This classification provides effective viewpoints from which to consider the agricultural sector's potential impact on the industrial sector of when the excess-labor economy attempts to take-off.
Since immediately after its independence, India has suffered from chronic food problems caused by rapid population growth. The terms of trade between agriculture and industry (Figure 1-4) only made the country's agriculture deteriorate rather than bringing about any advantage, until the food situation came to a crisis due to the two consecutive years of droughts in the mid 1960s. This was because a cheap food supply was required by industrialization during this period with the second and third phases of the 5-year Plan giving top priority to the industrial sector. This made imports supplement the food shortage. The per-capita daily foodgrain consumption (including pulses) was 450.45 grams (Standard Deviation = 19.74), on average for ten years until the agricultural crisis occurred in the fiscal year 1965, which was almost at the same level as the average of 458.65 grams (SD = 24.90) for the period from fiscal 1967 to fiscal 1994. However the consumption level up to the mid 1960s was attained not only by domestic supply but also by a great deal of imports of foodgrains including food aid. Imports of foodgrains were already full scale in the latter half 1950s, and the ratio of foodgrain imports to the total imports has always been above 10% since the 1960s. This meant a placing of tighter foreign-currency constraints on industrialization. At the time of the agricultural crisis in the fiscal 1966, foodgrains occupied 31.3% of the total imports. The amount of imported rice accounted for less than 10% of the total amount marketed domestically, whereas that of wheat exceeded 100% of the total wheat marketed domestically, and reached 230% in 1966. These figures demonstrate the scale of impact on the domestic foodgrain supply-demand balance of the import of foodgrains.
This implies that the conditions of the country's economic crisis in the mid 1960s were prepared in the late 1950s where import of food was restricting the amount of foreign currencies.
