Theories of structural change suggest that the share of the agricultural sector will fall in course of economic growth, while agricultural incomes are expected to rise. This paper examines the hypothesis and analyses the role of agriculture in Gujarat. Agricultural production is still fluctuating, resulting in low and fluctuating agricultural incomes. High growth rates in other sectors have not generated commensurate growth in agricultural incomes. Significant constraints on private investment in agriculture exist, creating an efficiency case for public investment. The issue of stagnant agricultural incomes presents an argument for public investment in agriculture on distributive grounds.
