The Importance of Agriculture to the Indian Economy
Agriculture in India is a vast sector with diverse sub-sectors like forestry, logging, and fishing. While its share of India’s GDP has declined, the sector remains a significant contributor to the country’s economic and social well-being.
Employment
- The agriculture sector is the largest employer in India. In 2004-05, 52.1% of the workforce was employed in agriculture.
- Most of the population in developing countries, including India, depend on agriculture for their livelihoods.
Food Security
- India’s population is growing rapidly, which has led to an increased demand for food.
- Agricultural development is crucial for increasing food supply, ensuring food security, and reducing reliance on imports.
- The Green Revolution significantly increased wheat and rice production.
- To control prices and ensure food security, the Indian government has implemented a system of procurement and the Public Distribution System (PDS).
- The government buys food grains at a minimum support price (MSP) to build up buffer stocks and support farmers.
- The government sells food grains through the PDS at subsidized prices to make food affordable for the poor.
Industrial Development
- Agriculture provides raw materials for industries, including sugar, jute, cotton textiles, vanaspati, and food processing.
- The development of agriculture is closely linked to the growth of these industries.
Rural Economy
- The majority of India’s population lives in rural areas, and their livelihoods are closely tied to agriculture.
- Rising agricultural incomes increase the demand for industrial products, supporting industrial development.
International Trade
- Although its share of total exports has declined, agriculture still contributes to India’s international trade.
- Historically, agriculture-based exports (cotton textiles, jute, tea, cashew kernels, tobacco, coffee, vanaspati oil, and sugar) accounted for 70-75% of India’s export earnings.
- In 2010-11, agricultural exports made up 9.9% of total exports.
Poverty Reduction
- Growth in agriculture is more effective at reducing poverty than growth in non-agricultural sectors.
- Increasing agricultural productivity and incomes, especially for small and marginal farmers, is important for poverty reduction.
Challenges
The sources also highlight several challenges facing Indian agriculture:
- Low productivity: Indian agriculture suffers from low productivity compared to other countries. Factors contributing to low productivity include outmoded farming techniques, inadequate irrigation facilities, small and fragmented landholdings, and dependence on the monsoon.
- Marketing Inefficiencies: The agricultural marketing system is often inefficient, with high costs and exploitation of small farmers.
Policy Interventions
The government has initiated several policies and programs to address the challenges faced by agriculture. Some key interventions include:
- Land reforms: These aim to redistribute land, provide security of tenure, and eliminate exploitative practices.
- Investment in infrastructure: Developing irrigation facilities, rural electrification, transportation networks, and storage infrastructure can improve productivity and market access for farmers.
- Technological upgradation: Promoting the use of high-yielding varieties of seeds, improved irrigation techniques, and farm machinery can raise productivity.
- Market reforms: These include the development of regulated markets, contract farming, and efficient supply chains.
- Financial inclusion: Providing affordable credit through institutional sources enables farmers to invest in inputs and technology.
Addressing these challenges is crucial for realizing the full potential of agriculture in India. By improving productivity, efficiency, and sustainability, the sector can contribute to the country’s economic growth, food security, and social well-being.