“Falling Agricultural Investment and Its Consequences”

Citation: Ganesh-Kumar, A. 1992. “Falling Agricultural Investment and Its Consequences”, Economic & Political Weekly, 27(42), pp.2307-2312.

Abstract: Neglect of agriculture, an important sector of the Indian economy, is likely to have an adverse impact on the country. Such a neglect has been observed as a fall in agricultural investment during the 80s. Simulations using a computable general equilibrium model help in assessing the adverse impact of the fall in total agricultural investment on agriculture in particular and the economy in general. Though shifting investment resources away from agriculture to non-agriculture may result in a faster growth in total gross domestic product, the growth across sectors is likely to be uneven, with non-agriculture likely to show a far higher growth than agriculture. However, slowing down agricultural growth would lead to growing income inequality in rural areas. If the present trends of investment policy are continued large-scale cereal imports may become necessary and also despite such imports prices would go up substantially. Price increases of foodgrains are known to hit the poor most.

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