Unleashing Growth in India’s Rural Economy: Diversifying Employment for a Brighter Tomorrow

The Indian rural economy, rich in its diversity and potential, finds itself at an important crossroads. Despite its substantial workforce, the rural economy has yet to fully embrace diversification in employment sectors. This situation, where the majority of the workforce is still tied to the agricultural sector, is increasingly becoming unsustainable due to agriculture’s reducing contribution to India’s GDP.

A crucial stumbling block in India’s path to progressive development is the failure to broaden the economic horizon beyond low-value-added activities. This deficiency limits the pace of growth and restricts the realization of the country’s full economic potential. A well-rounded understanding of the current state of affairs, particularly concerning employment statistics in rural India, is essential to tackle these issues.

A Snapshot of Employment in Rural India

The lion’s share of the workforce remains embroiled in low-value, low-paying jobs primarily in the agricultural and other primary sectors. This reality contrasts sharply with the successful economic transformation witnessed by countries such as Japan, South Korea, and China, where industrialization propelled growth.

Over the past twenty years, rural employment diversification has undergone a concerning phase, characterized by a fall in employment rates for both genders. The situation is particularly alarming for rural women, with employment rates falling to an abysmal 17.5 percent in 2017-18 from the earlier figures hovering around 34 percent. Although a modest recovery in 2021-22 brought the rate to just under 27 percent, it is still far below the levels observed four decades prior.

The sharp decline in formal employment among women is a significant factor contributing to the overall drop in total employment from 2011-12 to 2017-18. It’s important to realize that female work participation rates generally capture recognized employment, such as self-employment, thereby neglecting a significant amount of unpaid work performed primarily by women—work crucial to household consumption and survival.

Dissecting the Employment Structure

The structure of employment for male workers in rural India has undergone changes over the years. While the share of agricultural employment declined, the construction sector’s growth filled in the gap, becoming a significant employer accounting for 16.6 percent of rural male employment by 2021-22. Sectors like trade, hotels, restaurants, and transport services also boosted their share of employment but continue to remain relatively low-paying.

The diversification of employment for rural women, on the other hand, has been far less dynamic. The share of agricultural employment for women fell from 87.5 percent in 1983 to 73.2 percent in 2017-18. Surprisingly, it showed a renewed increase in 2021-22, rising to 75.9 percent.

A considerable portion of these women identify as self-employed, mainly working unpaid on family farms, since wage employment is less likely to be a “refuge” sector. Manufacturing employment, which provided jobs for 6.4 percent of rural women in 1983, climbed to 9.8 percent in 2011-12 before dipping again to 7.9% in 2021-22. Services like community and personal services also saw significant growth before declining recently.

Unraveling the Lack of Diversification in Rural India

Several factors contribute to the current stagnation in rural employment diversification:

1. Agricultural Dependence: Over 50 percent of the rural population depends directly or indirectly on agriculture—an industry at the mercy of unpredictable monsoons and prone to droughts and floods, leading to irregular, often low, income.
2. Inadequate Financial Resources: The lack of access to financial resources like credit, insurance, and savings hampers rural residents’ ability to invest in productive activities, manage financial shocks, and diversify their livelihoods.
3. Insufficient Infrastructure: The deficiency in infrastructure, such as roads, electricity, irrigation systems, telecommunications, and basic social amenities, stunts the growth of non-farm sectors and curtails access to markets, services, and opportunities.
4. Prevailing Social Inequalities: Discrimination based on caste, gender, religion, or ethnicity affects the economic opportunities and outcomes of rural people. Marginalized groups, including women, scheduled castes, tribes, and minorities, often face discrimination, exclusion, and violence, limiting their economic potential.

Government Initiatives for Rural Upliftment

Several government schemes aim to rejuvenate the rural economy and diversify employment:

• Deendayal Antyodaya Yojana – National Rural Livelihood Mission (DAY-NRLM): This scheme strives to empower economically weaker households to access self-employment and skilled wage employment opportunities, paving the way for sustainable and diversified livelihoods.
• Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS): The scheme provides guaranteed employment for the unskilled workforce, particularly focusing on securing employment for women.
• Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY): This scheme imparts skills to unskilled rural youth, creating employment opportunities in various non-agricultural sectors.
• Women Empowerment Schemes: Initiatives like NRHM (ASHA), Aganwadi (PM-POSHAN), and Banking Correspondence (BC-Sakhi) have been instrumental in employing women in non-agricultural sectors in rural areas.

The Way Forward

To foster economic growth and diversification in rural India, a multipronged approach is required:

• Infrastructure Development: Enhanced transportation, communication, and basic infrastructure in rural areas can attract businesses and investments.
• Entrepreneurship Support: Entrepreneurship should be encouraged and supported through better implementation of schemes like the Prime Ministers Employment Generation Programme (PM-EGP).
• Industry Diversification: It’s essential to promote the development of diverse industries in rural areas to reduce dependence on agriculture. This can involve identifying and nurturing sectors with growth potential that align with local resources, such as agriculture, tourism, renewable energy, manufacturing, or technology.

India’s rural economy, with its vast potential and untapped resources, stands poised for a significant transformation. With the right interventions and support, this potential can be harnessed, propelling India towards economic prosperity and improved living standards for its rural population.