AGRICULTURE ORIENTATION INDEX

AGRICULTURE ORIENTATION INDEX

TOPIC: Agriculture

Context- The Food and Agriculture Organization (FAO) of the United Nations (UN) report for 2001 to 2019 shows that, globally, India is among the top 10 countries in terms of government spending in agriculture, constituting a share of around 7.3% of its total government expenditure. However, India lags behind several low-income countries such as Malawi (18%), Mali (12.4%), Bhutan (12%), Nepal (8%).

Concept-

Agriculture Orientation Index:

• The Agriculture Orientation Index (AOI) for Government Expenditures is defined as the Agriculture Share of Government Expenditures, divided by the Agriculture Share of GDP, where Agriculture refers to the agriculture, forestry, fishing and hunting sector.
• In other words, it measures the ratio between government spending towards the agricultural sector and the sector’s contribution to GDP.
• The measure is a currency-free index, calculated as the ratio of these two shares. This indicator will measure progress towards SDG Target 2.a.(Zero hunger).
• An Agriculture Orientation Index (AOI) greater than 1 reflects a higher orientation towards the agriculture sector, which receives a higher share of government spending relative to its contribution to economic value-added.
• An AOI less than 1 reflects a lower orientation to agriculture, while an AOI equal to 1 reflects neutrality in a government’s orientation to the agriculture sector.
• India’s index is one of the lowest, reflecting that the spending towards the agricultural sector is not commensurate with the sector’s contribution towards GDP.
• India holds only the 38th rank in the world, despite being an agrarian
• economy wherein a huge population is dependent on the agricultural sector for its livelihood, and despite being among the largest producers of several crops produced and consumed in the world.