The issue of agricultural supply response is a very important one as it has an impact on growth, poverty and environment. The size of agricultural supply response is expected to improve after removing some of the constraints that farmers were facing before. Though many constraints have been removed from the agrarian system and many incentives have been provided to farmers, still the supply response for Indian agriculture is price inelastic. Hence, the question “why is supply response price inelastic” becomes relevant. The present study is an attempt to find supply response through cointegration approach and to see if the response has been better at the all India level in comparison to previous studies. Further, it also focuses on the question whether there is difference in the supply response among highly agricultural based, medium agricultural based, and low agricultural based states. The study indicates that aggregate agricultural output elasticity with respect to agricultural TOT is very low and not statistically different from zero.
- agricultural supply response,
- nerlove model,
- error corection model
Available at: http://works.bepress.com/amarnath_tripathi/3/