Performance of Indian Cotton Sector- An Econometric Analysis

Abstract

Cotton is a high commercial profile crop serving as a lifebelt crop for millions. It is a predominant crop under cultivation in a large spectrum since the ancient period. Globally it is a significant income earning crop hence aptly termed as White Gold. India is a leading cotton producer, exporter, and consumer in the world. It has surpassed China’s cotton production in 2021 and stands first in world cotton production. But India’s cotton productivity is 466 kg/ha very low than the global average cotton productivity; ranking 42nd in world productivity. Cotton is cultivated in an area of 12.35 million hectares with a production of 5.79 million metric tonnes. The present study aims in estimating the growth rate and the factors influencing cotton acreage and production in India for the last four decades of 1981-82 to 2020-21. The compound growth rate was examined using exponential growth function and instability by Cuddy Della Valle instability index in three different periods i.e Period I 1981-82 to 2001-02 (Pre introduction of Bt), Period II 2002-02 to 2020-21(Post introduction of Bt) and Overall period (1981-82 to 2020-21).The data used in current study is secondary in nature and collected from sources namely Directorate of Economics and statistics, India stat and from FAO. The acreage and supply response was estimated using the Nerlovian double-lagged adjustment model. The findings revealed that a higher growth rate and instability have been witnessed after the introduction of Bt technology in India which symbolizes the magnanimous role of Bt technology in the Indian cotton sector. The responsiveness of cotton area towards the lag cotton area, cotton MSP, rainfall and lagged export price stands significant whereas cotton supply response is highly triggered by lagged cotton production, rainfall and Bt technology.