The
assumption that rural households are largely dependent on farm income is no
more valid
There is a quiet change sweeping
through the Indian countryside, one that has virtually crept up on us during
the past decade. Yet few people realise the implications and consequences of
the enormous changes taking place. Let’s take a closer look at some of these
realities and what these signify for the well-being of not just the 800 million
people living in its 6 lakh villages but the entire nation.
Rural India’s share of national
income and expenditure is above the half mark. The ICE 360 survey (2014)
reveals that rural India contributes over half of India’s income (55.4%), has a
share of 56.1% of consumption expenditure, and its 179.5 million households
have a share of 52.3% of the country’s surplus income. The fact of the matter
is that while most of the bottom of income pyramid families live in rural
India, around half of the upper income households are also located there. The
good news is that rural poor have increased their consumption more than urban
poor. The bad news is that there is a huge income disparity between the rich
and the poor in rural India which continues to widen.
The perception of rural India is one
of a large population comprising small and marginal farmers with pockets of
rich farming households in the so-called food baskets of Punjab and Haryana.
The truth is half of all rural households do not have any land holdings, 37%
are marginal farmers, 7% are small farmers, 3% have small-to-medium sized
farms, 2% have medium-sized farm holdings and 0.1% have large cultivable land
holdings.
The assumption that rural households
are largely dependent on farm income is no more valid. Consider this: A little
over a quarter of all the households (25.8%) or 46.2 million families in rural
India depend on incomes from cultivation of land. An overwhelming majority
(76.2 million households, 42.5%) earn their livelihood from non-farm
activities. There are 39.2 million families (21.8%) that are dependent on a
combination of farm and non-farm incomes. This indicates that agriculture-dependence
has gone down drastically.
Interestingly, the households that
depend on a combination of farm and non-farm activities are the ones that are
doing better than other households on the income, expenditure and surplus
income fronts. Thus, for the 10 million households mentioned above, annual
surplus income at R62,434 is twice that of the other group whose surplus income
stands at R27,393. Significantly, nearly 55% of all households that rely only
on farm incomes are to be found in the Underdeveloped Rural areas, while 30%
live in Emerging Rural areas and just 15% in Developed Rural.
These changes in the structure of
the rural economy have widespread implications for policy-makers. While it is
true that a large population of Indians are still stuck in the dark underbelly
of rural India, as discussed in yesterday’s article (http://goo.gl/7rMeUl), the
fact remains that most central and state government subsidies are being
directed towards large agricultural landowners that constitute a tiny percentage
of the rural population.
This focus has led to a situation
where linkages between agriculture and nutrition have been severed. Right
through the 1990s and up to the first decade of the new millennium, food
production has declined due to flawed agriculture policies. Subsidies,
irrigation and investments have been directed at cash crops, leading to a
decline in food production across states. As a result, small and marginal
farmers have had to rely on agricultural labour opportunities or bailed out
completely from the farm sector. The ones that remain are trapped in a cycle of
debt and low nutrition—as can be witnessed from high farmer suicide rates.
MGNREGA, it has already been discussed, has addressed the income requirement of
this population but only to a limited extent.
It is not surprising, then, that
when asked about what worries them the most, households across all three rural
economic clusters—Developed, Emerging and Underdeveloped—give top billing to
personal and family health. Soaring health expenses and lack of adequate health
facilities make the situation particularly worrisome. Safety and security too
rank among the top concerns. For Emerging Rural households, finding jobs is a
major concern. Law and order and the urgent need for job creation, therefore,
assume significant importance in the current scenario. Rural India presents a
challenge of huge proportions but one of the most heartening findings is the
fact that across all rural household types, worries about “daughter’s wedding”
has been downgraded.
The way forward for state and
central governments is to focus on issues and create a healthy rural economy
that offers opportunities in agriculture and non-agriculture sectors while
enhancing skill-sets of people employed in both.
Even as all-in-one-health-insurance
(including crop and health insurance) is being readied to be launched by the
central government, such schemes will only make a meaningful difference if they
are targeted at financially vulnerable farming households. An annual premium of
R700-1,300 that is being proposed would constitute almost 6% of the surplus
income of a household that is completely dependent on farm income. Besides,
with the clause that only a five-member household would be eligible for such an
insurance policy, it would definitely rule out a major proportion of the
intended target group. Only when schemes are tailored to meet the requirements
of the most needy people, will government measures succeed in ensuring the
overall well-being of the rural population.
The author is director & CEO,
People Research on India’s Consumer Economy—ICE 360°
(This is the fourth in a series of articles by the author)
(This is the fourth in a series of articles by the author)
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