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Overview

Agriculture in South Asia

 

The rapid increase in foodgrain productivity in the 1970s and 1980s made possible by the “Green Revolution” improved food security and increased rural wages. As a consequence, the rural poverty rate declined significantly. In India, for example, it fell from about 53% in 1977/78 to 26% in 1999/00.

 

Despite these achievements, poverty in South Asia is still largely rural. About 70% of the population, and about 75% of the poor, live in rural areas. Most of the rural poor depend on rainfed agriculture, livestock, fragile forests, and/or casual often migratory employment. Agricultural and rural non-farm growth will be a critical to reach the  Millennium Development Goals of halving the number of poor people by 2015. 

 

In the past years, agriculture sector has shown:

·    The successful foodgrain self-sufficiency strategy of the 1970s to the 1990s is no longer sufficient for sustaining agricultural growth in the longer term.

·    Agricultural growth is less than 3%, which is far below the growth rates of other economic sectors.

 

Overview Graph

 

·    Agriculture employs about 60% of the labor force and contributes 22% of the regional GDP.

·  Demand for lower value traditional crops like wheat and rice is slowing. However, the demand for higher value products, spurred by a rapidly growing upper and middle class, and export opportunities, offers new avenues to revitalize the agriculture sector through   diversification and value-addition. These higher value products include fruits, vegetables, meat, dairy and fish.

 

While the transition to nontraditional products and markets is already underway, a number of obstacles need to be addressed if the sector is to reach its full potential:

 

·   In several countries (e.g. India and Sri Lanka), subsidies for grain, food, power, irrigation and fertilizers encourage the farmers to stay in traditional crops and crowd out public spending on more productivity-enhancing items e.g., technology, market support services and rural infrastructure. These subsidies also threaten sustainable productivity growth by inadvertently causing nutrient imbalances, over-extraction of groundwater, and water-logging and salinity in potential irrigated areas;

 

·   Government over-regulation of domestic trade, agro-processing, enterprise size, and land and credit markets discourage private investments in rural areas;

 

·   Weakened agricultural technology and innovation systems hamper the adoption of improved technologies and practices

 

·   Deteriorating irrigation systems need rehabilitation and institutional reform.

 

The World Bank Response

 

The World Bank’s lending for agriculture in South Asia has recently expanded considerably, hovering over about 40% of the total Bank lending in the agriculture sector in the recent years.. There has also been an increase in analytical studies and policy dialogue directed at policy and institutional reforms.

 

The  main areas of the lending growth are:

  •  Water Resources Management/irrigation. The Bank is pursuing opportunities to combine infrastructure modernization and institutional reforms, particularly in Pakistan and India; and where champions for reform have emerged at the state or provincial level. The Bank’s focus is on decentralized, participatory and financially sustainable water users associations and on increasing irrigation output.
  • Technology and Innovation: The Bank supports the governments to increase poverty reduction impact of agricultural research and innovation programs and well-defined national extension strategies. We will aim at developing public/private partnerships, and intermediation schemes that facilitate small farmers’ integration into the marketing chain.
  • Agricultural Diversification and Market Development: New opportunities are emerging  for the private sector to participate in agribusiness, agro-processing, value addition and in linking farmers to the markets.    The Bank is supporting policy reforms to improve the investment climate; investments in market infrastructure and services to enhance market efficiency; and capacity building to meet emerging challenges such as food safety, sanitary and phyto-sanitary standards, and zoonotic diseases (i.e. avian flu). Also, improving rural roads is essential to these efforts



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World Bank in South Asia

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