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Labour Subsidy for Rural Economy

The labour subsidy can be granted to farmers, employers engaged in food processing industries, engaged in logistics and transportation of agricultural products, and rural businesses. — Alok Singh


Agriculture is the most complicated profession in the world. The farmers are the managers of this profession. The government policies affect these agriculture professionals which are serious but sometimes invisible. One such invisible matter is the wage to labourers. The farmers whose source of livelihood is only farming have many constraints. Among the many constraints is the unsustainable farm labour wage. Many farmers have left cultivation because of costly wages to farm labourers. The costly labour wages to the farmers have forced them to quit full time farming and follow cultivation practices like sharecropping or farming by tenants. The arrival of agriculture-related machines has motivated the farmers to buy such equipment as it is relatively cheaper than to engage labourers on farmland. The government also encourages such purchases by giving subsidies to buy such equipment. 

Every job related data admits that the agricultural sector is the biggest employer but do not admits that it will remain the biggest employer. The way the factories are getting automated, and the services sector being run by interactive voice and software applications; the aim to divert employment from agriculture to manufacturing or to the service sector is an illusion.

It’s a dichotomy that the agriculture sector is seeing many varieties of equipment and machines and rural labourers are struggling to get work in the villages. The government is subsiding the purchase of equipment and machines and at the same time spending a lot to assure the minimum number of work availability to labourers. This seems to be a mismatch of the spending on subsidies. These are competing subsidies. The farmers buy equipment and machines because it’s cheaper than engaging labour on farmland, and labour do not work on farmland because farmers can’t pay them the wages as proposed in the rural guarantee scheme. This is a competing and conflicting strategy for the rural area of our country. The construction industry and other labour-intensive industry which is run by trained and educated manager figures out the ways to do the business. But farmers are unable to match the acumen of such educated and well-trained managers in handling their labour-related issues. The policymakers have to come up with a cooperating strategy.

The government should provide an alternative to the farmers that either they should avail the subsidies on the agriculture or farming-related machines and equipment; or should avail the labour subsidy for their farming. This can be a test case to figure out what alternatives do farmers choose.

The arrival of smartphones and the penetration of broadband in the villages provides an opportunity to implement the labour subsidy on farmlands. This will motivate the farmers to engage in traditional agriculture practices and the labourers will get the earnings in their own village. Such subsidies can change the character of agriculture. The rich farmers can buy the expensive machines and equipment on their own. The agriculture-related subsidy needs to be repositioned. The polluted and poisoned soil will gain strength and purity. The costly pesticides will be replaced by manual labours. The food grains and the fruits and the vegetables will be organic and tasty. The consumption of costly and harmful chemical pesticides and weedicides will decrease as these are used as a substitute and not by choice because manual labour is costly to the farmers. The arrival of pesticides that uses carcinogenic compound such as Glyphosate is dangerous. The agriculture labour subsidy will withhold the decreasing share of employment in the agriculture sector. 

The labour subsidy in the agriculture sector will impact rural employment. It will expand beyond addressing the issue of labour cost by farmers, and will also impact the industries engaged in agri-business. It will promote small scale industrialization in rural areas. It will promote the model of small industries rather than a single giant industry. The value addition will happen in villages and the rural people will be an important stakeholder in the overall development goals. 

Today’s model of business facilitation creates way for one single giant company controlling the whole agriculture products value addition business. This is making the life of farmers miserable, forcing labourers to migrate to cities and making them vulnerable for their livelihoods. 

The mass migration of labourers during the Covid -19-Pandemic by travelling thousands of kilometres on their foot with families, and few belongings on their head, to their villages is a chilling live example to think for policymakers to make jobs available at the place of origin of the labourers. The migration by choice and migration by force are different. 

Hence, the labour subsidy in the agriculture sector in particular and farmland, in specific, is the demand for sustainable development. It will discourage the use of non-manual techniques like the application of pesticides and will be helpful in climate control, soil health conservation, and organic food to the citizens and self-reliance to the rural population.All the stakeholders will have win-win situations. The losers will be big companies who creates products to substitute engagement of laborers on farmland.

The labour subsidy in the agriculture sector will stimulate the growth of industries in rural areas. The world of automation and artificial intelligence is killing the jobs for humans in factories and in many services. There are countries in Europe and Canada that are looking for ways to increase jobs in the agriculture sector. The labour subsidy in the agriculture sector is not new. It has been practiced by countries such as Canada and many European countries.

The labour subsidy can be granted to farmers, employers engaged in food processing industries, engaged in logistics and transportation of agricultural products, and rural businesses. The primary idea is to create a job that is sustainable to the economy and to the climate and makes us a self-reliant society.  The policymakers can divert funds from other subsidies which are not sustainable to the labour subsidy in the agriculture sector. The maths for unsustainable subsidies can be done by the experts and quantified in monetary terms by using parameters such as long term and short term and immediate impact on the job, value addition in rural areas, impact on soil, impact on quality of food availability, impact on the growth of organic farming, impact on climate, impact on self-reliance and many more. Deep and unbiased analysis is needed. qq

(Alok Singh is a Fellow of the Indian Institute of Management Indore and currently is faculty of general management at NICMAR, Delhi-NCR Campus.)

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