1. Agriculture has been observed to contribute a very large share of GDP before industrial development- As the process of industrial development accelerates, the share of non-agricultural sector in GDP tends to increase steadily.
2. Agriculture provides employment opportunity for rural people on a large scale in underdeveloped and developing economy - It is an important source of livelihood. It is an important source of livelihood. Generally, landless workers and marginal farmers are engaged in non-agricultural jobs like handicrafts, furniture, textiles, leather, metal work, processing industries, and in other service sectors. These rural units fulfill merely local demands.
3. Source of Foreign Exchange for the Country:: The progress in agricultural sector provides surplus for increasing the exports of agricultural products. According to Simon Kuznets “Agriculture was a major source of exports and that the resulting command over the resources of the more developed countries played a strategic role in facilitating modern economic growth.
4. Agriculture is the basic source of food supply of all the countries of the world: The most important contribution of agriculture is to provide food supply to increasing population of the countries of the world. Raising supply of foods by agriculture sector has, therefore, great importance for economic growth of a country
5. Agricultural advancement is necessary for improving the supply of raw materials for the agro-based industries : Agriculture provides industrial raw material to a large number of industries (textile, silk, oil, sugar, rice, flour mills etc.)As a supplier of raw material, agricultural sector is of primary significance for the growth of industrial sector in the economy.
6. Agriculture plays a vital role in creation of infrastructure: The development of agriculture requires roads,market,storage,transportation,postal services and many others services for an infrastructure creating demand for industrial products and the development of commercial sector.
7. The development of agricultural sector has minimized the burden of several developed countries who were facing the shortage of foreign capital : If foreign capital is available with the ‘strings’ attached to it, it will create another significant problem. Agriculture sector requires less capital for its development thus it minimizes growth problem of foreign capital.
8. Agriculture is helpful in reducing inequality: The prosperity of agriculture would raise the income of the majority of the rural population and thus the disparity in income may be reduced to a certain extent where there is a greater inequality of income between the rural and urban areas of the country..
9. Agriculture Improves rural welfare: The rising agriculture surplus caused by increasing agricultural production and productivity tends to improve social welfare, particularly in rural areas.
10. A rapid growth of agriculture output with fair amount of stability is very important, as it enables food supply to be available at relatively lower prices. In that case the non-agricultural sector, requires less of its income to purchase food, and this helps to increase effective demand for the output of non-agricultural sector. Agricultural development also increases purchasing power of farmers which will help the growth of the non-agricultural sector of the country.
11 . Agricultural growth largely contributes to capital formation in the under-developed countries : Without adequate capital formation, rapid economic growth cannot attained. There are three ways in which the farm sector contributes to capital formation. First, increased agricultural productivity benefits the non- agricultural sector through lower food prices .It will facilitate increased saving and capital accumulation in urban sector. Second, increased farm output may generate higher levels of farm income ,part of which may be saved .These savings may be utilised in financing the growth of the non-agricultural sectors.Thirdly,capital can be derived through a well devised tax system. In China, Russia and Japan , farm tax revenue helped significantly in their economic growth
12. As a result of agricultural progress, there will be extension of market for industrial products: Agricultural efficiency raises rural income levels and creates an effective market for more and new industrial goods. It enlarges the size of market .If there is surplus production, then it can be exported to the other countries of the world. So, agriculture sector expands the market at national and international level.
