GTA5

Economic contribution of Farm Universities

 Farm Universities in India have the mandate of teaching, research and extension in addition to policy making in the interest of agriculture and the State. Estimation of their economic contribution to the society is crucial not only in the context of meeting the development goals at large but also for the financial allocation of budgetary grants for functioning of the farm Universities in the National Agricultural Research System. Common methods used in the estimation of contribution of research and extension of farm Universities are (1) Total Factor Productivity (TFP) approach (2) Economic Surplus approach and (3) Modified Partial Budgeting approach. From this analysis it can be concluded that the economic contribution of farm universities every year is equal to ten percent of the value of the gross value of agricultural GDP every year. The TFP is that portion of aggregate output that is not explained by the amount of inputs used in production. This unexplained portion of output can be inter alia due to technical innovations, organizational and institutional changes, changes in societal attitudes, fluctuations in demand, Roads, Markets, changes in factor shares, omitted variables, measurement errors. 

TFP index

The TFP index is the difference between the output growth and the input growth.  The TFP index for the period 1989 to 2007, which is the long term indicator of the contribution of research and extension is 1.11. The annual growth of output is at 1.88 percent, and the TFP growth is 1.11 percent. Therefore TFP growth of 1.11 forms 59.26 percent of the growth of output (following methodology of Kannan 2011). Since TFP measures the contribution of non-inputs including, research, extension, technology, the contribution of technology to output growth is 59.26 percent of the agricultural output growth. For the estimation of economic contribution of technology, the same trend in TFP index from 1989 to 2007 is assumed to exist in 2014-2018 period also. 

Table 1: Annual growth in Input, Output, TFP index and Share of TFP in output growth in all crops of Karnataka

Determinants of Total Factor Productivity in Karnataka Agriculture

The determinants of TFP in Karnataka agriculture indicate the role of different explanatory variables in shaping the TFP. Accordingly, it can be observed that among the explanatory variables Research expenditure contributes to 23.04 percent, while that of Extension contributes to 12.8 percent, and in combination 35. 84 percent (Table 2).

Table 2: Determinants of TFP in Karnataka

Economic contribution of farm universities in Karnataka

The TFP index of 1.11 obtained as annual growth in output minus annual growth in input for the period 1989 to 2007, indicated that the share of TFP in output growth is 59.26 percent. It is postulated that the trend which existed in the said period continues to shape the TFP for the period 2014 to 2018 also. Further, according to the study, the contribution of Research expenditure to TFP is 23.04 percent, and the contribution of Extension expenditure to TFP is 12.80 percent, and the combined contribution of Research and Extension to TFP is 35.84 percent. The contribution of Research and Extension in Karnataka therefore is 59.26 percent of 35.84 percent = 21.24 percent of the gross value of agricultural output. It is crucial to note that research and extension efforts are from both public and private sector. According to a study, it is found that 43 percent of research expenditure has been on food crops and this is largely by public sector. Therefore 43 percent of economic contribution of 21.24 percent being 9.13 percent of the gross value of agricultural output can be considered as a conservative estimate of the economic contribution of farm universities. The gross state domestic product of Karnataka for 2015-16 is Rs. 10,22,729 crores of which the the contribution of Agriculture and Forestry is Rs. 54844 crores, that of Horticulture is Rs. 52,731 crores and that of Animal Husbandry, livestock and fishery is Rs. 33,712 crores. Considering the economic contribution of farm Universities in each of the sectors, the economic contribution of research and extension in agriculture is Rs. Rs.5008 crores, that in horticulture is Rs. 5009 crores and that in Animal Sciences, livestock and fishery is Rs. 7160 crores (Table 3).

Table 3: Economic Contribution of Research and Extension in Farm Universities in Karnataka for 2015-16 (Rs Crores at current prices)

Economic contribution of Research and Extension is 59.26 percent of 35.84 percent = 21.24 percent of the gross value of agricultural output.  As the research and extension efforts are from both public and private sector, as 43 percent of the investment is from public sector (mainly the Universities), the economic contribution is 43 percent of 21.24 percent = 0.0913 or 9.13 percent of the gross value of agricultural output. Thus, the total economic contribution of Research and Extension of farm Universities in Karnataka for 2015-16 is 9.13 percent of Rs. 30,007 crores being Rs. 12903 crores and generalized as ten percent of the gross value of agricultural domestic product for the country. 

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Views expressed above are the author’s own.



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