How productive is the agricultural sector across Indian states?

Abstract

Purpose – This paper aims to provide an up-to-date analysis of the productivity in the agricultural sector within the states and union territories of India. Despite agriculture’s diminishing role as a share of overall gross domestic product (GDP) in India, it plays a crucial role by providing a large proportion of jobs to the workforce. Recognising agriculture’s central role in the economy as well as the significant diversity between the states in terms of resources, this paper estimates the total factor productivity (TFP) for Indian crops at the state level from 2000 to 2010 using both the growth accounting and the Malmquist Index Data Envelopment Analysis methodologies. The results highlight the possibility of increasing production with existing technologies by focusing on efficient resource deployment and enhanced management techniques. Design/methodology/approach – The paper utilizes both growth accounting and the Malmquist Index Data Envelopment Analysis methodologies to estimate the growth of TFP at the regional level at the sub-national level (for states and union territories). Findings – The results highlight the wide variations in the performance of states with respect to growth in TFP for the period 2000-2010. At the regional level, the Western region experienced the largest TFP growth, while the Eastern region experienced the lowest. At the state level, Gujarat registered the highest TFP growth, while Bihar emerged as a laggard with the lowest growth in TFP. Practical implications – The results highlight the possibility of increasing production with existing technologies by focusing on efficient resource deployment and enhanced management techniques. Originality/value – Although most of the existing literature focuses on national level analysis for India, this paper provides an up-to-date analysis of the productivity in the agricultural sector within the states and union territories of India. Correspondingly, the results are more applicable for these sub-national economies and offer more relevant policy implications.