On 9th October 2024, the National Bank for Agriculture and Rural Development (NABARD) has released the results of its 2nd ‘NABARD All India Rural Financial Inclusion Survey (NAFIS) for 2021-22’, which provides primary data based on a survey of 1 lakh rural households, covering various economic and financial aspects in the post-COVID period.
- The key findings of NAFIS 2021-22 provides deep insights on how rural economic and financial indicators have evolved since 2016-17.
- The inaugural NAFIS was conducted by NABARD for the agricultural year (July-June) 2016-17, and was released in August 2018.
About NAFIS 2021-22:
i.It is a national-level survey conducted by the Department of Economic Analysis & Research (DEAR), NABARD based in Mumbai(Maharashtra).
ii.The survey has covered 10,000 village blocks, 710 districts across 28 states and Union Territories (UTs) of Jammu & Kashmir (J&K) and Ladakh.
- It has covered rural and semi-rural areas of the country including Tier-3 to Tier-6 centres (which have a population of less than 50,000) and both agricultural and non-agricultural households.
iii.It provides a comprehensive overview of the status of rural population in terms of two different, yet interconnected themes i.e. livelihood and financial inclusion.
iv.It also provides detailed information about various other indicators such as: savings, credit, insurance and pension, remittances, and financial literacy.
Key Findings of NAFIS 2021-22:
i.Increase in Average Monthly Income: The average monthly income of households has witnessed a significant increase of 57.6% over the last 5 years, from Rs 8,059 (in 2016-17) to Rs 12,698 (in 2021-22). This suggests a nominal Compound Annual Growth Rate (CAGR) of 9.5%.
- While, Annual average nominal Gross Domestic Product (GDP) growth during the same period (on a financial year basis) was 9%.
- The average monthly income of agricultural households was Rs 13,661, slightly more than the average monthly income of households and also more than the average monthly income of non-agricultural households which was Rs 11,438.
- The survey found that cultivation was the main source of income for agricultural households, accounting for about 1/3rd (33.33%) of their monthly income, followed by government or private services (25%), wage labor (16%), and other enterprises (15%).
- While for the non-agricultural households, government or private service accounted for 57% of the total income of households, followed by labour which accounted for nearly 26% of the total income.
- As per the survey, the salaried employment in the government or private sector emerged as the largest source of all households, representing for nearly 37% of their total income.
ii.Increase in Average Monthly Expenditure: According to the survey, the average monthly expenditure of rural households has increased significantly in last 5 years from Rs 6,646 (in 2016-17)to Rs 11, 262 (in 2021-22).
- The agricultural households witnessed a higher consumption expenditure of Rs 11,710 compared to Rs 10,675 for non-agricultural households.
- The survey highlighted that in some states or UTs like Goa and J&K, the monthly household expenditure was more than Rs 17,000.
iii.Increase in Financial Savings: The annual average financial savings of households increased from Rs 9,104 (in 2016-17) to Rs 13,209 (in 2021-22).
- The survey showed that overall 66% of households reported saving money in 2021-22 as against 50.6% of households in 2016-17.
- The survey revealed that 71% of agricultural households reported saving money in 2021-22 as against 58% of non-agricultural households.
- According to the survey, over 70% households in 11 states reported saving money during 2021-22.
- Uttarakhand (93%) topped among these 11 states in term of savings money followed by Uttar Pradesh (UP) (84%) and Jharkhand (83%).
- While states like Goa (29%), Kerala (35%), Mizoram (35%), Gujarat (37%), Maharashtra (40%), and Tripura (46%) witnessed less than 50% of households reporting savings.
iv.Kisan Credit Card (KCC): The KCC has emerged as a prominent tool for promoting financial inclusion in the rural agricultural sector. It showed a significant growth in coverage over the last 5 years.
- As per the survey, 44% of total agricultural households were found to have a valid KCC.
- The survey showed that 77% of agricultural households with land holdings greater than 0.4 hectares (ha) or those who had taken any agricultural loans from banks in the last year were reported to have a valid KCC.
v.Surge in Insurance Coverage: The percentage of households with minimum one member covered by any type of insurance increased exponentially from 25.5% (in 2016-17) to 80.3% (in 2021-22).
- 55% of households have vehicle insurance among various types of insurance.
- Life insurance coverage extended to 24% of households, with agricultural households (26%) having a slightly larger share than non-agricultural households (20%).
vi.Pension Coverage: The percentage of households with minimum one member receiving any form of pension (like old age, family, retirement, or disability) increased from 18.9% (in 2016-17) to 23.5% (in 2021-22).
- 54% of total households with a minimum one member more than the age of 60 years have reported of receiving pension.
vii.Financial Literacy: The percentage of respondents showing good financial literacy increased by 17% i.e., from 33.9% (in 2016-17) to 51.3% (in 2021-22).
- Also, the percentage of respondents showing sound financial behavior such as: managing money effectively, making informed financial decisions, monitoring expenses, and paying bills on time, increased from 56.4% to 72.8% in 2021-22.
- The survey found that 58% of respondents from rural areas and 66% from semi-urban areas have good financial knowledge.
Other Key Findings:
i.The survey showed that the share of food in the consumption basket of households decreased from 51% (in 2016-17) to 47% (in 2021-22).
ii.The percentage of households who reported to have outstanding debt increased from 47.4% (in 2016-17) to 52.0% (in 2021-22).
- The percentage of households who have outstanding loan from any institutional source increased from 60.5% (in 2016-17) to 75.5% (in 2021-22).
- While, for non-agricultural households it increased from 56.7% (in 2016-17) to 72.7% (in 2021-22).
- The percentage of agri-households that took loans from non-institutional sources decreased from 30.3% (in 2016-17) to 23.4% (in 2021-22).
iii.The survey revealed that the average size of landholding declined from 1.08 hectares (in 2016-17) to 0.74 hectares (in 2021-22).
About National Bank for Agriculture and Rural Development(NABARD):
NABARD was established under NABARD Act, 1981 and works under the jurisdiction of Department of Financial Services (DFS), Ministry of Finance (MoF). It was established in 1982 based on the recommendations of B.Sivaramman Committee.
Chairman– Shaji K.V.
Headquarters– Mumbai, Maharashtra
