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Potential of Agriculture bringing Prosperity remains Limited

NITI Ayog Vice Chairman Arvind Panagariya says job creation in Industry and Services is important for overall prosperity

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Underlining the importance of job creation in industry and services for overall prosperity of the nation, Vice chairman of NITI Aayog, Arvind Panagariya today said that in the longer run, the potential of agriculture to bring prosperity to a vast population remains limited.

Sharing his iews with the people in his first blog post published on the newly launched website of NITI Aayog, he said, “There can be little disagreement that the fastest relief to the poor in India would come from productivity growth in agriculture.”

“This is where nearly half of the workforce is employed. With the share of agriculture in the GDP at about 15 percent now, this half of the workforce is also significantly poorer than the other half, employed in industry and services,” the Vice Chairman said.

Panagariya pointed out that over long periods, experiences such as that of Madhya Pradesh during 2011-12 to 2013-14 whereby agriculture grew in excess of 20 percent annually are rare.
In the recorded Indian history, the fastest that agriculture has grown nationally over a continuous ten-year period has been under 5 percent.
“Put another way, in countries experiencing growth rates of 6 percent or more over long periods, overwhelmingly, industry and services have grown substantially faster than agriculture,” he said.

According to him, it is in this context that the creation of good jobs in industry and services is critically important. Unless workers have the opportunity to migrate to better paid jobs in these sectors, they will be unable to fully share in the prosperity experienced by a fast-growing economy. Thus, for example, prosperity was widely shared in South Korea and Taiwan during the 1960s and 1970s because workers in agriculture could migrate to good jobs in industry and services.

Indian farmers and their children recognize the superior prospects that faster-growing industry and services can potentially offer. According to a recent survey conducted by the NGO Lokniti, 62 percent of all farmers say that they would quit farming if they could get a job in the city. As for their children, 76 percent say that they would like to take a profession other than farming.

It is in recognition of these aspirations that while reorienting public investment in agriculture toward productivity-enhancing items such as micro irrigation, soil cards, effective extension services and improved seeds, the government has paid special attention to creating jobs in industry and services.

The Vice Chairman said that a common fear aired in the media is that the expansion of industry and services would divert land away from agriculture thereby undermining food security. Accelerated growth over the last fifteen years facilitated by the 1 percentage point increase in non-agricultural use of land has produced more gains in per-capita income and poverty reduction than what had been achieved over the entire fifty preceding years.

Of course, even this 1 percentage point increase did not come at the expense of agriculture, Panagariya argued. “There remains much scope for further output increase through the extension of the Green Revolution to eastern states and rain-fed regions,” he emphasised.

Agricultural growth and the expansion of good jobs in industry and services can go hand-in-hand to bring rapid elimination of poverty and shared prosperity for all, Panagariya concluded.

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