Links between Diversification of Family Income and Returns from Agriculture in Rural Odisha

Abstract

With the manifestations of rapid rural transformation in Odisha, the households have also started diversifying their sources of income. At the same time, with the spread of neo-liberal ethos and abundance of knowledge on commodities, the consumption pattern has also registered a significant change. The analysis of household-level consumption expenditure data released through NSSO rounds also reflects such changes happening across the country. It is in this context that the paper seeks to explore the composition of household income in selected rural conglomerations in Odisha.  As a step forward, the paper also tries to examine the role of diversification of family income in influencing the returns from agricultural occupations. The study uses the Simpson Index as a proxy for occupational diversification. With the help of descriptive and inferential statistical tools on primary data collected from 1500 sample rural households in nine selected districts, we conclude that families with greater occupational diversity also have better returns from agricultural activities through the process of rural transformation. This study confirms that households with less diversified occupations have lesser total income, total value of assets and agricultural land than that of the households with diversified occupations. Labour productivity is also found to be higher for the latter than the former. The key differences in average outcomes for both groups have been established through the Mann-Whitney U test. The researcher draws that, policies with a focus on creating diversified livelihood options are more likely to have better outcomes for the agricultural sector than policies that focus on agriculture alone.