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In an economy such as that of India,
the generation of productive employment opportunities
spread over a wide base of population is obviously the
key to any sustainable economic expansion, as well the
reduction of poverty and more equitable distribution
of income. Indeed, the inability to generate such employment,
thus improving aggregate productivity of labour in the
Indian economy rather than just in a few chosen sectors,
has been the most obvious symptom of the failure of
the Indian economic development process.
The marketist economic "reforms" of the 1990s were not
specifically directed at employment, however. Despite
this, the stated expectation of policy makers over this
period has been that liberalising markets, easing the
conditions for entry and operation of foreign investors
and encouraging exports especially in agriculture, would
all contribute to more employment generation. Thus,
this was supposed to be a positive fallout of the new
economic strategy. And since the expansion and diversification
of rural employment in particular has been associated
with declining levels of rural poverty over the 1980s,
this was also expected to lead to a decline in poverty.
The data recently released by the National Sample Survey
Organisation allow for an investigation into all-India
trends in employment patterns and trends in poverty
incidence, based on annual surveys conducted since 1990-91.
There has already been much discussion of what the data
on consumer expenditure suggest with respect to poverty,
in particular the disturbing finding that rural poverty
in particular has not declined after the reforms but
may even have increased. But the observed pattern of
trends in employment have been less noted. In this piece,
we deal with rural employment patterns at the all-India
level.
The annual surveys provide an important picture of how
employment generation has changed in the Indian economy
in the era of reforms. It should be noted that these
annual surveys, which have been conducted since 1990-91,
relate to a smaller number of households than the much
larger quinquennial surveys, the last of which was held
in 1993-94. Thus they have covered between 27,000 and
29,000 households rather than 1.3 lakh households in
the larger sample. For this reason, the results tend
to be less reliable estimates in terms of all indicators
at the state level. However, at the all-India level
they continue to be statistically relevant and reliable
indicators, except possibly for those variables (such
as unemployment) for which the proportion of population
is rather low.
In what follows, therefore, we consider the all-India
trends only, in terms of arriving at some idea of the
trends in overall employment generation and pattern
of employment in terms of sector and type of activity.
A further note on the definitions used in the data is
in order. The NSS data on employment is based on the
distinction between "principal" and "subsidiary"
status of activity as well whether the person is "usually"
engaged in the activity. Thus, a person is classified
as "usual principal status" according to the
status of the activity (or non-activity) on which the
person spent a relatively longer time of the preceding
year. The activities pursued by a person are grouped
into three broad categories : (a) working or employed
(b) seeking or available for work (i.e. unemployed)
and (c) not in the labour force.
A "non-worker" (on the basis of the usual
principal status) is someone whose major part of time
in the preceding year was spent as either unemployed
or not in the labour force. However, he or she could
still be involved in some economic activity in a subsidiary
capacity - when this is usually the case the person
is referred to as a "subsidiary status worker".
The two categories together - usual workers by both
principal and subsidiary status - constitute "all
usual workers". In the discussion below, we consider
"all workers" - that is both principal and
subsidiary, so as to allow for a comparison over time.
However, it should be noted that this could in fact
overestimate the extent of employment, on average by
around 2 per cent of the population.
The "current weekly status" definition is
one which classifies a person as employed if he/she
was engaged in any one of the gainful occupations listed
for at least one hour on any one day of the previous
week. The activity assigned to the person then depends
upon which activity he/she had spent the most amount
of time on. Both the usual status and the weekly status
provide stock measures of employment, but the usual
status definition is likely to be less reflective of
the transient character of the timing of the survey
and be less affected by seasonal and short-run factors.
Economic activity is defined by the NSSO as any activity
that results in the production of goods and services
that adds value to the national product. These in turn
are both market activities and non-market activities.
The non-market activities encompass all activities relating
to the agricultural sector and gathering of primary
produce for consumption, and activities relating to
the own account production of fixed assets such as houses,
roads and wells or even machinery for household enterprise.
It should be noted that this definition of economic
activity is still quite restrictive, and does not include
the full spectrum of economic activities defined in
the UN System of National Accounts. It therefore excludes
a significant amount of unpaid or non-marketed labour
within the household, especially by women, including
the processing of primary produce for own consumption,
services such as cleaning, child care and so on, which
are undertaken within the household and not marketed.
This means there is a likely underestimation of economic
activity within the household, as well as of the work
participation rates especially of women.
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