Rural Unemployment & Agriculture

India, essentially is a rural nation where agriculture, horticulture, handicraft, fisheries, poultry and dairy are the major contribution to the rural economy.Yet the contributions of agriculture has been dwindling, creating a space for inequities.Here, unemployment is mainly due to the shortage of capital, the poor exploitation of natural resources and inadequate employment opportunities.The main issue lies in the character of the job as agriculture is dependent upon the benevolence of nature.It is the rain that makes the sector thrive and unfortunately India has rains last for only 3-4 months.In addition,it is a labour – intensive job, whereas in the present era,no one prefers to toil throughout the year. Naturally,there has been a major shift in dependency on agriculture as their main source of income.From 60%,it is constantly reducing owing to problems like price fluctuations, draught,flood, pest and diseases outbreak etc,which brings uncertainty income. Agriculture in Indian context is a seasonal occupation and there is always a heavy demand for labour at the time of sowing, wedding and harvesting whereas in slack season demand for labour falls considerably.In rained agriculture, farmersremain unemployed for four to six months in a year.Because of illiteracy, poverty and poor health,they are unable to avail some alternative employment opportunity during this period.India should urgently look at comprehensive reforms to make agriculture a sustainable and scalable industry. Where does India’s agriculture stand now? The country has made big stride in agriculture post liberalization, the yield has increased and is the third largest producer by value. However the sector realize only 50 to 60% of its potential. Price realization is affected by the APMC(Agricultural Produce Market Committee)Act and middlemen. In rural India, sowing season is nearing end. The rural unemployment rate climbed to 7.1% in the week ended 19 July 2020 to 6.34% recorded in the previous week, according to fresh data from Centre for Monitoring Indian Economy (CMIE).This is still below the figure for the week before India went to lockdown on 25th March but economists feel it will see a gradual climb in the coming weeks and July may not see job creation picking up much. Overall national unemployment also inched up to 7.94% in the week ended 19 July from 7.44%, the previous week.
However urban employment remains the bigger concern, as it continues to stay high and its decline has been slower. The urban joblessness rate come down marginally to 9.78% from 9.92% during the same period, according to CMIE, reflecting the stubborn formal sector jobs space that is directly influenced by the existing business environment, which is improving very slowly.Economists and experts said, labor market will see tougher challenge over the next couple of months both in the rural areas and urban pockets. Monsoon is expected to pick up in parts of India bringing along with it natural calamities such as floods, which will restrict activities in the agriculture sector and partially limit low-end self-employment activities. India’s rural unemployment rate has started moving upward with the summer crop sowing season drawing to an end. Except for few crops (rice, wheat) and a few states ( Punjab, Haryana, Andhra Pradesh) the selling price for the farmers is 15-50% below Minimum Support Price(MSP).The sowing season is nearing completion and strain in the rural labor market will be visible in the coming weeks. How can farming be made a sustainable occupation? The agriculture sector employs over 52% of the workforce contributing to only 14% of the GDP. Incomes have been stagnant over the last decades with the average worker earning less than 60-70% of the income of their counterparts in the city. As in urban areas witnessing sporadic lockdown to contain the spread of novel coronavirus, the slow reopening of business will limit the faster recovery that the country saw in June. With labor moving to rural India and depressed consumer demand income could drop about 10-20%. Agriculture and food processing GDP contribution has to rise to close to 20% while surplus labor needs to be deployed in manufacturing and food processing.However the country’s food processing value addition at the moment is less than 10% of the produce while for most developed economies there is 100 to 300%. The sector needs to grow at 5% per annum which is double the historical growth.
How do we ensure adequate remuneration for farmers? Increasing remuneration via MSP has drawbacks. It couldn’t be enforced beyond three states and it triggered food inflation and macroeconomic instability. The center and states must devise a strategy for the growth of non-farm sector in rural India which can help absorb people in decent jobs. The slow recovery of business and urge tomeet cost by employers for survival has a direct impact on rural employment. Farmers with a good land holding are doing fine but people who don’t have enough land or workplace as daily wagers are in real trouble. The lack of cash in hand is a problem and this will prompt people to go back to urban areas again despite the bad living condition there. This is where non-farm activities and white color jobs in regional level will be of help. The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) is helpful but may not be able to take pressure off and absorb all the people during the rainy season, who were earlier largely deployed in agricultural activities.CMIE data shows that rural employment scenario is much better in recent weeks but “we must take note that a higher labor force participation “rate in agriculture means, only a marginal growth in productivity of labor. Immediate income growth is not there. There are other ways: increased price realization for the farmers so that they get most of the consumer surplus and use of technology and supply aggregation platforms for storage, logistics and better price discovery. There is potential to create a segment of processed and branded food to increase farmers’ income. The country should follow a five point agenda reforms: focus on sustainable yield improvements through scientific farming practices; improve agricultural marketing to increase farmer’s price realization through policy changes; set up an Integrated Agriculture Export Mission to scale up food processing and exports to increase value addition from 10% to 50%; promote direct marketing through farmer producer Organization; and seriously work on reforms in the agriculture sector.