Agricultural growth and productivity trends, Microeconomics


Despite a steady decline in the share of agriculture in the Gross Domestic Product (GDP) of India, this sector continues to remain a very important sector of the Indian economy. Its share in the GDP, in the first five years of the 21st century has averaged around 20 per cent. Moreover, nearly 58 per cent of the work force in India derives its sustenance through direct employment in agriculture either as cultivators (32 per cent) or as agricultural labourers (26 per cent). It is also noteworthy that almost 72 per cent of the population of India is located in rural areas where agricultural activities, both directly and indirectly, influence other economic activities. 

Besides being the largest employment providing sector and a major contributor to the GDP, agriculture contributes significantly to the import earnings of India. Agricultural sector is a major user of rail and road transport facilities as these two modes of transport secure bulk of their business from the transportation of agricultural commodities. The sector also generates demand for industrial products such as tractors, tube wells, pump sets as well as construction material for storage and warehousing, fertilisers etc. Agriculture in India has been the source of supply of raw materials to some of the major industries viz, cotton and jute textiles, sugar, vegetable oils, food processing etc. Moreover, a steady growth in the marketed surplus of foodgrains is crucial for the workforce engaged in non-agricultural sectors. As such, rapid industrial growth and overall development in the economy hinges on the growth of production of foodgrains in the agricultural sector. On the whole, agriculture continues to remain the backbone of the Indian economy; the decline in its share of GDP notwithstanding its role in the supply of raw materials to some of the industries as well as in the supply of foodgrains is vital for smooth and sustained growth. Income generated in agriculture, with a bulk of the workforce engaged in this sector, also becomes a major source of demand for industrial produce. In the course of more than half a century of planned economic development, Indian agriculture has made great strides. The country has been able to achieve self-sufficiency in foodgrains and has succeeded in attaining food security to an extent despite a phenomenal increase in population. The steady transformation of the farming sector from traditional to modern needs to be sustained and accelerated for not only raising incomes in the relatively backward agricultural sector but also rapid growth of the economy as a whole. Hence in this unit, we shall discuss the growth and productivity of agriculture over a period of time, cropping pattern, potentials of productivity growth and policy implications for accelerating agricultural production and productivity.  

Posted Date: 11/10/2012 6:08:40 AM | Location : United States

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