The fall in the male labour force engaged in agriculture was more pronounced 13 percentage points; from 71 per cent to 58 per cent. However, since 1987, the shift of the labour force in percentage terms has stopped. The labour force engaged in agriculture has stabilised at 65 per cent. Even the push factor, i.e increasing pressure on land and forcing people to seek avenues in non-farm sector, is also not operating. This is, perhaps, because adequate job or work opportunities in the non-farm sector are not growing. People in rural areas are being forced to eke out a living from land.
The trend of stabilisation of the labour force engaged in agriculture in percentage term started before the reforms began. The period covered in the survey is upto 1993-94. Hence, it is too early to assess the impact of reforms on the structure of labour from this data. But there is need to remain alert on this question. It is more so when the data emerging from some countries which have been through the type of reforms that are being implemented in India for a long period, is not very encouraging. For instance, the labour force engaged in agriculture in Thailand has remained stable at 60 per cent of the countrys total labour force. Such a phenomena is particularly true in countries where foreign capital has played a big role in the growth of the manufacturing and service sector.
Culturally, foreign companies hold a bias for capital-intensive industries and their investments are weak in backward linkages. Thus, in Japan, South Korea and Taiwan, where sources of industrial growth were indigenous companies, the shift of the labour force from farm to non-farm sector was much more pronounced and swift than in the latecomer Asian Tigers.
However, the right lesson to be drawn from this is not to turn ones face away from foreign capital, but create an environment where value-addition at every stage is profitable for foreign companies. Changes in labour laws to attract foreign capital in labour-intensive industries should also be made. In fact, as a blessing in disguise, the high interest rate regime should be able to make labour-intensive investments more profitable than capital-intensive ones. In labour-intensive industrialisation, even 10-12 per cent sustained growth in manufacturing can bring about a significant shift in the structure of the labour force in a reasonable time-frame. To get similar results from capital-intensive industrialisation, one may, perhaps, need a sustained growth rate of over 15 per cent in the manufacturing sector.
The shift in the structure of the labour force is very important for the political economy. A faster shift can bring about more equitable distribution of newly-created wealth. India has had an annual growth rate of over 3 per cent in agriculture for the last 15 years. This is fairly high, even according to international standards. Yet, because of the inadequate shift in the structure of the labour force, urban-rural inequalities have widened. According to World Bank estimates, the value-addition of a worker engaged in agriculture is only one-fifth of that of one engaged in the non-farm sector.
This gap could increase further. In Thailand, the income gap between the farm and non-farm sector increased from 1 to 8 in 1990 to 1 to 11 in 1994. In fact, the focus of the sociology of a political economy should shift from poverty to inequalities. Urban-rural inequalities are getting reinforced by two other trends: within the non-farm sector tardy growth of employment in the formal sector and a much faster growth in the non-formal sector; and increasing regional disparities.
In the NSS survey, the category of casual labour broadly covers the non-formal sector. Of the total workforce, the percentage of casual labour increased from 23 to 32 between 1972 and 1993 and that of the regular employees declined from 15 to 13. In urban areas, during the same period, the percentage of casual workers increased from 12.5 to 18.3; that of the self-employed increased from 41 to 42, but the percentage of regular employees declined from 46 to 39. Casual workers financially worse-off. The casualisation of the workforce actually accelerated after 1987. In the recent period, regional disparities too have started increasing. The per capita income in the two most populous states of the country, Bihar and U.P, has stagnated or even declined.
The widening of all-round inequalities began before the reforms. But market-oriented reforms, left to themselves, can accentuate inequalities. This trend can be tempered only through conscious State intervention.The test of the quality of economic leadership lies not in supplanting the market, but supplementing, guiding, influencing and directing it to ensure that inequalities remain within the limits of political and social management. Inequalities can be tolerable only up to the point when social mobility increases through education, hierarchical structures are demolished and labour-intensive industrialisation is encouraged. The sense of jealousy arising out of relative deprivation and increasing inequalities can be destructive. Reformers can ignore political sociology, but only by endangering reforms.
