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Efficiency and Equity in the Producer Levy of India

Author

Listed:
  • Yujiro Hayami
  • Keijiro Otsuka
  • K. Subbarao

Abstract

India's producer levy scheme has been considered a prime example of government market intervention to depress price incentives for farm producers. Analysis in this study shows that the scheme increases the average producer price for the short run with inelastic supply. In this case, significant improvements in income distribution can be obtained with little loss of economic efficiency if the scheme is implemented effectively. However, if the scheme is applied for the long run, it might result in market instability. More critically, the scheme is likely to have an adverse effect on income distribution in the absence of effective implementation.

Suggested Citation

  • Yujiro Hayami & Keijiro Otsuka & K. Subbarao, 1982. "Efficiency and Equity in the Producer Levy of India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(4), pages 655-663.
    • Handle: RePEc:oup:ajagec:v:64:y:1982:i:4:p:655-663.
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    File URL: http://hdl.handle.net/10.2307/1240574
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    Citations

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    Cited by:

    1. de Janvry, A. & Subbarao, K., 1982. "Welfare Effects of Forced Deliveries and Area Requirements in Egyptian Agriculture," Working Papers 243483, University of California, Davis, Agricultural Development Systems: Egypt Project.
    2. Abler, David G. & Sukhatme, Vasant, 1991. "Indian Agricultural Price Policy Revisited," 1991 Annual Meeting, August 4-7, Manhattan, Kansas 271262, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Shuto, Hisato, 2000. "Fertilizer Subsidy Reform in the Indian Foodgrain Market: A Comparative Static Analysis with Respect to an Increase in Fertilizer Price," Japanese Journal of Agricultural Economics (formerly Japanese Journal of Rural Economics), Agricultural Economics Society of Japan (AESJ), vol. 2.
    4. Schiff, Maurice, 1994. "The Impact of Two-Tier Producer and Consumer Food Pricing in India," The World Bank Economic Review, World Bank, vol. 8(1), pages 103-125, January.
    5. Raghav Gaiha, 1995. "Does Agricultural Growth Matter in Poverty Alleviation?," Development and Change, International Institute of Social Studies, vol. 26(2), pages 285-304, April.
    6. Simrit Kaur, 2014. "Food entitlements, subsidies and right to food: a South Asian perspective," Chapters, in: Raghbendra Jha & Raghav Gaiha & Anil B. Deolalikar (ed.), Handbook on Food, chapter 19, pages 482-514, Edward Elgar Publishing.
    7. Meenakshi, J.V. & Banerji, A., 2005. "The unsupportable support price: an analysis of collusion and government intervention in paddy auction markets in North India," Journal of Development Economics, Elsevier, vol. 76(2), pages 377-403, April.
    8. Shyam Kamath, 1988. "Partially suppressed markets: Controls, rent seeking and the cost of protection in the indian sugar industry," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 124(1), pages 140-160, March.
    9. J.V. Meenakshi & A. Banerji, 2001. "The Unsupportable Support Price: The Government in Paddy Auctions of Northern India," Working papers 94, Centre for Development Economics, Delhi School of Economics.
    10. Samar K. Datta & Jeffrey B. Nugent & Asher Tishler, 2004. "Contractual Mix Between Cash and Kind Wages of Casual Workers in an Agrarian Economy," Review of Development Economics, Wiley Blackwell, vol. 8(4), pages 521-540, November.

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