Acreage and farm investments decisions amidst uncertainty: A case study of rural India

Abstract

This study provides evidence‐based information on the impact of the pandemic lockdown and other COVID‐19‐related policies on Indian rural households' decisions on‐farm investments and operations (planting and borrowing decisions). The study uses the World Bank's (2021) high‐frequency rural household‐level survey across six states of India for the 2020 Kharif crop season. Our analyses also show that farm households exhibit differences in their perception of the pandemic's impact on their farming operations. In terms of input cost, farm households exhibited heterogeneous reactions to input costs like fertilizer during the early part of the pandemic. Our results also show that government incentives in the form of cash transfers do not significantly impact households' farm operations decisions (including loan acquisitions). Policymakers could focus on policies that develop resilience toward a major shock like the pandemic and this requires preparedness [EconLit Citations: C36, D19, Q12, R20].