This micro-level study of income and consumption patterns in southern Karnataka reveals that farm activities constitute the main source of income in both progressive and less progressive areas; non-farm and off-farm activity (agricultural labour) contribute only a negligible portion. During the slack agricultural season, smallholders and rain-fed households in progressive areas depend on rural non-farm activities through non-agricultural labour; in less progressive areas, house rent contributes most of the non-farm income of all farmer categories. The percentage of spending on various items varied by farmer category. In both areas, expenditure on non-food items rose with an increase in income. The expenditure on non-food consumption differed; therefore, the inequality in income distribution was less than in consumption expenditure. The income and expenditure inequality is higher in less progressive areas.
