NABARD has published the findings from its second All India
Rural Financial Inclusion Survey (NAFIS) for 2021-22, which offers primary data
based on a survey of 1 lakh rural households, covering various economic and
financial indicators in the post-COVID period. Recognizing the vital role of
financial inclusion for economic development, NABARD conducted the inaugural
survey for the agricultural year (July-June) 2016-17, with results released in
August 2018. Since then, the economy has faced numerous challenges, and
policies have been implemented to support agriculture and boost rural
socio-economic progress. The NAFIS 2021-22 results could help to shed light on
how rural economic and financial development indicators have evolved since
2016-17. The survey included all 28 states and the Union Territories of Jammu
& Kashmir and Ladakh.
Strengthening Rural Population: Insights from the NAFIS
2021-22
- Increase
in Average Monthly Income: The average monthly income of
households saw a substantial rise of 57.6% over a five-year period,
increasing from Rs. 8,059 in 2016-17 to Rs. 12,698 in 2021-22. This
indicates a nominal compound annual growth rate (CAGR) of 9.5%.
Annual average nominal GDP growth during the same period (on financial
year basis) was 9%. When considering all households together, the average
monthly income stood at Rs. 12,698, with agricultural households earning
slightly more at Rs.13,661, compared to Rs. 11,438 for non-agricultural
households. Salaried employment in the government or private sector was
the largest income source for all households, accounting for approximately
37% of their total income. For agricultural households,
cultivation was the main income source, making up about one-third of their
monthly earnings, followed by government or private services
contributing one-fourth share, wage labor (16%), and other enterprises
(15%). Among the non-agricultural ones, it was the Government/ private
service which contributed 57% of the total household income, followed by
wage labour which made up for roughly 26% of the total income.
- Rise
in Average Monthly Expenditure: The average monthly
expenditure of rural households rose significantly from Rs. 6,646 in
2016-17 to Rs. 11,262 in 2021-22. The agricultural households reported
a relatively higher consumption expenditure of Rs. 11,710 than Rs. 10,675
for non-agricultural households. In states like Goa and Jammu &
Kashmir, the monthly household expenditure exceeded Rs. 17,000. Overall, agricultural
households demonstrated both higher income and expenditure levels than
non-agricultural households.
- Increase
in Financial Savings: The annual average financial savings of
households increased to Rs. 13,209 in 2021-22 from Rs. 9,104 in 2016-17.
Overall, 66% of households reported saving money in 2021-22, compared to
50.6% in 2016-17. Agricultural households outperformed non-agricultural
ones in terms of savings, with 71% of agricultural households reporting
savings during the reference period, compared to 58% of non-agricultural
households. In 11 states, 70% or more households saved money, with
Uttarakhand (93%), Uttar Pradesh (84%), and Jharkhand (83%) leading. In
contrast, states like Goa (29%), Kerala (35%), Mizoram (35%), Gujarat
(37%), Maharashtra (40%), and Tripura (46%) saw less than half of
households reporting savings.
- Kisan
Credit Card (KCC): The Kisan Credit Card (KCC) has emerged as a key
tool for promoting financial inclusion in the rural agricultural sector,
showing substantial growth in coverage over the past five years. In total,
44% of agricultural households were found to possess a valid Kisan Credit
Card (KCC). Among those with land holdings greater than 0.4 hectares or
those who had taken any agricultural loans from banks in the past year,
77% reported having a valid KCC.
- Insurance
Coverage: The percentage of households with at least one member
covered by any form of insurance increased significantly from 25.5% in
2016-17 to 80.3% in 2021-22. This means that four out of every five
households had at least one insured member. Agricultural households
outperformed their non-agricultural counterparts by a margin of roughly 13
percentage points. Among different types of insurance, vehicle insurance
was the most prevalent, with 55% of households covered. Life insurance
coverage extended to 24% of households, with agricultural households
showing slightly higher penetration (26%) compared to non-agricultural
ones (20%).
- Pension
Coverage: Pensions significantly enhance recipients' quality of life
by offering financial support and reducing dependency on others, thereby
boosting their self-worth and confidence. The percentage of households
with at least one member receiving any form of pension (such as old age,
family, retirement, or disability) increased from 18.9% in 2016-17 to
23.5% in 2021-22. Overall, 54% of households with at least one member over
60 years old reported receiving it, highlighting the importance of
pensions in supporting elderly members of society.
- Financial
Literacy: The percentage of respondents demonstrating good
financial literacy increased by 17 percentage points, rising from 33.9% in
2016-17 to 51.3% in 2021-22. The proportion of individuals exhibiting
sound financial behavior- such as managing money effectively, making
informed financial decisions, tracking expenses, and paying bills on
time—also increased from 56.4% to 72.8% during the same period. When
assessed on financial knowledge, 58% of respondents from rural areas and
66% from semi-urban areas answered all questions correctly.
Conclusion
The NAFIS 2021-22 results highlight the remarkable strides
made in rural financial inclusion since the last survey in 2016-17. Rural
households have experienced notable improvements in income, savings, insurance
coverage, and financial literacy. The Government welfare schemes like Pradhan
Mantri Kisan Samman Nidhi, Pradhan Mantri Kisan MaanDhan Yojana, Mahatma Gandhi
National Rural Employment Guarantee Scheme (MGNREGS), Pradhan Mantri Awas
Yojana-Gramin (PMAY-G), Pradhan Mantri Gram Sadak Yojana (PMGSY), Deendayal
Antyodaya Yojana- National Rural Livelihoods Mission (DAY NRLM), Deendayal
Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) have significantly contributed to
improving the lives of the rural population. As access to financial services
continues to expand, there is a bright outlook for the economic empowerment of
these households. The survey underscores the importance of ongoing support and
investment in rural development, paving the way for a more prosperous and
financially secure future for India’s rural population.
A PIB feature
References
https://www.nabard.org/PressReleases-article.aspx?id=25&cid=554&EID=91
https://www.nabard.org/auth/writereaddata/tender/pub_0910240156351156.pdf