India’s rural economy,
the backbone supporting nearly two-thirds of its population, continues to play
a pivotal role in the country’s socio-economic development. Recognizing its
significance, the Government of India launched the Doubling Farmers’ Income
(DFI) mission in 2016. The NABARD All-India Rural Financial Inclusion Survey
(NAFIS) 2021-22 presents a comprehensive review of the mission’s progress,
revealing a mix of achievements and challenges that demand attention. Conducted
in the aftermath of the COVID-19 pandemic, the survey underscores rural
resilience while highlighting disparities in income and access to
opportunities.
NAFIS 2021-22
demonstrates a commendable 53% increase in the average monthly income of
agricultural households since 2016-17, now reaching ₹13,661. For all rural
households, income growth surged by 57.6%, driven largely by diversification
into allied and non-agricultural activities. Notably, 43% of rural households
now derive income from non-agricultural sources, a testament to the role of
economic diversification in advancing the DFI mission.
However, the survey also
exposes stark regional disparities. Agricultural incomes in states like Punjab
(₹31,433), Haryana (₹25,655), and Kerala (₹22,757) outpace those in Bihar,
Odisha, Jharkhand, and Tripura, where they remain below ₹10,000. This gap underscores
the urgent need for region-specific policies and investments to promote
equitable growth.
The survey emphasizes the
transformative impact of financial inclusion on rural incomes. Institutional
credit has become the dominant source of rural borrowing, with the Kisan Credit
Card (KCC) scheme playing a critical role. Access to formal credit has enabled
farmers to adopt productivity-enhancing technologies, reduce input costs, and
mitigate income shocks.
Crop insurance under the
Pradhan Mantri Fasal Bima Yojana (PMFBY) has further stabilized farm incomes,
while 71% of rural households now save through institutional channels,
reflecting improved financial resilience. Yet, challenges persist—gaps in
financial literacy, high indebtedness, and delays in credit delivery hinder the
full potential of these initiatives.
NAFIS highlights the
correlation between landholding size and income levels. Larger landholders
enjoy higher incomes due to greater production potential, while marginal
farmers with less than 0.01 hectares rely heavily on wage labour and livestock,
earning only 2% of their income from cultivation. Addressing this divide
requires targeted support for smallholders, such as promoting collective
farming models and income diversification strategies.
Income diversification
has emerged as a cornerstone of rural prosperity. Investments in allied sectors
like dairy, poultry, and livestock are growing, supported by Self-Help Groups
(SHGs) and Farmer Producer Organisations (FPOs). These collectives enhance
market access, financial inclusion, and training, enabling better price
realization and reducing dependency on single income sources. Scaling these
models nationwide could significantly boost rural incomes.
Technological adoption is
another critical factor. Increased investments in tractors, micro-irrigation,
and other physical assets indicate farmer confidence in long-term stability.
Emerging innovations—precision farming, high-yield seed varieties, and digital
financial tools—offer immense potential for transforming agriculture. However,
infrastructure gaps and limited awareness must be addressed to maximize their
impact.
Despite progress,
systemic challenges constrain small and marginal farm holders. Rising input
costs, fragmented landholdings, and delays in crop insurance claims erode
financial security. High food inflation and limited rural employment
opportunities further compound the difficulties.
Policymakers must adopt a
multifaceted approach to overcome these hurdles. Expanding support for allied
sectors, strengthening rural non-farm employment, and enhancing financial
literacy campaigns are essential for fostering sustainable income growth. Broader
inclusion of tenant farmers in the KCC scheme, reducing borrowing costs, and
improving the PMFBY through timely claim settlements can provide critical
financial support. Investments in sustainable technologies—such as drip
irrigation, renewable energy, and climate-resilient practices—are also
necessary for long-term agricultural productivity.
NAFIS 2021-22 offers a
detailed roadmap for advancing rural India’s progress towards higher incomes
and economic resilience. By emphasizing financial inclusion, diversification,
and technological adoption, the survey underscores the potential for inclusive
growth. However, achieving this vision requires concerted efforts to address
systemic challenges and build on existing successes.
With the right policy
interventions, India can unlock the true potential of its rural economy,
ensuring sustainable prosperity for millions of farmers and rural households.
Transforming this vision into reality will solidify agriculture’s role as a
cornerstone of the nation’s economic future.
