India’s growth story cannot be complete without a truthful representation of its rural economy. The latest Census report, released in 2011 stated that around 73% of Indian households were rural and this can be seen as an indicator of its rural extant and the report establishes that India is still overwhelmingly a country of rural realities. Decades ago, Mahatma Gandhi had said, “India lives in villages.” The latest Census indicates that still, almost 68% of India’s population lives in rural areas.
The irony of agriculture
Agriculture and allied sectors form the basis of India’s rural economy. The imminent problem in India’s rural economy can be assessed from the fact that around 52% of India’s population is linked directly or indirectly to agriculture whereas the sector now only contributes around 14% towards the country’s economy. Its contribution has reduced from 51.88% in 1950. The overwhelming deprivation visible in the rural/agricultural sector can be linked to this sharp drop of the sector’s contribution to GDP with reference to its employability. The former has shirked over the years whereas the latter remains high.
Linking India’s overtly non-mechanised agricultural sector to the market economy has accentuated its vulnerability. Instances of farmer suicides have soared in recent years and the overall agricultural sector has been in doldrums. Farmers have consistently claimed that they are not receiving fair prices for their produce. Disturbing images of farmers in India’s rural hinterlands destroying their crops have surfaced frequently. India has seen its highest rural to urban migration in recent times and this reflects of the crisis in the agrarian sector.
MNGEGA – impact
The government flagship programme is aimed at providing guaranteed employment to the rural poor. The scheme has factored in the fact that the majority of the rural poor are unskilled and are highly vulnerable and prone to exploi-tation. It has successfully intervened in providing guaranteed employment to the poorest in India and has provided some wanted relief to India’s rural economy.
Yet, there remains a flip-side. There is an increasingly prominent economic position that is being taken against this scheme. According to this position, this scheme is generating an idle labour army in India’s rural sector and is arresting the economic potential of this large and untapped resource.
Bidyut Mondal runs a flourishing decoration business in one of Kolkata’s uptown eastern suburbs. His business has taken of well and he is behind some of the popular Durga Puja pandals in his area of operation. With the approaching wedding season, his services are in great demand. He specialises in arranging open air weddings and the upcoming wedding season holds great promise. However, for the past few years he has been facing problems in arranging labour. The labourers working for him are mostly rural agriculturalists who migrate to the city in the post-harvest season. For the last few years, Mondal is finding it increasingly difficult to arrange labour and informed, “The cost of labour is spiking and this is negatively impacting the market. The government schemes in rural areas like MNREGA and such others have ensured employment to the rural unskilled labour market. Most of them have lost the need to migrate to cities for work during the post-harvesting season.”
The impact is not limited to the migrating rural to urban labour market. The rural agricultural market is also waking up to a scarcity of labour, a phenomenon unheard previously. Many of the rural agriculturists across Indian states depended on unskilled labourers for agricultural work. With an ensured employment for 100 days, the rural unskilled labour market has contracted, spelling woes for rural agriculturists. This has increased the cost of production and adversely affected the agricultural sector.
These realities cannot be wished away. However, concealing the positive impacts of this scheme will be fallacious. It must be stated that the programme has been one of the most impactful programmes for India’s rural sector and has provided much needed relief to millions of rural poor. However, given the present state of things, there is need to rework this scheme. Although there is need to provide guaranteed employment to the unskilled millions residing in India’s vast rural expanses, the rural economy cannot be expected to grow with this alone. There is an urgent need to skill the rural population to transform this vast human resource into a more productive workforce. The government must focus on schemes and programmes which will impart skill training to the country’s rural population and encourage them to take up various entrepreneurial activities. Though the MNREGA needs to be continued and emphasised, the government must supplement it by promoting other schemes aimed at skill development. To transform India’s rural economy, the government must also provide easy access to institutional credit and promote and incentivise agro-entrepreneurship. Pisciculture, horticulture, cattle rearing and poultry farming needs to be emphasised and the rural entrepreneurs must be protected initially, on their entry to the market. Depending only on MNREGA will not serve the purpose of enhancing the productivity of India’s rural economy.