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NEWS ALERTS | Southern states had a higher proportion of indebted farm households in 2019, shows NSO survey
Southern states had a higher proportion of indebted farm households in 2019, shows NSO survey

Southern states had a higher proportion of indebted farm households in 2019, shows NSO survey

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published Published on Sep 21, 2021   modified Modified on Jul 29, 2022


The Situation Assessment Survey of Agricultural Households and Land and Livestock Holdings of Households in Rural India (NSS 77th Round), which was released recently, informs one about farm households' income in the crop year 2018-19 and indebtedness in 2019 (as on the date of survey), among other things. Prior to the recent report, Land and Livestock Holding Surveys (LHS) and Situation Assessment Survey (SAS) of Agricultural Households used to be conducted as separate surveys. 

The recently released report related to the NSS 77th Round shows that the outstanding loan per agricultural household has climbed up from Rs. 47,000/- to Rs. 74,121/- between 2013 and 2019, which is a steep rise by Rs. 27,121 i.e. 57.7 percent. Please see chart-1(a). With an annual amount of Rs. 6,000, which is being paid to a farming household under the Pradhan Mantri Kisan Samman Nidhi Yojana (PM-KISAN), it will take a little more than twelve years to repay the entire amount of Rs. 74,121/- per farm household. 

Please note that only small and marginal farmers' families, with combined landholding upto 2 hectares, were eligible initially when the PM-KISAN was launched on 24th February, 2019. The scheme was later on revised w.e.f. 1st June, 2019 and extended to all farmer families irrespective of the size of their landholdings.

Although about 51.9 percent of agricultural households carried the burden of debt in 2013, the proportion of such households reduced marginally to 50.2 percent in 2019.  

According to the NABARD All India Rural Financial Inclusion Survey 2016-17 (in short, the NAFIS 2016-17 report), almost 52.5 percent of agricultural households and 42.8 percent of non-agricultural households were reportedly indebted at the time of the survey (i.e. during January-June, 2017). The average amount of outstanding loan per indebted agricultural household was Rs. 1,04,602 as on the date of survey. In other words, between 2013 (NSS 70th Round) and 2017 (NAFIS), the average amount of outstanding debt more than doubled. Please click here to know more about the NAFIS 2016-17 report.

Based on a nationwide consultative process involving more than 190 farmers’ organisations, a bill entitled The Farmers' Freedom from Indebtedness Bill (2018) was formulated in 2018. Among other things, the bill, which was prepared by the All India Kisan Sangharsh Coordination Committee (AIKSCC), proposed a one-time immediate and complete loan waiver.

Farm indebtedness as per the NSS 77th Round Report

The average amount of outstanding loans per agricultural household increased with the rise in the possessed land’s size class (as one moved from 'less than 0.01 hectare' to 'more than 10.00 hectares'). The average amounts of outstanding loan per farm household were Rs. 26,883, Rs. 33,220, Rs. 51,933, Rs. 94,498, Rs. 1,75,009, Rs. 3,26,766 and Rs. 7,91,132 for possessed land's size classes 'less than 0.01 hectare', '0.01-0.40 hectare', '0.40-1.00 hectare', '1.01-2.00 hectares', '2.01-4.00 hectares', '4.01-10.00 hectares', and 'more than 10.00 hectares', respectively. Please consult table-1.

Table 1: Percentage distribution of indebted agricultural households and average amount (Rs.) of outstanding loans per agricultural household for each size class of land possessed

Source: Situation Assessment of Agricultural Households and Land and Livestock Holdings of Households in Rural India, 2019, NSS 77th Round, January 2019-December 2019, NSO, MoSPI, please click here to access  
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The proportion of indebted farm households were 38.5 percent, 40.8 percent, 48.4 percent, 57.4 percent, 69.7 percent, 79.3 percent and 81.4 percent for possessed land's size classes 'less than 0.01 hectare', '0.01-0.40 hectare', '0.40-1.00 hectare', '1.01-2.00 hectares', '2.01-4.00 hectares', '4.01-10.00 hectares', and 'more than 10.00 hectares', respectively. 

Out of the total indebted farm households, most belonged to the possessed land's size class '0.40-1.00 hectare' (constituting 34.4 percent of the total indebted farm households), followed by the size class '0.01-0.40 hectare' (forming 27.8 percent of the total indebted farm households), size class '1.01-2.00 hectares' (constituting 20.2 percent), size class '2.01-4.00 hectares' (constituting 12.0 percent), and size class '4.01-10.00 hectares' (making up 4.5 percent of the total indebted farm households).   

According to the report pertaining to the NSS 77th Round, information on the amount of outstanding loan as on date of survey (i.e., the day on which data was collected from the household) was collected from each of the surveyed farm households during the first visit. Along with the outstanding amount, information on source, nature, purpose, etc., of the loan was also collected. The amount of outstanding loan reported in the survey also included outstanding interest. However, the Situation Assessment Survey of NSS 70th Round did not collect information on the purpose for which the loan was taken, which was recorded in the 77th Round.

Farm indebtedness across the states/ UTs

The highest average amount of outstanding loan per farm household in 2019 was observed in Andhra Pradesh (Rs. 2,45,554), followed by Kerala (Rs. 2,42,482), Punjab (Rs. 2,03,249), Haryana (Rs. 1,82,922) and Telangana (Rs. 1,52,113). Please see chart-1(a). 

Note: Please click here in order to access the data of the charts-1(a) and 1(b) in a spreadsheet format

Source: For the data related to 2019, please consult -- Statement 5.7.1, NSS Report No. 587: Situation Assessment of Agricultural Households and Land and Livestock Holdings of Households in Rural India, 2019, NSS 77th Round, please click here to access

For the data related to 2013, please consult -- Table-12, Appendix A, Key Indicators of Situation Assessment Survey of Agricultural Households in India (January-December 2013), NSS 70th Round, MoSPI, GoI, December 2014, please click here to access 
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The highest average amount of outstanding loan per farm household in 2013 was observed in Kerala (Rs. 2,13,600), followed by Andhra Pradesh (Rs. 1,23,400), Punjab (Rs. 1,19,500), Tamil Nadu (Rs. 1,15,900) and Karnataka (Rs. 97,200)

Between 2013 and 2019, the average amount of outstanding loan per agricultural household grew by more than 100 percent for Assam (382.6 percent), Chhattisgarh (110.2 percent), Haryana (131.5 percent), Himachal Pradesh (206.5 percent), Jammu and Kashmir (149.5 percent), Madhya Pradesh (131.8 percent), Mizoram (709.8 percent), Nagaland (191.7 percent), Sikkim (225.1 percent) and Tripura (378.9 percent)

The highest proportion of indebted agricultural households during 2019 was found in Andhra Pradesh (93.2 percent), followed by Telangana (91.7 percent), Kerala (69.9 percent), Karnataka (67.6 percent) and Tamil Nadu (65.1 percent). Please consult chart-1(b). 

Note: Same as for Chart-1(a)
Source: Same as for Chart-1(a)

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The highest proportion of indebted agricultural households in 2013 was detected in Andhra Pradesh (92.9 percent), followed by Telangana (89.1 percent), Tamil Nadu (82.5 percent), Kerala (77.7 percent) and Karnataka (77.3 percent)

Sources of credit  

Table-2 provides the percentage distribution of the amount of outstanding loans by the source from which it was taken for different size classes of land possessed (in hectares). At the national level, almost 28.0 percent of the entire outstanding loan was from institutional sources [like Scheduled Commercial Banks; Regional Rural Banks; Co-operative Banks; SHGs -- bank linked or non-linked; and Other institutional agencies (including insurance companies, provident fund, employer, financial corporation/institution, NBFC including micro financing institution and other institutional agencies)] and 71.8 percent was taken from non-institutional sources [like Agricultural money lender; Professional money lender; Relatives and friends; and Other non-institutional agencies (including include landlord, input dealer, chit-fund, market commission agent/ trader and others)] in case of agricultural households with possessed land's size class 'less than 0.01 hectare'. However, about 68.4 percent of the entire outstanding loan was taken from institutional sources and 31.6 percent was taken from non-institutional sources in case of agricultural households with possessed land's size class 'more than 10.0 hectares'.  

Table 2: Percentage distribution of amount of outstanding loans by sources of loan taken for each size class of land possessed (in hectares)

Source: Same as in table-1

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It can be seen from table-2 that in case of agricultural households with possessed land's size classes ‘0.01-0.40 hectare’, ‘0.40-1.00 hectare’, ‘1.01-2.00 hectares’, ‘2.01-4.00 hectares’, ‘4.01-10.00 hectares’ and ‘10.00+ hectares’, a higher proportion of outstanding loans was taken from institutional sources instead of non-institutional ones. 

Purpose of loans

Table-3 provides the percentage distribution of the amount of outstanding loan by purpose of loan for different size classes of land possessed (in hectares). As the size class of land possessed increased from 'less than 0.01 hectare' to 'more than 10.00 hectares', a higher proportion of outstanding loan was taken for agricultural purposes and a lower proportion of outstanding loan was taken for non-agricultural purposes. For example, in the case of possessed land's size class 'less than 0.01 hectare', 42.2 percent of the outstanding loan was taken for 'education and medical' purposes and 12.8 percent was taken for 'marriages and ceremonies'. Only 2.6 percent of the outstanding loan was taken for 'capital expenditure in farm business' and 4.2 percent of the outstanding loan was taken for 'revenue expenditure in farm business'. 

Table 3: Percentage distribution of amount of outstanding loans by purpose of loans taken for each size class of land possessed (in hectares)

Source: Same as in table-1
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On the contrary, in the case of possessed land's size class 'more than 10 hectares', about 34.1 percent of the outstanding loan was taken for 'capital expenditure in farm business' and 48.8 percent was taken for 'revenue expenditure in farm business'. Only 6.4 percent of the outstanding loan was taken for 'education and medical' purposes and 0.4 percent was taken for 'marriages and ceremonies'.

According to the report pertaining to the NSS 77th Round, the purpose of loan is defined as the occasion which prompted the agricultural households to contract the loan. Even if the loan is utilised for a purpose other than that for which it is borrowed, only the original purpose of borrowing was considered. If more than one purpose is involved, the purpose for which the major part of the loan was originally intended to be spent was recorded. 

Methodology and definitions

The definition of agricultural households followed in NSS 77th round is identical with the definition used in the ‘Situation Assessment Survey of Agricultural Households’ of NSS 70th round, where an agricultural household was defined as an ‘agricultural production unit’ which produced field crops, horticultural crops, livestock and the products of any of the other specified agricultural activities with or without possessing and operating any land. This definition was different from the definition of farmer and farmer household as followed in the SAS of NSS 59th Round which made the possession and operation of land as a necessary condition for a household to be a farmer household. In order to exclude households with insignificant agricultural production from the coverage of agricultural households, the definition followed in the NSS 70th Round adopted an income cut-off for the receipts from the self-employment activities in agriculture by the household. In the NSS 77th Round, the income cut-off used for identifying the agricultural households has been updated by adjusting for inflation.

In the 77th Round of National Sample Survey (NSS), an agricultural household was defined as a household receiving value of produce more than Rs. 4,000/- from agricultural activities (e.g., cultivation of field crops, horticultural crops, fodder crops, plantation, animal husbandry, poultry, fishery, piggery, bee-keeping, vermiculture, sericulture, etc.) and having at least one member self-employed in agriculture either in the principal status or in subsidiary status during the last 365 days. Like in the previous rounds, households which were entirely agricultural labour households and households receiving income entirely from coastal fishing, activity of rural artisans and agricultural services were not considered as agricultural households and they were kept outside the scope of the survey.

In the 70th Round of National Sample Survey (NSS), an agricultural household was defined as a household receiving value of produce more than Rs. 3,000/- from agricultural activities and having at least one member self-employed in agriculture either in the principal status or in subsidiary status during the last 365 days. It should be also noted here that in the NABARD All India Rural Financial Inclusion Survey 2016-17 (i.e. NAFIS 2016-17) the threshold level of annual agricultural income was Rs. 5,000/-.  

After reading the new report, we come to know that when it comes to concepts and definition followed, the results of the survey on Land and Livestock Holdings of Households and Situation Assessment of Agricultural Households (Schedule 33.1) of the NSS 77th Round (January-December 2019) are broadly comparable with the corresponding estimates derived from the Land and Livestock Holding Survey (Schedule 18.1) and Situation Assessment Survey of Agricultural Households (Schedule 33) of NSS 70th Round (January-December 2013).

Due to optimisation attempted in the integration of the survey instruments and refinement of concepts, certain changes happened in the NSS 77th Round, which have been explained in the latest report.

The National Statistical Office (NSO) conducted the latest Land and Livestock Holdings of Households and Situation Assessment of Agricultural Households survey in its 77th Round during January-December 2019. For crops, information on expenses and receipts from cultivation were collected for the period July to December 2018 in visit-1 and for January to June 2019 in visit-2. However, it was ensured that all the crops, whether principal or not, harvested during agricultural year 2018-19 were duly considered in either visit-1 or visit-2. The same reference period was used for collecting information on productive assets. 

For other items of information, different reference periods were used, viz., ‘as on the date of survey’ for indebtedness, ‘last 30 days’ for farming of animals and non-farm business. For information on land possession, productive assets and expenses and receipts from cultivation, earnings from wages/ salaried employment, earnings from pension/ remittances the reference period was July to December 2018 in visit-1 and January to June 2019 in visit-2.

The NSS 70th Round survey was conducted during the calendar year 2013 (1st January, 2013 to 31st December, 2013). The same household was visited twice during the survey period. The period of first visit (visit-1) was January to July 2013 and that of second visit (visit-2) was August to December, 2013. 

 

References

Situation Assessment of Agricultural Households and Land and Livestock Holdings of Households in Rural India, 2019, NSS 77th Round, January 2019-December 2019, National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI), please click here to access  

Key Indicators of Situation Assessment Survey of Agricultural Households in India (January-December 2013), NSS 70th Round, Ministry of Statistics and Programme Implementation, GoI, December 2014, please click here to access, please click here to access  

FAQ on PM-KISAN, please click here to access

NABARD All India Rural Financial Inclusion Survey 2016-17, released in August, 2018, please click here to access  

The Farmers' Freedom from Indebtedness Bill (2018), please click here to access

News alert: Monthly income per farm household grew between NSSO & NABARD surveys, but so has the level of outstanding loans, Inclusive Media for Change, published on 24th August, 2018, please click here to access  

What the Latest NSS Survey Tells us About the State of Farmers in India -Siraj Hussain and Seema Bathla, TheWire.in, 20 September, 2021, please click here to read more

NSS survey on farmers is a mid-term report card of Modi’s promise, with ‘fail’ written over it -Yogendra Yadav, ThePrint.in, 15 September, 2021, please click here to access

Most farmers did not know of agencies that procured crop under MSP: Report -Shagun Kapil, Down to Earth, 14 September, 2021, please click here to access  

Average daily income from cultivation was 27 per day in 2018-19 -Roshan Kishore and Abhishek Jha, Hindustan Times, 13 September, 2021, please click here to access  

NSO survey: Most farmers selling in local markets, government agencies procure the least -Richard Mahapatra, Down to Earth, 13 September, 2021, please click here to access  

Indebted India: Over half of farm households still under debt -Shagun Kapil, Down to Earth, 11 September, 2021, please click here to access  

Average debt of farm households up 57% in five years till 2018 -Harikishan Sharma, The Indian Express, 11 September, 2021, please click here to access

Explained: Why it’s an underestimate to say only 6% farmers benefit from MSP -Harish Damodaran, please click here to access The Indian Express, 6 October, 2020, please click here to access  
 

Image Courtesy: Inclusive Media for Change/ Himanshu Joshi



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