Nexus between Traditional and Modern Value Chains and Household Well-Being in India: A Multinomial Endogenous Switching Regression Approach

This study investigates the welfare implications of traditional versus modern value chains on agricultural households in India, used a national representative farm-level dataset (NSSO-SAS) with 44,770 agricultural households. Employing a multinomial endogenous switching regression (MESR) approach, our findings underscore the pivotal role of cultivation income, constituting 56.23% in adult equivalent terms, surpassing wages income (22.46%) among households engaged in both traditional and modern marketing channels. Moreover, households engaging in both traditional and modern marketing channels exhibit a remarkable 80 percent increase in overall household income compared to non-participating counterparts. Intriguingly, a noteworthy 19.57% savings from monthly income per adult is observed after fulfilling consumption expenditure needs. Those adopting a synergistic blend of traditional and modern channels experience a commendable 13 percent surge in monthly consumption expenditure compared to non-participating peers. These results underscore the significant benefits of diversifying marketing channels within the agricultural sector. Given these trends, advocating for policies promoting such diversification becomes imperative to enhance the well-being of agricultural households in India.