Public financing of Indian agriculture and its returns: Some panel evidence

This paper compares the effectiveness of public investment and input subsidies in augmenting agricultural production. It uses an autoregressive distributed lag (ARDL) model on time-series data at the national level and panel data at the state level. The paper finds that subsidies have a positive and significant impact in augmenting agricultural production in the short run only, and public investment is more effective at the national and subnational level in the short and long run. The range of long-run elasticity is 0.030.368 and short-run elasticity is 0.030–0.205. Therefore, input subsidies should be rationalized and funds diverted to farm investment.