Analysis of Agriculture Industry Linkages in Indian Economic Development

Kumar Arvind and Vijay Paul Sharma

No WP1998-02-06, IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department

Abstract: The purpose of this study is to examine the trends in India’s growth rates and interdependency between agricultural and industrial sectors of Indian economy. A dual economic growth model was developed to investigate the relationship between the two sectors and factors affecting Indian economic growth. The study reveals that the GDP growth rate has increased considerably over the period 1950-95 and the increase is more pronounced in the post-economic reforms period. The industrial sector of the economy in the post-economic reforms period. The Indian economy has made a transition from the predominantly agrarian economy to a more balanced economy with the share of agriculture being about 29 per cent and that of industrial sector about 30 per cent during 1992-95. But the share of agricultural sector is still higher than for most of the developing nations. The results of economic growth model indicate that land is an important input to the growth of agriculture in India. The traditional input, such as labour, does not play an important role in the economic development of both the sectors. Capital investment contributed significantly to the growth of industrial sector, but not to the agricultural sector. It was found that the agricultural growth in India is contributed by its industrial sector and the growth of industrial sector depends on its agricultural growth, indicating strong linkages between the agricultural and industrial sectors in Indian economic development.

Date: 1998-02-06
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