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Business News/ Opinion / Views/  Workers are moving off Indian farms but where are they going?

Workers are moving off Indian farms but where are they going?

An agricultural employment study suggests that our prime-age citizens need to be employed by other sectors in huge numbers

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Photo: Mint

Agriculture and allied sectors account for about 18% of the Indian economy, but around 40% of employment. How do we reconcile this with the reports we hear of shortages of farm labour? What is the true extent of farm employment in India and how does it differ in states which have traditionally been agriculture- focused vis-à-vis others?

Using estimates derived from unit-level data of the Employment and Unemployment Survey, 2004-05, and the Periodic Labour Force Survey, 2018-19, we investigate age-wise, gender-wise and state-wise changes in India’s employment pattern, with agriculture as our focus.

We calculate the sector-wise employment-to- population ratio, instead of the typical employment-to-labour force ratio. The advantage of the former is that it tells us the overall employment dependency of a particular sector of the economy and not just among people who are employed or looking for work. We restrict our analysis to the age group of 20 to 59 years, which we define as the prime working-age.

The farm challenge
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The farm challenge

Unlike older farm workers, workers in the prime-age group face trade-offs in the labour market and are expected to move to an alternative job if the opportunity cost of working on a farm rises. Alternatively, if family incomes increase, women may drop out of farm work, which is a cultural phenomenon in India. Also, we exclude the age group of 15 to 19 years, which is generally considered a part of the working-age group, since, with rising education levels, a large proportion of the group is in education.

Our estimates show that there has been a dramatic reduction in prime working-age Indians engaged in agriculture, with their share falling to 23.3% in 2018-19 from 40% in 2004-05. Even in rural India, only one in three prime working-age adults was employed in the sector in 2018-19. There was an even sharper decline in the share of young adults (20-29 years) who work in agriculture. Only about 14.4% of young adults were working on farms in 2018-19, down from 34% in 2004-05.

A decline of young people in agriculture work partly explain reports of shortages of agriculture labour. Further, this also means that the median age of agriculture workers has increased to 40 years in 2018-19 from 35 in 2004-05.

Among major Indian states, the average age of agriculture workers is the highest in Kerala and Tamil Nadu, at 46.7 and 43.4 years respectively in 2018-19. The ageing agriculture workforce would necessitate faster mechanisation of Indian agriculture going ahead, but fragmented farm sizes in India may pose a problem.

There is wide regional variation in the dependence on farm employment, although there has been a sharp reduction across states. While only 8.5% of Kerala’s prime working-age population was working in agriculture in 2018-19, down from 20.3% in 2004-05, Madhya Pradesh had an estimated 35.3%, down from 51.7% in 2004-05.

What is striking about Punjab and Haryana, where agriculture forms a larger share of their state economies than others, is that less than 20% of prime-age adults in rural areas reported working on farms in 2018-19. In fact, since 2004-05, Haryana and Punjab have witnessed the largest decline in the share of farm employment, along with Karnataka and Bihar. Lower reliance on agricultural employment in Punjab and Haryana reflect higher farm productivity and incomes, allowing women to exit paid farm work. However, a change of status quo in terms of assured demand and prices for food grains (which are already in excess supply) could alter this equilibrium.

In contrast, in other prosperous states of India that are not agriculture-driven, such as Karnataka, Maharashtra and Gujarat, between 40% and 45% of the rural working-age population was still employed in agriculture in 2018-19. Higher levels of reliance on farm employment in these states would point to insufficient non-farm jobs.

A decline in the farm employment-to-prime-age population ratio in India is in line with historical experiences of structural transformations of countries towards industry and services. However, what is particular to the Indian experience is that this decline is not mirrored in a corresponding increase in the proportion of prime-age adults taking up non-farm jobs. Rather, it is reflected in an increase in the share of prime adults leaving the labour market.

The largest increase in the prime-age population leaving paid employment, mainly women, has been in three relatively prosperous states, Gujarat, Haryana and Karnataka, and more worryingly also in India’s most populous and relatively poor state of Uttar Pradesh. It is a matter for further investigation how much of this decline in Uttar Pradesh is on account of an increase in family incomes (via, for example, remittances), and how much of it is traceable to the non-availability of local jobs.

Further, among young adults, the reduction in the share of agricultural employment has been accompanied by a rise in those who report being in education (13.4% in 2018-19). Given that educated young adults aspire to work in non-farm sectors, unemployment among the educated could rise further if India’s pace of productive non-farm job creation does not improve.

In sum, going forward, the high levels of agricultural-growth driven prosperity and equality enjoyed by some states, especially Punjab, may face a problem of stagnation if prime-age adults leaving agricultural work are not successfully absorbed by other productive sectors.

Vidya Mahambare, Sowmya Dhanaraj & Sankalp Sharma are, respectively, professor of economics at Great Lakes Institute of Management, Chennai; assistant professor; and postgraduate student at Madras School of Economics

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Published: 24 Mar 2021, 10:05 PM IST
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