Indira Gandhi Institute for Development Studies(IGIDR), and the International Food Policy Research Institute (IFPRI) on ‘Harnessing Opportunities to Improve Agri-Food Systems’ on July 24-25 , 2014 in New Delhi. The two day conference aims to discuss the agricultural priority of the government and develop a road map to realise these priorities for improved agri food systems.

1. IGIDR-IFPRI
Conference on
“Harnessing
Opportunities to
Improve Agri-Food
Systems”
24-25 July, 2014
Spatial Effects of Some Agricultural
Policy Choices
A. Ganesh-Kumar, IGIDR, Mumbai
Manoj Panda, IEG, New Delhi

2. Enormous spatial variation in Indian agriculture
Crops cultivated, resource base (irrigation), technological
progress & input usage pattern, productivity and output
levels, ...
Constitutionally agriculture is a state subject
Agricultural performance in different regions
likely to have differential impacts
Understanding the spatial aspects is critical for
policy analysis
IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 2
Spatial dimension in Indian agriculture

3. Seeks to understand the spatial dimensions of
some agricultural policy choices
Total factor productivity improvement
Fertiliser subsidy reduction
Irrigation expansion
Greater market integration
Removal of agricultural export barriers
Using a spatial CGE model
Framework allows for inter-state mobility of labour and
transmission of price changes across the country
IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 3
This presentation

4. Based on the following study:
Ganesh-Kumar, A. and M. Panda (2014) “Some Policy Options for
Indian Agriculture: Analysis Using a Regional Computable General
Equilibrium Model”, report prepared for the World Bank
References should cite the above mentioned study
These are the authors’ views – not to be
attributed to IGIDR / IEG / World Bank
IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 4
This presentation …

5. Model is based on a “regional” SAM for 2006-07
23 regions
24 commodities: 15 agricultural, 5 industrial & 4
services
32 production activities: 23 regional agriculture + 9 non-
agriculture
6 labour types: location (rural/urban) & skill level
(unskilled, semi-skilled and skilled)
5 capital types: 3 agricultural (region-specific) & 2 non-
agricultural
137 household types: location by States and Rural /
Urban & 3 MPCE percentiles
IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 5
Features of the spatial CGE model

6. Captures the spatial location of agricultural production
and household consumption
 Agricultural supply and household behaviour are modeled at the
State level
Non-agriculture supply is “national”
Government is an aggregate of Central and State
governments
Nationally clearing commodity & labour markets with
inter-state price differentials through fixed coefficients
Locally clearing markets for land (irrigated/rain-fed)
IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 6
Features of the spatial CGE model …

7. Agricultural supply
determined
regionally
 Activity-commodity
approach
o One activity produces
more than one
commodity
o A commodity is
produced by more than
one activity
State-specific input
& output prices
National commodity
output = sum of
state outputs
IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 7
Features of the spatial CGE model …
Agricultural supply
Raw materials
Labour by type Regional Paddy
agriculture
Irrigated land activity Wheat
maximizes
Rainfed land profits …
Other ag. Capital
Optimal factor demand Optimal output mix
Total cost = Total revenue

8. Non-agricultural supply determined nationally
 National treatment of factors used in non-agriculture
Distinguishes several prices – imports, exports,
domestic market price, producer price
 Consumer price index is the numeraire
Household are spatially located
 Income from factor endowment, government transfers and
foreign remittances
 Outlays on direct taxes, savings, and consumption
 Commodity demands through piece-wise Linear Expenditure
System
IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 8
Features of the spatial CGE model …

9. Government
 Revenue from taxes (direct, domestic indirect, tariffs), and
from its ownership of capital
 Expenditure on subsidies, transfers and current consumption
 Savings is residually determined
Balance-of-Payments
 Commodity imports & exports determined endogenously
through Armington approach
o Domestically produced and traded goods are imperfect substitutes
 Various foreign flows fixed in Dollar terms – Net factor
income, remittances, government borrowings
 Capital flows clear the forex market at fixed exchange rate
IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 9
Features of the spatial CGE model …

10. Savings – investment
Investment levels are exogenous
oDemand for capital goods – as fixed proportion of total fixed
capital investment
oStock (working capital) requirements for each commodity fixed in
real terms
Rupee savings from households, government & foreign
are endogenous
Savings adjust to meet investment targets
Johansen closure – tax rate for top 20% of households is
endogenous
oHousehold disposable income & hence private savings
oGovernment revenue & hence government savings
IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 10
Features of the spatial CGE model …

11. 11IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014
3% TFP exogenous rise in all
States

12. Autonomous rise in productivity
Technological change
oResearch outcome – Better seed varieties
oImprovements in extension
Modern farm equipment
Improvements in farmer/worker skills
Farm / natural resources management practices
IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 12
3% TFP exogenous rise in all States

13. IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 13
Impacts of TFP rise
Rural
Decile
01-04
Rural
Decile
05-08
Rural
Decile
09-10
Urban
Decile
01-04
Urban
Decile
05-08
Urban
Decile
09-10
Jammu & Kashmir 3.13 0.10 0.20 -2.95 0.02 -0.08 0.00 0.00 0.00 0.00 0.00 0.00
Himachal Pradesh 3.03 0.00 0.20 -2.97 -0.01 -0.21 -0.01 -0.01 -0.01 0.00 0.00 0.00
Punjab 2.96 -0.05 -0.02 -2.99 -0.07 -0.09 -0.01 -0.02 -0.04 -0.01 -0.02 -0.03
Uttarakhand 3.05 0.00 0.19 -2.99 -0.01 -0.19 -0.01 -0.01 -0.01 0.00 0.00 -0.01
Haryana 3.02 0.00 0.08 -2.96 -0.01 -0.09 -0.01 -0.01 -0.01 0.00 -0.01 -0.01
Delhi 3.01 0.00 0.03 -2.95 -0.01 -0.04 -0.03 -0.02 0.00 -0.01 -0.01
Rajasthan 3.17 0.15 0.25 -2.92 0.03 -0.07 -0.01 -0.01 0.00 0.00 0.00 0.00
Uttar Pradesh 2.97 -0.05 0.00 -2.98 -0.02 -0.07 -0.01 -0.01 -0.01 0.00 -0.01 -0.01
Bihar 3.02 0.00 0.05 -2.96 -0.01 -0.06 0.00 -0.01 -0.01 0.00 0.00 -0.01
Assam 2.98 -0.06 0.08 -2.98 -0.02 -0.15 -0.01 -0.01 -0.01 -0.01 -0.01 0.00
West Bengal 3.06 0.04 0.11 -2.94 0.00 -0.06 -0.01 0.00 -0.01 0.00 0.00 0.00
Jharkhand 3.05 0.00 0.14 -2.99 -0.01 -0.15 -0.01 -0.01 -0.01 0.00 0.00 -0.01
Odisha 3.05 0.00 0.09 -2.99 -0.01 -0.10 -0.03 -0.03 -0.02 -0.02 -0.01 -0.01
Chattisgarh 3.05 0.00 0.08 -2.98 -0.01 -0.09 -0.03 -0.03 -0.02 -0.02 -0.01 -0.01
Madhya Pradesh 3.10 0.05 0.13 -2.97 0.01 -0.06 0.00 -0.01 -0.01 0.00 0.00 0.00
Gujarat 3.02 0.00 0.08 -2.96 -0.01 -0.08 -0.02 -0.02 -0.01 -0.01 -0.01 -0.01
Maharastra 2.79 -0.26 -0.13 -3.04 -0.05 -0.18 -0.03 -0.02 -0.02 -0.01 -0.01 -0.02
Andhra Pradesh 3.02 0.00 0.06 -2.96 -0.01 -0.07 -0.01 -0.01 -0.02 0.00 0.00 -0.01
Karnataka 3.03 0.00 0.06 -2.97 -0.01 -0.08 -0.01 -0.01 -0.01 -0.01 0.00 -0.01
Kerala 3.02 0.00 0.46 -2.94 -0.01 -0.46 -0.03 -0.02 -0.01 -0.01 -0.01 0.00
Tamil Nadu 3.00 0.00 0.03 -2.95 -0.01 -0.04 -0.03 -0.02 -0.02 -0.01 -0.01 -0.01
North-East 3.02 0.00 0.05 -2.96 -0.01 -0.05 -0.01 -0.01 -0.02 0.00 -0.01 -0.01
Union Territories 0.01 0.00 0.03 -0.02 -0.01 -0.04 -0.02 -0.03 -0.01 -0.01 -0.01 -0.01
Household real income per capitaPrice of
aggregate
intermedi
ate input
Price of
value
added in
agriculture
Price of
aggregate
agricultural
output
Aggregate
intermedia
te input
usage
Aggregate
agricultural
output
State Value
added in
agriculture

14. Aggregate agricultural output rises in all states
2.79% in Maharashtra to 3.13% in Jammu and Kashmir
Almost all gain in output is neutralised by fall in
agricultural prices in all states
Hardly any gain in income for most households
Efficiency gain primarily through changes in
cropping pattern / output mix within each state
Changes in shares of states across states
National output of commodities doesn’t change much
IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 14
Impacts of TFP rise …

15. IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 15
Impacts of TFP rise …
Region Paddy Wheat
Other
Cereals
Pulses Sugarcane Oilseeds Fibres
Plantation
crops
Fruits Vegetable
Other
crops
Milk & milk
product
Other
livestock
prod.
Poultry &
Eggs
Fishing
Jammu & Kashmir 0.16 0.15 0.13 0.17 0.13 -0.27 0.25 0.00 0.13 0.00 0.35 0.13 0.23 0.13 0.16
Himachal Pradesh -0.01 -0.02 -0.04 0.00 -0.04 -0.44 0.08 -0.04 -0.04 -0.17 0.18 -0.04 0.06 -0.04 -0.01
Punjab 0.00 -0.01 -0.03 0.00 -0.03 -0.43 0.09 0.00 -0.03 -0.16 0.18 -0.03 0.07 -0.03 -0.01
Uttarakhand 0.03 0.02 0.00 0.04 0.00 -0.40 0.00 0.00 0.00 -0.13 0.22 0.00 0.10 0.00 0.03
Haryana 0.07 0.06 0.04 0.08 0.04 -0.36 0.16 0.00 0.04 -0.09 0.25 0.04 0.14 0.04 0.07
Delhi 0.00 -0.01 -0.03 0.01 0.00 -0.43 0.00 0.00 -0.03 -0.16 0.18 -0.03 0.07 -0.03 0.00
Rajasthan 0.16 0.16 0.14 0.17 0.14 -0.26 0.25 0.14 0.14 0.01 0.35 0.14 0.24 0.14 0.16
Uttar Pradesh -0.03 -0.03 -0.05 -0.02 -0.05 -0.45 0.06 -0.05 -0.05 -0.19 0.16 -0.05 0.04 -0.06 -0.03
Bihar 0.02 0.01 -0.01 0.02 -0.01 -0.41 0.11 -0.01 -0.01 -0.14 0.20 -0.01 0.09 -0.01 0.01
Assam -0.05 -0.06 -0.08 -0.04 -0.08 -0.47 0.04 -0.08 -0.08 -0.21 0.14 -0.08 0.02 -0.08 -0.05
West Bengal 0.05 0.04 0.02 0.06 0.02 -0.38 0.14 0.02 0.02 -0.11 0.23 0.02 0.12 0.02 0.05
Jharkhand 0.01 0.01 -0.02 0.02 -0.02 -0.41 0.10 0.00 -0.01 -0.15 0.20 -0.02 0.08 -0.02 0.01
Odisha -0.03 -0.03 -0.05 -0.02 -0.05 -0.45 0.06 -0.05 -0.05 -0.18 0.16 -0.05 0.05 -0.05 -0.03
Chhattisgarh 0.03 0.02 0.00 0.04 0.00 -0.39 0.12 0.00 0.00 -0.13 0.22 0.00 0.10 0.00 0.03
Madhya Pradesh 0.03 0.02 0.00 0.03 0.00 -0.40 0.12 0.00 0.00 -0.13 0.21 0.00 0.10 0.00 0.02
Gujarat -0.02 -0.03 -0.05 -0.02 -0.05 -0.45 0.07 -0.05 -0.05 -0.18 0.16 -0.05 0.05 -0.05 -0.03
Maharashtra -0.22 -0.23 -0.25 -0.22 -0.25 -0.65 -0.13 -0.25 -0.25 -0.38 -0.04 -0.25 -0.15 -0.25 -0.23
Andhra Pradesh 0.03 0.02 0.00 0.04 0.00 -0.40 0.12 0.00 0.00 -0.13 0.22 0.00 0.10 0.00 0.03
Karnataka -0.03 -0.03 -0.06 -0.02 -0.06 -0.45 0.06 -0.06 -0.05 -0.19 0.16 -0.06 0.04 -0.06 -0.03
Kerala 0.22 0.00 0.19 0.23 0.19 -0.21 0.31 0.19 0.20 0.06 0.41 0.19 0.29 0.19 0.22
Tamil Nadu -0.05 0.00 -0.07 -0.04 -0.07 -0.47 0.04 -0.07 -0.07 -0.21 0.14 -0.07 0.02 -0.07 -0.05
North-East 0.02 0.01 -0.01 0.03 -0.01 -0.41 0.11 -0.01 -0.01 -0.14 0.21 -0.01 0.09 -0.01 0.02
Union Territories 0.00 0.00 -0.02 0.01 -0.02 -0.42 0.09 0.00 -0.02 -0.16 0.19 -0.02 0.07 -0.02 0.00
All India 0.01 0.01 -0.01 0.00 -0.07 -0.40 0.06 -0.03 -0.06 -0.16 0.21 -0.01 0.09 -0.01 0.02

16. 16IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014
TFP rise in all States
+
50% fertilizer subsidy reduction

17. IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 17
Impacts of TFP rise + fertilizer subsidy
reduction
Rural
Decile
01-04
Rural
Decile
05-08
Rural
Decile
09-10
Urban
Decile
01-04
Urban
Decile
05-08
Urban
Decile
09-10
Jammu & Kashmir -9.71 -10.95 -14.72 -8.30 -6.98 -2.86 -1.14 -1.56 -1.68 -0.41 -0.89 -1.57
Himachal Pradesh 6.50 1.60 20.44 -8.20 -3.73 -18.78 -0.58 -1.17 -1.61 -0.09 -0.76 -1.43
Punjab -17.69 -16.86 -31.58 -19.83 -20.56 -3.46 -0.61 -3.04 -8.19 -0.98 -3.32 -8.00
Uttarakhand 7.71 1.45 16.18 -9.44 -3.79 -15.99 -0.97 -1.29 -1.63 -0.33 -0.98 -1.47
Haryana 3.17 0.09 0.40 -7.05 -4.16 -4.45 -0.49 -1.30 -1.87 -0.02 -0.92 -1.59
Delhi 3.83 1.59 -1.65 -5.85 -3.74 -0.57 -1.96 -2.16 -0.51 -1.09 -1.59
Rajasthan -2.89 -6.00 -4.71 -8.92 -5.86 -7.14 0.04 -0.94 -2.01 0.32 -0.91 -1.95
Uttar Pradesh 1.60 -0.74 -2.12 -6.60 -4.36 -3.00 0.16 -0.75 -1.47 0.35 -0.77 -1.49
Bihar 36.53 28.89 39.11 1.68 7.69 -0.23 0.40 1.48 6.18 1.17 1.89 6.17
Assam -19.02 -21.57 -20.89 -9.04 -6.04 -6.85 -0.10 -0.48 -1.03 0.21 -0.35 -1.57
West Bengal 8.52 6.13 3.40 -4.36 -2.19 0.39 -0.27 0.40 -0.87 0.31 -0.18 -0.26
Jharkhand 3.09 -1.40 2.84 -8.66 -4.45 -8.39 -0.77 -0.74 -1.16 0.27 -0.65 -1.15
Odisha 2.58 0.15 -0.89 -6.47 -4.16 -3.16 -0.36 -0.43 -0.82 0.27 -0.30 -1.04
Chattisgarh 1.16 0.00 -3.08 -5.32 -4.19 -1.15 -0.19 -0.74 -1.29 0.37 -0.63 -1.32
Madhya Pradesh -0.35 -3.41 -3.15 -8.38 -5.43 -5.69 -0.51 -0.64 -1.90 0.13 -0.92 -1.95
Gujarat 4.77 0.70 4.17 -7.75 -3.98 -7.18 -0.57 -1.05 -1.70 -0.13 -0.90 -1.39
Maharastra -31.87 -34.67 -32.74 -12.78 -8.96 -11.56 -1.19 -0.68 -1.75 0.11 -0.96 -2.59
Andhra Pradesh 3.07 1.54 -2.04 -5.16 -3.71 -0.19 -0.33 -0.95 -1.47 -0.10 -0.65 -1.07
Karnataka 3.01 0.58 -0.73 -6.34 -4.04 -2.78 -0.67 -1.13 -1.50 -0.04 -0.82 -1.43
Kerala 4.80 1.19 38.18 -7.36 -4.04 -29.73 -0.94 -1.27 -1.57 -0.32 -0.79 -1.34
Tamil Nadu 2.58 0.31 -4.22 -6.29 -4.14 0.39 -0.76 -1.21 -1.60 -0.12 -0.83 -1.40
North-East 2.50 1.60 -2.70 -4.61 -3.74 0.51 -0.76 -0.79 -0.81 -0.09 -0.20 -0.76
Union Territories 0.59 1.56 -1.87 -2.84 -3.75 -0.39 -0.20 -1.17 -1.78 -0.20 -0.81 -1.36
State Aggregate
agricultural
output
Value
added in
agriculture
Price of
aggregate
agricultural
output
Price of
value
added in
agriculture
Price of
aggregate
intermedi
ate input
Household real income per capitaAggregate
intermedia
te input
usage

18. Fertilizer price rises by 4%, demand falls by 6%
Level and direction of change in state-level
agricultural output is not same
 Large output loss – J&K, PB, RJ, AS, MP, MH
Value added changes in states are modest but
mostly similar in direction
Considerable changes in the national agricultural
commodity output basket
 Rise – Vegetables, other crops, livestock, fishery & fibres
 Fall – Foodgrains, sugarcane, oilseeds, plantation crops,
fruits, dairy
IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 18
Impacts of TFP rise + fertilizer subsidy
reduction …

19. IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 19
Impacts of TFP rise + fertilizer subsidy
reduction …
Commodity Domestic
output
Total
domestic
demand
Total
househol
d
demand
Imports Exports Sales
price
received
by
producer
s
Price of
composit
e good
Paddy -1.43 -1.58 -0.04 -9.59 2.69 2.98 3.05
Wheat -2.33 -3.37 0.07 -39.67 14.22 -12.66 -12.27
OCereals -0.22 -0.38 0.01 -25.52 8.06 -5.49 -5.43
Pulses -1.78 -1.83 0.09 -15.29 12.59 -5.62 -5.58
Sugarcane -1.74 -1.74 -1.86 -0.40 -0.40
Oilseeds -2.18 -2.21 -6.52 -1.66 0.65 7.07 7.09
Fibres 2.41 2.12 -35.05 36.10 -26.95 -26.78
Plantation crops -0.96 -1.54 -1.02 -10.20 7.99 -1.61 -1.13
Fruits -1.11 -1.87 -2.17 -7.71 5.89 0.79 1.45
Vegetables 13.02 10.42 13.41 -26.59 24.70 -25.48 -24.02
Other crops 13.63 12.24 40.41 -47.58 58.63 -43.97 -43.40
Milk and milk products -1.74 -1.74 -1.78 -12.32 3.94 1.38 1.38
Other liv.st. produ. & Gobar Gas 13.00 12.06 35.59 -32.46 32.35 -30.47 -29.98
Poultry & Eggs 3.19 2.92 5.04 -13.95 11.33 -8.24 -8.04
Natural resources 3.77 -2.65 -2.35 -6.29 1.03 -1.27 3.42
Fishing 10.80 10.07 12.94 -16.64 13.88 -15.78 -15.31
Agro-processing -0.98 -2.21 -2.41 -11.70 3.42 -0.87 0.16
Textiles & garments 2.86 1.21 0.59 -16.73 3.07 -5.13 -4.21
Fertilizers -8.32 -5.86 16.17 5.69 4.24 19.99
Manufacturing -1.58 -3.90 -5.38 -7.27 2.68 1.87 4.25
Transport -2.24 -2.81 -2.92 -9.74 3.94 -0.40 0.38
Storage and warehousing -4.17 -4.17 -1.69 -1.69
Trade -1.29 -1.73 -0.73 4.46 -3.02 -2.41
Services -1.32 -2.06 -1.75 -10.48 3.99 -1.82 -0.95

20. 20IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014
TFP rise in all States
+
Irrigation expansion in all states

21. 5% of rain-fed land in each state is converted
into irrigated land
Stock of irrigated land in each state expands by
more than 5% by state-specific cropping
intensity factor
IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 21
TFP rise in all States +
Irrigation expansion in all states

22. IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 22
Impacts of TFP + Irrigation
Rural
Decile
01-04
Rural
Decile
05-08
Rural
Decile
09-10
Urban
Decile
01-04
Urban
Decile
05-08
Urban
Decile
09-10
Jammu & Kashmir 17.57 13.09 16.19 -0.89 3.04 0.29 0.21 0.21 0.33 0.15 0.18 0.27
Himachal Pradesh 4.95 1.72 3.21 -3.46 -0.37 -1.81 0.01 0.19 0.11 0.19 0.15 -0.03
Punjab 2.40 -0.33 -1.81 -4.92 -2.30 -0.83 0.31 0.07 -0.47 0.11 -0.09 -0.57
Uttarakhand 9.46 5.60 8.35 -2.68 0.89 -1.67 0.35 0.34 0.35 0.24 0.19 0.24
Haryana -0.24 -2.85 -4.00 -4.58 -1.99 -0.83 0.32 0.28 -0.01 0.20 0.08 -0.23
Delhi 2.16 -0.58 -1.58 -3.82 -1.14 -0.15 0.23 0.11 0.11 0.07 -0.02
Rajasthan 11.79 8.05 10.29 -1.85 1.55 -0.51 -0.01 0.24 0.87 0.29 0.43 0.81
Uttar Pradesh 2.34 -0.65 -0.62 -3.75 -0.83 -0.86 0.30 0.20 0.03 0.19 0.09 -0.07
Bihar 0.16 -2.44 -3.25 -4.27 -1.70 -0.87 0.23 0.06 -0.39 0.15 -0.05 -0.50
Assam 9.12 5.65 6.70 -2.84 0.37 -0.62 0.21 0.21 0.20 0.14 0.13 -0.04
West Bengal 1.47 -1.43 -1.63 -4.14 -1.30 -1.10 0.10 -0.18 0.08 0.09 -0.06 -0.43
Jharkhand 5.28 1.80 2.92 -3.48 -0.17 -1.25 0.22 0.29 0.17 0.21 0.16 0.17
Odisha 3.39 -0.07 0.77 -3.93 -0.58 -1.41 0.24 0.25 0.14 0.18 0.14 0.06
Chattisgarh 2.46 -0.63 -0.45 -3.88 -0.88 -1.06 0.15 0.10 0.15 0.16 0.13 0.01
Madhya Pradesh -5.98 -7.32 -9.65 -4.71 -3.32 -0.82 -0.86 0.16 -0.20 0.09 -0.19 -0.95
Gujarat 2.19 -0.66 -1.07 -3.79 -1.01 -0.60 -0.82 -0.21 -0.17 0.02 -0.08 -0.34
Maharastra 5.70 2.73 2.49 -2.94 -0.12 0.12 -0.02 -0.06 -0.01 0.07 0.10 0.08
Andhra Pradesh 2.36 -0.55 -0.74 -3.63 -0.80 -0.62 -0.10 0.15 0.09 0.14 0.08 -0.10
Karnataka 2.67 -0.31 -0.34 -3.48 -0.58 -0.55 -0.16 0.00 0.14 0.05 0.09 0.02
Kerala 3.54 0.62 -3.32 -3.14 -0.33 3.74 0.09 0.11 0.05 0.11 0.11 -0.01
Tamil Nadu 4.13 1.05 1.35 -3.33 -0.37 -0.66 0.03 0.03 0.03 0.07 0.03 -0.01
North-East 1.71 -0.89 -1.66 -3.55 -1.00 -0.22 0.14 0.10 0.06 0.10 0.08 0.02
Union Territories 0.07 0.12 -0.08 -0.20 -0.25 -0.05 0.15 0.07 -0.09 0.10 -0.02 -0.06
State Aggregate
agricultural
output
Value
added in
agriculture
Aggregate
intermedia
te input
usage
Price of
aggregate
agricultural
output
Price of
value
added in
agriculture
Price of
aggregate
intermedi
ate input
Household real income per capita

23. Favourable impacts on agricultural output in
most states
But, output in Punjab, Haryana, UP, Bihar & WB is
slightly lower than in TFP only scenario
Impact on value added shows variation in
magnitude & direction
Negative in about half the states
National-level output
Rise – sugarcane, fibres, fruits & livestock
Fall – cereals, pulses, poultry & fishery
IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 23
Impacts of TFP + Irrigation …

24. 24IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014
TFP rise in all States
+
Greater market integration

25. 3% reduction in inter-state price differentials of
goods & all types of labour
Rise in marketing efficiency
Improved mobility of goods & factors within the country
Price-differentials in agricultural commodities
derived from NAS data on state-wise value of
commodity output and agricultural data on
state-wise (physical) quantity output
IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 25
TFP rise in all States +
Greater market integration

26. IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 26
Impacts of TFP rise + market integration
Rural
Decile
01-04
Rural
Decile
05-08
Rural
Decile
09-10
Urban
Decile
01-04
Urban
Decile
05-08
Urban
Decile
09-10
Jammu & Kashmir 5.85 1.28 5.72 -1.13 3.35 -1.00 5.52 5.40 4.59 3.67 3.63 3.67
Himachal Pradesh 1.19 -1.42 -4.08 -0.10 2.54 5.39 5.05 5.66 4.75 3.82 3.95 2.84
Punjab 2.66 -0.36 -0.20 -0.49 2.53 2.36 6.02 6.24 5.57 4.07 4.24 3.91
Uttarakhand 36.44 29.96 40.96 7.83 13.15 4.32 5.58 5.96 6.10 3.67 4.11 4.80
Haryana 2.48 -0.59 -0.24 -0.35 2.73 2.36 5.85 6.97 6.21 4.06 4.41 3.53
Delhi 65.69 53.83 95.39 15.35 24.14 -2.27 6.23 5.83 3.76 3.92 4.10
Rajasthan 7.48 3.94 5.83 0.79 4.21 2.36 5.10 5.92 6.02 3.72 4.31 4.08
Uttar Pradesh 0.88 -2.25 -1.81 -0.75 2.44 1.98 4.72 5.25 4.65 3.28 3.74 3.37
Bihar 5.16 1.10 3.75 -0.60 3.40 0.76 4.52 5.15 5.27 3.24 3.92 4.08
Assam -2.70 -5.51 -5.60 -0.52 2.44 2.54 4.24 4.48 3.85 2.86 3.01 2.00
West Bengal -4.23 -7.20 -6.53 -2.52 0.62 -0.11 3.98 2.75 3.96 2.83 2.76 1.43
Jharkhand 1.27 -1.69 -1.66 -0.36 2.65 2.61 4.71 4.35 4.77 3.21 3.69 3.41
Odisha -2.18 -5.48 -4.62 -1.54 1.92 1.00 4.33 3.57 4.18 2.96 3.08 2.62
Chattisgarh -0.22 -3.57 -2.78 -1.90 1.53 0.70 4.37 3.71 4.57 3.16 3.32 2.98
Madhya Pradesh -10.07 -11.32 -13.59 -2.64 -1.24 1.36 2.34 5.12 4.45 3.24 3.09 1.66
Gujarat 1.18 -2.13 -0.92 -1.07 2.29 1.04 2.99 5.07 4.94 3.46 3.49 2.96
Maharastra 7.53 4.27 4.56 0.57 3.72 3.43 3.63 4.40 4.44 3.05 3.37 3.13
Andhra Pradesh 1.17 -2.60 -0.49 -1.69 2.12 -0.04 3.67 4.79 4.43 3.15 3.20 2.75
Karnataka 8.70 3.95 7.78 -0.47 4.09 0.39 4.14 4.32 4.30 2.84 3.18 3.06
Kerala 9.36 6.39 -1.48 1.07 3.89 12.19 4.33 4.18 3.47 2.99 3.10 2.85
Tamil Nadu 1.43 -1.92 0.87 -0.78 2.62 -0.21 4.86 4.64 3.78 3.42 3.29 2.80
North-East 2.99 -2.01 2.46 -2.62 2.38 -2.09 4.15 4.14 3.53 2.70 3.01 2.88
Union Territories 0.74 -0.57 4.62 1.47 2.81 -2.30 4.79 4.62 3.10 3.31 2.86 2.63
Price of
value
added in
agriculture
Price of
aggregate
intermedi
ate input
Household real income per capitaState Aggregate
agricultural
output
Value
added in
agriculture
Aggregate
intermedia
te input
usage
Price of
aggregate
agricultural
output

27. Gainers in terms of agricultural output
Delhi, Rajasthan, Uttarakhand, J&K, Maharashtra,
Karnataka & Kerala
Output of several commodities rise
Milk (9%), oilseeds (5.6%), fibre (4.5%), sugarcane
(4.4%), fruits (2.3%) & vegetables (1.5%)
Unit price of agriculture falls in almost all states
leading to fall in commodity prices
IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 27
Impacts of TFP rise + market integration …

28. Integration of labour markets helps improve
value added in agriculture even though output
price falls
Rise in real income of all households
Rural – Output & value added effect > over price fall
Urban – Price fall
IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 28
Impacts of TFP rise + market integration …

29. 29IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014
TFP rise in all States
+
Export barriers removal

30. Higher export at the prevailing prices
10% increase in intercept of export demand
function
IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 30
Removal of export barriers

31. IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 31
Impacts of TFP + Export barriers removal
Rural
Decile
01-04
Rural
Decile
05-08
Rural
Decile
09-10
Urban
Decile
01-04
Urban
Decile
05-08
Urban
Decile
09-10
Jammu & Kashmir 13.31 8.19 13.64 1.19 6.00 0.91 -0.24 0.32 0.60 -0.37 0.04 0.68
Himachal Pradesh -0.95 -1.17 -17.86 2.94 3.17 24.13 -0.69 -0.79 -0.11 -0.96 -0.43 0.81
Punjab 10.28 5.44 16.53 6.10 10.96 0.40 -1.38 -0.17 2.66 -0.50 0.74 3.54
Uttarakhand -3.09 -1.30 -16.31 5.07 3.15 21.64 0.04 0.07 0.43 -0.23 0.18 0.55
Haryana 3.69 0.23 2.05 0.15 3.63 1.79 -1.28 -1.74 -1.02 -1.12 -0.54 0.57
Delhi 2.18 -1.23 0.70 -0.30 3.16 1.18 0.04 0.54 -0.23 0.16 0.77
Rajasthan 2.33 -0.43 -1.40 0.59 3.40 4.42 -0.75 -0.87 -0.64 -1.03 -0.54 0.30
Uttar Pradesh 5.31 1.32 3.44 -0.10 3.85 1.73 -0.15 -0.06 0.32 -0.48 0.08 0.84
Bihar 4.11 0.41 2.17 -0.02 3.69 1.91 0.33 0.14 0.40 -0.19 0.07 0.66
Assam 23.90 20.48 19.84 2.78 5.71 6.28 -0.16 -0.20 0.38 -0.25 -0.01 1.49
West Bengal -1.78 -4.43 -5.20 -0.72 2.05 2.88 0.32 -0.30 0.42 -0.12 0.05 0.33
Jharkhand 1.04 0.86 -6.10 3.51 3.70 11.39 0.74 0.15 0.11 -0.15 -0.07 0.26
Odisha 2.63 1.44 -1.85 2.62 3.82 7.31 0.59 0.26 0.31 -0.12 -0.02 0.68
Chattisgarh 3.38 0.44 0.31 0.75 3.72 3.85 0.72 1.01 1.12 0.00 0.45 1.10
Madhya Pradesh 14.77 9.91 12.52 3.15 7.72 5.21 1.87 0.11 1.33 -0.10 0.86 2.65
Gujarat 1.38 -0.77 -3.33 1.08 3.28 6.02 0.11 0.07 0.59 -0.35 0.14 0.61
Maharastra 12.53 10.73 7.43 3.75 5.44 8.67 0.90 0.35 0.93 -0.29 0.23 1.40
Andhra Pradesh 3.86 0.55 1.28 0.40 3.72 2.97 0.66 0.44 0.82 -0.10 0.30 0.97
Karnataka 2.32 0.57 -2.22 1.90 3.69 6.64 0.89 0.99 1.03 0.08 0.56 1.18
Kerala 1.75 -1.24 -0.06 0.31 3.36 2.13 0.74 0.80 1.04 0.16 0.42 1.04
Tamil Nadu 1.94 -1.06 -0.90 0.28 3.34 3.17 0.35 0.36 0.66 -0.28 0.18 0.80
North-East 3.06 -1.22 1.61 -1.16 3.16 0.29 0.80 0.68 0.47 0.25 0.05 0.47
Union Territories -0.71 -1.28 0.88 2.56 3.15 0.94 0.23 0.64 1.27 -0.11 0.45 0.94
State Aggregate
agricultural
output
Value
added in
agriculture
Aggregate
intermedia
te input
usage
Price of
aggregate
agricultural
output
Price of
value
added in
agriculture
Price of
aggregate
intermedi
ate input
Household real income per capita

32. Output rises in several (not all) states
 Assam, Madhya Pradesh, Maharashtra, J&K, & Punjab
Export rise – paddy, wheat, o.cereals, fibres & fruits
Prices of oilseeds, vegetables, milk, other livestock
rise considerably
Exchange rate appreciates – adversely affects non-
agricultural exports
Real income of several households fall, especially
urban poor
IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 32
Impacts of TFP + Export barriers removal …

33. 33IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014
Combined scenario
TFP rise +
Fertilizer subsidy +
Irrigation expansion +
Market integration +
Export barrier removal

34. IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 34
Impacts of combined scenario
Rural
Decile
01-04
Rural
Decile
05-08
Rural
Decile
09-10
Urban
Decile
01-04
Urban
Decile
05-08
Urban
Decile
09-10
Jammu & Kashmir 13.34 7.06 16.33 -0.42 5.43 -2.97 4.27 4.72 4.45 2.99 3.29 3.57
Himachal Pradesh 10.73 6.94 11.91 1.77 5.37 0.70 3.78 4.21 3.89 2.84 3.13 2.95
Punjab 1.34 -1.59 -1.71 -2.22 0.70 0.84 4.64 4.48 3.50 2.89 3.01 2.60
Uttarakhand 6.23 2.22 6.03 0.11 4.04 0.30 4.88 4.85 4.47 3.10 3.33 3.47
Haryana -0.60 -3.74 -2.76 -1.44 1.78 0.76 4.49 4.70 4.14 2.97 3.35 3.02
Delhi 8.40 3.54 11.66 -0.45 4.23 -3.35 5.05 4.64 3.08 3.28 3.27
Rajasthan 2.86 -0.58 1.47 -0.34 3.12 1.03 4.21 4.50 4.35 2.95 3.39 3.38
Uttar Pradesh 2.19 -1.56 0.22 -0.74 3.05 1.22 4.50 4.72 4.17 2.99 3.40 3.37
Bihar 4.66 0.84 2.89 -0.18 3.61 1.55 4.27 4.49 4.63 2.91 3.48 3.84
Assam 23.87 18.64 24.70 1.23 5.68 0.54 3.33 3.65 3.75 2.26 2.78 2.69
West Bengal -18.13 -19.75 -22.44 -4.64 -2.69 0.68 3.17 0.83 3.90 2.35 2.05 -0.02
Jharkhand 30.34 23.42 32.57 2.73 8.47 0.99 4.97 5.30 4.59 3.04 3.68 4.64
Odisha 10.52 5.22 9.23 -0.51 4.51 0.67 3.77 3.48 3.84 2.47 2.99 3.34
Chattisgarh 10.82 5.01 9.70 -0.03 5.50 0.99 4.14 4.45 4.53 2.77 3.46 4.18
Madhya Pradesh -3.47 -6.27 -6.28 -1.94 1.00 1.02 3.17 5.16 4.73 3.20 3.35 2.60
Gujarat 6.50 2.52 5.47 0.24 4.13 1.21 3.84 4.55 4.91 3.18 3.54 3.99
Maharastra 10.70 6.08 9.38 0.14 4.51 1.36 3.37 4.02 4.28 2.68 3.07 3.23
Andhra Pradesh 6.88 2.69 5.49 0.24 4.33 1.56 4.41 4.49 4.75 2.99 3.47 4.12
Karnataka 6.76 2.54 5.19 0.08 4.20 1.58 4.73 4.92 5.00 3.13 3.53 3.55
Kerala 2.61 -0.44 2.04 0.43 3.51 0.99 4.48 4.42 3.92 3.12 3.41 3.22
Tamil Nadu 1.05 -2.15 -0.39 -0.16 3.10 1.29 4.28 4.08 3.58 2.77 2.94 2.89
North-East 5.24 -0.63 5.72 -2.61 3.16 -3.04 3.78 3.84 3.38 2.42 2.71 2.87
Union Territories 0.30 -1.34 5.21 1.60 3.28 -3.15 4.15 4.32 3.30 2.91 2.77 2.80
Price of
value
added in
agriculture
Price of
aggregate
intermedi
ate input
Household real income per capitaState Aggregate
agricultural
output
Value
added in
agriculture
Aggregate
intermedia
te input
usage
Price of
aggregate
agricultural
output

35. Agricultural output rises everywhere
Exceptions – WB, MP & Haryana
Agricultural value added also rise everywhere
Exceptions – WB, MP, Haryana, Punjab, Tamil Nadu
Agricultural prices fall in several states
Household real income rises everywhere for
everyone
Sole exception urban-rich in WB
IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 35
Impacts of combined scenario …

36. 36IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014
Concluding remarks

37. Base output pattern within and across states
Expenditure elasticities of various commodities
across household classes
Absence of any other shock on the demand side
Immobility of certain factors (land) combined
with full employment specification
Full employment specification may not be unreasonable
w.r.t. land given the small land holding sizes
IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 37
Main drivers of the results

38. Significant spatial inter-relationships exists and
need to be recognised
 Over and above the importance of inter-sectoral and inter-
agent inter-relationships
TFP scenario shows that significant scope to
improve resource allocation across states exist
 Over and above resource allocation across commodities
Spatial impacts of agricultural policies vary
substantially
 Depend upon the policy change itself & the combination of
policies
IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 38
Concluding remarks

39. Objective of the policy needs to be stated clearly
 Output or household income (proxy for welfare) or multiple
objectives?
Combined scenario has worthy multiple objectives
 E.g., fertilizer subsidy removal may be desirable from fiscal &
environmental perspectives
 But income gain is lower for several households than in the
“TFP + Market integration” scenario

IGIDR-IFPRI Conference on “Harnessing Opportunities to Improve Agri-Food Systems”, 24-25 July, 2014 39
Concluding remarks …