With depressed farm wages, rising unemployment and falling consumption, rural India has been hit particularly hard by the current slowdown. One way to address this is to make it easier for those dependent on agriculture to access more productive jobs in the ‘non-farm’ sector. According to new research by Varun Kumar Das and A. Ganesh-Kumar of the Indira Gandhi Institute of Development Research, such a policy would not only boost employment in rural areas but also raise farmers’ incomes.

Non-farm (or off-farm) work is defined as any remunerative work outside one’s own farm. It includes wage labour on other farms, wage labour engaging in non-farm work, or running non-farm enterprises or businesses. The authors use data from the 70th round of the National Sample Survey to understand what influences household decisions to diversify into non-farm employment. They find that beyond farm and household characteristics (such as farm size, household size and caste), structural factors matter.

Factors such as infrastructure in the area and agro-climatic conditions can influence decisions to shift to non-farm employment.

For instance, they show that commercial and domestic power availability is more likely to push households towards non-farm work. Domestic power frees up time spent on household chores for non-farm activities. In the same vein, favourable soil conditions make farming easier and release household labour time for non-farm activities. Similarly, access to financial services can increase the probability of households engaging in entrepreneurial activities and wage employment.

So, policymakers should play an active role in encouraging rural non-farm diversification by developing necessary infrastructure and address other structural features such as agro-climatic conditions in policy decisions.

Also Read: Off-the-farm Livelihood Choice of Farm Households in India

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