India's need for Agricultural Reforms to boost GDP growth

It is often assumed that since agriculture and allied sectors contribute about 14% to India's GDP, their role in the economy is not very significant.

- Kishore Kumar Biswas

However, India has the largest workforce engaged in agriculture, with nearly 80% of the country's poor residing in rural areas and primarily dependent on agricultural labor. As the most populous nation, ensuring food security remains a top priority. Moreover, India cannot achieve developed status unless its per capita income reaches the required level. Therefore, revitalizing the agricultural sector is crucial for sustainable economic growth.

The Role of Agriculture in Economic Development

Agriculture plays a fundamental role in the broader production system. In a globalized economy, increased productivity is a key driver of overall economic growth. Efficient agricultural production ensures lower costs for food, which in turn reduces labor costs, a vital input in the entire production system. This leads to a lower-cost economy and enhanced global competitiveness. Recognizing this, governments— especially in developed countries— provide substantial subsidies to their agricultural sectors to maintain economic stability and competitiveness.

As economies grow, a transition occurs where people move from agriculture to small-scale industries. China serves as a strong example, where workers were gradually absorbed into Town and Village Industries (TVIs), which modernized over time. Similarly, in India, labor-intensive industries, construction, and the service sector create demand for workers as the economy expands. Therefore, improvements in agriculture are essential to facilitate this transition and ensure balanced economic growth.

Agricultural Performance in India