Agricultural growth and crop diversification in India: a state-level analysis

This paper focuses on trend in India's agricultural growth estimated based on structural breaks in agricultural GDP from 1981-82 to 2019-20, using Bai-Perron multiple breakpoint method. The paper also examines the relationship between agricultural growth and crop diversification. At the national level, five structural breaks in agricultural GDP were identified: 1987-88, 1992-93, 1997-98, 2003-04, and 2011-12. At the state level, structural break points occurred at different time periods indicating the effect of state-specific policy changes or occurrence of extreme climatic events. The southern, western, and central regions have highly diversified cropping pattern, whereas eastern and northern regions follow a specialised cropping pattern. Panel instrumental variable regression results show that crop diversification has a positive and statistically significant effect on agricultural output controlling for effects of other variables such as gross terms of trade, irrigation, cropping intensity, public capital expenditure, fertiliser use and labour. The study results have policy implications for promoting crop diversification that holds the key to sustain agricultural growth in the long run.