Income Inequalities among Agricultural Households in India: Assessment and Contributing Factors

Growing inter- and intra-state income inequalities have been at the centre stage of policy discourse in India. A disaggregated analysis of income inequalities among agricultural households and the associated factors can be useful in deliberating the role of public policies toward inclusive growth and welfare. This paper estimates income inequality among agricultural households and identifies the factors that contribute to it by using a farm-level data from nationally representative survey conducted in 2003 and 2013. The results show that households income from crop and animal farming has doubled and that from wage and non-farm activities has increased by 1.3 times over the decade. The inequalities have not widened much but the Gini indices are drastically high in each state, irrespective of land size. The regression based inequality decomposition approach shows land, non-farm income and farm assets as major contributors to inequality with varying magnitude in each state. The contribution of these at all India is estimated at 25.8, 28.6 and 14.3 percent respectively. The findings suggest accelerating public investment and bringing equality in access to land, technology and credit for higher private investment and productivity. The real challenge in mitigating income gaps is to improve the viability of holdings that are increasingly getting fragmented. Acknowledgement