Misplaced Priorities and Lopsided Investments: A Macroscan of Agriculture, Livestock and Fisheries Sectors in India

Abstract

This paper captures the performance of the agriculture, livestock and fisheries sub-sectors in terms of capital formation, incremental capital output ratio and relative contribution of these sub-sectors to gross domestic product during the period 2004-05 to 2010-11. The Gross Fixed Capital Formation (GFCF) in fisheries took off at around 6 per cent in 1990, peaked at around 16 per cent in 1999 and has been hovering around 10 per cent for the past 5-6 years. But, the GFCF in agriculture turned positive after 1999, and reached a maximum of 5 per cent, while GFCF in livestock, turned positive only in the X th Plan period and still remains below the 5 per cent mark. The investment elasticity of growth (IEG) in agriculture has been found fluctuating during 1981-2011, while that of the livestock and fisheries sub-sectors has been found improving. In all the three sub-sectors, when the investment elasticity is higher, the Incremental Capital Output Ratio (ICOR) is lower and vice-a-versa. The investment efficiency ratio (IER) has been found increasing in agriculture and fisheries, and reducing in the livestock sub-sector. Despite the fact that agriculture is the largest private investment sector in India, the investment elasticity is low and the ICOR is high, indicating the need for a relook at the composition and direction of investment in agriculture and livestock sub-sectors. The estimates of IEG in the fisheries have been found positive but, the ICOR is declining, indicating an increased output resulting from the increasing capital formation. The cointegration analysis has revealed a long-run equilibrium of time series with a common ground in the values of agriculture, livestock and fisheries GDP and GFCF. The ICOR in livestock has been found declining, indicating an excess capacity of capital in this sub-sector despite the fact that the IER has been marginally positive. The excess capacity could also arise because of misdirected investments in areas within the livestock sub-sector. Some broad leads have been derived from the results.

Spatio-temporal distribution of subsidy on major livestock inputs and services in India

“…But subsidies, now constituting about 2.5% of India's GDP, also impose negative externalities on both the exchequer and the environment. As agricultural growth stagnates, and because the resources for expenditure are limited, policymakers must shift the expenditure from subsidies to investment to boost growth (Jha 2011; Qureshi et al 2015). The government is planning to support farmers by direct benefit transfer, phase out the subsidies, and replace these with additional production and sales subsidies; these measures would raise real farm income by about 4% and improve welfare overall (Dixon et al 2020).…”

“…And structural changes in livestock production are supported by institutional reforms (Chandel, Lal, and Kumari 2019). But the livestock sector receives fewer resources and less institutional support than commensurate with its contribution to the economy (Qureshi et al 2015).…”

Performance and Perspective Analysis of Indian Shrimp Exports

“…As far as gross fixed capital formation (GFCF) in agricultural sector is concerned, the share of the fisheries sector has increased from 3.4 to 9.7% during 1990-1991 to 2014-2015 [49]. Despite the positive investment elasticity and investment efficiency ratio and also the marginally declining incremental capital output ratio (ICOR), the fisheries investments would yield more growth if the direction of investments shifted more towards the inland subsector including processing [50]. But, the share of investments in fisheries sector vis-a `-vis total public capital formation is very low [27].…”

Capital formation in fisheries sector in India: trends, compositional changes and potential implications for sustainable development

“…The investment elasticity of growth shows responsiveness of GDP to changes in investment (Qureshi et al 2015). In this paper, the elasticity has been estimated for agricultural sector as a whole, and separately for fisheries sub-sector:…”