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Agriculture plays a significant role in economic development of theunderdeveloped region. Multiple factors influence the performance ofagricultural sector but a few of these have a strong bearing on its growth. Wedevelop a growth diagnostics framework for agricultural sector in Bihar locatedin eastern India to identify the most binding constraints. Our results showthat poor functioning of agricultural markets and low level of cropdiversification are the important reasons for lower agricultural growth inBihar. Rise in the level of instability in the prices of agricultural producesindicates a weak price transmission across the markets even after repealing theagricultural produce market committee act. Poor market linkages andnon-functioning producer collectives at village level affect the farmersmotivation for undertaking crop diversification. Our policy suggestions includestate provision of basic market infrastructure to attract private investment inagricultural marketing, strengthening the farmer producer organisations, and acomprehensive policy on crop diversification.

Agricultural Growth Diagnostics: Identifying the Binding Constraints and Policy Remedies for Bihar, India