Non-agricultural informal sector in India: Impacts of agrarian conditions

Type Journal Article - Indian Journal of Labour Economics
Title Non-agricultural informal sector in India: Impacts of agrarian conditions
Volume 53
Issue 2
Publication (Day/Month/Year) 2010
This paper analyses the impacts of agrarian growth and land distribution and of corporate led or supported crop diversification on the rural non-farm sector, in particular, and the informal sector, in general. It shows that the informal sector benefits from agriculture if it is constituted mostly of marginal and small farmers, as they demand a majority of the primary equipments for farming and non-farm business. Moreover, the agricultural growth-induced expansion of the rural non-farm sector is conditional upon the size class of landholdings; it is the marginal holdings that have a prosperity-induced impact on the rural non-farm sector. Next, the paper proposes a distress-led eviction of the petty non-farm sector, which largely depends on traditional farming, as agriculture goes for corporate led or supported crop diversification towards high-value crops. An analysis of informal manufacturing units engaged in the processing of agricultural products reveals the dominance of labour-intensive coarse crops processing firms and thereby questions the view that high value crop cultivation would pave the way for non-farm employment generation in the processing sector. On the other hand, it has been found that the wholesale and retail trade of high-value crops is dotted with micro-entrepreneurs who may not be able to compete with the corporate-driven modern agricultural supply chain. Finally, it is argued that crop diversification may create problems of micro food security for the informal producers.

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