India’s labour force and national income data

NSSO’s latest annual Periodic Labour Force Survey (PLFS) report for 2021-22 (July-June) has been released recently.

Key highlights:

• The report underlines that the agricultural sector employs 45% of the nation’s labour force. 
• Though this figure is less from the 46.5% in 2020-21, but still on the higher note than in 2018-19, which was as low as 42.5%. 
• It is obvious that the pandemic's economic impacts, which compelled a reverse exodus to the farms, haven't completely subsided.
• The share of labour force employed in agriculture fell from 64.6% in 1993-94 to 42.5% in 2018-19. 
• The biggest decline, from 58.5% to 48.9%, happened between 2004-05 and 2011-12. 
• The rate of decline in the employment share of agriculture after 2011–12 has moderated, and after 2018–19, it actually increased. 

Reasons for shifting trend:

• High value-addition: agriculture is able to employ such large chunks of people primarily because of high value addition; 
• Eg. The sector’s share in terms of value-added or GVA is as high as 19%. . 
• Low value addition in Manufacturing:  Manufacturing has low value addition when compared to the agriculture sector 
• Eg. Manufacturing had a 35.4% overall proportion of GVO but only a 15.8% relative share of GVA.
• Service sector driven growth: Indian economic growth is driven towards the service sector, which requires high skills. 
• Eg. Service sector is the biggest contributor to the GDP but employs less than 30%. 
• Skills development: Indian labour is not skilled enough to meet modern industrial needs. The employment options for workers with lower skill levels are limited.
• MSME under stress: Compared to large companies, MSME have a four times higher labour intensity. But they deal with numerous issues like credit crunch etc.

Way forward:

• Boosting labour intensive sectors: Labour-intensive industries should be supported, such as those in the food processing business, the leather industry, the garment industry, the electronics industry, the gem and jewellery industry, the financial services industry, and the tourism industry.
• Building up MSME: The MSME sector needs to be supported and developed. Regulation easing and financial aid are helpful. Priority should also be given to easy credit availability. MUDRA could lead to the creation of necessary jobs in India.
• Skill development: various government schemes like Pradhan Mantri Kaushal Vikas Yojana  should be implemented in letter and spirit
• Labour reforms: Reforming the labour market requires changing the strict labour laws that currently exist. In a nation where labour is in plentiful supply, corporations in India favour capital-intensive modes of production.