Role of Public Investment in Food-Grain Productivity

The main objective of the study is to examine the long-run relationship between public investment and foodgrains productivity across the fifteen major states of India. The analysis is confined to the period, 1974-'75 to 2000-'01. In order to examine the long-run impact of public investment on foodgrains productivity, the study uses Koyck's Autoregressive Distributed Lag model (ADL). The same methodology has also been used to test the long-run relationship between foodgrains productivity and investment in irrigation - the major component of public investment. The study shows that the growth of foodgrains productivity had been positive and significant during the Sixth and the Seventh Plans, but registered no significant growth during the Eighth and Ninth Plans both at the all India level and in the majority of the states. The analysis also shows interstate difference in the average levels of productivity and investment. The study points out that growth of public investment increased during 1974-'75 to 1980-'81, but declined sharply during the next decade both at all India level and in the majority of the states and rose again since 1993-94.