Growth of the Rural Non-Agricultural Sector in West Bengal:
Field Studies and Evidence
Nabanita Mitra[1]
Abstract
Structural changes have been taking place in rural India. Over the last few decades, a rural non-agricultural sector (also referred as the non-farm sector) has expanded in India: a phenomenon also observed in other developing countries in Asia, sub-Saharan Africa and Latin America. There are some field studies on the rural non-farm sector in the states of Andhra Pradesh, Haryana, Madhya Pradesh, Punjab and West Bengal. The initial section of this survey article reviews village studies in West Bengal on non-farm sector employment, earnings, causes for its expansion and linkages, if any with the agricultural sector and the factors deciding a worker’s choice of non-farm employment. Village studies in the states of Andhra Pradesh and Haryana are also looked into to find out regional commonalities/ disparities. The next section presents data from National Sample Survey reports on rural employments trends, monthly per capita consumer expenditure from these states as well as at the all-India level. It then tries to draw conclusions whether trends revealed by village level studies are in line with official data.
Keywords: growth of rural non-agricultural sector; evidence from village studies; official data; rural employment trends; rural monthly per capita expenditure
1 Introduction
Agriculture was the prop of West Bengal’s rural economy both in terms of employment and earnings, for several decades. Even now agriculture’s dominance in rural employment continues; but its contribution to the State Domestic Product (SDP) has tapered off. Since, the early 90s the rate of growth in agriculture plateaued and it’s share in SDP reduced to the least in four decades in 2006. What happened in West Bengal was not an aberration, agricultural growth rates slumped all over India in the period 1990-93 to 2003-06. Lack of development of the agricultural sector in developing countries is either leading to rural households engaging in multiple activities that span rural agricultural and non-agricultural sectors; or migration of workers from the rural agricultural sector to the rural non-agricultural sector. Such job moves at rural household levels are resulting in occupational diversification and growth of a rural non-agricultural sector at the macro level. In West Bengal, the rural agricultural sector has been contracting both in terms of its share in the state’s output and in employment and a growth of the non-agricultural sector is observed. In his exhaustive study on agrarian change and occupational diversification in rural West Bengal, Chandrasekhar (1993) observes that increased agricultural output has not led to increased employment in the rural non-agricultural sector. He states that size of the rural non-agricultural workforce is largely determined by demand for labour in the agricultural sector and creation of job opportunities in non-agricultural sectors like construction and services. In the former case, when demand for labour is low due to low levels of agricultural output, labourers opt for low-paying non-agricultural jobs to sustain themselves; and in the latter case spurt in non-agricultural sector workforce is not associated with increased agricultural output.
The purpose of this paper is to present findings on the rural non-agricultural sector in West Bengal from existing village studies and official data. The primary objectives are:
i. To understand the character of the rural non-farm sector: whether it is a conglomerate of small, informal own account enterprises and heterogeneous services or comprises of rural industries;
ii. To understand changes in patterns of rural employment and its impact on nature of jobs created;
iii. To identify its bearing on rural purchasing power as reflected in monthly per capita expenditure (MPCE);
iv. To conclude whether trends revealed by village level studies are in line with official data.
Section 3 of the paper presents four village studies on growth of non-farm sector in rural West Bengal. Some village studies carried out in the states of Andhra Pradesh and Haryana are also looked into to understand regional commonalities/ disparities. Although Haryana is small in size compared to West Bengal, it has been a choice for comparison as it has attained Green Revolution, has a significant rural non-agricultural sector and figures high in rural monthly per capita expenditure (http://www.census2011.co.in/states.php). Andhra Pradesh has been selected as it has a population comparable to West Bengal, has a SDP growth rate higher than West Bengal and has a prominent handloom sector, which is one of the largest providers of rural non-farm employment (http://www.census2011.co.in/states.php). Section 4 presents data obtained from National Sample Surveys on employment trends, distribution of rural households as per MPCE, state wise MPCE etc. The next section presents structural changes in West Bengal in the period 1971 to 2006.
2 West Bengal: A Look at Structural Changes 1971-2006
West Bengal has been a choice for this study as it has a chequered sectoral growth. In the 1960s, West Bengal was an agriculturally backward region that faced the “backwash effect” of the Green Revolution regions of India (Mohan Rao, 2012); in the 1980s, in a span of two decades it achieved its own Green Revolution. Since early 90s, rate of growth in agriculture has plateaued. Agriculture’s contribution to West Bengal’s SDP has fluctuated over the four decades, 1971 to 2006 (Table 1). In 1971, agriculture was 29.4 per cent of SDP; and it increased to a high of 30.1 per cent in 1991. In 2006 it dropped to 20 per cent, the least in the period 1971 to 2006. The manufacturing sector showed an upward trend in 2006: it increased from 16.6 per cent in 1991 to 17.2 per cent in 2006; but much lower than its four decades peak of 22.1 per cent in 1971. The growth in industrial output in 2006 was largely due to increased output of the unorganized sector which, performed better than the organized sector although the latter’s performance also improved since the mid-1990s. Although the informal sector grew, it is the services sector that
Table 1:Sectoral composition of West Bengal's State Domestic ProductYear / Sectors
Agriculture / Manufacturing / Services
1971 / 29.4 / 22.1 / 35.9
1981 / 25.9 / 19.9 / 42.3
1991 / 30.1 / 16.6 / 41.8
2006 / 20 / 17.2 / 50.2
Source: The Economic and Political Weekly Research Foundation (EPWRF). Domestic Product of States of India: 1960-61 to 2000-01; Government of West Bengal. Economic Review (2007-08)cited in West Bengal Development Report, Planning Commission, 2010.
registered a substantial and more or less consistent growth in its share of SDP. It increased from 35.9 per cent in 1971 to 50.2 per cent in 2006. Changes in the sectoral composition of West Bengal’s SDP also had a bearing on the rural distribution of its workforce; but their rates of change (increase/decrease) were not similar (changes in patterns of employment will be taken up in Section 4).
3 Growth of the Non-Agricultural Sector in West Bengal: Village Studies
This section presents findings from four village studies: Chandrasekhar (1993), Dutta (2007), Bhaumik (2009) and Karmakar and Sarkar(2013) on West Bengal’s rural non-agricultural sector. To draw comparisons with that in the states of Andhra Pradesh and Haryana, studies by Bhalla (1995, 2006) and Rawal (2008) are also discussed.
It has been argued that growth of the rural non-farm sector is a result of the Green Revolution witnessed in India. Chandrasekhar(1993) examines data from quinquennial surveys on employment from NSSO and Census data on India and West Bengal specifically, to show that the “observed occupational diversification in rural India over the last decade-and-a-half is not so much a fall-out of rural dynamism in the wake of the Green Revolution, but a reflection of the fact that two-an-a-half decades after the Green Revolution began in India, much of the country is yet to experience the impact of that process”. He augments his argument with village-based studies spanning five districts in West Bengal that have spatial variation in agricultural output. Chandrasekhar’s study is perhaps the most comprehensive work on the relationship between agrarian change and diversification of rural livelihoods in West Bengal from the 1960s to the late 1980s. This section will discuss his village-based study; his findings from official data will be presented in the next section. The six villages surveyed in Chandrasekhar’s study are Kuchly and Sahajapur in Birbhum district, Simtuni in Purulia district, Bhagabanbasan in Medinipur, Kalmandasguri in Koch Bihar and Magurmari in Jalpaiguri. Dutta (2007) examines whether farmers’ capital goes in financing non-farm ventures and the factors that decides a farmer’s choice of non-farm entrepreneurship. His field work was carried out in the district of Bardhaman, one of the main rice producing districts in West Bengal. Bhaumik (2009) looks at nature and extent of rural occupational diversification, earnings of the workforce in farm and non-farm sectors, nature of employment (self-employed, wage labourer, salaried employment) and factors that determine workers’ choice of a particular sector over the other. His field study was carried out in the districts of Hooghly, “a socio-economically advanced and agriculturally developed district” and Cooch Behar, a backward district. A recent study by Karmakar and Sarkar (2013) tries to find out how non-farm income has impacted income inequality among farmers with different farm sizes.
As part of a Project on Agrarian Relations in India, Rawal (2008) surveyed three villages belonging to different agro-ecological regions of Andhra Pradesh in 2005-06 to understand rural income diversification. The villages surveyed were Ananthavaram, a canal-irrigated village in south coastal Andhra producing high yield paddy, Bukkacheria, “a dry and drought-prone village of Rayalaseema” and Kothapalle, a village located on a major highway in north Telangana, that produces a mix of food grain and other crops and is bore well irrigated. His study focuses on the impact of rural occupational diversification on rural household earnings. Bhalla (2006) carried out village-based surveys in 1992 and 2002 in the districts of Nalgaonda, Andhra Pradesh and Rohtak and Jhajjar in Haryana. In her study, she explores the character of the rural non-farm sector, employment trends and income levels of non-farm households.
Findings
i. On Employment Trends
a. Sectoral distribution of the workforce and major activities
In all the villages surveyed by Chandrasekhar (1993) excepting Magurmari (district Jalpaiguri), agriculture continued to employ bulk of the rural workforce. The villages exhibited a marked variation in per cent of non-agricultural workers. It varied “from a low of 11.76 per cent in Simtuni (district Purulia) and 13.9 per cent in Kuchly (district Birbhum) to near state average levels of around 30 per cent in Kalmandasguri (district Koch Bihar) and Bhagabanbasan (district Medinipur) to a remarkable high of 86.92 per cent in Magurmari (district Jalpaiguri). He found in West Bengal rural industries could be broadly classified into three categories: industries engaged in producing low cost, low quality items using traditional techniques (like beedi making, bamboo work etc.); agro-processing industries (like rice milling and production of puffed rice) and some modern industry. Most of these rural industries had low paying jobs taken up by “lower income deciles of the population”.
Bhaumik (2009) found both in Hooghly (developed region) and Cooch Behar (backward region), the major proportion of the workforce was in agriculture. 54 per cent in the advanced region and 62 per cent in the backward region were exclusively in agriculture whereas 33 per cent in the advanced region and 23 per cent in the backward region were exclusively in the non-agricultural sector. 13 per cent in the advanced region and 15 per cent in the backward region had activities that span both the sectors. Exclusive participation in the agricultural sector was higher for workers with higher size of land holdings; those with smaller size of holdings were either in the non-agricultural sector or both. Like West Bengal even in Andhra Pradesh, the major proportion of the rural households in the surveyed villages excepting Kothapalle, north Telangana was engaged in cultivation and crop production. Bukkacheria, Rayalseema with the least level of landlessness among the three villages had 74 per cent of the households in agriculture and Ananthavaram, south coastal Andhra Pradesh had 53 per cent. In the non-agricultural sector, around 17 per cent to 18 per cent of the households were in business and trade in Ananthavaram and Kolthapalle and around 10 per cent in Bukkacheria. Bhalla’s study (2006) reveals that in Nalgonda, major proportion of the work force was involved in agriculture either as cultivator or casual labourer. Whereas in Rohtak, Haryana, major proportion of the workforce worked exclusively in the non-farm sector either as casual labourer or in a second non-farm enterprise. In Nalgonda, Andhra Pradesh where people are poorer, workers were also found to be involved in both the sectors. In all the villages of Andhra Pradesh and Haryana, the non-farm sector had artisan activities, manufacturing and trade and service enterprises. Construction was a flourishing activity in Rohtak villages but not so in Nalgonda villages. Fishing and animal husbandry activities were present in Nalgonda and food processing and food sales were found to be significant in Nalgonda.
It is evident from field studies that distribution of rural workforce in Haryana between agricultural and non-agricultural sectors is distinct from that in Andhra Pradesh and West Bengal in the surveyed villages during the study period. The agricultural sector continues to have the dominant share of rural workforce in villages of Andhra Pradesh and West Bengal whereas in Haryana villages it is the opposite. This perhaps is a consequence of expansion of the non-farm economy in Haryana since 1961 especially between 1971 and 1991. Secondary sector growth rates were 7 per cent to 8 per cent and tertiary sector growth rates were higher than that in the period 1980-81/1985-86, 1985-89 in Haryana (Bhalla, 1995).
b. Patterns of employment
Bhaumik’s (2009) and Rawal’s (2008) studies include some findings on distribution of the rural work force by category of employment (self-employed, salaried employee and casual labourer) in West Bengal and Andhra Pradesh respectively. In the districts of Hooghly and Cooch Behar, Bhaumik found that three fourths of the agricultural workforce was self-employed and the rest were wage labourers; whereas in the non-agricultural sector the major part of the workforce comprised of wage labourers. In the villages of Andhra Pradesh surveyed by Rawal, significant proportion of the households was in the wage labour market. Proportion of households engaged in casual agricultural labour varied from 47 per cent to 59 per cent and in non-agricultural labour varied from 17 per cent to 21 per cent.