Explain the great dependence of the Indian Economy on agriculture?
During Independence agriculture had very low productivity. However, this situation was completely changed with the introduction of economic planning in the year 1950 to 1951. There was an increase in the area under cultivation, an increase in the growth of food crops and an increase in the yield per hectare. Although the industrial sector is prominent in India, the contributions of agriculture cannot be ignored. This is mainly because of the following reasons:
1. Agriculture helps to increase the Gross Domestic Product. The latest census shows a 26% contribution to the national income
2. It helps to give employment opportunities to two third of the working population. This is because the other sectors have failed to create much employment opportunity.
3. Due to the increase in the population, there is also an increase in the demand for food. The income elasticity of demand for food is extremely high. So it is important that agriculture should continuously increase its surplus of food grains or else a crisis is likely to emerge.
4. The agricultural sector plays an extremely important role to increase the rate of capital formation. If it fails to do so, the whole economy will suffer a setback.
5. It helps to supply raw material to the agro-based industries like sugar, jute, cotton textiles, etc. It is also important to the food processing industries.
6. It is very important to increase the rural purchasing power for Industrial Development. This is because two third of the population lives in villages.
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