Significant structural changes have occurred in India's agriculture sector, as seen by the decline in its GDP share from 30% in 1990–1991 to 14% in 2021–2022. This indicates a move away from the country's traditional agrarian economy and towards one that is dominated by services. However, it has drastically transformed also in the last 20 years due to policies of globalization and liberalization that have opened up new avenues for agricultural transformation. This research paper identifies the existence of structural break around the liberalization period. The model is applied on agriculture, forestry and fishing value added in current US billion dollars, crop production index, Use of fertilizers that is Fertilizer consumption (kilograms per hectare of arable land). The impact of use of fertilizer and irrigated land on crop production is assessed. The next part of the analysis concerns with the impact of lagged values of independent variable on the dependent. We have used Vector Auto Regression and granger Casualty Wald test to see the existence of two-way causality between irrigated land and crop production and use of fertilizer and crop production. Existence of two-way causality persists.

HIGHLIGHTS

• Dummy regression analysis is used to evaluate the presence of structural break in Indian Agriculture (value added, crop production, fertilizer consumption) in and around the period of liberalization.
• Irrigation and fertilizer consumption has a positive impact on crop production in the Indian Agricultural Sector
• Though in present time period fertilizer consumption has a positive impact on crop production, but in the long run (analysis done with lagged values) it may not have a positive impact as it can deplete soil health

Irrigation has a positive impact on crop production both in short run and long run