All India Rural Financial Inclusion Survey (2021-22)

Syllabus: Agriculture and allied activities.

Source: IE

Context: The latest All India Rural Financial Inclusion Survey (2021-22) indicates a reversal of the declining trend in rural households’ dependence on agriculture.

About All India Rural Financial Inclusion Survey (2021-22):

• Increase in Agricultural Households: 57% of rural households were identified as “agricultural” in 2021-22, up from 48% in 2016-17. This includes semi-urban centers with less than 50,000 population. (NABARD’s All India Rural Financial Inclusion Survey)

• 57% of rural households were identified as “agricultural” in 2021-22, up from 48% in 2016-17. This includes semi-urban centers with less than 50,000 population. (NABARD’s All India Rural Financial Inclusion Survey)

• Rise in Agricultural Income: The average monthly income of agricultural households was ₹13,661 in 2021-22, compared to ₹8,931 in 2016-17. Agricultural households earned more than their non-agricultural counterparts. (NABARD Survey)

• The average monthly income of agricultural households was ₹13,661 in 2021-22, compared to ₹8,931 in 2016-17. Agricultural households earned more than their non-agricultural counterparts. (NABARD Survey)

• Increased Income from Cultivation and Animal Husbandry: Income from farming activities rose from 43.1% to over 45% in 2021-22. (NABARD Survey)

• Income from farming activities rose from 43.1% to over 45% in 2021-22. (NABARD Survey)

• Impact of COVID-19: The pandemic-induced economic slowdown caused a shift back to agriculture, which was less affected by lockdowns due to exemptions. (NABARD Survey and PLFS).

• The pandemic-induced economic slowdown caused a shift back to agriculture, which was less affected by lockdowns due to exemptions. (NABARD Survey and PLFS).

• Rising Dependence on Agriculture for Employment: PLFS data shows agriculture engaged 46.5% of India’s workforce in 2020-21, rising from 42.5% in 2018-19. (PLFS)

• PLFS data shows agriculture engaged 46.5% of India’s workforce in 2020-21, rising from 42.5% in 2018-19. (PLFS)

Positives:

• Increased agricultural participation: More rural households are relying on agriculture for income, potentially revitalizing the sector.

• Example: 57% rural households involved in agriculture (NABARD).

• Higher agricultural income: Agricultural households reported an increase in income, contributing to rural economic stability.

• Example: Monthly income increased to ₹13,661 from ₹8,931 (NABARD).

• Resilience during COVID-19: Agriculture remained resilient during the pandemic, ensuring a livelihood for many when non-farm jobs were scarce.

• Example: Agriculture was exempt from lockdowns (NABARD, PLFS).

• Improved farm productivity: A rise in income from animal husbandry and cultivation reflects increased farm productivity.

• Example: Income from farming activities rose to 45% (NABARD).

Negatives:

• Lack of non-farm jobs: The increased dependence on agriculture reflects a shortage of alternative employment in manufacturing and services.

• Example: Only 11.4% of the workforce is employed in manufacturing (PLFS).

• Low marginal productivity: Agricultural jobs tend to offer low productivity and subsistence-level wages, hindering overall economic growth.

• Example: Employment characteristics in agriculture remain similar to low-wage, informal sectors.

• Income diversification decline: Agricultural households are now earning less from non-farm sources, which could make them more vulnerable to farming risks.

• Example: Reduction in income from non-farm sources across land-size categories (NABARD).

• Economic disparities across states: States like Bihar, Uttar Pradesh, and Chhattisgarh still have a very high dependency on agriculture, which points to regional economic disparities.

• Example: Chhattisgarh, Madhya Pradesh, and Bihar have over 50% of their labor force in agriculture (PLFS).

Way ahead:

• Diversify rural employment: Promote rural industries and service-sector jobs to reduce over-reliance on agriculture.

• Boost agricultural productivity: Invest in modern technologies and practices to enhance farm productivity and increase income.

• Strengthen rural infrastructure: Improve transportation, irrigation, and storage facilities to support the agricultural sector and rural industries.

• Promote skill development: Implement programs for skill development in rural areas to provide youth with non-farm employment opportunities.

Conclusion:

The survey data highlights a paradox where rural India is increasingly reliant on agriculture despite overall economic growth. While agricultural income has risen, the need for diversification and productivity improvements is essential for long-term rural prosperity.

Insta Links:

• NABARD Report

• Second-all-India-rural-financial-inclusion-survey

“In the villages itself no form of credit organization will be suitable except the cooperative society.” –All India Rural Credit Survey. Discuss this statement in the background of agricultural finance in India. What constraints and challenges do financial institutions supplying agricultural finance face? How can technology be used to better reach and serve rural clients? (UPSC-2014)