Innovations in various production methods, markets and related activities are important drivers of agricultural growth and the advancement of its inclusivity. The study was conducted to examine the impact of farmer-led innovations in Northern India in improving the welfare of farming households. The study was carried out in the states of Haryana and Punjab in 2020–21, as these two states were linked to the most creative dairy producers in India. Two districts were randomly chosen from each state. A total of 360 persons from two districts were included in the study's sample size, which was made up of 20 members of the public and private research and development sectors and 70 dairy farmers from each district. The Economic Substance Regulation (ESR) model's expected household incomes were used to compute the treatment impacts of farmer-led innovations on household income. The findings of the study reveal that farmer-led innovation has a positive and statistically significant influence on innovating households' household income. Farmers-led innovation raises per adult equivalent household income of innovators by around 8 per cent, and this effect is statistically significant. This finding backs with farmers' subjective reports of their inventions' good income effects. According to the Average Treatment on Treated (ATT) findings, agricultural innovators boosted their consumer expenditure per Aggregate Expenditure (AE) by roughly 6% as a result of their innovations. This favourable consumption effect could be attributed to the anticipated revenue rise or cost reduction of farmer-led innovations. This also implies that the previously established favourable income impacts of farmer-led innovation translate into greater household spending.