Rural employment strategies for India


The unprecedented commitment of the present Government of India to seriously address the need for employment generation is a propitious opportunity to implement strategies for generating full employment in the country. This report, which builds upon work done by the International Commission on Peace & Food in the early 1990s, confirms the potential to generate sufficient employment opportunities for all new entrants to the workforce as well as to absorb the current numbers of unemployed and underemployed. It includes strategies and policy recommendations designed to maximize the effectiveness of the Government's recently proposed initiatives for employment generation and rural prosperity. Implementation of these recommendations will be sufficient to generate 100 million additional employment and self-employment opportunities.

While many formal studies have been prepared to assess the growth and employment potential in India' formal private sector, less attention has been given to the conditions and strategies to promote rapid expansion and job creation in the rural and informal sectors. This report focuses on strategies to increase employment opportunities in India's informal sector, with emphasis on agriculture, agro-industry, rural services and related vocations. The report consists of three parts: an overview of employment in India, a business plan containing specific recommendations for implement┬Čation, and a detailed discussion of employment opportunities and strategies in agriculture.

The major findings and recommendations can be summarized as follows:

1. The Indian economy is already generating approximately seven million employment and self-employment opportunities per annum, almost all of them in the informal sector, but in there is a serious lack of accurate information on the types and numbers of these jobs. The most effective strategy for employment generation will be to provide the missing links and policy measures needed to accelerate this natural process of employment generation.

2. There is enormous scope for raising the productivity of Indian agriculture, doubling crop yields and farm incomes, and generating significant growth in demand for farm labour. The report present evidence to demonstrate that improving plant nutrition through micronutrient analysis and improving irrigation through deep chiselling of soil can result in a tripling of crop yields.

3. Rising rural incomes consequent to higher productivity will unleash a multiplier effect, increasing demand for farm and non-farm products and services, thereby stimulating rapid growth of employment opportunities in other sectors.

4. Indian agriculture is constrained by weak linkages between agricultural training and extension, crop production, credit, processing, marketing, and insurance. The report presents an integrated strategy for bringing together all these elements in a synergistic manner by

  • Establishment of village-based Farm Schools to demonstrate and impart advanced technology to farmers on their own lands.
  • Establishment of a network of sophisticated soil test laboratories capable of high volume precision analysis of 13 essential plant nutrients coupled with development of expert computer systems to interpret soil test results and recommend individualized packages of cultivation practices for each crop, location and soil profile.
  • Establishment of Rural Information Centres to act as a medium for transmission of soil test data and recommended practices, access to current input and market prices, and other essential information for upgrading agriculture.
  • Policy and legal measures to encourage contract farming arrangements between agri-business firms and self-help groups in order to increase small farmers' access to advanced technology, quality inputs, bank credit, processing, marketing and crop insurance.
  • Measures to strengthen farm credit and insurance programmes, including creation of linkages between crop insurance, crop loans, and farm school training to encourage farmers who seek credit and crop insurance to adopt improved cultivation practices.

5. In order to ensure ready markets for the crops that are produced, the report focuses on the potential for linking crop production with huge untapped markets and specific agro-industries, including energy plantations to fuel biomass power plants, bio-diesel from jathropa, ethanol from sugarcane and sugar-beet, edible oil from Paradise Tree, horticulture crops and cotton.

6. The report argues that the India labour force suffers from a severe shortage of employable skills at all levels and that intensive development of vocational skills will act as a powerful stimulus for employment and self-employment generation. In addition to Farm Schools to impart advanced skills in production agriculture, the report recommends establishing a network of government-certified, rural vocational institutes providing training and certification in hundreds of vocational skills not covered by the ITIs. In order to offset the shortage of qualified trainers and the costs of replicating institutions throughout the country, the report advocates creation of a national network of 'Job Shops' linked to the Rural Information Centres and offering televised multimedia training programmes and computerized vocational training programmes.

7. The report recommends that the National Commission on Farmers arrange for employment surveys to provide accurate information on the growing demand for different occupational categories, the natural rate of employment generation by category and skill level, and other issues required to promote full employment in the country.

PART I - OVERVIEW OF EMPLOYMENT IN INDIA

Profile of the Indian Workforce

  • Workforce: Although accurate measures of employment and unemployment are difficult in India's largely informal economy, the current labour force consists of approximately 400 million men and women.
  • Growth in Labour Force: It is estimated that the work force is currently growing by 7 million persons per year.
  • Sector-wise: Of these, about 56% are engaged in agriculture as their primary occupation which is down from 65% in the early 1990s. Another 13% are engaged in manufacturing and the balance are employed in the service sector, which has grown from 25% to 32% of total employment over the past two decades.
  • Organized vs. Unorganized: The organized sector provides less than 8% of the total jobs, about 3% in private firms and 5% in the public sector. The informal/unorganized sector is provides the other 92%.
  • Skills: Only 6-8% of India's workforce has received formal training in vocational skills, compared with 60% or more in developed and most rapidly developing countries.
  • Unemployment: Depending on the survey measure applied, unemployment is estimated to range between 25 and 35 million. Youth unemployment is 13%, but reaches a high of 35% in Kerala. Unemployment as a percentage of the workforce fell in the 1980s and rose slightly in the 1990s. Authoritative published data was not available to indicate trends after 2001-2.
  • Migration: According to sample survey estimates, approximately 27% of India's population are migrants, including those who move from one rural or urban area to another or between rural and urban areas. Approximately 57% of urban male migration is for seeking better employment opportunities. The net migration from rural to urban areas is approximately 2 million per annum, of which about 1 million may be job seekers.

Observations about Employment in India

Several significant conclusions can be drawn from this summary data:

1. High rate of 'natural' employment generation: In spite of a large influx of youth into the workforce, unemployment is not rising dramatically. This indicates that the Indian economy is generating a very large number of additional employment opportunities by natural processes that are not well documented or understood. An understanding of these processes is will assist the formulation of effective strategies to accelerate employment generation and eliminate the remainder of unemployment and underemployment in the economy. If the unconscious process of employment generation can achieve this much, surely a conscious understanding and application can accomplish far higher rates of job growth.

2. Urban employment: Since high rates of urban unemployment would almost invariably lead to rising discontent and violence, the relative stability of India's urban environment suggests that the urban economy is generating sufficient employment opportunities to absorb most new entrants and migrants from rural areas.

3. Mismatch between Education & Employment: While the number of employment opportunities is rising more or less as required to keep pace with the growth of the workforce, the type and quality of these opportunities does not match the expectations of many educated job seekers, which reflects inadequacies both in the type of employment generated and type of education being imparted to youth. Ironically, despite the surging number of graduates, many firms report difficulty in recruiting educated persons with the required work capabilities to meet the growth in demand for business process outsourcing, automotive component production and many other fields.

4. Gap in Occupational Skills: At the other end of the labour spectrum, it is increasingly difficult to obtain workers with basic skills in carpentry, masonry, electricals, mechanics, and many other trades. Although India operates a large vocational training system, it provides training to less than 2 million persons annually, which is grossly insufficient to impart skills to the 7 million new job entrants as well as the huge number of current unskilled workers. Absence of reliable information on the actual growth in employment by specific occupational categories makes it difficult to determine either the number of jobs being created in each field or the unsatisfied demand for various types of skills.

5. Casualization of the workforce: Evidence of an increase in casual and migratory employment reflects a deterioration in the quality of jobs in rural areas as well as rising expectations of the workforce that impels increasing numbers to abandon traditional occupations in search of better employment opportunities.

6. Agricultural Employment: While the percentage of the workforce employed in agriculture is declining, total employment in this sector continues to rise, though at significantly slower rates than in the past. A reduction in the proportion of the population employed in the primary sector is a natural and inevitable trend that is spurred by rising expectations and changing attitudes as much as by rising levels of farm productivity and mechanization. However, this does not mean that the potential for employment in this sector is being fully exploited. The findings of this report indicate that in the short term, strategic initiatives to modernize and diversify Indian agriculture can generate employment opportunities for very large numbers of people, thereby providing time for the more gradual expansion of employment potentials in other sectors.

7. Surging Service Sector: The traditional path of economic development was a progression from agriculture to manufacturing to services. India's recent success in IT and IT-enabled services is only one indication that this formula need not necessarily apply in the context of today's global economy where the demand for services internationally can rapidly expand employment opportunities domestically. In addition, changing social expectations within the country are stimulating rapid growth in demand for services that become prevalent in advanced industrial countries at a much later stage in their development, as indicated by the proliferation of courier companies, Xerox shops, Internet cafes, fast food restaurants and retail boutiques. The rampant clamour for education at all levels, surging demand for health care services, telecommunications, media, entertainment, and financial services are other expressions of this phenomenon. The publication of six English dailies and six Kannada dailies in the city of Bangalore is only one reflection of this wider trend. Research is required to more carefully document growth of the service sector, particularly its informal portion, to assess the potential demand and most effective strategies for accelerating growth of employment. These trends suggest that rural India has the opportunity to leapfrog over the traditional path to development, moving directly from agriculture into services.

Theoretical Basis for Full Employment

The International Commission on Peace and Food, in its report entitled Uncommon Opportunities: Agenda for Peace & Equitable Development, examined the process of employment generation in society and concluded that full employment was a realistic and achievable goal for all countries in the foreseeable future. It observed that efforts to achieve full employment are constrained by a vague sense of helplessness or inevitability based on the erroneous perception that the number of employment opportunities generated in society is determined by forces that are either beyond the control of government and public initiative or too complex, costly and difficult to manage without severe adverse affects on the economy. Therefore, it may be useful to examine some of the major factors that presently limit the creation of new employment opportunities and the practical scope for action at these specific points.

Economically, employment generation is determined by how fully and productively society utilizes the material, technological, organizational and human resources at its disposal. The more productive the society is, the greater the quality and efficiency with which it produces goods and services, the greater the demand for those goods and services in the marketplace, the more employment opportunities and purchasing power created. This increased purchasing power then acts as an additional stimulus to the creation of new demand and employment opportunities.

Although early economists perceived that resources were limited, we now know that the potential for enhancing the productivity of resources is not. The Commission's report points out that the productivity of resources is the result of human resourcefulness. Since no society can or does fully exhaust its potentials for enhancing social productivity, the potential for employment generation is unlimited. Land, water and minerals may be limited, but the scope for increasing their productivity is not. Land is limited in India, but the scope for raising farm yields is not.

If this is the case for purely material resources, how much more true is it of technology, organization, knowledge, skill and other less tangible society resources? The enhancement in computer performance over the past 35 years according to Moore's Law is only one dramatic instance of a general truth about technological productivity in all fields. While the power of computers keeps increasing, the cost of producing them keeps falling because of technological developments that reduce their size, material consumption and labour inputs.

Technology alone does not result in human development. The application of technology through innovative social organizations has been the chief cause for the phenomenal gains of the past century. It was not the invention of the automobile but rather the innovation of a new organization of mass production by assembly line that enabled Henry Ford to transform the car from a luxury of the idle rich into a necessity for middle and working class families. It was not the invention of the computer, but the innovation of a new organization for electronic exchange of information in a standardized format that converted the Internet from the medium of academics and military planners into the most powerful communication tool in history and led to the emergence of the World Wide Web as a global library and global marketplace. India's dairy cooperatives, micro-finance self-help groups, STD booths, export processing zones, technology parks, and private computer training centres are aes in innns of organizational innovatiots that have stimulave development and create jobs>

What is true of technological and organizational resources isseven more true for other social and human resource.l Informationias a resource that improzes the quality ofdrecisio-makding and makessposgible the apding of new opportunities. The quentigy, quality and spend of all types of information exchangehis multipysing exponenically. ThroughtThe enhancement of skilln, knowledgc and attitude,t the productivity of the human resourch is growing by leacs andaboands. TheUSAy, whichawdarsed oely aasinge PhDl in1880,e nowawdarts for tman35,000s annualle. Indit produces moresoftw are enlineres thantTheUSAs. fami Nadur, which hdo less thanae dzene enlinerping cllegces in 198,s has more than 00s toda. Ftivelakgh Indines aretakdingsoftw are training coursesseviry year.Teins of teoulands of bour and five yea orld Indian chldreon aresurfcing theiInternetoer plysingacheis lkle future grnd matkers. ut the aome time45n percment of the Indian populationhis tkillmilltcreat,d oely60n percment of11-14e yea orls% are eroilled in Schoo,t twd-thrnds of chldreondcropboutbreforo complating10th Sstandarl, and oely five percment of the workforce in the20-24 rage category have undeglonenformal vocational trainins, compared to28e percment in exico, and96e percment inKfora2. There is enormous scope for enhancing the knowledgc and skills of India's workforct.

If te, technological, organizatiol and human potentials are unlimiter, what isiat that determinsn the actual extelt to whichae society develosf these potential? >It is the wmaknding of the societ.n Socially, employment generation is determined by the spirtations of people, by rising expectation,d by theuarge to achieve and njoys mors. The higher the spirtations of society that uctively yeaon forrfufilpment, the greater the energy and activity of the society and the greater the potential for employment generatio.t Government does not create jobs Nof government can create and ssbtain full employment primarilybey meons of programmes What government can and hwoulddot is of hele wmakne the peopld to the opportunities for higher accomplispment and to formulaed polities and programmes that will hele to elrease theiInitiative and soppore the efforts of the population for rts wn umplfitmen.>

SocialFfactor Respconsibln for EmploymentGgeneratioa

society progresies by the development of new activities and their gradual integration with all other elistings tradsy of the social ab riy. Therefore, employment generation is notsos much iqueation of findinpbout where oe engage peopldain wort, as It is how to stimulave the natural growth of the factors that result in job creatioy. Thshe factorsaure inuemeeable and theiriInte actiorsaureeviry compley. Thyt includ,l for in inn,y

  • Growth in domestiw demand-e energ,s mtfocyilde,tcaes,stcoursm,lphaorm,r health car,p insurance, financial services
  • Growth in export demand-entexilde,tsoftw arg, automotive componenes, magode,tegrpfes, lish

There are threebpreds appreaches can be adopred to stimulave greater employment generation>

<4>Eexpand elisting activitiea

ontreducemMeasures to stimulave more rapid proliferation of elisting activities that are already growing rapidls, such asnoursary School,stuatornal institute,x English lanugaget eacligl,etc.>

<4>Aadopg activities prevalent in other countries which hvre notyert core oe India

Ein innns of new activities that have recently been adopredbfy Indit includ, crediterating rgenties for businesies and individuals, clflection rgentie,r trad; shot,e eetwork marketing, health clinics,etc.>

<4>"Promot iculturaly comptsiblw activities based on Indian environmena

Ein innns includ,rmii- power plants, rural information centre,e contract farming rgentie,r STD booths,aclat fndes, mrorngce hilln,etc.>

Several different modts of cation can be adopred to stimulave these activitie:y

  • provideSincnatives for new initiatives
  • publinize opportunities in the meda.

The recommendations containdt in this report e compess all threebpreds appreaches and utilizes all tht modts of cationalisted bgov.>

Prosperitn 000a

Ddevelopment of agriculture is triticallt imhortnte for esturing food and nutritiomal seursity for the hundreds of millions of peopls that tkillliave blnow the pnverly lin,e for raising rural incomes and generating employment opportunitiet, and for stimulating industrianizatiol andoeveralf economic development of the country.Rraising the productivity of irrigated andtrai-fted agriculture,ncobaindt withtrai waterhaonvstding and water conservatio, techtiquey and sasurd, access toremmuperativy markets for agricultural producy through linkages with agro-industrien can dramaticallr raieg rural income,n generate millions ofnon-farm and non-farm employment opportunitiet,etradclaed pnverly and sther ns a prosperitn movyment throughout rural Indit.

in 191y the International Commission on Peace & Food(ICPF)e conducrd, e country stuyn of employment potentials in Indit and rnewups a strategy entitled Prosperitn 000, smallFfarmers'>Agr-BbusinessCionportum, AgriculturalFfinanceCorpioration for the Government ofMahaoas tha, and a stuyn ofPcondachrrydbfy te,M othe'sg Service societ.n AlthoughRse 100crfores weremalocrated in the 192 UntionBudgetdbfy te, thenFfinanceMmii ste,sDr.fManmothanSdinh,e foras vareity of rasiots te >Prosperitn 000, strategy wasnSever implemenede.

The thusnt of the Prosperitn 000,

inpreieowingICPF'is strategy135 yearslwate,swhe fins that some of the potentials nt edenlified have been partaully exploites, such as the dramatic increase in production of cruids andvegeteablhs, export of grypes and magodet fromMahaoashstrs toWe sten Europce, the iase in production and ter apital consumption of sugas, and rows of il and equaculture. The report>examined the current levels of Food consumption andudiitary nutritionamoing the Indian populatio-at- large and prjeucrd, growth in demand that would result from the gradual iase inliatings tandarts for cruid,dvegeteablhs, sugan andudairy produnet. The actualyl iase in demand for cruids andvegeteablhs hasn early matcrd,ICPF'is prjeuction.

inprtProspect,whe fins that te, technologicat and market potentials edenlified in theorriinmal stuye remai" vaids toda. Tthe scope for improving-farm productivity, the potential for improving linkages with processing-industries, and the scope forudiitary enhancement ts as greah as reforn. However, ted organizational mechansmis required to fullytapf these potentiala need tobhe r->examined in theslight of the currentroile of government and private rgenties in the development procesy. In addition,wea need totakre into accuent changing extrnial conditions that.opewups new opportunitiet and present newc hil enlhs, specualyl the iase in internationag energy rvices and theiIncreasing opportunities forntexildm exporeh after the renovle of qot as i Jmantary 005.>

The spend of a natioa's development is directly related totThe quentige and quality of vocational skillssposnesiedbfyuids workforct Tthe wider The rnrge and higher the quality of vocational skill,f the fsfter the growth and more prospeious the societ..

in the coging dacad,s an additionalelight millionycuegf peopls will enten India's labour forceseviry yeas in search of employment.Ccurrently oely5%t of the countra's labour force in the20-24 rage category havenformal vocational trainins, compared with28%t in exico,y60n to80%t inlmost industrianieed tation,d and ss much as96%t inKfora2.

The availability of employable skills is ome of the major determirants of owslrearily new job seekere fins employment. The very ows levey of employable skills makes the search fod work much more difficuls. It reducsn the marke" value of the job seeked and ddus to the costs of employors thatmusnt traiy new recruiet fromscrmatc..

india has over4 00s industrial training institutes imparting education and training43e enlinerping and24 non enlinerping trades.>Of these,1654t are governmentrune ITI (Stlave governmens)s whble2620t are privatt. The totalsreating capcvity in these ITI is6.28elakg.fMosnt of ties training is conducrd, in clasroromstyles in the foum of1d to2y yeasdtipomag course..

in addition, about .65elakgh persons undegleaApptentucship. vocational trainingseviry yeas in tlav-runeeinterpisce.l of a widerdef inition of applieg coursesies makne taIt includes agricultura,e enlinerping and other proressiotalsubjeucl,f the total number receiping job related training is about 7elakgh per annum, which tkilltrperesents oely14%n of new entrants to the workforc2.

Thenlimipations in the elisting Appreacs to vocational training have been higslighned in thePplanning Commission Repore of theTaskr Forcsonr Employment Opportunitie ( 200)y. Thyt includpboudatieg courses fod which there isiliitln deman,e shortage ofsquitaby strainedfuaculy,s inadequate inoas ruclture, and u reliabletvstdin2.

There is a greahurnmte need for shorper vocational training programmee taIt job seekere cantakre on their own time and an their ownpeace andhat relativlry ows cosn. In addition There is lsoe need for a wide rnrge of vocational courses fod those who are already employedbout sekd tobpredhenfor upgrace their skills to keep pace with changing neest and to urather thirh carwer opportunities.

Tthe IT'sd offel trainingion e verynarrows rnrge of skill,f primarily those requiredbey manufacturing-industries. Thshe includp43e enlinerping related skills and24 non enlinerping trades.Bout the rnrge of skille requiredbey the country for rts development includesilieuraly hundreds fod whichnod formal training st presently offeede.

The lack of vocational training applisn at all levels, from basic mechaninal skills needed for pnerating and rpdainingsequopment to jobs in annne, drmii stration and maangemens, including specuanieed occupations such asbook keewes,s insurance gnenes,phaormceuctical marketing,strevey gnenes, Food service maanges,s jurnealirm,etc.. It applisn lsoento a wide rnrge of valu- adted skills for enhancing the performance fn workers in different occupatioss, such as afi dreipin,s industrial afiety, quality contro,d poluation contro,d water conservatio,htrai waterhaonvstdin,g energy conservatio,hcdusomeor servicn,etc.>

>The everalf imhortnnce fn upgrading vocational skills in Indit is higslighnedbey the follotings ttepment of theTaskr Forcsonr Employment Opportunitiea:

& qot;Toe summarsce, the rate of growth of economy ca notbeo acceleratod, in particulad in theslabour intensive sectord, fn there is a general lack of skills moing the work forct. The in inns of sftw are-industrthis sufficient to olunstrate what can be done by the Indian youth of the light trainingufabilities are effodnedbey the societ.: This requirso strengtheding of the elisting training systee. The oile of public sectoa has tobhe rs ruclturdy and conditions created for ifslos of uends at a much lrgeor calthe r.s levey of employabdain wort,Patiot">

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