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| India’s dilemma: Farm yield rises, industrial growth sluggish | | |  Vijay Garg
As the Government boosts minimum support prices and extends credit schemes to sustain rural momentum, policymakers face a complex balancing act — how to nurture farm-driven optimism amid factory-floor fatigue and an uncertain global trade climate
India’s agricultural sector is charting new territory as record-breaking food production sets the stage for a stronger presence in global export markets. While farms flourish, a contrasting picture emerges in the industrial landscape, where stagnating production signals underlying economic strain. This divergence underscores a shifting balance in India’s growth narrative — buoyant fields amid faltering factories.
To pace it up further, the Centre also increased the kharif crop minimum support price (MSP) focusing on pulses, oilseeds and coarse grains. The MSP for paddy was raised by Rs 69, three per cent, to Rs 2369 per quintal. The MSP of 14 other items including groundnut, sunflower seed, cotton, tur/arhar, and niger seed benefitted.
The Centre claims that its procurement of wheat has surpassed previous three-year records yet is below the target. The 5 per cent interest subvention scheme on Kisan Credit Card up to Rs 3 lakh will continue. Amid such a farm yield bonanza, the stymied industrial production remains a concern. The country’s industrial output growth slowed to an 8-month low in April, dragged down by contraction in mining, sluggish electricity and manufacturing sectors. It is dipping since reaching a peak of 6.2 percent in April 2024 which had fallen to minus 0.1 percent during mid-year.
India has achieved a record food grain production of 353.95 million tonnes (MT) in the 2024-25 crop season. This is largely due to record harvests of paddy (rice) — 149.07 MT, wheat — 117.50 MT, and maize — 42 MT.
India surpassed China to become the world’s largest rice producer. Maize production jumped by 12.3 per cent. Oilseeds yield also rose by 7.4 per cent.
Data show a record production of rice, wheat, maize, soybean, rapeseed, mustard, and sugarcane. “The third estimated production of major crops such as paddy, wheat, soybean, groundnuts, oilseeds, and pulses are going to be a record,” says Agriculture Minister Shivraj Singh Chauhan. This is against agricultural ministry figures of about a 1.2 per cent fall in production a year back.
8-year-record
The food-grain estimate claims a 6.6 per cent record increase in major crops in eight years. Chouhan announced that the country’s food grain production reached 3539.59 lakh metric tonnes (LMT) in 2024-25, which is 216.61 LMT higher than last year’s (2023-24) 3322.98 LMT.
Another heartening news is India’s agriculture exports rising 6.4 per cent to $51.9 billion in 2024-25, from $48.8 billion during the preceding fiscal year that ended March 2024. This was as against the almost flat 0.1 per cent growth in the value of its overall goods exports in 2024-25.
In 2024-25, India’s total merchandise exports reached $374.1 billion, a 6 per cent increase from the $352.9 billion in 2023-24, excluding petroleum products. This marked a record high for non-petroleum merchandise exports. Overall, India’s total exports (merchandise and services) reached $824.9 billion, the highest ever. Services exports reached a high of $387.5 billion. However, the country’s exports in February 2025 experienced a decline, marking the fourth consecutive month of contraction. The export value fell to $ 36.91 billion, a 10.85 per cent decrease compared to the same period last year. Both exports and imports saw a sharp contraction. This decline was primarily attributed to factors like volatility in petroleum prices, global uncertainties, and the impact of sanctions on the gems and jewellery sector.
The country is hit also by lower capital expenditure hitting the Rs 86000 crore construction equipment industry. It grew 21 per cent in 2022-21 per cent and 24 per cent in 2023-24. Companies like Caterpillar, JCB, Tata Hitachi, Cummins and Volvo CE are piqued at the overall growth of 3 per cent in 2024-25.
Private sector laggard
Overall construction infrastructure activities are stated to be slowing down. The infra and construction goods sector slowed by 4 per cent in April against 8.5 per cent in April 2024, according to the National Statistics Office (NSO).
The construction industry has been thriving on liberal Government expenditure. Its thaw speaks a lot that the private sector’s contribution to the country’s growth is below the expectations.
The manufacturing sector remained subdued, growing by 3.4 per cent in April, lower than the 4.2 per cent a year earlier. The IIP dip is stated to be lower than estimated at a 2.7 per cent fall. The slowdown is broad — based across sectors, according to rating agency ICRA. The infra and construction goods sector slowed to 4 per cent in April against 8.5 per cent in April 2024.
In 2024-25, India’s private sector capex also saw a decline, falling by nearly 9 per cent to Rs 26.8 lakh crore. This represents a three-year low and the second consecutive year-on-year decline.
Both the developments, in agriculture and industry, are significant in the light of the US policy manipulations by President Donald Trump. India is in protracted negotiations with the US to moderate and modify the tariff regime, particularly in the thawed world market, where multilateral UN institutions, including the World Trade Organisation, are being bypassed. Surfeit of bilateral transactions like the Indo-UK trade deals are changing the global trade scenario. The developing countries are particularly at the receiving end as they have to spend more effort, time and resources on talks. The settled multilateral norms are being gradually bypassed. It reflects on their exports and global growth. There are issues of farm exports particularly in the light of Russia-Ukraine war, conflict situations near the Mediterranean zone and Israel-Gaza — the Middle East. India must resolve these to boost global trade.
Despite a ceasefire in the wake of Operation Sindoor, Pakistan has not lifted the ban on its airspace for Indian airlines. It is bleeding the airline industry by a cost overrun of 30 per cent a flight. Air India estimated it lost over Rs 100 million in a month for detouring Pakistan.
The stock markets too are tizzy having lost severely since January as it crashed with the US President Donald Trump’s tariff hikes and retaliation from China fueled investors’ jitters amid fears that a full-blown trade war could impact economic growth across the world.
The pace of policy pronouncements, along with postponements and modifications, has created heightened uncertainty for companies and US trading partners. A fluid trade policy environment is likely to continue as the administration continues to negotiate, takes steps to impose additional sectoral tariffs and reviews requests for product-specific exemptions from tariffs amid the latest US Federal Court striking down Trump tariffs.The coming year months may see many global changes and the fortunes of India.
Despite an impressive agricultural surge—marked by record food grain output and rising agri-exports—India’s broader economic landscape remains uneven. Sluggish industrial growth, faltering manufacturing, and declining private capex cast a shadow over rural gains. Global uncertainties, fluid trade policies, and weak infrastructure demand further complicate recovery. While Indian farms bloom, factories struggle to regain momentum. The Government’s challenge now is to bridge this rural-urban growth divide and sustain momentum in both agriculture and industry amid global flux.
Vijay Garg Retired Principal Educational columnist Eminent Educationist street kour Chand MHR Malout Punjab |
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