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LATEST NEWS UPDATES | Only 40 per cent of rural households dependent on farming as main income source: NSSO -Harish Damodaran

Only 40 per cent of rural households dependent on farming as main income source: NSSO -Harish Damodaran

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published Published on Dec 22, 2014   modified Modified on Dec 22, 2014
-The Indian Express

Hardly 58 per cent of rural households in India are engaged in farming activity, which, in turn, contributes not even 60 per cent to their average total monthly incomes.

These are the findings of the latest countrywide "Situation Assessment Survey of Agricultural Households" conducted by the National Sample Survey Office (NSSO) for the 2012-13 crop year from July to June.

They refute a common perception regarding agriculture - how it generates just 15 per cent of India's GDP (2012-13 data) despite rural areas housing 68.8 per cent of the total population (2011 Census). Such a view, reinforcing concerns of a widening Bharat-India divide, basically assumes "rural" to be synonymous with "agriculture".

But as the NSSO survey findings released on Friday show, only 9.02 crore (57.8 per cent) out of the country's estimated 15.61 crore rural households were "agricultural" - defined as those having at least one member self-employed in farming, either in principal or subsidiary status, during the last 365 days.

Further, even within the 9.02 crore agricultural households, only 68.3 per cent reported farming (i.e. cultivation, livestock rearing and other agricultural activity) as their principal source of income. Thus, a mere 39.5 per cent of rural households today are dependent on agriculture as the source yielding the maximum share of income.

Even more revealing is the data on the total income of agricultural households. Net receipts from cultivation and rearing of animals accounted for just 59.8 per cent of the average Indian farming family's monthly income.

The remaining was from wage/salaried employment, non-farm business and other sources such as remittances, interest and dividends.

In short, while barely 58 per cent of rural households are now "agricultural", over 40 per cent of income even in their case comes from non-farming economic activities. This makes the gap between agriculture's share in GDP relative to that of the population residing in rural areas not as yawning as it may appear to be.

"While 69 per cent of India is still rural, the notion of rural meaning simply wheat or mustard fields is no longer appropriate. All agriculture is rural by definition, but the converse isn't true," points out Neelkanth Mishra, India Equity Strategist for Credit Suisse, a global financial services company.

The most obvious examples of the weakening association of rural with agriculture are Kerala, Tamil Nadu, Andhra Pradesh and, perhaps surprisingly, West Bengal and Bihar. Slightly over a quarter of Kerala's rural households are "agricultural". Moreover, just about a third of income even for them originates from farming (see table).

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Rajasthan has the highest share of agricultural-to-rural households, at 78.4 per cent. But agricultural households even in this state derive less than 56 per cent of monthly income from farming.

One reason for the growing chasm between "rural" and "agricultural" has to do with the very definition of the former, which is residual: Under the Census, any area not urban is deemed to be rural. Urban, on the other hand, refers to any place having a minimum population of 5,000, a population density above 400 per square km, and at least 75 per cent of the male working population engaged in non-agricultural pursuits.

Such a wide definition implies that even if only a quarter of households in a particular place are agricultural - which is roughly the levels reached in Kerala - it will continue to be classified as rural.

As a result, while the farm sector's share to GDP will keep falling - it was 25 per cent till two decades ago - rural wouldn't register as steep a decline, though it may become less and less agricultural.

Mishra estimates that agriculture's share within India's rural GDP is already now down to 25 per cent. According to him, 75 per cent of all new factories and 70 per cent of manufacturing jobs created in the last decade were in rural areas.

 


The Indian Express, 22 December, 2014, http://indianexpress.com/article/business/business-others/theres-less-of-krishi-in-bharat-now/99/


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