Role of Agriculture in Indian Economy: Issues and Priorities

27 Aug 2023
Role of Agriculture in Indian Economy: Issues and Priorities
Indian agriculture is the backbone of Indian economy. It plays a critical role in the economic development of India. It provides livelihood to more than 55 per cent of Indian population and contributes around 20 per cent to the national income. It also contributes more 12 per cent to the exports of India.

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India is primarily an agriculture-based economy because more than 55 per cent of Indian population derive their livelihood from agriculture. However, Indian agriculture is characterised by technological dualism, low mechanisation, and hence low productivity. As a result, a large section of the society dependent upon agriculture have low income and low standard of living.

The need is to use technology to promote farm mechanisation to boost productivity and improve standard of living.

In this blog, we will discuss the multifaceted role of agriculture in economic development of India, explore the issues it faces, and discuss the key priorities that should guide its advancement.

Role of Agriculture in India's Economic Development

Agriculture remains a vital sector in India supporting livelihoods for millions and contributing significantly to the country's economy. The contribution of agriculture in Indian economy can be seen in many ways, such as:

  • It ensures food security for vast majority of Indian population. Adequate food helps meet the nutritional needs of individuals and strengthens human capital.
  • Another importance of agriculture in Indian economy is that it provides livelihoods for more than 55 per cent of Indian population, particularly in rural areas.
  • It contributes around 20 per cent to the national income of India, and in turn, generate income for both farmers and non-farm rural households.
  • Agricultural products form around 12 per cent of total exports of the country. Cash crops, like coffee, tea, and cotton, contribute to foreign exchange earnings.
  • Agriculture provides raw material to the industry. The textile, food processing, and pharmaceutical sectors, among others, heavily depend on crops like cotton, fruits, and medicinal plants.
  • Agricultural growth can trigger rural development by enhancing infrastructure, education, healthcare, and other essential services in rural areas. This can help bridge the urban-rural divide.

Issues in Indian Agriculture

The Indian agriculture faces numerous issues that hinder its contribution to economic development. These include low productivity, land degradation, and inadequate infrastructure, among others.

Low Productivity

Outdated farming practices, lack of access to modern technology, and limited mechanization contribute to low agricultural productivity, affecting both food security and income levels.

Climate Change

Agriculture is highly vulnerable to climate change impacts, such as erratic rainfall, droughts, and extreme weather events. These disruptions can lead to crop failures, livestock losses, and reduced yields.

Land Degradation

Soil erosion, deforestation, and improper land management practices degrade arable land, reducing its long-term fertility and capacity to support agricultural activities.

Lack of Infrastructure

Insufficient rural infrastructure, including roads, storage facilities, and market access, impedes the efficient movement of agricultural products and increases post-harvest losses.

Market Access and Price Volatility

Farmers often struggle with limited market access and face price volatility due to a lack of information, bargaining power, and exploitation of mediators.

Limited Access to Finance

Many small-scale farmers lack access to credit and financial services, hindering their ability to invest in modern technologies and improve productivity.

Priorities for Indian Agriculture

Unlocking the full potential of agriculture in economic development, certain priorities remain for Indian agriculture. These include promoting the adoption of technology, boosting infrastructure development, and improving access to finance, among others.

  • Technology Adoption: Promoting the adoption of modern agricultural practices and technologies, such as precision farming, drip irrigation, and biotechnology, can significantly boost productivity and sustainability.
  • Research and Development: Investment in agricultural research is crucial to develop crop varieties that are resilient to climate change, pests, and diseases, as well as to enhance overall productivity.
  • Infrastructure Development: Developing rural infrastructure, including roads, storage facilities, and marketplaces, will facilitate efficient movement of goods and reduce post-harvest losses.
  • Access to Finance: Ensuring access to credit and financial services for smallholder farmers can enable them to invest in inputs, machinery, and technology that enhance productivity.
  • Market Access: Establishing better market linkages and eliminating intermediaries can help farmers fetch fair prices for their produce and improve their overall income.
  • Climate Adaptation: Implementing climate-resilient farming practices and promoting sustainable land management techniques will help agriculture in Indian economy adapt to changing climate conditions.
  • Education and Extension Services: Providing farmers with access to agricultural education and extension services can equip them with the knowledge and skills necessary for modern farming practices.


The role of agriculture in economic development in India is multifaceted, encompassing food security, employment generation, income creation, and export earnings. It continues to face challenges that impede its potential to contribute more effectively to economic growth.

Addressing these challenges requires a concerted effort to prioritize technology adoption, research and development, infrastructure enhancement, and improved market access.

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