Growth & Welfare Public Investment Contribution in The Agricultural Sector To Growth & Welfare

Running head: Public Investment Contribution in the Agricultural Sector to 1
Growth & Welfare

Public Investment Contribution in the Agricultural Sector to Growth & Welfare
Public Investment Contribution in the Agricultural Sector to Growth & Welfare
Anuj Singh Rajawat (2137003)
Shrestha Paritosh Kundu (2137061)
Manisha Rai (2137042)
MEC143_Agricultural Economics
CIA-3
November 20, 2021
CHRIST (DEEMED TO BE UNIVERSITY)

Public Investment Contribution in the Agricultural Sector to Growth & Welfare 2
Index
 Introduction
 Contributions Made
 Background of the study
 Analysis –
 Relationship of public investments with growth in agriculture.
 Public investments & the welfare of agricultural community.
 Important schemes.
 Conclusion
 References
Introduction
Agriculture plays an essential role in process of economic development of less developed
country like India. Agriculture and related activities account for almost 50% of India's national
income. About 72% of the total workforce was engaged in agriculture. at the time of
independence. These confirm that Indian economy was a backward and agriculturally based
economy after 61 years of independence the share of agriculture in total national income
declined from 50% in 1950 to 18% in 2007-08 but even till today more than 60% of the
workforce is engaged in agriculture.
Agricultural share in the Indian economy is gradually declining to less than 15% due to
the high growth rate of the industrial and services sector, but the importance of the sector in
India's economic and social structure far exceeds this indicator. First, almost three-quarters of
Indian families depend on rural income. Second, the majority of India's poor (about 770 million,
or about 70 percent) live in rural areas. And third, India's food security relies on grain growth
and increased fruit, vegetable and milk production to meet the needs of population growth as
income grows. To achieve this, a productive, competitive, diverse and sustainable agricultural
sector must emerge at an accelerating pace.
India is a global agricultural powerhouse. It is the world's largest producer of milk,
legumes and spices, with the world's largest herd of cows (buffalo) and the largest cultivation
areas of wheat, rice and cotton. It is the second largest producer of rice, wheat, cotton, sugar
cane, farmed fish, mutton, goat meat, fruits, vegetables and tea. The country has about 195
million hectares of arable land, of which about 63 percent is irrigated (about 125 million
hectares) and 37 percent is irrigated (70 million hectares). In addition, forests cover
approximately 65 million hectares of land in India. Public area farming examination plays a
basic part to play in wiping out neediness all throughout the planet. The private area can't fill the
extraordinary job served by open farming examination, for a long time. Private speculation needs
are driven by market factors and may not help public premium, (for example, wellbeing and
security checking and authorization) similarly as open examination. Furthermore, legislatures
lead fundamental/applied examination to prod monetary development and advancement with
next to no assumption for direct open settlement.
Rising interest for food and farming items can be met through (1) extending assets
utilized underway, or (2) raising the usefulness of existing assets, estimated as absolute element
efficiency (TFP) development. Public farming innovative work (R&D) limit is a critical
determinant of a nations for some time run TFP development. China and Brazil, for instance,
have put vigorously in farming innovative work and out-played out the world in TFP
development.
Contributions Made
We as a group tried our best to coordinate with each other & dig deeper into the research.
All three of us contributed in different ways. Anuj & Shrestha took the efforts to extract the data
related to growth of GDP in agriculture & Gross Capital Formation, & formed the basic structure
of its analysis part, therefore brain storming of growth aspect through several timelines was the
niche of Anuj & Shrestha. For the welfare aspect, Manisha took the responsibility of writing &
analysing the important factual understanding of the phenomenon. More than half of the policies
were covered by her, & some of them were covered by Anuj. Background study part covered
thoroughly by Shrestha, & the other two – Introduction & conclusion were done by Manisha &
Anuj respectively. The compilation & editing was done by Anuj.

Background of the study
Agriculture productivity was quite poor when India got independent in 1947. (About 50
million tonnes). Agriculture was mostly rainfed, and it was mostly subsistence farming, with
limited farm power and conventional tools and equipment. Agriculture provided a living for
more than 80% of the inhabitants in rural areas.
In its 1928 report, the Royal Commission on Agriculture emphasized the importance of
using science to develop and distribute innovative agricultural technology for irrigated, arid, and
semi-arid areas. However, in comparison to the complexity and diversity of the problems that
needed to be solved, the amount of effort put into agricultural engineering research and
instruction until 1947 was negligible. India adopted an agricultural development plan after
independence that emphasized self-sufficiency in staple grains such as wheat and rice.
Consolidation of properties, eradication of landlordism, and other agrarian reforms were
implemented. The farmer's situation appears to be glorious in the early decades, but policy
stagnation, ignorance, and bad vision lead to the condition's demise.
Agriculture was given importance after independence when Five Year Development
Plans were developed in 1950. However, it was not until the 1960s that a number of large
projects and programmes were implemented in the country, as well as investments, for the
benefit of farmers. Apart from that, agricultural research activity ramped up and received a boost
throughout this period.
Prime Minister Lal Bahadur Shastri coined the term "Jai Jawan, Jai Kisan" in the 1960s
and successfully launched milk cooperatives, which eventually ushered in the White Revolution;
Prime Minister Indira Gandhi sowed the roots of the Green Revolution. Farmers did the rest
while the government imported high-yielding dwarf wheat seeds from Mexico and provided
irrigation as well as external inputs such as chemical fertiliser and pesticides.
The first harvest with the introduction of Green Revolution technology was a record
three million tonnes higher in 1967. The country hasn't looked back since. India has progressed
from a period of food imports to one of food self-sufficiency.
However, the government's financial assistance to farmers is seldom known. Wheat's
Minimum Support Price (MSP) was only 76 Rs. per quintal in 1970. The policymakers must be
commended for bringing in what was essentially a famine-avoidance plan by providing a higher
assured price to farmers as well as an assured market (by establishing the Food Corporation of
India). The extraordinary turnaround was only made possible by a courageous farming
community in a country that had experienced 28 famines during the British Raj.
For a decade and a half, farmers enjoyed a golden age. Despite the fact that the Green
Revolution had largely ignored small farmers, an attempt was made to present a picture of
affluence. As a sign of wealth, the image of a progressive farmer operating a tractor was
displayed. In actuality, the increase in output did not correspond to an increase in agricultural
income. While successive governments were pleased with bumper harvests, agriculture as a
whole was ignored. Agriculture's downfall began shortly after the mid-1980s, when it was
coupled with a diminishing rate of public sector investments.
Another important aspect of agricultural progress is the success in eliminating
dependence on imported grains. India's agriculture has not only made progress in terms of
production and yield, but also contributed to structural changes. All of these milestones in Indian
agriculture are brought about by a series of steps initiated by the Indian Government. These
include land reform, the establishment of agricultural price committees aimed at ensuring
reasonable prices for producers, new agricultural strategies, investment in research and advisory
services, provision of credit lines, and improvement of rural infrastructure. Part of the step.
Despite these advances, the post-WTO agricultural situation deteriorated, affecting all sub-
sectors of agriculture. When the World Trade Organization (WTO) was established in 1991,
complacency countries began to shift away from agriculture. As Europe and the United States
also accumulated food, milk and butter surpluses over the same period, general economic
thinking turned into global competitiveness, lowering import tariffs and enabling cheaper
imports. At the same time, farmers were given full responsibility to keep food inflation under
control. Producer prices for agricultural products remained frozen around the world. According
to a UNCTAD study, farm gate prices have not changed for 20 years from 1990 to 2010. Since
then, the pessimistic trend has continued. Farmers were denied their legitimate income, but other
parts of society were given a big leap in wages. Meanwhile, farmers' wheat prices have risen 19-
fold over the same period. Agriculture has become inefficient and repeated demands for a place
of equal competition have faced years of negligence.
Farm suicide is the result of permanent negligence and indifference in the agricultural
sector. In addition to politics, agronomists and economists also play an important role. We
cannot escape the tragic agricultural crisis that has been going on for nearly 20 years.
About 20 years after the Green Revolution began, at some point in the early 1990s, the
idea of the world economy shifted to shrinking agriculture and stimulating industry. The World
Bank / IMF and international financial institutions have begun to suggest that economic growth
is possible only if few people remain in agriculture. In 1996, the World Bank's World
Development Report proposed that by 2015, 400 million people would be relocated from rural to
urban areas in India over the next 20 years. This is twice the total population of Britain, France
and Germany, which has also seen the establishment of the world. In 1995, trading institutions
shifted their focus to retail. The mainstream of economic thought has shifted to reducing
agricultural support and importing cheap food with high subsidies from developed countries. As
a result, the World Bank and multinational corporations have promoted land acquisition, contract
farming, and the creation of supermarkets, paving the way for corporate farming. In other words,
ignoring smallholder farming is part of the blueprint. This is part of the pre-planned economic
strategy that is being imposed. State intervention in the agricultural sector left large and small
farmers vulnerable as they struggled to compete in the global market. Farmers face many threats
in every respect, including uncertain yields, uncertain prices, inputs (wrong quality) and
technology (groundwater flow limits). Agricultural products are being thrown into India from
increasingly developed countries. The Agricultural Markets Commission (APMC) legislation has
been amended to sensitize the agricultural market and enable contract farming. The restrictions
on futures trading contracts for many commodities have been lifted, allowing foreign direct
investment (up to 100%) in many sectors of agribusiness. Agriculture has become a more risky,
low-profit activity. Increasing input costs far outweighs rising production prices and productivity
gains, leading to lower agricultural returns (CACP, 2000). In addition, the agricultural
diversification of smallholders and neighbouring farmers towards high quality crops has made
them uneasy and exacerbated the problem of malnutrition.
Analysis
Agriculture is that ‘sine qua non’ sector, without which Indian economy & wellbeing
would find itself in shambles. Whether it sees a rise or a fall in development, its existence can
never be underestimated, as it provides the source of livelihood to almost half of the population
& feeds the stomach of the whole country, directly or indirectly. As we discussed the difference
between public & private investments in agriculture, now we will analyze the trends observed in
the former one & its direct impact on growth & welfare.
Let’s discuss the growth aspect first.
Figure 1: Average Annual Investment in Agriculture (Rs. Crore)
Average Annual Investment in Agriculture

Public Investment Total Investment in Agriculture Share of public investment in total Investment (in %)
23.39
2000-06 22387
5237
28.23
1990s 17136
4837
45.11
1980s 14283
Decades
6443
39.93
1970s 12149
4851
42.50
1960s 6833
2904
0 5000 10000 15000 20000 25000

Amount (Rs. Crore)
Source: Data have been taken from 'Ramesh Golait & S.M. Lokare's paper, which
was computed from 'National Accounts Statistics at a glance, Ministry of Agriculture,
GOI'.
The above trends depict the waning public investments from the total agricultural
investments. However, the latter is on continuous skyscraping mode due to the rise in private
investments made by individuals & institutions (a real picture of which would be seen later on).
The share of public investments was quite constant till the economic reforms happened in the
1990s, primarily due to the green revolution. But the missing stone from the renaissance in the
Indian Economy that took place, later on, could be identified from here, as the share of public
investments fell from around 45% to 28%, & kept declining in the new century too. This was just
the overall average picture of the state of public investments in the country.
Let’s have a look at the relationship between the GDP in Agriculture sector with that of
Gross Capital Formation by Public Sector in Agriculture
Table 1: Gross Capital Formation in Public & Private Sector in Agriculture in
Relation to Gross Domestic Product in Agriculture (At 1993-94 prices) (Rs. Crore)
Years GDP in Gross GCFpu as
Agriculture Capital Formation %of GDPag
(GDPag) in agriculture
through public
sector (GCFpu)
1980-81 159293 7301 4.58
1981-82 167723 7130 4.25
1982-83 166577 7092 4.26
1983-84 182498 7196 3.94
1984-85 185186 6921 3.74
1985-86 186570 6213 3.33
1986-87 185363 5864 3.16
1987-88 182899 6045 3.31

1988-89 211184 5699 2.70
1989-90 214315 4972 2.32
1990-91 223114 4992 2.24
1991-92 219660 4376 1.99
1992-93 232386 4539 1.95
1993-94 241967 4918 2.03
1994-95 254090 5397 2.12
1995-96 251892 4849 1.93
1996-97 276091 4668 1.69
1997-98 269383 3979 1.48
1998-99 286094 3870 1.35
1999-00 286983 4756 1.66
2000-01 286666 4435 1.55
2001-02 305263 5488 1.80
2002-03 283393 4760 1.68
2003-04 310611 5923 1.91
2004-05 310486 6051 1.95
2005-06 329168 6385 1.94
2006-07 334511 6122 1.83
2007-08 362255 6534 1.80
2008-09 390012 6298 1.61
2009-10 424418 6316 1.49

Source: Data have been taken from Poonam Singh's paper, 'Declining Public
Investment in Indian Agriculture after Economic Reforms: An Interstate analysis' which
was taken from ‘National Account Statistics 2000, 2001(Back Series 1950-51 to 1992 -93)
2004, 2005 and 2007, 2013, C.S.O., Government of India’.
The above data highlights the three important decades of India, i.e., before economic
reforms, economic reform period & later period. Following graphs & statistical analysis would
help it much better to understand it.
Figure 2: GCF in Agriculture by Public Sector (GCFpu) as % of GDP in
Agriculture (GDPag)
GCF in Agriculture by Public Sector (GCFpu) as % of

GDP in Agriculture (GDPag)
5.00
4.50
4.00
3.50
3.00
in %
2.50
2.00
1.50
1.00
0.50
0.00
19 -81
19 -82
19 -83
19 -84
19 -85
19 -86
19 -87
19 -88
19 -89
19 -90
19 -91
19 -92
19 -93
19 -94
19 -95
19 -96
19 -97
19 -98
19 -99
20 -00
20 -01
20 -02
20 -03
20 -04
20 -05
20 -06
20 -07
20 -08
20 -09
0
-1
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
19
YEARS
The decline in the share of GCFpu as % of GDP in Agriculture could be attributed to the
shift of a large pool of the investments in subscribing subsidies for power usage, fertilizers,
cheap credits & other agricultural-related inputs. This preference for current expenditure on
subsidies instead of catapulting it to widen the irrigation pipeline across the country led to the
decline in the proximity of Gross Capital Formation through public investment in agriculture. As
we can see above in the graph, drawn from the data provided, a continuous decline throughout
the years, even close to 1% now.
To understand the symmetry between GDP in agriculture & GCF in Agriculture through
public investment, we run the correlation test for the data on MS-Excel, by taking GDPag &
GCFpu as our variables & found the following result:
GDP in Gross Capital Formation in
Agriculture (GDPag) agriculture through public sector
(GCFpu)
GDP in 1
Agriculture (GDPag)
Gross Capital -0.1704951 1
Formation in
agriculture through
public sector
(GCFpu)
The negative correlation of GDP & public investment in agriculture shows the lousiness
of capital formation in agriculture made between 1980-2010. As we depicted the whole data set
of the period, we saw a rise in the absolute amount of GDP in Agriculture (in Crores). The
negative correlation shows that the public investment didn’t contribute much to the rise in the
absolute value of GDP in agriculture. The real metric of that overall rise in GDP of agriculture
might be because of other factors, like better productivity, better monsoon, the outperformance
of few states, private investments related policies by government, etc.
When allied activities like fisheries, plantations, forestry & wildlife, etc., are counted, a
broader picture comes to our mind. Looking at the share of Agricultural sector & allied activities
in our overall country’s GDP throughout several decades since independence:
Figure 3: Share of Agricultural & allied sector in GDP of India
Share of Agricultural & allied sector in GDP of India
2014-15 17
2013-14 17.1
2012-13 13.7
2000-01 22.3
Decades/Years
1990-91 29.5
1980-81 35.7
1970-71 41.7
1960-61 47.6
1950-51 51.9
0 10 20 30 40 50 60
Share in GDP (%)
Source: Planning Commission, Government of India, July 2015
During the time of independence, the agricultural & allied sector contributed the
maximum to the total GDP of India & acted as the most crucial bone of our Indian Economy.
But checking the trends of its performance from hindsight now, we see a meager performance of
the sector, but the irony is that it still deploys the majority of the population into employment &
millions of livelihoods depend on it. There are many such reasons for its downfall, but since our
focus here is regarding public investment, we will stick to it only.
Figure 4: Public Investment & share of Agriculture in GDP
Public Investment & share of Agriculture in GDP

Share of public investment in total agricultural investment (in %) Share of Agricultural & allied sector in GDP of India
60.00
50.00
40.00
(in %)
30.00
20.00
10.00
0.00
1960s 1970s 1980s 1990s 2000-06
Sources: Data have been taken from 'Ramesh Golait & S.M. Lokare's paper, which
was computed from 'National Accounts Statistics at a glance, Ministry of Agriculture,
GOI'. & ‘Planning Commission, Government of India, July 2015’.
The period of 1970s & 80s saw a peak in public investment because of the outreach of
the green revolution in several parts of India. Although, the share of Agriculture & allied sector
in GDP kept declining despite it, particularly due to growth of service & manufacturing sectors.
But a 45% to 28%, i.e., approximately 17% decline can’t be just excused for the development of
other sectors & lack of investments by successive governments should be blamed for it. If it had
been adequate & instead of allocating it to less capital forming applications like expenditures in
subsidies, welfare schemes, etc, the chart for a share of agriculture in GDP could have been a
little stable.
Some important points of concern that we found related to growth aspects due to public
investments from the paper of Golait. R & Lokare. S.M. (2008) are:
 The investment made to develop the rural areas too saw a slump since the 1990s.
 Less investment in infrastructure, like irrigation, farm mechanization degraded the
growth of agriculture for many years.
 Just like the reach of the green revolution was limited to some states only during the time
of its inception, technology is still at the hands of the limited proportion of the population
& hasn’t seen an equitable transfer of it.
 Rotten storage facilities & warehousing have damaged the quality of agricultural produce
an immense number of times in history, fluctuating the prices & supply at the final
frontier of this dilemma.
The recent government pushes for the private investments more in agriculture, which
already exists according to our analysis by now, because the governments have failed to mark
any solid presence through their pipeline. 2011-12 and 2014-15 period saw the gross capital
formation in agriculture dipping from Rs. 2,74,432 Crore to Rs. 2,54,495 Crore. Out of this
private contribution to this was Rs. 2,38,717 Crore in former and Rs. 2, 20,434 in the latter
period. The public contribution was just Rs. 35,715 Crore in 2011 and Rs. 36,061 Crore in 2014,
constantly staying to the meagre levels & unable to generate enough Capital Formation to
catalyst the growth of agriculture (“Private and government: Who is investing how much on
agriculture?”, 2019).
Despite forming enough capital in the sector, governments at the center across time
immemorial have had a concern for the state of agriculture & constructed several policies related
to it, because the majority of the livelihoods in India are dependent on agriculture. Setting up of
RIDF (Rural Infrastructure Development Fund) in 1995 to gallop the private investments in
agricultural fields was one such measure, which helped in nullifying the absence of public
expenditures in agriculture. RBI took several steps to increase the inflow of investments by
Banks too in the sector. ‘Bharat Nirman Programme’ in 2005 emphasized rural infrastructure.
Other measures like Diversification of agriculture, marketing infrastructure setup, renovation of
water management, micro-irrigation, etc. were too adopted to supplement the sector through a
different channel (“Golait. R & Lokare. S.M.”, 2008).
Finally, a more comprehensive approach is needed to extract the growth variable from the
agricultural sector & public investments could play a sincere role in achieving it. A major push
of public sector investments should be on building farmer-friendly infrastructure which could
minimize the cost & time & enrich him/her with greater farm yield. It could be done by investing
in: irrigation, farm mechanization, investment in research & development, water management,
storage facilities, marketing channels, less developed areas like eastern India, transportation
easiness like roads, waterways, etc, Also, the number of Regional Rural Banks should be
encouraged in all over India, in institutionalizing the credit infrastructure. Therefore, there is an
urgent need of shifting the resources from unnecessary expenditure burdens & building the
necessary infrastructure & support channels to increase the agricultural growth through public
investments, which would lead to the overall development of the Indian Economy.
Now we will look at the welfare aspect of public investments made in agriculture.
Income of the farmers between the period 2002-2003 and 2012-2013. (a review of
study of Thiagu Ranganathan paper “Farmer's Income in India: Evidence from secondary data)
Farm household income has been classified into income from animal husbandry, crop
cultivation, non-farm business enterprise and wages and salaries.
The annual household income grew at 3.7% per annum, from INR 53,330(2002-2003) to
INR 77,283 (2012-2013). However, the growth was not uniform. The income of the agricultural
wages increased (6.4%) followed by crop husbandry (4.3%) and the income from animal
husbandry increased at 13.2% per annual.
While in some states like Haryana (8.3%), Rajasthan (8.1%) and Odisha (7.6%) the real
income of the farm household showed a growth between the period 2002-03 to 2012-13. The
other states of Assam (-0.3%), Bihar (-0 8%) and west Bengal -1. 3%) recorded low growth
during the period 2002-2003 to 2012-2013.
The slow growth during this period was accompanied by increasing inequality.
The lowest among the farmers groups in terms of landholding earns the least. And India
primarily consists of small and marginal farmers defined as having landholding below two
hectares (Ha). India's 85% of landholding are below 2 Ha. This shows great inequality in the
farmers income. The agrarian reforms that land will be redistributed to the landless farmers and
gives them the ownership of cultivators could not be successful. During the period 2002 to 2003
and 2012-2013 the lowest land class earned INR 54,147 while the largest land class earned INR
4,52,299. While the large landholder earns more from crop cultivation (86%) the lowest land
class earns more from wage (63%).
The majority of the farmers undertakes cultivation at two seasons I. E kharif and rabi.
The profitability of the farmers was much higher in 2012-13 in both the seasons as compared
with 2002-2003. And the profit gained from kharif was higher than the profit gained from rabi in
2012-2013 whereas profit gained from rabi was higher than kharif in 2002-2003.
Household undertaking livestock earn more in rabi (INR 9,131) as compared to kharif
(INR 8.712). Also, the profitability in Rabi is higher (2.20) than kharif (1.94). due to low costs in
feed.
Also, the proportion of farm households leasing -in- land in 2012-13 increased than 2002-
2003 which was 12.76% an increase by 3.66%. The, best reason could be the increase in the
stance of tenancy or due to increase in lease rent amounts.
Figure 5: FARMERS DEBT AND YEARLY INCOME SINCE 2003

Figures in rupees
120,000
100,000
80,000
60,000
40,000
20,000
0
2003 2013 2019
YEARLY INCOME OUTSTANDING LOAN
Source: Data have been taken from Samrat Sharma paper which was computed
from Ministry of statistics and Programme Implementation
Average income rose four-fold while debt surged nearly six times since 2003.
In 2012-2013 about 52% of farm households were in debt. This has increased to 57.7% in 2019.
Over 50% of agricultural households in the country were in debt with an average outstanding
loan per household at Rs 74,121 in 2019 compared with Rs 47,000 in 2013.In both the years
Andhra Pradesh recorded the highest debt. And Nagaland the lowest. About 69.6% of the loans
were from institutional societies and government agencies and 20.5% were taken from
moneylenders. The reason for farmers increasing loans can to attributed to the loans taken for
farm mechanization (almost 95% tractors are taken on loans) and increasing high value
agriculture. Thus, from the figure we can extract that the income and debt of the farmers are
positively correlated that is as income increases debt too increases.
In order to increase the welfare of the farmers centre came up with many
schemes. Some of the major central sector and centrally sponsored schemes which
increased the welfare of the farmers are:
 Crop Insurance Scheme: Pradhan Mantri Fasal Bima Yojana
Government implemented the crop insurance scheme- Pradhan Mantri Fasal Bima Yojana a
centre sector schemes on 18th February 2016 which was a milestone initiative in providing a risk
solution at the lowest uniform premium across the country for farmers. Only 2% of premium is
to be paid by the farmers for the Kharif crops and 1.5% for the Rabi crops. The scheme also
extends support to the farmers during the entire cropping cycle for losses arising out of prevented
sowing and mid-season adversities. The scheme covers over 5.5 crore farmer applications year
on year. 70 lakh farmers benefitted even during the time of pandemic from this scheme. (PIB
Delhi, 2021 https://pib.gov.in/PressReleaselframePage.aspx?PRID=1738233 )
 Interest subsidy for short term credit to the farmers
Interest subsidy for short term credit to farmers which is a centre sector project came into effect
on 2006-07 aims to provide short term credits to farmers at subsidized interest rate. The scheme
permits farmers to take loans up to 3 lakh a year and were given one year time to make
repayment with a interest rate of only 4%. In the phase of pandemic many farmers are not able to
reach banks due to the restrictions on the movement of people and as a result they are not able to
pay their short term loans dues to the banks. However, prohibition was granted for three months
on payment which felled between March 2020 and May 2020. Government is providing
concessional crop loans to farmers through banks with 2% interest subvention to banks and 3%
additional benefit on timely repayment to farmers. (https://www.nabard.org/content.aspx?id=602
 Income support scheme/Pradhan Mantri Kisan Samman NidhiPm-kisan)
Income-support scheme or Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) a centre sector
scheme was launched by the government on 12th September 2018 to ensure the social Security
facilities to the old age small and marginal farmers who have no means of livelihood and enough
savings to take care of their basic necessities. This scheme is applicable only to the farmers of
smaller and marginal groups who reached .60 years and above with a minimum fixed pension of
Rs3000. About 12 crores of farmers have been benefitted from this scheme so far and majority
of them are from Uttar Pradesh (2.5 crore). (https://m.economictimes.com/wealth/pm-kisan-
scheme/amp)
 Rashtriya Krishi Vikas Yojana
Rashtriya Krishi Vikas Yojana a centrally sponsored scheme was initiated in 2007 to ensure
holistic development of agriculture and allied sectors. The scheme has been quite successful and
has been implemented across two plan periods that was the eleventh and twelfth five-year plan.
The scheme motivates and encourage states to increase public investment in agriculture and
allied sectors. Total allocation made in this scheme was 15,722 crores. (Department of
Agriculture and farmers welfare” Rashtriya Krishi Vikas Yojana”
https://agricoop.nic.in/en/divisiontype/rashtriya-krishi-vikas-yojana)
 National Project on Agro-forestry

National Project on Agro- forestry a centrally sponsored scheme was launched on February 10th
which deals with the practise of integrating crops, livestock and trees on the same plot of land.
India becomes the first country in the world to \ adopt an agroforestry policy. There is a potential
in agroforestry to achieve sustainable agriculture while optimising its productivity and mitigating
climate change impact. Although some farmers are practicing agroforestry to maintain healthy
soil and secure food supplies, the practice of agroforestry has been declining sharply in India in
the past few decades. Agroforestry holds multiple benefits for the farmers. Majority of the
farmers are small-landholders (80%) owning less than two hectares or less and 60% of the
cultivated area and they rely mostly on the rains for the irrigation. These rainfed farms are under
stress due to improper irrigation and low biodiversity and they see agroforestry as the best
solution to meet the challenges of food, energy, nutrition, employment and environment security.
Unemployment can be reduced by adopting agroforestry. As per the estimates of 2014, 64% of
the timber requirement is met through trees grown on farms which generates 450 employment-
days per hectare per year. As land-holding size is decreasing the only way to optimize farm
productivity is to combine tree farming with agriculture. (Jitendra, 2014 “India becomes the first
country to adopt an agroforestry policy”)
 National Horticulture Mission
National Horticulture Mission (NHM) is an Indian horticulture scheme provided by Government
of India. It was launched under the 10th five -year plan in the year 2005-06. Horticulture sector
play an important role in doubling farmers income. The Government of India allocated Rs 2250
crore for development of horticulture sector during 2021-22 which was comparatively higher
than the previous year. Horticulture production exceeded the agricultural production due to the
government intervention. In the year 2019-20 the country recorded its highest ever horticulture
production of 320.77 million hectares. Mission for Integrated Development of Horticulture
played a very important role in increasing the area under horticulture crops and resulted in the
increase in the area and production by 9% and 14% respectively during the year 2014-15 to
2019-20.(PIB Delhi, 2021 https://pib.gov.in/PressReleaselframePage.aspx?PRID=1717447)
 National Bamboo Mission
India ranks second in terms of bamboo cultivation while China stands first. The National
Bamboo Mission (NBM) was launched by the Government of India in October 2006 to focus on
the issue regarding the development of the bamboo industry in the country. National Bamboo
Mission of 2006 was brought under the Integrated Horticulture Development Mission during the
year 2014-15 and was extended till the year 2015-2016.Since its inception 07,3,61,791 ha of land
has been covered with bamboo plantations out of which 91,715 ha of existing plantation of
bamboo has improved for higher productivity. NBM was restructured by the Government of
India in April 2018 to support the entire chain of the bamboo sector from plantation to
marketing. This will generate more employment opportunities for various skilled as well as
unskilled workers which will also contribute to the doubling of farmers income especially in the
rural areas. (Lahiry, 2018” The story of National Bamboo Mission”)
 Soil Health card scheme
Soil Health Card scheme is launched by the Government of India on 19th February 2015 to issue
farmers soil health cards in every two-year interval so as to provide a basis to address nutritional
deficiencies in fertilization practices. Soil testing was also developed to promote soil test based
on nutrient management. Soil testing reduces cultivation cost by application of right quantity of
fertilizer. It contributes to the additional income to farmers by increasing the yields. It provides
information to the farmers about the status of soil nutrients along with the recommendations on
the use of correct dosage of nutrients such that there is greater fertility of soil and improves the
health of it. The scheme has made the country to achieve surplus capacity in food grain
production. During 2015 to 2017 10.74 soil health cards was distributed to the farmers followed
by 11.74 crore during 2017 to 2019.Since its launch five years ago Rs. 700 crores have been
spent by the Government of India. So far 86 new mobile Soil Testing Labs, 129 static Soil
Testing Labs and 179 village level Soil Testing Labs has been established. Soil Health card
decreased the use of chemical fertilizers (8-10%) and has promoted sustainable farming. In
addition, it has also led to the increase in the yield of crops (5-6%) all inclusive. (PIB Delhi,
2020 https://pib.gov.in/PressReleaselframePage.aspx?PRID=1603758)
Conclusion
Going through the detailing of public investments in Indian Agricultural sector, we
found that major chunk of huge resources which should have been invested was missing.
Generally, in India, we see that there is an interstate variation of gross capital formation &
developed states progress more compared to the least ones, despite being the fact that the
majority of latter’s economy & population depends solely on it. Despite having such a strong
significance towards the majority of the population of the country, the successive governments
didn’t push the sector & this was seen with the continuous decline in its growth throughout the
years as we saw in our analysis. Through the research paper, not only we found the missing link
of public spending in infrastructure of agricultural sector, but also tried to understand how such
investment can safeguard the disposable income of farmers. By increasing the penny spent on
this field & developing capital, the lives of farmers could be improved significantly, achieving a
better socio-economic status.
References
Department of agriculture & farmers welfare. Overview. Retrieved November 17, 2021
from https://agricoop.nic.in/en/divisiontype/rashtriya-krishi-vikas-yojana
Down To Earth. (26 June 2019). Private and government: Who is investing how much on
agriculture? by Richard Mahapatra.
Golait, R., & Lokare, S.M. (2008). Capital Adequacy in Indian Agriculture: A Riposte.
Reserve Bank of India Occasional Papers, Vol. 29, No.1, Summer 2008.
Mathur, A. S., Das, S., & Sircar, S. (2006). Status of agriculture in India: trends and
prospects. Economic and political weekly, 5327-5336.
Randhawa, M. S. (1980). A history of agriculture in India. A history of agriculture in
India.
Singh, P. (December, 2014). Declining Public Investment in Indian Agriculture after
Economic Reforms: An Interstate analysis. Journal of Management & Public Policy Vol. 6, No.
1, December 2014, p. 21-33.
Wagh, R.R., & Dongre, A. (January 2016). Agricultural Sector: Status, Challenges and
it’s Role in Indian Economy. Journal of Commerce and Management Thought · January 2016
The Times of India (Oct 29, 2021). PM-Kisan scheme: Uttar Pradesh tops in prompt
grievance redressal. Retrieved November 15, 2021 from
https://m.timesofindia.com/city/lucknow/pm-kisan-scheme-up-tops-in-prompt-grievance-
redressal/amp_articleshow/87347828.cms

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Running head: Public Investment Contribution in the Agricultural Sector to 1

Growth & Welfare

Public Investment Contribution in the Agricultural Sector to Growth & Welfare

Anuj Singh Rajawat (2137003)

Shrestha Paritosh Kundu (2137061)

Manisha Rai (2137042)

November 20, 2021

CHRIST (DEEMED TO BE UNIVERSITY)

 Background of the study

 Relationship of public investments with growth in agriculture.

 Public investments & the welfare of agricultural community.

Agriculture plays an essential role in process of economic development of less developed

workforce is engaged in agriculture.

sector must emerge at an accelerating pace.

India is a global agricultural powerhouse. It is the world's largest producer of milk,

security checking and authorization) similarly as open examination. Furthermore, legislatures

lead fundamental/applied examination to prod monetary development and advancement with

next to no assumption for direct open settlement.

Anuj respectively. The compilation & editing was done by Anuj.

Background of the study

more than 80% of the inhabitants in rural areas.

Consolidation of properties, eradication of landlordism, and other agrarian reforms were

stagnation, ignorance, and bad vision lead to the condition's demise.

throughout this period.

irrigation as well as external inputs such as chemical fertiliser and pesticides.

from a period of food imports to one of food self-sufficiency.

However, the government's financial assistance to farmers is seldom known. Wheat's

coupled with a diminishing rate of public sector investments.

Another important aspect of agricultural progress is the success in eliminating

of equal competition have faced years of negligence.

them uneasy and exacerbated the problem of malnutrition.

Let’s discuss the growth aspect first.

Figure 1: Average Annual Investment in Agriculture (Rs. Crore)

Average Annual Investment in Agriculture

0 5000 10000 15000 20000 25000

was computed from 'National Accounts Statistics at a glance, Ministry of Agriculture,

Gross Capital Formation by Public Sector in Agriculture

Table 1: Gross Capital Formation in Public & Private Sector in Agriculture in

Years GDP in Gross GCFpu as

Agriculture Capital Formation %of GDPag

1980-81 159293 7301 4.58

1981-82 167723 7130 4.25

1982-83 166577 7092 4.26

1983-84 182498 7196 3.94

1984-85 185186 6921 3.74

1985-86 186570 6213 3.33

1986-87 185363 5864 3.16

1987-88 182899 6045 3.31

1988-89 211184 5699 2.70

1989-90 214315 4972 2.32

1990-91 223114 4992 2.24

1991-92 219660 4376 1.99

1992-93 232386 4539 1.95

1993-94 241967 4918 2.03

1994-95 254090 5397 2.12

1995-96 251892 4849 1.93

1996-97 276091 4668 1.69

1997-98 269383 3979 1.48

1998-99 286094 3870 1.35