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Abstract
This study examines the sources of crop income growth in Indian agriculture over the
1980s and 1990s. Using a method developed by Minot (2003), the analysis decomposes
crop income growth into the contribution of yield increases, area expansion, price
increases, and diversification from low-value crops to higher-value crops. The results
confirm that at the national level, technology (higher yield) was the main source of crop
income growth during 1980s, while rising prices and diversification emerged as the
dominant sources of growth in agriculture during 1990s. Diversification towards higher-value
crops such as fruits and vegetables accounted for about 27% of crop income growth
in the 1980s and 31% in the 1990s. However, these national averages hide substantial
regional variation. In the grain-dominated northern and eastern regions, price increases
were the most important source of growth during 1990s, while in the southern and western
regions crop income growth was led by diversification into higher-value crops. The results
reflect the slowing growth of wheat and rice yields in India, as well as the growing
importance of diversification into higher-value crops. Restoring the growth in grain yields
will require investment in agricultural research and development, while facilitating further
diversification involves institutional development to better link small farmers with growing
markets for high-value commodities.