Current Economic Statistics and Review For the Week Ended September 15

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Current Economic Statistics and Review For the Week
Ended November 17, 2007 (45^thWeekly Report of 2007)

Theme of the week:

Situation Assessment Survey – A Synopsis*

Indebtedness of Farmers

Introduction

Economic and social well being of a country depends upon the performance of agriculture. It is more so in a developing country like India because still agriculture provides not only food and nutrition to the entire nation but also livelihood to more than 60 to 70 per cent of the teeming millions. Over the years, India has moved from a state of food shortage to self-sufficiency in food. It has become a net exporter of variety of food items from a net importer of food grains. Our farmers have been using varieties of improved seed and various sources of irrigation for their crops. Farmers now use a wide range of industrial inputs like fertilisers, pesticides and veterinary services for their livestock. Farming activities have been mechanised and farmers are now accessing different types of modern technology.

In spite of all these, the policy planners in the Ministry of Agriculture were not fully aware of the life and living of farming community as also their preferences. Thus Union Ministry of Agriculture planned a countrywide survey known as ‘Situation Assessment Survey (SAS)’ at the beginning of this millennium for the first time. Main areas of interest are educational level of farmer households, level of living as measured by consumer expenditure, their income, productive assets, indebtedness, their farming practices and preferences, resource availability, awareness and access to technological development, etc.

National Sample Organisation (NSSO), Ministry of Statistics and Programme Implementation, conducted the above survey during January and December 2003 as part of its 59^th round. The survey was conducted only in the rural areas of the country. In all 51,770 households spread over 6,638 villages were surveyed in the central sample. In the state sample, seven states/Uts, namely, Andhra Pradesh, Chandigarh , Gujarat, Maharashtra , Meghalaya, Orissa and Tripura participated. The central sample covered whole of the nation except (i) Leh (Ladakh) and Kargil districts of Jammu and Kashmir , (ii) interior villages of Nagaland situated beyond five kilometres of any bus route and (iii) villages in Andaman and Nicobar Islands which remain inaccessible throughout the year.

The survey collected information on various aspects of farmers and the farming practices along with their indebtedness and published five reports viz., I) Indebtedness of farmers, 2) Access to Modern Technology for Farming, 3) Some Aspects of Farming, 4) Consumption Expenditure of Farmer Households and 5) Income, Expenditure and Productive Assets of Farmer Households.

This aim of the note is to give a brief review of the results published by NSSO in their Report No 498 on the Indebtedness of Farmer households. The report gives the data of each component in terms of 1000 and total. However, for a better understanding and to have a sharper focus the data is presented in percentages. More over in some cases in order to understand the magnitude the problem actual number of households are worked out by using the ratio published to the total given in the report.

II

Concepts and Definitions

A few of the concepts and definitions followed in the survey by the NSSO have been reproduced below for better readability of the note.

Household: Broadly, a household is defined as a group of persons normally living together and taking food from a common kitchen. By “normally” it is meant that temporary visitors are excluded while temporary stay-away are included. “ Living together” is usually given more importance than “sharing food from a common kitchen” in drawing the boundaries of a household in case the two criteria are in conflict. Size of household is the total number of persons, normally living in the household.

Farmer: Farmer is a person who operates some land and is engaged in agricultural activities during the last 365 days. Agricultural activities include cultivation of field crops and horticultural crops, growing of trees or plantations, (such as rubber, cashew, coconut, pepper, coffee, tea, etc.), animal husbandry, poultry, fishery, piggery, bee keeping, vermiculture, sericulture, etc.

Thus a person gets qualified as a farmer if

he possesses some land ( i.e. land, either owned or leased in or otherwise possessed), and
he is engaged in some agricultural activities on that land during the last 365 days.

It may be noted that persons engaged in agricultural and/or allied activities but not operating a piece of land are not considered as farmers. Similarly, agricultural labourers, coastal fishermen, rural artisans and persons engaged in agricultural services are not considered as farmers

It is also quite possible that during the reference period of last 365 days, a person could have left his entire land as ‘current fallow’ by discretion or due to natural situation or otherwise. Such farmers are also execluded from the coverage of the present situation assessment survey.

Farmer household: A household having at least one farmer as its member is regarded as a farmer household in the context of the present survey.

Social Group: There are four social groups, namely, scheduled tribe, scheduled caste, other backward class and others. Others mean those who do not come under any of the first three social groups and cover all categories.

Principal source of income of the household is the source, which yields maximum income among various sources from which the household received any income during 365 days prior to the date of survey. The different sources are I) cultivation, ii) farming other than cultivation, iii) other agricultural activity, iv) wage/salaried employment, v) non-agricultural enterprises, vi) pension, vii) remittances, viii) interest and dividends and ix) others. Income from begging and prostitution, etc., is not considered as principal source of income.

Cultivation means activities related to production of crops by tillage and related ancillary activities.

Farming other than cultivation includes animal husbandry, poultry, fishery, piggery, bee-keeping etc. Growing of trees, horticultural crops and plantations ( rubber, cashew, pepper, coffee, tea, etc.) are considered under other agricultural activity.

Loans: Any liability, which was taken in cash or kind, is termed as a loan, if the amount at the time of transaction was Rs. 300 or more. Loan taken from different sources are considered as separate loans. Even if two or more different loans were taken from the same source at different times, they were considered as separate loans.

Sources of Loan: For each liability, the agency to which the loan was due, was considered as the source of loan. The different sources were government, co-operative society, bank, agricultural/money lender, trader, relatives and friends, doctors/lawyers and other professionals and others.

Purpose of loan: For each liability, the purpose for which the household has taken the loan was considered as the purpose of loan. There are nine purposes for which loans are taken. They are capital expenditure in farm business, current expenditure in farm business, non-farm business, consumption expenditure, marriages and ceremonies, education, medical treatment and other expenditure.

Amount of outstanding loan: For each loan, the amount outstanding on the date of survey was the sum of principal outstanding and the interest payable as on the date of survey. In case of kind loans, the amount of the liability was evaluated at the current market price prevailing in the locality.

Reference period: Different reference periods were followed in collecting information on different aspects of farming and the condition of farmers ‘as on the date of survey’, ‘last 30 days’, ‘last 365 days’, ‘kharif season’, ‘rabi season’, etc. For information related to loans, the reference period was as ‘on the date of survey’.

III

Geographical Distribution of Total and Indebted Farmer Households

At all-India level, the survey covered 6,638 sample villages and 51,770 sample farmer households.

At all- India level, out of 147.9 million rural households, 89.4 million or 60.4 per cent of rural households were farmer households and among them 43.4 million or 48.6 per cent were reported to be indebted (Table 1). More than fifty per cent of farmer households were indebted in 11 out of 27 states. Andhra Pradesh topped the list with highest indebtedness (percentage of indebted farmer households in total farmer households) of 82.0 per cent, followed by Tamil Nadu (74.5 per cent), Punjab (65.4 per cent), Kerala (64.4 per cent), and Karnataka (61.6 per cent). Union Territories together got 3.5 million indebted farmer households out of 6.9 million farmer households. It is interesting to note that Uttar Pradesh, which has got the highest number of farmer households at 17.2 million, has got low indebtedness at 40.3 per cent. Similarly, Bihar , which has got the second highest farmer households of 7.1 million, had only 2.3 million (or 33.0 per cent) indebted households.

The percentages of indebted farmer households in the north-eastern states, viz., Assam , Arunachal Pradesh , Manipur, Meghlaya, Mizoram, Nagaland except Tripura are generally small and the farmers of these states usually avail loan from their relatives and friends (see discussion on sources of loan).

The number of estimated farmer households in different social groups was 11.9 million (or 13.3 per cent) in scheduled tribes, 15.6 million (or 17.5 per cent) in scheduled tribes, 37.0 million (or 41.5 per cent) in other backward class and 24.7 million (or 27.7 per cent) others. The prevalence rate of indebtedness of farmer households has been the lowest at 36.3 per cent in respect of ST farmer households while other groups had higher rates at 50.2 per cent for SC, 51.4 per cent for OBC and 49.4 per cent in the case of others.

Table 1: Estimated number of Rural Households and Total and Indebted Farmer Households
States	Estimated Number of Rural Households	Estimated Number of Farmer Households	Per cent of Farmer to Total Rural Households	Estimated Number of Indebted Farmer Households	Percentage of Farmer Households Indebted
Northern Region
Haryana	31474	19445	61.8	10330	53.1
Himachal Pradesh	11928	9061	76	3030	33.4
Jammu & Kashmir	10418	9432	90.5	3003	31.8
Punjab	29847	18442	61.8	12069	65.4
Rajasthan	70172	53080	75.6	27828	52.4
North-Eastern Region
Arunachal Pradesh	15412	1227	8	72	5.9
Assam	41525	25040	60.3	4536	18.1
Manipur	2685	2146	79.9	533	24.8
Meghalaya	3401	2543	74.8	103	4.1
Mizoram	942	780	82.8	184	23.6
Nagaland	973	805	82.7	294	36.5
Tripura	5977	2333	39	1148	49.2
Eastern Region
Bihar	116853	70804	60.6	23383	33
Jharkhand	36930	28238	76.5	5893	20.9
Orissa	66199	42341	64	20250	47.8
Sikkim	812	531	65.4	174	32.8
West bengal	121667	69226	56.9	34696	50.1
Central Region
Madhya Pradesh	93898	63206	67.3	32110	50.8
Chattisgarh	36316	27598	76	11092	40.2
Uttar Pradesh	221499	171575	77.5	69199	40.3
Uttranchal	11959	8962	74.9	644	7.2
Western Region
Gujarat	63015	37845	60.1	19644	51.9
Maharashtra	118177	65817	55.7	36098	54.8
Southern Region
Andhra Pradesh	142512	60339	42.3	49493	82
Karnataka	69908	40413	57.8	24897	61.6
Kerala	49942	21946	43.9	14126	64.4
Tamil Nadu	110182	38880	35.3	28954	74.5
Uts	2325	732	31.5	372	50.8
All India	1478988	893504	60.4	434242	48.6
Source: NSSO (2005), Indebtedness of Farmer Households, 59^th Round (Jan-Dec 2003), Report No. 498 (59/33/1)

Source of Income of Total and Indebted Farmer Households

Table 2: Number of Farmer Households and Indebted Households by Sources of Income
State	All Farmer Households (‘ 00)					Indebted Farmer Households (' 00)
State	Cultivation	Farming Other than Cultivation	Other Agril. Activities	Others	All	Cultivation	Farming Other than Cultivation	Other Agril. Activities	Others	All
Northern Region
Haryana	10286	972	486	7700	19445	6177	393	217	3543	10330
Himachal Pradesh	3851	136	426	4648	9061	1248	58	106	1621	3030
Jammu & Kashmir	4810	151	85	4386	9432	1174	96	0	1739	3003
Punjab	8410	479	904	8649	18442	6360	241	483	4997	12069
Rajasthan	28610	2654	1592	20223	53080	16252	1197	863	9545	27828
North Eastern Region
Arunachal Pradesh	1054	32	34	107	1227	55	0	1	16	72
Assam	16652	326	200	7863	25040	2767	73	0	1701	4536
Manipur	1431	86	58	571	2146	269	43	14	208	533
Meghalaya	1821	10	226	486	2543	81	3	6	14	103
Mizoram	657	16	42	65	780	141	15	0	29	184
Nagaland	555	8	5	237	805	204	2	0	88	294
Tripura	1528	61	40	705	2333	802	13	20	312	1148
Eastern Region
Bihar	41845	1487	2124	25348	70804	12066	421	842	10101	23383
Jharkhand	17677	791	1045	8726	28238	2893	83	212	2699	5893
Orissa	18842	508	2583	20408	42341	10530	223	972	8525	20250
Sikkim	327	11	2	191	531	89	5	0	81	174
West Bengal	40566	1523	3946	23191	69226	19256	763	1943	12768	34696
Central Region
Madhya Pradesh	37165	885	2907	22249	63206	20550	450	1830	9312	32110
Chattisgarh	15206	1159	1159	10073	27598	6611	433	322	3727	11092
Uttar Pradesh	113411	4118	3260	50786	171575	45948	1799	1246	20275	69199
Uttranchal	5718	161	108	2975	8962	434	6	0	202	644
Western Region
Gujarat	23350	1211	1817	11467	37845	12356	511	864	5932	19644
Maharashtra	38108	1185	1909	24616	65817	22597	614	866	12021	36098
Southern Region
Andhra Pradesh	32402	2595	3741	21601	60339	26924	2128	2871	17620	49493
Tamil Nadu	19051	2527	1594	15708	38880	14680	1650	898	11726	28954
Karnataka	23520	1172	2586	13134	40413	14988	697	1618	7594	24897
Kerala	3687	2568	2151	13541	21946	2034	1992	1427	8659	14126
Uts	332	37	73	289	732	177	29	51	115	372
All India	511084	26805	34847	320768	893504	247084	13896	17804	155024	434242
Source: NSSO (2005), Indebtedness of Farmer Households, 59^th Round (Jan-Dec 2003), Report No. 498 (59/33/1)

Table 2 shows state-wise distribution of farmer and indebted farmer households by source of income. The principal source of income of farmer households was categorised as cultivation, farming other than cultivation, other agricultural activities and others.

Out of the 89.4 million farmer households, 51.1 million (57.2 per cent) farmer households had their income from cultivation, among them 24.7 million (48.3 per cent) were indebted. Another 32.1 million (35.9 per cent) farmer households derive their main income from other sources. Farming other than cultivation was the main source of income reported by 2.7 million farmer households and out of them 1.4 million were indebted.

Among the states, cultivation is the main source of income among farmer households except Kerala. In Kerala, 61.7 per cent of the farmer households reported that they draw their income from other sources.

V

Distribution of Total and Indebted Farmer Households –

by Size Class of Land Possessed

According to agricultural census the farmer households have been categorised as per various land holding size classes have been regrouped under five groups viz., Marginal ( size of land <= 1 ha), Small (1.01 – 2.00 ha), Semi-medium ( 2.01 – 4.00 ha), Medium (4.01 – 10.00 ha), and Large ( more than 10.00 ha). Situation assessment survey collected some information about the number of households possessing by size of land. Table 3 shows the number of total farmer households and indebted farmer households classified according to land possessed by farmers.

About 66 per cent of farm households were marginal farmer households (58.9 million) each possessing land holdings of size less than or equal to 1 hectare. Of these households, 26.5 million (or 65.2 per cent) were indebted. Small farmers having land of size between 1 to 2 hectares numbered 16.1 million ( or 18.0 per cent) with 8.2 million households ( 18.8 per cent) indebted. About 8 lakh farmer households fall in large category,having land above 10 hectares. Among them about 5 lakh households were indebted. Thus about 80 per cent of the indebted farmer households possessed land amounting to 2 hectares or less and the prevalence of indebtedness among them was the least at 46.3 per cent. The prevalence of indebtedness among other categories had been much higher than this and it ranged from 58 to 66 per cent and higher incidence could be because of their better land ownership.

Table 3: Estimated Number of Total and Indebted Farmer Households in Each Size Class of Land Possessed
Category	No. of Farmer Households		No. of Indebted Farmer Households		Prevalence Rate of Indebtedness
Category	(00)	(per cent)	(00)	(per cent)	(Percentages)
Marginal (<= 1.00 ha)	589071	(65.9)	265031	(61.0)	45.0
Small (1.01 – 2.00 ha)	160600	(18.0)	81920	(18.9)	51.0
Semi-Medium (2.01 - 4.00 ha)	93504	(10.5)	54409	(12.5)	58.2
Medium (4.01 - 10.00 ha)	42581	(4.8)	27734	(6.4)	65.1
Large (10.00 + ha)	7748	(0.9)	5148	(1.2)	66.4
All Sizes	893504	(100.0)	434242	(100.0)	48.6
Source: NSSO (2005), Indebtedness of Farmer Households, 59^th Round (Jan-Dec 2003), Report No. 498 (59/33/1)

Table 4 presents the statewise distribution of the number of indebted farmer households as per different categories of their land holdings. Among southern region states, about 56 per cent of indebted farmer households in Andhra Pradesh (or 2.8 million) were marginal farmers and about 22 per cent (1.1 million) were small farmers. Thus in Andhra Pradesh among indebted farmer households 78 per cent of them had land holdings of 2 hectares or less.

Among central region states, in Uttar Pradesh out of 6.9 million indebted farmer households, 4.9 million were marginal households possessing land of less than one hectare. Small indebted farmers were 1.2 million and hence in Uttar Prdaesh, 6.1 million were indebted farmer households (88 per cent) possess land of only 2 hectares or less.

Among eastern region states, in Bihar about 96 per cent of indebted farmer households (2.2 million) falls under the marginal and small categories as per land holdings. 91 per cent of indebted households in Orissa hold land of 2 hectares or less, in West Bengal, more than 97 per cent of indebted farmer households has got land less than or equal to 2 hectares.

Table 4: Indebted Households by Size Class of Land Possessed
	Size Class of Land Possessed (in ha)
State	Marginal	Small	Semi-Med	Medium	Large	Total
Northern Region
Haryana	5403	1890	2035	909	93	10330
Himachal Pradesh	2309	473	191	58	0	3030
Jammu & Kashmir	2186	411	378	27	0	3003
Punjab	6421	1907	2052	1424	266	12069
Rajasthan	12189	5510	4953	3924	1252	27828
North-Eastern Region
Assam	3202	943	367	23	0	4536
Arunachal Pradesh	20	32	20	0	0	72
Manipur	427	99	6	1	0	533
Meghalaya	75	16	12	0	0	103
Mizoram	107	57	20	0	0	184
Nagaland	190	99	5	0	0	294
Tripura	1087	61	0	0	0	1148
Eastern Region
Bihar	20320	2151	655	164	140	23383
Jharkhand	4691	919	159	53	71	5893
Orissa	14256	4172	1478	344	0	20250
Sikkim	143	26	5	0	0	174
West Bengal	30775	2949	833	139	0	34696
Central Region
Chattisgarh	4947	3394	1875	832	44	11092
Madhya Pradesh	10564	8702	7417	4174

II

Concepts and Definitions

III

Geographical Distribution of Total and Indebted Farmer Households

North-Eastern Region

Eastern Region

Central Region

Western Region

Southern Region