International Journal of Environment, Agriculture and Biotechnology

Vol-10, Issue-4; Jul-Aug, 2025

Peer-Reviewed International Journal
Journal Home Page Available: https://ijeab.com/
Journal DOI: 10.22161/ijeab

Processes of Diversification of Rural Economy— A Pioneer

Approach Dealt for Doctoral Research on Kangra Farms
Girish Mahajan

Extension Specialist (Agricultural Economics), Krishi Vigyan Kendra- Bara-Hamirpur-Himachal Pradesh, India

Received: 17 Jun 2025; Received in revised form: 20 Jul 2025; Accepted: 24 Jul 2025; Available online: 01 Aug 2025
©2025 The Author(s). Published by Infogain Publication. This is an open-access article under the CC BY license
(https://creativecommons.org/licenses/by/4.0/).

Abstract— Thesis advocates rural diversification for solving the problems of rural unemployment, poverty,
and hunger. The study was undertaken in Kangra valley of Himachal Pradesh. Two developed blocks form
the developed category and two backward blocks form the backward category were selected on the basis of
infrastructural as well as agrarian related variables for the study. Two stages stratified random sampling
with stratification, on the basis of index of crop acreage diversification using Entropy index, at second
stage was employed for the selection of villages and households. Both primary as well as secondary data
was used in this study. Commensurate with the objectives of the study, data were analyzed using suitable
statistical techniques. The results have shown that diversification of crops, measured by Herfindhal and
Entropy indices, were higher in more-diversified farms. In the overall farm analysis, crop diversification is
higher under developed agriculture than in backward agriculture whereas reverse is observed for income
diversification. This clearly shows that income diversification is no guarantee for increasing total
household income. The extent of income diversification is higher in less-diversified farms than in more-
diversified farms of developed category. In contrast, diversification of income is higher in more-diversified
farms of backward category. A pioneer work has been done to examine the impact of diversification on
income, consumption and poverty. In this context, the household income was highly diversified in
backward category but the level of total household income was significantly lower as compared to
developed category, where low level of diversification is associated with high level of income, pointing
towards the prevalence of distress diversification. So far as the relationship between the extent of
diversification and poverty is concerned, there was systematic relation with crop diversification, but it was
not found to be systematic with income diversification. The thesis has identified and analyzed the problem
of rural diversification and suggested solution to accelerate the process of diversification in Kangra valley
of Himachal Pradesh. Specifically, the policy should be that emphasis on diversification of rural economy
shall yield no dividend unless efforts are made to improve the productivity of the existing resources and
attending to problems like marketing, credit facilities and technical know-how.
Keywords— Rural diversification, Extent, diversification indices, More-diversified farms, Less-
diversified farms, Determinants, Income, Consumption, Poverty, Constraints

Preparatory work done before undertaking research knowledge on the problem area, i.e. Kangra
work on thesis problem: district.
(a) I was intellectually involved on the problem of (b) Involvement in seminars and discussions on the
rural diversification during my MSc thesis and problem of rural diversification and critical study
became well versed first with the Dimensions and of the literature was the part of the preparatory
Determinants of Diversification, second with the work.
statistical tools to be used and finally with the (c) Frequent visits and observations of the problems
of rural areas of Kangra district during my stay at

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Mahajan Processes of Diversification of Rural Economy on Kangra Farms- a Pioneer Approach dealt for Doctoral
Research

Himachal Pradesh Agricultural University, With this background in view the investigation was carried
Palampur had created a strong background to out with the following objectives:
undertake research on the specified area. 1. To examine the magnitude of diversification in
Specifically, my preparation for research work farm sector of Kangra district.
was confined to regular academic courses of the 2. To examine the empirical relationship between
university and my personal interest and efforts in the magnitude of diversification and socio-
studying the literature on rural diversification. economic factors such as family size, land tenure,
When and how the research problem was identified: education, and distance from the town / market
The problem of processes of diversification of rural and so on.
economy was identified when I was stuck with an idea of 3. To examine the impact of diversification on
researching the relationship between the magnitude of income, consumption and poverty.
farm diversification and the level of household income, 4. To find out the factors (constraints) inhibiting the
consumption and poverty. The idea came to my mind process of rural diversification.
when I understood during my discussion with the farmers Consistent with the above objectives, the following
that there must be relationship between the diversification hypotheses were proposed to be tested empirically:
and income, consumption and poverty for diversification a. The level of diversification and agricultural
to be meaningful. Further analysis proved that there was development are positively related. A highly
lack of literature on this relationship. Then, I thought of diversified agricultural category tends to be more
researching deep into the problem of rural diversification. diversified. In other words, agricultural
Brief description and objectives: development acts as a stimulus in broadening the
Diversification of rural economy is considered essential income and employment base of rural poor.
for solving the problem of rural unemployment, poverty, b. There is a positive relationship between the extent
and hunger. Not only that, in a backward agrarian of diversification and experience/education of
economy, diversification of agriculture is also thought of rural households.
as a strategy to minimize risk to cover crop failures where c. There is no clear relationship between farm size
the immediate goal is not to make profits but to stabilize and extent of diversification.
income for survival. Also, diversified agriculture is more d. Rural diversification has significant impact on
resilient to unforeseen shocks and stresses and in the income, consumption and incidence of poverty.
words Conway (1911) tends to be more enduring and e. Extent of diversification and family size are
sustainable. It is; therefore, no wonder that rural positively related.
diversification has attracted the attention of scholars and f. Land tenure has negative effect on the extent of
policy makers in the recent past. The concept of diversification.
diversification is interpreted differently by different g. Diversification tends to be more pronounced in
scholars; it means shifting from subsistence farming to those areas which are nearer to town/markets.
commercial farming to some and, to others it implies shift Methodology:
from low value food/ non-food crops to high value food/ The study was undertaken in Kangra district of Himachal;
non-food crops and still others it means switching over Pradesh. Two developed blocks which form the developed
from local to high yielding varieties, the integration of category and two backward blocks which form the
animal husbandry, fisheries, horticulture, etc. The backward category were selected on the basis of ranking of
diversification of agriculture is considered essential to take infra-structural variables such as the number of
advantage of complementary and supplementary relations educational institutions, basic health care units, the number
and, as a result to reap the maximum returns. In addition, it of banks, the number of post offices and the number of fair
is also required to maximize the resource use efficiency price shops as well as agrarian related variables like the
through multi-dimensional use of limited land, time, and percentage of net irrigated area, cropping intensity,
use of output of one enterprise as an input to others and fertilizer consumption and seed distribution. Two stages
intensive use of family labour to maximize the profit. For stratified random sampling technique with stratification,
this, economists and researchers both in the country and on the basis of index of crop acreage diversification using
abroad have strongly advocated for evolving an integrated Entropy index, at second stage was employed for the
system approach to the problem of rural diversification for selection of villages and households. Both primary and
rapid, balanced and egalitarian growth of the economy. secondary data was used in this study. Commensurate with
the objectives of the study, data were analyzed using

ISSN: 2456-1878 (Int. J. Environ. Agric. Biotech.)

https://dx.doi.org/10.22161/ijeab.104.26 181
Mahajan Processes of Diversification of Rural Economy on Kangra Farms- a Pioneer Approach dealt for Doctoral
Research

suitable statistical techniques. Tabular analysis was carried 3. Mahajan Girish (2005),” Indicators od
out to work out averages, percentages so as to represent Development: A Block Level Study in Kangra
the socio-economic features of sample households. The District of Himachal Pradesh,” The Asian
magnitude of diversification was quantified using Economic Review, Vol. 47(1), pp:137-144
Herfindhal and Entropy indices. The effect of different 4. Mahajan Girish (2009),” Diversification of Rural
factors on the magnitude of diversification was estimated Economy: Effect on Income Consumption and
using multiple linear regression models. Further to study Poverty,” The Asian Economic Review,
the effect of diversification on income and consumption, Vol.(51(2), pp:270-289
the diversification indices of crop acreage and income 5. Mahajan Girish (2013),” Income Diversification
were compared to household income, per capita income, in Hill Farms- An Empirical Analysis,” Journal
household consumption and per capita consumption. of Renewable Agriculture, Vol. 1(5), pp:91-101
Further income/ consumption were regressed on 6. Mahajan Girish (December,2013-
diversification indices along with socio-economic factors February,2014),” Constraints in Diversification of
using multiple linear regression models. To find out the Rural Economy,” American Journal of Research
relationship between the extents of diversification on in Formal, Applied and Natural Sciences, Vol.
poverty, for heavy work poverty line was calculated to be 5(1), pp:54-64
Rs. 24375 per annum for a five member family below 7. Mahajan Girish (2014),” Dimensions, Effects,
which a family is declared as a family below poverty line. Determinants and Constraints of Rural
Regarding factors (constraints), constraints in the Diversification: Emiprical Evidences on Kangra
diversification of rural economy were simply worked out Farms,” Journal of Renewable Agriculture
by the farmers perception in terms of the percentage of (Accepted for publication)
household showing each problem were tabulated and then 8. Mahajan Girish (2018),” Diversification of Rural
Chi-square test was applied to know the significance of the Economy- A Review of Issues,” Amity Journal of
difference in the constraints faced by the sample Agribusiness, Vol.2 (2): 30-39
households in diversifying to different enterprises, both
crop and non-crop related. Book Chapter:
Procedure developed for the research problem: Rural Diversification and Agricultural
Development-Empirical Evidences on Kangra
a. Ranking of variables, infra-structural as well as
Farms. In: Climate Change Dimensions and
agricultural, in different blocks of Kangra district
Mitigation Strategies for Agricultural
were made in ascending order for the selection of
Sustainability (Volume II) editedby Suborna Roy
blocks for the developed and backward category.
Choudhury and Chandan Kumar Panda @ New
b. Literature on the relationship between extent of
Delhi Publishers, New Delhi: 2022, (pp 221-249).
diversification and household income,
ISBN: 978-93-93878-50-2, DOI: 10.30954/ndp-
consumption and poverty was analyzed.
climatev2.15
c. For the first time, new method of classification of
households on the basis of index of crop acreage Principal Results:
diversification using Entropy index was The findings indicated that Nurpur and Panchrukhi were
introduced the most developed blocks, form the developed category,
d. Chi-square test was used to identify whether there in terms of infra-structure as well as agricultural
is similarity in the problems of more-diversified development point of view while, Lamba –gaon and
farms and less-diversified farms. Nagrota –surian, form the backward category, were the
Research papers published from the dissertation: least developed blocks. Diversification of crops measured
by Herfindhal and Entropy indices was higher in
1. Mahajan Girish (2003),” Dimensions and
developed category as compared to backward category;
Determinants of Diversification on Kangra Farms
again, diversification in developed category was cereals
of Himachal Pradesh-An Empirical Analysis,”
plus horticulture plus dairy based. In comparison, the
Bangladesh Journal of Agricultural Economics,
extent of diversification was low in backward category
Vol. XXVI (182), PP:1-22
primarily because of rain fed agriculture and small size of
2. Mahajan, Girish (2004),” Crop Diversification:
holding where the cropping pattern being dominated by
An Empirical Analysis of Kangra Farms of
cereals. Between pattern of farm diversification which
Himachal Pradesh,” Agricultural Economics
were made on the basis of index of crop acreage
Research Review, Vol. 17(2), pp:199-217
diversification using Entropy index, more-diversified

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Mahajan Processes of Diversification of Rural Economy on Kangra Farms- a Pioneer Approach dealt for Doctoral
Research

farms having Entropy index value >0.6393 and less- was associated with high level of income thus, pointing
diversified farms having Entropy index value < 0.6393, towards the prevalence of distress diversification. To
crop diversification was higher in more-diversified farms. further concretize the relationship between the level of
Statistical evidence in relation to the determinants of crop household income and consumption expenditure and the
diversification revealed that both the economic factors like extent of diversification, some regression equations were
farm size, tractor and bullock density, extent of tenancy, estimated with household income and consumption
farm income and non-farm income and the social factors expenditure as dependent variables and the extent of
such as family size, age and education of the head of the income and crop diversification along with some other
family, distance from town/ metalled road were the socio-economic variables like family size, education,
significant determinants of crop diversification suggesting number of sources of income etc. as independent variables.
that a proper mix of both the economic and non-economic The statistical results in this regards showed, while the
factors were essential to promote agricultural production in diversification of crops had significant and positive effect
developed category. In contrast, economic variables like on income in the developed and backward categories, the
number of fragments of holdings, extent of tenancy, net diversification of income was found to have significant
farm income and off-farm income had significant impact affect on consumption and not on income only in
on agricultural production in backward category. As for as backward category and did not have any affect in
income diversification is concerned, it was higher in developed category. This inter alia, implies high
backward category as compared to developed category in productivity of various crops under cultivation. In general,
the overall farm situation. But, the level of total household the findings showed that high level of diversification
income in backward category was significantly lower stands no guarantee for higher level of income and farmers
(Rs.78408/ farm) as compared to developed category (Rs. in order to meet their both ends diversify to various
138074/farm). This shows that income diversification sources of income. So for as the relationship between the
stands no guarantee for increasing total household income. extent of diversification and poverty is concerned, there
With regard to the classification of farm diversification, was systematic relationship with crop diversification, but it
the extent of income diversification was higher in less was not found to be systematic with income
diversified farms (EI>0.6393) than in more-diversified diversification. For example, between two different
farms (EI<0.6393). In comparison, the diversification of categories of households, the incidence of poverty was
income was higher in more-diversified farms of backward higher in backward category (around 5%) where the extent
category. The regression results for the determinants of of diversification of household income was more as
income diversification revealed that both the economic compared to developed category where the incidence of
variables like the size of operational holdings and tractor poverty was low (around 2%). Regarding constraints in
density as well as social variables such as family size and introducing new agricultural crops like vegetables,
educational status of the head of the family were the horticulture, pulses, oilseeds, lack of timely availability of
important determinants for explaining the process of inputs, lack of availability of labour, lack of marketing
income diversification in developed category, while family facilities, price fluctuation, lack of irrigation water and
size and dichotomous bullock were significant variables in lack of capital were found to be the important constraints.
backward category. Alternatively, the proportion of off- For diversifying to agricultural related enterprises like
farm income of the total household income was also taken poultry, bee-keeping, mushroom cultivation, fishing and
as a measure of rural diversification. The analysis rabbitory the lack of technical know-how, high initial
suggested that proper mix of both the economic factors investment, lack of credit facilities coupled with non
such as the number of fragments of holding, size of availability of quality inputs were the important
operational holdings, tractor density, extent of tenancy and constraints. For diversifying to non –agricultural
social factors like family size, age and educational status enterprises like starting flour mill, crusher and buying
of the head of family were found to be significant for productive assets like thresher the lack of credit facilities
explaining the process of off-farm income diversification and very high initial investment were reported to be the
in both the developed as well as in the backward category. important constraints. For buying assets threshers, the
A pioneer work has been done to examine the impact of seasonal demand for their services was also an important
diversification on income, consumption and poverty. In factor discouraging the household to buy them. Yet
this context, household income was highly diversified in another important factor is that in a particular village in a
backward category but the level of total household income particular season, limited number of threshers can do
in backward category was significantly lower as compared business on economically viable basis. The thesis has
to developed category where low level of diversification identified and analyzed the problem of rural diversification

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Mahajan Processes of Diversification of Rural Economy on Kangra Farms- a Pioneer Approach dealt for Doctoral
Research

and suggested solution to accelerate the process of Journal of Research in Formal, Applied and Natural
diversification in Kangra valley of Himachal Pradesh. Sciences, Vol. 5(1), pp:54-64
Specifically, the policy should be that emphasis on [7] Mahajan Girish (2014),” Dimensions, Effects, Determinants
and Constraints of Rural Diversification: Emiprical
diversification of rural economy shall yield no dividend
Evidences on Kangra Farms,” Journal of Renewable
unless efforts are made to improve the productivity of
Agriculture (Accepted for publication)
existing resources and also attended to problems like [8] Mahajan Girish (2018),” Diversification of Rural Economy-
technical know-how, marketing and credit facilities. A Review of Issues,” Amity Journal of Agribusiness, Vol.2
Original contribution to the solution of the research (2): 30-39
problem: [9] Vaidyanathan, A (1986) ,” Labour Use in Rural India: A
Study of Spatial and Temporal Variation,” Economic and
Diversification of agriculture is considered to have large Political Weekly, Vol. 21 (52)
potentialities of increasing income and employment and [10] Mehta, P. and Kumari ,A. (1986),” Farm size, Extent of
providing strength through reduced instabilities particular Poverty and Capital Formation in Himachal Pradesh,”:
under the situation of risk and capital constraints. One of Monograph, Department of Agricultural Economics, HPAU,
the objectives of the study is to analyze the relationship Palampur, (83)
between the magnitude of farm diversification and the
level of household income, consumption and the extent of
poverty. In the literature of non –farm diversification, the
level of wages is taken to be clinching evidence on the
nature of diversification. It is argued that a situation where
an increase in rural work force employed in rural non-farm
sector is accompanied by stagnant or low wages represent
distress diversification. We here take a slightly different
position and define the distress diversification as a
situation where high degree of diversification especially
income was associated with low level of household
income. The micro evidence at our disposal indicated that
high degree of diversification especially income was
associated with low level of household income. All other
findings of the thesis give a unique policy to accelerate the
process of rural diversification for the development of
rural sector.

REFERENCES
[1] Mahajan Girish (2003),” Dimensions and Determinants of
Diversification on Kangra Farms of Himachal Pradesh-An
Empirical Analysis,” Bangladesh Journal of Agricultural
Economics, Vol. XXVI (182), PP:1-22
[2] Mahajan, Girish (2004),” Crop Diversification: An
Empirical Analysis of Kangra Farms of Himachal Pradesh,”
Agricultural Economics Research Review, Vol. 17(2),
pp:199-217
[3] Mahajan Girish (2005),” Indicators od Development: A
Block Level Study in Kangra District of Himachal Pradesh,”
The Asian Economic Review, Vol. 47(1), pp:137-144
[4] Mahajan Girish (2009),” Diversification of Rural Economy:
Effect on Income Consumption and Poverty,” The Asian
Economic Review, Vol.(51(2), pp:270-289
[5] Mahajan Girish (2013),” Income Diversification in Hill
Farms- An Empirical Analysis,” Journal of Renewable
Agriculture, Vol. 1(5), pp:91-101
[6] Mahajan Girish (December,2013-February,2014),”
Constraints in Diversification of Rural Economy,” American

ISSN: 2456-1878 (Int. J. Environ. Agric. Biotech.)

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