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JOMATVol. 3 No.2 January – June 2015ISSN No. 2278-9316ACCOUNTING PRACTICES IN AGRICULTURE SECTORJ. P. BHOSALEABSTRACTAgriculture Sector plays a pivotal role in the Indian economy. This sector continues to provide employment and livelihoodfor majority of the population. Over the period, the accounting practices in non-organised part of Agriculture Sector havenot been evolved to the required extent. Emerging new accounting policies and practices at par with international practiceswill certainly improve the agriculture accounting.India is traditionally recognized as country of Agriculturists. Agriculturetraditionally continued to remain as one of the predominant sector of Indian economy. Contribution of Agricultural sectorto the nation’s growth and prosperity continues to be significant even in modern era. It also provides employment to largeradult population.Agriculture forms the backbone of the development of the Indian economy, where roughly half of the workforce is engaged in agriculture for its livelihood. On the other hand, an average Indian still spends almost half of his/hertotal expenditure on food. Accordingly, while being both a source of livelihood and food security for a vast majority of lowincome, poor and vulnerable sections of society, this sector has crucial significance in Indian economy. The experience fromBRICS countries indicates that a one percentage growth in agriculture is at least two to three times more effective in reducingpoverty than the same growth emanating from non-agriculture sectors. Accordingly, over the period, it has been realized thatGovernment has given higher priority to agriculture sector in order to achieve the goals of reducing poverty and malnutritionas well as of inclusive growth. Since agriculture forms the resource base for a number of agro-based industries and agroservices, it is more meaningful to view agriculture not as farming alone but as a holistic value chain, which includes farming,wholesaling, warehousing processing, and retailing.KEYWORDS : Accounting Practices, Methodology, Agriculture Sctor, Indian Economy, Agriculture Accounting.INTRODUCTION :times more effective in reducing poverty than the samegrowth emanating from non-agriculture sectors. Accordingly,over the period, it has been realized that Government hasgiven higher priority to agriculture sector in order to achievethe goals of reducing poverty and malnutrition as well as ofinclusive growth. Since agriculture forms the resource basefor a number of agro-based industries and agro-services, it ismore meaningful to view agriculture not as farming alone butas a holistic value chain, which includes farming, wholesaling,warehousing (including logistics), processing, and retailing.India is traditionally recognized as country of Agriculturists.Agriculture traditionally continued to remain as one of thepredominant sector of Indian economy. Contribution ofAgricultural sector to the nation’s growth and prosperitycontinues to be significant even in modern era. It also providesemployment to larger adult population.Agriculture forms the backbone of the development of theIndian economy, where roughly half of the work force isengaged in agriculture for its livelihood. On the other hand,an average Indian still spends almost half of his/her totalexpenditure on food. Accordingly, while being both a sourceof livelihood and food securityIn view of the above, the Government of India and stateGovernments from time to time come out with variousschemes to educate the farmers, to create sufficientinfrastructure for agriculture, to introduce new techniques offarming, etc. Various schemes and support programmes arealso launched by the Government from time to time supportsmall farmers.for a vast majority of low income, poor and vulnerablesections of society, this sector assums crucial significance inIndian economy.The experience from BRICS countries indicates that a onepercentage growth in agriculture is at least two to three SBPIMHead, Research Centre in Commerce & Accountancy, Arts, Commerce & Science College, Narayangaon, PuneContact No.: 9860360733Email Id: bhosale jay@yahoo.in4

JOMATVol. 3 No.2 January – June 2015OBJECTIVES OF RESEARCH STUDY:ISSN No. 2278-9316agricultural activity. Bearer plants related to agriculturalactivity were previously within the scope of IAS 41. The IASBdecided that bearer plants should be accounted for in thesame way as property, plant and equipment in IAS 16, becausetheir operation is similar to that of manufacturing. However,the produce growing on bearer plants would remain withinthe scope of IAS 41.The present research study is carried out with followingobjectives in view:1. To study the International Scenario of AgricultureAccounting.2. To study the applicability of Accounting Standards toAgriculture Sector.ACCOUNTING STANDARDS IN INDIA:The institute of Chartered Accountants of India (ICAI), beinghighest accounting body in India, formulates AccountingStandards through its Accounting Standards Board (ASB)established in April 1977.3. To study the Accounting Practices and Methodology ofAgriculture Accounting.HYPOTHESES OF THE RESEARCH STUDY:The Accounting Standards, as recommended by the ICAI, hadbeen notified by the Ministry of Corporate Affairs, CentralGovernments in consultation with the National AdvisoryCommittee on Accounting Standards (NACAS) in the year2006 under Companies (Accounting Standards) Rules, 2006 asa part of Companies Act. At present, 29 Accounting Standards(Ass) are notified by the Ministry of Corporate Affairs (MCA)under the Companies Act.H-1 In recent times, Agriculture Sector forms an importantcomponent of the Indian Economy.H-2 Now a days, awareness about Agriculture Accounting isimproving.RESEARCH METHODOLOGY:The present research study uses the most recent availablepublished secondary data. To achieve the above statedobjectives, the secondary data was used. The secondarydata was also used from various reference books related toAccounting Practices and Methodology, Agriculture Sctor,Indian Economy, Agriculture Accounting, E-Commerce,M-Commerce, Information Technology, Marketing, Banking,Finance, Commerce, Management etc. For the said researchstudy the secondary data is also collected from the variousNational and International Research Journals which arerelated to Commerce, Management, Marketing andAgriculture Accounting. The Secondary data is also collectedfrom various websites.There is no specific Accounting Standards dealing withagriculture accounting. After converging IFRS based Standards,ICAI converged 39 IFRSs in the form of Ind AS with carve-outsin consultation with NACAS, which have been notified byMinistry of Corporate Affairs (MCA) under Companies (IndianAccounting Standards) Rules, 2015 as a part of CompaniesAct, 2013 effective from 01-04-2015.Ind AS comprise ofStandard on ‘Agriculture’ as Ind AS 41.APPLICABILITY OF ACCOUNTING STANDARDSTO AGRICULTURE SECTOR :‘Preface to the Statements of Accounting Standards’, issuedby the institute Chartered Accountants of India (ICAI), laysdown that the Accounting Standards are applicable to entitiesengaged in commercial, industrial or business activities. Inthis regard, paragraph 3.3 of the preface as follows :INTERNATIONAL SCENARIO OF AGRICULTUREACCOUNTING:Agriculture accounting did not receive much attensionaround the world and more particularly in India. Therefore,not much guidance was available with regard to accountingfor agriculture.“Accounting Standards are designed to apply to the generalpurpose financial statements and other financial reporting,which are subjects to the attest function of the membersof the ICAI. Accounting Standards apply in respect of anyenterprise (whether organised in corporate, co-operative orother forms) engaged in commercial, industrial or businessactivities, irrespective of whether it is profit oriented or it isestablished for charitable or religious purposes. AccountingStandards will not, however, apply to enterprises only carringon the activities which are not of commercial, industrial orbusiness nature, (e.g., an activity of collecting donationsand giving them to flood affected people). Exclusion of anenterprise from the applicability of the Accounting Standardswould be permissible, only if no part of the activity ofsuch enterprise is commercial, industrial or business innature. Even if a very small proportion of the activities ofHowever, in February 2001, IAS 41, Agriculture, was issuedby the international Accounting Standards Committee, thepredecessor of the International Accounting Standards Board(IASB), with prescribes accounting for agriculture.In April 2001 the International Accounting Standards Board(IASB) adopted IAS 41, Agriculture, as a part of InternationalFinancial Reporting Standards (IFRS).In December 2003 the IASB issued a revised IAS 41 as part ofits initial agenda of technical projects.In June 2014 the IASB amended the scope IAS 16, Property,Plant and Euipment, to include bearer plants related to5

JOMATVol. 3 No.2 January – June 2015ISSN No. 2278-9316LAND USED FOR AGRICULTUREan enterprise is considered to be commercial, industrial orbusiness in nature, the Accounting Standards would applyto all its activities including those which are not commercial,industrial or business in nature.”As per the land use statistics of 2011-12, the total geographicalarea of the country is 328.7 million hectares, of which 140.8million (42.83%) hectares is the reported net sown area and195.2 million hectares (59.38%) is the gross cropped areawith a cropping intensity of 138.7%. The net irrigated area is65.3 million hectares.Since the agriculture activities are undertaken with ancestralsource of livelihood and inheritance, Framework to theAccounting Standards may not apply to unorganized entitieslike proprietor, HUF, AOP etc. However, an orgnisation whohas undertaken this activity with commercial objective,Accounting Standards (Ass) will apply. As such corporateentities and co-operative societies undertaking agricultureactivities with commercial objective, Ass will apply.POPULATION DEPENDENT ON AGRICULTUREIn India about 65 to 70 per cent population is dependent onagriculture. On the other hand in the developed countriesless then 10 per population is dependent on agriculture.AGRICULTURE GDPAGRICULTURE IN INDIA :CURRENT SCENARIOThe Agriculture and Allied Sector contributed approximately13.9% of India’s GDP (at constant 2004-05 prices) during2013-14. Gross Domestic Product (GDP) of Agriculture andAllied Sector and its share in total GDP of the country duringthe last 3 years including the current year, at 2004-05 pricesis as follows :Agriculture Sector forms an important component of theIndian Economy. The contribution of agriculture sectortowards the GDP is also a significant factor in the growth ofthe economy. Majority of Indian population lives in villages.Certain data showing significance is given in this section.Share of Agriculture & Allied Sector in Total GDP (Rs. In Crore)ItemsYear2010-112011-122012-132013-14GDP of Agriculutre and Allied Sector7,17,8147,53,8327,64,5108,00,548Percent to total GDP14.60%14.40%13.90%13.90%Source :Central Statistics office, Ministry of Statistics and Programmes Implementation, Govt. of India.There has been a continuous decline in the share ofAgriculture and Allied Sector in the GDP from 14.60% in 201011 to 13.90% in 2013-14 at 2004-05 prices. Falling share ofAgriculture and Allied Sectors in GDP is an expected outcomein a fast growing and structurally changing economy.household sectors. Items included in the estimates of GCFare; improvement of land and irrigation works, laying of neworchards and plantations, purchas

management graduates at selected institutes in pune and mumbai archana salve, kirti dharwadkar a study to assess the h.r.d. practices adopted among school teachers in selected secondary schools in pune city during 2011–12 sunny p. mathew, daniel penkar journal of management and administration tomorrow