Importance of agriculture

Importance of agriculture:-

1.Contribution to national income

Agriculture contributes a significant share of Indian national income. According to Central statistical organisation agriculture contributes 55.4 percent of share in 1950-51 toward national income. But in 2001-02 it declined to 29.6 percent and till 2016-17 it was 17.32 percent.

 The share of agriculture in national income is often considered as an indicator of economic development. The developed economics are less dependent on agriculture as compared to underdeveloped countries. For example in developed countries like UK, USA, 20,000 of agriculture on national income it is between 2% to 3%. Thus, Indira is too much depend upon agriculture. and Indian agriculture play a dominant role for its economic development.

2.Supply of wage goods

Main objective of agriculture sector is to supply wage goods. Those goods which are consumed by the masses of the country to satisfy their necessity of life are called “WAGE GOODS”. This includes agriculture products like wheat, rice etc. In India agriculture sectorprovides foods to about 127 crores of population and fodder 40 crore of cattle. Per capita availability of cereals and pulses was 395 grams in 1951 which rose to 487 grams in 2016.

3.Increase in employment

Agriculture is the main source of employment in India. In the year 2015-16 46.2 % of the population was engaged in agriculture. The productivity of agriculture is low of the total working population 1.2% in UK, 1.6% in USA and 3% in Germany is engaged in agriculture. Proportion of population depending on agriculture had been declining with increase in economic development.

4.Agriculture and industry

In the initial stage agriculture has an important contribution to the growth of industrial sector in a variety of ways. Agriculture and industrial sector are interdependent on each other. That are:-

• Industries get raw materials from agricultural sector.

• Income of the people rises under the impact of agricultural Development. They demand more goods produced by the industrial sector.

• As a result of industrial development, income of the population rises and so also rises their demand for cereals, so development of agriculture is very essential.

5.Agriculture and foreign trade

Agriculture is of the great important in foreign trade:-

• In the total export trade of India, contribution of agricultural product has been very large. In 2015-16 total exports about 12.6% constituted of agricultural products.

• Inter importants food grains edible oils fertilizers, agricultural implement play important role. If Agriculture develops in the country dependence on imports would go down.

6.Role of internal trade

According to NSSO, in the year 2009-10, 57% of income was spent on food in the rural areas and 44% of the income was spent on food in rural areas. Thus, agriculture plays an important role in the internal trade of the country. Food trade provides employment to a large number of people and also generates tax revenue for the government.

7.Agriculture and transport

Agricultural production in India is characterized by regional disparities. In some states like Punjab, Haryana ,the production of food grain has increased. These state have not only become self sufficient in food grain but other states also purchase from them. So means of transport have been earning good revenue by carrying agricultural products from stupid states to deficit states.

8.Income to government

State governments obtain a sizable part of their revenue from the agricultural sector. Many kind of taxes are levied on agriculture. Central government also earned revenue by way of exercise duty and export duty on agricultural products like tabacco, tea, coffee etc. In the wake of Green revolution, the government is seriously considering taxation on agricultural income.

9.Capital formation

Large part of Indian capital invested in agriculture. Capital with millions of rupees in invested in the means of irrigation cattle, agricultural implements, warehouse etc. Disguised unemployment is also a potential source of capital formation. This surplus labour of agricultural sector can be employed in urban industries at less than prevailing rate of wages.

10.Source of saving

After Green revolution, agriculture may constitution an important source of saving. So it benefited to rich farmer only. The additional income can be saved and invested. If benefits of green revolution are extended to all farmer then income can be increased and thus saving potential can be very large. If the same are properly utilized, they can prove very helpful in economic development.

11.Basis of economic development

Indian agriculture serves as a basis of the economic development. Because firstly development of agricultural sector provides inputs to industries for their development. Secondly agriculture requires relatively less capital and less foreign exchange for its development. Agricultural Development will help in development of industries, transport, foreign trade etc.

12.Social and political importance

Development of agriculture has it’s social and political significance.As a result of agricultural Development, economic, social and political life of villages will improve. They will take more interest in national programmes and development problems. Such public co-oporation is very essential for all round development. Different political parties make all efforts for their improvement through the development of agriculture.

13.International importance

Some of the agricultural products of India are of international significance. India ranks first in the world as regards the production of spices, milk, jute, butter. Second rank with regard to suger, rice, wheat, fruit, tea and tobacco and sixth rank with regard to potatoes. India enjoy monopoly in the production of lac.



The agricultural development has a significant role to accelerate the rate of economic development. Appropriate development of the agricultural sector is almost a precondition for the success of any development plan of the country.