NABARD All India Rural Financial Inclusion Survey 2016-17

August 20, 2018August 20, 2018 admin 0 Comments Income level and sources, Individual level Financial Knowledge, Rural Financial Inclusion Survey

GENESIS

The rural financial landscape is ever changing and is not captured adequately and as frequently as required. Existing large sample surveys in this space conducted by NSSO such as Situation Assessment Survey (SAS) and All India Debt Investment Survey (AIDIS) are done once in a decade and cover limited aspects- either livelihood related or financial and not both. NABARD wanted to understand rural financial inclusion in its entirety covering aspects besides borrowings on one hand and livelihood related aspects on the other. The focus of the Survey is on livelihoods in addition to financial aspects. It also involved assessment of financial knowledge, attitude and behaviour at the individual level.

SAMPLE

The sample size of the survey is 40327 rural Households (HH) selected through multi–stage stratified random sampling from 29 states, 245 districts and 2016 villages/Centres.

Districts within each state are stratified on bank branch density. Villages/centres are stratified into three: i) those having a population of less than 250, ii) villages having bank branch within boundaries and iii) villages not having bank branch within its boundaries. Here rural⁴ area is defined as a centre having population less than 50000 (Tiers III to Tier VI centres) in tune with NABARD’s mandated jurisdiction. Hence, rural centres (up to population of 9,999) and some semi-urban centres (up to 49,999 population) are covered in the sample.

The sample size is comparable to that of SAS by NSSO (i.e., 36,000). Both agricultural and non-agricultural households are included in the sample. Information on all members of the household is collected through detailed structured questionnaire. The reference year is 2016-17⁶

ADMINISTRATION

NABARD conducted the survey through Academy of Management Studies (AMS) and the under the Guidance of an Advisory Committee consisting of representatives of RBI, NSSO, ISI, Kolkata, academia and senior officers of NABARD under the overall guidance of the Top Management.

DELIVERABLES

An All India Report, State-wise briefs and the household level data were the key deliverables planned under NAFIS. At present, preliminary results for all states and All India are generated and being ratified. A few highlights of the NAFIS findings are given here.

HIGHLIGHTS OF THE SURVEY

NAFIS focussed on financial inclusion aspects besides livelihood aspects of rural’ households. Financial inclusion is covered in terms of borrowings, savings, investment, insurance, pension and remittances. Besides financial inclusion aspects, financial knowledge, attitude and behaviour of the family member who usually undertakes financial transactions are also measured. Microfinance related information also is collected in good detail.

Livelihood aspects covered in the survey include activity/occupation profile, income from different sources, training received, and skills needed, asset ownership, consumption expenditure, risks and uncertainties faced such as major distress events faced and coping mechanisms adopted, etc.
Thus, NAFIS combines information collected from Situation Assessment Survey (SAS) and All India Debt Investment Survey (AIDIS) of NSSO which are collected from two different sets of respondents into a single Hence, financial and income aspects are measured on the same households.
As is the case with all surveys, the estimates are based on reported data by the respondents and not strictly comparable with other survey estimates available due to differences in concepts and definitions as also due to specific sampling design adopted and the estimation procedure followed.
48% of the 40,327 households surveyed are agricultural households (AH)⁸. The remaining are classified as non-agricultural (NAH). Small and marginal farmers possessing land of 2 ha and less accounted for 87% of Agricultural households.

Land and Assets

Average land possessed by agricultural households is 1.1 ha. Two states, i.e., Kerala and Tamil Nadu recorded the same average size. While 14 states such as Nagaland, Rajasthan, Haryana, Punjab have higher than all India average land size, 13 States such as Bihar, West Bengal, Odisha have lower than average land size.
Taking all states combined, 12% AH reported to have leased-in some land, while only 2% leased-out land.
As regards ownership of agricultural assets, overall, only 5.2% AH reported owning tractors for agricultural use. Maximum ownership of tractors is reported in Punjab (31 %), followed by Gujarat (14%) and Madhya Pradesh (13%). Ownership of power tillers is maximum Andhra Pradesh (15%) and Telangana (7%), while the average ownership for the country as a whole is 1.8%.
About 51% and 14% AH have milch animals and small ruminants, respectively.
The penetration of mobile telephones, televisions, and two wheelers were reportedly about 89%, 56% & 38% respectively among agricultural households.

Income level and sources

Average monthly income for agricultural households is 28,931; 35% percent of which is received from cultivation, followed by wages (34%), salaries (16%), livestock (8%) and non-farm sector (6%). Other sources, including income from rent on building or land, income from interest earned on bank deposits, dividend or interest earned from investments accounted for 1% share of total income. Transfer income (which includes remittances) received by the households have not been accounted for, while calculating the total income.
Non-agricultural households reported average monthly income of Z 7,269 per month, of which, 54% is from wages, 32% from salaries, followed by non-farm sector activities accounting for 12% of total income.
Taking all households combined, the average monthly income stood at ! 8,059. 20 States are having higher average monthly income as compared to all India estimates.
The average monthly per household consumption expenditure (MHCE) for all households was Z 6,646/-which is less than average monthly income of Z 8,059. The MHCE for agricultural households is higher (Z 7,152) as compared to that of nonagricultural households (z 6,187). Also, MHCE for AH and NAH is lower than their monthly income.
51 % of the total consumption expense is reported to have been made on food items and remaining 49% on the non-food items.
Livelihood shocks faced by households at least once over the last 10 years include crop failure due to natural calamities (reported by 54% AH), yield loss due to pests and insects infestation (reported by 28% AH), and sudden fall in crop prices (reported by 18% AH). Taking all households combined major illness/accidents (by 19.7% all HH) was another major shock faced in the given reference period.

Savings and Investment

1 per cent of the HH reported having a bank account.
55 per cent of Agricultural households reported any savings during the last year and of these 53 per cent saved with institutions like banks, post offices and SHGs. Average savings per annum per saver households was reportedly Z 17,488, of which 95 per cent is with institutional agencies.
Savings amount per saver AH reportedly ranged from 212,941 for lower marginal farmers (0.01 to 0.40 ha land possessed) to 231,831 for saver AH with more than 2 ha of land.
6% of all households and 46.3% of Non-Agricultural households reported savings during last year. They have preferred institutional agencies as they parked 94 per cent of their savings with institutions (including SHGs). Average savings per all households wo reported saving was Z 18,007 and that for saver non-agricultural household was 218,568.
Considering all households together, the proportion reporting any saving by at least one member increased with increase in MPCE, with 47% households reporting any saving in decile class 1 to 60.5% households reporting the same for decile class 10.
34% of all households who saved in the given year, reported savings by 2 or more members per family.

10% of AH reported any investment in the last one year. Taking all investments made by the households in the given year, the average investment per investing AH was reportedly 262,734. For all investments amounting more than Z 10,000 in the year, 60% of the amount was funded through borrowings from either institutional or informal
The proportion of all households reporting investments during the last year increased with increasing MPCE classes from 2.8% for decile class 1 to around 28% for decile class 10.

Incidence of Indebtedness and Borrowings

Incidence of Indebtedness (101), measured as proportion of HH reporting outstanding debt on the date of the survey. 52.5% AH and 42.8% NAH were reportedly indebted at the time of survey. All India 101 taking all rural households together stands at 47.4%.
101 increased with increase in MPCE Decile Class and with increase in size class of land possessed. It increased from 39.5% at the lowest decile to 68% in the 10th decile among agricultural households. For the same AH, the 101 ranged from 48 to 49% for landless and lower marginal farmers, to 60% for above 2 ha category.
101 was reportedly lowest in Jammu (26.7 %) and highest in Telangana (79.5%).
Average amount of outstanding debt (AOD) for indebted agricultural households is reportedly Z 1,04,602 as on the date of the survey. Debt outstanding for indebted nonagricultural households is reportedly 276, 731. Overall extent of indebtedness taking all households combined is 291,407.
Taking combined estimate for all households, the average amount of outstanding debt per indebted household increased with increase in MPCE decile classes. The value of AOD per household for MPCE decile 10 was 21,62,466 which was more than double the amount for MPCE Class 1 (281,839).
5% AH reported to have borrowed any money during last year from some source or the other. 60.4% of them reportedly borrowed from institutional sources exclusively. Further, 30.3% borrowed from only informal sources and 9.2% of Agricultural HH borrowed from both sources. 56.7% of Non-Agricultural households and 58.6% of all HH borrowed from institutional sources during last year.
During the reference year, a borrowing Agricultural HH reportedly availed a loan of 2107,083 from various agencies, 72% of which was availed from institutional sources including MFIs and SHGs. 69% of borrowings of all HH and 65% of Non-Agricultural households were from institutional sources.
Considering all loans taken by agricultural households, it was found that a majority of 44% loans were taken for agriculture purposes, followed by domestic needs (19%) and medical expenses (12%). Of the remaining, 16% loans were taken for non-agricultural purposes , 11 % for housing and 4% for other purposes.
Among AH owning more than 0.4 ha land⁹ and borrowing from institutional agencies 32% have reportedly been issued KCC.
24% of AH have reportedly one or more members associated with one or the other type of Microfinance groups such as Self Help Groups, Joint Liability groups or other communities. 22% AH reported membership in SHGs.
Of the MF services, 62.5% Agricultural households reportedly availed personal loans, 26% availed loans for promoting any enterprise, and 19% received any kind of training support from MFIs.

Insurance and Pension coverage

About 26% Agricultural households and 25% of no-agricultural households reported to have been covered under one or the other type of insurance.
Among AH who reported to have taken any loan for agricultural purposes in the last one
year from institutional agencies, 6.9% reported being covered under crop insurance.
Livestock insurance penetration is reportedly 1.7% amongst AH owning milch animals.
The coverage under any type of insurance was reported to be about 18.9 % for NAH as against 20.1% for AH.
When assessed for type of pension received, 32% of all households with senior citizens reported being covered by old age pension.

Individual level Financial Knowledge, Attitude & Behaviour

Overall, only 9.4% individuals from rural areas and over 13.2% from semi-urban areas reported to have been exposed to any session on financial education or training.
On the whole 40% respondents fared well on financial knowledge scale giving all correct responses to the questions asked. Assessment according to location revealed that 48% respondents from rural areas and 52% from semi-urban areas were assessed to be having sound financial knowledge.
When assessed for financial attitude, 42% individuals from rural areas and 48% from semi-urban areas were found having positive attitude, earning a score of 3 or more on a scale of 5.
Behavioural assessment reflected that 57% individuals from rural areas and 54% from semi-urban areas exhibited good financial behaviour, earning a score of 6 or more on a scale of 5.
As per the combined estimation on financial literacy status, for individuals who fared well in all three above components, 11 % of rural respondents and about 15% or semi-urban area respondents were found to be have good financial literacy.
48% respondents reported that they needed some loan in the last one year. Among these, 29% sought loan from institutional sources and got it too. 14% sought it from informal sources and got it, while out of remaining 2% sought it but did not get it and 3% did not seek it despite needing it.
As regards usage of various financial services within a period of last 3 months, about 24% reported to have used ATM services, with 73% of the users being absolutely comfortable and confident of being able to use it independently.
About 7.5% individuals reported to have used cheque or debit/credit cards for making any payment in the last 3 months and more than 95% of users found these mechanisms easy to use.