Agricultural production efficiency of Indian states: Evidence from data envelopment analysis

Abstract

AbstractThis paper aims to provide an analysis of the agricultural productivity of food grains across the states 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. Acknowledging the central role of agriculture in the economy as well as the diversity between the states in terms of availability of resources, this study analyses the impact of various inputs like land area, fertilizers, electricity and labour use on the production efficiency of food grains at the state level from 2006 to 2017 using Data Envelopment Analysis (DEA) and Malmquist Productivity Index (MPI). The results highlight the variation in the performance of states with five out of selected 20 states experiencing efficiency under the CCR model of DEA and nine out of 20 states being efficient under the BCC model of DEA. MPI results indicate that 11 out of 20 states have progressed in terms of MPI during the period under consideration. The paper highlights the possibility of increasing agricultural production with optimizing the inputs by focusing on efficient resource deployment and enhanced production management. The paper investigates the relationship between various agricultural inputs and food grain production efficiency using DEA and provides a way to improve on the allocation of these resources across various Indian states.