Although employment in general has been a major failure of the
macroeconomic policies of the past decade, the decline in employment
generation in agriculture is probably more startling. The Census of India
2001 and the 55th Round of the NSS, both show a dramatic
slowdown (and in some states, actual decline) of employment in
agriculture.
The NSS data suggest that the employment elasticity of agricultural output
(the rate of change of employment per unit change of GDP in agriculture)
has fallen from 0.7 in the period 1987–88 to 1993–94, to only 0.1 in the
period 1993–94 to 1999–2000. This sharp fall means that the employment
elasticity is among the lowest yet observed in Indian agriculture since
such data began to be collected.
Chart 1 gives some indication of the evidence from the NSS. Employment
growth rates are provided for the periods 1987–88 to 1993–94 (hereafter
the first period) and 1993–94 to 1999–2000 (hereafter the second period),
using the 56th Round survey results according to various
definitions and superimposing them on Census population figures. Note that
these reflect people employed rather than actual work, since there is no
real estimate of days/hours worked.
Chart 1
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The chart shows a very substantial decline of employment by all
indicators, to rates that are far below those of growth of population over
these periods. The usual status definition, which refers to what a person
usually does over the year in question, can be interpreted as a stock
measure of employment. Both in terms of principal activity and principal
plus subsidiary activities, there is evidence of very significant falls in
employment growth.
But there are even sharper falls, by the 'flows' definitions, of weekly
and daily status employment growth, suggesting that even for those who saw
themselves as usually employed, there were difficulties in getting jobs on
a weekly or daily basis.
Furthermore, the data indicate that the sharpest fall has been in the
number of those classified as 'self-employed' in agriculture, which has
actually exhibited an absolute overall decline. This means that the number
of persons working on household-operated holdings has gone down.
What explains this sharp fall in agricultural employment growth? A wide
range of explanations and associated interpretations have been offered. A
common explanation hinges on the expansion of the non-agricultural sector
in rural areas. According to this argument, labour has been moving out of
agriculture in the standard way predicted by the Lewis model, without
affecting productivity in agriculture because of the prevalence of
disguised unemployment in agriculture. This means that the tendency is a
wholly positive one, reflecting acceleration of growth and development.
The problem with this argument is that while non-agricultural employment
has indeed increased as a share of population, the increase is nowhere
near enough to explain the dramatic decline in agricultural employment
generation. In fact, both the increasing role of education for the younger
age cohort and the apparent increase in non-agricultural employment
growth, are inadequate to counterbalance the sharply decelerating growth
in agricultural employment.
So much so that not all the increase in such employment may be the result
of positive pull factors. Rather, several observers have described at
least some of the increased non-agricultural employment as possibly
reflecting a distress phenomenon (or 'push' process), with rural residents
desperately searching for any jobs that are available or whatever can be
described as work.
Another explanation has to do with changes in technological and cropping
patterns that have reduced labour demand in agriculture. These factors may
certainly have played an important role. Much of the more recent
technological change in Indian agriculture has taken the form of
mechanization that is labour-saving. Indeed, the rate of labour-saving
mechanization appears to have increased over the past decade, and this has
both reduced labour demand and made smaller farmers relatively worse off.
Similarly, cropping-pattern changes are also likely to have played a role
because even while they can have divergent effects, the general thrust of
such shifts (especially towards horticulture and floriculture at the
margin in some areas) may be said to have reduced demand for labour.
An additional, and important, reason for the slowdown in employment
generation and the large fall in employment elasticity of agricultural
output growth may have to do with the pattern of land relations in rural
India. It is now clear that this period witnessed a significant degree of
concentration in terms of operated holdings, which reflected changes in
both ownership and tenancy patterns. Many small and very marginal peasants
lost their land during this period, and have therefore been forced to look
for work as landless labourers; micro-level surveys have reported
increasing leasing-in by large farmers from small landowners.
This is indicated, on an all-India level, in Chart 2. There has been a
steep increase in landless households as a percentage of total rural
households, from around 35 per cent in 1987–88 to as much as 41 per cent
in 1999–2000.
Chart 2
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It is well known that, for various reasons, persons occupying small
holdings tend to use land and labour more intensively than those with
larger farms, to achieve higher per land unit productivity. Typically,
this means that they employ more household members at least in some
agricultural work, whether it be principal or subsidiary activity. If
those who previously occupied land are now effectively dispossessed and
are forced to hire themselves out as wage labour, the chances are low of a
similar level of household employment being achieved.
