{"id":50308,"date":"2019-07-20T19:00:24","date_gmt":"2019-07-20T13:30:24","guid":{"rendered":"https:\/\/blogadmin.forumias.com\/?p=50308"},"modified":"2019-07-20T16:51:13","modified_gmt":"2019-07-20T11:21:13","slug":"7-pm-green-shoots-of-economic-growth-20th-july-2019","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/7-pm-green-shoots-of-economic-growth-20th-july-2019\/","title":{"rendered":"7 PM | Green shoots of economic growth | 20th July, 2019"},"content":{"rendered":"\n<p><strong>Context:<\/strong> capital\ninvestment in agriculture and its impact on Indian economy<\/p>\n\n\n\n<p>Public\ninvestment in agriculture has played a vital role in promoting growth of\nagricultural output because it includes expenditures directed to agricultural\ninfrastructure, research and development and education and training etc.<\/p>\n\n\n\n<p><strong>Need\nfor capital investment in agriculture:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>$ 5trillion economy:<\/strong> present government aiming to take the economy to $ 5 trillion economy\nby 2024-25. To achieve this target, strong agricultural growth also needed.\nPresent status of agriculture sector is in doldrums; to revive the agriculture\nsector capital investment is imminent.<\/li><li><strong>Doubling the farmer income:<\/strong> by 2022 farmer should get the double the income what\nhe is earning now. So, the present capital investment rate falls short to\nrealise the target. So to double the income of farmer, need to step up the\ninvestment as soon as possible.<\/li><li><strong>Food processing:<\/strong> according to united nations food and agriculture organisation (FAO), India\nis home to more than 190 million Indians going hunger daily and at the same\ntime around $ 14 billion (96,000crore RS) food wastage in India due to lack of\nproper food storage facilities.<\/li><li><strong>Foreign direct investment:<\/strong> according to Invest India report, around 1.5 billion USD foreign\ninvestment came to food processing sector. So there is a huge potential to tap\nin Indian food processing industry<\/li><li><strong>Demand:<\/strong> present\nconsumption of food and its present value stood at $ 370 billion. And this food\nconsumption market will reach $ 1trillion by 2050. So the government should\ntake a giant step to raise capital for agriculture sector<\/li><li><strong>Live stock:<\/strong> In India livestock considered as a supplement to farm income to farmer.\nBut at present day livestock contribution to agriculture GDP is nearly 30%. And\nmany of the livestock farmers earning more than traditional agriculture\nfarmers. India is home to highest number of livestock population in the world,\ninvestment should make to utilise this surplus.<\/li><li><strong>Renewable energy:<\/strong> investment in renewable energy generation on fallow farmland and in\nhilly terrain would help reduce the burden of debt-ridden electricity\ndistribution companies and state governments and farmers no need to rely on\ndiscom companies for power supply.<\/li><\/ul>\n\n\n\n<p><strong>Challenges to capital investment in agriculture\nsector:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Current expenditure:<\/strong> The\nfalling public investment in agriculture was mainly because of a large\nproportion of the resource flows to the agriculture sector going in to current\nexpenditure on subsidies for fertilizers, irrigation, electricity, credit and\nother agricultural inputs, rather than investment.<\/li><li><strong>Public\nand private investment:<\/strong> the share of agricultural sector\u2019s\ncapital formation in GDP has been revolving around 2.7% to 3.3% in post reform\nperiod. Even though the private investment is rising but that to be\noccasionally. Public investment usually induces the private investment, because\nof low public investment; private investment in agriculture sector is also\ndeclining.<\/li><li><strong>Subsistence\nsector:<\/strong>\nagriculture always looked upon as subsistence sector by government and\nindustrialists. So the industrialists and government has less focus on agriculture\nand very low intention of making agriculture from subsistence to market\ndetermined sector.<\/li><li><strong>Extension services<\/strong><strong>:<\/strong>\nDespite a wide range of reform initiatives in agricultural extension in India\nin the past decades, the coverage of, access to, and quality of information\nprovided to marginalized and poor farmers is uneven. Extension services have declined over time due to chronic\nunderfunding of infrastructure and operations, no replacement of aging\nresearchers or broad access to state-of-the-art technologies.<\/li><li><strong>FDI<\/strong>: according to Invest\nIndia, food processing signed Memorandum of Understanding with industries worth\nof 13.56 billion USD. But realized amount is just 1.5 billion USD. So realization\nof potential FDI to actual investment is also a challenge to investment in\nagriculture.<\/li><li><strong>Lending:<\/strong> government policies\nand schemes along with commercial banks focus on short term lending to\nagriculture like one crop season or two cycles of season. Banks are not willing\nto provide long term lending towards landscape development like changing fallow\nland to sowing land.<\/li><\/ul>\n\n\n\n<p><strong>Government initiatives and measures to improve investment in\nagriculture sector:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Long term irrigation fund:<\/strong> To address the problems associated with perennial irrigation water\ncrisis in rural India, government of India signed an agreement with NABARD to\noperationalize the long term irrigation fund. The\nNabard is funding the central and state share of 99 prioritized irrigation\nprojects under the PMKSY through long term irrigation fund (LTIF). It is mandated\nto provide Rs 70,000crore loan to these projects to be completed by 2019.<\/li><li><strong>Public private partnership (PPP):<\/strong>\nPPPs could help spur the development of the food processing\nindustry, one of the newest sectors in Indian agriculture. The food processing industry\nmust do more than just increase the shelf life of food, preserve food nutrients\nand provide fortified products.<\/li><li>An important role of the\ngovernment, besides funding, will be to create an enabling environment for\nprivate investment. This needs to be done through tax rationalizations, duty\nexemptions, increases in public spending, priority sector lending and FDI.\nSteps such as these that will boost private sector investment in supply chain\ninfrastructure and services, leading to a reduction in waste and more added\nvalue.<\/li><li><strong>Improving access to credit:<\/strong>\nKisan credit card (KCC) loans are given to farmers for crop cultivation as a\nrunning account facility. Loans available through KCC are very low, so the\ngovernment and RBI should work together to increase the loan amount.<\/li><li><strong>Patient capital:<\/strong> present\nagriculture growth is in declining phase, to revive the agriculture growth need\npatient capital (as financial returns to investment are unlikely to materialize\nin the initial years.) like rural infrastructure development fund (RIDF).<\/li><\/ul>\n\n\n\n<p><strong>Way forward<\/strong><strong>:<\/strong> Though\neconomic transition has seen significant growth contribution from services and\nindustry, agriculture remains the most trusted sector in helping alleviate\npoverty, hunger and malnutrition and ensuring better income distribution. But\nPublic investment in agriculture research and development in terms of\npercentage share in agriculture GVA stands at 0.37%, which is fairly low in\ncomparison to between 3% and 5% in developed countries. Therefore, public\ninvestment in agriculture should see a commensurate rise with a healthy mix of\neducation, research and extension encouraging \u2018blue-sky thinking\u2019 in all\nsegments, while pushing for a targeted pruning of public expenditures on\nsubsidies, kind transfers, loan waivers and populist measures. An inclusive\nbusiness model facilitating strong investor-farmer relations should be created,\nwith a legal and institutional framework for governance. Expanding institutions\nis essential to accommodate the developmental impacts of foreign agricultural\ninvestment.<\/p>\n\n\n\n<p>Source:<a href=\"https:\/\/www.thehindu.com\/opinion\/op-ed\/green-shoots-of-economic%20growth\/article28598733.ece\">https:\/\/www.thehindu.com\/opinion\/op-ed\/green-shoots-of-economic\ngrowth\/article28598733.ece<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Context: capital investment in agriculture and its impact on Indian economy Public investment in agriculture has played a vital role in promoting growth of agricultural output because it includes expenditures directed to agricultural infrastructure, research and development and education and training etc. Need for capital investment in agriculture: $ 5trillion economy: present government aiming to&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/7-pm-green-shoots-of-economic-growth-20th-july-2019\/\">Continue reading <span class=\"screen-reader-text\">7 PM | Green shoots of economic growth | 20th July, 2019<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":49370,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[130,9],"tags":[],"class_list":["post-50308","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-7-pm","category-public","entry"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2019\/07\/7-PM.png?fit=1000%2C500&ssl=1","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/50308","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=50308"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/50308\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media\/49370"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=50308"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=50308"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=50308"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}