Though rural India always had a section of its population employed in non-farm occupations, they tended to be subsumed within the agrarian economy. Given the hegemonic position of categories such as peasantry and its uncritical use in the Indian context, the macro data collected by the state agencies perhaps did not even have columns for the enumerations of the wide range of artisan communities in rural India, who mostly functioned outside agriculture, though supporting its operations. It was with the growing visibility of newer forms of rural nonfarm occupations, such as construction and manufacturing, that the economists began to take note of the rural non-farm Rural Livelihoods: Agriculture and Non-farm Economy (RNFE).

Besides increasing the productivity of land through the introduction of new technologies of cultivation, the post-independence developmental state also expanded the reach of education. It invested in developing communication networks and increasing connectivity across regions and settlements. Those who prospered with the GR and acquired formal education also developed aspirations for mobility beyond agriculture. The decline of the traditional jajmani occupations and an increasing use of machines and other inputs for cultivation also began to alter the rural economy. Growing cultures of consumption also created demand for a range of goods.

Over time, villages saw a growth of local markets. Prosperous rural residents began to invest in building pukka houses. The state development programmes, such as assured rural employment for a certain number of days under the MGNREGA of 2005, also encouraged investment in rural infrastructure. Besides construction, a much larger number of rural residents are employed in petty shopkeeping and providing urban-style services to rural residents. These ranged from shops that sell locally required farm inputs and consumer goods to beauty parlours and tuition centres.

Despite the significant pace of growth of its economy since the early 1990s, India continues to be predominantly rural. This is not simply about its demographics. Even in 2011, nearly three-fourths (72.4 per cent) of its workforce resided in rural settlements, larger than the share of the rural population, which stood at 68.8 per cent.

As one would expect, a large proportion of those who live in rural areas also work locally, within the rural settlements. Interestingly, however, the proportion of those working in agriculture has been steadily declining, shifting their livelihood to other rural non-farm occupations, completely or partially. Some rural residents also go to the neighbouring town to work while continuing to live in the village with their families.

What is new about rural non-farm occupations? What implications does it have for rural livelihoods and the well-being of rural residents?

The available official data points to some very interesting trends. Besides the steady decline of agriculture, which we discuss at length in the next chapter, the rural non-farm economy has been growing in terms of its value addition to the national income mostly because of the growing practice among urban industrialists to set up their manufacturing units in rural areas. Though this trend has been there for a long time, it seems to have picked up after the introduction of economic reforms in the early 1990s.

For example, the share of manufacturing units located in rural areas in the year 1993–94 contributed less than 30 per cent to the net national domestic product. By 2011–12 it went up to 51 per cent. In other words, a larger proportion of the net domestic product (NDP) contribution of the manufacturing sector came from industries located in rural areas.

The share of factories located in urban centres was lesser than those located in rural areas. However, this is not an indication of any kind of internal economic dynamism of the rural economy. It merely points to the growing spatial spread of Indian manufacturing. The newer manufacturing units are being set up in rural areas as urban land would have been far more expensive.

More importantly, this migration of manufacturing to rural areas did not translate into a significant shift of rural workforce from agriculture to manufacturing. In fact, nationally the share of workforce employed in the manufacturing sector “declined by 4.1 percentage points during the 40 years ending with 2011–12”. Further, the official data also shows that the share of agriculture in the rural NDP has declined quite substantially during this period, from 64.36 per cent in 1980–81 to merely 35 per cent in 2009–10. In other words, agriculture contributed to only around one-third of the total rural economy.

However, such a statistical representation of the status of agriculture in the rural economy is not free from problems. Despite its relative decline in the national economy, agriculture remains the mainstay of the rural economy, more so in some regions than others. Even more importantly, it continues to be the primary source of livelihood for a much larger proportion of the working population. While the NDP generated by rural manufacturing is added to the gross number for rural areas in official data sets, it hardly belongs to the rural residents.

Excerpted with permission from The Indian Village: Rural Lives in the 21st Century, Surinder S Jodhka, Aleph Book Company.