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Abstract
Investment in agriculture is widely recognised as crucial for economic growth, poverty reduction and improved food and nutrition security. In India, investment in agriculture as a share of total capital formation in the economy continue to decline for both public and private investments. The present study attempts to find out the composition and determinants of farm household investment on productive assets using recent NSSO situational assessment survey data. Composition of average monthly expenditure on productive assets indicated that nearly 33 per cent was spent on agricultural machinery and implements, 18 per cent was on livestock and poultry and another 42 per cent was on ‘other assets in farm businesses. Average monthly expenditure on productive assets used in farm business indicated that less than one-third of the all-India average in the lowest size class of land (<0.01 ha.) compared to more than nine times of the all-India average in case of agricultural households with more than 10 ha of land. The Heckman (1979) selection model, sometimes called the Heckit model has been used to explore the determinants of farmers’ investment and the results indicated that sex, caste, credit availed, household size, crop income, education and possessed land were the significant variables which determines the investment decision of farm households and the extent investment on productive assets.