‘Farm to Factory’: Employment for Marginal Farmers, Farm Labourers Need of the Hour in Rural India

In farming, size matters. Seventy per cent of farmers in India are small and marginal ones operating below one hectare in size. On average, smaller holdings lose money, i.e., their household costs are higher than earning.

According to NSSO (National Sample Survey Office) data the weighted average of income of farmers owning up to 2 hectares of land, it comes out to Rs.5,240/month. The smallest farms are afloat since they do not pay for labour, relying entirely on the family, and they consume much of what they produce. A proposed amendment in three central farm laws may lead reforms in the agriculture sector but with small farming, second employment must be there for the small, marginal farmers and farm labourers.

Farming is a seasonal affair, not a full-time job so the second job option mostly required by the small, marginal farmers and farm labourers in their nearby areas that’s why new industrial investment should be attracted in rural and backward areas by offering special incentives. Farm to the factory is the need of the hour.

Apart from part-time seasonal farming a small farmer and a farm labourer have sufficient time to work and can earn Rs.12,000-Rs.15,000/month easily after 8 hours working in a nearby factory. Thus can ensure an additional income to minimise the dependency on sole agriculture-based income. This model of linkage of industrialisation with employment to small & marginal farmers and farm labourers can be amplified pan India backward areas. It would be the real execution of ‘sab ka Saath, sab ka Vikas,’ covering more than 60% of the population of the country residing in rural and backward areas.

Fundamentally, India must figure out a way to provide meaningful employment to hundreds of millions of people outside agriculture. Failing to do so means not just a failure of human development, underemployed and disaffected large numbers of young people, children of farmers, want to emigrate to Canada and other places because there are no jobs. Small farming is not so lucrative, younger generations do not want to follow their parent’s footsteps, which pushes them to work in cities.

Unfortunately, urban areas, while offering more opportunities, also relegate many to low earning jobs, while working in cities rural youths earning and expenses are at par, their net earning is almost negligible to help out the families residing in villages. So it is not lucrative for them to work in cities so for away from their native rural places. Realistic hope is there that promotion of new industrial investment with a special incentive in backward and rural areas will provide new jobs to rural India.

Though economic liberalisation in the country in 1991 paved the path of globalisation and FDI in India, but before this liberalisation the central government preferred to issue conditional licenses and incentives to promote the industry in rural and backward areas only. After liberalisation, while delicensing of the industry also lost the crucial aspect of locating industry in rural or distressed backward area growth.

In the last 30 years, industrial growth has shifted from rural or backward areas to crowded industrial areas in developed cities. As earlier, licensing and incentives were higher for industrial investments in rural and backward areas. In the 1970s, JCT, Hawkins cookware and Mahavir spinning mills had invested in Hoshiarpur, the most backward area of Punjab, because of licensing terms and special incentives offered by the central govt.

As a relief under pandemic, the central government has introduced production linked incentives (PLI) schemes of Rs.1.96 lakh crore, but they will not attract industrial investment in rural and backward areas. Before this, the government codified 29 central Labour laws into four codes but none these policies are not sufficient to attract industrial investment in rural and backward areas.

Prime Minister Narendra Modi’s Atma Nirbhar philosophy of development has to be applied to provide special incentive on industrial investment in rural and backward areas and to increase export from these areas 50% relaxation in railway freight as freight subsidy can be provided from dry ports like CFS Delhi and Ludhiana. As of now mostly industrial investments are being attracted by southern states nearby to seaports but for Make in India, Atma Nirbhar Bharat philosophy of development, employment generation in rural and backward areas need to be additional incentivised.

Special incentives are being offered to develop industrial corridors and clusters but this model should be replicated in rural and backward areas to provide employment opportunities to the nearby small and marginal farmers and farm labourers. The traditional models of job generation have to be re-evaluated. A distributed, micro-level factory that can produce solopreneurs and micro-enterprises has to be created and supported in the rural area. For instance, processing and packaging of vegetables for sale in urban malls can be a micro-enterprise that may not need high capital investment but will be labour intensive at the block level in backward areas.

This needs tweaks at several levels from the ease of doing business at the district level to restructure the credit and legal structure to recognise, create, and enable these rural entrepreneurs. Our land usage laws are still structured around recognising enterprises in industrial areas or commercial areas, not in rural and backward areas. This needs to change. A micro-enterprise in a village or agricultural area should not be forced to go for land usage conversion. Rural preneurs will create jobs in rural areas and need to be recognised by banks, NBFCs and NABARD.

Self-sufficient and self-reliant rural India dreamed by Mahatma Gandhi to be fulfilled through prevention of migration from rural to urban by providing job opportunities to small, marginal farmers and farm labourers in nearby areas. On ground reforms in the agriculture sector through central amended laws will take more time but It’s time for a policy and framework to promote industrial investment in rural and backward areas as a job engine to be revamped for small-marginal farmers and farm labourers.