Income inequality and its decomposition among farm households in Punjab

Income distribution is found to be highly skewed among farm households with a Gini coefficient of 0.48. Most of the marginal and small farm households are in lower-income strata. Higher participation in pluriactivity and the highest Gini coefficient within each farm size category for marginal (0.50) and small farm size category households (0.45) highlight the tug of war for survival. Regression analysis revealed that less-educated and resource-poor farmers engaged themselves more in non-agricultural and unorganised sources of income, i.e., wages and non-farm business. Source-wise decomposition revealed that livestock and casual wages decrease income inequality. Hence, small holder farmer-centric farming systems and crops, low interest rate loans for women engaged in livestock rearing, agro-processing units and skill development centres to increase the share of non-farm income in total income are the key policy interventions.

Automated summary

Income distribution is highly skewed among farm households, with most marginal and small farmers in lower-income strata. Less-educated and resource-poor farmers rely more on non-agricultural and unorganised sources of income. Livestock and casual wages contribute to decreasing income inequality. Therefore, policy interventions such as small holder farmer-centric farming systems, low interest rate loans for women engaged in livestock rearing, agro-processing units, and skill development centres should be implemented.