Impact of Liberalisation Measures on India's Coffee Sector:An Economic Analysis

This paper makes a descriptive analysis of the impact of liberalisation measures on India's coffee sector in terms of recent changes in production, consumption, marketing, pricing and exporting of coffee. As a background to this description, corresponding changes in world coffee are analysed. This analysis implies that the: (i) recent changes in India's coffee sector cannot be strictly and solely associated with the domestic liberalisation measures since the simultaneous global changes have been of much influence on the domestic coffee situation; (ii) growers and marketing agents have been reaping windfall profits Which may not be conducive to long run production and production condition, especially when output prices start falling in the presence of downward inflexibility of factor prices; (iii) market prices have steeply gone up for domestic consumers, resulting in a loss of domestic consumption/demand; and (iv) complementary government policies, such as export tau policy and foreign exchange rate policy, in general, have been favourable for growers and exporters in the domestic coffee sector as well. These implications are useful for (a) understanding of the nature and direction of recent policy changes, and (b) formulating alternative future policy interventions in India's coffee sector.