Technical Change and Market Price Effects on Income Distribution in Indian Rice Economy

07/02/1998

Technical Change and Market Price Effects on Income Distribution in Indian Rice Economy

Namboodiri N V

Working Papers

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1432 Considering the Marshallian concepts of producers' and consumers' surplus this study examines the total economic gain from technical change in rice production in India and its distribution among producer-cum consumers (PCC) and non-producer consumers (NPC) at two points of time viz., triennium ending 1982-83 and 1994-95. These are examined separately for those states where rice is multi-season crop and those states where it is mono-season. The total economic gain has increased by four-fold between 1982-83 and 1994-95. The NPC are the major beneficiary in both the periods and more so in states where rice is a mono-season crop. However the relative share of PCC in total economic gain has improved significantly in early 1990s. further the relative shares of both PCC and NPC have improved for the rate of marketed surplus below 25 per cent in both mono-and multi-season states. The sensitivity of rate of marketed surplus and supply function shift showed that the NPC are the major beneficiary from future rightward shift in supply curve assuming constant demand and supply elasticities. The study suggests that while non-product price policies encouraging technical change and market infrastructure development would be beneficial to both PCC and NPC, the rice price support would be needed once technical change occurs to protect the relative share of the former, i.e., producer-cum consumer.

IIMA