Performance of Agriculture in the Changing Structure of the Orissa Economy: Issues Revisited

Abstract

The economy of Orissa is characterized by the dominance of agricultural sector. Agriculture continues to be the mainstay of the state's economy with contribution about 28.13 percent to net state domestic product during 2001-2002. The agriculture alone provides direct and indirect employment to around 65 percent of the total workforce of the state as per 2001 provisional census. Nevertheless, the sector is continues to be characterized by low productivity. Although the contribution of agriculture to state income has significantly declined, the percentage of work force engaged in agriculture has remained somewhat unchanged. This implies that there has been an overcrowding in agriculture without any perceptible increase in production. Therefore, agricultural growth holds the key to the overall development of the state by way of creating employment, generating income, providing raw materials to the industrial sector and last but not the least ensuring self-reliance in food production and food security to the deprived sections.

In this paper, we have studied the pattern of structural change in the last two decades. It is observed that, while the share of Primary sector has gone down drastically in gross state domestic product in 90's vis-a-vis 80's, the secondary or manufacturing sectors share is hovering around 17 percent throughout last fifty years. The only substantial change is occurred in service sector. In 1980, the share of service sector in GSDP was 30 percent. In 2000, it is reached at 45 percent. The issue at hand is that, while the share of primary sector has gone down in state income, it is not showing any trend of releasing labour force. In 1951, 72.86 percent of total workforce was engaged in primary sector, also in 1991, 72.9 percent is workforce is engaged there. Hence, whatsoever developmental effort has been undertaken by state, the fruit is unequally distributed as per capita income of service sector worker is much higher than primary sector.

In this scenario, we have gone to explore the productivity in agriculture district wise. It is found that inter district variation in agricultural productivity is very high. Also, the input use in agriculture is skewed across the districts. In the plain and coastal land, the high productivity is explained by higher use of input. It is a vicious circle. Poverty reduces purchasing power i.e. in our case low application of input, and this again leads to poverty due to low agricultural productivity. This gives a strong message. That is Orissa which is a typical rural based agrarian economy, any developmental effort without due consideration for agricultural improvement will be proved nullified. It is also shown that over the years, the plan outlay on agriculture has gone down which reflects the priority of state government. Finally, we have tried to explain the role of several input in explaining agricultural productivity and concluded the paper with few suggestions.

Keywords: Structural Change, Agricultural Productivity, Orissa Economy, Panel data

JEL Classification: N55, O13