Inter-district Variations in Agricultural Production and the Impact of MSP on Farm Income in Telangana, India

Abstract

The present study examines the differences in agricultural production between the districts of Telangana. The study also examines the effect of Minimum Support Price (MSP) on the income of farmers. The study has been conducted to assess the differences in crop area, crop production, and crop productivity in different districts of Telangana. The study has been conducted using secondary data from 2016-17 to 2025-26. The required data was obtained from the Directorate of Economics and Statistics, Government of Telangana. Additional data was also obtained from AGMARKNET and the Commission for Agricultural Costs and Prices (CACP). The study has been conducted using descriptive statistics and the Coefficient of Variation (CV) to assess the spatial differences in agricultural production. The study has also been conducted using a paired t-test to assess the differences between MSP and market price. The study has also been conducted using a price transmission model to assess the differences between MSP and market price. The study has also been conducted using panel data regression to assess the determinants of farm income and the effectiveness of MSP. From the results, it has been observed that there exist differences in crop area, crop production, and crop productivity across the districts of Telangana. The results from panel regression, carried out by employing the Fixed Effects Model, reveal that MSP gap, procurement intensity, and productivity have a significant impact on income in Telangana farms. The negative sign on the MSP gap has been found significant, revealing that in case of a lower market price than the MSP, the level of income for the farmers will be negatively impacted. The positive sign on procurement intensity is significant, implying that procurement intensity is positively related to the income level of farmers, and this is because better prices are realized through procurement programs. Productivity is positively related to the income level of farmers, and the result is significant.MSP is found to be important in stabilizing market prices and hence in improving the income level of farmers in Telangana, and there are significant differences in the levels of irrigation facilities and infrastructure among districts in Telangana.