Rural jobs conundrum: Farm sector employment hits 17-year high in FY23, defying trends

More jobs in agriculture

The number of people employed in agriculture, hunting, forestry and fishing scaled a 17-year high to 253 million in FY23, according to RBI data on capital, labour, energy, materials and service (KLEMS).

FY23 was also the first year since FY07 when agriculture employment crossed 250 million, with 50 million added in the last four years. In FY23, agriculture added 4.8 million jobs, surpassing manufacturing and trade combined at 4.4 million.

Economists, however, contend that the turn towards agriculture may be a cause of the sector outperforming the overall economy.

"The rise in agricultural employment can be attributed to high growth in the sector, particularly due to growing output in livestock, forestry and fishing," said Laveesh Bhandari, president at the Centre for Social and Economic Progress (CSEP).

While the economy averaged a compounded annual growth rate (CAGR) of 3.5 percent between FY19 and FY23, crop production expanded 4 percent per annum, livestock 5.2 percent and fishing and aquaculture 7.3 percent.

In the four years between FY15 and FY19, crop output grew just 1.8 percent per annum, shows a Moneycontrol analysis. Other agricultural activities, however, had a faster rate of expansion.

Not all are convinced, though. Experts indicate that demonetisation, followed by introduction of the Goods and Services Tax (GST) and Covid added stress to the informal sector, which reversed the trend in FY19. The government banned Rs 500 and Rs 1,000 as legal tender in November 2016, while the GST came into effect from August 2017.

Agricultural employment had fallen to 200 million in FY18, but started rising again from FY19.

“All these have had an accumulated effect. The informal sector couldn’t sustain the shocks leading to a reversal back to agriculture. The excess capacity could not be absorbed by the formal sector,” said Satyaki Roy, associate professor at the Institute for Studies in Industrial Development (ISID).

Roy also pointed out that after Covid forced migrant workers move out of cities, there has not been a return in the same scale.

Despite the rise in the agricultural workforce, the country still employs only 42-43 percent of its workforce in the farm sector compared with nearly 50 percent a decade ago.

An increase in labour force participation and a rise in non-farm jobs, especially in construction, has contributed to a higher workforce.

A Moneycontrol analysis shows that despite a rising agricultural workforce, the country has been able to create non-farm jobs. Nearly 10 million jobs were created in the non-farm sectors, excluding construction, in FY23, averaging 8.31 million over the last seven years.

The Economic Survey has set a target of creating 7.9 million non-farm jobs each year until 2030.