Income from agriculture (cultivation and livestock) is not enough for rural livelihood. In fact, more than one-third of rural poor are farmers. They require adequate off-farm income opportunities in their vicinity, for this to happen, growth of productive employment in rural non-farm sector is important.

History of Rural Non-Farm Employment:

• In the 1950s, the Planning Commission used the concept of village and cottage industries for implementation of Integrated Rural Development Programme (IRDP).
• In the 1970s, the Ministry of Rural Development used the concept of industry, business and services (IBS).
• In the 1980s, NABARD started to use the term Rural Non-Farm Sector (RNFS).

Status of Rural Employment:

• The rural labour force continues to swell.
• After the 1990s, there is a steep fall in the share of agriculture in rural workforce.
• It shows the increase in importance of non-agriculture sectors even in rural areas.
• Traditionally, manufacturing has been the most important of non-agriculture sectors.
• However its share has declined in recent period in both rural and urban sector.
• Construction is now the largest employing industry of rural workers.
• Favourable policy environment for cement and tax incentive in house loans has encouraged construction activity after the mid-1980s.
• Employment in construction is influenced by many factors, such as the policy of extending basic infrastructure like roads, growth of population and specific economic policies.
• Service sectors are emerging in rural areas too, though it has largely been confined to the urban areas.
• Services actually consists community-social-personal services (CSPS), which are largely under public domain.
• Government emphasis on social welfare may increase employment in CSPS.
• Finance-insurance-real estate-business services (FIREBS) are mostly private initiatives.
• Other service sectors include the real estate business, Transport-storage-communication (TSC), trade-hotels-restaurant (THR), retail trade etc.

Factors for the Development of RNFS:

• Development-related factors: Productivity-led growth in agriculture influences the penetration of RNFS.
• Development-induced growth of RNFS results in increase of wages of workers and this must be targeted for betterment of rural workers.
• In dearth of development-induced growth of RNFS, a significant proportion of rural non-farm labour remains poor. They are widely referred to as ‘working poor’.
• Residual sector hypothesis: In a situation where labour absorptive capacity of agriculture becomes limited and urban industrial sector is not able to accommodate ever-growing labour force, the RNFS tends to act as a sponge for surplus labour. This has an effect on wages of workers in RNFS.

Challenges:

• Employment is low in mining and utilities.
• There is significantly high level (one-third) of disguised unemployment among female workers in rural sector.
• The growth of urban centres is a stimulant for growth of RNFS. However this needs to be integrated with rural sector with adequate infrastructure.

Way Forward:

• There should be sufficient incentives to encourage manufacturing in rural vicinity.
• These incentives can be in the form of creating suitable infrastructure like common facility centres (CFCs) and incentives like cheap electricity.
• Rural industrialization must adopt a cluster-based approach wherein large and medium size enterprises based on local resources are linked with the micro-small enterprises.
• A robust growth of rural manufacturing requires massive investments in skill formation and entrepreneurship development.
• There should be a single window integrated service centre to promote rural non-farm sectors.

Conclusion:

Growth of productivity in agriculture, manufacturing and tourism are important to trigger growth of productive employment in other sectors of the rural economy. Though there have been numerous public institutions to encourage rural manufacturing, the gap between productivity of manufacturing in the rural and urban sector continues to widen.