Food security and government interventions: A study of Indian grain markets

Abstract

This study examines the future of Indian food security in light of possible liberalization of its agriculture sector. Demand for major food grains such as wheat and rice is projected after taking into account possible dietary changes due to income growth, urbanization and other demographic changes. Policy Analysis Matrix (PAM) indicators are constructed to predict changes in supply patterns in the case of reduced government intervention. The projected demand growth suggests faster increases in per capita wheat consumption due to strong income growth and urbanization whereas per capita rice consumption is projected to level off in the next few years and then will likely decline steadily for the remainder of the projection period. This indicates that Indian wheat production may need to grow at a much faster rate than rice production in order to remain self-sufficient in the future. Based on the PAM ranking, this may be possible under reduced or no government interventions because of the comparative advantage of wheat over rice in the major growing regions.