Agriculture vs Industry as a Prime Moving Force

Introduction :

A prime moving force in an economy refers to a sector which has the potential to drive the growth of the entire economy. It has the ability to grow at a high rate, create large-scale employment, has a high value-addition, and productivity. Governments identify/designate a sector as the prime moving force based on the specific characteristics of their respective economies. At the time of independence, India identified industry as the prime moving force in the economy. This choice is still debated, whether India should have gone for industry or agriculture as the economy's prime moving force. Why Industry could not be a prime moving force in India after independence:

  • Lack of basic infrastructure needed for the development of industries such as transportation, power, telecommunications and so on.
  • Poor industrial base i.e., core industries such as iron and steel, coal, cement, crude oil, refining, electricity etc., were not developed to a sufficient extent.
  • Shortage of capital, both in the public sector as well as the private sector, which could be invested in fixed assets such as land, plant and machinery etc.
  • Insufficient availability and deployment of technology needed to support the process of industrialization.
  • Shortage of skilled manpower and entrepreneurial spirit among people.
  • There was no market, or was in a nascent stage, for industrial goods in the domestic economy.

Why Agriculture could have become the prime moving force after independence?

  • Availability of large tracts of fertile land which was irrigated.
  • Low level of human capital, or skills, required in agriculture.
  • With sufficient organization of land ownership, irrigation, and other inputs, agricultural productivity could have been easily enhanced.
  • Majority of the population was dependent on agriculture for livelihood.
  • Development of agriculture could have addressed the basic needs of masses such as food, shelter, decent incomes, healthcare etc., particularly in rural areas. This could have enhanced the purchasing power of a large section of the population, which could have fuelled domestic demand for industrial goods.

During the freedom struggle, the Gandhian idea of national development evolved which was centered around agriculture and rural development. Gandhi had stressed on the development of villages, with a focus on agriculture and local self-government (panchayats). However, post-independent India's economic framework was deeply influenced by Nehruvian Socialism. The planned economic growth model envisaged by Jawaharlal Nehru was centered on the industry as its prime moving force. The reasons for this were as follows:

  • Agriculture at the time of independence was based on the use of traditional tools and technologies. The modernization of agriculture in particular, and the economy in general, could not have happened without a focus on industrialization.
  • In the absence of an indigenous industrial base, India would have had to depend on import of technology which could have drained the nation of precious foreign capital.
  • Multilateral institutions such as the World Bank and IMF were pushing the developing countries to industrialize. It would not have been possible to receive the same kind of support from these bodies if agriculture had been the prime moving force.
  • The dominant belief of that time was that agriculture was a symbol of backwardness while industry signified modernity and progress. Social scientists and economists of that time believed that Indian society needed a break from the traditional, outmoded way of life. This required the cultivation of a scientific temper among the population for which industrialization was inevitable.
  • The defence requirements of the country meant that there was a need to focus on creating an industrial base by encouraging science and technology, research and development.
  • The experience of the Western World, as well as the Soviet Union, had convinced our political leadership about the might and efficacy of the industry as prime moving force.

Nevertheless, the perceptions towards agriculture began to change in the last decade of the 20th century (beginning of economic reforms). It was no longer viewed as a symbol of backwardness. By the decade of the 2000s, agriculture was seen as an engine of growth and development. In the Tenth Five Year Plan (2002-07), the Planning Commission had identified agriculture as the prime moving force of the economy, marking a paradigm shift in economic planning. The Planning Commission believed that such a policy shift can address the challenges faced by the economy such as,

  • Achieving food security, increasing agri-exports through surpluses which can increase the country's foreign exchange revenues.
  • Addressing the challenges of poverty alleviation, the creation of employment - higher agrarian incomes can induce the growth in the rural economy and generate gainful employment in rural areas.

Agriculture and allied activities still employ close to 50 percent of India's population and contribute around 17-18 percent to India's GDP. Though agriculture plays a very important role in our economy, it was the last to be influenced by the economic reforms in the 2000s, which began in the 1990s for the industry and services sectors. The reasons for such delay were as follows:

  • Unlike the industry which was tightly controlled by the government until then, agriculture was relatively free and open for private participation. The need of the hour was to boost contract farming by incentivizing the corporate sector to invest in agriculture.
  • Since a majority of farmers were unaware of the possible reforms in agriculture, there was little pressure on the government to undertake such reforms.
  • As around half the population was dependent on agriculture for livelihood, the government was cautious in introducing any major reforms in agriculture before reducing the dependency on it. Hence the focus was on energizing the industry and services which could absorb the excess labour out of agriculture.

In order to make agriculture the prime moving force of our economy, the following measures need to be taken:

  • Creation of a single, national market for agriculture and livestock produce which can increase the returns to farmers on their produce, enhance their market access by limiting the number of intermediaries and enable the seamless movement of agricultural products between the regions of demand and supply. Initiatives such as eNAM, rural haats and Gramin Agriculture Markets (GrAMs), model Agriculture and Livestock Produce Marketing (ALPM) Act etc., are positive steps in this direction. A lot more needs to be done.
  • Promoting contract farming which can bring in corporate private investment into agriculture, increase the value addition to farm produce, stabilize and improve farm incomes is of utmost importance.
  • Labour laws need to be reformed to promote industrial farming.
  • Facilitating the growth of commodity trading in agriculture, while putting in place adequate checks against speculative trading which can hurt the incomes of farmers and also increase the cost of agri-commodities for consumers
  • Strengthening the supply chain by putting in place robust forward and backward linkages. This is needed for reducing the wastage of perishable commodities and facilitating the development of food processing industry.
  • Boosting farm mechanization to increase the productivity of farmlands.
  • Increasing the spending on research and development, revitalizing the agricultural extension services to enable the transmission of technological developments from lab to field.

The government has announced its objective to double the farm incomes by 2022. A seven-point strategy was developed to achieve this goal. It includes the following:

  • Increase production through assured irrigation and water-use efficiency. Under the Pradhan Mantri Krishi Sinchay Yojana, efforts are made to provide assured irrigation (har khet ko pani) and increase the water use efficiency (per drop more crop) through use of micro-irrigation systems such as drip and sprinklers.
  • Effective use of inputs - through the soil health card scheme, farmers are provided accurate information about the levels of soil nutrients which can help in choosing the right amount of fertilizers, reducing the cost. Neem coated urea is supplied to increase the efficacy of nitrogen release to the soil. Through the use of space technology, land use mapping is done to provide accurate forecasts of cropping patterns. Timely advisories are sent to farmers using multiple media such as Kisan Call Centers, Kisan Suvidha App etc., on prices, weather information and so on.
  • Reducing post-harvest losses by strengthening forward and backward linkages between the farm gate and the food processing industry. Under the Pradhan Mantri Kisan Sampada Scheme, agro-processing clusters are being developed along with the creation of integrated cold storage chains to increase value addition in agriculture and reduce losses due to wastage.
  • Reforms are being undertaken in agricultural marketing such as the creation of eNAM which integrates 585 APMC mandis across the country onto a single online platform, setting up of 22000 GrAMs (Gramin Agricultural Markets) by upgrading rural haats etc., which aim to increase the income to farmers by reducing the role of intermediaries.
  • Mitigating the risks in agricultural by creating safety nets such as crop insurance. The Pradhan Mantri Fasal Bima Yojana was started to provide affordable crop insurance to farmers to protect them against any kind of crop failure.
  • Encouraging allied activities such as horticulture, dairy farming, fisheries, agroforestry, beekeeping, poultry, and integrated farming systems which are a mix of crop cultivation with livestock rearing to ensure income security for farmers.

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