Impact of Investment on Agricultural Growth and Rural Development in Himachal Pradesh: Dynamics of Public and Private Investment

In India, agriculture is an integral part of general development system still supporting the heavy burden of working population (65 per cent) despite its declining share (19 per cent) in the gross domestic product (GDP). Slow growth in agricultural sector has become a major concern as it has profound implications on the other sectors of the economy. To overcome this inertia in agriculture, a need is felt that public and private sectors should learn to join together and assist in the overall economic development. Agricultural development is necessary for two reasons, as a source of raw materials for industries and food for people, respectively (Government of India, 1959, Anderson and Lorch, 1994) and as a means to achieve the goals of employment-led economic growth, poverty alleviation and self-reliance (Johnston, 1997; Desai and Namboodiri, 1998). Sustained agricultural growth, therefore, has been a central theme of our developmental planning since Independence, for simultaneously enhancing both availability of and access to food. In this context, Government of India (1998) observed that while private investment has been the principal source of agricultural growth, particularly in the recent past, and will continue to be so in future, public investment is essential to correct the existing infirmities and to impart added dynamism to this sector. Undoubtedly, poverty alleviation depends ostensibly on increasing agricultural productivity particularly among small farmers, and investment in agriculture has a major role to play (Alagh, 1997; Anderson and Lorch, 1999; Roy and Pal, 2002). Realising the importance of investment, a number of studies have looked into inter alia, the trend, impact and complementarity between public and private investment. A substantial investment in agricultural sector during early 1960s that ushered in green revolution has paid off handsomely (Mishra, 1997). But, studies have observed that there has been a decline of public investment in agriculture during