In rural India, non-farm activities is the main source of income!

Workers moving out of agriculture to the rural labour force were largely getting absorbed in construction activities

Non-farm activities, not agriculture, generated more than two-thirds of the income in rural areas.

But this hasn’t translated into significant rise in employment opportunities in these areas or bridged disparities in worker productivity, a discussion paper floated by agriculture economist and NITI Aayog member Ramesh Chand said.

The paper, released on Wednesday, found that in the four decades from 1970-71 to 2011-12, rural output increased almost seven times (at constant prices) and rural economy turned more non-agricultural, with the share of agriculture in rural income reduced to 39 per cent.

But rural employment did not even double during this period.

“In fact, employment growth decelerated over time and reached a negative range after 2004-05,” the paper, Changing Structure of Rural Economy of India, Implications for Employment and Growth, said.

More than half the value added in the manufacturing sector in India was contributed by rural areas, it said.

The paper said there was de-feminisation of rural workforce between 2004-05 and 2011-12 as women workers withdrew from agriculture in large numbers.

Most women workers who withdrew from farm work and stayed back at home belonged to agricultural labour households, whose economic conditions are usually not good.

“Clearly, women in agricultural labour households do not prefer to go for farm work,” the report said.

Workers moving out of agriculture to the rural labour force were largely getting absorbed in construction activities, it added.

The report said lack of required skills and technical knowledge were the main barrier for rural workers wanting to enter manufacturing.

It said the services sector has played a major role in structural transformation of the economy but its achievements during the recent years were mainly concentrated in urban areas.

In rural areas, this sector witnessed a deceleration in output as well as employment after 2004-05.

Citing a United Nations report, the paper observed that population projections indicated India would continue to be predominantly rural till 2050, after which urban population was estimated to overtake rural population.

Photograph: Reuters