Abstract
The impact of non-farm activity on rural income inequality in the South 24 Parganas district of West Bengal has been studied. The non-agricultural activities play a key role in shoring up income and employment opportunities for the rural work force in this district. The average annual income of nonfarm families ( 108662) is almost double to that of farm families ( 56081). The results of Gini coefficient decomposition have indicated that nonfarm income is the largest component (44.05%) of total income, followed by farm income (39.41%). The non-farm income contributes largest to the overall inequality (58.27%) in which non-farm self-employment activity increases the total income inequality, while non-farm wage employment decreases it. The analysis of factors influencing participation of households in different income generating activity showed that human capital endowed with formal and informal education are engaged more in nonfarm activities. The study has suggested development of both farm and non-farm sectors simultaneously to reduce rural income inequality.
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