ABSTRACT
This chapter examines the relationship between the prices of rice quoted in four Indian market centres such as West Bengal, Bihar, Odisha and Uttar Pradesh, using an approach of cointegration with threshold adjustment. Due to the non-stationarity of many commodity price series, the concept of cointegration has become widely used in the econometric analysis of commodity market integration. The increasing level of rice production has been associated with a significantly increasing ratio of marketed surplus. India has been self-sufficient in rice as it was able to produce rice more than its demand, enabling it to export a huge quantity of rice every year. The shortfall of production of rice relative to its demand in the years of poor harvest is usually met from the buffer stock maintained by the government. The primary objectives of price policy in India are to promote growth in agricultural production and to ensure food security and price stability.
