Topic

An Economic Analysis of Capital Formation In Agriculture-A Study in Gulbarga District

Introduction

Capital Formation refers to net additions of Capital stock such as Equipment, Building, and other Intermediate goods.

Generally the rate of Capital formation and Economy’s Aggregate Income has direct relationship.

The Process of Capital formation consists of both Tangible and Intangible goods.

Thus the capital formation must include both material and Human Capital.

The investment made on capital assets of Agriculture by Public and Private Enterprises are generally known as Capital Formation in Agriculture.

The Capital Formation is being made in Agriculture to Improve the quality of rural assets and enhance there productivity.

Importance of Capital FormationTo Increase Productivity

It Helps to increase employment opportunities.

Capital is also required for construction of Schools and Hospitals.

Steps in Capital Formation Increase in Savings

Mobilization of Savings

Investment of Savings

Reasons of low rate of Capital Formation

1. Low Income

2. Low Productivity

3. High growth rate of Population

4. Imperfect Market Structure

Objectives

i) To Analyze of the pattern of investment in different capital assets.

ii) To Identify of the sources of capital for investment in agriculture.

iii) To Assess of the variability in capital formation in both progressive and less-progressive areas.

iv) To Identify of the factors influencing capital formation.

Hypothesis Investment in capital assets is same in both

progressive and less-progressive areas

There is more dominance of borrowed capital in both the areas

High growth rate of Population is main factor which is influencing the capital formation.