Institute for Social and Economic Change
Working Paper: 345
Effect of Rural Infrastructure on Agricultural Development:
District-Level Analysis in Karnataka
This paper empirically investigates the relationship between rural infrastructure and agricultural productivity in the state of Karnataka. The analysis has been carried out among the districts of Karnataka for the period of 1980-2010. The paper presents a framework of availability and utilisation of rural infrastructure to analyse these linkages. By and large, existing literature has stressed the importance of making adequate infrastructure available. However, the utilisation of these infrastructures has not been considered for explaining the differences in productivity. Rural infrastructure development indices have been constructed by using principal component analysis for availability and utilisation indicators. Random effects model is applied to examine how different categories of infrastructure affect agricultural productivity. The study establishes that the role of availability of infrastructures in rural areas is contributing to agricultural productivity. Infrastructure utilisation index also turns out to be a positive determinant of agricultural productivity. Along with provision of infrastructures, fertiliser input continues to play an important role in agricultural development. Despite the fact that availability of data limited the variables that could be considered, the study throws up evidence in support of greater investment in infrastructures in rural areas while at the same time stressing the need to take steps to maximise the utilisation of existing resources. Therefore, it is important to invest in providing region specific infrastructures to resolve the disparities across region.