Page 1 of 8
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 04 Issue 01
January 2018
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 186
Agriculture Sector in Indian Economy: A
Study
Dr. K. Venkataiah
Lecturer in Economics
Email: kjvgoud@gmail.com
Abstract:
Agriculture sector also known as a primary sector is essential for economic growth in any economy
including India. It has emerged as the essential-growing sector in the global economy since
independence. This sector contributing 13.7 per cent of GDP. In employment providing, this sector is
occupying first place. Its respectable share in foreign direct investment (FDI) inflows as well as in
total exports makes it the engine of economic growth. Keeping in above backdrop, the present study
makes an analysis of agriculture sector in Indian economy. The study confirms that agriculture sector
has achieved tremendous growth over the year in Indian economy. Besides, their contributions in
GDP, employment and exports are also rising considerably. To maintain and accelerate the growth &
contributions of this sector & to develop it as a true engine of economic growth, there is logic &
rationale of complementary investments in physical infrastructure as well as in human capital.
INTRODUCTION:
Agriculture is the Primary sector of Economy.
It makes direct use of natural resources. It is
contrasted with secondary sector( producing
manufactured& other processed goods) & the
Tertiary sector (producing services). This
sector is usually most important in less
developed countries & typically less important
in industrial countries. Until the industrial
revolution, Vast majority of human population
labored in agriculture. Pre Industrial agriculture
was typically subsistent in which farmers raised
most of their crop for their own consumption
instead of cash crop for trade. A remarkable
shift in agriculture practices has occurred over
the past century in response of new technology
& the development of world market. Now,
Agriculture with its allied sector is
unquestionably the largest livelihood provider
in India, more so in the vast rural area. It also
contributes a significant figure to GDP. Most of
the industries also depend on agriculture sector
for their raw materials. The planned approach
to development has helped the country to reach
a stage where the country is self sufficient in
food grains and has a comfortable buffer stock.
These achievements have been possible mainly
through the favorable policy framework. The
policy of Indian Agriculture was to achieve
food security by providing incentive for growth
along with equitable access to food. As a result
terrible famines have become events of the past
and the agricultural production does not show
large variation even in the event of adverse
climatic condition.
Page 2 of 8
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 04 Issue 01
January 2018
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 187
Importance of Agriculture:
Agriculture plays a crucial role in the life of an
economy. It is the backbone of our economic
system. Agriculture not only provides food and
raw material but also employment
opportunities to a very large proportion of
population. The following facts clearly
highlight the importance of agriculture in this
country.
1. Source of Livelihood:
In India the main occupation of our
working population is agriculture.
About 70 per cent of our population is
directly engaged in agriculture. In
advanced countries, this ratio is very
small being 5 per cent in U.K., 4 per
cent in USA., 16 per cent in Australia,
14 per cent in France, 21 per cent in
Japan and 32 per cent in USSR.This
high proportion in agriculture is due to
the fact that the non-agricultural
activities have not been developed to
absorb the rapidly growing population.
2. Contribution to National Income:
Agriculture is the premier source of our
national income. According to National
Income Committee and C.S.O., in
1960-61, 52 per cent of national income
was contributed by agriculture and
allied occupations. In 1976-77, this
sector alone contributed 42.2 per cent
while in 1981-82, its contribution was
to the tune of 41.8 per cent.In 2001-02,
it contributed around 32.4 per cent of
national income. This was further
reduced to 28 per cent in 1999-2000.
Contrary to this, the proportion of
agriculture in U.K. is only 3.1, in USA
it is 3 percent, 2.5 per cent in Canada, 6
per cent in Japan, 7.6 per cent in
Australia. The mere conclusion of all
this is that more developed a country
the smaller is the contribution of
agriculture in national output.
3. Supply of Food and Fodder:
Agriculture sector also provides fodder
for livestock (35.33 crores). Cow and
buffalo provide protective food in the
form of milk and they also provide
draught power for farm operations.
Moreover, it also meets the food
requirements of the people. Import of
food grains has been very small in
recent years, rather export avenues are
being looked for.
4. Importance in International Trade:
It is the agricultural sector that feeds
country's trade. Agricultural products
like tea, sugar, rice, tobacco, spices etc.
constitute the main items of exports of
India. If the development process of
agriculture is smooth, export increases
and imports are reduced considerably.
Thus, it helps to reduce the adverse
balance of payments and save our
foreign exchange. This amount can be
well utilized to import other necessary
inputs, raw-material, machinery and
other infra-structure which is otherwise
useful for the promotion of economic
development of the country.
5. Marketable Surplus:
The development of agricultural sector
leads to marketable surplus. As country
develops more and more people are to
be engaged in mining, manufacturing
and other non- agricultural sector. All
these people depend upon the food
Page 3 of 8
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 04 Issue 01
January 2018
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 188
production which they can meet from
the marketable surplus.As agricultural
development takes place, output
increases and marketable surplus
expands. This can be sold to other
countries. Here, it is worth mentioning
that the development of Japan and other
countries were made possible by the
surplus of agriculture. There is no
reason why this could not be done in
our own case.
6. Source of Raw Material:
Agriculture has been the source of
raw materials to the leading industries
like cotton and jute textiles, sugar,
tobacco, edible and non-edible oils etc.
All these depend directly on
agriculture.Apart from this, many others
like processing of fruits and vegetables,
dal milling, rice husking, gur making
also depend on agriculture for their raw
material. According to United Nations
Survey, the industries with raw material
of agricultural origin accounted for 50
per cent of the value added and 64 per
cent of all jobs in the industrial sector.
7. Importance in Transport:
Agriculture is the main support for
railways and roadways which transport
bulk of agricultural produce from farm
to the man dies and factories. Internal
trade is mostly in agricultural products.
Besides, the finance of the govt, also, to
the large extent, depends upon the
prosperity of agricultural sector.
8. Contribution to Foreign Exchange
Resource
Agricultural sector constitutes an
important place in the country's export
trade. According to an estimate,
agricultural commodities like jute,
tobacco, oilseeds, spices, raw cotton,
tea and coffee accounted for about 18
per cent of the total value of exports in
India. This shows that agriculture
products still continue to be significant
source of earning foreign exchange.
9. Vast Employment Opportunities:
The construction of irrigation projects,
drainage system and other such
activities. With the fast growing
population and high incidence of
unemployment and disguised
unemployment the agricultural sector is
significant as it provides greater
employment opportunities in in
backward countries, it is only
agriculture sector which provides more
employment chances to the labour
force. In this way, significance of
agriculture emerges more and more.
10. Overall Economic Development:
In the course of economic
development, agriculture employs
majority of people. This means raising
the level of the national income and
standard of living of the common man.
The rapid" rate of growth in agriculture
sector gives progressive outlook and
further motivation for development. As
a result, it helps to create proper
atmosphere for general economic
development of the economy. Thus,
economic development depends on the
rate at which agriculture grows.
11. Source of Saving:
Improvement in agriculture can go a
long way in increasing savings. It is
