In India, agriculture still engages about half of its workforce

In India, agriculture still engages about half of its workforce, and about 85 per cent of its farms are small and marginal. Compared to China and Vietnam, which have experienced fast structural and rural transformation, India’s story is of slow transformation.

As a result, poverty reduction in India was at much slower pace during 1988-2014, compared to China and Vietnam. India’s poverty reduction was slow during 1988-2005, but during 2005-2012, it accelerated dramatically–almost three times faster than during the earlier period. What did India do during this period?

Research reveals that the relative price scenario changed significantly (by more than 50%) in favour of agriculture in the wake of rising global prices. This boosted private investments in agriculture by more than 50%. As a result, agri-GDP growth touched 4.1% during 2007-2012 as against 2.4% during 2002-2007. The net surplus of agri-trade touched $25 billion in 2013-2014; real farm wages rose by 7% per annum. All this led to unprecedented fall in poverty.

With reference to the above passage, the following assumptions have been made:

  1. Structural and rural transformation is impossible when farms are mainly small and marginal.
  2. A good price incentive can trigger investments in agriculture.
  3. India needs to build value chains for high-value agri-products like livestock and horticulture.
  4. Higher global prices of agricultural commodities are essential for India’s poverty reduction.

Which of the above assumptions are valid?

  1. 1 and 3
  2. 2 and 4
  3. 2 and 3
  4. 3 and 4

Answer: B

Explanation

Statement 1 is not a valid assumption. It is nowhere indicated in the passage that small and marginal farm size is a hurdle in structural and rural transformation. Passage only mentions that 85 per cent of Indian farms are small and marginal. Statement 2 is a valid assumption. "Research reveals that the relative price scenario changed significantly (by more than 50%) in favour of agriculture in the wake of rising global prices. This boosted private investments in agriculture by more than 50%."

Statement 2 can clearly be stated from the above mentioned sentence.

Statement 3 is not a valid assumption. The passage nowhere clearly talks about the need to build value chains for high-value agri-products like livestock and horticulture in India. It only makes mention of structural and rural transformation along with boost in private investment.

Statement 4 is a valid assumption. Assumption can directly be derived from the sentences in the passage. "India’s poverty reduction was slow during 1988-2005, but during 2005-2012, it accelerated dramatically– almost three times faster than during the earlier period. What did India do during this period? Research reveals that the relative price scenario changed significantly (by more than 50%) in favour of agriculture in the wake of rising global prices. This boosted private investments in agriculture by more than 50%."

  • Exam Year: 2020