ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Intersectoral Terms of Trade Revisited

R Thamarajakshi This paper examines the performance of agriculture in the Indian economy in the context of changing trends in the commodity terms of trade between agriculture and the rest of the economy. Aggregate terms of trade, it is argued, do not seem to enter as such in the calculus of farmers' production decisions. On the other hand, real factors which promote growth of crop yields and which impart relative stability to agriculture have a deciding influence on profitability of agriculture. Perhaps the causality is from production to terms of trade THE subject of terms of trade between agriculture and rest of the economy is an area of enduring interest to development analysts. There are changing and complex relations between the sectors in the process of growth. Changes in terms of trade are an aspect of changing intersectoral relationships. When economies develop, demand patterns diversify and production patterns adjust to these demand patterns leading to structural changes in work force and gross domestic product. Consequently, commodity terms of trade also change in the course of development. The question is whether, in the dynamic context, movements in terms of trade at the sectoral level significantly alter farmers' decisions. This paper examines the performance of agriculture in the Indian economy in the context of differential trends in the commodity terms of trade in the past decades.

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