Economic Sectors
9.1 Role of Agriculture
Agriculture plays a pivotal
role in economy. Some of its significant roles are:
i.
Source of Employment: In rural area agricultural is the main source of
generating employment opportunities. As
per 1991 census, it provided employment to about 67% of total population.
In 2004-05 it came down to 54%. In countries like UK USA
ii.
Source of National Income: Agricultural sector contributed 18% of GDP (in
2006-07). A significant portion of revenue comes from agriculture. India UK USA Japan
iii. Development of Industries: Agriculture has big role
in the development of industries, specially the agro based industries such as
textiles, sugar, tea etc. Many other industries also depend on agriculture for
their inputs.
iv. International trade: The country’s foreign
trade, specially export of commodities like jute, tea, coffee, tobacco etc.
depends a great deal on the supplies of agricultural sector. As Indian is not
much developed in industrialisation, so cannot export much industrial products.
But a significant portion of expert revenue is obtained from exporting
agricultural products. India
Share of agriculture and
their allied products in total export was about 70% percent.
India most exportable
agricultural product is Tea.
v.
Cost of Living: Agricultural production influences the cost of living standard of the
country.
vi. Domestic Trade & Commerce:
On account
of agricultural predominance. The considerable part of trade and commerce depends
on agriculture because many industries depend on agricultural produces as
input. So, income of majority of people depends upon agriculture.
vii. Low Capital Ratio: Agriculture has a low
capital output ratio. It requires lesser capital per unit of output produced
compared to Industries. Therefore, a capital poor economy like India
viii. Population
Migration: Due to rising unemployment, rural population tends to migrate to
urban areas. Agriculture tends to reduce such migration. If agriculture can
create required employment opportunities to the youths, then rural people may
not flock to the urban for jobs and then pressure on urban areas will be
reduced.
9.2 Growth of Agriculture
Growth in Plan Period
i. First Plan (1951-56): Faced with Food crisis & Shortage of
industrial raw materials such as raw
jute & raw cotton, 31% of the total plan outlay was devoted to agriculture.
First plan was successful. It saw production of 67 million tonnes as against a
target of 62 million.
ii. The Second Plan (1956-61): The emphasis shifted to industry Outlay on
agriculture was reduced to 20% from 31%. 1st plan agricultural production
target was 81 million and actual production was 80 million tones.
iii. The Third Plan (1961-66): Greater allocation was provided for agriculture, Intensive
agricultural District Programme (IADP) & Intensive Agricultural Areas
Programme (IAAP) were launched. In 1966-67, High Yielding Varieties Programme
(HYVP) & Multiple Cropping Programme were adopted. But whole planning process
received a severe jolt.
iv. The Fourth Plan (1969-74): The 3rd plan was a failure in respect of
agriculture 4th planed assigned high priority to agriculture through scientific
& modern techniques. But poor monsoons in 1972-73 led to crop failure &
created price inflation.
v. The Fifth Plan (1974-79): The growth target in the agriculture & allied
sectors was fixed at 3.94%. Outlay on agriculture was 21% of total plan outlay.
vi. The Sixth Plan (1980-85): The sixth plan was the successful & is known
as 2nd Plase of Green Revolution. While the 1st phase of
Green Revolution developed Punjab, Haryana
& Western U.P. the 2nd phase see growth in states like
West Bengal, Bihar, Orissa, MP & Eastern U.P.
vii. The Seventh Plan (1985-90): The 7th plan aimed at 4% growth rate of
agriculture output.
viii. The Eighth Plan (1992-97): The 8th plan proposed outlay of Rs.22,467 as
against the actual expenditure of Rs.12,792 crores in the 7th plan. It aimed at
4% annual growth and 3.9% annual growth in agriculture was realized.
ix. The Ninth Plan (1997-2002): The agriculural sector performed badly during the
Ninth plan. There was negative growth rates of (-) 6.1%, (-)0.7% & (-)3.5%
during 1997-98, 1999-2000 & 2000-01. during 1998-99 & 2001-2002,
positive growth rate of 7.7% & 6.5% respectively was achieved.
x. The Tenth Plan (2002-2007): The Tenth Plan targeted growth rate in excess of
4% per annum in the agriculture sector, but achieved only 2% growth rate.
Special focus was given to commercial crops like sugar, oilseeds & to
foodgrains like superior cereals, rice, wheat so that qualitative changes take
place.
xi. The eleventh plant (2007-2012): The paln targets growth rate of 4% in agriculture,
from less than 2% achieved in the 10th plan. The 2nd
Green Revolution aims to raise the growth rate of agricultural to GDP to 4%.
Green Revolution
Green revolution
began in 1966. [Q: 15] The term Green
Revolution is used for the significant break through in the production of
food grains through use high yielding variety seeds and improved cultivation
process. The main elements of green revolution are:
i. Use of Modern
equipment and machinery: For bringing green
revolution, tractors, harvesters, pumps etc. are being used in place of human
& animal power.
ii. Chemical
fertilizers: Use of chemical fertilizers for enhancement
of production has boosted Green revolution.
iii. Use of Wonder
seeds: Green revolution is brought by using high
yielding seeds such as pv18, Kalyan sona 227 for Wheat, Jaya, Vijaya, Ratna
IR-8, etc. for Rice.
iv. Super irrigation
facility: Efficient irrigation system for supply of
adequate water for crops. The crops helped green revolution.
v. Arrangement for Improved
credit facility: Agricultural credit at cheap rate to the
farmer is another factor for bringing green revolution.
Main target of green revolution was to bring
about significant increase in food grain production.
Yellow Revolution
Green revolution proved many landmarks in the production
of food grains. The next step in the series of agriculture research and
development came through Yellow
Revolution’ for attaining self-dependence in the production of
oil-seeds. Its mission was optimum utilization of production, processing and modern
technology in oil-seeds crops.
9.2.1 Causes of low
agricultural Productivity
(i)
Uncertain rainfall: Indian agriculture gains in
monsoon, but the rains are uncertain, insufficient or unevenly distributed. Too
much rain results in floods causing widespread damages and destruction.
(ii)
Poor Techniques of Production:
Indian
farmers are still using old & inefficient methods & techniques of
production Use of both farmyard manure & chemical fertilizers is mostly
inadequate. Well and tube wells
are still the main source of irrigation in India. [Q:171]
(iii) Limited use of HYV seeds: The adoption of High Yield Variety (HYV) seeds
improve yields considerably. But HYV seeds are used only in 40% of gross
cropped area, which leads to low production per hectare.
(iv) Lack of Inputs: Agricultural output & Productivity largely depend on availability
of inputs. Indian farmers are poor & with meager financial resources. They
cannot employ latest fertilizers, farm equipments, irrigation facilities etc.
(v) Size of holding: The size of holding in India
(vi) Inadequate Credit Facilities: Though banks & other financial institutions
are advised to give liberal loans to farmers for buying their necessary HYV
seeds, pesticides, construction of wells & pumps illeterate farmers often
are unable to fulfil the bank’s requirements.
Regional rural banks plays
the major role as institutional source of finance for agricultural sector. [Q:182]
9.3 Land Reform
Land reforms is a
revolutionary step taken by government for promoting agricultural production. Earlier,
tillers of the land had no right on the land. They only worked for wages. All
the produces of the agricultural land was the property of the landlord. Consequently,
the farmers were always under heavy in debt.
Government
introduced land reforms, taking away the ownership of land from the landlord,
and giving to the actual tiller of the land. Exploitation of farmers by the
land lord reduced and financial condition of the farmers improved due to land
reform measures.
Objectives of land reform
(a) To redistribute land
through consolidation of holdings and imposing ceilings on holding.
(b) To give ownership to the
actual tillers.
(c) To improve the size of
farms and provide security of tenure.
(d) To regulate the rent etc.
Steps undertaken to achieve land reforms
objectives
(a) Tenancy Reforms
(b) Abolition of Zamindari
system.
(c) Ceiling on land holding
(d) Consolidation of holdings
(e) Co-operative
farming.
9.4 Agricultural marketing
in Indian scenario
(i) Availability of high number of buying
agencies: A lot of
private and government agencies are engaged in buying the agricultural produces.
Uneducated farmers cannot properly select the right agency for selling their
produces. In most cases, they do not get right price for their agricultural
produces.
(ii) Lack of finance: The Indian farmers are poor and always in
debt. So, they are often forced to sell their produce at low price.
(iii)
Cultivators
are not properly organised: Farmers are uneducated and unorganized. On
the other hand, the purchasers are organized and are able to bargain to their
advantage. Purchasers always try to buy the agricultural produces from the
farmers at low price.
(iv)
Lack
of market intelligence: Indian
farmers lack market intelligence. They do not have proper information regarding
prices prevailing in the markets. Due to ignorance of knowledge, mostly they
sell their agricultural produces at low price.
(v)
Insufficient
communication facilities: Due to poor
communication facility, they do not have knowledge about the prevailing market
conditions. They tend to sell their produces at lower price.
(vi)
Lack of storage facility: The
storage system is primitive. About 10-20 percent of the produce is wasted &
lost. So, farmers prefer to sell the produce at whatever price they get immediately,
instead of storing them.
9.5 Industrialization
Industrialization
plays a vital role in the development of an economy. It is extremely important
for under developed economics. Rapid industrialization brings employment
opportunities. It helps capital formation. To reach developed stage, all
under-developed countries try to increase its industrialization process.
Role of industrialization in development of
an economy:
(a) Employment opportunities: In an under developed economy, agriculture
cannot provide adequate employment to all. In such a situation,
industrialization provides move employment opportunities to absorb the
unemployed labour. Employment in industries was 18.2% in 2004-05.
(b) Balanced growth: Industrialization decreases dependence on
agriculture, which is more or less unstable due to its seasonal nature. To
ensure growth with stability industrialization is a must. Every developing
countries try to transfer its agriculture economy to industry based economy.
Share of industrial sector in GDP increased from 12% in 50-51 to 26% in 2004.
(c)
Increasing
returns: The economy enjoys
the benefit of increasing return through industrialization. Industrialization
thus ensures optimum utilization of the scarce resources and improves the
remunerative capacity of the economy.
(d)
Economic
self-reliance: The
industrial sector has a higher capacity to save and invest. It thus, assists
the economy to be self-sufficient. Industrialisation is necessary to increase
country’s capital stock.
(e)
Country’s
infrastructure: When industry develops, it develops with the
infrastructure of the economy. It helps in the development of communication, transport,
banking, insurance and other commercial services.
(f)
Per the capita income: By improved
capital formation, industrialization makes a large contribution to the GNP and
thus increases the per capita income. Increased per capita income paves way to economic
development. In India ,
per capita income is just $720 in 2005, as against $43470 in USA .
(g)
Capital
formation: Capacity to save and invest industrialization assists in
capital formation through increased saving and investment.
Obstacles of industrial
development in India
i. Under utilization of Capacity: Many Indian industries suffer from the
problem of under-utilization of production capacity. It is estimated that utilizing
capacity in a planned manner, industrial production can be enhanced by 30 to
40% without any further investment. Poor production planning, lack of proper
training to the workers, improper production scheduling, lack of order are some
of the reasons for under utilization of capacity. The real per capita growth of
industrial output is just 3.3% p.a.
ii. High Cost Economy: The cost and price of goods / services in India are
generally much higher than international costs and prices.
iii. Inadequate employment generation: Though employment creation in relation to
investment made creation of more employment opportunities is one of the major target
of five years plans, if has been so for incapable of creation of substantial
direct employment. So, inspite of industrial development, our country is
suffering from acute unemployment problem.
iv. Concentration of Economic Power: Large business houses have accumulated considerable
assets. Accumulation of industrial power in few hands, hinders the development
of small and medium size industries.
v. Sectoral Imbalance: Sectoral imbalance is also a major problem of
industrial development. Industries are suffering from inadequate support from
agriculture and infrastructure.
vi. Poor performance of Public Sector: Many public sector
enterprises are not operating profitably. Accumulation of large losses in public sector units has now become a
matter of grave concern (Rs. 73.50 crores in 05-06). A loss making undertaking
becomes weak. In course of time, it loses survival capability and causes huge
financial loss to the country.
vii. Industrial
sickness: Many Indian small, medium and large units are suffering from
industrial sickness. Due to poor financial mismanagement, demand recession,
labour unrest, working capital shortage, cost escalations, shortage of raw
materials, uneconomic size, out-dated machinery and equipment etc. In 2001, there
were about 2.53 lakh sick units of which about 2.49 lakhs were in SSI sector.
A registered company can be declared sick by
judiciary or by BIFR.
viii. Unrealistic and faulty planning: Lack of preparatory action before launching the
projects results in time and well as cost over runs. Lack of co-ordination
between various related sector results in bottlenecks.
ix. Unbalanced regional growth: Efforts at bringing about a balanced regional
growth have not so far succeeded. Maharashtra ,
West Bengal , Tamil nadu & Gujrat account
for 44% of total factories. Bihar , U.P., A.P.,
MP have somehow failed to avail the benefit of industrialization. Thus,
industrialization is concentrated only in few states resulting in unbalanced
growth.
9.6.2 Service Sector
Service sector now plays a crucial role in income generation in India . A major
part of national income comes from service sector, through services like:
(i)
Professional
services
(ii) Communication services
(iii) Construction services
(iv) Education services
(v) Transportation services
(vi) Tourism Services
(vii) Financial services
(viii) Health
services
Share in GDP: The share of service
sector in GDP in 06-07 was 55.4%.
Employment: Employment in service
sector increased from 17.3% in 50-51 to 22.% in 2001.
Exports: Services accounted for 3.5% of India ’s total
exports in 2004-05. In grew by about 75% in 05-06, India ranked 11th in
exported of commercial services in 2005.
Growth of Service Sector in
India
The growth of service sector in India India
