Role of Agriculture in the Indian Economy

Agriculture plays several distinct roles in the Indian economy at once, which is why its importance cannot be judged from its share of GDP alone.

As a source of livelihood. A very large share of India's working population is engaged in agriculture and allied activities, particularly in rural areas where non-farm job opportunities are limited. Even where agriculture's contribution to national output has declined relative to industry and services, its role as an employer of last resort and first choice for rural households has not fallen at the same pace — this is the sectoral mismatch introduced above, and it means that the welfare of a large section of Indians is still tied closely to farm incomes and farm prices.

As a supplier of food. Domestic agriculture is the country's primary source of food grains, pulses, vegetables, fruits, milk and other food items — feeding a very large population is, first and foremost, a domestic agricultural achievement, not one built on imports.

As a supplier of raw material to industry. Many important Indian industries are agro-based — cotton textiles, sugar, edible oils, jute, food processing and leather all draw their basic raw material from farms and allied activities. Growth or shortfall in agricultural output therefore has a direct knock-on effect on these industries.

As a source of export earnings. A number of agricultural and agro-based products — tea, coffee, spices, cotton textiles, sugar, marine products and more — have historically been significant contributors to India's export earnings, giving agriculture a role in the country's external trade beyond just feeding its own population. …