Irrigation Governance, Private Investment and Agricultural Productivity in India <sup/>

This article analyses irrigation investment among agricultural households across 20 major Indian states and its relationship with irrigation governance and agricultural productivity. An irrigation governance index is constructed based on select indicators that capture important dimensions of irrigation water governance. The principal component analysis is used to construct the index in each of the selected states for the period 2001–2002 to 2015–2016. Results reveal that in some states, farmers’ dependence on electric tube wells, and hence groundwater, has increased extensively due to inadequate access to public (canal) irrigation. Irrigation accounted on average for 35% of total investments undertaken by farmers, with little increase between 2002–2003 and 2012–2013. During that period, farmers’ expenditures on machinery, tractors and livestock have significantly increased. Results further indicate that good irrigation governance has a positive influence on private investment in agriculture, which in turn can contribute to enhance agricultural productivity and farmers’ incomes. This argument is substantiated by the results obtained from a structural equation model using the ICAR–ICRISAT household, individual and plot-level data. We find that states where both governance and private investment in irrigation are at very low levels should receive higher priority; these include Assam, Odisha, West Bengal, Kerala, Bihar and Jharkhand and Uttar Pradesh and Uttarakhand. The states which are low in governance but high in irrigation investment (Madhya Pradesh, Chhattisgarh, Himachal Pradesh and Karnataka) should improve governance to enable efficient use of irrigation resources. JEL Classification: Q15, Q18