Finance minister Arun Jaitley has expressed concern over a declining share of public investment in agriculture while subsidies to the sector are on the rise. “I do see a point in blending the subsidy support with investment because a model which sustains indefinitely only on subsidy will not be sustainable.
Investments will make the farm sector self-sufficient. With much lesser subsidies, a self-sufficient farmer may be able to serve the cause of Indian agriculture much better,” Jaitley said.
Releasing the book ‘Supporting Indian Farms the Smart Way’, authored by Ashok Gulati, Marco Ferroni and Yuan Zhou and published by Academic Foundation and Icrier, the minister said public discourse occasionally gets impacted by populism, but good politics has to be blended with sound and rational policies.
Government subsidy on agriculture has increased from 2.8% of agri-GDP in 1980-81 to 8.1% in 2014-15, while public investment in the sector declined from 3.9% to 2.2%, Gulati said. The subsidy increased at a much faster rate in recent years, leading to a dip in investment. As a result, the capital formation in agriculture increased from 8.4% of agri-GDP in 1980-81 to a peak of 18.2% in 2011-12, but has since declined to 13.8% in 2016-17, he noted.
Jaitley said formalisation of the economy has started showing visible results in terms of higher resource mobilisation, leaving more in the hands of the government for contributing to capital formation in various sectors. “I don’t think this process will now be reversed,” he said. With more resources at hand, the government’s spending on rural roads, rural sanitation and rural infrastructure has increased in the last few years, he said, adding there will be pressure to spend more on sectors which need maximum support.
According to the finance minister, physical infrastructure, social and farm sectors are some of the important areas which require more investments.
Source : Financial Express