Large-scale Investments in Agriculture in India

Abstract

Public investment in agriculture has significant poverty-reducing effects. This article attempts to analyse trends in agricultural investments in India between the 1950s and the 2000s. It argues that public investment and expenditure on agriculture in India have grown only slowly and have not decisively increased even after more than 60 years of independence. While public capital formation and expenditure do show a moderate rise in the 2000s, a revival of India's agricultural growth requires a far greater thrust to public spending. Major and medium irrigation projects require special attention, as irrigation is instrumental not just in raising yields, but also the number of days of employment for labourers. Increasing public investment in agricultural research and extension is central to bridging the yield gap that persists. Formal credit flows to agriculture have to specifically target small and marginal farmers, and emphasis should move away from generating agricultural growth by channelling credit to agri-business firms and corporate players in agriculture. If India's second green revolution has to contribute to an accelerated reduction of poverty, hunger and malnourishment, it undoubtedly has to be a state-led project.