PUBLIC INVESTMENT IN AGRICULTURAL AND GDP GROWTH-- ANOTHER LOOK AT THE INTER SECTORAL LINKAGES AND POLICY IMPLICATIONS

Despite its reduced share in India’s GDP, agriculture continues to have a strategic importance in ensuring its overall growth and prosperity. As part of the new economic policy package introduced in the early nineties, there has been a reduction in the rate of public investment. While this may not be bad for the industrial sector, the impact of this policy on agriculture is a matter of concern, in sofar as it not only affects steady growth of agriculture but also influences the overall performance of the economy. This is more so because the agricultural sector public investment has also promoted private investment by way of what is termed as the crowding-in phenomenon. This phenomenon together with inter-sectoral linkages is used in this paper to examine the effect of higher public investment for agriculture on the stable growth of this sector as well as of the entire economy. Policy implications of this exercise are important for obvious reasons.