In most remote villages that I visit several houses belonging to the poorest people are often seen to be in very poor condition, requiring urgent repairs to such an extent that otherwise these may fall down, particularly in conditions of heavy rain.

Several houses or huts are in such a pathetic state that these can hardly provide proper shelter. The rural housing scheme is meant precisely for these households and provides them a housing grant in installments.

However, at the implementation level it appeared in the villages that I visited that the well-intentioned scheme is badly marred by corruption. Some well-informed persons said that the going rate is around Rs 25,000 or so. While one felt sad about this, one hoped still that at least the remaining amount reaches the poorest households who badly need better housing.

However, when I mentioned this, people pointed out that when corruption becomes a precondition, the chances of the poorest people getting selected for the scheme are automatically reduced as it is very difficult for them to pay this money or a part of it to start with. If they pay corruption money, it also becomes difficult to complete a certain amount of construction which is needed for receiving the next installment.

On the other hand, those who are already in good economic condition (at least relatively) can pay the bribe and adding their own money, also quickly carry out the initial construction for the second installment to be released.

Is there a way out for the poor household who really and desperately needs government help for a shelter? Some of the poor ‘beneficiaries’ said they had to take loans at a very high interest rate; however in the process the basic purpose of the well-intentioned scheme appears to be at least partially defeated.

So in such a case it is clear that it is not just a part of the grant that goes down the drain of corruption, instead to a significant extent extent because of corruption the scheme slips out of the grip of several of the poorest households for whom it is meant.

Let’s see such impacts on development at various levels. If Rs 50 crore (500 million) is allocated for spending on an irrigation project and Rs 10 crore is snatched up by corruption at various levels, then what is the amount that remains for actual development work?

The most obvious answer would be Rs 40 crore, but more often than not this is likely to be wrong. The loss is likely to be much higher. The reason is that the powerful persons including key decision makers involved are likely to be so involved in siphoning off the corruption money that the quality of the construction work gets much less importance.

As long as the official is getting his money, he may be much less caring for the quality of the work. Regardless of the required proper location of the work, both the contractor and the officials may be interested in pushing it towards a place of less visibility. They are likely to avoid all efforts at improving transparency and participation of people, and thereby the most important means of ensuring good quality and cost effectiveness is lost.

The official may be in a hurry to give a completion certificate to the contractor so that both can quickly collect their booty, and for this reason important aspects of proper work completion may be missed. Hence due to all these factors, the actual public loss is much greater than the commission or corruption money taken by the official.

Now let us take another example of a much bigger project that costs Rs 20,000 crore or 200 billion. Assuming that corruption of around 20 per cent is also involved here, Rs 4,000 crore will go away directly, but will the remaining Rs 16,000 crore be spent for the benefit of people? Very unlikely, as all that was stated earlier is valid here also.

Assuming corruption is 20%. Rs 4,000 crore will go away directly, but will remaing Rs 16,000 crore be spent for people’s benefit? Very unlikely

Additionally, as in such a cases the amounts involved are much bigger and are shared at much higher levels a situation is created by powerful persons that this project must go on, come what may. If it is revealed in studies, or on the basis of the experience of some very well-informed persons, that this project may turn out to be harmful, then this possibility is simply brushed aside and such voices are silenced in various ways.

In this way undesirable and unsafe projects also come up. So in such a case the strange math of corruption may say that Rs 200 billion minus Rs 40 billion is not Rs 160 billion at all; in fact it may even turn out to be a negative figure as the project turns out to be harmful to people. Hence the strange math of corruption may say, for example, that Rs 200 billion minus Rs 40 billion (in the case of such a project) leads to a minus figure, perhaps equals minus Rs 100 billion!

Now consider another situation in which most farmers already have access to some irrigation and all that is needed is to allocate the available budget equally among all farmers so that they can take up some repair work as well as water conservation work on their farmland.

But this option has least room for corruption so the official ignores this best option and anyway decides to use the entire budget for a new project not really needed. Again the real benefit may be extremely low or a minus figure.

Or take an example where an official has enough money for improving paths of 100 villages by equally dividing budget among them. But the corruption possibility is either very low , or too many people are involved which may also lead to exposure.

So he devotes this entire money for awarding a single big contract to his favored contractor for widening of a big city approach road which is not really needed. Widening leads to cutting many big trees which creates opportunities of more earnings for him. Again there may be minus benefit and the village paths remain in bad shape.

Let us take a situation where several schools have satisfactory buildings but there is need for devoting more attention at several levels for improving education. However, there is no money to be made in this. So an official somehow finds a justification to build a new hall in all schools which actually reduces the already limited playing space for children, while the real educational work also suffers.

Due to high impact of corruption a situation can arise where those aspects of development which involve payment of commission are prioritized and speeded up, while those very important aspects which have no room for this get neglected.

Hence corruption can be much more damaging for proper development needs than what is indicated by the amount of stolen money. High levels of corruption have a much more harmful and damaging systemic influence much beyond this and therefore a much tougher stand against corruption is needed.

In the case of several highway widening projects people of nearby villages have told me that heavy economic and high ecological costs could have been avoided easily but these projects awarded to big contractors were imposed on their region due to considerations relating to corruption.

What is happening is that certain very important kinds of development is being neglected while certain undesirable kinds of development is being favored due to consideration linked to corruption. Hence the actual costs of corruption in terms of what we lose, what the entire society loses are very high indeed.

*Journalist involved with public hearings and campaigns for transparency; was first convener of the National Campaign for People’s Right to Information; has written several books and booklets on the issue in English and Hindi

Courtesy: CounterView

The post How corruption in rural development leads to floating ‘undesirable, unsafe’ projects appeared first on SabrangIndia.

Image Courtesy: Hindustan Times

In a statement released today, the Morcha said:
On the central issue of inadequate funds which several MPs raised and NREGA workers and citizens groups have been consistently demanding for years, the minister responded by first simply citing a cumulative budget amount between 2014 and 2019 comparing it to the period between 2008 and 2013. These figures are meaningless because they do not give people a sense of the real decline in MGNREGA allocation in the budget.

The Minister then went to on to say that this government has regularly increased the budget allocation for MGNREGA. This, says the Morcha’s statement, “ is an outright lie” made on the floor of the house. In fact the minister himself presented the figures of Rs. 55,000 crores in 2017-18, followed by Rs. 61,084 crores in 2018-19 and Rs. 60,000 crores in 2019-20. By his own figures, the budget allocation for MGNREGA in this financial year (Rs. 60,000 cores) is less than that of the previous year (Rs. 61,084 cores).

Moreover, with pending liabilities mounting at the end of the every financial cycle (20-35% of budget allocation) and inflation increasing every year, both incontrovertible facts, even a seemingly small decrease in the allocation for the program brings implementation to a grinding halt on the ground. The dismissal of the demand for higher allocation for the program without any acknowledgement of this reality and presenting inaccurate figures demonstrates the intent of this government to continue to choke funds to MGNREGA while misleading the public and elected representatives alike.

Second, the minister announced that 99% of MGNREGA payments are going into workers accounts. While this is true, the payment to bank accounts has nothing to do with the work of this government. The shift from cash to bank accounts dates back to 2010. What the minister refused to address is the issue of delayed payments linked to the non-availability of timely funds which has strangled the program and adversely affected the lives of millions of workers. Also, the minister seems to be ignorant about the fact that the payments are still routinely delayed and the Adhaar based payments through the fragile rural banking systems have further added to the plights of the  workers.

Rightfully acknowledging the role of MGNREGA in providing alternative employment across rural India, the Minister cited official figures of 268 crore person days provided in 2018-19 of which a little over half the share of employment went to women (55%). However, activists and researchers have been pointing out for years that MGNREGA is functioning far below its potential. The Minister however seems unaware of this reality because according to him 52% of households that have worked under the program have been employed for a 100 days. This figure is nothing but fiction. Never in the history of MGNREGA, have more than 10% of households received the full 100 days of guaranteed employment and average days of employment has not gone beyond 51. 
 
After the presentation of these grossly misleading figures, followed a bizarre statement where the Minister said that he is not in favour of the continuation of NREGA because it is a program designed for the poor and this government is committed to eliminating poverty.
 
The Morcha has condemned this statement on two counts.
 
First, MGNREGA is an act of Parliament with constitutional backing and is not subject to the whims and beliefs of individual ministers that come and go.
 
Secondly, the statement reveals an anti-poor bias of this government which seems to be more interested in “eliminating” the poor rather that addressing the complex issues of poverty and inequality that rural India continue to face in 2019. This statement also reveals a complete lack of understanding of the role MGNREGA has played in addressing rural poverty. There is now ample evidence to show that MGNREGA has served as a lifeline for the rural poor with one out of every three households having worked under the program since its inception. Just as one example, according to the NCAER report, at least 25% of the decline in poverty since 2004-05 for participating households can be attributed to MGNREGA.
 
Last year, the average increase in MGNREGA wages across the country were at a measly 2.6%. At a time when large parts of the country are experiencing yet another drought, unemployment is at a historical high and the poor are still recovering from 2016’s demonetisation which crippled the informal economy and led to job-losses for millions across the country, rural wages remain stagnant.

The Supreme Court has repeatedly upheld minimum wages as a fundamental right and equated payment of anything less as “forced labour”. Un-remunerative NREGA wages, coupled with long delays in wage payments – even non-payment of wages in many cases – has turned many rural workers away from the employment guarantee programme.

For 33 states and Union Territories the NREGA wage rate is less than the corresponding minimum wage for agriculture, condemning its employment guarantee act workers to another year of bonded labour.

The NREGA Sangharsh Morcha has strongly condemned this anti-workers decision and demands an increase in the NREGA wage rate to Rs. 600 a day. This follows the Seventh Pay Commission recommendation of Rs. 18,000 as the minimum monthly salary.
 
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2. 19 Lakh Jobless in Gujarat, not Six Lakh: Gujarati Economist

The post 9-Hr House Debate on Rural Dev, MGNREGA reveals GOI Contempt for Worker, Underprivileged: Forum appeared first on SabrangIndia.

The agricultural and rural development is inextricably interwoven, each reinforcing or decelerating their growth. The performance of agricultural development determines the levels of living of the people living in rural areas (Mahajan, 2015). The New Agricultural Technology launched during the mid-1960s as it relates to the package of high-yielding varieties of seeds, assured irrigation for intensive agriculture,chemicals, fertilisers, insecticides and pesticides, agricultural extension programmes for the training and education of farmers, emphasis on research and its application, etc., helped India in the transformation of traditional agrarian economy with the most pervasive forces resulted in a growing polarisation between large-scale and small-scale cultivators (Wilson, 2002). It is conceded that in the wake of introduction of New Agricultural Technology, arm incomes have increased and farming today is in better shape (Grewal and Sidhu, 976), but a significant proportion of the gross income of progressive farmers is ploughed back into agriculture by the use of new inputs.

It has resulted in a continuous decline in the net surplus generated from the production of crops (Shah and Agarwal, 1970). It is found that the farmers have suffered losses both due to increased cost of cultivation in some crops and reduction in value of output in some other crops. Continued suffering of losses or earning only a low margin of profit from crop cultivation would definitely discourage farmers from engaging in agriculture (Narayanamoorthy, 2013).

Due to government faulty policy, the terms of trade have been against the agriculture sector for the last 43 years. So, farming has become a loss making profession (Kaur, 2015). As a result of negative agricultural price policy of the government of India, the income of marginal and small peasants has decreased so low that they have been trapped in high indebtedness and are unable to pay even interest on their loans out of their current income. This policy’s drubbings are not confined to marginal and small farmers only, but even greater aggressive effects are being experienced by agricultural labourers and rural artisans (Singh, 2014).

With the commencement of economic reforms in 1991 and membership of World Trade Organisation (WTO) in 1995, India witnessed a distinct slow-down in agricultural growth during the past two decades, in spite of substantial acceleration in the growth of economy as they started showing their impact in the form of virtual freezing of Minimum Support Prices (MSP) and reduction in farm input subsidies (Shergill, 2010). The agrarian sector of the country would undergo a process of rapid capitalistic change during liberalisation leading to concentration of land in few hands and proletarisation and pauperisation of small peasantry (Haque, 1996). The slow-down is accompanied by a significant reduction in the share of agriculture in national product, but without much reduction in the share of workers depending on it for their livelihood. The contribution of agriculture to Indian economy in terms of Gross Domestic Product (GDP) is declining steadily year by year due to the process of industrialisation and the economic growth that gathered momentum with the manufacturing and service sectors growing rapidly (Gol, 2013).
Since the mid-1990s, large sections of the farm households have been facing a great deal of distress as a consequence of decline in agricultural income, erosion of their repayment capacity and increased debt burden. Although agriculture now accounts for only 14 per cent of Gross Domestic Product (GDP), it is still the main source of livelihood for majority of the rural population. As such rapid growth of agriculture is critical for inclusiveness, important structural changes are taking place within the sector;and there are definite signs of improved performance (Gol, 2013). The policy with regard to agriculture since 1991 has caused massive distress among the rural people tied to the labour markets of the urban areas for survival (Tiwana, 2015). The present paper is an attempt to analyse the levels of livings of farmers and agricultural labourers in rural Punjab.

Methodology

For the purpose of the present study, data are collected from the three districts of Punjab State representing the three different regions i.e., the South-West region, the Central Plains region and the Shivalik Foothills region. The South-West region comprises Bathinda, Mansa, Ferozepur, Fazilka, Faridkot, Muktsar and Moga districts. The Central Plains region constitutes Patiala, Fatehgarh Sahib, Sangrur, Amritsar, Kapurthala, Jalandhar, Nawanshahr, Tarn Taran and Ludhiana districts. The Shivalik Foothills region comprises Hoshiarpur, Pathankot, Gurdaspur and Ropar districts. Keeping in view the differences in agro-climatic conditions and to avoid the geographical contiguity of the sampled districts, it was deemed fit to select one district from each region on random basis. Mansa district from the South-West region; Ludhiana district from the Central Plains region; and Hoshiarpur district from the Shivalik Foothills region have been selected for the purpose of the present study.

On the basis of random sampling method one village from each development block of the selected districts has been chosen. There are twenty seven development blocks in the selected three districts. Thus, in all the selected blocks, twenty seven villages have been selected from the three districts under the study. A representative proportional sample of households comprising the marginal farmers, small farmers, medium farmers, large farmers and agricultural labourers have been taken up for the survey. Out of these 27 villages, 1007 farm households and 301 agricultural labour households are selected from the three districts for the purpose of survey, out of which, 240 farm households and 111 agricultural labour households from Mansa district, 481 farm households and 139 agricultural labour households from Ludhiana district and 286 farm households and 51 agricultural labour households from Hoshiarpur district have been selected. Out of total selected 1308 households, 1,007 are farm households and 301 are agricultural labour households. Out of 1007 selected farm households, 408 belong to the category of marginal farmers, 273 to small farmers, 192 to semi-medium farmers, 186 to medium farmers and 46 to large farmers. The present study relates to the agricultural year 2014-15.

Results and Discussion

Household Income: The income earned from the various sources by the different farm-size categories and agricultural labourers shows that an average sampled farm household earns Rs 2,91,798.19, per annum in rural Punjab. There are considerable variations in the income levels earned by the different farm-size categories. The income figures of Rs 1,39,365.27, Rs 2,22,992.32, Rs 3,69,432.68, Rs 5,66,407.60 and Rs 12,02,780.38 against the respective marginal, small, semi-medium, medium and large farm-size categories clearly reflect the variations in the income levels of the different farm-size categories. It is evident that as the farm size increases, there is also an increase in the average income of the farm households.

Farm business income is the most important component of household income, followed by income from milk & milk products and salaries. In absolute terms, these sources of income have shown a similar pattern across the different farm-size categories except the large farm-size category. In the large farm-size category, farm business income is the most important component of household income, followed by income from leased out land and milk & milk products. The field survey highlights the fact that the farm households generally hesitate to hire out labour in agriculture. This can be explained in terms of socio-cultural environment. Income from hiring out labour in agriculture is reported only by the marginal farm-size category. This fact has an important implication that the farm business income of the marginal farm-size category is not sufficient to meet their minimum consumption needs; and farmers of this category earn some income from hiring out labour in agriculture.

The relative shares of income from the various sources of farm households and agricultural labourers show that the main source of income in the case of an average sampled household across the farm-size categories is the farm business income. On an average, 77.62 per cent of the total income comes from farm business income. However, there are considerable variations in the relative share of farm business income across the different farm-size categories. The marginal, small, semi-medium, medium and large farmsize categories have 61.90, 77.59, 82.21, 85.87 and 80.50 per cent of their average annual household income, respectively from farm business income. The second important source of income in the case of an average sampled farm household is milk and milk products. As much as 10.40 per cent of the total income comes from this source. The relative share of income from this source has a negative relationship with farm size.

Income from salaries ranks third in the case of an average sampled farm household. The next important source of income is remittances. The proportional share from this source is 2.01 per cent for an average sampled farm household. It is 3.30 per cent for the marginal farm-size category, followed by the large, small, semi-medium and medium farmsize categories. Pensions appear at the fifth place in the income pattern of farm households. The relative share from this source is 1.83 per cent. It is 2.80 per cent for the marginal farm-size category, followed by the small, large, medium and semi-medium farm-size categories. The sixth place in the income pattern of the farm households goes to income from leased out land. An average sampled farm household earns 1.67 per cent of their total income from this source. This share increases with an increase in the farm-size, except the medium farm-size category. The large farm-size category earns maximum, i.e., 5.65 per cent from this source of income. The marginal farm-size category has not reported any income from this source. This fact can be explained in terms of their meagre land ownership. The components of income, such as hiring out agricultural equipment, livestock, hiring out labour in agricultural sector and other sources, account for a meagre share of the total income for an average sampled farm household.

An average agricultural labour household earns Rs 81,452.17, per annum in rural Punjab. As the agricultural labourers are landless and they have no other choice than to sell their labour power in the agricultural sector, the main source of income in the case of agricultural labour households is the income from hiring out labour in the agricultural sector. They earn 90.89 per cent of the total income from this source. This is because of the fact that Punjab’s economy provides limited alternative employment opportunities in the secondary and tertiary sectors. The second important source of income in this category is income from hiring out labour in the non-farm rural sector. This source contributes 5.39 per cent towards their total income. The next important source of income is pensions. The proportional share of this source is 1.14 per cent. The components of income such as hiring out labour in the urban industrial sector salaries, hiring out labour in the non-industrial urban sector and sale of manure account for a meager share of the total income for an average agricultural labour household.

An average sampled farm household earns per capita income of Rs 54,475.49, annually. However, there are differences in the per capita income levels of the different farm-size categories. For example, the large farm-size category earns the maximum, i.e., Rs 1,69,717.48 per capita, followed by the medium, semimedium, small and marginal farm-size categories. The medium farm-size category has registered an income of Rs 89,808.77 per capita; and it is Rs 63,729.63, Rs 41,667.97 and Rs 29,324.93 for the semi-medium, small and marginal farm-size categories, respectively. Although the family size increased with an increase in the farm size, yet the per capita income is also positively associated with farm size. However, there are considerable differences in the range of average per capita income and the average household income of the various farm-size categories. The per capita income earned by the large farm-size category is 5.78 times the per capita income earned by the marginal farm-size category. On the other hand, the average household income earned by the large farm-size category is 8.63 times the income earned by the marginal farm-size category. An average agricultural labour household earns per capita income of Rs 16,735.22, annually.

The above analysis clearly shows that the income levels of agricultural labourers, marginal, small, semi-medium farmers are significantly lower than the medium and large farmers.

Consumption Expenditure

One of the key indicators of levels of living of an individual is consumption pattern. The consumption pattern and levels of living of an individual are closely related to income (Sharma, et al. 2015). For the purpose of analysis that follows, the consumption basket is presumed to constitute consumer non-durables, consumer durables, services and socio-religious ceremonies, whereas the important constituents of consumer nondurables are foodgrains, milk & milk products, sugar/gur, edible oils, clothing, footwear, intoxicants, fuel and light, tea leaves, LPG and other items of daily use. The durables include house construction, electric fans, coolers, AC, television, radio, bicycles, scooters, cars and jeeps and so on. Services cover consumption expenditure on education, healthcare, conveyance, communication and entertainment. The socio-religious ceremonies cover consumption expenditure on marriages and other socio-religious ceremonies.

The consumption expenditure of an average farm household is Rs 3,35,739.14. However, there are variations in the consumption expenditure of the different farm-size categories. For example, households belonging to the large farm-size category have recorded the maximum annual per household consumption expenditure of Rs 11,36,247.03, whereas the annual consumption expenditure for the marginal small, semi-medium and medium farm-size categories has been recorded at Rs 1,88,523.14, Rs 2,87,451.40, Rs 4,05,573.08 and Rs 5,97,275.52, respectively. The consumption expenditure on the non-durables, durables, services, marriages and other social ceremonies have a tendency to increase from the marginal farmers to the large farmers. However, there are few exceptions; for example, the average expenditure incurred on eggs by the semi-medium farm-size category is more than that of the medium farm-size category. The expenditure incurred on radio, TV, VCD and LCD by the small farm-size category is less than the other farm-size categories; and this expenditure of the medium farm-size category is also less than that of the semi-medium farm-size category. The expenditure incurred on watches and clocks by the small farm-size category is less than the other farm-size categories. The expenditure incurred on refrigerator is the highest among the farmers belonging to large farm-size category, followed by the marginal, semi-medium, medium and small farm-size categories. The large farm-size category has reported no expenditure on bicycles and the small farm-size category spends the minimum, followed by the marginal, medium and semimedium farm-size categories.

The marginal farm-size category has reported no expenditure on geysers, while the large farm-size category spends less than the medium farm-size category. The expenditure incurred on power inverter is the highest among the farmers belonging to the large farm-size category, followed by the semimedium, medium, marginal and small farmsize categories. The small farm-size category has reported no expenditure on computer, laptop and printer. The expenditure incurred on healthcare by the small farm-size category is less than the other farm-size categories.

The large farm-size category spends the maximum amount on socio-religious ceremonies, followed by the durables, nondurables and services, but the remaining farmsize categories spend the maximum amount on the non-durable items. The maximum expenditure incurred on all the items by the large farmers reveals that ownership of means of production has its important role in determining the farmers’ levels of living. The consumption expenditure of the large farm-size category is found to be 6.03 times the consumption expenditure of the marginal farm-size category and 12.5 times the consumption expenditure of the agricultural labour households.

For an average farm household, the non-durables consumption expenditure accounts for a major proportion of the total consumption expenditure, followed by the durable commodities, services and socio-religious ceremonies. An average sampled farm household spends 40.29 per cent on the nondurable items. However, the marginal farm-size category spends the maximum, i.e., 50.38 per cent of total consumption expenditure on such items. This proportion decreases with an increase in farm-size. Among the non-durables, milk & milk products is the most important item of consumption. The field survey has revealed that the different agricultural production activities require hard labour. As a result, the farmers rear some milch animals; and the proportion of this consumption item is the highest among the non-durables items. This is followed by foodgrains consumption, i.e., 6.86 per cent. This proportional share has decreased with an increase in farm-size. An average sampled farm household spends 4.45 per cent on fuel and electricity. This proportional share decreases as farm-size increases. Slightly more than 3.40 per cent of total consumption expenditure is incurred on clothing by an average sampled farm household. This proportional share also decreases as farm size increases. An average farm household spends 2.22 per cent on vegetables. This proportion is as high as 2.96 per cent for the marginal farm-size category and as low as 1.20 per cent for the large farm-size category. Slightly less than 1.6 per cent of total consumption expenditure is incurred on sugar/ gur (jaggery) by an average farm household. This proportion is as high as 2.41 per cent for the marginal farm-size category and as low as 0.69 per cent for the large farm-size category. This proportional share also decreases with an increase in farm-size. The non-durable items like intoxicants and drugs, LPG, footwear and edible oils washing and toilet articles, condiments and spices, tea leaves, fruits, biscuits, bread and sweets and others have a meagre share in the total consumption expenditure of an average farm household. This implies that the marginal farmers (50.38 per cent) and small farmers (45.31 per cent) spend most of their income to meet the non-durable requirements of their families.

For an average farm household, 21.46 per cent of the total consumption expenditure is incurred on the durable items. This proportion increases as the farm-size goes up. Among the durable items, a major share goes to house construction, addition of rooms and major repairs accounting 13.60 per cent for an average farm household. This proportion is the lowest for the marginal farm-size category, followed by the large, small, semi-medium and medium farm-size categories. This is followed by expenditure on cars and jeeps. This proportion is the highest for the large farm-size category, followed by the medium, semi-medium, marginal and small farm-size categories. Scooters/motorcycles/mopeds contribute 1.26 per cent of total consumption expenditure for an average farm household. This proportional share is the highest for the medium farm-size category and the lowest for the semi-medium farm-size category. The other durable items have a meagre share in the total consumption expenditure of farm households.

For an average sampled farm household, 20.02 per cent of total consumption expenditure is incurred on services. The marginal farm-size category spends the maximum (22.87 per cent) of total consumption expenditure on services, followed by the semi-medium, small, medium and large farm-size categories. Among the services, a major share goes to expenditure on education, accounting 9.50 per cent for an average sampled farm household. This is followed by healthcare expenditure, i.e., 6.97 per cent. This proportion is the highest (10.86 per cent) for the marginal farm-size category, followed by the semi-medium, small, medium and large farm-size categories. Next in order of magnitude is the expenditure on conveyance, communication and entertainment. The socioreligious ceremonies account for 18.22 per cent for an average farm household. This proportion is the highest (32.09 per cent) for the large farm-size category, followed by the medium, small, semi-medium and marginal farmsize categories. An average farm household spends 16.21 per cent of its total expenditure on marriages, 1.02 per cent on other social ceremonies and 0.99 per cent on religious ceremonies.

The annual consumption expenditure of an average agricultural labour household is Rs 90,897.37. For an average agricultural labour household, the non-durables consumption expenditure accounts for the major proportion of the total consumption expenditure, followed by services, socioreligious ceremonies and durable commodities. An average agricultural labour household spends 56.63 per cent on the non-durable items. Among the non-durables, foodgrains consumption is an important item of consumption; and an average agricultural labour household spends 14.06 per cent of its total consumption expenditure on this item. This is followed by milk & milk products and clothing, i.e., 11.56 per cent and 5.58 per cent, respectively. An average agricultural labour household incurs 18.62 per cent of its total consumption expenditure on services. Among the services, a major share goes to healthcare accounting 8.72 per cent for an average agricultural labour household. This is followed by education expenditure, i.e., 4.39 per cent. Next in order of magnitude is the expenditure on conveyance, entertainment and communication. The socio-religious ceremonies account for 16.43 per cent of the total consumption expenditure for an average agricultural labour household. For an average agricultural labour household, 8.32 per cent of its total consumption expenditure is incurred on the durable items. Among the durables, a major share goes to house construction, addition of rooms and major repairs, accounting 5.67 per cent for an average agricultural labour household.

Since the family size of the different farmsize categories and agricultural labourers varies, it becomes relevant to study the per capita consumption expenditure of the different farm-size categories and agricultural labourers. The per capita consumption expenditure of an average farm household is Rs 62,678.78. However, there are considerable variations in the per capita consumption expenditure across the different farm-size categories. For example, per capita consumption expenditure is the highest for the large farmsize category which spends Rs 1,60,329.34, followed by the medium (Rs 94,703.15), semimedium (Rs 69,964.09), small (Rs 53,712.68), and marginal farm-size (Rs 39,668.61) categories. As the farm-size goes up, the per capita consumption expenditure on most of the non-durables items increases. In the case of per capita consumption expenditure on milk and milk products, the medium and large farm-size categories interchange their positions. In the case of per capita consumption expenditure on edible oils, vegetables, tea leaves and eggs, the semi-medium and medium farm-size categories interchange their positions. The per capita consumption expenditure of farm households on meat, mutton and fish is the lowest for the small farm-size category, followed by the marginal, semi-medium, medium and large farm-size categories. As farm-size goes up, the per capita consumption expenditure on most of the items of durables, services and socio-religious ceremonies also increases.Per capita consumption expenditure of an average agricultural labour household is Rs 18,675.84.

The per capita consumption expenditure pattern of the farm households is closely related to the household consumption expenditure pattern across the different farm-size categories. Since the family size varies from one category to the other, there are some differences in the range of per capita and per household consumption expenditure. The per capita consumption expenditure of the large farmers is 4.75 times and per household consumption expenditure is 6.13 times of the marginal farm-size category. It is directly related to the farm-size; larger the farm-size, more is the per capita consumption expenditure allocated to the non-durable items. On the other hand, in the case of large farm-size category, the highest proportion of expenditure is accounted for by the durable items, followed by socio-religious ceremonies, non-durables and services.

Average Propensity to Consume

Average propensity to consume, defined as the proportion of income spent on consumption is worked out for the farm and agricultural labour households in rural Punjab. Average propensity to consume comes to 1.15 for an average farm household. It is the highest (1.35) for the marginal farm-size category decreases as farm-size increases. Since average propensity to consume is greater than one for the marginal, small, semi-medium and medium farm-size categories, this shows that an average household in the sample incurs an annual deficit of Rs 43,940.95. The highest deficit of Rs 64,459.08 is incurred by the small farmsize category, followed by the marginal, semimedium and medium farm-size categories. The large farm-size category has a surplus of Rs 66,533.35.It appears that the marginal, small, semi-medium and medium farm households try to maintain a minimum level of consumption whether they can afford it or not. The field survey has brought out that to overcome this problem, the farmers have to take loans from the various sources.

For an average agricultural labour household, average propensity to consume comes to 1.12. This shows that an average agricultural labour household in the sample incurs an annual deficit of Rs 9,427.17. This implies that agricultural labour households try to maintain a minimum level of consumption and whether they can afford it or not. The field survey has revealed that to overcome this problem, the agricultural labourers have to take loans and most of the times from the noninstitutional sources which charge exorbitant rates of interest.

Extent of Debt

The extent of debt among the different farm-size categories in the study area depicts that 85.90 per cent of the farm households in the State of Punjab are under debt. There are certain variations 80.07 per cent of the agricultural labour households are under debt. There are certain variations across the different farm-size categories. As many as 89.06 per cent of the semi-medium farm households are under debt, while in the case of marginal, small, medium and large farmsize categories, these percentages are 83.33, 88.64, 84.09 and 82.61, respectively. Similarly, 80.07 per cent of agricultural labour households are under debt.

The average amount of debt per indebted sampled farm household in rural Punjab is Rs 5,52,064.16, while the average amount of debt per sampled farm household is Rs 4,74,215.99. The amount of debt per indebted household and per sampled household increases as farm-size,  goes up. This reveals that the needs of farmers go on increasing with an increase in farm-size, because without investing in operational as well as fixed costs, the major share of income cannot be generated. The average amount of debt  per indebted agricultural labour household in rural Punjab is Rs 68,329.88, while the average amount of debt per sampled agricultural labour households is Rs 54,709.30.

For an average farm household, the amount of debt per owned acre and per operated acre is Rs 1,16,801.97 and Rs 71,203.60, respectively. The category-wise amount of debt per owned acre decreases as farm-size goes up. The amount of debt per operated acre is the highest among the marginal farmers, followed by the small, semi-medium, large and medium farmers. It is pertinent to note that the burden of debt is greater on the lower farm-size categories as compared to the upper farm-size categories. The upper farm-size categories partly finance their crop production operations from their own savings.

Conclusions and Policy Implications

The above analysis shows that an average sampled farm household earns Rs 2,91,798.19 per annum in rural Punjab. It is evident that as the farm size increases, there is also an increase in the average income of the farm households. The farm business income is the most important component of household income, followed by income from milk & milk products and salaries. In absolute terms, these sources of income have shown a similar pattern across the different farm-size categories except the large farm-size category. In the large farmsize category, farm business income is the most important component of household income, followed by income from leased out land and milk & milk products.

Income from hiring out labour in the agricultural sector is reported only by the marginal farm-size category. This fact implies that the farm business income of the marginal farm-size category is not sufficient to meet their minimum requirements; and farmers of this category earn some income from hiring out labour in the agricultural sector. An average agricultural labour household earns Rs 81,452.17, per annum in rural Punjab. As the agricultural labourers are landless and they have no other choice than to sell their labour power in the agricultural sector, the main source of income in the case of agricultural labourer households is the income from hiring out labour in the agricultural sector. In general, there is much similarity in the consumption expenditure pattern of the agricultural labourer, marginal, small, semi-medium and medium farm-size categories. The large farm-size category has a different pattern. The consumption expenditure pattern of the marginal, small, semi-medium and medium farm-size categories is of subsistence in nature. A large share of total consumption expenditure by these categories is allocated to the non-durable items. On the other hand, in the case of large farm-size category, the highest proportion of expenditure is accounted for by the durable items, followed by socio-religious ceremonies, non-durables and services. Average propensity to consume comes to 1.15 for an average farm household. It is the highest for the marginal farm-size category and decreases as the farm-size increases. Average propensity to consume is greater than one for the marginal, small, semi-medium and medium farm-size categories and for the agricultural labour households. More than four-fifths of the farm and agricultural labour households in the State of Punjab are under debt. The amount of debt per indebted household and per sampled household increases as farm-size goes up, but the amount of debt per owned acre decreases as farm-size goes up. It implies that the burden of debt is greater on the lower farm-size categories as compared to the upper farm-size categories.

The income levels of the farmers are positively correlated with land ownership. It is an utmost necessity to re-visit the land reforms in favour of the marginal and small farmers. The agricultural labourers, an important section of the farming community that has been ignored for ages, must be equally associated with revisiting the land reforms. To raise the income levels of the farm households along with the land reforms, remunerative prices of different crops, suitable for the State of Punjab, must be announced and implemented. To reduce cost of production, subsidies must be given to the farmers and the government must spend the required amount on R&D activities. The basic R&D activities must be carried in the public sector. Social security measures need to be implemented particularly for the benefit of these low income farmers and agricultural labourers. Further, distribution of essential goods, particularly cereals and pulses at subsidised rates may be undertaken for the benefit of poor farmers and agricultural labourers. A mass campaign should be launched against the use of intoxicants and the conservative social values which impose unbearable expenditure on unproductive purposes such as marriages and other socioreligious ceremonies. The government should provide interest-free loans to the marginal and small farmers, and agricultural labourers. The farmers and agricultural labourers should be given proper training according to the specific region’s requirements, which will lead towards upgradation of their skills and capabilities.

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*Professor, Department of Economics, Punjabi University, Patiala; ** Assistant Professor, Department of Economics, Punjabi University, Patiala; *** Professor, Department of Geography, Punjabi University, Patiala; ****Assistant Professor, Dashmesh Khalsa College, Zirakpur

These are excerpts from the paper “Levels of Living of Farmers and Agricultural Labourers in Rural Punjab”, published in the “Journal of Rural Development”, Vol 38, No (1), pp 78-101 NIRDPR, Hyderabad

Courtesy: Counter View

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