Role of Agricultural and Allied Sector in Indian Economy

  • sameer By sameer
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  • 03 Apr 2024

Agriculture and allied sectors have long been the backbone of the Indian economy, deeply integrated with its social, cultural, and economic fabric. Despite the rapid growth of other sectors such as manufacturing and services, agriculture remains an important component, contributing significantly to GDP, employment, food security, and rural development. This essay looks into the multifaceted role of agriculture and allied sectors in India's economy, showing their contributions, challenges, and potential for sustainable growth of our country.   The share of agriculture in total Gross Value Added (GVA) of the economy has declined from 35% in 1990-91 to 15% in 2022-23. The decline is brought out not by the decline in agricultural GVA but a rapid expansion in industrial and service sector GVA. In growth terms, the agriculture and allied sector has registered an average annual growth of 4% during the last five years. As far as global experience is concerned, the share of agriculture in the world’s GDP has also decreased over the decades and stands at about 4% in recent years.    
Year  Share of agriculture and allied sector in total GVA
1990-91 35
2000-01 26
2010-11 18
2020-21 16
2022-23 15
Table 1. The share of Agriculture & Allied sectors in total GVA of the economy from 1990- 91 to 2022-23   Contribution to GDP Agriculture's contribution to India's Gross Domestic Product (GDP) may have declined over the years, but it still holds significant importance. According to recent data, agriculture contributes around 15-20% of India's GDP, making it a substantial sector in the economy. The allied sectors, including forestry, fisheries, livestock, and dairy, further add to this contribution. Together, they form a critical foundation for economic growth, providing raw materials, employment, and value-added products. Employment Generation One of the most important aspects of agriculture is its role as the largest employer in India. With a large rural population dependent on agriculture for livelihoods, it serves as a primary source of income for millions of people. Small and marginal farmers, along with landless laborers, constitute a major portion of the agricultural workforce. The sector's labor-intensive nature ensures employment opportunities even in areas with limited industrialization, thereby reducing poverty and income inequalities.   Food Security Agriculture plays an important role in ensuring food security for India's large population. With a diverse range of agro-climatic zones, India produces a variety of crops, fruits, and vegetables, catering to the dietary needs of its people. However, challenges such as post-harvest losses, inefficient distribution systems, and inadequate storage facilities continue to affect food availability and accessibility, particularly in remote areas.   Raw Material Supply and Industrial Growth The agricultural sector serves as a primary source of raw materials for various industries, including textiles, food processing, pharmaceuticals, and more. Crops such as cotton, sugarcane, and oilseeds feed into these industries, driving industrial growth and economic diversification. The allied sectors also contribute significantly to industrial development by providing inputs and value-added products, therefore providing a symbiotic relationship between agriculture and industry.   Foreign Exchange Earnings India's agricultural exports play an important role in earning foreign exchange and balancing trade deficits. The country exports a wide range of agricultural products, including rice, wheat, spices, fruits, and vegetables, according to global demand. However, enhancing export competitiveness requires addressing quality standards, infrastructure inavailability, and market access barriers, ensuring sustained growth in agricultural exports.   Rural Development Agriculture and allied sectors are instrumental in growing rural development, improving infrastructure, and reducing poverty in rural areas. Government initiatives such as rural electrification, irrigation projects, and agricultural extension services aim to increase productivity, increase incomes, and improve living standards in rural communities. Furthermore, investments in rural infrastructure, education, and healthcare contribute to holistic development, driving inclusive growth and reducing regional inequalities.   Environmental Sustainability Sustainable agricultural practices are essential for environmental conservation and long-term viability. Measures such as crop diversification, water conservation, organic farming, and agro-forestry promote soil health, biodiversity, and resilience to climate change. Adopting eco-friendly technologies and practices not only ensures food security but also eliminates environmental degradation, safeguarding natural resources for future generations. Social and Cultural Importance Beyond its economic significance, agriculture holds immense social and cultural value in India. It is deeply integrated with traditions, festivals, and rituals, shaping the cultural identity of rural communities. Agricultural societies celebrate harvest festivals such as Pongal, Baisakhi, and Makar Sankranti, reflecting the close relationship between agriculture and spirituality.   Conclusion In conclusion, agriculture and its allied sectors form the foundation of the Indian economy, embodying a multifaceted and indispensable role. Beyond just economic metrics like GDP contribution and employment generation, they are vital for ensuring food security, increasing rural development, and safeguarding cultural heritage. However, many challenges such as low productivity, climate change, market volatility, and institutional reforms loom large, requiring urgent attention.   Addressing these challenges is necessary to unlock the sector's full potential. Using sustainable practices, developing technological innovations, and fostering inclusive policies are important steps towards realizing this goal. By doing so, India can not only improve agricultural productivity and resilience but also make the way for equitable growth and prosperity nationwide. Agriculture, thus, stands as a beacon of hope, capable of driving transformative change and taking the nation towards prosperity and sustainability.     (Author is Senior Assistant Professor, Division of Veterinary Medicine SKUAST Kashmir. Feedback: drzubair7866@gmail.com)

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