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UPSC Prelims 2020 · Agriculture · Farm Money
In India, which of the following can be considered as public investment in agriculture? Select the correct answer using the code given below:
- Fixing Minimum Support Price for agricultural produce of all crops
- Computerization of Primary Agricultural Credit Societies
- Social Capital development
- Free electricity supply to farmers
- Waiver of agricultural loans by the banking system
- Setting up of cold storage facilities by the governments.
- (a) 1, 2 and 5 only
- (b) 1, 3, 4 and 5 only
- (c) 2, 3 and 6 only
- (d) 1, 2, 3, 4, 5 and 6
Show the answer and explanation
Answer: (c) 2, 3 and 6 only
PACS computerisation, social capital and cold storage create lasting assets.
Statement by statement
1. ✗ NO MSP is price support — a transfer, not an asset.
2. ✓ YES Computerising PACS builds lasting capacity.
3. ✓ YES Social capital (groups, institutions, training) is an investment.
4. ✗ NO Free power is a subsidy.
5. ✗ NO Loan waivers are transfers.
6. ✓ YES Government cold storage is a physical asset.
Why the others are wrong
(a) Counts MSP and loan waivers as investment.
(b) Counts subsidies and waivers as investment.
(d) Counts subsidies and transfers as investment.
The trap
Everything the government spends on farmers feels like “investment”. Investment must create a lasting asset.
🔒 Public investment = capital formation (irrigation, storage, research). Subsidies = current transfers.