Over the years 1921 -91, the size of labour force dependent on agriculture had more than doubled and over the next decade is projected to going by more than 25 per cent. This is contrary to the development economists’ observation that as country develops the share of labour force dependent upon agriculture as a source of livelihood declines. The occupational structure of the country has shown a lack of flexibility, the large proportion of the increasing labour force, in the absence of any alternative employment opportunities, has been absorbed in agriculture. It is observed that while the share of agriculture in GDP has been declined significantly, its share in the manufacturing sector has gone up. However, corresponding to this structural shift in production, the structure of employment has shown little change.

Since agriculture contributes significantly in the National Income, this sector is treated as major source of savings and hence capital formation for the economy. The pace of development is largely conditioned by the rate of capital formation in the economy. Since independence, large investment, both public and private, has been made in agriculture. In areas where agricultural practices are traditional, investment has also been on traditional lines like land and its improvement, tools and implements, farm structures, etc. But the pailern of investment in progressive areas, where modern technology has been adopted, has been predominantly in irrigation, land improvements, farm machinery and other infrastructures. Of course in recent years public investment in agriculture sector has declined. To stimulate growth, substantial capital investments are required for various infrastructure and inputs.