Agricultural Productivity Inter Sectoral Labor Shift And Economic Growth In India

In this paper, we study the transformation process Indian agriculture exhibited in the recent past, studying its policy implications. Between the years 2005-06 and 2015-16, more than 52 million workers left agriculture, which did not have any effect on agricultural output due to productivity improvements. We estimate the contribution of productivity growth and structural change in agriculture to national productivity growth during 1981-2016. We estimate differentials in agricultural productivity and in their ability to contribute to the structural change process for 21 major states of India. Using revised employment estimates, we trace major changes during the pre-reforms (before 1991) and post-reforms periods. Results show that in the pre-reforms period, the impact of productivity improvements in agriculture on agricultural output was equated by the new workforce entering into this sector, leading to a stagnant labor productivity trend. The labor-shift from agriculture during the early years of the post-reforms period, which increased further in the next decade, has led to a consistent rise in agricultural productivity. In the absence of reforms and the associated labor shift, the productivity growth in Indian agriculture would have been much lower. A similar labor shift during the last decade has not affected agricultural output, which has risen more rapidly. This result holds true for almost all states studied. There exists a positive relation between labor-shift and agricultural output in a cluster of states. Decomposition results indicate ‘within-sector’ productivity growth is the major source of overall growth, with a rising contribution of ‘structural change’. Studying the sources of growth across states offers new scope to achieve inter-sectoral productivity convergence.

In this paper, we study the transformation process Indian agriculture exhibited in the recent past, studying its policy implications. Between the years 2005-06 and 2015-16, more than 52 million workers left agriculture, which did not have any effect on agricultural output due to productivity improvements. We estimate the contribution of productivity growth and structural change in agriculture to national productivity growth during 1981-2016. We estimate differentials in agricultural productivity and in their ability to contribute to the structural change process for 21 major states of India. Using revised employment estimates, we trace major changes during the pre-reforms (before 1991) and post-reforms periods. Results show that in the pre-reforms period, the impact of productivity improvements in agriculture on agricultural output was equated by the new workforce entering into this sector, leading to a stagnant labor productivity trend. The labor-shift from agriculture during the early years of the post-reforms period, which increased further in the next decade, has led to a consistent rise in agricultural productivity. In the absence of reforms and the associated labor shift, the productivity growth in Indian agriculture would have been much lower. A similar labor shift during the last decade has not affected agricultural output, which has risen more rapidly. This result holds true for almost all states studied. There exists a positive relation between labor-shift and agricultural output in a cluster of states. Decomposition results indicate 'within-sector' productivity growth is the major source of overall growth, with a rising contribution of 'structural change'. Studying the sources of growth across states offers new scope to achieve inter-sectoral productivity convergence.

China’s growth potential has become a hotly debated topic as the economy has reached an income level susceptible to the “middle-income trap” and financial vulnerabilities are mounting after years of rapid credit expansion. However, the existing literature has largely focused on macro level aggregates, which are ill suited to understanding China’s significant structural transformation and its impact on economic growth. To fill the gap, this paper takes a deep dive into China’s convergence progress in 38 industrial sectors and 11 services sectors, examines past sectoral transitions, and predicts future shifts. We find that China’s productivity convergence remains at an early stage, with the industrial sector more advanced than services. Large variations exist among subsectors, with high-tech industrial sectors, in particular the ICT sector, lagging low-tech sectors. Going forward, ample room remains for further convergence, but the shrinking distance to the frontier, the structural shift from industry to services, and demographic changes will put sustained downward pressure on growth, which could slow to 5 percent by 2025 and 4 percent by 2030. Digitalization, SOE reform, and services sector opening up could be three major forces boosting future growth, while the risks of a financial crisis and a reversal in global integration in trade and technology could slow the pace of convergence.

This book critically discusses the changing relationship between the Indian state and capital by examining the mediating role of society in influencing developmental outcomes. It theorizes the state’s changing context allowing the discussion of its pursuit of contradictory economic and social welfare goals simultaneously. Both structural and ideological factors are argued to contribute to a shifting context, but the centrality of re-distributive politics and the contradictions therein explain a lot of what the state does and cannot do. The book also examines what the state aspires to do but structurally cannot accomplish either because of the scale of the problem or the dysfunctionality that sets in with continuous reforms. The collection provides rich evidence on the contested forms of governance arising from changing contexts and shifting roles of the state. Readers will benefit from this recasting of the Indian state in terms of the actual forms of intervention today. Changing Contexts and Shifting Roles of the Indian State is a timely book. At a time when the question of the role of the state in promoting more inclusive forms of development has never been more urgent, this book provides a range of powerful and insightful case studies of how a changing Indian capitalism is impacting and in turn being impacted by the multi-stranded role of the Indian state. Patrick Heller, Professor of Sociology and International Affairs, Brown University, Providence. Since the early 1990s, the Indian economy has moved away from a statist model of development to a more market-oriented one. However, very little scholarship exists that attempts to analyse India’s recent development experience from a political economy lens. This book, which is edited by two of India’s reputed scholars in the political economy of development, addresses this important gap in the literature. It provides an insightful account of the role of the state and the market in India’s economic resurgence in the last three decades. The book also contributes to a fresh understanding of what is meant by a twenty-first century developmental state in a globalised world. The book will be valuable reading for all scholars of India, as well as to researchers in the political economy of development. Kunal Sen, Director, United Nations University – World Institute for Development Economics Research (UNU-WIDER), Helsinki. This collection gives us a richer and more layered understanding of the Indian contemporary State. Rather than see the State as an unchanging entity with unchanging interests, the book argues that the role of the State changes with the context and with the change in political regime. Thus, taking contradictory decisions such as greater dispossession of land from the peasantry and expansion of the universe of economic rights is explainable. The argument is that we can have a better understanding when we see the Indian State as dealing with the ebb and flow of a democracy. C. Rammanohar Reddy, Former Editor, Economic and Political Weekly, Mumbai.

Over the last two decades, a fascinating growth story has unfolded in India. Yet, the improvement in material conditions for the country’s vast majority has not kept pace with that growth. This is mainly because India is still grappling with poor employment conditions and widespread unemployment. However, there is not much clarity on the exact nature of this problem and the steps required to tackle it. This short introduction addresses this lack of information. Reviewing the evolution of employment conditions in India since Independence, this volume underscores the linkages between it and economic growth and development. It not only clearly outlines the contours of the employment challenge that India is now confronted with but also discusses viable ways of overcoming this hurdle.

Fostering and sustaining robust economic growth is an imperative across advanced, emerging, and low-income countries alike. Countries will need to focus on supply-side reforms to raise their potential output and anchor medium-term growth prospects. This SDN will emphasize the role of structural reforms and supportive policy and institutional frameworks for boosting productivity–a key engine of economic growth–in the wake of the crisis. By examining a broad spectrum of reforms that eliminate impediments to growth, the paper will seek to highlight a differentiated policy agenda across countries.