The recent findings of NABARD’s All India Rural Financial Inclusion Survey (NAFIS) 2021-22 highlight critical challenges and opportunities for India’s small farmers. On the surface, the data reveals encouraging trends: rural household incomes have grown by 57.6% since 2016-17, with agricultural families earning slightly more than non-agricultural ones. However, rising expenses, shrinking landholdings, and increasing debt burdens threaten the long-term viability of small-scale farming. The average landholding size dropped from 1.08 hectares in 2016-17 to just 0.74 hectares in 2021-22, exacerbating challenges for small and marginal farmers.
The primary contributors to this situation are fragmented land ownership, rising costs, and insufficient access to advanced technologies. With small farmers struggling to achieve economies of scale, they often face higher per-unit production costs and reduced profitability. Additionally, their growing reliance on debt—52% of rural households are indebted—creates a cycle of financial vulnerability. While financial inclusion initiatives, such as the expansion of Kisan Credit Cards, have made institutional credit more accessible, the dependency on loans highlights the precarious state of smallholder farming.
To address these systemic issues and prevent the marginalization of small farmers, several targeted interventions are necessary. Consolidation of landholdings through cooperative farming models can help achieve economies of scale while retaining individual ownership. This approach allows farmers to pool resources, share machinery, and negotiate better market terms collectively. Furthermore, enhancing access to technology—such as precision farming, AI-based solutions, and irrigation innovations—can improve productivity and reduce input costs.
Rural infrastructure must also be strengthened, with investments in storage facilities, transport networks, and digital marketplaces like eNAM, ensuring small farmers receive fair prices for their produce. Policy measures should focus on diversifying rural employment opportunities, enabling small farmers to supplement their agricultural incomes through non-farm activities such as food processing or rural crafts.
By adopting these reforms, India can build a sustainable agricultural sector that values and supports small farmers, preventing their exclusion and fostering equitable rural development. A holistic approach that combines financial literacy, technological advancement, and market-driven strategies will be crucial to empowering small farmers and securing their place in the industry.
