Instabltity of Farmers' Savings

Instability of Farmers’ Page|1
Savings
Instability of Farmers’ Savings:

An Analysis in Context of
Rural Households of Uttar
Pradesh
By Tanish
Bhasin
Abhishekraj Yadav
Suraj Bhan Singh
B.A. (Hons) Applied Economics
School of Business
Studies
Sharda University
Instability of Farmers’ Page|2
Savings
Acknowledgements
We would like to pay our sincere gratitude to Dr. Md. Junaid Alam, who
provided his support and guided to us throughout this term paper in various
ways.
We would like to also thank Dr. Amarnath Tripathi for helping us in our
approach towards the area of primary research and analysis, without which
this topic could not have been studied comprehensively.
Additionally, we appreciate the valuable resources made available by Dr. Priya

Rampal which proved to be of immense help.
Lastly, we would like to thank Dr. Bithika Bishesh for providing her guidance
and clarity in numerous aspects of this term paper.
Tanish Bhasin Abhishekraj Yadav
System ID: 2018013732 System ID: 2018012809
Date: 10/06/2020 Date: 10/06/2020
Suraj Bhan Singh
System ID: 2018014591
Date: 10/06/2020
TABLE OF CONTENTS
Chapter 1: ABSTRACT/ INTRODUCTION.......................................................................................3
Chapter 2: LITERATURE REVIEW.................................................................................................9
Chapter 3: OBJECTIVES/ METHODOLOGY/ HYPOTHESIS/ LIMITATION........24
Chapter 4: ANALYSIS AND FINDINGS / CONCLUSION..................31
Chapter 5: BIBLIOGRAPHY/ APPENDIX.........................................................................................54

Chapter 1: ABSTRACT /INTRODUCTION
ABSTRACT
It has been estimated that India will overtake China in terms of population by the year 2024.
This projectile implies an increment in the demand and supply of good and services,
especially necessities. Also, this population estimation requires India to ensure a sustainable
production of crops and food security to ensure a healthy and growing economic
environment in the decades to come. However, the current agricultural production is
plagued by instability of savings of farmer which disables them to make a higher
contribution to the economy, given the alarming fact that agriculture sector employs more
than 50% of the aggregate labor force of India. The largest contributor in the sphere of
agriculture for India is the state of Uttar Pradesh and is also the most severely instable
regions in the country in terms of the economic variables involved. This research paper
provides a comprehensive analysis on the economic instability in the rural agricultural
households of Gautham Buddh Nagar, Uttar Pradesh.
INTRODUCTION
Agriculture is the most significant sector of the Indian economy as the country relies on the
sector significantly for national income, output generation, and employment provision. India
has traditionally been an agriculture-based economy and even today more than 52% of the
total workforce relies on agricultural activities for employment purposes. Additionally, the
agriculture sector is responsible for more than 18% contribution to the Indian GDP and is
hereby, regarded as the backbone of the Indian economy. Since independence, India has
made substantial advancement towards output generation to ensure sustainable food
security with the growing demands particularly due to population growth in India. India has
traditionally relied on agriculture for its economic growth and development, especially rural
development, since the end of colonialism in 1947 to ensure progress and economic
stability. Currently, India is the world’s largest producer of pulses, rice, and wheat. India is
also the second-largest producer of fruits and vegetables.
There have been phases marked by instability in crop production for which governmental
intervention and reforms were much needed to enhance food security and sustainable food
grain production to match the trends of increasing demand along with growing population
and urbanization over different decades. As a result, there has been a substantial increment
in the persistent food grain per capita. Indian agriculture can be characterized by 3 different
phases which were instrumental in creating the current favorable and optimistic agricultural
sector for the Indian economy. Preceding the mid-1960s, India was not self-sufficient as
imports and aids were required to meet domestic demands. Changes in the agricultural
policy in the mid-1960s provided India the necessary impetus in order to become self-
sufficient and self-reliant and resist reliance on food imports and aid for domestic purposes.
With the adoption of superior yielding, disease-resistant wheat varieties with greater and
credible knowledge in farming, agrarian reforms, the establishment of irrigation projects,
cooperative credit institution and most notably, the abolition of intermediaries and
provision of land titles to the actual cultivators helped India stimulate its Green Revolution
which allowed it to strive towards its potential in agricultural production.
Subsequent 1960s, a shift in the agricultural strategy was adopted which relied on high-
yielding assortments of crops, modern farming methods, and more productive irrigation
practices and multiple cropping. This ushered India towards attainment in the area of self-
sufficiency and enhancement in food security. Additionally, research, input supply,
marketing, price support, and technological advancements and use were areas upon which
emphasis was placed during policy formation. Consequently, from the early 1980s,
agriculture oversaw diversification which produced accelerated growth in non-food grains
such as meat, fish, poultry, vegetables, and fruits. Additionally, subsidies in agriculture grew
however government expenditure in the areas of agrarian infrastructure development saw a
decline with rising trends in investment by farmers. The fourth phase in Indian agriculture
post- independence commenced in 1991 with the liberalization of the Indian economy.
Reforms in agriculture included deregulation, reduced government intervention, and
liberalization. However, this period also saw indirect adverse effects on agriculture through
devaluation of exchange tare, reduced protection of the sector and liberalization of external
trade.
Two types of crops dominate the Indian agricultural industry. The first is food grains and the
second comprises commercial crops. Food grains include essential crops such as rice, wheat,
pulse, and oilseeds. Commercial crops include cash crops such as jute, cotton, tobacco. Uttar
Pradesh is the state of India that contributes the most to the national agricultural
production. Agriculture is the largest employment generator of the state and a vital
instrument to bring about social and economic development in the region. The state has
16.81 million ha of cultivated area, constituting 70% of the total geographical region. The
irrigated area stands at over 73% and the major crops of the state are rice, wheat, maize,
sugarcane, chickpea and pigeon pea. Additionally, the state possesses 5.6 million ha for rice
cultivation activities. The two most sought-after crops for production in this region are rice
and wheat due to their high demand. Uttar Pradesh comprises 18 divisions, which include 75
smaller districts. Among these districts is the Gautam Buddh Nagar district, which is the
focused region of this research.
Although the agricultural policy of India is formed for the entire nation’s agricultural
industry by Government India, State Governments, and further local administration design
agrarian policies too for their respective geographical location administration with the
accordance of the national policy. Hence, a particular region’s policies are a combination of
both national and state and/or local policies. Therefore, despite certain differences in the
state and local agricultural sector throughout the country, the agricultural sector of India as
a whole, more or less represents the same socioeconomic issues, with varying intensity, in
the context of agriculture in different geographical situations.
Figure 1: Map of Gautam Budh Nagar

Source: Uttar Pradesh - Region Profile
In the focused region of Gautham Buddh Nagar district, 4 villages have been adopted by
Sharda University under the Unnat Bharat Abhiyan initiative of Government of India.
Agriculture is the primary source of livelihood in rural Uttar Pradesh regions, such as the 4
villages. Therefore, it remains an imperative sector for the stimulation of socio-economic
growth. However, despite innumerable reforms, initiatives, and variations in policies and
agricultural strategy, there are issues that have to be combatted to ensure a high agricultural
growth to match the increasing trends in population and demand. The current agricultural
practices are not economically sustainable while the yield for several commodities in India
remains low, considering the current and forecasted demand patterns. Major issues lay in the
areas of productivity and infrastructure along with appropriate government policies. All these
issues
place a great emphasis on the economic stress which farmers have to bear. This indicates
the massive discontentment with regards to financial instability in the farming sector for the
farmers and farmers’ suicides is a prominent manifestation of this. Farmers have been
facing instability in economic variables, namely expenditure, revenue and savings, which
hinders their socioeconomic development and the nation, as a whole, considering that
farming is the largest source of livelihood in the country.
As mentioned earlier, agriculture is the backbone of the Indian economy and with the
current context of increasing populations and increasing urbanization, agricultural growth is
required to grow exponentially at a fast pace while resolving the underlying socioeconomic
issues pertaining to the agrarian economy for economic growth and development, which
requires a comprehensive study of the economic instability of farmers.
The main motive of this paper is to estimate the real savings of the farmers taking
government and other financial institutions constant and the secondary motive of this paper
is to find the relationship between factors that are affecting the cost of farming and the
household expenditure. In section 2 of this paper, we explain the factors that we have
considered in our research. Section 3 of this paper helps in knowing the objectives of the
research paper. Section4 comprises of research methodology followed by section 5 and
section 6 showcases the hypothesis and limitation respectively. Section 7 consists of all the
findings and analysis that we analyzed from our primary data. Section 8 is conclusion which
is followed by bibliography and appendix in section 9 and 10 respectively
Chapter 2: LITERATURE REVIEW
This section explains the variables that were taken into consideration and measured in the
survey of the villages. These variables are broadly divided into:
1. Household Consumption Expenditure

2. Household Income from Non-Farming Activities
3. Farming Activity Expenditures
4. Subsidies
5. Revenue
The variables are explained by using reliable resources on the topics. Thoroughly researched
papers are used as sources to explain individual variables usefully in the context of this
research. Each variable gives an insight to the situation on the ground hence variables
considered here are chosen carefully to showcase the best possible picture of the field.
1. Household Consumption Expenditure

The family consumption expenditure of a household is mainly influenced by the level of
income and size of the family. The qualitative, as well as quantitative domestic expenditure,
is the correct scale to judge the livelihood standard of household. During estimating
household expenditure, farm-products consumed at home were valued at the current
market prices. The important items over which sample farmers incurred expenditure were
food items, clothing, fuel, light, housing, furniture, education, medicine, health, etc. A
detailed list of items on which farmers may have incurred maximum household expenditure
according to us are explained.
1.1 Education
Quantity of education, measured by the average years of school attainment, is utilized in
growth literature along with income inequality literature. Accounting for the quality of
education is inherently difficult to measure. It has proven statistically that higher income
inequality and increment in quality and quantity of educational attainment has a significant
relationship. Education has a major role in helping individuals, especially from rural areas, in
crossing the poverty trap. It is the socioeconomic status, including income inequality, which
coerces individuals to fall and remain in the poverty trap for an extended period of time.
Education, an investment in human capital, is exceedingly necessary and an important
component of sustainable economic development as illustrated by Lucas (1988) and Romer
(1990) in their new growth literature. Additionally, neoclassical growth models developed by
Mankiw, Romer and Weil (1992) have stressed the importance of human capital, making
public policies and initiatives to be directed towards education attainment. Rural households
have realized the importance of education in the sense of uplifting of socioeconomic status,
particularly in income inequality, and escaping the poverty trap and subsistence economic
livelihood, making them invest in education more and therefore, making education an
indispensable expenditure variable
1.2 Health and Medicines

Medical expenses are a sizeable portion of a farmers’ income. These problems can arise due
to various reasons such as increased costs due to limited accessibility to remote areas,
increased costs due to lack of insurance coverage. There are also age-related increases in
costs due to a person becoming more susceptible to diseases with increasing age. Common
conditions in older age include hearing loss, cataracts and refractive errors, back and neck
pain and osteoarthritis, chronic obstructive pulmonary disease, diabetes, depression, and
dementia. Also use of tobacco and intoxicants by the farmers severely hinders their ability
to maintain good health as their habits lead to a higher risk of diseases such as cancer, heart
diseases, and stroke. Lack of awareness can also contribute to the future outcomes of health
and these health expenses especially in the case of infants and children. Considerable
influence is seen of early nutritional status on the future outcomes of health in a child.
1.3 Food
Food consumption expenditure is a major part of farmers’ household expenditure. Monthly
Per Capita Expenditure on food expenditure was Rs.278.74 according to the NSSO survey
2003-2004. But a particular phenomenon has been happening to the expenditure on food by
rural and agricultural households. Since 1972-73, monthly per capita consumption
expenditure on food has been declining, according to NSSO surveys. The decline has been
from 72.83%, as a proportion of total expenditure, from 1972-73 to 52.76% in 2011-12. The
expenditure on non-food items has increased during this period from 27.15 percent to 47.24
percent. Expenditure on food mainly occurs in cereals and cereal substitutes, pulses and
their products, milk and milk products, edible oil, egg, fish, meat, vegetables, salts and
spices, beverages refreshment. Most expenditure happens in Cereals…., Milk…. And
vegetables. National Sample Survey Report No. 538 (2011) said that milk and its products
are a luxury for the greater part of the rural population is shown by the steady rise in the
share of rural consumer expenditure from 3-4 percent of the total expenditure. Engel Ratio
refers to the expenditure on a particular item expressed as a proportion of total
expenditure. The ratio for the food was highest 78.12% for marginal farm household which
is followed by the small farm household that is 73.20% and the large farm household is
66.24%
1.4 Miscellaneous
Miscellaneous variable compiles the several expenditure areas that may have gone
unconsidered. This variable composes consumers’ expenditure on various areas, such as
clothing, taxes, consumer services, and goods, which were not aforementioned. Hence, this
variable aims to compensate for the expenditures that may have been unasked before and
assist in providing a detailed compilation of expenditure areas for farmers. Upon obtaining
data from farmers, the several miscellaneous expenditure sections, such as clothing,
consumer goods and services, taxes, and others, which constitute a sizeable portion came
about, and therefore, it has an imperative role towards savings and the livelihood of
farmers.
1.5 Others
Other expenses of a farmer include majorly of the expenses that are in some sense fixed for
a month more or less. These expenses incur no matter what happens because they are
associated with day-to-day activities. They can be seen as quasi-fixed fixed costs associated
with the farmers’ household-they only occur when a positive output by the household. If the
household stops producing food daily, commuting to work/school, and indulging in
entertainment activities then these costs will amount to zero. Some expenses in this
category that we collected data about are as follows:
Electricity - The fact that has become a basic need of any household could be seen as we
went to these rural areas to collect data. Most of the houses in the 5 villages had meters
installed for measuring electricity usage by the state provider Uttar Pradesh Power
Corporation Limited. The utilities that used electricity in the households were TV, Fan, Tube
lights, Coolers, and occasionally fridge and air conditioners.
Petrol - Conveyance is a major issue in rural areas owing to lack of infrastructure and
remoteness of these areas. Most farming households move around using bicycles and bikes
due to their ease of mobility of these modes. Daily expenses in bikes used by a farmer to go
around on average is around Rs.300. Household expenses on petrol also depend on the total
number of vehicles and their frequency of use which vary at the individual level.
Gas - In agricultural households cooking gas expenses are another kind of recurring one. It
also depends on the size of the household and the frequency of use. A cylinder typically
costs around Rs. 800 and use frequency on average is 3.5 weeks (varies individually).
1.6 Entertainment
These are the expenses that occur outside of the daily routine sustenance expenses of a
household. These happen due to utilization of free time by the agricultural household to
indulge in entertainment providing facilities such as listed below
1. Phone
2. TV
3. Public Travelling expenses
4. Newspaper
5. Tobacco and intoxicants
Some of these expenses are recurring in nature (such as monthly and weekly etc.) and each
member of the household has different expenditures because their demands are different. A
typical TV recharge costs around Rs.250 and phone expenses are the standard Rs. 200 per
person per month. Usually, phone expenses are higher for the younger members of the
household. Newspapers are also a type of expense that is recurring and mostly newspaper
demand is scattered in these rural areas (some demand it regularly; some do not demand at
all). Some of the expenses are habit forming such as tobacco and intoxicants, mostly
consumed by the elder males of the household. While some are occasional expenses such as
public transport expenses, movies, and other local shows ticket expenses. Hence
entertainment covers a wide variety of expenses that are incurred by agricultural
household.
According to the Ministry of Statistics and Programmed Implementation reports on

consumer spending, expenditure on transportation services, tobacco products, other
products and services facilitating communication amount to a high proportion of
expenditure for Indian consumers and especially rural households. In FY 2018, INR 77,000
amounted to annual per capita consumer expenditure, out of which transportation was
named as the third biggest category, constituting an expenditure of approximately 16% of
the total per capita expenditure by consumers. Furthermore, tobacco products attracted
approximately 6% of expenditure on average. With roughly 10% of world tobacco products
consumers residing in India along with heavy taxation on such products, these expenditure
values have been altered
rapidly causing a shift in consumer expenditure and therefore, making the proportion of the
entertainment variable sizable and indispensable constituent of expenditure. In low- and
middle-income countries, such as India, the price elasticity of demand varies between –0.5
to
–1 and with research showing that a 10% increase in cigarette prices would reduce cigarette
consumption by 3.4% in rural India and 1.9% in urban India, showcasing that rural areas are
more attracted to tobacco, thereby affecting their expenditure more than the urban
individuals. Hindi and regional dailies grew at 3.9 percent and 5.7 percent, respectively,
English newspapers saw a 10.7 percent growth. Hindi dailies had 186 million readers, while
regional readership stood at 211 million in IRS Q1 2019, showcasing newspapers to be an
important expenditure area in rural areas as they continue their practice of communication
in regional languages, which appeals to consumers
2. Household Income from Non-Farming Activities

There is another factor which plays a major role in our research which is household income.
In this, we will consider all the members in the family that are involved in making money
another than farming activity. By this a family makes some extra money by which they are
able to sustain and sometimes also able to improve their standards of living. As this is the
only way by which they are able to do the saving. Sometimes the whole family needs to rely
on the nonfarming activity money due to external conditions that prevail in the economy
and climate. Instability is one of the important decision parameters in development
dynamics and more so in the context of agricultural production. Apart from the growth of
farming, it is also important for the instability of farming activity by which the farmers
sometimes need to rely on the non-farming activity sources. Wide fluctuations in crop
output not only affect prices and bring about sharp fluctuation in them but also results in
wide variations in the disposable income of the farmers. The magnitude of fluctuations
depends on the nature of crop production technology, its sensitivity to weather, economic
environment, availability of material inputs, and many other factors. High growth in
production accompanied by a low level of instability for any crop is desired for the
sustainable development of agriculture. Farmers agreed that they totally depend on wind
and rainfall but sometimes they experience instability in them which causes their crops to
fail.
3. Subsidies
A subsidy is an amount of money given directly to firms by the government to encourage
production and consumption. A unit subsidy is a specific sum per unit produced which is
given to the producer. The effect of the subsidy on the demand and supply curve is that it
shifts the supply curve rightward as there is a reduction in the cost which is because of the
government. However, the price the consumer pays does not fall by the full amount of the
subsidy thus the main motive of the subsidy may be to reduce the price to the consumer by
the full amount of the subsidy, the producer gets some of the benefits in terms of additional
revenue that they keep this can be shown with the help of a simple graph of demand and
supply in which both the surplus is shown that is the producer’s surplus and the consumer’s
surplus. The gains to the producers are shown between point C and point P and gain to the
consumers are shown between points P and point P1. it can be clearly seen that whenever
the government implements the subsidies the producer’s output increases which can be
shown in the graph between point Q and Q1. That is caused due to increase (rightward shift)
in the supply curve. Subsidies are just the antithesis of the tax but both of them are used so
as to reduce the inequality in the economy that is between all the income levels.
Figure 2: Effect of Subsidies

Source: Economics online
As we all know that agriculture is the main source of living of 70% of its rural household the
population in India.in which 82% of farmers being small and marginal levels of farmers. So, it
becomes the major constraint of the government of India to provide farmers with the
subsidies and other aids by which their burden shifts. By providing them subsidies and lower
tax, the inequality between the rich and the poor classes in the current economic scenario in
India reduces and also the output increases thus the government has an incentive to provide
subsidies to different sectors. The subsides which we took in our study are mainly for the
farming sector. Though the government is providing enough subsidies but the ground reality
is that many of the farmers are of general category so they cannot avail many of the
government subsidies while the other caste categories are able to avail these subsidies.
4. Farming Activity
The variables below are related to revenue and expenditure incurred during the whole
process of producing output through farming activities. The expenditure variables, as
explained below, showcase the level of expenditure in different areas of farming which
farmers have to pay for to ensure an optimal level of production at the end of a particular
growing cycle. The revenue showcases the total amount that a farming household procures
from the sale of a portion of the total produce subsequent to selling it at a local market or
distributor or retailer. These two variables are imperative as they directly showcase the
amount that farming activities cost and also how much they help in earning, which
altogether showcase the saving level of farming households.
4.1 Expenditure on Irrigation

Income stability is exceedingly imperative for rural small-scale producing households.
Irrigation mainly increases crop output level and also increases the stability of the output
from consecutive years which further has a stabilizing impact on producer incomes,
particularly for internationally tradable commodities whose domestic prices are a
determinant of international prices. Less than half (48.8%) of farmlands in India are
irrigated. Rest is perennially dependent on seasonal changes, such as monsoon. The
economic survey of 2019 assessed that climate changes could reduce annual agricultural
incomes by 15-18% and 20-25% for unirrigated areas for the long-run and as 80% of the
annual rainfall is received
in less than four months, this illustrates the dependence and necessity of farmers to spend
on irrigation activities.
Furthermore, despite increased investment by state and central governments in irrigation

projects through policies such as Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), irrigation
is much needed to at least attain a sustenance farming level. Ultimately, constant irrigation
is required for higher productivity, bringing more land under cultivation and ensuring an
optimal level of yield and income stability for these rural farming communities which are
economically sustenance in nature. Therefore, irrigation forms an indispensable variable in
the farming expenditure bourn by a typical farmer.
4.2 Expenditure on Seed

There are various types of expenditure which occur while planting a crop. Seed is the basic
and most critical input for sustainable agriculture. According to Indian Seed Sector, “It is
estimated that the direct contribution of quality seed alone to the total production is about
15 – 20% depending upon the crop and it can be further raised up to 45% with efficient
management of other inputs”. There were 3 phases in which the administration of India
carried out a national seeds project that is from 1977-19978, 1978-79, and 1990-1991 which
strengthened the seed foundation that was needed at that point in time.
The Government of India passed remarkable bills on national seed policy in 2002 and 2004.
2002 focused on quality assurance and 2004 that is seed bill, 2004 in which it became
compulsory to register every kind and varieties of seed by which the government can trace
the evaluation of performance, compensation to farmers. The government also asked for a
regulation of the sale of certified seeds. Certified seeds are the progeny of foundation seed
and must meet the standards of seed certification prescribed in the Indian minimum seed
certification standard, 1988. In the case of self-pollinated crops, certified seeds can also be
produced from certified seeds provided it does not go beyond three generations from
foundation seed Stage-I. Certified seed creation is established through State Seed
Corporation, Departmental Agricultural Farms, Cooperatives, etc. The dispersal of seeds is
offered through a number of channels i.e. departmental outlets at block and village level,
cooperatives, outlets of seed corporations, private dealers, etc. the private sectors also play
a major role in the supply and assurance of the quality of seeds of vegetables and other
crops the images show the type of seeds which is produced in Uttar Pradesh state There are
many varieties of seeds that are nuclear seed, breeder seed certified seed and registered
seed by which government made a combination By the means of cross-pollination of
different varieties a seed is known as the hybrid seed which is also known as HYV high yield
variety seeds as they produce more and quality of crops only disadvantage is that they are
not able to generate seeds by its own which means that the framer needs to buy seed after
in all the season of cropping which makes an additional expenditure on the farming. Though
the government provides many subsidies on the seeds but still it causes them a huge
amount of price as they have huge land which requires more seeds.
Figure 3: Major seed Producing States of India

Source: PRS India
4.3 Expenditure on Labor
Indian agriculture has been facing a shortage in labor, with larger farms relying on farmers
from far lands of the country to meet their farming requirements. As younger generations
generally continue to push for urbanization and high- and stable-income job opportunities
and neglect agriculture as a profession, the labor supply has been gradually decreasing,
causing a profound impact on labor wages, which in turn impact the expenditure of farmers
who hire labor. According to NSSO data, farmers spend on average approximately 30% of
revenue on inputs, namely fertilizer and labor which is due to the rise in wages. According to
International Crops Research Institute for Semi-arid Tropics (ICRISAT), the daily nominal
wage rate of activities, such as ploughing, sowing, and transplanting, increased 3.6 to 4.2
times from the years 2004 to 2014. Furthermore, according to the Department of
Agriculture and Cooperation, cultivation of crops such as rice and wheat, two prominent
crops of the focused geographical location of this research, has increased at an annual rate
of 10% due to the rise in labor wages. Additionally, KPMG suggests that 23 million more
people will move out of agriculture labor activities in the next 5 years, posting a substantial
impact on labor wages increment, thereby making farming expenditure on labor to be a
more prominent recipient of expenditure in the future, compared to present conditions.
4.4 Expenditure on Machine

In traditional times we all know that farming is a slow and tedious process and also required
skill as well as experienced labor but nowadays the tedious work which was back at those
earlier days done by the people is usually nowadays don by machines. they not only make
the process simple but also fast. the only disadvantage is that these machines require many
high expenses on maintenance because these are very sophisticated machine which is
usually designed for a particular piece of task. Another expense that is related to machines
is that it requires a huge amount of diesel which sometimes costs them even more due to
the fluctuating diesel rate in India this also causes a problem for them. Farming is divided
into stages and only certain stages require the use of machines. like ploughing the field,
spraying the insecticides and pesticides, and the most common tractor for transportation
and other, and etc. there is sometimes when people don’t have enough land which can
generate them
money but yes, they use those lands just like a kitchen garden but in a broad way so those
people sometimes don’t require machines for doing any of the farming activity by this their
cost of production reduces but yes, this production is of no use as it is for self-consumption
this usually happens when people are having a good source of income from non-farming
activity and a very small area of land for farming. That is usually less than 2 bigha or 0.2529
hectares.
4.5 Other Expenditure

Farming is extremely diverse in nature, hence expenditure inclination on different factors
can vary from farmer to farmer. Some farmers might spend more on one factor to help the
cultivation of a particular, and a group of farmers might use their purchasing power to
purchase products to supplement the growth of another crop. Therefore, other expenditure
variable aims to compensate for the unconsidered factors where expenditure can occur
from farmers. This variable includes expenditure which may not have been considered
otherwise, as a separate factor. Therefore, using this particular variable allows researchers
to attain a more comprehensive farmer expenditure model to analyses without any
persisting leakage of expenditure which may have gone unnoticed.
4.6 Expenditure on Fertilizers and Manure

Fertilizers are used to enrich the soils which have low nutrient contents so as to increase
production. The organic carbon content of most of the Indian soils is very low and the
nitrogen deficiency is universal. Most of the soils are low to medium in phosphorus and
potassium, and Sulphur deficiencies have gone up over time. Soil fertility reduction and the
increasing deficiencies of certain micronutrients are causes of worry not only in India but
universally as well.
According to FAO “Fertilizer consumption has promised less than 1 million tons of total
nutrients in the mid-1960s to almost 17 million tons today. The introduction of high- yielding
varieties in the 1960s boosted fertilizer use. The high grain and fertilizer prices on the
international markets during the oil crisis of 1973–74 provided a further push to policies
aimed at improving the country’s fertilizer supplies and food security.”
4.7 Expenditure on Pesticides

Many insect pests and pathogens attack plants at different growth stages of the crop as well
as in storage. Chemical pesticides kill these pests to save the crops from destruction. Mostly
the pesticides were used in paddy production in the region analyzed because according to
the farmer’s paddy is more susceptible to pests as compared to wheat which is grown on
the same land in Rabi Season. The pesticides used in rice production in India include
Carbaryl which is a long-lasting, broad-spectrum pesticide that kills both insects and certain
other invertebrates. Furthermore, lambda-cyhalothrin, malathion, and zeta-cypermethrin
are broad-spectrum pesticides used on rice that are imperative for its healthy growth.
Copper sulfate pentahydrate and Diflubenzuron. All these are narrow-spectrum pesticides
that have a moderate duration impact, lasting between a few days and two weeks. Broad-
Spectrum Pesticides- pesticides that kill a variety of organisms, including some that are
beneficial, in addition to the target pest. Narrow-Spectrum Pesticides-pesticides that only
kill the organism for which it was intended to and not any other organisms. In addition,
herbicides are used to control weeds.
Broad-Spectrum Pesticides- pesticides that kill a variety of organisms, including some that
are beneficial, in addition to the target pest. Narrow-Spectrum Pesticides-pesticides that
only kill the organism for which it was intended to and not any other organisms. In addition,
herbicides are used to control weeds. According to the farmers in the region, the
expenditure of pesticides on paddy crop was roughly double of what they spent on wheat
during the Kharif season. Most of them stated the same expenditure on paddy per acre of
land, possibly because they have to the same supplier.
4.8 Amount Lost After Harvest (Post-Harvest Loss)
A certain amount of crop is lost after harvest due to reasons such as bad harvest timing,
inefficient machinery, lack of storage facilities, sudden exposure to heat, cold, and also due
to the lack of moisture. These losses can be prevented to some extent as they are mostly
caused by the inefficiency of the farming process. While a certain percentage is normal, in
India the losses occur at considerably high rates according to the FAO (Food Authority of
India). Crop worth Rs 55,600 Cr wasted every year. Food grain worth of Rs. 16,500 Cr is
wasted every year, which is roughly 10 percent of all food grain produced.
4.9 Total Loss Until Harvest (Pre-Harvest Loss)

The estimation of crop loss due to pests and diseases is a complex subject. It is in fact
difficult to assess the loss caused by the individual pest as a particular crop may be infested
by a variety of pests at the same time according to the farmers’ field conditions. Further, the
extent of crop loss either physical or financial depends on the type of variety, pest
population, weather conditions, and stage of crop growth. At all India level, crop loss
estimates due to insect pests have been given comprehensively by Dhaliwal et al (2010).
According to Dhaliwal, the crop loss was estimated at 25 percent in rice and maize, 50
percent in cotton,15 percent in pulses, and 5 percent in wheat. The crop loss has risen
during the post-green revolution period when compared to the pre-green revolution period.
Generally, crop loss is estimated as the difference between potential (attainable) yield and
the actual yield. The potential yield is the yield that would have been obtained in the
absence of pest under consideration.
4.10 Storage Cost After Harvest

Storage of food in rural regions is typically done in structures made by mud, bamboo, and
bricks. Although brick storage is sort of a luxury for most of the small-scale farmers, who
have to make do with bamboo and mud structures. Pests and insects are a main area of
concern for these types of storages and to make grains storage ready farmers have to invest
in oils and preservatives too. So mostly they prefer to sell the crops directly in crop season
and store some for their own consumption in their homes. They do this by directly loading
their harvest
to the mode of transport (preferably a tractor) to take to the local market. There is usually
only one transporter or tractor available in a village. The harvest season also has the
advantage of readily available transportation to the local markets and merchants as most
people choose to directly sell their crops instead of storing them.
4.11 Revenue
Revenue is fees earned from providing services and the amounts of merchandise sold.
revenue is also known as the sales on the income statement. revenue can be calculated
using the total quantity of goods multiplied with the unit price of the goods. Sometimes
farmers try to consume their own producers so that they can compensate for their food
expenditure by saving a little bit more. so, the total good consist of two parts that are:
1. Own Consumption - Quantity of goods which are consumed by the farmers is known
as their own consumption they are added in the revenue part. Own consumption is
not treated as a liability as they are used so that they can compensate their
household expenditure on food.
2. Quantity Sold - the leftover or a specific amount of quantity is sold by the farmer so
as to make a profit.
In the sample mostly people consume wheat as north Indian people primarily really on
wheat and they mostly take the part of the wheat as their own consumption. While north
India don’t rely too much on rice so they don’t take too much quantity for their own
consumption rather they sell most part of it. So as to calculate we will be using a simple
formula
Total quantity = Own Consumption + Quantity of Sold
Revenue = Total quantity * UNIT PRICE
By this formula, we will be getting whole revenue which is gendered with the help of unit
price which keeps on changing from time to tie as it depends on demand and supply of
goods in the market.
Chapter 3: OBJECTIVES / RESEARCH METHODOLOGY/
HYPOTHESIS/ LIMITATIONS
OBJECTIVES
 To find out Marginal Propensity to Save (MPS) and Marginal Propensity to Consume
of the agricultural households.
 To study the relationship between consumption expenditure and income groups

(high income-low-income household) of the households.
 To analyses the relationship between rising income and rate of change of food
expenditure.
 To explain the relationship between household income and household expenditure

through the use of Engel’s Law.
 To analyses the relationship between the cost of output and revenue generated
from the output.
 To analyses the relationship between cost of output and revenue generated from
the output.
 Showcase the effect of cross-sectional variation on the outcomes of agriculture.
 To analyses the relationship between population and food production growth of the
most populated countries in the world.
 To analyses the relationship between irrigation expenditure while estimating the

total cost.
 To find costs incurred under the expenditure variables.

 To calculate the cost of cultivation of major crops in each village.
 To find the total sales and total expenses relationship.
 To find the savings of the household taking government and other financial
institutions constant.
RESEARCH METHODOLOGY
Source of Information Purpose
Primary Research The primary questionnaire comprises of 15
questions which are aimed at finding data
 Survey of a sample of 50 farmers regarding expenditure and revenue of the
from the 5 villages adopted by farmers.
Sharda University under Unnat
Bharat Abhiyan initiative of
Government of India.
Secondary Research The main purpose of the secondary

research is to obtain contextual
 Reports published on the study of information of Indian agriculture as a whole
various farmers’ income trends. and also by regions, especially on the
 UN Reports on population growth. focused region of Gautam Buddh Nagar.
 FAO UN Reports on Agriculture. Purpose is also to find information
 World Bank articles. regarding the following:
 All India Crop Situation reports
published by Department of  Population trends in India as a
Agriculture, Cooperation and whole and by region.
Farmers Welfare.  Additional information regarding
 Policy Discussion Papers submitted policies affecting the farmers.
by PRS Legislative Research Group.  The agricultural context of Gautam
 Indian Agriculture and Allied Buddh Nagar.
Industries report published by India  Historical agricultural policies of
Brand Equity Foundation. India.
 Articles on Growth and Opportunities  Problems pertaining to agriculture.
Trends in Agriculture by IMARC  Output and type of yields according
Group. to region and crop.
 Indian agricultural history.
Table 1: Source of information and its purpose

Source: Author’s Creation
Preliminary Suppositions and implications
 It is assumed that no financial support in the form of a loan is being provided to the
farmers from any financial institution. To see farming is profitable or not, loans are
assumed to be constant.
 It is assumed that the focused sample of farmers are landowners. So that the
expenditure can be counted accurately by ensuring that there will be no double
counting of the expenditure as labor wages are an important component of the
expenditure model.
HYPOTHESIS
 Aggregate expenditure is higher than the revenue: The average savings of all the
households combined should be negative given the expenses and no financial
support to the farmers.
 Aggregate expenditure is lower than the revenue: Income increases, the Saving rate
should go up as farmers tend to save most of their profits as a future resource.
 Aggregate expenditure is the same as revenue: MPS=MPC for the agricultural

households, showcasing no investment, development, and growth opportunities.
Some other things hypothesized are:
 Income increases, the Saving rate should go up as farmers tend to save most of their
profits as a future resource.
 Consumption’s rate should be low after the initial autonomous expenditure because
the households are rural agricultural and thus not high expense consumers as
compared to their urban non-agricultural counterparts.
LIMITATIONS
 The sample size could’ve been larger, allowing for larger data and results to be
analyzed which would have further allowed for a more comprehensive analysis and
study and therefore, providing assistance in drawing more conclusive inferences
 Some information, which could’ve potentially helped analysis, may have been
concealed by respondents of the survey. For example, it is likely that farmers may
have decided against disclosing information about their expenditure, which they
thought was uncomfortable or an invasion of their privacy.
 During the data collection, farmers mostly used estimates when sharing their
information regarding expenditure activities. As a result, the accuracy of the results
obtained stands to an extent compromised, allowing for a limited analysis of the
results.
 The credit facility, often received by farmers through private and public financial
institutions for assistance in farming expenditure and activities, is considered to be
constant in this research. This is to help to attain a primary objective of this research,
which is to determine the saving level, derived solely from farmers personal and
farming expenditure and revenue attained.
 In order to emphasize their socioeconomic vulnerability and issues, one limitation of

this research can be that information obtained from farmers was to an extent
exaggerated. The figures provided by farmers may be subject to exaggeration to help
researchers highlight their economic status.
 The data collected was during a specific time period, when climatic and economic
conditions were relatively stable, which are two fundamental elements that impact
crop production. Time-series’ components are considered to be constant and
therefore, the research has the limitation of providing analysis on the saving level of
farmers during a certain period, rather than spread out through a fiscal year or
different seasons where certain season, cyclical and irregular variations persist.
Chapter 4: FINDINGS AND ANALYSIS/ CONCLUSION
FINDINGS AND ANALYSIS

From the secondary data, we can also analyze that India will be betting china’s population
The graph shown represents the rise in population in India and china by which it can be
predicted that the rise in the food rises as now more and more people will be needing food
so as to live which can only be provided by the main sector that is the agriculture sector. the
x-axis of the graph shows the years and the y-axis represents the population. Different
colors representing different countries. if a country wants its people to live the agriculture
sector must also have a steady rise just like the population.
Graph 1: Bar graph of Population Trend in China and India

Source: Authors Creation
But actually, there is no such steady rise in the agriculture (food) production in both of the
countries. It can be seen from the radar graph which is showing the food production of both
of the countries and the time period, thus it is clear from both of the graph shown able
though there is a rapid increase in the population of both the countries and India would be
leading in the race of population there are not enough steady increases in the rise of food
production which help us know the purpose the government and other financial institution
intervene in the agriculture sector in India because of which the present scenario of the
farmers they are
Graph 2: Radar Graph of agriculture (food) production
able to survive in the economy because agriculture is not static in nature that is the earning
are not so stable as food and its cost truly depends on the demand and supply prevailing in
the economy, which is not only the key factor as the agriculture get affected due to
weather, time, seasons, place, soil, and many more thus the intervene of the government
and other financial institutions are important.
For our research, we have considered many factors so as to estimate the total cost of
producing any type of corps that is Kharif and Rabbi Crop in a given year. For estimating the
total cost of for products we have taken 7 variables that are:
a. Expenditure on Irrigation
b. Expenditure on Seed
c. Expenditure on Fertilizer& Manure
d. Expenditure on Pesticide
e. Expenditure on Labor
f. Expenditure on Machine
g. Other expenditure
h. Storage cost after harvest
i. Amount lost after harvest
j. Total lost until harvest
Each and every part plays an important role in estimating the total cost for farming though
there are many other factors that we could include in this model but we have taken them
constantly.
So, the formula for estimating the total cost for farming is = a+b+c+d+e+f+g. Though there
are certain limitations in these factors, that is the farmers were not giving the exact figures
and sometimes they exaggerate them also which made some of the observations invalid but
still we can identify many of the social and economic impacts of crops from some of the
factors from our variables. for the sample size, we have taken four villages from GAUTAM
BUDDHA NAGR district in UTTAR PRADESH. the crops that we took in our sample we
estimated them as dummy variable by which it becomes easy from visualization of the
graphs that is
1 – Wheat
2 – Rice
3 – Jawar
4 – Bajra
5 – Flowers
6 – Vegetables
7 – Mustard
The first thing we can observe that how much cost is incurred on each crop on irrigation ass
it is the main and most basic thing which is required by the crops. On the x-axis, household
ID is listed and on the y-axis cost on irrigation is listed and the cops no. tell us the name of
the crops which is stated above. Household ID tells us the village the graph is talking about
that
Graph 3: Bar graph of Expenditure on Irrigation by Village no.1


is 101- 113 being village one, 201-206 is village two, 301-311 is village no. three and from
401- 406 is village no. four.
Given are the graphs of three villages with the respective crops which helps un in know how
much each of the cops requires irrigation cost. it is clearly seen that the rice requires most in
all the three villages. It is also clearly seen that the respective household only plant any two
variants of the crops in a given year.
Second things which we can know is from a variable that is storage cost after harvest and its
contribution in total expenditure incurred for producing crops. The given graph represents
all the households from respective villages and their cost incurred on storage after harvest.
The x-axis of the graph shows household ID and the y-axis represents the cost incurred on
storage after harvest. It is clearly seen that there is the negligible amount which is incurred
by the household it is because of mainly two reasons first, they usually have their own
storage units which doesn’t require any cost and second, they usually sell their crops as
soon as they are produced so as to get money and start plowing filed for another crop. Thus,
the above graphs show negligible cost which is incurred while storing the crops. one of the
people from village no. 1 is having a big amount of field by which the crops produced by him
are also high because of this he needs to have a separate warehouse for storing the crops
thus he is the only one from our sample which incurred a storage cost that is also not so
high the cost is about 3000 Indian rupees.
Graph 6: Bar graph of Storage cost after harvest by all the 4 villages
The third thing which we can know is the cost of fertilizers, manure, and pesticides on crops
as they are the major part of the total cost because these are only one of the ways by which
farmers can produce quality products or can even increase its yield. Amount of the fertilizer,
manure, and pesticides differ as the crops differ these not only affect the price but also help
us know which are the minerals that are not present in the soil.
The use of fertilizer, manure, and pesticides differ from person to person, as some farmers
only do organic farming that is not using any of the chemicals and letting the crop grown
naturally but some farmers rely on fertilizer, manure, and pesticides.
Instability of Farmers’ P a g e | 37
Savings
Graph 7: Bar graph of Total cost incurred in producing the crop from village no. 1
Savings
The above graph shows the cost incurred on fertilizers, manures, and pesticides which is on
the y-axis, and on the x-axis household ID is shown which tells us the respective village and
the farmer. it is clearly seen that there are some of the people which have zero or negligible
cost on fertilizers, manures, and pesticides this is because the respective household wants
to use the organic method of cultivation of crops that require negligible use of chemicals.
The second thing which we can know is which crop requires the highest number of
fertilizers, manures, and pesticides. As shown by the above graph, it is clearly seen that the
least cost on fertilizers, manures, and pesticides is incurred on vegetable, bajra, jowar, and
flowers while the highest cost is incurred on the rice plantation.
Thus, from all the expenses which are present, we can estimate the total expenses incurred
by the household on a plantation of crops in a given year this is calculated just by adding up
all the various expenses which are incurred while producing crops.
Thus, the graph below shows the total cost which is incurred by all the villages with their
respective crops.
In the first village, the main type of crops which most of the household were indulged in
producing are rice and wheat while only very few of them are indulged in jawar and bajra
The mean, median standard deviation and median absolute deviation of the total expenses
incurred by village one is
mean Sd median medianAbsoluteDeviation
45750. 34661 31800 30082.
Graph 11: Bar graph of Total cost incurred in producing the rise crop from village no. 1
The above graph represents the major crops which are cultivated in the village no. 1 and the
cost which is incurred for producing into the x-axis household ID is shown and, on the Y-axis,
total cost per crop is shown. Both the graph helps us knowing that in village one rice
requires much cost for producing than wheat and another crop.
In the second village, the main type of crops which most of the household were indulged in
producing are wheat rice and bajra while only very few of them are indulged in jawar.
The mean, median standard deviation and median absolute deviation of the total expenses
incurred by village two is
51655. 78839. 26550 28837.
Graph 12: Bar graph of Total cost incurred in producing the Wheat crop from village no. 2
Graph 13: Bar graph of Total cost incurred in producing the Rice and Bajra crop from village no. 2
cost which is incurred for producing into the x-axis household ID is shown and, on the Y-axis,
total cost per crop is shown. Both the graph helps us knowing that in village one rice
requires much cost for producing than wheat and another crop.in the second graph
household 201 and 202 are indulged in producing rice while household no. 204 and205 are
indulged in producing bajra because it not only requires less cost but also make food for
their own cattle by which they are able to produce dairy products and sell them.
In the third village, the main type of crops which most of the household were indulged in
producing are wheat rice and bajra while only very few of them are indulged in jawar, bajra,
flowers and even vegetables.
The mean, median, standard deviation, and median absolute deviation of the total expenses
incurred by village no.3 is
26325 19120. 22350 24982.

Graph 15: Bar graph of Total cost incurred in producing the Rice crop from village no. 3
cost which is incurred for producing it. The x-axis household ID is shown and, on the Y-axis,
total cost per crop is shown. Both the graph helps us knowing that in village 3 rice requires
much cost for producing than wheat and another crop.
In the four villages, the main type of crops which most of the household were indulged in
producing are wheat rice. The mean, median, standard deviation, and median absolute
deviation of the total expenses incurred by village no. 4 is
16125 5413. 14000 4670.
Graph 17: Bar graph of Total cost incurred in producing the Rice crop from village no. 4
cost which is incurred for producing it. On the x-axis household ID is shown and, on the Y-
axis, total cost per crop is shown. Both the graph helps us knowing that in village 4 rice
requires much cost for producing than wheat and another crop.
So, the mean, median, standard deviation, and median absolute deviation of the total
expenses incurred by all the villages together irrespective crop is
35303. 38708. 21850 20237.
Thus, we can interpret the saving from our data which is generated only from the farming
activities which is very minimal which can be seen from the below-given graph
Graph 18: Bar graph of Total cost incurred in producing and revenue generated from the crops from
all household from all the villages
The x-axis represents the household id and the y-axis represents the amount in rupees
spend and earned by the farmers. Total sales revenue refers to the sales revenue that was
generated throughout the year by the sales of all the crops cultivated on the individual
agricultural land. Total cost refers to the cost incurred during the process of production of
these crops; these include all of the costs from whether it be cultivation, harvest, or sales.
Total Revenue minus the total costs that give us the profits generated from the farming
activities on the individual agricultural land. This profit can be added to the income
generated through nonfarming activities of the household to get a glimpse at the total
disposable income of the agricultural household in these areas.
As you can see through the graph that most of the farming activity is not exceedingly
profitable with some of them even incurring loose during the production process. The
average income from farming in these areas was Rs. 21630.33.
We can also analyze the expenditure which is spent by the household is on different fields
by which it we can know which thing they give their period. This is shown with the help of
pie chart below, containing all the villages and their consumption expenditure in different
fields.
Graph 19: Pie chat of the consumption patterns from all the households
It can be seen that most of the expenses occur in two avenues; food and education. After
that comes health. Such a major push towards gaining education seems to be a trend
emerging in many developing countries around the world. In fact, it was one of the main
reasons for the East Asia Miracle which was seen post-1965 in Asian economies such as
Japan, Hong Kong, Taiwan, Vietnam, Thailand, etc. There too a focus was seen in acquiring
human capital for the future generation to be able to get out of the poverty cycle.
Basis of the Model
The model is based on the consumption function, frequently used in simple Keynesian
models. A consumption function shows a relationship between consumption and disposable
income (total income - taxes). The simplest form of the Keynesian Consumption function is as
follows:
where,
a = autonomous consumption
b = marginal propensity to consume &
Yd= disposable income
The term b*Yd is the induced consumption that is influenced by the income level of the
economy. It is generally assumed that there is no dependence or correlation between C and
Yd. b or marginal propensity to consume measure the incremental consumption with each
unit increase in the income (as it is the partial differential of consumption with respect to
the disposable income). b is the slope of the function. One of the key assumptions of
Keynesian economics is that the parameter ‘b’ is positive but smaller than one. 0<b<1.
Autonomous consumption (also exogenous consumption) is the consumption expenditure

that occurs when income levels are zero. Such consumption is considered autonomous of
income only when expenditure on these consumables does not vary with changes in
income; generally, it may be required to fund necessities and debt obligations. If income
levels are actually zero, this consumption counts as dissaving, because it is financed by
borrowing or using up savings. Autonomous consumption contrasts with induced
consumption, in that it does not systematically fluctuate with income, whereas induced
consumption does.
Marginal Propensity to Consume
Keynes also took note of the tendency for the marginal propensity to consume to decrease
as income increases. If this assumption is to be used, it would result in a nonlinear
consumption function with a diminishing slope. Also, as individual consumption is different
for everyone, individual MPCs are also different. The same applies to different sectors.
Hence, some sectors of society are likely to have a much higher MPC as compared to others.
An individual with above-average wealth or income or both may have a very low (short-
term, at least) MPC of nearly zero, saving most of any surplus income. But a pensioner, for
example, can have an MPC of 1 or even greater than 1. It’s because a pensioner is likely to
spend every paisa of any extra income. This would occur in a situation where the extra
income stream gives confidence that the person does not need to put aside as much in the
form of savings (as seen in case of the pensioner); or perhaps can even dive into existing
savings. Some other examples of high MPCs are (include mostly low-income individuals)
parents with young children, students, and people who are unemployed.
Marginal Propensity to Save
It depicts the fraction of the increased income that a person chooses to save. There is a
multiplier effect related to MPC that states that every dollar spent in the economy becomes
income for someone else and then for someone else and so on. Hence a dollar spent
multiplies over the whole economy. This is known as the Multiplier Effect.
An interesting outcome of the multiplier effect is that if MPS decreases then the multiplier
increases, this is due to the fact that if someone saves less, he/she spends more and thus
more spending multiplies more over the time.
Also, the relationship between MPC and MPS can be given as,
The Model
The model is based on the consumption function with dummy variables added for individual
cross-sections (the villages) and income groups (high and low) respectively.
𝐶 = 𝑎 + 𝛽1𝑌𝑑 + 𝛽2𝑑1 + 𝛽3𝑑2 + 𝛽4𝑑3 + 𝛽5ℎ1
a = constant
𝛽1= Marginal Propensity to Consume
Yd = Income
d1 = dummy variable for village 2
h1 = dummy variable for high income
Income of farmer is divided into two groups - high income (>4 lakhs per annum) and low
income (< 4L Per Annum).
Engel’s law
Engel’s law is more of an observation that states that as the income rises the proportion of
expenditure on food declines, even as the absolute value of the expense increases. Hence it
states that the income elasticity of demand for food is between 0 and 1.
In our observed data also this can be seen,

Graph 20: Regression of Income on the Expenses on food from all the villages with log trend
Graph 21: Regression of Income on the Expenses on food from all the village with Polynomial
Trend
Graph 22: Regression of Income on the Expenses on food from all the village with Linear Trend
As seen in the charts above as income rises, rate of change expenses on food become more
stagnated or even decreases. This can be best seen in the diagram with a polynomial trend
line (Graph 21) and to some extent in the log trend line diagram (Graph 20). The R 2 value
(out of the three) is highest for Polynomial trend line indicating that it is the best fit thus
proving Engel's Law.
y= consumption exp
y= consumption expenditure; x1=income, x2=village dummy 1, x3=village dummy 2,

x4=village dummy 3, x5=high income dummy
Regression Statistics
Multiple R 0.323811
R Square 0.104853
Adjusted R
Square -0.04434
Standard
Error 194058.5
Observation
s ns 36
ANOVA
Significanc
df SS MS F eeF
Regression 5 1.32E+11 2.65E+10 0.702812 0.625723
Residual 30 1.13E+12 3.77E+10
Total 35 1.26E+12
Standard Lower Upper

Coefficients Error t Stat P-value Lower 95% Upper 95% 90.0% 90.0%
Intercept 288375.4 59626.86 4.836333 3.70E-05 166601.1 410149.6 187173 389577.7
inc 0.069434 0.191734 0.36214 0.719786 -0.32214 0.461007 -0.25599 0.394856
d1 -57385.2 98790.48 -0.58088 0.565661 -259142 144371.8 -225058 110288
d2 -121604 80552.52 -1.50963 0.1416 -286115 42905.81 -258323 15114.26
d3 -57993.4 97229.2 -0.59646 0.555342 -256562 140575.1 -223017 107029.9
h1 30219.74 133525 0.226323 0.822485 -242475 302914.2 -196407 256846.5
y= savings; x1=income, x2=village dummy 1, x3=village dummy 2, x4=village dummy 3,

x5=high income dummy
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.851783
R Square 0.725534
Adjusted R
Square 0.67979
Standard
Error 194058.5
Observatio
ns 36
Savings
ANOVA
Significanc
df SS MS F eeF
Regression 5 2.99E+12 5.97E+11 15.86064 1.19E-07
Residual 30 1.13E+12 3.77E+10
Total 35 4.12E+12
Standard Lower Upper

Coefficients Error t Stat P-value Lower 95% Upper 95% 90.0% 90.0%
Intercept -288375 59626.86 -4.83633 3.70E-05 -410150 -166601 -389578 -187173
inc 0.930566 0.191734 4.85343 3.52E-05 0.538993 1.322138 0.605144 1.255988
d1 57385.24 98790.48 0.580878 0.565661 -144372 259142.3 -110288 225058.5
d2 121604.4 80552.52 1.509628 0.1416 -42905.8 286114.6 -15114.3 258323
d3 57993.39 97229.2 0.596461 0.555342 -140575 256561.9 -107030 223016.7
h1 -30219.7 133525 -0.22632 0.822485 -302914 242474.7 -256847 196407
.
CONCLUSION
The research paper helps us in finding the relationship between many of the factors and
their cause. the given research paper helps us in knowing why household tries to spend
more in the education sectors, it also helps us know the savings which are generated from
farming activity without taking any help from the government and the other financial
institutions. We were also able to estimate the total cost per crop which is incurred by the
farmers, it also helps us know the major portion of the expenditure incurred by the crops by
which we were able to know the ground level requirements of the crops. many problems of
the farmers were also known because sometimes the crops fail due to many of the external
impacts which causes a steep decrease in the income of the farmers. we were also able to
show Engle’s Law which states that as income increases the rate of expenditure on food
goes down. Also, we saw that once the autonomous expenditure is done, the saving rate is
much higher for these families. The hypothesis that most of the households have negative
savings was also accepted and that the households have less consumption rate as compared
to saving rate is also proven.
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APPENDIX
Appendix A: Survey
Instructions: This section to be filled out by Location of Farm

interviewer.
State:
District:
Block
Village
Village no. Household

Household ID : No.
1.1. Name of respondent:
1.2 Name of the religion
Key: 1. Hindu 2. Muslim 3. Sikh 4. Christian 6.Others
1.2. Which category of caste does the household belong to?
Key: 1. General, 2. SC, 3. ST, 4. OBC, 5. others (specify)
1.4 What religion does the household practice?
Key: 1. Hindu, 2. Christianity, 3. Islam, 4. Sikh, 5. other (specify)

Savings
HOUSEHOLD ROSTER
Name 1.3.1 1.3.2 1.3.3 1.3.4 1.3.5
No. Gender Age Occupation Earnings
Relation to (years)
household head
1 Start with
household head
10
11
12
13
14
15
ACCESS TO GOVERNMENT SUBSIDIES
Kind of Total value of subsidy
(Yes-1, Subsidy Who received in last 12
No-2) receives the months (In Rs.)
(1 = cash; aid?
2 Material )
2.5.1.1 PDS
2.5.1.2.MDM
2.5.1.3 MGNERGS
2.5.1.4 NRHM & Janani

Suraksha
Yojana
2.5.1.5 IAY
2.5.1.6 Cycle
2.5.1.7 Scholarship
2.5.1.8 Stationary &

School
Uniform
2.5.1.9 Gas Cylinder

under
Ujjawala Yojana
2.5.1.10 pm kisan yojna
2.5.1.10 Seeds and

other agricultural
subsidy
Other, specify
Savings
AGRICULTURE INCOME
Expe Expe Expe Expe To am St am Tot own

nditu ndit ndit ndit tal ou or ou al cons
re on ure ure ure O nt ag nt los umpt
Irriga on on on ut left e los s ion
tion Seed Ferti Pesti pu for co t unti
N lizer cide t se st aft l
a and s in ed aft er har
m Man qu ne er ha ves Un
e ure int xt ha rve t it
of Expe Expe le se rve st incl Pri
th Are ndit ndit Othe as st to udi Qu ce
e a In ure ure r on pe ng ant in
Cr acre on on Expe sts har ity Qu
o /Big Labo MAc ndit ves Sol int
p ha r hine ure t d le
1
(
K
)
2
(
R
)
3
(
J
)
a b c d e f g Sa i j k Sale Sal
le s(1) es
s( (2)
err
o
re
d)
Consumption expenditure
Savings
S.No Types
INR
1 Education
2 food
3 Entertainment
4 Health
5 Miscellaneous
6 Others (specify)
Remarks
Appendix B: Data with basic stats

Savings
a b c
Min. : 0 Min. : 0 Min. : 0
1st Qu.: 3750 1st Qu.: 0 1st Qu.: 0
Median: 6000 Median: 1320 Median: 1200
Mean :10886 Mean : 3925 Mean : 3506
3rd Qu.:12000 3rd Qu.: 3000 3rd Qu.: 4500
Max. :55000 Max. :100000 Max. :24000
d e f g i
Min.: 0 Min.: 0 Min. : 0 Min. : 0 Min. :0.00
1st Qu.: 0 1st Qu.:0 1st Qu.: 0 1st Qu.: 0 1st Qu.:0.00
Median: 0 Median :1170 Median: 1440 Median :0Median :0.00
Mean :3705 Mean : 5429 Mean : 3353 Mean :3352 Mean 40.27
3rd Qu.: 2500 3rd Qu.:4500 3rd Qu.: 4500 3rd Qu.:0 3rd Qu.:0.00
Max. :42500 Max. :100000 Max. :27000 Max.:66000 Max.:2940.00
j k total cost per crop
Min. : 0 Min. : 0.00 Min. : 100
1st Qu.: 0 1st Qu.: 0.00 1st Qu.: 14000
Median: 0 Median: 0.00 Median: 21850
Mean : 1042 Mean : 64.38 Mean : 35303
3rd Qu.: 0 3rd Qu.: 0.00 3rd Qu.: 40000
Max. :24000 Max. :1200.00 Max. :266000

education food entertainment health
Min. : 0 Min. : 0 Min. : 1445 Min. : 0
1st Qu.: 6112 1st Qu.: 36000 1st Qu.: 6000 1st Qu.: 9300
Median: 30000 Median: 60000 Median: 9600 Median: 22000
Mean : 66229 Mean : 77653 Mean : 21673 Mean : 36175
3rd Qu.: 90000 3rd Qu.: 88500 3rd Qu.: 19500 3rd Qu.: 39000
Max. :372000 Max. :300000 Max. :192000 Max. :350000
NA's :1
government Income from nonfarming activity
Min. : 0 Min. : 0
1st Qu.: 0 1st Qu.: 0
Median: 0 Median: 125000
Mean : 1806 Mean : 227306
3rd Qu.: 0 3rd Qu.: 345000
Max. :36000 Max. :1344000

mis. others total consumption by household
Min. : 0 Min. : 0 Min. : 50300
1st Qu.: 0 1st Qu.: 16245 1st Qu.:131100
Median: 0 Median: 32000 Median :188435
Mean : 10900 Mean : 47002 Mean :257793
3rd Qu.: 13500 3rd Qu.: 67800 3rd Qu.:310900
Max. :120000 Max. :146000 Max. :917000
Savings calculated
Min. : -667960
1st Qu.: -173014
Median: -31950
Mean: -7052
3rd Qu.: 138700
Max. :1251160

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Instability of Farmers’ Page|1

Instability of Farmers’ Savings:

Additionally, we appreciate the valuable resources made available by Dr. Priya

Tanish Bhasin Abhishekraj Yadav

System ID: 2018013732 System ID: 2018012809

Date: 10/06/2020 Date: 10/06/2020

Suraj Bhan Singh

System ID: 2018014591

Chapter 1: ABSTRACT/ INTRODUCTION.......................................................................................3

Chapter 2: LITERATURE REVIEW.................................................................................................9

Chapter 3: OBJECTIVES/ METHODOLOGY/ HYPOTHESIS/ LIMITATION........24

Chapter 4: ANALYSIS AND FINDINGS / CONCLUSION..................31

Chapter 5: BIBLIOGRAPHY/ APPENDIX.........................................................................................54

Figure 1: Map of Gautam Budh Nagar

1. Household Consumption Expenditure

1. Household Consumption Expenditure

1.2 Health and Medicines

According to the Ministry of Statistics and Programmed Implementation reports on

2. Household Income from Non-Farming Activities

Figure 2: Effect of Subsidies

4.1 Expenditure on Irrigation

Furthermore, despite increased investment by state and central governments in irrigation

4.2 Expenditure on Seed

Figure 3: Major seed Producing States of India

4.4 Expenditure on Machine

4.5 Other Expenditure

4.6 Expenditure on Fertilizers and Manure

4.7 Expenditure on Pesticides

4.9 Total Loss Until Harvest (Pre-Harvest Loss)

4.10 Storage Cost After Harvest

 To study the relationship between consumption expenditure and income groups

 To explain the relationship between household income and household expenditure

 Showcase the effect of cross-sectional variation on the outcomes of agriculture.

 To analyses the relationship between irrigation expenditure while estimating the

 To find costs incurred under the expenditure variables.

 To find the total sales and total expenses relationship.

Secondary Research The main purpose of the secondary

Table 1: Source of information and its purpose

 Aggregate expenditure is the same as revenue: MPS=MPC for the agricultural

Some other things hypothesized are:

 In order to emphasize their socioeconomic vulnerability and issues, one limitation of

FINDINGS AND ANALYSIS

Graph 1: Bar graph of Population Trend in China and India

Graph 3: Bar graph of Expenditure on Irrigation by Village no.1

Graph 4: Bar graph of Expenditure on Irrigation by Village no.2

mean Sd median medianAbsoluteDeviation

45750. 34661 31800 30082.

mean Sd median medianAbsoluteDeviation

51655. 78839. 26550 28837.

mean Sd median medianAbsoluteDeviation

26325 19120. 22350 24982.

16125 5413. 14000 4670.

35303. 38708. 21850 20237.

b = marginal propensity to consume &

Yd= disposable income

Autonomous consumption (also exogenous consumption) is the consumption expenditure

Marginal Propensity to Consume

Marginal Propensity to Save

𝐶 = 𝑎 + 𝛽1𝑌𝑑 + 𝛽2𝑑1 + 𝛽3𝑑2 + 𝛽4𝑑3 + 𝛽5ℎ1

𝛽1= Marginal Propensity to Consume

d1 = dummy variable for village 2

d2 = dummy variable for village 3

d3 = dummy variable for village 4

Instabltity of Farmers' Savings

Instabltity of Farmers' Savings