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The National commodity exchanges were established in India in the year 2003-2004 to perform the functions of price discovery and price risk management in the economy. The derivatives market can perform these functions properly only if they are efficient and unbiased. So, there is a need to properly evaluate these aspects of the Indian commodity derivatives market. The purpose of this paper is to test the market efficiency and unbiasedness of the Indian soybean futures markets.

The paper uses cointegration and a QARCH-M-ECM-based framework to test the market efficiency and unbiasedness in the soybean futures contract traded in the National Commodity Derivatives Exchange (NCDEX). The cointegration test is used to test the long-run unbiasedness and market efficiency of the contract, while the QARCH-M-ECM model is used to test the short-run market efficiency and unbiasedness of the contract by allowing for a time-varying risk premium. The price data is also tested for presence of structural breaks using a Zivot and Andrews unit root test.

The soybean contract is unbiased in the long run, but there are short-run market inefficiencies and also a presence of a time-varying risk premium. Though the weak form of market efficiency is rejected in the short run, the semi-strong market efficiency is not rejected based on the forecasts.

This is the first paper to consider time-varying risk premium while performing the tests of market efficiency and unbiasedness on Indian commodity markets.

The purpose of this paper is to perform an analysis of potential benefits from usage of the futures markets for the farmers. The national commodity exchanges were established in India in the year 2003-2004. Though there has been a spectacular growth in trading volumes in these exchanges, participation of farmers in these markets has been very low. Efforts are being made to increase the awareness and participation of farmers in these markets. As such efforts are being made, it is critical to analyse the potential benefits from usage of the futures markets for the farmers. Our study performs such an analysis for soybean farmers in the Dewas district of Madhya Pradesh state in India.

The authors estimate the optimal hedge ratios in futures markets for farmers in different scenarios characterised by varying levels of different parameters relevant to the farmer. For these optimal hedge ratios, we then estimate the benefits from hedging defined as the change in certainty equivalent income (CEI) due to hedging.

Results indicate that the CEI gain due to hedging is positively related to the farmer’s risk aversion and inversely related to farmer’s price expectations and transaction costs. Also, only when the risk aversion is high, the CEI gain is positively related to the natural hedge. Thus, for a farmer with high risk aversion, hedging acts as a substitute to the natural hedge.

This is the first study that analyses the hedging for farmer in the Indian context by considering yield risk while doing so. Also, their study establishes a relationship between risk aversion, the natural hedge and benefits from hedging in futures markets for the farmer.

Credit is an essential element in the production process in agriculture. There are two sources from which farm households can access credit: institutional sources and non-institutional or informal sources of credit. The informal sources of credit, such as moneylenders, charge exorbitant rates of interest, which further puts a financial burden on the farmers. Hence, to increase the flow of credit from institutional sources, a policy known as the interest subvention scheme (ISS) was introduced in the year 2006. This paper aims to find the effect of the ISS on the behaviour of farm households.

The author has used difference-in-difference analysis for estimation. In the analysis, the author has taken Madhya Pradesh as the treatment state and Andhra Pradesh as the controlled state. The author has used the Village Dynamics in South Asia (VDSA) dataset of ICRISAT for analysis. The author has used data from 2009 to 2014 for the two states.

The author has found that the difference between the average interest rate of Andhra Pradesh and Madhya Pradesh is significant for both pre-treatment and post-treatment periods and this gap has increased after the intervention period. The results suggest that the share of informal sector borrowings has reduced in the treatment group (Madhya Pradesh) as compared to the control group (Andhra Pradesh) in the post-treatment period.

This paper is particularly important because of the dearth of literature on the impact of this scheme in India and may shed light on the much-needed policy implications of this particular policy.