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Role of non farm sector in the transformation of indias rural economy
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INTERNATIONAL JOURNAL OF
MANAGEMENT (IJM) International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online), Volume 5, Issue 11, November (2014), pp. 48-50 © IAEME ISSN 0976-6502 (Print) ISSN 0976-6510 (Online) Volume 5, Issue 11, November (2014), pp. 48-50 © IAEME: http://www.iaeme.com/IJM.asp Journal Impact Factor (2014): 7.2230 (Calculated by GISI) www.jifactor.com IJM © I A E M E ROLE OF NON-FARM SECTOR IN THE TRANSFORMATION OF INDIA’S RURAL ECONOMY *V. SUJATHA, **Dr. M. SIVARAJAN *Ph.D., Research Scholar (Part-Time), Pachaiyappa’s College, Chennai-30 **Associate Professor of Economics, Pachaiyappa’s College, Chennai-30 48 ABSTRACT This research paper discusses about the role and functions of the Non-farm sector in the development of Indian economy. Rural non-farm sector (RNFS) has gained momentum especially after liberalization. It is major objective of the limitation agriculture sector in providing gainful employment to the surplus workforce. Besides, due to the seasonal fluctuation and environmental degradation, the agricultural workforce itself is not able to obtain the sufficient livelihoods from agriculture. This creates the problem of unemployment and underemployment. Due to this situation, rural non-farm sector is considered to be the panacea for the problem of poverty, unemployment and rural out migration. Keywords: Economy, India, RNFS, Employment, Agriculture and Environmental etc., INTRODUCTION The rural economy in India is predominantly based on agriculture and other activities related to agriculture sector. The key to India’s development lies in the development of its rural areas. In India, there are as many as six lakh villages where about 70 per cent of the total population lives. The agricultural sector occupies a pivotal place in the national economy both in terms of its contribution to the gross domestic product and employment generation. However, segmenting rural employment growth into the farm and non-farm sector would demonstrate that non-farm employment growth has been significantly higher than farm sector employment growth. In the view of the Economic Census (2005) identifies 17 non-farm activities includes mining and quarrying, manufacturing, electricity, gas, water supply, construction, maintenance and repair, wholesale and retail trade, hotels and restaurants, transport and storage, financial intermediation, health and social work etc., Economic census 2005 reveals that number of non-agricultural establishment in rural India has increased annually at the rate of 4.56 per cent during 1998-2005 as against 1.65 per cent during 1990-98 wholesale – retail trade has the highest share in RNF
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International Journal of
Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online), Volume 5, Issue 11, November (2014), pp. 48-50 © IAEME establishments and the shares of transport, storage and communications, financial real estate etc, have increased appreciably during 1990-2010. Agricultural sector alone cannot provide the ultimate solution for rural poverty, unemployment and underemployment. As long-term strategy for structural changes in employment and earnings may be necessary. In the rural households, out of necessity, workers are being pushed into the non-farm sector and pulled by the dynamic rural non-farm opportunities. Non – farm employment has received much attention from the policy makers and researchers because it could reduce pressure on farm activities by creating supplementary income and could moderate household’s economic risks in the rural economy. In the developing countries share of non-farm income is high and it varies from 20 per cent to 50 per cent. India, like other developing countries also exhibited a high proportion of non-farm employment. Due to launching of liberalization policies, (1991) high rate of growth is exhibited after two decades of economic reforms. Since 1990’s several employment generation programmes were adopted in order to generate employment to the rural poor. Priority was given to the non-farm sector over the past six decades, tremendous efforts have been focused and promotion of rural non-farm sector globally. 49 GROWTH OF URBANISATION The process of urbanization also effects the growth of RNFS. Urbanisation expands the market for rural enterprises, and encourages non – agricultural activities in secondary and tertiary sectors in the neighbouring rural areas to meet the non – local demand. Rural enterprises may therefore benefit from economies of scale resulting in decreased cost and increase in efficiency. FUNCTION OF RNFS The major role the RNFS plays is in reducing the inequality in income distribution across different sections of the society like a landless agricultural laborers who work in agricultural season, which is highly seasonal in nature and the people remains slack for rest of the year but a land holder have enough product to fulfill his requirement of food and non – food items for the rest of the year. So, by providing employment during slack seasons RNF Sectors smoothens the rural households income flows and hence the consumption. Hence participation in the RNF Sector allows poor people to smooth out or offset fluctuations is agricultural income that might occur on a seasonal basic or as a result of unexpected events and in this way it reduces vulnerability of the poor sections to cope with future unforeseen contingencies. GROWTH OF NON-FARM EMPLOYMENT IN INDIA In India, the land man ratio is decreasing, employment elasticity in agriculture has not only declined but has reached almost zero. In this situation, the rural non – farm sector is generally perceived as the answer for tackling the twin problems of employment and poverty in rural India. Employment growth in the farm sector has not been in consonance with employment growth in general. A planned strategy of rural non-farm development may prevent many rural people from migration to urban industries and commercial centers. When the economic base of the rural economy extends beyond agriculture rural-urban salutary effects in many other aspects associated with the life and aspirations of the people. Rural industrialization has significant spin-off for agricultural development as well. Rural income distribution is much less unequal in areas where a wide network of non-farm avenues of employment exists; the lower strata of rural societies participate much more intensely in non-farm activities.
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International Journal of
Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online), Volume 5, Issue 11, November (2014), pp. 48-50 © IAEME 50 CONCLUSION In view of the above, the rural non-farm sector is increasingly playing an important role in the development of rural areas in India. Where, agriculture in the region declines its importance in terms of its contribution to the economy, the rural non-farm sector will provide employment and income to many rural folks. It is noted that RNFS are not the substitutes for employment in agriculture but rather as a supplementary measures for development of non-farm sector policy and interventions for creating employment opportunities on this regard the role of the government is crucial especially in the provision of necessary infrastructure and other support services in the country. It is also vital to improve the marketing links between the village entrepreneurs and the larger business firms located in the towns. Other important considerations that need to be focused on may include human resource development and women participation with a view in making the activities self-sustaining in the changing competitive environment. REFERENCES [1] Bhalla, G.S. (2008), Globalisation and Employment Trends in India, Indian Journal of Labour Economics, Vol.51, No.1. [2] GOI (2006), Employment – Unemployment Situation in India, 2004 – 05”, Report no.515, Part I II, National Sample Survey Organization, New Delhi. [3] Ministry of Labour and Employment, Government of India (2008), Selected Labour and Employment Statistics, Directorate General of Employment and training, Government of India, New Delhi. [4] Papola, T.S.(1992), The Question of Unemployment in Bimal Jalan (ed.), The Indian Economy: Problem and Prospects, New Delhi, Viking, Penguin Books India (P) Ltd. [5] Sundaram, k.(2007), Employment and Poverty in India: 2000 – 05 Economic and Political Weekly, July 28, 2007. [6] Vasanth Vinayagamoorthi, Selvam Murugasen, Lingaraja Kasilingam, Karpagam Venkatraman and Gayathri Mahalingam, “Environmental Management Accounting – A Decision Making Tools”, International Journal of Management (IJM), Volume 3, Issue 3, 2012, pp. 144 - 151, ISSN Print: 0976-6502, ISSN Online: 0976-6510. [7] Vaibhav Kumar, “The Impact of Strategic Human Resource Management on Achievement of Organisational Goals Objectives: Study on Attraction of Public Sector Companies for Employment in India”, International Journal of Marketing Human Resource Management (IJMHRM), Volume 5, Issue 3, 2014, pp. 10 - 21, ISSN Print: 0976 – 6421, ISSN Online: 0976- 643X. [8] Dr. Dattatry Ramchandra Mane, “A Study on Employment Generation Via Outsourcing and Areas of Concern for Sustainable Development of SSI Units”, International Journal of Management (IJM), Volume 4, Issue 6, 2013, pp. 52 - 60, ISSN Print: 0976-6502, ISSN Online: 0976-6510.
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