Regional income inequalities and public investments in rural India

Abstract

Regional inequalities in income levels in the agricultural sector have increased over time, but not as sharply as in the non-agricultural sectors. This article examines the effect of public investments on agricultural income inequalities across 17 major Indian states for the period 1981/82 to 2013/14 and for the pre-and post-liberalisation periods. The impact of conventional inputs and various types of public investments on income inequality is found to be significant but spending on education and health have larger adverse effects compared with spending on roads, energy, and irrigation over time. Land, labour, and private investment in irrigation also have only a modest impact. Among various categories of public investments contributing to regional income inequality, the contribution of education is estimated to be 32.2% nationally, and 50.8%, 38.5%, and 29.7%, respectively, in the low, middle, and high per capita income states. Results suggest that public investments should target roads, energy, irrigation, and agricultural research and development in the less-developed, more agriculture-dependent states to improve regional income equality, increase agricultural productivity, and alleviate rural poverty. The marginal returns to each of these investments, in terms of reducing income inequality, are generally higher in the low-income, agriculture-dominant states, implying the potential benefit of a location-specific expenditure policy.

Income Inequality and Its Pattern among Farm Households in Southern Rajasthan, India

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Policy preferences of experts seeking to raise and stabilise farm incomes in the Eastern Gangetic Plains

“…The ongoing policy discourse on the environmental and fiscal burden of these subsidies (Badiani-Magnusson & Jessoe, 2019;Bathla et al, 2017) and the need to redirect the limited budgets from subsidies to public investments in agriculture (Hoda & Terway, 2015) may also have influenced India's experts' rankings (Ramaswami, 2021). Some agricultural inputs like fertilisers are subsidised in Bangladesh and Nepal too, but the subsidy outlays are significantly higher in India.…”

Income inequalities of farmer producer organizations registered as Mutually Aided Co-Operative Society (MACS) in Anantapur district of Andhra Pradesh

“…The easiest approach to measure inequality is dividing the populace into quintiles from poor to rich, and documenting the income levels that accrue to each level (Bathla et al (2017) [4] , Severini et al (2019) [16] Gini coefficient of inequality The portion of area under diagonal line is known as the Lorenz curve, whose value follows from 0 to 1, which helps to define the Gini coefficient of inequality. The ratio is closer to 1 means the income is allocated evenly, and the ratio is closer to zero the more unequally the income is distributed.…”