Rural distress increased sharply as farm wages fell - Santosh Mehrotra

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published Published on Dec 25, 2022   modified Modified on Dec 30, 2022

- Deccan Herald

Covid-19 reverse migration of labour added to joblessness

A rise in self-employment and unpaid family labour three years into the Covid-19 pandemic even as wage rates fell is an indication that rural distress has risen, the economist Santosh Mehrotra writes. Economic distress was on an upward trajectory even before the Pandemic and the sudden arrival of millions of reverse migrants in 2020 added to the stock of unemployed people in rural areas. Since growth has not picked up per capita income in FY 2021-22 is below the level of two years ago, and this combination of falling wages and increased labour supply has created a sharp uptick in rural distress. 

The percentage of workers in agriculture in 2020 rose to 45.6 percent and went up further to 46.5 percent. It was 42.5 percent in 2018-19. This marked a reversal from a falling trend that went back to 2004-05. For the first time in India’s post-independence economic history, the absolute number of workers in agriculture was falling as people shifted from farm to non-farm work, a process that continued for 15 years until 2019. Subsequently the number of workers in agriculture rose by 45 million in 2020 and another 7 million in 2021. This was on top of the 188 million already underemployed in farms across India. 

This is the reason why there has been a very sharp increase in unpaid family labour from 47 million to 68 million between 2018-19 and 2019-20, with a further rise in 2020-21. Women, who had been leaving agriculture in large numbers prior to 2017 (one of the main reasons why female labour force participation in rural areas was declining), began to join the workforce in 2018, primarily as unpaid family labor. 

The Periodic Labour Force Survey (PLFS) shows that Labour Force Participation Rate (LFPR) and Workforce Participation Rate (WPR) are rising and that the unemployment rate is falling. However, Centre for Monitoring Indian Economy data show the reverse. How does one resolve this paradox? Mehrotra writes that the explanation is clear: CMIE does not consider “unpaid family labour” as employment, while the PLFS does.

Deccan Herald, 25 December, 2022,

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