Total Factor Productivity and Returns to Public Investment on Agricultural Research in India§

This study has estimated the total factor productivity (TFP) and its share in output growth, and returns to public investments on research in agriculture in India. The contribution of agricultural research in reducing real cost of production and attainment of food self-sufficiency has also been estimated for the country. The estimates of TFP have shown considerable variations across crops in different states and at all-India level during the period 1975-2005. These wide variations in TFP growth indicate that technological gains have not been experienced in a number of crops in many states. The TFP growth has helped in reducing the real cost of production in the range of 1.0–2.3 per cent annually in the case of cereals. This has helped in keeping the prices of cereals low for consumers and providing benefits to producers through a decline in the real cost of production. Returns to investment on agricultural research have been found to be a highly paying proposition. The study has suggested that further investments on research will generate significant returns. At the sector level (including crop and livestock), the TFP growth has contributed 15 per cent to output growth during 1990-91 to 2006-07. The returns to investment on agricultural research have been estimated at 42 per cent. Study has found that about one-fourth growth in the output of wheat and cotton, one-fifth in case of pearl millet, and around one-eighth in paddy and maize each have been achieved due to investments on agricultural research. In the year 2005-06, contribution of research in crop output has been estimated to be 10.4 Mt for wheat and 6.3 Mt for rice. In monetary terms, the contribution of research in the value of the nine selected crops has been computed as ` 1552 crore. The study has suggested a higher allocation of resources for development of agriculture in the country and attainment of national food and nutritional security.