ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Synchronising Public Investment in Agriculture with Capital Requirements of Farmers

Increasing public investment in agriculture is not translating into higher rates of growth in private investment in agriculture, output, and farmers’ income. So this article probes the missing elements that might have come in the way by analysing the state-level data from 1981–82 to 2015–16.

Capital formation, used synonymously with investment, is undertaken in agriculture and allied activities by the public and private (mainly household) sectors. The share of public capital formation in agriculture has steadily gone down over the last 50 years. So, an overwhelming share of the agricultural investments is now of the private household sector at 82%, followed by public sector at 15% and the remaining by the private corporate sector.

Recognising that investments on both public and private accounts are imperative for agricultural growth and development, the key concerns have centred around: (i) How to increase investments in agriculture through personal savings, institutional lending, and inviting the corporate sector? (ii) How much is the “crowding in” effect of public investment in agriculture, rural infrastructure and investment support on private investments? (iii) Does public spending on input subsidies cut down investments in agriculture? (iv) What ways can input subsidies be rationalised to impact farmers’ investment and hence crop productivity? (v) Which type of public investment has the maximum potential to mitigate poverty and inter- and intra-regional inequalities in income and output? (vi) Can capital use efficiency in major-medium irrigation systems be improved through better institutional arrangements and governance? (vii) What are the futuristic public investment requirements for augmenting farmers’ income in the medium term and also for mitigating the growing risks due to climate change?

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Updated On : 6th Jul, 2023
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