All India Rural Financial Inclusion Survey (2021-22)

Key Highlights of All India Rural Financial Inclusion Survey (2021-22)

• 57% of rural households, including those in semi-urban centres with populations below 50,000, were classified as “agricultural.”
  • This is a significant rise from 48% in the previous survey of 2016-17.
• An “agricultural household” is defined as one that:
  • Earns over ₹6,500 from farming (including crop cultivation, livestock rearing, aquaculture, etc.).
  • Has at least one member self-employed in farming.
• This threshold was ₹5,000 in 2016-17, showing an upward trend in rural households depending on agriculture.
• Agricultural Household Income:
  • Agricultural households earned an average monthly income of ₹13,661 in 2021-22, which was higher than the ₹11,438 earned by non-agricultural rural households.
  • In the 2016-17 survey, agricultural households earned ₹8,931 monthly, while non-agricultural households earned ₹7,269, showing a consistent trend of higher earnings from agriculture.

Rising Income from Farming Activities

• The share of income from farming (cultivation and animal husbandry) among agricultural households has increased:
  • For households with less than 0.01 hectares of land, farming income rose from 23.5% to 26.8%.
  • For households with 0.41-1 hectare, it increased from 38.2% to 42.2%.
  • For those with 1.01-2 hectares, it jumped from 52.5% to 63.9%.
  • Households with more than 2 hectares saw a rise from 58.2% to 71.4%.
• This shows a stronger reliance on farming income and less diversification into non-farming sources such as jobs, wage labour, or investments.

Impact of COVID-19 on Agriculture’s Role:

• The survey period (2021-22) followed the COVID-19 lockdowns, during which agriculture remained largely unaffected compared to other sectors that experienced disruptions.
• Four consecutive good monsoons also benefited the farm sector.
• This context may explain the increased role of agriculture in rural livelihoods during the pandemic years, suggesting that the share of agriculture in rural income and employment may be slightly overestimated.

Paradox of Increased Agriculture Dependence in a Growing Economy

• Despite a growing economy (GDP growth of 8.3% annually from 2021-22 to 2023-24), dependence on agriculture for employment has remained high.
• The Periodic Labour Force Surveys (PLFS) show that agriculture engaged 42.5% of the country’s workforce in 2018-19, but this increased to 45.6% in 2019-20 and 46.5% in 2020-21, during the pandemic.
• Even post-pandemic (2023-24), 46.1% of the workforce remains employed in agriculture, well above the pre-pandemic low of 42.5%.

Lack of Jobs in Manufacturing

• One of the reasons for continued reliance on agriculture is the lack of job creation in the manufacturing sector. Manufacturing employed only 11.4% of the workforce in 2023-24, down from 12.6% in 2011-12 and 12.1% in 2018-19.
• More people are moving from farms to sectors like trade, hotels, restaurants, and construction, which have low productivity and largely informal employment, similar to agriculture.
• States with the highest agricultural workforce include:
  • Chhattisgarh (63.8%)
  • Madhya Pradesh (61.6%)
  • Uttar Pradesh (55.9%)
  • Bihar (54.2%)
• States with the lowest agricultural workforce include:
  • Goa (8.1%)
  • Kerala (27%)
  • Punjab (27.2%)
  • Haryana (27.5%)

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