Reports

Two recent household surveys reveal no trickle down

Print edition : October 22, 2021

A woman withdrawing cash using a hand-held device, in Vellore, Tamil Nadu, in July 2020. As many as 84.4 per cent of the adult population in rural India and 85.2 per cent in urban India have money deposited in banks. Photo: C. Venkatachalapathy

At Chawla Worli area in Mumbai. Land accounts for 69.2 per cent of the value of assets held by households in rural India and 49.4 per cent in urban India, while buildings account for 22.3 per cent and 37.5 per cent, respectively. Photo: SUJIT JAISWAL/AFP

Two surveys paint a stark picture of an India divided between a small minority that owns most of its wealth and the large majority that is excluded from gaining assets.

In September, the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation, published two significant survey reports, the eighth All-India Debt and Investment Survey (AIDIS) and the Situation Assessment of Agricultural Households and Land and Livestock Holdings of Households in Rural India, 2019. Both reports present a stark picture of the socio-economic divide in asset holdings between urban and rural India, the skewed nature of indebtedness, and the large concentration of wealth and benefits among a small percentage of the population.

The AIDIS, part of the 77th round of the National Sample Survey (NSS), was conducted from January to December 2019, the year before the pandemic. The survey sample was spread over 5,940 villages covering 69,455 households in the rural sector and 3,995 blocks covering 47,006 households in the urban sector. The 77th round had several additional indicators of financial inclusion and Sustainable Development Goals (SDGs), such as information on deposit accounts, possession of credit or debit cards and e-wallets and their use by each household member in the past 365 days, ownership of land and ownership of agricultural land by each household member, number of household members contributing to government insurance and pension subscriptions under various schemes, ownership of land by female household members, monthly average consumer expenditure, and premium paid for life and non-life insurance.

On the face of it, the AIDIS report, which runs into 2,000 pages, shows that 99.4 per cent of rural households and 98 per cent of urban households are ‘owners’ of assets, both physical and financial. In rural India, 97.5 per cent of households reported ownership of physical assets, while 96.6 per cent had financial assets. On the other hand, 94.7 per cent of urban households reported ownership of financial assets and 85.4 per cent reported physical assets.

The data on financial inclusion show that 84.4 per cent of the adult population in rural India and 85.2 per cent in urban India have money deposited in banks, with men outnumbering women. According to the AIDIS, only 35 per cent of rural households and 22 per cent of urban households reported indebtedness. Asset ownership was ‘universal’ among all social groups—the Scheduled Castes (S.Cs), the Scheduled Tribes (S.Ts), Other Backward Classes (OBCs) and Others.

Deep-seated inequalities

The big picture, however, conceals the deep-seated inequalities and a fundamental division that characterises economic relations and the overall structure, as revealed by the AIDIS data. Asset ownership is far from homogeneous, and the inequities lie in the value and nature of those assets held by different segments of the population.

At Rs.27,17,000, the average value of assets held per household in urban India is 1.7 times that in rural India (Rs.15,92,000). Across social groups in rural and urban India, ‘Others’ have the highest average asset holding, Rs.26,03,000 and Rs.40,54, 000, respectively. These are more than three times that in the S.C. category, where the average value of asset holding per household is Rs.8,79,000 and Rs.13,15,000 in rural and urban India, respectively. The average value of assets per household among S.Ts is Rs.8,84,000 in rural India and Rs.18,90,000 in urban India. In both rural and urban India, OBCs fare relatively better, with average assets per household being Rs.16,45,000 and Rs.21,20,000, respectively. However, even OBCs are well behind ‘Others’, and even more so in urban India than in rural India.
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The inequality across social groups ultimately reflects the fact that ‘Others’ disproportionately dominate the higher asset ownership groups in India, both financial and physical, and it is here that the greatest inequality is revealed. According to the AIDIS, the average asset holding of the top 10 per cent of asset owners in both rural and urban India is more than three times that of the next 10 per cent. In urban India, the top 10 per cent of asset owners have an average holding of Rs.1,50,35,000; the corresponding figure in rural India is Rs.81,17,000.

In contrast, the average holdings of the second 10 per cent in urban and rural sectors are Rs.47,41,000 and Rs.26,13,000, respectively. The gap between the top 10 per cent and the remaining 80 per cent of households increases progressively as one moves down the asset holding category. The net result is that the top 10 per cent of rural households account for 50.84 per cent of all rural asset ownership, while the top 10 per cent in urban India own 55.67 per cent of the assets. The bottom 70 per cent of households have only 22.63 per cent of the assets in rural India and just 17.53 per cent in urban India.

What is striking in the AIDIS data is the fact that the ratio of debt to assets increases as one moves down the asset holding categories. That is, the lower the value of assets held, the higher the ratio of debt to that value. In rural India, the debt-asset ratio averages 3.8 per cent across all groups; it is as high as 39.1 per cent for the bottom 10 per cent households and only 2.8 per cent for the top 10 per cent households. In urban India, where the average for all groups is 4.4 per cent, in the bottom 10 per cent the debt is five and a half times greater than the value of assets held. This means that the lower the value of assets held, greater the degree to which that ownership is cancelled out effectively by debt liabilities.

Average debt

The story of the debt-asset ratio exists despite the fact that the average level of debt is much higher in higher asset ownership groups. The average amount of debt per household in urban India (Rs.1,20,336) is higher than in rural India (Rs.59,748). Among social groups, ‘Others’ had the highest level of debt per household in both rural and urban India, while the S.Cs and the S.Ts had the lowest levels.

Moreover, the AIDIS shows that institutional debt is far more significant than debts from non-institutional credit agencies in the case of higher asset ownership groups. In other words, a small minority of the Indian population not only dominates overwhelmingly in the ownership of assets, but it also has a disproportionate access to lower cost credit (mainly institutional credit) as a means of acquiring assets. That is, there is a double skew in their favour.

Land ownership

The full significance of inequality in ownership of assets emerges, however, only when the composition of those assets is considered. According to the AIDIS, ownership of land and buildings dominates the asset portfolio of households. Land accounts for 69.2 per cent of the value of assets held by households in rural India and 49.4 per cent in urban India, while buildings account for 22.3 per cent and 37.5 per cent, respectively, in the two sectors. In other words, these two categories (land and buildings) account for 91.5 per cent of the assets in rural India and 86.9 per cent of the assets held by urban households, with financial assets and machinery and equipment making up the rest.

In the case of buildings, the bulk of asset ownership consists of self-occupied residential buildings, and for most low asset households, such buildings are all they own. Regarding land, low asset households in both rural and urban India have a marginal share in the ownership of urban land. As many as 80 per cent of rural households and 30 per cent of urban households own practically no land in urban areas; the average amount of land owned by another 50 per cent of urban households is very small. The top 10 per cent of urban households have on an average three times the land per household than the next 10 per cent. Interestingly, the top 10 per cent of urban households also own a significant amount of land in rural India, with 29.2 per cent of them reporting an average ownership of rural land per household that exceeds the amounts held by 80 per cent of rural households.
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Ownership of rural land is more common among the lower asset ownership groups, with almost all rural households owning some land. However, agricultural land constitutes a large part of the rural land, and here the position is starker than in the case of simply land ownership.

Situation Assessment Survey findings

What emerges from the Situation Assessment of Agricultural Households and Land and Livestock Holdings of Households in Rural India, 2019, is that a large proportion of rural households (42 per cent) own no agricultural land. And except for the highest land ownership classes who are a minority, even among those who own land, the amount owned is very small. As many as 70.4 per cent of agricultural households and 98.9 per cent of non-agricultural households owned less than one hectare of land. Only 0.4 per cent of agricultural households had more than 10 hectares, while none of the non-agricultural households held more than 10 hectares of land. Large ownership of land was zero among non-agricultural households, whereas marginal ownership comprised 83.7 per cent. Thus, the Situation Assessment Survey (SAS) found that among the landowning categories, both agricultural and non-agricultural rural households were likely to have marginal land ownership patterns.

The patterns of household ownership of landholdings by social categories indicate that not much has changed over the years though there might have been a palpable shift in land ownership towards the OBC category. Of the total ownership of landholdings, the S.Ts owned 14.1 per cent, the S.Cs 10.2 per cent, OBCs 47.2 per cent and ‘Others’ 28.5 per cent.

What all this adds up to is the fact that ownership of what may be termed as productive assets, or assets capable of generating a flow of income, is almost completely monopolised by the top asset owning segments of the population and among them by the historically dominant social groups. The inclusion of self-occupied residential buildings and land that is not used for production activity in the class of ‘owned’ assets tends to obscure this reality and makes such ownership to be more dispersed than it actually is. What appears to be simply inequality in asset ownership in the AIDIS is a modified reflection of a reality where India is divided between a small minority that owns most of its wealth and the large majority that is excluded from gaining assets.

As far as occupational category of households is concerned, the AIDIS indicates that in rural India 57 per cent are non-cultivator households and 43 per cent are cultivator households. In the urban sector, 74 per cent are self-employed and the remaining 26 per cent come under “others” who earned wages, salary, and worked as casual labour and, so on. Typically, average asset ownership is shown to be higher among cultivators (Rs.22,07,000) compared with non-cultivators (Rs.7,07,000) in rural India and higher among the self-employed (Rs.41,51,000) compared with Others (Rs. 22,11,000) in urban India.

Rural indebtedness

The AIDIS also has pointers to the state of rural and urban indebtedness in the country. It finds a higher degree of indebtedness in rural India compared with urban India; the incidence of indebtedness among cultivator households, at 40.3 per cent, is higher than the 28.2 per cent among non-cultivator households. According to the SAS, 55.7 per cent of the loans taken by agricultural households were for agricultural purposes.

Thus, with extremely low level of asset ownership of the productive kind and a greater burden of indebtedness, the situation of most cultivator households and those who are self-employed is typically no better than those who are in some form of wage employment. Indeed, the average earnings of the typical agricultural household or earnings from self-employment revealed in the SAS and the Periodic Labour Force Survey (PLFS) only serve to confirm this.

According to the SAS, the average income of an agricultural household is just Rs.10,218, and more than 90 per cent of agricultural households earn more or less the same amount. The SAS further shows that net receipts from crop production accounted for only Rs.3,798 of this income, while Rs.4,063 came from wages, Rs.134 from leasing out land, Rs.1,582 from farm animals and Rs.641 as net receipts of non-farm businesses.

According to the PLFS for 2017-18 and 2018-19, the average monthly earnings of self-employed workers in India was in the Rs.10,000-Rs.12,000 range. The overwhelming majority of the Indian population is therefore more accurately described as asset-less rather than asset-owning.
Also read: Neoliberal road to poverty

The gulf between two groups of citizens in India in terms of ownership of wealth also translates into inequalities in income distribution. The fact that this gulf has widened tremendously over the past few decades is proof of the fact that government policies have done nothing to narrow it and may have even contributed to it.

The surveys belie Prime Minister Narendra Modi’s claim after the 2019 electoral victory that there was no real divide in India except between those who want to come out of poverty and those who want to bring them out of poverty. The allusion was, of course, to a presumed process of wealth accumulation at the top creating trickle-down opportunities for the rest, a promise that has not been fulfilled in 30 years but has only served to justify a continued process of polarisation.

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