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Lack of investment leashes India farm growth - study

MUMBAI, June 27 (Reuters) - India’s agricultural growth has slowed down since the economic reforms of 1991 on stagnating public investment, slowing irrigation expansion and fragmented farm holding, according to a central bank study.

Environmental stress and lower investment in research and extension has contributed to the slow growth, according to the Reserve Bank of India report released on Friday.

Indian agricultural output grew at a compound annual growth rate (CAGR) of 1.3 percent in the period between 1991/92 and 2006/07. The area under all crops grew a mere 0.1 percent CAGR, while CAGR for area under food grains fell 0.1 percent.

The yield growth was only 1.2 percent, according to the report prepared by development research group of the bank.

In India, Asia’s third largest economy, about two-thirds of the population and a fifth of its economy depend on agriculture. see[nSP161899]

Only 40 percent of India’s cultivatable land is irrigated.

The report said despite spread of financial institutions in rural areas, the quantum of flow of financial resources to agriculture continues to be inadequate, impeding growth. (Reporting by Sourav Mishra; Editing by Harish Nambiar)

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