Rural Livelihood Diversification and its Measurement Issues Focus by mifei

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									Rural Livelihood Diversification and
its Measurement Issues: Focus India

Rajiv Mehta


                                       Wye City Group on
      Rural Statistics and Agricultural Household Income
                                             Second Annual Meeting,
                                                    11-12 June 2009,
                                                         FAO, Rome

                                                 Parallel Session 1. a
                 “Two views of diversification and non farm income”
  Rural Livelihood Diversification and its
    Measurement Issues: Focus India

Structure of presentation

A. Postulations on rural economy

B. Rural Economic Diversification: multiple dimensions

C. Analytical inferences: focus India

D. Suggestions to further the Wye City Group agenda
The scope of increasing real income of farmers
and bringing sustained improvement in their well
being, solely through farming operations is
seriously constrained.

There is concern on the incidence of deep rooting
of poverty amongst the households depending on
single income from farm activities
(Wye Group, 2007)
Rural - Urban Structural Differentiation
• Rural Distinctiveness in factors of production
   – Intense and intrinsic relationship with natural endowments,
   – Oriented to production of primary goods
   – Net suppliers of primary produce and generally, the net
     consumers of secondary and tertiary goods and services.

• Rural sectors are rigid /less dynamic in restructurings
• Shrinking share of primary sector in GDP
• Commitment to ensure food security
   – Sustainability and conservation commitment

• Constraints in economic activities and income generation
   – Inter and intra regional differentiations in livelihood and
     well-being.
                        Issues
Diversification of rural economy
  • Creation of non-agricultural income opportunities,
  • Expansion of Rural Non Farm Employment

  Integral to rural development strategies and for
  bringing meaningful structural change in rural
  socio-economic conditions

Opportunities, Empowerment & Security
  – three factors have complimentary and supplementary
    role in neutralization of rural economic deprivation

  – these three factors are also closely associated with the
    process of rural economic diversification.
Rural Economic Diversification - Multiple dimensions

 • Production of diverse goods and services in a production
   boundary

 • Pursuance of diverse economic activities for producing
   larger range of goods and services

 • Diverse production & activities results into income flows
   from diverse sources

 Rural livelihood diversification – an adjunct to rural
   economic diversification
    –   measurements,
    –   indicators,
    –   data profile,
    –   development correlates
                Rural livelihood diversification
• Rural employment diversification
    – Individuals or households to engage in the alternative choices in the labour market
      and undertake different forms of employment (rural / urban); both farm as well as
      nonfarm

• Rural income diversification
    – Individuals or households to have income sourced from the diversified sources.

• both are broadly complementary but not synonymous
• employment diversification is measured in terms of labour force participation in
  diverse industries and occupation.
• wages and remunerations from different employment would add up to income.

• income diversification is more comprehensive, since it would also account for
  transfer payments (rents, interests, dividends etc.) to individuals.

• Measurement as domain aggregate
• Aggregate of individuals or of household
Measurement of Rural Economic Diversification
   Diversification Measures         Data required                         Data Source
I. Crop Diversification
a. In terms of Area                 Season-wise, crop-wise area           Agricultural
b. In terms of Value of output      crop-wise value of output             Statistics
                                    apportioned season-wise               National Account
                                    (National – sub-national)             Statistics

   II. Farm Sector                  Crop-wise, subsector-wise (Crops,     National Account
   Diversification                  Horticulture, Livestock, Fisheries,   Statistics
                                    forestry) value of output
                                    (National – sub-national)

   III Livelihood Diversification
a. Employment Diversification       Population work participation rates   NSSO labour force
                                    in different activities (aggregate,   surveys
                                    household classified)
                                    (National – sub-national)
b. Income Diversification

                                    (National – sub-national)             Data limitation
                                    Income accrual from different
                                    economic activities ( aggregate,
                                    household classified) and transfer
                                    payments
                                    (National – sub-national)
    Different rural diversification indices (India – sub national)
State Category                        Diversification Measures                            Other
(Sub National)     Crop Diversification          Farm Sector        Livelihood         Explanatory
                   Index *                      Diversification   Diversification       Indicators
                   Area based     Value            (2004-05)       Employment       ( % incidence of
                   (2000-01)      based                #          Diversification     rural poverty)
                                                                   (2004-05) $         (2004-05) !
                                    RICE-WHEAT STATES
Punjab                 0.730        0.721      0.534                 0.665               6
Haryana                0.800        0.810      0.546                 0.663               9
Uttar Pradesh          0.801        0.878      0.590                 0.509               32
                                  RICE DOMINANT STATES
Bihar                  0.708        0.912      0.726                 0.400               33
Orissa                 0.725        0.876      0.696                 0.524               40
West Bengal            0.742        0.909      0.728                 0.577               24
                                       OTHER STATES
Andhra Pradesh         0.893        0.903      0.707                 0.469               8
Gujarat                0.906        0.925      0.653                 0.424               14
Karnataka              0.943        0.935      0.716                 0.330               12
Madhya Pradesh         0.906        0.916      0.592                 0.321               30
Maharashtra            0.940        0.943      0.716                 0.358               22
Rajasthan              0.909        0.912      0.609                 0.500               14
Tamil Nadu             0.889        0.897      0.706                 0.546               17

   Simpson Index of Diversity: ( 1 -  Pi2) where, Pi is the proportionate area of ith factor
    Percent distribution of usually employed persons by
                   broad industry division
                     Data Source: NSS 61st Round Report no. 515
                                   INDIA - Rural

Broad Industry Division                      Male                                  Female
                              th
                            50 Rd          55th Rd     st
                                                      61 Rd          th
                                                                    50 Rd         55th Rd    61st Rd
                            (1993-         (1999-     (2004-        (1993-        (1999-     (2004-
                            94)            00)        05)           94)           00)        05)
Agriculture                   74.1           71.4       66.5          86.2          85.4       83.3
Mining and Quarrying           0.6            0.6        0.7           0.4           0.3        0.3
Manufacturing                  7.0            7.3        7.9           7.0           7.6        8.4
Electricity, Water, etc.       0.3            0.2        0.2
Construction                   3.2            4.5        6.8          0.9           1.1        1.5
Trade, Hotel & Restaurant      5.5            5.8        8.3          2.1           2.0        2.5
Transport, Storage &           2.2            3.2        3.8          0.1           0.1        0.2
Communication
Other Services                7.0            6.1        5.9           3.4           3.7        3.9
All                           100            100        100           100           100        100

Livelihood Diversification Index
                                   0.437      0.475         0.535         0.250      0.263       0.297
India - Rural
    Percentage distribution of rural households by size
                   class of land owned
                 Data Source: NSS 61st Round Report no. 515
                               INDIA - Rural


 Size class of   Household       Household Type in economic activity class
 land owned      distribution   Self employed Rural labour       Other
  (Hectares)                        in non         non-        Household
                                 agriculture   agriculture
Land Less            6.6              6.7           11.9           20.5
Less than 1HA       71.0              85.5          83.8           68.5
1-2 HA              11.7              4.7           2.8            6.1
2-4 HA               7.2              2.2           1.1            3.4
More than 4HA        3.5              0.1           0.5            1.6
All Classes         100.0            100.0         100.0          100.0
Relationships between incidence of rural poverty and
rural livelihood diversification
                         Key inferences
• Despite low employment elasticity, rural employment continues to be
  predominantly agrarian
    – There is slow but steady decline in rural work participation in agriculture.
    – The work participation in non agriculture is also becoming diversified
    – The pace of diversification in respect of females is much slower compared to
      the male counterparts

• Manufacturing and services are not having that pronounced a role in
  stimulating rural labour force engagement
• Varying sub national pattern in RNFE

• Significance of “push factor” in the preponderant land marginalization

• Inverse relation in rural poverty and rural livelihood diversification
• Poverty and illiteracy are positively correlated
• Negative correlation between illiteracy and rural livelihood diversification

• Coexistence of advanced agriculture with rural livelihood diversification
        Concluding observations

• The Wye city Handbook 2007
  – stepping stone for further profiling the statistical
    indicators on livelihood stability and security of rural
    and particularly farm households.

  – Measurements of rural livelihood diversification and
    its impact on and relationship to empowerment,
    opportunity and security of rural population is
    proposed for furthering the agenda of Wye Group

• Data needs for deeper synthesis of rural
  economic composition
             Concluding observations
• Suggested areas for furthering the work of Wye Group
   – status and composition of rural non-farm employment - national / sub-
     national;

   – measures for promotion of rural diversification and responses;

   – interventions for capacity building of farm households through HRD,
     knowledge dissemination, awareness etc.;

   – institutional support mechanism to encourage and facilitate non-farm
     employment such as marketing, credit etc.;

   – provision of infrastructure, specially for promoting diversified employment;

   – measuring involvement of local government bodies, NGOs, cooperatives
     and

   – policy and programme intervention to facilitate and stimulate rural non-
     farm employment.
                                 Dr. Rajiv Mehta
                          Additional Director General,
               Survey Design and Research Division,
               National Sample Survey Organisation,
Ministry of Statistics and Programme Implementation
                                         Govt. of India
                               “Mahalanobis Bhawan”
                     164, G. L. T. Road, Kolkata, India
                             Tel: (o): 91-33-25771326
      email : rajivmehta2@gmail.com

								
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