Significance of Agriculture in Economy

Agriculture in Economy

The impact of agriculture on national income:

During the first two decades of the twentieth century, agriculture contributed between 48 and 60 percent of the gross domestic product. During the years 2001-2002, its contribution fell to around 26%.

Agriculture plays a critical role in creating jobs:

At least two-thirds of India’s working population makes their living from agriculture. Other sectors in India have failed to provide enough jobs for the country’s rising working population.

Agriculture provides food for the world’s ever-increasing population:

Food production is increasing at a quick rate as a result of the excessive pressure of population labour surplus economies like India and the rapid increase in demand for food. Food consumption in many countries is now quite low, and even a small increase in per capita income causes food demand to skyrocket (in other words it can be stated that the income elasticity of demand for food is very high in developing countries).

As a result, unless agriculture is able to increase its sold surplus of food grains on a consistent basis, a crisis is likely to occur. Many developing nations are going through this period, and agriculture has been developed to meet the rising food demands.

Contribution to the creation of capital:

On the requirement of capital formation, there is broad consensus. Agriculture, being the largest industry in a developing country like India, can and must play a significant role in increasing capital formation rates. If it fails to do so, the entire economic growth process would be hampered.

Agro-based industries’ raw material supply:

Agriculture provides raw ingredients to a wide range of agro-based businesses, including sugar, jute, cotton textiles, and Vanaspati. Similarly, the food processing industry is reliant on agriculture. As a result, agriculture is completely dependent on the growth of these businesses.

Industrial goods market:

Because two-thirds of India’s population lives in villages, an increase in rural buying power is critical for industrial growth. Because of their increased revenue and low tax burden, big farmers’ purchasing power expanded after the green revolution.

Impact on domestic and international trade and commerce:

Agriculture in India is critical to the country’s internal and foreign trade. Internal commerce in food grains and other agricultural goods aids the service sector’s growth.

Contribution to the federal budget:

Starting with the First Five-Year Plan, Agriculture is the most important source of revenue for both the federal and state governments. Agriculture and related sectors like as cattle ranching, animal husbandry, poultry farming, and fishing, on the other hand, generate significant money for governments. Freight rates for agricultural products, both semi-finished and final, bring in a lot of money for the Indian railway and the state transportation system.

Workforce shortage:

For construction and other areas, a huge number of expert and unskilled labourers are necessary. Agriculture in India provides this labour.

Enhanced competitive advantages

Because of low labour costs and self-sufficiency in input supply, Indian agriculture enjoys a cost advantage in various agricultural commodities in the export market.

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