Low growth may turn jobseekers back to farm sector: Crisil report

Non-farm employment will increase by only 38 mn in financial years 2012-19, compared with 52 mn in FY 2005-12


Agriculture has seen a decline of 37 million employment in the seven-year period ending March 2012. Photo: Mint
Agriculture has seen a decline of 37 million employment in the seven-year period ending March 2012. Photo: Mint

New Delhi: The slowing economy will result in fewer jobs being added to industry and services in the next seven years and more workers moving back to farming, Crisil Research said in a report on Tuesday, indicating job creation will remain a key concern for the next government.

Non-farm employment will increase by only 38 million in financial years 2012-19, compared with 52 million in FY 2005-12, Crisil said.

The projection comes even as jobs data for the period 2004-05 to 2011-12, released by the National Sample Survey Office (NSSO) last year, showed that for the first time, more than half of India’s labour force was working in non-farm jobs, mainly in construction. In the seven years to 2011-12, about seven million non-farm jobs were added every year, absorbing the five million workers who left agriculture every year, the data showed.

“It is desirable to pull more and more people out of agriculture since it is a low-productivity sector, with only a 14% share in GDP (gross domestic product), but around 49% share in employment. The old trend of migration from agriculture will reverse with fewer non-farm job opportunities coming in the way of achieving this,” Mukesh Agarwal, president, Crisil Research, said. The study said fewer jobs will be created in the coming years due to slowing economic growth and a decline in labour intensity—the proportion of labour used—across industry and services. This was because of increasing automation.

Because of this, an additional 12 million workers will move into agriculture, considered the least productive activity and a low-wage sector, even as the labour force swells faster than before, it said.

Crisil estimates India’s economy will grow at an average 6% between fiscal years 2013 and 2019, with 50 million new jobs being created.

The Indian economy grew at an average 8.5% between fiscal years 2005 and 2012. But growth fell to 5% in 2012-13, the slowest in a decade, and is expected to be at similar levels this fiscal year as well.

According to NSSO data, 14 million jobs were added between 2009-10 and 2011-12 as against only a million in the five years to 2009-10, labelled by many as a period of jobless growth. In the five-year period ended 2004-05, 60 million jobs were added. Crisil said the ability of labour-intensive sectors such as manufacturing to absorb workers has diminished due to not only to rising automation but also complex labour laws.

Pronab Sen, chairperson of the National Statistical Commission, said it may not be correct to treat agriculture as a residual employer.

“Between the 1960s and 1980s, agriculture was (a) residual employer—those who did not get any job in the manufacturing sector moved to farms. But this has changed from the 1990s. Those workers who are not absorbed into the manufacturing sector look for employment in the informal non-agricultural sector,” he said. “Even though there is a lot of talk on how adequate labour is not available for farming, the point remains that average productivity is low. You can’t add more labour without increasing productivity,” he said.

The problem of job creation in the non-farm sector will become more severe given the decline in economic growth, Jawaharlal Nehru University professor and Mint columnist Himanshu said.

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