By Bhagirathi Panda
It has turned out to be a long drawn out night of gloom. The natural and nascent human hope of Covid 19’s early demise has transpired to be a nagging despair. For the country as a whole, Covid 19 has brought serious disruptions to life and livelihoods. The North Eastern Region (NER) is no exception. In the initial days of its occurrence, saving lives was the priority for governments and societies. Along with the country, government after Government in the NER went for lockdowns to contain the spread of the deadly virus. For millions of working population, particularly the ones in the informal sector,life got precedence over livelihood. Gradually as it became evident that the virus is not going to leave us soon, prolonging the lockdown was imperative to prepare the necessary infrastructure in terms of men and materials to take care of the hospitalisation and quarantine needs of the affected and to-be- affected populace. After one third of the year had passed, now the reality of livelihood bites us. For these heaving millions and others, ‘livelihood for life’ is more important than the unintended bite of the pandemic.
We all know the NER is predominantly a rural society and economy. About 80% of its population live in the rural sector. In February 2020 i.e. the pre-lock down month of the current year, rural unemployment rate for the states of Assam, Meghalaya and Tripura remained at 3.3, 2.8 and 26.2 percent respectively (CMIE). With the onset of Covid 19 and initiation of the programme of complete lockdown, the woes of states like Assam, Tripura, Meghalaya and Manipur significantly worsened in the month of April and May 2020. The CMIE data for month wise unemployment rate showed a sharp rise for states in the North east. For example, the rural unemployment rate for the month of April 2020 stood at 43.6% and 8.4% respectively for the states of Tripura and Meghalaya. Equivalent data for Assam, and other NE states like Manipur, Nagaland, Mizoram and Arunachal Pradesh are not available.
For Assam the rural unemployment rate remained at 9.6% in the month of May 2020. Data for June 2020 for the states of Assam, Tripura and Meghalaya show rural unemployment rates of 0.0, 18.8 and 1.4 percent respectively. These data require serious analysis and introspection. At first sight, the impression it gives is that rural unemployment rate post unlocking of Covid 19 has eased out compared to pre-Covid 19 situation in the North East. One definite reason for some temporary improvement in the monthly unemployment rate in the rural economy of NER and for that matter for the country as a whole is the expansion of MGNREGA programme. Under the scheme, an average of 3.42 crore people have been provided daily work across the country in June 2020 which is 84 per cent higher than the corresponding period last year (MORD). This is the right move by the central and state Governments to provide immediate employment to the rural masses and thereby give a boost to the depressing consumer demand situation in the rural economy.
However, it is somewhat difficult to completely buy this data and that too in a situation wherein lakhs of reverse migration have taken place in the region. There could be other reasons for such a finding. First of all, the CMIE data base for the NER is based on small sample size. For example, the total number of households covered for the states of Assam, Meghalaya and Tripura happen to be 576, 704 and 464 respectively. Secondly, there would be much disguised unemployment in the agriculture and non-agriculture sectors of the rural economy post unlocking-1. Many of the native returnees from outside the region might have been surveyed to be employed in agriculture and possibly in some non-agricultural activities, although practically there might not be much work for them in these activities.
An objective examination of the present and immediate future state of the pandemic affected rural economy in the region, suggests of social and economic distress. So what about the pandemonics of employment in the NER i.e. the economics to overcome the impact of the pandemic on employment in the rural economy?Contemporary situation of economic development of any economy is fundamentally a tale of the process of structural transformation in the domain of income and employment.Structural transformation primarily refers to a continuous reallocation of labour (can be also other resources including capital) as an important factor of production from low productive sectors to high productive sectors and thereby increasing income and employment. Here we will primarily be reflecting on the employment situation.
Change in the employment structure of a region over time and across space is otherwise called “employment diversification”. Countries which are now regarded as developed economies, have all gone through this process. For example, in most developed countries the share of agriculture in GDP is less than 3%. Similarly agriculture as a source of employment contributes less than 4 % to the total employment in such countries. In the NER of India, the share of Agriculture to the average GSDP is approximately 20%, whereas 53 % of the workforce is engaged in agriculture as source of livelihood (NSSO, 68th round). This huge imbalance shows the extremely low productivity of agriculture in the NER. This could also reflect the presence of disguised unemployment in the primary sector of the economy of the region. Rural economy of the NER shows a dualism in its economic space. This dualism in terms of sectors and analytical category is composed of the rural farm (agricultural) and non-farm (non-agricultural) sectors. Employment diversification thus is the situation and process of reduction in farm employment and a corresponding increase in non-farm employment. When such diversification happens, because of pull or development factors like increase in agricultural productivity, commercialisation of agriculture, education expansion and skill formation, infrastructural improvements etc. confirms to the structural transformation theory propounded by economists such as Lewis (1954) and Chenery(1960).
My colleague Prof S Umdor had written an insightful article in this column about John Mellore’s idea of small commercial farmers (SCFs) and their role in bringing out development induced structural transformation in the economies of the developing countries. Mellore’s work is an extension of his earlier seminal farm–non-farm linkage hypothesis developed in 1976. It is time to analyse if such type of pull or development based employment diversification has happened in the NER. Studies undertaken including some by this author reveal that considerable employment diversification has taken place in the region post economic reforms. The share of rural non-farm employment (RNFE) which was 24.7 percent in NER in 1993-94 has increased to 36.5 during 2011-12 (the latest year for which credible data from NSSO are available). However, when we analyse the factors responsible for such employment diversification, we find the role of distress factors such as poverty, landlessness and disguised unemployment being more pronounced compared to pull factors such as increase in agricultural productivity or infrastructure development.
Against the existence and continuity of such a macro structural situation in the rural economy of NER in the employment front, the addition of the native returnee-migrants because of Covid 19 will distort and depress the rural labour market and thereby will have serious pushing-up effects. The problem may further get aggravated in the short period because of disruptions in the supply, demand and marketing chains affecting particularly the farmers. Farmers are not getting different agricultural inputs because of supply chain disruption. They also find it difficult to sell their products on account of demand depression and marketing links being cut off.
One more important fact that we need to keep in mind when planning for quality employment diversification is the very nature of economic development. As development gets consolidated, the elasticity of job creation (i.e. the percentage change in employment associated with a 1% increase in agricultural income) in agriculture will diminish. Increasing the productivity of agriculture through effective targeting and promotion of SCFs would definitely create more non-farm job opportunities in the rural sector through backward and forward linkages. However, this also needs to be supplemented by augmenting the other developmental factors like infrastructure development, access to credit, skilling and reskilling of the workforce and provision of better governance. These have also been found to be the other critical pull factors leading to the growth of RNFE in the rural economy of NER.
Another fact to be taken note of, is that sectors in economies these days do not have exclusive existence. The rural farm is linked to the rural non-farm. The rural non-farm is linked with the urban formal or informal sectors. The rural farm can also be linked with urban formal or informal sectors. Increased technology integration would certainly strengthen the linkages among these sectors and sub-sectors. Establishments in development practice like the Government and the Community should act as catalysts to strengthen such positive linkages so that the rural economy of NER experiences increased development-induced- employment diversification.
(The author teaches in the Department of Economics, NEHU, Shillong and can be reached at [email protected])