Revealing Trends in Investment in Ag Research & Extension

Cross-posted from the FSP India website written by Jaspreet Aulakh

Photo Credit: Flickr (P. Casier/CGIAR)
Photo Credit: Flickr (P. Casier/CGIAR)

In an article published in European Journal of Development Research, “Public Investment in Agricultural Research and Extension in India,” Pramod Kumar Joshi, Praduman Kumar, and Shinoj Parappurathu examine the spatial and temporal dimensions of agricultural research and extension (R&E) investments with emphasis on returns on investment in major states in India. The article concluded that investments in R&E should increase to meet the future growth challenges in the Indian agriculture sector.

The authors map the temporal and spatial changes in investment in R&E with emphasis on returns to investment in major states of India. They track past patterns of public spending on Research & Development (R&D) in terms of efficiency and explore variation in public spending on R&D across states.  They also estimate the returns to R&D spending and test if the states that spend more achieve higher Total Factor Productivity growth (TFP). TFP growth is estimated using factors such as research and extension stock created over the years, infrastructure and the quality of natural resources, which is later used to calculate Value of Marginal Product (VMP) and the Internal Rate of Return (IRR).

Interesting trends surfaced from the data. R&E increased not only in absolute terms but also as a share of GDP and the Green Revolution has been due to effective R&E investment. The R&E system of India has played a significant role in changing country’s status from food-importing to food-secure in relatively short time. The investment in agricultural research, which was equivalent to 0.30 percent of total GDP in agriculture in 1980/1981, increased to 0.52 percent in 1990/1991 and 0.77 percent in 2010/2011.

The share of research in total R&E investment increased from 65 to 82 percent from the period of 1961-1970 to 2001-2010, but the share of extension declined from 35 percent to 18 percent. This illustrates that research and extension did not follow parallel trends in the spending over time. This can have important policy implications, as lower relative allocations to extension could retard the flow of new knowledge from labs to field and the returns accrued from higher research investment could be underutilized.

Another important inference from the study was that relative shares to priority sub-sectors of agricultural and allied sectors has shifted considerably over time. Investments in R&E in the crop sector and fisheries have increased while investments in R&E for the livestock sector have decreased. The investment in soil and water R&E has remained unpredictable. In addition, different states’ shares of aggregate R&E have been reduced while the central government’s share has increased over the past decade.

The study also reveals that investment in extension has considerably reduced over the years, and the gap between research and extension investment has been widening as well. The intensity of investment in R&E (i.e., total investment per unit cropped area/population) varies considerably across Indian states, with a difference of 1:20 between the lowest-intensity of investment and high intensity of investment.  High disparity in TFP and wide variations in VMP and IRR have been observed across different states and the actual returns on these investments depend on TFP and growth.  For example, while Himachal Pradesh, Haryana and Assam have had high investment intensity, this has not translated to higher productivity.  In conclusion, it is important to identify the agriculture areas which are important for future investments in R&E and this should be strategically directed and balanced among different agricultural sectors so that growth is not compromised in the future.

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