Role of agriculture in economic

development
Economic development
Economic development is a process whereby the real
national income of a country increases over a long period of
time. If the increase in real national income is greater than
the increase in population growth, the real per capita income
would increase. Thus the increase in real GNP(Gross national
product) is a representative of economic development.
AGRICULTURE
Agriculture is the process of producing food, feed, fiber and many other
desired products by the cultivation of certain plants and the raising of
domesticated animals (livestock).
Agriculture is the most important constituent of the primary sector.
Agriculture has already made a significant contribution to the economic
prosperity of advanced countries. various under-developed countries of
the world engaged in the process of economic development have by
now learnt the limitations of putting over-emphasis on industrialization
In developed countries, agricultural development has helped to a
greater extent in the process of their industrialization
“Thus industrial and agricultural developments are not alternatives but
are complementary and are mutually supporting each other”
Agriculture role in overall growth of an economy
According to Kuzents , agriculture makes three types of contribution to
overall growth of an economy. These are :
• The Factor Contribution
• The Product Contribution
• The Market Contribution
Factor Contribution
Transfer of some resources to the non-agricultural sectors are called as Factor
contribution of agriculture. It can be in the following forms :
a) Provision of Capital: Underdeveloped and developing countries need
huge amount of capital for its economic development.In the initial stages
, agriculture sector provides funds for capital formation in many ways
as :
• Agricultural taxation
• Exports of agricultural products
• Transfer of capital from farm to non-farm activities
• collection of agricultural products at low prices by the government and
selling it at higher prices. This method is adopted by Russia and China
b) Provision of Labour: In densely populated agricultural
economics,there already exists labour whose contribution at
the margin, to agriculture is zero .This is what called
disguisedly unemployment labour. This labour can be taken
away and utilized for producing some overhead capital.
Product Contribution
The product Contribution of agriculture towards an over all economic
development takes two forms:
a) Provision of wage goods : foodstuffs over the subsistence level
to feed the labour force of urban non-agricul­tural sector is
required. A growing population must be suppor­ted with
increased food supply.
b) Provision of industrial raw-materials: Agricultural
advancement is necessary for improving the supply of
raw material for the agro-based industries especially in
developing countries.
Market Contribution
• Flow of goods generated by the development of the agriculture sector
–a flow which helps the development of other sectors .This
contribution can take various forms :
a)Expanded market for the products of other sector: The development
of agricultural sector would tend to increase the purchasing
power of agriculturists which help the growth of the non-
agricultural sector of a country.It will provide a market for
increased production. In underdeveloped countries, it is well
known that the majority of people depend upon agriculture
and it is they who must be able to afford to consume the
goods produced
Development of international trade
• Agriculture may be great source of foreign exchange of a
country .Surplus products from the agricultural sector, as a
result of its development, can move to the international
market .
Role of agriculture in developed economy
In an open economy, the extent of these contributions, is
likely to go down. Now the non-agricultural sectors can
depend upon various external sources for their development.
But in a well developed economy, agriculture sector will not
lose all its importance in the process as a source of further
development. Its importance as a source of the industrial raw
materials and wage goods will still be there will now Only
change will be that instead of being an initiator of the
process of development, it will now become one of the
contributor to that process.
ROLE OF AGRICULTURE IN INDIAN
ECONOMY
Agriculture is the most important Sector of Indian Economy.
According to the Survey (2017-2018), Indian agriculture sectors
accounts for 17-18 percent of India’s gross domestic product
(GDP) and provides employment to around 50% of the
country's workforce.
Agriculture and ensuring food security, reducing poverty and sustaining growth in India.
The role of Agriculture in Indian economy will be more clear from the following facts:
● Share in national income: From the very beginning, agriculture is contributing
a major portion to our national income . In 1950- 51, agriculture and allied
activities contributed about 59 per cent of the total national income.
Although the share of agriculture has been declining gradually with the
growth of other sectors but the share still remained very high as compared
t o that of the developed countries of the world.
● Agriculture plays vital role in generating employment: In India over two thirds of
our working population are engaged directly on agriculture and also
similarly depend for their livelihood.
• Supply of raw material to agro based industries: source of supply
of raw materials Agriculture in India has been the major to
various important industries of our country. Cotton and jute
textiles, sugar, Vanaspati, edible oil plantation industries
(viz. tea, coffee)
• Source of food security to the expanding population: Agriculture is
the only major source of food supply as it is providing
regular supply of f ood to such a huge size of population of
our country.
• Market for industrial products: Since more than two thirds of the
population of like India lives in rural areas, increases rural
purchasing power is a valuable stimulus to industrial
development