Contribution of agriculture to GDP

In 1990-91, the contribution of agriculture towards Gross Domestic Product (GDP) output was at 32%, which has decreased to 20% by 2005-06. If trends continue, the output would be expected to decrease further. This makes us think about the fact that The Indian economy is mainly dependant on agriculture, but in the future it would contribute to only 10-15% of the GDP. We need to look in to the reasons for this worrying trend.

In 2005-06, the industry and services sectors contributed to 80% of the GDP which would increase further, with all of india's big corporate houses focusing on infrastructure and IT segments. The GDP contribution of each sector depends on how much investments it can attract from the people, and the overdependence on industrial sectors would mean that India is slowly shifting from a agrarian based economy to that dependant on imports and exports.

The recent economic recession would have a negative effect on the overall contribution of the service and industrial sector to the nations GDP. In contrast, the demand for agricultural productivity has been increasing over the years, but has suffered due to lack of investment. Most people invest in land for real estate, while only a very few see it as an asset which can be used for agriculture.

Organic farming is one shining example, which is picking up as a feasible business alternative. India is importing wheat and sugar apart from major cash crops such as cotton. The crux of the problem is that India depends mainly on a central agency such as Food Corporation of India (FCI) for the collection, storage and distribution through Public Distribution Schemes (PDS). In cases such as monsoon failure, the FCI faces a distinct lack of supply, compounded by problems such as improper storage and transport and corrupt distribution practices.

Instead of spending crores on importing, subsidies can be given to farmers by the government. It is not a rule that only farmers are responsible for food production. We as citizens, can also show interest by starting community farms through land sharing and corporate companies have to step in and invest a lot in agriculture, thus making India self dependant, and increasing the contribution of agriculture towards India's GDP. We have seen a market based economy, such as US suffer due to recession because it depended heavily on the services industry for its GDP.



Author: RK06 Jul 2009 Member Level: Gold   Points : 1

Hi V.Nikkam,

Good information, thanks for posting informative resource.


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