Crop diversification and income of agricultural households in India: an empirical analysis

Abstract The present study empirically tests the relationship between crop diversification and farm income. The study area is India, the fifth largest economy of the world, and the units of study are its households which dominates India’s labor force. The propensity score matching technique is applied on the two waves of nationally representative data on agricultural households pertaining to agricultural year 2012–13 & 2018–19 to test the relationship between crop diversification and farm income. We find a strong and positive impact of crop diversification on farm income as farm income increases by around 13 per cent if non-diversified households opt for crop diversification. Furthermore, important factors such as literacy, access to market, access to irrigation, agricultural training, farming experience, and household size positively affects crop diversification at the household level. However, recent decline in the extent of diversification in India is a cause for concern. Promotion of cultivation of HVCs by giving them such institutional supports as initial capital required for switch to HVCs and other steps that insulates them from higher risks is the need of the hour in Indian agriculture.