Model Answer
0 min readIntroduction
Agriculture remains a vital sector for the Indian economy, contributing approximately 18.8% to the country’s GDP (as of 2022-23) and employing over 40% of the workforce. Public investment in agriculture, encompassing irrigation, research & development, market infrastructure, and credit, has historically played a crucial role in driving productivity growth. However, since the 1990s, there has been a discernible decline in public investment as a percentage of GDP, raising concerns about its impact on the sector’s performance. This decline, coupled with increasing reliance on private investment, necessitates a critical examination of whether it is adversely affecting agricultural productivity growth in India.
Impact on Irrigation
Irrigation is a cornerstone of Indian agriculture, particularly given the monsoon-dependent nature of rainfall. Public investment in irrigation projects – major, medium, and minor – has significantly decreased. According to the Economic Survey 2022-23, the share of irrigation in total agricultural credit declined from 18.7% in 2011-12 to 9.8% in 2020-21. This decline has led to:
- Reduced Irrigation Coverage: A lower rate of irrigation expansion limits the area under cultivation, especially during dry seasons, directly impacting production.
- Decreased Water Use Efficiency: Lack of investment in maintaining and modernizing existing irrigation infrastructure leads to water wastage and reduced efficiency.
- Regional Disparities: Uneven distribution of irrigation facilities exacerbates regional inequalities in agricultural productivity.
Impact on Research & Development (R&D)
Public investment in agricultural R&D is crucial for developing high-yielding varieties, improving crop management techniques, and addressing emerging challenges like climate change. However, India’s spending on agricultural R&D as a percentage of agricultural GDP is relatively low, around 0.6-0.7% (as per data up to 2021), compared to the global average of around 2.5%. This underinvestment results in:
- Slow Pace of Innovation: Limited funding hinders the development of new technologies and improved crop varieties.
- Reduced Crop Yields: Without continuous innovation, crop yields stagnate, impacting overall agricultural output.
- Vulnerability to Climate Change: Insufficient research on climate-resilient crops makes agriculture more vulnerable to the impacts of climate change.
Impact on Market Infrastructure
Efficient market infrastructure, including storage facilities, transportation networks, and regulated markets, is essential for reducing post-harvest losses and ensuring fair prices for farmers. Public investment in these areas has been inadequate, leading to:
- High Post-Harvest Losses: Lack of adequate storage facilities results in significant losses of agricultural produce, estimated at around 16% annually (as per the Ministry of Food Processing Industries, 2020).
- Inefficient Supply Chains: Poor transportation infrastructure increases transportation costs and delays, hindering the timely delivery of produce to markets.
- Price Volatility: Insufficient market regulation and lack of market information contribute to price volatility, impacting farmer incomes.
Impact on Credit Availability
Access to affordable credit is vital for farmers to invest in inputs, technology, and infrastructure. While overall agricultural credit has increased, the share of institutional credit (provided by public sector banks) has declined, with a greater reliance on informal sources of credit. This shift has implications for:
- Increased Debt Burden: Informal credit often comes with high interest rates, increasing the debt burden on farmers.
- Reduced Investment: Limited access to affordable credit discourages farmers from investing in productivity-enhancing technologies.
- Financial Exclusion: Small and marginal farmers, who often lack collateral, are disproportionately excluded from accessing institutional credit.
It is important to note that other factors also influence agricultural productivity growth, including land reforms, climate change, and farmer education. However, the decline in public investment has undoubtedly exacerbated these challenges and hindered the sector’s potential.
| Area of Investment | Impact of Decline |
|---|---|
| Irrigation | Reduced coverage, lower water use efficiency, regional disparities |
| R&D | Slow innovation, stagnant yields, climate vulnerability |
| Market Infrastructure | High post-harvest losses, inefficient supply chains, price volatility |
| Credit Availability | Increased debt, reduced investment, financial exclusion |
Conclusion
The fall in public investment in agriculture has demonstrably and adversely affected productivity growth in India. While private investment has a role to play, it cannot fully compensate for the critical role of public investment in providing essential infrastructure, research, and support services. Revitalizing public investment in agriculture, with a focus on irrigation efficiency, R&D, market infrastructure, and affordable credit, is crucial for ensuring sustainable agricultural growth, enhancing farmer incomes, and achieving food security in India. A renewed commitment to public investment, coupled with policy reforms, is essential to unlock the full potential of the agricultural sector.
Answer Length
This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.