The issue of farmer welfare, particularly farm earnings, has always been a matter of concern in India. It is widely believed that since a large proportion of rural households rely on farming for their livelihood, farm earnings play a significant role in shaping the welfare of the rural masses.
In common parlance, a farmer is someone who is engaged in farming. The 77th round of the NSS survey on the ‘Situation Assessment of Agricultural Households,’ conducted between January and December 2019, defines an agricultural household as one that receives a value of produce exceeding ₹4,000 from agricultural activities and has at least one member self-employed in agriculture, either in the principal status or in the secondary status, within the past 365 days.
This definition of agricultural households can be considered as a functional definition of farming households. Based on this definition, 54 per cent of rural households are categorised as agricultural households.
However, if we consider only those households for which farming is the primary source of income, they account for 38.8 per cent of the total rural households.
Farmer’s Dependence on Farming
On average, agricultural households receive nearly 50 per cent of their total income from farming, which includes income from crop cultivation and animal husbandry. However, a deeper analysis reveals that 15 per cent of agricultural households receive less than 10 per cent of their income from farming.
If we consider agricultural households receiving less than 30 per cent of their income from farming, that number rises to 31.8 per cent. For 43.3 per cent of agricultural households, farming contributes less than 50 per cent of their total household income.
Out of the total agricultural households, 38.9 per cent are fully dependent on farming. Speaking in terms of the percentage of all rural households, 21 per cent are completely dependent on farming, while 31 per cent receive more than 50 per cent of their household income from farming.
In terms of absolute numbers, 362.14 lakh of 930.94 lakh estimated agriculture households rely fully on farm income, while 526.91 lakh getting more than 50 per cent of household income from farming. It is evident that rural households’ reliance on farming varies on the criterion used. It ranges from 54 per cent under a broad definition (agricultural households) to 21 per cent of total rural households under a more rigid definition (households completely dependent on farming).
Farmers’ earnings from farming
The average monthly farm income for an agricultural household is ₹5,380, of which ₹3,798 comes from crop cultivation and ₹1,582 from animal farming. However, this average value hides significant differences between the lowest and highest farm incomes.
A deeper examination of the distribution of farm income reveals that 71 per cent of agricultural households earn a monthly farm income of less than ₹5,000, and only 13 per cent of households earn more than ₹10,000 per month from farming. Further analysis shows that 44 per cent of agricultural households earn less than ₹2,000 per month, 27 per cent earn less than ₹1,000, and 5 per cent of households receive negative returns from farming.
Farm income is highly concentrated among the top 10 per cent of agricultural households. It is observed that the top 10 per cent of agricultural households receive nearly 50 per cent of the total farm income, while the poorest 50 per cent receive only 8.5 per cent.
This high concentration of farm income is largely a result of the unequal distribution of land, a well-known phenomenon. The poor farm earnings of Indian farmers are reflected in the fact that 77.6 per cent of agricultural households earn a monthly farm income below the updated official poverty line (Rangarajan Committee’s 2011-12 poverty line, updated for 2018-19).
Total Income of Farmer Households
Apart from farming, agricultural households earn income from other sources such as wages, non-farm businesses, crop production, animal farming, pensions/remittances, and rent from leasing out land. On average, agricultural households earn ₹4,063 per month from wages, ₹641 from non-farm businesses, ₹134 from land leasing, and ₹611 from remittances and pensions. Including income from farming, agricultural households in rural India earn an average monthly income of ₹10,829.
The distribution of total income among agricultural households reveals that 68 per cent earn a monthly total income of less than ₹10,000, meaning only 32 per cent of agricultural households earn more than ₹10,000 per month.
However, when only farm income is considered, only 13 per cent of agricultural households earn more than ₹10,000 per month, highlighting the importance of non-farm sources in boosting income levels.
Despite contributions from non-farm sources, a significant proportion of agricultural households continue to live on very low incomes. For instance, 39 per cent of agricultural households earn less than ₹5,000 per month, 14 per cent earn less than ₹2,000 per month, and 6 per cent earn less than ₹1,000 per month. Moreover, at the national level, 49.5 per cent of agricultural households have a total monthly income below the updated official poverty line for the survey year.
The Way Forward
Nearly half of the rural households in India are engaged in agricultural activities, but only one-fifth depend entirely on farming for their livelihood.
While government initiatives such as doubling farmers’ income and schemes like Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), which provides ₹500 per month to each farming household, are helpful, they are unlikely to bring substantial changes to the economic conditions of agriculture households.
Agricultural households earning minimal income from farming and relying heavily on non-farm sources of income require increased support through budgetary provisions focused on promoting non-farm business activities.
Additionally, agricultural households entirely dependent on farming but with very low earnings need enhanced assistance under PM-KISAN.
The writer is with Sardar Patel Institute of Economic and Social Research (SPIESR), Ahmedabad
