India’s agricultural growth over the past three decades has been propelled primarily by yield improvements, diversification into high-value crops, and enhanced cropping intensity, according to an article published in the RBI Bulletin, August 2025. The study, spanning the period from 1992-93 to 2022-23, highlights horticulture—particularly fruits and vegetables—as a central pillar of resilience for the farm sector, while also noting persisting challenges of yield fluctuations, post-harvest infrastructure gaps, and price volatility.
The analysis, authored by Shivam from the Reserve Bank of India’s Department of Economic Policy and Research, decomposes agricultural growth into four components: area expansion, yield or technological improvement, price effects, and diversification. It focuses on eight major crops—rice, wheat, pulses, coarse cereals, fruits and vegetables, oilseeds, sugarcane, and tobacco—collectively accounting for over 80 per cent of gross cropped area and 75 per cent of gross value of output.
Yield and Diversification Drive Growth
Between 1992-93 and 2022-23, yield improvements contributed the largest share to growth at 1.67 per cent, followed by diversification at 0.68 per cent and area expansion at 0.54 per cent. Price effects, however, dragged growth by -0.11 per cent during the period.
The decade-wise analysis reveals shifting trends. In the 1990s, yield gains (1.72 per cent) and diversification (0.76 per cent) were the primary drivers. In the following decade (2002-03 to 2011-12), diversification gained further momentum, contributing 1.13 per cent, alongside yield improvements (1.68 per cent) and area expansion (0.83 per cent). The latest period (2012-13 to 2022-23) saw balanced contributions from all four components, with yields (1.63 per cent), diversification (0.21 per cent), area (0.76 per cent), and prices (0.49 per cent) pushing overall growth to 3.25 per cent.
Enhanced cropping intensity—from 139.15 per cent in 2012-13 to 155.4 per cent in 2021-22—helped farmers derive higher output from limited land resources. At the same time, diversification was strengthened by dietary shifts towards fruits and vegetables, policy initiatives promoting food processing, and greater urban demand for high-value produce.
Fruits and Vegetables Outshine Staples
The study finds that fruits and vegetables (F&V) have consistently outperformed traditional staples in terms of growth. Despite occupying just 5.77 per cent of gross cropped area in 2022-23, F&V contributed 28.19 per cent to the gross value of output.
Over three decades, they maintained the highest annual growth rates: 5.86 per cent (1992-2002), 4.33 per cent (2002-2012), and 3.84 per cent (2012-2023). Their contribution to overall agricultural growth averaged above 1.3 per cent in each period, offsetting slower growth in cereals, pulses, and oilseeds. Without F&V, overall agricultural growth would have been substantially lower.
This surge reflects broader dietary changes. Household expenditure data shows the share of fruits in food budgets rising from 2 per cent in 2004-05 to 3.9 per cent in 2023-24, while cereal consumption declined sharply in both rural and urban areas.
Small Farmers Leading Diversification
Importantly, small farmers have been at the forefront of horticultural diversification. Agriculture Census data indicates that in 2015-16, smallholders allocated 6.08 per cent of their gross cropped area to horticulture, compared with 5.32 per cent for medium farmers and 5.04 per cent for large farmers.
Vegetables, being labour-intensive and offering quicker returns, dominate small farmers’ choices, whereas larger farmers favour fruits and spices that require higher capital and longer gestation. Between 1995-96 and 2015-16, small farmers steadily expanded their horticultural footprint, underscoring their adaptability and economic reliance on high-value crops.
Challenges: Yields, Storage, and Prices
Despite horticulture’s strong performance, the sector faces three persistent challenges. Yield fluctuations remain pronounced, especially in fruits like mango, grapes, and sapota, where productivity has declined or stagnated over the years. While vegetables generally show an upward trend, volatility in certain crops such as peas and tapioca persists. Government initiatives such as the Mission for Integrated Development of Horticulture (MIDH) and the Horticulture Cluster Development (HCD) programme launched in 2021 aim to address these issues through better planting material, tissue culture units, and advanced technologies.
Post-harvest storage continues to be a major bottleneck, with losses estimated at ₹1.5 trillion annually. India’s cold storage capacity reached 38.2 million MT by 2022 but remains highly concentrated in four states—Uttar Pradesh, West Bengal, Gujarat, and Punjab—accounting for 71 per cent. Moreover, nearly 75 per cent of cold storage is dedicated to potatoes, leaving little for other perishables. Recent measures such as the Agriculture Infrastructure Fund (AIF), which has sanctioned over 48,000 storage projects, and food processing schemes under PMFME and Mega Food Parks are expected to ease this constraint.
Price volatility poses another hurdle. While fruit price instability declined in the decade after 2012-13, vegetable prices became more volatile, especially for onions, potatoes, and tomatoes. In contrast, cereals like rice and wheat enjoyed stable, rising prices due to Food Corporation of India procurement support, making them less risky for farmers. Recognising this imbalance, the government launched Operation Greens in 2018-19, initially for tomato, onion, and potato (TOP), later expanded to cover all fruits and vegetables under the TOTAL scheme.
Path Ahead
The study concludes that yield improvement and diversification, particularly into horticulture, will remain the backbone of sustainable agricultural growth. Strengthening farmer linkages with export markets and urban consumers, encouraging intercropping, and advancing agro-processing industries will be crucial for future progress.
It emphasises the need to expand agricultural research, especially in areas of climate resilience, pest management, and productivity enhancement, to ensure stable returns for farmers. By addressing yield and price instability and expanding post-harvest infrastructure, India can unlock the full potential of horticultural diversification as a pathway to rural prosperity and agricultural resilience.