Macroeconomic Shifts and Structural Transformation in Indian Agriculture: A Policy-Oriented Perspective

Agriculture remains a vital source of livelihood and an enduring pillar of India’s socio-economic and cultural foundation. This study investigates the macroeconomic determinants of agricultural productivity in India using annual time series secondary data for the period 2000–2024. Employing advanced econometric techniques, including the Auto Regressive Distributed Lag (ARDL) model and the bounds testing approach to co-integration, the study examines both the short-run dynamics and long-run equilibrium relationships between agricultural productivity and key macroeconomic variables. Empirical findings indicate that the inflation rate and interest rate are positively associated with agricultural productivity, suggesting that moderate inflation and credit expansion may incentivize agricultural investment. Conversely, GDP growth, exchange rate depreciation, population growth, gross capital formation, gross domestic savings, public expenditure, export value, and foreign direct investment (FDI) exhibit a negative relationship with the agricultural productivity ratio during the study period. The study recommends a comprehensive policy framework focusing on: (i) strengthening rural infrastructure and agricultural technology adoption; (ii) enhancing social sector spending, particularly in education and health; (iii) implementing population control measures; (iv) promoting agricultural exports through a competitive exchange rate regime; (v) improving access to affordable credit for farmers; (vi) incentivizing domestic savings and productive investment through tax and subsidy reforms; and (vii) fostering greater public-private partnerships and attracting targeted FDI in the agricultural sector. These measures are critical to unlocking productivity gains and ensuring the long-term sustainability of Indian agriculture within a transforming macroeconomic environment.