No alternatives for migrating Agricultural Labourers

• India is currently facing a unique job crisis because, while fewer people are employed in agriculture today, the transformation has been slow.
• Those who leave farms work on construction sites and in the informal sector rather than in industries.

Analysis of India’s job crisis:

Population engaged in agriculture has been shrinking:

• The share of India’s working population engaged in farming has fallen quite significantly during the last three decades.
• According to the National Statistical Office’s Periodic Labour Force Surveys, agriculture’s share of India’s workforce fell from 61.9% to 41.4% between 1993-94 and 2018-19.
• Given the current share of agriculture in GDP of India and comparing with the countries in the same income bracket, India's farm sector should employ 33-34% of the entire workforce.
• 4% may not represent a significant difference.
• This suggests that it is not totally correct that India has too many people in agriculture and the successive governments have failed to move surplus labour from farms.

Weak structural transformation:

• The movement of workforce from agriculture over the past decades does not qualify as what economists call “structural transformation”.
• Such transformation (also known as Kuznets Process) would entail shifting labour from agriculture to sectors with better productivity, value addition and higher average incomes, such as manufacturing and modern services (such as IT, business process outsourcing, finance, healthcare, education, etc).
• The share of manufacturing (and mining) in total employment has actually fallen along with that of agriculture.
• This is because, the surplus labour pulled out from the farms is being largely absorbed in construction, services (petty retailing, small eateries, domestic help etc.) and similar other low-productivity informal economic activities.
• This is also reflected in the low share of employment in organised enterprises (those employing 10 or more workers).
• Simply put, the structural transformation process in India has been weak and deficient.

IT industry adding jobs:

• The IT industry (a high-productivity industry that is able to pay reasonably good salaries) is clearly an isolated island of the Indian economy that added jobs during the pandemic and is continuing to do so.
• Exports have contributed significantly to the IT sector's recent success.
• India's net software service exports increased from $84.64 billion in 2019-20 to $109.54 billion in 2021-22.
• The five companies (Tata Consultancy Services, Infosys, Wipro, HCL Technologies and Tech Mahindra) have more employees than the Indian Railways (12.5 lakh) and the three defence services (14.1 lakh), respectively.

Why is India's job crisis unique?

• The manufacturing sector is potentially best placed to absorb agricultural labourers. However, there is a lack of jobs in the manufacturing sector.
• The somewhat more educated are not qualified to be programmers or develop software programs which are essential for the IT industry.
• They aim to join the armed forces or to sit for the Railway Recruitment Board's NTPC (non-technical popular categories) exams.
• So, the Indian workforce possesses skill sets for the sectors where there is a lack of job opportunities. And sectors that generate excess jobs require particular skill sets that the majority of the Indian workforce lacks.
• As a result, the Indian economy is unable to absorb excess labour.