ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Hans P Binswanger-MkhizeSubscribe to Hans P Binswanger-Mkhize

Double-Digit Inclusive Growth

India aspires for a double-digit growth rate. For that, agriculture will have to grow at least 4% annually to support gross domestic product growth rates in excess of 8% if we are to constrain imports at slightly higher levels than at present. Such agricultural growth can be attained with a total factor productivity growth rate of 2%, along with developing the net irrigated area to 90 million hectares. But in the past two decades, agricultural growth has been less than 3% and productivity growth has been lower than 2%. Surface irrigation has not grown and groundwater is being overexploited in many parts of the country. Achieving the required agricultural growth for double-digit growth of the economy is a signifi cant challenge.

The Stunted Structural Transformation of the Indian Economy

India's economy has accelerated sharply since the late 1980s, but agriculture has not. The rural population and labour force continue to rise, and rural-rban migration remains slow. Despite a rising labour productivity differential between non-agriculture and agriculture, limited rural-urban migration and slow agricultural growth, urban-rural consumption, income, and poverty differentials have not been rising. Urban-rural spillovers have become important drivers of the rapidly growing rural non-farm sector, which now generates the largest number of jobs in India. Rural non-farm self-employment is especially dynamic with farm households diversifying into the sector to increase income. The bottling up of labour in rural areas means that farm sizes will continue to decline, agriculture will continue its trend to feminisation, and part-time farming will become the dominant farm model.
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