An Analysis of Production Efficiency in Indian Agriculture: Study on Rice and Wheat Producing States

Abstract

The paper examines the production efficiency of agricultural system in rice-producing and wheat-producing states of India using state level data for the period 1990–91 to 2004–05 and for 2005–06 to 2013–14. Stochastic production frontier model using panel data, as proposed by Battese and Coelli (1995), has been used for estimating the efficiency variations taking an integrated effect model into consideration. State level mean efficiency estimates of rice production ranges from 0.937 to 0.437 during 1990–91 to 2004–05 and from 0.834 to 0.314 for 2005–06 to 2013–14. The statistically significant variables are rate of rural literacy, total state road length per unit of area and share of agricultural NSDP to state NSDP. The major inputs were net irrigated area and consumption of both fertilizers and pesticides. State level mean efficiency estimates for 1990–91 to 2004–05 of wheat production ranges from 0.845 to 0.307 and from 0.902 to 0.304 during 2005–06 to 2013–14. The statistically significant variable is total state road length per unit of area. The major inputs were institutional credit, net irrigated area and consumption of both fertilizers and pesticides.