This book examines the functioning of the dual grain market with reference to rice and wheat and traces the answer of better policy option for raising food output between investment in irrigation and fertiliser subsidy. This is done by carrying out the following three simulations: What is the impact of a 10 per cent hike in fertiliser prices?What is the impact of 1 per cent increase in irrigated acreage? What is the combined impact of the two above? The study underscores the superiority of investment in irrigation over fertiliser subsidy as a more cost-efficient option of raising food output. The finding is even more valid in the context of economic liberalisation which creates favourable investment climate in agriculture. The public investment in irrigation needs to be increased by reducing food and fertiliser subsidies by trageting public distribution system and revamping fertiliser industry respectively and by charging the users at least a part of the economic cost of providing services such as irrigation and electricity.
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