The ‘NABARD All India Rural Financial Inclusion Survey’ (NAFIS) was rolled out on August 16, 2018, by NITI Aayog. Introduced during 2016-17, NAFIS is a nationwide survey providing an in-depth look at rural livelihood status and the extent of financial inclusion. It covers an array of financial inclusion factors, such as loans, savings, investments, pensions, remittances and insurance. In addition, it gauges individuals’ financial literacy levels, attitudes, and behaviours. NABARD plans continuous reviews every three years.
Survey Analysis
As per the NAFIS, the average monthly income of an agricultural household in 2016-17 was a scant Rs 8,931. Additionally, farmers struggle with increasing debt, limited financial inclusion, and a lack of insurance. Over the last four years, farm household income has grown by merely Rs 2,505 per month. This figure derives from a comparison between the NABARD report and a 2012-13 study by the National Sample Survey Organization (NSSO), which estimated the average farming household’s monthly income to be Rs 6,426. However, considering food inflation, the real income would be actually less. Cultivation (35 percent) and daily wage labour (34 percent) constitute the major income sources, while livestock rearing accounts for only 8 percent.
Debt among Agricultural Households
According to the NAFIS, indebtedness is a reality for 41% of rural households, mostly being farming households (43%). Households in Gujarat, Maharashtra, Telangana, Jammu and Kashmir, and Himachal Pradesh are severely indebted. Approximately one-third of all households seek loans from informal lenders and non-financial organizations. While about 60% of households approach financial establishments for loans, the average loan amount from non-institutions is more than double that of any financial institution. This trend illustrates a significant portion of rural households being isolated from financial inclusion.
Insurance and Pension Schemes
Only one-fourth of all rural households possess some form of insurance, be it life, vehicle, accident or health insurance. Among these, a meagre 5% and 2% have vehicle and accidental insurance respectively. Health insurance is held by only 6%, while pension schemes are subscribed to by just 19%.
Financial Inclusion
Around 49% of total rural households report having savings in financial institutions, along with approximately 53% of agricultural households. However, a substantial number of rural households remain digitally illiterate. One-fourth cannot operate an ATM independently and 60% require assistance using mobile banking services. Participation in Self-Help Groups is also low, with only 20% of households reporting involvement.
NABARD: Functions and Origin
NABARD (National Bank for Agriculture and Rural Development) was established in 1982 following the recommendations of the B. Sivaraman Committee and Act 61 of 1981. Its functions range from providing financial support to poverty alleviation programs run by IRDP (Integrated Rural Development Programme), devising service area plans, facilitating linkages between Self-help Groups and other credit agencies, financing wasteland development initiatives, to overseeing the cooperative banks and Regional Rural Banks for the progressive development of rural financing and farmer welfare.
