Irrigated agriculture was one of the main components of the Indian government plan to increase agricultural productivity following the Bengal Famine of 1943.
To this end, rural electrification programs for irrigation purposes have been set up with the aim of facilitating access to electricity for millions of smallholder farmers. The consequences of this electricity use in the agricultural sector can be numerous. As shown in the literature, it can lead to a structural transformation of the Indian economy with a reallocation of resources between sectors. It can also put increasing pressure on natural resources such as forests or the water table due to an uncontrolled use. To shed light on the externalities associated with this transition and to understand issues related to them, I use an empirical strategy that studies each possible scenario. One possible scenario is an electricity use for irrigation purpose accompanied with a structural transformation of the economy due to a release of the workforce from the agricultural sector and reallocated towards other sectors and thus leading to their expansion. A second possible scenario may be an adoption accompanied by a reduction in forest cover or water table. The realization of one or the other of these scenarios depends strongly on the effect of the use of electricity on the use of other agricultural inputs (capital, labour, land, etc.). In fact, the first possibility would occur if electricity is a labor-saving technology and the second one arise if it is land-biased. The approach requires data on the agricultural and manufacturing sector as well as forest cover and water table aggregated at district level in India.
Agricultural technology, structural transformation, natural resources, trade openness
Pr Martino Pelli, Département d'économique