Title : Is productivity a major constraint in India’s competitiveness in the global agricultural commodity market?
Abstract:
Productivity primarily determines the competitiveness of a country. Countries with high productivity can become highly competitive in the global market and enhance their export revenues. On the other hand, productivity shocks can worsen the commodity price dynamics in the domestic market and affect the competitiveness of the country. Role of productivity has not been extensively analysed in agriculture trade worldwide and especially in India. Hence, an attempt is made to understand the role of productivity in agricultural exports of India through Vector Error Correction Model (VECM). Competitiveness of the nine major agricultural commodities exported from India has been analysed to understand the role of productivity in influencing exports. As a first step, the trends in productivity of the nine commodities in India and leading producing and exporting countries globally is ascertained and compared. Then the impact of productivity on exports is analysed using regression models. The results shows that there is a long run relationship between productivity and exports and a percent increase in the productivities of Rice, Wheat, Sorghum, Groundnut, Sugarcane, Millets, Tea, Coffee, and Bengal gram will increases their exports by 2.95 percent, 10.98 percent, 24.21 percent, 1.11 percent, 5.14 percent, 1.88 percent, 1.85 percent, 5.23 percent, 18.51 percent, 7.84 percent, respectively, in India. The productivity trend analysis and CAGRs have shown that India has performed relatively well in different time periods (1961 – 2020, 1961 – 1990, 1991 – 2020 & 2006 – 2020) compared with other major producers and exporters of selected agricultural commodities. Overall analysis of the data and the literatures have shown that sustainable cultivation practices and supportive government policies towards viable productivity enhancement measures can improve competitiveness of India in the global commodity market.
