Rural India, "the battleground in the fight against poverty", can be transformed by switching government expenditure from food, fertiliser and power subsidies to productive investment in farm infrastructure, World Bank economists have said.
"Besides being bad for the environment and a potential source for leakage of funds, these subsidies absorb an increasingly larger share of agricultural spending," World Bank Lead Rural Development Specialist Martien van Nieuwkoop and Lead Economist Dipak Dasgupta said in their paper on Indian agriculture.
They said government expenditure must be shifted from these large and often unproductive subsidies to transforming rural infrastructure like roads, water supply, research, electrification and market support.
Based on various analytical works and project interventions, the World Bank economists, terming India's rural areas as "the battleground in the fight against poverty", said farmers must be involved "front-end" to deal with resistance to the transition for rationalisation of existing sops.
They said barriers to domestic marketing of agricultural product must be removed and greater participation of the private sector in procurement be encouraged.
"This will entail a different role for the state, including the need for organising farmers so that they are better positioned to capture economies of scale in marketing and value addition," the paper said.
The World Bank complimented the government for the recent Tribal Rights legislation that has "opened the door to better community forestry management". However, implementation, learning and community involvement is the key to achieving success, it said.