Q. In India, which of the following can be considered as public investment in agriculture?
- Fixing Minimum Support Price for agricultural produce of all crops
- Computerization of Primary Agricultural Credit Societies
- Social Capital development
- Free electricity supply to farmers
- Waiver of agricultural loans by the banking system
- Setting up of cold storage facilities by the governments
Select the correct answer using the code given below: (UPSC Prelims 2020)
Answer:
2, 3 and 6 only
Notes: The correct answer is
[C] 2, 3 and 6 only. In the context of the Indian economy, it is vital to distinguish between
"Investment" (which creates productive assets or enhances long-term capacity) and
"Subsidies/Transfers" (which are revenue expenditures aimed at immediate relief or price support).
- Computerization of PACS (Statement 2 – Correct): This is an investment in rural financial infrastructure. By digitizing Primary Agricultural Credit Societies, the government improves the efficiency, transparency, and reach of the credit delivery system, creating a long-term productive asset.
- Social Capital Development (Statement 3 – Correct): This refers to the creation of networks, farmer-producer organizations (FPOs), and cooperative structures. Investing in the "capacity building" of farmers is considered a form of human and social investment that yields long-term dividends in productivity.
- Setting up of Cold Storage Facilities (Statement 6 – Correct): This is a classic example of physical infrastructure investment. It creates tangible assets that reduce post-harvest losses and improve the supply chain.
- Minimum Support Price (Statement 1 – Incorrect): MSP is a price support mechanism. It is a transfer payment from the government to the farmer to ensure a guaranteed price. It does not create a new productive asset; rather, it is a recurring revenue expenditure.
- Free Electricity (Statement 4 – Incorrect): Providing free or subsidized power is an input subsidy. While it reduces the farmer's cost of production in the short term, it is classified as a subsidy (revenue expenditure), not a capital investment.
- Loan Waivers (Statement 5 – Incorrect): A waiver is a fiscal transfer to clear debt. While it provides immediate relief to the farmer's balance sheet, it is a non-productive expenditure for the government and does not enhance the long-term structural capacity of the agricultural sector.