Public Spending on Agriculture in India: 2010-11 to 2019-20

The droughts in the mid-sixties were preceded by another drought in the year 1957-58. It was from here on that fears of inadequacy of food production began, the report states. The Ford Foundation was asked by the Indian government to do a thorough analysis of Indian agriculture in 1959. It produced a report titled "India's Food Crisis and Steps to Meet It", which had a significant impact on agricultural policy. It stated that a sharp increase in production was unavoidable given the trends in both population and production. It also recommended urgent improvement in irrigation and drainage facilities, better water management, small-scale irrigation projects and increased consumption of fertilisers as part of a short-term action programme. The government introduced the Intensive Agriculture Development Programme (IADP) in 1961 and the Intensive Agricultural Area Programme (IAAP) in 1964.

The 1969 commercial bank nationalisation program greatly increased the amount of credit available to farmers, the report states. The nationalisation of banks aided in absorbing the fresh liquidity generated in rural areas and expanded the geographic and functional reach of the public. This, the report states, helped reduce the influence of predatory moneylenders in rural communities and banks. Commercial banks in rural regions pursued an intensive policy of branch expansion, which led to an increase in the number of rural bank offices from 1,443 in 1969 to 35,134 in 1991.

There was an unequal distribution of the advantages of the green revolution due to a "concentration of production along crop, region, and class lines,” the report states. Farmers were not able to raise the funds required to implement the new technology. Punjab, Haryana, and the western portion of Uttar Pradesh, which had already made significant expenditures in irrigation infrastructure, profited the most. In the absence of land reforms, wealthy peasants and old landowners who held large areas of land were able to spend heavily in farming and amass wealth more quickly than others.

An Intellectual Property Rights (IPR) system was adopted in agricultural research to satisfy the World Trade Organization agreement signed by India in 1994. The National Agricultural Research System was the main investor in seed production before the IPR rule. The majority of seeds were open-pollinated that farmers could keep and resow. But when IPRs became more prevalent, the commercial sector made significant investments in the creation of hybrids, which forced farmers to purchase new seeds on a yearly basis.

Governmental investment in agriculture started to fall in the early 1980s and kept falling during and after the 1990s. Public investment in agriculture averaged roughly 3.1 per cent of the agricultural GDP between 1985–86 and 1989–90. By 1999–2000, it had dropped to 1.9 per cent, by 2010–11 to 2.6 per cent, and by 2017–18 to 2.5 per cent. In the 2000s and 2010s, fixed capital investment increased overall almost entirely due to private sources.

Private companies increased their influence on agricultural research in the 1990s and 2000s. In India, the private sector sold around 59 per cent of the total amount of seeds that were sold in 2014–15. The share of private sector seeds in the total amount of paddy seeds sold was 42.5 per cent. However, in certain crops including cotton, maize, and sunflower, the private sector's share of the total amount of seeds sold was higher than 95 per cent.

During 1990-2000, government support for agriculture weakened, the report states. In the 1990s, there was large-scale closure of commercial bank branches in rural areas. Agriculture was no longer shielded from imports, the report states. The input subsidy scheme was reorganized as part of fiscal reforms, which led to a substantial increase in input prices and production costs.

Focus and Factoids by Ishita Banerjee.