11/17/2018 Agriculture Vs Manufacturing Industry in India - priorities for future | MBAUniverse.

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Agriculture Vs Manufacturing Industry in

India - priorities for future

To help the participants tackle the topic covering all aspects on Agriculture – its importance
in Indian Economy; How to improve Agriculture and condition of farmers engaged in
Agriculture; Agriculture Vs Manufacturing Industry; How to double the farmers income-
steps taken among others, MBAUniverse.com has prepared and shares the key facts about
the role of agriculture and manufacturing Industry in Indian economy, the constraints in
these sectors & policy suggestions to improve the role of Agriculture in manufacturing
alongwith the ways and means to increase the agriculture income. The topics is of great
significance in the context of Indian economy in GD round.

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Agriculture and Manufacturing industry are drivers of growth for any economy. India, which
has 70% population living in rural areas with Agriculture as the main stay of employment, is
setting up goals to improve the condition of farmers by targeting to double the Agriculture
income by the year 2022 and make it a high growth, highly employable sector at par with
manufacturing industry and the service sector.

Number of steps are being taken up to achieve the goal. The Prime Minister of India, Shri
Narendra Modi has reiterated the government’s target that it wants to double farmers’
income by 2022 and said “With ‘Beej se Bazaar Tak’, we are bringing exceptional reforms in
the agriculture sector.”
Background

The transition of any nation from developing to developed nation is marked by a move
from traditional sector (agriculture) to modern sector (services and manufacturing)
Modernization was first initiated under the II Five Year Plan, famously known as the
Nehru-Mahalanobis plan which focused on pushing up the heavy and basic goods
industry to build local capacity and reduce reliance on foreign goods. This was thought to
be a policy impetus to absorb the surplus laborers in agriculture and counter disguised
unemployment in the sector.

Key Facts about the state of Indian Economy

In India, agriculture contributes around 15% to the GDP and absorbs a little more than
49% of the labor force. The manufacturing sector contributes around 19% to the GDP and
absorbs around 27% of the labor force.
International comparisons with China, South Korea and Taiwan show the sluggish growth
of Indian manufacturing sector due to the rigid labor market
South East nations have grown and become the global manufacturing hubs despite being
at comparable GDP levels to India in 1970s and 1980s as they focused on building local
manufacturing units through both public and private investment.

Group Discussion Topics & Tips: Learn the Facts

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Agriculture Backbone of Indian Economy and Manufacturing Industry

Generates Trade Surplus: India’s share in global agriculture produce is 7.68%. India has
maintained an overall trade surplus in agriculture since 2000s. The overall trade (exports+

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imports) has also grown. India’s relative comparative advantage in agriculture is greater
than that in manufacturing and commercial activities.

Generates greater investible surplus & savings: The rise in agriculture output and income
can expand the market for manufacturing sector. The migration of surplus labor from
agriculture to manufacturing. This supports urbanization and industrialization as it did in
England in 19th century.

Provider of Raw Material: Agriculture provides raw materials and wage goods for
manufacturing industry like textile, Sugar, packaged food among others

Constraints in Agriculture Sector

The low contribution of agriculture to GDP despite 49% of the labor force in the sector
shows the inefficiencies in the sector as seen by:

Agriculture Bias: Farmers have not been able to fully exploit the comparative advantage in
agriculture exports due to overvalued exchange rate, tariffs and quota restrictions on trade
of agriculture products.

Decline in per capita availability: Despite an increase in yield, the per capita availability of
agriculture output has fallen due to excessive diversion of stock in silos and procurement
and release was ill timed. It has also put inflationary pressure during draughts.

How to Improve Agriculture Role:

Technological reforms to improve efficiency and to reduce dependence on monsoon as

still around 53% agricultural land is rain fed.
Rationalize food and fertilizer subsidies to circumvent inefficient resource allocation
towards certain crops like wheat and rice.

Role of Manufacturing Industry in India:

Manufacturing has the highest multiplier effect (backward linkage) on economic growth.
Provides modern inputs and implements for other sectors like fertilizers for agriculture.
Manufacturing has immense potential for job creation which can help in reducing poverty
The GVA by Automobile Industry is around 6% as of 2017. India is among the leading
automobile manufacturers and can emerge as global market leader in other segments.
Automobile sector’s employment multiplier value of five which is indicative of its large
employment generation capacity.

Constraints in Indian manufacturing sector:

1. Supply side bottlenecks like power supply and demand mismatch, infrastructural
bottlenecks leading to capacity underutilization;
2. Demand side constraints: India is a low income nation so large income inequalities skew
the demand of capital intensive goods

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3. The growth of capital intensive industries due to more export demand has either taken
down the labor intensive firms or forced them to downsize to circumvent the stiff labor
laws

How to improve Manufacturing Industry Role:

1. The rising inequalities and unemployment can be tackled by absorbing labor in

manufacturing sector especially in labor intensive sectors like textile. It can act as a
driving force in India’s growth trajectory through capital accumulation and better capacity
utilization which currently is at 70%.
2. Make in India needs both public and private investment to make India a manufacturing
powerhouse which will increase its export demand and GDP by creating new job
opportunities.
3. The value added by MSMEs to manufacturing is more than 30%. They require more credit
and better ease of doing business to allow greater financial inclusion, encourage
entrepreneurship and gender equality.

Improving Agriculture Income: Steps Taken

Government has ensured in its notification that from Kharif 2018 onwards Minimum
Support Price (MSP) of the notified crops would be minimum of 150% of the cost of
production; it ranges from 150-200% for coarse cereals
Emphasis on agriculture as the prime industry of rural India urges doing everything
possible to make agriculture both a source of income and the pride of our nation.
The Prime Minister Modi’s Israel visit has placed a heavy stress on agricultural
cooperation. It is felt that Israeli agriculture and irrigation technologies can help deliver
this goal.
Improving technology, increasing milk production, use of solar light, honey production.
Increase afforestation by planting more trees along the river banks to avoid soil
erosion during floods and to keep the rivers flowing eternally without getting them dry.
Government of Madhya Pradesh organized Narmada Yatra and has taken steps to
prevent Narmada River from going dry in next 100 years.
The Niti Aayog has prepared a ‘Three Year Action Agenda’ – a plan that covers a time
period up to the 2019. In its chapter on agriculture titled ‘Agriculture: Doubling Farmer’s
Incomes’, the economic think-tank has put forth a 4 point action plan to double the
incomes of India’s farmers.
The 4 point action plan to improve Agriculture income includes 1) Remunerative prices
for farmers by reforming the existing marketing structure; 2) Raising productivity; 3)
Reforming agriculture land policy; and 4) Relief measures.
A subsidy would be provided on targeted produce in case the price falls below MSP-linked
threshold. It would spread price incentives to producers in all the regions and all the
crops considered important for providing price support.
The government and NABARD are pushing farmer-producer companies where a large
group of farmers pool their land together and work as a collective. Maharashtra has
already asked the Israeli Consulate in Mumbai to prepare a plan for establishing a
farmer-producer collective in Dehni village in Yavatmal district, which has one of the
highest incidences of farmer suicides.
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India has already adopted drip irrigation in some parts of Maharashtra, Gujarat and
Haryana. Israeli firm Netafim, the world’s largest micro-irrigation company, indigenized its
Family Drip System (FPS) for mainstream farming in India. Drip irrigation is now available
for farms that are as small as a quarter acre.

Agriculture and Manufacturing: Equally Important

Agriculture and Industry are complementary and not competitive in nature due to
demand, production and savings- investment linkages.
India needs to revamp its manufacturing sector and agriculture sector by using scientific
methods of production which are economically feasible and practical, environmentally
sustainable and globally competitive to exploit the gains from trade, increase output &s
employment and reduce inequalities.

Tips to crack GD round

The above discussed topic is one of the most talked about issue and has been carefully
chosen and solved with the sole aim to help you succeed in GD round. If you follow a few
key tips, you can improve your participation and scores on this GD topic and others:

Initiate the group discussion only if you are well versed with the facts and information on
the GD Topic.
If you are not well versed with the topic and feel a bit low on content, try to gather
information from first 1-2 speakers and then participate.
Quote facts and figures, if you are sure of the authenticity. You may encounter volley of
counter questions on the facts and statistics from your fellow participants. Unless very
sure, don’t use it.
Make multiple entries using the opportunity to speak. Note down important information
from other participants and turn it to your benefit.
Since GD is a sort of debate, you should have a clear view point on the topic - either for or
against.
Do not switch viewpoints. However, if you have points for both for and against the topic,
substantiate your viewpoint with well qualified data, examples or exceptions.
Even if you agree or disagree to the view point of other participant, add value by giving
reasons for it when you speak but don’t simply say I agree or disagree.
You can conclude above topic by summarizing key facts on both point of views and
conclude with the majority opinion, while respecting the minority viewpoint

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