NABARD has recently released the results of the All India Rural Financial Inclusion Survey.
What does it reveal?
The survey, which was for 2016-17, covered 40,327 rural households.
Definition - Agricultural households were defined as those where at least one member was self-employed in agriculture in the past year, and which derived at least Rs 5,000 from agricultural produce.
It found that the average annual income of an agricultural household was Rs 107,172 versus Rs 87,228 for non-agricultural households.
Sources of income - Only about 48% of all rural households are agricultural and only 23% of rural income comes from agriculture.
This reveals that rural India is no longer predominantly agricultural.
Diversification – 88% of agricultural households diversified their sources of income.
The most important among them was wage labour, including public works, which accounted for more than a third of the income of agricultural households.
It provides an important source of supplementary income to farmers, especially when they consider cultivation as risky and unremunerative.
Importance of land - The income of agricultural households possessing less than 0.4 hectares (one acre) is lower than both those who have more land, and those who have no land.
These households might well be better off if they were to either sell off their land, or if they were to buy or lease in more land.
This illustrates the importance of well-functioning land markets.
It also highlights the need to liberalise tenancy laws, so as to enable the recording of leasing for the purposes of inputs, credit, insurance and marketing support.
Access to finance - 88% of the rural households reported having a bank account.
Yet, savings in a formal institution is meagre and this shows the dormant status of the savings account opened under Jan Dhan Yojana.
Debt - Any household which had an outstanding loan at the time of the survey is dubbed “indebted” and found that found that 47% of all rural households were “indebted”.
The borrowing households had borrowed about Rs 92,000 on an average from all sources, 70% from formal and 30% from informal.
Insurance - Only 6.9% of the households that had an agricultural loan had crop insurance in the agricultural year 2015-16.
But the coverage of farmers raised to more than 50% in the year 2016-17 under the Pradhan Mantri Fasal Bima Yojana.
How can it be made better?
Comparison - The survey differs from NSSO surveys slightly in its definitions of basic concepts such as “rural” and “agricultural household”.
If these definitions had been the same, the figures produced by this survey could be more easily compared with the figures produced by the NSSO.
Classification - The term “indebtedness” conveys a negative image, notwithstanding the fact that state policy in India has been aimed at increasing formal indebtedness.
The term “indebted” should be used for those households whose liabilities exceed their assets or whose debt servicing obligations exceed 30% of their income, instead of taking mere outstanding loans as a criterion.
Access to credit helps increase the net earnings for some households, while others might find themselves in a debt trap, compelled to borrow more to repay previous loans.
Hence, the survey should attempt to distinguish between these two kinds of households so that it will be useful from a policy perspective.
Also, the survey might be better if it were shorter and the questions be spread across more households.
Source: Business Standard
Quick Facts
Classification - NSSO
‘Situation Assessment Survey of Agricultural Households’ conducted in NSS 70th round considers an agricultural household as –
a household receiving value of produce, more than Rs.3000/- from agriculture
at least one member self-employed in agriculture either in the principal status or in subsidiary status during last 365 days.
‘Situation Assessment Survey of Farmers’ conducted in NSS 59th Round considers a ‘farmer’ as a person who possesses some land and is engaged in some agricultural activities on that land during last 365 days preceding the date of survey.
Thus the definition followed in NSS 59th Round had kept all agricultural activities of persons outside the scope of the survey which did not possess and operate any land.
