THE CONTRIBUTION OF CROP INCOME IN REDUCING POVERTY AND INCOME INEQUALITY AMONG DIFFERENT FARM SIZES: A COMPARISON OF COTTON/WHEAT AND BARANI PUNJAB

Crop sector shows an increasing trend but the benefits of this growth have shifted towards households having large land holdings leading to poverty and inequality in the economy. There is a need to decompose the crop income of households belonging to different farm sizes. This will ensure that proper policies can be made for the deprived groups to reduce overall poverty and inequality in the economy. The analysis has used data from Households Income and Expenditure Survey (HIES 2005-06). Decomposition measures, i.e., Gini coefficient and coefficient of variation have been employed for analysis. These measures decompose crop income into eleven different components according to different farm sizes to determine their impact on poverty. Results show that in Cotton/Wheat Punjab all households are receiving highest share of their crop income from wheat and cotton while in Barani Punjab, the major share of crop income is coming from wheat. In Cotton/Wheat Punjab, under the category No land to less than 5 acres, cotton is inequality increasing source while in Barani Punjab rice, maize and vegetables are inequalities increasing sources. Sugar cane, rice, maize, fruits and vegetables are inequality increasing sources in Cotton/Wheat Punjab while in Barani Punjab the category other crops is inequality increasing source under the category of households having 5 to less than 12.5 acres. Both decompositions agree that in Cotton/Wheat Punjab four income sources i.e. cotton, sugar cane, maize, and others, while in Barani Punjab maize, vegetables and other crops are inequality increasing sources of income among households having 12.5 to less than 25 acres.