ECONOMIC HIGHLIGHTS

New Delhi, 23 March 2006

Agro-Industries

KEY TO INDIA’S ECONOMIC PROGRESS

By T.D. Jagadesan

The widely acclaimed 2006 Budget of Union Finance Minister P. Chidambaram has unfolded, among other things, a nine-flagship programme for the social sector in which rural employment claims pride of place.  Agro-industries are capable of fostering rural employment and therefore a fillip to them will go a long way to achieve desired results.

In this context, it may be pointed out that in the last week of February, the Chinese Government announced an ambitious rural policy programme in which rural infrastructure projects will receive large doses of funds in that country’s new Five Year Plan.

Against this wide background it goes without saying that a new-found impetus to agro-industries will most certainly achieve our objectives in view.  Let us discuss the broad contours of our agro-industries for the benefit of entrepreneurs, as well as the egg-heads of Yojana Bhavan.

Industries manufacturing input for agriculture or processing agricultural output or those industries, which are supported by agricultural goods, are classified as agro-industries.  The agro-industries provide the essential input, as also function as an outlet for the agricultural produce.

In the present economic scenario, agro-industries constitute the backbone of an economy. These industries have become an invaluable weapon in bringing out integrated socio-economic order in global economy  in general and economies of developing countries in particular, like that of India.  The role and the contribution of agro-industries is significant both in respect of employment and value addition by manufacturer, not only in the developing economies, but also in highly developed economies of the world.

Economic progress of developing economy like India’s is dependent on meaningful integration of its agriculture with industry. The emancipation of rural people from disadvantages arising out of economic imbalances would depend upon how best we diversify rural economy since rural people constitute more than 70 per cent of the population. Taking away a few millions of people from villages to industrial areas cannot remove the fundamental constraints of increasing pressure of population on agriculture.

Industrialization, as is well known, feeds upon agricultural surpluses.  Unless the farmers produce more than their needs, they will have nothing to sell and, hence, nothing to buy.   Increase in agricultural output furnishes increase in purchasing power.  Industrialization cannot precede, but will only follow increased agricultural output.  Increase in productivity of land is thus a vital prerequisite for diversification of rural economy.

Rise in productivity of land in turn depends upon structural land and technological changes in agriculture. Agro-industries are considered the most vital, strategic and most suitable agencies for achieving this.  Experience has shown that rural areas, where agro-industries have come up in a big way, have set in motion forces that change the socio-economic structure of the areas.

It means development of agro-industries on the one hand and of the entire group of industries to cater to the needs of the masses in as decentralized a fashion as possible, on the other.  This is not merely to raise the level of material living but also to promote the basic and essential values of social cohesion, unity and inner strength in the rural economy.

Imperfections in the system of processing and marketing of agricultural produce constitute a significant restraint on agricultural output. There is, therefore, immediate need for developing an efficient, effective and orderly processing and marketing system. Such a system has to render services efficiently, effectively and ensure incentives to the farmers for better quality and more output.

Agro-industries also help to strengthen other cooperative services, mainly supply of agricultural credit, marketing and storing etc.  In a subsistence economy like India, integration of cooperative societies with agro-industries is of paramount significance.

Excess dependence on agriculture forms a vicious circle and leads to unemployment, low productivity, low income and consequently low savings and low investment i.e., burden of providing capital for economic progress and emancipation, falls heavily on agriculture alone.  Therefore, we must bear in mind the fact that there cannot be prosperity and progress in agriculture without prosperity and progress in industry.

Agro-industries set-up has to be designed in such a way that they operate more as catalytic agent for development of infrastructure that would bridge the gap between rural and urban India.  These industries need to be looked upon primarily as an agency to pave the way for occupational shifts and for creating new social groupings, which would from the basis for creation of necessary social, cultural and psychological premises for modern industrial India.

Industries recline on agriculture, and the future will witness greater fusion of industry and agriculture, and one of the instruments for bringing this fusion will be agro-industries.  In this process of integration, the agro-industries could render significant services by modernizing the outlook of the rural population gradually.

Apart from providing additional work in the village, these industries together with other cottage industries facilitate the expansion of creative skill and maintain the traditional arts, skills and efficiency of the artisans. Depending on the potential of utilizing science and modern technology, these industries promote input-output relations.---INFA

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