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Module VIII

Agriculture and Business:
Role of Agriculture in Economic Development
Trends in Agricultural Production
Agro based Industries
Dependence of Business on Agriculture
Corporate India Initiatives

Agriculture and Business
• Agriculture is the mainstay of the Indian
economy because of its high share in
employment and livelihood creation. It
supports more than half a billion people
providing employment to 52 per cent of the
• Agriculture in India has a significant history.
Today, India ranks second worldwide in farm
output. Agriculture and allied sectors like
forestry and fisheries accounted for 16.6% of
the GDP in 2009, about 50% of the total
workforce. The economic contribution of
agriculture to India's GDP is steadily declining
with the country's broad-based economic
growth. Still, agriculture is demographically
the broadest economic sector and plays a
significant role in the overall socio-economic
fabric of India.
Role of Agriculture in Economic
1. Share in national income
2. Source of employment
3. Industrial Development
4. International trade
5. Development of tertiary sector
6. Revenue to the government
7. International importance
8. Internal trade (90% of our population spends
60% of their income on purchase of food items)
Problems of Indian Agriculture
• General problems
• Institutional problems
• Technical problems
General problems
1. Overcrowding in agriculture
2. Discouraging rural atmosphere
3. Inadequate non-farm services
4. Crop losses
Institutional problems

1. Defective tenancy reforms
2. Lack of credit and marketing facilities
3. Size of holdings
Technical problems
1. Obsolete techniques of production
2. Lack of irrigation facilities
3. Cropping pattern
Agro-based Industries
• Those industries which have either direct or
indirect link with agriculture, industries which
are based on agricultural produce and
industries which support agriculture come
under agro-based industries.
Need for Agro-based industries
1. They are suitable for rural areas as they are raw
material oriented
2. The upliftment of rural economy is possible
3. They provide employment opportunities to rural
people, solving the problem of under
employment and disguised unemployment.
4. Improve the purchasing power of rural people
through income generation.
5. Decentralization and dispersal of industries is
possible through establishment of agro industries
in rural areas.
7. To bring rural economy on par with urban economy,
rural industrialization is important.
8. To achieve a balance growth of industry and
agriculture, agro industries should be encouraged.
9. To solve the problem of exploitation of farmers by
10. Transportation cost of agricultural produce can be
reduced by processing them at the place of
11. Infrastructure facilities can be improved in rural
areas and create potential for establishment of others
industries in rural areas.
12 They curb the migration of people from rural areas
to urban areas.
• Agro Produce processing units
• Agro Produce Manufacturing units
• Agro Input manufacturing units

Importance of Agro Based Industries
• Availability of Raw Material
• Uplifting of Rural Economy
• Provides employment
• Improves the economic conditions
• Establishment of agro based industries in rural areas will help in:

– Dispersal of industries
– Reducing exploitation of producers by middlemen
– Bring more areas under different crops
– Reducing transporting costs of produce and there by price the finished
– Reducing wastage of perishable agricultural commodities.
– Increasing the incomes of farmers
– Development of backward areas
– Preventing in the migration of people from rural areas to urban areas.

• Cotton Textile Industry
• Woolen Textile Industry
• Silk Textile Industry
• Artificial Fibre Textile Industries
• Jute Industry
• Sugar Industry
• Paper Industry

• Infrastructure
• Skills
• Technology
• Support services