Rural jobs fall, farm activity slows: Is rural India still economy’s growth engine amid double whammy?

The shrinking of the labour force in rural India along with a sharp fall in employment is a sign of growing stress in the hinterland.

While rural India was slightly immune from the disruptions caused by the coronavirus pandemic in the early months, the case has reversed by now. In rural India, employment fell by 3.6 million in August and the count of the unemployed rose by 2.8 million, said the Centre for Monitoring Indian Economy (CMIE). The rest of those who lost jobs quit the labour market and thus the labour force shrunk by 0.8 million in the month. This shrinking of the labour force in rural India along with a sharp fall in employment is a sign of growing stress in the hinterland, CMIE added. 

While urban India was struggling with the disruptions in businesses and industries, the hinterlands were believed to be driving India’s growth towards recovery by July. However, in the month of August, the hinterlands are hit by two major stones. On one hand, where the growth in MGNREGA person-days of employment was up by a mere 14 per cent, there was also a significant fall in farming activities in August. 

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By July-end, 83 per cent of the kharif sowing was complete, which left very little work for August. Consequently, 40 per cent of the sowing was done in the months of June and July respectively, which fell to a mere 20 per cent of the sowing in August. The fall in farm activities also led to lower engagement of the workforce. The CMIE data showed that the employment in farming fell by 0.5 million in August and job losses in the rural non-farming sectors were to the tune of 3.2 million.

Meanwhile, the labour force expanded in urban India but shrunk in rural India. Also, the employment and employment rate expanded in towns and shrunk in the country-side. While the unemployment rate rose in both regions, it rose more in rural India. It is also believed that the return of the migrants to urban labour markets may be the reason behind a fall in rural employment.