Diversification of Indian Agriculture: Composition, Determinants and Trade Implications

The pattern of diversification across states/crops in India has beenschematized and various determinants of diversification have beendeciphered. To objectively confer the empirical resonance, values ofSimpson index have been estimated. The diversification index (SID) hasbeen found to range from 0.47 (WB) to 0.90 (Karnataka) in 1990-91 andfrom 0.40 (Orissa) to 0.92 (Karnataka) in 2000-01. The increase indiversification Index signifies shift towards non-foodgrain crops. InKarnataka, though the Index has increased, but the similar increases inarea under foodgrain imply shift from coarse to fine cereals. Agriculturaldiversification is influenced by a number of infrastructural and technologicalfactors. The coefficients have indicated that the presence of electricityand road density are negatively associated with the diversification. In theyear 2001-02, large share of export earnings has come from non-traditionalitems, namely rice, fruits, vegetables, livestock and marine products,signifying positive boost to diversification. Indian agriculture has witnesseddiversification with impressive improvements in the shares of livestockand fisheries sectors in the total income from agriculture. Within the cropsector, the diversification has largely been in favour of non-foodgrainscrops in most of the states. However, diversification in these states hasnot been essentially for income generation, but also for the risk-mitigatingproposition. However, harnessing the potential of diversification presupposesgradual restructuring of diversification hindering marketinstitutions, infrastructure and quality standards.