Aspects of the Political Economy of Crop Incomes in India

Abstract

This article intends to evaluate at the farm level, the nature of variation of output prices and input costs in agriculture through the lenses of socio-economic class differentiation. Official systems of the calculation of agricultural costs in India have evolved—with respect to their methodological sophistication and complexity—continuously since the early years of India's Independence. At present, there is a three-tiered system of calculation of input costs for crops, ranging from a base calculation of paid-out costs to a calculation that takes into account the shadow prices of family labor and supervision costs as well as other categories of imputed costs. The study uses detailed information from a unique dataset on agricultural outputs, prices and cost of cultivation for paddy and wheat in five villages of three states of India to (1) estimate actual costs of cultivation and the extent to which minimum support price as declared by the Government of India cover these costs and (2) examine costs of cultivation across socio-economic classes of cultivators. Official statistics deal only with averages across states and all classes, thus ignoring the sharp socio-economic differentiation and inequality prevalent in the Indian countryside.