Agriculture reforms: Path to GDP growth - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Agriculture reforms: Path to GDP growth

Dec 26, 2001

It is a widely known fact that 700 m of India’s billon-strong population is dependent on agriculture, but the sector contributes to less than a quarter of India’s GDP. More worrying is the fact that this share is falling over the years as shown in the chart below. This clearly suggests that reforms in the sector have been largely neglected. Agricultural reforms (particularly legislative reforms) could result in massive GDP growth of the country. The tenth (2002-07) five-year plan is just round the corner. While we are finding it hard to sustain a growth of 5%, the targeted GDP growth for the tenth five-year plan is around 8%. Apart from a strong GDP growth, agriculture reforms would mean broad based wealth creation opportunity and equal wealth distribution. Generally, India’s per capita consumption levels are amongst the lowest in the world. Only a broad based opportunity creation could create a chain demand for other industries thus raising our consumption levels.

The problems that agriculture currently faces are fragmented land holdings, low investments in technology, complex legislative structure and most importantly, inefficient supply chain system. For example, various states currently limit produce from an area to be sold through the ‘mandi’ in that area, limiting free movement of agriculture produce across the country. Further, a food processor cannot directly approach a farmer and is required to go through the ‘mandi’ route to buy his requirement, which results in inefficient and costly supply chain.

It is high time we realize the importance of agriculture in overall, sustainable economic growth. The finance minister has time and again assured his commitments of kick starting reforms in the sector. Though some headway has been made in the last budget by offering incentives for the food processing industry, a lot more is required to be done and we have little time left. A case in point here is corporate/ contract farming which has already shown early success. We would discuss this issue in our next article.

Equitymaster requests your view! Post a comment on "Agriculture reforms: Path to GDP growth". Click here!

  

More Views on News

Ride the Indian Real Estate Revival with this 'Different' Smallcap Stock (Profit Hunter)

Mar 23, 2021

Affordability in the housing segment has never been so good in last one and a half decade. Here's how you could make the most of it...

My Latest Stock Recommendation (Fast Profits Daily)

Oct 9, 2020

How I picked an exciting stock using trends from both the commodity and equity markets.

Data is the New Oil but It's Also the New Sugar. Here's How to Fight it (Profit Hunter)

Jun 1, 2020

Is too much data hurting your quest for market beating returns?

Quantum Mutual Fund: Hum woh nahi hain (The Honest Truth)

Apr 29, 2020

Ajit Dayal on how the mutual fund industry robs you of your wealth.

This One Trigger Could Turnaround Yes Bank's Stock Price (The 5 Minute Wrapup)

Oct 16, 2019

If Yes Bank manages to do this, it could be the start of a much-needed turnaround for the bank.

More Views on News

Most Popular

Hotel Stocks Will Reward Investors (Fast Profits Daily)

Jun 8, 2021

This is why I'm bullish on the hotel and hospitality sector.

My 'Unlock' Investments (Fast Profits Daily)

Jun 11, 2021

The best unlock investments you can make in the market.

The Most Visible Sign of India's Revival is on Two Wheels (Profit Hunter)

Jun 9, 2021

Investing in the best stocks could result in wealth compounding on a massive scale.

How I Discovered a 400-Year-Old Open Secret to Extreme Wealth (Profit Hunter)

Jun 11, 2021

Charlie Munger's open secret about investing success.

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms

MARKET STATS