This is indeed remarkable, especially given that the CSO's national accounts data indicates that the decade of the 1990s shows a marginally higher rate of growth of output than the previous decade. Thus, the fall in work force participation has come in a period during which economic activity in the aggregate is supposed to have accelerated.
 
What these employment rates imply in terms of the growth of employment is shown in Chart 3. This chart shows growth rates of employment which have been calculated using extrapolated annual population data based on Census figures up to 1991, and thereafter using the now standard projections of annual rates of growth of 1.73 per cent for the rural population and 1.84 per cent for urban population for the period after 1991.
 
Based on these estimates of population and the employment data of the NSS, estimates of the annual compound rate of employment growth in rural and urban India are provided in Chart 3. This shows a very significant deceleration for both rural and urban areas, with the annual rate of growth of rural employment falling to as low as 0.67 per cent over the period 1993-94 to 1999-2000. This is not only less than one-third the rate of the previous period 1987-88 to 1993-94, it is also less than half the projected rate of growth of the labour force in the same period. In fact, it turns out that this is the lowest rate of growth of rural employment in post-Independence history.
Chart 3 >>
 
We have also attempted to calculate the employment elasticity of rural output growth based on these growth rates and on estimates of the rural share of GDP. (The methodology of these estimates of rural GDP growth is the same as that used for a previous Macroscan, in Businessline February 22, 2000, and the details are provided there.) This yields an employment elasticity of rural output growth of only 0.13 for 1993-94 to 1999-00, compared to 0.38 for the previous period.
 
In other words, the employment elasticity of rural output growth has declined to less than one-third of what it was in the earlier period, which itself represented a decline compared to past trends. It also means that it can no longer be assumed that the process of economic growth itself will necessarily generate much more employment even in the rural areas, as has commonly been supposed by advocates of the economic liberalisation process.
 
If this is correct, this clearly points to some major problems with the pattern of growth that has emerged in the rural areas in particular. Note that these rates of employment growth refer to all forms of employment in the rural areas, and what is emerging is that there is no sector in which employment is growing fast enough to take up the slack that is brought about by falling labour use patterns in agriculture. This point is discussed in more detail below.
 
Even in the urban areas, the rate of employment generation has slowed down very dramatically over the various periods considered here, and in the latest period it appears to have been also well below the estimated rate of growth of the urban population. Urban elasticity of employment calculations have not been attempted here, but since it is widely felt that economic growth in the 1990s has been disproportionately higher in the urban areas, the significantly lower rates of employment growth here also suggest very low and falling elasticity of employment generation.
 
It is worth examining in some more detail the data on types of employment. The past several decades have been marked by a fairly steady process of casualisation of labour, and the past decade turns out to have been no exception. As Charts 4a and 4b indicate, for both rural men and women, the share of casual employment has gone up, in fact quite substantially for men.
Chart 4a >> Chart 4b>>