India is on a growth path. Industries are doing well and service sector is booming. Everywhere we get to see the resurgent India and the feel good factor is on the face in any form of media. But, there is always a pertinent question about Agriculture. We have started importing food grains. Prices are shooting up. The farmer suicides continue to be reported from every part of the country except a few states.
Why does a nation that grows at 8-9% can’t even save its farmers? Is our agrarian part of the economy breaking down? Where are we going wrong?
Just take a look at the table below. This is a very simple analysis courtesy a Ma'am at college.
| Sectors | Share in GDP | Population Dependency |
| Primary | 17% | 60% |
| Secondary | 29% | 15% |
| Tertiary | 54% | 25% |
The estimated contribution to Indian GDP by all three sectors is as given above (2008 data, not much change till 2011). The primary sector (constituting Agriculture, Fishing etc) contributes around 17%. The secondary sector (constituting Industries) contributes around 29% and the tertiary sector (constituting all the services) contributes around 54%.
Now, come to the percentages of population dependent on each of these sectors. 60% of the population is dependent on primary sector, where around 80-90% of these are dependent on agriculture itself. This means that around 50% of total India population is still dependent on agriculture. 15% of the population is dependent on secondary sector and the rest 25% is dependent on tertiary sector.
If we combine the secondary sector and the tertiary sector, around 83% of the GDP is contributed by these two sectors and 40% of the population is dependent on these sectors. But, in case of primary sector, the share in GDP is only 17% and 60% of the population is dependent on the same.
Coming to the growth story, everyone agrees upon the fact that our GDP is growing at 8-9% and will continue to do so. Now, let’s do a simple math. If the secondary and tertiary sectors grow at 10-11% YoY, and even if the primary sector doesn’t grow at all (0%), the growth is given by 83%*(10%-11%)+17%*0% = 8.3-9.13%. Did you notice?. Our GDP can grow at a rate of 8-9%, even without any growth in primary sector, especially agriculture!
So, 60% of our population lives in a no-growth sector, although in the current budget it’s claimed that it’s 5.4% (FY 2010-11), which is only an aberration for only this year. It has been normally around 1-2% for more than a decade, which is almost near to a no growth situation. This is also the reason why, the share of agriculture in Indian GDP is continuously reducing from the past and will continue to reduce, if status quo prevails.
This is alarming. Even if we suppose that more and more people are ready to move away from primary sector to the other two, are they skilled enough to do so? Are we investing enough in the skill development? Are we ready to move from people intensive agriculture to a mechanized one? Doesn’t the migration from hinterlands to big cities indicate that the agrarian system in this country is at crossroads, as they don’t get the right prices and due to other inefficiencies? Even if we don’t have revenue growth from agriculture, are we ready to support the ones who engage in agriculture? I guess, as of now, the answer is a resounding NO. One thing is sure. If we continue to observe how agriculture has been shaped up in our country in past 1-2 decades, we are going to face a crisis or we are already facing one. Some policy changes have to definitely happen and may be only some radical changes will help. That’s for sure.
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