By Dharam Ghai, Azizur Rahman Khan, Eddy Lee, Samir Radwan
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Extra resources for Agrarian Systems and Rural Development
Apart from being consistent with a widening of relative inequality among farm households, it also raises some questions about the nature of the income increase. The relative price of grain (both rice and barley) increased sharply between the two years as a result of a sharp increase in procurement prices and this could account for the fact that consumption was cut back in favour of grain sales. This would imply that most of the income increase could be explained by this relative price effect and not by the increase in physical output.
Secondly, the sharp upturn in the terms of trade for the agricultural sector could have had a regressive impact due to the unequal distribution of marketable surplus amongst farm households. Thirdly, the data on savings, which we discuss in the next sub-section, show that the average savings ratios have been higher for larger farmers and have increased since 1963. It is likely, therefore, that these substantially higher savings margins over this period have been translated into widening inequality in income levels.
10, there were no marked changes either in the composition of farm output or income. The proportion of receipts from rice in net farm income remained virtually unchanged for farms of all size groups and there was no change in the proportion of total income coming from non-farming sources except for farms in the smallest size group. 20 There has, moreover, been no significant change in cropping patterns over this period 'because of the physical constraints on expanding rice output'. 21 It could thus be argued that the increase in the relative price of grain probably contributed to a widening of relative inequality among farming households.
Agrarian Systems and Rural Development by Dharam Ghai, Azizur Rahman Khan, Eddy Lee, Samir Radwan