Linkages and Effects of Exogenous Shocks on Resource Productivity and Private Fixed Capital Investment in Indian Agriculture

Exogenous shocks of market expansion and trade oriented economic reforms initiated during 1990's and combined after 2004-05 with price increase and higher public investment, accelerated aggregate output growth, enhanced resource productivity, and improved private investment in agriculture. The effects of external shocks transmitted dynamically through linkages between macroeconomic variables, aggregate agricultural output, and private fixed capital investment. The response of private investment to agriculture terms of trade is strong and has in turn a positive effect on aggregate agricultural output. Management of inflation, targeted institutional credits, and focused public investment and support programs, however, would be critical for enhanced private fixed capital investment and sustained long term aggregate productivity growth of agriculture