Investing in the present, hoping for the future: A financial behaviour analysis of farm households

Introduction

The economic well-being of rural households, particularly those engaged in agriculture, hinges not only on their income generation capabilities but also on how they choose to allocate resources between consumption and investment. Financial behaviour in such contexts is shaped by a multitude of factors -socio-economic characteristics, size of landholdings, risk perception, and financial awareness [1,2] . According to the NABARD All India Financial Inclusion Survey (2021), more than 60% of Indian farm households prioritize consumption over long-term investments, although aspirations for education, health, and durable assets are gradually rising [3] . Several studies have noted that saving behaviour in rural India is characterized by precautionary motives, asset creation, and preparation for social obligations [8,9,10] . Bathla et al. emphasized that income stability plays a crucial role in household saving rates, particularly among marginal and small farmers [2] . Similarly, Deshpande observed that farm households face structural constraints that affect their ability to convert income into long-term investments [6] . In this backdrop, understanding the financial decisions of farm households, especially how they balance short-term consumption with long-term investment priorities, becomes essential for effective rural development planning. This paper attempts to bridge that gap by analyzing primary data from 300 farm households in Bilaspur, Chhattisgarh. By categorizing expenditures and saving purposes, the paper offers insights into whether these households are becoming increasingly future-oriented in their financial behaviour [2,6] .

Methodology

This study is based on primary data collected from a sample of 300 farm households in Bilaspur district, Chhattisgarh, using a stratified random sampling method. Households were classified based on their landholding size: marginal (up to 1 ha), small (1-2 ha), medium (2-4 ha), and large (4-10 ha).

Tools Used

Where: Rij=R_{ij}= rank given for the ith item by the jth respondent, Nj=N_j = total number of items ranked by the jth respondent Data were collected on investment in food, inputs, education, health, durable goods, and savings for future goals. The analysis focused on durable vs. non-durable www.extensionjournal.com expenditures and categorized saving goals into 12 types.

Results and Discussion

Investment Pattern in Durable and Non-Durable Expenditure

The study found that non-durable consumption, particularly expenditure on food and farm inputs, accounted for the majority of total household expenditure across all categories of farm households. Marginal farmers allocated more than 50% of their expenditure to food, indicating a predominantly consumption-driven financial behaviour [1] . Conversely, large farm households invested relatively more in farm inputs and durable assets such as farm maintenance and house assets. Overall, food expenditure constituted the largest share (52.98%) of the total investment, followed by farm inputs (23.55%) and durable goods (12.99%). This pattern reflects the prioritization of immediate consumption needs alongside essential productive investments.

Investment

Future Saving Purposes

Analysis of savings behaviour indicated a gradual shift toward goal-oriented saving among farm households. Fixed household expenses accounted for the largest proportion of savings (23.66%), followed by emergency preparedness (19.09%). Substantial shares were also directed towards medical needs (14.11%), children's education (13.84%), and acquisition of durable assets (13.03%). This diversified saving pattern highlights an emerging awareness among farm households regarding the importance of financial planning for future contingencies and long-term welfare, signaling a transition from short-term consumption to a more balanced financial strategy [4,5,7] .

Purpose

Conclusion

The findings of this study demonstrate that rural farm households in Bilaspur district exhibit a nuanced financial behaviour characterized by the dual objectives of meeting immediate consumption needs and securing future investments. Despite the predominance of expenditure on food and farm inputs, there is clear evidence of an increasing propensity to save for education, health, emergencies, and durable asset acquisition. This shift suggests a growing financial prudence influenced by both necessity and aspiration, reflecting a balanced approach to consumption smoothing and future-oriented planning. These insights underscore the need for targeted financial literacy programs and supportive rural development policies that can enhance the capacity of farm households to optimize resource allocation and improve their economic resilience [2,6] .

References

1. Areef M, Radha Y, Rao VS, et al. Does size of landholding contribute to consumption expenditure inequalities among agricultural households? Asian J Agric Ext Econ Sociol. 2021;39(4):1-8.
2. Bathla S, Kumar A, Saroj S. Nexus in income, saving and investment among agricultural households. Indian J Agric Econ. 2022;77(3):348-67.
3. NABARD. All India Financial Inclusion Survey. Mumbai: National Bank for Agriculture and Rural Development; 2021.
4. NSSO. Household Consumption and Expenditure Survey (76 th Round). New Delhi: Ministry of Statistics and Programme Implementation, Government of India; 2021.
5. Kumar A, Meena R. Household investment behaviour and financial planning in Indian agriculture. J Rural Dev. 2020;39(2):158-74.
6. Deshpande RS. Agrarian crisis and farm investment behaviour in India. Soc Sci. 2017;45(5-6):45-63.
7. Salam A, Kulsum U. Saving behaviour in India: An overview. Indian Econ J. 2000;5:77-81.
8. Shriwastawa W, Prasad B. A study of income, saving and investment on small medium and large farms of Nainital district of U.P. Agric Situ India. 1989;28:28990.
9. Vani BP, Gupta M. Savings behaviour in India: An empirical analysis using ARDL approach. Indian Econ J. 2014;62(3):382-96.
10. Ramakrishna G. Farm household savings in India: Micro evidence from Andhra Pradesh. IUP J Appl Econ. 2007;6(4):7-22.