Agrarian distress and rural non-farm sector employment in India

The rural labour market in India is still virtually, to a large extent, dominated by the agriculture related workers, both cultivators and hired workers consisting of more than 70 percent of the rural workforce even in the current decade. However, there have been signs of a shift from farm to non-farm occupations and industries during the recent times, at a magnitude relatively higher than the experience of the last three decades. This has brought in a lot of optimism among economy watchers that there is at last a visible structural shift in employment. Yet, it needs to be recognized that this shift has occurred in a period when the economy was reeling under the effects of a severe agrarian crisis. The trends and patterns in the structural shift support the argument that this has occurred mainly as a distress-driven response to the crisis. Logit and Multinomial logit analysis shows that in distress-driven regions the shift has occurred due to the push factors associated with the distress, while in the normal regions the shift has been relatively more responsive to growth driven factors.