Is Crop Diversification Impacting the Trade Basket of the Indian Economy?

Abstract

Agriculture is important in the Indian economy, with more than half of the rural population. Agriculture is imperative for the Indian economy, with over half of the rural population relying on agriculture and interrelated activities as their foremost source of income. The introduction of New Agricultural Technology in the mid-1960s brought about significant changes in Indian agriculture, leading to further alterations in the following years. Since the 1990s, there has been a perceptible growth in diversification within the agriculture sector in India. Farmers have adopted crop diversification to reduce their vulnerability to risks and challenges in agriculture while also aiming to lift their farm income. The alteration towards more profitable and high-value crops in Indian agriculture reflects deviations in the country's consumption patterns. The study highlights the impact of crop diversification on trade, which is measured by using the share of the agriculture sector in India’s exports and imports. To check the impact of crop diversification on agriculture sector growth, a share of agriculture in GDP has been taken. The study's objective is to check the direction of the impact of crop diversification on the variables: agriculture's contributions to the GDP and India’s exports and imports. The Shannon index is used to identify the crop diversity in India. Share in GDP, import, and export are taken from various Government sites such as the Department of Commerce, Ministry of Statistics, and program implementation and agriculture statistics at a glance. The results are analyzed by using a multiple linear regression model. The results show a positive impact of crop diversification on GDP and Exports and a negative impact on imports..