Trends of Public and Private Investment in Agriculture in Uttar Pradesh: An Issue of Complementarity

The agrarian economy of Uttar Pradesh continues to grapple with low productivity and lack of proper infrastructure. poor investment and the emerging regional and sectoral inequalities in Uttar Pradesh was highlighted by many scholars. The present study has prepared a time series of capital expenditure in agriculture of state government of Uttar Pradesh including major heads associated with investment ‘in” agriculture or investment ‘for’ agriculture, examines the compositional shifts in capital formation in state agriculture on public account and deals with complementarity issue between public and private investment in agriculture in Uttar Pradesh.

With perceptible decline in public sector investment in agriculture in the state during the decades of 1980s and 1990s, the agrarian economy of Uttar Pradesh continues to struggle with low productivity and lack of proper infrastructure. A negative compound growth rate of gross capital formation of was observed in the state agriculture in the eighties and the nineties. Ratio of public investment in agriculture to net state domestic product in the agriculture of the state at constant prices also declined till 1995–96. Similarly proportion of gross capital formation in agriculture in Uttar Pradesh to net state domestic product at constant prices declined since 1980–81. Public and private investment in agriculture in Uttar Pradesh however shows a clear positive increase after 2000–01. The decline in plan expenditure in its turn can be traced to the sharp deterioration in the fiscal situation in the state of Uttar Pradesh witnessed since early nineties. Due to mounting pressure of non-developmental expenditure on salaries, pensions and interest payments, the government budgets have been running into continuous and high revenue deficit. Thus the state government is not in the position to raise its expenditure on development plans and other priority sectors like education, health and infrastructure. This fiscal crisis has negative impact on public investment of economy, particularly in agriculture sector.