The Indian economy has two major pillars—agriculture and industry—both contributing significantly to growth, employment, and social development. While agriculture has been the backbone of India for centuries, the industrial sector drives modernization, exports, and technological progress. This unit explores their importance, reforms, and policies shaping their future.
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Importance of Agriculture in the Indian Economy
Agriculture remains the primary source of livelihood for a large portion of the Indian population, especially in rural areas. It not only provides food security but also supplies raw materials to industries such as textiles, sugar, and food processing.
Key contributions of agriculture include:
Employment generation – Nearly half of India’s workforce is engaged in agriculture.
Contribution to GDP – Although declining in percentage, agriculture still accounts for a significant share of GDP.
Supply of raw materials – Industries like cotton, jute, and sugar depend on agricultural produce.
Export earnings – Products like tea, coffee, rice, and spices bring foreign exchange.
Agricultural Reforms in India
To improve productivity and ensure farmers’ welfare, the government has introduced several agricultural reforms over the years.
1. Land Reforms
Introduced mainly after independence, land reforms aimed at equitable distribution of land and protection of farmers’ rights. Measures included:
Abolition of Zamindari system – Eliminated intermediaries between the state and farmers.
Land ceiling laws – Imposed limits on land ownership to redistribute surplus land.
Tenancy reforms – Provided security to tenant farmers.
2. Minimum Support Price (MSP)
The MSP is a government-announced price for certain crops to ensure farmers get a fair return, regardless of market fluctuations. Crops like wheat, rice, and pulses are commonly covered under MSP.
3. Technological & Infrastructure Development
Promotion of high-yield variety seeds, fertilizers, and irrigation facilities.
Investment in rural roads, storage, and cold chains to reduce wastage.
Industrial Sector in India
The industrial sector plays a crucial role in modernizing the economy, creating jobs, and boosting exports. It comprises manufacturing, mining, construction, and electricity generation.
1991 Industrial Policy Reforms
In 1991, India introduced major economic liberalization measures to overcome a severe financial crisis. These reforms changed the industrial landscape significantly:
Liberalization – Reduced government control and allowed private players more freedom.
Privatization – Reduced the role of the public sector in certain industries.
Globalization – Opened the economy to foreign trade and investment.
These reforms led to rapid growth in sectors such as IT, automobiles, pharmaceuticals, and consumer goods.
Make in India Initiative
Launched in 2014, Make in India aims to transform India into a global manufacturing hub by encouraging domestic and foreign companies to invest and produce locally.
Key features:
Focus on 25 priority sectors like automobiles, electronics, and defense manufacturing.
Simplification of business regulations to attract foreign direct investment (FDI).
Development of industrial corridors and smart cities to support manufacturing.
MSME Sector Development
The Micro, Small, and Medium Enterprises (MSME) sector is a major driver of employment and innovation in India.
Significance of MSMEs:
Generate employment at low capital cost.
Promote balanced regional development.
Contribute significantly to exports.
Government support includes:
Credit guarantee schemes.
Technology upgradation programs.
Skill development initiatives.
Public Sector Disinvestment
Disinvestment refers to the government reducing its stake in public sector enterprises (PSEs). It is done to improve efficiency, raise funds, and encourage private sector participation.
Examples of disinvestment include:
Selling stakes in companies like Air India, BPCL, and LIC (IPO).
Strategic sales to private companies for better management.