Measurement of Production Efficiency: A Case of Indian Agricultural Production in Post Reforms Period

The paper examines the production efficiency of agricultural system in regions of India using state level data for the period 1990-91 to 2004-05 and for 2005-06 to 2013-14. Stochastic production frontier model using panel data, as proposed by Battese and Coelli (1995), has been used for estimating the efficiency variations taking an integrated effect model into consideration. State level mean efficiency estimates ranges from 0.9660 to 0.4369 during 1990-91 to 2004-05 and from 0.8648 to 0.4805 for 2005-06 to 2013-14. The statistically significant efficiency variables are rate of rural literacy, rate of rural technical education, total state road length per unit of area and share of agricultural NSDP to state NSDP and the major inputs were net irrigated area and consumption of pesticides for the period 1990-91 to 2004-05. For the period 2005-06 to 2013-14, institutional credit, consumption of fertilizers and consumption of pesticides shares a significant and positive relation with the level of production. The total state road length per unit of area and share of agricultural NSDP to state NSDP are found to reduce inefficiency in agricultural production.