India’s economy is predominantly rural in character. This is evident from the fact that in 2011, nearly 69 per cent of its population lived in its nearly 0.64 million villages and about 63 per cent of the rural population was engaged in agriculture and allied activities as cultivators and agricultural labourers. The rural sector is composed of two main sub-sectors, that is, the agricultural sub-sector and the non- agricultural sub-sector. The agricultural sub-sector, comprising agriculture and allied activities, is most prominent. In 2018-19, it contributed about 16 per cent of India’s national income. It is also an important source of foreign exchange and raw materials for India’s major agro-industries and provides a large market for industrial products.
Despite the impressive progress that India has made since independence in the field of science and technology, the rural sector and rural people remain grossly underdeveloped with about 270 million (about 26 per cent of India’s rural population) of the rural people living below the poverty line in 2011-12 and 31 per cent being illiterate in 2011.
The farm sector is characterized, inter alia, by the preponderance of small and scattered rural enterprises, lack of basic infrastructure, low productivity, high incidence of poverty and indebtedness, and excessive dependence on weather and climatic factors, and the consequent high degree of risk and uncertainty and high incidence of farmer suicides.
The capital requirements of agricultural and rural development are enormous. Capital is required not only for on-farm investment to improve the production apparatus and to provide various farm inputs and services but also for a vast array of supportive infrastructural facilities, such as power, roads, transportation, communication, markets, storage, warehouses, education, training, research and extension. Capital is also required for the creation of non-farm jobs through the provision of factories and their complementary machinery and equipment.
Duly recognizing the need for giving a big push to the farm sector, particularly in the context of the current socio-economic crisis engendered by the infestation of COVID- 19 virus, the Union Finance Minister Nirmala Sitharaman announced on May 15, 2020, a huge relief package of Rs. 1.60 lakh crore for agriculture for the year 2020-21. This is in addition to an allocation of Rs. 30,000 crore for emergency working capital funding for refinancing farmers through NABARD and Rs. 2.0 lakh crore as concessional credit boost to 2.5 crore farmers through Kisan Credit cards.
This big push to the agricultural sector is in conformity with the theory of “Big Push” propounded by Rosenstein-Rodan in 1970 and briefly narrated in our book, Rural Development: Principles, Policies and Management (Sage 4e, 2016, p.76). According to this theory, there is a minimum level of resources that must be devoted to a development programme if it is to have any chance of success. The big push would help the agricultural sector enter into the self-sustaining growth phase.