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Dynamic Output Response Revisited: The Indian Cash Crops

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  • Sunil KANWAR
  • Elisabeth SADOULET

Abstract

Diverse instruments have been used to encourage developing agriculture. In the process, billions of dollars have been spent on providing incentives to peasants. Given scarce resources, an important concern has been the issue of what policy instruments to emphasize. In this regard, useful policy information can be gleaned from the role of expected profits (revenue and input prices), assets (irrigation and infrastructure), and relevant risks, in evoking peasant response. Using panel data for the period 1967/1968 to 1999/2000 pertaining to seven major Indian cash crops cultivated across 14 major states, we find strong evidence of a differential producer response in the post‐liberalization phase, although the important variables per se are much the same. Our results suggest that the preferred policy ought to emphasize availability of irrigation, affordable fertilizer, and rural infrastructure, rather than incessant increases in output prices.

Suggested Citation

  • Sunil KANWAR & Elisabeth SADOULET, 2008. "Dynamic Output Response Revisited: The Indian Cash Crops," The Developing Economies, Institute of Developing Economies, vol. 46(3), pages 217-241, September.
  • Handle: RePEc:bla:deveco:v:46:y:2008:i:3:p:217-241
    DOI: 10.1111/j.1746-1049.2008.00064.x
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    References listed on IDEAS

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    1. Delpeuch, Claire & Leblois, Antoine, 2014. "The Elusive Quest for Supply Response to Cash-Crop Market Reforms in Sub-Saharan Africa: The Case of Cotton," World Development, Elsevier, vol. 64(C), pages 521-537.
    2. Rimjhim M. Aggarwal, 2006. "Resource-Poor Farmers in South India: On the Margins or Frontiers of Globalization?," WIDER Working Paper Series RP2006-97, World Institute for Development Economic Research (UNU-WIDER).
    3. Kumawat, Lokendra & Prasad, Kamta, 2012. "Supply Response of Sugarcane in India: Results from All-India and State-Level Data," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 67(4), pages 1-15.

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