Agriculture Industry –Regional variations in input and output in these sectors

Regional Patterns in Agriculture

Period 1 – –HVY seed and technology initially restricted to Punjab, Haryana and western UP. –also the wheat-growing region. – not initially successful for rice cultivation. – led to widening of regional disparities in the India in the agricultural output –Nearly 44 percent of the incremental output in the period 70s to that of the 60s occurred in the northwest region., While southern region contributed for 32 percent of the incremental output during the same period. (Table below) Period 2 – –extension of new technology from wheat to rice –and its spread from Punjab and Haryana to the eastern UP and the rice producing states of the south. –Eastern region declined because of the petering out of the HYV wheat cultivation in the region. This can be seen in W.Bengal and Bihar. –Wide fluctuations in the central region, mainly due to good monsoons of the period in the region. Thus in the table below it shows the decline of share of the incremental output of the eastern regions, north western region and the southern region, and the rise of the central region. Period 3 – –Period of turning point in Indian agriculture. –highest growth rate during this phase, at the rate of 3.40%. –And the growth has been more or less regionally distributed in the period.

Growth of output – due to growth of yield, – growth of area –and changes in the cropping pattern.

Regional Patterns in Agriculture

–Significant rise in yield of some of the crops like rice and wheat after mid 1960s following the new technology. Period 1.- Yield increase across all regions, highest in the north east region and the south region. –Yield levels substantially high in costal states like Kerala, TN, and W.Bengal. due to factors like weather, rainfall, and soil. –High in north west region due to irrigation facilities Period 2 – significant change in the yield levels and growth across regions. –The southern region continues to have a higher yield – due to the agro-climactic conditions. But the yield growth was faster in the northeastern region due to the new technology. –Yield in the central region continued to be the lowest. But the growth was substantial. –During the period 70s to 80s the combined cultivation of wheat and rice led to the spread of new technology to many new regions, Gujarat, Maharashtra, in central region and Andhra and Karnataka in the south. However eastern region continued to be at the lowest level. Period 3 :- Yield growth rate highest in all the periods. This is also seen across regions, especially in the central region, which was growing the slowest in period previously. However, as would be discussed later, the sources for this growth of yield rate are different in different regions. –Eastern region – due to rise in rice productivity –Central region and to some extent southern regioncropping pattern changes from low value coarse cereals to oil seeds ( in southern region cultivation of rice also played some role) –Northwestern region - due to the growth of rice, wheat and cotton and sugar cane.

Regional Patterns in Agriculture

growth of cropped area –through increase in the net area sown –or through an increase in the intensity of cultivation. Intensity of cultivation is brought about by bringing in more short duration crops and irrigation. Area expansion has ceased to be a source of growth of crop output since mid 1960s. After the 1960s NSA is more or less stagnant while the cropped area increased mainly due to increases in intensity of cultivation. Period 1 – GCA grew at 0.43 percent at the all India level, while in Punjab and Haryana the area growth was much higher than this due to the irrigation facilities and the short breeding crop varieties. Other regions also experienced rise in the GCA but this was due to other reasons like weather and rainfall. Period 2- GCA total increased at the rate of 0.56, while GCA in the northwestern regioncontinued to grow at a fast rate due to the intensive cultivation. Other regions the growth was due to other factors like rainfall. Etc. Period 3- GCA total growth declined to 0.24 percent. Both north west region and the eastern region experienced decline in GCA growth.

Regional Patterns in Agriculture - The trends in the NSA shows that there was fairly rapid deceleration in the growth of NSA during the entire period. In many states the NSA even declined due to the urbanization/ or and afforestation. This has led to the rise of cropping intensity across the regions in all the years, especially in the period to

Regional Patterns in Agriculture

The levels and growth of land productivity (yield) and the growth of output are positively related to the use of modern inputs, such as irrigation, tractors, fertilizer use. There is also an association between the growth of output and use of modern inputs at the all India level though not as strong as for the yield relationship. The largest rise in output growth and yield was in the period from 83 to 93. This was also the period when input consumption shot up to the peak in India. (see irrigation and fertilizers)

Regional Patterns in Agriculture

The seed fertilizer technology was primarily confined to wheat and rice in the mid 60s. Later on the technology spread to a number of crops like the coarse cereals, rapeseed and mustard, soyabean, sunflower, cotton and sugarcane etc. Different regions experienced different growth rates in output partly due to the changes in the crops in cultivation as well. The regions that focused in the production of wheat, which had the highest yield generally had a higher rate of growth. This was followed by cotton, rapeseed, mustard, rice and coarse cereals, in that order. Structural rigidities in the Indian agriculture that the traditional agriculture did only food grain production. It is only in the eighties that the cropping pattern started to change in India. But there were substantial changes within the food grain production itself. Due to the rise in yield and the price advantage during 1965 to 80s the share of wheat in the total cropped area increased from 8.9 % to 13.7 percent. On the other hand the share of coarse cereals and pulses recorded a notable decline. While rice continued without much change.

Regional Patterns in Agriculture In the northwestern region the chief crops became wheat and rice, displacing coarse cereals and pulses, though the share of food grains remained more or less same during the entire period. In the eastern region also the wheat share increased substantially at the cost of coarse cereals and pulses. There was some rise in the share of oil seeds. Central regions saw the decline of coarse cereals especially in the periods, while the share in oilseeds increased heavily. in the southern region also there was a vast decline in the share of coarse cereals,whose share was taken over by the non-food grains, especially oilseeds. this massive shift towards the oilseeds was mainly due to the relative increase in profitability due to two factors; 1- hefty increases in the administered prices of oil seeds compared to the coarse cereals. 2- increase in the yield in the major oilseeds.

Regional Patterns in Agriculture

Rapid rise in agricultural output along with increasing intensity of cultivation increased the demand for labor in some parts of India. On the other hand there took place a rapid capitalization of agriculture in response to the rising wages, and this resulted in the displacement of labor in certain agricultural operations. In some regions where the new technology did not take root also the labor absorption in the sector was high due to non – availability of non-agricultural employment. Historically speaking in traditional societies in spite of the vast differences in the land yield per worker productivity have tended to remain equal over regions. The inequalities were kept low through migration, population adjustment, and suction mechanism. However we find that the regional disparity in MAW productivity is increasing over the years.

Regional Patterns in Agriculture

Regional perspectives in Industrial development 1.Manufacturing Sector as the Engine of Growth- Kaldors First Law: Countries with higher manufacturing growth will also have higher GDP growth GDPgrowth = f(ManufacturingGrowth) Kaldors Second Law: Growth of manufacturing production is causally and positively related to the growth of manufacturing productivity because the sector is subject to economies of scale (Verdoons law) Manufacturing growth = f(manufacturing productivity growth) Kaldors Third Law: Economys productivity growth should vary inversely with the growth of labour force not employed in manufacturing because it is envisaged that outside of manufacturing sector, productivity growth is lower due to disguised unemployment, decreasing returns etc. Productivity growth = f {1/ non-manufacturing employment growth)

Regional perspectives in Industrial development Manufacturing Sector for regional development Industrialization results in strong backward linkages strengthening the market of the primary products of the region. It also helps in infrastructure building of the region It relieves agriculture from disguised employment, leading to productivity rise in agriculture (fei ranis model) and higher wage rates Manufacturing sector in the regional setting Manufacturing sector is a potential candidate for bringing in regional balance, due to its locational mobility unlike agriculture sector and its inter- sectoral linkages, which could produce dynamic outcomes of growth, productivity, and higher wages However, some of the issues are (Dholakia, 1989) –Should individual industries be geographically concentrated in a few regions or should they be evenly spread out? –Should individual regional economies have a diversified structure of industries or should they have a high degree of specialization in a few industries?

Regional perspectives in Industrial development 5.Regional perspectives in industry is analyzed from various angles such as : Regional Growth patterns Regional Location of various industries Regional concentration of all industries Inter regional inter industry linkages Regional variations in formal and informal manufacturing Regional variations in size, ownership etc 6.All of these are to be analyzed using various industry indicators like NVA C-O ratio C-L ratio Employment

Regional perspectives in Industrial development Regional Patterns in Industrial growth (Goldar and Seth, 1989, EPW) Industrial Growth Patterns : Spatial Variations Marked deceleration in Indian manufacturing after the mid 60s.(Raj, 1976, Shetty, 78, and Ahluwalia, 1978) The reasons as per Ahluwalia Slow down of public investment and resulting inadequate infrastrcutre investment Poor management of infrastrucure sector. Slow growth in agricultural income and the resulting slow growth in demand for industrial products. Restrictive industrial and foreign trade policies which led to high cost industrial structure. After mid seventies, especially in the eighties, the deceleration in the sector have been arrested and there is evidence for some smart recovery in rate of industrial growth. -ahluwalia holds the view that it is the favorable changes in the industrial and foreign trade policy in the period helped this recovery in the growth rate.

Regional perspectives in Industrial development annual growth rate of real NVA in reg. Manufacturing State Growth Rate (Per Cent Per Annum)*change in growth rate abcb-ac-b to to to Andhra Pradesh Bihar Gujarat Karnataka Kerala Madhya Pradesh Maharashtra Orissa Rajasthan Tamil Nadu Uttar Pradesh West Bengal

Regional perspectives in Industrial development The period of study covered to 85-86, dividing into three phases. They are –to 65-66,- period I –65-66 to 75-76, - period II –75-76 to – period III 12 of the large states are covered. NVA in the registred manufacturing at prices is obtained and then the growth rates are calculated statewise. Trends – All the states experienced a deceleration in the rate of industrial growth after the mid sixties. But the extent of deceleration varied from state to state. Sharp fall in Orissa, Bengal, Kerala, Rajasthan, whie Andhra and Maharashtra saw onlty marginal decline in the rate odf industrial growth. After the mid seventies there was a sharp rise in the industrial growth rates in most states. These states are Orissa, Bihar, Bengal, and UP, while Kerala and MP and to a lesser exten Karnataka and Andhra Pradeh experience a deceleration in industrial growth beyond States that experienced the sharpest deceleration in the first period are also the same states that experienced a sharp recovery in the second period. (except for Kerala)

Regional perspectives in Industrial development Based on the trends States can be classified into 3 groups. First group – states that did not experience any marked deceleration after the mid sixties or ant markets improvement in the growth rate after the mid seventies. I.e. they experienced growth at a uniform rate – Maharashtra, Andhra Pradesh, Gujarat, TN, Karnataka. Second group – states that experienced a significant deceleration after the mid sixties and then a significant acceleration after the mid seventies.- Orissa, Rajasthan, UP and W. Bengal, Third Group- states that experienced a continuous deceleration in the rate of industrial growth. – MP and Kerala

Regional perspectives in Industrial development Regional inequality is lesser in the secondary sector as a whole compared to the manufacturing sector alone. Regional Inequality is declining by both indicators Weighted CV reg mfg sector secondary secotr Dholakia, 1989

Regional perspectives in Industrial development NVA growth Nva highlow LevelhighGujarat, HaryanaMaharashtra, Punjab, Karnataka, TN, WB lowJK, Himachal, UP, MP, BiharRaj, AP, Kerala, Orissa, Assam Dhaolakia, Net Value added in southern states have grown at a rate lower than the national growth rate during the period The northern states, except Rajasthan and Punjab, on the contrary have grown at a rate higher than the national growth rate during the same period. Deliberate policy alone can give rise to such sharp regional differentiation. -Again the Southern region (plus West Bengal and Assam) has a considerably above average capital productivity in manufacturing but has significantly less capital per worker. The northern region, on the contrary, has high capital per worker but is far below the national average in terms of capital productivity. -One of the reasons for high capital intensity in manufacturing of the northern region during the mid-eighties is that the north has secured a much larger share in the investments in the new undertakings of the central government. Most of these states were congress run states, which also had the same party forming the central government. -States that have a higher level of per capita net value added than the national average had a lesser growth rate than the national average, while states that had a level less than the national average, the had a growth rate higher than the national average, implying convergence in the per capita NVA across states.

Regional perspectives in Industrial development Causes for the spatial variation in industrial growth. Agricultural growth –The expected relation is that states that high rates of agricultural growth will have low rates of deceleration in industrial growth. –But the rank correlations drawn between the two shows that there is no significant relation between the two. I.e. states, which experienced poor agricultural growth, did not experience in industrial growth as much those states whose agricultural performance had been relatively better. Increase in power supply (infrastructure) – –similarly the changes in power supply in different regions also did not show any significant relation with the deceleration or acceleration of industrial growth across different regions. Regional intensity of public sector investment. –The rank correlation between the extent of industrial deceleration and the index of regional intensity of pubic investment is found to be If Rajasthan is excluded, then the coefficient increases to In essence it means that the states which gained relatively more from public investment in the 50s and 60s experienced a more pronounced slow down in the industrial growth after the mid sixties, presumable due to the significant slowdown in the public investment during the period.

Regional perspectives in Industrial development Regional Concentration of Industrial Location: (Shetty, S.L., 1982) State wise distribution of factories brings out the nature of extreme concentration of factories in a few states. The four industrialized states of Maharashtra, West Bengal, Gujarat and Tamil Nadu together had 44.7% of factories, 37.9% of the fixed capital and 40.8% of productive capital. While Bihar had only 5 to 6% share of all attributes whether relating to employment or output. The five above mentioned states and U.P, M.P., A.P. and Karnataka had a share in the Value added at about 4.0% or more, each. These nine states accounted for 78.4% of total number of factories, 79.0% of fixed capital and productive capital, 82.4% of factory employment. And over the years the concentration in a few states continue to be rising. What causes greater growth in NVA, concentration of an industry in a few states or regional spread of an industry? (dholakia,89) –If returns to scale are increasing, increased regional concentration of industry would lead to higher growth of NVA. But if there are decreasing returns to scale, then increased regional concentration of an industry would result in a lower growth of NVA. –23 two digit level industry groups are taken for the period to 84-85The degree of regional concentration of an industry is taken as the share of the top three states in terms of NVA in the industry group. The degree of association or correlation between the degree of concentration and growth rate of per capita NVA turns out to be negative and significant. –This show decreasing returns to scale, hence regional spread of industries would be needed for higher growth of per capta NVA.

Regional perspectives in Industrial development Regional Patterns of Industrial Diversification: (Shetty, S.L., 1982) Within each of these nine states mentioned above nearly 70 percent of the gross output and value added is concentrated in 7 major industries. Generation of electricity, manufacture of chemicals and chemical products, and manufacture of food products appear in all the states top 7 industries. Cotton textile is common to six out of the nine states. In the three southern states of TN, AP and Karnataka, there was greater diversification into other industries, while in the other states there was primacy of a few industries as said above. (DHolakia, 89) We find the top 3 industrial share in each state as the degree of concentration in a state. This is correlated with capital per worker. Such a correlation is to test the hypothesis that if the regional economy is diversified th invariably reduces the requirement of capital per worker.This is based on the justification of diminishing returns. Specialization implies more investment in that industry groups which are already dominating the regional economy. If diminishing returns to scale operate in the economy we require a higher amount of capital per worker to maintain labor productivity at the original level. Thus would mean increase in capital intensity. The measured correlation coefficient turn out to be =.503 and significant at 5 percent level.