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Abstract
The paper examines the effective and efficient use of labour in Indian agriculture in the context of
farm mechanisation. It explores the rationality of labour use in paddy production across states with the
help of Stochastic Frontier Production Function analysis based on plot level data under the Cost of
Cultivation Scheme during 2009-10. The study analyses the productivity, unit cost and farm income
differentials and the variation in the extent of farm mechanisation and other inputs use in paddy
production between and within states during 2004-05 to 2010-11. It also examines the impact of machine
use on the production, productivity, cost and profitability in paddy production in India based on
aggregated and disaggregated data. It is observed that there is no rational use of human labour in Indian
agriculture (i.e., the present study rejects the hypothesis of equality between marginal productivity of
labour and average wage rate). Machine use in agricultural production plays an important role in the
increase in productivity and reduction of unit cost of production resulting profitable making farming
viable in India. There is a great variation in the degree of farm mechanisation across Indian states but there
is a good indication that inequality in input use and the variation in access to modern agricultural
technology has decreased among the states during post-WTO period.