Understanding Rural Income Pattern (Part I)

The distressful condition of poor in general and rural population in particular has become an important issue during this election and desirably so. However, while data on income level and income pattern in urban India is easier to obtain, getting the same for rural India is tougher. To address this issue, NABARD (National Bank for Agriculture & Rural Development) undertook an extensive survey, the report on which was published in Aug’18. The report gives valuable insights on income as well as borrowings level of rural households. Here is a look at the details.

The survey divides rural India into two categories based on the primary source of income generation – agricultural households (AH) and non-agricultural households (NAH). (A household means all those living under a roof, average being 4.5 people per household in rural India). AH are classified as those who derive income of at least Rs 5,000 per year from cultivation, animal husbandry etc. All others are classified as NAH and normally work as wage labourer, are salaried or engaged in trade. As per the survey, about 48% of rural households are AH whereas the rest are NAH. However, dependency of rural economy on agriculture is higher than the figure of 48% since a large number of NAH work as labourer on large farms. They are also indirectly dependent upon agriculture and any agricultural distress like low rainfall etc is a cause of hardship for them too. An interesting figure is that age of the head of a NAH household is less than 35 years in about 26% cases against 18% for AH. This probably indicates a shift away from agriculture for the younger generation.

As per the report, AH earns monthly income of Rs 8,900 on an average whereas it is just about Rs 7,300 for NAH. The result is somewhat surprising as so far, the discussion centers around distress in agriculture sector only. The survey shows that rural households not directly engaged in cultivation are more distressed than agriculture households. These households earn almost 20% lower than AH. Most of the NAH are, by default, so since they are either landless or have very small land holding which is not sufficient to meet their livelihood needs. However, a perplexing figure is that as much as 80% of NAH are dependent on one person for their livelihood in contrast with only 13% in case of AH (average household size is 4.5). This means at least one more member of agriculture household is engaged in activities such as animal husbandry, dairying, fisheries etc (together called livestock rearing). It is difficult to understand the reason for this anomaly in case of NAH.

The skewed earnings pattern puts the onus on the government to carefully formulate the programs so that the criteria stipulated does not exclude the distressed households which are landless. Further, since NAH face greater distress, probably there is a need to prepare an independent strategy for them. One of which could be encouraging these households to enhance income through livestock rearing, dairying etc since it is largely independent of monsoon and requires very small investment. That is particularly so because of increasing scarcity of these resources in urban area.

As a result of landlessness, low landholding and possibly a lack of enterprising mindset, 20% of the total households (including both AH and NAH) earn Rs 2,500 or less per month. (This is per household, not per person). This is grossly inadequate to meet the minimum needs, leave aside the exigencies. Even the income level of population above this threshold is not very high with almost 80% of households earning less than Rs 11,000 month. Only the top one percent households earn Rs 49,000 per month, not an uncommon income level in urban India. As a result, the disparity in rural area is less than that in urban area, a fact, probably, contributing to greater brotherhood and sense of togetherness among village population.

Trivia – India accounts for 57% of the world’s buffalo population..!


(Image courtesy – Ministry of rural development).

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