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Abstract

We examine the spatial integration of wheat, rice and pearl millet in the Indian states of Bihar, Haryana, and Uttar Pradesh after the reforms of 2002 which liberalized inter-state trade. Our data represent a large share oflndia's cereal grains. The government regulates markets for staple foods heavily; almost all grain is marketed through government licensed markets that impose a price floor. This could discourage private investment in storage capacity among farmers and traders, impacting market integration. We find little evidence of market integration despite the 2002-03 reforms, and this fragmentation is particularly notable for smaller, and less regulated crops.

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