A Special Programme for Marginal and Small Farmers


The National Commission for Enterprises in the Unorganised Sector (NCEUS) was set up in 2004 by the United Progressive Alliance (UPA) government as an advisory body and a watchdog for the informal sector. Its mandate was to increase the productivity of enterprises in the unorganised sector and create large-scale employment, particularly in rural areas.

This report highlights, through surveys and data analysis, the problems faced by marginal and small farmers and their households. It also mentions the agrarian policies of the National Democratic Alliance (NDA) government (1998-2004) and provides a brief history of government initiatives for the development of marginal and small farming in India. The report discusses programmes that can improve the condition of small and marginal farmers and focuses on possible solutions. 


  1. Marginal and small farmers are the backbone of Indian agriculture because they constitute about 84 per cent of all farm households, own 43 per cent of land, operate about 46 per cent of the total cultivated area, and produce half of the country’s agricultural output. However, a marginal or small farmer typically only owns or operates less than two hectares of land.

  2. When foodgrain production and agricultural growth dipped (1997-99 and 2003-04), marginal and small farmers were the worst affected. They benefitted to a lesser extent from government programmes than farmers with more land.

  3. The share of marginal and small farmers in owned land has gone up from 16.3 per cent in 1953-54 to about 43.5 per cent in 2002-03 because of the sub-division of land holdings and land distribution.

  4. By 2002-03, marginal and small farms accounted for nearly 80 per cent of operational holdings as compared to 61 per cent in 1960-61. 

  5. 41.8 per cent of marginal and small farmers belong to the other backward classes (OBCs), 19.3 per cent to the scheduled castes (SCs) and 13 per cent to the scheduled tribes (STs). 

  6. The rising costs of cultivation and poor returns have increased the indebtedness of farmers. The average outstanding loan per farmer household was Rs. 12,585 in 2002-03. Farm business expenditure (capital and current) accounted for 58 per cent of the total loan, marriages accounted for 11 per cent and consumption expenditure for 9 per cent. Thus the main reason for debt in farmer households was operational costs. 

  7. Besides small land holdings, which lead to inadequate incomes, marginal and small farmers face other difficulties, including imperfect markets for their produce, a lack of access to credit and poor technical know-how. 

  8. With the development of more integrated markets, led by large private players, smaller cultivators face asymmetric conditions and large transaction costs. The government’s attempts to mitigate farmers’ risks through measures such as the minimum support price have not been successful because the coverage of the scheme is limited, in terms of crops and area. 

  9. The decline in government support in investment in agriculture, research and expenditure in the post-90s period has led to a much greater dependence on private sources for agricultural inputs, extensions, markets and credit. Most suicides have occurred among marginal and small farmers. The central and state governments have set up several commissions, including the National Commission on Farmers and the Committee on Agricultural Indebtedness, to suggest remedial steps. 

  10. Banks do not approach marginal and small farmers actively because of the perceived risk that they will default on loans. So the NCEUS asked the government to set up a Credit Guarantee Fund in the National Bank for Agriculture and Rural Development (NABARD) to guarantee a cover on loans to small units. 

  11. The Special Programme for Marginal and Small Farmers will promote the formation of farmers’ self-help groups, enable greater access to institutional credit, train farmers, strengthen their sources of non-farm income, and support women farmers by promoting joint ownership, leasing or operation of land.

  12. To improve the incomes and skills of marginal and small farmers, to strengthen their livelihood security and to offer them alternative opportunities in the non-farm sector, the Commission has asked the State to constitute a Marginal and Small Farmers Development Society at the district level.

    Focus and Factoids by Vedika Inamdar.


National Commission for Enterprises in the Unorganised Sector, New Delhi

The Commission had the following members: Dr. Arjun K. Sengupta, Dr. K.P. Kannan, Dr. R.S. Srivastava, V.K. Malhotra, Dr. T.S. Papola and B.N. Yugandhar.


National Commission for Enterprises in the Unorganised Sector, New Delhi


01 Dec, 2008