Five million job losses fuelled rural woes

The next Indian government is likely to inherit a rural economy in bad shape as the informal sector in many parts of agrarian India is yet to recover from the multiple disruptions over the past several months, a report said

Nearly 50 lakh (five million) people in India lost their jobs between 2016-2018, a report said highlighting that the “beginning of the decline” coincided with demonetisation, although “no direct causal relationship could be established” between the trends. The report by Azim Premji University’s titled State of Working India was based on the CMIE-CPDX data that highlighted India’s unemployed were mostly the youth.

“In general, women are much worse affected than men. They have higher unemployment rates, as well as lower labour force participation rates,” it added.

The report revealed that unemployment, in general, has risen steadily post 2011. Both the Periodic Labour Force Survey and the CMIE-CPDX report the overall unemployment rate to be around 6 per cent in 2018, double of what it was in the decade from 2000 to 2011.”

“Among urban women, graduates are 10 per cent of the working age population but 34 per cent of the unemployed. The age group 20-24 years is hugely overrepresented among the unemployed.

“Among urban men, for example, this age group accounts for 13.5 per cent of the working age population but 60 per cent of the unemployed.”

The next Indian government is likely to inherit a rural economy in bad shape as the informal sector in many parts of agrarian India is yet to recover from the multiple disruptions over the past several months, a report said.

The JM Financial report titled Rural Safari, “Still on a bumpy road” has said that even with the possibility of a short burst of growth in discretionary consumption like in two- and fourwheelers after the general election, “a market-led sustained recovery may be more gradual than earlier estimated”.

“We have already trimmed our estimates for the auto sector and are beginning to see earnings cuts for staples. In our view, a ‘pure’ rural portfolio could underperform in FY20,” the report said. The survey report noted that rural growth is currently weak in 10 out of 13 states visited when compared to September last year.

It also highlighted that rural incomes are impacted by subdued realisations and stress on non-farm income.

“Slackening of rural demand due to agrarian income challenge is now more widespread vis-a-vis only in western regions earlier. This is largely due to crop prices being deflationary,” the report noted.

“Stress on non-farm income due to various reasons - ban on sand mining, closure of brick kilns and disruption in NBFCs - further aggravated the situation.”

Rural income growth in the last fiscal has been adversely impacted by weak agripricing as overall crop production has not been disappointing.

In terms of agri-related income, the expected rise of 13 per cent year-on-year (YoY) for paddy and 5-53 per cent YoY for other crops in the Kharif season clearly did not materialise, barring few states which have good procurement infrastructure, the report said.

“From the income perspective, a clear disappointment has been the steady decline in prices for most food crops, notably the continued downtick in fruits and vegetable prices, particularly in 2HFY19,” it said.

The survey highlighted a mixed trend in output across states given the lack of rainfall in western India and a weaker North East monsoon (October-December) impacting southern India.

On a historical note, the report said that safer crops (wheat, paddy, sugarcane) continue to find favour with farmers and have much lower volatility.

On the other hand, there was high volatility in income for farmers growing vegetables and fruits, pulses and cotton, and barring cotton, income declined for a large section of commercial crops in fiscal 2018-19 due to weak pricing levels, it added.

Moreover, the difference in output, and hence in income, from irrigated and nonirrigated farms continue to rise given the patchy and erratic rainfall pattern (9.4 per cent below normal in 2018).

From the income perspective, therefore, agri-income suffered in the last fiscal, and decline was higher for small farmers, while large farmers were still able to get better prices because of their ability to store and also have better market access, it added.