Determinants and Development Implications of Foodgrains Prices in India, 1949–1964

John W. Mellor and Ashok K. Dar

American Journal of Agricultural Economics, 1968, vol. 50, issue 4, 962-974

Abstract: A price index for foodgrains in India for the period 1949–1964 is estimated as a function of a set of real demand and supply variables and the money supply. More than 80 percent of the variation in the foodgrain price index is associated with variation in these independent variables. The upward trend in foodgrains prices is associated prmarily with expansion of the money supply. There is little evidence of government foodgrain price policy having affected the trend of relative agricultural prices. The coefficient on the lagged supply-demand variable suggests that year-to-year changes in farmers' storage stocks are an important determinant of foodgrains prices in any one year. The implications of these findings to the relation between agricultural and industrial growth, monetary and fiscal policy, and agricultural price and buffer-stock policy are discussed.

Date: 1968
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