Diversification and its Determinants: A Search for Alternative Income and Agricultural Development in Eastern India

Abstract

The eastern region of India, comprising the states of Bihar, Jharkhand, Assam, Odisha and West Bengal, is one of the most backward regions of the nation. This region occupies about 21.85% of geographical area and supports 34% of the population of the country. Agriculture is the mainstay of economy in the region. About 67% of the cultivators belong to marginal group and over 75% of their earnings are utilized to ensure their food security. Issues related to diversification have been discussed by researchers for a long period and they have been trying to relate diversification to the developmental prospects and various factors responsible for it. Despite this, the eastern region has rich natural resources i.e. fertile land, abundant ground water (145.12 BCM), however, the pace of agricultural development is very slow. In the present study, an attempt has been made to measure diversification using Herfindahl- Hirschman index, known as the most popular method, it was used to measure extent of diversification. The regression model was applied to access the determinants of crop diversification in the region. The study is based on secondary data collected from various published sources from 2001-02 to 2014-15 i.e. for a period of 14 years. The results revealed that in the region, the diversification for the study period was observed very low in almost all the states under study and for the eastern region as a whole. The study pinpointed the fact that despite the rich natural resources, its potential could not be harnessed from the point of view of improving agricultural productivity, poverty alleviation and livelihood improvement. Strengthening of crop diversification depends on market and taking care of production risks through technological support, quality input supply, more insurance coverage and establishment of modern storage-processing centres in the region. Keeping in view the rich natural resources and hidden agricultural development opportunities in the region, government has already taken initiative for Second Green Revolution from the region, however a strong policy push up towards instilling confidence among the farming community is needed in this direction.

Keywords: Diversification, Herfindahl Index, Second Green Revolution, Eastern India, poverty alleviation

JEL Classification: O13, O21, Q1, Q16, Q18