Required, A Paradigm Shift In India's Agriculture Policy

As any developing economy matures, there is a natural movement of workers from low productivity agriculture to higher productivity manufacturing and services sector, where wages are relatively higher thanks to the higher productivity.

- V.P. Nandakumar

India’s economy is currently going through a difficult phase with GDP growth weakening sharply against a backdrop of turbulence in global trade and domestic challenges such as the prolonged stress in the banking sector and a more recent liquidity crisis affecting the non-banking sector. The Indian economy grew by 7.2 percent in FY19, an improved performance from FY18, when it grew by 6.7 percent. However, in the current fiscal year, leading economic indicators suggest growth is likely to slow down to less than 6 percent as many sectors have reported a sharp drop in demand.

India’s GDP attained a level of ₹188.41 trillion ($2.7 trillion) in 2018-19 and will probably touch $3 trillion in FY20. The government is aiming to hit $5 trillion levels by 2024-25, which effectively requires nearly 11-12 percent nominal growth in dollar GDP. While it’s not easy (given the size of the economy and structural challenges), it is also not an impossible target. After all, India has in the past managed to achieve periods of sustained high growth. All the same, the government would be well advised to focus on removing the structural bottlenecks to a higher growth trajectory.

The surest way to a $5 trillion economy is to capitalize on the demographic dividend that India has in abundant measure. India is home to the largest working-age population at a time when much of the rest of the world is aging. We are a young country becoming younger with each passing year. It is estimated that one million people join the workforce in India every month. But, if this demographic dividend is not utilized well by creating adequate employment opportunities, the dividend will turn into an unwelcome social and economic challenge for the next generation.

Agriculture holds the key