The Hindu Business Line : Capital investment in agriculture stagnant

Capital investment in agriculture has been stagnating in recent years. At constant prices (1999-2000), the investment has been at around Rs 43,123 crore in 2004-05 against Rs 43,473 crore in 1999-2000, says the Annual Report 2005-06 of the Reserve Bank of India.

The RBI claims that a revival of the rural co-operative credit institutions through legal and institutional reforms will improve credit flows and aid investment. The ratio of investment to the GDP fell to 1.7 per cent in 2004-05 from 2.2 per cent in 1999-2000 owing to a dip in private investment to Rs 30,532 crore from Rs 35,719 crore over the same period.

However, public sector investment has moved up to Rs 12,591 crore in 2004-05 over Rs 7,018 crore in 2000-01.

The improved availability of credit for agriculture and liberalised trade for agricultural products will improve private investment in agriculture, it said.

Expenditure on various subsidies such as food, fertilisers, power and irrigation is believed to have crowded out resources for public investment in farm-related infrastructure. Project delays, relatively lower allocation for irrigation and poor rural infrastructure and research, have impacted agricultural investment.

There is a need to revisit the issue of power subsidies to agriculture, as it seems to be leading to exhaustion of ground water and lowering of water table in many areas.

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