Farm Mechanisation, Agricultural Productivity and Structural Change in India: A State-Level Analysis of Post-Reform Period

Abstract: Agriculture in India is characterised by low productivity, and structural change has been slow and unconventional. Nevertheless, at state-level one can identify different patterns for these process. The attempt in this work has been to understand the linkages between farm mechanisation, agricultural productivity and structural change at the state-level during the post-reform period. The aim was to identify whether mechanisation can contribute to productivity growth and thereby structural change. We made use of the micro-data of India’s nationally representative surveys to estimate the three variables of interest. We also relied on a decomposition method to calculate the drivers of labour productivity growth. We find that mechanisation continues to be highly unequal among states, although there was a convergence during the last two & half decades. Not all structurally transformed states were mechanised. But the highly mechanised regions of Punjab & Haryana, are witnessing a sort of conventional pattern of structural with a growth in manufacturing employment. Their experience has important lessons for the low structurally transformed, low mechanised and low productivity regions of central and eastern India. Apart from labour-substitution, mechanisation also offers other demand linkages that directly contributes to the growth of non-farm sectors. It becomes an imperative for developing manufacturing sector for exploiting the demographic dividend that these languishing states currently possess.