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Poverty in India has been declining consistently over the years, yet it is home to 172 million poor people. Most of India's poor are concentrated in rural areas and are dependent on agriculture. This poses a serious challenge to the exploration of potential pathways that could effectively eradicate poverty and accomplish the United Nations Sustainable Development Goals. We estimate the effects of various types of investment in rural areas in accelerating agricultural productivity and reducing rural poverty, and find differential impacts of investments and subsidies across low-, middle-, and high-income states. Private investment in minor irrigation, public investments in agricultural research and development, and subsidies on irrigation and electricity have the highest marginal returns in low-income states. Further, the payoffs from additional spending in promoting agricultural income are also higher in low-income states, suggesting targeting these locations with strategic investments and subsidies to improve agricultural productivity and reduce poverty. [ABSTRACT FROM AUTHOR]

Earlier studies have empirically illustrated the significant role that investment in agricultural research and extension (R&E) plays in enhancing productivity, accelerating agricultural growth and reducing poverty in India. This article adds to the existing literature on the spatial and temporal dimensions of agricultural R&E investments with special emphasis on returns to investment in major states of India. The study reveals that significant structural changes have occurred in the pattern of agricultural R&E investments across sectors and states over the past five decades. R&E investments on the crop and fishery sectors improved over time at the expense of the livestock sector. Similarly, the states' share in aggregate R&E investments declined over the years, while the centre's improved proportionately. Returns to investments differed significantly according to geography, with the states that had a higher share of total factor productivity growth in their output growth faring better than the rest in relative terms. The R&E investment in the crop sub-sector in India has been especially rewarding, generating returns that are close to 50 per cent. In general, the findings of the study suggest the engineering of a deliberate shift in focus from alternative types of investment to agricultural R&E to meet the future growth challenges in India's agriculture sector. [ABSTRACT FROM AUTHOR]