Declining share of agriculture in national income facilitated a rise in the rate of economic growth in…

Question

Declining share of agriculture in national income facilitated a rise in the rate of economic growth in India. - Justify your answer

Ghissu Editorial · Accepted Answer

The declining share of agriculture in national income has raised India's growth rate by shifting labour and capital from low-productivity farming to higher-productivity industry and services. Agriculture's share fell from about 18.2% in 2014-15 to 16.5% in 2019-20, though it still employs over 45% of the workforce.

**Introduction**

India’s declining agricultural⟦1⟧ share⟦2⟧ in national income signals structural transformation, enabling faster growth by reallocating labour and capital to industry and services, with states like ==Andhra Pradesh⟦3⟧== exemplifying this shift. This transition is vital for raising overall productivity and income levels while addressing rural livelihoods.

**Institutional Evolution and Sectoral Shifts**

1. **Structural Transformation Dynamics**: Agriculture⟦4⟧’s share dropped from 18.2% (2014-15) to 16.5% (2019-20), reflecting faster industrial and service sector growth that boosts overall productivity. This shift aligns with the classical Lewis model of economic development, where surplus labour moves from low-productivity agriculture to higher-productivity sectors.

2. **Policy and Institutional Support**: Government schemes such as Pradhan Mantri Fasal Bima Yojana, Pradhan Mantri Krishi Sinchayee Yojana, and Soil Health Card Scheme⟦5⟧ have enhanced productivity and stabilized incomes in ==Andhra Pradesh==. Additionally, the state’s active participation in e-NAM has improved market access for farmers, complementing agro-based industrialisation efforts.

**Implementation Challenges and Economic Outcomes**

4. **Fiscal and Growth Linkages**: ==Andhra Pradesh==’s projected GSDP growth of 9.24% in 2024-25, outpacing national average, reflects benefits of structural shifts and strong fiscal management. Increased tax revenues and infrastructure investments further support rural economies and non-agricultural sectors.

**Way Forward**

6. **Promote Agro-Industrialisation**: Developing agro-processing clusters in ==Andhra Pradesh== can diversify rural incomes and create non-farm employment, reducing dependence on traditional crop agriculture and enhancing value addition.

**Conclusion**

The declining agricultural share has enabled India’s economic growth by shifting resources to higher productivity sectors while highlighting the need for targeted reforms in agriculture to ensure inclusive and sustainable development.

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