There is a need for enhancing planned capital expenditure in agriculture and allied sectors that can be targeted to specific inducements, especially in the backward regions. This is especially important as Gross Capital Formation (GCF) in agricultural sector has been very poor and its growth rate has been declining over the last decade.

It would be a cliché to start with say ing India lives in villages, and more than 60% of its population depend on agriculture even after 60 odd years of independence. The share of agriculture to total GDP over the years has been sharply declining (Exhibit 1). However, the proportion of labor force dependent on this sector has not seen similar proportional decline (Exhibits 2 and 3). There has been a remarkable achievement by Indian state in agricultural growth, transforming the economy from a net importer of agricultural products to a net exporter over the decades. Similar remarkable achievements can also be seen in terms of food grain stock and addressing famine-like situations. Post-Bengal famine, India has not seen a disaster of that magnitude in the following decades that can be attributed to phenomenal sensibility and achievement by the Indian state. However, these achievements have come with a cost to the society. Besides, there is little room to be complacent about such achievements when we look at a sustainable economic growth rate in the coming decades.

Considering the general feeling among the economists as well as the views of the Finance Minister, it would be impossible to sustain a GDP growth rate of 9% and above without a phenomenal contribution from agriculture sector. In other words, if agriculture fails to sustain a growth rate of 3 to 4% it would be difficult for India to continue with 9% and above GDP growth rate on a sustainable basis. It is not only the growth of the economy, but also benefits of growth to a larger section of the society that matters. Looking at the workforce of Indian economy, a substantial portion of it falls in semi-skilled category and the largest proportion of it is in the unskilled category. These set of workforce cannot be substantially absorbed in services or manufacturing sectors. At the same time, agriculture and allied sectors hold the maximum capacity to absorb this workforce. Therefore, growth in agricultural sector would not only lead to higher GDP growth rate but also have a distributive effect where a large part of its population would be able to share the benefits of growth.

The Analyst Magazine, Indian Agriculture Sector, Capital Expenditure, Gross Capital Formation, GCF, Gross Domestic Product, GDP, Agricultural Growth, Agricultural Products Irrigation Facilities, Agricultural Commodities, Foreign Direct Investment, FDI.