India 1999-2007: Dynamics of Structural Change at the Village and Household Level
58 Pages Posted: 6 Sep 2014
Date Written: August 8, 2014
We analyze structural change of Indian agriculture at the household level using an all India panel of 5885 farm households for 1999 to 2007. The data come from the ARIS/REDS surveys of the NCAER. During the period household division has led to an increase in the number of panel households by 24.5 percent, but average household size has gone down from 6.09 to 5.24. Per capita incomes have gone up at an annual rate of 5.16 percent, while farm profits grew at 3.6 percent. Nonfarm self-employment income grew at 8.75 percent compensated for the slower growth of farm income. The proportion of the households that combined agriculture with nonfarm enterprises rose from 64 to 73 percent. As a consequence, the agricultural profit share in average village income has declined slightly while the share of non-farm self-employment income sharply increased from 6.61 percent to 18.75 percent. Clearly, nonfarm self-employment is not distress employment as often alleged.
Farm sizes have continued to decline significantly showing that there is no national tendency to land consolidation. The economic growth in India and village income growth have led to a massive increase in the prices of agricultural land by 113 percent over the period or by 14.13 percent per year, which in addition to rising profits, provides even small farmers greater incentive to hold on to their land. The increase in total value of output of the farms was 29.31 percent, of which 7.5 percent came from increases in the real agricultural prices and 22 percent was accounted for by increases in quantities of output.
The number of tractors in these villages has no longer increased, but significant increases have occurred in modern harvesting machinery in terms of a significant shift to more labor saving technology. Investment in improved cows and buffaloes has expanded. In irrigation there continues to be significant investment in electric pumps, and investments in sprinkler and drip irrigation have emerged from almost nothing to a very significant component of investment. Farmers also continue to further increase their use of high yielding varieties.
Most of these trends are in line with trends observed from secondary data. We are able to provide more income trends, in particular for non-farm self-employment income, which show that non-farm self-employment income as the most dynamic source of farmer income growth, rather than as a form of distress employment. The paper also provides very detailed data on these issues which serve as a baseline for the REDS agricultural data.
Keywords: agriculture, India, REDS
JEL Classification: Q1, Q24, N55, O13
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