Empirical Study of Price Volatility of Staple Foodgrains Commodities During Covid19 in India by GARCH Model using CPI

Abstract

Purpose: India is an agriculture-dominated country having different weather conditions conducive to producing various types of foodgrain commodities. Despite good agriculture production as per Economic Survey 2020-21, in particular staple food grain commodities for every household, the imposition of lockdown from March 2020 onwards during the Covid 19 pandemic has changed the supply and demand dynamics, thus leading to the price volatility in staple foodgrain commodities as well as in concomitant services like health and transportation, etc. which was reflected in Consumer Price Index collected by ministry of MOSPI, Govt. of India.

Design/ Methodology/ Approach: This study investigates the price volatility of staple agricultural commodities for household and services, using consumer price index monthly time-series data (2012 as a base year) obtained from the Reserve Bank of India from Jan. 2019 to Dec. 2020, and analysis was carried out using econometric GARCH model followed by stationarity tests, heteroscedasticity test, autocorrelation test of time-series data for statistical significance.

Findings: The results have shown that some items exhibit significant price volatility than others for the said duration, and the same is further evident from the sum of α, β coefficients estimated using Econometric model analysis.

Paper Type: Empirical Research Paper