Answer:

The government spending in agriculture sector is around 20%-25% of the GDP, one of the highest in South and South-East Asian region. Yet it does not result in desired output from agriculture.

♤ The nature and manner in which expenditure is poured into agriculture is responsible for precarious situation. Almost 80% of the public expenditure going to

agriculture is in the form of input subsidies (fertilizers, power, irrigation) and only 20% as investments in agriculture.

♤ In the post-reform period investment has been an overlooked aspect in Indian agriculture. The role of government must evolve so that those activities which it still does are performed with the greatest effectiveness, in terms of meeting the needs of the agricultural sector.

♤ In past the large investment made by the government in irrigation works, agricultural inputs and technology played crucial role in the success of the Green Revolution.

♤ Public investment has a leading role to play, in the form of infrastructure as well as necessary research and development in farm technologies. Spread of infrastructure in power, transport, communication, storage and processing sectors are important.

♤ By investment irrigation systems can be developed, which in medium and long term will change the face of Indian agriculture from being rain-fed to irrigated.

♤ Similarly investment in research and development can help to produce high productivity crops which can be resilient in face of climate change.

♤ Along with this rural infrastructure and e-infrastructure creation can open new avenues for farmers. This investment may also create favourable environment for allied activities and agro-based industries.

♤ Rationalisation of subsidies and better targeting of beneficiaries through direct transfers would generate part of the resources for the public investment that is essential in research, education, extension, irrigation, water-management, soil testing, warehousing and cold-storage, whether research, education, and extension.

♤ Distortions emerging from various policies, including, exempting user charges for electricity and water need to be reduced through better targeting and eliminating leakages.

Hence we can see that for a vibrant agriculture sector preferred approach should be investment instead of providing subsidies. Although necessity of some subsidies cannot be written off but they need to be rationalized so that money thus saved can further be invested for making Indian agriculture an attractive and profitable profession. Proper balance between investment and subsidies can make agriculture engine of Indian economy.