Pathways of agricultural transformation: A comparative analysis of Punjab and Bihar

This paper discusses the process of structural transformation in Punjab and Bihar. These states lie at the extremes of the continuum of economic development in India-Punjab is at an advanced stage of structural transformation and it has the highest per capita income and lowest incidence of poverty, while the reverse holds true for Bihar-but agriculture is an important economic sector in both states and holds promise for future growth. In Bihar, agricultural growth is driven by technological change and diversification towards high-value crops; in Punjab technological change and price increases drive growth. The area expansion-through an increase in cropping intensity-has also contributed to growth in both states; however, the prospects of area-driven growth are limited, especially in Punjab, because the supply of land is fixed. Further, price-driven growth, as in Punjab, is unlikely to sustain in the long run. In Bihar, the recourse is to exploit the potential of existing and frontier technologies by investing in agricultural research and extension systems and strengthening institutions that link farmers to remunerative markets. In Punjab, the need is to diversify the crop portfolio from staple food crops to high-value food commodities that consume less water and to reorient the research agenda towards crops that can profitably substitute water-guzzling crops.