Academic journal article The Journal of Social, Political, and Economic Studies

Occupational Transformation in India: Issues and Challenges

Academic journal article The Journal of Social, Political, and Economic Studies

Occupational Transformation in India: Issues and Challenges

Article excerpt

(ProQuest: ... denotes formulae omitted.)

1. Introduction

Structural transformation is central to the idea of modern economic development. The pattern of employment growth was a key factor in facilitating the structural transformation of the economy as it happened in the developmental experience of developed economies. In the case of India, there are three apparent observations at the outset regarding the nature of its structural transformation. First, there has been a significant structural transformation in income. No commensurate change in the occupational structure occurred, however, for quite some time. In the post-Reform period1 there is now some acceleration in transforming occupations. Second, this is led by the service sector, instead of by industry. Third, an overwhelming share of the modern economy is informal. The "informal economy's" contribution to quality of work conditions and to social security is extremely marginal. India's transformative trajectory is at a significant turning point. It is the task of this paper to measure the magnitude of the transformation. While doing so, we will estimate some determinants of structural transformation in the Indian economy.

2. Structural Transformation: The Indian Experience

When India embarked on the development process after Independence in 1950, the economy's GDP comprised about 60 per cent agriculture, 13 per cent industry, and 27 per cent services. It was structurally comparable to the economy of Great Britain in the late eighteenth century, of Germany at the beginning of the nineteenth, of the United States and Italy in the mid-nineteenth century, and of Japan in 1900. Similar comparisons hold with respect of the share of the labor force in different sectors: in India, agriculture accounted for about 75 per cent, industry about 11 and services 16 per cent of total employment in 1950. This is comparable to the United States of 1841, with 72 per cent of its workers in agriculture, 12 per cent in industry and 16 per cent in services, or to the Japan of 1880 with the respective shares of employment in the three sectors being 65, 15 and 20 per cent (Papola, 2005).

What India has achieved in the structural transformation of income in a span of sixty years represents a rate of change greater than experienced in developed countries. The share of agriculture in GDP in India declined from around 60 per cent in 1950-51 to 36.38 per cent in 1983 and further declined to 14 per cent by 2010-11. That of industry increased from 13 to 24, then to 28 per cent; and that of services went from 28 to 40, and then rose to 58 per cent (see Figure 1). A significant difference is to be noted: while most developed countries came upon a predominance of services in their economies after going through an industrial phase, India pretty much arrived at its present service sector dominance by going directly from agriculture to service.

The accelerating growth of GDP in India is not accompanied by a commensurate growth in employment. This asymmetry is noted by a plethora of studies like Rao (1979), Bhattacharya and Mitra (1997), Kuldeep and Dhindsa (2000), Gandhi and Gansan (2002), Papola (2005), and Dev (2008), and is evident from the data (see Table 1). However, there is some increased movement in the sources of employment in the three decades since 1983, as 23.21 per cent of jobs shifted away from agriculture. This is a much larger shift compared to the first 30 years after Independence, when only 4.7 per cent came out of agriculture. An increased share of agricultural workers are moving out of agriculture and joining the non-agricultural sector every decade. In the next three decades, if this rate of transformation persists, the share of agricultural labor may fall below 10 percent, a feature akin to developed countries.

We see three aspects of this change. One, the service sector has absorbed more labor than the industrial sector2. Second, the shift of labor has taken place from the informal sector3 of agriculture to the informal sector of the non-agriculture. …

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