Agriculture, Growth, and Redistribution of Income: Policy Analysis With a General Equilibrium Model of India

311 Pages·1991·15.144 MB·English

by  N. S. S. Narayana, Kirit S. Parikh, T. N. Srinivasan

CONTRIBUTIONS
TO
ECONOMIC ANALYSIS
190
HonoraiY Editor:
J. TINBERGEN
Editors:
D. W. JORGENSON
J. WAELBROECK
NORTH-HOLLAND
AMSTERDAM · NEW YORK · OXFORD · TOKYO
AGRICULTURE, GROWTH
AND REDISTRIBUTION
OF INCOME
Policy Analysis with a General Equilibrium Model
of India
N.S.S. Narayana
Indian Siatisdcal Institute, Bangalore
Kirit S. Parikh
Indira Gandhi Institute of Development Research, Bombay
T.N, Srinivasan
Yale University, New Haven
1991
NORTH-HOLLAND
AMSTERDAM · NEW YORK · OXFORD · TOKYO
in association with
ALLIED PUBLISHERS LIMITED
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PRINTED IN THE NETHERLANDS
(Indian edition: Printed in India)
INTRODUCTION TO THE SERIES
This series consists of a number of hitherto unpublished studies, which are intro­
duced by the editors in the belief that they represent fresh contributions to economic
science.
The term "economic analysis" as used in the title of the series has been adopted
because it covers both the activities of the theoretical economist and the research
worker.
Although the analytical methods used by the various contributors are not the same,
they are nevertheless conditioned by the common origin of their studies, namely
theoretical problems encountered in practical research. Since for this reason, busi­
ness cycle research and national accounting, research work on behalf of economic
policy, and problems of planning are the main sources of the subjects dealt with, they
necessarily determine the manner of approach adopted by the authors. Their
methods tend to be "practical" in the sense of not being too far remote from appli­
cation to actual economic conditions. In additon they are quantitative.
It is the hope of the editors that the publication of these studies will help lo stimulate
the exchange of scientific information and to reinforce international cooperation in
the field of economics.
The Editors
Krishilo NaastiDurbhiksham
For one who toils there is no hunger
An old Sanskrit aphorism
Acknowledgements
The research work reported in diis book was initiated at die Intema٧onal
Institute for Applied Systems Analysis (IIASA), Laxenburg, Aus٧ia as a part
of its Food and Agriculture Program (FAP). Though the bulk of die work was
carried out over a number of years at IIASA, a lot of research and writing
was also done at the Indian Statistical Institute, New Delhi and Bangalore and
at the Indka Gandhi Institote of Development Research, Bombay. We grate­
fully acknowledge die support of diese instiuitions.
The development of the model has benefited enormously from die com­
ments and criticism of many of our colleagues of the FAP at IIASA. We want
to particularly acknowledge our mtellecmal debt to Michiel Keyzer widi whom
we have had many fruitful discussions. Odier colleagues whose con٧ibution
we want to specifically acknowledge are Csaba Csaki, Guenther Fischer, Klaus
Frohberg, Ferenc Rabar and Mahendra Shah. We also wish to diank Jan
Morovich and Laslo Zeold for computational assistance and R. Radhakrishna
and KJ^Ν. Murthy for die demand system a modified version of which is used
in die model.
Our profound dianks are due to die library staff of IIASA and of die Indian
Statistical Institute, Bangalore for dieir hearty cooperation in meeting widi our
requhements which were sometimes exacting.
We thank Maulik Parikh for helping us widi editorial corrections.
Finally for entering, revising and beautifying many versions of the various
chapters on the word processor, we diank Barbara Hauser, T.S. Mahesh Mohan
and B.S. Phaniraj. K. Arvind also helped us widi computer work. We thank
A. Ganesh Kumar for his help in proof-reading.
Bombay, December 1990 N.S.S. Narayana
Kirit S. Parikh
T.N. Srinivasan
Lisi of Tables
Chapter 2
Table 2.1: Sahent Features of Indian Economic Development
Table 2.2: Salient Features of Indian Agriculture and its Development
Chapter 3
Table 3.1: Zonal Weights and State-Zone Correspondence
Table 3.2: State Weights for Various Crops
Chapter 4
Table 4.1: Physical and Financial Flow Balances for the year 1980
Table 4.2: Physical and Financial Flow Balances for the year 2000
Table 4.3: Some Results of die Reference Scenario and Actual Data for
die year 1980 (1980-81)
Table 4.4: Average Annual Growth Rates of Selected Variables between
1960 & 1980 (actuals) and Growdi Rates between 1980 &
2000 in the Reference Scenario
Table 4.5: Average Annual Growdi Rates of Producdon and Demand over
1980-2000 in die Reference Scenario
Table 4.6: Bounds and Progressive Nature of Taxation
Table 4.7: Target Reahzation in REFl
Chapter 5
Per Capita Availability, Public Distribution and Imports of
Table 5.1: Foodgrains
Impact of Alternative Procurement and Distribution System on
Table 5.2
Selected Macroeconomic Indicators
Disuibution of Income and Food Energy Intake in the Refer­
Table 5.3
ence Scenario
Disuibutional Impact of Removing Present Procurement and
Table 5.4
Disuibution Policy
Disuibutional Impact of Ration to All — Which can be
Table 5.5
Resold
Lisi of Tables Xlll
Table 5.6: Disiribulional Impact of Subsidized Radon to All — No Resale
Permitted
Table 5.7: Distribudonal Impact of Subsidized Ration to Ail: No Resale
Permitted (With Same Population Distribution)
Table 5.8: Impact of Free Food Distribution to All on Selected Macro-
economic Indicators
Table 5.9: Distribudonal Impact of a Free Food Policy (Financed by
Changes in Tax Rate)
Table 5! 10: Distribudonal Impact of a Free Food Policy (100 kg of Wheat
Free to All) Tax Rate Fixed and Investment Adjusted
Chapter 6
Table 6.1: Exports of Traditional Commodi٧es (As Percentage of Total
Exports)
Table 6.2: Imports & Exports of Food and Fertilizers
Table 6.3: Interaction of Imports with the Government's Domestic Op­
erations: All Foodgrains
Table 6.4: Public Investment and Total External Assistance
Table 6.5: Impact of Alternative Trade Policies on Selected Macro-eco­
nomic Indicators
Table 6.6: Net Exports under Alternative Trade Policies
Table 6.7 Distributional Impact of Free Trade, FRT
Table 6.8 Distributional Impact of Self-Reliance, SFR
Table 6.9 Impact of Increased Capital Inflow on Selected Macro-eco­
nomic Indicators
Table 6.10: Net Exports
Table 6.11: Distributional Impact of Additional Aid for Non-Agricultural
Investment, LANR
Table 6.12: Distributional Impact of Additional Aid for Investment, LATR
Table 6.13: Distributional Impact of Additional Aid for Investment widi
Tax Rate Fbced, LATRX
Chapter 7
Table 7.1 Nature of Assets
Table 7.2 Impact on Growth and Rural Poor of Rural Works Programs
Table 7.3 Tax Rates on Non-agricultural Income
Chapter 8
Table 8.1: Macro-economic Impact of changes in Agricultural Terms of
Trade
XIV List of Tables
Table 8.2: Impact on Welfare due to changes in Agriculture Terms of
Trade
Table 8.3: Social Welfare Comparison widi Reference Scenario for the
year 2000
Chapter 9
Table 9.1 Macro-economic Impact of Fertilizer Subsidy
Table 9.2 Consumpdon, Market and Shadow Prices of Ferdlizer
Table 9.3 Production of Cereals
Table 9.4 Welfare Impact of Ferdlizer Prices Subsidy
Chapter 10
Table 10.1: Irriga٧on Potendal and Utilization (1950-90)
Table 10.2: Ouday and Development of Irrigation Potential
Table 10.3: Costs of Developing Irrigation Potendal
Table 10.4: Macro-economic Indicators
Table 10.5: Production Indicators
Table 10.6: Disuibudon of Population
Table 10.7: Equivalent Incomes
Table 10.8: Average Energy Intake
List of Figures
Chapter 1
Figure 1.1: Some Conceivable Effects of Pohcy Instruments
Chapter 3
Figure 3.1: A Schematic Outline of the Indian Agricultural Supply Sub­
models
Chapter 4
Figure 4.1: Problem of Prices in Comparing GDP's
Figure 4.2: The Notion of Equivalent Income
Figure 4.3: Relative Price of Agriculture in die Reference Scenario
Figure 4.4: Total and Sectoral GDP: Reference Scenario
Figure 4.5: Per Capita GDP, Equivalent Income and Calorie Intake:
Reference Scenario
Figure 4.6: Gross Cropped and Irrigated Area: Reference Scenario
Figure 4.7: Production of Cereals: Reference Scenario
Figure 4.8: Yields of Cereals: Reference Scenario
Figure 4.9: Production of Odier Food and Non-food Agricultural Products
Figure 4.10: Production of Dairy Products
Figure 4.11: Production of Bovine & Ovine Meat, Other Animal Products
and Protein Feeds
Figure 4.12: Production of Non-agriculture
Chapter 5
Figure 5.1: Welfare Comparison - Impact on Rural Populations of Subsi­
dized Ration to All
Figure 5.2: Welfare Comparison - Impact on Urban Populations of Subsi­
dized Ration to All
Figure 5.3: Consumption Choice Under Rationing