Is agriculture becoming less important for employment, incomes and livelihoods of people in rural India and for the Indian economy as a whole? The answer depends on the way in which the role and contribution of agriculture is measured.

The conventional measurement in terms of contribution of a sector to Gross Domestic Product (GDP) or national income shows a rapid decline in the contribution of agriculture over the years. In India, agriculture and other allied activities accounted for 53 percent of GDP in 1951, 25 per cent in 1991, and 16.8 per cent in 2011. The share of the non-agricultural sector is growing not only in the national economy, but also in the rural economy.

Turning to employment, the proportion of workers engaged in agriculture and allied activities has also declined, though at a slower pace. In the Census of India, the categories of “cultivators” and “agricultural labourers” can be used to identify workers engaged in agricultural activity. The share of cultivators and agricultural labourers in total workers fell from 58.2 per cent in 2001 to 55 per cent in 2011 at the all-India level (rural and urban combined). To put it differently, in 2011, one in two males and two in three females worked in agricultural activities. In the last decade, there was an absolute decrease in the number of male and female cultivators (though there was an increase in the number of male and female agricultural labourers).

What is interesting, however, is a finding emerging from village studies. It is that almost all rural households engage in some agricultural activity. In a recent seminar at the Economic Analysis Unit, Indian Statistical Institute, Bangalore Centre, Aparajita Bakshi presented a paper on diversification of income of rural households. The paper was based on a detailed analysis of data on household incomes from seven villages surveyed as part of the Project on Agrarian Relations in India (PARI) of the Foundation for Agrarian Studies. The villages in her paper are from Uttar Pradesh, Maharashtra, Rajasthan and Madhya Pradesh (all surveyed between 2006 and 2010).

Bakshi defined income from crop production and allied activities and from agricultural wages as income from the primary sector. The share of income from the primary sector in total income (that is, income of all households resident in the village) ranged from 25 per cent to 80 per cent. The share was as high as 70 to 80 per cent in 25 F Gulabewala village, Sri Ganganagar district, Rajasthan, and Harevli village in Bijnor district, Uttar Pradesh. These two villages are characterised by irrigated, agriculture (and fall in what may be called the Green Revolution belt). By contrast, the share of primary-sector income in total income was low (25 to 35 per cent) in Mahatwar village, Ballia district, eastern Uttar Pradesh, and Rewasi in Sikar district, Rajasthan. Both villages did not have much irrigation (and, in the case of Rewasi, the survey year was a drought year).

Nevertheless, the remarkable finding of her study is that almost all households (93 to 99 per cent across the seven villages) engaged in some agricultural activity – as self-employed or wage workers. In other words, for households resident in rural areas, the agricultural sector is inevitably and almost invariably a source of income, and developments in agriculture are thus not peripheral to their livelihoods. At the same time, all households reported at least two distinct sources of income, reflecting the diversification of livelihoods.

The message of the paper is that agriculture, even if not the sole or main source of income of rural households, is still very much a part of their lives and livelihoods. This message is distinct from the one that derives from data on GDP or employment in the economy as a whole.