Declining profitability of rice cultivation, changing patterns of food demand in the rapidly growing cities and liberalized Indian economy putting challenges before the planners and policy makers to maintain a steady growth of food grain production to feed the growing population and at the same time generate employment opportunities. Agriculture-led-industrialization appears to be the best strategy to achieve these twin objectives and that necessitates agricultural diversification. In this regard coordination failure between sectors (e.g. agriculture, agro-based industry, infrastructure, supply chain, markets etc) happens to be the prime cause of not achieving these objectives. The basic requirement is a balanced growth of investments in different sectors with proper linkage between them. In the sphere of production, this relationship is visualized in terms of forward and backward linkages. A forward linkage lowers the cost of production for another activity; on the other hand, a backward linkage raises the demand for another activity. The sector that benefits from the linkage, a backward linkage directly raises the price of its output, stimulating higher production or supply. A forward linkage reduces the price of one of its inputs of production. However, what we observe in reality is that investment in one area is not forthcoming simply because required complementary investments in other sectors are not made. In the present liberalized economic regime, where demand-driven strategies are governing all the policy decisions, India needs to formulate her cropping pattern in such a way that it ensures her agricultural producers, finding national and international markets and good remunerative prices for their products. Such new cropping pattern should create the basis for agro-industrialization and at the same time opportunities for man-days creation in the rural areas as well. The inherent challenge is to make demand driven diversification in agriculture and to tie up production and productivity patterns with markets and end users. The potential of the horticulture sector emanates from its ability to generate more man-days, more income and greater employment opportunities. Moreover, having diverse agro-climatic regions, India has great comparative advantage in the production of various horticultural crops whose enhanced production would create scope for export earnings. But, the comparative advantage of Indian horticultural sector is greatly diminished with respect to the issue of price-competitiveness due to inefficient and lengthy supply chains, sanitary and phytosanitary requirements, wastages, inability of small and marginal farmers to undertake risk due to the lack of infrastructure and institutional support. Keeping all the above pictures in mind, the present study tries to examine the potential and performance of horticulture in India and evaluates to what extent small and marginal farmers are accommodating this changing scenario. In this study the performance of the states across the country are assessed in terms of area under and growth of horticultural crops mainly vegetables, flowers and fruits. Moreover, it attempts to scrutinize the effects of size-class of farmers on crop choice and also examine the performance of food processing sector across the Indian states in terms of gross and net value added over the period 2005-06 to 2012-13. The study is based on secondary data sources and with the help of simple statistical techniques and regression analysis it has shown that while India’s cropping pattern is still dominated by the cereal crops, there is enormous potential for horticultural crops (as revealed by its commendable performance in terms of growth of area and production) across states. The study has highlighted the issue that horticultural and food processing sector have the potential to enhance the income and employment generation in the rural sector. However, lack of proper infrastructural and institutional supports are not encouraging small and marginal farmers to take up horticulture-centric cropping pattern. The study has come out with a firm policy option that considering increasing demand for horticultural crops both in domestic and international markets, just institutional and infrastructural support such as proper storage, price support, collectivization, efficient supply chain etc., would generate an agro-processing revolution through a horticultural boom in India in the near future
