*Kaushik Basu, Chief Economic Advisor, when queried as to what needs to be done to boost agricultural growth, stated that ‘4 per cent annual growth in agriculture is something we can realistically aspire to. Our aim has to be productivity. For that, we need infrastructure and investment — regular power supply, irrigation and decent fertilisers’ (Q&A-B.S. 07-06-10)

*After the economic reforms started, the government’s expenditure and investment in the agricultural sector have been drastically reduced. The expenditure of the government in rural development, including agriculture, irrigation, flood control, village industry, energy and transport, declined from an average of 14.5 per cent in 1986-1990 to six per cent in 1995-2000. The allocation to Agri sector amounts to just about 2.86% of the massive Central Plan Outlay of the Government of India of Rs. 5,24,484 crore for 2010-11.

1.Role and Importance of Agriculture in the Indian Economy

The continued high growth of agriculture is essential to meet the food and nutritional security requirements of the people and provide livelihood and income in rural areas. Agriculture should  have priority in national policies and plans, since the nation's food security depends on the performance of the agricultural sector.

But the reality is opposite of what has been stated as the need for investment in Agri  infra development. There is continuous decline in public outlays and investments in Agri Sector for over two decades.

Plan out lays for Agriculture are continuously declining from one plan period to another and have been far below  Agri GDP share of 15% in the total GDP as seen from the figures given in the table below.

The share of expenditure on Research &Education was very low at 6% of the total development expenditure on Agriculture. The growth of public expenditure has slowed down since 1990s on Research and Extension, in constant terms. In the case of extension services the growth of expenditure was highest in the sixties resulting in acceleration in the agricultural growth. Thereafter the rate slowdown is very sharp. The rate of growth of expenditure on extension services has declined three-fold since 1990s.
The total expenditure on Agriculture fell from 13% in the 90s to 10% in the early part of the current decade.

*At 2001-02 prices  **@2006-07 Prices Source: Plan Documents

However, when the actual expenditure of Rs. 10617crore for 2009-10 is considered instead of the RE figure, the total utilisation of funds during the Eleventh Plan stands at Rs. 27206 crore. Allocation for 2010-11 is Rs.15,042 crore.

As against a proposed outlay of Rs.17080 crore for the Annual Plan 2010-11, the Planning Commission have approved an outlay of Rs.15042  crore for DAC.

Plan	Sixth Plan 1980-85	Seventh 1985-90	Eighth 1992-97	Ninth 1997-2002	Tenth 2002-07
Amount Rs in Crore	@64,012 @1999-2000 prices	@52,107	@45,565	@42,226	@67,260

Analysis of trends in public investment in agriculture and allied sectors reveal that it declined in real terms (at 1999-2000 prices) from Rs.64,012 crore during the Sixth Plan (1980-85) to Rs.52,107 crore during the Seventh Plan (1985-90) to Rs.45,565 crore during the Eighth Plan (1992-97), and Rs.42,226 crore during Ninth Plan (1997-2002). This trend was reversed in the Tenth Plan (2002-07), with public investment in agriculture of Rs.67,260 crore.

The Gross Capital Formation (GCF) in agriculture as a proportion to the total GDP has shown a decline from 2.9 per cent in 2001-02 to 2.5% percent in 2007-08. As Gross Fixed Capital Formation is estimated at 35% of total GDP, 15% there of being agri sector’s share in GDP, should be invested in improving agri infra, This works out to more than 5% of the total GDP which means investment in agri infra should be doubled

The share of agriculture & allied sector in total GCF after showing a marginal increase during 1999-2000 to 2001-02 has been continuously declining. It stood at 10.2 per cent in 1999-2000, increased to 11.7 per cent in 2001-02 and thereafter declined to 7 per cent in 2006-07. The decline was mainly attributed to decline in the private sector despite increase in the share of public sector. This should be at least 15% of the total GDP, being the share of agri sector in the GDP which again means that investment in agri infra like irrigation, power, rural roads, godowns etc, should be doubled.

Year after year, the shortfall in disbursals continues to be around 40%, since inception of the Scheme. Disbursal level should be improved substantially.

Growth of credit to agriculture was only 12 per cent during 1986-87 to 1994-95 as against target of 18%. The share of long-term loans to agriculture in outstanding credit by SCBs to agriculture declined sharply from 76% at end-March 1991 to 59 % at end-March 1996, to 40 % at end-March 2005 and further to 35 % at end-March 2006 before showing an improvement to 40% per cent at end-March 2007.