Decreasing Share of Agriculture in GDP of India

During 2008-09 the agricultural sector contributed to approximately 15.7 per cent of India’s GDP (at 2004-05 prices) and 10.23 per cent (provisional) of total exports besides providing employment to around 58.2 per cent of the work force.

During 2009-10, agricultural sector contributed to approximately 14.6 per cent of India’s GDP (at 2004-05 prices). The share in GDP is estimated to be 14.2 % in 2010-11. This is evident from the following table:

The growth in share of agriculture in GDP as per the final figures of 2008-09 was -0.1%. It was 0.4% in 2009-10 and is estimated to be 5.4% in 2010-11.

In terms of composition, out of a total share of 14.6 per cent of the GDP in 2009-10 for agriculture and allied sectors, agriculture alone accounted for 12.3 per cent followed by forestry and logging at 1.5 per cent and fisheries at 0.8 per cent.

During the period 2004-05 to 2007-08, the GDP for agriculture and allied sectors had increased from Rs. 5, 65,426 crore to Rs. 6,55,080 crore, at constant 2004-05 prices; thereafter it stagnated at this level for two years (2008-09 to 2009-10) (Figure 8.1). In 2009-10, it accounted for 14.6 per cent of the GDP compared to 15.7 per cent in 2008-09 and 19.0 per cent in 2004-05. Its share in GDP has thus declined rapidly in the recent past.

The Economic Survey 2010-11 says that the overall GDP has grown by an average of 8.62 per cent during 2004-05 to 2010-11, agricultural sector GDP has increased by only 3.46 per cent during the same period. The role of the agriculture sector, however, remains critical as it accounts for about 58 per cent of employment in the country (as per 2001 census). Moreover, this sector is a supplier of food, fodder, and raw materials for a vast segment of industry. Hence the growth of Indian agriculture can be considered a necessary condition for ‘inclusive growth’. More recently, the rural sector (including agriculture) is being seen as a potential source of domestic demand, a recognition that is even shaping the marketing strategies of entrepreneurs wishing to widen the demand for goods and services.

The following table shows the decreasing share of agriculture in the GDP:

So, In our country, 58.2% work force contributes to only 15.7% of the GDP and this is the reasons that a farmer of India is poor and backward. If we compare the data with USA or Canada we find that As of 2008, approximately 2-3 percent of the population is directly employed in agriculture in United States and the contribution in GDP is also around 2-3%. So, in India there is a large disparity between the per capita income in the farm sector and the non-farm sector.

Further, GDP per agricultural worker is currently around Rs 2000 per month, which is only about 75% higher in real terms than in 1950 compared to a four-fold increase in overall real per capita GDP.

Why this Decline?

The decline in growth of agricultural GDP was primarily due to the fall in the production of agricultural crops such as oilseeds, cotton, jute and mesta, and sugarcane. In 2009-10, despite experiencing the worst south-west monsoon since 1972 and subsequent significant fall in kharif food grain production, the growth marginally recovered to 0.4 per cent primarily due to a good rabi crop.

Category: Agriculture Current Affairs • Economy & Banking Current Affairs