ABSTRACT

This chapter discusses various issues related to the functioning of the water market and rental market of capital goods. The discussion in the chapter shows that these markets, besides performing the usual function of correcting imbalances in factor endowments, enhance the extent of mechanization of agriculture and encourage adoption of production and productivity enhancing practices. Further, it appears that by benefitting the small and marginal farmers the most, the emergence of these markets has substituted for India’s long-pending agrarian reform in terms of consolidation of holdings. These markets, however, are not free from imperfections, and hence intervention for their regulation is desired