Trends in Fertilizer Consumption and Foodgrain Production in India: A Co-integration Analysis

Abstract

Food grain production in India has increased considerably from 50 MT in 1951 to 266 MT by 2013-14. Introduction of green revolution, modernization of agriculture, encouragement to research and extension in agriculture are some of the factors contributed for this growth. However, this is accompanied by considerable increase in the usage of chemical fertilizers starting with the introduction of green revolution in 1960s leading to unsustainable agriculture. The Green Revolution was a technology package and it contains technical component of improved high yielding varieties of two staple cereals (rice and wheat), irrigation and use of fertilizers, pesticides, and better management practices. The high yielding varieties demanded more usage of fertilizers and it is supported by the subsidy policy on fertilizers. In the early 1980s, India introduced New Economic Policy (NEP) which has opened up the economy to privatization and globalization. In the globalized economy agricultural sector became more commercial and production is oriented to export market. This also led to increase in fertilizer consumption. The main objective of this paper is to analyse the trends in the consumption of chemical fertilizers and food grain production in India and to identify the relationship between these two. The study is based on the secondary data and Co-integration Technique and CAGR are used to analyse the trends. The analysis revealed long run relationship between these two variables in India. Encouraged by the increased production, farmers have increased fertilizer consumption without considering the environmental consequences and sustainability of agriculture.