Contribution of agriculture in economic growth: A case study of West Bengal (India)

• Author: Waseem Khan,Mohammed Jamshed,Sana Fatima
• DOI: http://doi.org/10.1002/pa.2031
• Published date: 01 May 2020
• Date: 01 May 2020

ACADEMIC PAPER

Contribution of agriculture in economic growth: A case study

of West Bengal (India)

Waseem Khan

1

| Mohammed Jamshed

2

| Sana Fatima

3

1

Institute of Business Management, GLA

University, Mathura, India

2

Department of Management, Jamia Hamdard

University, New Delhi, India

3

Department of Economics, Aligarh Muslim

University, Aligarh, India

Correspondence

Waseem Khan, Institute of Business

Management, GLA University, Mathura, Uttar

Pradesh 281406, India.

Email: waseemdbf42@gmail.com

Economists have argued that role of agriculture is pivotal for economic development

of the nation. Worldwide studies have shown that agriculture sector is more effective

in reducing hunger and poverty than other sectors. This study is an attempt to ascer-

tain the importance of agriculture in the economic growth of West Bengal. Agricul-

ture, being the source of livelihood and supplier of raw material to various industries,

triggers economic growth of the nation. This paper exhibits how agriculture has con-

tributed to West Bengal's economic excellence using empirical data and a

cointegration analysis. The role of agriculture is examined on four contributions: (a)

product contribution (forward linkage), (b) market contribution (backward linkage), (c)

factor contribution, and (d) foreign exchange contribution. The composition and

growth of the sectors and its association with other sectors is analyzed using time

series analysis. Findings of the study revealed that agriculture sector has appeared as

an important contributor to drive West Bengal economic growth even after declining

share in gross state domestic product over the years. Empirical analysis reveals that

agriculture is having long run causal linkages with industry, services, and overall eco-

nomic growth in West Bengal.

1|INTRODUCTION

Agriculture has been the topic of discussion among the development

economists since long because of its kaleidoscopic nature and cascad-

ing effect on economy. Because of its complementing nature, agricul-

ture sector assumes greater importance in the economic growth of

the state as it provides food, fiber, and raw material to the other sec-

tors. Further, it also helps in generating employment. Such interactive

nature necessitates further interest to explore the potential of agricul-

ture in nations' development. India is predominantly an agrarian econ-

omy since independence. About 50% of the population is directly or

indirectly dependent on agriculture for their livelihood. Over a period

of 70 years, the share of agriculture sector in gross domestic product

(GDP) has declined from 55% to 14.4% in 2018–2019. The decline in

share of agriculture in GDP is mainly attributed to increase in contri-

bution of manufacturing and services sector. But still, agriculture is

among the largest employment providing sector in the economy.

Indian agriculture has been passing with different phases since

independence. Chand and Parappurathu (2011) had classified the

entire period into five phases namely: Phase I: pregreen revolution

period (1950–1951 to 1967–1968); Phase II: early green revolution

period (1968–1969 to 1985–1986); Phase III: period of wider dissemi-

nation (1986–1987 to 1996–1997); Phase IV: postreform period

(1997–1998 to 2005–2006); and Phase V: period of recovery

(2006–2007 to 2009–2010/2010–2011). The food grain production

has witnessed remarkable growth from 51 MT in 1950–1951 to 264.8

MT in 2013–2014 (Ministry of Agriculture, Government of India).

Indian agriculture was subjected the policy interventions such as tar-

iffs, quantitative import restrictions, import licensing, domestic mar-

keting controls, and export restrictions for protecting farmers'

interest.

Indian economy has passed through Harrod–Domar model to

Mahalanobis model in the first decade. India has adopted green revo-

lution and established institutions like Agricultural Price Commission

and Food Corporation of India in the mid-60s. These development ini-

tiatives have proven as stepping stone to achieve food sufficiency in

India. In 1991, economic liberalization has brought a substantial

Received: 19 July 2019 Accepted: 13 September 2019

DOI: 10.1002/pa.2031

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https://doi.org/10.1002/pa.2031