Agriculture in a High Growth State: Case of Gujarat (1960 to 2006)

Theories of structural change suggest that the share of the agricultural sector will fall in course of economic growth, while agricultural incomes are expected to rise. This paper examines the hypothesis and analyses the role of agriculture in Gujarat. Agricultural production is still fluctuating, resulting in low and fluctuating agricultural incomes. High growth rates in other sectors have not generated commensurate growth in agricultural incomes. Significant constraints on private investment in agriculture exist, creating an efficiency case for public investment. The issue of stagnant agricultural incomes presents an argument for public investment in agriculture on distributive grounds.

I would like to acknowledge Barbara Harriss-White, Utsa Patnaik, and Indraneel Dasgupta, as well as seminar audiences at the University of Kolkata and Jadavpur University, for their guidance and useful suggestions.

Anita K Dixit (anidixit@gmail.com) is Visiting Study Fellow, Oxford Department of International Development, Queen Elizabeth House, Oxford, UK.

carved out from the earlier Bombay Province, going up to 2005-06. We also calculate the extent of structural change in the state, and undertake a correlation exercise to establish a relation between rates of growth in the three sectors – primary, secondary and tertiary. Section 2 further develops this theme by looking at price ratios of the primary sector versus other sectors. In the last, short, section, we undertake a disaggregated examination of the agricultural sector itself to see the composition of its growth.

The paper concludes that the agricultural sector still has a pivotal role to play in the overall growth of the state, in spite of its low and declining role in the NSDP. Especially in the post-liberalisation years, the relation between the agricultural and industrial sectors has grown stronger. Since commercial (and not foodgrain) crops contribute the major share of agricultural production, it is reasonable to conclude that the agricultural sector is a provider of raw materials and not of wage goods. However, the emphasis on development of commercial crops in the state has not resulted in higher incomes in the agricultural sector itself. There is therefore need for public investment in agriculture, in order to improve both productivity and incomes in the sector.

1 Shares of Three Sectors

We compare the shares of the three sectors at the Gujarat and all-India levels within a decadal framework. In 1960-61 Gujarat had a lower share of income from agriculture than India. In the 1960s and 1970s the share of the primary sector in the state tended to be stagnant, while it declined at the all-India level from 52% to 40% between 1960 and 1980-81. It was during the latter half of the 1980s that the share of agriculture in Gujarat started rapidly declining, much faster than the all-India level. From 40.8% in 1980-81 it declined

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to 27.6% in 1990-91, while at the all-India level it declined from 41% to 34% (Appendix 2, p 70). The state level share of the primary sector had fallen by 1999-2000 to 19%, and this low proportion continued thereafter. This is a result of a decline in the absolute level of real agricultural output in the years following 1999-2000, and a simultaneous increase in output in the secondary and tertiary sectors (Appendix 1, p 69).

While in India as a whole it is the services sector that has grown the fastest, the secondary sector has shown the most rapid growth in Gujarat. The marked increase in the share of the industrial sector occurred in 1986-87 when it rose to 33.1% from 27.9% in the previous year; and it remained consistently over 30% of the NSDP thereafter. On the other hand, the share of the tertiary sector in 2005-06 was 41.87%, lower than the 50% share of the sector at the all-India level.

The share of the primary as well as the secondary sectors is highly fluctuating in the state as compared to the all-India situation. Figure 1 indicates the trends of growth in the three sectors by the use of five-year moving averages. The most obvious trend is the sharply declining one of the primary sector. The average share of

Figure 1: Five-Year Moving Average of Sectoral Shares in NSDP (Constant 1980-81 Prices, 1960-61 to 2005-06, in %)

the sector declines from about 45% to about 17% between the quinquennium ending (QE) 1963-64 and QE 2005-06. The share of the secondary sector also exhibits large fluctuations in the five-year averages, though not throughout the period.

Primary Secondary Tertiary

– Si)2

i

also in a decline in the share of the primary

sector and an increase in the share of the

The formula for the CSC is:

n

i–1

secondary and sector 3 the tertiary sector respectively. Therefore, S1 = share of primary sector in the initial year of the series, i e, 1960-61

= share of secondary sector in 1960-61

S2 S3 = share of tertiary sector in 1960-61 S’1 = share of primary sector in each terminal year S’2 = share of secondary sector in each terminal year S’3 = share of tertiary sector in each terminal year.

The upper and lower limits of the CSC are therefore 100 and 200, respectively. The index does not however indicate whether the change is towards a greater share of the primary, secondary or tertiary sector, and must be used in conjunction with the data on sectoral shares to understand the direction and magnitude of structural change.

The data for the state indicates that structural changes in the composition of the NSDP were not very high in the initial years of the state’s existence (Appendix Table 3, p 71). In fact, in 1972-73 and 1974-75, two years when agricultural output declined in absolute real terms, there was very little increase in the output of other sectors. The decline in agricultural output was then reflected in the decline in the overall NSDP of the state. Substantial changes in the production structure began after 1985-86, reflected

NSDP of the state.

The comparative contribution of the three sectors can be expressed through an analysis of growth rates. Overall, the state’s NSDP has increased by 10.8 times its original (1960-61) value in real terms. There is very little growth in the primary sector, which has increased by only 4.29 times. On the other hand, the secondary

sector has increased 17.67 times and the

)

Up to the five-year period ending 1982-83, the share of the secondary sector on

(

√

1 + x 100

n

services sector has grown to 15.8 times its

few fluctuations. After 1982-83, however, and S’i are the relative shares size in 1960-61.

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Figure 2: Sectorwise NSDP (1980-81 Prices, 1960-61 to 2005-06, Rs crore) corresponding to an the relation remains significant at the

Primary sector Secondary sector Total NSDP Tertiary sector

1992-93 1996-97 2000-01 2004-05

increase in agricul-5% level. Taking the period 1990-2006 tural performance together, the relation between primary (1976-77 onwards). and secondary sector production again On the other hand, emerges as significant at the 1% level. the performance of The secondary and tertiary sectors have NSDP post-1982-83, maintained a high and mostly significant though still influ-(except for 1980-90) relation. The primary enced by the primary and tertiary sectors become significantly sector, is seen to be correlated in 1990-2000 at 1%, the value following the upward being 0.811, and this high correlation

trend of the other two sectors, specifically continues in the period 2000-06. It the tertiary sector after 1992-93. The appears, therefore, that the primary spurt of NSDP growth in the period after sector operated independently of the two 2000-01 is equally attributable to the other sectors till 1990, after which it has size and growth of the secondary and the become integrally associated with the tertiary sectors. rest of the economy. This association was

later given policy endorsement after Correlation between the Sectors 2000, in the Gujarat Agro Vision 2010 Growth rates in the three sectors are inter-document, which further emphasised the dependent. In what follows we therefore use interrelationship between the primary

correlation to analyse the relation between the three sectors.

The three sectors are closely correlated.1 Correlation coefficients over the period 1960-61 to 2005-06 are high, and all significant at the 1% level (Table 1). The correlation coefficient between the secondary and tertiary sector is as high as 0.97. In order to capture the changes in the interrelations between the variables we have taken correlation coefficients separately by each decade of the 45-year series.

In the three decades between 1960 and 1990, the correlation coefficient between the primary and secondary sector is not significant at 1% level. However, the trend is reversed dramatically after 1990 with a high (0.857) and significant relation emerging between the primary and secondary sectors. Between 2000 and 2006

Table 1: Correlation Matrix between NSDP Originating in Primary, Secondary and Tertiary Sectors (Gujarat, Overall and by Decade)

1960-2006 Total NSDP 1 0.872** 0.985** 0.992**

Primary sector 0.872** 1 0.846(**) 0.820(**)

Secondary sector 0.985** 0.846(**) 1 0.978(**)

Tertiary sector 0.992** 0.820(**) 0.978(**)

1960-70 Total NSDP 1 .786** .876** .950**

Primary sector .786** 1 .267 .457

Secondary sector .876** .267 1 .973(**)

Tertiary sector .950** .457 .973(**)

1970-80 Total NSDP 1 .857** .793** .899**

Primary sector .857** 1 .357 .558

Secondary sector .793** .357 1 .962(**)

Tertiary sector .899** .558 .962(**)

1980-90 Total NSDP 1 .399 .343 .906**

Primary sector .399 1 .238 -.074

Secondary sector .343 .238 1 .284

Tertiary sector .906** -.074 .284 1

1990-2000 Total NSDP 1 .735** .974** .953**

Primary sector .735** 1 .857(**) .811(**)

Secondary sector .974** .857(**) 1 .914(**)

Tertiary sector .953** .811(**) .914(**)

2000-06 Total NSDP 1 0.905(*) 0.964(**) 0.982**

Primary sector 0.905(*) 1 0.854(*) 0.918(**)

Secondary sector 0.964(**) 0.854(*) 1 0.986(**)

Tertiary sector 0.982** 0.918(**) 0.986(**)

1990-2006 Total NSDP 1 0.768** 0.985** 0.975**

Primary sector 0.768** 1 0.750(**) 0.646(**)

Secondary sector 0.985** 0.750(**) 1 0.961 (**)

Tertiary sector 0.975** 0.646(**) 0.961 (**)

* Correlation is significant at the 0.05 level (2-tailed). ** Correlation is significant at the 0.01 level (2-tailed).

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Economic & Political Weekly

and secondary sectors through the development of agro-industries.

2 Production and Prices

It is essential to study the agricultural/ non-agricultural sector terms of trade in order to understand the role of the agricultural sector in overall economic development. Terms of trade between sectors would be strictly defined as the ratio of the prices of goods traded between the two sectors. However, for lack of data we have not undertaken analysis of the traded goods, but of all goods produced in the primary and non-primary sector (sum of the other two sectors), and use the term “price ratio” rather than “terms of trade” in this analysis.

The agricultural/non-agricultural price ratio is the ratio of deflators in the agricultural and non-agricultural sectors. These deflators are in turn the ratios of current prices to constant prices in each sector. Prices have moved in favour of the agricultural sector. The agricultural to nonagricultural price ratio is higher than 1 for all years after 1981-82, and several of the years before that (Figure 3). We can treat 1981-82 as the break-point in the series, since the price ratio is less than 1 (against the primary sector) before that and greater than 1 (in favour of the primary sector) after. The relative rate of increase in the primary sector prices has speeded up post1982-83 from 0.21% to 0.41%. The terms of trade (price ratio) have moved definitely in favour of the agricultural sector after 1982-83.

Per capita figures for total NSDP are available at the state level; however the data have been calculated sectorally by using the industrial classification of workers from the Primary Census Abstracts.2 This yields the NSDP per worker rather than per capita. Per worker NSDP data therefore relates to only the census years.

Trends in total and per capita NSDP in the three sectors display certain differences. The total real NSDP from the agricultural sector is higher than that from the two other sectors, until 1982-83 (Figure 4). The three series start to diverge only after that, and more specifically after 1990-91. The NSDP in the tertiary sector shows a high and steady growth rate, followed by the secondary sector. NSDP in the primary

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sector shows very little Figure 3: Price Ratios of Agricultural to Non-agricultural Sectors

(1980-81 Prices, 1960-61 to 2005-06)

growth (Figure 5).

1.8

However, per capita

1.6

income in the primary

1.4

sector has always been the

1.2

lowest of all three sectors

1

(Appendix Table 4, p 71).

0.8

Theoretical and empiri

0.6

cal analyses on struc

1960-61 1964-65 1968-69 1972-73 1976-77 1980-81 1984-85 1988-89 1992-93 1996-97 2000-01 2004-05

tural change in an econ-

Figure 4: Sectorwise NSDP (1980-81 Prices, Selected Years, in Rs crore)

omy by Kuznets (1966,

10000

1973) and Chenery (1975) argue that the 8000 shift from primary to

6000

secondary and tertiary sectors in the share of

4000

NSDP occurs first, and is followed only later by 2000 shifts in the occupational structure out of 0

1960-61 1970-71 1980-81 1990-91 1999-2000

the primary sector. In

Figure 5: Average Annual Growth Rates Sectorwise Per Capita NSDP

Gujarat, the decline in

(1960-61 to 1999-2000, %) NSDP share of the pri-25

Primary mary sector is even 20 greater, since the abso

15

lute level of income from

10

the primary sector has

5

remained almost stag

0

nant. The proportion of

1960-61 to 1970-71 1970-71 to 1980-81 1980-81 to 1990-91 1990-91 to 2000-01

population employed in

Table 2: Sectoral Distribution of Population and Per Worker NSDP (at 1980-81 prices, selected years)

y = 0.0117x + 0.8293 R² = 0.5599 Price ratio Linear (price ratio)

Tertiary Primary Secondary

Secondary Tertiary

0.39 0.49 0.41 0.28 0.21

Year	1960-61	1970-71	1980-81	1990-91	1999-2000
Workers per sector
Primary	58,75,910.00	57,08,947.00	69,00,214.00	84,23,399.00	1,01,23,279.44
Secondary	11,81,808.00	11,32,715.00	18,55,106.00	25,17,954.00	30,26,088.63
Tertiary	14,46,870.00	15,53,844.00	22,28,692.00	31,54,339.00	37,90,899.04
Total NSDP (Rs lakhs)
Primary	1,39,991.56	2,40,367.74	2,67,178.00	2,99,266.00	3,15,760.53
Secondary	75,529.36	1,05,514.46	1,78,366.00	3,12,788.00	7,92,313.90
Tertiary	85,658.45	1,26,762.05	2,09,198.00	4,09,387.00	8,74,108.09
Per worker NSDP (Rs)
Primary	2,382.47	4,210.37	3,872.02	3,552.79	3,119.15
Secondary	6,391.00	9,315.18	9,614.87	12,422.31	26,182.77
Tertiary	5,920.26	8,157.96	9,386.58	12,978.54	23,058.07
vol xliv No 50					67

agricultural sector to that in the non-area per agricultural worker was 1.24 In terms of total production, wheat and agricultural sector (Figure 6, p 67). hectares. After 1970 net sown area (NSA) sugar cane are also important. Gujarat

has been lost to fallow and wasteland due has an edge in the yield of bajra and 3 Profile of Agriculture to degradation. the cash crops while its productivity of Gujarat had a gross cropped area of The main crops grown in the state are rice and wheat, the major food staples, is 1,11,43,800 hectares in 1998-99, 34.5% groundnut, millet (bajra) and cotton in relatively low. of which was irrigated. The operated terms of area under cultivation (Table 3). The share of coarse grain in terms of

Table 3: Production of Major Crop Groups Gujarat (1960-61 to 2000-01, ‘000 tonnes) area and production has gone down over

Year Rice + Wheat Coarse Grain Cereals Pulses Foodgrains Groundnut Oil Seeds Sugar Cane the years, though the yield of coarse grains

1960-61 564 973 1,719 169 1,888 1,214 1,260 130

has increased from 3.27 to 7.96 quintals/

1970-71 1,605 2,844 4,643 201 4,844 1,869 1,943 228

hectare (Tables 4 and 5). On the other

1980-81 1,957 2,314 4,438 520 4,958 1,616 2,005 790

hand, the area under rice and wheat

1985-86 1,437 1,243 2,762 385 3,147 473 964 715

(totally) has increased marginally and

1989-90 1,923 2,430 4,438 572 5,010 1,670 2,580 916

their share in total agricultural produc

1990-91 2,285 1,993 4,359 624 4,983 983 2,044 1,035

tion substantially, reflecting a growth in

1991-92 1,922 1,440 3,420 419 3,839 711 1,650 974

yield. The share of pulses in area has simi

1992-93 2,373 2,837 5,285 656 5,941 2,200 3,332 1,087 1993-94 1,994 1,533 3,602 549 4,151 596 1,550 1,023 larly increased from 7% to 10% during the

1994-95 3,165 1,988 5,215 546 5,760 2,305 3,684 1,687 time, but their share in total production

1995-96 2,325 1,904 4,287 486 4,774 1,032 2,212 2,060 has declined.

1996-97	2,760	2,597	5,425	664	6,089	2,368	3,802	1,665 There is a decline in the percentage
1997-98	2,799	2,637	5,469	618	6,113	2,494	3,866	1,467 of cultivated area and production of
1998-99	2,879	2,465	5,399	640	6,038	2,465	3,881	1,734 foodgrains, attributable mainly to the
1999-2000	2,120	1,812	3,992	446	4,438	733	1,826	1,867 decline in area under coarse grain. Pro
2000-01	1,403	1,485	2,936	249	3,185	740	1,738	1,818 duction of foodgrain fell sharply from
Source: Statistical Abstract of Gujarat 2004, Table 11.2.
Table 4: Area Under Major Crop Groups Gujarat (1960-61 to 2000-01, ‘000 hectares)		1993-94 onwards, though non-foodgrains
Year	Rice + Wheat	Coarse Grain	Cereals	Pulses	Foodgrains	Groundnut	Oil Seeds	Sugar Cane have always dominated the agricultural
1960-61	911	2,973	4,121	512	4,632	1,982	2,206	26	sector in Gujarat. The share of oilseeds
1970-71	1,158	3,691	5,087	496	5,583	1,778	1,966	39	in cultivated area increased from 32%
1980-81	1,192	2,906	4,324	794	5,118	2,179	2,660	98	to 41% during 1960-2000, though their
1985-86	1,092	2,949	4,213	870	5,083	1,868	2,492	123	share in total production declined. Area
1989-90	1,196	2,502	3,830	941	4,770	2,038	2,873	106	under sugar cane increased 10-fold.
1990-91 1991-92 1992-93 1993-94 1994-95	1,232 1,182 1,310 1,220 1,514	2,457 2,454 2,512 2,395 2,320	3,800 3,632 3,925 3,711 3,926	949 883 962 880 932	4,749 4,515 4,887 4,591 4,858	1,826 1,976 1,880 2,035 1,914	2,818 2,865 2,919 3,028 2,981	115 113 127 128 222	High value crops such as spice, fruits and vegetables are also increasingly replacing foodgrains; their share in area stagnated around 11% until 1983, after which it
1995-96	1,318	2,234	3,634	877	4,511	1,871	2,912	251	doubled to 22.51%. Over	1990-2003,
1996-97	1,384	2,182	3,642	915	4,557	1,803	2,850	232	production of fruit and vegetables, fol
1997-98	1,454	2,099	3,620	905	4,525	1,839	2,885	225	lowed by spices and cotton, grew rapidly.
1998-99	1,363	2,014	3,446	884	4,330	1,881	2,927	243	Production of most	crops (except for
1999-2000	1,238	1,904	3,207	792	3,999	1,849	2,864	255	spices) fluctuates around a declining trend.
2000-01	1,047	1,865	2,975	743	3,718	1,822	2,861	257	Production	of	oilseeds	fluctuates	the
Source: Statistical Abstract of Gujarat 2004, Table 11.2. Table 5: Value of Selected Crops Gujarat (as a percentage of total, 1990-91 to 2002-03) Year Foodgrains Oil Seeds Cotton Tobacco Fruit/ Veg 1990-91 28.27 24.02 11.27 2.98 10.56	Spices 4.76	Total 100	most violently. The cultivation of cash crops requires heavy investment in irrigation, which then
1991-92	20.97	21.88	11.74	3.04	13.89	4.64	100	has to be covered up through substantial
1992-93	22.35	28.37	13.32	2.21	12.46	4.02	100	returns. Irrigated area has been increas
1993-94	21.72	18.38	14.50	2.95	17.80	3.74	100	ing, from 27.2% of NSA in 1984 to 31.2% in
1994-95	20.66	31.01	14.25	2.46	12.10	3.41	100	1994. However, irrigation in the state is
1995-96	19.79	22.37	17.19	2.82	14.67	3.96	100	beset with various issues such as diver

1996-97 20.72 32.64 17.02 2.49	7.48	3.78 100 sion of water to non-agricultural uses,
1997-98 20.19 30.25 18.46 1.97	9.71	3.97 100 inequality of access, overuse, etc. The
1998-99 18.51 28.01 20.88 1.82 1999-2000 19.52 17.92 16.28 2.87 2000-01 14.25 21.08 11.11 2.62	11.01 16.78 22.37	4.94 100 3.84 100 3.96 100 most important source of irrigation in Gujarat is wells, and it increased from
2001-02 18.40 31.68 10.91 1.71	15.76	4.61 100 79% of irrigated area in 1970-71 to 86%
2002-03 16.53 18.30 13.48 1.70	21.35	6.52 100 in 2000-01, while area under surface
Source: www.mospi.nic.in (Ministry of Statistics and Programme Implementation).		irrigation declined.
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Gujarat has embarked on the path of increasing overall income of the primary The increased integration of the agriculeconomic growth right from its forma-sector. The agricultural sector has served tural sector into the economy in the 1990s tion in 1960-61. The state has gone to fuel economic growth in other sectors, is likely to have been based on increased through structural change in its output. but that economic growth has not fed into demand for agricultural inputs useful for Throughout the period studied in this the sector itself. agro-industry rather than on increased paper, there has been an increase in After the 1980s the Gujarat economy demand for wage goods. The state’s growth the share of the industrial sector in the has progressed to the second stage of policy, inasmuch as it relates to the agri-NSDP and a reduction in the share of the economic growth. However, the integral cultural sector, is spelt out in Gujarat Agro agricultural sector. relationship between the agricultural and Vision 2010. It bases itself on this increased

In the 1980s, the joint share of the non-non-agricultural sectors still continues. input demand from the industrial sector, agricultural sectors in the NSDP became

Appendix Table 1: Sectoral Net State Domestic Product at Constant (1980-81) Prices and Annual Growth Rates

larger than the agricultural sector. Growth

(1960-61 to 2003-04 )

rates in the non-agricultural sector have Year NSDP at Constant Prices by Sector (Rs Lakhs) Annual Growth Rates of NSDP by Constant Prices by Sector

been high and increasing. At the same time, the price ratio turned in favour of the agricultural sector, remaining consistently over 1 in all the years after 1981-82, whereas it has remained below 1 in the years before this. Increased relative agricultural prices indicate an inadequate supply response to

Primary Secondary Tertiary Total NSDP Primary Secondary Tertiary Total NSDP Sector Sector Sector Sector Sector Sector

1960-61	1,39,991.6	75,529.36	85,658.45	3,01,271.2
1961-62	1,63,096	78,372.4	91,316.32	3,31,440.4	0.17	0.04	0.07	0.10
1962-63	1,55,155.7	80,937.1	92,990.08	3,28,836.5	-0.05	0.03	0.02	-0.01
1963-64	1,64,202.5	88,261.4	98,508.47	3,50,671.6	0.06	0.09	0.06	0.07
1964-65	1,85,579.2	93,438.51	1,06,476.7	3,81,501.9	0.13	0.06	0.08	0.09
1965-66	1,51,976.8	95,919.71	1,04,173.5	3,54,116.3	-0.18	0.03	-0.02	-0.07

the higher demand from the other sectors,	1966-67	1,50,412.4	1,02,019.3	1,07,707	3,63,001.3	-0.01	0.06	0.03	0.03
occurring due to increased relative non	1967-68	1,89,782.9	98,070.87	1,10,299.9	3,97,341.6	0.26	-0.04	0.02	0.09
agricultural incomes.	1968-68	1,52,824.8	1,02,297.7	1,11,558.8	3,69,853.8	-0.19	0.04	0.01	-0.07
In the 1990s, the agricultural sector	1969-70	1,81,230.4	1,06,619.9	1,17,889	4,07,079.6	0.19	0.04	0.06	0.10
developed a closer relation with the sec	1970-71	2,40,367.7	1,05,514.5	1,26,762	4,69,295.3	0.33	-0.01	0.08	0.15
ondary and tertiary sectors, from which it	1971-72	2,50,523.5	1,01,897.3	1,14,771.7	4,83,644.9	0.04	-0.03	-0.09	0.03
had been historically isolated in the state.	1972-73	1,37,968.7	1,21,234.9	1,26,662.6	3,85,963.3	-0.45	0.19	0.10	-0.20
The agricultural sector’s role in an economy	1973-74	2,00,957.1	1,31,618.8	1,41,253	4,72,077.8	0.46	0.09	0.12	0.22
may be to provide agro-industrial inputs, and/or wage goods (mainly foodgrains). Cotton, oilseeds and tobacco are especially important in the state. The share	1974-751975-761976-77 1977-781978-79	1,35,595.9 2,39,393.5 2,46,691.5 2,67,622.5 2,67,622.5	1,32,519.1 1,30,524.2 1,41,449.6 1,60,535 1,68,428.8	1,38,023.4 1,54,699.3 1,69,756.5 1,82,169.6 1,99,184.1	4,06,878.8 5,22,875.7 5,56,792.5 5,95,532.4 6,34,741.9	-0.33 0.77 0.03 0.08 0.00	0.01 -0.02 0.08 0.13 0.05	-0.02 0.12 0.10 0.07 0.09	-0.14 0.29 0.06 0.07 0.07
of high-value crops such as spices, fruit	1979-80	2,59,502.9	1,76,792.4	2,00,802.7	6,36,549	-0.03	0.05	0.01	0.00
and	vegetables	in	total	output	has	1980-81	2,67,178	1,78,366	2,09,198	6,54,742	0.03	0.01	0.04	0.03
increased after 1990-91. According to ASI	1981-82	3,44,010	1,81,620	2,24,142	7,19,772	0.29	0.02	0.07	0.10
data, the value of output in the food	1982-83	2,68,886	2,01,113	2,39,021	7,09,020	-0.22	0.11	0.07	-0.01
processing industry was 10.26% of total	1983-84	3,27,348	5,21,268	2,62,424	8,45,088	0.22	1.59	0.10	0.19
production in the factory sector in 2004-05.	1984-85	3,31,626	2,35,948	2,77,055	8,44,629	0.01	-0.55	0.06	0.00
On the other hand, the value of foodgrains	1985-86	2,54,414	2,72,078	2,94,942	8,21,434	-0.23	0.15	0.06	-0.03
as a percentage of total agricultural pro	1986-87	2,53,462	2,44,815	3,21,545	8,72,032	0.00	-0.10	0.09	0.06
duction	has	declined	from	1994-95.	1987-88	1,37,713	2,42,467	3,34,334	7,74,882	-0.46	-0.01	0.04	-0.11
Therefore, agriculture’s role not as a wage	1988-89	3,58,043	2,84,593	3,85,381	10,87,339	1.60	0.17	0.15	0.40
good, but as a provider of industrial inputs becomes evident in the increased correlation between the agricultural and industrial sectors. While demand from the secondary and	1989-901990-91 1991-921992-931993-94 1994-95	3,17,637 2,99,266 2,46,798 3,68,547 2,79,798 3,89,146.6	2,74,596 3,12,788 2,43,549 4,81,156 4,86,126 5,73,137.4	4,15,460 4,09,387 4,16,766 4,64,668 5,08,175 5,54,231.7	10,68,111 10,83,915 9,94,403 13,14,371 12,74,099 15,29,848	-0.11 -0.06 -0.18 0.49 -0.24 0.39	-0.04 0.14 -0.22 0.98 0.01 0.18	0.08 -0.01 0.02 0.11 0.09 0.09	-0.02 0.01 -0.08 0.32 -0.03 0.20
tertiary sectors increased, demand from	1995-96	3,43,118	6,26,638.9	6,09,640	15,75,525	-0.12	0.09	0.10	0.03
within the primary sector stagnated with	1996-97	4,55,212.5	7,01,607.3	6,47,263.3	18,15,707	0.33	0.12	0.06	0.15
declining	incomes.	Absolute	NSDP	per	1997-98	4,16,783.1	6,57,519	7,32,720.8	18,15,544	-0.08	-0.06	0.13	0.00
worker as well as NSDP per worker within	1998-99	4,39,868.8	7,08,563.2	7,87,935.9	19,43,477	0.06	0.08	0.08	0.07
the primary sector as compared to the other	1999-2000	3,15,760.5	7,92,313.9	8,74,108.1	19,50,703	-0.28	0.12	0.11	0.00
sectors	declined,	indicating	increased	2000-01	2,79,733	7,24,346.4	9,00,098.4	18,73,258	-0.11	-0.09	0.03	-0.04
income inequality between sectors. The	2001-02	3,56,288.4	7,23,179.9	9,65,029.2	20,30,782	0.27	0.00	0.07	0.08
policy emphasis on agro-industry and	2002-03	3,13,706	9,48,663.2	10,48,306	22,58,567	-0.12	0.31	0.09	0.11
commercial crops has not succeeded in	2003-04	5,21,163.8	10,01,672	11,43,934	26,54,233	0.66	0.06	0.09	0.18
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and emphasises agro-industry as the agricultural sector as a dynamic sector and A second and most important area of future of agriculture in the state. How-a sustained source of industrial growth, concern is that the agricultural sector, in ever, agricultural production in the state seems premature unless adequate steps spite of its relatively small contribution to still fluctuates strongly. The years of the are taken to weatherproof production. In state income, still continues to employ the present decade (2000-06) are marked by light of the low relative incomes in the largest proportion of workers. The sector an explosive growth in the agricultural sector, there is a significant constraint on is characterised by two trends – a rising sector. However downturns in production private investment in agriculture. This agricultural price ratio and a declining per still occur almost every alternate year. task will have to be undertaken through worker income level. These indicate that In these circumstances, a vision of the public investment. the higher relative agricultural prices have

benefited a selective few farmers but not Appendix Table 2: Sectoral Share of NDP (India) and NSDP (Gujarat) 1960-61 to 2003-04, Constant* Prices the majority in the agricultural sector. The

Year % of total NDP (India) % of NSDP (Gujarat) Primary Secondary Tertiary Primary Secondary Tertiary

1960-61 52.23 19.12 28.65 41.82 25.73 32.45

1961-62 50.86 19.85 29.29 44.29 24.27 31.44

1962-63 48.71 20.78 30.52 42.47 25.26 32.27

1963-64 47.45 21.66 30.90 42.14 25.80 32.06

orientation of the Agro Vision document is towards refocusing the agricultural sector as an industrial input provider, but this vision ignores the distributive aspect within the sector. Dynamic agricultural growth based

1964-65 47.93 21.63 30.44 43.78 25.14 31.08 on commercial crops – if stabilised and

1965-66 43.76 23.32 32.91 38.63 27.80 33.57 weatherproofed with the help of irrigation

1966-67 42.92 23.35 33.73 37.29 28.85 33.86 – can be a source of increased incomes

1967-68 45.53 22.24 32.23 42.99 25.33 31.68 within the sector, but special efforts have 1968-68 44.48 22.64 32.87 37.19 28.39 34.42

to be made to see to it that the benefits of

1969-70 44.41 23.11 32.47 40.07 26.88 33.05

1970-71	45.39	22.40	32.21	46.10	23.08	30.82 sector. The present policy is set to strengthen
1971-72	45.22	22.82	31.95	49.46	19.60	31.02 the high growth path of the state, which
1972-73	43.08	23.81	33.09	34.13	29.10	36.77 does not feed back into the agricultural
1973-74	44.23	23.12	32.64	40.65	25.83	33.52 sector, and does little to augment the
1974-75	46.41	20.59	33.00	31.82	30.17	38.01
1975-76	47.80	19.75	32.45	43.72	23.12	33.16 income levels of the majority of the popu
1976-77	44.42	21.56	34.03	44.00	24.47	35.53 lation. It is necessary to ensure that the
1977-78	45.58	21.25	33.17	40.76	24.97	34.27 emphasis on commercial crops translates
1978-79	44.35	21.61	34.04	40.26	24.58	35.16 into regionally widespread incomes for the
1979-80	40.84	22.20	36.96	38.93	25.73	35.34	broad population involved in agriculture.
1980-81	41.30	23.00	35.70	40.81	27.24	31.95	Gujarat is a case of a fast-growing state;
1981-82	41.35	23.33	35.32	43.63	25.23	31.14	it is also, however, a state with its own
1982-83	39.74	23.62	36.64	37.92	28.36	33.71	unique agro-ecological, social and politi
1983-84	40.60	23.86	35.54	38.74	30.21	31.06	cal features. We therefore do not seek to
1984-85	39.11	24.43	36.46	39.26	27.94	32.80

this growth are spread evenly within the

*From 1960-61 to 1970-71 at 1960-61 prices, from 1971-72 to 1979-80 at 1970-71 prices, 1980-81 to 1992-93 at 1980-81 prices, 1993-94 to 2003-04 at 1993-94 prices.

1985-86	37.70	24.54	37.76	30.97	33.12	35.91 regarding the growth process and the role
1986-87	35.88	25.22	38.89	29.07	34.06	36.87 of the agricultural sector. However, the
1987-88	34.50	25.78	39.72	17.77	39.08	43.15 study does indicate that the agricultural
1988-89	36.06	25.15	38.79	32.93	31.63	35.45 sector, even where high growth has been
1989-90	34.42	26.21	39.20	29.74	31.37	38.90
1990-91	34.22	26.58	39.20	27.61	34.62	37.77 achieved, need not disappear, but may
1991-92	33.15	25.78	41.07	24.82	33.27	41.91 maintain its potential as an active contri
1992-93	33.54	25.17	41.29	28.04	36.61	35.35 butor to the growth process, albeit indi
1993-94	35.07	21.67	43.26	26.88	33.29	39.83 rectly as an input provider. It also remains
1994-95	31.55	26.69	41.74	31.13	32.69	36.18	an important source of livelihood for a
1995-96	28.95	28.36	42.68	26.66	34.70	38.64	major proportion of the population. It is
1996-97	28.35	27.91	43.69	30.69	33.72	35.60	the role of economic policy to realise its
1997-98	30.48	22.57	46.95	28.31	31.75	39.94
1998-99	30.38	21.72	47.90	26.83	32.21	40.96
1999-2000	28.74	21.36	49.90	19.81	35.44	44.75
2000-01	27.55	21.97	50.48	18.28	33.74	47.98	available at
2001-02	27.68	21.39	50.94	21.47	31.07	47.45
2002-03	25.45	21.92	52.62	17.00	36.65	46.35	B.N.Dey & Co. News Agent
2003-04	22.10	23.90	54.00	24.03	32.93	43.04	Panbazar

make from this study any generalisations

Source: NDP data calculated from NAS (various issues), NSDP data calculated from state level data available at www.mospi.nic.in Guwahati 781001, Assam and EPWRF (2003).

Ph: 2546979, 2547931

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Economic & Political Weekly

potential for economic growth as well as distributive justice.

Notes

1 Dholakia (1983) carried out an analysis of correlation between indices of sectoral production for the period 1960-1978, and comes to the conclusion that there is no significant relation between the production indices of the primary and secondary sectors, but that there is some association between the primary and tertiary sectors.

Appendix Table 3: Coefficient of Structural Change (Base Year 1960-61) for Sectoral Distribution Gujarat

(1960-61 to 2005-06)

Year Constant* Prices Current Prices

1960-61 100.00 100.00

1961-62 101.75 101.10

1962-63 100.47 100.95

1963-64 100.29 100.72

1964-65 101.42 103.21

1965-66 102.29 100.80

2	The industrial classification of workers has been	References
	changed after 1999-2000. Classification of workers in the primary sector remains the same; however all other workers are classified simply as “workers in household industry” and “other workers”. Therefore it becomes impossible to classify workers into secondary and tertiary sectors after 1999-2000. Due to this, we have	Dholakia, Ravindra H (1983): “Economic Growth and Fluctuations in Gujarat” in D T Lakdawala (ed.), Gujarat Economy: Problems and Prospects (Ahmedabad: Sardar Patel Institute of Economic and Social Research). Kuznets, Simon S (1966): Modern Economic Growth:
	used data only up to 1999-2000 in the analysis of	Rate, Structure, and Spread (New Haven: Yale
	per worker NSDP.	University Press).
3	The total NSDP in the tertiary sector is higher	– (1973): “Modern Economic Growth: Findings
	than that in the secondary sector, but the income	and Reflections”, Nobel Memorial Lecture, 11
	per worker is lower, which indicates an influx of	December 1971, American Economic Review, 63,
	workers in the tertiary sector in the 1990s.	No 3, June.

Appendix Table 4: Per Capita Sectoral NSDP and Its Growth Rate (1980-81 Prices) Gujarat (1960-61 to 2003-04)

Year	Per Capita NSDP by Sector – 1980 Prices (Rs)	CAGR of Per Capita NSDP at 1980 Prices by Sector	Ratio Per Capita
			NSDP Primary/
	Primary	Secondary	Tertiary	Primary	Secondary	Tertiary	Other Sectors
1960-61	2,382.47	6,391.00	5,920.26				0.39
1961-62	2,705.07	6,462.88	6,150.76	0.14	0.01	0.04	0.43
1962-63	2,507.91	6,504.60	6,104.18	-0.07	0.01	-0.01	0.40
1963-64	2,586.63	6,912.80	6,301.94	0.03	0.06	0.03	0.39
1964-65	2,849.01	7,132.12	6,638.42	0.10	0.03	0.05	0.42

1965-66 2,273.80 7,135.28 6,329.62 -0.20 0.00 -0.05 0.34

1966-67 103.28 102.72

1967-68 100.84 104.22 1966-67 2,193.15 7,395.97 6,377.85 -0.04 0.04 0.01 0.32

1968-69 103.29 102.02 1967-68 2,696.82 6,928.88 6,365.25 0.23 -0.06 0.00 0.41

1969-70 101.26 102.48 1968-68 2,116.40 7,043.66 6,274.14 -0.22 0.02 -0.01 0.32

1970-71 103.05 105.13 1969-70 2,445.94 7,154.53 6,461.51 0.16 0.02 0.03 0.36

1971-72 105.72 104.08 1970-71 4,210.37 9,315.18 8,157.96 0.72 0.30 0.26 0.49

1972-73 105.45 103.62 1971-72 4,282.34 8,778.71 7,208.02 0.02 -0.06 -0.12 0.54

1973-74 100.92 103.34

1972-73 2,301.45 10,192.59 7,762.80 -0.46 0.16 0.08 0.26

1974-75 107.08 105.81

1973-74 3,271.25 10,798.50 8,448.04 0.42 0.06 0.09 0.35

1975-76 101.91 101.57

1974-75 2,154.00 10,609.92 8,055.64 -0.34 -0.02 -0.05 0.24

1976-77 102.30 101.68

1975-76 3,711.07 10,197.97 8,810.98 0.72 -0.04 0.09 0.39

1977-78 101.30 102.00

1976-77 3,731.90 10,784.82 9,435.19 0.01 0.06 0.07 0.37

1978-79 101.93 103.36

1977-78 3,950.82 11,944.54 9,880.73 0.06 0.11 0.05 0.37

1979-80 102.36 103.11

1978-79 3,855.46 12,229.39 10,542.81 -0.02 0.02 0.07 0.34

1980-81 101.09 101.09

1979-80 3,648.24 12,526.81 10,371.94 -0.05 0.02 -0.02 0.32

1981-82 101.32 101.96

1980-81 3,872.02 9,614.87 9,386.58 0.06 -0.23 -0.10 0.41

1982-83 102.81 110.55

1981-82 4,890.58 9,603.89 9,865.64 0.26 0.00 0.05 0.50

1983-84 103.24 101.79

1982-83 3,749.81 10,432.19 10,320.25 -0.23 0.09 0.05 0.36

1984-85 101.96 100.95

1983-84 4,478.20 26,524.58 11,115.01 0.19 1.54 0.08 0.25

1985-86 107.84 107.15

1984-85 4,450.35 11,777.58 11,511.30 -0.01 -0.56 0.04 0.38

1986-87 109.16 106.35

1985-86 3,349.18 13,322.48 12,021.18 -0.25 0.13 0.04 0.27

1987-88 117.04 111.70

1986-87 3,273.13 11,759.31 12,855.95 -0.02 -0.12 0.07 0.26

1988-89 106.40 102.98

1987-88 1,744.52 11,424.80 13,112.79 -0.47 -0.03 0.02 0.14

1989-90 108.55 105.42

1990-91 110.15 106.06 1988-89 4,449.28 13,154.43 14,827.12 1.55 0.15 0.13 0.32

1991-92 112.05 107.12 1989-90 3,872.02 12,450.71 15,680.07 -0.13 -0.05 0.06 0.27

1992-93 110.27 107.10 1990-91 3,552.79 12,422.31 12,978.54 -0.08 0.00 -0.17 0.28

1993-94 110.57 110.57 1991-92 2,870.67 9,476.94 12,945.34 -0.19 -0.24 0.00 0.25

1994-95 107.67 108.21 1992-93 4,200.15 18,344.14 14,141.44 0.46 0.94 0.09 0.26

1995-96 110.78 112.40

1993-94 3,124.25 18,158.91 15,152.83 -0.26 -0.01 0.07 0.19

1996-97 108.12 109.61

1994-95 4,257.40 20,976.32 16,192.03 0.36 0.16 0.07 0.23

1997-98 109.57 110.30

1995-96 3,677.93 22,470.74 17,450.70 -0.14 0.07 0.08 0.19

1998-99 110.63 110.45

1996-97 4,780.84 24,650.39 18,153.07 0.30 0.10 0.04 0.23

*From 1960-61 to 1970-71 at 1960-61 prices, from 1971-72 to 1979-80 at 1970-71 prices, 1980-81 to 1992-93 at 1980-81 prices, 1993-94 to 2003-04 at 1993-94 prices.

1999-00	115.60	115.49
2000-01	116.93	116.54
2001-02	114.92	115.53
2002-03	117.59	116.40
2003-04	112.65	112.34
2004-05	115.63	115.64
2005-06	114.06	113.92

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1997-98	4,288.74	22,634.32	20,134.33	-0.10	-0.08	0.11	0.20
1998-99	4,434.78	23,898.32	21,213.83	0.03	0.06	0.05	0.20
1999-00	3,119.15	26,182.77	23,058.07	-0.30	0.10	0.09	0.13
2000-01	3,604.90	7,817.87		0.16	-0.70		0.21
2001-02	4,498.63	7,647.47		0.25	-0.02		0.25
2002-03	3,880.89	9,829.09		-0.14	0.29		0.19
2003-04	6,317.02	10,168.48		0.63	0.03		0.29

Source: NSDP data calculated from state level data available at www.mospi.nic.in and EPWRF (2003), population data calculated from Primary Census Abstract (various years).

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