In recent years has witnessed a notable resurgence in agricultural dependence among rural households. The All India Rural Financial Inclusion Survey for 2021-22 reveals that 57% of rural households now identify as agricultural, an important increase from 48% in 2016-17. This trend marks a reversal of the previous decades when rural areas were increasingly distancing themselves from agriculture. The survey, conducted by the National Bank for Agriculture & Rural Development (NABARD), defines agricultural households based on specific income thresholds and self-employment in farming activities.
Defining Agricultural Households
An agricultural household is one that generates a total value of agricultural produce exceeding ₹6,500 and has at least one member engaged in farming or related activities. This is a shift from the previous threshold of ₹5,000. The increase in the proportion of agricultural households across nearly all states indicates a growing reliance on farming as a primary source of income and livelihood.
Income Dynamics
The average monthly income of agricultural households in 2021-22 was ₹13,661, surpassing the ₹11,438 earned by non-agricultural rural households. This trend is not only indicative of a rise in agricultural participation but also reflects an increase in income derived from farming activities. Within agricultural households, income from cultivation and animal husbandry accounted for over 45% of total income, up from 43.1% in 2016-17. This shift demonstrates a consolidation of income sources towards agriculture, suggesting a diminishing diversification into non-farm activities.
Impact of COVID-19
The data from the 2021-22 survey was collected in the aftermath of the COVID-19 pandemic, which had implications for the economy. While agriculture was exempt from many lockdown restrictions, the overall economic disruptions may have influenced these findings. Notably, the agricultural sector benefitted from favourable monsoon seasons during this period, which could have inflated the perceived stability and profitability of farming as a livelihood.
Labour Market Trends
Historically, agriculture has engaged a substantial portion of India’s workforce. In 1993-94, 64.6% of the workforce was involved in agriculture, a figure that fell to a low of 42.5% in 2018-19. However, recent trends indicate a reversal, with agriculture’s share of the workforce rising to 46.1% by 2023-24. This paradox, where an expanding economy sees increased reliance on agriculture, raises questions about the availability of alternative employment opportunities, particularly in manufacturing, which only employed 11.4% of the workforce in 2023-24.
Regional Variations
The reliance on agriculture varies across states. For instance, states like Chhattisgarh and Madhya Pradesh report over 60% of their labour force engaged in agriculture, while states such as Goa and Kerala have much lower figures. This disparity marks the complex socio-economic fabric of India, where agricultural dependence can be both a necessity and a choice influenced by local conditions.
Economic Implications
The increasing dependence on agriculture, despite overall economic growth, suggests systemic issues within the job market. The manufacturing sector’s inability to absorb surplus labour from agriculture points to a stagnation in industrial growth. Economists argue that this trend could lead to a cycle of low productivity and subsistence wages, perpetuating poverty in rural areas. The challenge lies in creating sustainable employment opportunities outside of agriculture to ensure balanced economic development.
Conclusion
The resurgence of agricultural dependence in India reflects a complex interplay of economic realities, historical trends, and the immediate impacts of the COVID-19 pandemic. As rural households increasingly turn to farming for their livelihoods, understanding the underlying factors driving this trend is crucial for policymakers. Addressing the challenges of agricultural dependency, while encourageing growth in other sectors, will be essential for India’s long-term economic stability and prosperity.
