Economic and Agriculture Promotion
Agriculture which is predominantly the base of systems of economy in most of the under developed countries is the primary occupation of rural people in those countries. It is primary because it supplies basic necessities of human life, provides basic inputs for industries and, in addition to these, purveys goods for exports and other purposes. the rise in agricultural production makes important contributions to general economic development and that, within considerable limits at least, it is one of the preconditions which must be established before a take off into self sustained economic growth becomes possible.
dP=A.a+O.oWhere, A= Product of Agriculture; O = Product of all other sectors; P= Total Proudct =(A+O); a=rate of growth of A ; o=Rate of Growth of O; d= change. The increment in the total product is the aggregate of products of sectarian outputs as multiplied by their respective rates of growth.
Role of Agriculture in Economic Development- Traditional approach
The traditional and earlier approaches proposed by development economists like Lewis, Fie and Ranis, and so on highlighted the important roles of agriculture sector in the economic development of any country A fast track development of this sector is crucial for other sectors as well. Only a strong and efficient agricultural sector can feed the growing population of a country, provide employment, play vital role in the foreign trade and earning of foreign exchange and give a strong base to the industries. Because of these multifaceted functions of agriculture, it has got a multiplier effect on any country’s socio-economic and industrial scenario. Thus according to the traditional analysis the role of the agricultural sector is confined to the source of food, source of livelihood, role in foreign trade, capital/savings transfers and its role in industrial development
Supply of Savings for Industrial Investment
The process of the development of an economy, particularly during its initial stages, depends on the savings from agriculture for investing in industrial and service sectors. After a point of time, the savings from the agriculture sector will not be invested in the same sector itself mainly because it will not create positive marginal productivity and hence, savings from agricultural sector is invested and re-invested in industrial sector for further economic growth.
Role in Foreign Trade and Drive to exports
The items like tea, coffee, spices, cotton, fruits and vegetables are the traditional items of exports and they are produced in farms and not in the factories. Agriculture contributes in the building up of the foreign exchange reserve and its contribution is so significant that it may reverse the terms of trade as well as the balance of trade of any country in which it plays vital role.