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In India, which of the following can be considered as public investment in agriculture ? 1. Fixing Minimum Support Price for agricultural produce of all crops 2. Computerization of Primary Agricultural Credit Societies 3. Social Capital development 4. Free electricity supply to farmers 5. Waiver of agricultural loans by the banking system 6. Setting up of cold storage facilities by the governments Select the correct answer using the code given below :
Explanation
The correct answer is Option 3 (2, 3 and 6 only). In economic terms, public investment refers to the creation of tangible or intangible assets that enhance long-term productive capacity, rather than mere fiscal transfers or subsidies.
- Statement 2 (PACS Computerization) and Statement 6 (Cold storage facilities) are correct as they involve building physical and digital infrastructure that reduces wastage and improves credit efficiency, directly contributing to capital formation.
- Statement 3 (Social Capital development) is correct because it involves enhancing the skills, cooperation, and capacity of the farming community, which acts as an intangible productive asset.
- Statements 1, 4, and 5 (MSP, free electricity, and loan waivers) are classified as subsidies or revenue expenditures. While they provide immediate financial relief or income support, they do not result in the creation of new productive assets and are therefore excluded from the definition of "investment."
Thus, only statements 2, 3, and 6 qualify as investments that strengthen the structural foundation of Indian agriculture.
PROVENANCE & STUDY PATTERN
Guest previewThis is a classic 'Capital vs. Revenue Expenditure' concept disguised as an Agriculture question. The strategy is binary: classify every government spending item as either 'Asset Creation' (Investment) or 'Consumption Support' (Subsidy/Transfer). If it doesn't build a durable asset, it's not investment.
This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.
- Statement 1: Is fixing minimum support prices (MSP) for agricultural produce of all crops considered public investment in agriculture in India?
- Statement 2: Is computerization of Primary Agricultural Credit Societies considered public investment in agriculture in India?
- Statement 3: Is social capital development in rural/agricultural communities considered public investment in agriculture in India?
- Statement 4: Is free electricity supply to farmers considered public investment in agriculture in India?
- Statement 5: Is waiver of agricultural loans by the banking system considered public investment in agriculture in India?
- Statement 6: Is setting up of cold storage facilities by the government considered public investment in agriculture in India?
- Defines MSP as a government price-support mechanism fixed for specific mandated crops (22 crops) on CACP recommendations.
- Shows MSP is a price-setting/procurement policy rather than described as an investment item.
- Describes MSP as part of measures to ensure remunerative prices and government procurement at MSP.
- Frames MSP as a market/price support action (procurement/remuneration), not as capital or public investment spending.
- Discusses 'public investment in agriculture' in terms of infrastructure (e.g., irrigation projects) and acceleration of such investments.
- Supports a distinction between public investment (physical/capital projects) and policy tools like MSP.
The exam-style question explicitly lists 'Fixing Minimum Support Price for agriculture produce of all crops' among items to judge as 'public investment in agriculture', indicating this is a debated classification in textbooks.
A student could use this to check official definitions of 'public investment' (capital formation vs revenue support) to see whether MSP matches the criteria.
Defines MSP as the rate at which government purchases are made from farmers for the central pool — showing MSP involves government procurement and expenditure.
Combine this with the student's knowledge that government purchases/stocking create fiscal outlays to assess whether such outlays are treated as investment or revenue expenditure in public accounts.
States it would be 'a huge financial burden and practically not possible' for the government to procure all crops at MSP — implying significant fiscal/recurring cost associated with MSP implementation.
A student could link this to the idea that policies imposing recurring large fiscal burdens are typically treated as subsidies/transfer payments rather than capital investment.
Lists MSP under 'Subsidies' alongside power subsidy and farm credit, implying MSP functions like a price support/subsidy instrument.
Using the standard distinction that subsidies are revenue expenditures, a student could infer MSP is more akin to subsidy/transfer than public capital investment.
Describes implementation of MSP through government schemes (PM-AASHA) with mechanisms like Price Support Scheme and Price Deficiency Payment, showing MSP is operationalised via targeted government programmes.
A student could examine the nature of these schemes (procurement, payments) to judge whether they create durable assets (investment) or are income/support transfers.
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This statement analysis shows book citations, web sources and indirect clues. The first statement (S1) is open for preview.
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This statement analysis shows book citations, web sources and indirect clues. The first statement (S1) is open for preview.
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This statement analysis shows book citations, web sources and indirect clues. The first statement (S1) is open for preview.
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