Measurement of Regulations: An Application to the Agricultural Produce Markets of Indian States

Effective regulation of agricultural produce markets has been increasingly recognised as an important institution for agricultural sector development. This paper provides the construction of a composite time-varying de jure quantitative index measuring a specific legislative institution of colonial lineage – the Agricultural Produce Markets Commission (APMC) Act & Rules across 14 Indian states for the period 1970-2008. It represents the first most comprehensive effort till date to systematically characterise post-harvest regulations of agricultural produce markets of India. The paper discusses the possible sensitivity of the APMC indices using higher statistical techniques and examines the evolution of agricultural regulations across Indian states through the study of cross‐sectional and secular trends in the indices. The results suggest that though regulations of agricultural produce markets have shown improvement over time in all states but few; however pace of the progress has been extremely slow. There are wide differences in the APMC measures across the states. Rankings of states in terms of the APMC index show varying time trends – stable and high ranks for states like Maharashtra and Punjab, stable and low ranks for states like Uttar Pradesh, West Bengal and Assam, rapidly improving ranks for states like Karnataka and Madhya Pradesh, while maintaining better ranks for Haryana, Andhra Pradesh, Tamil Nadu and Rajasthan and swift deterioration in ranks for states like Gujarat, Bihar, and Orissa