Dynamics of agricultural growth and diversification in Eastern India

Abstract

PurposeIn low-income economies agriculture plays an important role in promoting economic growth and reducing poverty. Agricultural growth achieved through diversification toward the higher value crops enhance income and mitigate risk. The present study focuses on one of the eastern Indian states namely “Jharkhand”; where agriculture is the mainstay for the 80% of its rural population. The state per-capita income is below the national average; however, it has registered an impressive growth, especially in the agriculture sector in the last one decade. In this study, the authors attempt to identify the components in sources of agricultural growth; the authors also estimate the determinants of overall agricultural growth.Design/methodology/approachThe study is based on the secondary data from 2000–2001 to 2015–2016. This paper first decomposes the agricultural growth into area, price, yields (technological improvement) and diversification effects through the method of growth accounting approach. Secondly, the study employs the new classical growth model through the ordinary least square (OLS) to examine the determinants of overall agricultural growth.FindingsThe author's findings indicate that there has been a shift in cropping patterns from the cultivation of cereals to non-cereals in the state during the study period. Among the major crops, the area under pulses cultivation has increased by 19% from 2000–t2002 to 2014–2016. The increase in area under cultivation and the diversification in favor of higher-value crops have been the major reasons for the accelerating overall agricultural growth in the state along with improvements in technology. The study reveals that increased use of fertilizer per hectare, capital formation and road density are the main determinants of high agricultural growth in the state.Research limitations/implicationsThe study is based on secondary data and based on one state. A primary study to complement this could have been better. The limited data available for some of important variables related to mechanizations are also a limitation of the present study.Originality/valueSeveral studies have analyzed the diversification and agricultural growth in India. With our best knowledge this kind of study has not been done so far for the state of Jharkhand in eastern India.