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A Behavioural Approach to Agricultural Investment Decisions

Farming as a business requires constant inflow of investment and the investments in this area is made by both public and private sector. The private sector investment includes investment by organised corporates and households. Hence investment by private sector and individual households play an important role in increasing agricultural production and productivity thereby strengthening farmers? income. Despite continuous initiatives of the Government, the share of Gross Capital Formation in Agriculture in Gross Value Added from Agriculture and Allied sector is declining. This reflects that farmers and private investors are often reluctant to invest in agriculture. There is a greater need to understand the reasons behind low private investment, and address these timely and in effective manner. Behavioural factors could be one of the main factors and considering behavioural factors can lead to more realistic and effective agri-policies.