Determinants and Development Implications of Foodgrains Prices in India, 1949–1964

A price index for foodgrains in India for the period 1949–1964 is estimated as a function of a set of real demand and supply variables and the money supply. More than 80 percent of the variation in the foodgrain price index is associated with variation in these independent variables. The upward tren...

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Bibliographic Details
Published in:American journal of agricultural economics 1968-11, Vol.50 (4), p.962-974
Main Authors: Mellor, John W., Dar, Ashok K.
Format: Article
Language:English
Subjects:
Coefficients
Crop economics
Crop production
Crops
Food crops
Food demand
Income elasticity of demand
Market prices
Money supply
Supply
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Summary:A price index for foodgrains in India for the period 1949–1964 is estimated as a function of a set of real demand and supply variables and the money supply. More than 80 percent of the variation in the foodgrain price index is associated with variation in these independent variables. The upward trend in foodgrains prices is associated prmarily with expansion of the money supply. There is little evidence of government foodgrain price policy having affected the trend of relative agricultural prices. The coefficient on the lagged supply-demand variable suggests that year-to-year changes in farmers' storage stocks are an important determinant of foodgrains prices in any one year. The implications of these findings to the relation between agricultural and industrial growth, monetary and fiscal policy, and agricultural price and buffer-stock policy are discussed.
ISSN:0002-9092
1467-8276
DOI:10.2307/1237632