The National Sample Survey Office (NSSO), since it put out the latest numbers on employment garnered from its 68th round of sample survey, has stirred a debate on jobs. It has broadly followed two strands: those who see in it a ray of optimism on the vexing issue of job generation in the Indian economy and those who don’t.

This is unfair. Rhetoric has and will always cloud logic, especially if it is premeditated. If you separate the grain from the chaff, you will actually see that the new data reveals the underpinnings of a fascinating transformation of the Indian economy, which, in turn, throw up very interesting pointers to the future. Capital Calculus on 24 June did dwell on it. Since then, the skewed tenor of the debate suggests a revisit.

But before that, a quick glance at the numbers. The NSSO showed that in the two years ended 2011-12, the Indian economy added 14 million jobs to the workforce. No big deal, if you consider the fact that about 12 million join the labour force every year, or about 1 million a month. It is significant though if you consider the fact that the economy, according to the earlier, 66th round survey of the NSSO, added a mere 1 million jobs in five years ended 2009-10.

That is not all. The data also showed that the Indian economy had logged a very important milestone—for the first time the workforce employed in agriculture dropped below 50%. While it continues to be the biggest source of employment, the disproportionate employment in agriculture is on the wane. This has not happened overnight. It is a trend that has been in the making since the turn of the new millennium; it was little over 60% in 2009-10.

Clearly, the data so far tells us two things. One, there has been some sort of turnaround on creating jobs. Second, there is a structural transformation of the economy underway.

A lot of the debate so far has focused, rather sharply though, on the uptrend in jobs. Yes, the numbers do show that there is a pick-up. Impressive when compared with the immediate past, it is, as critics argue, obviously not enough. What it does tell us though is that the NSSO data is robust, especially important given that when the 66th round data went public two years back, several experts, both within and outside government, had questioned its veracity.

So, what is bad then can’t be good today for those who sought to fend off criticism on the economy by disingenuously suggesting the data was faulty.

But, this poetic justice is not the point. Instead, it is that the economy is showing that it has a natural capacity of employment generation, just as it has for the rate of the growth of the economy, which, given all the constraints, is about 5% a year. In short, we should be a lot more unhappier with the fact that neither the economy nor jobs are growing above the natural rate; a proactive government is clearly missing.

Moving on to the bigger story underlying the data, it is obvious that a new dynamic is in play, especially in the rural economy. While those absorbed in the agriculture sector is below 50%—in other words, increasingly non-farm employment in the economy is growing—a closer perusal of the data reveals that this dynamic is visible even in rural India.

In the 66th round, the share of employment of agriculture for rural males was 65% in 2009-10, but dropped to 59% in 2011-12 in the 68th round sample survey. This was made up by the increase in employment in the secondary sector (construction, rural jobs guarantee scheme and so on) and the tertiary sector (dhabas, corner shops and so on). Their proportion rose from 19% to 22% and 18% to 19%, respectively.

The same trend played out for rural females. The proportion of women employed in agriculture dropped from 79% to 75%, while it rose from 13% to 17% in the secondary sector, the proportion employed in the tertiary sector remained unchanged at the level of 8%.

Critics are right when they say that this shift is too little. But then, this is a trend which clearly shows that a new dynamic is in play. At the least, we have to be grateful for the end of status quo.

As one policy planner, in an email response to the previous column, put it succinctly: “Watch the next five years. Aam aadmi (the common man) is not kisaan (the farmer) and rural is also less kisaan than people think. But agricultural growth is important for kisaan, aam aadmi and rural and also spurring non-agricultural activity in rural areas."

This person is spot on: the trend has enormous implications. It is fundamental in the fight against poverty. The returns from agriculture are meagre to lift people out of poverty by employment in this sector. Non-farm employment is the key to achieve this. The big achievement is in effecting the shift, now the fight has to move to the quality of employment and consequently the emoluments.

At the same time, what it also reveals is that rural Indians are as much fired up by aspirations, as their urban counterparts. Reality is obviously not anywhere close. This is important in a year when the country is readying for a fresh round of elections to state assemblies and also for the battle for the general election due next May.

Matching expectations of the rural electorate—a key voter constituency—would be impossible. Politicians will be lucky if they can assuage their disappointment with some credible promises.

All told, the change in status quo in rural India, captured in the new employment data, augurs interesting prospects, especially electorally.

Anil Padmanabhan is deputy managing editor of Mint and writes every week on the intersection of politics and economics. Comments are welcome at capitalcalculus@livemint.com

Close