Rural Transformation and Workforce Dynamics

It is well known—and almost axiomatic in mainstream theories of structural transformation—that as an economy progresses through ‘modern economic growth’, its reliance on the primary sector, particularly agriculture, tends to decline, both in terms of output and workforce share. While this trend has been reflected in agriculture’s declining contribution to national income, most countries in the Global South, including India, have not experienced a corresponding drop in agricultural employment. Since independence, India’s transition from a lowpaid agricultural workforce to higher-productivity sectors such as industry and manufacturing has been sluggish. It was argued that market-oriented reforms and policies would accelerate this transformation, with the private sector driving economic growth and the government playing a regulatory and facilitative role. However, the expected shift has not materialised to large extent as anticipated.

In spite of progress, there are also signs of concerns in rural India. Wage growth has been negligible, and the share of the workforce engaged in agriculture, contrary to the slow and steady trend witnessed earlier, has not only remained high but has even increased in recent years. Additionally, self-employment—often a form of disguised unemployment or subsistence earnings—has risen sharply after the shock of the COVID-19 pandemic.

Rural transformation has occurred on multiple levels. Agriculture’s role in shaping the labour market has diminished. This is partly due to structural changes in agricultural production driven by increasing mechanisation and monetisation of the agrarian and rural economy. It is also influenced by shifts in the rural nonfarm sector, which has become increasingly integrated with the broader economy through urbanisation, migration, and enhanced connectivity. These changes have had far-reaching implications for the social and economic fabric of villages. The economic transformation, combined with social and economic hierarchies, has led to unequal distribution of the benefits of structural change. Simultaneously, the weakening and dismantling of agrarian production systems have reshaped class and social relations. Previously marginalised groups, such as Scheduled Castes (SCs), have leveraged new opportunities to enhance their bargaining power in the labour market, though they remain excluded from ownership and control of production systems. The emerging class contradictions demand a new lens for understanding rural transformation and its impact on labour markets.

Another key factor shaping the labour market is public policy—both through active intervention and, in many areas, its conspicuous absence. A prominent example of state intervention is the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), which has played a critical role in providing employment to the most vulnerable segments of the rural population. While it initially helped raise rural wages, it has faced pushback from state governments in recent years. MGNREGA proved to be a lifeline for vulnerable workers during periods of economic shock such as droughts, demonetisation, and, crucially, the COVID-19 pandemic. However, it has not empowered rural labour to demand better wages and working conditions in recent years.

There is also a lack of clarity on the drivers behind the recent rise in female labour force participation in rural India, particularly in agriculture but also in nonagricultural sectors. This phenomenon needs to be thoroughly investigated for its role in rural transformation and well-being of women workers.

Finally, the rural economy is now more integrated with the urban and global economies—not just in terms of production structures but also through financial linkages. These integrations have introduced new methods, technologies, and global value chain connections into the rural economy. However, they have also introduced new risks related to production and marketing. These developments have led to new forms of labour relations and land tenancy in agriculture, as well as changes in the organisation and production of non-farm goods and services.

All these clearly necessitates a fundamental reassessment of India’s development trajectory. The country must adopt a more nuanced approach to economic policymaking—one that emphasises long-term planning, robust state intervention in critical sectors, and ensures that growth translates into real improvements in wages and employment. At this juncture, revisiting and rethinking economic policies is not just desirable, but essential.

Given this backdrop, some select themes and issues that the prospective paper writers may wish to explore include:

  • What are the trends in multi-tasking or pluri-activity by large segments of workers, in rural India; and their patterns and dynamics?
  • What are the recent trends in non-farm employment and dynamics over time?
  • What is happening to migration (rural to urban/rural to rural) and their implications for rural economy? Has reverse migration stopped after Covid? What are their implications for wages, income and labour relations?
  • How have intergenerational aspirations among rural youth influenced migration decisions, education choices, and engagement with agriculture?
  • The recent increase in women’s workforce participation are subsistence led or expanding opportunities?
  • What are the linkages between caste dynamics and the world of work and patterns in participation, remuneration, and socio-economic security?
  • Are there serious mismatches between demand and supply of skills and employment generation in rural areas?
  • How has rural financialisation (microfinance, digital credit, SHGs) altered labour relations and household economic strategies in rural India?
  • In what ways has mechanisation in agriculture contributed to shifts in intrahousehold labour dynamics, particularly across caste and gender lines?
  • How has the integration of rural economies with global value chains impacted traditional artisanal, craft, or local production systems?
  • What are the long-term implications of rural housing, public services, and informal employment networks?
  • To what extent have digital technologies and platform-based gig work penetrated rural areas, and what are their effects on employment patterns?
  • How do environmental factors (e.g., climate variability, land degradation) intersect with rural employment challenges?
  • What is the impact of public investment in rural infrastructure and irrigation on labour absorption in agriculture and allied sectors?
  • What are the regional disparities in rural labour market transformations, and how do state-specific policies (or the lack thereof) mediate these changes?