Role and Contribution of Agriculture in Indian Economy


Contribution of Agriculture in Indian Economy

Agriculture is the most important sector of Indian economy which employs more than half of the population in country. It is also known as the backbone of economy contributing about 16% of total GDP and 10% of total exports in India’s economy. At present, India stands at second position at world level in terms of farm output. It is a process under which land is utilized for growing a wide variety of crops. Agricultural activities also comprise of breeding, poultry, raising livestock and aquaculture. It primarily focuses on providing food to peoples, raw materials to industry, capital for agrarian development, employment among large peoples and surpluses for national economy. 

For yielding the better returns from agricultural activities, it is must to have a proper planning right from the level of crop selection till the selling of products in market at better prices. However, agricultural sector suffers from distinct issues such as absence of adequate irrigation facilities, overabundance of labourers, lack of proper storage, complex credit facilities and many more. All these issues act as a hurdle in overall development of agricultural sector of country.

Role of Agriculture in Indian Economy

Agriculture has been playing an efficient role in overall development of Indian economy which can be well-understood from points given below: –

Share in National income

Agriculture is contributing largely from the beginning to the national income of our nation. The overall contribution of agricultural and its allied activities in gross domestic product ranged in between 48% to 60%. Although, this share is now declining gradually due to the growth of secondary and tertiary sector. In year 2006-07, agricultural contribution was about 18% in national income which is yet quite large in comparison to other developed nations of world.

Generates employment

Agricultural activities serve as the key source of employment opportunities for an Indian economy. It employs around two-third of the Indian population which depends primarily upon agricultural activities for earning their livelihood. At present around 66% of our population is engaged in agriculture which is quite large as compared to their countries around the globe. However, other sectors in our country have failed to generate much employment opportunities. 

Contributes to capital formation

This sector makes great contribution towards the capital formation in country. Agriculture industry is at present a largest industry in developing nation like India. It promotes development of industrial sector by timely supplying them with the required amount of raw materials. Various other sector of nations like railways, roadways etc. generates a good amount of income via movement of agricultural products.

Source of Food supply

Agricultural sector is only the primary source of food supply in our country. It serves the food need of large section of population where about 60% of household consumption is met by agricultural products. The overall production of food grains has increased to a great extent in India from past that has enabled it in overcoming the issues of food grain shortages. 

Earner of foreign exchange

It serve as a crucial means of earning sufficient amount of foreign exchange by our country. Agriculture sector produce a large amount of export products such as tea, sugar, coffee, spices, tobacco, oil, cashew-nuts, jute, cotton textiles and many more. All this in total contributes to around 70% of our country export earnings. This way agricultural activities are assisting the country in meeting its bill of import items. 

Contribution in Government budget

Agricultural sector is the significant source of making revenue for both central as well as state government. The government earns a substantial amount of income in the form of land revenue, irrigation charges and distinct taxes charged on the purchased of agricultural machinery by cultivators. Various allied activities of agriculture such as poultry farming, animal husbandry, fishing, cattle rearing etc. also provide high revenue to government of our country.