India: NABARD Publishes Reports of Survey on Rural Financial Inclusion for 2021-22

 New Delhi: NABARD has published the findings from its second All India Rural Financial Inclusion Survey (NAFIS) for 2021-22. The report offers primary data based on a survey of 1 lakh rural households, covering various economic and financial indicators in the post-COVID period. Recognizing the vital role of financial inclusion in economic development, NABARD conducted the inaugural survey for the agricultural year (July-June) 2016-17, with results released in August 2018. NAFIS 2021-22 results could help to shed light on how rural economic and financial development indicators have evolved since 2016-17. The survey included all 28 states and the Union Territories of Jammu & Kashmir and Ladakh. 

The average monthly income of households saw a substantial rise of 57.6%, increasing from Rs. 8,059 in 2016-17 to Rs. 12,698 in 2021-22. This indicates a nominal compound annual growth rate (CAGR) of 9.5%.  Annual average nominal GDP growth during the same period (on a financial year basis) was 9%. When considering all households together, the average monthly income stood at Rs. 12,698, with agricultural households earning slightly more at Rs.13,661, compared to Rs. 11,438 for non-agricultural households. Salaried employment in the government or private sector was the largest income source for all households, accounting for approximately 37% of their total income. For agricultural households, cultivation was the main income source, making up about one-third of their monthly earnings, followed by government or private services contributing one-fourth share, wage labour (16%), and other enterprises (15%). Among the non-agricultural ones, it was the Government/ private service which contributed 57% of the total household income, followed by wage labour which made up roughly 26% of the total income.

The average monthly expenditure of rural households rose significantly from Rs. 6,646 in 2016-17 to Rs. 11,262 in 2021-22. The agricultural households reported a relatively higher consumption expenditure of Rs. 11,710 than Rs. 10,675 for non-agricultural households. In states like Goa and Jammu & Kashmir, the monthly household expenditure exceeded Rs. 17,000. Overall, agricultural households demonstrated both higher income and expenditure levels than non-agricultural households.

 The annual average financial savings of households increased to Rs. 13,209 in 2021-22 from Rs. 9,104 in 2016-17. Overall, 66% of households reported saving money in 2021-22, compared to 50.6% in 2016-17. Agricultural households outperformed non-agricultural ones in terms of savings, with 71% of agricultural households reporting savings during the reference period, compared to 58% of non-agricultural households. In 11 states, 70% or more households saved money, with Uttarakhand (93%), Uttar Pradesh (84%), and Jharkhand (83%) leading. In contrast, states like Goa (29%), Kerala (35%), Mizoram (35%), Gujarat (37%), Maharashtra (40%), and Tripura (46%) saw less than half of households reporting savings.

The percentage of households with at least one member covered by any form of insurance increased significantly from 25.5% in 2016-17 to 80.3% in 2021-22. This means that four out of every five households had at least one insured member. Agricultural households outperformed their non-agricultural counterparts by a margin of roughly 13 percentage points. Among different types of insurance, vehicle insurance was the most prevalent, with 55% of households covered. Life insurance coverage extended to 24% of households, with agricultural households showing slightly higher penetration (26%) compared to non-agricultural ones (20%).

Pensions significantly enhance recipients' quality of life by offering financial support and reducing dependency on others, thereby boosting their self-worth and confidence. The percentage of households with at least one member receiving any form of pension (such as old age, family, retirement, or disability) increased from 18.9% in 2016-17 to 23.5% in 2021-22. Overall, 54% of households with at least one member over 60 years old reported receiving it, highlighting the importance of pensions in supporting elderly members of society.

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