Thursday, March 21, 2013

Declining share of agricultural sector in Indian GDP

According to latest government reports, share of agriculture and allied sectors in India's GDP may decline to 13.7% in 2012-13 from 14.1% in 2011-12. In 2009-10, it was 14.6% and in 2010-11 it was 14.5%.

This declining trend, in terms of percentage, can be attributed to relatively high growth in non-farm sector like services.

Now the question is, whether this trend is good or bad for India? I think it is good as long as the reason is better growth in other sectors. However, these numbers will pose another problem in front of policy makers.
We can't afford to have close to 60% of working population stick to a sector which contributes just 13.7% of GDP. Subsistence farming and seasonal employment in agro sector is one of the main reasons for high rate of poverty in rural areas.

What we need to have is optimum number of people working in agro sector and shifting the rest to industrial sector. Here comes another problem, is our industrial sector is capable enough to handle such a massive flow of work force? I think the answer is no.

As long as we are trying to improve productivity in agriculture, even shrinking acreage may not pose problems for nation’s food security. However, if we are not able to expand industrial sector and accommodate excess labour force - coming from agro sector currently engaged in seasonal or no employment – there, it may create a big social problem.



1. Agriculture's share in GDP may fall to 13.7% in FY13 - Business Standard

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