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 Indian Journal of Economics and Development NAAS Score: 4.82
Volume 16 No. SS, 2020, 183-189 www.naasindia.org
DOI: https://doi.org/10.35716/ijed/NS20-008
UGC Approved
Indexed in Clarivate Analytics (ESCI) of WoS UGC-Care List Group II

Changing Role of Agriculture in Income and Employment, and Trends

of Agricultural Worker Productivity in Indian States
1 2* 3 4
Jaspal Singh , Tanima Dutta , Anupama Rawat , and Nirmal Singh
1 2
Consultant, NITI Aayog, New Delhi, Associate Professor, Mittal School of Business, Lovely Professional University
Phagwara, 3Professor, Dr. Bhim Rao Ambedkar University of Social Sciences, MHOW and
4
Research Scholar, Barkatullah University, Bhopal

*Corresponding author's email: tanimaadutta@gmail.com

Received: January 13, 2020 Manuscript Number: NS20-008 Revision Accepted: March 14, 2020
ABSTRACT
The productivity of land has been often discussed and deliberated by the academia and policymakers to understand agriculture,
however, very few studies have focused on the agriculture worker productivity to analyze this sector. This study concentrates on the
productivity of agricultural workers from across the states taking two-time points into consideration. The agriculture worker
productivity needs to be dealt with seriously and on a time series basis so that the marginal productivity of worker can be ascertained
but also the dependency of worker on agriculture gets revealed. There is still disguised unemployment in all the states and high level of
labour migration, yet most of the states showed the dependency has gone down. Although a state like Madhya Pradesh is doing very
well in terms of income earned but that is at the cost of increased worker power in agriculture as a result of which, the productivity of
worker has gone down. States like Mizoram, Meghalaya, Nagaland and Tripura, though small in size showed remarkable growth in
productivity and all these states showed a positive trend in terms of worker shifting away from agriculture. The traditional states which
gained the most from Green Revolution of the sixties are performing decently well, but they need to have the next major policy push so
that they move to the next orbit of growth.

Keywords
Agriculture, employment, growth trend, worker productivity.

JEL Codes
D24, E24, J82, O13.
INTRODUCTION
Agriculture and allied sector contributes 17.2 percent
to the GVA of the country (Ministry of Statistics and
Programme Implementation, 2019) and in terms of
employment, its contribution is about 44 percent
(National Statistical Office, 2019). This showed that
though agriculture's contribution to the national income
has come down over the years but it is still the largest
employer of the country. The term disguised employment
has also been derived from this sector only as the marginal
productivity of agricultural worker is not always positive.
The number of people employed in this sector is dynamic
in nature as there is constant migration taking place as
small and marginal land holdings is the norm in India
where the landholding Act, though, in place does not have
much traction on ground. The productivity of land is of
paramount importance while studying the total production
of the primary sector but as constant use of land has
reached its saturation point in spite of technological
Copyright ©2020 The Society of Economics and Development, except certain content provided by third parties.
intervention (Singh, Yadav, Singh, & Singh, 2013; Singh
& Singh, 2017) especially in agricultural advanced states,
the productivity of labour is of much intrigue and
importance for the policymakers who want to make
agriculture a business of profit. Agricultural worker
productivity depends on capital input intensity that is the
use of modern technology has made labour more
productive (Bhalla and Alagh, 1983). Shifting of
agriculture workforce to non-agriculture also pre requires
condition so as to enhance agricultural worker
productivity (Lewis, 1954; Fei & Ranis, 1964; Jorgenson,
1967), but this transition is neither smooth nor easy. Over
the years the policy of the government has been directed
towards more emoluments in forms of handouts and loan
write-offs in place of implementing policies towards
increasing the productivity of farmers. Moreover, in the
eighties the advocacy to use more technology has led to
depletion of soil, degrade in soil quality affecting the
health of farmers and agricultural labours alike.

183
 Indian J Econ Dev 16(SS), 2020
The objective of writing this paper is to analyze the
spatial contribution of agriculture and allied sector to
income and employment, along with measuring the
agricultural worker productivity in all the states for the
selected time period. The convergence-divergence
hypothesis was tested to see the movement in terms of
agricultural worker productivity. The study period was of
six years as data at two-time points were taken as
collected by National Sample Survey Organization,
under-employment and unemployment situation (for
2011-12) and periodic labour force survey (for 2017-18).
METHODOLOGY
The study is based on the secondary data taken from
two rounds of NSSO, one of 2011-12 (NSSO-employment
and unemployment situation and the other from the
National Statistical Office, 2017-18 for estimation of
number of workers in agriculture. Agricultural worker
included summation of cultivator in agriculture and casual
labour in agriculture sector. Contribution of agriculture
and allied sector was estimated using gross state value
added by economic activity (GSVA) data collected from
Ministry of Statistics and Program Implementation,
Government of India (new series, 2011-12 prices).
Estimation of agriculture worker productivity is defined as
per agriculture worker gross value added in agriculture
and allied sector. Estimation of agricultural worker
productivity using the formula as below:
GSVAAit
AWPit =
NAWit
Where
th
AWPit = Agricultural worker productivity of i state at t
time
GSVAAit = Gross state value added by agriculture in i
th
state at t time
th
NAWit = Number of Agricultural worker in i state at t
time
The compound growth rate of agricultural worker
productivity was calculated for selected periods of time.
Compound growth rate was estimated with the following
exponential model.
Yt = ((AWPit / AWPin)^(1/n-1) – 1) * 100
where,
Yi = Compound Annual Growth rateof agricultural worker
th
productivity ofi state
th
AWPit = Agricultural worker productivity of i state at t
time
th
APWin= Agricultural worker productivity of i state at n
time, and
1/n-1= 1/ no of gap year.
RESULTS AND DISCUSSION
India is an agrarian economy which has been
reiterated again and again in various literature, policy
documents, political speeches, and academic
deliberations. The centrality of agriculture in economic
development of India cannot be ignored in solving the
problems of poverty, unemployment, scarcity of food
through the character of this sector kept on changing
(Majumdar, 2006; Roy, 2017). In spite of understanding
the importance of this sector very little has been done to
augment the productivity of the agricultural worker. The
Swaminathan Commission (National Commission for
Farmers) was formed in 2004 which spoke about the need
for a Second Green Revolution, doubling of production,
increasing land productivity, cooperative farming,
contract farming, farmer suicides, credit requirements
and other issues but no significant part of the report was
dedicated to increasing worker productivity in
agriculture. The emphasis was on increasing land
productivity so as to increase the income of the farmers
but little has been to make the workers more productive
which will automatically increase the income of the
farmers and of the overall sector.
The share of agriculture in state's income and
employment and percentage change between 2011-12
and 2017-18 is presented in Table 1. Arunachal Pradesh
topped the list of the states for the contribution of
agriculture to the state GVA and in terms of employment;
it was marginally behind Chhattisgarh which employed
the highest number of people in agriculture. The chief
crops of Arunachal Pradesh are paddy, millets, fruits and
herbs. Eighty percent of the crops were organic in nature
and it practices Jhum cultivation. As the state is tribal-
dominated with 64.2 percent of population is tribal
population (Census, 2011), they keep migrating and were
not very keen to adopt modern technology. This led to
such high percentage of population being employed in
this sector though comparatively, the employment has
th
gone down by 18 percent and contribution to income by 8
percent. Though the government was trying to attract the
th
youth to remain in agriculture through various plans, but
the diversification in the economy with tourism became a
th
major player which pulled people from agriculture to the
tertiary sector (Organic Farming, 2019)
Ten states showed a positive increase in contribution
to GSVA in terms of agriculture but when it came to
employment, only three states showed a positive increase
1
(Delhi is not considered ). Madhya Pradesh, Andhra
Pradesh, Mizoram, and Tripura showed a significant
increase in agricultural income contributing to the state
domestic product. Madhya Pradesh showed the most
significant change towards contribution to SDP as the last
th
government of the state was committed towards
agriculture and concentrated on the cash crops like
th
soybean, oilseeds, pulses and the traditional crop of wheat
also had extraordinary production. The government's
policy was backed by normal rains which aided the state
to earn five consecutive Krishi Karman Awards. The state
government of Madhya Pradesh and Andhra Pradesh also
took advantage of the various schemes of the Ministry of
Food Processing Industries as it opened up plants to
process the crops. As a result of this both the state's
contribution to state income increased but reduced the
number of people dependent on agriculture for livelihood
(Andhra Pradesh clocked a negative growth in terms of
184
 Singh, Dutta, Rawat and Singh: Role of agriculture in income and employment

employment). In Mizoram, there has been a marked
change from Jhum cultivation to settled cultivation which
increased the production and the yield (Sati, 2015). Area
under wet rice crop increased and so the area under fruits
and vegetables. Pulses and sugarcane were also being
cultivated over large areas. Tripura bagged the Krishi
Karman Awards in 2009-10 and 2015-16 in small state
category for marked increase in food grain production
with yield of 2946 kg/hectare (Business Standard, 2017).
Policymakers kept in mind the topographic limitation of
the state while emphasizing on the production of crops
like millet, pulses, oilseeds, sesame and also horticulture
crops. There are states like Punjab, Chhattisgarh, and
Uttar Pradesh who are known as traditional food basket of

Table 1. Changing share of agriculture in income and employment between 2011-12 and 2017-18 across states
State/UTs Agriculture share in income Agriculture share in Change percentage point
employment
2011-12 2017-18 2011-12 2017-18 Income EMP
Andhra Pradesh 26.88 34.51 52.92 49.78 7.6 -3.1
Arunachal Pradesh 41.96 33.39 68.07 50.08 -8.6 -18.0
Assam 21.05 17.68 56.05 45.47 -3.4 -10.6
Bihar 25.68 23.74 62.37 45.1 -1.9 -17.3
Chhattisgarh 18.10 21.39 72.81 67.5 3.3 -5.3
Goa 5.18 7.18 3.92 8.47 2.0 4.6
Gujarat 19.45 16.42 48.78 42.43 -3.0 -6.4
Haryana 23.55 19.29 43.34 27.41 -4.3 -15.9
Himachal Pradesh 16.75 13.59 58.43 55.61 -3.2 -2.8
Jammu and Kashmir 17.47 19.26 42.48 40.74 1.8 -1.7
Jharkhand 16.05 19.39 50.4 46.75 3.3 -3.7
Karnataka 13.69 11.60 49.94 45.72 -2.1 -4.2
Kerala 14.39 11.80 25.53 19.85 -2.6 -5.7
Madhya Pradesh 29.99 40.44 59.00 60.59 10.4 1.6
Maharashtra 13.11 11.63 49.10 47.79 -1.5 -1.3
Manipur 19.77 21.50 39.69 36.41 1.7 -3.3
Meghalaya 14.95 20.05 56.55 56.27 5.1 -0.3
Mizoram 20.12 29.57 55.31 43.97 9.5 -11.3
Nagaland 30.94 33.58 60.54 36.79 2.6 -23.8
Odisha 17.87 19.35 55.71 48.76 1.5 -7.0
Puducherry 5.09 4.52 16.18 11.57 -0.6 -4.6
Punjab 30.80 29.00 36.45 26.04 -1.8 -10.4
Rajasthan 28.56 26.31 50.41 49.57 -2.3 -0.8
Sikkim 8.28 11.03 61.51 41.48 2.8 -20.0
Tamil Nadu 12.66 12.27 35.16 27.74 -0.4 -7.4
Telangana 16.25 15.04 52.92 43.43 -1.2 -9.5
Tripura 27.20 34.31 27.12 29.05 7.1 1.9
Uttar Pradesh 26.87 25.67 52.41 48.75 -1.2 -3.7
Uttarakhand 12.28 9.17 48.96 42.53 -3.1 -6.4
West Bengal 23.49 22.70 39.23 36.56 -0.8 -2.7
A&N Islands 14.79 11.57 26.4 15.47 -3.2 -10.9
Chandigarh 0.67 0.51 0.66 0.46 -0.2 -0.2
Delhi 0.94 0.48 0.19 1.21 -0.5 1.0
All India 18.53 17.25 48.9 44.14 -1.3 -4.8
Source: Authors estimation based on NSSO and Ministry of Statistics and Programme Implementation (2019).
EMP= Employment.

185
 Indian J Econ Dev 16(SS), 2020

India but these states became stagnant in terms of Table 2. Agricultural worker productivity and its growth
production. Until a major policy change is undertaken or between 2011-12 and 2017-18 across states in
an external shock was given to the agriculture sector in India
these states, major changes would not be visible. In case State/UTs Agricultural worker Growth
of Punjab, there was remarkable change in agriculture productivity ( per rate
employment as it went down by more than 10 percent age worker) at 2011-12 price (Percent)
point showed that people have either shifted base or they
have changed their occupation. However, it needs to be 2011-12 2017-18
kept in mind that Punjab economy has now become a
Andhra Pradesh 76704 142952 10.9
rentier economy with the labour force mainly constituting
of the migrant labour from Bihar and Uttar Pradesh. Thus, Arunachal Pradesh 129886 175519 5.1
the amount added to agriculture and allied value add in the Assam 47395 70976 7.0
state of Punjab also goes as wages to the migrating
labour's state (Singh, Singh, & Ghuman, 2007). Thus, Bihar 34697 58570 9.1
posing a serious challenge to the calculation of Chhattisgarh 30900 41288 4.9
agricultural worker productivity from GSVA in Punjab. Goa 993704 608441 -7.9
Trends of Agriculture Worker Productivity between
2011-12 and 2017-18 across States Gujarat 85634 139001 8.4
The worker productivity in agriculture in terms of Haryana 169361 330786 11.8
rupees and the growth (negative as well) between the two
time periods is presented Table 2. The perusal of Table 2 Himachal Pradesh 55448 71603 4.4
showed that all the small states showed the maximum Jammu & Kashmir 62483 74057 2.9
growth in worker productivity barring the state of Andhra Jharkhand 37913 56809 7.0
Pradesh and Bihar which had also clocked a double-digit
growth in agriculture labour productivity. Karnataka 58198 73472 4.0
Meghalaya showed the highest change as the number Kerala 150028 198793 4.8
of agricultural workers had gone down which is a good
Madhya Pradesh 54737 80539 6.6
sign for any economy as it means that less people are
dependent on the primary sector for employment. Maharashtra 62653 80860 4.3
Conversely, the GVAA increased in the state as more Manipur 58919 81623 5.6
emphasis is laid on horticulture and organic farming, thus
increasing the income. This state has a lot of potential as Meghalaya 38279 47078 3.5
the net sown area was just 9.9 percent and the cultivable Mizoram 56316 186516 22.1
wasteland was 20.63 percent (Directorate of Economics Nagaland 84402 231174 18.3
and Statistics, 2017). The other North-Eastern states like
Nagaland and Sikkim exhibited remarkable change as the Odisha 103576 156510 7.1
government is trying to make agriculture a business of Puducherry 40600 61132 7.1
profit which had improved the scientific intervention in
Punjab 195701 333411 9.3
farming, thereby improving the productivity of farmers.
Haryana and Andhra Pradesh are the other two states Rajasthan 85451 118394 5.6
which showed a double-digit increase in productivity, Sikkim 45986 101308 14.1
however, in their case, it is expected as both the states are
agriculturally developed and led the country in Tamil Nadu 77651 130113 9.0
agricultural practices. Haryana is known as the Bread Telangana 61538 96616 7.8
Basket of India and within five decades of its formation, it Tripura 131301 227140 9.6
is one of the fastest-growing states with its per capita
income of 214509 more than the national average of Uttar Pradesh 74040 96378 4.5
112432. Out of the total area of the state, about 86 Uttarakhand 52086 71040 5.3
percent was arable and 96 percent of it was cultivated. The
West Bengal 82947 104777 4.0
Horticulture Vision of the state is encouraging organic
farming thereby opening new avenues for the farmers A&N Islands 139518 284457 12.6
(Indian Chamber of Food and Agriculture, 2017). Chandigarh 508502 683424 5.1
In Andhra Pradesh, as per the 2017-18 National
Statistical Office data, the total workers in agriculture Delhi 2628214 245837 -32.6
including cultivators were 11.43 million. The area under All India 64827 89451 5.5
forest covered 3663 thousand hectares, and barren and Source: Authors estimation based on NSSO and Ministry of Statistics and
uncultivable land was 1351 thousand hectares Programme Implementation (2019).

186
 Singh, Dutta, Rawat and Singh: Role of agriculture in income and employment
(Directorate of Economics and Statistics, 2018) out of the
total land of -16276 thousand hectares. Though the
population density of the state had gone up from 277 per
square kilometers in 2001to 308 per square kilometers in
2011, the agricultural worker productivity had gone up
because of government policies and also because of
technological interventions aiding labour.
Bihar is the surprise state in the state as it is always
counted as one of the most backward state of the country
with issues in governance. However, in recent years there
was marked improvement in the economic performance
of the state, though the rate of industrialization was very
slow, thus creating its own contradictions. In agriculture,
the new sown area of the state was 52.78 lakh hectares in
2014-15, with 76.73 lakh hectares as gross cropped area
and the culturable wasteland was 0.45 lakh hectares
(Directorate of Economics and Statistics, 2018). In recent
years flower production of the state had increased
immensely especially for roses, jasmine, marigold and
tuberose. This generated huge employment and income
potentials for the state. Sugarcane was another crop which
has helped to increase the farmer productivity. The
sugarcane productivity of the state was 69.72 tonne per
hectare which was above the national average of 68.8 ton
per hectare. A very important feature that needs to be
looked into was that the dependence of labour on
agriculture had declined by 17 percent between the two
time periods, thereby increasing the intensity of worker.
Convergence Trends of Agricultural Worker
Productivity across States between 2011-12 and 2017-
18
The spatial analysis of the productivity levels in the
Figure 1. Growth rate in agricultural worker productivity vs LN initial productivity
187
two time periods gives a more specific insight into the
situations in various states. The quadrant graph showed
the spatial result with the log of the initial period taken and
then the growth of the subsequent period was calculated
so as to see the change in the position of the states. The
intercept value of the regression equation had a negative
value which showed that there had been convergence but
the R2 value was not promising as it explained only 8
percent of the relationship. The states falling in the first
quadrant are not surprising as all the major agriculture
states of India, viz, Punjab, Haryana, Gujarat, Andhra
Pradesh, Tamil Nadu fall in this part. These states were
constantly exploring their agriculture potential
constantly. Another point that needs to be kept in mind
while discussing the worker productivity of these states
was that the agriculture in these states is mainly
dependent on migrant labour especially in the states of
Punjab and Haryana.
Madhya Pradesh which falls in the second quadrant
showed a poor initial level with poor growth rate was the
most surprising result in terms of agriculture worker
productivity as this state had come out of the Bimaru state
tag in recent years on the basis of its agricultural
production. The state of Madhya Pradesh was the
recipient of the Krishi Karman award for five years
consecutively for the production of wheat. Policy
measures were taken to make agriculture a business of
profit with it being one of the first state to implement the
Bhavantar Scheme where the farmer's income was
augmented by calculating the difference between the
market value and the MSP price. The data on income and
employment (Table 1) categorically points out that there
 Indian J Econ Dev 16(SS), 2020
Map 1. Agricultural worker productivity across states during 2017-18 (at current price) and growth rate during 2011-
12 to 2017-18
was a tremendous increase in agricultural income of the
state but the employment remained almost static. Thus,
the claim by the present and the previous government
regarding agriculture doing very well was a farce as this
sector lagged behind in the state and therefore any
movement forward gets magnified. The negative growth
in the productivity of worker showed that disguised
unemployment remained, leading to a fall in the marginal
productivity of worker. This was a cause of concern for
any state which was primarily an agrarian economy.
All the states in the third quadrant belong mostly to
the North-Eastern region where the initial level was not
satisfactory because of many political and economic
reasons. Another feature that stands out was that all these
states are the pioneers in the field of horticulture, organic
farming and alternative cultivation. Most of these states
showed a remarkable progress in terms of worker
productivity and income from agriculture. In the fourth
quadrant, Maharashtra and West Bengal stand out
because both these states did decently well over the years
as far as agriculture was concerned. West Bengal was one
of the major beneficiaries of Green Revolution but over
the years it had become stagnant.
The analysis of the current year in terms of
agriculture worker productivity and the growth in it needs
188
to be discussed so as to see the condition of the states with
respect to the two parameters so as to see the discrepancy
between the two. There are certain states which had high
worker productivity but fell in the lowest category when it
came to growth. Kerala is one such state and on the other
end of the spectrum are states like Maharashtra,
Karnataka, Chhatisgarh, Himachal Pradesh, and Jammu
and Kashmir which had very low agricultural worker
productivity (less than 125000) and their growth rates
were also less than five percent. The states where both the
parameters were doing well were either agriculture states
(Punjab and Haryana) or where the policies were very
positive (Meghalaya and Nagaland). The map made it
clear that maximum states had a medium agricultural
productivity whereas there are considerable states who
had high growth rate.
CONCLUSIONS
The productivity of agriculture holds a special place
in literature related to agriculture as it showed the level to
which land was being utilized and how developed is the
technological intervention. In a country like India which
was known for its population and as an agrarian economy,
the agriculture worker productivity needs to be dealt with
seriously and on a time series basis so that the marginal
productivity of worker can be ascertained but also the
View publication stats
Singh, Dutta, Rawat and Singh: Role of agriculture in income and employment
dependency of worker on agriculture gets revealed. Lewis
Theory of Unlimited Supply of Labour holds true for the
developing countries like India where there was unlimited
supply of labour in agriculture at subsistence level of
wages. This study revealed that slowly this was changing
across the country and though there was still disguised
unemployment in all the states and high level of labour
migration, yet most of the states showed the dependency
had gone down. Another feature that stands out from this
study was that though a state like Madhya Pradesh is
doing very well in terms of income earned but that was at
the cost of increased worker power in agriculture as a
result of which, the productivity of worker had gone
down. States like Mizoram, Meghalaya, Nagaland, and
Tripura, though small in size show remarkable growth in
productivity and all these states showed a positive trend in
terms of worker shifting away from agriculture. The
traditional states which gained the most from Green
Revolution of the sixties are performing decently well,
but they need to have the next major policy push so that
they move to the next orbit of growth.
End Notes
1. Only two data rounds are taken due to the availability
of GSVA data, GVA by sector at 2011-12 price
available only from 2011-12 to current years and the
previous series were not appropriate to be converted
to the same base due to methodological issues
2. Delhi is an aberration as it is a highly urbanized city
and agriculture plays a very negligible role in its
economy. The one percent increase in employment
between the two time periods was negligible and may
be because of the increase in the number of migrants.
As migration is not a part of this study, it was not
discussed here.
Disclaimer
Views expressed in the paper are personal and do not
represent the organizations with which the authors are
associated.
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