Agriculture is the main occupation in India. Two-third of population is dependent on agriculture directly or indirectly.

It is not merely a source of livelihood but a way of life. It is the main source of food, fodder and fuel. It is the basic foundation of economic development.

Agriculture provides highest contribution to national income.

“Agriculture needed top most priority because the Govt. and the nation would both fail to succeed if agriculture could not be successful”

Literally speaking agriculture means the production of crops and live stock on a farm. Generally speaking, agriculture is cultivation of crops. In Economics, agriculture means cultivation of crops along with animal husbandry, poultry, dairy farming, fishing and even forestry.


Agriculture is the back bone of our economy. Agriculture is important not only from economic point of view but has deep rooted influence on our social, political and cultural life. In the words of Jawahar Lal Nehru, “Agriculture needed top most priority because the Govt. and the nation would both fail to succeed if agriculture could not be successful”

The following points explain the significance of agriculture:

(i) Contribution to National Income:

Contribution to national income from agriculture, forests and other primary activities is 24%. In 1950-51 contribution of agricultural sector to national income was 59% and in 2004-05, it came down to 24.4%. Contribution of agricultural sector in national income is considerable. In rich countries the agriculture is quite developed but contribution is very little. In USA agriculture contributes only 2%. In under-developed countries like India, contribution of agriculture is national income was 27%.


(ii) Main source of Food:

Agriculture provides food for Nation. Before 1947, we had acute food shortage but after 1969 Green Revolution in agriculture has made us self sufficient in food production. In 2003-04, production of rice was 870 lakh metric tonnes and of wheat 721 lakh metric tonnes.

(iii) Agriculture and Industrial development:

For industrial development, agriculture plays active role. It provides essential raw materials to many industries like cotton textiles, jute, sugar, vegetables, oil, tinned food, Cigarettes and rubber etc.


(iv) Sources of Revenue:

Land revenue, excise duty on agro-based goods, taxes on production and sale of agricultural machinery forms a goods part of sources of Govt. Revenue.

(v) Source of Foreign trade:

Foreign trade is associated with agriculture. We export tea, tobacco, spices and coffee etc. Other agricultural exports include cotton, textiles, jute goods and sugar etc. So total share of agricultural exports becomes 70%.

(vi) Transport:

Means of transport are required for transporting food grains from farms to consumers and agricultural raw materials to markets and factories. Transport is also needed for taking chemical fertilizers, seeds, diesel and agricultural equipment from markets and factories to villages and farms.

(vii) Source of saving:

Green revolution has increased the production manifold and farmers become rich. The additional income earned by these farmers can be saved and invested in Banks.

(viii) Capital formation:


Agriculture also helps in capital formation. Surplus income from agriculture production can be invested in other sources like banks, shares etc. Use of tractors and harvesters increase capital formation.

(ix) International importance:

India ranks top position in production of groundnuts and sugarcane. It has second position in production of rice and staple cotton. It has third position in production of tobacco. Our agricultural universities are working as role model for other developing nations.

(x) Way of life:


Agriculture in India is not only a source of livelihood but has become a way life. Our fairs, festivals and customs are influenced by agriculture. In politics; too, agricultural community has say.

(xi) Effect on prices:

Sufficient production of food grains will bring stability in prices of food grains. This brings stability in cost of living and wages also. Agriculture influences the price level. So increased production of agriculture keeps the price stable.

(xii) Source of labour supply:


Agriculture is the main occupation in India. Majority of people live in villages. So labour force in various sectors like police, defence and industries is provided by villages disguised unemployment present in agricultural sector can be used as source of supply for other sectors.

(xiii) Economic development:

India is agricultural state. 71% people live in villages and most of these depend on agriculture. So development of agriculture gives boost is economy. Progress of industry, trade and transport is impossible without progress of agriculture. Stability of prices also depends on agriculture growth.