UPSC Prelims 2020 Question:

In India, which of the following can be considered as public investment in agriculture?

1. Fixing Minimum Support Price for agriculture produce of all crops
2. Computerization of Primary Agriculture Credit Societies
3. Social Capital development
4. Free electricity supply of farmers
5. Waiver of agriculture loans by the banking system
6. Setting up of cold storage facilities by the governments
   
   

Select the correct answer using the code given below:

Explanation:

• • Public investments in agriculture refers to investments made by government to build up financial or social resources to raise agricultural productivity. Any capital expenditure that benefits agriculture is considered public investment in agriculture.
  • Accordingly, fixing of Minimum Support Prices (MSPs) of agricultural products or waiver of agricultural loans are regulatory measures which will raise the liability of the government to pay without any future returns. Hence, it's neither raising the assets, not reducing the liability for the government. This is why, they are not considered as public investment. So, points 1 and 5 are not correct.
  • Computerization of Primary Agriculture Credit Societies results in improvisation of the public infrastructure in the agriculture sector for better availability and management of credit. Similarly, setting up of cold storage is an investment in public infrastructure. So, points 2 and 6 are correct.
  • Social Capital Development refers to the development of networks of relationships among people who live and work in a particular society, enabling that society to function effectively. It is a type of social resource and is considered a type of public investment. So, point 3 is correct.

• Free electricity supply is a kind of revenue expenditure as it does not create any asset nor it reduces any liability for the government. So, point 4 is not correct.
  
  

Therefore, option (3) is the correct answer.

Subject: Economics | Agriculture and Food Management