Is Price Transmission in the Indian Pulses Market Asymmetric?

Andaleeb Rahman  | 2015 


Pulses form an integral part of the Indian diet. In the recent past, the domestic wholesale-retail price differential has risen rapidly. The retail prices continued to increase without responding to any changes at the wholesale level. The government enquiry into the same suspected collusive behaviour amongst the major traders. This article attempts to test for asymmetric wholesale to retail price transmission in India using the threshold autoregression and momentum threshold autoregression models for four commonly consumed pulses: arhar, moong, masur and urad. We find that the asymmetric price transmission does characterise the market for pulses. The wholesale and retail prices behave independent of each other in the short-run. The results support the hypothesis of imperfect agricultural markets which lends credence to the audit report of the Comptroller and Auditor General (CAG) of India.