Impact of Agricultural Sector on the Indian Economy

Abstract

The agricultural sector plays a crucial role in India\'s economy, contributing significantly to GDP and employment. Despite industrial growth, agriculture remains the primary source of livelihood for a large section of the population. This research analyzes the sector’s economic contribution, highlighting its impact on rural development and overall economic stability. Government policies and reforms have aimed to modernize agriculture, improve farmer incomes, and ensure food security. This study evaluates the effectiveness of initiatives such as Minimum Support Price (MSP), PM-KISAN, and digital market platforms in promoting agricultural growth. Technological advancements, including precision farming, artificial intelligence, and digital supply chains, have transformed agricultural efficiency. This research examines how these innovations enhance productivity, reduce wastage, and support sustainable farming practices. Globalization and trade policies have further influenced Indian agriculture by opening export opportunities while also exposing farmers to global competition. This paper assesses the impact of international trade agreements, market integration, and foreign investment on the sector. A strong agricultural foundation is essential for India\'s long-term economic resilience. By integrating policy support, technology, and trade strategies, India can enhance agricultural productivity, boost farmer welfare, and sustainable economic growth.

Introduction

Agriculture remains a vital sector in India’s economy, contributing about 18% to GDP and employing nearly 45% of the workforce, despite growth in industry and services. The government has introduced policies like Minimum Support Price (MSP), PM-KISAN, and e-NAM to support farmers and stabilize markets, though their effectiveness varies across regions and farmer groups.

Modern technologies such as precision farming, AI, and digital platforms show promise in improving agricultural efficiency and market access but face challenges in adoption due to costs, training gaps, and connectivity issues. Globalization has expanded export opportunities for Indian agriculture but also introduced risks like price volatility and increased competition, affecting small farmers disproportionately.

The study identifies research gaps including limited evaluation of policy impacts, barriers to technology adoption, effects of globalization, climate change challenges, financial support accessibility, and post-harvest losses. Using secondary data and analytical methods, the research aims to assess agriculture’s economic role, policy outcomes, technology adoption, and globalization effects, ultimately suggesting strategies for sustainable growth.

Key findings highlight agriculture’s declining GDP share but continued importance for employment and rural livelihoods, partial success of government schemes with implementation challenges, promising yet uneven technology uptake, and mixed impacts of globalization that require improved infrastructure and support for small farmers.

Conclusion

The agricultural sector continues to serve as the backbone of the Indian economy, not only due to its direct contribution to GDP but more importantly for its central role in providing livelihoods to nearly half of the country\'s population. This research confirms that while the sector’s economic contribution has relatively declined with the growth of industry and services, its strategic significance remains intact, especially in ensuring food security, generating employment, and driving rural development. Government interventions through policies like MSP, PM-KISAN, and e-NAM have provided much-needed support to farmers. However, the effectiveness of these schemes is uneven, with issues such as regional imbalances, lack of awareness, and implementation bottlenecks limiting their impact. Modern technologies such as AI, IoT, and precision farming hold great promise in transforming Indian agriculture, but accessibility, affordability, and digital literacy remain key challenges, particularly in remote and marginalized farming communities. Globalization has created new opportunities for agricultural exports and investment, but it has also exposed Indian farmers to market volatility and international competition. There is a pressing need to align domestic policies with global standards while ensuring that small and marginal farmers are protected and empowered. In conclusion, the growth and sustainability of Indian agriculture lie in a balanced integration of policy support, technological innovation, market accessibility, and inclusive development. Strengthening the sector holistically will not only boost the rural economy but also contribute significantly to India’s overall economic resilience and inclusive growth.

References

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Copyright

Copyright © 2025 Vrinda Gupta, Digna Manuel Verniz , Shrikant Vashishtha. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.