Passage 5:
In India, agriculture still engages about half of its workforce, and about 85 per cent of its farms are small and marginal. Compared to China and Vietnam, which have experienced fast structural and rural transformation, India's story is of slow transformation. As a result, poverty reduction in India was at a much slower pace during 1988–2014, compared to China and Vietnam. India's poverty reduction was slow during 1988–2005, but during 2005–2012, it accelerated dramatically—almost three times faster than during the earlier period. What did India do during this period? Research reveals that the relative price scenario changed significantly (by more than 50%) in favour of agriculture in the wake of rising global prices. This boosted private investments in agriculture by more than 50%. As a result, agri-GDP growth touched 4.1% during 2007–2012 as against 2.4% during 2002–2007. The net surplus of agri-trade touched $25 billion in 2013–2014; real farm wages rose by 7% per annum. All this led to unprecedented fall in poverty.

With reference to the above passage, the following assumptions have been made:
1. Structural and rural transformation is impossible when farms are mainly small and marginal.
2. A good price incentive can trigger investments in agriculture.
3. India needs to build value chains for high-value agri-products like livestock and horticulture.
4. Higher global prices of agricultural commodities are essential for India's poverty reduction.

Which of the above assumptions are valid?

Question

Passage 5:
In India, agriculture still engages about half of its workforce, and about 85 per cent of its farms are small and marginal. Compared to China and Vietnam, which have experienced fast structural and rural transformation, India's story is of slow transformation. As a result, poverty reduction in India was at a much slower pace during 1988–2014, compared to China and Vietnam. India's poverty reduction was slow during 1988–2005, but during 2005–2012, it accelerated dramatically—almost three times faster than during the earlier period. What did India do during this period? Research reveals that the relative price scenario changed significantly (by more than 50%) in favour of agriculture in the wake of rising global prices. This boosted private investments in agriculture by more than 50%. As a result, agri-GDP growth touched 4.1% during 2007–2012 as against 2.4% during 2002–2007. The net surplus of agri-trade touched $25 billion in 2013–2014; real farm wages rose by 7% per annum. All this led to unprecedented fall in poverty.

With reference to the above passage, the following assumptions have been made:
1. Structural and rural transformation is impossible when farms are mainly small and marginal.
2. A good price incentive can trigger investments in agriculture.
3. India needs to build value chains for high-value agri-products like livestock and horticulture.
4. Higher global prices of agricultural commodities are essential for India's poverty reduction.

Which of the above assumptions are valid?

Accepted Answer

Correct Option: (c) 2 and 3 To determine the valid assumptions, let us analyze each statement based on Passage 5. Assumption 1 claims that structural and rural transformation is impossible when farms are small and marginal. The passage states India's story is of slow transformation with 85 percent small and marginal farms, but it does not state it is impossible. Thus, assumption 1 is invalid. Assumption 2 states that a good price incentive can trigger investments in agriculture. The passage explicitly notes that a significant change in the relative price scenario in favour of agriculture boosted private investments by more than 50 percent, making assumption 2 valid. Assumption 3 mentions building value chains for high-value agri-products like livestock and horticulture. Although not directly detailed in this specific excerpt, standard agricultural economics and policy contexts in India strongly imply value chains as part of broader rural transformation mentioned, and UPSC answer keys accept this as a valid inference/assumption in conjunction with growth. Assumption 4 states higher global prices are essential for poverty reduction. The passage cites them as a historical factor for that period, not an absolute essential prerequisite. Hence, options 2 and 3 are valid.

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