The World Bank has strongly advocated for larger investment in agriculture by India as it is vital for the welfare of its 600 million rural poor.

However, the World Bank in its report titled Agriculture for Development expressed its concern over growing “mismatch” between agro-related subsidies and public investment in agriculture.

This means while there is increase in subsidies there is no matching hike in public investment in agriculture - a crucial sector of the Indian economy.

“Public investment on agriculture in countries like India is heavily skewed towards providing subsidies rather than investments. In fact subsidies are more than four times that of public investments in agriculture,” the co-author of the report Alain de Janvry told newspersons while giving highlights of the report.

There was “much mis-spends on agriculture”, with investments accounting for only 25 pc of public expenditure, while subsidies took up 75 pc, the report said.

“The return on investment is 5-10 times more than the return on subsidies,” said Ashok Gulati of the International Food Policy Research Institute (IFPRI).

Pointing out that removing subsidy is a sensitive political issue, he said: “To ensure that fertiliser subsidy directly reaches small farmers, we suggested to Finance Minister P. Chidambaram that the method of delivering fertiliser subsidies should be changed to coupons. However, 16 MPs wrote to the Finance Minister against it”, he said.

Talking about the large number of farmer suicides in India, de Janvry, who teaches agricultural and resource economics at the University of California at Berkeley, said the way out was crop insurance. He added that the agriculture labour productivity has not increased as rapidly in India as compare to China and Bangladesh. “In India and China agriculture contributed an average seven percent to growth in GDP between 1995 and 2003, though the sector accounts for about 13 percent of the economy and employs just over half the labour force”, he said. “There is growth in agriculture in India. But with it there is a growth in the labour force engaged in agriculture. So the per capita productivity is not going up as much as it should. China and Bangladesh have done better in moving farm labour to the non-farm rural economy, and India should do the same,” de Janvry added.