rural non farming

Topics: Employment, Infrastructure, States and territories of India Pages: 67 (22199 words) Published: August 19, 2014

Brajesh Jha

Agricultural Economics Unit
Institute of Economic Growth
University Enclave, Delhi-110007
Gram: Growth-110007 Phones: 91-11-27667101, 27667288, 27667365 Fax: 91-11-27667410 E-mail: Website:

Towards the end of the 1990s, the incidence of unemployment on the basis of CDS (current daily status) has exceeded seven per cent. There are also evidences of deterioration in the quality of rural employment; casualization of rural workers for instance, has increased many-fold. Real wages of rural workers however, increased and the disparity in rural and urban wages also reduced during the 90s. In this context, the present study investigates the nature and pattern of rural diversification in India. The study uses the NSS quinquennial survey on employment to present macro-trends in rural employment; it also utilizes selected information collected by Agro-Economic Research Centres (AERCs) to arrive at certain inferences about the process of rural diversification. Disaggregate level figures shows that both push-and-pull factors have contributed to rural non-farm employment growth; the process of rural diversification in such situations is however, different. The study finally discusses broad strategies to increase rural non-farm employment in the country.

The Indian economy grew at an impressive rate in the last decade and demographic pressure also slowed.1 Yet, the incidence of unemployment (CDS) towards the end of the 1990s was more than seven percent. The situation is especially disconcerting in the rural sector. Employment in rural sector, which is associated mostly with agriculture, has stagnated during the 90s (Jha 2006). Considering the increased pressure on land there exists limited scope for increasing employment in agriculture so that employment in the non-farm sector becomes an important option

* The author is grateful to Prof. B. N. Goldar and Prof. Arup Mitra for their comments on an earlier draft of the paper. Author is also grateful to Dr Sakthivel for parting with some data on employment. 1

Though the rate of growth of the economy varies depending on the choice of base year and other factors, most of the study finds growth in the economy during the decades of 1990s at around 6 per cent.


Studies also suggest that with the process of development, the share of non-farm income and employment in the total income and employment of the rural households increases in the developing countries.2 A combination of farm and non-farm income at the household level provides resilience against adverse situations in either of the sectors, though agriculture is known for more frequent adversity. There are also evidences to show that productivity and profitability in the non-farm sector is generally higher than in the farm sector; as are the average wages and working conditions that obtain in the non-farm sector (Fisher et al. 1998). A greater reliance on the non-farm sector would therefore provide a demand-pull to rural economy and also ensure welfare for rural workers. In India, economic opportunities in the non-farm sectorhave also increased.3 A comparative account of the non-farm sector in the rural vis-à-vis the urban sector however, shows significant disparity in terms of its size and growth.4 The lopsided nature of growth of the non-farm sector is causing a problem of rural - urban migration. The small base of the rural non-farm sector located within a large rural population is in fact indicative of the employment









of employment growth as per its potential may require a more favourable policy environment; and the present study attempts to search for these policy options....

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