Relative Efficiency and Technological Change in Paddy Cultivation:Indian Experience

The paper examines relative efficiency by adopting a different approach, under which differentiated groups of farmers on the basis of yield and unit cost (i.e. technical and economic efficiency) have been studied in cross sectional framework in each state. The influence of the technological change on relative efficiency is being captured through yield variations among different efficiency groups. The most technical efficient farmers had achieved the maximum yield at higher unit cost vis-a-vis the most economic efficient farmers; for, they appeared to be more interested in maximising yield rather than reducing unit cost. Whereas, the most economic efficient farmers had obtained higher yield, but unit cost happened to be much lower as compared to the least economic efficient farmers as well as to the most technical efficient ones. This suggests; (i) the influence of technological change on input use efficiency is more pronounced among the most economic efficient groups; (ii) there is scope to reduce unit cost among the most technical efficient farmers; and (ii) there is also scope to raise yield with lower cost of production, under which the technology would play an important role. The influence of the technological change on unit cost has come up sharply in time series analysis. The significantly negative regression coefficients of unit cost on yield during the entire period of study in most of paddy producing states give supportive evidence to the fact that technological changes, while raising yield, had reduced unit cost of paddy in the country. However, the process was not smooth in the sense that in the initial stage of technological development during early seventies, more yield was obtained at higher unit cost, but when the technology became well spread in terms of area coverage along with more use of purchased inputs like fertiliser, higher yield resulted in lower cost of production.