EFFECT OF AGRICULTURAL TRADE LIBERALIZATION ON FARM INCOME IN INDIA: AN EMPIRICAL ANALYSIS USING ARDL APPROACH

Authors

  • Hariom Prakash Verma, Nand Kumar Author

Abstract

This study examines cointigration between farm income and agricultural export using ARDL approach during trade liberalization era (1991-2021) in India. ARDL is one of the most dynamic unrestricted model in economic literature. We have used ARDL approach to account for the non stationary of the data.  Several measures and indicators are used to assess farmers' income in the country. Agricultural GDP can provide an approximate proxy for farm income to some extent, but it has limitations. Agricultural GDP represents the total monetary value of all goods and services produced within the agricultural sector. Farmers' income, on the other hand, is the actual earnings that farmers receive from their agricultural activities. This paper considers only Agriculture component of Gross Domestic Product at constant prices as a proxy for farm income. The ARDL Bound test revealed the existence of a long run relationship among selected variables. The coefficient of error correction term indicates that short run shocks could be adjusted towards their long run equilibrium at a rate of 107 percent per annum. The results of the study show that in the long run, agricultural output is positively influenced by exports, fertilizer use, and yield. Imports do not have a significant long-run impact. In the short run lagged differences of imports and fertilizer use have significant affect on farm income. CUSUM test demonstrates stability in the model and diagnostic tests shows that there is no serial correlation as well. While this study has limitations, it provides valuable insights into the relationships between agricultural exports and farm income in India.

 

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Published

2024-06-15

How to Cite

EFFECT OF AGRICULTURAL TRADE LIBERALIZATION ON FARM INCOME IN INDIA: AN EMPIRICAL ANALYSIS USING ARDL APPROACH. (2024). International Development Planning Review, 23(1), 2288-2302. https://idpr.org.uk/index.php/idpr/article/view/310