Livelihood Diversification into NFEs and Poverty Alleviation Among Farm Households in Rural India

Abstract

Using the Indian Human Development Surveys of 2004–2005 and 2011–2012, this article examines the impact of livelihood diversification of farm households in non-farm enterprises (NFEs) on their poverty status, escaping from poverty and falling into poverty. The estimates reveal that livelihood diversification into NFEs prevent farm households from falling into poverty and helps them escape it. The result also indicates that NN (who did not diversify in 2004–2005 and 2011–2012), NY (who diversified in 2011–2012 but not in 2004–2005), and YN (who diversified in 2004–2005 but not in 2011–2012) had 4.1 per cent, 16.6 per cent and 24.5 per cent, respectively, lower odds of escaping poverty compared to those farm households that diversified their livelihood into NFEs in 2004–2005 as well as in 2011–2012. However, the results of whether previously non-poor households fell in poverty or not show that livelihood diversification status of NN and YN had 28 per cent and 44.7 per cent higher chances of falling into poverty than those farm households who diversified their livelihood in 2004–2005 as well as in 2011–2012. The results of control factors like religion, caste, education of household head, land holding, livestock ownership, quintiles of income and consumption represent consistent coefficients, which reveals robustness concerning the impact of control factors on outcome variables.