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LATEST NEWS UPDATES | The roots of rural distress -Manas Chakravarty

The roots of rural distress -Manas Chakravarty

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published Published on Jun 21, 2017   modified Modified on Jun 21, 2017
-Livemint.com

Forgiving farm loans is no solution. The data shows there’s a far more fundamental problem—most agricultural households are unable to keep body and soul together.

There’s nothing new about rural distress. Nor is it surprising. If the income of almost 70% of farm households is less than their consumption expenditure, according to the government’s own data, then it’s obvious they’ll be “distressed”. Yet that’s the inescapable conclusion from the National Sample Survey Office (NSSO) report that mapped the income, expenditure and indebtedness of agricultural households in India in 2013.

Consider Chart 1, which shows average monthly income from all sources and consumption expenditure for households with different sizes of farm holdings. For households with farms up to 1 hectare, aka marginal farmers, average monthly consumption is more than total income. They can barely scratch out a living from their handkerchief-sized plots. What else can these households do but borrow to make ends meet?

The chart also shows that for farm households that have a hectare of land or less, net receipts from cultivation make up less than half their total income. They manage to eke out a precarious living by supplementing their income with income from wage labour, animal husbandry and other non-farm businesses.

The proportion of receipts from farming goes up as land holdings increase. Any waiver of crop loans, therefore, benefits those with large landholdings the most.

The next obvious question is—how many households do we have that own 1 hectare or less? The answer (in Chart 2), again taken from NSSO figures, is 69.4%. So, the majority of agricultural households are in chronic distress, unable to keep the wolf from the door. Another 17.1% households—those owning between 1 and 2 hectares—had an average monthly surplus of Rs891. A major illness, or perhaps a couple of bad monsoons, would be enough to wipe out all their savings.

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Livemint.com, 20 June, 2017, http://www.livemint.com/Opinion/ZgHxh8x5xaYjv8g3GCfynL/The-roots-of-rural-distress.html


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