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Unit 6: Agriculture in the National Economy

agriculture under various heads. Importance of agriculture in the national economy is depicted Notes
by many facts. For instance, agriculture is the chief support for India’s transport systems, secure
bulk of their business from the movement of agricultural goods. Internal trade is mainly in
agricultural products.
Additionally, good crops implying large purchasing power with the farmers result in greater
demand for manufactures and, hence, better prices. In other words, prosperity of the farmers is
also the prosperity of industries. Similarly, bad crops result in a depression in business.

In this unit, you will learn about the agricultural development essentials for economic growth,
progress of agriculture under the Five-Year Plans and future prospects of Green Revolution.

6.1 Role of Agricultural Development in the National Economic
Growth

Now let us the unit with the role of agricultural development in national economic growth. The
importance of agriculture in India emerges from the fact that the development in agriculture is
essential necessary condition for the development of the national economy. Ragnar Nurkse
argues that the excess population in agriculture should be moved to the newly started industries.
Nurkse’s thesis is that agricultural productivity will be enhanced on the one hand and on the
other latest industrial units would be established with the use of surplus labour. The Nurksian
thesis, though broadly welcomed at one time, has been questioned currently:
(a) Industrialisation does not comprise only of shifting of workers from agriculture to
industries. It needs a specific set of motives and values which an agricultural economy
cannot supply. A change in agriculture itself is necessary before these motivations and
values are evolved.

(b) The marketable agricultural excess will have to be increased substantially to feed the
growing urban population and to offer raw materials to industries.
(c) New uses have been found for food grains and other agricultural crops. With fossil oils
becoming progressively expensive, ethanol is being utilised as an alternative fuel. Com,
sugarcanes, beetroot and other crops are progressively converted into ethanol and alcohol.

(d) The new industries and the rapidly growing services sector, however fast they may develop,
they will not be able to offer sufficient employment for the ever-growing millions in
India. There is a limit to the capacity of employment in industries in the short duration.
Necessarily, hence, increased employment will have to be discovered in agriculture and
in rural industries.

Example: During 2002-03, failure of the agricultural sector spelt disaster to the whole
planning process.
Hence, any change in the agricultural sector-positive or negative-has a multiplier effect on the
whole economy. The agricultural sector serves as a bulwark in maintaining food security and in
the process, national security as well. Identifying the crucial role played by the agricultural
sector in facilitating the widest dispersal of economic benefits, the Tenth Plan laid stress that
agricultural development is central to quick economic development of the country.

!

Caution Rapid economic development will require rapid agricultural development either
to precede or to go hand in hand with it. Indian planners learnt a bitter lesson during the
Second and Third Five-Year Plan periods and in recent years.

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