How Is Agriculture Contributing To National Income

A country’s economy relies heavily on the agricultural sector. One of the most critical factors in the economic development of less-developed nations is its role in making advanced countries more prosperous. Agriculture and other core industries are being prioritised in areas where per capita real income is low. Considering that improved agricultural output and productivity are clearly associated with better national economic growth, it is only logical and acceptable to concentrate more focus on the sector’s continued development.

Contribution of Agriculture to the Economy

Agriculture has a significant impact on a country’s economic growth in the following ways:

(1) By supplying non-agricultural sectors of the economy with food and raw materials.

(2) Using the rural population’s purchasing power, to create demand for items produced in non-agricultural industries.

(3) Savings and taxes can be invested in the non-agricultural sector to provide an investable surplus.

(4) Agricultural exports bring in significant revenue in the form of foreign currency.

(5) Giving work to a large number of people who are illiterate, backward, and unskilled. In fact, the agricultural sector is where economic development must begin if it is to become self-sustaining.

Role of Agriculture in Economic Development

For an economy to function, it must have a strong agricultural sector that provides the raw materials for industrialization. As a result, agriculture plays an important part in the growth of an economy as follows:

National Income Contribution

We can learn a lot from the economic history of many prosperous countries about the importance of agricultural development. Agriculture remains important in developing economies, contributing significantly to their national revenue, despite the fact that “the major industrialised countries today were formerly mostly agricultural. This industry still contributes 28% of India’s total national income.

The source of the food supply

Agriculture is the primary source of food supply for all countries, regardless of their level of development. In developing and poor countries, where population growth is accelerating, the need for food is rising at an alarming rate. Growth in the economy can be negatively affected if agriculture cannot keep up with the increased demand for food. As a result, increasing food production through the agricultural sector is critical for a country’s economic development.

Raw Material Prerequisite:

Food-based companies, particularly those in developing nations, rely on an abundant supply of raw materials. There is a direct correlation between the lack of agricultural items and a rise in the overall price level. The economy will be hampered as a result. Wheat mills, oil & dal mills, bread, meat, milk, sugar, wine, and numerous more sectors rely on agricultural products.

Provision of Surplus Resources 

The increase in agricultural exports can be attributed to the growth of the agricultural industry. Because of the increased demands on the foreign exchange situation caused by financing imports of fundamental and essential capital goods, growth in export earnings is more desired in the early phases of development.

Employment

Agriculture first takes a significant number of workers. About 62% of Indian workers are employed in this industry. Progress in agriculture makes it possible to shift workers from the agricultural sector to the non-agricultural one. In the early stages of economic development, shifting labour from agriculture to non-agricultural sectors is particularly critical since it reduces a load of an excess labour force on the limited land resources. As a result, the agricultural sector’s surplus workers must be released in order for it to progress and for the non-agricultural sector to expand.

A means of reducing inequality

Income inequality is greater between rural areas and urban areas in a country where agriculture is the primary source of employment. Agriculture needs to be given more importance in order to lessen this disparity in wealth. Agriculture’s success would boost the incomes of the vast majority of rural residents, hence reducing income inequality to some degree.

Source of foreign currency

The majority of the world’s developing nations export primary products. 60 to 70 percent of their overall export revenue comes from these products. Importing machinery and capital goods for industrial development is, thus, highly dependent on agricultural export earnings. If agricultural exports do not expand at a sufficient rate, these countries face a major foreign exchange problem.

Primary goods, on the other hand, are seeing their prices fall on the international market, thus the chances of seeing an increase in export revenue from them are slim. As a result, large emerging countries like India (which have the potential for industrial development) are seeking to diversify their production structure and boost exports of manufactured goods, even though this involves the adoption of protective measures in the planning phase.

Opportunities for Rural Residents to Find Work

Rural people in developing and impoverished countries have access to a wide range of employment options thanks to agriculture. It is a significant source of income. For the most part, landless and marginal farmers are employed in non-agricultural jobs, such as handicrafts, textiles and leather, metalwork, processing industries, and other service sectors. These rural units serve only the needs of their immediate area. Agriculture accounts for 70.6 percent of India’s overall workforce.

Reducing Poverty in Rural Communities

The rural economy of a developing country must be based on agriculture and related professions once again. Increasing agricultural production and productivity leads to a rise in agricultural surplus, which in turn improves societal well-being, particularly in rural regions. They begin to eat a more nutritious diet that includes eggs, milk, ghee, and fruits as their standard of life improves. They are well-off, with a nicer home, motorcycle, radio, and television, as well as nicer clothing.

Final Words

We can conclude that agricultural development is essential to a country’s economic growth based on the above-mentioned argument. A focus on agricultural development is seen as important even in advanced economies such as the United States and Europe. Agricultural advancement is needed to provide food for the rising non-agricultural labour force, raw materials for industrial output, and savings and tax income to fund the development of the rest of the economy.