Changing Rural Labour Markets and Rural Diversification

Rural diversification, which forms an essential part of rural transformation, has been an important growth strategy. It encompasses not only agricultural diversification but also diversification of income, employment and occupation within the entire rural sector. The nature and pattern of rural labour markets significantly affect the pace and pattern of rural diversification and inter alia labour markets also get transformed by rural diversification. If diversification is key, it is not only diversification in production, but also diversification within households, both because individuals undertake multiple jobs, and because different family members work in different activities, with a division of labour by gender and age. There seems to be a move away from the purely agricultural household towards more complex forms of household insertion in the labour market.

In India, agriculture is by far the most dominant activity in rural areas in most parts of the country. Over time, there is a trend of long-term contraction of agriculture in economy and the share of agriculture in the GDP has declined at a rapid rate from around close to 50 percent in early 1970s to only around 13 percent in 2019-20. However, the extent of diversification of the labour force away from agriculture is very limited and has only declined from around 74 percent in early 1970s to around 46 percent in 2019-20. This structural imbalance in the economy has led to the increasing burden of the population on agriculture and low productivity of agricultural workers. While there are large inter- regional variations in the levels of agricultural productivity and wages, they are invariably lower than rural non-agricultural wages and earnings. Low productivity is combined with increasing marginalization of small holdings and concentration of low incomes and poverty among the marginal and small farmers. This is one of the important factors behind the agrarian crises that India is currently witnessing.

There have been several other changes in rural sector in recent years. Due to mechanization the growth in demand for labour in agriculture has declined. At the same time some alternative agricultural technologies and practices like SRI, natural and organic farming, albeit in small way have emerged and there has been a shift in agricultural production towards horticulture, dairy, poultry etc. Rural non-farm employment has been growing consistently and non-farm employment has become a major or supplementary source of income for a considerable proportion of agricultural households. The structural shift within rural non-farm employment has been driven by construction, but transport and other services, albeit small, have also grown. However, almost all employment in agriculture and more than eighty percent of non-farm employment is informal in nature.

The link between rural and urban areas through migration, commuting and trade has strengthened over the years. Increased rural-urban connections, both physical and virtual, mean that the labour market is becoming more integrated across urban and rural spaces. It is important to study regional or district labour markets rather than distinct rural and urban labour markets. The increasing attainment of education among a large proportion of rural population, including women, has implications for labour markets. Women are still more engaged in agriculture and subsidiary activities. There has been changes in the labour market institutions as well. Although, mobilization of rural labour is limited, thanks to other developments and pubic interventions (i.e., migration from backward areas, MGNREGA etc.) the bargaining power of rural labour has somewhat increased. There is increasing tendency towards payment of wages by piece rate, or by contracted quantity of work, in place of daily rates, with uncertain implications for incomes of workers. The government interventions such as Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Rural Livelihood Missions, etc. have had profound impacts on rural areas.

All these mentioned above have considerably changed the rural landscape, both agriculture and non-agriculture sectors. It will be insightful to examine their implications and impacts on rural labour markets, rural diversification, and in fact rural transformation.

The following may be considered as indicative issues for prospective paper writers on this theme.

• How far has the process of rural diversification taken place in India? Whether or not rural diversification and in various states is related to agricultural growth? How far has crop diversification been instrumental in rural diversification?
• What role the development of rural industrialization plays in rural diversification? What are specific requirements of the non-farm enterprises so that these can be better integrated into policies and strategies at various levels?
• What are the demand side requirements for rural industries to succeed?
• What are the roles of various kinds of policies and programmes (credit, subsidies etc.) in the growth of rural industries?
• Given the growth of services in rural areas, how can development of services contribute to accelerating rural diversification?
• What are the implications and impacts of changing nature of rural labour markets on employment of workers – males, females and young?
• What are the implications of increasing mechanization of agriculture and emerging alternative technologies and practices on the labour market?
• What are the impacts of shift in agriculture towards high value crops and growth of dairying on labour markets?
• The majority of land holdings are small and marginal. Are such marginal and small holdings viable anymore?
• Is the shift from farm to non-farm activities indicative of higher productivity of the latter? If yes, what are the entry barriers and can it reduce gender and social group segmentation?
• How is rural labour market being impacted by links with urban areas (through migration, commuting, trade etc.)?
• What household labour market strategy is adopted to diversify economics activities and improve livelihoods and incomes?
• What are the gender implications of changing rural labour markets?
• What are the barriers that affect entry of female workers in non-farm employment?
• What are the implications of MGNREGA and other initiatives of the government for rural labour markets, including reducing gender and social groups discrimination in the labour market?
• What is the role of state and its agencies in accelerating the pace of rural diversification in various regions of India?
• What are the relevant international experiences from which India can draw suitable lessons?

These are only indicative topics and prospective paper writers may choose their own topics within the broad theme.