Agricultural Diagnostics for Bihar

Published on Mar 04, 2022 03:23 PM IST
  • The National Council of Applied Economic Research (NCAER) partnered with DFID, the United Kingdom’s Department for International Development in India, to undertake an agricultural sector diagnostic study for the state of Bihar, titled, Water-to-Cloud: Correlating socio-economic indicators with river water quality, to understand the economic, natural, technological, and political constraints that agriculture in the state faces, and what it should do to alleviate these constraints.
During 2008-16, its per capita income was one-fifth of Haryana’s and a just about one-third of India’s. Bihar lost the bulk of its mineral resources in 2000 when the new state of Jharkhand was created, but it retained its fertile agricultural land and water resources.(HT File Photo)
During 2008-16, its per capita income was one-fifth of Haryana’s and a just about one-third of India’s. Bihar lost the bulk of its mineral resources in 2000 when the new state of Jharkhand was created, but it retained its fertile agricultural land and water resources.(HT File Photo)
ByNational Council of Applied Economic Research

Bihar underwent a remarkable turnaround in economic performance in the mid-2000s. Effective policies, better infrastructure, governance, and social protection, and greater political stability have all contributed to this improvement. Yet Bihar remains one of India’s poorest states: During 2008-16, its per capita income was one-fifth of Haryana’s and a just about one-third of India’s. Bihar lost the bulk of its mineral resources in 2000 when the new state of Jharkhand was created, but it retained its fertile agricultural land and water resources. About 70% of its rural workforce is employed in agriculture, which contributes over a quarter of the state’s Gross Domestic Product (GDP). Hence, rapid agricultural development remains important for Bihar. Recognising this, the state government started implementing what it called Agricultural Road Maps in 2008, aimed at increasing productivity growth in the crop and livestock sectors and boosting farm incomes.

Agricultural growth responded well to these new initiatives in their first four years, reaching 3.1% annum during the first Road Map, but declined to 1.3% in the second Road Map, averaged about 2.0% during 2001 to 2017, and has shown a decelerating trend since 2012-13. It has also remained quite volatile from year to year.

What explains these trends in Bihar’s agriculture development? The NCAER study aimed at addressing these and related questions. The key goal of the NCAER study has been to identify the binding constraints to faster and more sustainable agricultural growth in Bihar. The search for such binding constraints has covered both the crop and livestock sectors, and has looked at land switching from low-value to higher-value crops, crop diversification, crop yield improvements, and input intensification.

In order to identify the binding constraints and hence policy priorities for Bihar, the NCAER team used the growth diagnostics framework pioneered by Hausmann et al (2008), developing a hybrid by combining it with the work of Minor et al. (2006). This framework explores a hierarchy of distortions from the largest to the smallest, and recommends starting by reducing the largest distortion or constraint, both on the output and the input sides, which is expected to have the largest direct effect on farmers’ income or welfare. For instance, if the problem seems to be the low scale of farming, is that due to poor soil quality, inadequate irrigation, expensive labour, or government restrictions on specific cropping patterns? Is the low scale of farming due to insecure land tenure, fragmented landholdings, high rent, or restrictions on land leasing? Of course, while data analysis drives the answers to many of these questions, this is not an easy task and requires deep insights from knowledgeable experts who know Bihar agriculture well.

The study offers a range of policy and programme recommendations to address various constraints, both on the output and marketing sides, and on the input and institutional sides.

 

(The National Council of Applied Economic Research (NCAER) partnered with DFID, the United Kingdom’s Department for International Development in India, to undertake an agricultural sector diagnostic study for the state of Bihar, titled, Water-to-Cloud: Correlating socio-economic indicators with river water quality, to understand the economic, natural, technological, and political constraints that agriculture in the state faces, and what it should do to alleviate these constraints.)

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Tuesday, August 16, 2022
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