SOIL Report 2008 - ACCESS Development Services

Possibilities: Livelihood Opportunities and PotentialGiven that manufacturing is a mainstay for stable economic growth, we need to configure solutions suchthat employment in manufacturing also goes up commensurately. In the manufacturing sectors, thereis a need to enhance the labour-capital ratio by adopting more and more labour-intensive productiontechnologies and decentralised systems like the cluster approach for promoting a large number of relatedand support enterprises within a geographical area.8. Given the current share of employment in agriculture, it is not desirableto create more employment in this sectorAgriculture, which has lowest LPPI (see annex Table A.4.1), employs over half the workforce of India.The broad message is that employment in agriculture is near saturation. Even as agriculture cannotsupport fresh livelihoods, the dependence of such a large proportion of workers on agriculture needsattention. This attention has to be in terms of inputs to raise labour productivity and incomes.What annex Table A.4.1 obscures by using agriculture as the base is that the labour productivity inagriculture itself had gone up by around 31 per cent between the 38th and 55th rounds of NSS. Yet,the productivity of agriculture and animal husbandry in India compare very unfavourably with othercountries, and this gap will have to be made up in order to ensure stable and strengthened livelihoodsfor the large numbers dependent on this sector. Any productivity or wage improvements on the marginin agriculture are likely to have a much larger impact than other sectors.In themanufacturingsectors, thereis a needto enhancethe labourcapitalratioby adoptingmore and morelabour-intensiveproductiontechnologies anddecentralisedsystems like thecluster approachfor promotinga large numberof relatedand supportenterpriseswithin ageographicalarea.Given the current share of employment in agriculture, it is not desirable to create more employment inthis sector. Higher employment growth in agriculture will only encourage casual labour and underproductiveemployment. In fact, some of the underproductive labour from agriculture should be divertedto other sectors. Agriculture, like manufacturing, needs to grow and stabilise to enable growth of othersectors, which have a dependence on agriculture for growth of their output, and therefore employment.Transport and storage, as well as business service activities, which offer the second highest opportunityfor supporting livelihoods, are sectors which are dependent on the agriculture and manufacturing sectorsto a great extent. Only when agricultural commodities are produced, or manufactured, they needto be transported and stored.9. Then there are sectors with a high share in total employment but verylow total employment growth ratesServices such as Community, Social and Personal Services which include services in education, health,social services, garbage disposal, defense services, compulsory social security and public administrationrequire huge doses of public sector investment, and are driven largely by the public sector therefore.This sector has a high share of 8.5 per cent in total employment, but very low employment growth rates.While it is desirable for this sector to grow for the universalisation of health and education in particular,just the nature of investment in infrastructure for service provision in these sectors is so prohibitive thatany livelihood promotion initiatives will have to revolve around formal initiatives by the public sector.Electricity, Gas and Water Supply and Mining and Quarrying have negligible LPPIs. Employment growthin these is likely to be for people with high and specialised skills. The large strides that these sectorshave made in terms of productivity, has contributed to poor employment potential and low employmentelasticity in Mining and Quarrying. The high employment elasticity in Electricity, Gas and Water Supplyduring 2000 to 2005 has to do with a very low denominator of GDP growth rate. The high productivityof both sectors coupled with the small share of employment indicates that there is no merit in lookingat these sectors for a livelihood promotion intervention.Electricity, Gasand WaterSupply andMining andQuarryinghave negligibleLPPIs.Employmentgrowth in theseis likely tobe for peoplewith high andspecialisedskills.93