Indian Agricultural: Growth, Generation, Policy & Problem Indian Agricultural | Page 10

Pg.no. 9
Increase in demand for food in an economy is determined by the following equation:
D = P + 2g
Here,
D stands for Annual Rate of Growth in demand for food.
P stands for Population Growth Rate.
g stands for Rate of Increase in per Capita Income.
2 stands for Income Elasticity of Demand for Agricultural Products.
3. Pre-Requisite for Raw Material:
Agricultural advancement is necessary for improving the supply of raw materials for the agro-based
industries especially in developing countries. The shortage of agricultural goods has its impact upon
on industrial production and a consequent increase in the general price level. It will impede the growth
of the country’s economy. The flour mills, rice shellers, oil & dal mills, bread, meat, milk products
sugar factories, wineries, jute mills, textile mills and numerous other industries are based on
agricultural products.
4. Provision of Surplus:
The progress in agricultural sector provides surplus for increasing the exports of agricultural products.
In the earlier stages of development, an increase in the exports earning is more desirable because of
the greater strains on the foreign exchange situation needed for the financing of imports of basic and
essential capital goods.
Johnson and Mellor are of the opinion, “In view of the urgent need for enlarged foreign exchange
earnings and the lack of alternative opportunities, substantial expansion of agricultural export
production is frequently a rational policy even though the world supply—demand situation for a
commodity is unfavorable.”
5. Shift of Manpower:
Ramesh Kumar P