Abstract
In terms of economic development and feeding the world’s populations, the importance of the agricultural sector is well known. However, agriculture and its related sectors are also known for contributing more than one-quarter of the world’s GHG emissions. To address this issue, we evaluate the performance of agriculture and its related firms in India from 2013 to 2019 with its environmental efficiency under the paradigm shift promoted by the National Agroforestry Policy in 2014. To evaluate the feasibility of this paradigm shift in agricultural policy, the non-radial slack-based measure (SBM) is utilized in the first stage, and Tobit regressions are used to assess the determinants of efficiency (or sources of inefficiency) measures at the second stage. The results from non-radial SBM show that Indian agricultural firms (foreign direct investment, private, and public) show huge potential with 32.2% on average to enhance their performance if they move toward the frontier of the production possibility curve. This suggests that Indian policymakers should regulate much stronger regulations for firms, especially for the use of agricultural inputs such as energy (fertilizers), with performance-oriented financial measures for sustainable agriculture. To determine the strategic variables for these firms to enhance their performance, Tobit regressions showed that fertilizers use (−3.350%) appears to have the highest negative impact on environmental efficiency. On the other hand, credit access (2.710%) has the highest positive impact on environmental efficiency, implying that policymakers should provide subsidies to firms in the form of soft loans (or credit access) for the purchase of high-quality fertilizers and to adopt energy-saving equipment/technology to minimize the use of chemical fertilizers in India.
Highlights
Agriculture is the main engine for economic development and feeding the world’s population in many countries
When there is an increase in the growth of Indian gross domestic product (GDP), there is an increase in the number of ARS-VAs, which indicates that the agriculture sector plays an important role in boosting Indian GDP
We used the slack-based measure (SBM)-data envelopment analysis (DEA) method in the first stage of our study to determine the environmental efficiency of sample firms
Summary
Agriculture is the main engine for economic development and feeding the world’s population in many countries. In the Indian economy, agriculture contributes to about 20% of the national gross domestic product (GDP), while about 58% of the Indian population depends on agriculture for their livelihood, directly or indirectly [2,3]. When there is an increase in the growth of Indian GDP, there is an increase in the number of ARS-VAs, which indicates that the agriculture sector plays an important role in boosting Indian GDP
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