Shagun
Each sector of the village economy is interdependent on the others for example if you see the primary sector consisting of agriculture,horticulture,etc they require the secondary sector activities like diary industry,agro industries to refine and manufacture finished goods and the tertiary activities like transportation help in exporting finished goods produced in the village to the nearby town.hence all economic activities in palampur are interdependent
Farm activity means agricultural activity and non-farm activity is used synonymously with non-agricultural activity. There are two alternative approaches to define rural-non-farm activities (Saith, 1992). The first is the locative approach in which the primary criterion is that a RNF activity is performed in a location which falls within a designated rural area. The second is based on the linkage approach where an industrial enterprise generates significant development linkages with the rural areas. For purposes of this study we are using the first. Rural-Non-Farm-Sector (RNFS) includes all economic activities viz., household and non-household manufacturing, handicrafts, processing, repairs, construction, mining and quarrying, transport, trade, communication, community and personal services etc. in rural areas. Rural-Non-Farm-Activities (RNFAs), thus, play an important role to provide supplementary employment to small and marginal farm households, reduce income inequalities and rural-urban migration. Though, agricultural sector has played a very significant role for generation of rural employment in the Asia and Pacific region, its contribution to the overall economy has greatly reduced in the recent past (Asian Productivity Organization, 2004). Therefore, development of various non-farm-activities can effectively be exploited as a potent stimulator for further economic growth offering rural communities better employment prospects on a sustainable basis.
Importance of Rural Non-Farm Sector
The non-farm sector, particularly in rural areas is being accorded wide recognition in recent years for the following reasons: * Employment growth in the farm sector has not been in consonance with employment growth in general. * A planned strategy of rural non-farm development may prevent many rural people from migrating to urban industrial and commercial centers. * When the economic base of the rural economy extends beyond agriculture, rural-urban economic gaps are bound to get narrower along with salutary effects in many other aspects associated with the life and aspirations of the people. * Rural industries are generally less capital-intensive and more labour absorbing. * Rural industrialization has significant spin-offs for agricultural development as well. * Rural income distribution is much less unequal in areas where a wide network of non-farm avenues of employment exists; the lower strata of rural societies participate much more intensely in non-farm activities, though their involvement is much less remunerative as compared with that of the upper strata. * * Structure and growth of Rural-Non-Farm-Sector * The RNFS in India is too diverse in respect of activities, unit size and geographic dispersal. Further, it does not consist of a homogenous set of activities in terms of income and productivity levels. The RNFS is classified into three major sub-sectors (Saxena, 2004). The first sub-sector consists of enterprises that are run on more or less stable basis with target on the surplus generation and growth, employing labour with certain degree of technical sophistication. The second sub-sector consists of products or activities, which are often seasonal, run solely with the help of unpaid family labour, using primitive technology and catering mostly to the local market. These two sub-sectors can be differentiated in terms of capital use rather than product categories. The third sub-sector consists of paid workers characterized by low earnings and a disintegrated market with respect to labour supply. As per the Economic Census 2005, the total non-agricultural establishments accounted for about 17.855 million in the country, whereas 19.83 million were situated in rural areas. Out of 19.83 million non-agricultural establishments located in the rural area, 13.26 million (66.89 %) were own-account establishments and remaining 6.56 million (33.11 %) were establishments with hired workers (Table 1). Non-agricultural and agricultural establishments registered a growth rate of 4.56 and 8.62 % respectively during 1998-2005 (Figure 1). The data suggests that with the major share of non-agricultural activities, the growing rural labour force can successfully be absorbed as RFNS workers generating supplementary income for better economic growth of the rural community. Retail trade (39.28 %) was the dominant activity followed by manufacturing (26.02 %) and other community, social and personal service (8.15 %) of the non-farm establishments. Sector-wise distribution of different rural non-farm sectors in rural India has been depicted in Figure 2. * Trends of non-farm employment and income * Rural non-farm economy in recent times is being considered an effectual strategy for decentralization of economic activities to rural India and giving a halt to the migration of people to urban centres. Around 41.89 million persons worked in rural non-agricultural establishments of rural areas which constitute 46.55 % of the total employment in non-agricultural sectors including both rural and urban areas. Of these, 17.30 million persons (41.30 %) were employed in own account establishments and the remaining 24.59 million (58.70 %) in establishments with hired workers. Female workers (nearly 10 million) constituted 21.96 % of total employment in rural non-farm sectors and proportion of female employment was found comparatively higher (24.32 %) in establishments which hire workers than own-account establishments (18.59 %). There were 1.03 million child workers, which constituted 2.45 % of total employment in non-agricultural establishments in rural areas and the proportion was more in establishments with hired workers (2.85 %) than in own account establishments (1.89 %) (Table 1). Retail trade, manufacturing and other community, social and personal service activities were the three most important activity groups which attracted the largest number of own account establishments. However, the percentage of other categories including social and personal service activities was much less compared to that of retail trade and manufacturing. Employment in retail trade (7.5 million) constituted 43.12 % of the total employment in the own account establishments in the rural area followed by manufacturing engaging 5.4 million workers (31.01 %) and other community including social and personal service activities 1.3 million workers (7.67 %). Percentage of share of employment was found negative in the sectors like mining and quarrying, electricity, gas and water supply, financial intermediation and other activities. The trend of percentage share follows the same pattern as that of establishments with hired workers. The non-agriculture-sectors where employment growth during the 90’s was positive and higher were manufacturing, construction, trade, transport, and business services whereas negative in mining and quarrying, utilities and community services. * Strength and weaknesses of non-farm sector * Non-farm activities either keep the poor falling into deeper poverty or are advantageous in lifting the poor above the poverty line. Keeping this in view, it becomes imperative to identify the strengths and weaknesses of the non-farm sector in India to focus on, in order to alleviate poverty. The strengths and weaknesses of rural non-farm sector in India as highlighted by Mukherjee and Zhang (2005) have been discussed below. * Strengths * Institutional basis for rural non-farm sector:
Decentralization process:
Weaknesses
Infrastructure:
Regulatory restrictions on small-scale sector:
Quality of manpower
Forward and backward linkages
Farm activity means agricultural activity and non-farm activity is used synonymously with non-agricultural activity. There are two alternative approaches to define rural-non-farm activities (Saith, 1992). The first is the locative approach in which the primary criterion is that a RNF activity is performed in a location which falls within a designated rural area. The second is based on the linkage approach where an industrial enterprise generates significant development linkages with the rural areas. For purposes of this study we are using the first. Rural-Non-Farm-Sector (RNFS) includes all economic activities viz., household and non-household manufacturing, handicrafts, processing, repairs, construction, mining and quarrying, transport, trade, communication, community and personal services etc. in rural areas. Rural-Non-Farm-Activities (RNFAs), thus, play an important role to provide supplementary employment to small and marginal farm households, reduce income inequalities and rural-urban migration. Though, agricultural sector has played a very significant role for generation of rural employment in the Asia and Pacific region, its contribution to the overall economy has greatly reduced in the recent past (Asian Productivity Organization, 2004). Therefore, development of various non-farm-activities can effectively be exploited as a potent stimulator for further economic growth offering rural communities better employment prospects on a sustainable basis.
Importance of Rural Non-Farm Sector
The non-farm sector, particularly in rural areas is being accorded wide recognition in recent years for the following reasons: * Employment growth in the farm sector has not been in consonance with employment growth in general. * A planned strategy of rural non-farm development may prevent many rural people from migrating to urban industrial and commercial centers. * When the economic base of the rural economy extends beyond agriculture, rural-urban economic gaps are bound to get narrower along with salutary effects in many other aspects associated with the life and aspirations of the people. * Rural industries are generally less capital-intensive and more labour absorbing. * Rural industrialization has significant spin-offs for agricultural development as well. * Rural income distribution is much less unequal in areas where a wide network of non-farm avenues of employment exists; the lower strata of rural societies participate much more intensely in non-farm activities, though their involvement is much less remunerative as compared with that of the upper strata. * * Structure and growth of Rural-Non-Farm-Sector * The RNFS in India is too diverse in respect of activities, unit size and geographic dispersal. Further, it does not consist of a homogenous set of activities in terms of income and productivity levels. The RNFS is classified into three major sub-sectors (Saxena, 2004). The first sub-sector consists of enterprises that are run on more or less stable basis with target on the surplus generation and growth, employing labour with certain degree of technical sophistication. The second sub-sector consists of products or activities, which are often seasonal, run solely with the help of unpaid family labour, using primitive technology and catering mostly to the local market. These two sub-sectors can be differentiated in terms of capital use rather than product categories. The third sub-sector consists of paid workers characterized by low earnings and a disintegrated market with respect to labour supply. As per the Economic Census 2005, the total non-agricultural establishments accounted for about 17.855 million in the country, whereas 19.83 million were situated in rural areas. Out of 19.83 million non-agricultural establishments located in the rural area, 13.26 million (66.89 %) were own-account establishments and remaining 6.56 million (33.11 %) were establishments with hired workers (Table 1). Non-agricultural and agricultural establishments registered a growth rate of 4.56 and 8.62 % respectively during 1998-2005 (Figure 1). The data suggests that with the major share of non-agricultural activities, the growing rural labour force can successfully be absorbed as RFNS workers generating supplementary income for better economic growth of the rural community. Retail trade (39.28 %) was the dominant activity followed by manufacturing (26.02 %) and other community, social and personal service (8.15 %) of the non-farm establishments. Sector-wise distribution of different rural non-farm sectors in rural India has been depicted in Figure 2. * Trends of non-farm employment and income * Rural non-farm economy in recent times is being considered an effectual strategy for decentralization of economic activities to rural India and giving a halt to the migration of people to urban centres. Around 41.89 million persons worked in rural non-agricultural establishments of rural areas which constitute 46.55 % of the total employment in non-agricultural sectors including both rural and urban areas. Of these, 17.30 million persons (41.30 %) were employed in own account establishments and the remaining 24.59 million (58.70 %) in establishments with hired workers. Female workers (nearly 10 million) constituted 21.96 % of total employment in rural non-farm sectors and proportion of female employment was found comparatively higher (24.32 %) in establishments which hire workers than own-account establishments (18.59 %). There were 1.03 million child workers, which constituted 2.45 % of total employment in non-agricultural establishments in rural areas and the proportion was more in establishments with hired workers (2.85 %) than in own account establishments (1.89 %) (Table 1). Retail trade, manufacturing and other community, social and personal service activities were the three most important activity groups which attracted the largest number of own account establishments. However, the percentage of other categories including social and personal service activities was much less compared to that of retail trade and manufacturing. Employment in retail trade (7.5 million) constituted 43.12 % of the total employment in the own account establishments in the rural area followed by manufacturing engaging 5.4 million workers (31.01 %) and other community including social and personal service activities 1.3 million workers (7.67 %). Percentage of share of employment was found negative in the sectors like mining and quarrying, electricity, gas and water supply, financial intermediation and other activities. The trend of percentage share follows the same pattern as that of establishments with hired workers. The non-agriculture-sectors where employment growth during the 90’s was positive and higher were manufacturing, construction, trade, transport, and business services whereas negative in mining and quarrying, utilities and community services. * Strength and weaknesses of non-farm sector * Non-farm activities either keep the poor falling into deeper poverty or are advantageous in lifting the poor above the poverty line. Keeping this in view, it becomes imperative to identify the strengths and weaknesses of the non-farm sector in India to focus on, in order to alleviate poverty. The strengths and weaknesses of rural non-farm sector in India as highlighted by Mukherjee and Zhang (2005) have been discussed below. * Strengths * Institutional basis for rural non-farm sector:
Decentralization process:
Weaknesses
Infrastructure:
Regulatory restrictions on small-scale sector:
Quality of manpower
Forward and backward linkages