SPECIAL ARTICLE
Factors Contributing to Income Inequalities
among Agricultural Households in India
Seema Bathla, Anjani Kumar
Inequality in agricultural households in 20 major states is
estimated and its factors analysed. In most states,
farming and livestock contribute over half the total
income. Income inequalities, irrespective of farm size,
are large, though these have not widened much over
time; major sources are non-farm income, land, and
farm assets. The relationship between growth in
household income and land size is positive; it does
not augur well for the government’s professed
objective of promoting inclusive development.
To bridge income gaps, mechanisms need to be
developed to ensure the viability of increasingly
small and fragmented landholdings.
(Annex Tables A1 to A5 accompanying this article are available on the
EPW website.)
An earlier version of the paper was presented in a National Seminar on
“Challenges of Growing Inequalities in India,” organised by the Council
for Social Development, New Delhi during 14–15 July 2016 as part of the
preparation for the Social Development Report 2018. We are grateful
to T Haque and other participants in the seminar for their valuable
suggestions.
Seema Bathla (seema.bathla@gmail.com) teaches at the Centre for the
Study of Regional Development, Jawaharlal Nehru University, New Delhi.
Anjani Kumar (anjani.kumar@cgiar.org) is a researcher at the
International Food Policy Research Institute, New Delhi.
Economic & Political Weekly EPW MAY 25, 2019 vol lIV no 21
K
uznets (1955) hypothesised the relationship between
income inequality and average income as an inverted
U-curve, which suggests that income inequality rises
with higher economic growth in the initial stages of develop-
ment and shrinks subsequently over time. Kuznets justified
this argument based on the migration of workers from the low-
wage, low-inequality rural sector to the high-wage, high-
inequality urban sector. In the context of emerging economies
such as India and China, Borooah et al (2015) argues that
income inequality may also stem from the removal of economic
regulatory controls; the resulting growth may have reduced
absolute levels of poverty but, nonetheless, it increased
inequality. Although many developing countries have experi-
enced an increase in income inequality, studies have chal-
lenged this hypothesis on the grounds of significant differences
in the sociocultural, historical, religious, and caste factors that
shape household income levels and asset possession. It is also
important to distinguish between inequality of outcomes—
such as income and assets—and inequality of opportunity,
measured through education, access to health and other
services, and gender and caste disparities (Kanbur et al 2014).
Economic inequalities often are interlinked with social and
cultural inequalities that result from differences in caste, religion,
and gender.
Notwithstanding these facts, many have expressed interest
in the concept of an equal distribution of income, whether in
the context of economic growth, poverty–inequality trade-off,
or globalisation (Basu 2006; Piketty 2014). Dev (2017) reported
that global inequality is high, ranging between 0.55 and 0.70,
and it has increased substantially in most advanced countries
because of the growing income share of the top 10%. Also,
income inequalities are becoming more pronounced in many
developing economies, such as Indonesia, a situation largely
explained by gaps in wealth and education (Wicaksono et al
2017). Efforts towards a more equal distribution of income
constitute one of the key components of the United Nations
Sustainable Development Goals, which all countries aim to
achieve by 2030.
In India, inter- and intra-state income inequalities have been
major policy issues. Studies have often focused on measuring
regional inequalities in economic and social development indi-
cators such as per capita income and consumption, infrastruc-
tural development, access to education, and the health of people
in different castes and social groups. Bhattacharya and
Sakhthivel (2004) probed regional disparity by analysing
55
SPECIAL ARTICLE
growth rates of aggregate and sectoral income of major states
in the pre- and post-reform decades. The results indicate that
although the growth rate of India’s gross domestic product
(GDP)—that is, its income—improved only marginally follow-
ing economic reforms, the regional disparity in gross state
domestic product (GSDP) widened much more significantly.
Industrial states grew much faster than agriculturally dominant
states; there is little evidence that growth rates are converging.
One disturbing aspect was an inverse relationship between
population growth and GSDP growth, a phenomenon that has
serious implications for India’s poverty and employment rates,
and the country’s political economy.
An accentuation in regional disparities is a serious concern.
States where the per capita income is below the national average
are home to more than 60% of the population, most of whom
belong to the poorer strata and disadvantaged groups (Planning
Commission 2012). Recently, the per capita income has
increased significantly in several states, such as Bihar, Madhya
Pradesh, Chhattisgarh, and Odisha, but there is little decline
in the income ratio of the richest state (Maharashtra) and the
poorest state (Bihar). The gap between the richest and poorest
states is much higher in the case of non-agricultural income; it
was 6.7 from 1980–81 to 2013–14, and lately dropped to 4.6 in
2016–17. The agricultural income gap between Haryana and
Bihar continues to be 3.4.1 From 1980–81 to 2011–12, only
seven of the 24 Indian states showed a tendency towards
convergence in agricultural income (Kaur and Dhillon 2017).
Panagariya et al (2014) maintain that inequality is lower in
rural incomes than in urban incomes—broadly representing
agriculture and non-agriculture incomes—and has remained
stable from 2004–05; they attribute the widening inter-state
income inequality to increasing non-agricultural incomes.2
Research on interstate inequalities is extensive, but few
studies analyse intra-state and interpersonal income growth
and disparities. District-level data limitations are cited to be
one of the important reasons for the lack of research at the
disaggregate level. Nonetheless, the comparative study at the
disaggregate level is important, as most Indian states have
large populations and are heterogeneous in terms of owner-
ship of land, agroclimatic conditions, economic activities and
sectoral performance, access to social amenities, and level of
urbanisation and infrastructure. The dimensions of such eco-
nomic and social differences have widened across the districts
and within and across states (Ghosh and Das Gupta 2017; Plan-
ning Commission 2012). Dubey (2017) estimates intra-state
disparities in Gujarat, Haryana, Kerala, Odisha, and Punjab
based on the National Sample Survey Office (NSSo) consumption
expenditure data for two quinquennial rounds undertaken
during the 2000s. The three indicators chosen for the analysis—
consumption, inequality (Gini coefficient) and the incidence of
poverty—showed an increase in disparities, with the greatest
increase noted in the headcount ratio. These rising intra-state
disparities observed since 1993–94 have coincided with the
per capita income growth surge.
A few studies analyse and compare rural and urban inter-house-
hold income and poverty dispersion and provide interesting
56
insights. Rawal (2013) identifies high inequality in rural
incomes, at 0.76, based on the NSSo 70th (2012–13) round, and
attributes this finding to skewed ownership of both physical
and financial assets. Using the two NSSo rounds, the 59th
(2002–03) and the 70th (2012–13), Chakravorty et al (2016)
estimate changes in the income of agricultural households from
various sources, and confirm a high Gini ratio (around 0.60) in
income in most states during 2002–03 and a slight decrease
during the subsequent year. They ascribe about half the inter-
household income inequality to income from cultivation,
which in turn depended primarily on variance in landowner-
ship. Based on a primary survey in tribal-dominated areas in
Jharkhand, Meena et al (2017) find higher and pervasive income
inequality among labouring households, albeit without a con-
sistent relationship to farm size. Education, adoption of high-
yielding varieties, and access to non-farm income opportunities
were significant factors influencing income in the study region.
Borooah et al (2015) focus on caste-based discrimination while
measuring inter-household inequalities in rural areas. The study
used the Indian Human Development Survey 2004–05 to explain
variations in consumption expenditure across social groups by
ownership of land; livestock; productivity-enhancing assets
such as tractors, tube wells, and diesel pump sets; education; and
location. These factors varied significantly across caste groups.
Intra- and Interstate Income
What explains these growing inter- and intra-state income
inequalities in India? The literature attributes inequalities to
a bias in sectoral policies; reductions in public investment; dif-
fering levels of infrastructure development, economic reforms
and trade liberalisation, and foreign direct investment; and
weak institutions and governance (Kundu and Varghese 2010;
Pal and Ghosh 2007; Rao 2017). The World Bank (2008) ascribes
India’s regional inequalities to lower levels of urbanisation, a
larger share of tribal population, poor roads and market infra-
structure, and little private investment in the lowest-income
states and districts. Additional factors affecting the agricul-
tural sector include weak initial conditions, persistent gaps
in economic and social amenities, unfavourable climate and
production conditions, market failures, and increasingly frag-
mented landholdings.
To address these issues, agricultural policies may need to be
redesigned, public investments stepped up, and efforts made
to target social benefits and appropriate institutions to
enhance land productivity (Kanbur et al 2014). Bathla et al (2018)
find large disparities in public expenditure across states with
low, middle, and high per capita income from 1981–82 to 2013–14.
The share of public investment in agriculture and irrigation in
total investment has been decreasing steadily in almost all
states, although investment has improved in some low-income
states like Bihar, Madhya Pradesh, and Uttar Pradesh. Of the
various types of public investment, investment in health and
nutrition and in education have had greater effects on reducing
the impact of interstate income inequality than investment in
roads and transport, agricultural research and development,
and rural energy. However, the marginal returns in terms of
MAY 25, 2019 vol lIV no 21 EPW Economic & Political Weekly

income equality from additional investments in the latter cat-
egories are higher in low-income, agriculture-dependent states.
The literature on both inter- and intra-state investigations
pays little attention to sectoral analysis. The highlights specific
to the agricultural sector include the following points. Income
inequality over the period has been high, but stable. Social fac-
tors, such as religion and caste, play a dominant role in rural
areas, which in turn explain differences in access to finance
and ownership of land, livestock, and assets. Differences in
income generation patterns are significant, but farming and
livestock continue to be the main income-generating activities,
and explain the high disparity compared to income from non-
farm activities. For appropriate policy interventions, it is crucial
to understand the measurement and dimensions of inequalities
across geographical domains.
Against this backdrop, this study estimates income inequality
in agricultural households in the major Indian states and assesses
its factors. Agriculture is India’s largest economic sector, sup-
porting more than 70% of the country’s population and 48% of
the workforce. Agriculture has diverse patterns of growth,
because of varied climatic and production conditions, skewed
land distribution, and high poverty rates. A subnational analysis
can help to evaluate how public policies may lessen income
gaps within each state. The analysis looks at 20 major states
and a countrywide assessment, based on representative NSSo
data for the 59th (2002–03) and 70th (2012–13) rounds of the
Situation Assessment Survey of agricultural households.
Data and Methodology
The study utilises farm-level data from nationally representative
surveys conducted by the NSSO, identified as the 59th and 70th
Situation Assessment Surveys. The main purpose of each
survey is to assess the status of farmers and farming in India.
The survey was spread over 4,000 villages across the country
and collected information from 51,770 households during
2002–03 and 35,200 households during 2012–13 on a wide array
of characteristics (NSSo 2006, 2014).
Officials of the NSSO visited the same households twice, first
between January and July and again between August and
December; at each visit, they collected information on expenses
and cultivation receipts for the periods in question. Different
reference periods were used for other information such as income,
consumption, household characteristics, and income from
sources other than farming. For instance, information on land
possession and indebtedness was “as on the date of survey;”
farming of animals was collected as in “last 30 days;” and
non-farm business, consumer expenditures and principal
source of income were collected on a “last 365 days” basis.
The two NSSo rounds are not directly comparable because of
intervening changes in the survey definitions. In the 59th
round, an essential condition for defining a person as a farmer
(agricultural household) was possession of land; however, this
condition was relaxed in the 70th round. Thus, as defined in
the 70th round, agricultural households may or may not have
possessed land. Moreover, the only households included in the
survey were those that had at least one member self-employed
Economic & Political Weekly EPW MAY 25, 2019 vol lIV no 21
SPECIAL ARTICLE
in agriculture, either as principal or subsidiary employment,
and had a total value of produce exceeding `3,000 over the
past 365 days. This condition was set to exclude households
that engaged only in small farming activities (such as kitchen
gardens), which had been included in the 59th round. This
study addressed such differences by dropping households that
did not possess land in the 70th round, and estimating that
`3,000 in 2012–13 was equivalent to `1,400 at 2003 prices.3
Households from the 59th round were included that had an
annual agricultural income of at least `1,400 and had at least
one member engaged in agriculture during the past 365 days.4
The 20 states chosen for analysis were Andhra Pradesh
(undivided), Assam, Bihar, Chhattisgarh, Gujarat, Haryana,
Himachal Pradesh, Jharkhand, Jammu and Kashmir, Karnataka,
Kerala, Madhya Pradesh, Maharashtra, Punjab, Rajasthan, Odisha,
Tamil Nadu, Uttarakhand, Uttar Pradesh, and West Bengal.
These states cover more than 90% of the population (1.32 billion)
and net sown area (141 million hectares [ha]) in India. Farm
size was classified in four intervals: up to 1 ha (marginal), 1.01
to 2 ha (small), 2.01 to 10 ha (medium), and more than 10 ha
(large). The net income (value of output minus value of input),
expenditure on farm assets, and other variables given in nomi-
nal prices were converted into 2011–12 real prices. The GDP
deflator given in the National Accounts Statistics, Central Sta-
tistics Office, Government of India, was used.
The study used the Gini index to investigate the extent of
income inequality among agricultural households (total and as
per farm size) in each state. To identify factors that contribute to
inequality, it used the regression-based inequality decomposition
method based on Shorrocks (1982) and Fields and Yoo (2000).5
The approach rests on the neoclassical framework through the
specification of a Cobb–Douglas production function. At first,
the household income (y) is explained by key variables (xi)—
family size, operated land; capital (represented by expenditure
on farm assets); other sources of household income (represent-
ed by number of family members involved in non-farm activi-
ties); access to institutional credit; number of years of educa-
tion of the household head; household caste; and age. The vari-
ables education and age are taken to represent skill/knowledge
and productivity, and can be highly correlated with income.
The logarithmic form of the income equation is given as:
y = a + ∑ki=1 xi + ε …(1)
The error term ε represents stochastic shocks to income and
is assumed to be unrelated to other variables. The next step
is to decompose the variance of y to estimate the inequality
coefficient and quantify the contribution of each variable to
inequality as follows:
σ2(y) = ∑ki=1 βicov(y, xi)+ σ2(ε) …(2)
where, σ2(y) is the variance of y and cov(y,) represents covariance
of y with other variables (xi). Taking y in the logarithmic form,
sigma (y) is the standard inequality measure, called logarithmic
variance. Studies posit that the covariance term on the right-hand
side of equation (2) can be considered as factor component
contributions to total inequality. The production function was
57
SPECIAL ARTICLE

estimated using ordinary least squares based on unit-level
data for 2012–13. District dummies were specified to see the
disaggregated location-specific effect in each state. Caste
dummies were also included. The variable access to credit was
highly correlated with expenditure on assets and therefore
was dropped from the equation.
Agricultural Household Income
India’s rural economy has undergone significant changes over
the period covered by this study. From 1993–94 to 2011–12, the
share of agriculture in rural income declined from 57% to
39%, and its share in rural employment decreased from 78%
to 64%. In the rural economy, however, this transition is not
uniform; it differs widely across the sectors and states (Chand
et al 2017). Even within the agricultural sector, different
household categories show economic variations.
Income Levels and Growth
Annex Table A1 provides general characteristics of agricultural
The income of agricultural households declined in Bihar
(−0.20%) and Uttarakhand (−2.24%), due perhaps to recurrent
floods and other unfavourable climatic conditions, along with
neglect of public investment in agriculture and irrigation. Low
income is linked largely to small landholding size. Smaller
landholders earn more from sources other than agriculture,
such as animal husbandry and horticulture; policies to support
these sources should likewise be strengthened. Income regis-
tered more impressive growth, greater than 5%, in Odisha
(8.59%), Rajasthan (7.80%), Haryana (7.39%), Andhra Pradesh
(6.82%), Madhya Pradesh (6.25%), Chhattisgarh (5.26%), Tamil
Nadu (5.25%), and Karnataka (5.23%). Growth remained
between 3% and 5% in Maharashtra (4.29%), Punjab (3.97%),
Kerala (3.96%), Gujarat (3.88%), Himachal Pradesh (3.51%),
and Uttar Pradesh (3.28%).
Table 1: Per Capita Income, Growth and Share of Non-farm Sector Income in
Annual Income of Agricultural Households in Indian States
States Per Capita Annual Income (`) NFS Share of HH Income (%)
2002–03 2012–13 CAGR (%) 2002–03 2012–13
(2003–13)

households during 2002–03 and 2012–13 based on farm size. Andhra Pradesh 7,739 15,988 6.82 50.0 39.1
The size of operated area under each category hardly changed Assam 12,248 14,629 1.63 41.3 25.3
Bihar 7,201 7,043 −0.20 37.1 43.3
during this period; the national average was 7.54 ha in 2003
Chhattisgarh 6,138 10,791 5.26 55.0 35.5
and 6.62 ha in 2013. Nonetheless, the differences in household
Gujarat 10,687 16,242 3.88 41.6 38.5
dependence on agriculture and livestock activities are evident.
Haryana 12,178 26,683 7.39 50.2 27.2
Marginal and small landholders (less than 2 ha) constituted Himachal Pradesh 14,295 20,899 3.51 67.6 54.9
more than 60% of households and depended more on livestock Jammu and Kashmir 21,202 24,640 1.38 51.7 70.0
and wages as alternate sources of livelihood. At the national Jharkhand 8,297 10,057 1.76 58.2 42.6
level, the share of non-farm sector (NFS) income earned Karnataka 10,883 19,076 5.23 49.5 37.5
through wages and non-farm activities of agricultural house- Kerala 19,736 30,249 3.96 68.3 65.9
holds income declined from 49.0% in 2003 to 40.1% in 2013. Madhya Pradesh 6,469 12,603 6.25 39.5 23.6
An increasing income share of crop cultivation is attributed to Maharashtra 10,063 15,974 4.29 46.3 40.0
the revival of agriculture from the mid-2000s. During 2004–05 Odisha 4,680 11,589 8.59 70.7 45.4
Punjab 24,206 37,144 3.97 31.1 30.5
to 2011–12, agriculture grew at an impressive average annual
Rajasthan 6,417 14,654 7.80 66.7 43.7
growth rate, close to 4%. Further, the share of NFS income
Tamil Nadu 10,710 18,806 5.25 64.6 57.3
depicted a negative relationship with land size—as one moves
Uttar Pradesh 6,458 9,210 3.28 43.2 31.1
from marginal to large farmers, the share of NFS income in Uttarakhand 13,531 10,542 −2.24 32.7 27.8
total income declines. Household education levels were abys- West Bengal 8,897 9,797 0.88 62.2 70.0
mally low: 54.85% were not literate, and only 8.64% had India 8,906 13,572 3.90 49.3 40.1
attained at least a higher secondary degree. Net annual income is given at 2011–12 prices; $1= `63.
Source: NSSO 59th and 70th rounds. Non-farm income is from non-farm activities and
Table 1 shows the pattern of change in how agricultural and wages/salary.
NFS income contribute to the economy of agricultural house-
holds in different states. The contribution of NFS income was Policy reforms initiated during the mid-2000s under various
similar across the states, except in Jammu and Kashmir, Bihar, flagship programmes—such as the National Food Security
and West Bengal, where it increased as part of total income Mission, the National Horticulture Mission, the Rashtriya Krishi
between 2003 and 2013. The real per capita income of agricul- Vikas Yojana, and the Mahatma Gandhi National Rural Em-
tural households grew at an annual rate of 3.9% during 2003 ployment Guarantee Scheme (MGNREGS)—along with robust
and 2013. In absolute terms, per capita annual real income growth in industry and services sectors may have contributed
increased from `9,806 to `13,572 during this period. Again, the towards the higher rate of income growth in some of these states
robust growth observed at the national level is not uniform. (Bathla et al 2017). Income inequalities decreased among agri-
Income levels and growth in agricultural households differ cultural households in all states except Jammu and Kashmir,
considerably between states. Bihar, Chhattisgarh, Jharkhand, Punjab, Bihar, Karnataka, and Kerala, where income inequalities
Odisha, Uttarakhand, and Uttar Pradesh continue to be at increased for marginal and small farm households (Annex
the lower end of income distribution, while Punjab, Haryana, Table A2). On average, a farm household in India earned
Kerala, and Jammu and Kashmir remain among the richer `49,038 per annum during 2003, which increased to `69,223
states. The gap between income of agricultural households in by 2013. Household annual income varied widely across states.
laggard and rich states remains. The highest was in Punjab (`1,94,913), Haryana (`1,56,211),
58 MAY 25, 2019 vol lIV no 21 EPW Economic & Political Weekly
 SPECIAL ARTICLE

Jammu and Kashmir (`1,37,568), and Kerala (`1,28,896). The Table 2: Inequality in Per Capita Income (Gini Coefficient) of Agricultural
Households in Indian States, 2002–03 and 2012–13
lowest income was in Bihar (`38,801), West Bengal (`43,113),
States Per Capita Inequality in Net Income (` )
Uttarakhand (`50,510), and Uttar Pradesh, Jharkhand, and 2002–03 2012–13
Odisha each at nearly `52,818. Despite an increase in NFS Andhra Pradesh 0.68 0.71
activities, agriculture remained a predominant source of income Bihar 0.57 0.64
in most states (Annex Table A3). Chhattisgarh 0.57 0.45
Gujarat 0.54 0.51
Inequalities in Income of Agricultural Households Haryana 0.62 0.55
Himachal Pradesh 0.70 0.64
Inequality in per capita income of agricultural households
Jammu and Kashmir 0.54 0.57
across India, as measured by the Gini index, is high; it was Jharkhand 0.53 0.51
0.67 in 2003, and dropped slightly to 0.63 in 2013. This drop is Karnataka 0.58 0.63
attributed partially to changes in three states—Madhya Kerala 0.53 0.76
Pradesh, Chhattisgarh, and Rajasthan—where maximum Madhya Pradesh 0.75 0.53
reductions were observed (Table 2). In these three states, per Maharashtra 0.64 0.59
capita income of agricultural households grew 5% or more. Odisha 0.59 0.54
Punjab 0.57 0.56
Income inequality among agricultural households widened
Rajasthan 0.79 0.58
further in several poorer states like Bihar, Kerala, and West Bengal.
Tamil Nadu 0.65 0.61
As expected, the level of income of agricultural households
Uttar Pradesh 0.65 0.61
depicted a positive relationship with land size (Table 3). The Uttarakhand 0.76 0.59
share of NFS income is inversely proportional to land size, as West Bengal 0.59 0.61
larger farmers depend more on agricultural income. However, India 0.67 0.63
a positive relationship between growth in household income Source: NSSO 59th and 70th rounds.

and land size does not augur well for the avowed objective of Table 3: Household Income, Inequalities, and Farm Size
promoting inclusive development. The difference realised in Farm size Per Capita NFS Share of Inequality in Net
Annual Income Income (%) Income
the growth of household income has widened the gap between 2002–03 2012–13 CAGR (%) 2002–03 2012–13 2002–03 2012–13
marginal and large farmers. This finding suggests a strong need (2003–13)
Marginal (<1 ha) 7,516 10,359 2.96 68.3 56.5 0.60 0.57
to take corrective measures to narrow this gap. The inequality
Small (1–2 ha) 8,598 15,089 5.25 38.8 31.5 0.65 0.58
in income of agricultural households may have declined in each
Medium (2–10 ha) 11,293 20,965 5.79 26.4 20.3 0.68 0.61
category, but the positive relationship between land size and
Large (>10 ha) 17,611 37,051 7.00 17.4 12.9 0.84 0.65
income inequality has remained intact. Source: Based on NSSO 59th and 70th rounds.
CAGR = compound annual growth rate.
Sources of Income Inequalities Table 4: Elasticity Estimates from Income Equation in Double Log Functional Form: 2012–13
The analysis begins with an estimation of Dependent Variable: Net Income (`/HH)
States/Explanatory Variables Age (HH Years of Family Operated Farm Assets NFS-earning Constant Number of Adj
factors determining household income Head) Education Size Land (Rs/HH) Members Observations R-sq
based on age, family size, education of of HH Head

household head, NFS income, land, and Andhra Pradesh – 0.80*** -0.28 -0.09 -0.03 0.21 11.75* 77 0.13
Bihar 0.22 0.55 0.15 0.073 0.003 0.15 8.97* 156 0.33
capital (Equation 1). Table 4 provides elas-
Chhattisgarh 0.16 0.57* 0.12 0.33 0.095** 0.13 9.56* 125 0.39
ticity estimates with levels of significance
Gujarat 0.83* 0.61* 0.15 0.025 0.058 0.77* 5.69* 135 0.57
for each explanatory variable. Elasticity
Haryana 0.16 0.09 -0.12 0.056 0.004 0.58** 11.26* 63 0.57
was much higher for NFS income, age, and Himachal Pradesh 0.51*** 0.49* 0.26** 0.44* 0.10* 0.62* 6.69* 189 0.36
years of education of the household head Jammu and Kashmir 0.37 0.98* 036* 0.13 0.031 0.54* 6.06* 179 0.54
than for other variables. The coefficients Jharkhand 0.11 0.14 0.34** 0.02 -0.02 0.56* 9.89* 185 0.28
of operated land and assets are positive Karnataka -0.16 0.56 0.01 0.12 0.05 0.72* 10.87* 97 0.38
and low in almost every state. The nega- Kerala – 0.21 -0.25 0.26* -0.01 0.72* 11.98* 215 0.3
tive sign for land in Odisha, Andhra Madhya Pradesh 0.82* 0.64* -0.16 0.03 0.057 0.16 7.41* 166 0.34
Pradesh, Maharashtra, and Tamil Nadu Maharashtra 0.11 0.61* 0.24*** -0.01 0.11* 0.72* 9.09* 273 0.34
indicates that land is a constraining factor Odisha 0.63* 0.80* 0.14 -0.072 0.056** 0.35* 7.31 362 0.38
Punjab – 0.56** 0.13 0.09 -0.009 0.35 11.28* 88 0.50
in these areas. Moreover, land as a factor
Rajasthan 0.46** 0.72* 0.14 0.082 0.074* 0.37* 8.54* 208 0.36
of production is limited in each state,
Tamil Nadu – 0.57* -0.21 -0.03 -0.049 0.79* 11.61* 197 0.52
which is empirically verified by taking its
Uttar Pradesh 0.23*** 0.46* -0.03 0.12* 0.059* 0.41* 9.99* 706 0.5
square in a non-linear regression equa- Uttarakhand 0.65 -0.49 0.58 0.12 0.11 0.014 9.65** 44 0.48
tion. The result is similar with the square West Bengal 0.07 0.49* 0.24* 0.19* 0.097* 0.63* 9.13* 499 0.35
of assets, which also bears a negative sign. India 0.35* 0.57* 0.16* 0.051* .075* 0.48* 9.04* 4,904 0.36
Based on the estimated elasticities, * Is significant at 1%, ** is significant at 5% and *** is significant at 10%; India includes all states and union territories
and state dummies. Statewise analysis includes district and caste dummies. North-eastern states and UTs are not taken
Table 5 (p 60) shows various factors affect- separately due to small sample size.
ing income inequality. Among the factors Source: Based on NSSO 70th round (2012–13).

Economic & Political Weekly EPW MAY 25, 2019 vol lIV no 21 59
SPECIAL ARTICLE

evaluated to explain inequalities, NFS income, land, and farm (with more than 10 ha of land) have the maximum share in
assets contributed the maximum—respectively, 28.6%, 25.8%, institutional loans—smaller and marginal farmers should
and 14.3%—across India, with considerable differences in have this share. Compared to these factors, education was not
their share in each state. Land as a source of inequality was as important a contributor to income inequality in this study
prominent in the northern states and in Bihar, Chhattisgarh, except in Jammu and Kashmir, Odisha, Bihar, Madhya Pradesh,
and Kerala, whereas NFS income was significant in the south- Andhra Pradesh, and Tamil Nadu. Age and family size also
ern states and in Haryana, Jharkhand, West Bengal, and explain income inequality. Their share across India was modest
Odisha. Between 2002 and 2013, the percentage of family at, respectively, 6.72% and 11.08%; slightly higher in Madhya
members engaged in NFS activities increased from 9% to 16% Pradesh; and nearly 10% each in Rajasthan, Odisha, and Gujarat.
(Annex Table A4).
Table 5: Decomposition of Income Inequality during 2012–13 (%) Conclusions
State Operated Farm Non-farm Education Family Age Significant differences exist in the sources of income generation
Land Assets Activities Size
of agricultural households in each of the 20 major Indian
Andhra Pradesh 18.99 2.91 8.98 60.97 8.14 –
Bihar 39.97 1.44 11.31 22.20 15.92 9.16
states. Farming and livestock contribute more than 50% in
Chhattisgarh 50.13 27.43 -0.82 14.13 6.21 2.93 total income in most states. The annual rate of growth in real
Gujarat 5.73 13.66 49.13 9.74 11.35 10.38 net income per household varied from nearly 7% in Haryana
Haryana 46.47 2.02 53.10 3.06 -11.23 6.59 and Rajasthan to as low as 1% in Jammu and Kashmir, Assam,
Himachal Pradesh 47.93 11.58 18.06 7.08 12.49 2.86 and Jharkhand; it was negative in Uttarakhand and Bihar.
Jammu and Kashmir 12.02 4.64 31.60 22.09 24.37 5.29 Inter-state income inequality decreased marginally from 0.67
Jharkhand 1.91 -3.83 70.87 -0.12 30.57 0.61 in 2003 to 0.63 in 2013. Statewise analysis reveals that ine-
Karnataka 32.16 14.59 42.68 12.97 0.75 -3.15
quality has risen only in Jammu and Kashmir, Bihar, Andhra
Kerala 66.98 -1.22 44.68 4.711 -15.14 –
Pradesh, Karnataka, and Kerala. Nonetheless, each state shows
Madhya Pradesh 20.85 31.89 18.03 28.84 -26.54 26.92
Maharashtra -1.36 28.71 44.59 8.78 18.98 0.30 a high Gini ratio (more than 0.50) irrespective of farm size,
Odisha -29.88 27.91 40.47 33.70 17.45 10.35 indicating the persistence of large income inequalities in India.
Punjab 68.93 -4.26 11.13 16.36 7.85 – Among the factors examined to explain income inequalities,
Rajasthan 25.15 21.31 19.88 12.36 11.46 9.85 NFS income, land, and farm assets contributed the maximum, to
Tamil Nadu 11.72 16.00 66.11 34.24 -28.07 – the tune of 28.6%, 25.8%, and 14.3% respectively across India,
Uttar Pradesh 49.73 21.26 15.84 9.82 -2.04 5.38 with considerable differences in their share in each state. Land
Uttarakhand 22.64 33.05 0.61 -5.45 42.07 7.07
as a source of inequality is prominent in the northern states and
West Bengal 25.07 17.24 34.23 9.07 13.42 0.97
in Bihar, Chhattisgarh, and Kerala, whereas NFS income is sig-
India 14.27 25.82 28.58 13.54 11.08 6.72
All India includes all states and union territories. North-eastern states and UTs are not taken
nificant in the southern states and in Haryana, Jharkhand, West
separately due to small sample size. Bengal, and Odisha. Inequality owing to differing asset levels
Source: Based on NSSO 70th round (2012–13).
was identified largely in Uttarakhand, Uttar Pradesh, Chhattis-
The upturn in NFS income noted in the low-income states can garh, Madhya Pradesh, and Maharashtra. Education as a source
be associated with agrarian distress and government employment of inequality was identified in Jammu and Kashmir, Odisha,
programmes. The inequality attributed to livestock and other Bihar, Madhya Pradesh, Andhra Pradesh, and Tamil Nadu.
farm assets is identified largely in Uttarakhand, Uttar Pradesh, The real challenge in mitigating income gaps is to find ways to
Chhattisgarh, Madhya Pradesh, and Maharashtra. On average, in improve the viability of increasingly fragmented landholdings.
2013, households spent `2,964 on assets, of which livestock, A positive relationship between growth in household income
tractors and tube wells held major shares (Annex Table A5). and land size does not bode well for the national government’s
Equal access to land can enhance households’ capital base, purported objective of promoting inclusive development. State
which can have significant effects on productivity and growth and governments should initiate measures to provide marginal
reduce income gaps among households. However, investment and small farmers with increased access to land, credit, tech-
in assets is highly correlated with household access to credit. nology, and irrigation to accelerate investments and produc-
Kumar et al (2017) and Bathla and Kumari (2017) find that tivity. Concerted efforts also should be made to enhance edu-
63% of households invest by using credit from institutional cation offerings as part of the country’s aspiration to achieve
sources, but access to credit is highly uneven, as large farmers its long-desired equality of opportunity in the agricultural sector.

notes
1 Income inequality based on per capita con-
sumption expenditure also shows an increase
in the ratio of urban to rural expenditure from
1993–94 to 2004–05 (Anand et al 2014; Sen
and Himanshu 2005).
2 Agricultural income shows less divergence
across states, possibly because it grew faster in
poorer states than in richer states during the
2000s.
3 The state-level Monthly Consumer Price
Index–Agricultural Labour (CPI–AL) with the
1986–87 base has been used to deflate the
2013 prices. The All India CPI–AL was calcu-
lated by taking the weighted average of the
state CPI. The CPI–AL was 322 for the period
from July 2002 to June 2003; it was 691 for
the period from July 2012 to June 2013. If the
base is changed to 2003, the CPI–AL becomes
100 for the period from July 2002 to June
2003 and 214 for the period from July 2012 to
June 2013. Therefore, the deflation factor for
2013 prices was 100/214=0.4667, and `3,000
in 2013 is equivalent to `1,400 in 2003.
4 The definition mentions “at least one member
self-employed in agriculture either in princi-
pal status or subsidiary status,” but because
these data were unavailable in the 59th round,
the sample includes households having at least
one member engaged in agriculture during
the past 365 days.

60 MAY 25, 2019 vol lIV no 21 EPW Economic & Political Weekly

5 In this context, the regression-based approach
is preferable to the other decomposition methods
of inequality, as it provides an efficient, flexi-
ble way to quantify the conditional roles of
variables (Heshmati 2004).
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Review of Environment and Development

October 13, 2018
Situating Agroecology in the Environment–Development Matrix —Nandan Nawn, Sudha Vasan, Ashish Kothari
Global Status of Agroecology:
A Perspective on Current Practices, Potential and Challenges —Michel P Pimbert
Maximum Sustainable Yield: A Myth and Its Manifold Effects —Madhuri Ramesh, Naveen Namboothri
State, Community and the Agrarian Transition in Arunachal Pradesh — Deepak K Mishra
Urbanisation and New Agroecologies: The Story of Bengaluru’s Peripheries —Sheetal Patil, Dhanya B, Raghvendra S Vanjari,
Seema Purushothaman
Agroecological Farming in Water-deficient Tamil Nadu — C Saratchand
Indian Agriculture: Redefining Strategies and Priorities —Raj Gupta, Mamta Mehra, Rabi Narayan Sahoo, Inder Abrol
Bovine Politics and Climate Justice —Sagari R Ramdas
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Economic & Political Weekly EPW MAY 25, 2019 vol lIV no 21 61
 SPECIAL ARTICLE
Annex Tables

Table A1: General Characteristics of Agricultural Households during 2002 and 2012 (2011–12 Prices)
Particulars 2002–03 2012–13
Marginal Small Medium Large All Marginal Small Medium Large All
No of hhs 34,917 8,667 5,008 3,126 51,718 15,636 9,916 7,382 2,212 35,146
Age of hh head (years) 45.2 48.2 49.3 51.4 46.6 47.0 49.6 51.6 52.6 50.7
Family size (no) 5 6 6 7 6 5 5 6 6 5
Operated land (ha) 0.41 1.36 2.63 7.54 1.23 0.42 1.39 2.59 6.62 1.04
Distribution of sources of income (% of hhs)
Cultivation 44.79 76.54 83.82 88.19 57.18 54.30 83.12 85.80 88.12 63.49
Livestock 3.48 2.03 1.90 2.78 3.01 4.21 2.39 2.38 2.94 3.68
Other farm activity 5.15 2.09 1.00 0.93 3.91 1.11 0.88 1.13 0.58 1.05
Non-farm enterprises 9.77 3.00 1.89 1.72 7.24 5.62 3.19 1.64 0.98 4.66
Wage/salary 30.09 13.93 10.09 5.03 23.59 28.18 8.63 7.20 5.52 22.00
Pension 0.62 0.38 0.36 0.31 0.53 1.24 1.00 0.59 0.57 1.11
Remittances 2.82 0.89 0.52 0.64 2.10 4.34 0.56 1.21 1.29 3.28
Other 3.04 1.14 0.42 0.40 2.26 0.95 0.22 0.05 0.00 0.71
Caste structure of hhs (%)
Scheduled Tribe 12.51 15.97 15.63 10.25 13.34 12.71 17.71 13.62 7.45 13.44
Scheduled Caste 21.54 11.31 8.96 4.96 17.40 19.27 10.82 7.84 5.88 16.23
Other Backward Class 41.37 41.83 40.95 41.41 41.41 45.22 45.52 47.45 45.36 45.49
Other 24.27 30.66 34.41 43.35 27.60 22.77 26.03 31.09 41.31 24.84
HHs education (%)
Not literate 61.99 55.16 53.27 49.35 59.10 57.01 50.84 49.41 46.95 54.85
Primary 14.11 15.08 13.66 14.90 14.28 12.74 11.56 12.98 11.49 12.51
Middle 12.29 14.30 14.27 15.98 13.08 13.94 15.64 15.81 14.88 14.44
Secondary 6.58 7.95 9.80 10.44 7.39 8.70 12.07 10.12 12.33 9.55
Higher secondary and above 4.91 7.36 9.01 9.33 6.04 7.58 9.98 11.69 14.34 8.64
Net income ( ` per capita) from
Agriculture 1,942 4,839 7,999 14,167 4,104 3,051 8,600 14,376 29,469 6,467
Livestock 436 428 326 381 418 1,453 1,738 2,306 2,759 1,653
Non-farm activity 1,063 722 646 1,341 969 1,035 1,240 1,064 1,714 1,107
Wage/salary 4,074 2,605 2,344 1,718 3,418 4,824 3,497 3,197 3,127 4,342
Total 7,515 8,594 11,316 17,608 8,908 10,363 15,074 20,942 37,069 13,570
% share of each in total net income
Agriculture 25.84 56.30 70.69 80.46 46.07 29.44 57.05 68.65 79.50 47.66
Livestock 5.81 4.98 2.89 2.17 4.69 14.02 11.53 11.01 7.44 12.18
Non-farm 14.14 8.40 5.71 7.62 10.87 9.98 8.22 5.08 4.62 8.16
Wage/salary 54.21 30.32 20.72 9.76 38.37 46.55 23.20 15.27 8.44 32.00
Farm size categories: Marginal <1 ha; small 1–2 ha; medium 2–10 ha; large >10 ha.
Source: NSSO 59th and 70th rounds.
Table A2: Inequality in per Capita Income (Gini Coefficient) of Agricultural Households as per Size of Farm in Indian States
2002–03 2012–13
States Marginal Small Medium Large All Marginal Small Medium Large All
Jammu and Kashmir 0.53 0.52 0.51 0.28 0.54 0.55 0.53 0.65 0.47 0.57
Himachal Pradesh 0.70 0.64 0.68 0.65 0.70 0.58 0.55 0.64 0.75 0.64
Punjab 0.49 0.42 0.42 0.41 0.57 0.54 0.45 0.44 0.43 0.56
Uttarakhand 0.65 0.81 0.83 − 0.76 0.54 0.44 0.53 0.30 0.59
Haryana 0.60 0.56 0.51 0.62 0.62 0.51 0.49 0.43 0.45 0.55
Rajasthan 0.68 0.77 0.84 0.89 0.79 0.47 0.46 0.48 0.66 0.58
Uttar Pradesh 0.65 0.61 0.59 0.53 0.65 0.55 0.58 0.51 0.54 0.61
Bihar 0.56 0.51 0.51 0.59 0.57 0.62 0.64 0.51 0.53 0.64
West Bengal 0.58 0.61 0.51 0.73 0.59 0.54 0.58 0.57 1.52 0.61
Jharkhand 0.53 0.51 0.49 0.52 0.53 0.49 0.56 0.48 0.39 0.51
Odisha 0.57 0.58 0.67 0.47 0.59 0.49 0.53 0.52 0.52 0.54
Chhattisgarh 0.52 0.58 0.61 0.64 0.57 0.40 0.37 0.43 0.46 0.45
Madhya Pradesh 0.58 0.81 0.92 0.72 0.75 0.42 0.45 0.44 0.59 0.53
Gujarat 0.47 0.48 0.59 0.55 0.54 0.43 0.45 0.54 0.60 0.51
Maharashtra 0.54 0.64 0.57 0.70 0.64 0.51 0.56 0.60 0.63 0.59
Andhra Pradesh 0.56 0.73 0.75 0.84 0.68 0.55 0.65 0.73 0.79 0.71
Karnataka 0.48 0.58 0.65 0.66 0.58 0.51 0.59 0.63 0.68 0.63
Kerala 0.50 0.54 0.60 0.52 0.53 0.57 0.64 1.10 0.66 0.76
Tamil Nadu 0.57 0.72 0.82 0.73 0.65 0.53 0.59 0.61 0.64 0.61
India 0.60 0.65 0.68 0.84 0.67 0.57 0.58 0.61 0.65 0.63
Source: NSSO 59th and 70th rounds.

Economic & Political Weekly EPW MAY 25, 2019 vol lIV no 21 1
SPECIAL ARTICLE
Annex Tables (continued)

Table A3: Total Net Annual Income (`/HH) (2011–12 Prices)

States 2002–03 2012–13
Marginal Small Medium Large All Farmers Marginal Small Medium Large All Farmers
Andhra Pradesh 28,762 33,136 42,349 88,671 35,983 48,927 64,142 77,651 1,67,146 65,612
Assam 58,193 76,611 1,16,697 2,86,861 69,344 52,264 97,917 1,44,046 7,33,307 72,008
Bihar 34,566 57,342 1,01,335 2,24,856 43,852 32,756 45,458 1,19,133 2,92,937 38,801
Chhattisgarh 27,851 29,534 44,210 62,446 33,124 38,185 64,115 89,065 1,36,708 55,937
Gujarat 45,084 57,520 70,795 1,24,717 59,489 73,682 81,074 1,06,190 1,57,149 84,967
Haryana 52,455 68,434 1,03,566 1,63,988 72,392 94,143 1,58,985 1,70,597 5,15,085 1,56,211
Himachal Pradesh 59,852 1,16,738 1,16,215 2,25,626 73,982 83,848 1,10,029 2,50,793 6,86,700 95,348
Jammu and Kashmir 1,05,328 1,57,273 2,12,569 2,98,965 1,22,377 1,27,011 1,38,815 5,47,842 1,07,449 1,37,568
Jharkhand 40,135 45,874 74,625 1,73,531 44,453 51,089 57,241 67,985 1,07,297 52,544
Karnataka 47,927 47,317 64,876 1,22,204 57,722 68,963 78,534 1,33,799 2,59,643 95,292
Kerala 82,122 1,44,911 2,62,884 2,41,615 92,955 1,17,155 1,88,803 1,29,944 10,55,278 1,28,896
Madhya Pradesh 28,066 23,714 34,407 99,471 37,255 40,094 64,028 96,132 2,36,176 67,034
Maharashtra 38,028 42,148 54,059 1,19,363 51,600 58,313 74,426 98,406 1,74,031 79,562
Odisha 19,988 26,455 39,349 79,564 23,245 44,170 75,943 1,31,217 2,40,471 53,966
Punjab 72,323 1,22,931 2,00,596 4,86,659 1,41,720 1,02,484 1,93,127 3,04,714 5,27,823 1,94,913
Rajasthan 34,659 34,617 43,579 44,402 37,827 56,328 76,424 91,859 1,62,476 77,317
Tamil Nadu 40,127 43,780 64,244 1,69,340 46,892 69,052 65,585 1,16,534 1,98,568 76,010
Uttar Pradesh 29,073 52,253 84,296 1,43,789 39,428 37,124 90,757 1,70,060 2,79,261 52,818
Uttarakhand 37,474 97,949 7,65,659 4,45,694 68,919 38,173 99,399 2,07,567 5,50,160 50,510
West Bengal 41,811 70,630 1,06,816 1,10,923 46,675 39,459 70,915 87,076 4,00,821 43,113
India 39,076 49,395 69,981 1,22,996 49,038 51,053 79,600 1,17,298 2,29,878 69,223
Source: NSSO 59th and 70th rounds.

Table A4: Members Engaged in Non-farm Activities (%)

State 2003 2013
Marginal Small Medium Large All Marginal Small Medium Large All
Andhra Pradesh 11 9 5 6 9 24 19 15 12 20
Assam 11 6 3 10 9 15 7 6 6 12
Bihar 7 2 3 1 6 9 5 5 5 8
Chhattisgarh 9 6 5 6 7 26 28 23 17 26
Gujarat 11 9 9 9 10 15 8 7 2 11
Haryana 15 7 6 4 11 18 7 2 2 11
Himachal Pradesh 15 11 9 8 14 23 18 15 12 22
Jammu and Kashmir 18 9 13 10 16 26 20 10 16 25
Jharkhand 14 5 9 2 12 29 22 20 15 28
Karnataka 10 6 5 3 7 14 9 7 6 11
Kerala 20 14 11 8 19 22 20 8 22 22
Madhya Pradesh 8 6 4 3 6 18 13 5 8 13
Maharashtra 9 6 4 5 7 14 10 7 4 11
Odisha 12 11 8 8 12 26 25 25 16 26
Punjab 18 7 2 2 12 19 9 9 3 14
Rajasthan 19 11 8 6 13 29 20 18 11 23
Tamil Nadu 14 12 8 7 13 26 21 20 19 25
Uttar Pradesh 9 4 4 2 8 12 6 4 4 11
Uttarakhand 10.3 8.4 11.5 – 10.2 14.2 8.1 3.8 2.5 13
West Bengal 13 8 7 5 12 20 17 18 29 19
India 12 7 5 5 9 18 13 10 8 16
Source: NSSO 59th and 70th rounds.

2 MAY 25, 2019 vol lIV no 21 EPW Economic & Political Weekly
 SPECIAL ARTICLE
Annex Tables (continued)

Table A5: Investment in Agriculture (`/HH) in 2012–13 and Annual Rate of Growth from 2002–03 to 2012–13 (2011–12 Prices)
State Tractor Power Tubewell Thresher Livestock Chaff cutter Total Tractor Power Tubewell Thresher Livestock Chaff Cutter Total
Tiller and Other Tiller and Other
Implements Implements
Jammu and Kashmir 193 48 6 838 838 1,924 14.78 -17.67 8.13 5.34 9.40 4.09
Himachal Pradesh 246 121 67 1,017 516 1,968 -12.48 7.56 19.31 -1.89 6.79 -2.63
Punjab 8,444 1,529 304 3,576 825 14,678 3.19 -7.65 -0.34 5.12 4.55 1.45
Uttarakhand 1,167 295 36 460 347 2,304 2.89 4.20 6.62 -6.17 -5.83 -1.28
Haryana 1,607 1,165 110 3,335 993 7,211 -3.24 -8.41 -0.28 1.42 10.80 -1.66
Rajasthan 1,363 848 102 1,431 429 4,174 6.26 2.21 3.83 5.78 6.78 5.10
Uttar Pradesh 1,545 451 49 1,157 355 3,558 4.25 -0.72 2.62 3.68 7.69 3.50
Bihar 211 117 52 420 216 1,017 16.95 0.03 0.08 2.03 10.12 4.64
Assam 56 16 4 505 202 783 7.71 -14.7 14.21 -3.55 5.84 -1.98
West Bengal 61 102 29 306 324 822 -0.40 -2.95 6.75 1.70 9.20 2.96
Jharkhand 16 94 6 448 288 850 46.52 0.56 1.25 0.56 8.26 2.70
Odisha 12,634 22 4 521 241 13,422 76.42 2.28 56.51 7.43 15.65 40.14
Chhattisgarh 267 133 10 305 503 1,219 -11.73 -9.69 35.36 -6.62 2.58 -6.29
Madhya Pradesh 1,850 1,095 690 1,337 543 5,515 3.74 7.28 28.01 7.17 4.85 6.59
Gujarat 2,180 1,087 225 1,220 825 5,537 12.70 2.10 35.93 5.22 10.36 7.76
Maharashtra 399 2,440 22 2,084 1,010 5,956 -3.75 17.33 4.76 9.23 19.64 10.58
Andhra Pradesh 1,671 673 96 1,195 464 4,099 21.56 0.97 85.61 2.46 8.99 7.26
Karnataka 635 1,070 21 1,406 701 3,833 0.89 7.45 25.36 13.34 18.16 8.71
Kerala 28 193 162 1,007 706 2,096 -24.37 -4.79 – 1.55 16.94 0.86
Tamil Nadu 1,489 728 2 647 180 3,045 15.58 -0.76 -18.71 -3.05 15.42 3.61
India 646 582 15 1,341 380 2,964 -0.62 0.82 -6.50 5.90 7.00 2.97
Source: NSSO 59th and 70th rounds.

Economic & Political Weekly EPW MAY 25, 2019 vol lIV no 21 3