Determinants of Foodgrain Prices in India: An Empirical Study, 1961-83

This paper attempts to analyse the importance of agricultural input costs in the determination of foodgrain prices in India. The analysis pertains to the period 1961 through 1983 during which agriculture and in particular food production has become input intensive. Consequently, technology (yield) and input costs are expected to play an important role in the explanation of foodgrain prices. The present study analyses the differential price behaviour in the two sub-periods 1961-62 through 1969-70 and 1970-71 through 1982-83. It reveals the importance of money supply to GDP ratio, representing demand factors and stocks of food-grains to public distribution, representing supply aspects in both the pre and post green revolution periods. However, in the later period, yield and agricultural input costs have as expected, turned out to be of considerable importance.