India’s agricultural sector remains central to the livelihoods of millions, engaging 46 percent of the workforce and contributing to rural sustainability (PLFS 2023-24). The sector’s Average Annual Growth Rate (AAGR) was 4.02 percent during Financial Year 2014-15 FY (15) to FY (25), compared to overall GDP growth of 6.05 percent. However, the estimated level of income of an average agri-household remains quite low at INR 19,696 in 2024-25, adjusting the income from Situation Assessment Survey (SAS) 2018-19, National Sample Survey data at current level. One of the major factors behind the low level of agri-household’s income is the small holding size (average holding size 1.08 hectares as per Agriculture census, 2015-16) and lack of resource endowment. This level of income cannot generate enough demand for non-agricultural goods and services, and provide impetus for overall GDP growth on a sustained basis. This underscores the need to augment farmers’ income for inclusive and sustained development. In this context, this policy brief looks at the level and composition of agri-households’ incomes, and analyses the factors that can augment their incomes. Regression results of SAS unit level data shows that farmers with livestock have 86.2 percent higher incomes than those without any livestock. Further, evidence suggests that farmers who allocate a greater share of their gross cropped area (GCA) to horticulture crops experience significantly higher incomes than those with minimal diversification. Farmers with less than 6 percent of their land under horticulture, the national average, serve as the baseline. In comparison to that, those who have higher area under horticulture (6–23 percent of GCA) earn approximately 25 percent higher incomes. Income gains continue to rise with greater diversification towards horticulture: farmers with 23-40 percent of their area under horticulture earn 44 percent more, while those exceeding 40 percent report an average income increase of 56 percent compared to the baseline. This upward trend highlights how diversifying into high-value horticulture crops can substantially boost farm incomes.
In the backdrop of these findings, our policy recommendation is to rationalise the budget for agriculture sector as a whole, and allocate more resources towards livestock and horticulture. Along with budgetary re-allocation, we also recommend strengthening the value chains of livestock and horticulture products as they are perishable and carry higher market risk than the staple crops. Here the private sector needs to be roped-in to build more efficient and inclusive value chains. But the public policy has to create an enabling environment for expanding alternative marketing channels like farmer producer organisations (FPOs), promoting logistics (roads, transportation, storage infrastructure, etc), and agro-processing in rural areas, etc. Finally, targeted skill formation through designed training, vocational programmes, and extension support in high-value horticulture and livestock can consequently bridge the education gap, permitting even small and marginal farmers to partake in and benefit from these income-augmenting prospects.
