But the real challenge is to channel this dynamism to the mainstream of the economy
Himanshu
Profile: Assistant Professor of Economics at Jawaharlal Nehru University and Visiting Fellow, Centre de Sciences Humaines, New Delhi.
Interests: In his spare time he enjoys tracking political developments; loves to follow cricket.
Two sets of data recently released by the National Sample Survey Organisation (NSSO) have been significant in more than one way. The first, based on the Employment and Unemployment Survey (EUS) for 2011-12, shows that the percentage of workers engaged in agriculture is now less than half of total workers in the country. The second is the data on poverty estimates released by the Planning Commission, based on consumption expenditure survey of NSSO for 2011-12, which shows a sharp reduction in poverty between 2004-05 and 2011-12. A large part of the poverty reduction, at least in the last two years, has been driven by poorer states and states which are primarily rural.
Along with these, data from the population census of 2011 showed a faster rate of urbanisation than any of the previous decades. While these may be early and premature pointers towards the changing role of rural areas in the overall economy, these are certainly not enough to conclude that the rural areas are the new engines of growth. At the same time, the new-found dynamism in rural areas, particularly in states with a significantly larger population residing in rural areas, does need a deeper examination of the happenings in rural areas.
The good thing is that a large part of the dynamism is not coming from the traditional dominant agricultural sector but from the non-agricultural sector. While the shift from agriculture to non-agriculture was already there in income terms, the welcome news is the employment pattern with acceleration in shift towards non-farm employment in rural areas. The shift is significant not only because it allows the ever increasing workforce to find avenues in the more productive non-farm sector but also because it creates the synergy between the primary engine of growth of the economy and the rural areas. However, a word of caution may be necessary here since a large part of the rural non-farm is still in self-employed low-productive categories or in low-paid construction as casual labourers.
But this shift to non-farm is not only helpful in generating incomes in rural areas, it has also changed the dynamics of income generation in these areas. Two things are worth noting here: First, the movement away from agriculture has meant that traditional bottlenecks of rural revival such as agriculture and land are less relevant. Second, the fact that non-farm employment is less driven by traditional institutions such as caste has also meant that the deprived castes are now enjoying a significant share of the benefit of the growth of income in rural areas. While this is certainly evident based on primary surveys, it is also being seen in terms of poverty reduction with Scheduled castes and Scheduled tribes showing a significant reduction in poverty than earlier.
(This story appears in the 23 August, 2013 issue of Forbes India. To visit our Archives, click here.)