Wheat economy of India: a study of the growth, development and international trade prospects

Abstract

India is now the second largest producer of wheat in the world even though it is only the seventh largest in land area. It produces about 70 million tons of wheat per year or about 12 per cent of the world production. Being second largest in population, it is also second largest in wheat consumption, after China, with a huge and growing wheat demand. What is the nature of the wheat economy of India? How has wheat production increased in India? Will it be able to keep pace with consumption growth? What are the prospects and the market environment for international trade? This paper seeks to explore and examine these issues. Analysis indicates that depending on the rate and nature of economic growth, a 4 to 5 per cent annual rate of growth in the demand for wheat is likely in the near future, given the population growth and the income elasticity of demand. Wheat production may be expected to grow at about 2 to 3 per cent per year considering the various constraints. The outcome will depend substantially on the rate and nature of economic development in India. Good performance in economic development will lead to a deficit whereas slow economic development will lead to a surplus. Promoting rapid economic development which includes the poor and particularly the rural poor will lead to significant growth in demand.