1. Structural and rural transformation is impossible when farms are mainly small and marginal.
2. A good price incentive can trigger investments in agriculture.
3. India needs to build value chains for high-value agri-products like livestock and horticulture.
4. Higher global prices of agricultural commodities are essential for India's poverty reduction.
Which of the above assumptions are valid?
In India, agriculture still engages about half of its workforce, and about 85 percent of its farms are small and marginal. Compared to China and Vietnam, which have experienced fast structural and rural transformation, India's story is of slow transformation. As a result, poverty reduction in India was at a much slower pace during 1988-2014, compared to China and Vietnam.
India's poverty reduction was slow during 1988-2005, but during 2005-2012, it accelerated dramatically-almost three times faster than during the earlier period. What did India do during this period? Research reveals that the relative price scenario changed significantly (by more than 50%) in favour of agriculture in the wake of rising global prices.
This boosted private investments in agriculture by more than 50%. As a result, agri-GDP growth touched 4.1% during 2007-2012 as against 2.4% during 2002-2007. The net surplus of agri-trade touched $25 billion in 2013-2014; real farm wages rose by 7% per annum. All this led to unprecedented fall in poverty.
Correct Answer: (c) 2 and 3
Solution:The passage only mentions about small and marginal farmers being 85% of the agricultural population. It does not talk about that leading to structural and rural transformation. Hence statement is not correct. Statement 2 is valid as the passage says "Research reveals that the relative price scenario changed significantly (by more than 50%) in favour of agriculture in the wake of rising global prices.This boosted private investments in agriculture by more than 50%." Statement 4 seems incorrect as the passage does mention about global rise in prices affecting the agriculture sector in two specific time periods, thus leading to poverty reduction but the word "essential" makes it a very strong statement. This may not always be the case. Statement 3 also seems correct as a logical corollary to boosting of investment in private sector. Hence correct answer option is (c).