Agriculture vs Manufacturing in India


India, the growing economy has one of the biggest population in the world relies heavily on its extensive manpower for economic development, whose major contributors are the industries about we would be talking about. One is the agricultural sector, which has been the backbone of the nation’s growth since 1947. While the other being the manufacturing sector which came into the picture because of the modernization of Indian policies after 1991. But this continuous transition for India from becoming a ‘traditional’ to more ‘advanced’ and ‘modern’ has lead to a constant imbalance between both these sectors. So, let’s have a brief view of these sectors.

Agriculture Sector:

The agriculture sector contributes to over 15% of the GDP of India. While it’s the absorption of people for employment is 58% of the population. If we talk only about fruits, India comes up as the second-largest contributor to global fruit production. India is also proud of the fact that it produces a trade surplus of 7.68 and has been increased to 13% in the year 2014-15.

Manufacturing Sector:

The manufacturing sector was introduced in India when modernization and LPG policies came into the picture. The manufacturing sector has been developing at a faster pace in our country. This sector is also the highest and most potential holding contributor to the Foreign Direct Investment (FDI) which has been a major requirement for the country. This sector contributes to over 29 % of GDP. The employer contribution is approximately 27% which is increasing gradually.

Constraints in the Agricultural sector:

As seen earlier, the agricultural sector’s less contribution to the GDP as compared to that of the manufacturing industry shows the presence of constraint in this sector:

  • Fragmented lands: Initially, when technological development was not there in the agricultural sector, the lands were fragmented between family members as the land was associated with wealth or income. But now these fragment lands make it impossible to introduce technologies as they need more land and more storage space.
  • Bottle-necked supply chain: This is a problem that has been sustaining a long time. The middlemen in the farming supply chain are greedy enough to purchase more products at less price. This leads to farmers, who are selling their crops at a distressed sale or at prices where they receive very less or hardly any type of profit. This diminishes their income and also leads to the next problem.
  • The transition from Rural to Urban: Due to less income and lack of employment opportunities in the rural sector, many farmers tend to leave and move to urban cities to earn more for their families.
  • Lack of effective irrigation facilities: In India, farmers heavily rely on rain and weather as the sole way to provide water to their crops. This leads to distress and farmer suicides as their sole income provider crops get damaged, during extreme weather conditions.
  • Lack of awareness towards various produces: Indian soil can grow many different types of products on land. But farmers are unable to know this as they are not made aware of this. Sometimes, they are even resistant to change in crops which makes them limited to a single product only.

Constraints in the Manufacturing sector:

Despite being one of the biggest contributors to the GDP, this industry also faces the following issues:

  • Lack of meeting the demand and supply: India being in a transitional economic state consists of the population who are having less disposable income. That makes no room for product manufacturing which has high capital values. But the manufacturing of products is made more capital intensive which creates an imbalance between the demand and supply of the Indian population.
  • Quantity present, quality absent: Despite being some of the most populated and highest manpower holding countries, India fails to offer quality labor to the manufacturing sector. The skills and knowledge required for the tasks to be performed at manufacturing are quite essential for any manufacturing company to earn profits from. Hence, the scenario is created where workers don’t have jobs and factories don’t have enough workers to bring good results.
  • Less amount of Research and Development: Contribution to R&D by Government was over 9%, which is very less as compared to that of developed nations like the USA and China. This causes a lot of less opportunity for the skilled labors of our country to work on new ideas and develop their innovations & startups efficiently and effectively.

Government has been facing the issue in maintaining a balance between both these sectors as they are directly connected while some of the examples are mentioned below:

RiceRice crackers, snacks, vermicelli, flour, etc.
WheatFlour, instant noodles, bread, etc.
Fruits and vegetablesJuices, chips, jams, etc.
Plants(wood of trees or timber)Paper, books, furniture, etc.
Cotton and rubberTextile and medical gear.
Whole spicesSpice blends, Ayurvedic medicines, etc.

Hence, if any of the two sectors, not maintained well, there shall be a major fall in the development of the country. Hence, the government has taken many initiatives to offer a boost to the overall growth of the sector.

Government initiatives were taken for both sectors:

Agricultural sectorManufacturing sector
Rationalization of food and fertilizer subsidies for the farmers, to offer help as well as to offer them a chance to experiment on different or hybrid farming.Make in India initiative was taken which offers more opportunity to the people who interested in manufacturing Indian based products. This might increase R&D investment effectively.
Awareness is offered to the farmers in types of the crop, fertilizer, and farming techniques for more production.The value added by MSME(Medium and Small Enterprises) should be heavily considered by offering them financial help in terms of loans at a low rate of interest.
Regulation of supply chain is done extensive basis for offering help to the farmers from the greed of the middlemen in the chain.Absorption of labor in labor-intensive divisions like textile must be induced and this was done by textile communities all over India this year to offer employment to as many people as possible.
Kisan Sinchan Yojana was introduced to offer knowledge to the farmers’ awareness of irrigation methods as the majority of the farming is on fragmented lands with dependence on rains.Skill India initiative was developed to offer skills and knowledge of various jobs to the people which would increase the number of skilled labor required for performing tasks at a manufacturing plant.
Technical knowledge courses on agriculture are offered to the rural population to control the transition of the farmers from rural to urban areas.


Overall, both the sectors are necessary not only for the Indian economy as well as to each other as mentioned above and the Government needs to emphasize both of these sectors equally to obtain a good balance between these two sectors and to make India a developed nation.

Author: Shraddha