Indian agriculture had reached the stage of development and maturity much before the now advanced countries of the world embarked upon the path of progress. There was a proper balance between agriculture and industry and both flourished hand in hand. This situation continued till the middle of the 18th century. The interference from the alien British govt. destroyed the balance and the economy of the country was badly shattered. Therefore Indian agriculture in the pre-independence period can be correctly described as a “subsistence” occupation. It was only after the advent of planning (more precisely the advent of the green revolution in 1966) that the farmers started adopting agriculture on a commercial basis.
THE ROLE OF AGRICULTURE IN INDIAN ECONOMY
1. Share in national income: at the time of the First World War, agriculture contributed two-thirds of the national income. After the initiation of planning in India, the share of agriculture has persistently declined due to the development of the secondary and the tertiary sectors. At 1999-2000 prices, the share of agriculture in GDP at factor cost was 27.3% in 1999-2000 and 21.7% in 2005-2006. 2. Largest employment providing sector: in 1951, 69.5% of the working population was engaged in agriculture. This percentage fell to 66.9% in 1991 and to 56.7% in 2001. 3. Provision of food surplus to the expanding population: the ninth Five Year Plan set a target of increasing the food grains production from a level of 199.4 million tonnes in 1996-97 to 300 million tonnes by 2007-08 to meet the consumption requirement of India’s estimated population of more than a billion. 4. Contribution to capital formation: since agriculture happens to be the largest industry in India, it can play an important role in pushing up the rate of capital formation. The policies advocated are: a) Transfer of labor and capital from farm to non-farm activities. b) Taxation of agriculture in such a way that the burden on agriculture is greater than the governmental services provided to agriculture. c) Turning the terms of trade against agriculture b imposing price controls on agricultural products, taxation or the use of multiple exchange rates that discriminate against agriculture. 5. Providing raw materials to industries: agriculture provides raw materials to various industries of national importance, like, sugar industry, jute industry, cotton textile industry, etc. 6. Market for industrial products: since more than two-thirds of the population of India lives in rural areas, increased rural purchasing power is a valuable stimulus to industrial development. 7. Importance in international trade: for a number of years, cotton textiles, jute and tea accounted for more than 50% of export earnings of the country. With economic progress and consequent diversification of production base, the share of agricultural goods in total exports has consistently fallen. It fell from 44.2% in 1960-61to 10.2% in 2005-06. A growing surplus of agricultural produce is needed in the country to: i) Increase supply of food and agricultural raw materials at non-inflationary prices. ii) Widen the domestic market for industrial goods through increased purchasing power within the rural sector. iii) Facilitate inter-sectoral transfers of capital needed for industrial development (including infrastructure) iv) Increase foreign exchange earnings through agricultural exports.
THE NATURE OF INDIA’S AGRICULTURE
At the time of independence, India’s agriculture was in a state of backwardness. Productivity per hectare and per worker was extremely low. The techniques employed were age-old and traditional. Because of low productivity, agriculture merely provided ‘subsistence’ to the farmers and had not become ‘commercialized’. Approximately 45% of the total consumption of the farmers came from their own production in 1951-52. This highlights the low importance of money in...