Report of the Expert Group on Agricultural Indebtedness

<strong>Expert</strong> <strong>Group</strong> on Agricultural IndebtednessII.STRUCTURAL PROBLEMS AND RESOURCE STRESSPopulation Pressure on Agriculture1.8 Most developing countries are characterised by excessive dependence <strong>of</strong> population onagriculture and low productivity in agriculture. In 2004-05, from <strong>the</strong> estimated population <strong>of</strong> 1092million in India, 71.4 per cent were in rural areas. The estimated labour force was 467 million,and out <strong>of</strong> this, 348 million (74.61 per cent) lived in rural areas. Of <strong>the</strong> total workers (measuredin terms <strong>of</strong> Usual Principal and Subsidiary Status (UPSS) in 2004-05), 56.5 per cent worked inagriculture. Of <strong>the</strong> rural workforce <strong>of</strong> 341 million, as many as 247 million (72.5 per cent) wereengaged in agriculture. These figures should bring home <strong>the</strong> true nature <strong>of</strong> population andemployment burden on agriculture.1.9 Over <strong>the</strong> years, <strong>the</strong>re has been a distinct shift in terms <strong>of</strong> <strong>the</strong> sectoral distribution <strong>of</strong> GDP,but <strong>the</strong> process <strong>of</strong> labour force shift has been slow. The share <strong>of</strong> agriculture in GDP declinedfrom 41.0 per cent in 1972-73 to 20.2 per cent in 2004-05 at constant 1999-2000 prices.However, <strong>the</strong> share <strong>of</strong> employment in agriculture (UPSS) declined only from 73.9 per cent in1972-73 to 56.5 percent by 2004-05 (Table 1.1). The most important structural feature <strong>of</strong> <strong>the</strong>agricultural sector in India is <strong>the</strong> continuous decline in <strong>the</strong> share <strong>of</strong> agriculture in total grossdomestic product, but very slow diversification <strong>of</strong> workforce away from agriculture.Table 1.1Share <strong>of</strong> Agriculture in GDP and EmploymentYear Share <strong>of</strong> Share <strong>of</strong> Ratio <strong>of</strong> Worker Ratio <strong>of</strong> WorkerAgriculture Agriculture in Productivity in Productivity inin GDP at Employment – Agriculture to Non-agriculture1999-2000 UPSS (%) Non-Agriculture to AgriculturePrices (%)1972-73 41.0 73.9 0.26 3.921993-94 30.0 63.9 0.24 4.121999-00 25.0 60.2 0.22 4.552004-05 20.2 56.5 0.20 5.12Note : GDP denotes Gross Domestic Product and UPSS denotes Usual Principal and Subsidiary Status.Source : Central Statistical Organisation (CSO), National Accounts Statistics, Various Years and National Sample SurveyOrganisation (NSSO), Employment and Unemployment Situation in India, Various Rounds.1.10 This structural rigidity has resulted in a large and increasing gap in <strong>the</strong> per workerearnings in agriculture and non-agricultural sectors. With 56.5 per cent <strong>of</strong> <strong>the</strong> national workforcethat produces a little more than one-fifth <strong>of</strong> <strong>the</strong> GDP, <strong>the</strong> relative productivity <strong>of</strong> workers inagriculture is only one fifth <strong>of</strong> those in non-agricultural occupations and has declined from 26 percent <strong>of</strong> non-agricultural productivity in 1972-73 to 20 per cent in 2004-05.15