(The Gist of Kurukshetra) Non farm sector in India [JULY-2019]
(The Gist of Kurukshetra) Non farm sector in India
Non farm sector in India
In India almost 70 percent population lives in the countryside, thus
ascertaining that the soul of India lives in villages.
Again, India has been traditionally an
agrarian country. Thus, rural India has always been the centre of both national
as well as international focus.
Besides agriculture, traditional handlooms and handicrafts of India like
weaving, pottery, etc. have also been nurtured in rural India, making it the
cradle of modern Indian civilization.
What is Rural Non-Farm Sector?
The Rural Non-Farm Sector (RNFS) encompasses all non-agricultural activities:
mining and quarrying, household and non-household manufacturing, processing,
repair, construction, trade and commerce, transport and other services in
villages and rural towns undertaken by enterprises varying in size from
household own account enterprises to factories.
Need for Rural Non-Farm Sector
Over the years, the economic contribution of agriculture to India's GDP is
with the country's broad-based economic growth.
As per the Tenth Agricultural Census, the average size of agriculture
declined to 1.08 hectare in 2015-16 from
1.15 hectare in 2010-11. This explains the rise of employment in NonFarm Sector.
It is observed that 64 per cent of rural employment is in the agriculture
sector, while the share of agriculture in rural output is 39 per cent.
Different Rural Non-farm Sectors
Mining and Quarrying: According to Periodic Labour Force Survey (PLFS) by
Ministry of Statistics and Programme Implementation (MoSPI), the percentage of
rural males and females employed in this activity is 0.5 per cent and 0.2 per
cent, respectively during 2017-18.
Household and Non-Household
Manufacturing: As per PLFS, during 2017-
18, about 52.2 per cent of rural households had major source of income from se/f-employment. The
share of rural households with major source of income
from casual labour during 2017-18 was 25 per cent and that of regular wage/salary earning was
12.7 per cent.
Construction and Manufacturing: The proportions of male and female workers in
rural areas engaged in 'construction' sector were 14.5 per cent and 5.3 per
cent, respectively. The proportions of male and female workers in rural areas
'manufacturing' sector were 7.7 per cent and 8.1 per cent as per PLFS.
Trade, Hotel and Restaurant: As per PLFS
2017-18, the number of rural males and rural females engaged in these activities
are 9.2 per cent and 4.0 per cent, respectively.
Transport, Storage and Communications:
5.2 per cent of rural males and 0.3 per cent of rural females are engaged in
these sectors as per PLFS 2017-18.
How can RNFS be developed?
In order to develop Rural Non-Farm Economy, heavy investments are needed for
inclusive, sustainable and diversified rural development along as access to markets,
education and health) for the overall economic development of backward rural
This will also provide an additional avenue
of livelihood for SHGs.
Around 624 routes are currently served by
AGEY across the country as on January
Strength in Rural Non-Farm Sectors
In India, the institutions underlying the development of non-farm sector have
been strengthened over the years.
The introduction of JAM Trinity - Jan Dhan, Aadhar and Mobile has increased
the share of total disbursement of money in the non- farm sectors.
This is in addition to the existing financial institutions like Khadi and
Village Industries Commission (KVIC), State Khadi Boards, Small Industries
Development Bank of India (SIDBI) etc which have helped in the development of
agro-industries, domestic marketing channels for rural non farm production as
well as government support in export promotion.
Challenges in Rural Non-Farm Sectors
Infrastructure: The most significant bottleneck in generating higher levels
of non-farm activities in India is the quantity, quality and reliability of
infrastructure. Corrective steps are being taken in this regard like development
of roads, increase in road connectivity, improvement of power supply, etc. as
discussed in the previous sections, resulting in a more holistic development.
More efforts in this regard will lead to more flourished non-farm sectors.
Regulatory restrictions on small sectors: Regulation of the small-scale
sector constitutes an important aspect of non- farm development policy in India.
In the initial stages, capital investment restrictions were imposed to protect
the small-scale sector, especially in rural areas from predation by large
industry. Reservation of products for the sector was initiated to create a
domestic market and quantitative restrictions imposed to protect them from
competition from imports. At the end of the 1990s, however these very policies
have become detrimental to the dynamism of the small- scale sector, especially
in the rural areas. Capital investment limits have discouraged economies of
scale, and concession offered to small industry have created adverse incentives
against re-investment. Reservation of products for the small-scale sector has
gradually reduced in significance. The decision of the government to put a the
reserved items in the open general license category from April 2005 meant free
import of such items at the prevailing tariff rate With the latter slated to
come down over time to around
20 per cent as per the WTO norms this will effectively signal the end of
protection for the small-scale industry.
Education and Awareness: High levels of illiteracy in rural India have
hampered the growth of the rural non-farm sector Education has both intrinsic
and Instrumental value Apart from having a positive correlation with wages, a
minimum basic standard of education is necessary to apply for credit, to be
aware of one's rights and responsibilities and to deal with instances of
corruption and malpractice. Often, a lack of education is intrinsic to poverty,
which seems to have been the case in India until recently. This is also
supported by the fact that wage rates are not defined and depends on the contratcors' wishes. Women are more vulnerable than their male counterparts
because generally they are less educated and less paid.
Around 70 per cent of Indian population still lives in rural areas with the
major source of income continuing to be agriculture. However, with increased
urbanization and decrease in the agricultural land. Non Farm Sector in rural
India is gradually gathering momentum. This is supported by the implementation
of different schemes of the Union Government like Skill India, Make in India,
Digital India, etc. More livelihood and poverty alleviation programmes will
bring in more participation in the non farm activities, reducing the dependence on agriculture.
Agriculture needs to be incentivized in its own way along with the development
of non-farm activities to improve the economic situation of rural India. This
can be more facilitated by providing more financial/credit facilities, research
and development and increase woman s participation to make non-farm activities
self-sustainable in the days to come.