Revisiting Rural Non-farm Sector Employment in India: Trends from 1993-94 to 2023-24

Abstract

Rural economic transformation in the last few decades has been marked by a significant growth of rural non-farm employment. This is accompanied by a shift of workers from the farm to the non-farm sector in absolute terms, especially from 2004 to 2005 onwards. The onset of the COVID-19 pandemic, however, disrupted this trend with a reverse increase in the share of farm employment. To assess how the sector reacted to the economic disruptions—whether its decline was temporary and how it varies across regions, this article revisits the size, structure and growth patterns of non-farm sector employment in rural India based on secondary data from 1993–1994 to 2023–2024. The analysis suggests an overall increase in the share of workers engaged in the non-farm sector, though at a slower pace after COVID-19. Women appear to have been affected more than men as women’s employment increased in the farm sector in higher numbers, similar to the trend in 2004–2005 which was interpreted as a distress response. Further, there is wide variation between states in the shares of rural non-farm employment, with the highest employment shares in Kerala while low and stagnant shares in Madhya Pradesh and Chhattisgarh.