Indian Agricultural: Growth, Generation, Policy & Problem Indian Agricultural | Page 12

Pg.no. 11
help of agricultural progress. Thus, development of agriculture sector is also relevant on political and
social grounds.
10. Create Effective Demand:
The development of agricultural sector would tend to increase the purchasing power of agriculturists
which will help the growth of the non-agricultural sector of the country. It will provide a market for
increased production. In underdeveloped countries, it is well known that the majority of people depend
upon agriculture and it is they who must be able to afford to consume the goods produced.
Therefore, it will be helpful in stimulating the growth of the non- agricultural sector. Similarly,
improvement in the productivity of cash crops may pave the way for the promotion of exchange
economy which may help the growth of non-agricultural sector. Purchase of industrial products such
as pesticides, farm machinery etc. also provide boost to industrial dead out.
11. Helpful in Phasing out Economic Depression:
During depression, industrial production can be stopped or reduced but agricultural production
continues as it produces basic necessities of life. Thus, it continues to create effective demand even
during adverse conditions of the economy.
12. Source of Foreign Exchange for the Country:
Most of the developing countries of the world are exporters of primary products. These products
contribute 60 to 70 per cent of their total export earnings. Thus, the capacity to import capital goods
and machinery for industrial development depends crucially on the export earning of the agriculture
sector. If exports of agricultural goods fail to increase at a sufficiently high rate, these countries are
forced to incur heavy deficit in the balance of payments resulting in a serious foreign exchange
problem.
However, primary goods face declining prices in international market and the prospects of increasing
export earnings through them are limited. Due to this, large developing countries like India (having
potentialities of industrial development) are trying to diversify their production structure and promote
the exports of manufactured goods even though this requires the adoption of protective measures in
the initial period of planning.
Ramesh Kumar P