Skip to main content

Higher agri price influenced Gujarat agriculture to grow by 10 plus per cent in 2001-2011: Senior economist

Prof Dholakia
By Rajiv Shah
Amidst sharp controversy raging among top scholars on whether high agricultural growth rate of Gujarat agriculture is being cited by a section of economists by choosing one of the worst drought years as the base year (2000-01) (click HERE to read), a senior economist of the Indian Institute of Management-Ahmedabad, has said come up with a new explanation of the allegedly high growth rate. He has said that a higher price for agricultural product has been the main reason why Gujarat’s agriculture grew at a higher than 10 per cent per annum between 2001 and 2011. IIM-A’s Prof Ravindra Dholakia, who is one of those who has been criticized for choosing a bad drought year as the base, has in a recent paper, “Inter-sectoral Terms of Trade and Aggregate Supply Response in Gujarat and Indian Agriculture”, has said, “Inter-sectoral terms of trade” played a major factor ”in determining the growth performance of agriculture in Gujarat and all India”, whether it was the last decade or earlier.
Prof Dholakia’s view that a high agricultural growth rate is more the result of better terms of trade than anything else comes amidst fresh data, made available by the Government of Gujarat’s agricultural department, which show that the state’s agricultural production fell sharply in 2012-13, a semi-drought year, anywhere between 16 per cent (cotton) and 72 per cent (groundnut) (click HERE to read more). Overall, the state agricultural production fell by about 20-30 per cent, these estimates go to suggest. Already, state officials are trying to suggest that in 2013-14 the state agriculture will rise by 20 per cent, which suggests it will be back to where it was in 2011-12, when, again, it grew very little.
Prof Dholakia says, “Terms of trade (ToT) reflects price signals and economic incentives for producers and hence could be a determinant of supply response and growth performance of agriculture and the whole economy. We identify structural breaks endogenously in inter-sectoral terms of trade and analyse phase wise growth performance in distinct periods in both Gujarat and all India. Empirical analysis supports the hypothesis that favourable terms of trade for agriculture lead to a higher growth in agriculture and the whole economy. The terms of trade reflect the price incentives that producers in the respective sectors face determining their investments, savings and competitiveness.”
The senior economist, who has written the paper in association with Amey A Sapre of the Indian Institute of Management, Kanpur, has said that “Gujarat did not experience a statistically significant growth in agriculture except during the last decade. On the other hand, agriculture in the nation grew at a statistically significant rate during all the past decades. Comparison of the performance of agricultural income during the last decade between Gujarat and all India, however, almost reverses the story of the earlier decades. The decade of 2001-11 shows the first statistically significant growth performance of agriculture in the state. The average growth rate is about 10.6% per annum and a statistically significant trend growth rate of 8% was registered in the state during this period compared to only 3.1% in the nation. This period also shows a considerable decline in growth fluctuations.”
Given this framework, Prof Dholakia says, “When we calculate the compound annual growth rate (CAGR) of Gujarat agriculture and total gross state domestic product (GSDP) for the three phases of ToT, we find that during the first phase of 1960-61 to 1974-75 when ToT was highly fluctuating, the agricultural trend rate was 2.2% (statistically not different from zero) while it was around 3% for total GSDP. During the second phase when ToT was fluctuating but around a falling trend, the agricultural CAGR was 2% (again statistically not significant) and 4.9% for total GSDP. However, during the third phase when the agricultural terms of trade were sharply rising, the agricultural CAGR was statistically significant at 3.8% and GSDP registered a CAGR of 7.60%, which later rose to 8.0% for agriculture and 10.4% for GSDP.”
Prof Dholakia further says, “It is equally evident that prior to 1990-91, the terms of trade were rising for the nonagricultural sector and post 1990-91; the same were declining. Thus, agriculture was relatively losing before 1990-91 and was economically gaining after 1990- 91 in Gujarat. This change of regime seems to have spurred a positive and significant growth of agriculture in the state after 1990-91. Similarly, at the national level we observe four distinct phases of terms of trade regimes, viz. 1950-51 to 1966-67, 1967-68 to 1974-75 and 1975-76 to 1990-91 and the last phase 1991-92 to 2010-11. Direct evidence based on the association of the growth rates of agricultural output and total output during different phases of ToT indicates that agricultural terms of trade have a significant bearing on agricultural growth performance and on the overall economy.”
He underlines, “The evidence is sharper for the state than for the nation. It is possible to argue that a strong favorable upward trend in the terms of trade for agriculture (and hence unfavorable trend for nonagriculture) would lead to agricultural growth, prosperity and subsequently to higher growth trajectory for the state. This happens because, other things remaining the same, when prices of agricultural commodities rise, farmers are encouraged to supply more value by changing cropping pattern in favor of high value crops, bring more area under cultivation, increase cropping intensity, increase investments in modern inputs and machinery, expand irrigation facilities, or take more risks for better technology, marketing, and storage among others.”
He says, “During the period 1974-93, the elasticity in both the cases was negative and not significant, but during the latter period of 1992-2011, the elasticity in both the cases was positive and significant. This indicates a sharp contrast in the two phases such that the overall regressions for the whole 51 year period turned out to be statistically irrelevant. Moreover, the second phase of 1992-2011 has the expected sign of the elasticity estimate as compared to the earlier phase (1974- 93) which has an opposite sign though statistically insignificant. During 1974-93 there were serious restrictions on trade of even non-agricultural products because of quantitative restrictions and high tariff barriers. Moreover, during these years several prices were also administered and controlled. As a result, the underlying economic logic of price incentives to producers in the sector would not fully work during such period and would empirically lead to statistically insignificant results.”
He goes on to say, “However, with economic policy reforms initiated during the early 1990s, several market distortions including the ones in export markets were reasonably corrected and the economic logic of price incentives started operating in a holistic sense. As a result, the hypothesis of favorable terms of trade to agriculture leading to growth of agriculture and hence the total state income appears to hold in Gujarat from the empirical evidence. It also provides us the estimates of aggregate price elasticity of supply for agricultural output to be +1.15 and for overall GSDP to be +2.46. These estimates suggest that the ToT as a policy parameter has a definite role to promote growth of agriculture and total income in the state; and the more favorable it is for agriculture, the more effective it would be.”
Coming to comparison between Gujarat and India, he says, “At the All India level, the corresponding results for the same time period as of Gujarat for agriculture and GDP are as follows. It may be noted that the drought dummy variable was found insignificant in all cases. Significant acceleration in Gujarat agriculture and the overall economy is associated with sharply rising ToT in favour of agriculture – a factor most studies have not considered while explaining the success story of Gujarat agriculture. Prior to 1992-93, the terms of trade were falling for the agricultural sector and post 1992-93, the same were rising. Thus, agriculture was relatively losing before 1992-93 in the state and as ToT changed favorably, they spurred significant growth of agriculture.”

Comments

TRENDING

'Blatant violation' of law by Central government in making NREGA payments

By Our Representative  In September third week, NREGA workers across the country were mobilised for two day so raise their issues and submit a memorandum to the Prime Minister. Organised the NREGA Sangharsh Morcha (NSM), a collective of groups that work with NREGA labourers across the country, workers from 13 states -- Andhra Pradesh, Bihar, Chhattisgarh, Gujarat, Haryana, Jharkhand, Karnataka, Madhya Pradesh, Odisha, Rajasthan, Telangana, Uttar Pradesh and West Bengal -- carried out Kaam Do Abhiyaan, staging demonstrations and rallies against what they called blatant violation of law by the Central government in making NREGA payments. While NREGA has had very positive impacts, it has lately become fruitless, exploiting labour, even though workers who have put in honest hard work have to wait for their wages endlessly, it was suggested.  In such a situation, there is a need to firm up NREGA implementation and end systematic corruption to ensure that workers get their basic NREGA entit

Fascism on prowl? Religious meet 'deeply pained' at silence of Church, bishops, priests

Counterview Desk  The ‘Forum of Religious for Justice and Peace’which held its 17th National Convention at the Montfort Social Institute, Hyderabad, Telangana from 22 to 24 September 2022 on the theme “Deepening our Identity as Religious: Responding to the Signs of the Times”, has expressed concern “at the deteriorating situation of our nation on every front”, especially stating, “Fascism seems to have come to stay” in India. At the same time, the convention, which took place with the participation of 60 persons from 16 states representing 20 religious congregations, in its unanimously-adopted statement added, “We have reached abysmal depths on every parameter: be it social, economic and political”, underlining, “The poor in India become poorer every day; the rich and powerful continue to profiteer at their expense and amass scandalous amounts of wealth.” Text: We, members (63 women and men Religious, from 16 states representing 20 Congregations) of the Forum of Religious for Justice

Rajasthan cops 'halt' Gujarat Dalit women's rally: homage to untouchability victim boy

By Our Representative  In a surprise move, the Rajasthan police stopped a Dalit women's rally from Gujarat on the borders after it crossed Gujarat alleging that it would "disturb peace" in village Surana, Jalore district, where the gruesome incident of death of a Dalit boy took place on August 13 after he was brutally beaten up by his teacher on touching the drinking water pot. Sources said, while the Gujarat government had "no objection" in allowing the rally, which originated from the Dalit Shakti Kendra (DSK), an empowerment-cut-technical institute for teens founded by human rights leader Martin Macwan, on September 24 morning, the Rajasthan police stopped it for two and a half hours before allowing it to proceed to Surana. The decision to take out a women's rally was taken at a DSK meeting on September 5 following a condolence meeting of the NGO Navsarjan Trust, also founded by Macwan, activists committed to work against caste-based discrimination, orga

Introducing non-native cheetahs is 'not equivalent' to restoring pride in the nation

By Bappaditya Mukhopadhyay*  The Cheetahs from the African continent has finally been introduced to India by the Indian Prime Minister on his 72nd birthday. The process had started with the previous Government in 2009. However, the Supreme Court clearance was pending owing to the objection by the National Tiger Conservation Authority (NTCA) plea to reintroduce cheetahs. Finally the clearance was obtained in January 2020 and thereafter Kuno National Park (KNP) was chosen for the reintroduction of first set of Southeast African Cheetahs. In the near future, depending upon the success story of the current reintroduction, more cheetahs from South Africa may also be introduced. This exercise has generated a lot of interest among various stakeholders with opinions on both sides galore. It is important to pose some questions that surround the whole exercise. Let us evaluate some of these arguments. The first set of arguments are quite detached from the issues of conservation as they most

'Military diplomacy': US praises Bangladesh Army for leadership role in UN operations

By Kamal Uddin Mazumder* As the Indo-Pacific region represents the world’s economic and strategic center of gravity, the Indian Ocean today is becoming the centerpiece of all geo-strategic play. Cooperation in the region is crucial to implementing the international community’s global agenda, including achieving the UN’s Sustainable Development Goals. Major powers like the US have enhanced and deepened their strategic engagement and leadership roles with countries in the region. The Indo-Pacific Army Management Seminar, or IPAMS, is a U.S. Army Pacific (USARPAC) initiated conference that is aimed at facilitating and enhancing interactions among the armies of the Indo-Pacific region. This year's 46th Indo-Pacific Armies Management Seminar (IPAMS)-2022, co-hosted by the Bangladesh Army and US Army Pacific (USARPAC), concluded in Dhaka. The objective of IPAMS is to promote peace and stability in the region through mutual understanding, dialogue, and friendship. It is the largest confer

Buddhist shrines were 'massively destroyed' by Brahmanical rulers: Historian DN Jha

Nalanda mahavihara By Our Representative Prominent historian DN Jha, an expert in India's ancient and medieval past, in his new book , "Against the Grain: Notes on Identity, Intolerance and History", in a sharp critique of "Hindutva ideologues", who look at the ancient period of Indian history as "a golden age marked by social harmony, devoid of any religious violence", has said, "Demolition and desecration of rival religious establishments, and the appropriation of their idols, was not uncommon in India before the advent of Islam".

Shocking? No Covid vaccine trials conducted on pregnant, lactating women: RTI reply

By Rosamma Thomas*  A Right to Information applicant who sought details of safety trials conducted in India on pregnant and lactating women for three Covid vaccines in use in India – Covishield, Covaxin and ZyCov-D -- was shocked to learn from the Central Drugs Standard Control Organization (CDSCO) that Serum Institute, manufacturer of Covishield, and Cadila Healthcare, manufacturer of the ZyCov-D vaccine, had not sought permission for such trials.  Bharat Biotech, manufacturer of Covaxin, had sought permission for trial on pregnant women and later withdrawn its application. This response , provided after the applicant was initially unsatisfied with the response and went in appeal, is from the joint drugs controller, CDSCO. It was dated September 13, 2022. One researcher closely following the vaccine rollout, however, is of the opinion that the lack of a trial on pregnant and lactating women is a blessing; potential trial participants and their unborn babies thus escaped harm. Aruna Ro

Is coal import dependence of more than 50% by 2047 of any relevance to India?

By Shankar Sharma*  I have read the article " Building Resilience in India’s Power Sector " by N Vedachalam, released by the Observer Research Foundation, with a lot of interest. I expected it to provide few useful recommendations to our authorities in charting out a sustainable pathway to green energy transition much before the climate catastrophe push our communities to the precipice. But I am sorry to say that the overall discussions or the message implied in the article disappointed me. I was expecting the article, coming from an engineer with past experience in the power sector, to discuss the much needed recommendations to put the power sector on a sustainable developmental pathway. But I could notice mostly technical jargon and a lot of statistical information, which may already be available in the public domain.   The article also seems to have simply accepted what some of the official agencies seem to have indicated as inevitable for the power sector in our country;

Older than Delhi, no other school may have witnessed so many vicissitudes as this one

By Firoz Bakht Ahmed*  Behind every book there is a writer or writers. Are the books written for the personal gratification of authors? Is the purpose utilitarian, educational or to gain public ovation? There are writers who publish books because they are inspired by a purely disinterested and fair-minded pursuit of knowledge and to clarify the issues that agitate them and society. The book under discussion   is a masterstroke on the life and times of not only an institution at Ajmeri Gate, Delhi — Anglo Arabic School — but about the complex relationship between the school and the cajoled Muslim community. Just while you are at Ajmeri Gate, supposedly, the border of Old and New Delhi, barely a few meters from the cacophony and the chaos outside the New Delhi railway station, lies an island of serenity — a school much older than New Delhi, with a wholesale machine tools market on its West, a road leading to Rajiv Chowk (Connaught Place) on the East and colourful confusion of rickshaws,

Government 'fails to take up' Indian migrants' unpaid wages issue with other countries

By Rafeek Ravuther, Chandan Kumar, Dharmendra Kumar*  The migrant workers were one of the most vulnerable sections during the pandemic. India experiences large-scale movement of migrants internally and internationally. After the outbreak of the pandemic, migrant workers continued to face injustice especially in getting wages in expedited manner. In the international context, India, the home of 9 million cross-border temporary labour migrants, carried out the largest repatriation exercise ‘Vande Bharat Mission’. Even though the Indian government addressed the immediate requirement of repatriation, it failed to understand and recognise their post-arrival grievances, like back wages, social protection etc. Recently many workers were deported from the middle- east region. Amidst the establishment of grievance mechanisms such as Consular Services Management System (MADAD) and helplines in Pravasi Bharatiya Sahayata Kendra (PBSK), the unresolved grievances remain high. The number of unresolv