Underemployment in Agriculture

The chapter begins with a history of agricultural policy in India. It goes on to argue that policies aimed at improving outcomes within agriculture alone cannot bring prosperity to those engaged in it. Today, agriculture employs 44 percent of India’s workforce but produces at most 17 percent of GDP. With the overall GDP per capita itself low, agricultural output per worker is extremely low, indicating gross underemployment of labor. Therefore, marketing reforms that shift prices in favor of the farmer and against intermediaries cannot go very far. With self-sufficiency in agriculture, increases in productivity will likely result in lower prices rather than higher revenues. Besides, agricultural growth rarely exceeds 4.5 percent over even a decade-long period. Scope for increased incomes through diversification within agriculture into horticulture, fisheries, and animal husbandry is also limited. The upshot is that the only avenue to increasing agricultural incomes rapidly is to pave the way for half or more of the farm workforce to migrate into industry and services.