Diversification of Indian Agriculture: Composition, Determinants and Trade Implications

The pattern of diversification across states/crops in India has been schematized and various determinants of diversification have been deciphered. To objectively confer the empirical resonance, values of Simpson index have been estimated. The diversification index (SID) has been found to range from 0.47 (WB) to 0.90 (Karnataka) in 1990-91 and from 0.40 (Orissa) to 0.92 (Karnataka) in 2000-01. The increase in diversification Index signifies shift towards non-foodgrain crops. In Karnataka, though the Index has increased, but the similar increases in area under foodgrain imply shift from coarse to fine cereals. Agricultural diversification is influenced by a number of infrastructural and technological factors. The coefficients have indicated that the presence of electricity and road density are negatively associated with the diversification. In the year 2001-02, large share of export earnings has come from non-traditional items, namely rice, fruits, vegetables, livestock and marine products, signifying positive boost to diversification. Indian agriculture has witnessed diversification with impressive improvements in the shares of livestock and fisheries sectors in the total income from agriculture. Within the crop sector, the diversification has largely been in favour of non-foodgrains crops in most of the states. However, diversification in these states has not been essentially for income generation, but also for the risk-mitigating proposition. However, harnessing the potential of diversification presupposes gradual restructuring of diversification hindering market institutions, infrastructure and quality standards.