INTRODUCTION:
Livelihood is a much discussed and debated issue in
modern day development studies as it raises questions about how “ people in
different places live”(Ellis, 2000b). At the heart of its study lies the issue
of people’s assets, activity and income (Barrett, Reardon, and Webb, 2001) to
gain a living (Scoones, 1998).Thus in economic parlance a livelihood frame work
means “ asset mediated income generating activities and social support system”
(Ellis, 2000b).
Income is the final outcome of all the assets and
activities, and it directs the attention in the manner in which a living is
made (Hussein and Nelson, 1998). Several literatures confirm the presence of
income generating multiactivity and multi asset holding across different sector
and space. The presence of the so called “income diversification” from
multiactivity is itself an evidence of the diversification of livelihood.
Livelihood diversification has been explained as a process through which
households “construct diverse portfolios of assets and activities”(Ellis,
2000b) to meet their objective. The objective can be either to survive for the
vulnerable or to improve the standard of living for the better off (Ellis,
2000b). Contemporary literature on
livelihood explains and confirms the phenomenon of diversification throughout
the rural space of world with multiple causes and consequences (Steward, 2007).
The remaining section of this work is organized in the
following manner: section II comprises of review of literature on rural
household livelihood diversification. In section III, a brief background of the
study area is presented. In section IV, objectives and methodology is
presented, in section V result and discussion is presented and finally section
VI presents the conclusion of the work.
REVIEW OF LITERATURE:
Rural areas since early has been treated as purely
agricultural by theories like Lewis (1954) and Fei and Ranis (1964).
And they strongly advocated the shifting of excess labour to industries in
urban manufacturing as the strategy for rural development. The Lewisian
perception later on totally collapsed due to the very basic structural
incapacities of industries to absorb the excess labour. Several studies found
that hardly 2% to 3%of total increased workforce got employed in large scale urban manufacturing
sectors during 1960s and 1970s in countries like India, Pakistan and Bangladesh
(Amjad, 1998) also cited by S. Chakrabarti and Kundu (2009). The dualistic model of development was
criticized by Ellis (1998) in the sense that these theories treated rural and
urban areas as compartmentalized and which was not very much true in the real
world scenario. After 1960s the concept of nonfarm activities and income came
into discussion (Hymer and Resnick, 1969) and research and in India the
decennial population census was the only source of information in rural
India(Reardon, 1997; Vaidyanathan, 1986).
The concept of livelihood became very popular with the
concept of sustainable livelihood by Chambers and Conway (1991) and then
further with the work of Scoones (1998) which focused on different assets,
activities and capabilities which people should maintain to make a living. This
was perhaps an important leap forth which paved ways for policy and research
throughout the world in the living attained by different people. A
comprehensive research study was done by Ellis (1998, 2000a, 2000b) on
livelihood diversification by rural households in developing countries,
followed by Barrett et al. (2001) and several others throughout the world.
Literatures on livelihood diversification reveal that throughout the world
rural households mostly do not make their livings just from the farm incomes,
but instead have a broad array of income generating activities (Brown,
Stephens, Ouma, Murithi, and Barrett, 2006) . In short they talk about
alternative activities (Davis et al., 2009) and income sources of rural
households (Bryceson, 1999).
The broad causes classified are on the basis of individuals, households
and farm characteristics, socio-cultural institutions, macroeconomic policies,
natural resource endowments, demographic factors, infrastructure, credits and
remittances have been revealed to be the “major Pull and Push factors” in
diversification (Adi, 2007; Akaakohol and Aye, 2014; Carswell, 2002; Ellis,
1998, 2000a, 2000b; Jayne, Chamberlin, and Headey, 2014; Manjur, Amare,
HaileMariam, and Tekle, 2014; Reardon, Berdegue, Barrett, and Stamoulis, 2007;
Rigg, 2006; Smith, Gordon, Meadows, and Zwick, 2001; Stifel, 2010; Tuyen, Lim,
Cameron, and Huong, 2014; Whitehead, 2002). The same causes have also been
called prosperity induced and distressed led diversification (Barrett et al.,
2001; Ellis, 2000b; Tuyen et al., 2014), where in the first case household
diversify for better incomes and in the latter case household diversify for
survival. Some of the major causes identified as pull factors are access to
capital (Dercon and Krishnan, 1996), education (Ellis, 2000b; Saha and Bahal,
2015), credits (Manjur et al., 2014), geographical location and infrastructures
(Rahut and Scharf, 2012). Push factors include
shrinking farm and land sizes
(Awasthi, 2012; Rahut and Scharf, 2012), shrinking farm income (Rigg, 2006),
socio-techno competition in the farm sector (Schneider and Niederle, 2010),
risk and vulnerability in agriculture (Ellis, 1998, 2000b).
But the success of diversification is not uniform for
all activities and places where it is carried out (Ellis, 2000b; Saha and
Bahal, 2015) . This postulation is supported by the findings of many
researchers who have mixed results with diversification, in different places
across continents. Livelihood diversification has no significant impact on
household well being (Ijaiya and Ajaiya, 2009), has lead to increase in
household welfare (Steward, 2007), has led to reduced income variability
(Ahmed, Bhandari, Gordoncillo, Quicoy, and Carnaje, 2015) and contributed to
income inequality (Adepoju and Oyewole, 2014; Iwasaki, 2015).
Spatially relevant work on livelihood diversification
has been done in Sikkim and DGHC by Rahut and Scharf (2012), in the hill state
of Uttarakhand by Awasthi (2012), in Humla district of Nepal by Gautam and
Andersen (2016). It has also been supported by the works of Mamgian (2004) in Uttarakhand, Mistri (2013)
in Darjeeling hills and Rahut and Scharf (2008)
in Sikkim and Darjeeling hills
which shows the presence of farm and nonfarm employments. These works have
clearly identified mountain specificities like fragility, marginality in land
holdings, heterogeneity in resource endowments, steep landscapes and other
individual and household characteristics as the causes of diversification.
BACKGROUND OF THE STUDY
AREA:
Sikkim was a very recently transited from a feudal to
a democratic federation of India in the year 1975 and has remained historically
backward. It is totally a hilly state measuring area 7096 sq. km with a
population of 607688 persons. According to the Census of India 2011, nearly 86
% of the population lives in some 447 Villages. This clearly shows the rural character
of the state. And being rural in character historically it has been an agrarian
economy with its subjects engaged in crop cultivations and animal husbandry.
Because of its hilly terrain and acute problem of infrastructure which was not
harnessed, the state was less developed till merger. Sikkim was a feudal state
since 3 centuries and it was only in 1975 that it was aligned with democratic
federation of India (A. Chakrabarti, 2010). Due to very little number of
educational institutions and inaccessible health care services, human capital
formation was very limited. This was clearly shown in the literacy rate of
43.6% in 1981 census, the first census after integration with Indian
federation. Heavy dependence on subsistence agriculture (Subba, 2008) , lack of
transport, communication and other development activities before merger, kept
the hill economy of Sikkim at a subsistence level (Bhattacharya, 1998).
But after integration with the Indian federation,
situations changed a lot. Infrastructure development, social development and
institutional establishment were the basic priorities. The clear example to
show improvements in human capital was the rise in literacy rates in various
population censuses from 43.6% in 1981 to 52.2% in 1991, 64.8% in 2001and 74%
in 2011. The focus of the Government policies aimed at making the state self
reliant both at the household and the state level. The growing population
combined with the larger aspiration of the people for material wants has put
enormous pressure on land (Bhasin and Bhasin, 1996) and has strong influence on
the living of the people in rural areas.
All mountain area is ecologically fragile, instable
and steep thus being very vulnerable does not permit to have large scale
industrialization (Awasthi, 2012). On the other hand farm based activities does
not fully support living of households on its own for all land holdings.
Households have been seen to find alternative income sources apart from farming
for obvious reasons. Tourism is in its heights as many tourists both national
and international visit the state every year. The large flows of funds into the
development, led to a sustained growth in the economy and thereby creating new
employment opportunities and entrepreneurial avenues (Sankrityayana, 1994). And
similarly many other nonfarm activities are seen to be practiced by rural
households (Rahut and Scharf, 2008, 2012). Thus this paper tries to see the
real scenario of changing and diversified livelihood in the rural households.
Fig. 1. Map of Sikkim showing
districts.
OBJECTIVE OF THE STUDY:
To study
the income distribution of rural households through diversified livelihood
activities in Sikkim.
METHODOLOGY:
The study area is the rural villages of Sikkim where
from 350 rural households were surveyed using random sampling. The different
aspects of making a living were surveyed with structured schedules and the
informed member of the household was asked to reveal the total change that they
witnessed since their childhood. Data was collected on household and individual characteristics like
total operational land holdings, total cultivable lands, the lists of all
income generating activities in cash and kind, education of the members, number
of live stocks, total annual income, number of working members and dependents
and many other relevant parameters.
Analytical Tools:
Data analysis was done according to the objectives,
for calculating the extent of diversification; Simpson’s Diversity index has
been used. The formula for Simpson’s Diversity index,
SDI= 1 - ∑pi2
(1)
where i= 1……….n, n= number of income generating
sources.
The value of SDI lies in between 0 and 1, 0 signifies
absence of diversification and 1 signifies complete diversification. This
method has been used by Khatun and Roy (2012) and Saha and Bahal (2014) in West Bengal.
Table:
1. Criteria for judging the extent of diversification.
|
Level
of Diversifications (extent) |
SDI
values |
|
No
Diversification |
<
0.01 close to Zero |
|
low |
0.01-0.25 |
|
Medium |
0.26-0.50 |
|
High |
0.51-0.75 |
|
Very
High |
≥
0.76 (close to 1) |
Gini coefficient has been used to measure the income
inequality and decomposition of total income inequality to its income component
as used by Iwasaki (2015). Taking cue from Omilola (2009), this work defines total household income
Y0 from k number of sources as
Y0=∑Yk, k = 1,……K, (2)
each income sources denoted by Yk.
The formula for the decomposition of income inequality
with respect to its income source is
G = 
Rk GK SK where
k= 1……..k, (3),
Sk is the share of component k in total
income and is positive, Gk is the source Gini, corresponding to the
distribution of Income from source K and lies between o and 1, and Rk
is the Gini Correlation of Income from source K with the distribution of total
income and is calculated as
Rk= Cov(Yk, F(Y0))/Cov(Yk,
F(Yk)) (4),
where F(Y0) and F(YK) represents
the cumulative distribution of the total income and the income from the source
K respectively. The value of Rk lies in between -1 and +1. This Gini
inequality decomposition method adopted in this work is originally taken from Lerman and Yitzhaki (1985) and employed by Omilola (2009) in Nigeria, by Iwasaki (2015), Adams (1999) in
rural Egypt and Pradhan (2014) in Orissa, India.
RESULTS
AND DISCUSSIONS:
Using the analytical
framework discussed in the previous section, the following results have been
generated. Results generated in this section, have emerged from the data
collected from 300 rural households. The interpretation comprises of two parts
namely, first on the extent of diversification and second on the distribution
of income and decomposition of the Gini coefficients of income according to its
source components.
Extent of Diversification:
On the basis of the SDI
value’s criteria mentioned above in the methodology, the following table shows
the distribution of households across the level of diversification.
Table
2: Distribution of households as per the
SDI
|
Level
of Diversification |
Number
of Households |
Percentage |
|
No
Diversification |
13 |
4.3 |
|
Low
Diversification |
47 |
15.7 |
|
Medium
Diversification |
111 |
37 |
|
High
Diversification |
125 |
41.7 |
|
Very
High Diversification |
4 |
1.3 |
Source:
field data.
On an average the Value of
SDI for the overall state is 0.55 which indicates that the extent of
diversification is high. There might be several reasons of it like the
declining profitability of agriculture and emergence of more lucrative nonfarm
activities. Also another reason for it might be the MGNREGA program which
renders almost rupees close to twenty thousand to every household. As the
result above indicates more than fifty percent of the sample households fall
into low and medium diversification, the impact of MGNREGA can be considered a
major source. The strength of high and very high diversification is also huge;
this might be due to the evidence of employment in nonfarm sectors mostly into
job, skilled and unskilled works, business and self employments along with
significant farming. Emergence of sectors like tourism, other services and
simultaneous farming of cash crops like ginger, cardamom and mandarin may be
considered as a major source of diversification. The prevalence of life stocks and the earning
sources accordingly generated also cannot be negated as a factor contributing a
high level of diversification in the state. Declining land for cultivation is
seen to be a major concern for the people who depend on land resources for
their livelihood and accordingly households finding alternative income sources
in the nonfarm sectors are evident. The value of correlation coefficient
between total household income and the SDI is found to be .56 which indicates
that livelihood diversification is positively correlated to the household
income.