Minimum Support Prices in Indian Agriculture:

Supporting Whom and at What Price?∗

Shilpa Aggarwal Ishani Chatterjee Natasha Jha
September 8, 2023

Abstract

While the distortions from price controls are well-understood in theory, these may
be underestimated if the controls are captured for uses beyond fixing market failures.
We study this issue in the context of minimum support prices (MSP), the government
of India’s procurement price of food grains. We find that when a district with a histor-
ically larger area under cultivation for a crop is slated to go for elections, the central
government announces a higher MSP for that crop. Since government procurement
price is the same across the country, the center uses this blunt instrument only when
other policy instruments are unavailable, i.e., when the incumbent state government is
not aligned with the center. Even small increases in MSP can have large welfare effects
as the central government spent nearly 1% of the GDP on procurement in 2020-21.

JEL Codes:
Keywords: Minimum Support Price, Procurement, Corruption, Elections, Incumbency,
Consumer Welfare, India

∗
Aggarwal: Indian School of Business and J-PAL (shilpa aggarwal@isb.edu); Chatterjee: University of
California, San Diego(ischatterjee@ucsd.edu); Jha:University of Notre Dame (njha@nd.edu). We are grate-
ful to Ujjwal Gaur for excellent research assistance. We owe immense gratitude to Raja Gopal and N.
Guruswamy for several insightful conversations about the institutional context of procurement. We thank
Prashant Bharadwaj, Ashwini Chhatre, Sarang Deo, Sripad Devalkar, Maitreesh Ghatak, Gaurav Khanna,
Craig McIntosh, Debraj Ray, Esha Zaveri, and seminar participants at the Indian School of Business for
useful discussions and suggestions. All errors are our own.
Introduction

Price controls, while distortionary, are widely used to fix market failures. Since economic
theory cannot provide guidance on the level at which to place a price floor or ceiling, these are
often arbitrarily determined and may, therefore, be susceptible to regulatory capture by the
price-setter, further magnifying their deadweight loss. Moreover, while the welfare foregone
under a well-designed price-control system is a cost that voters may be willing to bear in
order to accomplish equity goals, the welfare costs imposed by self-serving price-setting by
the regulator are unlikely to be part of the desired efficiency-equity trade-off. There is a
large literature on the efficiency costs of price controls going back to Olsen (1972)1 , yet,
to our knowledge, the issue of whether and how these controls may be manipulated by the
regulator has not been researched.
In this paper, we study this issue in the context of minimum support prices (MSP),
wherein the federal government of India sets annual price floors for 23 different agricultural
commodities, although the focus of this paper is only on the MSP for rice and wheat, the main
staples. These prices are set annually for each crop, just before the summer planting season
(“Kharif ” season) for rice (and other summer crops), and just before the winter planting
season (“Rabi ” season) for wheat (and other winter crops).2 The MSP is a somewhat unique
price-control policy in that it is not the mandated price for purchases by private entities or
individuals, but it legally obligates the central and all state governments, as well as their
agencies, to procure at this price (or the market price, whichever is higher). In that sense,
it can be thought of as the public procurement price.3 Procurement by public actors forms

1
Refer to Arnott (1995) for a detailed discussion on price controls
2
The 23 commodities for which MSP is announced are Paddy; Maize; Bajra, Jowar, and Ragi, which are mil-
lets; Arhar, Moong, and Urad, which are pulses; Groundnut, Sunflower, Soybean, Sesamum, and Nigerseed,
which are oilseeds; and Cotton for the Kharif season and Wheat; Barley; Gram and Masur, which are
pulses; Mustard and Safflower, which are oilseeds; Copra; Jute; and Sugarcane for the Rabi season.
3
Public procurement of wheat and rice has been an essential pillar of India’s food security strategy since the
1960s. The government procures food grains to be able to ensure a remunerative price to the producers, in
turn accumulating enough food grain stock for its many social assistance programs as well as to serve as
buffer stock during times of crises.

1
a significant proportion of food grain sales by farmers.4 According to the Government of
India, public procurement amounted to 43% of the annual rice production and 36% of the
wheat production in the 2019-20 agricultural year,5 so there is very likely pass-through from
the public procurement price to the prevailing market prices. Finally, while an MSP is
announced for 23 different crops, procurement is largely concentrated on rice and wheat.6
We study two aspects relating to the regulatory capture of MSP, namely the presence
of political cycles and the circumstances that contribute towards regulatory capture. First,
we use the staggered schedule of state elections in India7 to show that during state elections,
the MSP for a crop is higher if it is grown in that state. Specifically, we find that the
announced MSP is higher by 0.7% per quintal for every percentage increase in the historical
area under cultivation of that crop at the district level. This finding is in line with the
evidence provided in papers on political cycles in the public good provision, such as Cole
(2009); Banful (2011); Cole et al. (2012); Sukhtankar (2012); Baskaran et al. (2015) and
Mahadevan (2019) on manipulation in the provision of a variety of services, such as bank
credit, fertilizer subsidies, disaster relief, and electricity. Note that this literature documents
three distinct geneses for political cycles - those that arise ex -ante in order to manipulate
voting behavior, those that arise ex-post for rewarding electoral support, and finally, another
set that also arises ex-ante, but to raise funds for electoral campaigns. Our evidence is
consistent with the first kind of manipulation.
Next, we examine the circumstances under which the MSP is used for electoral gains.
Specifically, evidence of electoral manipulation in public provision has so far only been shown
within the boundaries of the administrative unit (state or district or county) which is slated
to go for election - for example, Cole (2009) shows that agricultural credit is manipulated
4
Government agencies are obligated to procure as much grain as is brought to them during the time pro-
curement operations are ongoing, a 3-4 months long period that begins shortly after harvest.
5
These details were provided in response to unstarred question number 331 in the Loksabha, the lower house
of the Indian Parliament on September 15, 2020.
6
Public procurement of pulses amounts to 12% of the total production and that of coarse grains is about
1%.
7
There is a large number of papers that utilize this variation in state elections; for example, see work by
Pande (2003), Khemani (2004), Cole (2009) and Min and Golden (2014) amongst others.

2
within the state that goes to the election, and other states remain unimpacted. Mahadevan
(2019) finds that following an election, electorates of the winning party within the same
state are billed lesser than their actual electricity consumption. In a similar vein, Khemani
(2004) reports targeted state tax relief for pivotal population groups to garner campaign
support. The MSP on the other hand, is a far more blunt tool in that once the MSP for a
crop is announced, the government is obligated to use the same price to procure that crop
everywhere in the country, also making it an expensive tool.
Our second finding sheds light on the kinds of scenarios under which this blunt tool
is used. We find that the federal government is much more likely to use the MSP for
manipulating state elections when its state unit has no other tools at its disposal, i.e.,
when the incumbent state government is not part of the same political party or the same
governing alliance as the party in power at the center. In this situation, many different kinds
of policies that typically fall under the ambit of the state government, such as bank credit,
local infrastructure development, or health and education programs cannot be favorably
manipulated by the central government’s state unit. We find that the announced MSP is
higher by 1% to 3% per quintal for every percentage increase in historic area under cultivation
for the crop when states with incumbent not aligned with the center are up for election as
compared to the aligned states. Furthermore, we examine if the stage of own tenure for
the federal government is also a determinant in the use of MSP. We find that the federal
government is more likely to use the MSP for manipulating state elections for non-aligned
political parties when the federal government is in the early years of its tenure.
We find evidence to support announcement effects of the MSP on food grain markets for
rice and wheat. Post announcement of the MSP the retail prices for both wheat and rice see
a sharp upsurge in the immediate months following the announcement. The price jump is
substantial and while the magnitude of this announcement effect is dampened by the supply
of food grains, the initial increase is large enough to sustain higher prices seven months post
announcement. We interpret this finding as suggestive evidence on a potential impact on

3
consumer welfare.
Our paper makes three broad contributions. First, we contribute to the existing lit-
erature on the efficiency costs of price controls. While previous studies have focused on
the deadweight loss resulting from rationing and trade protection (Olsen (1988); Gyourko
and Linneman (1989); Glaeser and Luttmer (2003); Sims (2007); Kyle (2007); Autor et al.
(2014); Diamond et al. (2019)), they have also identified additional losses due to extensive
margin misallocation of quotas in rental markets (Glaeser and Luttmer (2003)) and export
licenses (Khandelwal et al. (2013)). We complement prior findings of extensive margin mis-
allocation by exploring a new source of misallocation - political gains - which can lead to
price controls being implemented above a level that fixes the targeted market failure levels.
Moreover, by analyzing the MSP, we present evidence on the efficiency costs of price controls
in agricultural markets in developing nations.
Second, we provide evidence on the strategic use of public policy in line with electoral
cycles. A robust literature on the electoral manipulation of a range of public goods and
service delivery exists in developing countries (Khemani (2004); Burgess et al. (2015); Cole
(2009); Khwaja and Mian (2005); Sukhtankar (2012)) along with a parallel but related
literature on greater fund divergence towards politically aligned units (Arulampalam et al.
(2009); Brollo and Nannicini (2012); Ansolabehere and Snyder Jr (2006); Asher and Novosad
(2017); Mahadevan (2019)). Our paper connects these two strands of literature by providing
evidence on how policy tools are strategically employed based on political alignment as well
as stage of tenure. We demonstrate that the federal government resorts to using a blunt
policy tool like the MSP only when state-level policy options are unavailable. Additionally,
the federal government relies on the MSP to a greater extent in the later stages of its tenure.
Our findings enrich the literature on electoral cycles in developing countries by shedding
light on the nuances of policy implementation.
Third, we contribute to an exceedingly sparse literature on minimum support prices in
India. Despite structural transformation in recent years, agriculture still forms 23% of the

4
GDP and employs more than 90 million individuals (NSSO 2019). Agricultural support
policies directly impact these individuals by changing market incentives. Yet, despite its
outsize impact on Indian agriculture, we know of only two studies about it (Banerji and
Meenakshi 2004; Krishnaswamy 2019), and none about how it is determined.

Background

Minimum Support Price and Procurement

The Minimum Support Price was introduced in 1965 as a part of a multi-pronged market
intervention strategy for the growth of agricultural sector in India. It is, as the name implies,
the “minimum” price that the government agrees to buy the agriculture produce from farmers
during harvest As a part of the larger scheme to tackle the ongoing food crisis in the country,
the price support was regarded to serve the dual objective of incentivizing farmers to grow
certain crops using improved technology as well as protecting them against the sudden price
drop due to the seasonal nature of the market. Currently, the Commission for Agricultural
Costs and Prices (CACP) determines MSP every year. It considers a range of micro and
macro factors to establish the appropriate price floor for certain crops. As an example, we
quote the following on determination of MSP verbatim from the CACP Kharif report 2022 -
The Commission has considered the cost of production, overall demand-supply situation and
price trends in domestic and world markets, inter-crop price parity, terms of trade between
agriculture and non-agriculture sector, a minimum of 50 percent as margin over the cost of
production, likely effect of price policy on rest of the economy and optimal utilization of land,
water and other production resources. The MSP, once announced by the federal government,
is enforced evenly across the entire nation8 .
India has two main agricultural seasons viz a viz Kharif(Monsoon) and Rabi(Winter).
The Kharif crops (such as Paddy) are typically sown in July whereas sowing for the Rabi

8
Refer to Aditya et al. (2017); Gupta et al. (2021) for a more detailed discussion on MSP

5
crops (such as Wheat) is usually around October. Thus to be relevant and informative
for the cultivators, the MSP is typically announced just before the time of sowing i.e. in
June and October for the Kharif and Rabi crops respectively for the 23 notified broad
agricultural commodities9 . Although MSP is announced for multiple commodities, however,
the procurement is usually concentrated for two main cereal crops viz a viz Wheat and Rice.
Since the MSP is regarded as only being effective when there is procurement, the location
and the intensity of the procurement operations become major drivers of the success of this
price support program. While procurement is necessary to purchase and distribute grains
for India’s massive Public Distribution System (PDS), it also enforces the minimum price
support and thus, acts as a channel of rewarding patronage to the farmers. The decentralized
procurement system started in 2002 where the nodal agency - Food Corporation of India
(FCI) in collaboration with the State level Food and Civil Supply Corporation and State
Co-operative Marketing Federation procure mainly food grains from various states in the
harvest season. The National Agricultural Co-operative Marketing Federation (NAFED)
is responsible for the procurement of other commodities mainly pulses and cotton. The
procurement operations occur at dedicated purchase centres or at local mandis (agricultural
markets) in short time windows in the harvest season. Typically, for paddy, procurement
operations begins late September and ends in October. Whereas, for wheat, concentrated
procurement operations occur in March.

Elections

India has a parliamentary system with the division of legislative, executive and administra-
tive power between the federal and state governments. Every adult citizen in the country
has the right to vote to elect the Members of Lok Sabha (General elections) and Members
of State Legislative Assembly or Vidhan Sabha (State elections). The elections are consti-
9
14 Kharif crops (Paddy(both common and Grade A), bajra, jowar(hybrid and maldandi), maize, ragi, arhar,
moong, urad, groundnut, sunflower, soyabean(black and yellow), sesamum, nigerseed and cotton(medium
and long staple)) and 9 Rabi crops (Wheat, barley, gram, masur, mustard, safflower, copra(milling and
ball), jute and sugarcane)

6
tutionally fixed at five year intervals10 although the timing of the state elections are not
necessarily synchronized. Candidates run in state elections to fill single-member legislative
constituencies; the one receiving the most votes in a particular constituency wins the seat
i.e. the first-past-the-post system. The regional political party that wins the most seats in
a state election forms the government; it may do so either on its own (i.e., if it wins more
than 50% of the assembly seats) or as part of a coalition.

Data

We combine data from various sources for our analysis. We leverage the area under cultiva-
tion for a particular crop as the main source of variation in a district in a year. It is worth
mentioning here again that our main results on the MSP are at the crop-year level since the
MSP is announced at the national level. The following paragraphs describe the data sources
in greater detail.

Agricultural Census 2001

Data on the area under cultivation for each crop at the district level was taken from the
2001 round of the Agricultural Census which is conducted by the Department of Agriculture
and Cooperation, Ministry of Agriculture, Government of India. We define the historical
area under a crop as the percentage of area cultivated at the district level for the crop. It is
calculated as the ratio of the area under cultivation for a crop in a district to the total area
under cultivation for all the crops in the same district in 2001. Wheat and Rice, on average,
constitute about 16% and 37% respectively of the total area under cultivation in a district.

10
Except under special circumstances when the government becomes non-functional and early elections are
scheduled.

7
CACP Price Reports

CACP publishes the MSP for all the notified crops every year in its annual reports. We
hand-collected the minimum support price announced using Kharif and Rabi reports from
2001 − 2016. In our sample period, the procurement of Wheat and Rice11 accounts for about
45.13% & 52.47 % of the total procurement of crops in the country. Thus, we restrict our
analysis to MSP for these two crops and present analysis results for the remaining crops such
as other cereals(excluding wheat and rice), pulses, and oilseeds as part of our appendix.

Election Commission

We obtain detailed constituency-level data for all assembly elections held between 2001−2016
from the website of the Election Commission of India, which has made this information
publicly available.12 These data include the identity, party affiliation, and share of votes
won at the candidate level. We define the margin of victory as the difference in vote share
between the winner and runner-up candidates.
The analysis period was marked by multi-party alliances at both the central and state
levels. We collected detailed information on the party composition as well as the alliance of
state legislatures with the central ruling party during our study period. Factiva was used
to extract newspaper articles13 pertaining to all state-level elections between 1999 − 2016.
Information on the central ruling front in case of coalition governments or the majority
central party was compiled using General Election information available on the election
commission website. State incumbent parties were classified as not aligned if none of the
incumbent state parties were part of/aligned with any of the parties in the central ruling
front.

11
Paddy refers to rice grains with the surrounding husk. While MSP is announced for paddy, procurement
occurs for rice or de-husked paddy. To avoid ambiguity moving forward we use the term rice in place of
paddy
12
This data can be found here: https://eci.gov.in/assembly-election/assembly-election/
13
The search criteria included all articles with key words “state name”, “election”,“assembly” & “center”.
The search was restricted to leading national dailies only.

8
Retail Market Prices

We collected information on the retail prices of crops from 2009 − 2016 available at the
website of the Department of Consumer Affairs, Ministry of Consumer Affairs, Food and
Public Distribution. The website reports retail prices of 2214 commodities in 100 centers
spread across 5 zones in the country15 . We identified the district of each of these centers
and assume that the price at the center is representative of the prevailing local prices in the
entire district as a whole. We restricted our sample only to retail prices of wheat and rice.

Empirical Strategy

The empirical strategy exploits the staggered schedule of state legislative assembly elections
to identify the political influence in setting support prices for crops in the country. Our
measure of the historical area under cultivation for a crop is constructed using the area
under cultivation for a crop as a proportion of the total area under cultivation in a district
in 2001 i.e. at the beginning of the sample period. The main hypothesis that we test is if
the central government announces a higher MSP for crops grown in districts that are due
for state assembly elections. Furthermore, we posit that higher MSP announcements as a
means for electoral capture are only relevant in districts with procurement operations i.e.
districts that ever reported having conducted a procurement operation for a crop in our
sample period. Thus, our analysis are restricted to only those districts which ever reported
procurement. We also report results when using a sample of all the districts in the country
as part of the appendix.

State Elections and MSP: To test our main hypothesis of a higher MSP announcement
in the year leading up to an election we focus on two measures of announced MSP which
14
Rice, wheat, atta (wheat), gram dal, tur/arhar, urad, moong, masoor, sugar, milk, groundnut oil (packed),
mustard oil (packed), vanaspati (packed), soya oil (packed), sunflower oil (packed), palm oil (packed),
jaggery/gur, loose tea leaves, iodized salt pack, potato, onion and tomato.
15
North, South, East, West, and North-East zones of the country

9
is our main outcome variable. Each of these measures aims to capture the effect in terms
of both nominal and real prices. The first measure uses the announced MSP which is the
nominal rupee value of the MSP for crop c in year t, we term this MSP (at levels). The
second measure is the deflated MSP which accounts for changes in price levels in our sample
and provides an estimate of the effect in terms of real prices. To calculate the deflated MSP,
we benchmark the announced MSP for a crop to the MSP for the crop in the year 2001
(M SPc2001 ). Deflated MSP for a crop c in a year t is defined as follows:

M SPct
Def lated M SPct =
M SPc2001

We use both these measures of announced MSP to study the effect of state elections on
support price announcements using the following specification:

yct = β1 Est+1 + β2 Est+1 × Acds + β3 Acds + β4 Rdt + γd + γc + γt + ϵct (1)

The outcome variable yct is a measure of announced MSP for crop c in year t. Est+1 is a
dummy indicating if state s had an upcoming election in year t+1. Acds denotes the historical
area under cultivation for crop c in district d in state s. The within-state measure captures
the important variation across districts that differ in importance from a procurement per-
spective. District-level variation in the historical area under cultivation for a crop combined
with an annual variation in the state-level election provides the empirical variation for our
estimation strategy. The panel nature of our data allows us to control for time-invariant
crop characteristics, year-specific, and district time-invariant unobservables using crop (γc ),
year (γt ), and district fixed effects (γd ) respectively. To account for agro-climatic variations
that may drive year-to-year differences in MSP announcement the regression specification
also controls for the average annual rainfall in district d in year t (Rdt ). Our main coefficient
of interest is β2 , which we interpret as the effect on the announced MSP for a crop when
a district with a greater historical area under cultivation for a crop undergoes a state-level

10
election. We cluster standard errors at the district level. Table 1 & 2 presents results from
estimating equation 1 for the outcome MSP (at levels) and Deflated MSP respectively.

We also perform the above analysis for the sample of all states as well as crops other than
rice and wheat. Results are presented in the appendix as table 7 for all states and tables 8
& 9 for other crops apart from rice and wheat.

Incumbent vs non-incumbent states: We next explore the role of political alliances in

the use of the MSP as a tool to influence state-level elections. For this analysis, we restrict
our sample to election years and modify the empirical equation in equation 1 to test if the
MSP is used deferentially between incumbent and non-incumbent states in election years:

yct = β1 Ist+1 + β2 Ist+1 × Acds + β3 Acds + β4 Rdt + γd + γc + γt + ϵct (2)

The outcome variable yct is a measure of announced MSP for crop c in year t. The
equation above is similar to 1 with Ist+1 which is a dummy to indicate if the incumbent
political party in state s is not aligned with the ruling party at the center at the time of
upcoming state-level elections in year t + 1. The coefficient of interest is β2 which measures
the difference in announced MSP across state-election years when states with the incumbent
party not aligned with the federal government face upcoming elections versus states with
the incumbent party aligned with the center. In this manner, we are able to tease out the
effect of political alignment between state and central government on the use of MSP as a
political tool. Results are reported in Table 3.

Early vs late tenure: We next focus on if the manipulation in the setting of the support
price, in addition to the state’s incumbency status,also depends on the own-tenure stage of
the federal government. Specifically we ask if fiscal responsibility through the MSP perspec-
tive varies across the tenure term of the federal government in conjunction with political

11
alliance. To examine if the tenure stage of the federal government differentially impacts
the MSP in the politically aligned vs non-aligned state elections, we implement a triple
difference-in-difference regression design as follows:

yct = β1 ETst+1 + β2 Ist+1 + β3 ETst+1 × Ist+1 + β4 Acds + β5 ETst+1 × Acds

(3)
+ β6 Ist+1 × Acds + β7 ETst+1 × Ist+1 × Acds + β8 Rdt + γd + γc + γt + ϵct

The outcome variable yct is a measure of announced MSP for crop c in year t. ETst+1
denoting early tenure of the central government is a dummy taking value one if at the time
of the upcoming state elections, the central government is in the first 3 years of its tenure.
The coefficient of interest is β7 , which we interpret as the difference in announced MSP
ahead of a state-level election when the timing of the announcement is in the early years of
the central government tenure and the central government is not aligned with the incumbent
state-government at the time of state-level elections for every increase in the historical area
under cultivation for a crop in the state. A significantly different value on β7 suggests that
the central government not only varies the use of MSP by political alliance but also considers
how the timing of announcement ties with its own tenure. Table 4 reports our results using
the above equation 3.
Alternatively, the federal government might behave differently across its own tenure term
for a host of other policy tools. To account for these differences in behavior across time
periods, we also perform the analysis by splitting the sample into early vs late tenure of
the federal government and examine the coefficients separately. Thus, we implement the
following difference-in-difference design for the split sample as follows:

yct = β1 Ist+1 + β2 Acds + +β3 Ist+1 × Acds + β4 Rdt + γd + γc + γt + ϵct (4)

12
 The outcome variable yct is a measure of announced MSP for crop c in year t. Tables 5
and 6 report the results from the above equation when the central government is in its early
and late tenure stages respectively.

Effect on retail prices: Next, we investigate the effect of higher announced MSP in election
years on retail prices paid by the end consumers. Any increase in the retail prices of staples
due to political manipulation of the MSP is economically undesirable and results in welfare
loss. To examine the effect of the higher MSP announcement on the retail prices of wheat
and rice, we implement a dynamic event study design as follows:

i=−2 i=6
βi 1m−Ec =i + βi 1m−Ec =i + β7 Acds + δRdt + γd + γc + γt + ϵcdmt
X X
retailcdmt = (5)
i=−5 i=0

The outcome variable retailcdmt is the retail price of crop c reported in district d in
month m of year t. We denote the month of the announcement of the MSP as Ec 16 . The
time dummy 1m−Ec =i take the value 1 when the difference between the calendar month m
and the month of MSP announcement Ec = i. Similar to earlier specifications, we control for
the area under cultivation for a crop (wheat and rice), total annual district rainfall, district,
crop, and year-fixed effects. The standard errors are clustered at the district level. The
regression coefficients on the time dummies measure the impact on retail prices as compared
to the month prior to announcement and are reported in figure 1.

Results

We report our results on the MSP (at levels) in Table 1. Across specifications, the interaction
term displays a consistently positive and significant coefficient, which confirms our hypothesis

16
Month of announcement of MSP is June and October for kharif and rabi crops respectively. Thus, it takes
the value 6 for rice(kharif crop) and 10 for wheat(rabi crop).

13
of a higher MSP being announced for crops with a greater area under cultivation in districts
that are facing upcoming elections. Moving from column 1) to column 2) of table 1, the
magnitude of the coefficient declines substantially with the inclusion of year-fixed effects.
This decline is expected since the MSP is an annual price announcement and is based on
year-to-year considerations, most importantly the cost of cultivation. Column 3) accounts for
annual rainfall as a proxy for agro-climatic conditions that influence price-setting decisions.
The magnitude of the coefficient of interest is also similar in columns 2 & 3. Based on column
3), which is our desired specification, estimation results indicate a Rs 6.80 higher MSP per
quintal per unit area cultivated for a crop, in years when districts face upcoming state-level
elections as compared to non-election years. This increase is roughly a 0.7% increase over
the mean. The overall effect of an election year is reported in the test-statistic in table 1 as
Rs 3.74 higher MSP per quintal per unit area cultivated for a crop in election years.
Table 2 reports estimation results using an identical equation as in table 1, but with the
outcome variable as deflated MSP. The results across columns in table 2 are qualitatively
consistent with results reported in table 1. The coefficient on the interaction term indicates
that the announced MSP per quintal per unit area cultivated for a crop is significantly
higher in election years as compared to non-election years. Furthermore, we observe similar
patterns in magnitudes across columns 1) through 3) in table 2 as in table 1. Controlling
for year fixed effects leads to a substantial fall in the magnitude of the interaction coefficient
(column 1 to 2 in table 2), whereas the coefficient is relatively stable after controlling for an
agro-climatic condition proxy (column 2 to 3 in table 2).
The results reported in table 2 provide evidence against any price effects that may be
correlated with election years and may potentially drive results observed in table 1. The
magnitude of the effect size also increases when we use the deflated MSP as an outcome.
17
Compared to the average MSP of 1.76 over our study period, the MSP per quintal per
unit area cultivated for a crop is higher by 0.01 points, in years when districts face upcoming

17
On average, the MSP in other years was higher by 76% over the 2001 MSP level

14
state-level elections as compared to non-election years. This increase manifests as an effect
size of 1.5% higher MSP per quintal per unit area cultivated in election years as compared
to non-election years.
To assuage concerns around sample selection driving the aforementioned results, we also
conducted an identical analysis while easing our sample restriction on procurement districts.
Table 7 report results for all districts in the sample. We find that our result of a higher MSP
announcement in election years remains qualitatively unchanged even without conditioning
on procurement status of a district and for a sample that include all districts over our study
time period (table 7). Furthermore this result is consistent across the two measures of MSP
that we employ.
Our study examines the MSP for rice and wheat, which are arguably the most salient
in terms of both procurement as well as area under cultivation. To provide supporting
evidence on the use of MSP as a tool towards political capture of state-level elections, we
examine differences in MSP for crops besides rice and wheat during election years. Tables
8 & 9 report estimation results using 1 for a sample of cereals apart from rice and wheat
(column 1), pulseeds (column 2) and, oilseeds (column 3). We find no significant differences
in both level (table 8 as well as deflated MSP (table 9) for cereals, a consistent positive effect
for pulses (column 2) and mixed evidence for oilseeds (column3). These results are inline
with the limited procurement for cereals outside of rice and wheat and a relatively robust
procurement of pulses among crops outside rice and wheat.
Table 3 reports estimation coefficients using equation 2 and provides insights into the
differential use of MSP within election years relative to political alliance between state and
central government parties. The coefficient of interest is the interaction term that indicates
the difference in the announced MSP for a crop per quintal per unit area cultivated in
election years when the state government is politically aligned versus when state and central
governments belong to different political coalitions. Table 3 reports estimation results using
our desired specification which controls for agroclimatic conditions, district-fixed effects, year

15
fixed effects as well as crop fixed effects. We perform the analysis for both MSP at levels
(column 1)and deflated MSP (column 2) in the table 3. We find that for election years
the central government announces a higher MSP per quintal per unit area cultivated for a
crop when state governments that are not aligned with the center face upcoming elections
as compared to state governments that are aligned with the center.
Table 3 suggests that the central government is strategic in the use of MSP and is
unwilling to use it indiscriminately as a means of political capture. Political alliance with
the state government affords the central government access to a portfolio of public goods
and services that are perhaps more suited to manipulation in election years. In this manner,
the central government acknowledges the blunt nature of the MSP as a tool for political
capture at the state level. The coefficient of interest in columns 1 and 2 of table 3 imply
that the center announces a higher MSP for a crop (23 units in nominal rupees and 0.01
units as compared to 2001 prices) per quintal per unit area cultivated in election years when
the central and state government parties vary as compared to when the central and state
government parties are aligned. While the coefficient on the nominal MSP roughly translates
to an effect size of 3% higher MSP per quintal per unit area cultivated, the coefficient on
deflated MSP (about an effect size of 1%) is not statistically significant. The test statistic,
at the bottom of the table, reports the overall effect on announced MSP for politically non-
aligned incumbents as compared to incumbent state governments that are aligned with the
center in election years. We find a significantly higher overall announcement of MSP (at
levels) when the incumbent is not politically aligned with the center. Taken together these
evidence suggest that while the central government is keen to manipulate MSP in election
years, it restricts the use of MSP as a tool only for influencing state government elections
where it lacks control over alternate means of political capture.
While the federal government is less likely to use MSP when it has access to alternate
state-level policy tools (table 3, but does this strategic behavior also depend on its own

16
tenure stage? Tables 4, 5 and 618 suggest that the central government is more likely to
manipulate MSP announcements in the later years of its tenure, in the absence of access to
finer state-level policy tools. The test statistic, at the bottom of tables 5 and 6, report the
overall effect on the MSP when the incumbent state party is not aligned with the center
when the center is in its early and late tenure stages respectively. In both these cases, we
document a positive and significant effect, in line with our incumbency results in table 3.
However, the magnitudes on the effect sizes differ between early and late tenure samples.
The nominal MSP is about INR 2 higher and the deflated MSP is about 0.03 units higher
in the later tenure as compared to the early tenure stages of the central government. While
we are unable to disentangle if the higher MSP announcements for non-aligned states in
later tenure is to garner support for upcoming federal elections or still restricted to political
capture of state-level elections, but our results our consistent with lower fiscal discipline in
later tenure terms of federal governments.
We, now, turn to our result on the effect of the higher announcement of MSP on the
retail prices of wheat and rice as shown in figure 1. The vertical dotted line at t = 0 denotes
the time of announcement of MSP19 . We see an immediate jump in the retail prices of these
crops at the time of the announcement of MSP and the prices continue to increase in the next
two months post-announcement of the MSP. Political manipulation of the support prices of
these staples for selfish electoral gains causing any increase in the retail prices as paid by the
end consumers undoubtedly generates welfare losses.

Conclusion

In this paper, we investigate the political cycles in the determination of the MSP, the control
price for foodgrains in India. We find that when a district goes for elections, the central
government announces a higher price for those crops that are traditionally grown in that
18
The table 4 reports results from the triple diff-in-diff equation 3 and the tables 5 and 6 report results from
the diff-in-diff equation 4 for the split sample of early vs late tenure of the central government.
19
June for rice and October for wheat

17
district. While these findings are in line with electoral cycles that have been found to exist
in the context of many other publicly-provided goods and services, their existence in the
case of the MSP is somewhat surprising as MSP is not a state-level policy, and therefore,
this kind of electoral manipulation distorts market incentives nation-wide. Our findings shed
light on when this blunt tool is used – essentially, in cases where no other tools are available,
i.e., when the state government and the central government are not aligned and the central
government desires to influence the election.
Our findings, therefore, open up questions about a new source of distortion that gets in-
troduced in regulated markets, i.e., these regulations themselves may be self-serving. Future
research should focus on ways to quantify this as well as design mechanisms to minimize this
kind of regulatory capture.

18
References
Aditya, KS, SP Subash, KV Praveen, ML Nithyashree, N Bhuvana, and Akriti Sharma
(2017). “Awareness about minimum support price and its impact on diversification deci-
sion of farmers in India.” Asia & the Pacific Policy Studies 4 (3): 514–526.

Ansolabehere, Stephen and James M Snyder Jr (2006). “Party control of state government
and the distribution of public expenditures.” Scandinavian Journal of Economics 108
(4): 547–569.

Arnott, Richard (1995). “Time for revisionism on rent control?” Journal of economic per-
spectives 9 (1): 99–120.

Arulampalam, Wiji, Sugato Dasgupta, Amrita Dhillon, and Bhaskar Dutta (2009). “Electoral
goals and center-state transfers: A theoretical model and empirical evidence from India.”
Journal of Development Economics 88 (1): 103–119.

Asher, Sam and Paul Novosad (2017). “Politics and local economic growth: Evidence from
India.” American Economic Journal: Applied Economics 9 (1): 229–73.

Autor, David H, Christopher J Palmer, and Parag A Pathak (2014). “Housing market
spillovers: Evidence from the end of rent control in Cambridge, Massachusetts.” Journal
of Political Economy 122 (3): 661–717.

Banerji, Abhijit and JV Meenakshi (2004). “Buyer collusion and efficiency of government
intervention in wheat markets in northern India: An asymmetric structural auctions
analysis.” American journal of agricultural economics: 236–253.

Banful, Afua Branoah (2011). “Old Problems in the New Solutions? Politically Motivated
Allocation of Program Benefits and the “New” Fertilizer Subsidies.” World Development
39 (7): 1166–1176.

Baskaran, Thushyanthan, Brian Min, and Yogesh Uppal (2015). “Election cycles and electric-
ity provision: Evidence from a quasi-experiment with Indian special elections.” Journal
of Public Economics 126: 64–73.

Brollo, Fernanda and Tommaso Nannicini (2012). “Tying your enemy’s hands in close races:
the politics of federal transfers in Brazil.” American Political Science Review 106 (4):
742–761.

Burgess, Robin, Remi Jedwab, Edward Miguel, Ameet Morjaria, and Gerard Padró i Miquel
(2015). “The value of democracy: evidence from road building in Kenya.” American
Economic Review 105 (6): 1817–51.

19
Cole, Shawn (2009). “Fixing market failures or fixing elections? Agricultural credit in India.”
American economic journal: applied economics 1 (1): 219–50.

Cole, Shawn, Andrew Healy, and Eric Werker (2012). “Do voters demand responsive gov-
ernments? Evidence from Indian disaster relief.” Journal of Development Economics 97
(2): 167–181.

Diamond, Rebecca, Tim McQuade, and Franklin Qian (2019). “The effects of rent control
expansion on tenants, landlords, and inequality: Evidence from San Francisco.” American
Economic Review 109 (9): 3365–94.

Glaeser, Edward L and Erzo FP Luttmer (2003). “The misallocation of housing under rent
control.” American Economic Review 93 (4): 1027–1046.

Gupta, Prankur, Reetika Khera, and Sudha Narayanan (2021). “Minimum Support Prices
in India: Distilling the Facts.” Available at SSRN 3791859.

Gyourko, Joseph and Peter Linneman (1989). “Equity and efficiency aspects of rent control:
An empirical study of New York City.” Journal of urban Economics 26 (1): 54–74.

Khandelwal, Amit K, Peter K Schott, and Shang-Jin Wei (2013). “Trade liberalization and
embedded institutional reform: Evidence from Chinese exporters.” American Economic
Review 103 (6): 2169–2195.

Khemani, Stuti (2004). “Political cycles in a developing economy: effect of elections in the
Indian states.” Journal of development Economics 73 (1): 125–154.

Khwaja, Asim Ijaz and Atif Mian (2005). “Do lenders favor politically connected firms? Rent
provision in an emerging financial market.” The Quarterly Journal of Economics 120 (4):
1371–1411.

Krishnaswamy, Nandita (2019). “At What Price? Price Supports, Agricultural Productivity,
and Misallocation.” Unpublished.

Kyle, Margaret K (2007). “Pharmaceutical price controls and entry strategies.” The Review
of Economics and Statistics 89 (1): 88–99.

Mahadevan, Meera (2019). “The price of power: Costs of political corruption in Indian elec-
tricity.” Department of Economics, University of Michigan.

Min, Brian and Miriam Golden (2014). “Electoral cycles in electricity losses in India.” Energy
Policy 65: 619–625.

Olsen, Edgar O (1972). “An econometric analysis of rent control.” Journal of Political Econ-
omy 80 (6): 1081–1100.

20
Olsen, Edgar O (1988). “What do economists know about the effect of rent control on housing
maintenance?” The journal of real estate finance and economics 1: 295–307.

Pande, Rohini (2003). “Can mandated political representation increase policy influence for
disadvantaged minorities? Theory and evidence from India.” American economic review
93 (4): 1132–1151.

Sims, David P (2007). “Out of control: What can we learn from the end of Massachusetts
rent control?” Journal of Urban Economics 61 (1): 129–151.

Sukhtankar, Sandip (2012). “Sweetening the deal? Political connections and sugar mills in
India.” American Economic Journal: Applied Economics 4 (3): 43–63.

21
Tables

Table 1: Effect of elections on the Minimum Support Prices (at levels)

MSP (at levels)

(1) (2) (3)
Election Year=1 -119.81*** -2.99*** -3.07***
(5.84) (1.06) (1.06)
Prop area under culti -215.42*** -1.09** -0.79
(34.20) (0.53) (0.55)
Election Year=1 × Prop area under culti 50.34*** 6.57*** 6.80***
(14.30) (2.49) (2.48)
Year FE N Y Y
Control for Rainfall N N Y
Control Mean 1021.97 1021.97 1021.97
Control SD 350.66 350.66 350.66
Lincom test statistic -69.47 3.58 3.74
Lincom p-value 0 .03 .02
Observations 9803 9803 9803
R2 0.12 0.99 0.99
Notes: This table reports results for our estimating equation 1 for districts that ever reported procurement of rice
and wheat in our sample period. The dependent variable is the MSP of wheat and rice announced in a given year
i.e. at levels. The variable ElectionY ear = 1 takes the value 1 if the state goes for an election in that year. Our
coefficient of interest is the interacted term between ElectionY ear = 1 and proportion of area under cultivation for
rice and wheat in a district. The Lincom test statistic and p-value report the joint coefficient and its corresponding
p-value on the main and interacted variable - ElectionY ear = 1. Controls include crop and district-fixed effects.
Standard errors clustered at the district level are reported in parentheses. * p < 0.10 , ** p < 0.05 , *** p < 0.01:

22
 Table 2: Effect of elections on the deflated values of MSP

Deflated MSP
(1) (2) (3)
Election Year=1 -0.21*** -0.00 -0.00
(0.01) (0.00) (0.00)
Prop area under culti -0.35*** 0.02*** 0.02***
(0.06) (0.00) (0.00)
Election Year=1 × Prop area under culti 0.09*** 0.01** 0.01**
(0.03) (0.01) (0.01)
Year FE N Y Y
Control for Rainfall N N Y
Control Mean 1.76 1.76 1.76
Control SD .6 .6 .6
Lincom test statistic -.12 .01 .01
Lincom p-value 0 .03 .02
Observations 9803 9803 9803
R2 0.06 0.99 0.99
Notes: This table reports results for our estimating equation 1 for districts that ever reported procurement
of rice and wheat in our sample period. The dependent variable is the MSP of wheat and rice announced
in a given year stated in terms of their respective MSP in the year 2001. The variable ElectionY ear = 1
takes the value 1 if the state goes for an election in that year. Our coefficient of interest is the interacted
term between ElectionY ear = 1 and proportion of area under cultivation for rice and wheat in a district.
The Lincom test statistic and p-value report the joint coefficient and its corresponding p-value on the main
and interacted variable - ElectionY ear = 1. Controls include crop and district fixed effects. Standard errors
clustered at the district level are reported in parentheses. * p < 0.10 , ** p < 0.05 , *** p < 0.01

23
Table 3: Effect of the electoral win of an incumbent state party not aligned with the center on
MSP (at levels) and deflated MSP

Dependent var
MSP (at levels) Deflated MSP
(1) (2)

Incum not aligned centre=1 -10.18*** -0.00

(3.73) (0.01)
Prop area under culti -4.85 0.07***
(4.76) (0.02)
Incum not aligned centre=1 × Prop area under culti 22.73*** 0.01
(4.58) (0.01)
Control Mean 788.59 1.35
Control SD 247.39 .41
Lincom test statistic 12.55 .01
Licom p-val 0 .24
Observations 1786 1786
R2 0.99 0.99
Notes: This table reports results for our estimating equation 2 for districts that ever reported procurement of rice and wheat during
elections in our sample period. In column 1, the dependent variable is the MSP at levels and in column 2, we have MSP of wheat and
rice announced in a given year as a fraction of their respective MSP in the year 2001. The variable Incum not aligned centre = 1
takes the value 1 if any of the incumbent state parties were not a part of the central ruling front or were not aligned with any of
the parties in the central ruling front. Our coefficient of interest is the interacted term between Incum not aligned centre = 1 and
the proportion of area under cultivation for rice and wheat in a district. The Lincom test statistic and p-value report the joint co-
efficient and its corresponding p-value on the main and interacted variable - Incum not aligned centre = 1. All regressions include
controls for the total annual rain in the district, year, crop, and district fixed effects. Standard errors clustered at the district level
are reported in parentheses. * p < 0.10 , ** p < 0.05 , *** p < 0.01

24
Table 4: Effect of the electoral win of an incumbent state party not aligned with the center for different
tenure stages of the central government

Dependent var
MSP (at levels) Deflated MSP
(1) (2)

Early tenure=1 -5.39 -0.17***

(6.52) (0.03)

Incum not aligned centre=1 -23.27*** -0.04**

(5.87) (0.02)

Early tenure=1 × Incum not aligned centre=1 29.90*** 0.08***

(5.94) (0.02)

Prop area under culti -59.86*** -0.12***

(11.83) (0.03)

Early tenure=1 × Prop area under culti 84.92*** 0.29***

(11.35) (0.03)

Incum not aligned centre=1 × Prop area under culti 45.01*** 0.10***
(8.51) (0.02)

Early tenure=1 × Incum not aligned centre=1 × Prop area under culti -35.95*** -0.12***
(9.48) (0.03)
Observations 1786 1786
R2 0.99 0.99
Notes: This table reports results for our estimating equation 3 for districts that ever reported procurement of rice and wheat during elections in
our sample period. In column 1, the dependent variable is the MSP at levels and in column 2, we have MSP of wheat and rice announced in a
given year as a fraction of their respective MSP in the year 2001. The variable Early tenure centre = 1 takes the value 1 if the central government
is in its first three years of its 5-year-long tenure period. Our coefficient of interest is the triple interacted term between Early tenure centre = 1,
Incum not aligned centre = 1, and the proportion of area under cultivation for rice and wheat in a district. All regressions include controls for
the total annual rain in the district, year, crop, and district fixed effects. Standard errors clustered at the district level are reported in parentheses.
* p < 0.10 , ** p < 0.05 , *** p < 0.01

25
Table 5: Effect of the electoral win of an incumbent state party not aligned with the center
during its early tenure stage

Dependent var
MSP (at levels) Deflated MSP
(1) (2)

Incum not aligned centre=1 -2.22 0.02***

(2.38) (0.01)
Prop area under culti 15.68*** 0.15***
(3.94) (0.02)
Incum not aligned centre=1 × Prop area under culti 24.05*** 0.00
(5.42) (0.01)
Lincom test statistic 21.83 .03
Licom p-val 0 0
Observations 979 979
R2 0.99 0.99
Notes: This table reports results for our estimating equation 4 for districts that ever reported procurement of rice and wheat dur-
ing elections in our sample period when the central government is in its early tenure stages. In column 1, the dependent variable
is the MSP at levels and in column 2, we have MSP of wheat and rice announced in a given year as a fraction of their respective
MSP in the year 2001. The variable Incum not aligned centre = 1 takes the value 1 if any of the incumbent state parties were not
a part of the central ruling front or were not aligned with any of the parties in the central ruling front. Our coefficient of interest
is the interacted term between Incum not aligned centre = 1 and the proportion of area under cultivation for rice and wheat in
a district. The Lincom test statistic and p-value report the joint coefficient and its corresponding p-value on the main and inter-
acted variable - Incum not aligned centre = 1 when the center is in its early tenure stages. All regressions include controls for the
total annual rain in the district, year, crop, and district fixed effects. Standard errors clustered at the district level are reported in
parentheses. * p < 0.10 , ** p < 0.05 , *** p < 0.01

26
Table 6: Effect of the electoral win of an incumbent state party not aligned with the center
during its late tenure stage

Dependent var
MSP(at levels) Deflated MSP
(1) (2)

Incum not aligned centre=1 -27.49*** -0.05***

(5.81) (0.02)
Prop area under culti -46.57*** -0.10***
(8.88) (0.03)
Incum not aligned centre=1 × Prop area under culti 51.07*** 0.11***
(8.97) (0.02)
Lincom test statistic 23.58 .06
Licom p-val 0 0
Observations 796 796
R2 0.99 0.98
Notes:This table reports results for our estimating equation 4 for districts that ever reported procurement of rice and wheat dur-
ing elections in our sample period when the central government is in its late tenure stages. In column 1, the dependent variable
is the MSP at levels and in column 2, we have MSP of wheat and rice announced in a given year as a fraction of their respective
MSP in the year 2001. The variable Incum not aligned centre = 1 takes the value 1 if any of the incumbent state parties were
not a part of the central ruling front or were not aligned with any of the parties in the central ruling front. Our coefficient of
interest is the interacted term between Incum not aligned centre = 1 and the proportion of area under cultivation for rice and
wheat in a district. The Lincom test statistic and p-value report the joint coefficient and its corresponding p-value on the main
and interacted variable - Incum not aligned centre = 1 when the center is in its late tenure stages. All regressions include con-
trols for the total annual rain in the district, year, crop, and district fixed effects. Standard errors clustered at the district level
are reported in parentheses. * p < 0.10 , ** p < 0.05 , *** p < 0.01

27
Figures

Figure 1: Announcement effect on retail prices of rice and wheat

Notes: The figure above shows the results from our event study design as implemented by the estimating equation 5. The
regression coefficients of the time dummies ranged from −5 to −2 and 0 to 6 along with their 90% confidence intervals are
plotted. The vertical dotted line at time t = 0 refers to the month of the announcement of MSP for both rabi and kharif
crops. All regressions include controls for the total annual district rainfall, year, crop, and district fixed effects. Standard
errors clustered at the district level are reported in parentheses.

28
Appendix

Table 7: Effect of elections on MSP of Paddy and Wheat for all states

Dependent var
MSP (at levels) Deflated MSP
(1) (2)

Election Year=1 -2.43*** -0.01***

(0.52) (0.00)

Prop area under cultivation -1.93*** -0.00***

(0.35) (0.00)

Election Year=1 × Prop area under cultivation 10.34*** 0.02***

(1.88) (0.00)

Control Mean 1021.97 1.76

Control SD 350.66 .6
Lincom test statistic 7.91 .02
Lincom p-value 0 0
Observations 16976 16976
R2 0.99 0.99
Notes: This table reports results for our estimating equation 1 for all districts in the country whether or not procurement
operations occurred in the district in any year in our sample period. In column 1, our dependent variable is the MSP (at lev-
els) announced in a given year and in column 2, our dependent variable is the deflated MSP. The variable ElectionY ear = 1
takes the value 1 if the state goes for an election in that year. Our coefficient of interest is the interacted term between
ElectionY ear = 1 and proportion of area under cultivation for paddy and wheat in a district. The Lincom test statistic and
p-value report the joint coefficient and its corresponding p-value on the main and interacted variable - ElectionY ear = 1.
Controls include district total annual rainfall, crop, year and district fixed effects. Standard errors clustered at the district
level are reported in parentheses. * p < 0.10 , ** p < 0.05 , *** p < 0.01

29
Table 8: Effect of elections on MSP for crops other than wheat and paddy for all states

MSP (at levels)

Cereals Pulses Oilseeds
(1) (2) (3)
Election Year=1 4.37*** -2.59** 1.94
(0.73) (1.28) (1.47)
Prop area under cultivation 3.13 -41.71*** -0.14
(3.44) (12.40) (8.80)
Election Year=1 × Prop area under cultivation -18.16 215.69*** 0.03
(18.23) (66.06) (46.89)

Control Mean 887.12 2622.06 2251.68

Control SD 377.2 1272.73 1085.61
Lincom test statistic -13.79 213.09 1.97
Lincom p-value .44 0 .97
Observations 36320 37232 42816
R2 0.93 0.94 0.90
Notes: This table reports results for our estimating equation 1 for crops other than paddy and wheat for all states. In
column 1, our dependent variable is the MSP (at levels) for all cereals other than wheat and paddy. These cereals include
bajra, barley, jowar, maize and ragi. In columns 2 and 3, our dependent variable is the MSP (at levels) for pulses and
oilseeds respectively. We have arhar, gram, masur, moong and urad as pulses and groundnut, mustard, nigerseed, saf-
flower, sesamum, soybean, and sunflower as oilseeds. The variable ElectionY ear = 1 takes the value 1 if the state goes
for an election in that year. Our coefficient of interest is the interacted term between ElectionY ear = 1 and proportion
of area under cultivation for paddy and wheat in a district. The Lincom test statistic and p-value report the joint coef-
ficient and its corresponding p-value on the main and interacted variable - ElectionY ear = 1. Controls include district
total annual rainfall, crop, year and district fixed effects. Standard errors clustered at the district level are reported in
parentheses. * p < 0.10 , ** p < 0.05 , *** p < 0.01

30
Table 9: Effect of elections on deflated MSP for crops other than wheat and paddy for
all states

Deflated MSP
Cereals Pulses Oilseeds
(1) (2) (3)
Election Year=1 0.01*** -0.00 0.00
(0.00) (0.00) (0.00)
Prop area under cultivation 0.01 -0.02*** 0.02*
(0.01) (0.01) (0.01)
Election Year=1 × Prop area under cultivation -0.04 0.13*** -0.10*
(0.04) (0.05) (0.06)

Control Mean 1.82 2.02 1.87

Control SD .78 .97 .83
Lincom test statistic -.03 .13 -.1
Lincom p-value .38 0 .07
Observations 36320 37232 42816
R2 0.93 0.95 0.90
Notes: This table reports results for our estimating equation 1 for crops other than paddy and wheat for all states.
In column 1, our dependent variable is the deflated MSP for all cereals other than wheat and paddy. These cereals in-
clude bajra, barley, jowar, maize and ragi. In columns 2 and 3, our dependent variable is the deflated MSP for pulses
and oilseeds respectively. We have arhar, gram, masur, moong and urad as pulses and groundnut, mustard, nigerseed,
safflower, sesamum, soybean, and sunflower as oilseeds. The variable ElectionY ear = 1 takes the value 1 if the state
goes for an election in that year. Our coefficient of interest is the interacted term between ElectionY ear = 1 and pro-
portion of area under cultivation for paddy and wheat in a district. The Lincom test statistic and p-value report the
joint coefficient and its corresponding p-value on the main and interacted variable - ElectionY ear = 1. Controls in-
clude district total annual rainfall, crop, year and district fixed effects. Standard errors clustered at the district level
are reported in parentheses. * p < 0.10 , ** p < 0.05 , *** p < 0.01

31