Public investment and agricultural productivity : a state-wise analysis of foodgrains in India

Abstract

The main objective of the study is to examine the long-run relationship between public investment and foodgrain productivity across the fifteen major states of India. The analysis is confined to the period, 1974-’75 to 2005-’06. In order to examine the long-run impact of public investment on foodgrain productivity, the study uses Koyck’s Autoregressive Distributed Lag model (ADL). The study observes that the productivity levels are higher in those states where the initial investments were above the national average. The major conclusion of the study is the existence of a positive but lagged effect of public investment on productivity. The lag varies across states; as low as 0.5 years in Gujarat and as high as more than 10 years in Punjab, Haryana and Kerala. The existence of the lag, the study argues, might point to the need for sustained public investment as a means to raise foodgrain productivity in the future. Keywords: Public Investment, foodgrains, productivity JEL Classification: Q1, Q14, Q15, Q16