Growth of Rural Non-Agricultural Employment and Poverty Alleviation in India: What Does Emerging Evidence Indicate?

The growth of rural non-agricultural employment (RNAE) has occupied an important place in the development paradigm of many povertystricken countries as it leads to greater poverty reduction as well as, in most cases, income-equalising effects. In India, the rural economy has witnessed occupational diversification in favour of the rural nonagricultural sector over the years. It was largely driven by the growth as well as poverty-related factors. The growth of RNAE, followed by agricultural growth and human resource development, turned out to be the major reason for poverty reduction in rural areas. An important observation is that a shift of workers away from agriculture to the rural non-agricultural sector tends to raise the wage rates of the existing labourers in agricultural sector, thereby contributing to a decline in poverty. Occupational diversification in favor of RNAE, therefore, has dual impact, direct and indirect, on the reduction of poverty. In view of a gradual decline in the share of the public expenditure for rural developmental programmes, including poverty alleviation, the promotion of RNAE largely driven by agricultural growth and human resource development which can be considered as an important policy intervention to tackle the long-standing problem of poverty in rural India.