Why do our farmers and farm labour get the lowest wage rates?

Amir Ullah Khan and Anjana Divakar

India’s economy has been among the fastest growing economies in the world, at least till 2016 and, one of its major contributors has been the agriculture sector. Agriculture remains the largest employer, employing around 150 million of the total workforces of 408 million. Over the years the sector has made significant variations in production and seen an increase in the diversification of crops largely driven by the demand of the urban consumer. While looking at overall improvement of the farm sector, the Indian farm wages needs a keen look as well. 

Almost seventy per cent of Indian farmers are small and marginal ones who operate with less than one hectare of land. These small farmers manage to stay afloat as they do not employ labour and rely entirely on income generated from their small pieces of land. According to a study by  the Center for Development Research (University of Bonn (ZEF) and ICRIER , the last 20 years of data shows that wages of India’s farm labourers increased at an abysmally low average annual rate of 3.2 % in real terms. What this means is that for an average agricultural labourer the increase was from rupees 50 per day two decades ago to about rupees 90 per day. This is far lower than any urban unskilled worker in any part of the country. What is also tragic is that the agricultural worker today earns half of what is the mandated minimum wage of rupees 178 a day. 

For most people involved in the agriculture sector, especially in small farms, farming is a seasonal employer. There is almost always a requirement for an alternate source of income. This alternate source of income is usually sought as labour on other agricultural lands. Usually, these small farmers and manual labour end up working for big farmers where they do not have bargaining powers. Loans taken from zamindars are common and mostly for non-productive uses that are mainly for marriages and funerals. Given the nature of the loans taken and the kind of expenditure incurred, farmers find it difficult to repay their debt and end up working on the fields of these land owners. There is too much pressure on land with disguised employment which cuts down on farm productivity and increases costs.

There is therefore an urgent need to create avenues within the agriculture sector and beyond. What is needed is an opportunity for farm labourers skilled and unskilled to supplement their income. The rural employment guarantee programme was an answer to this problem MNREGA has been to this the day one of the largest schemes in the world in terms of financial outlay and outreach. Its implementation had its problems and the limited number of days provided under the scheme do not always provide enough support to unskilled labour. Also, the impact has not been evenly significant across the country. Many also believe that MNREGA has adversely impacted the contribution made the farm sector and has reduced the potential growth in productivity and employment in the non-farm sectors.

However, there is enough evidence, particularly during the harsh lockdown post COVID that MNREGA came to the rescue of millions of migrant labourers who were left hapless with the draconian closure of industry in urban centres. For nearly 200 million people, it was this scheme and its wages that saved them from hunger and starvation. Beyond schemes such as MNREGA that provide temporary relief, it is important to realise that job-creation is crucial for unstable and insecure workers in rural farms. The number of jobs created in the market should approximately match the new entrants into the labour market every year. Creating this ecosystem will help manage the number of labourers employed on fields and supplement small farmers and manual farm labour.

To create such alternative employment opportunities in sectors which are labour intensive should be of particular focus, which can, in off-seasonal phases absorb unskilled labour. Training and improving skill set of unskilled workers in both farm sector and non-farm sectors shall provide the required boost in employment and income. In the farm sector by imparting skilling in processing, grading, packaging skills, creates an added value to the worker and the farm, contributing to the value chain. Skills training in other sectors shall help absorption into small services, factory work, manufacturing and so on. The New Education Policy has placed emphasis on skill creation at the secondary school level itself. However it hasn’t said anything yet on how this would be carried out.

The ongoing farm protests are not just a voice against issues such as Minimum Support Prices and agricultural markets getting captured by crony capitalists. These are also a result of the low wages that rural labour gets and is condemned to as the manufacturing sector in urban India fails to take off and as construction and housing sectors remain dormant. Rural consumption has in real terms actually been declining over the last two years and is a major reason for the fall in growth rates. India now is among the slowest growing economies in the world while it was among the fastest growing ones just six years ago. A major reason for this stagnation, even in pre Covid times, is that rural customers’ inability to consume. It is high time the wage rate on farms goes up and from the dollar a day figure climbs up to a barely respectable 3 dollars a day.

Amir Ullah Khan and Anjana Divakar are researchers at CDPP