Investment In Indian Agriculture

Using the decennial All-India Debt and Investment Survey from 1981-82 to 2012-13, this paper delves into the spatial and temporal trends in private fixed capital expenditure and its composition, among rural households in India. We also assess its relationship with public investment in agriculture. Amidst sizeable ups and downs, the magnitude and rate of growth in private investment in agriculture has gained momentum from 2000s except in Odisha, Himachal Pradesh, Jammu and Kashmir. An increasing preference of farmers to invest in residential land and buildings, and that at the cost of asset formation in farm business, is evident in agriculturally advanced states. Within agriculture, relatively higher investments in land improvement, machinery-implements, tractors, and livestock are identified over the period. Importantly, such investments are positively influenced by public investments in agriculture and irrigation in the high and low income states and also by public spending on input subsidy in the middle and low income states. An increase in public expenditure that is well targeted and is commensurate with farmers’ investment portfolio would reinforce a complementary relation between the two across-the-board. The impact of terms of trade on private investment though positive turns out to be statistically insignificant. Land acts as a constraint, indicating need for policy interventions that augment crop yield and can bring remunerative prices to farmers. A continued effort to improve the outreach of formal financial institutions for credit is warranted for higher private capital formation.

Documented and analyzed in this comprehensive account are the cross-country evidences in India that establish a relationship between capital and growth as well as between growth and poverty. The accelerated growth of the service sector, the almost stagnant growth of the industrial sector, and the decelerated growth of the agricultural sector have all been registered as patterns of growth in India during the last few decades. As a result, among other things, the rural-urban development divide has broadened and deepened, moving the agricultural sector to the top of the development agenda. The book analyzes macro evidences on investment behavior in Indian agriculture, shifting composition of public and private sector investment in agriculture, and the relationship among capital formation, agriculture growth, and poverty alleviation. It also provides comprehensive micro (field) level evidences on capital structure, growth, composition, capital intensity, the impact of capital stock on productivity of labor and land, and determinants of farm-level capital formation.

This book presents an extensive study on India’s agricultural and nonfarm sectors, examining prices, investments and policies, and suggesting various essential technological changes. It offers appropriate financial, institutional, and policy frameworks that can help to sustain agricultural growth and augment farmers’ incomes across geographical locations. Further, it addresses agricultural growth and rural poverty reduction through multiple pathways that also tackle varied geographical locations, making it a highly useful guide to understanding the changing contours in agriculture and rural areas across the country and among rural households with various social and economic backgrounds.

Agriculture sector still dominates the Indian economic scene by providing livelihood to majority of the population. In most of the developing countries including India, agricultural growth is a precondition for economic development. Agriculture and allied activities contributed nearly 50 percent to India’s national income. Around 72 percent of total working population was engaged in agriculture. Inspite of an impressive rate of growth in the GCFA, its share in the GCF in the economy has been found to be declining. Although some improvement was observed in the share of GCFA in the GCF of economy in 2001-02, at 8.65 per cent, it again fell to 6.96 per cent in 2010-11. Capital formation is usually defined as an addition to the stock of productive equipment’s over time. The terms ‘capital formation’ and ‘investment’ are used interchangeably though have some distinction. But at the present stage of development of Indian agriculture, an assessment of capital formation in the agriculture sector may miss many important items of investment which are not accounted. This is because of the fact that, majority of Indian agriculturists being poor subsistence farmers for whom farming is not a business enterprise but a mode of living, Capital investments on the farm generally take place through small bits of acquisitions and activities which lead to an improvement in their productive capacity. Sustained investment on productive assets in agriculture is a pre-requisite for augmenting agricultural growth.

This book is completely related to Economy and Agriculture. It tells about "Long run relationship between private investment and its determinations in Indian Agriculture."

Contributed articles on economic aspects of agriculture in India.

Despite strong overall economic growth and strengthening food demand, investment in Indian agriculture and agribusiness has remained sluggish, and growth in farm output has slowed, since the early 1990s. An array of policies and regulations affecting agricultural production, marketing, and food processing--along with weak infrastructure and a lack of market services--have discouraged private investment by farmers and large, vertically integrated agribusinesses. The policy environment has grown more investor friendly since the late 1990s and private investment appears to be responding, but significant barriers remain and the pace of future reforms remains uncertain.