Rural Household Income Growth in India
The National Bank for Agriculture and Rural Development (NABARD) conducted a survey revealing a significant increase in the average monthly income of rural households in India. From 2016-17 to 2021-22, the income rose by 57.6%, from Rs 8,059 to Rs 12,698, marking a compound annual growth rate of 9.5%.
Financial Savings and Debt
Household savings also increased, with an average of Rs 13,209 saved annually in 2021-22, compared to Rs 9,104 five years earlier. The percentage of households saving rose from 50.6% to 66%. However, households with outstanding debt increased from 47.4% to 52%.
Insurance and Financial Services
Insurance coverage saw a remarkable rise, with 80.3% of households having at least one member insured in 2021-22, up from 25.5% in 2016-17. This indicates improved access to financial services in rural areas.
Spending and Borrowing Patterns
Household expenditures increased, with average monthly spending rising from Rs 6,646 to Rs 11,262. The share of food in total consumption decreased from 51% to 47%, showing a shift in spending habits. Institutional borrowing among agricultural households grew from 60.5% to 75.5%, while non-institutional borrowing dropped from 30.3% to 23.4%.
Other Findings
The survey highlighted the effectiveness of the Kisan Credit Card in promoting financial inclusion. Pension coverage improved from 18.9% to 23.5%, and financial literacy and behavior showed positive trends. However, the average landholding size decreased from 1.08 hectares to 0.74 hectares over the five years.
Doubts Revealed
NABARD -: NABARD stands for National Bank for Agriculture and Rural Development. It is an important bank in India that helps farmers and people living in villages by providing them with financial support and services.
Rural Household -: A rural household refers to a family or group of people living together in a village or countryside area, as opposed to a city or urban area.
Kisan Credit Card -: The Kisan Credit Card is a special card given to farmers in India. It helps them get loans easily from banks to buy seeds, fertilizers, and other things needed for farming.
Financial Inclusion -: Financial inclusion means making sure everyone, especially people in villages, can use banking services like saving money, getting loans, and having insurance.
Pension Coverage -: Pension coverage refers to the number of people who have a plan to receive money regularly after they retire from work. It helps them have a steady income when they are older.
Financial Literacy -: Financial literacy means understanding how to manage money, like saving, spending wisely, and knowing about banking services. It helps people make better financial decisions.
Institutional Borrowing -: Institutional borrowing means taking loans from banks or financial institutions, rather than from informal sources like friends or moneylenders.