Labour Scarcity and its implication in India
Author: Vikram Yogi

In India agriculture is the main sector which has employed a major portion of its total workforce since a long time ago. But the structural changes in the national and state economies, large scale migration of labour from agriculture and operation of the rural development and poverty alleviation programmes have systematically reduced the relative importance of agriculture in labour allocation decisions of rural households. Consequently, there has been considerable reduction in labour supply to agriculture. On the contrary, the spread of advanced farm technology, increase in cropping intensity, growing importance of timely farming operations, and a remarkable shift in agriculture from a family-labour based way of life kind of activity to a business enterprise have significantly increased the demand for farm labour. In such view of things agriculture is facing acute labour shortage and the notions of surplus rural labour and zero marginal product and opportunity cost of labour have become misnomers. Its impact on agriculture can be seen in terms of reduction in crop yield, reduction in cropping intensity and changes in traditional cropping pattern. It has impacted the whole economy also by increasing the wage rates thereby high cost of cultivation which is directly reflected in higher output prices resulting in the food inflation.

In 2011-12 out of the total workforce of 467 million, agriculture sector has constituted 228.3 million (48.9%). In agriculture labour has remained very less productive as compared to other sectors. Worker’s productivity in agriculture is growing at only 2.9%, while in industry it is growing at comparatively higher growth rate of 6.7% and in services at 5.3% (Chand and Srivastava, 2014). Goldman Sachs (2014) has also calculated that labour is 4 times more productive in industry and 6 times more productive in services compared to agriculture in India.

Usually as an economy matures there is a movement of excess agricultural workers from low productivity agricultural sector to higher productivity sectors. Higher productivity implies higher wages in other sectors. So natural movement of workers take place away from agriculture. Such shift should be coupled with technological advancement in the primary sector means adoption of lower labour intensive or higher capital intensive technology; otherwise agriculture productivity will be affected.

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About Author / Additional Info:
I am currently pursuing Ph.D in Agricultural economics from IARI New Delhi.