2 Data Base and Methodology
The trends in public expenditure in agriculture and irrigation are analysed for the
period 1981–82 to 2015–16 across 20 major Indian states. The Finance Accounts
published by the Comptroller and Auditor General of India (CAG), Government of
India (GoI), provide detailed account of government expenditure under the revenue
and capital heads of social and economic services. The capital expenditure represents investment or gross capital formation
1 on different economic activities. The
expenditure on irrigation head includes (a) minor irrigation (b) medium irrigation
(c) major irrigation (d) command area development, and (e) flood control.
Expenditure on agriculture and allied head includes twelve categories; major ones
are crop husbandry, animal husbandry, soil conservation, research and extension,
food-storage-warehousing, and fishery and forestry.
Data on gross state domestic product, net sown area, and irrigated area were
compiled from the National Accounts Statistics, Ministry of Statistics and
Programme Implementation, Government of India (GoI) and Ministry of
Agriculture and Farmers’ Welfare (MOA&FW), GoI. Public expenditure on agriculture and irrigation, compiled from the Finance Accounts, GoI, are converted into
2011–12 prices using gross state domestic product (GSDP) deflators. For maintaining consistency in expenditure data analysis, information pertaining to the
newly formed states of Telangana, Chhattisgarh, Jharkhand and Uttarakhand
(available from 2000–01) was merged with their respective parent states of Andhra
Pradesh, Madhya Pradesh, Bihar, and Uttar Pradesh. The 20 selected states cover
about 90% of the net sown area and agricultural income.
An agricultural orientation index (AOI) was developed to analyse the priority of
the state governments in allocation of resources towards agriculture and irrigation.
The AOI is defined as the share of agriculture and irrigation in total public
expenditure divided by the share of agriculture in GSDP. According to Syed and
Miyazako (2013), this index is an indicator of the degree to which the share of
agriculture–irrigation in public expenditure commensurate with the weight of the
sector in GDP. Efficiency of public expenditure on irrigation was analysed through
Data Envelopment Analysis (DEA). DEA has been widely used in the literature for
estimating technical efficiency of various economic activities (Ray 2004; Watkins
et al. 2014).
The percentage area irrigated by canal in total net irrigated area is taken as an
outcome variable while public expenditure on capital and revenue accounts on
major–medium–minor irrigation and command area development (excluding
expenditure on flood control) as two input variables. Public investment (capital
expenditure) in irrigation is taken as a stock variable, estimated by taking the accumulated expenditure in 1981 and accounting for 10% depreciation each year.
1
Capital expenditure is given in gross terms and includes the government’s investment in financial
stocks. Hence, it may be an over-estimation of actual investment in the respective heads/services.
This is the major data limitation.
Estimating Efficiency of Public Investment in Irrigation ...
47
The trends in public expenditure in agriculture and irrigation are analysed for the
period 1981–82 to 2015–16 across 20 major Indian states. The Finance Accounts
published by the Comptroller and Auditor General of India (CAG), Government of
India (GoI), provide detailed account of government expenditure under the revenue
and capital heads of social and economic services. The capital expenditure represents investment or gross capital formation
1 on different economic activities. The
expenditure on irrigation head includes (a) minor irrigation (b) medium irrigation
(c) major irrigation (d) command area development, and (e) flood control.
Expenditure on agriculture and allied head includes twelve categories; major ones
are crop husbandry, animal husbandry, soil conservation, research and extension,
food-storage-warehousing, and fishery and forestry.
Data on gross state domestic product, net sown area, and irrigated area were
compiled from the National Accounts Statistics, Ministry of Statistics and
Programme Implementation, Government of India (GoI) and Ministry of
Agriculture and Farmers’ Welfare (MOA&FW), GoI. Public expenditure on agriculture and irrigation, compiled from the Finance Accounts, GoI, are converted into
2011–12 prices using gross state domestic product (GSDP) deflators. For maintaining consistency in expenditure data analysis, information pertaining to the
newly formed states of Telangana, Chhattisgarh, Jharkhand and Uttarakhand
(available from 2000–01) was merged with their respective parent states of Andhra
Pradesh, Madhya Pradesh, Bihar, and Uttar Pradesh. The 20 selected states cover
about 90% of the net sown area and agricultural income.
An agricultural orientation index (AOI) was developed to analyse the priority of
the state governments in allocation of resources towards agriculture and irrigation.
The AOI is defined as the share of agriculture and irrigation in total public
expenditure divided by the share of agriculture in GSDP. According to Syed and
Miyazako (2013), this index is an indicator of the degree to which the share of
agriculture–irrigation in public expenditure commensurate with the weight of the
sector in GDP. Efficiency of public expenditure on irrigation was analysed through
Data Envelopment Analysis (DEA). DEA has been widely used in the literature for
estimating technical efficiency of various economic activities (Ray 2004; Watkins
et al. 2014).
The percentage area irrigated by canal in total net irrigated area is taken as an
outcome variable while public expenditure on capital and revenue accounts on
major–medium–minor irrigation and command area development (excluding
expenditure on flood control) as two input variables. Public investment (capital
expenditure) in irrigation is taken as a stock variable, estimated by taking the accumulated expenditure in 1981 and accounting for 10% depreciation each year.
1
Capital expenditure is given in gross terms and includes the government’s investment in financial
stocks. Hence, it may be an over-estimation of actual investment in the respective heads/services.
This is the major data limitation.
Estimating Efficiency of Public Investment in Irrigation ...
47