Rural Economic Transformation


Bihar Vs Punjab : Agri-Evolution

In 2006, the APMC Act was abolished by the state of Bihar. By 2018 Bihar’s growth rate grew to be 13.3% while India’s total growth rate still remained at 7.5%.

In Bihar, as agriculture increased, other sectors grew as well. 

Although Punjab’s growth rate initially surpassed India’s, it’s still way behind. A contributor to this was the monoculture behaviour in the crops of paddy and wheat. 

  • Following shows the average economic growth for India and Bihar. As stated by Arvind Virmani (Economist), the second period witnessed more than double growth than the earlier one in Bihar. 
1993-94 to 2004-20056.85.3
2004-05 to 2011-128.311.7
2011-12 to 2019-207.513.3
  • In 2005-06, when Chief Minister Nitish Kumar came to power, if we take the long-term trend from 2004-05 to 2014-15, the compound annual growth rate has been increasing more than Punjab.
Bihar and Punjab growth rate of Agricultural GDP


  • Punjab has moved to the vicious cycle of wheat and paddy, while other states such as Maharashtra, Andhra Pradesh, Karnataka are moving on with vegetables, fruits, and other value-adding crops. The main reason can be that the following incentives are skewed in the favour of Punjab and Haryana and other states failed to meet all these major procurement.
  1. HYV seeds are only available for Paddy, Wheat etc.
  2. Subsidized supply of irrigation facilities and fertilizers
  3. Assured MSP purchase from State and Central agencies.
  • Continuous adoption of rice-wheat cropping system in North-Western plains of Punjab, Haryana and West Uttar Pradesh has resulted in depletion of ground water and deterioration of soil quality, posing a serious threat to its sustainability. Still Punjab is incentivised for paddy production in form of MSP and Subsidies. (The initial objective to give MSP was to give income support to farmers and security) 
  • Which eventually results in a surplus of these food products. Unless this combination is available for alternate crops no diversification can take place in punjab. 
  • Only 12 out of all states in India have APMC act as it was in the beginning. Private madies are Rythu Bazar in Telangana, Apni Mandi in Punjab and many more 
  • Farmers protesting against the bill are mainly Medium and Large scale farmers who are also said to be the middle mens. (From Punjab and Haryana)
  • Per capita income of Bihar has not increased prominently. (Need to explore more on this)
  • It is believed that, with Punjab being one of the leading producers in the agriculture sector it is also pulling down India’ Overall growth rate of GDP of agriculture.
Growth rate of GSDP states in Agriculture


We can conclude that the farmers protesting only come from the places of Punjab, Haryana and some parts of Uttar Pradesh, where due to heavy focus on paddy and wheat agriculture, causing depletion of resources, especially water resources and decrease in soil quality which further poses a problem for both long term and short term sustainability. This problem is also persistent due to the provisions that are skewed for this region. Farmers protesting currently are medium and large-scale farmers who are believed to be middle-men. 

Written by: Uttara Nigudkar and Gayathri Chandran

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