Explain the role of agriculture in economic development
Answers
Answer:
Thus agriculture can make significant contribution to economic development by earning foreign exchange required for importing industrial raw materials and capital goods required for expanding industries. The lack of foreign exchange acts as a great constraint on the growth process.
Explanation:
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Answer:
Role of Agriculture in Economic Development:
The agriculture sector is the backbone of an economy which provides the basic ingredients to mankind and now raw material for industrialisation.
Therefore, the role of agriculture for the development of an economy may be stated as below:
1. Contribution to National Income:
The lessons drawn from the economic history of many advanced countries tell us that agricultural prosperity contributed considerably in fostering economic advancement. It is correctly observed that, “The leading industrialized countries of today were once predominantly agricultural while the developing economies still have the dominance of agriculture and it largely contributes to the national income. In India, still 28% of national income comes from this sector.
2. Source of Food Supply:
Agriculture is the basic source of food supply of all the countries of the world—whether underdeveloped, developing or even developed. Due to heavy pressure of population in underdeveloped and developing countries and its rapid increase, the demand for food is increasing at a fast rate. If agriculture fails to meet the rising demand of food products, it is found to affect adversely the growth rate of the economy. Raising supply of food by agricultural sector has, therefore, great importance for economic growth of a country.
Increase in demand for food in an economy is determined by the following equation:
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D = P + 2g
Here,
D stands for Annual Rate of Growth in demand for food.
P stands for Population Growth Rate.
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g stands for Rate of Increase in per Capita Income.
2 stand for Income Elasticity of Demand for Agricultural Products.
3. Pre-Requisite for Raw Material:
Agricultural advancement is necessary for improving the supply of raw materials for the agro-based industries especially in developing countries. The shortage of agricultural goods has its impact upon on industrial production and a consequent increase in the general price level. It will impede the growth of the country’s economy. The flour mills, rice shellers, oil & dal mills, bread, meat, milk products sugar factories, wineries, jute mills, textile mills and numerous other industries are based on agricultural products.
4. Provision of Surplus:
The progress in agricultural sector provides surplus for increasing the exports of agricultural products. In the earlier stages of development, an increase in the exports earning is more desirable because of the greater strains on the foreign exchange situation needed for the financing of imports of basic and essential capital goods.
Johnson and Mellor are of the opinion, “In view of the urgent need for enlarged foreign exchange earnings and the lack of alternative opportunities, substantial expansion of agricultural export production is frequently a rational policy even though the world supply—demand situation for a commodity is unfavorable.”
5. Shift of Manpower:
6. Creation of Infrastructure:
The development of agriculture requires roads, market yards, storage, transportation railways, postal services and many others for an infrastructure creating demand for industrial products and the development of commercial sector.
7. Relief from Shortage of Capital:
The development of agricultural sector has minimized the burden of several developed countries who were facing the shortage of foreign capital. If foreign capital is available with the ‘strings’ attached to it, it will create another significant problem. Agriculture sector requires less capital for its development thus it minimizes growth problem of foreign capital.
8. Helpful to Reduce Inequality:
In a country which is predominantly agricultural and overpopulated, there is greater inequality of income between the rural and urban areas of the country. To reduce this inequality of income, it is necessary to accord higher priority to agriculture. The prosperity of agriculture would raise the income of the majority of the rural population and thus the disparity in income may be reduced to a certain extent.
9. Based on Democratic Notions:
If the agricultural sector does not grow at a faster rate, it may result in the growing discontentment amongst the masses which is never healthy for the smooth running of democratic governments. For economic development, it is necessary to minimize political as well as social tensions. In case the majority of the people have to be kindled with the hopes of prosperity, this can be attained with the help of agricultural progress. Thus development of agriculture sector is also relevant on political and social grounds.