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How Important is Agriculture to the Indian Economy?


How Important is Agriculture to the Indian Economy?

Do you think our agricultural sector is getting the due it deserves?

By Pratibha Yadav 19th Oct, 2015 04:26 pm

Agriculture is not just all about food. As a sector, it is one of the vast and important sectors which largely contributes towards our economy. A lot of efforts, planning and strategies are involved in the production of crops, but the results can be better. Do you think our agricultural sector is getting the due it deserves?

Let us see how important agriculture is for India, where a large part of the population depends on it. Also, let us look to what extent it is being neglected in the country.


India is an agricultural country, and therefore, agriculture is indeed a source of income for about 70% of the working population. In rural areas, families are dependent on agriculture to support their day-to-day activities. The productivity and profitability in agriculture directly affect the people involved. Therefore, farmers suffer huge losses because of low production. Apart from being the source of livelihood for human beings, agriculture provides food and fodder to livestock, another important aspect of agriculture.

National Income

Agriculture plays an important role in contributing to national income. However, the contribution of agriculture to national income has decreased considerably. According to surveys, the contribution of agriculture to national income in 1960–61 was about 52%; it came down to about 42% in 1976–77, 41% in 1981–82 and drastically decreased to 28% in 2000. These statistics are not a positive sign for the country.

Contribution to International Trade

Agriculture plays an important role in boosting international trade for the country. Products such as spices, tea, sugar and rice are some important items exported from India. Thus, the profitability in agriculture is directly proportional to international trade. Higher the produce, higher the profits and higher will it boost international trade. Good exports can lead to better imports too. Profits gained in the export of products can be well utilised in importing raw materials, machinery required to boost agricultural production and other related facilities.

Dependence of Industries on Agriculture for Raw Materials

Agriculture is the source of raw materials for many industries in the country. Industries such as cotton, jute and oil are dependent on agriculture for the production of raw materials. If the produce is low, not enough raw materials can be generated. This in turn can affect the functioning of industries, thereby affecting the economy in the long run.

Foreign Exchange

Products such as tobacco, oilseeds, jute, spices, raw cotton, tea and coffee contribute to about 18% of the total value of exports in India. Export products are a great source of earning foreign exchange.

Economic Development

Agriculture is one of the major contributors to the country’s gross domestic product (GDP). India is the largest producer, consumer and exporter of spices. Export of spices contributes to about 10% of the country’s overall exports, making it the fourth-largest exported commodity. India is the second largest producer of sugar and its sixth largest exporter accounting for about 2.76% of global exports. The sector directly contributes to the national income. The Indian agricultural sector generates employment opportunities for the labour class and for industries which produce agricultural products. Thus, it helps in raising the standard of living and in contributing towards national income leading to economic development.

Is the Agricultural Sector the Most Neglected Sector?

India is achieving milestones in various sectors. However, the agricultural sector seems neglected because of lack of facilities in many agricultural areas.

Interestingly, this sector has huge potential for earning foreign exchange. It can also lead to economic progress and social well-being, only if a little focus is given to agricultural production and wastage.

The major source of employment for the population who live in rural areas is agriculture. However, because of lack of monetary funds, improper and outdated equipment and natural calamities, agricultural production is hindered. Low production leads to low income which further deteriorates the condition and livelihood of people dependent on agriculture.

Farmers committing suicide is one of the serious issues which indicate our incapability and helplessness in managing this sector. With urbanisation and industrialisation, the population is moving towards better employment opportunities and better living standards. In short, neither the manpower nor the facilities are improving. The decreasing contribution to national income is a live example of the negligence in agriculture.

If we really have to CELEBRATE World Food Day, we need to give due importance to our agricultural sector as well as generate market surplus and reduce wastage. India will then be able to curb hunger and strengthen social protection for its local population.

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