32. Role and Importance of Agriculture Sector in Economic Development of Pakistan

 Role and Importance of the Agriculture Sector in the Economic Development of Pakistan

Introduction of Agriculture:

    Agriculture involves cultivating land or soil for the purpose of production, and it plays a crucial role in the development and economy of Pakistan. Nearly half of the labor force, or 48%, is directly involved in agriculture, making it the primary source of income for a significant portion of the population. Additionally, around 70% of the population is connected to agriculture either directly or indirectly. Agriculture serves as a primary source of food for a large segment of the Pakistani population and provides raw materials to the industrial sector. With a contribution to GDP of approximately 25%, agriculture has a greater impact on the economy than any other sector.

As per the Pakistan Economic Survey 2021-22:

• The agriculture sector accounts for 22.7% of the country's GDP.
• The agriculture sector experienced a growth rate of 4.4%.
• The labor force engaged in agriculture comprises 37.4% of the total workforce.
• The total cropped area, which spans 24.1 million hectares, makes up 30.3% of the country's land area.

Role or importance In the Economic Development of Pakistan:

There are following main points in economic development which are given below:

1. Increase in Per Capita Income:

    Per capita income refers to the average annual income of individuals within a nation and is obtained by dividing the national income by the total population. The agricultural sector plays a significant role in providing employment to the unemployed population, thereby contributing to an increase in both individual and national income. Given that the per capita income in Pakistan is $1798 according to the Pakistan Economic Survey 2021-22, the agricultural sector is crucial in driving its growth and improving the living standards of the population.

2. The Major Source of Employment:

    The agriculture sector is a significant source of employment for a major portion of Pakistan's labor force. Directly employing 37.4% of the workforce, it also serves as a crucial source of income for 65% of the rural population. Given its substantial contribution to employment, the agriculture sector plays a vital role in reducing both unemployment and disguised unemployment. Therefore, it can be considered the main sector that provides employment opportunities to a large segment of the Pakistani population.

3. Supply of Food:

    Food is considered the most fundamental of life's basic necessities, and the agricultural sector is responsible for providing a wide range of food items, such as wheat, rice, corn, sugarcane, vegetables, fruits, and more, to the entire population of Pakistan, regardless of their occupations. The agricultural sector also produces food for the animals that provide milk, cheese, butter, and meat, which are necessary for maintaining the health and efficiency of the population. As per the Pakistan Economic Survey 2021-22, the food group exports of Pakistan amount to $1523 million.

4. Supply of Surplus Labor:

    Approximately 60% of Pakistan's population resides in over 61,000 villages. The agriculture sector, which often employs disguised unemployment and farm mechanization, serves as a crucial source of labor for the industrial sector. As a result, an increase in income resulting from the agricultural sector's growth can significantly improve the living standards of people, especially those living in rural areas.

5. Poverty Reduction:

    Agricultural development plays a crucial role in promoting rural development by reducing poverty and stimulating non-farm employment opportunities. When the productivity of the agricultural sector increases, it helps to provide better living standards for people living in rural areas. This includes access to basic necessities such as water supply, sanitation, health services, and educational facilities. However, despite the progress made, a significant portion of Pakistan's population - 29.5% - still lives in poverty, highlighting the need for continued efforts to promote agricultural and rural development to address this issue.

6. Supply of Raw Material:

    The agricultural sector in Pakistan plays a crucial role in not only providing food but also producing a range of raw materials such as cotton, sugarcane, tobacco, rice, oil seeds, meat, and milk. These raw materials are supplied to various agro-based, small-scale, and large-scale industries in the country, serving as critical input for their production processes. As such, the agricultural sector serves as a significant source of raw materials for the various major industries in Pakistan, contributing to the country's overall economic growth and development.

7. Development of the Industrial Sector:

    The agricultural and industrial sectors in Pakistan are strongly interdependent and play a crucial role in each other's development. When agricultural productivity increases, it leads to a rise in farmers' income. This, in turn, increases the demand for agricultural goods, such as tractors, fertilizers, pesticides, tube wells, etc., and industrial goods like televisions, mobile phones, and computers. As a result, the industrial sector experiences growth, contributing to the overall development of the economy. According to the Pakistan Economic Survey 2021-22, the growth rate of the industrial sector in Pakistan is 7.2%.

8. Improvement in Living Standards:

    The development of the agricultural sector in Pakistan has the potential to increase the income of farmers, enabling them to improve their living standards. With an increase in income, farmers can invest in constructing better houses and purchase luxuries such as televisions, computers, mobile phones, motorcycles, and other items that improve their quality of life. Thus, the growth of the agricultural sector has a direct impact on the standard of living of the population, particularly in rural areas where agriculture is a major source of income.

9. Economic Development:

    The agricultural sector plays a crucial role in the economic development, progress, and prosperity of Pakistan. It not only provides employment opportunities to a large segment of the population but also produces exportable items, which increases the foreign exchange resources. As a result, the growth of the agricultural sector is essential to achieve rapid economic development. In fact, the real GDP growth rate of Pakistan's economy is 6.0%, which underscores the importance of the agricultural sector in driving economic growth and development.

10. Increase in Government Revenues:

    While there is no direct tax on agricultural income in Pakistan, the government indirectly receives a substantial amount of tax revenue from the agricultural sector. This is achieved through the imposition of duties on imported technologies used in farming, taxes on chemicals and other inputs used in agriculture, and other indirect taxes that are levied on the sector. Thus, while the agricultural sector is a vital source of income and livelihood for many people, it is also an important source of revenue for the government.

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