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Services, industry push needed for job creation : Arvind Panagariya

The Aayog vice-chairman said even Indian farmers and their children recognize the superior prospects offered by faster-growing industry and services.

By: ENS Economic Bureau | New Delhi |
May 19, 2015 2:22:24 am
Arvind Panagariya, Jagdish Bhagwati, Indian Political Economy, Business news Workforce employed in the farm sector is significantly poorer than those employed in industry, Panagariya said.

Owing to limited potential of the agriculture sector in bringing prosperity to a vast population in the long run, the country should emphasise on creating more employment in industrial and services sectors, NITI Aayog vice-chairman Arvind Panagariya said on Monday.

In his first blog published on the newly launched portal of NITI Aayog, Panagariya said with the share of agriculture in the country’s GDP at about 15 per cent currently, the workforce employed in the farm sector is significantly poorer than the other half employed in industry and services.

The Aayog vice-chairman said even Indian farmers and their children recognize the superior prospects offered by faster-growing industry and services. He cited a recent survey by the NGO Lokniti, wherein 62 per cent of all farmers said they would quit farming if they got a job in the city. As for their children, 76 per cent say they would like to take a profession other than farming, the survey said. “But in the longer run, the potential of agriculture to bring prosperity to a vast population remains limited. In sum, agricultural growth and expansion of good jobs in industry and services can go hand-in-hand to bring rapid elimination of poverty and shared prosperity for all,” Panagariya said.


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Unless workers have the opportunity to migrate to better paid jobs in these sectors, they will be unable to fully share in the prosperity experienced by a fast-growing economy, the Aayong vice-chairman pointed out. He cited that in South Korea and Taiwan prosperity was widely shared during the 1960s and 1970s because workers in agriculture could migrate to good jobs in industry and services. Panagariya said the government’s Make in India campaign provided the umbrella for many of the Centre’s initiatives in this connection.

“…In countries experiencing growth rates of 6 per cent or more over long periods… industry and services have grown substantially faster than agriculture… In this context that the creation of good jobs in industry and services is critically important,” he added.

Using the instrumentality of cooperative federalism, the government has encouraged states to undertake labour law reforms to stimulate jobs and states like Rajasthan and Madhya Pradesh have taken the lead in this area. The Centre intends to consolidate 44 Central labour laws into five while introducing important employment-friendly reforms, the Aayog vice-chairman said.

The government has also greatly cut the inspector raj by introducing a portal that allows MSMEs to comply with 16 Central labour laws through self-certification. Any inspections are performed via a computer generated random selection, he said. Under a recent initiative, 1.4 million workers aged 35 or younger from households having completed 100 days of work during 2014-15 under the NREGA scheme, would be imparted skills to enable them avail of urban employment opportunities, Panagariya said.

Seeking to dispel a common fear that expansion of industry and services would divert land away from agriculture thereby undermining food security, the Aayog vice-chairman said this view overlooks the fact that area under non-agricultural use, which includes housing, industry, offices, roads, railways and other similar items, was only 8 per cent in 2011-12. Fifteen years earlier, in 1997-98, this proportion was 7 per cent. Accelerated growth over these 15 years facilitated by the 1 percentage point increase in non-agricultural use of land has produced more gains in per-capita income and poverty reduction than what had been achieved over the entire 50 preceding years.

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