At the national level, however, the ToT indices are computed separately by the Commission for Agricultural Costs and Prices (CACP) and the Directorate of Economics and Statistics (DES) in the Union agriculture ministry. This is done using two different methodologies and two different base periods. But the trends depicted by these two computations move in tandem. Besides, these computations are averages at the national level, which conceal a great deal of variations across the states in terms of agricultural growth, differing agro-climatic conditions and production patterns, farm mechanisation, capital formation, changes in poverty levels and overall differing terms of trade for agriculture.

In the absence of such state-level data, the Jaipur-based Institute of Development Studies (IDS), in collaboration with the Australian Centre for International Agricultural Research (ACIAR), has computed certain crop- specific ToT indices for the states and has reached certain astounding conclusions.

The study, conducted under the guidance of former CACP chairman and present IDS director, SS Acharya, felt that unless corrective steps were taken to improve the ToT in time, the disparities in farm incomes between irrigated and high-rainfall regions and dryland areas, as also between resource-rich and resource-poor farmers would grow. The study cautioned that the ToT for pulses and oilseeds-growing farmers and regions would deteriorate and that of those growing rice and wheat would improve.

The findings of the study further bring home the need for computation of ToT for agriculture at the state level. These computations could help figure out whether the ToT in a particular state would actually benefit agriculture. These would also help the policy-makers to take cue from the readings and create a favourable climate for farmers in the form of intervention. The production and productivity of agriculture depends a lot upon what remunerative prices a farmer gets for his produce. The ToT indicates this.

One of the approaches used in the IDS-ACIAR study to analyse the behaviour of the ToT was to work out the ratio of implicit price deflators for GDP from agricultural and non-agricultural sectors to represent the index of ToT at the state level. This again is a gross method of estimation. The states are in a better position to construct a series of ToT indices of their own which can be of help to researchers and policy-makers.

The IDS-ACIAR study showed that the ToT for all crops in almost all the states revealed wide inter-year fluctuations. The ToT for paddy in all major states, except Tamil Nadu, recorded an increasing trend. During the nineties, the ToT in Haryana were relatively higher and in Bihar relatively lower than in other states. The ToT for wheat in all the states recorded an increasing trend and these have remained lower in Haryana and Punjab and higher in Gujarat. For coarse cereals, the ToT in almost all the states showed an increasing trend. These have remained relatively better in Gujarat and Rajasthan than in other states. The ToT for pulses improved during the second half of the eighties but deteriorated again during the first half of nineties.

The ToT for groundnut, sesame and mustard was the same as pulses, with an improvement during the second half of the eighties and deterioration during the nineties. For both pulses and oilseeds, the average of indices of ToT in all the states for the first half of the nineties was higher than that for the first half of the eighties. The ToT for cotton showed an increasing trend in all the states except Maharashtra where the monopoly procurement scheme is in vogue. The ToT for jute revealed a worsening trend in West Bengal whereas that for sugarcane in Uttar Pradesh revealed a consistently increasing trend.

The study suggested that while constructing the ToT indices at the state-level, there was need to take into account hired labour as one of the components of index of prices paid by farmers. There was also need to normalise the indices of prices paid by farmers on the pattern of normalisation of farm harvest prices. Also, state-level series on ToT based on the CACP and DES approach should also be generated.

With the help of the state-wise series on ToT and investment, further analysis is required to isolate the impact of these and technological, institutional and infrastructural factors on agricultural growth, employment and rural poverty.