ROLE OF CLIMATE CHANGE, INSTITUTIONAL CREDIT AND PUBLIC SECTOR INVESTMENT IN AGRICULTURAL PRODUCTIVITY IN INDIA, 1970-2018

Hrushikesh Mallick

Applied Econometrics and International Development, 2023, vol. 23, issue 1, 125-158

Abstract: Considering a broad set of determinants such as climatic factors (rainfall and temperature), institutional credit allocation, gross capital formation by private and public sectors and domestic demand sources along with other inputs used in agricultural production, we examine whether these factors influence agricultural productivity in India. Using cointegration, we find that rainfall, a climatic factor significantly augments agricultural productivity, while average temperature has no influence on it. The long-term institutional credit significantly improves agricultural productivity than short-term credit. Further, we find public investment potentially improves agricultural productivity than private investment, justifying tapping productivity potential of agriculture by stepping up public sector investment and deploying greater long-term institutional credits. Among other inputs, fertiliser use, irrigation and agricultural labour forces significantly contribute to raising productivity, while increasing pesticide use doesn’t yield productivity gains. These key findings are potentially useful for agricultural policy in India for achieving sustainable growth targets.

Keywords: Climate change; Agricultural productivity; Institutional credit; Capital formation in agriculture; Domestic sources of demand for agricultural output. (search for similar items in EconPapers)
JEL-codes: Q11 Q14 Q15 Q18 Q54 (search for similar items in EconPapers)
Date: 2023
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