Income inequality and its decomposition among farm households in Punjab

Abstract

Income distribution is found to be highly skewed among farm households with a Gini coefficient of 0.48. Most of the marginal and small farm households are in lower-income strata. Higher participation in pluriactivity and the highest Gini coefficient within each farm size category for marginal (0.50) and small farm size category households (0.45) highlight the tug of war for survival. Regression analysis revealed that less-educated and resource-poor farmers engaged themselves more in non-agricultural and unorganised sources of income, i.e., wages and non-farm business. Source-wise decomposition revealed that livestock and casual wages decrease income inequality. Hence, small holder farmer-centric farming systems and crops, low interest rate loans for women engaged in livestock rearing, agro-processing units and skill development centres to increase the share of non-farm income in total income are the key policy interventions.

Keywords:

• Income sources
• Income inequality
• Lorenz curve
• Gini coefficient
• Gini decomposition

Public Interest Statement

Everyone is well acquaintance with the distress the inequality cause among masses. Among all the inequalities, the inequalities of income can be considered as root cause which increase overall social inequalities. In rural agricultural economies with agriculture as a major source of income, the distress faced by marginal and small farmers is enormous. The situation for landless farmers and agricultural labourers is even more worrisome. Low income, less employment opportunities and high incidence of poverty is commonly observed among these households. Food insecurity among these households needs immediate redressal. In long term, we need to focus on capacity building programmes to ensure that their heirs have necessary skill-set which can help them to earn decent incomes.

Acknowledgements

This research work is a part of dissertation titled “Income inequality among farm households in Punjab” submitted at Punjab Agricultural University, Ludhiana. Financial assistance from the Indian Council of Agricultural Research in the form of Senior Research Fellowship is highly acknowledged. The authors are thankful to Kamal Vatta (Head and Professor, Department of Economics and Sociology, Punjab Agricultural University, Ludhiana) for their support and guidance in improving this research work.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the Indian Council of Agricultural Research [EDN/1/25/2015/-Exam cell].

Notes on contributors

Rohit Saini

Rohit Saini is a Ph.D. in Agricultural Economics currently working as Junior Research Fellow at Department of Economics and Sociology, Punjab Agricultural University, Ludhiana, India. His research interests include status of income of the agricultural households with special reference to landless, marginal and small farmers. His special interests include addressing the income stress in rural economy and analysing the potentials of creating decent opportunities in the vicinity of the rural households.

Manjeet Kaur

Manjeet Kaur is Principal Agricultural Economist at Department of Economics and Sociology, Punjab Agricultural University, Ludhiana, India. Her area of interest includes farmers’ income, indebtedness, stress faced by agricultural households. She has extensively worked to address the problems faced by agricultural labourers in Punjab and currently working on the rural distress and cause of suicides among persons engaged in agriculture.