The Indian agriculture entered the next phase after the 1960s. This is described as phase II marked for technologically dynamic agriculture with low capital intensity. This is the beginning of the process of transformation from traditional agriculture to modernisation. In this phase, agriculture still represents a large portion of the total economy.
But population and incomes would be rising, increasing the demand for agricultural products while the size of the average holding would be coming down. There is a scarcity of capital both in industry and agriculture. The farm sector tends to use more labour than capital, since labour, owned or hired, would be still, relatively cheaper than mechanization.
The distinguishing feature of phase II is the application of science and technology, evolved by research institutions, in a progressively large measure. This increases the productivity of farms when small capital additions are made in the form of improved seeds, fertilizers, and pesticides. The profitable innovations are accepted by the farmers despite imperfections in land tenure, marketing, and input supply system.
The stagnancy that had marked the agricultural sector during the early-1960s, had largely been overcome by the end of the decade. In the wake of the new agricultural strategy of growth (called the Borlaug seed-fertiliser-technology) that had been adopted, agricultural production especially food grains, began to increase sharply