Agriculture dominates change in India through its causal links with factor and product markets. It employs 60 per cent of
the labour force and contributes 26 per cent of the gross domestic product. In the poorer states, its contribution to the domestic product is close to 40 percent. Low
productivity in agriculture has led to the concentration of the poor in this sector. Due to the sheer size of the
agricultural economy and the importance of its major products in the diets of the poor, gains in agricultural productivity have significant potential impact on poverty. It is possible to reduce poverty as well as expand the domestic market for industry by raising labour productivity in agriculture and spreading its gains among the low income groups. Modelling of the linkages between agricultural and industrial growth has shown that a 10 percent increase in agricultural output would increase industrial output by 5 percent and urban workers would benefit by both increased industrial employment and price deflation. However, there is a symmetry of adjustments in the demand and supply of agricultural goods, whereas supply-side adjustments involving re-allocation of resources and net additional investment for capacity expansion take a much longer period. There is a widely held view that in a large country like India, the demand stimulus for industrialization would come mainly from agriculture with less social and economic costs.