Determinants of Livelihood Diversification of Farm Households in Rural India: Evidence From National Sample Survey

Abstract

The lives of rural households are predominantly based on agriculture and its allied activities. However, there are signs of an agricultural crisis resulting in dependence on alternative sources of income. This paper analyzes the factors that influence the decision of farm households to participate in non-farm activities for alternative income. The official data for two years on the Situation Assessment Survey of Agricultural Households are explored and a pooled probit regression model is run to examine the determinants of income diversification. Our findings reveal that farm income and irrigated land negatively influence diversification. However, diversification of those having lower access to farm holdings, socioeconomic deprivation, and improved access to education, informal credit, and crop insurance point out positive participation in non-farm enterprises. In addition, the population belonging to hilly and coastal plain regions and the age group 30–64 years are more likely to diversify.