Macroeconomic considerations in the choice of an agricultural policy: a study into sectoral independence with reference to India
This book investigates the ways in which the agricultural sector in India impinges on the rest of the economy and analyses implications for the design of economic policy. A critical review of the various theoretical approaches to the interaction between agriculture and industry is followed by a discussion of agriculture's role in Indian economic growth. A computable general equilibrium model is constructed incorporating the main relationships between agriculture and the rest of the economy in order to examine the short- and medium-term impact of various public investment programmes and (agricultural) price policies on sectoral output levels, the rate of inflation, income distribution, the government budget, and the country's balance of payments. The findings point to the overriding importance for Indian industrialisation, of an expansion of the domestic market through an increase in productivity and income in agricultural. The results suggest the inadequacy of the market mechanism alone in ensuring adequate agricultural growth, and underline the importance of public infrastructural investment in agriculture and maintenance of adequate price incentives for farmers.
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Alternative Theories of AgricultureIndustry
Pareto Efficiency and Price Distortions
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aggregate aggregate demand agricultural and non-agricultural agricultural income agricultural policy agricultural prices agricultural production agricultural sector agricultural supply agriculturalists cent commercial crops commodities computable general equilibrium consumer price index consumption crop output crop prices crop production cropwise decline deflation demand for non-agricultural direct tax economy effects endogenous equilibrium model estimation exogenous expenditure export factor cost farmers fertiliser price fertiliser subsidy food crops food subsidies foodgrains foreign savings GDP at factor GDP at market GDP deflator gross domestic investment hectare impact imports Indian industrial Janvry labour leads marginal market prices medium run neoclassical non-agricultural mark-up income non-agricultural production policy change post-Keynesian price elasticities price increases private investment demand private savings procurement prices public agricultural investment public investment public procurement public savings raising rate of fertiliser rate of real real GDP reference run reference scenario revenue rice and wheat rise share in GDP short-run Table terms of trade