We explore till 2040 the role of technical change in agriculture, irrigation and concern for food security in rapid economic growth in India. India aspires to achieve double-digit growth. For a densely populated country of 1.2 billion people with growing incomes meeting its increasing and diversifying food needs will be a challenge. We explore this using a multi-sector, inter-temporal optimising model with 20 expenditure classes, 10 rural and 10 urban, each with its own linear expenditure system derived from an underlying non-linear demand system. We also assess the diversification of demand that is likely to occur and impact on poverty under different alternatives. At least a 4 per cent growth rate of agricultural gross domestic product (GDP) is needed to support GDP growth rates in excess of 8 per cent for which a slightly optimistic agriculture TFPG growth rate of 2 per cent along with a slightly optimistic development of irrigation potential to 90 million hectare (Mha) (net) is needed.
JEL Classification: C61, C67, O13, O21, O33Keywords India, economic growth, agricultural growth, technical change, irrigation, import restrictions
I. Background and Importance of the IssuesThe Indian economy attained a growth rate exceeding 7.5 per cent from 2000 to 2010, at a rate exceeding 9 per cent from 2004 to 2007 and 8.5 per cent from 2004 to 2010. The election of Narendra Modi as prime minister has created much optimism that India can attain a double-digit growth rate and sustain it for few decades like China.
Corresponding author:Kirit S. Parikh, Modelling Group at Integrated Research and Action for Development (IRADe), C80 Shivalik, Malviya Nagar, New Delhi 110017, India. E-mail: kparikh@irade.org 116
The Indian Economic Journal 64(1-4)The role of agricultural growth in economic growth has been a much-debated issue in India. Dantwala (1976), Rudra (1967), Chakravarty (1987), Taylor (1992) and Ravallion and Datt (1996) among others have explored the impact of pricing and redistribution policies and sectoral composition on the poor. The 12th Five Year Plan (2012-2017) targets a growth rate of 4 per cent for agriculture. Of course, for a tradable sector, there is no minimum growth rate required for any particular growth rate of the economy. However, agricultural growth is important for India as it still employs 50 per cent of the rural labour even though its share in GDP was only 16 per cent at constant prices in 2011-2012. Thus it plays an important role in determining the level of poverty.Thus an important question that we address is, 'What are the implications of agricultural growth for economic growth and poverty over the next three decades? ' Continued population growth and double-digit economic growth that is inclusive will drive up food demand rapidly and change its composition. Significant diversification in agricultural production has taken place over time. India has become the world's largest producer of milk and pulses. More than half the value added in agriculture in the triennium ending (TE) [200...