Rural non-farm economy in SAT India: nature, extent and determinants

Type Conference Paper - 8th Conference of the Asian Society of Agricultural Economists (ASAE) held on 15-17 October 2014 at the BRAC Centre for Development Management (BRAC-CDM), Savar, Dhaka, Bangladesh.
Title Rural non-farm economy in SAT India: nature, extent and determinants
Publication (Day/Month/Year) 2014
Increased importance of rural non-farm economy (RNFE) to the livelihoods of rural population has
been reported in recent studies. The RNFE includes all income generating activities (either as a paid
work or as self-employment) that are not agricultural but provide income to the rural households.
The RNFE is of great importance to the rural economy for its productive and employment effects as
well as for creating demands for agricultural commodities. This paper has documented the
occupational patterns among rural households in semi-arid tropics (SAT) of India. It has identified
various types of rural non-farm (RNF) activities and quantified the contribution of various RNF
activities to employment and household income. We have studied participation behaviours of
household members in non-farm employment and factors affecting the RNF activities. The study is
based on household level panel data collected by ICRISAT under the Village Dynamics Studies in
south Asia (VDSA) project. A total of 864 panel households covering 18 villages across six states
in India (Andhra Pradesh, Gujarat, Karnataka, Madhya Pradesh Maharashtra and Telangana) are
studied for four years (2009-10 to 2012-13). The study villages and sample households come from
different rainfall zones representing varied infrastructural and socio-economic conditions.
Descriptive analyses are carried out for understanding the occupational pattern and contribution of
RNF activities to employment and income. The Tobit model was used to know the contribution of
various factors such as land ownership and tenancy, age of household head, number of household
workers, dependency ratio, average education of working family members, asset ownership, etc.
which are affecting the intensity of participation in RNF activities. The study has revealed
significant contribution of RNF activities as a source of primary and secondary occupations, and
increased importance for employment and household income. However, the extent and contribution
of RNF activities varied across villages and states.

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