Changing Contours Of Rural India

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: Rural India is a huge, heterogeneous entity that many of us know little of. Consequently, we often think it as a vast tract of woefully poor people, who labour under the scorching sun with rude ploughs and emaciated bullocks to earn meagre incomes that barely make ends meet. Of course, we are aware of the wealthy farmers of Punjab, Haryana and the western tracts of Uttar Pradesh, and the apocryphal tales of how many of them bought centrifugal washing machines, only for them to end up churning milk to butter and ghee! In general, however, we know woefully little of our rural heartland, and have hardly any idea of how it has been changing over the last decade.

I’m no expert on the subject. However, thanks to a project financed by the ICICI Bank, we at CERG Advisory have begun to look at a vast amount of data on rural India. In today’s column, I’d like to share with you some evidence on rural consumption expenditure based on household-level data from three rounds of National Sample Survey (NSS), and some evidence from the Census of India, 2001. The findings are the result of joint work of two colleagues, Vishal More and Sameer Narang, and myself.

The three NSS rounds on consumer expenditure are the 50th round (for 1993-94), 55th round (for 1999-2000), and the 57th round (2001-02). The 50th round consists of a sample of 69,206 rural households; the 55th has 71,385; and the 57th — which is considered a ‘thin’ sample — takes into account 25,505 households. The Census data are for the entire rural population.

The first thing worth noting is that rural is not necessarily agricultural. According to the 50th round, the main source of livelihood of over 33% of rural households was not from agriculture. Although the classification in Census 2001 is somewhat different, the ratio is quite the same: a bit over a third of rural households have non-agricultural occupations. This is not an arcane bit of statistics. Instead, it hints at something quite important for the future — namely, as this ratio increases, the cyclical nature of Indian agriculture may have lesser impact on rural incomes and consumption than before.