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Agriculture is one of the most important sectors of Indian economy. Agriculture (including allied activities) accounted for 17 per cent of the Gross Domestic Product (GDP-at constant prices) in 2008-09 as compared to 21.7 per cent in 2003-04.

Notwithstanding the fact that the share of this sector in GDP has been declining over the years, its role remains critical as it accounts for about 52per cent of the employment in the country. Apart from being the provider of food and fodder, its importance also

stems from the raw materials that it provides to industry. The prosperity of the rural economy is also closely linked to agriculture and allied activities.

One of the biggest success stories of independent India is the rapid strides made in the field of agriculture. From a nation dependent on food imports to feed its population, today India is not only self-sufficient in grain production but also has substantial food reserves. Dependence of India on agricultural imports and the crises of food shortage encountered in 1960s convinced planners that India's growing population, as well as concerns about national independence, security, and political stability, required self-sufficiency in food production. This perception led to a programme of agricultural improvement called the Green Revolution. It involved bringing additional area under cultivation, extension of irrigation facilities, the use of improved high-yielding variety of seeds, better techniques evolved through agricultural research, water management and plant protection through judicious use of fertilizers, pesticides and cropping practices. All these measures had a salutary effect and the production of wheat and rice witnessed a quantum leap.

However, there are still a host of issues that need to be addressed regarding Indian agriculture. Indian agriculture is heavily dependent on monsoons. The monsoons play a critical role in determining whether the harvest will be rich, average, or poor. The structural weaknesses of the agriculture sector are reflected in the low level of public investment, exhaustion of the yield potential of new high yielding varieties of wheat and rice, unbalanced fertilizer use, low seeds replacement rate, an inadequate incentive system and post-harvest value addition.

There is an urgent need for second green revolution in Indian agriculture. Following steps need to be taken to achieve this objective:

1. Doubling the rate of growth of irrigated area;

2. Reclaiming degraded land and focusing on soil quality;

3. Improving water management, rain water harvesting and watershed development;

4. Bridging the knowledge gap through effective extension services;

5. Diversifying into high value outputs, fruits, vegetables, flowers, herbs and spices, medicinal plants, bamboo, bio-diesel, but with adequate measures to ensure food security;

6. Providing easy access to credit at affordable rates.

Industry

Industry accounts for 19 per cent of the GDP in 2008-09. About one-third of the industrial labour force is engaged in simple household manufacturing only.

The different industry sectors of India witnessed astronomical growth over the last 19 years. This growth of the different industry sectors of India is attributed to the Government of India's liberal economic policy. Previously, the Indian economy was of closed type and the government enterprises controlled all Indian market. The post-1990 Government of India economic policy endorsed a complete different economic policy and opened its market for foreign investments. This saw a lot of FDI coming to India. As a result, different industry sub-sector made huge progress, both technologically and economically.

Central Statistical Organization (CSO) classifies the industrial sector into 3 segments:

Mining and Quarrying, Manufacturing and Electricity, Gas and Water Supply.

Micro and Small Enterprises (MBEs)

As per the data on micro and small enterprises (MSEs) in the Annual Report of Ministry of Micro, Small and Medium Enterprises, 2006-07, the sector accounted for around 39 per cent of total industrial production, 34 per cent of the exports in the industrial sector and around 35 per cent of total employment among units engaged in manufacturing and services. The sector registered a robust annual average growth in value of output, exports and employment at 16.8 per cent, 20.0 per cent and 4.4 per cent, respectively

during the expansionary phase of 2003-07, before showing signs of slowing down in 200708 particularly in respect of employment growth to 2.9 per cent.

The problems cited by MSE borrowers in obtaining access to bank finance are insistence on collaterals/ guarantees, limited outreach of banks, rigid approaches, high interest and other costs, complex documentation, lack of supporting business development services and so on. From the banker's point of view, the critical factors affecting credit delivery to this sector are low equity base, absence of marketing tie up, diversion of funds, poor management and book keeping, higher NPAs, mounting of receivables due to delay in payment of bills especially during downturn.

Measures to increase flow of credit leading to almost three fold increase in the credit to this sector from public sector banks from Rs.67,600 crore as on March 31, 2005 to Rupees 1,90,958 crore as on March 31, 2009.

The major policies in regard to credit delivery to this sector are as follows.

1. Inclusion of MSE (as per revised definition) in priority sector with sub limits for the micro units.

2. Stipulation that collateral should not be taken for loans up to Rs.5 lakh to MSE units.

3. Providing credit guarantee for collateral free loans from the Credit Guarantee Trust Fund administered by SIDBI.

Micro, Small And Medium Enterprises Development (MSMED) Act, 2006

1. The MSMED Act, 2006 classifies enterprises broadly into two categories, viz., (1) manufacturing enterprises; and (2) service enterprises. These broad categories are further classified into micro enterprises, small enterprises and medium enterprises, depending upon the level of investment in plant and machinery and equipment as the case may be.

2. The existing provisions of the Interest on Delayed Payment Act, 1998 to small scale and ancillary industrial undertakings have been strengthened under the MSMED Act.

3. The Act also provides for constitution of a National Board for Micro, Small and Medium Enterprises under the chairmanship of the Union Minister for MSME, with wide representation of stakeholders.

Services

The Service Sector now accounts for about two third of India's GDP: 64 per cent in 2008-09. This sector has gained at the expense of both the agricultural and industrial sectors through the 1990s. The rise in the service sector's share in GDP marks a structural shift in the Indian economy and takes it closer to the fundamentals of a developed economy (in the developed economies, the industrial and service sectors contribute a major share in GDP while agriculture accounts for a relatively lower share).

Some economists caution that if the service sector bypasses the industrial sector, economic growth can be distorted. According to them service sector growth must be supported by proportionate growth of the industrial sector; otherwise the service sector grown will not be sustainable. It is true that, in India, the service sector's contribution in GDP has sharply risen and that of industry has fallen.

Phenomenal growth has been noticed in selected service sector segments like IT/ITES, telecom, banking, insurance and real estate, and civil aviation.