Technical Efficiency on Individual Farms in Northwest India

Abstract

During the pre-green revolution years in India, agricultural production, especially of foodgrains, was substantially below the growth in demand arising from income and population growth. Consequently, India required continual and substantial import of food grains under the Public Law (P.L.) 480 program [2, 29]. During the post-green revolution years, the country has built modest food reserves. But India is continuously faced with a challenge of feeding a fast growing population. Even during the post-green revolution period, due to occasional unfavorable weather, foodgrain production has fallen short of its demand, and India had to buy foodgrains from the world market with hard currency. The government is naturally concerned with maintaining the growth in agricultural production above the growth in potential demand. It has been encouraging research to evolve improved agricultural technologies, but it is a slow process. An equally important aim should be to promote production efficiency, at farm-level, under the existing technology. Consequently, economic policy in India has largely been concerned with the efficiency of agricultural production, alternative forms of land tenure, and agrarian organizations. A country like India, which has shortage of all factors of production except labor, obviously cannot afford to make an inefficient use of resources. It is, therefore, important to estimate the level of technical efficiency at the farm-level, and to identify the sources of such inefficiency. Such information is important for formulating appropriate policies for reducing the level of technical inefficiency. Since the release of data from the Farm Management Studies of the Indian Ministry of Food and Agriculture in the mid 1950s, numerous studies have been devoted to the