All-India Rural Financial Inclusion Survey 2021-22

Recently, The second edition of the “All-India Rural Financial Inclusion Survey 2021-22” by the National Bank for Agriculture and Rural Development was released.

All-India Rural Financial Inclusion Survey 2021-22

• Agriculture remains central to India’s economy, supporting the livelihoods of the majority of its population.
• 57% of rural households rely on agriculture for their livelihood.
  • This dependence is higher among agricultural households compared to non-agricultural ones.

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What is Financial Inclusion?

It is a method of providing banking and financial services to individuals. 

• Objective: It aims to provide basic financial services to everybody in the society regardless of their income or savings. 
  • It also ensures that marginalized people make the best use of their money and get education related to finance. 
• Introduction in India: In India,  It was first introduced by RBI in 2005. 

Key Findings from NABARD Survey (2021-22)

• Rising Agricultural Dependence: 57% of rural households were identified as “agricultural,” up from 48% in 2016-17.
• Definition of Agricultural Households: An agricultural household is one that:
  • Earned more than Rs 6,500 from farming activities (including crops, livestock, aquaculture, etc.)
  • Had at least one self-employed member in these activities during the reference year (July 2021 to June 2022).

• Income Trends in Rural Households

  • Higher Income for Agricultural Households:
    • Agricultural households had an average monthly income of Rs 13,661 in 2021-22, higher than Rs 11,438 for non-agricultural households.
    • In 2016-17, agricultural households also earned more (Rs 8,931) compared to non-agricultural households (Rs 7,269).
  • Sources of Income for Agricultural Households
    • Only about a third of agricultural household income comes from cultivation.
    • Two-thirds of income comes from wage labor, government or private services, and other enterprises.

• Increase in Income from Farming Activities

  • Contribution of Farming: The share of income from farming (cultivation and animal husbandry) rose across land size categories:
    • For households with less than 0.01 hectare: from 23.5% to 26.8%
    • For households with 0.41-1 hectare: from 38.2% to 42.2%
    • For households with 1.01-2 hectares: from 52.5% to 63.9%
    • For households with over 2 hectares: from 58.2% to 71.4%
• Diversification of Income Sources
  • 56% of agricultural households rely on three or more income sources, while 66% of non-agricultural households depend on a single source.
  • Households with four or more income sources earn almost four times more than those with just one income source.
  • This income diversification reflects the resilience of small farmers amidst declining cultivation income.

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• Impact of the Covid-19 Pandemic

  • Covid-19 Influence on Agriculture: The pandemic may have contributed to the increase in reliance on agriculture, as farming activities were exempt from lockdown restrictions.
  • Good Monsoon Years: Four consecutive good monsoons from 2019 helped improve farming incomes.

• Economic Struggles of Agricultural Households

  • Challenges in Agriculture
    • 30% of agricultural households faced crop failures due to irregular rainfall, pest attacks, cyclones, and droughts.
    • 12% reported losses due to price fluctuations, forcing many to use savings or borrow from informal sources.
    • PLFS Data on Employment:
      • Agriculture’s share of India’s workforce decreased over the years (from 64.6% in 1993-94 to 42.5% in 2018-19).
      • However, post-pandemic, the share rose to 46.5% in 2020-21, showing a reversal of the trend.
  • High Expenditure and Debt
    • Agricultural households have an average monthly expenditure of Rs 11,710, leaving a small surplus of Rs 1,951.
    • Small and marginal farmers spend a higher proportion of their income on food.
    • Average debt for agricultural households: Rs 91,231, which is nearly seven times their monthly income.
    • Many farmers spend their entire lives repaying these debts.

• Paradox of Growing Agriculture Dependence in a Growing Economy

  • Economic Expansion vs. Agriculture Employment: Despite the economy growing 1.4 times between 2016-17 and 2023-24, there is increasing dependence on agriculture for jobs.
  • Lack of Manufacturing Jobs: Manufacturing’s share in employment declined to 11.4% in 2023-24, contributing to surplus labor remaining in agriculture or moving to low-productivity sectors like trade, hotels, and construction.

• Regional Variations in Agricultural Employment

  • States with High Agricultural Employment: Chhattisgarh (63.8%), Madhya Pradesh (61.6%), Uttar Pradesh (55.9%), Bihar (54.2%), and Rajasthan (51.1%).
  • States with Low Agricultural Employment: Goa (8.1%), Kerala (27%), Punjab (27.2%), Haryana (27.5%), and Tamil Nadu (28%).

Agriculture Schemes for Welfare of Farmers

There are some of the major Agricultural Schemes in India:

• Agriculture Development Schemes
  • Krishi Kalyan Abhiyan: Focuses on improving farmer welfare through various agricultural development activities.
  • Soil Health Cards (SHC) Scheme: Provides soil health cards to farmers to help them improve soil fertility and productivity.
  • National Bamboo Mission: Promotes the growth and development of bamboo cultivation and industry.
  • Green Revolution – Krishonnati Yojana: Enhances agricultural productivity and ensures food security.
• Financial Support and Insurance Schemes
  • Pradhan Mantri Annadata Aay SanraksHan Abhiyan (PM-AASHA): Ensures remunerative prices for agricultural produce.
  • Pradhan Mantri KISAN Samman Nidhi (PM-KISAN): Provides financial support to farmers for their cultivation needs.
  • Pradhan Mantri Fasal Bima Yojana (PMFBY): Offers crop insurance to farmers to protect against crop losses.
  • Ayushman Sahakar Scheme: Provides financial assistance for the creation of healthcare infrastructure in rural areas.
• Market Access and Innovation Schemes
  • E-NAM (National Agriculture Market): Creates a unified national market for agricultural commodities.
  • Yuva Sahakar-Cooperative Enterprise Support and Innovation Scheme: Encourages young entrepreneurs to set up cooperative enterprises.

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• Sustainable Agriculture and Environment Schemes
  • Pradhan Mantri Krishi Sinchai Yojana (PMKSY): Aims to improve irrigation coverage and water use efficiency.
  • Paramparagat Krishi Vikas Yojana (PKVY): Promotes organic farming through participatory guarantee system.
  • National Food Security Mission (NFSM): Focuses on increasing production of rice, wheat, pulses, and coarse cereals.
  • Mission Amrit Sarovar: Promotes water conservation through the development of water bodies.
  • National Beekeeping and Honey Mission (NBHM): Supports the development of the beekeeping sector.
  • National Mission on Edible Oils (NMEO-OP): Aims to increase the production of edible oils to make India self-reliant.
  • National Mission on Natural Farming (NMNF): Promotes sustainable and natural farming practices.
• Education and Skill Development Schemes
  • Pradhan Mantri Kisan Maan-Dhan Yojana (PM-KMY): Provides social security to small and marginal farmers.
  • Pandit Deen Dayal Upadhyay Unnat Krishi Shiksha Yojana (PDDUUKSY): Focuses on agricultural education and extension activities.
• Livestock and Fishery Development Schemes
  • Rashtriya Gokul Mission (RGM): Aims to conserve and develop indigenous bovine breeds.
  • National Scheme of Welfare of Fishermen (NSWF): Ensures the welfare of fishermen through various support measures.