Financial Daily from THE HINDU group of publications
Tuesday, Apr 02, 2002
Agri-Biz & Commodities - Foodgrains
Economic access through employment -- One way to tackle food security issue
S. Mahendra Dev
FOOD security is mainly a question of economic access at the household levels as food availability at the national level is not a problem. One of the reasons for the accumulation of over 60 million tonnes of food stocks with the Food Corporation of India is the low purchasing power of the poor. Even the most optimistic estimates show that 260 million people (26 per cent of the total) were below the poverty line in 1999-2000.
Two factors could be responsible for the low purchasing power in the 1990s. First, the high relative prices of food due to high procurement prices could have reduced the capacity of the poor to purchase more foodgrains. Second, there could be a decline in employment opportunities in spite of high GDP growth. The solution to food security and reduction in poverty is to improve economic access through employment.
Thanks to liberalisation and globalisation, the emerging labour market offers opportunities and challenges. First, opportunities have to be provided to unskilled workers and their education and skills improved. This is important because in the context of liberalisation and changes in technology (including information technology), educated and skilled workers are more in demand than the unskilled.
Second, employment among the educated is high and there is a need to create jobs for them. Third, the emerging labour market is likely to create more problems for women. Men may corner high remunerative jobs and the less productive ones, such as agriculture, may be left to the women. Fourth, the organised sector is not able to absorb labour, and workers may have to find jobs in the informal sector, which is characterised by poor working conditions and fluctuating wages. Within the organised sector, the growth of public sector employment has declined drastically, while that of the private sector has increased. However, the latter did not offset the former.
Labour market reform is expected to increase employment in the organised sector. It is possible that labour market reforms will attract private investment. But entrepreneurs may prefer contract labour to a permanent workforce. However, productivity-enhancing measures such as technology and infrastructure are more important for raising output than labour market reforms. Employment opportunities in the 1990s were not very encouraging. The growth rate of rural employment was around 0.5 per cent per annum between 1993-94 and 1999-2000 compared to 1.7 per cent per annum between 1983 and 1993-94. The daily status unemployment rate in rural areas rose from 5.63 per cent in 1993-94 to 7.21 per cent in 1999-2000. The overall employment growth declined from 2.04 per cent during 1983-94 to 0.98 per cent during 1994-2000 (Table). Much of the decline in growth was due to developments in the agriculture and community social and personal services sectors. These two sectors, accounting for 70 per cent of the total employment, have not shown any growth during the 1990s.
There are two approaches to creating employment opportunities through sectoral programmes and direct employment programmes. The elasticity of employment to GDP for the entire economy was 0.53 during 1977-83 and declined to 0.41 in the period 1983-94. The elasticity fell sharply to 0.15 during 1993-2000. Employment elasticities in agriculture and community social and personal services were zero during the same period. In the case of manufacturing, it was 0.26, while for services it was more than 0.50 during this period.
Experience in the developing countries has shown that the greatest stimulant for pro-poor growth is dynamic agriculture, which still contributes 60 per cent of the total employment in the country; during 1983-94, it contributed 50 per cent of the additional employment, while there was an absolute decline in agricultural employment between 1993-94 and 1999-2000. In the process of economic development, agricultural workers are supposed to shift to non-agriculture. However, underemployment can be removed with higher agricultural growth. Also, agriculture has the potential to absorb workers from regions with higher incidence of rural poverty such as Orissa, Bihar, Assam, Madhya Pradesh, West Bengal and Uttar Pradesh .
Within agriculture and allied activities, there seems to be some diversification towards non-cereal crops. Diversification into fruits and vegetables, fisheries and animal husbandry is expected to promote employment. For example, in Maharashtra, the requirement of person-days per hectare per crop season for wheat is 143; 200 for vegetables; 855 for fruits and 2,510 for grapes. Thus, fruits, in general, require nearly six times and grapes, in particular, over 17 times the person-days required per hectare compared to wheat. However, with diversification comes risk and uncertainty. Technology, infrastructure and market have to be improved to shift the farmers to non-foodgrain crops.
Development of wastelands will also increase employment opportunities. There are about 24 million hectares that are categorised as cultivable wasteland and permanent fallow, which can be developed and cultivated. The wasteland can be given either to farmers or to corporate sector and panchayats. However, one has to make sure that the corporate sector does not occupy the fertile tracts in the name of wastelands.
Turning to the rural non-farm sector, it is important both in generating productive employment and alleviating poverty in rural areas. There cannot be one policy package for the entire rural non-farm sector (RNFS). Sub-sectoral policies are needed for different regions. Technology and skill development, infrastructure, development of markets and institutions, credit availability are essential to promote rural non-farm sector.
On direct programmes, self-employment and wage employment schemes are important. Rightly, group approach in the form of self help groups is being adopted for self-employment.
The problem with women's SHGs is that most of the schemes undertaken by them are subsistence type and not high-income-generating activities. Public works are the most important wage employment programmes.
The government's food subsidy is Rs 21,000 crore and it expends Rs 50,000 crore to finance foodstocks. The government should have used this opportunity to undertake a massive food-for-work programme. This would have created employment and partly solved the problem of foodstocks.
Increase in employment opportunities and their quality would enhance economic access of poor households to food and other items. This would increase food security and reduce poverty. Apart from increasing public investment, the government should act as a facilitator to improve private investment in agriculture and non-agricultural activities.
In the 1990s, inter-State disparities in economic growth and employment increased. There is a need to look at employment elasticities and opportunities in different regions and sub-sectors to undertake policy actions.
(The author is Director, Centre for Economic and Social Studies, Hyderabad.)
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