Investment in agri R&D provides a return of 14 times, far higher than education, roads etc, finds study

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Every rupee invested in agricultural research yields a return of about 13.85, implying a multiplier effect that exceeds returns from all other activities linked to farming, the Business Standard has reported quoting a working paper published in April by the National Institute of Agriculture Economics and Policy Research (NIAP) in April this year that works under the Indian Council of Agriculture Research (ICAR).

The revelation comes against the backdrop of slowing down of fund flow into agri research in India between 2011 and 2022.

The paper also mentioned that returns on each rupee spent on agriculture extension, education, roads, electricity and canal irrigation provides a dividend of Rs 7.40, 2.05, 1.33, 0.84 and 0.25 respectively.

“Looking towards the growing demand for food and other agricultural products and the future challenges to their production amidst little scope for expansion of agricultural land, it is imperative to invest more in agricultural R&D and prioritise it across disciplines or subsectors and regions to maximise economic, social and environmental benefits,” the working paper mentioned.

On the totem pole of dividends, after research comes agriculture extension activities. It yields returns at 7.40 for every rupee of funds poured in.

However, if the broad “agriculture and allied activities” is put under the lens, according to the paper, there are wide differences in the returns.

Research in animal science yields a high pay-off at 20.81 for every rupee. However, that for entire crop science is 11.69. The study also revealed wide regional disparities in agriculture research. For example, between 2011-2020 the states Uttar Pradesh, Rajasthan, Madhya Pradesh, West Bengal and Odisha, which cumulatively account for 43% of India’s net sown area, have spent less than 0.25% of their agriculture GDP on research.

The other side of the spectrum is occupied by Bihar, Uttarakhand, Kerala, Jammu and Kashmir, Himachal Pradesh, and Assam that spent more than 0.80% of their respective agriculture GDP on R&D.

Research in agriculture is substantially funded by the public exchequer. Between 2011 and 2020, the Union government contributed 33.8% of its total investment in agri R&D, while the states allocated 58.5% of the total R&D funds in agriculture. Only 8% of the total amount spent on R&D in India came from the private sector.

The working paper mentioned that between 2011 and 2020, the total expenditure in the country on agri-research amounted to 0.61% of the agri-GDP. The global average, on the other hand, is 0.93%.

The expenditure on research in agriculture is heavily tilted towards crops with livestock and natural resources getting a much smaller part of the investment pie. Interestingly, the expenditure is more balanced in the states of southern India.

Disaggregating the headline figures leads to an interesting picture. The proportion of agriculture GDP spent on extension services was 0.16%. In 2020-21, India spent 0.54% its agriculture GDP on research and 0.11% on extension activities.

Though the country’s investment in agri R&D increased almost five times in the past 40 years, the annual rate of growth in research investment slowed down to 4.4% between 2011 and 2020 from about 6.4% in the period between 1981 and 1990.