NABARD has released the All India Rural Financial Inclusion Survey (NAFIS).
What is the NAFIS about?
NAFIS is based on a sample of 40,327 rural households in 29 states of which 48 per cent are agriculture households (agri-HHs), 87 per cent are small and marginal farmer households.
The survey combines the strengths of the NSSO’s Situation Assessment Survey (SAS) and RBI’s All India Debt and Investment Survey.
Among other things, the survey estimates 2015-16 farmers’ income levels.
What are the significant findings of the survey?
Doubling Farmers Income - The vision of doubling farmer incomes by 2022-23 had no assessment of the base (2015-16) aggregate income levels, the estimates from NAFIS fill that gap.
Benchmark Income Levels - The Dalwai Committee set up in 2016, to advice on the strategy to double farmers’ incomes by 2022, did not have any benchmark income levels for 2015-16.
So, the committee derived them by applying yearly growth rates of state-wise net-state-domestic-product (NSDP) to the NSSO estimates of 2012-13 income levels.
In terms of sources of income, NAFIS offers interesting insights, particularly for the Dalwai Committee.
Agri and Non- Agri Incomes - NAFIS estimates that in 2015-16, 35 per cent of farmers’ income came from cultivation, 8 per cent from livestock, 50 per cent from wages and salaries and 7 per cent from non-farm sectors.
The survey also estimates income of non-agri rural HH at Rs 7,269/month, more than half of which comes from working as wage labourers.
Insights based on Climate - NAFIS data finds that working as labourers is a fall-back option for average farmers in drought years.
Besides, the increasing pressure as a result of shrinking average holding size is presumably forcing farmers to work as labourers to meet their needs.
How it differs from other surveys?
NSSO used wider definition of rural areas, the NABARD survey includes areas that are bigger including Tier Three, Four and Five towns.
NAFIS estimates that an average Indian farming household earnings based on household-level data.
At Rs 5,000, it has a higher threshold level of income from agricultural and allied activities compared to the NSSO’s threshold income level of Rs 3,000.
This is likely to create an upward-bias in NAFIS’s estimates of farmers’ income.
If NAFIS followed NSSO’s definitions, the 2015-16 estimate of farmers’ income would have been somewhat lower, and so would have been its growth rate (below 3.7 per cent).
NAFIS data is very different from the assumptions of the Dalwai Committee, which states that by 2022-23, 69 to 80 per cent of farmers’ incomes will accrue from farming and animal rearing.
What is the way forward?
All three surveys of NAFIS, NSSO, and Dalwali Committee were conducted in years of deficit rainfall.
This creates debates over the reliability of all these surveys, as it might fail to capture the true picture of agriculture and farmers.
Going forward, it would be better if NSSO and NABARD ensure that their next surveys belong to normal rainfall years.
To achieve dream of doubling farmers’ incomes by 2022-23, the Dalwai Committee points out that farmers’ real incomes need to grow at 10.4 per annum, that is, 2.8 times the growth rate achieved historically (3.7 per cent).
This sounds like a challenge of raising country’s GDP growth from 7.2 per cent to 20 per cent.
Thus farmer income can possibly be done by 2030, unless the government undertakes drastic steps to augment farmers’ incomes at faster pace.
