Resource Flows between Agriculture and Non-Agriculture: The Indian Experience

Abstract

Development theory suggests that a transfer of resources from agriculture to industry constitutes a necessary condition for the development of developing economies. There are notable exceptions to this proposition which argues that in the contemporary Asian context many economies would actually require a reverse tranfer of resources into agriculture. Only through a detailed study of long run Inter-Sectoral resource flows can one establish either poinl of view. Utilising a more appropriate and camprehensive Time series data and methodology. This paper attempts to establish as firmly as possible the precise emperical position regarding net resource flow between agriculture and non-agriculture in India during the period, 1950-51 to 1981-88. Our estimates indicate that there has been a net resource inflow into the agricultural sector in India. The quantum of this inflow showed a fluctuating trend in real terms (increaving milry in nominal terms) up to the mid-sixties. But has tended to increase quite sharply. Both in nominal and real terms, since the mid-sixties. Our analysis suggests that the observed resource inflow takes place through public institutions and the government exchequer.