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Labour Productivity in Agriculture Versus Non-agriculture
The National Commission on Enterprises in Unorganised Sector (NCEUS) estimated
that in 2004-05 the ‘per worker GDP’ (called ‘labour productivity’) in agriculture
was about one-fourth of industrial sector GDP and one-sixth of service sector
GDP. The ratio of labour productivity in agriculture to that in non-agriculture has,
in fact, been continuously declining since 1983. This implies that the relative economic
condition of agricultural workforce (vis-à-vis industrial and service sector
workforce) has deteriorated over time. Further, due to limited access of farmers
and agricultural workers to employment in high value added non-agricultural
activities, a large number of them could not be occupationally mobile and per
force remained dependent on agriculture for their livelihood.
Employment Elasticity in Agriculture Versus Non-agriculture
Employment growth in agricultural and non-agricultural activities for the period
1993-94 to 2004-05 is presented in Table-7.1. Between 1993-94 and 1999-00,
agricultural employment witnessed a negligible 0.03 percent growth (i.e. annual
average percentage growth). During this period, agricultural GDP increased by 2.9
percent per annum. As a result, the employment elasticity (defined as the ratio of
employment growth to the corresponding GDP growth which indicates the
employment generated for every unit of income generated or added to the sector)
was low at 0.01. However, in the non-agricultural activities, the employment growth
was as high as 2.5 percent, GDP growth was 8.1 percent and the consequent
employment elasticity was also high at 0.31. The growth rate of real wages in the
non- agricultural sector (5.03) also was nearly twice as high as compared to the
agricultural sector (2.74). The growth story was similar even during the next
quinquennium i.e. 1999-00 to 2004-05 but the situation for the agricultural sector
was one of improvement. The employment elasticity in the non-agriculture was
0.65 as against 0.49 in agriculture. But the improvement in the employment elasticity
of agricultural sector itself, from 0.01 in 1994-95 to 0.49 in 2000-2005, is
significant. Notably, the real wages in agriculture also grew faster than the non￾agriculture i.e. 1.46 percent in the former as compared to 0.13 in the latter. These
facts are empirically encouraging from the point of view of agricultural development in India

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