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Building Rural Resilience
Context:
The current fiscal is set to witness robust growth in the “agriculture and allied activities” sector, thanks to a strong southwest monsoon and expanded kharif crop acreage.
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- The government’s second-quarter estimate of 3.5% growth — the highest in five quarters — signals this upswing.
- Beyond immediate gains, adequate rainfall replenishes reservoirs and groundwater, bolstering the prospects for winter or rabi crops.
- This rebound from last fiscal year’s modest 1.4% growth could significantly uplift rural incomes and revitalise private consumption, which had slowed due to weak demand in rural areas.
Diversifying Rural Incomes
- Despite recurrent adverse weather events that have strained rural livelihoods, rural households have shown resilience by diversifying income streams.
- Dependence on cultivation has declined, while earnings from livestock rearing and wage labor, including construction work, have risen.
- A National Sample Survey Office report highlights this trend.
- Between 2013 and 2019, the share of cultivation in total agricultural household income fell from 48% to 37%, while wage labor contributions increased from 32% to 40%, and livestock rearing rose from 12% to 16%.
- A National Bank for Agriculture and Rural Development (Nabard) survey underscores this shift: in 2021, 56% of agricultural households reported having three or more income sources, up from 35% in 2017.
Growth in Allied Activities
- The allied sector — comprising livestock, fishing, and forestry — has grown significantly, outpacing traditional crop production.
- Its share of the agriculture and allied sector’s gross value added (GVA) rose from ~35% in FY14 to nearly 46% in FY24, driven primarily by livestock, whose share increased from 23% to 30%.
- Fishing, though smaller, grew from 5% to over 7%.
- While crop GVA grew at a modest sub-2% during this period, the allied sector recorded an impressive average growth of over 6%.
- States like Rajasthan, Jharkhand, Haryana, Maharashtra, and Bihar witnessed a sharper rise in the allied sector’s share, correlating with weaker crop performance.
- Conversely, Madhya Pradesh, with strong crop GVA growth, saw the least increase in allied activities.
Climate Challenges and Changing Demand
- Two key factors are driving the shift towards allied activities: climate uncertainties and evolving consumption patterns.
- Weather disruptions, including erratic monsoons, extreme temperatures, floods, and pest attacks, have made crop production increasingly volatile.
- This has prompted rural households to diversify income sources to safeguard against climate risks.
- The Nabard survey revealed a decline in weather-related distress among agricultural households.
- In 2017, 54% of households reported weather-related challenges; by 2021, this dropped to 30%.
- Livestock losses remained consistently low (~10%), indicating that allied activities are less vulnerable to climate shocks.
- Changing dietary preferences have also boosted demand for protein-rich products like milk, eggs, meat, and seafood.
- Between 2011-2012 and 2022-2023, the share of these items in food consumption rose from 24% to 29% in rural areas and from 25% to 28% in urban areas.
- India’s growing meat and seafood exports further reflect this trend.
Policy Support and Future Prospects
- Programs like the National Livestock Mission and the Pradhan Mantri Matsya Sampada Yojana have provided financial and infrastructure support for livestock and fisheries development.
- This diversification of rural incomes reduces dependence on traditional farming and alleviates disguised unemployment in the agriculture sector.
- As climate pressures persist, building resilience in both core agriculture and allied activities will be critical to ensuring rural India’s economic stability.
The agrarian economy is undergoing a structural transformation, with allied activities gaining prominence. Seizing this momentum to bolster resilience and sustainability will ensure that rural India thrives, rain or shine.
