Author: cprindia

The recently released periodic labour force survey (PLFS) for 2019-20 brings to the fore a worrying truth about the Indian economy – an increasing trend in the number of people employed in agriculture. Worryingly the share of workers employed in manufacturing, construction and even some services contracted.

The latest PLFS data suggests that rather induce a transition out of agriculture in to manufacturing, the typical pathway to structural transformation and a process that was all too slow in India to begin with, the Indian economy is now restructuring such that agriculture is emerging as the primary driver of job growth. To put this in perspective, consider the following: Between 2018-2020, India’s total employed labour force went up from 380.57 million in 2018-19 to 426.75 million in 2019-20. Of this, an additional 46.18 million jobs, as many as 32.72 million or 70.9% were created in agriculture. The number of manufacturing and construction workers increased by a mere 1.65 million and 3.58 million, respectively, in 2019-20. What does this mean for the future of agriculture and the economy more broadly?

Unpacking trends

Consider the following facts.

First, labour force participation rate or LFPR. This is defined as the ratio of the country’s labour force, whether employed or unemployed, to its total population. As Chart 1 reveals there has been a significant increase in the LFPR, from 36.9% in 2017-18 and 37.5% in 2018-19 to 40.1% in the 2019-20 PLFS. However, this jump is perceptibly higher for rural than urban India.

Note: Rates are based on usual (principal+subsidiary) economic status during the preceding 365-days reference period.

Second worker population ratio or WPR. This is the percentage of the country’s population that is actually employed. The WPR, too, has gone up significantly in 2019-20; again this is on account of rising employment in rural India.

Note: Rates are based on usual (principal+subsidiary) economic status during the preceding 365-days reference period.

With the percentage of employed persons in the population rising, it is natural to also expect a corresponding drop in the ratio of those unemployed. The unemployment rate is defined as the percentage of persons in the country’s labour force that are unemployed (the total labour force, we saw, includes those who are both employed and unemployed). The chart below shows a sharp one percentage point dip in the unemployment rate in 2019-20. Once again, it is rural that has registered a bigger fall than urban.

Note: Rates are based on usual (principal+subsidiary) economic status during the preceding 365-days reference period.

With rural India emerging as the primary location for job creation, it is inevitable that agriculture is the primary driver. This is visible in the table below which highlights the distribution of workers or employed persons by broad industry/ sector.

Percentage distribution of employed workers

	2017-18	2018-19	2019-20
Agriculture	44.1	42.5	45.6
Manufacturing	12.1	12.1	11.2
Construction	11.7	12.1	11.6
Mining & quarrying	0.4	0.4	0.3
Electricity, water, etc	0.6	0.6	0.6
Trade, hotels & restaurants	12.0	12.6	13.2
Transport*	5.9	5.9	5.6
Other services	13.2	13.8	11.9
TOTAL	100.0	100.0	100.0

Note: Employment is based on usual (principal+subsidiary) economic status during the preceding 365-days reference period; *Includes storage & communications.

It can be seen that the share of workers employed in the agricultural sector has risen to 45.6% in 2019-20, from 42.5% and 44.1% for the preceding two PLFS years. This has been accompanied by the declining percentages of those engaged in manufacturing, construction and most services, barring trade, hotels & restaurants. Importantly, while the country’s rural employed workforce expanded by 35.82 million in 2019-20, over 89% of it was because of agriculture.

Is this trend of rising employment in agriculture reflective of a genuine rural resurgence and is this trend good for the Indian economy?

Through 2019-20, as the Indian economy decelerated, agriculture provided resilient. Agricultural growth stood at 4.3% in 2019-20, which not only surpassed that of overall gross value added (4.1%), but even manufacturing (minus 2.4%) and construction (1%).

One shouldn’t be surprised to see these results being replicated in the next PLFS for 2020-21 as well. Agriculture, we know, was the only sector that grew (by 3.6%) amidst an overall economic contraction (of 6.2%) in 2020-21. There were three main reasons for that – a good monsoon (both 2019 and 2020 were surplus rainfall years), farm-related activities being exempted from lockdown restrictions and stepped-up government procurement of produce. For a more detailed background on this, see our previous note (https://cprindia.org/news/9808).

The questions that really need to be asked is: Can agriculture continue to be the economy’s primary growth driver and job generator and how desirable is this for the rural economy?

The previous Employment and Unemployment Surveys of the National Sample Survey Office (the NSO’s earlier avatar) had shown India’s industry and services sectors to have added about 52 million jobs between 2004-05 and 2011-12. Of that, 25 million was in construction alone, with manufacturing (6 million) and other services (21 million) adding the rest. The 52 million-odd additional employment opportunities helped in pulling away some 37 million Indians from farms. And that, in turn, drove up rural wages, both in nominal and real terms (see chart below).

Note: Nominal wages are simple arithmetic all-India average for rural male labourers across 25 agricultural and non-agricultural occupations; for real wages, the Consumer Price Index for Rural Labourers has been used.

Source: Labour Bureau.

We will, in a subsequent note, be pointing out how the growth in non-farm incomes (including in rural areas) from roughly the mid-2000s till around 2013-14 actually gave a huge boost to Indian agriculture. Not only did it generate more demand for farm produce, but also stimulated diet and cropping diversification. Agriculture’s own cause was enabled by the growth of employment and income opportunities outside of agriculture.

The reversal in India’s structural transformation back toward agriculture is undoubtedly an indicator of deep distress in the Indian economy and a fall back to subsistence employment. The policy implications in the short term are significant. Enhanced safety nets through PM-KISAN and MGNREGA, which allows work on farm land for small and marginal farmers, will be critical investments needed to ensure that incomes are protected and basic needs are met. However, without firing other cylinders of the economy, in the long term, the costs of this reversal in India’s structural transformation will be heavy. Any discussion on a post COVID 19 economic revival has to recognize the limits of a growth model where agriculture is re-emerging as the primary employer.

This note, part of the Understanding the Rural Economy series by CPR, has been authored by Harish Damodaran and Yamini Aiyar, with research support from Ragini Rao Munjuluri and Samridhi Agarwal.

Find all previous notes as part of the series here:

• Can rural play “savior” again? Agricultural seasons and COVID-19 waves by Mekhala Krishnamurthy and Harish Damodaran
• How ‘food’ has become the real social safety net in pandemic by Harish Damodaran
• Where is food inflation headed? by Harish Damodaran
• Has MGNREGS Helped the Rural Economy in 2021? by Yamini Aiyar, Avani Kapur and Harish Damodaran
• Agricultural Households and Farming Income: An initial analysis of variations in income from farming and other sources among agricultural households in India by Harish Damodaran, Mekhala Krishnamurthy and Samridhi Agarwal
• Carbohydrates to proteins and back: How dietary and cropping diversification seems to have gone into reverse by Harish Damodaran, Mekhala Krishnamurthy and Samridhi Agarwal.
• Mapping India’s livestock economy by Harish Damodaran and Samridhi Agarwal.
• Unlocking the potential of Ganna Pradesh
• The Future of MSP by Harish Damodaran

FULL VIDEO OF TALK
URBAN GOVERNANCE

Watch the full video of the workshop (above), where Thomas Crowley explores the environmental politics of the Delhi Ridge, a hilly area that cuts through the National Capital Territory.

In this talk, Crowley discusses how the land, was first imagined. He talks about the evolution of the Ridge from the commonly-owned land used for grazing and firewood collection to a state-owned forest area. Crowley’s presentation analyses the shifts in land use over the past many decades, and explores their implications for ecological and social justice in Delhi today.

The question and answer session that followed can be accessed here, and more information about the talk can be found on the event page.

FULL VIDEO OF THE TALK ORGANISED BY THE STATE CAPACITY INITATIVE
ELECTION STUDIES POLITICS

Watch the full video (above) of the talk on ‘Establishing Regulatory Capacity for the Real Estate Sector: The MahaRERA Experience’ featuring Gautam Chatterjee (Chairperson, Maharashtra Real Estate Regulatory Authority) and Deepak Sanan (Senior Visiting Fellow,CPR), organised by the State Capacity Initiative at CPR.

The Real Estate (Regulation and Development) Act, 2016 was enacted by Parliament with the objective of bringing about transparency and financial discipline in the real estate business, and to protect the interests of home buyers. The law mandates states to set up real estate regulatory authorities; developers/builders are required to register projects with this regulatory authority before commencing bookings and sales. Builders are also required to deposit 70% of amounts collected from buyers into an escrow account, to ensure that these funds are used only for the specific project. The objectives of the Act include speedy dispute resolution, curbing the flow of black money, and ensuring timely completion of projects. Progress on the implementation of this law by states is encouraging. So far 29 states have set up regulatory authorities, and 24 have established appellate tribunals. Regulatory authorities of 24 states have set up their websites – which is critical for the implementation of the Act as it mandates online registration. A total of 46,695 real estate projects and 36,823 real estate agents have been registered under the Act across the country.

Maharashtra was the first state to set up its Real Estate Regulatory Authority (MahaRERA). The state has one of the largest real estate markets in India. It reports more than half of all projects registered in the country and most real estate agents.

Gautam Chatterjee is the first and current Chairperson of the Maharashtra Real Estate Regulatory Authority. The talk focused on his experience of establishing regulatory capacity and creating the conditions for transparency and market discipline in a difficult market.

The question and answer session that followed can be accessed here.

FULL VIDEO OF DISCUSSION
INTERNATIONAL POLITICS

Watch the full video (above) of the discussion between Khin Zaw Win and Nimmi Kurian on the Rohingya crisis in Myanmar. The discussion delves deep into the historical narrative, the complexities of the issue, the challenges it poses, and the possible solutions going forward.

The Rohingya issue has been reduced to a single-issue debate fixated on the security dimension largely concerned with issues of illegal migration, religious radicalisation and terrorism. Despite being intensely debated, the underlying causes and the potential consequences of the crisis are dimly understood.

Khin Zaw Win has decades-long experience as one of the most respected and independent political commentators from Myanmar. He is currently the Director of the Yangon-based Tampadipa Institute and works on policy advocacy and capacity building issues.

Nimmi Kurian is an Associate Professor at Centre for Policy Research and Academic Advisor at the India China Institute, The New School, New York. She is one of the contributors to the India Country Report as part of the Bangladesh China India Myanmar Economic Corridor (BCIM EC) Joint Study Group, Ministry of External Affairs, Government of India.

The question and answer session that followed can be accessed here.

CPR-TCPD (TRIVEDI CENTRE FOR POLITICAL DATA, ASHOKA UNIVERSITY) DIALOGUES ON INDIAN POLITICS
ELECTION STUDIES POLITICS

Watch the full video (above) of the fifth discussion in the series on the rise of farmers movements in India, featuring Mekhala Krishnamurthy, Harish Damodaran and V M Singh.

As we approach the 2019 general elections, Rural and Agricultural distress is an issue which is likely to dominate the election discourse. Over the last few years, India has seen a significant increase in farmers movements, best exemplified by the ‘Kisan Long March’ which signified the emergence of a new moment in Indian agricultural politics. Election season is therefore likely to see many promises being made to farmers as a response to this new mobilisation.

The talk seeks to unpack the reason behind the emergence of these new farmers movements and understand the nature of the current rural political economy and its likely impact on the elections next year.

Mekhala Krishnamurthy is Associate Professor of Sociology and Social Anthropology, Ashoka University.

Harish Damodaran is National Editor (Rural Affairs and Agriculture) at The Indian Express.

V M Singh is a Supreme Court lawyer and President of the Rashtriya Kisan Mazdoor Party.

The question and answer session that followed can be accessed here.

About the CPR-TCPD Dialogues

This was the fifth event in the CPR-TCPD Dialogues on Indian Politics series, launched in a partnership between Centre for Policy Research and Trivedi Centre for Political Data (TPCD) at Ashoka University. This is a monthly event that brings together academicians, policy and political practitioners, and civil society actors to grapple with important social and political issues in India. It provides a forum for intellectually rigorous, non-partisan commentary to strengthen public discourse on politics in India. In these polarised times, debates on politics in India have tended to be increasingly noisy, blurring the lines between critical engagement and partisan endorsement. This dialogue series is an effort to carve out a space for critical, nuanced engagement to understand the changing dynamics of Indian political parties, the impact of new and emerging social movements and the use of new instruments of mobilisation in our polity.

FULL AUDIO RECORDING
INDIA-PAKISTAN SOUTH ASIA

Listen to the full talk (above) by the author, Dr Venkat Dhulipala, where he discusses his book Creating a New Medina: State, Power, Islam and the Quest for Pakistan in Late Colonial North India.

The book examines how the idea of Pakistan was first articulated – not as a vague idea that serendipitously emerged as a nation-state, but as a sovereign Islamic State, referred to by some as ‘a new Medina’.

WATCH THE FULL VIDEO OF THE CPR- TRIVEDI CENTRE FOR POLITICAL DATA, ASHOKA UNIVERSITY (TCPD) DISCUSSION
POLITICS

Watch the full video (above) of the discussion on the book ‘Indian Federalism’ by Louise Tillin (Director, King’s India Institute, Kings College London), organised as part of the CPR-Trivedi Centre for Political Data, Ashoka University (TCPD) Dialogues on Indian Politics series. The author first made a presentation and then was in conversation with Yamini Aiyar (President and Chief Executive, CPR).

The question and answer session that followed can be accessed here.

Yamini Aiyar and Louise Tillin co-edited the May edition of Seminar on the future of federalism in India. The edition includes articles by Neelanjan Sircar, Rahul Verma and Avani Kapur from CPR. Read the complete issue here.

About the book

To understand how politics, the economy and public policy function in the world’s largest democracy, an appreciation of federalism is essential. Bringing to surface the complex dimensions that affect relations between India’s central government and states, this short introduction is the one-stop account to federalism in India. Paying attention to the constitutional, political and economic factors that shape Centre-state relations, this book stimulates understanding of some of the big dilemmas facing India today. The ability of India’s central government to set the economic agenda or secure implementation of national policies throughout the country depends on the institutions and practices of federalism. Similarly, the ability of India’s states to contribute to national policy-making or to define their own policy agendas that speak to local priorities all hinge on questions of federalism. Organised in four chapters, this book introduces readers to one of the key living features of Indian democracy.

This book is part of the Oxford India Short Introduction Series.

About the series

The CPR-TCPD Dialogues on Indian Politics brings together academicians, policy and political practitioners, and civil society actors to grapple with important social and political issues in India. It provides a forum for intellectually rigorous, non-partisan commentary to strengthen public discourse on politics in India. This dialogue series is an effort to understand the changing dynamics of Indian political parties, the impact of new and emerging social movements and the use of new instruments of mobilisation in our polity.

FULL VIDEO OF TALK
RIGHTS SOCIAL SECTOR SCHEMES ECONOMY

BUREAUCRACY
Watch the full video (above) of the talk by Ronald Abraham, where he shared key findings from IDInsight’s State of Aadhar Report 2016-17, which provides a careful unpacking of various topics related to Aadhaar.

The report provides a first-of-its-kind overview of Aadhaar’s technological and operational architecture, legal and governance framework, and its applications in financial inclusion, social protection, and emerging uses in other sectors.

The State of Aadhar Report aims to facilitate a more data and evidence-centric understanding of the Aadhaar ecosystem and highlights important areas for future research.

The Q&A session that followed can be accessed here.

ADITYA BHOL EXPLAINS THE INEQUALITIES BASED ON NATIONAL SAMPLE SURVEY’S DATA
SANITATION URBAN SERVICES

What is the research about?

In a new working paper, Aditya Bhol presents the levels of disparities in access to toilets based on varying socio-economic characteristics of households in urban India.

This analysis is based on data from the sixty-ninth round of the National Sample Survey (NSS) of India on ‘Drinking Water, Sanitation, Hygiene and Housing Condition in India (July 2012 – December 2014)’, conducted by the Ministry of Statistics and Programme Implementation.

State-wise disparities in access to urban sanitation have been analysed drawing on data based on inequalities with respect to the following factors:

Economic conditions – Monthly Per Capita Expenditure (MPCE – taken as a proxy for income)
Access to public infrastructure – drainage and drinking water supply
Social conditions – caste status of households (social groups)
Spatial conditions – slum and non-slum status of households
Behavioural conditions – adequacy of water supply and perceived housing condition of sampled households
What are the key findings?

The findings of the paper corroborate the existence of disparities in access to toilets across 15 states (selected on the basis of population) and the factors that drive the inequalities vary in the different states. For example:

Economic well-being gauged in terms of monthly per capita expenditure is observed to be a crucial determinant of access to toilet. Except Kerala and West Bengal, disparities in access to toilets are high based on MPCE of households in almost all the states.
Rajasthan, Bihar, Odisha, Jharkhand, Uttar Pradesh and Tamil Nadu show disparities in access to toilets based on differential access to drainage.
Caste based inequalities are seen to exacerbate disparities in access to toilets in the states of Rajasthan, Bihar, Jharkhand, Uttar Pradesh and Tamil Nadu.
Highly urbanised states of Maharashtra, Gujarat and Tamil Nadu exhibit acute spatial inequalities in access to toilets when slum and non-slum households are compared.
How was the research conducted?’

The findings mentioned above are the result of a regression analysis and hence represent the combined effect of different predictors. With MPCE taken as the base for comparison of the disparities, the relative effects of other factors – drainage or caste system or both combined have been measured. For instance, the disparities in access to toilets, which are based on either differential access to drainage or differential caste status of households or both taken together are seen to be acute at low levels of MPCE and become less severe with increasing MPCE.

Conclusion

The bashful acknowledgement of the poor sanitation figures in India has been substituted with a fervour to attain Clean India by 2019, engendered by the recent Swachh Bharat Mission (SBM/ Clean India Mission), Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and Smart Cities Mission. These policies and the policy makers stand to benefit from the acknowledgement of the inequalities inherent in India which have continued to impede the overall development of sanitation infrastructure in India. The findings of this research paper have far-reaching policy implications in this regard and urge the policy makers and stakeholders to address these inequalities while delivering the ascertained infrastructure towards the achievement of our collective goal – Swachh Bharat.

The full working paper can be accessed here.

A presentation on this research, made at the Population Association of America Conference in Chicago on 28 April 2017, can be accessed here.

This research is part of the Scaling City Institutions For India: Sanitation project at the Centre for Policy Research.

FULL AUDIO OF TALK
LAND ACQUISITION RIGHTS

Listen to the full audio (above) of the talk by Dr Michael Levien, based on his upcoming book, where he offers a reconstruction of existing theories of the relationship between dispossession and capitalism.

Drawing on his ethnographic study of Rajasthani villages dispossessed for one of North India’s largest Special Economic Zones, Dr Levien attempts to address three major questions: how has land dispossession changed with the shift from state-led development to neoliberalism in India? What are the consequences of this change for dispossessed farmers? And what are the implications of this change for our understanding of India’s land wars?

Dr Michael Levien is assistant professor of sociology at Johns Hopkins University.

This talk was organised by the CPR Land Rights Initiative.