Production dynamics of indian fertiliser industry: an analysis of its factors and Structural break

Abstract

Fertilisers play a key role in the agriculture sector, which is ultimately crucial to meet the agricultural needs of a large population, such as that of India. Due to its sicuificance in the Indian economy, the government has been a significant participant in the industry through the proactive implementation of strategic regulations, policies, and subsidies to ensure .tability, growth, and check hindrances in supply. Given the notable nature - f subsidies and schemes like the Neem-coated Urea policy, Nutrient-Based Subsidy scheme and Direct Benefit Transfer scheme, it is indicative that government policies play a vital role in the production and consumption of fertilisers. Further, there are several other nongovernmental internal and external forces and factors that act as determinants of Sfertiliser industry’s growth in India. This study attempts to find the shift in production trend through a structural break test to find the impact of these policies and regimes on production. In addition, it also aims to find the factors that impact the industry’s growth and the causal effect of these factors on the production of fertilisers in India. For fulfilling the objectives, structural break analysis, Principal Components analysis and Linear Regression analvsis have been used. Findings suggest multiple non-random break points in the production trend, thus suggesting the presence of structural breaks due to policy implementations. Further, using factor analysis, three chief factors were extracted, and these factors furthermore displaved a significant impact on production. These outcomes demonstrated that the fertiliser industry is not linked with only one factor, but rather a collective and complex interplay between global market conditions, domestic agricultural situation, state interventions, and infrastructural capabilities.