In August, the National Bank for Agriculture and Rural Development (NABARD) released the All India Rural Financial Inclusion Survey, 2016-17. It has revealing data about the worsening situation of farmers and villages across India. The survey shows that the average monthly income of rural households in India is `8,059. For agricultural households in rural areas, it is `8,931, whereas for non-agricultural households, it is just `7,269.
Further, we find agricultural households get hardly 43 per cent of their income from agriculture and allied activities such as animal husbandry, while the rest comes from wage labour and salaries from government and private services. Non-agricultural households get much of their income from wages and salaries from government and non-government jobs. They get hardly 11.7 per cent of their income from enterprises.
And overall, rural households get hardly 23 per cent of their income from agriculture and allied activities, with 67.1 per cent of their income coming from wages and salaries from government and non-government jobs and hardly 8.4 per cent from other enterprises. This data shows the meagreness of income from agriculture even in rural areas and also that only a very small percentage of rural income is from enterprises other than agriculture.
According to the NABARD survey, there were 21.17 crore households in rural areas in 2016-17; out of this, 10.07 crore or 48 per cent are agricultural households. According to the 2011 Census, 68.8 per cent of India’s population lives in rural areas. Assuming the population grows at the rate of 1.6 per cent per annum, the estimated population for 2016-17 would be 131.3 crores and assuming rural population to be 68.8 per cent of the total, the total population in rural areas would be 90.3 crores.
Given there are 21.17 crore rural households, the average family size in rural areas would be 4.27. The total annual income of rural households in 2016-17 would be only `20.5 lakh crore. In 2016-17, total national income on current prices as per CSO data was `135 lakh crore. If we subtract rural income from this total, the urban areas’ income would be `114.5 lakh crore.
If we calculate per capita income in rural areas, it would be `22,702 annually. On the other hand, the per capita income in urban areas would be over a whopping `2,79,000 annually. This indicates that per capita income in urban areas is over 12.2 times that in rural areas; it was nine times that in rural areas just a few years ago.
The rising rural-urban gap is not only a cause of concern for policymakers, but also presents a challenge for the nation. The rising disparity is becoming a major cause of increasing poverty and unemployment in rural areas, resulting in large-scale migration to urban areas. The extent of rising agriculture distress is further indicated by the fact that the portion of GDP coming from agriculture, which used to be 55 per cent in 1951, came down to 25 per cent in 1991 and to hardly 17.3 per cent in 2016-17.
The worsening situation in rural areas as depicted by GDP data is supported by the NABARD survey, which says that hardly 23 per cent of rural household income comes from agriculture. Now people living in villages are earning a majority of their income from wages or from government or private jobs in cities and not from farming and allied activities.
Villagers do earn wages from work on farms, or from other works including the Mahatma Gandhi Rural Employment Guarantee Scheme. In addition, home construction plan for the rural poor is also providing work to rural workers, including the landless. The rural people also get incomes from salaries from government and private jobs. However, the wide gap between rural and urban incomes calls for major policy initiatives, before the situation becomes explosive.
The Narendra Modi government has set a target to double the incomes of farmers by 2022. According to the NABARD survey, the total number of agricultural households is 10.07 crores. Since the average family size is 4.27, the total agricultural population would be 43 crores.
The government has decided to provide a minimum support price for agriculture produce by adding at least 50 per cent to the cost of production to raise the incomes of farmers, improve irrigation and reduce cost by cheapening of input cost for farming. However, the target of doubling farmers’ incomes would apply to only 43 crore people, which is 48 per cent of rural population. For improving the condition of all rural inhabitants, we need to make efforts to help non-agricultural rural households as well, whose condition is much worse as seen earlier from the average monthly incomes.
To improve their condition we need to generate employment opportunities in villages in food processing industry, animal husbandry, poultry, fishing, mushroom production, bamboo products development and other non-agricultural activities. Loans are available to farmers at subsidised rates, and even at zero rate of interest rate in many states; similar loans can be provided to landless people in rural areas for these allied and non-farm activities.
Lately, the government has extended Kisan Credit Card (KCC) facility to those engaged in animal husbandry and fishing; the same has to be extended to other rural non-farm activities. We must understand that flushing people out of rural areas is no solution to the rural distress; we need to provide them employment at their doorstep.