Researchers from the Indian Institute of Technology Madras (IIT-M) have identified barriers to entry of rural communities into non-agricultural occupations. Researchers studied issues related to the rural economy. In particular, they analyzed the reasons why farmers do not adopt non-farm jobs even when agriculture does not provide them with a reliable livelihood.
The researchers found that lack of education and skills, credit constraints and poor access to social capital were the main barriers to entry into the non-farm sector. They also showed that farm income and land assets have a negative influence on diversification, and that household size has a positive impact on rural community participation in non-farm activities.
The researchers called on regional rural banks to enable microfinance and composite financial services to remove financial barriers to rural employment diversification. The IIT Madras study shows that increasing the flow of information through access to mobile phones can improve awareness of the benefits of off-farm activities within the rural community, thereby enabling participation.
The research was undertaken by Sabuj Kumar Mandal, Associate Professor (Economics), Department of Humanities and Social Sciences, IIT Madras, and his student Anviksha Drall, PhD Research Scholar, IIT Madras. Insights from their research were recently published in the renowned international journal World Development (https://doi.org/10.1016/j.worlddev.2020.105381).
Mandal said the flow of income to farming families has diminished due to imperfect credit and insurance markets, which are prevalent in rural India. It has long been recognized that diversifying rural livelihoods into non-farm activities is a key strategy to ensure that rural families maintain a minimum level of income. Trade and hospitality, construction, transport, education and health are the four main sectors that contribute to rural non-farm employment in the country.
“Our empirical results indicate the specific policies that need to be implemented to increase the participation of rural households in non-farm activities,” Mandal said.
These policies should aim to increase access to education, credit and social capital. IIT Madras researchers recommend rigorous implementation of existing educational policies such as Samagra Shiksha and training programs such as Deen Dayal Upadhyaya Grameen Kaushal Yojana, according to the statement.
June 16, 2022