Economic analysis and supply response of rice cultivation in India: Insights from NITI Aspirational districts

Rice is a staple food crop and a critical economic commodity in India, supporting the livelihoods of millions, including small and marginal farmers. Despite being the world's second-largest rice producer, India faces significant productivity gaps, with yields 30–60% lower than in other developing nations. This paper investigates the economics of rice cultivation across aspirational districts in Chhattisgarh, Odisha, and Telangana during 2018–2022. Using panel data from the Cost of Cultivation Scheme, it examines factors such as gross income, input costs, and yield variability. The findings highlight the disparity in costs and efficiencies between states, revealing Odisha's labor-intensive practices, Telangana's mechanization, and Chhattisgarh's balanced cost structure. The Odisha state generally has higher the labor Costs (% LC to TC) was observed Odisha districts report significantly higher labor costs, e.g., Gajapati (55%), reflecting labor-intensive practices and Chhattisgarh has moderate labor costs (21–33%). Mechanical Costs (% MC to TC) ranges from 10% to 24%, with Telangana showing the highest (24% in Bhoopalpalli). A dynamic supply response model employing the Generalized Method of Moments (GMM) indicates that factors such as fertilizer cost, seed value, and irrigation expenses significantly influence acreage decisions. The study confirms the higher elasticity of rice production in the long run, driven by investments in inputs and infrastructure. Policy recommendations include improving irrigation efficiency, promoting high-yielding seed varieties, and strengthening market linkages to enhance productivity and farmer incomes. This research contributes to sustainable agricultural policy design, aligning with India’s goal to double farmer incomes and achieve the Sustainable Development Goals by 2030.