India's large and diverse agricultural sector accounts for about 21% of GDP and 10% of export earnings. Its arable land area of 159.7 million hectares (394.6 million acres) is the second largest in the world (after the United States). Its gross irrigated crop area of 82.6 million hectares (204.1 million acres) is the largest in the world.

India is among the top three global producers of a broad range of crops, including wheat, rice, pulses (chickpeas, pigeon peas, lentils, dry peas, etc.), cotton, peanuts, fruits and vegetables. India has the world's largest herds of buffalo and cattle, is the largest producer of milk and has one of the largest and fastest growing poultry industries.

India achieved strong growth in food grain production during the 1970s and 1980s because of its extensive agricultural resource base, the introduction of high-yielding grain varieties and supportive government policies. This enabled India to achieve its key policy goal of self-reliance in cereals during the 1990s and 2000s.

Recent Ag gains lag

However, gains in farm output slowed beginning in the early 1990s, even as growth in the rest of the economy strengthened. Yields of most major crops in India remain low by world standards, as the development and use of high-yielding varieties, irrigation and modern inputs has been slow to spread beyond wheat and rice production.

Policy reforms needed

Despite gains in irrigated area, Indian agriculture continues to be constrained by its dependence on variable monsoon rainfall for a large share of cropland. Also, major farm policies—including price supports, input subsidies and public sector research—that traditionally focused on the wheat and rice sectors have been slow to adjust to meet the needs of India's increasingly diverse domestic market or of competing in global markets. Alongside the robust gains in output and investment that have occurred in the overall economy since the early 1990s, public and private investment in agriculture has grown little.

Lagging investment creates pressure to reform domestic agricultural policies. Achieving consensus on the reform agenda is difficult. But measures to make Indian ag more market oriented, improve marketing efficiency, promote use of biotechnology and strengthen incentives for private investment are moving forward.