Pro-Poor Growth in India: what do we know about the employment effects of growth 1980-2000?

This paper aims to assess the extent to which economic growth in India has been pro-poor. Some of the key assumptions behind this are that pro-poor employment generation ought to take place in sectors with relatively high elasticities of employment and it should take place through unskilled jobs in order to be accessible to the poor.The analysis from this paper reveals that:diversification from agriculture to non-agriculture has been on the increase, but has been slower for females as compared to males. there has been a decline in the number of rural manufacturing and trade units and jobs in favour of modern sector activities, which are often urban based. Resultantly, women bear the greater impact of this decline. labour productivity is below average in agriculture and in the rural non-farming sector (except mining). with the general decline in unemployment has also been an increase in the casualisation of jobs and underemployment.This paper also raises several policy implications for employment creation and diversification in different sectors: Agriculture and food processing: With India being one of the world's largest producers of raw material for the food processing industry, the unutilised potential therein is enormous. Expanding the value chain of agricultural production, providing assured markets for farmers that would enable them to diversify into higher value horticultural crops and expanding employment by creating high quality non-agricultural work opportunities in rural areas. Livestock sector: Supply side factors like feed and marketing are the major constraining factors in this sector.Forestry sector: direct dependency of a large population on forests combined with increasing pressures on an already degraded resource base is the central challenge in the sector. Joint forest management or community forest management has to be encouraged in a big way to arrest the degradation of natural resources.Industry and services: for the last 50 years, the organised industrial sector has not created work opportunities for the majority of the poor. It is the small-scale industries and informal sector which absorbed the poor labour force. There is a need for providing an enabling environment for these workers. Providing higher wages, removing legal hurdles, and quality social security measures are some of the measures needed to help the poor. For small-scale industries, reservation is not the solution. The Government should give promotional support to small-scale industries. The small industries sector does not face a level playing field vis-àvis large industries because of innumerable market imperfections, so it is necessary to take positive steps to remove or at least to mitigate these disadvantages. International experience suggests that technical assistance, market assistance and information have to be available as a package to have the desired results. Similarly, there is a large scope for diversification into services in rural areas. Here also, rural infrastructure has to be improved to create work opportunities in rural services.Key policies for creating an enabling environment inlcude: Liberalisation and economic reforms: more public investment in agriculture and non-agriculture, and some kind of security for unorganised workers are needed to improve the livelihoods of the poor.Rural workers in small towns: Employment for rural workers has to be viewed keeping the entire rural space, including rural towns, in view – and rural development as an integrated and linked evelopment of these towns and the villagesAnti-poor laws: there are many anti-poor laws and policies that hurt the poor, and there is a need to liberalise or change these laws and policies. There is also need to collect information on anti-poor policies in the country for public action.Social sector policies: social security services to extended to unorganised workersEncouragement to women: an enabling environment has to be provided to home-based workers and other self employed workers in the informal sectors. The medium to long run solution is education and training.Skill improvement: A major effort to promote literacy and more importantly to bring about improvement in the skill levels of those in the working age group consistent with their level of education should therefore have high priority. One weakness of government supplied and directed education and training has been a divorce of the supply of skills from the demands of the market for skills.