ROLE OF ARICULTURE IN

CAPITAL FORMATION AND

EMPLOYMENT GENARATION
IN INDIA

SUBJECT CODE — ECO515

MANAGERIAL ECONOMICS

SUBMITTED TO— MR. CHANDRASHEKHAR DOGRA

(LECTURER LSB )

SUBMITTED BY -- ,

ANU
PAM KUMAR, MBA

ROLL
.NO –RR1002B44

REG
.NO. 11005012
 Email:
anupam2lpu@gmail.com

CONTANTS
1. INTRODUCTION

2. ANALYSIS

3. CRITICAL ANALYSIS

4. CONCLUSION

5. SUGGETION
 Acknowledgement

This term paper is dedicated to my teachers, my parents and

my friends

Who helped me complete this term paper? I tried my best

levels to

Elaborate on the topic with relative to the examples and

attachments.

I pay vote of thanks to the people who helped me to

understand the

Unemployment created by the slowdown in the It sector.

I am thankful to the gratitude for all those sources who

managed me to

Collect the information and data.

1. INTRODUCTION
This is the study of “Role of agriculture” in capital formation
and employment generation in Indian economy.

Agriculture has always been the backbone of the Indian

economy and despite concerted industrialisation of in the last
six years, agriculture still occupies a place of pride. It provides
52.54 % of the total work force in the country. The significance
of agriculture in the national economy can be best explained by
considering the role of agriculture.

Capital formation is one of the basic factors for increasing

production. This is all the more important in agriculture where
we are faced with the task of increasing production to keep
pace with the increase in population against the odds of the
vagaries of monsoon. Judicious use of natural resources for
sustainable production of agriculture, adoption of advanced
technology and development of infrastructure for facilitating all
agricultural activities, ensuring food security in the broader
sense of making adequate nutritious food available and
accessible to all and making agriculture a profitable
commercial activity at par with other industries in the arena of
global economy are the problems that can be successfully
tackled only with a strong capital base. This requires a close
monitoring of the status of capital formation which in turn
hinges on the nature of statistical system and quality of data
available for measurement of capital formation.

At present, the official source of information on capital

formation is the Central Statistical Organization who provide
estimates of capital formation for the economy as a whole as
well for the individual industrial sectors including agriculture, as
part of compilation of National Accounts Statistics in
accordance with the concepts and definitions contained in the
System of National Accounts (SNA) of the United Nations.

Agricultural development cannot be ensured by confining

attention to the activities within the boundaries of agricultural
fields. It should encompass activities fully or partially meant
for agriculture such as production of fertilizers and pesticides,
development of agricultural markets, rural roads and
communication; augmentation of facilities for agricultural
credit for small and marginal farmers, agricultural education,
research and development of agricultural technology which
are the main source of increasing production under the limited
availability of natural resources .For monitoring agricultural
growth it is necessary to have a broader measure of
agricultural capital formation that includes capital formation in
all these activities, which can be called capital formation for
agriculture in comparison with capital formation in agriculture
being compiled and presented at present in the National
Accounts Statistics .This report concentrates on issues
involved in the compilation of capital formation for agriculture,

Agriculture dominates the economy to such an extent that a

very high proportion of working population in India is engaged
in agriculture. Today, India ranks second worldwide in
farm output. Agriculture and allied sectors like forestry and
logging accounted for 16.7% of the GDP in 2008, employed
52.54% of the total workforce and despite a steady decline of
its share in the GDP, is still the largest economic sector and
plays a significant role in the overall socio-economic
development of India.

There are 11 types of agriculture sector in India:

1. Shifting agriculture 2. Subsistence farming 3.Intensive

agriculture
4. Extensive agriculture 5.Commercial agriculture
6.Plantation agriculture

7. Mixed farming 8. Monoculture 9.Dry farming

10. Crop rotation

11. Mixed farming.

Agriculture in India is unique in its characteristics where over

250 different crops are cultivated in its varied agro-climatic
regions, unlike 25 to 30 crops grown in many of the developed
nations of the world. Agriculture is one of the most important
sectors of the Indian economy contributing 18.5 per cent of
national income, about 15 per cent of total exports and
supporting two-thirds of the work force. India with its
favourable agro-climatic conditions and rich natural resource
base has become the world's largest producer across a range of
commodities.

 India is the largest producer of coconuts, mango, banana,

milk and dairy products, cashew nuts, pulses, ginger,
turmeric and black pepper.

 It is also the second largest producer of rice, wheat, sugar,

cotton, fruits and vegetables.

2. ANALYSIS
One of the biggest success stories of independent India is the
rapid strides made in the field of agriculture. From a nation
dependent on food imports to feed its population, India today is
not only self-sufficient in grain production but also has
substantial reserves.

Capital Formation in National Accounts-

Capital formation takes place in the production units. It consists

of additions, less disposals, to fixed assets and change in
inventories. Additions to fixed assets, called fixed capital
formation, are the assets produced as outputs from process of
production that are themselves used repeatedly or
continuously in other process of production for more than one
year.

Most of the industrial sectors contribute directly or indirectly to

the development of agriculture. For example, fertilizer
production is meant only for use in agriculture. Pesticide is also
mostly used in agriculture. Supply of electricity in the rural
areas is utilized in agricultural activities such as irrigation. Rural
roads provide facilities for transport of agricultural
commodities. Construction of godsons, cold storages,
development of agricultural markets provides facilities for
getting the monetary returns for the production. A
considerable proportion of the goods traffic on road and rails is
o account of transporting agricultural commodities. The rural
cooperative banks and commercial banks lend loans to the
farmers to facilitate increase in agricultural production.
Agricultural education and research is out and out meant for
developing agriculture only. Increase in the capital formation in
these activities boost up the growth of agriculture and Indian
economy.

The capital formation and employment generation in

agriculture in India are basically from following sources

1. Agriculture Mechanisation

2. Seeds and Fertilizers

3. Scientific Techniques used in cropping

4. Production and productivity

5. IMPOORT ANT EXPORT

6. Investments

Now we are going to discuss Agriculture machinery sector

which play the vital role in capital formation and employment
generation.

AGICULTURAL MECHANISATION
The progress of agricultural mechanization has been closely
linked with the overall development in production in
agriculture. Till 1950, very few farmers possessed prime
movers like tractors, engines and motors. Indian agriculture has
moved towards mechanisation after the success of the Green
Revolution. The Indian farmer has adopted modern agricultural
techniques, such as the use of tractors and tillers. The farm
power used in India has grown by five times to 1.502 kW/ha in
2005–06 from 0.0295 kW/ha in 1971–72, decreasing the
contribution of human power from 15 per cent in 1971–72 to
5.8 per cent in 2005–06.

The quick over view Indian Agri Machinery Sector

 India is largest manufacturer of tractors in India

with an estimated 275000 units being produced in
the last financial year.- Different sizes of tractors are
manufactured in India ranging from less than 25 HP to
more than 45 HP but most popular range is 31- 35 HP.
The Tractor sales show that their demand is region
specific. Punjab, Haryana and western UP constituted the
major Tractor market. The share of eastern states,
namely Bihar, Orissa, West Bengal and Assam had been
consistently low at 7- 9% due to various socio- economic,
agro-climatic and other reasons.

 Stationary Power – Diesel Engines & Electric Motors

-Electric Motors and Diesel Engines are the primary
sources of stationary power for irrigation, threshing and
various post-harvest agro-processing operations. Diesel
Engine population, which was 1.443 million in 1971-72
increased to 5.528 in 1995-96, and, crossed 7.4 million in
2005-06. Electric Motor population has increased from
1.535 million in 1971-72 to 7.464 million in1995-96, and,
was 12 million 2005-06.

Other Machinery in Operation

 Seed Bed Preparation Equipment:

 Tractor mounted implements such as mouldboard
ploughs, disc ploughs, cultivators and other crop- specific
equipment are widely being used for seed bed
preparation. Seed drills and planters, both animal drawn
and tractor mounted, have become popular. The growth
in use of tractor drawn machinery has been in the range
of 9-17%. Different sizes of cultivators and disc harrows
are used but due to farm road and terrain constraints,
cultivators of more than 15 times and disc harrows of
more than 18 discs are not much in use. The power from
higher horse power tractors, therefore, is not fully utilized.

 Sowing and planting equipment

The line sowing not only saves seed but also facilitates
regulate application of fertilizer near root zone. Besides, it
helps control of weeds through use of mechanical
welders. For precise application of seed and fertilizer,
mechanically metered seed drills and seedcum-

Fertilizer drills operated by animals and tractors have

been developed and are being manufactured to suit
specific crops and regions

Mechanical translators for rice and vegetable crops are

catching with farmers. Long handle tools and power
weeders for weeding and intercultural and manual and
power operated sprayers and dusters for application of
chemicals have been commercialized.

 Harvesting Equipment:

Cereal crop harvesters including various designs of

vertical conveyor reaper windrowers and combine
harvesters are being used on large scale. Tractor
mounted digger- elevators for groundnut and tuber crops
are being used. Spike-tooth and rasp bar type threshers
for cereal crops and crop specific threshers for major
crops such as soybean, groundnut, sunflower have been
developed and commercialized.
IMOACT OF MECHANISATION ON AGRICULTURAL PRODUCTION &
PRODUCTIVITY AND EMPLOYMENT

The mechanization of in Indian agriculture was the main

reasons for green revolution in India. The use of mechanisation
in Indian agriculture has increased its production and
productivity which makes India self dependent for food. but on
the other hand it reduces the human labour requirement . it is
one of the reason of declining the employment opportunity in
this sector.

SEEDS AND FERTILIZERS INDIA

HYV seeds and an organised seed sector have been

instrumental in driving agricultural productivity across the
country. The area under certified seed cultivation in India has
grown from less than 500 hectares in 1962–63 to more

Than 0.5 million hectares in 1999–2000, boosting the

productivity of agri products.

In 1950, per hectare use of fertilisers in India was 0.55 kg.

However, backed by the government‘s policies and initiatives,
consumption grew to more than 125 kg/ha by 2009.The
government has taken various policy initiatives for the fertiliser
sector, such as a pricing policy for indigenous urea, new
investments in the urea sector, nutrient-based pricing,
production and availability of fortified and coated fertilisers, a
uniform freight subsidy on all fertilisers under the fertiliser
subsidy regime, a concession scheme for decontrolled
phosphates and pathetic fertilisers, etc.

SCIENTIFIC TECHNIQUES USED IN CROPPING

The scientific tools and techniques used in agriculture are

helped in increase productivity, that’s why today India is
independent in food grains..
PRODUCTION AND PRODUCTIVITY

Agricultural production in India is an important determinant of

overall economic growth and a huge employer of the rural
populace. Production and productivity are continuously
increasing. The increase in food grain production from 50.8
million tonnes in 1950–51 to 234.5 million tonnes in 2008–09,
can be largely attributed to the Green Revolution, which took
place in the 1960s. Agri input, including fertilisers, high yielding
varieties (HYVs) of crops, pesticides, surface irrigation and
mechanised farming, has been primarily responsible for the
growth in agricultural productivity.

According to the final estimates of the Agricultural Statistics

Division, Government of India, production of food grains in
2008–09 was estimated to be 234.47 million tonnes, with the
Kharif crops accounting for 118.14 million tonnes and the Rabi
crops for 116.33 million tonnes. According to the second
advanced estimates of the Agricultural Statistics division,
production of food grains in 2009–2010 is estimated to be
216.85 million tonnes.

But Indian economy is shifting from agriculture to services and

industrial sector. The shift from agriculture to a services and
industry-driven economy has resulted in a decline in the share
of agriculture and allied services in India’s GDP from more than
50 per cent in 1950–51 to 15.7 per cent in 2008–09 and the
dependency of work force on agriculture are decline
continuously.

LABOUR PRODUCTIVITY AND WAGE IN AGRICULTURE

Labour productivity is one of the various dimensions of

productivity; increase in labour productivity is important but
not necessarily with a decrease of employment in agriculture
especially in a labour surplus rural economy such as that of
India. Creation of new employment opportunities at a rising
level of productivity is the most cherished objective

IMPORT AND EXPORT

Over the period 1990–91to 2007–08, the value of India’s
agricultural imports and exports has grown at a CAGR of 20.8
per cent and 16.3 per cent, to reach US$ 6.2 billion (INR 297.8
billion) and US$ 16.2 billion (INR 777.7 billion), respectively.

INVESTMENT IN AGRICULTURE

The Indian agri sector has transformed from pure agriculture to

agribusiness, providing value to each stakeholder in the farm-
to-fork value chain. In the recent past, the sector has witnessed
investments from the corporate sector in the form of organic
and contract farming, and set up of hubs for procurement of
farm produce. The govt. Allow up to 100 % FDI in this sector,
so the Indian as well as foreign privet players are investing
money in Indian agriculture , i.e., very helping to Indian
economy in capital formation as well as employment
generation .

In August 2006, Reliance Retail entered an agreement with the

Punjab government for agricultural and retail projects entailing
an initial investment of US$ 104.16 million (INR 5.0 billion). The
company plans to set up rural hubs for procurement of
vegetables, fruits, pulses and other farm produces

In July 2007, Cadbury India Ltd and the Tamil Nadu Horticulture
Department entered an agreement to promote cocoa farming.
The five-year agreement aims to bring 50,000 acres under
cocoa farming, which will provide coconut farmers an additional
income of US$ 1.66 million (INR 80 million) a year. It is creating
new employments in agriculture sector

Total investment in the agriculture and allied sectors in 2008–

09 amounted to US$ 28.87 billion (INR 1,386 billion), of which
the private sector accounted for 82 per cent (US$ 23.78 billion).

EMPLOYMENT AND INCOME IN

AGRICULTURE
Employment in agriculture is rural-based (85 percent); but it is
depressing to note that in the rural sector the rate of growth of
agricultural employment is abysmally low (0.01 per cent4) and
was insignificant during the ‘2003s. The corresponding growth
during the ‘90s was moderate and significant (1.18 per cent).
The decade of 90s and 2000s frequently referred in the present
discussion strictly refers to periods 1993-03 and 2003-03,
respectively. These are in fact the years for which NSSOs
quinquennial survey results based on a large sample is
available for employment.

The growth of agricultural income during the 2000s is not only

satisfactory and significant; it is marginally higher (0.02 per
cent) than the corresponding rate of growth in the 90s. The
income trend for allied activities is encouraging. In forestry and
fisheries the income growth is not only positive but it is
marginally higher than the previous decade. In the case of
livestock though the income growth is highest amongst all
allied activities, the growth rate in the ‘2000s declined over the
previous decade. This miss-match between employment and
income suggests job-less growth in agriculture as well. For a
proper understanding of the reasons for this disconcerting
trend an enquiry into the pattern of agricultural growth in the
country is necessary.

Agricultural income (GDP at factor cost) as per the CSO annual

series consists of income from crop outputs (field and
plantation crops), livestock, fisheries and forestry. At the
individual sub-sector level income for the crop and livestock
sector GDP at factor cost.

ACGR in Income ACGR in Empm. Employ.

Elasticity
1993-2003 2003- 1993- 2003- 1993- 2003-
09 2003 09 2003 03
Crops & 2.85 2.72 2.75 0.01 0.61 0.
plantati 01
on
Livestoc 3.59 3.09 -3.19 -0.68 -0.74 -
ks 0.
19
Forestr 2.56 2.89 3.29 -3.93 1.50 -
y& 1.
fishing 55
Agricult 2.84 3.24 1.44 0.01 0.51 0.
ure - 02
aggr

The income output series presents relatively detailed statistics

for crops and the livestock sector; these sectors also account
for the bulk of employment in agriculture. Lowest wages but
highest unit production cost for all crops --due to low crop
yields.

Contradictions in Indian Agriculture

*The contradictions in Indian agriculture can be point out as—

Lowest wages but highest unit production cost for all crops
--due to low crop yields.

*Abundant water resources but not enough water for

agriculture -- due to wastage of water.

e.g. California cotton farmers produce 35 times more cotton per

liter of water than in Tamil Nadu with AT.

*Huge food stocks but widespread malnutrition -- due to lack of

purchasing power.

*Though farmers produce more, they earn less -- due to falling

market prices.

GOVERNMENT INITIATIVE FOR AGRICULTURE

In the Union Budget 2010-11, the Finance Minister, Mr. Pranab
Mukherjee has made the following announcements for the
agriculture sector for increasing productivity and employment
in agriculture which will help in increase the participation of
agriculture in GDP.-

• Provision of US$ 86.9 million to extend the green

revolution to the eastern region of the country comprising
Bihar, Chhattisgarh, Jharkhand, Eastern Uttar Pradesh, West
Bengal and Orissa

• Provision of US$ 65.2 million to organise 60,000 pulses

and oil-seed villages in rain-fed areas in 2010-11 and to provide
an integrated intervention for water harvesting, watershed
management and soil health to improve productivity of the dry
land farming areas

• Provision of US$ 43.4 million for sustaining the gains

already made in the green revolution areas through
conservation farming, which involves concurrent attention to
soil health, water conservation and preservation of biodiversity

• Banks have been consistently meeting the targets set for

agricultural credit flow in the past few years. For the year 2010-
11, the agricultural credit flow target has been set at US$ 81.5
billion.

*100 per cent foreign direct investment (FDI) is allowed under

automatic route in Floriculture, Horticulture, Development of
Seeds, Animal Husbandry, Pisciculture, Aquaculture and
Cultivation of Vegetables and Mushrooms under controlled
conditions and services related to agro and allied sector.
Besides the above, FDI is not allowed in any other agricultural
sector/activity, according to the Department of Industrial Policy
and Promotion’s (DIPP), consolidated FDI Policy .

These are the govt. Initiative which can be increase the

production and productivity as well as employment generation
and capital formation in agriculture in India. But it needs
3. CRITICAL ANALYSIS
Agriculture provides the underpinning for our food and
livelihood security and support for the economic growth and
social transformation of the country. During 2008-09 the
agricultural sector contributed to approximately 16.7 per cent
of India's GDP (at 2004-05 prices) and 10.23 per cent of total
exports besides providing employment to around 52.54 per
cent of the work force. In the recent past, the impact of various
food, financial and economic crises has been felt across the
world. This has compromised the lives, livelihood and food
security of the people. Therefore, there is a compelling case for
increased investment in the sector investment in the sector

The continued high growth of agriculture is essential to meet

the food and nutritional security requirements of the people
and provide livelihood and income in rural areas. Agriculture
should have priority in national policies and plans, since the
nation's food security depends on the performance of the
agricultural sector. The present agriculture growth in our
country is 4 % per annum. For boosting the production and
productivity we have need a proper infrastructure and
investment- regular power supply, irrigation and decent
fertilizer.

But reality is just opposite of what has been stated as the need
for investment in Agri infra development. There is continuous
decline in public outlays and investments in Agri Sector for over
two decades. That is affecting capital formation and
employment generation in this sector.

After the economic reforms started, the government’s

expenditure and investment in the agricultural sector have
been drastically reduced.

We can analyze it with the help of data

Public Investment Decline in Agriculture

 Even though Agriculture is the life blood of the nation, public
investment in agriculture, in real terms, had witnessed a steady
decline from the Sixth Five Year Plan onwards

Plan Sixth Sevent Eighth Ninth Tenth

Plan h 1992- 1997- 2002-
1980- 1985- 97 2002 07
85 90

Amou @64,0 @52,1 @45,5 @42,2 @67,2

nt 12 07 65 26 60
Rs in @1999
Crore -2000
prices

Analysis of trends in public investment in agriculture and allied

sectors reveal that it declined in real terms (at 1999-2000
prices) from Rs.64,012 core during the Sixth Plan (1980-85) to
Rs.52,107 crore during the Seventh Plan (1985-90) to
Rs.45,565 crore during the Eighth Plan (1992-97), and
Rs.42,226 crore during Ninth Plan (1997-2002). This trend was
reversed in the Tenth Plan (2002-07), with public investment in
agriculture of Rs.67,260 crore

The share of agriculture and allied sectors in total gross

capital formation has also progressively declined for
nearly two decades.

However, this trend has since been arrested and the share of
capital formation of the agriculture and allied sectors in GDP
has slowly increased from 14 per cent in 2004-05 to 21 per
cent in 2008-09 (at 2004-05 prices). This needs to be increased
further to 35% in line with Investment/GDP ratio.

The share of public investment to GDP of the agriculture and

allied sectors has also increased from 2.9 per cent in 2004-05
to 3.8 per cent in 2008-09 (at 2004-05 prices). This needs to be
increased proportionately to 5% to be in tune with Agri sector
share in GDP

Steady decline of Public investment in

agriculture
Public investment in agriculture, in real terms, had
witnessed a steady decline from the Sixth Five Year
Plan (1980-85) to the Ninth Five Year Plan (1997-2002).
However, this trend was reversed in the Tenth Plan
(2002–07), with public investment in agriculture to the
tune of Rs.67,260 crore. Data on public and private
investment in agriculture and allied sectors since 2004-
05 is given below:

Investmen Share in
Allied t in investme
Sectors (at Agricultur nt (per
2004-05 e & Allied cent)
prices) sectors
Year (Rs. crore)

Total Pub Pvt Pub Pvt

2004 78848 1618 62665 20. 79.5

-05 3 5

2005 93121 1990 73211 21. 78.6

-06 9 4

2006 94400 2297 71422 24. 75.7

-07 8 3
2007 11000 2303 86967 20. 79.1
-08 6 9 9

2008 13859 2445 11414 17. 82.4

-09 7 2 5 6

Gross Capital Formation in Indian Agriculture

As per Central Statistical Organization, the investment
in agriculture as percentage of total GDP is very less.
The welfare government is supposed to provide the
right information at right time related to agriculture
inputs, the agriculture loans at minimum interest, good
seeds, and help the farmers. When the crop fails. This
immense responsibility has created a situation where
the government finds itself unable to attend every
problem of the poor farmers. However the share of
private sector in gross capital formation has been
increasing over the same period.
Gross capital formation public and private in
agriculture and allied sectors and its percentage
share to GDP of agriculture and allied sectors is
given below:
Gross Capital Formation (GCF) Public and Private in Agriculture
and Allied Sectors and its percentage share to GDP of
Agriculture and Allied Sectors (at 2004-05prices)

(in Rs. Publi %age Privat %age Total % share

crore) c share in e share in Inves in GDP
Year Inves Agricult Inves Agricult t- for
t- ure and t- ure and ment Agricult
ment Allied ment Allied (Rs. ure and
(Rs. Sector (Rs. Sector crore Allied
crore GDP crore GDP ) Sector
 ) )
1 2 3 4 5 6 7
2004- 16183 2.9 62665 11.2 78848 14.1
05
2005- 19909 3.4 73211 12.4 93121 15.8
06
2006- 22978 3.8 71422 11.7 94400 15.4
07
2007- 23039 3.6 86967 13.6 11000 17.2
08 6
2008- 24452 3.8 11414 17.5 13859 21.3
09 5 7

While the GDP from agriculture has more than quadrupled from
Rs. 108374 crore in 1950-51 to Rs. 4,85,937 crore in 2006-07
(at 1999-2000 prices), the increase per worker is only about
75% higher in real terms than in 1950 compared to 400%
increase in overall real per capita GDP in 1950. formation has
been increasing

Private Agencies in Indian Agriculture

NABARD, in one of the occasional papers published in 2003,

stated that nine non-public sector agencies are mainly involved
in Indian agriculture. There are-input agencies, large agri-
business houses, agri-processing firms involved in contract
farming, farmer organizations and producer co-operatives, non-
government agencies, media and web-based agri service
providers, financial agencies, agri-consultants and informal
extension agents. The private investment in agricultural sector
is on the rise and several agribusiness companies have
developed new models to reach to farmers. A few models are
here:

• e-choupal

• Tata Kisan Kendra

 • Mahindra Krishi Viha

• Hariyali Kisan Bazaars

• Indiaagrili

• PepsiCo Contract Farming

• Private Media

This model helps in increase of proclivity and creates new

employment opportunity in this sector.

5.conclusion
Now we are come to the conclusion .the role of agriculture in
capital formation and employment generation is still very
important. it contributes 16.7% in total Indian GDP and 52.54 %
of workforce depend on it.
Agriculture will continue to play an important role in the econo
mic development and poverty alleviation in India in the
era of economic liberalization and globalization. The
persistence of hunger in the developing world means
that ensuring adequate and nutritious food for the population w
ill remain the principal challenge facing policy makers in many
developing countries in the years to come.
For continuous rejuvenation of Indian agriculture
Rural banking system has to undergo comprehensive outreach
and ascending efficiency. For making sense of India as a emergi
ng ‘youth nation’, agriculture must be made intellectually and e
conomically rewarding for youths by means of partnership with
private players and entrepreneurs. Without any doubt,
agriculture’s role in economic growth remains critical to
achieving all these goals.

But the growth of agriculture is very slow which is only 4% per

annum and very less then other sectors of Indian economy.
The mechanisation of agriculture has increased the production
& productivity that helped in Indian economy to capital
formation and employment generation.

The Indian agriculture sector is not growing according to the

population growth. That’s why the contribution of agriculture in
GDP and employment are continuing decline.

Employment in agriculture to some extent is directly

proportional to the cropped area. However, there are lesser
chances of increasing the net sown area with the kind of
pressure on land. Though there is scope for increasing cropped
area by increasing intensity of land use; this requires
investments in infrastructure, as that of irrigation. Investment
in infrastructure and the role of public investment in it is well
documented; and is therefore excluded from the present
discussion.

Opportunities for agriculture

India’s population is projected to reach approximately 1.6

billion in 2050, creating a huge domestic demand for
agricultural products.

•Agriculture is expected to be a focal point for the private

sector in the country, since several private players are
expected to venture into organic and contract farming, and set
up hubs to procure farm produce.

•Significant investments are expected in supply chain

technology and cold storage facilities.
Contract farming is expected to gain ground. This is an
agreement between the food processor (contractor), typically a
large organised player, and the farmer, where by the latter is
contracted to plant and produce the former’s crop on his land.

Needs of Indian agriculture

The following are the main critical needs of agriculture in India -

*Apply advanced crop production technology to raise yields

*Intensive training of farmers on ATDiversify cropping patterns

*Improve management of water resources

*Create links with agro-industries

The privet participation in agriculture is continuing increasing.

The govt provide 100% FDI in this sector. The public and
private sector investment in agriculture have been steadily
increasing since 2004-05. While public sector investments in
agriculture have increased from US$ 3.61 billion in 2004-05 to
US$ 5.5 billion in 2008-09, private sector investment has
increased from US$ 14 billion in 2004-05 to US$ 25.5 billion in
2008-09, according to the Annual Report 2009-10 of the
Ministry of Agriculture.

6. SUGGESIONS
We can increase capital formation and employment through--

 Increase productivity to reduce unit cost of production and

generates jobs, higher income for farmers, and exportable
surpluses.
  Raise profitability of agriculture to increase the incomes
and purchasing power of rural population to eliminate
malnutrition and stimulate demand.

 Link agriculture to agro-industries such as biomass power,

fuel and edible oil to provide assured market for surplus
production & generate non-farm employment.

 Rotate crops every season and diversify from foodgrains

to commercial & orchard crops in response to market
demand to avoid surplus production.

 Raise efficiency of water usage & crop productivity by

advanced methods of deep soil ploughing & rainwater
harvesting

By this way we can ........

*Create 13 million farm & non-farm jobs

*Generate 40,000 MW of power

*Produce 18,000 crores of biofuels

*Meet India’s total demand for edible oil

*Increase agricultural GDP by 35 to 50%