Agriculture Reference
In-Depth Information
Indicators of access to information have improved as well. In 1970, national
averages of telephone, television, and radio ownerships were 2.70, 0.05, and
31.05 per thousand people, respectively (Table 3.1). Putting the numbers differ-
ently, only 1 of 370 people had a telephone, 1 of 20,000 people had a television,
and 1 of 32 people had a radio. Clearly, infrastructure for information flow was
inadequate, making it hard for government agencies to coordinate across states,
let alone for private traders to conduct efficient arbitrage. By contrast, in 2000
almost every fifth household had access to a phone line, every third household
owned a television set, and every other household could listen to a radio. 5
The most remarkable improvement is the spread of mobile phones to re-
mote areas. On average, India added 2-3 million mobile phones a month dur-
ing 2005-06, with a peak of about 6 million in October 2006. The popular cel-
lular phone company, Nokia, reportedly sold more than 400,000 handsets in a
single day on October 19, 2006, which is four times higher than its previous
record of 100,000 phones in a day (Srivastava 2006). This increase is a very pow-
erful demonstration of overcoming information asymmetry and making mar-
kets more efficient.
Risk Mitigation and Technology Promotion
When India embarked on promoting Green Revolution technologies, domestic
markets were poorly integrated, insurance and credit markets were either miss-
ing or incomplete, and farmers operated in a highly uncertain production and
marketing environment. These factors greatly increased the risks of adopting
the new technology. The challenge was real. In 1967, the first time it adopted
HYVs on a large scale, India harvested 17 million tons of wheat, 5 million tons
more than its previous high of 12 million tons. The country was poorly equipped
to deal with such a surge in production, and many schools in rural Punjab were
closed to store the grain. Policymakers' immediate response to this new chal-
lenge was to effectively enforce floor-price guarantees and to invest in storage
capacity. The policy worked in subsequent years and received widespread pub-
lic support. 6
However, times have changed. HYVs now cover more than 80 percent of
all area sown to wheat and rice at the national level (Table 3.2). In the main sur-
plus states of Punjab and Haryana, the HYV area reached 90 percent of total
area by the 1980s. 7
There can be little doubt that farmers have mastered the
5. All household-level calculations are based on the assumption that an average household
consists of five members and the ownership distribution is normal.
6. The policy was subsequently considered to be a variant of forward pricing, one that would
avoid issues of moral hazard and adverse selection, which are common challenges in instituting fu-
tures markets in developing countries (Stiglitz 1987; Islam and Thomas 1994).
7. Conditions essential for growing HYVs, such as irrigation facilities and low probability
of flooding, constrain cultivation of HYV but not the traditional varieties. Therefore, the national
averages underestimate the true level of technology adoption.
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