Академический Документы
Профессиональный Документы
Культура Документы
Assistant Professor in Agricultural Economics, College of Horticulture, Kolar, University of Horticultural Sciences, Bagalkot,
Karnataka, India
2
3
Subject Matter Specialist-Agricultural Economics, Market Intelligence Unit, Coffee Board, Ministry of Commerce and
Industry, Government of India, Bangalore, India
ABSTRACT
Economic growth could be incomplete without a regional balance. Agriculture sector plays a key role in
driving the economic growth. Therefore, regional imbalance in growth of agriculture would also be reflected in the
economy as a whole. Karnataka being one of the agriculturally important states of the country, disparities in growth
across its districts is evaluated in this paper. The convergence hypothesis states that the regions that lagged behind in
growth initially would catch-up with the rest and thus disparities could reduce over time. This hypothesis is tested for
convergence or divergence (low R2 and non-significant parameter) in the absolute convergence. But, the conditional
convergence results depicted that the states achieved convergence towards their own steady states at a rate of 1.5% per
annum and this process was negatively influenced by the two factors namely, proportion of commercial and plantation
crops area and proportion of irrigated area. Unit root test further supported the finding that higher growth among
regions with higher plantation crops area resulted in divergence across regions. Thus, it resulted in two convergence
clubs, those of poor and rich. This calls for a concentrated effort in agro-climatic regional planning to develop
Original Article
with three convergence tools and additionally with the unit root test. Prima facie, there was no indication of either
irrigation potentials of resource poor regions on priority so that farmers can undertake profitable enterprise and thus a
balanced regional growth.
KEYWORDS : Agriculture Growth, Disparity, Sigma Convergence, Absolute Convergence, Conditional Convergence
Received: Jul 28, 2016; Accepted: Aug 22, 2016; Published: Aug 26, 2016; Paper Id.: IJASROCT201609
INTRODUCTION
To strike a balance in growth (regional, sectoral, inter-personal, cultural etc) would be the objective of a
successful policy maker. The managers of Indian economy through various five year plans initiated discussion on
regional disparities in economic growth as early as in third and fourth five year plans. Taking clues from the
biased regional development behavior, the various governmental policies tried to even out such disparities.
The severity of such disparities being acute in rural areas, the government initiated programmes such as IRDP,
DADP, IAY, JRY and more recently MGNREGA. Some of these programmes were started as early as in 1970s
and 80s, but were not directly indicating their objective of addressing regional disparities.
Simultaneously, the public funds were also directed at developing the much needed infrastructure
facilities that were identified to be engines of development. As a part of policy response, for reducing
inter-regional disparities in agricultural growth, the agro-climatic regional planning (ACRP) was initiated in the
www.tjprc.org
editor@tjprc.org
76
year 1988 (Alagh, 1990). ACRP is a decentralized planning process for identifying specific resource strengths of a region
and develop plans for sustainable agricultural development. Regions with similar agro-climatic conditions were classified
into specific zones/regions, and a package for development of agriculture, in that region was suggested. Thus, it provides
scope for regional specialization in specific enterprises suitable to each region which gives ability to reduce the regional
disparities. Though such policies were devised to reduce disparities, the same was found to increase, especially during late
1990s.
Though the primary sector was declining in importance, north-western states of the country showed higher growth
of agriculture sector in the country especially between 1960 and 80 (Green Revolution period) (Bhalla and Tyagi, 1989).
Initially, the adoption of HYV technology was limited to the states with better irrigation facilities (Punjab, UP, Haryana
and Maharashtra) which then spread to the other states, partially reducing the level of disparity and further enabling
self-sufficiency in food grain production (Ghosh, 2006). Differences in infrastructure facilities, natural and manmade
resources and the differences in Government policy support also lead to disparities in the agriculture development across
regions (Venkatesh, 2000; Venkatachalam, 2003). The increasing urbanization, incomes, changing lifestyle is impacting
even the agricultural production resulted in a changed focus from traditional food grain production to high value
horticultural and livestock production in certain regions of India (Joshi, 2010). The policy shift in early 1990s seems to
have further increased disparities across regions (Rao et al.,1999; Ghosh, 2006 etc). The study of disparities across Indian
states for latest decade indicated increasing disparities (Somasekharan, Prasad and Roy, 2011) which is a cause of concern.
The analysis of disparities which, earlier, was focused across continents was then studied across countries and
states and now the focus has further come down to district level. The need for such a disintegrated analysis was highlighted
by Ahluwalia (2011). Agriculture sector has been the focus of such disintegrated analysis as well. With a contribution of
4.3 per cent (2009-10) to the national agricultural economy, the prevalence of disparities within Karnataka state, which is
agriculturally important state, was highlighted by Nanjundapppa (2003). The disparities are more because of the high
regional diversity, with as many as 10 agro-climatic zones which is a limitation for achieving balanced growth.
The composition of state economy showed a declining contribution (from 30.7% in 1999-2000 to 14.7% in 2009-10) of
agriculture sector. It is mainly due to the shift in the structure of economy, towards service sector and the boom of IT
sector
in
the
state.
Prevalence
of
disparities
within
the
state
was
reiterated
by
studies
(Nanjundapppa, 2003, Venkatesh,1999). It is quite known fact that the southern districts are generally better in terms of
infrastructure facilities (because of the developmental works of the then Kings ruling the region), which is mostly lacking
in the northern parts.
The prevalence of disparities was identified as early as in V Five Year Plan (1974-79) emphasized the need for
regional planning to reduce such imbalances. Further in both V and VI Five Year Plans reducing regional inequalities was
one of the major objectives. Though Hyderabad Karnataka Development Board (HKADB) was created as early as in the
year 1992, the region is found to be lacking in development yet. Also, the statistics show that the most important resource
for agriculture, the irrigation is more developed in north, which gives us an impression of its better development in the
region. One of the reports of the Board indicates that there is no parallel development of infrastructure facilities in the
region which puts the region in a development lagging condition and hence raising the doubt about uniform development
of the different districts of the state. Therefore, it requires a deeper analysis.
77
METHODOLOGY
The study has made use of the data on primary sector income (Net District Domestic Product) at current prices
published (District Income) by Directorate of Economics and Statistics (DES), Government of Karnataka. The per capita
agriculture income was arrived at by dividing with the respective rural population figures. The data was then deflated with
agricultural commodity price indices at 1980 prices for Karnataka state.
The methodology extensively used in the literature was that suggested by Barro and Sala-I-Martin
(Rao et al, 1999; Ghosh, 2006) which specifically examines development across regions over a period of time. Since this
methodology considers only initial and terminal point cross-section data and omits the intermediate data points in the
analysis, it has the lacuna of inconsistency. So, an alternative time-series methodology of univariate non-stationary
(unit-root) method was additionally employed in order to identify the districts converging to or diverging from the state
average path.
The convergence hypothesis says that, the growth rate in the districts with lower PCI should be higher than those
with higher PCI. This means that the inter-district differences in per capita output will reduce/disappear over time. This can
be tested with the help of 3 simple analytical tools viz., convergence, absolute convergence and conditional
convergence methods. While the first measure is a pure dispersion measure (standard deviation or coefficient of variation),
the second one employs simple linear regression with average growth in PCIA regressed on its base level values as below:
Gi,(t,t-) = [ln (Yi,t) ln (Yi,t-)] / = + ln (Yi,t-) + i,t
(1)
Absolute convergence prediction that initially poorer regions will grow faster than the rich ones depends on key
assumption that the regions differ in their levels of capital only. In reality, regions may differ in many other aspects. In
agriculture, things like climatic factors, technology adoption, credit availability, mechanization, market factors, labour
efficiency, literacy rate, etc., are dynamic. Hence these variables are included in the analysis and conditional convergence
is carried out by estimating the following equation.
k
(3)
j=1
Further, as said above, since the convergence hypothesis omits the intermediate data points, the time series unit
root approach has also be used in the analysis. This methodology also facilitates the classification of regions into two
groups. Under this framework, convergence requires real per capita output differentials across regions to be stationary.
Using this methodology, we examine the convergence hypothesis by evaluating the univariate time series properties of the
differentials of PCIA of each of the 20 districts relative to the state average. A test of null hypothesis of no convergence
(i.e., stationary) is undertaken as follows:
Ho: Xi,t = [ln(Yi,t) ln (Y*,t)]~I(1)
www.tjprc.org
editor@tjprc.org
78
Where, Xi,t is logarithm of per capita output of the ith district, relative to the state average; ln(Yi,t) denote logarithm
of the ith district PCI; ln (Y*,t) denote logarithm of the state average PCI; I(1) is integrated of the order one (non-stationary)
and I(0) is integrated of the order zero (stationary). The significance is tested using tow () test.
[R2 = 0.56]
(4)
The average spread of the PCIA for the study period was around 35.28 per cent with the trend showing two turns
(figure 1), as depicted in the equation. Thus, there is no clear trend in any one direction and the same needs to be probed
further.
Table 1: Coefficient of Variation of the Per Capita Agricultural
Income of THE Districts of Karnataka over Time
Years
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
CV
45.79
42.03
43.06
32.77
49.53
47.83
54.04
45.34
42.47
38.02
33.65
30.83
27.05
50.10
49.19
48.08
52.05
79
Figure 1: Coefficient of Varation of PCIA (1980-81 Prices) Over Time and Its Trend Line
Hence a regression analysis of average growth rate of the PCI on its base levels that depicts even the average pace
of convergence was attempted.
Gi,(t,t-) = 0.13* 0.017NS ln (Yi,t-)
(1.77) (-1.62)
(5)
[R2 = 0.12]
The low R2 apart from non-significant coefficients indicate that there are other variables that influence its growth.
But, despite non-significance the coefficient recorded negative sign indicating the possible convergence across the districts.
Since this analysis in itself does not suffice our purpose, further probing is done with conditional convergence. As per
Ghosh (2006), existence of conditional convergence signifies that the regions to converge only towards their own steady
states; the regional variations in agricultural performance may be explained in terms of regional variations in steady states.
Therefore, some of the variables influencing agricultural growth, identified from past literature, have been included in the
analysis.
Results pertaining to conditional convergence are represented in the table 2. Initially, when higher number of
variables were used in the regression analysis, higher R2 was recorded but only one variable was significant. Thus,
step-wise regression with backward elimination and forward addition were tried to find if there was any meaningful
improvement in the explanatory capacity of the equation. Also, there was chance of occurrence of multi-collinearity among
variables. So, this would greatly help to identify the explanatory variables that will have least correlation among them and
would represent a meaningful regression. The results of backward elimination in step-wise regression which gave
maximum number of significant variables along with better R2 was considered and the same has been represented in table
2. The table shows step-wise deletion of variables and finally ending up with two conditional variables (last iteration in the
table) having significant impact on the steady state growth. The variables having significant impact were commercial and
plantation crops as proportion of net sown area and proportion of net irrigated area. While the PCIA exhibited
convergence, the two conditional variables were found to be negatively impacting the convergence process. This can be
justified, as the regional imbalances in the distribution of irrigation and commercial and plantation crops may have resulted
in regionally imbalanced growth. The R2 value also was found to be convincingly higher at 0.64, justifying our analysis.
The coefficient of initial PCIA (0.015) indicates that the speed of convergence to be about 1.5 per cent per
annum and significant (at 10%). But, as said above, the inclusion of conditional variables to depict convergence implies
www.tjprc.org
editor@tjprc.org
80
convergence to different steady states and not to the state average. Also, this analysis provides only an indication of either
convergence or divergence, but cannot tell much about its long-term trend, because of the limitation of the methodology
which considers only initial and terminal year data ignoring the intermediate data points (lacking temporal dynamism)
Table 2: Stepwise Regression and Identification of Significant Variables Influencing the Dependent Variable
Iteration
II
III
IV
VI
0.10
-0.02
-0.01
-0.01
0.00
0.00
-0.07
-0.00
-0.00
0.09
-0.02
-0.01
-0.01
0.00
-0.07
-0.00
-0.00
0.06
-0.02
-0.01
-0.01
0.00
-0.07
-0.01
0.06
-0.02
-0.01
-0.01
-0.08
-0.01
0.10
-0.02
-0.01
-0.01
-0.07
0.07
-0.02
-0.01
-0.01
T-Value
0.71
-1.81
-1.72
-1.39
0.43
0.26
-0.98
-0.40
-0.32
0.69
-1.88
-1.79
-1.44
0.45
-1.04
-0.46
-0.28
0.79
-1.95
-1.85
-1.47
0.37
-1.13
-0.80
0.79
-2.02
-1.90
-1.49
-1.34
-0.96
1.56
-1.88
-2.87
-1.59
-1.15
1.23
-1.78
-3.56
-2.60
R2
0.64
81
Coefficient
Critical Value
Coefficient
Critical Value
Coefficient
Critical Value
Coefficient
Critical Value
Coefficient
Critical Value
t Trend
-6.08***
-4.80
-2.06
-3.31
-3.30
-3.31
-4.47**
-3.83
-4.18**
-3.76
intercept
-0.96
-2.70
-1.91
-2.67
-2.69*
-2.67
-3.02*
-2.67
-4.01***
-3.96
None
-1.67*
-1.60
-1.98**
-1.96
-2.81***
-2.72
-2.95***
-2.72
0.07
-1.60
editor@tjprc.org
82
Coefficient
-4.50**
-2.15
-2.39**
Critical Value
-3.83
-2.67
-1.96
Coefficient
-3.49*
-3.68*
-0.60
Chickmagalur
Critical Value
-3.34
-2.69
-1.61
Coefficient
-2.24
-1.31
0.230483
Chitradurga
Critical Value
-3.31
-2.67
-1.61
Coefficient
-1.78
-1.88
-0.41
D.K.
Critical Value
-3.31
-2.67
-1.61
Coefficient
-3.51*
-3.46**
-2.66**
Dharwad
Critical Value
-3.34
-3.10
-1.96
Coefficient
-3.44***
-2.58
-1.89***
Gulbarga
Critical Value
-3.31
-2.67
-1.61
Coefficient
-3.10
-3.53**
-3.70
Hassan
Critical Value
-3.36
-3.12
-1.60
Coefficient
-3.00
-3.16**
-0.14
Kodagu
Critical Value
-3.31
-3.07
-1.61
Coefficient
-2.08
-1.76
-1.80***
Kolar
Critical Value
-3.31
-2.67
-1.61
Coefficient
-3.30
-3.32**
-2.48
Mandya
Critical Value
-3.31
-3.07
-1.61
Coefficient
-3.32***
-2.59
-2.66
Mysore
Critical Value
-3.31
-2.67
-1.96**
Coefficient
-2.95
-3.10**
-0.55
Raichur
Critical Value
-3.34
-3.10
-1.61
Coefficient
-3.16
-1.50
-1.70*
Shimoga
Critical Value
-3.31
-2.67
-1.60
Coefficient
-5.23***
-5.28***
-0.15
Tumkur
Critical Value
-4.67
-3.92
-1.61
Coefficient
-3.39*
-3.43**
0.27
UK
Critical Value
-3.31
-3.07
-1.61
Note: ***, ** and * indicate significance at 1, 5 and 10% level of significance
Bijapur
CONCLUSIONS
The efforts of planning process, both at the national and state level, has been to achieve balanced regional growth.
The convergence hypothesis, assuming that the regions differ only in capital, hypothesizes that the regions converge over
period of time with the efficient use of the unused resources. But, the preliminary investigation (absolute convergence) did
not show any significant trend. Further probing with conditional convergence accounting for regional factors showed that
there was convergence at the rate of 1.5 per cent per annum. But, the uneven distribution of irrigation facilities and
commercial and plantation crop area had negative bearing on the convergence process. Also, this implies that the regions
do not converge to one steady state. Thus, the time series test of stationarity showed that, as many as 11 districts converged
to the state average and resulted in the formation of convergence club. These 11 districts were important with respect to the
agricultural development in the state and depicted a meaningful classification.
Since even Karnataka state has adopted agro-climatic regional planning, it would be appropriate to consider these
factors in planning and encourage growth of profitable enterprises, with higher vigour. So, the planning process may have
to focus more on the districts with lower PCIA, in terms of development of irrigation potentials, by which the farmers will
be able to grow better and remunerative crops. With the dwindling surface water and exhausting ground water resources, it
may be a real challenge for the policy makers to attend to such needs.
83
REFERENCES
1.
AHLUWALIA S. MONTEK, 2011, Prospects and Policy Challenges in the Twelfth Plan. Economic and Political Weekly,
46(21):88-105.
2.
ALAGH, Y.K., 1990, Agro-climatic planning and regional development. Indian Journal of Agricultural Economics, 45(3):244268.
3.
BHIDE SHASHANKA, KALIRAJAN, K.P. and SHAND, R.T., 1998, Indias agricultural dynamics weak link in development.
Economic and Political Weekly, 33(39):A118-A127.
4.
CHAND RAMESH, RAJU S.S. AND PANDEY L.M., 2010, Effect of global recession on Indian agriculture. Indian Journal of
Agricultural Economics, 65(3):487-496.
5.
CHOI CHI-YOUNG, 2003, A reexamination of output convergence in the U.S. states: toward which level(s) are they
converging? Journal of Regional Science, 44(4):713-741.
6.
DASGUPTA DIPANKAR, MAITI PRADIP, MUKHERJEE ROBIN, SARKAR SUBRATA and CHAKRABARTI SUBHENDU,
2000, Growth and interstate disparities in India. Economic and Political Weekly, 35(27):2413-2422.
7.
DHOLAKIA H. RAVINDRA, 2003, Regional disparity in economic and human development in India. Economic and Political
Weekly, 38(39):4166-4172.
8.
GHOSH BUDDHADEB, MARJIT SUGATA and NEOGI CHIRANJIB, 1998, Economic growth and regional divergence in
India. Economic and Political Weekly, 33(26):1623-1630.
9.
GHOSH MADHUSUDAN, 2006, Regional convergence in Indian Agriculture. Indian Journal of Agricultural Economics,
61(4):610-629.
10. GOVERNMENT OF INDIA, 2010, Agricultural Statistics at a Glance, 2010. Ministry of Agriculture, Government of India,
New Delhi.
11. GOVERNMENT OF KARNATAKA, 2003, Report of Nanjundappa Committee on Regional Imbalances in Karnataka.
Department of Planning, Government of Karnataka.
12. JOSHI, P.K., 2010, Crop diversification in india: Nature, Pattern and drivers, Chapter 5, Agriculture, Food Security, and
rural development, Asian Development Bank, Oxford Publishing.
13. KUMAR ANJANI, SHINOJ, P. AND JOSHI, P.K., 2010, Global economic crisis and Indian agriculture: impacts and
perspectives. Indian Journal of Agricultural Economics, 65(3):508-519.
14. MARJIT SUGATA and MITRA SANDIP, 1996, Convergence in regional growth rates Indian research agenda. Economic
and Political Weekly, 31(33):2239-2242.
15. RAO GOVINDA, M., SHAND, R.T. and KALIRAJAN, K.P., 1999, Convergence of incomes across Indian states A divergent
view. Economic and Political Weekly, 34(13):769-778.
16. RAVI, H.S., 2008, Statistical investigation of convergence of district incomes in Karnataka. M.Sc. (Statistics) Thesis
(Unpublished), University of Agricultural Sciences, Bangalore.
17. SARKAR PARABJIT, 1999, Theory of convergence and real income divergence 1950-92. Economic and Political Weekly,
34(8):500-504.
18. SOMASEKHARAN JAYASEKHAR, PRASAD SYAM and ROY NIRMAL, V.P., 2011, Convergence Hypothesis: Some Dynamics
and Explanations of Agricultural Growth across Indian States. Agricultural Economics Research Review, 24(2):211-216.
www.tjprc.org
editor@tjprc.org
84