poverty in rural india
As per the Eleventh National Development Plan of India more than 300 million people in India are poor. With great efforts, India has managed to reduce the number of poor from 55% in 1973 to about 27% (326 million poor) in 2004. According to the recent estimates (2011-12), 216.5 million people in rural areas are poor. And still, close to one third of the total population in India lives below the poverty line and majority of poor lives in villages and rural India. India’s the poorest state is Chhattisgarh where 40% of the population lives below the poverty line. 61% of poor population of India lives in seven states i.e. Chhattisgarh, Bihar, Jharkhand, Madhya Pradesh, Odisha, Rajasthan and Uttar Pradesh.
Though 30% of rural population lives in a chronic condition of poverty but in the last three decades some improvement in the number has been seen because of anti-poverty schemes and migration from rural to urban areas. Scheduled castes and tribes are the worst sufferers of rural poverty. Recently the Planning Commission has also revised the poverty line for rural as well as urban areas. The new poverty line for rural areas is Rs 27 and for urban areas it is Rs 30 per day.
Rural economy massively relies on agriculture. But farming in India depends upon unpredictable monsoon leading to erratic yield. Hence water shortage, bad weather conditions and reoccurring droughts are also the reasons of poverty in rural areas. Extreme poverty compels many farmers to commit suicide. Many rural areas are so poor that these even lack the basic facilities of sanitation, infrastructure, communication, and education. The rural economy is becoming stagnate and with this India’s overall economy is not growing at a pace with which it should be. There is not just a one cause of poverty but many which lead to the vivacious cycle of poverty.
Causes of Rural Poverty
Geographical factor
In certain rural areas geographical factors create conditions which lead to poverty. One of the most prominent geographical factors in India is unpredictable monsoons and weather which impact the crop production and yield. Natural calamities like flood, drought, cyclones etc take their own toll and damage the crop, livestock and land. Heavy loss is caused by these results in poverty. For an example, recent Cyclone Phailin has caused an extreme damage in the Odisha and Andhra Pradesh. This has led to a much talked about onion price rise.
Personal factors
Believe it or not but your economic status is defined by what you do and what you are determined to do. There are many personal factors that lead to poverty. One of these is sickness. Due to poverty families do not get enough food to eat and thus lack in immunity. They become prone to many diseases. So whatsoever they earn is utilized in the treatment of the same. Sickness in turn leads to more poverty. It is rightly said that “Poverty and sickness form a vicious partnership each helping the other to add to the miseries of most unfortunate of mankind.”
Laziness and not willing to work is another major reason of poverty in India. People just do not want to work. Even in urban areas you might have come across beggars who are in good health but are not willing to work even if given some. They need easy money.
Biological factors
Rapid growth in population also leads to poverty in rural India. Much developed medical and healthcare facilities in India have reduced the overall death rate but yet birthrate has not been controlled with effectiveness. Big families and limited resources result in poverty.
Economic factors
Rural India depends upon agriculture for everything. But most of the farmers still rely on primitive methods of agriculture. With this the annual produce is often very less. Moreover agriculture sector in India is still underdeveloped to provide enough jobs.
Faulty supply chain and mismanagement cause the farmers to suffer the most. People at the top of the supply chain earn the maximum benefit of the farmer’s hard work. But it should be another way round to uplift the rural India and to eradicaterural poverty.
Poverty alleviation programmes in rural India
The poverty alleviation programmes in India can be categorized based on whether it is targeted for rural areas or urban areas. Most of the programmes are designed to target rural poverty as prevalence of poverty is high in rural areas. Also targeting poverty is challenging in rural areas due to various geographic and infrastructure limitations. The programmes can be mainly grouped into
- Wage employment programmes
- Self-employment programmes
- Food security programmes
- Social security programmes
- Urban poverty alleviation programmes.
Rural indebtedness in india
One of the major problems concerning to the rural society is indebtedness. This problem is just not related to one individual but is passed on from one generation to the next generation. Taking or incurring debt for the purpose of agricultural production is indeed necessary as it contributes to production.
However, the rural people incur debts for nonproductive purposes such as to meet the family needs, perform social functions (related to marriages, birth, death), litigation, etc. Since money taken does not contribute to production but instead to consumption, it drags the rural people into indebtedness.
Thus, it becomes impossible to repay these loans. To clear these loans, the rural people incur debts again. In this way, they are stuck in the clutches of indebtedness, which passes on from one generation to another. For many small farmers, the agricultural production is so less that they are not able to provide for such unproductive expenditure.
Causes of Indebtedness
Poverty
Poverty is perhaps a major cause for rural indebtedness. The low level of rural incomes, the uncertain and primitive farming of small landholdings makes it impossible to meet the needs required for their living. Often, the rural people take debts to meet these needs.
Ancestral/Inherited Debt
Most of the rural debts of the present day are inherited from the past and which increases with the passage of time. An inheritor is liable to the repayment of the debt only to the extent of the property inherited by him.
Despite this law, the rural people continue to repay the debts of their forefathers, as they are not fully conversant with law as they are illiterate. As these people are bound by the traditions and values they regard it as their sacred social duty to repay the debts of their forefathers.
Such increasing debt is passed on from one generation to another making its repayment increasingly difficult, whenever it is passed on. Thus, the Royal Commission has rightly stated that the Indian farmer ‘is born in debt, lives in debt and dies in debt’.
Social and Religious Needs
Villagers are mostly bound by the social traditions and customs, which are considered to be sacred and had to be performed. Some of these ceremonies are marriage, births, deaths, religious occasions, etc. The expenditure is usually very high for the performance of these ceremonies. In order to meet these needs, the villagers take loans. As their incomes are not sufficient enough, they are not able to repay these loans. Thus, they remain unpaid and increase with the passage of time.
Litigation
Generally, the agriculturists in India are involved in various kinds of disputes related to land, property, etc., which force them to go to a court of law. Often, they view it important to win the case as it is related to the family prestige and honour. Such litigations involve heavy expenditure and time. In order to meet these needs, the agriculturists take loans that they are not able to repay and are caught into indebtedness.
Backwardness of Agriculture
Indian agriculture is an uncertain business. It virtually depends on unreliable rains for the supply of water. If there are no rains or untimely rains, the entire crop is lost and the credit invested in the agriculture goes waste. As a result, the loan taken for the productive purposes also becomes a burden, leading to indebtedness of the farmers.
Excessive Burden of Land Revenue and Rent
Land revenue, where it is levied by the government in some states and the rent payable to the landowners is becoming excessive burden on small farmers. In order to pay these land revenue, mid-rent, the farmers take loan. Sometimes, the farmers have to pay these rents and land revenues even during the floods and drought. This make the farmers run into debts.
Defective Money Lending System
The village money lending system is very much defective. The sole aim of the moneylenders is to extract the maximum from the farmers. The moneylenders make wrong entries in their account books, charge very high interest rates and extract high prices for the goods they sell to the farmers but purchase the farmers produce at very low prices.
In course of time, as the amount debt increases, the moneylenders are much interested in seizing the farmers lands, and other valuable assets than the debt being repaid by the farmers. Thus, the farmers are trapped in the hands of the moneylenders.
Bonded labour in india
A man keeping another man in perpetual bondage for his selfish and personal designs is a kind of man’s cruelty to man which is not confined to a particular country or a particular region but is found as a global phenomenon for thousands of years, right from the Biblical days to the present era. The nomenclature changed from period to period and place to place: slave, serf, and bonded labour.
In India, this type of exploitation of man remained prevalent in the name of beggar and riot for years. The term ‘bonded labour’ or bandhua mazdoor is of recent origin. Despite the abolition of the zamindari system, land reforms, Bhoodan movement, enactment of legislation (Bonded Labour Abolition Act, 1976), establishment of Panchayati Raj, interest shown by Social Action Groups and spirited individuals from society, lakhs of bonded labourers continue to be exploited and carry the yoke of neglect, suffering and frustration in abject silence.
In fact, the system of bonded labour, as prevalent in Indian society, is a relic of feudal hierarchical society. A considerable interest has come to be shown in bonded labour during the past two decades by social workers, social scientists and the government because it is considered incompatible with our social ideal of egalitarianism with our commitment to human rights. The magnitude of bonded labour is just baffling as lakhs of adult males and females as well as children are condemned to suffering under its yoke.
We have to understand the terms ‘bonded labour system’ and ‘bonded labour’. The ‘bonded labour system’ refers to “the relationship between a creditor and a debtor who obtains loan owing to economic compulsions confronting his day-to-day life, and agrees to abide by the terms dictated by the creditor”.
The important term of agreement is that the debtor agrees to mortgage his services or services of any or all the members of his family for a specified or unspecified period. The relationship built on the agreement is on such unequal terms that while for every labour or service, there must be some fair remuneration equivalent to the price of labour in the market, under the bonded labour system the service is rendered for the debt or in lieu of the interest accruing to the debt. The debtor either works without receiving any remuneration or if at all there is any remuneration, it is much less than the minimum wage (notified under the Minimum Wages Act) or the prevailing rate of market wage.
The 1976 Bonded Labour (Abolition) Act defines ‘bonded labour system’ as “the system of forced labour under which a debtor enters into an agreement with the creditor that he would render service to him either by himself or through any member of his family or any person dependent on him, for a specified or unspecified period, either without wages or for nominal wages, in consideration of loan or any other economic consideration obtained by him or any of his ascendants, or in pursuance of any social obligation, or in pursuance of any obligation devolving on him by succession”.
The agreement has other consequences too, such as, forfeiting the debtor the freedom of employment, denial of freedom of movement in any part of the country, and denial of the right to sell at market value any of his property or product of his labour.
The term ‘bonded labour’ has been defined by the National Commission on Labour as “labour which remains in bondage for a specific period for the debt incurred”. The Commissioner for Scheduled Castes and Scheduled Tribes explained the term bonded labour in its 24th report as “persons who are forced to work for the creditors for the loan incurred either without wage or on nominal wage”.
The ‘bonded labour’ is different from ‘contract labour’ employed in industries, mines, plantations and docks, etc. Contract labour includes workers who are not directly recruited by the establishment, whose names do not appear on the pay-roll and who are not paid wages directly by the employer. In theory, contract labourers in India are covered by the Factory Act, 1948, the Mines Act, 1952, the Plantations Labour Act, 1951 and the Dock Workers Act, 1948 so as to give them benefits as are admissible to labour directly employed.
Causes of Bonded Labour
Though the main causes of origin, growth and perpetuation of bonded labour system are economic, the social and religious factors to support the custom. The economic causes include: extreme poverty of people, inability to find work for livelihood, inadequate size of the landholdings to support family, lack of alternative small-scale loans for the rural and urban poor, natural calamities like drought, floods etc., destruction of men ‘ animals, absence of rains, drying away of wells, meagre income from forest produce, and inflation and constant rising prices.
High expenses on occasions like marriage, death, feast, birth of a child, etc., leading to heavy debts, caste-based discrimination, lack of concrete social welfare schemes to safeguard against hunger and illness, non- compulsory and unequal educational system, and indifference and corruption among government officials.
Sometimes, exploitation by some persons in a village also compels people to migrate to some other place and seek not only employment on the employer’s conditions but also get protection from influential persons. Religious arguments are used to convince the people of low castes that religion enjoins upon them to serve people of high castes. Illiteracy, ignorance, immaturity and lack of skill and professional training sustain such beliefs. Broadly speaking, it may be maintained that bondage originates mainly from economic and social pressures.
Social consequences of land reforms
Land reform is a broad term. It refers to an institutional measure directed towards altering the existing pattern of ownership, tenancy and management of land.
“a redistribution of the rights of ownership and/or use of land away from large landowners and in favour of cultivators with very limited or no landholdings.”
Impact of the Land Reform Policy
Land reforms are being attempted for twofold reason: to improve production and productivity and the distribution of income/asset. Land reform measures are costless methods of increasing production in the agricultural sector. It serves the purpose of social justice too. Let us see how far land reform measures have improved productive efficiency of the agricultural sector and ensured social justice.
On productive Efficiency
So far as productive efficiency is concerned, the land reform measures adopted in recent years have not made any significant impact. The probable reason is that the reforms have not been effectively implemented.
The ownership of land has not yet been fully transferred to the tillers. The actual rents still rule high. The consolidation of holdings has not been completed. Cooperative farming has not made much headway. In the- absence of economical holding being in actual possession of the tiller, in which he has a permanent interest, the modern techniques cannot be applied to land. Naturally, productivity continues to be low.
On Social Justice: The objective of social justice has, however, been achieved to a considerable degree. The intermediary rights have been abolished. India no longer presents a picture of feudalism at the top and serfdom at the bottom. The tenancy laws have given the tillers protection from exploitation by providing them security of tenure and fixing maximum chargeable rents.
It is true that the pace of implementation of land reform measures has been slow. Moreover, there is a marked unevenness in respect of progress in various states. This does not, however, mean that there has been no achievement at all in the sphere of land reform since independence.
But the progress has been slow and it needs to be accelerated. The manifold problems of our land are to be solved through the introduction of a suitable land policy.
Rural development projects
Deen Dayal Upadhyay Grameen Kaushal Yojna
- This is a placement linked skill development scheme for rural poor youth.
- It was launched by on 25 September 2014 by Union Ministers Nitin Gadkari and Venkaiah Naidu on the occasion of 98th birth anniversary of Pandit Deendayal Upadhyaya.
- It aims to target youth, under the age group of 15–35 years.
- A total of 52000 candidates have been skilled under this programme till 2014-15.
Roshni: Skill Development Scheme for Tribals
- The Ministry of Rural Development on 7 June 2013 launched a new skill development scheme designed to offer employment to tribal youth in 24 Naxal -affected districts.
- The scheme, which is named Roshni is supposed to provide training and employment to an anticipated 50000 youth in the 10-35 years age group, for a period of three years.
- As per the Ministry 50 per cent of the beneficiaries of the scheme will be women only.
- The scheme is designed in light of the Himayat project model, which was launched in Jammu and Kashmir has been implemented in Sukma, Chhattisgarh, and West Singhbhum, Jharkand, on a pilot basis over the last 18 months.
Sansad Adarsh Gram Yojna
- This programme was launched by the Prime Minister Narendra Modi on the birth anniversary of Lok Nayak Jai Prakash Narayan on 11 October 2014.
- Ministry of Rural Development will be the supervising authority for this programme.
- Under this programme each Member of Parliament will take the responsibility for developing physical and institutional infrastructure in three villages by 2019.
Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS)
- National Rural Employment Guarantee Act 2005, was launched on the 2nd Feb.2006. Now the new name of this scheme is “Mahatma Gandhi National Rural Employment Guarantee Act” (or, MGNREGA).
- This scheme is an Indian labour law and social security measure that aims to provide ‘right to work’ to the people falling Below Poverty Line.
- It guarantees 100 days employment in a year to the village people.
- Fifty percent workers should be women.
- Its 90% funding is borne by the central government and 10% by the state government.
National Rural Livelihood Mission
- This scheme was restructured from the Swarn Jayanti Gram Swarojgar Yojna in 2011.
- National Rural Livelihoods Mission (Aajeevika) is aimed to empower the women’s self-help group model across the country.
- Under this scheme govt. provides loan up to 3 lakh rupee at the rate of 7% which could be lowered to 4% on the timely repayment.
Pradhan Mantri Gram Sadak Yojna
- Initially it was 100% centrally funded scheme, launched on the December 25, 2000.
- After the recommendation of 14th finance commission report now expenditure will be shared by the centre and state at ratio of 60:40.
- The main aim of this scheme is to provide all weather road connectivity to the rural areas whose population is more than 500 persons and in terms of hilly areas it is 250 persons.
- This scheme is launched by the Ministry of Rural Development.
Village Grain Bank Scheme
- This scheme was implemented by the department of food and public distribution.
- Main objective of this scheme is to provide safeguard against the starvation during the period of natural calamity or during lean season when the marginalized food insecure households do not have sufficient resources to purchase rations.
- Under this scheme needy people will be able to borrow food grains from the village grain bank and return it when they have abundant food.
National Rural Health Mission
- The National Rural Health Mission (NRHM), now under National Health Mission is initiated on 12 April, 2005.
- Main aim of this plan is to provide accessible, affordable and accountable quality health services even to the poorest households in the remotest rural regions.
- Accredited social health activists (ASHA) scheme is also operational under this scheme.
- It is run by the ministry of health and family welfare.
Kutir Jyoti Programme
- This programme was launched in 1988-89.
- Its main motive was to improve the standard of living of schedule castes and schedule tribes including the rural families who live below the poverty line.
- Under this programme, a government assistance of Rs. 400 is provided to the families who are living below the poverty line for single point electricity connections in their houses.
Green revolution
Throughout history there have been many revolutions that have occurred and changed human lives, such as the American Revolution and the Industrial Revolution. In the mid- and late-20th century a revolution occurred that dramatically changed the field of agriculture, and this revolution was known as the Green Revolution.
The Green Revolution was a period when the productivity of global agriculture increased drastically as a result of new advances. During this time period, new chemical fertilizers and synthetic herbicides and pesticides were created. The chemical fertilizers made it possible to supply crops with extra nutrients and, therefore, increase yield. The newly developed synthetic herbicides and pesticides controlled weeds, deterred or kill insects, and prevented diseases, which also resulted in higher productivity.
In addition to the chemical advances utilized during this time period, high-yield crops were also developed and introduced. High-yield crops are crops that are specifically designed to produce more overall yield. A method known as multiple cropping was also implemented during the Green Revolution and lead to higher productivity. Multiple cropping is when a field is used to grow two or more crops throughout the year, so that the field constantly has something growing on it. These new farming techniques and advances in agricultural technology were utilized by farmers all over the world, and when combined, intensified the results of the Green Revolution
Benefits of the Green Revolution
As a result of the Green Revolution and the introduction of chemical fertilizers, synthetic herbicides and pesticides, high-yield crops, and the method of multiple cropping, the agricultural industry was able to produce much larger quantities of food. This increase in productivity made it possible to feed the growing human population.
One person who is famous for his involvement in the Green Revolution is the scientist Norman Borlaug. In the 1940s, Norman Borlaug developed a strain of wheat that could resist diseases, was short, which reduced damage by wind, and could produce large seed heads and high yields. He introduced this variety of wheat in Mexico and within twenty years the production of wheat had tripled. This allowed for the production of more food for people in Mexico and also made it possible for Mexico to export their wheat and sell it in other countries. Norman Borlaug helped introduce this high-yield variety of wheat to other countries in need of increased food production, and he eventually won a Nobel Peace Prize for his work with developing high-yield crops and for helping prevent starvation in many developing countries.
In addition to producing larger quantities of food, the Green Revolution was also beneficial because it made it possible to grow more crops on roughly the same amount of land with a similar amount of effort. This reduced production costs and also resulted in cheaper prices for food in the market.
The ability to grow more food on the same amount of land was also beneficial to the environment because it meant that less forest or natural land needed to be converted to farmland to produce more food. This is demonstrated by the fact that from 1961 to 2008, as the human population increased by 100% and the production of food rose by 150%, the amount of forests and natural land converted to farm only increased by 10%. The natural land that is currently not needed for agricultural land is safe for the time being and can be utilized by animals and plants for their natural habitat.
New strategies of rural development
The people lives in rural areas are majorly depends on agriculture. The rural agricultural production & consumption process plays a predominant role in developing the Indian economy. The major objective of rural development is to increase farm productivity, for achieving rapid economic transformation, increasing profits to farmers and to increase the household outputs of selected agricultural products. The paper majorly focused on the various rural development management of land, labour and natural resources to the effective harvesting, pre processing methods and effective marketing strategies to be followed. Although policy makers and the development community have widely used the phrase ?rural development?, what constitutes rural development seems to have changed significantly overtimes. The concept of rural development has changed significantly during the last three decades. Until the 1970s, rural development was synonymous with agricultural development and hence focused on increasing agricultural production. This focus seems to have been driven primarily by the interest of industrialization to extract surpluses from the agriculture sector to reinforce industrialization.
The major wings for the rural development are:
- Economic dimension
- Human dimension
- Science & Technology
- Resources and Environment
- Political dimension
New focus areas
- To raises the quality of life & environment in rural areas.
- To reduce urbanization
- For the improvement of Indian economy
- For the proper management of natural resources like land, water for agricultural production
- To produce variety of food products through agriculture.
- To improve profits for farmers.
The implementation of Rural development strategies will use & develop existing institutional, management and funding mechanisms to focus the expenditure of government in the three spheres to more effectively and efficiently respond to needs and opportunities. So there is a great need to develop the rural areas for the improvement of Indian economy.
The objectives of the RDS are to increase farm productivity, for achieving rapid economic transformation, to increase household outputs of the selected agricultural products, and to promote value addition and ensure a stable market for these agricultural products.
The changing rural scene
While the age old political truism that India resides in its villages may still hold true, there is a growing divergence between how Indian villages have been conventionally perceived and viewed and the current ground reality. The instant image the mind conjures up when rural India is mentioned is agriculture. However, the pervasive effects of rapid economic growth over the past two decades have been felt in the rural hinterland as well. The share of farm income, which made up 74 per cent of rural incomes in the 1970s, has dropped to 30 per cent in 2010. Non-farm growth has been substantial in rural India. The term “non-farm” encompasses all non-crop agricultural activities, including manufacturing activities, electricity, gas, construction, mining and quarrying, transportation and services in rural areas. Over 42 per cent of rural households draw their income from non-farm sources, particularly traditional services (27 per cent). Those households engaged in modern services had the highest income increase (200 per cent) in comparison to agriculture.
Rural India is a major part of India’s domestic consumption story, not just because 70 per cent of India’s population lives in rural areas but because it already has 56 per cent of India’s income, 64 per cent of expenditure and 33 per cent of savings. A significant proportion of salaried (39 per cent) and non-agricultural self-employed households (46 per cent) are located in rural areas. While an overwhelming share of illiterate households are based in rural areas (89 per cent), there are also 36 per cent households whose chief earners are graduates.
The rural share of popular consumer goods and durables ranges from 30 to 60 per cent and sales to rural India are steadily growing. A 1 per cent increase in refrigerator penetration over a five year period means that more than 1.5 million refrigerators have been added. The number of new owners of colour television sets in the last three years is equivalent to the population of Sweden or half of Australia! So, yes, even at a very slow burn and low acceleration, rural India unleashes enormous consumption power. Annual increase in average household income is expected to be about ` 11,000 between now and 2015; urbanites are expected to gain 3 times more than those in rural areas. We will also see the top 20 per cent in both rural and urban India gaining 24,000 and 75,000 in their annual incomes. On the other hand, people at the bottom of the pyramid will gain only about 2,100 irrespective of place of residence. But the question is: how sustainable, stable and volatility-free is this income and consumption growth? Rural India has seen a spurt in consumption periodically, usually because of a one-time burst of events that come together, causing an unsustainable one-time consumption boom.
The popular view is that non-agricultural income, which accounts for a hefty 50 per cent of rural income, is more stable (and less volatile) than agricultural income. Agricultural income, which accounts for half of rural income, has grown very slowly on a trend basis – agriculture is not profitable for majority of farmers in India, who are small and marginal cultivators. Certainly, non-agricultural income is far more attractive, though that does not mean it is more stable. National Sample Survey (NSS) data shows rural households with “non-agriculture” as the main source of income are far higher spenders than agricultural households and more “urban-like” in their proportion of food to non-food expenditure.
Non-agricultural income is widespread, and of different kinds. As per “How India Earns, Spends and Saves”, not counting labour, 25 per cent of rural households can be classified as solely non-agricultural income earners; they have 38 per cent share of rural income. This is disproportionately higher than their population weight. Piece-work labour does account for 20 per cent of rural income and 36 per cent of rural population but it is both agricultural and non-agricultural depending on what kind of work is available. The bloated NSS estimate of agricultural labourers is based on an ambiguous definition. For instance, if a person works for even a few days on the land in the past 365 days, the NSS classifies him as “farmer”. For the remaining 364 days this “farmer” could well be a bricklayer, a carpenter, or a welder.
Farmers or “self-employed” in agriculture comprise 41 per cent of the rural population garnering 43 per cent of income (this is just about what they should have, given their population weight). Even these farmer households whose main source of income is agriculture have a non-agricultural income stream.
On an aggregate, 29 per cent of all farm households also have non-agricultural income streams, led by large farmers. Some of this income from “other sources” is in states like Kerala, Uttar Pradesh and Bihar, made up of remittances from rural migrants to urban cities, and when these migrants return home because of job losses, not only does remittance income disappear, it also results in the economic stress of more mouths to feed. Therefore, before we hail non-agricultural income as the saviour of consumption in troubled times, we need to examine how dependent or coupled it is with (a) the agricultural economy, (b) the urban economy, and (c) even perhaps the global economy.
The truth is that we don’t yet have an answer to this through direct field surveys which actually ask people who their customers or their salary payers are. Sadly, India Inc.’s willingness to pay for hard data is low and in the absence of this, we are now at a place where conjecture, no matter how widely believed, can be a dangerous basis for business planning. As per our assessment, about 20 per cent of rural income from salaried earners is urban-coupled but not agriculture-coupled, and as much as 15 per cent of rural income from those self-employed in non-agriculture is agriculture income dependent. Most of “other income” accounting for 3 per cent of rural income is also in the top quintile. If we assume that higher the income, the more urban-coupled the occupation is, we find only about 25 per cent of rural income is definitely urban-coupled but agriculture independent. Therefore, before we celebrate that half of rural income is “safe” from agriculture, we must admit the sobering thought that about half of this “safe from agriculture” income is urban-coupled, another chunk in certain states is migrant-coupled, and the rest is agriculture income health determined.
There will be time periods and geographic pockets of activity like roads and transport, mining and quarrying, rural BPOs, etc., which will boost or tank non-farm rural incomes. This is primarily the result of growing urbanisation, increasing rural-urban linkages and the multiplier effects of setting up manufacturing and service units in rural areas. Intuitively, the rate of growth of rural incomes from non-farm sources will also depend on the growth of the state itself. High incomes states will have a lower share of the rural low income population and a proportionately higher share in total income. Additionally, high incomes states, at higher levels of development, offer higher income for all occupations when compared to individuals engaged in the same occupations in low income states. Thus, location, or in other words the level of development of a particular state, has a bearing on the remuneration an individual receives for his/her labour. The ability of households/individuals to raise their living standards and consequently move out of poverty is directly linked to the level and pace of development of the political state they live in.
While the share of agriculture in total GDP has gone down to roughly 15 per cent, the sector continues to employ over 55 per cent of the total labour force. Efforts to promote labour-intensive small and medium enterprises have been half hearted to say the least. Business unfriendly laws related to labour and land as well as unreliability of electricity have been significant obstacles in the development of labour-absorbing industry. One would have expected that in line with the Lewis model, as the modern sector grew, surplus labour from the traditional sector would have flown to the more efficient and higher paying modern industrial sector. This is, in a sense, the crux of the issue. Additionally, instead of actively encouraging the flow of labour from rural to urban centres, government policies seem to have the opposite effect. Policies such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), which provides 100 days of work, end up having the opposite effect of keeping surplus labour force in rural areas.
As the economy grows, as urbanisation increases and as rural-urban linkages strengthen, there will be a further rise in income from non-farm sources. Intuitively, rural areas in close proximity to urban centres will gain more as the spillover effects in these areas will be higher. Higher growth could open up opportunities for the labour force currently “employed” in agriculture and thus lead to flow of labour to more productive sectors. But one must also realise the dangers of not altering the status quo. According to population projections, India’s working population will peak in the coming decades. If this segment of society does not possess a basic skill set and if the transition of the labour force away from agriculture does not materialise, then this combination of low and stagnating incomes, unskilled individuals and higher growth in urban areas will lead to more inequality and less inclusive development.
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