AGRICULTURAL POLICY REFORMS AND SPATIAL INTEGRATION OF FOOD GRAIN MARKETS IN INDIA

Applying the maximum likelihood method of co-integration, this paper examines the impact of agricultural policy reforms on spatial integration of food grain markets in India. The extent of spatial integration of food grain markets has improved during the post-reform period, as the regional markets, which were either segmented or poorly integrated during the pre-reform period, are found to be strongly integrated, and in most cases to such an extent that satisfies the relative version of the law of one price. The agricultural policy reforms undertaken by the Indian government seem to have contributed towards improving the extent of spatial integration of food grain markets. The results offer important policy implications.