Price Transmission and Market Integration Analysis of Black Gram (Urad Dal) Across Major Indian States

Black gram (Urad Dal), one of the important pulse crops in India, serves as a significant protein source and offers number of health benefits due to its low glycemic index and high fibre content. Although the crop is prominent in states like Madhya Pradesh and Uttar Pradesh, the production in Punjab is minimal because of its dominant paddy-wheat cropping system. This study examines the price behaviour and market integration of black gram among selected states, highlighting Punjab’s potential for crop diversification. By employing Wholesale price data of Black gram from January 2014 to June 2024, collected from reliable sources, the research employs advanced econometric techniques including correlation analysis, Johansen co-integration, Granger causality tests, Vector Error Correction Model (VECM), impulse response function, and variance decomposition. The results indicate that black gram wholesale prices are highly integrated among the selected states indicated by high correlation coefficients, implying strong price linkages. Johansen co-integration test showed long-run equilibrium relationships among the states’ price series while VECM depicted short-term dynamics and speed of variable adjustment to reach equilibrium. The Granger causality test indicates bidirectional and unidirectional causal relationship with a focus on Madhya Pradesh playing central role in terms of influencing prices in other states. Impulse response function and variance decomposition analysis also confirm that price shocks affect markets across these states, thereby confirming their interdependence. The study recommended the upgrading of infrastructure to improve market connectivity, effective establishment of market information systems and improving market access for farmers. Furthermore, investment in agricultural research and vibrant marketing channels will also enhance diversification as well as support sustainable agriculture in Punjab, ultimately benefiting both producers and consumers.