Trends in agriculture-industry interlinkages in India: pre and post-reform scenario

Over the years the Indian economy has undergone a structural change in its sectoral composition: from a primary agro-based economy during 1970s, the economy has emerged as predominant in the service sector since the 1990s. This structural change and uneven pattern of growth of agriculture, industry and services sector in the post reforms period is likely to appear substantial changes in the production and demand linkages among various sectors, and in turn, could have significant implication for the growth and development process of the economy. This has triggered a renewed interest in studying the inter-relationship between agriculture and industry. The present paper is intended to examine the trends of interlinkages between the two sectors from a three sectoral perspectives for the pre- and post-reforms periods in India. The study observed that ‘agriculture-industry’ linkage has been deteriorating over the years and there has been directional change in the inter-linkages between the two sectors. Both the production and demand linkages were primarily from the industry to agriculture sector in the pre-reform period, which changed to from agriculture to industry in the post-reform period. Further, while the linkage was primarily through the production channel in the 1960s through 1980s, it translates primarily through the demand channel since 1990s.