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Non-Farm Sector for Employment Generation

What are the challenges faced by rural farmers?

1. In India, with low transition of workforce and complex land laws for agriculture, small and marginal farmers dominate rural economy.

2. Income from agriculture (cultivation and livestock) is not enough for their livelihood.

3. More than 1/3rd of rural poor are farmers.

4. They require adequate off-farm income opportunities in their vicinity for which growth of productive employment in rural non-farm sector is important.

Where does the status of employment of rural workforce stand?

1. There is a steep fall in share of agriculture in rural workforce after 1990s.

2. Manufacturing has been the most important of non-agricultural sectors traditionally; but its share has declined recently in both rural and urban sector.

3. Construction is now the largest employing industry of rural workers and its share has been increasing since 1990s.

4. Employment in construction has been influenced by factors such as policy of extending basic infrastructure like roads, growth of population and specific economic policies.

5. Services have also been important in urban areas and consist of community-social-personal services (CSPS) which are largely under public domain.

6. Government's emphasis on social overhead may increase employment in CSPS.

7. The increased investment in infrastructure may increase quality of real estate and consequently employment which will have multiplier effects on growth of business services.

8. Transport storage and communication is another sector which has registered an increased share in rural development.

9. Employment in these sectors are influenced with the increase of investment in infrastructure like roads.

10. Employment in trade, hotels and restaurant sector continues to increase and was low in mining and utilities.

11. Importance of utilities in rural sector has increased in recent years with decreasing and degrading natural resources.

12. Women constitute about 30% of rural workforce and bulk of them are in agriculture.

13. There is significantly high level (1/3rd) of disguised unemployment among female workers in rural sector.

How can Rural Non-Farm Sector (RNFS) impact employment status?

1. RNFS consists of several heterogenous industries and employment growth in each of these industries is influenced by a host of separate factors.

2. These can be grouped as development or distress-related factors of growth.

3. In many development related factors, productivity-led growth in agriculture has been the most important.

4. In a situation where labour absorptive capacity of agriculture becomes limited and urban industrial sector is not able to accommodate ever-growing labour force, the RFNS tends to act as a sponge for surplus labour.

5. Development induced growth of RNFS results in increase of wages of workers and this must be targeted for betterment of rural workers.

6. In dearth of development induced growth of RNFS, a significant proportion of rural non-farm labour remains poor.

Which are the areas to be focussed?

1. Productivity growth in agriculture, manufacturing and tourism are important to trigger growth of productive employment in rural India.

2. Though there have been numerous public institutions to encourage rural manufacturing, the gap between productivity of manufacturing in the rural and urban sector continues to widen.

3. There is need for sufficient incentives to encourage manufacturing in rural vicinity such as common facility centres, cheap electricity.

4. Rural industrialization must adopt a cluster-based approach wherein large and medium size enterprises based on local resources are linked with the micro-small enterprises.

5. A robust growth of rural manufacturing requires massive investments in skill formation and entrepreneurship development.

6. Better implementation of MNREGS will also affect positively the other sectors of economy.