Why policy on farm distress must include urbanisation-oriented actions

Updated: April 15, 2019 4:44:27 AM

Policy agenda on farmers’ distress must include urbanisation-oriented actions.

A scheme on a mission mode should be launched to implement spatial dispersal of economic activities across India

By KK Pandey

The political economy in India has not given due cognisance to the potential of urbanisation and associated expansion of income and employment in the non-farm sector to address farmers’ distress. A huge sum of Rs 2.3 trillion is extended to farmers under the typology of loan waivers and subsidies. Yet their agony continues. India will witness further increase in surplus workforce from agriculture, as it cannot gainfully accommodate the current size of rural population.

India ignored the potential of urbanisation commensurate to the requirements caused by structural transformation. The ministry of urban development was created only in 1985. Unlike India, urbanisation and development have followed the process of structural transformation across the world. Upper-middle and high-income countries with more than 80% urbanisation levels show 97% GDP from non-farm sector accommodating 83-99% workforce in 2017.

India is facing structural transformation without giving due attention to urbanisation and supplementary development of manufacturing and services. GDP from agriculture has declined at a far faster rate than size of workforce (56% in 1951 to 14% in 2011 and 69% to 43%, respectively). The size of 82% landholdings is less than one hectare, leading to fairly low income to small landowners. The share of landless labourers has gone up from 28% to 55% from 1951-2011. Marginal workers constitute 25% of the total workforce. This imbalance in the job market, resources and divide in rural-urban productivity causes stress among farmers.

Urbanisation should trigger non-farm sector to absorb landless labourers, small farmers and marginal workers for a reasonable access to income and employment. But there is a diagonal divide in the level of urbanisation. A large part of central and eastern India is below the national average of urbanisation and national income. More than 50% of non-farm, non-corporate sector enterprises are located in five states (Tamil Nadu, UP, Maharashtra, Karnataka and West Bengal). Urbanisation is also showing intra-urban divide in terms of concentration of 60%-plus population among top 394 towns, whereas nearly 7,000 small and medium towns (20,000-50,000 population) have untapped competitive edge and demographic dividend for expansion of non-farm sector. The policy agenda on farmers’ distress should, thus, include urbanisation-oriented actions. We need to ponder how to expand non-farm sector, which are the locations and what actions are needed?

First, promote spatial dispersal of economic activities containing a balanced development of urban centres across India. The Deen Dayal Antyodaya Yojana-National Urban Livelihoods Mission (NULM) aims to expand non-farm sector, yet is not covering census towns and lacks regional angle. NULM and MSME ministry should prepare time-bound programmes to harness economic potential in the vicinity of 7,000 towns to promote non-farm sector on the basis of local skills, traditional base and agro-based manufacturing.

Second, 3,892 census towns who have undergone structural transformation from farm to non-farm sector in their economic charter (over 75% not-farm sector employment) should be accorded status of statutory towns to be a part of urban planning and local economic activities as above. Third, the 7,000 municipal governments must do rural mapping in the hinterland to identify traditional skills to develop micro enterprises. Fourth, potential census towns from the preliminary survey of census 2021 should be identified and included in the plan for spatial dispersal of economic activities. Fifth, education and health facilities in small and medium towns are essential components to capture demographic dividend/competitive edge from the hinterland.

Finally, a separate scheme on a mission mode should be launched to implement spatial dispersal of economic activities with a particular focus on small and medium towns including census towns, aspirational districts of NITI Aayog, and surplus workforce from structural transformation.

(The author is professor, Indian Institute of Public Administration)

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