Modern economic development has been associated with a shift of population from the countryside to industry and services in the towns and cities. To be sure, this shift occurred during the six decades since Independence, but it has been uneven with long periods of stasis followed by a quickening pace and now a movement back from factories to the farms in rural India. The government’s periodic labour force surveys show a substantial increase in employment in agriculture from 44% of total employment in 2017-18 to 45.8% in 2022-23. This amounts to a massive increase of 68 million going back to agriculture. India thus remains one of the few examples left in the world of an enormous population still largely dependent on agriculture as less than half of the workforce still lives off the land.
This reversal has serious implications for living standards in the countryside and merits policy intervention that perhaps goes against the grain of modern economic development as has been hinted at in the latest Economic Survey. The survey findings of Global Development Incubator’s report, “State of Rural Youth Employment 2024”, offer interesting insights in this regard. Around 70-85% of surveyed individuals wish to be employed in small manufacturing, retail, or business sectors. Despite the disenchantment with agriculture, a “significant 60% of rural male youth” also do not want to migrate outside their villages for work. This is an important finding that assumes significance against the backdrop of large numbers of people returning to the countryside due to the inadequate employment opportunities in industry and services in the organised or formal sector. In this milieu, getting gainfully absorbed in the unorganised or informal sector, which includes self-employment and casual odd jobbing, is relatively constrained as this sector has still not fully recovered from the shocks like demonetisation in November 2016, the introduction of a goods and services tax, and lockdown to battle Covid-19 that triggered reverse migration.
The policy imperative clearly is for generating more rural non-farm employment. The chief economic advisor, V Anantha Nageswaran, who spoke at the launch of the report, said that “pessimism” on India’s employment was not warranted. The Survey in fact was more forthcoming that “India may have to abandon the old development playbook of moving on from agriculture to industry and services as economic development matures”. Far from fading away in relative importance, agriculture is still important not just as an engine of growth but also employment. In this milieu, an alternative policy imagination could consider the possibility of making small-scale agriculture more productive and remunerative.
As farming at the margin is getting more unviable, targeted interventions can enable small farmers to diversify from cultivating cereals to growing more fruits and vegetables, fisheries, poultry, dairy, and buffalo meat to improve their incomes manifold. Stepping up transfers to small and marginal farmers under the flagship Pradhan Mantri Kisan Samman Nidhi can also bolster their incomes to cope with the uncertainties of cultivation due to climate change. As differentials between country and town narrow, there will be no compulsion to shift from agriculture. The Survey points to an intermediate farm-to-factory transition by encouraging more agro-processing activities, which can gainfully employ the rural youth who prefer to remain in their villages. Realising the employment potential of the countryside thus makes more sense instead of viewing development only as a movement away from agriculture.