Estimating Demand Elasticities of Pulses in India

All pulses are disaggregated by major pulses to estimate their income and price elasticities in the Indian context. The hypothesis is that different pulses behaved differently in their consumption patterns in the food basket, their prices differ and some of them might not be easily substitutable because of strong regional preferences. We have estimated a pulse model to compute demand elasticities—price and income elasticities—of pulses at disaggregate level using three stage QUAIDS model.

India is the largest producer and consumer of most of the pulses in the world. The pulses productivity at 1 tonne per hectare is far less in India than other pulses-producing major countries in the world like Canada, where it is around 2 tonnes per hectare. Consequently, pulse crops in India have relatively low profitability which, coupled with differential impact of technology, is leading to shifting of area under pulses to more remunerative crops. Moreover, in India, pulses are largely grown under unirrigated and rain-fed conditions on marginal lands and, therefore, suffer high instability in yield. The marginal nature of farming, low factor response, incidence of on-field biotic and abiotic stresses, high-yield instability, etc, are the factors behind low pulse production in the country (Reddy 2009; Reddy et al 2013). As a result, the market prices of pulses have shown consistently rising trends, resulting in a slow increase in pulses consumption across the country households. Despite some improvement since 2011, the gap between demand and supply of pulses is widening and has necessitated annual import of pulses of 2.5 million tonnes to 3 million tonnes since the last few years.