Rainfall shocks, market infrastructure, and agricultural price stability: Evidence from tomato, onion, and potato markets in India

Ashima Goyal () and Anas Khan ()
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Ashima Goyal: Indira Gandhi Institute of Development Research
Anas Khan: Indira Gandhi Institute of Development Research

Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India

Abstract: Tomato, onion, and potato (TOP) prices are a recurrent source of food inflation in India. In this paper, we ask whether market depth attenuates the pass-through from rainfall shocks to TOP inflation. We build a monthly district panel from queue-based Agmarknet downloads for 2018-2025, combine it with IMD rainfall and district eNAM mandi counts, and estimate district and month-year fixed-effects models. The main TOP composite uses 253 districts with at least 60 months of price coverage for all three crops. Contemporaneous excess rainfall raises TOP inflation by about 0.011 log points, with a further 0.010 log-point effect after one month. Denser mandi networks weaken this pass-through in continuous-rainfall specifications, marginal-effects calculations, onion regressions, and specifications based on TOP-trading mandis. State reform scores also attenuate excess-rainfall pass-through, while startup-stock interactions do not survive in the broader sample, consistent with startup ecosystems not yet having reached the scale needed to buffer local price shocks. The broader evidence therefore points to market depth and reform quality, rather than startup accumulation alone, as the more credible buffers against TOP price shocks.

Keywords: food inflation; rainfall shocks; eNAM; mandi density; agricultural markets; India (search for similar items in EconPapers)
JEL-codes: E31 Q13 Q18 Q54 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2026-07
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