Role And Contribution Of Agriculture On Indian Economy

This article is related to the reasons why Indian agriculture is important to the Indian economy. Indian agriculture has contributed to India's economy in many ways like providing , contributing to a major share of revenue earned, share in national , providing buffer stock, supply of raw materials to industries, earner of foreign exchange etc

Webster dictionary states agriculture as the art or science of production of crops and livestock on a farm.

Agriculture is the backbone of the Indian economy. Despite major emphasis on industrial development during the last four decades, agriculture continues to occupy a place of pride in our economy. The importance of agriculture can be brought out from the following facts:

Share in national income

Although the share of agriculture in the total national income has been gradually decreasing on account of the development of the secondary and tertiary sectors, it still contributed about 18 % of nation income in 2006-07.(in 1950-51, it was 59%)

Source of employment

In India, agriculture is the main source of employment. Even in 2004-05, more than 56% of the total labour force of India is engaged in agriculture and depend on it for their livelihood (1950-51: 69.5%). It becomes evident from this fact that other sectors of the economy could not generate enough employment for the growing population.

Provision of foodgrains

In a developing country like India where a very large proportion of income is spent on food and the population is increasing rapidly, the demand for foodgrains has been increasing at a fast rate. Agriculture In India has played an important role in meeting almost the entire food needs of the people. The production of foodgrains in India has increased from 51 million tones in 1950-51 to 208.3 million tones in 2005-06, i.e. by a little more than 4 times since 1950-51. This has enabled the country to overcome the problems of foodgrain shortages. The country is almost self-sufficient in foodgrains and it no longer depends on import of foodgrains.

Supply of raw materials to industrial sector

Agriculture plays an important role in industrial development. Many industries like cotton industry, jute industries, sugar industries, food processing industries, etc. depends on agriculture for their raw material requirements. Moreover, workers engaged in various industries depend on agriculture for their food requirement.

Market for industrial product

Agriculture provides markets for a large number of industrial products. Since about two thirds of India lives in rural areas, there is a large rural purchasing power which has created a large demand for all types of industrial products. Green revolution has considerably increased the purchasing power of the large farmers substantially in the recent years. Thus for the demand for various products like soaps, detergents, clothes, cycles, scooters, radios, television, torches, lead batteries, etc. has witnessed a marked increase. Likewise, the demand for a variety of agricultural inputs like chemical fertilizer, tractors, pump-sets, pesticides etc. has increased sharply. This has stimulated the development of industries producing these inputs.

Earner of foreign exchange

Agriculture plays an important role in Indian economy as an earner of foreign exchange through exports of agricultural commodities like tea, cotton, coffee, jute, fruits, vegetables, spices, tobacco, sugar, oil, cashew kernels, etc. in the past, export of agricultural products accounted for about 70% of the export earnings of the country. However, with economic development and consequent diversification of our exports, the share of agriculture in total exports has come down to about 10% in 2005-06. All these exports bring valuable foreign exchange to pay for the increased imports of machinery and raw materials required in the non- agricultural sector.

Significance for trade and transport

Agriculture helps in the development of tertiary (or service) sector. For example various means of transport like roadways and railways get bulk of their business from the movement of agricultural commodities and raw materials. A significant part of internal trade constitutes mainly of agricultural products.

Source of revenue for the government

Through the direct contribution of agricultural taxes to the central and state governments is not significant, they get a
significant part of their total revenue in terms of land revenue, irrigation charges, taxes imposed on the commodities purchased by the cultivators etc. central government also earns revenue from export duties on agricultural production. Freight charges imposed by Indian Railways for carrying agricultural product generate huge revenue to the central exchequer.

On over all view, India has always been benefited by agriculture. Though the future of India is industrialization, the contribution of agriculture would always prove to be vital for making India a powerful and stable economy in the future.

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Author: Venkiteswaran13 Feb 2014 Member Level: Diamond   Points : 6

It is unfortunate that the land under agriculture and the number of people engaged in direct agriculture are fast dwindling.

We are seeing unrest and protest in various corners in our country against forcible grabbing of agricultural lands by land mafia who then construct Apartment complexes, entertainment parks or commercial establishments on them. Induced by the initial attractive offers for the land by the land syndicate mafia and discouraged by the lack of profit and encouragement for agriculture, the agriculturists sell their land and migrate to nearby cities.

From productive ventures either in agriculture or industry, we are shifting to trading ventures which makes our economy susceptible to the external vagaries and shocks. Unless drastic steps are taken to reverse the trend, we may have to face famines of food grains and other food items like the old days. God forbid that.

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