India - Reaping what you sow

India's productivity in agriculture is directly related to the low sums it invests in R&D.
For agricultural growth to be knowledge-based and technology-driven, adequate investment in farm research and education is a must. However, the actual spending on these aspects has been rather meagre though the country has managed to create one of the world’s largest farm research and education infrastructure.
In developed countries, technological advancement is reckoned to have contributed to between half and four-fifths of the agricultural output growth since the 1960s. In India, on the other hand, this contribution is estimated to have ranged from about one-fourth in the 1950s to only a little over half in recent decades.
This is because while developed countries have been investing, on an average, around 2.39 per cent of their agricultural gross domestic production (agricultural GDP) on agricultural research, India has seldom spent more than 0.5 per cent of its agricultural GDP for this vital purpose. Though successive governments at the centre and even in the states have been vowing to encourage farm research and education, their intentions have not been matched by allocation of resources.
This has been upheld by a Reserve Bank of India (RBI) study entitled “Agricultural Growth in India since 1991” (Study No. 27) circulated last month. Analysing the trends in public expenditure on farm research, education and extension, the study points to an actual downturn in the outlays for these activities, especially in the post-reforms period.
“It is clear that public support for expanding the knowledge base for agriculture is shrinking since 1991 precisely when the need for it is rising”, states the RBI report. It also adds that it is a matter of concern and compounds the issue of governing the national innovation system for India’s agriculture.
It has found that the total spending on agricultural research and education has hovered around 0.5 per cent of the total revenue expenditure. This compares rather poorly with the targeted overall expenditure on education, in general, of 6 per cent of the GDP in the 11th plan.
Interestingly, the report also examines whether the tightening financial position of a government committed to expenditure curtailment has anything to do with insufficient funding for generation and transfer of agricultural know-how, and it finds that this is not the case. “Our judgment is that the low outlay on research and extension has less to do with the reforms than reflecting a structural feature of the policy vis-à-vis agriculture in India”, the report maintains.
The numbers drawn from the government’s finance accounts by the study team show that the investment on farm research and education as proportion of the agricultural GDP has changed only marginally from 0.40 per cent in 1992-1994 to 0.52 per cent in 2004-2006. The spending on agricultural extension and training (read technology transfer) is even worse. The expenditure has actually declined from 0.15 per cent of the agricultural GDP in 1992-94 to 0.13 per cent in 2004-06.
All this, apparently, bodes ill for sustained growth of the country’s farm sector. Requisite public investment in farm research is indispensable as we can neither rely wholly on borrowed technology nor on the technology generated in the private sector. While technology evolved elsewhere, even if available, has limited adaptability to Indian conditions; that generated by the private sector is confined chiefly to niche areas, such as biotechnology and production of hybrid and transgenic seeds, with an eye on profits. The public sector investment is critical also because the returns from agricultural research, though quite high, come with a time lag.
A study by the International Food Policy Research Institute (IFPRI), that worked out the source-wise break-up of the total investment on farm research, bears out the low level of private investment in this area. According to this, about 50 per cent the total funding came from the centre, 20 per cent from state governments, 14 per cent from foreign donors and only around 16 per cent from private companies.