Day 5 – Q 3. Agriculture and rural industry could be India’s strength post COVID-19. Do you agree? Substantiate your response.

  • IASbaba
  • June 15, 2020
  • 0
GS 3, Indian Economy, TLP-UPSC Mains Answer Writing
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3. Agriculture and rural industry could be India’s strength post COVID-19. Do you agree? Substantiate your response.

कृषि और ग्रामीण उद्योग COVID-१९ के बाद भारत की ताकत हो सकते हैं। क्या आप सहमत हैं? आपकी प्रतिक्रिया को सारगर्भित करें।

Demand of the question:

It expects students to write about whether agriculture and rural industry will be India’s strength in economic revival or it will play marginal role in post COVID-19 India with examples and appropriate data. 


India is predominantly a rural country. As per the 2011 Census, 68.8 per cent of country’s population and 72.4 per cent of workforce resided in rural areas. Rural economy constitutes 46 per cent of national income. Despite the rise of urbanization more than half of India’s population is projected to be rural by 2050. Thus growth and development of rural economy and population is a key to overall growth and inclusive development of the country in post COVID-19 India.


Criticality of the rural sector in the economy:

  • As per NITI Aayog report, more than half of Indian industrial production comes from the rural areas. Rural construction also accounts for nearly half of the total building activity in the country. The value of rural services is about a quarter of the total services output. 
  • Agriculture has accounted for less than half of total rural output since the turn of the century. On the other hand, National Sample Survey Office (NSSO) data shows that more than one-fifth of rural households with self-employment in agriculture have income less than the poverty line.
  • Agriculture labour productivity in terms of gross value added (GVA) in India is less than a third of that in China and 1% of that in the US. Rural sector is net importer vis-e-vis urban areas which indicate outward flow of money. 

Agriculture and Rural industry as engine of economic recovery:

  • Renewed focus on NREGA: The government’s commitment to provide an additional Rs. 40,000 crore allocation for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) for FY21 will help to spur rural demand. 
  • Investment in farm infrastructure: NABARD will facilitate Rs 1 lakh crore finance for funding Agriculture Infrastructure Projects at farm-gate and aggregation points like Primary Agricultural Cooperative Societies, Farmers Producer Organizations, Agriculture entrepreneurs, Startups, etc. Local initiative for building community infrastructure, like water harvesting, canal irrigation network, huts for community market centers etc. may generate employment opportunities. 
  • Opportunity for Indian agriculture to tap world markets: As the global supply chains for agricultural products remains paralyzed in global market, Indian product can make headways as Indian rural sector is not as badly affected as the North American or European rural sector. 
  • If there is no universal access to a Covid-19 vaccine for another 18-24 months, then businesses in safer sectors and locations are likely to do well, here rural sector might act as net gainer. 
  • In rural India, where it is naturally easier to have physical distancing and outdoor work. This may shift the focus from urban markets to rural markets, for both demand and production.
  • Surplus labour: Livestock, fisheries, dairy, vegetables, fruit and food processing are more labour-intensive and high value-yielding. After many decades of neglect in research and development, lack of market access, on-off policies for exports, and market distortions, the present adversity may be a timely opportunity for this sector. Recently, Finance Minister informed allocation of Rs 20,000 crore for fishermen through Pradhan Mantri Matsya Sampada Yojana (PMMSY). This will include Rs 11,000 crore for activities in marine, inland fisheries and aquaculture while Rs. 9000 crore to be spent on developing fishing Harbours, cold chain, markets etc.
  • Self reliant rural sector: Local production of items of local requirement, the local weavers, artisans and craftsmen may establish micro enterprises and form local community marketing cooperatives. Finance minister announced Rs 10,000 crore scheme for the formalization of Micro Food Enterprises (MFE). This will help nearly 2 lakh MFEs to achieve technical up-gradation to attain FSSAI food standards, build brands and marketing.  
  • There may be community campaigns for buying local products, as far as possible, replacing some of the items coming from urban industrial sectors.

However, rural employment has shrunk after 2005 while the urban areas have not been able to absorb the millions who are leaving the farm. Rural India is incapable of absorbing the estimated 23 million interstate and intrastate migrant labours who might return home from urban areas due to the COVID-19 lockdown.

It would need support of a suitable policy framework and reforms in pricing policy, tax, market access, credit and rural infrastructure, like warehouses and cold storage. The next two years or so of how we learn to live with corona virus can redesign the economy towards safer and more sustainable production and consumption, with agriculture and the rural economy as its strength, rather than its weakness.


In this economic pandemic, the lifeline of Indian economy lies in the transformation of the rural sector into a matrix of local economies, striking a balance between their diversified local production for local needs and surplus trading.

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