7. Agriculture and Structural Transformation 1960–2040: Implications for Double-Digit Inclusive Growth

If imports of food are constrained to levels only slightly higher than at present, at least a 4 % growth rate of agricultural GDP is needed to support GDP growth rates in excess of 8 %. This can be attained with a slightly optimistic agriculture TFPG growth rate of 2 % along with a slightly optimistic development of irrigation potential to 90 million ha (Mha) (net). But in the past two decades, agricultural growth has been less than 3 %, productivity growth has been lower than 2 %, and limits on total water availability in India, competition for water from urban areas, and slow improvements in water use efficiency have reduced the irrigation growth rate and could continue to reduce it in the future. Achieving the required agricultural growth further increase the need for TFP growth. The way agriculture develops would have a profound impact on structural transformation when labor is pulled out of agriculture at a speed that depends on the labor intensity of industry and services. A turning point is reached when the labor productivity differential between the sectors starts to diminish and the share of labor in agriculture starts to decline faster than its share in output. India seems to be far away from such a point and we seem to be heading for a system of part-time farmers with substantial income coming from rural nonfarm activities. This is also leading to feminization of agriculture.