The formal non-farm sector, on the other hand, refers to the portion of an economy that is not involved in agricultural production. This sector includes industries such as manufacturing, construction, and services (such as finance, healthcare, and retail). The formal non-farm sector also includes the government and formal private sector, including large and small enterprises.
FPI stands for Foreign Portfolio Investment, which refers to the purchase of securities such as stocks and bonds by foreign investors. FPI is typically characterized by a short-term investment horizon and a lack of control over the management of the invested company. The foreign investors buy securities in the domestic companies and earn returns on the basis of the performance of the company.
In summary, the main difference between FDI and FPI is the nature of investment. FDI is a long-term investment, where a foreign entity establishes or acquires a controlling interest in a company, while FPI is a short-term investment, where a foreign entity purchases securities, such as stocks or bonds, without acquiring control over the management of the invested company.
Horticulture: This sub-sector includes the cultivation of fruits, vegetables, flowers, and plantation crops. India has a diverse range of climates and soils, which allows for the cultivation of a wide variety of horticultural crops. The Indian government has been encouraging foreign investment in this sector to improve productivity and increase exports.
Dairy: The dairy sector in India is the world's largest milk producer, and is also the largest source of livelihood for millions of farmers in the country. The Indian government has been encouraging foreign investment in this sector to improve the productivity of the dairy industry and to increase the exports of dairy products. Foreign companies such as Nestle, Danone, and Fonterra have invested in the Indian dairy sector to expand their presence in the country.
Incorporating MSP as an endogenous institutional growth factor means that the MSP policy is seen as a factor that can affect economic growth. One way to do this is to include MSP as a variable in a growth model that examines how different factors influence the rate of economic growth. The equation for the time rate of growth of consumption per capita could be:
dC/dt = f(MSP, other endogenous institutional growth factors)
Where C is consumption per capita, t is time, dC/dt is the time rate of growth of consumption per capita, f is a function that captures the relationship between MSP and other endogenous institutional growth factors, and the other endogenous institutional growth factors can be any other variable that is considered to affect the growth of consumption per capita.
In the post-reform era, beginning in the 1990s, the Indian government has implemented several economic reforms that have led to an increase in the efficiency of the agricultural sector. One of the key changes has been the liberalization of the agricultural market, which has increased competition and improved the functioning of markets.
However, the relationship between MSP and yield rates in Indian food grain production is complex. While the MSP policy has helped farmers to receive a guaranteed minimum price for their crops, it has also led to some negative consequences. Some studies have found that the MSP policy has led to farmers focusing on a few high-value crops, such as wheat and rice, at the expense of other crops, which has resulted in a decline in crop diversity and reduced overall yields.
Additionally, The MSP policy has led to overproduction of certain crops, resulting in surplus stocks and wastage, which has been one of the reasons behind the high food inflation in India.
It is worth to mention that while the MSP policy has been considered as a key factor in ensuring food security, it has also led to several problems like lower crop diversity, overproduction, wastage and price inflation in the post-reform era.