ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Price and Non-Price Factors in Agricultural Investments

Price and Non-Price Factors in Agricultural Investments B D Dhawan THE observations which follow arise out of a critical reading of V N Misra and Peter B R Hazell's paper Terms of Trade, Rural Poverty, Technology and Investment: The Indian Experience 1952-53 to 1990-91' (EPW, March 30). My major concern is with their following conclusion: ... the empirical evidence for the entire period of three decades clearly shows that the terms of trade and technology have been responsible for increasing the private investment in agriculture. It seems during the late 1980s the increase in private investment has not only helped in raising production and farmers' incomes but also improved the efficiency of investment made in agriculture despite unfavourable terms of trade (p A-11). Admittedly, Misra and Hazell (MH hereafter) have reckoned with both price and non-price factors in agricultural growth process, especially the interactive role of terms of trade with H Y V technology variable. But in their zeal to underscore the role of price factor which has been underplayed in earlier research writings they have un- warrantedly down played the role of three following non-price instruments in private capital formation in agriculture: (1) public investments in agricultural sector (major, medium and minor irrigation works; soil and water conservation works, agricultural research, etc); (2) public investments for agriculture development but outside the agriculture sector (rural electrification, rural roads, fertiliser and pesticide industries, etc); and (3) institutional credit through commercial and co-operative financial institutions.

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