Agricultural sector’s growing ineptness at providing wage employment is forcing rural households into non-agricultural activities

jeemolBy Jeemol Unni*

Of late, the contextual relevance of the term ‘rural’ has shifted from mere geographical space to epitomize the marginalized and the disenfranchised. While dissolving boundaries continues to stimulate greater interactivity between “urban” and “rural” it is also time for a reality check. The truth is this: the non-farm sector has been rising even as agricultural productivity continues to sink under its own weight.

The reasons for this are many. Rising agricultural wages, declining public sector investments and a sliding central and state budgetary share to the rural sector are some of the main offenders. Other culprits include the lack of a significant breakthrough relevant to agricultural productivity since the hallowed days of the Green Revolution, not to mention briskly depleting groundwater resources.

Growing urbanization has taken a toll of rural incomes and employment opportunities. Dependence on wage labour has gone up owing to the agricultural sector’s growing ineptness at providing wage employment forcing rural households into non-agricultural activities. Rural households – deriving their incomes from wage labour – swelled from 30 percent in 1974-75 to 40 percent in 2009-10 while agricultural labour households remained stagnant at 25 percent.

A bulge in wage dependence hardly bodes well for rural households starved of livelihood options, not to mention adequate number of wage employment days. The number of unemployed days, showing a declining trend in the previous decades, has hiked since 1993-94.

Is there a silver lining in these dark clouds? Perhaps. The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), collective organizations, and panchayats provide a partial solution. Prior to 2006 India had no programme in place that guaranteed employment as a legal right even though employment generation via rural works goes back as far as the 1960s. Ever since the introduction of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2006, overall daily wages have evinced a rise.

In 2009-10, 34.7 percent rural households had MGNREGS job cards, which is lower than the percentage of rural labour households (40 percent). The average number of days worked was 37 days, which is far lower than the guaranteed 100 days per household. Yet the MGNREGA still holds out a beacon of hope. Besides, employment, this programme has brought funds and devolved power for the use of it to the village level. Even the villages of UP now have closed drainage, water and sanitation to a large extent.

According to National Sample Survey Organisation (NSSO), person-days in casual labour on public work constituted only 1 percent (male and female) of all casual labour person-days in 1999-00 and 2004-05 in the rural sector. Post MGNREGA this figure climbed to 2.7 percent for male and 5.2 percent for female casual workers in 2009-10. The programme, well-intentioned as it is, could well become a tool for employment generation utilizing skill training (or upgrades) in the context of assessed demand. Skill training on MNREGA’s part could help workers move onto the next level of their professional development and improve their livelihoods.

Other employment generation tools could come about through collective representation, a shining example of which is AMUL. A positive sign in agriculture is the marginal and small farmers having diversified into growing vegetables, livestock, cattle, buffaloes, sheep and goat and poultry. Collectivisation through cooperatives and producers organisations could further improve their bargaining power. Another example includes the self-help group (SHG)-bank linkage programme launched by NABARD in 1992-93, which facilitated the growth of a women-led SHG movement. Many of these SHGs (self help groups) have federated to derive benefits of economies of scale and acquire large funds from banks to facilitate lending to the poor.

It has been noticed that wherever women have been at the forefront after having been empowered financially and administratively in village panchayats, evidence exists of better outcomes in health, education, water and sanitation, and forest management. The rising proportion of rural labour households remains a concern, no doubt. But this concern may be addressed with the generation of productive employment through the development of rural institutions. This fact alone, perhaps, can save the day for rural labour.

*Jeemol Unni is Professor of Economics and Director of Institute of Rural Management, Anand. Courtesy:

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