chapter  9
29 Pages

Transfer of Resources from Agriculture to Non-agricultural activities: the Case of India.

I. SURPLUSES: DOCTRINE AND FACT Of India's 540 million people, about 70 per cent depend on farming for their livelihood. They are supported by only 20-25 per cent of India's capital stock. Largely as a result, they produce only 40-45 per cent of India's gross output. Despite the substantial growth in Indian living levels, these relationships have not been substantially disturbed by twenty years of development planning; if anything, the inequality between farmers and townsmen, both in capital endowment and in levels ofliving, has increased somewhat. Yet the average productivity of labour is much lower in agriculture than in industry; of callal, much higher; and in this case what is true of the average roducts is almost certainly also true of the marginal prod ctS.l The a priori implication is that general labour should : leave agriculture for industry, while capital should be transferred from industry to agriculture.