Price Distortions in Indian Agriculture

Abstract

The current study is about estimating the extent to which domestic prices of major Indian agriculture commodities deviate from their corresponding free trade reference prices. The free trade reference prices are the estimated export-parity reference prices in cases of exported commodities and import parity reference prices in cases of imported commodities. The deviation between domestic and free trade reference prices is termed as “distortion” which can result from price- and trade-related policies. The extent of price distortions is analyzed using estimates of the “nominal rates of protection” (NRPs) and “nominal protection coefficients” (NPCs). The estimates are at the wholesale market level. The study spans 15 agri-commodities, 11 Indian states that are the major producing states of the identified commodities, and 5 ports through which the majority of trade of identified commodities happens. The study period is 10 years, 2004–05 to 2013–14.