EFFECTIVE INCENTIVES AND CHICKPEA COMPETITIVENESS IN INDIA
Rao, Krishna D.; Kyle, Steven C.
This paper attempts to measure the impact of government intervention in product and factor markets on chickpea competitiveness in India. This is done by estimating the nominal (NPC), effective (EPC) and effective subsidy (ESC) protection coefficients for chickpea and its main competing crops -wheat and mustard. Further, the Net Economic Benefit (NEB) in the production of these three crops is estimated to indicate where comparative advantage and production efficiency in production lie. In addition, this paper also analyses the production constraints affecting chickpea competitiveness. The analysis is confined to the states of Haryana, Uttar Pradesh, Madhya Pradesh and Rajasthan. The protection coefficients indicate that the government's output price, subsidy and trade policies have discriminated against chickpea producers. These policies provided the greatest effective protection to mustard producers in all the four states studied. In Haryana wheat received greater protection than chickpea, though in both Madhya Pradesh and Rajasthan chickpea had greater protection than wheat. This result indicates a general policy bias against chickpea producers in the northern wheat growing belt of India. The Net Economic Benefit coefficients show that all states have a comparative advantage in wheat and chickpea production, while only Uttar Pradesh, Madhya Pradesh and Rajasthan have comparative advantage in mustard production also. However, across all states, wheat is the most efficient crop to produce. From a standpoint of economic efficiency, this result implies that India is better off allowing resources to flow into wheat production and importing its chickpea and mustard requirements.
WP 1997-16 September 1997
Charles H. Dyson School of Applied Economics and Management, Cornell University