• UGI USER
  • Aug 07, 2024
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RETHINKING DEVELOPMENT PLAYBOOK

Relevance

  • GS 3 – Economy, Inclusive Growth

Focus

  • This paper examines the need to reconsider development techniques in order to provide inclusive growth and gainful employment.
  • It looks at the drawbacks of the status quo and offers several alternatives, highlighting small-scale agriculture’s potential in particular.

Current Scenario

  • Employment Data: The employment sector demonstrates a deficiency in providing adequate chances for individuals relocating from agriculture to urban settings or formal employment sectors, despite hopeful claims that more than 80 million jobs have been generated between 2017 and 2018. The Periodic Labour Force Survey (PLFS) 2022–2023 reported that 8.7% of people were unemployed in metropolitan areas.
  • Sectoral Shifts: Because of the sluggish pace of the shift from the agricultural to non-agricultural sectors, a sizable proportion of the labor force continues to work in low-wage or informal jobs. Even though it only makes up roughly 16% of India’s GDP, agriculture nonetheless employs over 42% of the country’s labor force (Economic Survey 2022-23).
  • Policy Statements: Ground realities frequently refute government claims of massive employment creation, highlighting the need for more effective policy initiatives. The mismatch between the skills available in the workforce and the development of jobs is highlighted in the Ministry of Labour and Employment’s report on employment generation.
  • Dominance of the Informal Sector: A significant portion of the labour force continues to work in the unofficial sector, underscoring the necessity of regular job possibilities. Approximately 81% of workers in India are employed in informal jobs, according to the PLFS 2022–2023.
  • COVID-19 Impact: The epidemic has made employment problems worse, which increases the urgency of developing inclusive and sustainable development policies. According to data from the National Statistical Office (NSO), during the pandemic, the jobless rate increased to 9.3%.

Key Issues

  • Unorganised Sector Employment:
    • Restricted Protection: The absence of institutional protection makes it more difficult to get work in the unorganized sector. The International Labour Organization (ILO) estimates that more than 90% of Indian workers are unemployed and do not receive social security payments.
    • Low Pay and Unfavorable Working circumstances: Positions in this industry frequently offer low pay and unfavorable working circumstances. According to the ILO, the average salary in the informal sector is less than half that of the formal sector.
    • Lack of Benefits: Unorganized sector workers are particularly susceptible because they usually do not obtain social security benefits. Although it covers a small area, the Social Security Code 2020 attempts to solve this.
    • High Turnover: In the unorganized sector, there is frequently job insecurity and a high incidence of turnover. The need for more stable employment prospects is highlighted in the Economic Survey 2021–2022.
    • Health and Safety: Informally employed workers may face greater dangers due to lax health and safety regulations. Informal workers are more vulnerable to occupational dangers, according to the National Institute of Occupational Health (NIOH).
  • Agricultural Dependence:
    • Stagnant change: The pace of change is slow, even while there is a clear need to move away from agriculture. Over the previous five years, there has only been a 2% decrease in agricultural employment, according to the PLFS 2022–2023.
    • Effective policy measures: Such as raising the productivity and compensation of small-scale agriculture, are necessary to support this transformation. Although they require greater execution, the PM-KISAN program and other agricultural reforms seek to increase farmers’ incomes.
    • Income Differences: There are notable differences in income between the agricultural and non-agricultural sectors. According to NABARD, the average monthly income of a household in the agricultural sector is approximately Rs. 10,000, while that of non-agricultural sectors is Rs. 20,000.
    • Seasonal Employment: Seasonal employment is a common feature of agriculture, which causes income instability. To provide year-round jobs, the Economic Survey 2022–2023 recommends supporting related industries like dairy and fishing.
    • Climate Vulnerability: The effects of climate change could seriously jeopardize the livelihoods of agricultural workers. According to the IPCC assessment, crop production could be negatively impacted by climate change by as much as 30% by 2050.
  • Economic and Social Implications:
    • Productivity and Compensation in Agriculture: Supporting small-scale farming may be a profitable and productive strategy that offers improved earnings and long-term sources of revenue. According to studies conducted by the Indian Council of Agricultural Research (ICAR), using contemporary farming methods can boost output by 20% to 30%.
    • Labor Productivity: It is imperative to raise labour productivity in the agricultural sector. For instance, small-scale agriculture’s production is far lower than that of the organized sector. Agriculture’s labour productivity is around one-third that of manufacturing (NITI Aayog).
    • Economic Diversification: To ensure sustainable growth, the rural economy must expand beyond agriculture. The necessity of fostering non-farming activities in rural areas is emphasized by the Ministry of Rural Development.
    • Skill Mismatch: The demands of non-agricultural jobs and the abilities of the rural labour force frequently diverge. The goal of the Skill India Mission is to close this gap by offering specialized training.
    • Obtaining Credit: The expansion of small-scale farming and rural businesses is hampered by limited access to financing facilities. The Kisan finance Card (KCC) program seeks to give farmers access to finance on time, but it requires more public awareness.
Case Studies

Bihar’s Agricultural Model

  • Employment and Displacement: By offering farm workers alternatives in the organized sector, Bihar’s model demonstrates how to deal with their displacement in an efficient manner. Women have been successfully employed in non-farm occupations in Bihar under the Jeevika project.
  • production Improvement: A more seamless and fruitful shift from small-scale agriculture to other sectors can be achieved by raising the production per worker. Programs to improve agricultural production run by the state have raised yields by 15–25%.
  • Microfinance Initiatives: The prosperous microfinance schemes in Bihar have aided small-scale farmers in making investments in improved farming methods. Through microfinance, the Bihar Rural Livelihoods Promotion Society (BRLPS) assists SHGs.
  • Cooperative agricultural: In Bihar, cooperative agricultural forms have enhanced resource sharing and collective bargaining strength. In certain regions of the state, farmer incomes have doubled thanks to cooperative societies.
  • Integrated Farming Systems: Productivity and sustainability have grown with the adoption of integrated farming systems. The ICAR encourages integrated farming approaches to increase the effectiveness of resource usage.

Erik Hobsbawm’s Theory

  • Historical Lessons: Historian Erik Hobsbawm claims that well-managed historical transitions have demonstrated that 50% of the workforce may be removed from conventional sectors without suffering harmful effects. His research highlights the significance of planned and gradual changes.
  • Policy Implications: These historical insights imply the importance of meticulous planning and policy actions. Sectoral changes can have negative repercussions that can be lessened by effective policy.
  • Social Safety Nets: In order to assist displaced workers, strong social safety nets are necessary. For workers in rural areas, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) offers a safety net.
  • Community Involvement: Planning and executing transition programs with the participation of the local community can improve their effectiveness. In many areas, community-led development initiatives have produced greater results.

Statistical Data

Employment Trends:

  • Employment Statistics: Despite the need for increased formal job creation, just 10% of the workforce is employed in the organized sector. The need for increased jobs in the formal sector is highlighted in the PLFS 2022–2023.
  • Rates of Unemployment: As of 2023, the most recent data indicates a 7.5% rate of unemployment, which reflects the difficulties in creating a sufficient number of formal jobs.
  • Labor Force Participation: The low rates of labour force participation suggest that the workforce is not being fully used. With a participation percentage of 40%, it is among the lowest in large economies.
  • Youth Unemployment: The need for focused interventions is highlighted by the high rates of youth unemployment. The PLFS estimates that the young unemployment rate is approximately 20%.
  • Gender Disparities: Considerable gender differences in the workforce need for targeted policy changes. Women’s participation in the labour force has only been 23%, compared to 76% for men workforce.

Economic Surveys:

  • Employment in Agriculture: According to reports, a sizable section of the workforce is still employed in agriculture, which makes good transfers to other industries necessary. This requirement is emphasized in the NITI Aayog report on agricultural transformation.
  • Income Disparities: The need for focused interventions to enhance livelihoods in the unorganized sector is highlighted by the differences in income between the organized and unorganized sectors. The organized sector’s average income is around twice that of the unorganized sector.
  • GDP Contribution: The need for economic diversification is highlighted by the diminishing GDP contribution of agriculture. The GDP percentage attributed to agriculture decreased from 30% in the 1990s to 16% in 2022–2023.
  • Poverty Rates: 15% of people live in poverty in cities, whereas 25% of people live in rural areas. Comprehensive development methods are necessary in rural areas due to the high rates of poverty.
  • Infrastructure Development: The Economic Survey 2022–2023 recommends significant funding for rural infrastructure. Economic progress in rural areas is impeded by inadequate infrastructure.

Sustainable Solutions

  • Improving Agricultural Productivity: Using cutting-edge farming methods and tools to boost output and profits.
  • Developing employees’ skills: In order to prepare them for higher-paying positions in the organized sector is known as skill development.
  • Market Access: Expanding small-scale farmers’ access to the market to guarantee that they receive fair prices for their produce.
  • Building rural infrastructure: To support agricultural activities and ease the shift to non-agricultural jobs is known as infrastructure development.
  • Creating inclusive policies: To ensures equitable progress by attending to the demands of both the organized and unorganized sectors.
  • Social Protection: Improving the living and working conditions of unorganized sector workers by extending social protection measures to them.
  • loans Facilities: Increasing small-scale farmers’ and rural entrepreneurs’ access to loans.
  • Encouraging Technology: The application of technology in rural and agricultural businesses is known as technological integration.
  • Creating agricultural techniques: That are climate resilient.
  • Encouraging public-private partnerships to propel rural development is a key strategy.

Conclusion

Rethinking the development playbook entails implementing measures that support equitable growth, especially by raising small-scale agriculture’s output and compensation. Increased productivity in the workplace and sustained economic growth can be achieved by tackling the gaps between the organized and unorganized sectors and putting into place sensible governmental initiatives.

Mains Question

Discuss the challenges and potential for rethinking development techniques to promote equitable growth and create productive jobs, with an emphasis on agriculture. (250 words)

Source:  Financial Express