The disguised unemployment is high in agricultural sector. The increasing dependence of agriculture also increases the problem of low per capita income. India needs to change her holding pattern of land. A progressive structure in the land holding pattern is required, so that more redistributive justice is ensured.
For this purpose the unfinished agenda on land reforms particularly tenancy reforms need to be done. The 60 percent of country’s population engaged in agriculture enjoys only 25 percent of total output; this is an indication of highly unscrewed distribution of income pattern.
Indian agriculture also helps tremendously in sustaining the growth of exports. The varieties of agricultural commodities that are exported include tea, oilcakes, fruits, vegetables, raw cotton, rubber, wool, agricultural machinery and vegetable oil.
The increase of production of food items like rice, wheat has helped in a big way to save import bill of food grains. The agrarian sectors along with agro-industries export account for 66% India’s exports.
The economy wise agriculture has important role to play. The agriculture provides necessary purchasing power for industries and services. The roads and railway network now depend mostly on agriculture for growth of traffic and their prosperity. The economic growth and planning have failed to a great extent owing to inadequacy of agricultural development.
Economists have found out interdependence and linkages between agriculture and other sectors of the economy.
Lewis and Nurkse, the eminent economists were of the view that agriculture provides necessary surplus labour for economic development of other sectors. Isher Judge Ahluwalia and C.R.Rangarajan found three types of linkages between agriculture and industrial sector in India’s process of development (a) production linkage (b) demand linkages (c) Savings and investment linkages.
Production Linkages are established through supply of raw materials through agro-based industries like Jute products, Cotton Textiles, sugar cane etc. Conversely industry supply machinery to agriculture. Mechanisation process of agriculture helped furthering the linkages. Demand Linkages are established through impact of urban income resulting from industrialisation and increased demand for food.
Rural income also increases consumption of edible oils, footwear’s, sugar etc. Savings Investment Linkages are established through terms of trade between the two. Agricultural sector is considered to be the important element and avenues of savings and capital formation in the economy.