Forests play a vital role in the national economy. They are an important source of fuel and also of raw materials, such as timber and bamboo. The gum and katha are useful for domestic, industrial and agricultural purposes. They also provide materials for defence and communications as well as grazing for cattle.
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Forests help in the conservation of soil fertility and play an important part in the maintenance of the water regime of the land. The organic matter they yield improves the soil and increases the water-holding capacity of the soil thereby reducing the run-off.
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The presence of vegetation acts as a physical check to the velocity of the run-off and reduces soil erosion. They protect flat lands against desiccation and erosion caused by winds. They exert a beneficial influence on the growth of agricultural crops and on the climate of the region in which they exist.
Forest produce in India is of two kinds: major forests produce (mainly teak, deodar, sal, sissoo, chir, and kail), comprising timber and firewood; and minor forest produce consisting of such commercially important items as bamboo, cane, gum, resins, dyes, tans, lac, fibres, floss, medicinal plants, fodder and grass.
Export of forest products (both major and minor) has been on the increase, but imports have also been very high, only slightly lower than the value of exports. Many states and union territories have set up Forest Development Corporations to promote sale of forest products.
In most states, the gross revenue from forests has been far greater than the expenditure on forest activities, most notably in the states of Maharashtra, Uttar Pradesh, Karnataka, Kerala, Orissa and Andhra Pradesh. Gujarat, Punjab, Haryana, Tamil Nadu and the Andaman and Nicobar Islands have had greater expenditures than gross revenues.