Opinion Tapping agriculture’s potential to create more jobs

The number of workers employed in unincorporated sector enterprises across India has fallen from 11.13 crore in 2015-16 to 10.96 crore in 2022-23, according to a comparative analysis of the National Sample Survey Office’s data by this newspaper. The drop has been entirely in manufacturing (from 3.60 crore to 3.06 crore), while the workforce engaged in trade (3.87 crore to 3.90 crore) and “other services” (3.65 crore to 4 crore) has marginally gone up. That, on the face of it, is disturbing. The informal sector has traditionally acted as a shock absorber and “employment sink” for the large masses of unskilled/semi-skilled labour that cannot be productively engaged either in formal firms or agriculture, more so in years of crop failure. In this case, these enterprises — whether own-account establishments or run with some hired hands — were themselves seemingly victims of the triple shocks of demonetisation, goods and services tax rollout, and the pandemic-induced economic lockdowns between 2016-17 and 2021-22.

The reduction in the number of workers in unincorporated non-agricultural establishments may have been, to some extent, offset by an expansion in formal sector employment. If such formalisation has happened — there’s no reliable data on that — it’s probably not a bad thing. Informal firms are, after all, characterised by small scale of operations and low productivity that also translates into workers being paid little: The annual emoluments per hired employee in unincorporated sector enterprises averaged just Rs 1,24,482 during 2022-23. India, it’s well known, has too many people in agriculture. If the jobs being generated outside agriculture are mostly in the informal sector and construction having the same characteristics — low output per worker and paying just-about subsistence wages — it does not amount to genuine structural transformation. The transfer of surplus labour should, ideally, be from informal (including agriculture and construction) to formal (manufacturing and high-productivity services).

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Therein lies the challenge. The manufacturing sector is becoming increasingly capital-intensive, with the deployment of both labour-saving and labour-displacing automation, artificial intelligence and machine learning technologies. IT, accountancy or financial services, on the other hand, demand skills that a majority of India’s working population lacks. That leaves agriculture and tapping its unexplored potential for gainful employment generation. Such jobs can be not on, but “near and outside” the farms — in the aggregation, grading, processing, packaging, transporting, warehousing and retailing of produce or the supply of inputs and services to farmers. It requires re-imagining agriculture and a vision of the “farm as a factory” producing crops that are raw material for further value addition. Converting onion and tomato to paste and puree can do what sugar mills and dairies have done — not just adding value to produce, but also creating jobs in the countryside itself.