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Agrarian distress and agricultural labour

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 Deshpande, R.S. and Khalil Shah (2007). Agrarian Distress and Agricultural Labour, The
Indian Journal of Labour Economics, Vol. 50, No. 2, June-July, pp. 257-72, 2007.
ISSN No- 0019-5308

AGRARIAN DISTRESS AND AGRICULTURAL LABOUR

R.S. Deshpande and Khalil Shah*

Abstract
Macro economic crisis of early nineties ushered in the process of liberalisation.
Even though the economic reforms have touched all the sectors, the performance of
agricultural sector has shown signs of acute distress. Distress in the agricultural
sector is quite widespread and noted by many authors. The debate largely surrounds
only the farmers and the farm sector, thus, by-passing agricultural labour and their
role in the entire process. This paper analyses the agrarian crisis in the Indian
agriculture during the last decade and traces its impact on the agricultural labour.
It is quite known that the share of GDP of agricultural sector has been going down
but at the same time the workforce in the sector is not declining with the same rate.
As a result, the density of agricultural labour is increasing and consequently the
surfacing. The process of marginalization of the farms has not only left indelible
mark on the farm economy but it has also provoked marginalization of the household
economy as such. Agricultural labourers are the worst sufferers in the process. This
paper traces this genesis and addresses a few policy issues in the context.

I. INTRODUCTION
Indian agriculture has undergone alternate phases of growth and stagnation during the last five
decades. Experience so far indicates a few bright spots often followed close on heels by a spate
of distress. Some of these bright spots were followed by strong phases of stagnation marked by
breaks in the process of development. Thinking on policy becomes complacent when we pass
through the bright spots, and hasty when the footsteps of stagnation are visible. Major
impediments faced at the time of Independence included food insecurity, high density of surplus
labour force, weather uncertainties, resource availability, market imperfections, technological
stagnation, price variations, and regional imbalances (Nanvati and Anjaria, 1965; Dantwala,
1996; Acharya, 2002). These issues began to feature in the analyses undertaken immediately
after independence, but continue to dog the sector for the last five decades with changing
intensity. The responses and development triggers were altered several times, often as a reaction
to the exigencies and only after understanding the failure of the design. Most of these responses
were taken keeping in view only the then visible crisis in the sector, without tuning to the existing
agrarian situation (Ghosh, 1997). The current phase of severe distress in the farm sector is one
such phase that came up along with a new turn in the development dynamics of the sector.
The agrarian structure of the Indian economy emerged out of a land system that had a long
deep-rooted history (Deshpande, 2003). Three specific indicators of the agrarian structure
continue to be the dominant issues on the scene. First, the density of small and marginal farmers
and the shrinking size of holding. This places them away from the market, unviable for new
technology and therefore stuck to the tenterhooks of the state programmes. The pace of
marginalisation was quite fast during the last decade and that placed a large number of peasants
in resource poor situation. Second, there is always high density of agricultural workers (marginal
* Agricultural Development and Rural Transformation Centre, Institute for Social and Economic Change, Bangalore.
Email: deshpande@isec.ac.in
258 THE INDIAN JOURNAL OF LABOUR ECOCS

farmers and agricultural labourers) with little bargaining power. The transfer of labour from
agriculture to non-agricultural sectors (Lewisian process) is quite slow, and wherever such
transfer is taking place the welfare of the migrating labour has been in peril. Third, the imperfect
land market (lease and sale) goes against the interest of the peasants. All these constitute a
precondition of the distress in the sector.
Immediately after Independence, land reforms were taken up and these had a myriad success.
The story of these institutional reforms was not an unexpected outcome if analysed with the
prevailing agrarian structure. Thereafter, the agrarian issues were dealt more symptomatically
and the policy interventions were frequently accompanied by severe negative externalities. Food
insecurity was addressed with the rice—wheat technology that provided food grains, but in the
process inflicted neglect on coarse cereals and consequently the farmers growing these crops
also suffered. Development of irrigation was taken up through surface and groundwater sources
and the externalities were soon realised. Market-led commercialisation process was introduced
and that threatened to bypass the most vulnerable among the farmers. In all these initiatives,
the agricultural labourers remained mute partners, always to share the distress but rarely to
partake gains. The current phase of agrarian crisis has also raised many such questions and
specifically some of them directly affecting the vulnerable in the sector. As a routine drill a
new policy package has been worked out and this focuses on credit, technology, and input
delivery system. This package emerged mainly from an ill-founded assumption of a
‘technological fatigue’. Basically, it does not flow from the ground and stays in the top-down
framework as usual. The package in its application conveniently forgets the agricultural labourers
as one among the sufferers.
Among the questions to be answered and issues to be discussed here begin from the
responsibility of the state to the functioning of the market. The Constitution of India in its
Directive Principles under Article 38 (2) provides, “The State shall in particular, strive to
minimise the inequalities in income and endeavour to eliminate inequalities in status, facilities
and opportunities, not only amongst individuals but also amongst groups of people residing in
different areas or engaged in different vocations.” Farmers as a group today feel let down by
the policies of the state that puts them relatively in disadvantageous position. This is made
abundantly clear by many analysts in the recent past (Bhalla, 2006). In other words, even if the
state is not directly discriminating against the farmer as a group, but the policies are sufficiently
provocative in increasing the gap between the farmers, agricultural labourers on one hand and
the remaining on the other.
This paper is an attempt to bring forth the forgotten position of agricultural labourers in the
context of the current agrarian crisis. Initially, we have addressed the issue of the emergence of
the crisis in the farm sector and its manifestation into the farmers’ distress. The current impact
concerns in the agricultural sectors follow this discussion. One of the major concerns is the
situation of unemployment and poverty in farm sector. These trends are discussed along with
the agricultural labour and trends in wages in the current context. Our findings are indicative of
further deepening of the crisis and its infliction to the agricultural labour sector.

II. GENESIS OF THE CRISIS

Macro-economic crisis of early nineties was the provocation that began in the process of
calibrating trade globalisation in the economy and agriculture could not be an exception. Even
though, the basic current emerged actually during mid-eighties, it could acquire a visible drive
 259

only by the early nineties (Cerra and Saxena, 2002). As is a matter of wider knowledge that the
crisis began when the foreign exchange reserves touched a critical bottom level, adverse balance
of payment condition was evident and a near debt trap situation became imminent. An alternate
view is about the very necessity of getting into the structural adjustments itself. If one looks
carefully at the data on National Accounts Statistics (NAS), it is quite visible that the trigger of
the situation leading to the crisis was located in the expansion of non-agricultural sectors during
mid-eighties beginning with the historical budget presented by the then Finance Minister Shri
V P Singh. The performance of the agricultural sector during that period was certainly impressive,
and contributed significantly to the national growth. It is a fact that the situation of the Balance
of Payment (BoP) did not originate overnight and even though agricultural exports were
increasing, it was felt that the situation was beyond the capacity of the economy to rescue, and
following this the structural adjustment programme was undertaken and globalisation became
an unavoidable outcome. Agricultural sector during these testing years performed well, and
whatever we could achieve on growth front was mainly due to the performance of agriculture.
Immediately after this crisis, the wave of globalisation was ushered in and the argument was
that ‘there is no alternative (TINA) to it’ (Joshi and Little, 1996; Gulati and Kelly, 1999).
Following the macro-economic crisis, the state of affairs was handled carefully with a battery
of macro-economic tools that included liberalisation of foreign trade, devaluation of the currency,
and other steps in domestic macro-economic policy management during early nineties (Singh,
1995). This period incidentally coincided with a few major changes in the arena of international
trade, heralding the establishment of World Trade Organisation (WTO) and removal of non-
tariff trade barriers. India being one among the founder members of GATT, agreed to abide by
the set of regulations given under the various agreements of WTO (WTO, 1998 and 2003). The
macro-economic situation in the country was also undergoing a rapid transition along with
significant changes in trade scenario, and in this process the agricultural sector, sheer by its
significance in the economy, became an important player. Naturally growth trends in agricultural

Table 1
Population, Cultivators and Agricultural Labours in India
Agricultural workers
(in millions)
Total Annual expo. Rural
population growth population Cultivators Agricultural Total
Year (in millions) rate (%) (in millions) labours
1951 361.1 1.25 298.6 69.9 27.3 97.2
(82.7) (71.9) (28.1) (100)
1961 439.2 1.96 360.3 99.6 31.5 131.1
(82) (76) (24) (100)
1971 548.2 2.22 439 78.2 47.5 125.7
(80.1) (62.2) (37.8) (100)
1981 683.3 2.20 523.9 92.5 55.5 148
(76.7) (62.5) (37.5) (100)
1991 846.4 2.14 628.9 110.7 74.6 185.3
(74.3) (59.7) (40.3) (100)
2001 1028.7 1.95 742.6 127.3 106.8 234.1
(72.2) (54.4) (45.6) (100)
Note: Figures in parenthesis represent per centage.
Source: Agricultural Statistics at a Glance 2005, Ministry of Agriculture, Government of India.
260 THE INDIAN JOURNAL OF LABOUR ECONOMICS

sector and the domestic market conditions emerged as the initial issues to signify the frontal
impact of globalisation (Chand and Jha, 2001).
India’s agricultural sector cannot be compared with that of many countries, especially those
significantly participating in the international trade. Among the major constraints faced by the
sector, prominent is the low average size of holdings as a base for production and high density
of uneconomic holdings. About 99 million small and marginal farmers inhabit the sector with
only a small proportion of farmers generate some marketable surplus. During the last five decades
the rural population has grown about 2.49 times, but the number of agricultural labourers has
grown more than that (almost by 3.91 times), which increased their density in rural sector. The
market conditions in factor as well as product markets are far from satisfactory; and finally the
country never had a sustained presence in the international trade to participate pro-actively in
the process of globalisation. Besides these, the gains from trade hardly percolate to the agricultural
labour. These overt constraints provoked the uses of terminology like ‘level playing field’ while
analysing comparative performance of India vis-à-vis its trading partners. It is quite clear that
the production as well as domestic and international trade environment in the country is not
comparable to many of its competitors. Therefore, the significant question crops up whether
agriculture and agricultural labourer will always be at the receiving end? How this should be
avoided is a major policy issue to wrestle with.

III. AGRICULTURAL SECTOR IN THE CURRENT CONTEXT

Over the last five decades, the agricultural sector in India performed under various constraints.
The performance during late sixties, mid-seventies, and early eighties helped to overcome the
problem of food insecurity. The performance of the last two years of the eighties was remarkable
and that was not exceeded in the following decade (Figure 1). GDP from agriculture grew at an
annual rate of 3.4 per cent during 1980s, but it registered only 1.8 per cent growth between
1997–98 and 2000–02. As can be seen from Figure 1, the decade of the nineties has recorded
Figure 1
Growth in GDP Originating from Agriculture
A nn ua l Gr ow t h Rat e o f GDP a t Fa ct o r C os t in Ag ric u lt u re
40

30

20

10

0
1 9 51 - 52

1 95 3 -5 4

195 5- 5 6

1957 - 5 8

1 9 59 - 60

1 96 1 -6 2

196 3- 6 4

1 9 65 - 66

1 9 67 - 68

1 96 9 -7 0

197 1- 7 2

1 9 73 - 74

1 97 5 - 76

1 97 7 -7 8

197 9- 8 0

1 9 81 - 82

1 98 3 - 84

1 98 5- 8 6

198 7- 8 8

1 9 89 - 90

1 99 1 - 92

1 99 3- 9 4

199 5- 9 6

1 9 97 - 98

1 99 9 -0 0

2 00 1- 0 2

200 3- 0 4*

-1 0

-2 0

Source: Agriculture Statistics at a Glance 2005 , Ministry of Agriculture, Government of India.

 261

positive growth in GDP in most of the years except two years, but the post-1997 situation is
bad. The peak achieved at the end point in the decade of eighties leads to a conclusion that the
nineties was a dismal decade. One point however is quite clear that the performance during the
eighties of the sector was quite supportive, but that in the early nineties was not bad. Similarly,
there is a decline in area, production, and productivity of all crops. While area under all crops
has shown a marginal increase in growth rate during 1990s, production and yield have shown
decreasing/stagnating trends.
The growth rates seen from the Table 2 indicate that the long-term performance of the
sector is quite satisfactory, though not exemplary. But the growth rates mask a lot than they
reveal. What is important to note here is that the growth during recent past as well as during the
last three decades has come from the technological inputs and market has not been very
supportive. Globalisation may further usher in new technological opportunities.
Table 2
Growth Performance of Major Crops: 1967-68 to 2004-05
1967-68 to 2004-05* 1990-91 to 2000-01 2000-01 to 2004-05 *
Crop Area Prod Yield Area Prod Yield Area Prod Yield
Rice 0.54 2.57 2.06 0.68 2.02 1.34 -1.74 -0.49 1.27
Wheat 1.28 4.02 2.70 1.72 3.57 1.83 0.60 0.57 -0.11
Coarse cereals -1.45 0.54 1.84 -2.12 -0.02 1.82 -0.37 3.20 3.06
Cereals -0.06 2.57 2.19 0.04 -0.02 1.59 -0.70 0.33 1.11
Pulses -0.09 0.84 0.86 -0.60 0.59 0.93 0.63 4.12 2.79
Food grains -0.07 2.35 2.02 -0.07 2.02 1.52 -0.44 0.68 1.20
Oilseeds 1.19 3.12 1.56 -0.86 1.63 1.15 2.59 8.40 4.86
Non-food grains 1.20 3.03 1.56 1.18 2.69 1.09 -0.03 3.06 3.07
All crops 0.25 2.61 1.83 0.27 2.29 1.33 -0.33 1.64 1.96
Note: *Provisional for non-food grains and all crops, based on fourth revised estimates.
Source: Agricultural Statistics at a Glance, 2005, Ministry of Agriculture, Government of India .

Figure 2
Stagnating Productivity of Crops

T re n d in th e Y ie ld of M a jor C ro ps fro m 195 0-5 1 to 200 6-0 7

30 00

25 00
W he a t
(Y il ed i n K g p er Ha)

20 00
R ic e

15 00

C oa rse C e re a l
10 00
Grou ndn ut Jo w a r
T ur

5 00

0
7

5
1

6
-5

-5

-5

-6

-6

-6

-6

-7

-7

-7

-8

-8

-8

-9

-9

-9

-9

-0

-0
50

53

56

59

62

65

68

71

74

77

80

83

86

89

92

95

98

01

04
19

19

19

19

20
19

19

19

19

19

19

19

19

19

19

19

19

19

20

Source: Agriculture Statistics at a Glance, 2006, Ministry of Agriculture, Government of India.

262 THE INDIAN JOURNAL OF LABOUR ECONOMICS

A comparison of the growth rates in the two decades of the eighties and nineties can be
quite deceptive, and therefore we have resorted to view the trends over the entire period. Figure
2 presents this picture. If one looks at the performance of the agricultural sector over the five
decades in terms of growth in crop productivity, it is quite clear that the sector has witnessed
alternative cycles of growth and stagnation. The performance between 1980 and 1995 was quite
ideal, but after that a phase of stagnation seems to have emerged again strongly. This is more
visible in the non-food grain sector than in the food grains.
As among the crops the picture is not very encouraging. The productivity of most of the
crops seem to have stagnated at about 1980s level with little growth beyond that. The growth is
recorded only in the case of wheat, rice, and a fluctuating performance in groundnut. Further
among these rice and groundnut seem to have caught the plateau after 1992-93. This seems to be
a matter of serious concern, especially when we are leading a growth strategy from globalisation
and trade angles. The worst sufferers are the farmers growing the crops, other than wheat, paddy
and groundnut. The performance of the agricultural sector on the production and productivity
front is not very satisfactory. It is well documented that the stagnation is rather due to failure or
plateauing of the technology, but a lot of it is due to market support for the crops.

IV. IMPACT CONCERNS

Globalisation of trade has bared quite a few concerns for the agricultural sector. On the positive
side, it is argued that globalisation has unwrapped the prospects for Indian agriculture to make
its presence felt in the international market. India has demonstrated comparative advantage in
some commodities, and therefore it was rightfully expected that the country would emerge as a
significant player in trade of these commodities (Gulati and Kelly, 1999; Pangariya, 1999). It is
expected that globalisation will help to boost up exports and meet the import bills apart from
enhancing foreign exchange reserves. But at the same time that will increase import-intensity
of exportable commodities. Opening of trade will also help to augment export competitiveness
and improve the quality of production. In these circumstances a clear long-term export-oriented
production strategy can be chalked out. Sudden shortages and hoarding of certain commodities
need to be tackled with. The demand for processed agricultural products will increase and that
will have a substantial value addition to the farmers’ produce thereby increasing the income of
the farmer. But these expectations did not seem to have come true.
The process of globalisation has spurred strong debates about its feasible impacts on the
agricultural sector. Several views are expressed beginning from a possibility of significant
destruction to our philosophy of rural development and impeding threat to our food security
(Shiva, 1999). It is argued that the flow of capital to the rural sector will reduce, preference will
be more towards the market-oriented crops impinging the food security, poor farmers may face
hard situation to sustain in farming, and corporatisation of agriculture may take place (Sharma,
1994, 2000). According to many, agriculture sector is the last sector to witness any changes
induced by globalisation. This is partially due to delay in making appropriate policy changes
and due to the forward and backward linkages of agriculture sector with other sectors. There is
a time lag in ‘trickle down’. On the other hand, the proponents of the globalisation vouch that
most of the maladies will be rectified through market process and that is under the assumptions
that markets have the capability of correcting the imperfections in the Indian context. Emerging
impact concerns and the probable welfare loss in the farm sector are dictated by the agrarian
structure, and that evades the attention of the analysts.
 263

1. Farm Size and Marginal Farming

Indian agriculture has been known for its density of small and marginal farms. According to
Agricultural Census 2000-01, we have 76 million marginal holdings and about 22.81 million
small holdings and that makes about 82 per cent of the holdings (Table 3).
Table 3
Distribution of Operational Holdings across Agricultural Census
(No. of holdings in ‘000’)
Size of holding 1970-71 1980-81 1990-91 2000-01*
Marginal (below 1 ha) 36,200 50,122 63,389 76,122
(51) (56.4) (59.4) (63)
Small (1 .01 to 2 ha) 13,432 16,072 20,092 22,814
(18.9) (18.1) (18.8) (18.9)
Semi-medium (2.01 to 4 ha) 10,681 12,455 13,923 14,087
(15) (14) (13.1) (11.7)
Medium (4.01 to 10 ha) 7932 8068 7580 6568
(11.2) (9.1) (7.1) (5.4)
Large (10.01 and above ha) 2766 2166 1654 1230
(3.9) (2.4) (1.60) (1.02)
All size classes 71,011 88,883 106,637 120,822
(100) (100) (100) (100)
Note: 1. Figures in parentheses indicate the per centage of respective column total.
2. * Excluding Jharkhand.
Source: Agriculture Census Division, Ministry of Agriculture, Government of India.

Needless to stress that the farmers cultivating these farms have limited market access and
bargaining power and that will be restricting their income. Their significant density in the farm
sector dictates the income trends in the sector. In addition to this, the preponderance of the
small and marginal holdings with low income generating capacity has a telling effect on the
wages of agricultural labourers. The impact is two pronged. First, the small and marginal farmers
under income stress enter the labour market as agricultural labourers and exchange labourers.
Second, their labour demand gets reduced significantly as the replacement of family labour
takes place in the position of hired labour. Besides the forces of commercialisation are also
impacting the crop constellations and that changes the labour demand function. It gets altered
in terms of quantity of labour, the skills and wage rates. That has a telling effect on the group of
agricultural labours, but they do not take the extreme step of suicides like the distressed farmers
as they have resigned themselves to the situation.

2. Changes in Cropping Pattern

Diversification of agriculture in order to meet the changing demand is adopted as one of the
important strategies by several countries to cope up with the volatile prices through deliberate
policy changes and encouragement of private participation. Diversification is in favour of high
value export-oriented crops under contract or buyback system. According to a recent study
(Joshi et al., 2004), agricultural diversification increased in all south Asian countries. Fruits
and vegetables have shown good performance during 80s and 90s. The study revealed the shift
from crops to livestock sub-sector during 80s and 90s in all regions of India except Eastern and
North-Eastern states. Within the crop sub-sector, non-food grain crops have gradually replaced
food grain crops. The shift is more towards non-food grain crops like oilseeds, fruits, vegetables,
spices, and sugarcane. Regional pattern of diversification showed that southern region is highly
264 THE INDIAN JOURNAL OF LABOUR ECONOMICS

diversified followed by western region (Gulati and Kelly, 1996). It was observed that crop
diversification results increased employment opportunities. For example, it was estimated that
one hectare shift in area from wheat to potato would generate 145 additional man-days. Similarly,
one hectare from coarse cereals to onions would generate 70 man-days of employment.
Joshi et al. (2004) conclude that crop diversification has not severely affected the food
security adversely because there is a change in the consumption basket and the shift is more
towards non-cereal food in both rural and urban areas. Besides these changes, diversification
towards non-food commercial crops has influenced the labour demand and it is expected that
the wage rates as well as employment will increase. But that does not seem to have taken place
as expected. On the one side, we have evidence of shrinking agricultural GDP and swelling
labour market (Figures 3 and 4) with market constraints, and on the other there is a promise of
increased employment opportunities in the commercial crop sector held aloft. Only the empirical
evidence can make the issue clear.

Figure 3
Increasing Density of Agricultural Workers in Total Workers

Tota l W or k for c e a nd Tot a l Agr ic ultur a l W or k for c e O ve r the de c a de s

350

300
(Po p u la ti o n i n m i ll i o n )

250

200

150

100

50

0
1 961 1 971 1 981 1991 2001

To tal W or ker s Total A gr ic ultura l Wor ker s

Source: India Population Census and indiastat.com

Figure 4
Increasing Agri-Workforce and Declining Agri-GDP

Tre n ds of Shar e of Agr icultur e Wo r kfo rc e and GDP fro m Ag ricu lture
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
1961 1971 1981 1991 2001

Share of Agri Workforce Share of Agri GDP

Source: India Population Census Reports for respective years and indiastat.com
 265

3. Employment and Poverty

Contrary to the expectations employment in agricultural sector registered a declining trend
with increasing workforce density. Employment on ‘usual status’ basis registered a growth
rate of 1.54 per cent per annum during 1983 to 1993-94, and showed a meagre growth rate of
0.18 per cent during 1993-94 and 1999-00. Similar is the case with ‘current daily status’, i.e.,
2.23 per cent and 0.21 per cent respectively. Real agricultural wages also increased at a lower
growth rate in 1990s (2.5 per cent per annum) compared to 1980s (5 per cent). Wage rates of
female casual labour in agriculture increased by 3.09 per cent in 1980s and 2.93 per cent in
1990s. There are differences across states in the growth of real wages. While Kerala and
Tamil Nadu registered highest growth (7.9 per cent and 6.7 per cent) between 1990 and 2000,
Assam and Rajasthan registered negative growth rate of -0.7 and -0.8 per cent, respectively.
It is clearly borne out in Tables 4 and 5 that employment has not been increasing in
agricultural sector despite expectations. That provokes investigation into the search for a
connection between the process of globalisation and typologies of employment. The experience
of the last decade brings out that the growth in the agricultural sector has been generating more
casualisation of employment and the trends in casualisation are quite bold across the country
(Figure 5).
These trends are sharper in the agriculturally lagging regions. That leads us to the question
of the quality of growth in the agricultural sector in the wake of globalisation in addition to

Table 4
Growth of Employment in Agriculture (Usual Status) in India
Period Growth of employment in agriculture (%)
1983 to 1993–94 Rural 1.38
Urban 1.54
1993–94 to 1999–00 Rural 0.18
Urban -3.4
Source: Jha (2004).
Table 5
Growth Rates of Real Agricultural Wages across the States between 1990 and 2000
State Growth rate (%)
Andhra Pradesh 1.3
Assam -0.7
Bihar 0.3
Gujarat 5.1
Haryana 2.7
Karnataka 3.2
Kerala 7.9
Madhya Pradesh 1.8
Maharashtra 1.6
Orissa 0.7
Punjab -0.8
Rajasthan 2.8
Tamil Nadu 6.7
Uttar Pradesh 2.5
West Bengal 1.6
All India 2.5
Source: Dreze and Sen (2002).
266

Figure 5
Casualisation of Rural Workforce across the States in India

70 C as u alizatio n o f Lab o r Fo r ce ac r o ss th e St at e s in In dia

R ur a l c a s u a l w or k e r de ns ity

60

50

40

30

20

10

.
.P

.
a
at

ka

sa

b
a
ar

.P

al
am

du
.P

.P
an
tr
n

ja
al
A

ar
ih

g
ta

M
ya

r is
H

sh

U
th
un

a
er
ss

en
uj
B

N
na
ar

as
O
ra
K
A

B
G

il
ar
H

aj
a

t
ah

es
K

Ta
M

W
19 83 1 9 8 7 -8 8 1 9 9 3 -9 4 1 9 9 9 -0 0 2 0 0 4 -0 5

Source: Based on the data from Bhalla et al. (2004) p. 83-84 and “Employment and Unemployment Situation
in India 2004-05”, NSSO Report No. 515 (Part-I).

the location of growth across regions. At the same time one cannot deny the influence of the
quality of growth in the non-agricultural sector also. It is more often said that the poor in
India are located largely in rural areas and specifically among agricultural labourers as an
occupation.
It is also observed that the density of labour is highest among the Scheduled Castes (SCs)
and Scheduled Tribes (STs). These social groups remained at the lower rung of the economic
hierarchy due to the forced occupational immobility and often viewed as the outliers as most of
the development initiative either did not reach them or they were the communities which suffered
the most in terms of displacement due to major developmental initiatives. As a result at the
time of Indian independence the poverty was largely concentrated in this group of the society.
It can be observed from the Table 6 that the main occupation of these social groups is
agricultural labour. The proportion of cultivators is declining in all the groups and such decline
is sharper among the workers belonging to SCs. The sharp increase in the proportion of SC
workers working as agricultural labourers can also be noted. No efficient policy steps are

Table 6
Proportion of Workers by Occupation Groups (Rural Male): 1961–2001
SCs STs Others
Year Cult AL Cult AL Cult AL
1961 42.9 32.83 69.69 18.59 63.74 12.12
1971 34.94 50.24 64.67 27.51 59.27 19.19
1981 36.7 46.82 62.52 26.72 58.44 18.3
1991 33.11 49.27 61.97 27.2 54.74 20.14
2001 25.59 46.48 50.98 31.96 44.72 22.15
Note: Cult: Cultivators, A. L: Agriculture Labour. We have taken here male labour as representative since
proportion of female cultivators is very small and the trends are similar across sexes.
Source: Population Census Reports for respective years.
 267

undertaken to arrest this. Similarly, marginalisation of SC workers can be seen from the
structure of changing work force. A recent study by Thorat and Mahamallik (2005) indicated
that in the year 1999-2000, about 36.2 per cent of the SC rural population was below poverty
line at all India level whereas 45.09 per cent of the STs are living under the bare minimum
consumption threshold (Table 7). These proportions when compared with other groups (other
than SCs and STs) clearly bring out the intensity of the problem of poverty among the SCs
and STs.
Interestingly, between 1983 and 1999–00 the decline in rural poverty among SC and ST
households was significant in West Bengal, Maharashtra, Rajasthan, Karnataka, Gujarat, and
Andhra Pradesh. The state policy towards SCs and STs is quite clear and has a clear emphasis
on positive discrimination. But that has only been beneficial to a myopic proportion. Those
depended on agricultural labour as mainstay remained at the same relative position of poverty.
It signifies a clear failure of designing the policy towards weaker sections. Even though the
majority belonging to poor strata came from agriculture labour group no clear policy programmes
were designed specifically focussing on them. It is also equally true that as a stake holder interest
group the agricultural labourers belonging to SCs could never plead their case due to lack of
organisation. Policy towards agricultural labour is in the purview of the policy by the provincial
governments, but nothing substantial has been done except promulgating the Minimum Wages
Act, which is more on the paper than in practice.
Table 7
State-wise Rural Poverty Ratio across the Social Groups
(Per cent to the total population of the respective groups)
SC ST Others All
States/Social groups 1983 1999–00 1983 1999–00 1983 1999–00 1983 1999–00
Bihar 80.9 59.8 74.9 59.7 59.6 38.4 64.4 44.2
Orissa 75.8 51.8 86.0 73.9 56.4 33.2 67.5 48.2
West Bengal 72.0 35.1 76.0 49.6 55.6 28.7 63.0 31.9
Maharashtra 59.3 33.3 62.2 43.6 41.0 17.3 45.2 23.8
Madhya Pradesh 58.4 41.3 66.4 56.3 37.7 26.9 48.9 37.1
Uttar Pradesh 57.2 43.7 NA 34.1 43.4 27.0 46.4 31.2
Karnataka 52.7 26.2 57.7 25.4 30.9 14.1 36.3 17.4
Assam 43.1 44.0 47.2 38.7 42.1 39.9 42.6 40.2
Rajasthan 40.8 19.6 61.6 25.3 25.1 8.5 33.7 13.6
Gujarat 39.2 17.8 57.8 29.1 20.5 8.3 29.8 13.2
Andhra Pradesh 37.2 16.5 34.9 23.8 23.3 8.1 26.5 11.1
All India 58.1 36.2 63.8 45.9 37.0 21.6 45.6 27.1
Source: Thorat and Mahamallik (2005).

4. Pointers of Distress
The pointers of distress have always focussed on the group of farmers, largely overlooking
agricultural labour as an unimportant component. Given the trends in productivity of the crops,
except the elite group consisting of rice and wheat, there is enough evidence to believe that the
farmers’ gross income is not increasing at the rate at which it grew in the years following Green
Revolution. This also holds true about the real wages of agricultural labourers. But at the same
time prices of the other commodities have increased sharply. The comparison is attempted in
two ways. First we have looked into the price indices of a few commodities as against the cost
of cultivation and the farm business income of farmer. We looked into relative price indices of
268 THE INDIAN JOURNAL OF LABOUR ECONOMICS

some of the important commodities and it is quite clear that the prices of farm products have
not been growing at the rate at which the prices of other commodities are increasing. We can
see the relative income with respect to the gold and silver prices in the country during nineties.
The fertiliser prices grew at a very fast rate and the net business income of the farmer could not
keep pace with it. Even though the A2 cost computations of CACP show some relationship
with Farm Business Income (FBI), the major components of the cost are increasing faster than
the income (Figure 6).
More than that it is also clear that the FBI did not grow in tune with the prices of Gold or
Silver (representing the historical gold standard). We usually go by the computations of the terms
of trade, which reveal a little and mask very important observations. It is necessary to look at the
relative prices rather than the terms of trade as revealed from the National Accounts Data (NAD).

Figure 6
Relative Indices – 1990-91 to 1999-2000
R e lativ e Ind ice s 1 99 0-9 1 to 1 99 9-00 Co s t A2
300

250
Fa rm
Bu s in e s s
200 In co m e

Go ld (R s .P e r
150
10 gm s )

100
Si lve r
(Rs .P e r kg )
50

Ure a (P rice
0 Rs .p e r to n )
91

93

95

96

98

00
-9
-9

-9

-9
0-

2-

4-

5-

7-

9-
91

93

96

98
99

99

99

99
9

9
19

19

19

19

19

19
1

Figure 7
Price Movements of Selected Goods and CPIAL
W ho le sale Pric e In dice s o f S e lecte d G o od s a nd C P I
450 for Ag ricu ltu ral L ab ou rs in In d ia
R ice
400
Whe at
350
Suga r, G ur & Kh ands ar i
300
O il s e e d s

250 R a w C o tto n

C PIAL
200

150

100

50
2

2
4

0
-8

-8

-9

-9
-8

-8

-8

-8

-8

-8

-9

-9

-9

-9

-9

-9

-9

-9

-0

-0

-0
81

82

91

1
83

84

85

86

87

88

89

90

94

95

96

97

98

99
99

99

0
19

19

19

19

19

19

19

19

19

19

19

19

19

19

19

19

19

20

20
1

1
 269

Second, we also plotted the prices of a few crops along with the Consumer Price Indices of
Agricultural Labours (CPIAL) (Figure 7). It is clear that except raw cotton, which showed the
price trends above the CPIAL in 1990s, all other commodities have price changes lower than the
CPIAL. The farmers produce these commodities and therefore, they feel let down by the market
forces and that sets in frustration. Added to this, the process of commercialisation in the economy
and the increased consumerism sets their ambitions at a higher mark. The severe frustration gets
manifested into suicides (Table 8), even though there is no one to one correspondence between
the two, the distress is quite genuine. We can see that the prices of agricultural commodities except
wheat and rice have not kept pace with the CPIAL. The prices of oilseeds, sugar, gur and khandsari
have shown similar growth trends. That indicates net welfare loss for the farmers growing these
commodities. We have also looked into the FBI series computed from the CACP data and when
compared this with the CPIAL, it clearly shows that the FBI did not keep pace with CPIAL, and
the gap between the two is increasing fast (Figure 8).
That brings forth the point that those farmers as a group has been losing on the count of
Table 8
State-wise Suicide Victims by Farming Profession in India
State 1996 1997 1998 1999 2000 2001
Andhra Pradesh 1706 1097 1813 1974 1525 1525
Karnataka 2011 1832 1883 2379 2630 2630
Kerala 1025 1204 1514 1431 1295 1295
Madhya Pradesh 1809 2390 2278 2654 2660 2660
Maharashtra 1981 1917 2409 2423 3022 3022
Punjab 136 111 108 87 73 73
Rajasthan 453 659 705 724 736 736
Tamil Nadu 799 932 1089 804 882 882
Uttar Pradesh 646 568 727 845 735 735
West Bengal 1738 1539 1457 1240 1377 1377
Total (India) 13,771 13,622 16,015 16,082 16,603 16,603
Source: Accidental Suicides in India, National Crime Records Bureau, Ministry of Home Affairs, Government
of India.

Figure 8
Indices of Farm Business Income and CPIAL

In d ic e s o f F a r m B u s in e s s I n c o m e a n d C P IA L
25 0

20 0

15 0

10 0

50

0
1 9 9 0 -9 1 1 9 9 1 -9 2 1 9 9 2 -9 3 1 9 9 3 -9 4 1 9 9 4 -9 5 1 9 9 5 -9 6 1 9 9 6 -9 7 1 9 9 7 -9 8 1 9 9 8 -9 9 1 9 9 9 -0 0

F a rm B u s in e s s In c o m e C P IA L
270 THE INDIAN JOURNAL OF LABOUR ECONOMICS

welfare and by the operations of the market forces alone, but largely due to state policies. The
trend needs to be reverted if we allow the Directive Principles of the Constitution of India to
protect this vulnerable section. The real wages of agricultural labourers also indicate near
stagnancy across the states except in the case of Kerala (Table 9).
Distress among the farmers in the country is a fact and such situation is quite depressing in
a few states including Karnataka, Maharashtra, Rajasthan, Orissa, and Assam. Though one cannot
draw any one to one correspondence between distress in the farm sector and the present spate
of suicides in some of the states, the farm and farm-related activities have a large stake in
explaining the unfortunate occurrences. The loss of welfare to the farmer as a group is consistent
and continued and that may affect the economy soon, if not arrested. In a broader economic
perspective, the farmers who are entrepreneurs and tried to adopt new ventures are likely to be
discouraged. The absence of safety nets should not crush this entrepreneurial spirit. This
phenomenon of inherent discrimination will have more difficult outcome for the sector in future
if not dealt with squarely. Therefore, the state must come out with a strong safety net programme,
market reforms and protecting the farm income. The recommendations go a long way in this
direction.
Table 9
State-wise Average Daily Earnings of Men and Women in
Rural Labour Households (Agricultural Occupations) in India (Rs./Day)
State Men Women
1987–1988 1993–1994 July 2006 1987–1988 1993–1994 July 2006
Andhra Pradesh 8.87 19.12 59.42 6.12 13.61 43.70
Bihar 9.02 10.93 57.47 8.03 14.78 50.67
Haryana 10.35 30.54 102.31 7.51 24.22 98.78
Karnataka 8.46 19.2 58.73 6.04 14.13 39.49
Madhya Pradesh 7.67 17.04 47.67 6.74 14.29 38.82
Maharashtra 9.16 19.54 64.98 6.04 12.17 41.25
Punjab 15.99 41.98 85.99 9.34 36.82 @
Tamil Nadu 9.82 25.11 84.74 6.18 15.09 48.54
Uttar Pradesh 9.07 21.59 63.15 6.99 16.57 51.65
West Bengal 11.85 24.2 68.54 10.71 19.92 57.44
India 9.46 21.52 67.68 7.05 15.33 48.47
Note: @ Indicates that the particular category of workers, i.e. men/women were not engaged in that operation
either because of their non-availability; or the activity connected with the occupation was not
undertaken in the state; or the activity was out of season in the state, etc.
Source: Figures computed from data available on Indiastat.com; Rural Development Statistics 2002–03, National
Institute of Rural Development and Ministry of Labour and Employment, Government of India.

In this context it is the small, marginal farmers and agricultural labourers who are caught in
a vicious circle of low investment, low productivity, and low income. That requires a Schultzian
break to effect a break away from the low-level equilibrium. The challenge is to empower them
with appropriate changes in the policy front, technology front, and institutional front to enable
them to get these constraints released; and unless some of these are addressed through group
action by small and marginal farmers with the support of appropriate policy-technology-
institution matrix, their survival in the wake of liberalisation will be in danger. Land legislation
to enable them to lease in and lease out land, and legislation to prevent further subdivision
beyond the threshold limit could form a part of policy change. Organisation of group action in
rebuilding depleted and degraded natural resource base, in input and output marketing, in putting
 271

pressure on agricultural research institutions to develop low-cost and risk-free technologies, in

approaching the credit institutions for loans, in dealing with agri-business firms, and in availing
the benefits of public extension system could provide a stage for developing a strong development
constituency of small and marginal farmers.

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