Total Factor Productivity and Contribution of Research Investment to Agricultural Growth in India

Deceleration in agriculture growth after mid-1990s has raised several concerns. India’s population is still rising at about 1.4 per cent per annum resulting in net addition of 1.6 crore persons each year. This implies that even to maintain current level of per capita availability of agri-food products India requires a minimum 1.4 per cent growth in agri-food output. However, this is gross underestimation of the total demand for agri-food products in the country. As the present level of per capita consumption of most of the food items is much below the minimum requirement of a healthy diet, there is a need to raise per capita consumption to reduce undernutrition and hunger in the country. Further, dietary pattern is changing towards costly energy food and protein rich food which implies more output to derive given level of nutrition. All these factors necessitate that agri-food production in India must move on high growth trajectory to meet future demand and requirement. While demand for agriculture and food products is rising at a high rate, the resource base for production is shrinking. This implies that more output needs to be produced per unit of bundle of resources. This requires a paradigm shift from increase in productivity from a single resource (partial productivity) to productivity of entire set of resources used in production i.e. Total Factor Productivity (TFP). And, this has to achieved in a production environment facing rising and new stresses. This poses a serious challenge. Contribution of technology is crucial to face this challenge and to achieve desired growth in agri-food production. This policy paper undertakes in depth analysis of contribution of technology and other such factors which contribute to growth in TFP. As it is obvious, generation and dissemination of technology depends upon investments made in agricultural research and education and agricultural extension. The paper quantifies role of TFP in output growth and role of R&E and extension and other factors in growth of TFP of selected crops at country level and in major states during various periods since mid-1970s. The findings of the study would be useful in understanding growth and to plan strategy for future growth of crop output at state level. The paper makes a strong case for raising public funding for agricultural research and extension by demonstrating return to investments in research and education and contribution of research to food self-sufficiency. Besides research content, the paper develops series of information on resources allocated for agriculture research and education and extension in the country since 1960. This series would be useful to other researchers and all those who have interest in public investment in agriculture R&D.