Rural non-farm employment in India: macro-trends, micro-evidences and policy options

Towards the end of the 1990s, the incidence of unemployment on the basis of CDS (current daily status) exceeded seven per cent. There are also evidences of deterioration in the quality of rural employment; casualization of rural workers for instance, increased many-fold. Real wages of rural workers however, increased and the disparity in rural and urban wages also reduced during the 90s.

In this context, this study investigates the nature and pattern of rural diversification in India. The study uses the NSS quinquennial survey on employment to present macro-trends in rural employment; it also utilizes selected information collected by Agro-Economic Research Centres (AERCs) to arrive at the following inferences about the process of rural diversification.

Though rural manufacturing is the most important industrial category in the non-farm sector, employment growth in it decelerated during the 90s.
There are also evidences of manufacturing activities shifting away from the rural to urban sector in the country
Though the quality of rural employment has deteriorated, casualization of rural workers also increased.
Real wages for rural workers increased consistently and disparity in the rural urban wages also reduced towards the end of 90s
Infrastructure has emerged as more important during the 90s

Disaggregate level figures shows that both push-and-pull factors have contributed to rural non-farm employment growth; the process of rural diversification in such situations is however, different. The study finally discusses broad strategies to increase rural non-farm employment in the country.

The study concludes by arguing that growth in agriculture and manufacturing is important for a broad-based growth of development-induced diversification in the country. Furthermore, in direct measures of employment, the rural works programmes are important for at least three reasons namely, increased marginalization of agriculture land, increased seasonality of employment and the importance of public goods in the rural sector.

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Rural non-farm employment in India: macro-trends, micro-evidences and policy options