Agriculture and allied activities constituted 37 per cent of the net state domestic product in 2011-12, while industry had a share of just over 17 per cent.
In the recent Global Investors Summit (GIS) at Indore, Chief Minister Shivraj Singh Chouhan and top government officials felt the state indeed needed to make a transition to generate employment.
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According to official figures, expression of interest on making investment to the tune of almost Rs 6.8 lakh crore was received during the three-day meet, of which big companies committed to pump in around Rs 100,000 crore. (MANY MILES TO COVER)
About Rs 70,000 crore, constituting 9.8 per cent of the total promised, is to come in food processing. Much of the investments are promised in the non-farm sector.
A robust food processing sector is critical for shifting an agrarian economy to an industrialised one, as it helps in effective absorption of farm surplus and also rural jobs.
Investments are committed to come in various fields such as power, cement, telecom, gas, semi-conductor fab, steel, iron ore, fertiliser and petroleum.
Data sourced from the Planning Commission showed agriculture and allied activities in the state have been recording a high double-digit growth rate since 2011-12 and clocked a high of 23 per cent in 2013-14, the highest in the country and much more than the national average, which hovers around four per cent per annum.
This growth has come in a short span of three-four years. Moreover, it has been primarily driven by cereals, particularly wheat, though horticulture also had its contribution.
Agriculture production in the state has increased from 24.75 million tonnes in 2009-10 to 37.66 million tonnes in 2012-13. Production of horticultural crops during the same period increased from 6.53 million tonnes to 18.10 million tonnes.
In contrast, industrial growth dipped from 5.05 per cent in 2011-12 to 2.15 per cent in 2013-14. Particularly bad was manufacturing, which fell from a growth of 3.89 per cent in 2011-12 to a contraction of 0.13 per cent. Overall, GDP growth during the same period in the state moved up from 9.69 per cent in 2011-12 to 11.08 per cent in 2013-14, the data showed.
To absorb the farm surplus, logic says industrial growth should be faster, as farming employs much more labour than industries.
"Historical evidence shows that whenever any predominantly agrarian economy wants to shift towards a manufacturing one, it needs to absorb two kinds of surplus: The surplus generated through farming and excess labour. It is still unclear as to how the state wishes to address these," said Jaya Mehta, eminent economist and social scientist, associated with the Joshi-Adhikari Institute of Social Sciences.
She said though the state government has claimed to generate around 170,000 jobs through its investment initiatives in the near future, it is not clear as to what kind of jobs will be created, what is the nature of skills these jobs require and whether the workforce currently available in the state possess those skill sets.
Mehta said the second set of problems could be related to land for setting up industries. Though the state has claimed to have created a land bank of around 26,000 hectares, not much is known on the land parcels, as, whether these have any legal encumbrances or not.
To this, senior state officials said the land bank created was free from any legal tangle, thoroughly identified and in the possession of the government.
"It also needs to be kept in mind that Madhya Pradesh is not an agriculturally homogenous state and some parts are extremely prosperous, while others are not. It needs to be seen whether this industrialisation benefits the less prosperous parts of the state," Mehta said.
Sachin Joshi, an activist associated with the Right to Food Campaign, said investment commitments made in the summit would require around 400,000 hectares but the land bank the government possess is only 26,000 hectares.
"In such a scenario, there can be only one option, of converting agriculture land into industrial use, but that would have its own problems," Jain said.
Nevertheless, the state seems determined to pursue its ambition of transforming Madhya Pradesh into a front-ranking industrial state from an agriculture-based economy. But does Madhya Pradesh have requisite resources and strength?