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The Importance of the Agricultural Sector in Indian Economy

In the FY 2017-18, the agriculture sector in India contributed around 17-18 per cent to the country's GDP. An economic survey revealed there has been a rise in the mechanization of agriculture tools.

The Importance of the Agricultural Sector in Indian Economy

Wednesday July 10, 2019,

4 min Read

The agriculture sector employs more than 50 per cent of the workforce in India. It plays a vital role in our overall economy.

1. Contribution to National Income

Agriculture and its related activities have always held a significant share in our national income. In recent years, the share of contribution has declined gradually with the growth of other industrialized sectors in the country. In 1950-51, agriculture and allied activities contributed about 59 per cent of the total national income. This number declined to 40 per cent in 1980-81 and then to 18 per cent in 2008-09. But the agriculture share in India still remains very high as compared to many developed countries of the world. For example, agriculture contributes only 3 per cent to the national income in U.K. and U.S.A.

2. Source of Livelihood

Over two-thirds of the working population in India is engaged directly in the agricultural sector. As per estimate, about 57 per cent of the working population is engaged in agriculture, as opposed to 2 to 3 per cent in U.K. and U.S.A. and 6 per cent in France.

3. Source of Food Supply

Agricultural products are the major source of food supply for the huge population of our country. As per certain estimates, it meets about 60 per cent of household consumption.

4. Role of Agriculture for Industrial Development

There are several important industries in India such as cotton and jute textiles, sugar manufacturing, edible oils, plantation industries (tea, coffee, rubber) and many agro-based cottage industries that depend on the agricultural sector for the supply of their raw materials. These agro-based industries generate about 50 per cent of income in the manufacturing sector, thus, agriculture helps in the industrial development of this country.

5. Commercial Importance

Agricultural products constitute a large part of the total exports of this country. Some of the main items in our export list include tea, coffee, sugar, tobacco, spices, cashew nuts, etc. These contribute to about 50 per cent of the total exports from India. In addition to agricultural products, products from agro-based industries like jute and cotton textiles also contribute another 20 per cent to the country’s total exports. Hence, the agriculture sector is vital to the country’s international trade and commerce activities.

6. Source of Government Revenue

Both the Central and State Governments of the country earn significant revenues from the agriculture sector. The rising land revenue contributes towards a substantial income. There are also other sectors like railways and roadways that derive a good part of their income from the movement of agricultural goods.

With all the above points, it can be safely said that agriculture is an essential foundation in the country’s economy. As per the Economic Survey 2017-18 Report, agriculture sector employs more than 50 per cent of the total workforce in India and contributes around 17-18 per cent to the country’s GDP. The report also stated that Indian farmers are adapting to farm mechanization at a faster rate in comparison to recent past.

Rising Mechanization in Agriculture

The Indian agricultural sector has seen considerable progress been made in the field of agricultural implements over the past decades. From using various hand tools like spades, pick axes, crowbars and sickles, Indian farmers have now graduated to using modern agricultural implements such as combine harvesters, rice trans-planters, power tillers, threshers, tractors, pumping sets, etc.

The Indian market has several leading tool manufacturing companies who produce the highest quality of agricultural implements. Their distribution channels include both B2B and B2C, with B2C having the largest share. Consumers can also buy agriculture tools online from various e-commerce platforms.

The Indian agricultural implements market was worth US$ 8.5 Billion in 2017. The market value is further projected to reach US$ 12.8 Billion by 2023, exhibiting a CAGR of 7.03 per cent during 2018-2023.

The agricultural implements market in India has been categorized on the basis of product type including tractors, rotavators, threshers and power tillers. Agricultural tractors dominate this market. The Indian tractor industry is the largest in the world and accounts for one-third of the global tractor production.

As mechanization in this sector continues to rise, tool manufacturing companies are now offering their agriculture tools online on e-commerce sites. This ensures that even the smallest fraction of farmers can buy required tools and equipment's on their will.

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