Agricultural Disparity Across Indian States: Determinants and Policy Implication

This paper essentially focuses on inter-state disparities among the 15 major states of India, from 1981-82 to 2002-03. This study was carried out as existing empirical literature on economic disparities were based on aggregate data of Net State Domestic Product (NSDP), which portrayed disparities among the states. But, whether this disparity was due to differences in agricultural or non-agricultural NSDPs has not been given emphasis. Against this backdrop, this paper examines the inter-state disparity in agricultural productivity and identifies the major factors in explaining this disparity. The study finds strong evidence of inequality in agricultural income across the states. It is seen that the better performing states are mostly in the western and southern regions of the country. On the other hand, the non-performing or poorly performing states are in the northern and eastern regions. The study finds that though there is a decrease in the disparity across the states in both NSDP and Per capita Net State Domestic Product (PNSDP) over the years, the disparity continues to be very high and it is relatively higher in the NSDP compared to PNSDP. There is strong evidence of cyclical nature of the disparity across the states, implying that agriculture still is highly dependent on nature and other stochastic factors that cause fluctuations in the output across time and space. It is seen that agricultural growth has decelerated in the agriculturally developed states like Punjab, Haryana and Western Uttar Pradesh in the post-reform period. Some agriculturally poor states like Bihar and West Bengal have shown a significant improvement in their agricultural growth. The regression results show that the disparity in the agricultural output is significantly and positively affected by the variations in fertilizer use and the length of pucca roads.