Trends of Public and Private Investment in Indian Agriculture: An Inter State Analysis

Abstract

This paper deals with the analysis of trends in investment in Indian agriculture, with specific emphasis on the period of economic reforms. Analysis with investment series has confirmed deceleration in public investment both at national and state level. There are undeniable evidences of decline in investment in real terms after the eighties. Public investment in agriculture began to decline in the 1980s, In state level analysis, declining trend of public investment in real terms in most of the states also has been reported. The falling public investment in agriculture during the 1980 was mainly because of a large proportion of the resource flows to the agriculture sector going in to current expenditure on subsidies for fertilizers, irrigation, electricity, credit and other agricultural inputs, rather than investment, according to many scholars. The reform process in India significantly weakened the structural support through declining public investment “in” agriculture as well as “for” agriculture. As part of fiscal reforms, major input subsidies were brought down relative to the size of the agricultural economy. The expansion of rural credit was arrested and informal sector again trapped the poor farmers. The new strategy of agriculture growth would require more investments on infrastructure. Over the period of economic reform, agricultural growth rates slowed down significantly. The spate of farmers’ suicides reported from some states reflects the distress condition of agriculture after 1991. A reversal of neo-liberal policies in agriculture has become absolutely essential to revive the livelihood systems of rural households in India.