Tapping agriculture’s potential to create more jobs

Relevance: GS Paper III

Why in News?

It necessitates a new approach to agriculture, envisioning “farm as a factory”  that generates raw materials for additional processing. 

More About the News: 

There are several critical issues related to employment trends in India, particularly focusing on the informal sector and its recent challenges and transformations.

• Decline in Unincorporated Sector Employment: The analysis of the National Sample Survey Office’s data reveals a significant decline in the number of workers employed in unincorporated sector enterprises across India, falling from 11.13 crore in 2015-16 to 10.96 crore in 2022-23. 
• This decline is primarily seen in the manufacturing sector, which saw a reduction from 3.60 crore to 3.06 crore workers.
• 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. 
• Role of the Informal Sector:  In contrast, employment in trade and "other services" sectors has seen a slight increase. 
• This trend is concerning as the informal sector has traditionally served as a critical buffer for unskilled and semi-skilled labor, especially during economic downturns and agricultural failures. 
• Several factors contribute to this decline in the informal sector employment, including the impacts of demonetization, the implementation of the Goods and Services Tax (GST), and the economic lockdowns induced by the COVID-19 pandemic between 2016-17 and 2021-22. 
• These events have disrupted the operations of many unincorporated enterprises, reducing their ability to employ large numbers of workers.
• Formalization and Its Impact: While there might have been some offsetting increase in formal sector employment, the lack of reliable data makes it difficult to assess the extent of this shift. 
• However, formalization of employment could be beneficial if it leads to higher productivity and better wages. 
• In the unincorporated sector, annual emoluments per hired employee averaged only Rs 1,24,482 during 2022-23, reflecting the low productivity and small scale of operations typical of informal firms. However, this transition needs careful monitoring.
• Challenges in Structural Transformation: A genuine structural transformation in the labor market should ideally involve the transfer of surplus labor from informal sectors, including agriculture and construction, to the formal sector, particularly in manufacturing and high-productivity services. 
• However, the manufacturing sector's increasing capital intensity and the deployment of labor-saving technologies pose significant challenges. 
• Additionally, many of India's workers lack the skills required for high-productivity service jobs in IT, accountancy, and financial services.
• Agricultural Sector Reimagining: There's a call to reimagine agriculture beyond traditional farming practices. 
• Agriculture offers a potential solution for gainful employment generation, not directly on farms, but in related activities such as aggregation, grading, processing, packaging, transporting, warehousing, and retailing of produce. 
• This approach requires re-imagining agriculture as a value-added industry, similar to a factory, where crops serve as raw materials for further processing. For example, converting onions and tomatoes into paste and puree can add value to the produce and create jobs in rural areas, much like sugar mills and dairies have done.
• Skill Development and Technology: There is the need for skill development to meet the demands of modern sectors like IT, finance, and high-tech manufacturing. 
• Technology adoption, including automation and AI, is transforming labor dynamics, emphasizing the need for upskilling and adaptation.

Conclusion:

The dynamics of employment in India is complex, with a shift observed from the informal sector towards potential formalization. However, structural challenges remain in terms of skill mismatches, sectoral transitions, and the need for inclusive growth strategies, particularly in revitalizing the agricultural sector and integrating it with modern economic activities. And agriculture still has the potential to solve unemployment issues in India.