India moved fewer people to non-agri jobs than most neighbouring nations

Change in employment ratio is also worse than its key peers

India has managed to move a smaller share of its working-age population away from farm-related work than many of its neighbours.

Bangladesh, Bhutan, Sri Lanka and Nepal managed to shift a bigger share of jobs to non-agricultural work than India, shows data from the year 2000 to 2023 compiled from the World Bank’s April South Asia Development Update report. Only Pakistan and the Maldives show a lower shift among South Asian peers.

The share of working-age Indians who are employed in agri-based jobs has come down over the years. This employment ratio for India was 63.9 per cent in 2000. It declined to 58.9 per cent by 2010; and further to 53.8 per cent in 2019. The majority of its neighbours have seen a lower decline or an improvement since the turn of the millennium (chart 2).

 

“Since 2000, South Asian countries have taken a different path: one of rising productivity but only marginally rising, or even declining, employment ratios. Employment ratios fell in Bhutan, India, Maldives, and Nepal, while in Bangladesh, Pakistan, and Sri Lanka… as a result of this employment weakness, more than two-thirds of South Asia’s output growth since 2000 has been accounted for by labour productivity growth and the remainder by working-age population growth, while the declining employment ratio reduced growth,” the World Bank report mentioned.

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India and Bangladesh are among the countries that saw a divergent gender trend when it comes to employment. There have been some gains for women as the employment ratio for men has declined. Women in Bangladesh are reportedly more economically active because of factors like the growth of its garment industry. Recent research has suggested that the increased participation of women in India could be driven by rising self-employment among them driven by economic distress.

“Since both self-employment and agriculture constitute fallback options for workers who have lost work and cannot afford to remain unemployed, we can interpret these numbers as indicating a rise in distress,” noted the State of Working India (2023) report from Azim Premji University. It noted that more women serving the same market translated into increased competition and lower earnings.

“Given that growth was generally slowing down as well as given the pandemic shock, demand in the product market collapsed even as supply of labour to the self-employed sector grew. This impacted earnings severely,” it said.

The employment ratio for men in India declined by 9.6 percentage points, the lowest after Nepal and Bhutan, between 2000 and 2023. Most South Asian countries recorded a decline. Women’s employment ratio in India increased by 1.4 percentage points. It was the highest for Bangladesh at 11.6 percentage points.