Agricultural Productivity and Structural Transformation in India

Abstract

This study examines the relationship between agricultural productivity growth and structural economic transformation across Indian states from 2000 to 2024. Using shift-share analysis and dynamic panel estimation, we find that agricultural productivity growth averaged 2.8% annually at the national level but varied substantially across states, ranging from 1.2% in Bihar to 5.4% in Gujarat. States achieving higher agricultural productivity growth experienced accelerated structural transformation with manufacturing and services sectors growing 2.3 times faster than in low-productivity states. We identify irrigation infrastructure, agricultural research investment, land tenure security, and market connectivity as primary determinants of productivity growth.