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In the contemporary times, rural non-farming activities and the rural non-farm economy has been gaining prominence. Around 41.89 million rural populations are employed in non-agricultural activity, estimates the Economic Census of India. These activities further, have a growth rate of 4.56% reported by the Economic Census of India, in the time period of 1998-2005. However, even after a considerable growth, this sector is suffering a hiatus due to few factors like the rural infrastructure (the roads, communication or the electricity), scanty skilled labor due to lack of proper training and facilities, etc.  None the less, in the present times, a number of research works are being conducted to study the rural non-farming activities and ways to promote and uplift the same, in our nation.

What is non farming activity?

All the non- agricultural activities are deemed to be non-farming activities. However, there are two varied ways to better define non-farming activities. The first approach deals with the locus, i.e., the space in which the activities are taking place should essentially be a designated rural area. The second approach is that of the linkage criteria. The linkage approach has to do with different industries developing commercial linkages with the RNF (rural non-farm) sectors. Non-farming activities can include various ventures like handicrafts, household as well as non-household small-scale manufacturing, construction, mining, quarrying, repair, transport, community service etc, but of course in the designated rural areas. The non-farming activities thus, play a vital role in providing employment facilities to small-scale farm household or to the rural-urban migrating population. Studies show that the productivity of farming activities has been seen considerably reducing in the contemporary times. (Reports from Asian Productivity Organization, 2004). As a result, rural non-farm activities need to be most extensively and effectively developed, more than ever in the recent times. Not only would it contribute to the overall GNI (Gross National Income), it would also act as a financial aid for the rural population, whose main income is vested in agriculture.

What Is the Importance of Non-Farming Activities?

Rural non-farming activities have become of primary importance in the changing contemporary times, because of many reasons. The reason being, the employment growth of the farm sector has not been consistent or of a reliable outcome, wherein rural non-farming activities play a major role in creating employment in the population. Secondly, if properly strategized, non-farming activities may prevent the migration of many rural people from rural to urban spaces, due to lack of employment opportunity. Thirdly, when employment opportunities go beyond the quintessential agricultural economy, it helps to bridge the urban-rural economic lacuna. Fourth, rural non farm activities incur less capital and employ a larger percentage of manpower/ labor. Further, rural industrialization, (falling under the category of non-farming activities) indirectly has ways to spin-off agricultural industries too. Finally, the rural spaces having the rural non-farming industries are seen to have much lesser unequal income distribution, compared to rural areas with the facility of non-farming industries.

What are the apparent trends of non-farm employment and income?

Census reports reveal that around 42 million people work for the non-farming activities in rural India. This census constitutes nearly about 47% of the total non farm employment of rural areas. Out of these, 17.30 million people (which constitute around 42%) had their own employment establishments. The remaining 24.59 million (nearly 58.70%) worked as hired employees. Around 10 million out of this populous are female workers (around 21.96%). However, the percentage of female workers for hired non-farming activities has been seen to be more (24.32%), compared to the self-established non-farm employees (18.59%). The percentage of child workers which can be estimated around 1.3 million of total employment in non-farming activities should also be taken into consideration. However, once again their percentage was higher in the hired establishments, compared to the establishments of personal accounts.

Manufacturing, social or personal service and most importantly retail trade are the three major own account establishments of non-farming activities. The percentage of the three however varied to a large extent. So while the category of retail and manufacturing constituted about 43.12%, the social and personal service constituted only about 7.67% of the total employment in the own account establishments in the rural areas. Employment in the non-farming sectors like mining, quarrying, electricity, gas and water supply, or other activities like financial intermediation was found to be near to negative. However, trade, transport, manufacturing, business services or construction- such non-farming activity percentage was seen to be much higher. This was almost the employment trend in the rural areas around the 90’s.

When it comes to the wages, studies have shown that the financial gain of the regular workers in rural non–farm sector were 2.4 times greater than that of the workers employed in agriculture. Further, the male wage percentage in non-farming activities is 40% higher than that of the female. While for the female the difference is almost over 20%. Moreover, the National sample survey state that only 5% of female and 10% of male workers are regularly employed. Some independent studies also suggest that there has been a shift in the trend from self-employed agricultural background to taking interest in higher paid non-farming activities, from the last few years.

Classification of non-farming activities                          

One can classify non-farming activities into three broad categories, namely – regular employment, self-employment and casual employment. Studies show that the status was around 27 million people were underemployment in the organized sector in 2003. However, this percentage has been seen rapidly decreasing since the year 1998. Studies further reveal that 92 % of Indian workers are employed in the un-organized sector while the organized sector constitutes about 8% of the populous. It is, therefore, this informal trend of farming and non-farming activities is a huge cause of the existence of the unorganized sector in India.

Thus a keen study of the non-farming activities in the rural area would reveal how with time, it has evolved into a steady means of rural employment, acting as an alternative to farming activities and creating better employment opportunities in the rural sector as well.

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