UPSC Prelims 2020 Q61: Indian Economy – Agriculture & Rural Development
- (a) 1, 2 and 5 only
- (b) 1, 3, 4 and 5 only
- (c) 2, 3 and 6 only
- (d) 1, 2, 3, 4, 5 and 6
Answer: (c) 2, 3 and 6 only
Explanation
Public Investment in Agriculture: What Counts?
| Item | Is it public investment? |
|---|---|
| 1. MSP (Minimum Support Price) fixing | YES |
| 2. Computerization of PCS | YES |
| 3. Social Capital development | YES |
| 4. Free electricity to farmers | YES - subsidy/transfer |
| 5. Agricultural loan waiver | NO - transfer, not investment |
| 6. Cold storage facilities | YES - infrastructure |
Public investment includes:
- Direct capital expenditure (infrastructure: 2, 6)
- Policy framework (1 = MSP)
- Capacity building (3 = social capital)
- Subsidies/transfers (4, 5 = consumption/debt relief, not productive investment)
Statements 2, 3 and 6 are investments. Statements 1 is policy; 4, 5 are transfers/subsidies. Answer: (c) 2, 3 and 6 only.
Answer: (c) 2, 3 and 6 only.
Why each option is right or wrong
- (a) Incorrect. Includes MSP (policy, not investment) and loan waiver (transfer).
- (b) Incorrect. Includes loan waiver (transfer) and free electricity (subsidy/transfer).
- (c) CORRECT. Items 2 (computerization - infrastructure), 3 (social capital - capacity), 6 (cold storage - infrastructure) are productive investments. Items 1 (policy), 4, 5 (subsidies/transfers).
- (d) Incorrect. Includes non-investment items like free electricity.
Key point
Public investment vs subsidy: Investment = productive assets (infrastructure, equipment, training). Subsidy = direct transfer (free electricity, loan waiver). Investment builds capacity; subsidy provides immediate relief.
Remember
Public investment in agriculture includes: (2) Computerization of Primary Agricultural Credit Societies (infrastructure), (3) Social Capital development (human/social infrastructure), (6) Setting up cold storage facilities (capital infrastructure). Items 1 (MSP = policy), 4 (free electricity = subsidy), 5 (loan waiver = transfer) are not productive investments.
Common mistakes
- Confusing subsidies with investments. Free electricity is consumption subsidy, not investment.
- Assuming loan waiver is investment. It's debt relief/transfer, not capital formation.
- Missing that MSP is policy framework, not capital investment.
Exam tip
India's agri-investment: Focused on irrigation, storage, mechanization post-2014. PMKSY (irrigation), Pradhan Mantri Kisan Sinchayee Yojana, AIBP (watershed). These are capital investments.
Sources
- Ministry of Agriculture - Public Investment Framework
- World Bank - Agricultural Investment Analysis