Evaluation of Indian Fertilizer Projects: An Application of Consumer's and Producer's Surplus

The concept of consumer's and producer's surplus, though much criticized, provides a better idea about the welfare aspects of planning than other goals which have been proposed, especially in selection of projects under development planning. If we assume the measurability of utility and the similarity of individuals with respect to the marginal utility of money, the effects of a shift parameter on consumers' and producers' gains can be estimated by means of shifts in the relevant demand and supply functions. Comparison of the gains with the cost of the shift parameter (a project) provides a good guide for economic policy. Though Oriental culture is different from Western culture, granting the rationality of an individual in his own traditions does not seriously damage the applicability of the theory to an Oriental country. An attempt is made to estimate the effects of the use of ferilizer on surpluses in Indian agriculture.