People's Democracy

Why Is Agricultural Employment Generation Falling?

  Jayati Ghosh

WHILE employment in general has been a major failure of the macroeconomic policies of the past decade, the decline in agricultural employment generation has probably been the most startling. The growth of agricultural employment by usual status fell from 2.08 per cent per year in the period 1987-88 to 1993-94, to only 0.8 per cent over 1993-94 to 1999-2000. In terms of daily status, the fall was even sharper, from 2.47 per cent to 0.14 per cent.

The really sharp fall has been in the number of those classified as “self-employed” in agriculture, that is those working on household operated holdings.

DECLINE IN AGRICULTURAL EMPLOYMENT

What explains this? One explanation hinges on the expansion of the non-agricultural sector in rural areas. According to this argument, labour has been moving out of agriculture because of greater demand for labour in other sectors. But this explanation is not good enough, because in fact the increase in non-agricultural work has been much less than the decline in agricultural employment. In fact, at least some of this increase in non-agricultural employment might simply be because rural residents are desperately searching for any job that can be had.

Another explanation has to do with technological and cropping pattern changes that have reduced labour demand in agriculture. These factors have been important. Recently, there has been an increase in mechanisation of Indian agriculture, that is labour-saving in nature and so reduces labour demand. Also, the general thrust of the cropping pattern shifts (especially towards horticulture and floriculture at the margin in some areas) may be said to have reduced demand for labour.

But there is one other factor to be considered - the pattern of land relations in rural India. It is now clear that this period witnessed a significant degree of concentration in terms of operated holdings, which reflected changes in both ownership and tenancy patterns. Many small and very marginal peasants have lost their land over this period, and therefore been forced to search for work as landless labourers. Surveys also report increased leasing-in by large farmers from small landowners. There has been a very large increase in landless households as a percentage of total rural households at the All-India level, from around 35 per cent in 1987-88 to as much as 41 per cent in 1999-2000.

It is well known that, for various reasons, those occupying small holdings tend to intensively use land and labour to achieve higher per land unit productivity than larger farms. Typically this means that they will be employing more household members at least in some agricultural work. If those who previously occupied some land are now effectively dispossessed and are forced to hire themselves out as wage labour, they are less likely to get similar levels of household employment.

In other words, when a particular plot of land is occupied by small and marginal peasants working on household farms, it is likely to show higher use of labour than when that same plot is taken over by a large farmer using hired labour. Not all of this may be disguised unemployment, since the fact that small/marginal cultivators also use other non-land inputs more intensively suggests that they would use this additional labour to increase per hectare productivity.

Therefore, increasing landlessness (even in terms of occupancy holdings) of the rural population, may also lead to less employment generation in agriculture.

INCREASE IN PROPORTION OF LANDLESS POPULATION

The question then remains, why has the proportion of landless population increased so substantially over these two periods? This may be because of changes that have adversely affected small farmers in rural India over this period.

One of the more crucial changes has been the virtual collapse of formal rural credit, especially for small cultivators. This reduced availability of credit has very severe implications especially for small farmers. A number of input costs have also increased, as fertiliser subsidies have been reduced, and as water rates and other user charges have gone up.

In addition, there is some evidence that although real wage growth slowed down substantially during the nineties, real wage rates continued to increase in most parts of the country. Since the seasonality of agricultural operations means that most cultivators, whatever the size of holding, need to hire in some labour during peak seasons, this raised costs and made hiring out labour more worthwhile than working on own operated land in peak seasons.

The process of trade liberalisation has meant that domestic agricultural prices have less relation to domestic demand and supply conditions and instead follow world prices. This means that even when the harvest is lower or there are crop failures, cultivators do not get any recompense in terms of higher prices.

There is much greater use of a range of monetised inputs, including new varieties of seed and related inputs marketed by major multinational companies. Small cultivators, who have taken on debt (often from informal credit sources at very high rates of interest) in order to pay for these cash inputs, then find themselves in real difficulty if for some reason there is crop failure or output prices remain low.

All these could be reasons why the proportion of rural households that is not operating any land at all increased so much over these periods. This in turn would mean that there would be less people reporting themselves as self-employed in agriculture (which is what is observed) and a general reduction in employment generation because less people would be hired than had lost employment from own cultivation.

This aggregate pattern is reflected across most individual states, with some important exceptions. Greater landlessness is common to all states.  Similarly, the significant majority of states also show a pattern of substantially reduced agricultural employment growth. The extent of the deceleration varies from state to state but it is usually quite sharp.

OUTLIER STATES

Only three states show the opposite tendency in terms of agricultural employment – Haryana, Punjab and West Bengal. In the case of Haryana, this is not really of much significance because in both periods agricultural employment growth was negative. In Punjab, however, agricultural employment moved from a negative rate of –1.14 per cent to a positive rate of 1.47 per cent, which is the opposite of what occurred in most other parts of the country. But in Punjab the proportion of landless households remained broadly constant in the latter period, suggesting that the role of changing land relations would anyway be less.

West Bengal is the most interesting case. In West Bengal, there has been a significant increase in the landless population, from 39.6 per cent of rural households in 1987-88 to 49.8 per cent in 1999-2000. And yet agricultural employment accelerated, going from a negative rate of –0.36 per cent, to a positive rate of 0.54 per cent. This is clearly a process that deserves further examination. It is possible that cropping pattern changes in this state have been such as to induce greater labour use, and there may have been other changes in the countryside which have meant greater availability of work in agriculture.