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India's Struggle with Agricultural Labor Dependency

Published: 11th Apr, 2024

Context

The recent report highlighting India's comparatively lower rate of transitioning its working-age population away from farm-related work compared to its neighboring countries has brought renewed attention to the longstanding issue of agricultural labor dependency in the country.

Key-highlights of the Report (the shift)
  • Report by: World Bank’s April South Asia Development Update report.
  • Time Period: 2000 to 2023
  • Crux: India has managed to move a smaller share of its working-age population away from farm-related work than many of its neighbours.
  • Bangladesh, Bhutan, Sri Lanka and Nepal managed to shift a bigger share of jobs to non-agricultural work than India.
  • Only Pakistan and the Maldives show a lower shift among South Asian peers.
  • The share of working-age Indians who are employed in agri-based jobs has come down over the years. This employment ratio for India was 63.9 per cent in 2000. It declined to 58.9 per cent by 2010; and further to 53.8 per cent in 2019. 
  • Since 2000, South Asian countries witnessed rising productivity but only marginally rising, or even declining, employment ratios.
  • Employment ratios fell in Bhutan, India, Maldives, and Nepal, while in Bangladesh, Pakistan, and Sri Lanka.
  • Men’s employment ratio in India declined by 9.6 percentage points. Most South Asian countries recorded a decline.
  • Women’s employment ratio in India increased by 1.4 percentage points. It was the highest for Bangladesh at 11.6 percentage points. The increased participation of women could be driven by rising self-employment among them driven by economic distress.
1: Dimension- Why the findings are concerning?
  • Growth challenges: The slower transition of India's working-age population from agriculture poses challenges for sustainable economic growth and inclusive development.
  • Distress: Both self-employment and agriculture constitute fallback options for workers who have lost work and cannot afford to remain unemployed.
  • Reduced earnings: More women serving the same market translated into increased competition and lower earnings.
  • Poor quality of jobs: Indian agricultural labourers mostly moved to other low-paying and informal jobs such as petty retailing, small eateries, domestic help, sanitation, security staffing, and transport.
  • Low-paid employment: The labour transfer is happening within the low-productivity informal economy. The jobs that are getting generated outside agriculture are mostly in low-paid services and construction.
2: Dimension- Required measures
  • Investment: India aims to reduce agriculture's 'self-exploitation' through non-farm jobs. This requires addressing problems with job laws, promoting direct benefit transfer, improving infrastructure and human capital, and reforming social security and labor codes.
  • Creating opportunities in non-agricultural sectors to uplift rural populations from the cycle of self-exploitation in agriculture.
  • Skill development of this workforce that is moving away from farms into other sectors is essential.
  • Gender disparities in employment trends underscore the need for targeted interventions to empower women in the workforce and unlock their potential contribution to India's economy.

Fact Box

Workforce Distribution

  • In 2021, 43.96 percent of the workforce in India were employed in agriculture. The remaining half was split nearly evenly between manufacturing and services sector.

Government Initiatives to Shift Farmers to Non-Agricultural Jobs

  • Skill Development Programs: Skill India Mission focus on providing vocational training and certification to enhance employability in diverse sectors.
  • Rural Employment Schemes: Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)
  • Promotion of Entrepreneurship: Startup India initiative
  • Investment in Rural Infrastructure: Pradhan Mantri Gram Sadak Yojana (PMGSY)
  • Industry-Focused Policies: Make in India, Digital India, and Startup India

UPSC PYQ

Q1: “Economic growth in the recent past has been led by increase in labour productivity.” Explain this statement. Suggest the growth pattern that will lead to creation of more jobs without compromising labour productivity. (UPSC 2022)

Q2: Normally countries shift from agriculture to industry and then later to services, but India shifted directly from agriculture to services. What are the reasons for the huge growth of services vis-a-vis industry in the country? Can India become a developed country without a strong industrial base?  (UPSC 2014)

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