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Better money for farm labourers who shift to non-farm sector, but a higher debt too: Study

On an average, the agricultural labour household borrowed 72.40 per cent of the total debt during 1987–88 from such non-institutional sources, which increased to 89.89 per cent in 2018–19,says the study.

By: Express News Service | Ludhiana |
July 15, 2020 3:44:05 pm
Monsoon arrives in Telangana, Telangana weather, Telangana Monsoon, Hyderabad IMD, Telangana rainfall, The study says that the income pattern of households changed and the share of income from agriculture declined drastically in three decades. (PTI Photo)

Even after making a shift from the farming sector to non-farming jobs, the agricultural labourers in Punjab are still under debt. Their income increased after shifting to the non-farm sector but so did their expenditures, a study conducted over a period of three decades has found.

One hundred households from rural Ludhiana were surveyed under the study — ‘Punjab’s Agricultural Laborers in Transition-A Longitudinal Study of Three Decades’ — conducted by Dr Sukhpal Singh, professor and senior economist, Punjab Agricultural University (PAU) Ludhiana and Shruti Bhogal, researcher, Centers for International Projects Trust (CITP), New Delhi.

Speaking to The Indian Express, Dr Sukhpal Singh said, “It is rare longitudinal study because of its sampling. The field data from 100 agricultural labourer families from Ludhiana was collected via personal interviews, first in 1987-88 and then in 2018-19. All households studied in 1987–88 could not be located as full families in 2018–19, as some had undergone division, or migrated. A sample of 100 families was taken from the same or part of the same family for the study.”

“In 1987-88, out of 100 households, 88 were engaged in solely agricultural labour and 12 were in mixed labour (agriculture and non-farm). But after three decades, only seven of them were left in solely agricultural labour and 56 had shifted to solely non-farm works. Those engaged in mixed labour increased from 12 to 37. This implies that while in 1987-88, at least 88% families were in solely agricultural labor, it declined to mere 7% in 2018-19 indicating that agricultural labourers in Punjab are undergoing a socio-economic transition due to intensified capitalization and mechanization of agriculture. They are shifting from agriculture to non-farming sectors and secondly, the permanent or attached labour in agriculture is getting converted to casual labor.”

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However, the study also found that even after families shifted from agriculture to non-farm sector, they are still under debt. While their income increased, so did their expenditures. “Even after making a shift from farm to non-farm or mixed sector, most of these families are still under debt. Their income has increased after shifting from agriculture labor to the non-farm sector but so has their expenditures. Spending is still more than earning. Expenditure is exceeding income due to which they have to take debt from non-institutional sources at high interest rates. They are now spending more on items such as clothes, mobile phone,” Dr Sukhpal said.

“The proportion of expenditure budget spent on comforts, durables and services has increased, which indicates that the economic conditions of these households have improved with time. This is further affirmed by the declining incidence of poverty. However, consumption being more than income points towards inevitable indebtedness,” read the study.

Occupational shift in labour households

“The state is experiencing rampant de-peasantisation as peasants are giving up agriculture as a means of livelihood. Resultantly, the agricultural sector seems to be shrinking in terms of gainful employment opportunities. Thus, the population dependent on agriculture, especially the labour community, the weakest economic strata in the rural society, is mired into a state of vulnerability and desolation. This process pushed many households towards non-farm activities,” read the study. It added that the shift of labour from the farm to non-farm sector is quite robust (56 per cent of households under survey turned solely to non-farm sector over three decades). “This situation clearly brings out the magnitude of occupational shift in farm labour households in the rural economy of Punjab,” it adds.

Changing pattern of income

The study says that the income pattern of households changed and the share of income from agriculture declined drastically in three decades. “The total annual income of these labourers from agriculture declined from about Rs 7,276 in 1987–88 to Rs 2,878 in 2018–19 at constant prices. The share of income from agriculture in total income (permanent and casual labour) also declined from 86.17 per cent in 1987–88 to 21.78 per cent in 2018–19. With the agricultural sector becoming less remunerative, agricultural labourers depended upon non-farm activities. The income from non-farm sources increased from Rs 582 in 1987–88 to Rs 10,335 in 2018–19. The overall income increased from Rs 7,856 in 1987–88 to Rs 13,213 in 2018–19,” the study read.

It further notes wide disparity between income earned by workers engaged in the farm and non-farm sector. “The pattern of change in the income generated per worker from the farm and non-farm sector exhibits that the farmers who were still engaged in agricultural activities were far worse than those engaged in the non-farm sector, with regard to improvements in income over three decades. The annual income per worker per household from the non-farm sector increased more than double, from Rs 4,157 in 1987–88 to Rs 8,612 in 2018–19. On the contrary, the annual income per worker per household from the farm sector that was Rs 4,576 in 1987–88 increased marginally to Rs 4,718 after three decades in 2018–19. This feature of the farm sector is highly worrisome from the viewpoint of gainful employment and depicts the vulnerability and plight of those still engaged in this sector,” states the study.

Consumption/expenditure increases

“In 1987–88, the annual average consumption expenditure of an agricultural labour household on food items like foodgrains, milk, vegetables, intoxicants, fuel, clothing…. was Rs 5,525, which increased to Rs 8,388 in 2018–19,” says the study. The annual expenditure on durables like house construction, phones and television… exhibited an increase as these items, accounted for 6.17 per cent of the total consumption expenditure in 1987–88, which increased to 16.53 per cent in 2018–19. The study noted along with the consumption of durables, the type of such durables too changed over three decades. “For instance, phones were a luxury back in 1987–88 but have become an essential part of life now,” found the study.

Debt shoots up

The study found that households under debt decreased from 89 per cent in 1987-88 to 81 per cent in 2018-19, because of shift from farm to non-farm sector but magnitude of debt increased and earnings were still less than spendings. “On an average, the amount of debt of an agricultural labourer household was Rs 5,068 during 1987–88, which increased to Rs 8,178 in 2018–19. It was observed that the proportion of indebted households declined during the study period from 89 pr cent to 81 per cent. Despite the decline in the extent of indebtedness, the magnitude of debt of households increased from Rs 5,769 in 1987–88 to Rs 10,096 in 2018–19. This indicates that a significant shift towards the non-farm sector could not avert indebtedness, pointing towards the insufficiency of earnings,” the report read.

These families were dependent on non-institutional sources of debt at high interest rates. On an average, the agricultural labour household borrowed 72.40 per cent of the total debt during 1987–88 from such non-institutional sources, which increased to 89.89 per cent in 2018–19,says the study.

Way ahead: Agro-industrialization

Dr Sukhpal Singh said that agricultural labourers who shifted from farm sector to non-farm were still dependent on menial jobs at brick-kilns, workshops, factories, which led to a marginal increase in their income but still not sufficient to cover their expenditures and bring them out of debt completely. “While the agricultural labour households, solely depending on income from the agriculture sector are struggling, the ones shifting to the non-farm sector are switching over to menial jobs. The need is to focus on setting up agro-industry in rural areas to help such families. Rural agro-industrialisation for overall improvement in the employment situation along with enhanced wages, liberal institutional credit and debt waiver specific to workers are vital aspects that need attention. There is a need to develop rural industrialisation with special emphasis on agro-based industries that would help preserve the natural balance of employment in the rural economy,” he said.

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