Unit-3

Scope of Agriculture

Proverbially, India is known as “Land of Villages”. Near about 67% of India’s population live
in villages. The occupation of villagers is agriculture. Agriculture is the dominant sector of our
economy & contributes in various ways such as:

 National Economy: In 1990 – 91, agriculture contributed 31.6% of the National Income
of India, while manufacturing sector contributed 17.6%. It is substantial than other
countries for example in 1982 it was 34.9% in India against 2% in UK, 3% in USA, 4 % in
the Canada. It indicated that the more the more the advanced stage of development the
smaller is the share of agriculture in National Income.

 Total Employment: Around 65% population is working & depends on agriculture and
allied activities. Nearly 70% of the rural population earns its livelihood from agriculture
and other occupation allied to agriculture. In cities also, a considerable part of labor
force is engaged in jobs depending on processing & marketing of agricultural products.

 Industrial Inputs: Most of the industries depend on the raw material produced by
agriculture, so agriculture is the principal source of raw material to the industries. The
industries like cotton textile, jute, paper, sugar depends totally on agriculture for the
supply of raw material. The small scale and cottage industries like handloom and power
loon, ginning and pressing, oil crushing, rice husking, sericulture fruit processing, etc are
also mainly agro based industries.

 Food Supply: During this year targeted food production was 198 million tons & which is
to be increased 225 million tons by the end of this century to feed the growing
population of India i.e. 35 corer in 1951 and 100 corers at the end of this century. India,
thus, is able to meet almost all the need of its population with regards to food by
develop intensive program for increasing food production.

 State Revenue: The agriculture is contributing the revenue by agriculture taxation

includes direct tax and indirect tax. Direct tax includes land revenue, cesses and
 surcharge on land revenue, cesses on crops & agril income tax. Indirect tax induces sales
tax, custom duty and local octri, etc. which farmer pay on purchase of agriculture inputs.

 Trade: Agriculture plays and important role in foreign trade attracting valuable foreign
exchange, necessary for our economic development. The product from agriculture
based industries such as jute, cloth, tinned food, etc. contributed to 20% of our export.
Around 50 % of total exports are contributed by agril sector. Indian agriculture plays and
important role in roads, rails & waterways outside the countries. Indian in roads, rails
and waterways used to transport considerable amount of agril produce and agro based
industrial products. Agril products like tea, coffee, sugar, oil seeds, tobacco; spices, etc.
also constitute the main items of export from India.

Importance of Agriculture
Agriculture plays a crucial role in the life of an economy. It is the backbone of our
economic system. Agriculture not only provides food and raw material but also employment
opportunities to a very large proportion of population. The following facts clearly highlight
the importance of agriculture in this country.

1. Source of Livelihood:
In India the main occupation of our working population is agriculture. About 70
per cent of our population is directly engaged in agriculture. In advanced countries, this
ratio is very small being 5 per cent in U.K., 4 per cent in USA., 16 per cent in Australia, 14
per cent in France, 21 per cent in Japan and 32 per cent in USSR. This high proportion in
agriculture is due to the fact that the non-agricultural activities have not been
developed to absorb the rapidly growing population.

2. Share in national income:

Agriculture is the premier source of our national income. According to National
Income Committee and C.S.O., agriculture and allied sector has contributed as follows:

Year Contribution of agriculture in National Income

2001-02 32.4%
1981-82 41.8%
1976-77 42.2%
1960-61 52%

It is seen that agriculture contributes a major share in the national income of

India. Secondly, the share of agriculture in national income has been decreasing. At
 present the contribution is about 28%. This steady and gradual decline is due to the
rapid Industrialization in the difference part of the country. The contribution of
agriculture in national income in case of some development countries are as follows.
USA – 3%, Canada 4%, Canada 2.5%, Australia 7.6%, Japan 6%. This indicates that the
role of agriculture in the national income in the developed countries is negligible. More
developed a country, smaller is the contribution of agriculture in the national income
and vice-versa.

3. Supply of food grains, food and fodder:

Agriculture sector also provides fodder for livestock (35.33 crores). Cow and
buffalo provide protective food in the form of milk and they also provide draught power
for farm operations. Moreover, it also meets the food requirements of the people.
Import of food grains has been very small in recent years, rather export avenues are
being looked for.

4. Supply of raw materials to industrial sector.

Many industries dependent on agriculture, raw material from agriculture is
supplied to many industries e.g. sugar industries, Cotton Industries, Paper Industries,
tobacco industries, Chilies, turmeric etc. All these depend directly on agriculture. Apart
from this, many others like processing of fruits and vegetables, dal milling, rice husking,
gur making also depend on agriculture for their raw material. According to United
Nations Survey, the industries with raw material of agricultural origin accounted for 50
per cent of the value added and 64 per cent of all jobs in the industrial sector.

5. Market for industrial product:

Many agriculture produce like food grains, fruits are transported by roadways
and railways. Thus, it helps in employment of many people in this field.
If the agricultural production is good, cultivators will earn more income. They will
be in position to purchase manufactured products and other inputs required in
agriculture.

6. Earner of foreign exchange:

Many agricultural products like tea, sugar, oilseeds, tobacco, spices contribute
the major share in export. In addition to this, we are exporting fruits some vegetables
and flowers to the other countries. Now days we are exporting basmati rice to foreign
countries. The proportion of agriculture goods is to the tune of 50%. In addition to this
goods manufactured from agriculture products contribute 20 percent. Thus, agriculture
contributes 70% in export.
7. Marketable Surplus:
The development of agricultural sector leads to marketable surplus. As country
develops more and more people are to be engaged in mining, manufacturing and other
non- agricultural sector. All these people depend upon the food production which they
can meet from the marketable surplus.As agricultural development takes place, output
increases and marketable surplus expands. This can be sold to other countries. Here, it is
worth mentioning that the development of Japan and other countries were made
possible by the surplus of agriculture. There is no reason why this could not be done in
our own case.

8. Vast Employment Opportunities:

The agricultural sector is significant as it provides greater employment
opportunities in the construction of irrigation projects, drainage system and other such
activities.With the fast growing population and high incidence of unemployment and
disguised unemployment in backward countries, it is only agriculture sector which
provides more employment chances to the labour force. In this way, significance of
agriculture emerges more and more.

9. Overall Economic Development:

In the course of economic development, agriculture employs majority of people.
This means raising the level of the national income and standard of living of the
common man.The rapid" rate of growth in agriculture sector gives progressive outlook
and further motivation for development. As a result, it helps to create proper
atmosphere for general economic development of the economy. Thus, economic
development depends on the rate at which agriculture grows.

10. Source of saving:

Improvement in agriculture can go a long way in increasing savings. It is seen
that rich farmers have started saving especially after green revolution in the
country.This surplus amount can be invested in agriculture sector for further;
development of the sector. Saving potentials are large in agriculture sector which can be
properly tapped for the development of the country.

11. Food Security:

A stable agricultural sector ensures a nation of food security. The main
requirement of any country is food security. Food security prevents
malnourishment that has traditionally been believed to be one of the major problems
faced by the developing countries.
12. Significance to the international trade:
Agricultural products like sugar, tea, rice, spices, tobacco, coffee etc. constitute
the major items of exports of countries that rely on agriculture. This helps to reduce
countries unfavorable balance of payments as well as saving foreign exchange. This
amount may be well used to import other essential inputs, machinery, raw-material,
and other infrastructure that is helpful for the support of country’s economic
development.

13. Source of revenue for the government

In India, many state governments get sizeable revenue from the agriculture
sector. Land revenue, agricultural income tax, irrigation tax and some other types of
taxes are being levied on agriculture by the state governments. Moreover, considerably
revenue is earned by way of excise duty and export duty on agricultural products. Raj
committee on Agricultural Taxation has suggested imposition of taxation on agricultural
income for raising revenue.
In short, we can say that the prosperity of the country will depend upon the
prosperity of agriculture.