Agriculture in Indian Economy: Role, Challenges, Reforms & Way Forward

Agriculture has been the backbone of India’s economy since ancient times. Despite rapid industrialization and growth of the services sector, agriculture continues to play a pivotal role in ensuring food security, rural employment, poverty alleviation, and economic stability. With nearly half of India’s workforce still dependent on agriculture, its performance directly impacts economic growth, inflation, and social well-being.

For UPSC Prelims and GS Mains, agriculture is an essential theme under Indian Economy, Geography, Environment, and Social Justice. Understanding its historical evolution, current challenges, government schemes, and reforms is critical to tackle objective as well as analytical questions.

Agriculture in Indian Economy

🌿 Historical Significance of Agriculture in Indian Economy

Ancient Period

Agriculture was the primary occupation in the Indus Valley and Vedic periods.
Techniques like irrigation, crop rotation, and domestication of animals were practiced.
Land was considered a major source of wealth and power.

Medieval Period

Introduction of crops like rice, wheat, sugarcane, cotton, and pulses.
Mughal period saw the introduction of new irrigation systems and revenue models like Zamindari.

Colonial Period

British policies focused on cash crops (indigo, opium, cotton, tea) instead of food grains.
Famines, poverty, and rural indebtedness increased.
Introduction of railways and canals boosted cash crop production but damaged food security.

Post-Independence Period

Agriculture was marked by low productivity and frequent famines.
India depended heavily on food imports and aid (PL-480).
Agricultural reforms were prioritized through land reforms, Green Revolution, and institutional measures.

🌱 Role of Agriculture in Indian Economy

Contribution to GDP

At independence: over 50% of GDP.
Today: around 16-18% of GDP but employs nearly 45% of workforce.

Food Security

Self-sufficiency in food grain production achieved post-Green Revolution.
Buffer stocks maintained by the Food Corporation of India (FCI).

Employment Generation

Largest source of livelihood for rural India.
Allied activities (dairy, poultry, fisheries, horticulture) expanding rapidly.

Industrial Linkages

Provides raw materials to industries (cotton, sugarcane, jute, food processing).
Agro-based industries form a significant share of India’s manufacturing.

Contribution to Trade

Major exports: rice, spices, marine products, tea, coffee, cotton.
Agriculture contributes nearly 10-12% of total exports.

Rural Development

Rural credit, infrastructure, and irrigation directly linked with agricultural growth.

🌾 Evolution of Agricultural Policies in India

Land Reforms (1950s–70s)

Abolition of Zamindari system.
Land ceiling acts.
Tenancy reforms.

Green Revolution (1960s–80s)

Introduction of HYV seeds, chemical fertilizers, irrigation.
Food self-sufficiency achieved in wheat and rice.
Regional imbalances emerged.

Operation Flood (1970s)

Dairy revolution in India (White Revolution).
India became the largest producer of milk.

Economic Reforms (1991 onwards)

Liberalization of agricultural markets.
Introduction of contract farming and private investments.

Recent Reforms

National Food Security Act (2013).
PM-KISAN income support.
e-NAM (National Agriculture Market).
Digital agriculture initiatives.

🌿 Key Challenges in Indian Agriculture

Low Productivity

Per hectare yield lower than global averages.
Heavy dependence on monsoon rainfall.

Small & Fragmented Land Holdings

Over 86% farmers are small and marginal.
Economies of scale are missing.

Water Stress

Over-exploitation of groundwater.
Low irrigation efficiency.

Dependence on Monsoon

Rainfed agriculture still dominant.
High vulnerability to climate change.

Post-Harvest Losses

Poor storage, cold chain, and logistics infrastructure.
Leads to food wastage and reduced farmer income.

Price Volatility

Fluctuating market prices hurt farmers.
Weak procurement system for non-cereal crops.

Rural Indebtedness

High dependence on informal moneylenders.
Farmer suicides linked to credit distress.

Climate Change

Rising temperatures, floods, droughts impacting yields.
Need for climate-resilient agriculture.

🌱 Government Schemes and Initiatives

Income & Credit Support

PM-KISAN, Kisan Credit Card (KCC), Interest Subvention Scheme.

Insurance & Risk Management

PM Fasal Bima Yojana (PMFBY).

Infrastructure Development

PM Krishi Sinchai Yojana (PMKSY).
Agriculture Infrastructure Fund.
Grameen Bhandaran Yojana (storage).

Market Reforms

e-NAM for digital trading.
Farmer Producer Organizations (FPOs).

Sustainability Initiatives

Organic Farming Mission.
Paramparagat Krishi Vikas Yojana.
National Mission on Sustainable Agriculture (NMSA).

Allied Sector Support

Blue Revolution (fisheries).
Rashtriya Gokul Mission (dairy).
Horticulture Mission.

🌿 Technology & Innovation in Agriculture

Digital Agriculture

Drone technology for spraying.
AI and IoT for precision farming.
Satellite-based weather forecasts.

Mechanization

Farm machinery subsidies.
Custom Hiring Centres.

Biotechnology

GM crops debate in India.
Hybrid varieties improving yields.

Agri-Startups

Rise of agri-tech startups in logistics, farm advisory, and e-commerce.

🌱 Agriculture & Sustainable Development

Sustainable Development Goals (SDGs):
Agriculture linked with zero hunger, poverty reduction, climate action, and biodiversity conservation.
Shift towards:

Organic farming.
Climate-smart agriculture.
Natural farming (Zero Budget Natural Farming – ZBNF).

🌾 Agriculture in GS Mains: Key Themes

Role of agriculture in poverty alleviation and inclusive growth.
Agrarian distress and farmer suicides.
Doubling farmers’ income (target by 2022, extended further).
Agricultural marketing reforms and APMC Act.
MSP system: merits and demerits.
WTO & agriculture: subsidies and trade disputes.
Climate change impact on Indian agriculture.
Food processing sector: opportunities and challenges.

🌱 Way Forward

Diversification towards horticulture, fisheries, and animal husbandry.
Technological Upgradation with AI, blockchain, drones.
Market Reforms to ensure fair prices for farmers.
Water Management with micro-irrigation and watershed development.
Strengthening FPOs & Cooperatives for collective bargaining.
Climate Resilience through crop insurance, resilient varieties.
Rural Infrastructure: storage, cold chains, transport.
Policy Consistency to ensure farmer confidence.

🌿 Conclusion

Agriculture in India is not just an economic activity—it is a way of life and culture. While its share in GDP has declined, it remains crucial for employment, food security, and social stability. For India to achieve inclusive and sustainable growth, agriculture must transform into a modern, resilient, and market-driven sector. The focus must shift from “food security” to “farmer prosperity”.

❓ Top 10 FAQs on Agriculture in Indian Economy

1. What is the role of agriculture in the Indian economy?

Agriculture provides livelihood to nearly 45% of India’s workforce, contributes around 16-18% of GDP, ensures food security, supplies raw materials to industries, and supports rural development.

2. Why is agriculture called the backbone of India?

Because it ensures food security, generates rural employment, supports industries, and stabilizes the economy. Despite the rise of services, agriculture sustains rural India.

3. What are the main problems of Indian agriculture?

Key problems include low productivity, fragmented land holdings, dependence on monsoons, poor irrigation, price volatility, post-harvest losses, rural indebtedness, and climate change.

4. What is the contribution of agriculture to India’s GDP?

At independence, agriculture contributed over 50% of GDP. Today, it contributes around 16-18%, showing structural transformation while still employing nearly half of the population.

5. What is the Green Revolution in India?

A movement in the 1960s-70s that introduced high-yielding varieties (HYVs) of seeds, fertilizers, irrigation, and mechanization, leading to self-sufficiency in food grains.

6. What are the government schemes for agriculture?

Important schemes include PM-KISAN, PMFBY, PMKSY, e-NAM, Agriculture Infrastructure Fund, Organic Farming Mission, and Rashtriya Gokul Mission.

7. How does climate change affect Indian agriculture?

Climate change causes erratic rainfall, floods, droughts, and rising temperatures, leading to reduced yields, pest attacks, and food insecurity.

8. What is MSP and why is it important?

Minimum Support Price (MSP) is a price guarantee for farmers to ensure fair returns and protect them from price volatility. However, its effectiveness is debated.

9. How is technology changing Indian agriculture?

Technology is enabling precision farming, drone use, AI-based advisory, satellite monitoring, biotechnology, and agri-startups, improving efficiency and farmer income.

10. What is the future of agriculture in India?

The future lies in climate-resilient, technology-driven, market-oriented, and sustainable farming, with emphasis on farmer prosperity, diversification, and global competitiveness.

🌾 Agriculture in Indian Economy – MCQs with Explanations

1. Which sector is the largest employer in India?

A) Industry
B) Services
C) Agriculture
D) Construction
Answer: C) Agriculture
👉 Agriculture employs nearly 45% of India’s workforce, making it the largest employment provider despite its declining share in GDP.

2. What is the present contribution of agriculture to India’s GDP?

A) 50%
B) 25%
C) 16-18%
D) 10%
Answer: C) 16-18%
👉 Agriculture’s share in GDP has fallen from 50% at independence to about 16-18%, showing structural transformation of the Indian economy.

3. Which revolution made India self-sufficient in food grains?

A) White Revolution
B) Green Revolution
C) Blue Revolution
D) Golden Revolution
Answer: B) Green Revolution
👉 The Green Revolution (1960s) introduced HYV seeds, fertilizers, and irrigation, ensuring food grain self-sufficiency, mainly in wheat and rice.

4. Operation Flood is related to:

A) Wheat production
B) Cotton cultivation
C) Dairy sector
D) Fisheries
Answer: C) Dairy sector
👉 Operation Flood launched in 1970 transformed India into the world’s largest milk producer, also called the White Revolution.

5. Which crop is most associated with the Green Revolution?

A) Maize
B) Wheat
C) Sugarcane
D) Cotton
Answer: B) Wheat
👉 The Green Revolution first succeeded in wheat production, particularly in Punjab, Haryana, and western Uttar Pradesh.

6. Which system was abolished through land reforms?

A) Ryotwari
B) Mahalwari
C) Zamindari
D) Iqta system
Answer: C) Zamindari
👉 Post-independence land reforms abolished the Zamindari system to protect tenants and redistribute land for equity.

7. Which institution maintains India’s buffer stock of food grains?

A) NABARD
B) FCI
C) RBI
D) ICAR
Answer: B) FCI
👉 The Food Corporation of India (FCI) procures food grains at MSP and maintains buffer stocks for the Public Distribution System (PDS).

8. The major issue in Indian agriculture today is:

A) Overproduction
B) Low productivity
C) Lack of farmers
D) Excess mechanization
Answer: B) Low productivity
👉 Indian agriculture suffers from low per hectare yield, much below global averages, due to poor irrigation, technology gaps, and fragmented landholdings.

9. PM-KISAN scheme provides:

A) Fertilizers at subsidy
B) Minimum Support Price
C) Direct income transfer
D) Crop insurance
Answer: C) Direct income transfer
👉 PM-KISAN provides ₹6,000 annually in three installments to small and marginal farmers via Direct Benefit Transfer (DBT).

10. The PM Fasal Bima Yojana deals with:

A) Irrigation
B) Fertilizer subsidy
C) Crop insurance
D) Mechanization
Answer: C) Crop insurance
👉 PMFBY provides affordable crop insurance, covering losses due to natural calamities, pests, and diseases.

11. Which scheme promotes organic farming?

A) PMKSY
B) PMFBY
C) Paramparagat Krishi Vikas Yojana
D) Operation Green
Answer: C) Paramparagat Krishi Vikas Yojana
👉 This scheme promotes organic farming practices and reduces chemical input use for sustainable agriculture.

12. Which crop is linked with the White Revolution?

A) Rice
B) Milk
C) Sugarcane
D) Pulses
Answer: B) Milk
👉 The White Revolution significantly boosted India’s milk production, making it the largest global producer.

13. Which factor makes Indian agriculture highly vulnerable?

A) Dependence on irrigation
B) Dependence on monsoon
C) Large landholdings
D) High mechanization
Answer: B) Dependence on monsoon
👉 Over 50% of Indian agriculture is rainfed, making farmers vulnerable to monsoon fluctuations and climate change.

14. e-NAM is related to:

A) Employment guarantee
B) Digital agriculture marketing
C) Crop insurance
D) Fertilizer subsidy
Answer: B) Digital agriculture marketing
👉 e-NAM (Electronic National Agriculture Market) integrates APMCs across India into a unified online trading platform.

15. Which is the largest exported agricultural commodity of India?

A) Cotton
B) Rice
C) Sugarcane
D) Tea
Answer: B) Rice
👉 India is the largest exporter of rice globally, contributing significantly to its agricultural trade.

16. What is the key aim of Doubling Farmers’ Income initiative?

A) Only increase productivity
B) Only reduce costs
C) Increase farmer prosperity
D) Reduce farmer population
Answer: C) Increase farmer prosperity
👉 The initiative focuses on productivity, diversification, marketing, technology, and sustainability to double farmer income.

17. Which sector provides raw material for cotton textiles?

A) Fisheries
B) Forestry
C) Agriculture
D) Mining
Answer: C) Agriculture
👉 Agriculture provides raw materials like cotton, jute, sugarcane, oilseeds, vital for industries.

18. What is MSP in Indian agriculture?

A) Market Selling Price
B) Minimum Support Price
C) Maximum Selling Price
D) Marginal Support Price
Answer: B) Minimum Support Price
👉 MSP is a government-fixed price to ensure farmers get fair returns, reducing distress sales.

19. Which is NOT an allied sector of agriculture?

A) Fisheries
B) Animal husbandry
C) Horticulture
D) Shipbuilding
Answer: D) Shipbuilding
👉 Agriculture’s allied sectors include dairy, poultry, horticulture, fisheries, but not shipbuilding.

20. Which type of farming is promoted under Zero Budget Natural Farming (ZBNF)?

A) Chemical farming
B) Organic and natural farming
C) Industrial farming
D) Mechanized farming
Answer: B) Organic and natural farming
👉 ZBNF reduces chemical usage, relying on natural inputs like cow dung, bio-fertilizers, and crop diversity.