Despite pandemic, rural incomes up; but indebtedness too has gone up: Nabard Survey

Despite the challenges posed by the pandemic, the average monthly income of rural households was reported to be ₹12,698, with agricultural households earning slightly more than non-agricultural households. The average monthly expenditure was ₹11,262, with a significant portion going towards non-food items.

“The average monthly income of households increased by 57.6 per cent during the five years from ₹8,059 in 2016-17 to ₹12,698 in 2021-22, suggesting a nominal compound annual growth rate (CAGR) of 9.5 per cent, ” All India Rural Financial Inclusion Survey (NAFIS) 2021-22 conducted by the National Bank for Agriculture and Rural Development (Nabard) has said.

This survey covers one lakh rural households, living in Tier-3 to Tier-6 centres of the country, spanning all States and two Union Territories of Jammu & Kashmir and Ladakh.

Indebtedness up

The rural indebtedness, however, has seen an increase by about 5 percentage points. “The proportion of households who reported to have outstanding debt moved up from 47.4 per cent in 2016-17 to 52 per cent in 2021-22.

While 52.2 per cent of all households reported an average debt of ₹90,372, about 55 per cent of agricultural households reported a debt of ₹91,231, while 48 per cent of all non-agricultural households had a debt of ₹89,074 at the time of data collection.

The annual average nominal GDP growth during the same period was 9 per cent.

The survey also shed light on the role of community-based organisations in rural India. A significant proportion of households reported association with various microfinance groups, including Self-Help Groups (SHGs) and Farmer Producers’ Organisations (FPOs), highlighting their importance in promoting financial inclusion and livelihood development.

Overall, the survey results paint a picture of resilience and progress in rural areas. Despite the challenges posed by the pandemic, rural households have demonstrated their ability to adapt and grow.

The increased reliance on institutional sources for financing needs, the improvement in financial literacy, and the significant penetration of insurance schemes presented a positive trend.

The proportion of agricultural households that took loans from institutional sources only increased to 75.5 per cent in 2021-22 from 60.5 per cent in 2016-17.

The proportion of Agri-households that took any loan from non-institutional sources only decreased to 23.4 per cent in 2021- 22 from 30.3 per cent in 2016-17.

Monthly expenditure

The report found that the average monthly expenditure of households increased to ₹11,262 in 2021-22 from ₹6,646 in 2016-17.  The share of food in the consumption basket of households declined to 47 per cent in 2021-22 from 51 per cent. in 2016-17.

“The average annual average financial savings made by households increased to ₹13,209 in 2021-22 from ₹ 9,104 in 2016-17. 66 of households reported to have saved in 2021-22, as against 50.6 per cent in 2016-17,” it said.

The percentage of people having insurance cover and some form of pension has gone up during the period.