Contribution of agriculture in economic growth: A case study of West Bengal (India)

Abstract

Economists have argued that role of agriculture is pivotal for economic development of the nation. Worldwide studies have shown that agriculture sector is more effective in reducing hunger and poverty than other sectors. This study is an attempt to ascertain the importance of agriculture in the economic growth of West Bengal. Agriculture, being the source of livelihood and supplier of raw material to various industries, triggers economic growth of the nation. This paper exhibits how agriculture has contributed to West Bengal's economic excellence using empirical data and a cointegration analysis. The role of agriculture is examined on four contributions: (a) product contribution (forward linkage), (b) market contribution (backward linkage), (c) factor contribution, and (d) foreign exchange contribution. The composition and growth of the sectors and its association with other sectors is analyzed using time series analysis. Findings of the study revealed that agriculture sector has appeared as an important contributor to drive West Bengal economic growth even after declining share in gross state domestic product over the years. Empirical analysis reveals that agriculture is having long run causal linkages with industry, services, and overall economic growth in West Bengal.

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“…In order for this change to happen, education, engineering and many branches of science are also needed besides agriculture. This assessment is supported by other studies (Aydogan & Vardar, 2020; Khan et al, 2020). At the same time, this change will enable agriculture to play an important role in exports, as in another study with similar findings (Hwa, 1988;Dawson, 2005;Michler, 2020) The limitations of this study measure the discussion about the role of agriculture in promoting economic growth in selected countries with the variables used in the model.…”

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“…The contribution of agricultural productivity to economic growth is strongly significant. Efforts to increase labor productivity in agriculture provide more labor input for the industrial sector while also creating an increase in demand for agricultural machinery and equipment produced by the industrial sector (Khan et al, 2020). It also increases foreign exchange earnings via rising agricultural exports.…”

“…They came to the same conclusion as Oyakhilomen and Zibah (2014). In their recent study, Khan et al (2020) found that the agricultural sector positively impacts other sectors' economic growth in West Bengal. They concluded a long-run causality between the agricultural and industrial sectors, the service sector, and overall economic growth.…”

“…These four ways are product contribution, market contribution, factor contribution, and foreign exchange contribution. According to Khan, Jamshed, and Fatima (2020), product contribution refers to the growth of product per capita, while market contribution represents the rising demand for industrial inputs such as fertilizer, pesticide, farm machinery, etc. Factor contribution refers to the shift of labor in the agricultural sector to non-agricultural sectors.…”

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“…Global studies have revealed that agriculture division is more effective in reducing hunger and poverty than other sectors. [16] In [17] demonstrate that the number of traditional small farms strongly declines, being replaced by modern and larger farms. In [18] they instructed that agriculture is undergoing a fourth revolution triggered by the exponentially increasing use of knowledge and communication technology (ICT) in agriculture.…”