Inequality Among Agricultural Households in Rural Punjab: The Effect of Income Sources

This study examined income inequality among agricultural households in Punjab using primary data collected during the agricultural year 2020-21. The study employed the Gini coefficient and Theil index to measure and decompose income inequality. The results indicated that agricultural household's involvement in off-farm and ad-hoc sources increased with their income level. Crop cultivation contributed the highest to total income inequality due to its dominance in household income. Still, it had an inequality-decreasing effect in marginal, small, semi-medium, and medium-category households. Livestock income was also identified as a potential tool for reducing inequality, especially in the south-western zone of the state. However, the off-farm income sources were inequality enhancing, likely due to disparities in skills and education required for engaging in such activities compared to agricultural activities. The Theil index revealed that intra-zonal and intra-landholding size inequality were the main contributors to overall inequality. These results indicated that there was a need for targeted policy interventions to enhance the livestock sector, promote income diversification, and address intra-zonal and intra-landholding disparities to promote inclusive and equitable development in Punjab's agricultural sector.