What role does agriculture play in the indian economy


Importance of Agriculture in the Indian Economy

  • Agriculture is one of the major players in the economy and it is the backbone of the country.
  • This is the basic activity of the nation.
  • It provides employment opportunities to rural agricultural and non-agricultural laborers.
  • It also plays an important role in international trade in import and export activities.


What is the contribution of Agriculture to India’s economy?

Indian agriculture has contributed to India’s economy in many ways like providing , contributing to a major share of revenue earned, share in national , providing buffer stock, supply of raw materials to industries, earner of foreign exchange etc

What is the role of Agriculture in the development of economy?

Therefore, the role of agriculture for the development of an economy may be stated as below: 1. Contribution to National Income: The lessons drawn from the economic history of many advanced countries tell us that agricultural prosperity contributed considerably in fostering economic advancement.

Why is agriculture called the backbone of the Indian economy?

Indian is an agriculture based country, where more than 50% of population is depend on agriculture. This structures the main source of income. The commitment of agribusiness in the national income in India is all the more, subsequently, it is said that agriculture in India is a backbone for Indian Economy.

Is agriculture the future of India?

On over all view, India has always been benefited by agriculture. Though the future of India is industrialization, the contribution of agriculture would always prove to be vital for making India a powerful and stable economy in the future.


Importance of Agriculture in the Indian Economy

The importance of the agriculture sector in the Indian economy is given below;

Key objectives of agriculture in the Indian economy

To improve the economic potential of farming by significantly increasing the net income of farmers and to ensure that agricultural growth is measured by the progress made in that income.

Facts about the role of agriculture in the Indian economy

To assess the role and importance of agriculture, it is necessary to assess its role in the development of the economy. Such a contribution can be measured in terms of its share of gross domestic product (GDP), employment, exports, etc.

Role of agriculture in the Indian economy

From the very beginning, agriculture has been contributing a large share to our national income. Agriculture and allied activities contributed about 59% to the total national income.

Commercial importance and industrial development for agriculture in India

Indian agriculture is playing a vital role in the country’s internal and external trade. Agricultural products such as Tea, Coffee, Sugar, Tobacco, Spices, Cashews, etc. are the mainstays of our exports and account for about 50% of our total exports.

Role of Agriculture for Industrial Development

About 50% of the income generated in the manufacturing sector in India comes from all these agro-based industries. Furthermore, agriculture can provide a market for industrial products as an increase in the level of agricultural income can lead to the expansion of the market for industrial products.

Major crop production in India

Horticulture is one of the important sectors of Indian agriculture and it plays an important role in the country’s economy. Many horticultural crops are suitable for almost all agro-climatic zones of the country.

Agriculture Generates Employment

According to the estimation, agriculture is the prime income source of two-thirds of the population in India.

Feeds The Rapidly Growing Population

The Indian population is overgrowing, which is ultimately increasing the demand for food. So, the increase in per capita income is lower if you will compare with the population growth. The need for food is rising. The production of excess food grains can feed the growing population. Besides, food scarcity eliminates in the country.

Agriculture In India Contribution To Capital Formation

Capital formation is essential in developing countries like India. Agriculture is the largest contributing industry in the country. Furthermore, surplus extraction is through agriculture in India.

Agriculture in India Is A Massive Market For Industrial Products

In detail, agriculture helps in enhancing the purchasing power of the rural population. So, the agricultural market now is an active market for industrial products.

It Influences External And Internal Trade

Availability of agricultural land in the country makes many people adopt agriculture as their source of income.

Agriculture In India Provides Raw Material For The Processing Industry

The small, medium, and large food processing industries are emerging in India rapidly. Crops acquire the raw material for those agro-input and food processing industries.


Agriculture in India is an integral part as it is rooted in the Indian culture. Besides, most of the rural population adopt farming as a family tradition. Agriculture helps in increasing the per capita income in the country. It boosts the total economy of the country.

What is the role of agriculture in Indian economy?

Earner of foreign exchange. Agriculture plays an important role in Indian economy as an earner of foreign exchange through exports of agricultural commodities like tea, cotton, coffee, jute, fruits, vegetables, spices, tobacco, sugar, oil, cashew kernels, etc. in the past, export of agricultural products accounted for about 70% …

How has agriculture contributed to India’s economy?

Indian agriculture has contributed to India’s economy in many ways like providing , contributing to a major share of revenue earned, share in national , providing buffer stock, supply of raw materials to industries, earner of foreign exchange etc.

How has agriculture helped India?

In a developing country like India where a very large proportion of income is spent on food and the population is increasing rapidly, the demand for foodgrains has been increasing at a fast rate. Agriculture In India has played an important role in meeting almost the entire food needs of the people. The production of foodgrains in India has increased from 51 million tones in 1950-51 to 208.3 million tones in 2005-06, i.e. by a little more than 4 times since 1950-51. This has enabled the country to overcome the problems of foodgrain shortages. The country is almost self-sufficient in foodgrains and it no longer depends on import of foodgrains.

Why is agriculture important?

Agriculture plays an important role in industrial development. Many industries like cotton industry, jute industries, sugar industries, food processing industries, etc. depends on agriculture for their raw material requirements. Moreover, workers engaged in various industries depend on agriculture for their food requirement.

How does agriculture help the tertiary sector?

Agriculture helps in the development of tertiary (or service) sector. For example various means of transport like roadways and railways get bulk of their business from the movement of agricultural commodities and raw materials. A significant part of internal trade constitutes mainly of agricultural products.

What is the main source of employment in India?

In India, agriculture is the main source of employment. Even in 2004-05, more than 56% of the total labour force of India is engaged in agriculture and depend on it for their livelihood (1950-51: 69.5%). It becomes evident from this fact that other sectors of the economy could not generate enough employment for the growing population.

What is the main source of revenue for the Indian government?

central government also earns revenue from export duties on agricultural production. Freight charges imposed by Indian Railways for carrying agricultural product generate huge revenue to the central exchequer.

How much does agriculture contribute to the Indian economy?

In other words, agriculture and its related goods contribute about 38 per cent in total exports of country. In short, agriculture occupies a central place in the Indian economy.

What are the small scale industries that are dependent on agriculture?

Handlooms, spinning oil milling, rice thrashing, etc. are various small scale and cottage industries, which are dependent on agriculture sector for their raw material. This highlights the importance of agriculture in industrial development of the nation. iv. Importance in International Trade:

What are the main sources of industrial development in India?

Important Source of Industrial Development: Various important industries in India find their raw material from agriculture sector –cotton and jute textile industries, sugar, vanaspati, etc. are directly dependent on agriculture.

Is agriculture a part of the Indian economy?

In short, agriculture occupies a central place in the Indian economy. Its performance sets the pace of growth in the economy as a whole. It should, however, be noted that Indian agriculture is still in the state of backwardness, the per capita productivity in agriculture is less than in industry. Indian Economy.

How does agriculture affect economic development?

The interactions between agriculture and non-agriculture change significantly over time in the process of economic development. In the early stages, agriculture is of crucial importance as the employer of 50% to 75% of the labour force and also as the source of more than half of the GDP. As development gains momentum, however, the relative importance of agriculture declines sharply while that of industry increases.

Why is agriculture important?

Thus, agricultural development is so much important for reducing urban unemployment and income inequality. Moreover, understanding the interactions between agriculture and the other sectors of the economy is crucial for shaping appropriate developmental policies.

How is agricultural surplus transferred?

First, we discuss the investable agricultural surplus that may be transferred and utilised in the development of the industrial sector. This transfer can take place through the outflow of capital from agriculture, the outflow of labours agricultural taxation and the terms of trade. Next, we focus on the interdependence between agriculture and industry.

What is the dominant sector of the economy?

Although agriculture is the dominant sector of the economy, it is characterised by low productivity and low supply elasticity. The low productivity per worker implies that the major proportion of the output is absorbed within agriculture itself, i.e., self-consumption is high. So, little surplus is left for use in industry and other sectors.

What is the demand for agriculture?

Agriculture creates demand for basic inputs such as chemical fertilizers, pesticides, etc., but also for capital goods, like tractors, pump sets, etc., and for light consumer goods such as two wheelers, radios, mobiles, TV sets etc., more so after the recent trend towards rural electrification.

How does the industrial sector contribute to the economy?

The industrial sector adds to demand for agricultural goods, and absorbs surplus labour which may raise yield per hectare. In turn, the agricultural sector provides a market for industrial goods out of rising real income, and makes a further contribution to development, through the release of resources—if productivity rises faster than the demand for commodities.

What happens to agriculture with transformation?

With transformation of traditional agriculture, there is specialisation which leads to production for exports. If, at the same time, industry develops under the impact of agricultural growth, the two sectors become highly interdependent.

What is the role of agriculture in India?

Indian Agriculture is playing a very important role both in the internal and external trade of the country. Agricultural products like tea, coffee, sugar, tobacco, spices, cashew-nuts etc. are the main items of our exports and constitute about 50 per cent of our total exports. Besides manufactured jute, cotton textiles and sugar also contribute another 20 per cent of the total exports of the country. Thus nearly 70 per cent of India’s exports are originated from agricultural sector. Further, agriculture is helping the country in earning precious foreign exchange to meet the required import bill of the country.

Why is agriculture important in India?

Thus the agricultural sector is playing a very important role in a country like India and the prosperity of the Indian economy still largely depends on agricultural sector. Thus from the foregoing analysis it is observed that agricultural development is the basic precondition of sectoral diversification and development of the economy.

What are the major industries in India?

Agriculture in India has been the major source of supply of raw materials to various important industries of our country. Cotton and jute textiles, sugar, vanaspati, edible oil plantation industries ( viz. tea, coffee, rubber) and agro-based cottage industries are also regularly collecting their raw materials directly from agriculture.

What is the main source of revenue for the Central and State governments?

Agriculture is one of the major sources of revenue to both the Central and State Governments of the country. The Government is getting a substantial income from rising land revenue. Some other sectors like railway, roadways are also deriving a good part of their income from the movement of agricultural goods.

What is the prospect of planning in India?

The prospect of planning in India also depends much on agricultural sector. A good crop always provides impetus towards a planned economic development of the country by creating a better business climate for the transport system, manufacturing industries, internal trade etc.

What is the main source of food in the world?

Agriculture is the only major source of food supply as it is providing regular supply of food to such a huge size of population of our country. It has been estimated that about 60 per cent of household consumption is met by agricultural products.

What is the role of agriculture in the economy?

Agricultural sector plays a strategic role in the process of economic development of a country. It has already made a significant contribution to the economic prosperity of advanced countries and its role in the economic development of less developed countries is of vital importance. ADVERTISEMENTS: In other words, where per capita real income is …

Why is agriculture important for the economy?

If agriculture fails to meet the rising demand of food products, it is found to affect adversely the growth rate of the economy. Raising supply of food by agricultura l sector has, therefore, great importance for economic growth of a country.

How does rural economy affect social welfare?

The rising agricultural surplus caused by increasing agricultural production and productivity tends to improve social welfare, particularly in rural areas. The living standard of rural masses rises and they start consuming nutritious diet including eggs, milk, ghee and fruits. They lead a comfortable life having all modern amenities—a better house, motor-cycle, radio, television and use of better clothes.

Why is the progress in agriculture important?

The progress in agricultural sector provides surplus for increasing the exports of agricultural products. In the earlier stages of development, an increase in the exports earning is more desirable because of the greater strains on the foreign exchange situation needed for the financing of imports of basic and essential capital goods.

How can agriculture reduce inequality?

In a country which is predominantly agricultural and overpopulated, there is greater inequality of income between the rural and urban areas of the country. To reduce this inequality of income, it is necessary to accord higher priority to agriculture. The prosperity of agriculture would raise the income of the majority of the rural population and thus the disparity in income may be reduced to a certain extent.

Why is increased agricultural output important?

It is seen that increased agricultural output and productivity tend to contribute substantially to an overall economic development of the country, it will be rational and appropriate to place greater emphasis on further development of the agricultural sector.

What is the backbone of an economy?

The agriculture sector is the backbone of an economy which provides the basic ingredients to mankind and now raw material for industrialisation.


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