 "Growth in agriculture, industry and services sectors can go hand-in-hand: Arvind Panagariya")
Agricultural growth and the expansion of good jobs in industry and services can go hand-in-hand to bring rapid elimination of poverty and shared prosperity for all, according to Arvind Panagariya, vice chairman of NITI Aayog. He said this in his first blog post published on the newly launched website of NITI Aayog in New Delhi on May 18, 2015, while explaining the importance of job creation in industry and services for overall prosperity of the nation.
He said that the fear of losing agricultural land because of expansion in industrial and service sectors was uncalled for. Panagariya explained, “Area under non-agricultural use, which includes housing, industry, offices, roads, railways and other similar items, was only 8% in 2011-12, the latest year for which data are available. Fifteen years earlier, in 1997-98, this proportion was 7%. Accelerated growth over these fifteen years facilitated by the 1 percentage point increase in non-agricultural use of land has produced more gains in per-capita income and poverty reduction than what had been achieved over the entire fifty preceding years. Of course, even this 1 percentage point increase did not come at the expense of agriculture.”
Increased multiple cropping has allowed the gross area sown to rise from 57.8 to 59.4 percent of the total land area between 1997-98 and 2011-12. “And, of course, productivity increases allowed agricultural output to rise proportionately much more. There remains much scope for further output increase through the extension of the Green Revolution to eastern states and rain-fed regions, as emphasised by the Prime Minister,” he added.
There can be little disagreement that the fastest relief to the poor in India would come from productivity growth in agriculture, where nearly half of the workforce is employed, Panagariya said. “With the share of agriculture in the GDP at about 15 percent now, this half of the workforce is also significantly poorer than the other half, employed in industry and services. But in the longer run, the potential of agriculture to bring prosperity to a vast population remains limited,” he informed.
According to him, in countries experiencing growth rates of 6 percent or more over long periods, overwhelmingly, industry and services have grown substantially faster than agriculture. “It is in this context that the creation of good jobs in industry and services is critically important. Unless workers have the opportunity to migrate to better paid jobs in these sectors, they will be unable to fully share in the prosperity experienced by a fast-growing economy,” Panagariya said.
Citing the examples of South Korea and Taiwan, he said that during the 1960s and 1970s workers in agriculture could migrate to good jobs in industry and services, as a result prosperity was widely shared in these two countries. “The share of industry and services in employment in South Korea rose from 41.4 percent in 1965 to 66 percent in 1980 and further to 81.7 percent in 1990. Correspondingly, the employment share of agriculture fell. A similar pattern was observed in Taiwan during the 1960s and 1970s and more recently China,” explained Panagariya.
While reorienting public investment in agriculture toward productivity-enhancing items such as micro irrigation, soil cards, effective extension services and improved seeds, the government is paying special attention to creating jobs in industry and services, he said. “The Make in India campaign has provided the umbrella for many of the government’s initiatives in this context,” Panagariya added.
He said that the fear of losing agricultural land because of expansion in industrial and service sectors was uncalled for. Panagariya explained, “Area under non-agricultural use, which includes housing, industry, offices, roads, railways and other similar items, was only 8% in 2011-12, the latest year for which data are available. Fifteen years earlier, in 1997-98, this proportion was 7%. Accelerated growth over these fifteen years facilitated by the 1 percentage point increase in non-agricultural use of land has produced more gains in per-capita income and poverty reduction than what had been achieved over the entire fifty preceding years. Of course, even this 1 percentage point increase did not come at the expense of agriculture.”
Increased multiple cropping has allowed the gross area sown to rise from 57.8 to 59.4 percent of the total land area between 1997-98 and 2011-12. “And, of course, productivity increases allowed agricultural output to rise proportionately much more. There remains much scope for further output increase through the extension of the Green Revolution to eastern states and rain-fed regions, as emphasised by the Prime Minister,” he added.
There can be little disagreement that the fastest relief to the poor in India would come from productivity growth in agriculture, where nearly half of the workforce is employed, Panagariya said. “With the share of agriculture in the GDP at about 15 percent now, this half of the workforce is also significantly poorer than the other half, employed in industry and services. But in the longer run, the potential of agriculture to bring prosperity to a vast population remains limited,” he informed.
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According to him, in countries experiencing growth rates of 6 percent or more over long periods, overwhelmingly, industry and services have grown substantially faster than agriculture. “It is in this context that the creation of good jobs in industry and services is critically important. Unless workers have the opportunity to migrate to better paid jobs in these sectors, they will be unable to fully share in the prosperity experienced by a fast-growing economy,” Panagariya said.
Citing the examples of South Korea and Taiwan, he said that during the 1960s and 1970s workers in agriculture could migrate to good jobs in industry and services, as a result prosperity was widely shared in these two countries. “The share of industry and services in employment in South Korea rose from 41.4 percent in 1965 to 66 percent in 1980 and further to 81.7 percent in 1990. Correspondingly, the employment share of agriculture fell. A similar pattern was observed in Taiwan during the 1960s and 1970s and more recently China,” explained Panagariya.
While reorienting public investment in agriculture toward productivity-enhancing items such as micro irrigation, soil cards, effective extension services and improved seeds, the government is paying special attention to creating jobs in industry and services, he said. “The Make in India campaign has provided the umbrella for many of the government’s initiatives in this context,” Panagariya added.