Share of agriculture sector in employment sees steady increase: CMIE

Government efforts to boost manufacturing through production linked incentives or liquidity support to medium and small scale enterprises have not been effective in stemming the decline of manufacturing in India as there is a steady increase in the share of agriculture in total employment, the Centre for Monitoring Indian Economy said.

CMIE data from the consumer pyramid household survey shows the share of agriculture in total employment has gone up from 35.3% in 2017-18 to 36.1% in 2018-19 and then to 38% in 2019-20.

Worst still, CPHS data shows reverse migration to agriculture continues even in 2020-21. “The share of agriculture in total employment jumped to 39.4% in the year from 38% in 2019-20 while the share of manufacturing dropped sharply from 9.4% to 7.3%,” it said, adding employment in construction has however recovered. Its share in total employment shot up to 15.9% in 2020-21 from 15.4% in 2018-19 and 13.5% in 2019-20.


According to CMIE, while the trend on the bases of CPHS is in sync with the Periodic Labour Force Survey (PLFS) of the government, the shift toward agriculture in the last three years is more under PLFS. The latest PLFS report shows a sharp increase in employment in agriculture from 42.5% of the total employment in 2018-19 to 45.6% in 2019-20.

“While PLFS records a 3.1 percentage point increase in labour into agriculture, CPHS estimates a much smaller increase of 1.9 percentage points,” it said.

“Such a large shift of labour in favour of agriculture cannot be voluntary. It is a sign of distress in the labour market where non-agricultural sectors are unable to provide employment and labour is forced to shift to agriculture,” it said in its weekly labour market analysis.

As per CMIE, the shift to agriculture is happening despite the fact that the sector has lowest wage rates. Citing the PLFS data which shows wages under salaried jobs stands at Rs 558 per day, for self-employed it is Rs 349 per day while for the casual labour employed in agriculture it is Rs 291 per day said, “Labour would not voluntarily shift to this lowest wage-rate sector unless it had no better option.”

According to CMIE, large parts of employment from the relatively unorganised construction sector and the unorganised manufacturing sector moved into agriculture. It is estimated that nearly 60% of the employment in manufacturing industries is in the unorganised sector and labour from here migrated into agriculture in times of distress.