- Role of Agriculture in the Indian Economy
- 7 Important Role of agriculture in the Indian Economy (Ref):
- 1st Role of Agriculture – Share of agriculture in National Income
- 2nd Role of Agriculture – Largest Employment providing sector
- 3rd Role of Agriculture – Providing food to the growing population.
- 4th Role of Agriculture – Providing Raw materials to Industry
- 5th Role of Agriculture – Importance in Internal and International Trade –
- 6th Role of Agriculture – Development Influence on other sectors
- 7th Role of Agriculture – Impact on central and state Budgets
- Causes of low agricultural productivity in India –
Role of Agriculture in the Indian Economy
Agriculture is the backbone of the Indian Economy it has the highest share in employment and livelihood creation.
• It is also essential for food security, nutritional security, and poverty reduction in our country.
• GDP helps improve India’s foreign currency reserves through the export of agricultural products like tea, sugar, rice, etc.
• However, it is the largest unorganized sector in India.
- The share of agriculture in GDP is 16.5% in 2019-20 as per the estimates.
- However, In 2008 World Development Report (by World Bank) mentioned that GDP originating from agriculture is 4 times more effective than the GDP originating from other sectors.
- Around 50% of the population is engaged in the Agriculture sector, thus it promotes ‘Growth with Jobs’.
- More than 80% of farmers are still small and marginal farmers thus, farm mechanization is very low in India as compared to other
- Foodgrains production has increased over the period. It was 198) million tons in 1996-99. But it f has increased to (269 million tons in 2015-18 (36% increase).
- In 2018-19, it was 285 million tonnes.
Over the period, per capita net availability of total foodgrains and pulses has increased while it has declined for rice and wheat.
This is a good trend as it shows increasing diversity in the consumption of Indian households.
Per capita availability of pulses (an important source of protein) is around 55 g/day. This is higher than the threshold of 40 g/day as recommended by ICMR.
7 Important Role of agriculture in the Indian Economy (Ref):
- Share of agriculture in National Income
- Largest Employment Providing Sector
- Providing food to the growing population
- Providing raw materials to industry
- Importance in internal and international trade
- Development influence on other sectors
- Impact on central and state budgets
1st Role of Agriculture – Share of agriculture in National Income
- The share of agriculture in India’s national income is quite significant
- The relative share of agriculture in our GDP was about 55 % in 1950-51 which declined to about 16.36% in 2017 and 14.5 in 2020
- The share of agriculture in our GDP has been declined but it is still quite high as compared to developed Countries
- For Example – America and England is 2% but India is 15 %
2nd Role of Agriculture – Largest Employment providing sector
- Agriculture provides employment to about more than 50% of the working population in 2016-17.
- At the time of independence, agriculture provides employment to about 72% of the working population.
- The agriculture sector of our economy is a source of livelihood for a large section of our population.
3rd Role of Agriculture – Providing food to the growing population.
• In a developing economy like India aggregated food demand increase not only because of population growth but also because of rising per capita income
• The annual rate of increase in the demand for food can be expressed as per the following formula
D=P+(yed)*Y*D= rate of growth of food demand
P= rate of growth of population
Yed = high-income elasticity of demand for food
Y = growth rate of per capita income
- It has been estimated that the income elasticity for food in India is about 0.6 or more while in developed countries it is between 0.2 to 0.3. Besides the huge increase in population the per capita food availability per day in India had increased Significantly
4th Role of Agriculture – Providing Raw materials to Industry
- Agriculture also provides raw materials to many of our large-scale industries like cotton textile, jute, Sugar, vanaspati, plantation, etc. These Industries depend on agriculture for the supply of their raw materials.
• Besides there are many Other industries that depend on agriculture in an indirect manner like Handloom weaving, oil crushing, rice husking, etc.
• likewise the n entire range of food processing industries depends on agriculture. Thus the growth and development of these Industries are linked up with the development and progress of the agricultural sector.
5th Role of Agriculture – Importance in Internal and International Trade –
- The role of agriculture is quite significant both in the internal and international trade of the country it has been associated that food grain trade along with trading in other Agricultural Products constitutes about 20% of our total internal.
• A large number of people are engaged in different capacities in different agricultural trading operations and particularly in the busy season the agricultural markets are found to be buzzing with activities and caring on transactions running into crores of Rupees.
- Export of agriculture and allied product have been quite large in recent years and account for about 15% of our total export earnings.
• Similarly in sports of Agricultural Products to our quite significant in our foreign tree this account for about 10% of our total imports.
6th Role of Agriculture – Development Influence on other sectors
- Agricultural Development gives a big push to the development of other sectors of the economy like transport, communication, irrigation & power construction industry, fertilizers, pesticides, farm equipment and etc. Also, receive a boost as a result of agricultural development.
- Thus, agriculture help in the development of other sectors of the economy and in turn is helped by the development of this sector.
7th Role of Agriculture – Impact on central and state Budgets
• The prosperity or adversity of agriculture affects the budgetary position of both the central and the state governments for example in a year of good harvest there is an increase in the purchasing power of the rural population leading to an increase in the demand for various types of consumer goods including durable goods.
- This not only gives a boost to these Industries resulting in increased employment and income but also increases the revenue from Central Excise and other taxes likewise the state government also gets more income from the revenue Agriculture Income Tax, sales tax, etc.
Madhya Pradesh has the highest share in pulses production (27%) but ranked 15th in pulses yield.
Among the production of coarse cereals, maize production has increased substantially and constituted 60% of the total coarse cereals.
Maize is followed by Bajra (21.1%), Jowar (10.6%), Ragi (4.1%), and Barley (3.9%).
Causes of low agricultural productivity in India –
- General Factor
- High pressure of population on land
- Mainland Increase
- Inadequate nonfarm services
- Institutional factor
- Size of hoarding
- Land tenure System
- Technological factor
- Old and traditional technology
- No focus on new technology
- Inadequate irrigation Facilities
- Lack Fertilizer
- Inadequate Credit facilities
- Agriculture Services
- No Exclusion in taxes and other
- No agriculture marketing
7 Important Role of agriculture in the Indian Economy?
Share of agriculture in National Income
Largest Employment Providing Sector
Providing food to the growing population
Providing raw materials to industry
Importance in internal and international trade
Development influence on other sectors
Impact on central and state budgets
Reason For Low Productivity of Agriculture in India?
– General Factor
— High pressure of population on land
— Mainland Increase
— Inadequate nonfarm services
– Institutional factor
— Size of hoarding
— Land tenure System
– Technological factor
— Old and traditional technology
— No focus on new technology
— Inadequate irrigation Facilities
— Lack Fertilizer
— Inadequate Credit facilities
— Agriculture Services
— No Exclusion in taxes and other
— No agriculture marketing
What is the Share of agriculture in the National Income of India?
the relative share of agriculture in India’s GDP was about 53.1 % in 1950-51 which declined to about 16.36 % in 2017 and 14.5 % in 2019-20
Which is the Largest Employment providing sector in India?
Agriculture provides employment to about more than 50% of the working population in 2016-17.
How does Agriculture Impact central and state Budgets?
The prosperity or adversity of agriculture affects the budgetary position of both the central and the state governments for example in a year of good harvest there is an increase in the purchasing power of the rural population leading to an increase in the demand for various types of consumer goods including durable goods.