Contribution Of Agricultural Sector In Growth Of GDP In India

Contribution Of Agricultural Sector In Growth Of GDP In India

Agriculture occupies a very important place in the economic life of our country. It is the backbone of our economic system. Agriculture has been the major source of livelihood in the Indian economy. India is primarily an agricultural country. The fortunes of the economy are, even now, dependent on the course of agricultural production. 

Role of Agriculture In Indian Economy 

Agriculture is the most important sector of Indian Economy. Indian agriculture sector accounts for 18 per cent of India's gross domestic product (GDP) and provides employment to 50% of the country's workforce. India is the world’s largest producer of pulses, rice, wheat, spices and spice products. India has many areas to choose for business such as dairy, meat, poultry, fisheries and food grains etc. India has emerged as the second largest producer of fruits and vegetables in the world. Agriculture plays a vital role in the economic development of developing countries. The role of agriculture in economic development is crucial because a majority of the population of developing countries make their living from agriculture.

Product contributionAgriculture’s contribution to economic development has been classified into six categories

  • Provider of employment 
  • Industrial development 
  • Factor contribution
  • Source of capital 
  • International trade
  • Economic planning 
  1. Product Contribution: Most of the developing countries depend on their own agriculture to provide food to be consumed by their population. However, there are few exceptions. Some countries such as Malaysia, South Saudi Arabia have large exports based on natural resources which enable them to earn enough foreign exchange to import their food requirements for their people. But most developing countries do not have necessary foreign exchange earnings to import food-grains to feed their people and therefore have to rely on their own agriculture to produce enough food to meet the consumption needs of their people.
  2. Provider of Employment: Agriculture provides employment and work to an overwhelming majority of the Indian masses. In villages, about seventy per cent of the people earn their livelihood from cultivation and allied agro-industries. In absolute terms, agriculture provided employment to 97 million persons in 1995; the number of people working on land (cultivators and agricultural labourers) increased to 235 million.
  3. Industrial development: Agriculture provides raw materials to the industries. Cotton and Jute textile industries, sugar, Vanaspati and plantations - all these depend on agriculture. Many of our small scale and cottage industries like handloom weavings, rice husking, coir, khadi etc., depend upon agriculture for their raw materials. There are many other industries, which depend on agriculture in an indirect manner.
  4. Factor Contribution: Another contribution of agriculture to economic development is that it provides two important factors like labour and capital for industrial growth. The size of the agricultural sector in developing countries is quite large as around 60 per cent of their population is engaged in it and therefore it can release a significant amount of labour to be employed in the industrial and other non-farm sectors. However, agriculture can release labour for industrial development if its productivity rises.
  5. Source of Capital: Agriculture can also be a major source of saving or capital for industrial growth of developing countries. Even, in poor developing countries, as income from agriculture is unequally distributed, rural people with high incomes can invest their savings for industrial development. In Britain at the time of industrial revolution rich landlords voluntarily invested some of their savings in growing industries. Besides, small farmers can deposit their small savings in banks operating in the rural areas and then these banks can provide loans to the industrialists for investment purposes.
  6. International Trade: Indian agriculture plays an important role in the country's international trade. The main exported agricultural commodities are tea, oil cakes, fruits and vegetables, spices, tobacco, cotton, coffee, sugar, raw wool and vegetable oils. Agriculture contributes to a sizable part of exports and it is an important segment of imports of the economy. The agricultural sector is a net earner of foreign exchange.
  7. Economic Planning: Agriculture is the backbone of the Indian economy and prosperity of agriculture can also largely stand for the prosperity of the Indian economy. Importance of agriculture in the national economy is indicated by many facts. For example, agriculture is the main support for India's transport system, since railways and roadways secure the bulk of their business from the movement of goods. Internal trade is mostly in agricultural products. Agricultural growth has a direct impact on poverty eradication.

Most of the Indians are directly or indirectly depending on agriculture. Some are directly attached with the farming and some other people are involved in doing business with these goods. India has the capacity to produce food grains which can make a vast difference in Indian Economy. To achieve targeted mark by the government it needs to provide support in case of land, bank loans and other machinery to the small farmers along with the big farmers with this we can expect some improvement in Indian economy.