Role of Agriculture in Economic Development - PSCNOTES.IN

Stimulates industrial expansion

In this blog, you will read about different methods of Agriculture in economic development.

Expansion in the agriculture sector also led to the expansion of the industrial sector. When agriculturalists have savings, they can buy consumer goods, and invest in industries too. This results in an indirect expansion of the industrial sector.

NEW Agriculture Economic Development Training – ON Regional Economic Development

Providing employment

When there is an increase in the agriculture sector and its production, more employment opportunities will also be generated.  Direct employment in crop raising and agriculture expansion also provides work in the other sphere.

Economic Development and Agriculture in India | Bulletin – June Quarter 2011 | RBA

Resources for Capital Formation

This is all more important because with the existing modern capitalist sector being small, there is little that can come from this sector by way of surpluses or profits for investments. On the other hand, agriculture, as is the case in India, is a big sized sector.

Economic Development and Agriculture in India | Bulletin – June Quarter 2011 | RBA


It can contribute more to the development of the industrial sector because the primary industries run with the help of raw material which comes from agriculture. For example Sugar Industry, Juice Factory, Cotton industry, etc.

Economic Development and Agriculture in India | Bulletin – June Quarter 2011 | RBA

Supply of Foreign Exchange

Agriculture can contribute a great deal to earning foreign currency through the export of agricultural products. The requirements for the expansion of exports can be easily met by adding a crop or two within the existing crop pattern and that too with perhaps no additional capital investments. Further, since such exports have to cater to the existing and familiar international market, no additional costs are involved to discover or nurture new markets.

PPT - The Role of Agriculture in Economic Growth PowerPoint Presentation - ID:2730620

The Shift of Manpower

Provides work to the majority of the workforce in the country. In the least developed countries, the majority of the workforce work in disguised unemployed agricultural labor. Agricultural progress allows manpower to shift from the agricultural to the non-agricultural sector.

Importance of agricultural sector in a country's economic development

Labor shift

In the initial stages, it is more necessary to shift labor from the agricultural to the non-agricultural sector from the point of view of economic growth as it relieves the burden of surplus labor power over the limited land. Consequently, the release of surplus manpower from the agricultural sector is necessary to advance the agricultural sector and extend the non-agricultural sector.

Economic development in India - Wikipedia

Supply of Food and Raw Materials

Feeds the requirement of industrialization. Agriculture plays a very role in development. Contributes to many consumer goods like oil, clothing, etc.  Further food grains are very important for underdeveloped economies.  In case of a shortage of food, it helps a lot in developing countries as mass import is not possible and economically feasible for them.  So, agriculture should be given due importance so that this essential supply of food and raw material can be maintained.

Economic Development and Structural Transformation Of Countries - DataFlair

Helpful to Reduce Inequality

There is greater income inequality between the world’s rural and urban areas in a country that is largely agricultural and overpopulated. To reduce this income inequality, greater priority must be given to agriculture. Agricultural growth will increase the income of the majority of the rural population and hence the income inequality might be somewhat reduced.

Agriculture | Free Full-Text | Sustainable Economic Development of Farms in Central and Eastern European Countries Driven by Pro-investment Mechanisms of the Common Agricultural Policy

Create Effective Demand

Agricultural sector growth will tend to increase farmers’ purchasing power which will help the country’s non-agricultural sector expand. It will provide a more productive market. It is well recognized that the majority of people in underdeveloped countries rely on agriculture and it is they who must be able to afford to consume the goods produced.

Economic Development and Agriculture in India | Bulletin – June Quarter 2011 | RBA

Cash crop

It will, therefore, help boost non-agricultural sector production. Similarly, an improvement in cash crop productivity can pave the way for the promotion of the exchange economy which can help the growth of the non-agricultural sector. Buying agricultural goods such as chemicals, farm equipment, etc. also improves agricultural dead-outs.

Role Of Agriculture in Indian Economy

Source of Foreign Exchange for the Country

The majority of the world’s developing countries are exporters of primary products. Such goods contribute 60 to 70 percent of overall earnings from exports. Thus the ability to import capital goods and industrial development machinery is crucially dependent on the agricultural sector’s export earnings. If agricultural exports do not increase at a sufficiently high rate, these countries will be forced to incur a heavy balance of payments deficit resulting in a serious foreign-exchange problem.

Agriculture In India: Agricultural Exports & Food Industry in India | IBEF


Primary goods, however, face falling prices on the international market, and there is a limited prospect of increasing export earnings through them. Despite this, major developing countries such as India (with industrial growth potential) are attempting to diversify their manufacturing structure and encourage the export of manufactured goods even though this involves the introduction of protection measures in the initial planning period.

Economic Development and Agriculture in India | Bulletin – June Quarter 2011 | RBA

The major source of livelihood

One of the major sources of livelihood is agriculture. More than 70% of the rural Indian people depend on agricultural activities in one sense or the other for their livelihood. The people depend on agricultural activities in one sense or the other for their livelihood. The people dependent on agriculture in the foreign countries which are developed nations such as America, Japan, and Germany have less population dependent on agriculture in comparison to India.

Agriculture & America's Rural Economy — Harvest Returns

Increase in foreign trade

Agriculture in India plays an important role in the enhancement of international trade. The commodities which are exported from India are oil cakes, tea, vegetables, fruits, coffee, cotton, spices, tobacco, sugar, flowers vegetable oils, and raw wool. Agriculture contributes a noticeable part to Indian exports. With the invention of organic farming, exports have also increased in the last few decades.

Role Of Agriculture in Indian Economy

Creates employment opportunities

Indian agriculture gives employment and work to a vast majority of the people in the rural crowd. In rural and backward areas, almost 70% of the masses earn their livelihood from cultivation and allied agro-industries. Agriculture is also helpful in increasing employment opportunities in the manner that it is helpful in industrial growth and expansion which leads to an increase in employment.

The Netherlands is a leader in sustainable agriculture | World Economic Forum

More capital investment

In today’s world modern agricultural equipment is used for cultivation, irrigation, land preparation, banding, harvesting, plows, etc. which requires a huge amount of investment. Income leads to savings and savings leads to investments.

As we know that agriculture contributes almost 16% to the national income of the economy, there will be savings from the agriculturalist and it will lead to capital formation. The livestock viz. cattle, buffaloes, sheep, goats, horses, ponies, etc. also have their food from agriculture.

The future of Indian agriculture

Poor inputs and techniques

The techniques and methods of cultivation have been old and inefficient. It results in a high cost of production and low productivity. These methods have not undergone and changed for centuries. The investment in agriculture in the form of manures and fertilizers, improved seeds, irrigation, tools and implements, and other types of assets has been miserably low.

Frontiers | Water Management in Agricultural Production, the Economy, and Venezuelan Society

Inadequate irrigation facilities

One of the main reasons for the weakness of Indian agriculture has been the lack of irrigation facilities in the country. The farmers have to depend upon rainfall and very few of them can avail the facilities of the irrigation systems. Sometimes drought and floods also spoil the whole cultivation and crops.

Indebtedness of the farmers

There is an old saying that the farmers in India are born in debt, live in debt, and bequeath debt. The reasons for their indebtedness are many such as hereditary debt, litigation, want of supplementary incomes, and wasteful social expenditure.

Low adoption of improved technology

adoption of high-yielding varieties (HYV) is very rare in India. The important reasons for the slow growth of HYV are the non-availability of suitable seeds, the predominance of traditional seeds, a short supply of recommended seeds, and a defective distribution system.

Absence of Innovation in Agriculture

The absence of an alternative for escaping pre-monsoon showers to avoid the problem of pre-harvest sprouting of crops in flood periods is a major problem. There is a lack of improved crop management practices for shifting cultivation. The facilities of storage, processing, and marketing are particularly deficient for perishable commodities.

Rural transport and communication network

Most of the areas remain inaccessible during rainy seasons for the non-availability of all-weather roads. Roads are found to be highly damaged and there are no proper transport facilities to access the villagers.

Progress of Indian agriculture

Government Measures: Through the five-year plans, the government of India has played an active role in the development of agriculture. Proper objectives have been laid down in the various plans. According to these objectives, corresponding measures have been spelled out. All the activities are directed towards the achievement of these objectives.

Expanding Government’s Role

From the first five-year plan, the government realized that for the development of agriculture, the government has to play an important role which would be a crucial one. Agriculture is the backbone of the economy and the poor farmers cannot uplift themselves.


That is why the measures needed for the upliftment of agriculture could be taken by the government. In recent years, the government’s actions have expanded to include programs for rural development and special area programs.

Laudable objectives

The objectives of different plans are varied from time to time. Somewhere the aim was to increase productivity and elsewhere to improve the quality of food grains. Land reforms have been the other significant objective. Another important objective was to uplift the weaker sections of society. For example, the small and marginal farmers, landless agricultural laborers, and many of those engaged in activities allied to agriculture such as animal husbandry and fisheries, etc.

Economic Development and Agriculture in India | Bulletin – June Quarter 2011 | RBA

Appropriate measures

To achieve these objectives, many measures have been taken by the government of India. For example, to increase production and productivity the supply of inputs, infrastructural facilities, an extension of irrigation, modern laboratory-based seeds, include banking, marketing, credit, transportation, communication, finance, education, and information dissemination, etc.

Indian Agriculture contributes to green shoots of the Indian Economy with a Growth Rate of 3.4 Per Cent Despite COVID-19 Pandemic Recent Agricultural reforms a remedy, not a Malady says Economic Survey

Considerable resources

Large resources have been devoted to agricultural development. These have been on the rise from plan to plan. The funding for the development of agriculture has also been increased from time to time. For the control of droughts and floods, many funds have been given by the government. Special programs for the benefit of rural people have been introduced along with industrial development.

Agriculture In India: Agricultural Exports & Food Industry in India | IBEF


Agriculture is the Indian economy’s most important sector. India’s farm sector is the largest industry. Approximately 70 percent of people in India are either farmers as a vocation or as workers. The share of GDP is just 18 percent. But it employs around 50 percent of the workforce in the country. It provides food in India for about 135 crore people. India has become the world’s largest producer of pulses, rice, wheat spices, etc. For more information please visit Pritish Kumar Halder ‘s page .

Agriculture In India: Agricultural Exports & Food Industry in India | IBEF


Approximately 12 percent of export earnings come from the agricultural sector. The Indian trade surplus of 14.6 billion dollars from agriculture was generated in 2018. These stats show how big and important part of the country’s functioning is the agriculture sector. With constant changes and developments happening, and policies being introduced, it is only going to go upward from here and will always remain an important factor in the economic development of the nation.