B2.3.1 Returns to Agricultural Growth and Poverty Reduction from Investments in Public Goods and Subsidies in the Phases of the India’s Green Revolution, 1960–2000

TABLE B2.3.1: Returns to Agricultural Growth and Poverty Reduction from Investments in Public Goods and Subsidies in the Phases of the India’s Green Revolution, 1960–2000

1960-69 1970-79 1980-89 1990-99

Returns in agricultural GDP (Rs produced per Rs spent) Road investment 8.79 3.8 3.03 3.17 Educational investment 5.97 7.88 3.88 1.53 Irrigation investment 2.65 2.1 3.61 1.41 Irrigation subsidies 2.24 1.22 2.28 .. Fertilizer subsidies 2.41 3.03 0.88 0.53 Power subsidies 1.18 0.95 1.66 0.58 Credit subsidies 3.86 1.68 5.2 0.89 Agricultural R&D 3.12 5.9 6.95 6.93 Returns in rural poverty reduction (number of poor per million Rs spent) Road investment 1,272 1,346 295 335 Educational investment 411 469 447 109 Irrigation investment 182 125 197 67 Irrigation subsidies 149 68 113 .. Fertilizer subsidies 166 181 48 24 Power subsidies 79 52 83 27 Credit subsidies 257 93 259 42 Agricultural R&D 207 326 345 323

Source: Hazell 2009. Note: GDP = gross domestic product; R&D = research and development. BOX 2.3 Continued

Reprioritize the composition of spending. Input promotion during periods of high agricultural productivity in Asia and South America, for instance, addressed systemic constraints to productivity through integrated investments in new technologies, extension support, irrigation, and market linkages. Countries in Sub-Saharan Africa could get a bigger impact within the existing expenditure envelope by rebalancing the composition of public agricultural spending. They could start by moving away from a heavy focus on input subsidies, toward a package of complementary investments. The dividends from investments to strengthen markets, expand and improve soil and irrigation management, and develop and disseminate improved technologies can be enormous.90 For instance, investment of US$1 in agricultural research, on average, generates a stream of future benefits equivalent to US$10 (in net present value terms).91 The benefits from investments in irrigation are potentially high—with returns in SubSaharan Africa ranging from 17 percent on large-scale schemes to 43 percent for small-scale schemes. Finally, US$1 spent on a set of high-impact nutrition interventions can generate, on average, US$18 worth of economic returns.92 The lesson from regions that have transformed their agriculture sectors is that addressing the quality of public spending and the efficiency of resource use is even more important than addressing the level of spending.

90 Goyal and Nash (2017). 91 Alston, Pardey, and Rao (2021). 92 You et al. (2011).