IMPORTANCE OF RURAL NON FARM SECTOR

The residual sector hypothesis by Vaidyanathan expounds that when agricultural surplus labour is not been able to get absorbed by urban industrial sector RNFS acts as a sponge for this surplus labour. Rural India is thereby witnessing a transition.

1. Employment growth in the farm sector is not the same as employment growth in general. Rural industrialization has the capacity to absorb labour surplus in farms and also set a chain of other related peripheral employment opportunities.
2. The rural urban migration that puts stress on cities is likely to get reduced if RNFS is harnessed and the income gaps between India and Bharat can be lowered to a certain degree.
3. The nature of rural industry will be labour industry which can save jobs for rural population.
4. Further, Nonfarm activities do not get affected by crop failure and droughts.
5. It is in this context an alternative employment opportunity is the need of the hour.