Locating caste in India’s farm economy

A NSSO report shows there are significant caste-based differences in economic status of agricultural households in India

Social divisions in India’s countryside are a well-established fact. A National Sample Survey Office (NSSO) report released last week shows there are significant caste-based differences in economic status of agricultural households in India. Unsurprisingly, lower castes are the worst-off by most yardsticks.

A large majority of India’s farmers are finding it difficult to make ends meet. Around 70% of agricultural households report a deficit situation, where average monthly income was less than the sum of average monthly consumption and net investment in productive assets.
Agricultural households have been defined as those who received not less than Rs.3,000 of produce from farm activities in the preceding 365 days. The survey was conducted over two rounds in July-December 2012 and January-June 2013. The two survey periods broadly capture India’s two agricultural seasons.
An analysis by social groups shows scheduled caste (SC) farm households have the highest share among those running a deficit, followed by other backward classes (OBC).
As expected, ownership of land is an important factor of well-being in the farm economy. Deficit households have lower land holdings. The threshold of being an economically viable agricultural household among all social groups is 1 hectare.
Given the dominance of upper castes in the farm economy thanks to largest relative land ownership (share of land owned divided by share in population), they have the highest share of earnings from cultivation and non-farm incomes among all social groups. SCs have the highest share of income from wage employment, which makes them more vulnerable to unemployment.
The report also suggests a reversal in social fortunes might be in making. Currently, upper castes are the only social group that enjoys a more than proportionate share in total income and consumption than their share in population. Once again, SCs are the worst-off.
However, other backward castes have an equal share in income and consumption, but a much higher share in total expenditure on net investment in productive assets. Interestingly, the upper castes have the lowest share in investment expenditure relative to their share in population. These shares have been calculated by multiplying average income, consumption and investment expenditure with expected number of agricultural households in each social group.
According to Himanshu, an associate professor of economics at Delhi’s Jawaharlal Nehru University, OBCs are becoming the biggest stakeholders in agricultural activities. They have close to 45% share in population and land ownership—the highest in both categories—in rural areas. The disproportionate share in investment might be because they are actively engaged in farming, while upper castes are holding on to land for speculative purposes after having migrated in pursuit of better opportunities outside villages, he added.