1 Livelihoods in Rajasthan: An Overview and a Strategy Vijay Mahajan BASIX August 2004

2 Outline 1.Overview of livelihoods in Rajasthan 2.Approaches to livelihood promotion Natural resource based Rural Non-farm sector (RNFS) based Urban informal sector (UIS) based 3.Specific action strategies

3 What are livelihoods?  We prefer to use the term “livelihoods” to employment, because the latter evokes the image of jobs in the formal sector or government.  Livelihood is any set of economic activities through which a household meets its basic needs and earns some cash income. Carried out on a repetitive basis, these tend to become a “way of life”.  A vast majority of people make a living through self-employment or wage-employment in the informal sector.

4 Why focus on livelihoods?  Of the total population of 560 lakh in Rajasthan in 2001, labour force was 238 lakh, growing at about 2.2% pa, meaning about 6 lakh additional persons were seeking work per annum due rising working age population!  As compared to the 2.2 % pa growth rate in the labour force, employment rose by only 0.73% pa between  This led to increase in unemployment - 4.2% of labour force or about 9 lakh persons were unemployed. Another 200+ lakh were the “working poor”, employed at a BPL wage.  Thus to ensure near full-employment in a decade, about seven lakh new livelihoods have to be created every year in Rajasthan, and incomes have to be increased for lakhs of other “working poor”.

5 GSDP % vs. Workforce % Productivity in tertiary sector is five times that of primary sector SectorGSDP %WF %GSDP/WF Primary Secondary Tertiary Total100.0

6 Part II  An overview of various livelihood promotion approaches  Natural Resource : (land, water, forests, livestock, minerals) based sectors  Rural Non-Farm Sector  Urban Informal Sector

7 Natural Resource based: land, water, forests, livestock, minerals  Thus there is no escape from increasing agricultural productivity. Only then can 66% of the labour force get higher per capita income  This includes mainly the poorest – the landless and the small and marginal farmers  The key to increase agri productivity is water – not dams and canal irrigation but watersheds and johads (ponds) and protective irrigation

8 Rural Non-farm livelihoods  As agriculture is over-crowded, additional livelihoods have to come from the rural non-farm sector (RNFS) and the urban informal sector.  The RNFS accounts for nearly a quarter of all rural employment, and two-thirds of RNFS employment is in agro-processing and services.  RNFS promotion requires skilled manpower, infrastructure and market linkages, and credit.  The DRDAs should extend support from SJSY infrastructure and training funds and DPIP from Community Investment Funds.

9 Urban Informal Sector Livelihoods  The shift from over-crowded agriculture to a diversified rural non-farm sector (RNFS), though happening, is not adequate to absorb the growth in the labour force.  Thus the urban informal sector (UIS) becomes the “employment of last resort”. Lakhs of rural people from Rajasthan migrate every year to cities for work, in construction, transport, tea-shops, etc.  Rural poverty is spilling over into urban poverty and it is necessary to encourage the UIS livelihoods in small towns and cities.

10 Part III Strategy for Livelihood Promotion

11 Three pronged strategy for livelihood promotion  We need to generate 7 lakh new livelihoods every year in Rajasthan  Natural Resource based livelihoods: land, water, forests, livestock, minerals  These together have to generate 4 lakh new livelihoods every year  Rural Non-Farm Sector  This has to generate 1 lakh new livelihoods pa  Urban Informal Sector  This has to generate 2 lakh livelihoods pa

12 Three pronged strategy for livelihood promotion: Land, Water, Forests, Livestock and Minerals  Top priority must be to invest in reviving all existing water harvesting structures and building new ones  Watershed development, pasture development and forest regeneration through JFM must be pursued.  This will increase agricultural productivity via soil and water conservation, and livestock productivity through improving pastures  Dovetailing of all schemes must be done on an area basis, to ensure comprehensive drought proofing.  For mineral based livelihoods, focus on so-called minor minerals, which generate most employment.

13 Three pronged strategy for livelihood promotion: Rural Non-Farm Sector  Agro-processing (oilseeds, pulses, grains) to be encouraged by providing power supply and other infrastructure in large villages  Handicrafts and handloom units (cluster-based) to be given design and market linkages and credit  Repairs and business services to be given credit  Rural tourism to be promoted through a special package  Social services in the private sector to be encouraged.  Microfinance is a key missing input.

14 Three pronged strategy for livelihood promotion: Urban Informal Sector  Out-sourcing of manufacturing to the household and small-scale level to be encouraged from big units (Japanese model). Needs skill building and linkages.  Recognise that handicrafts and handloom units are largely urban: give design, market linkages and credit  Repairs and business services, trade, transport, hotels, restaurants, entertainment services to be encouraged through simplifying licensing, taxes, etc.  Social services in the private sector to be encouraged through partial privatisation - e.g. Rogi Kalyan Samitis

15 Specific steps for the future Establish a high level mission dedicated to promoting farm and non-farm livelihoods in Rajasthan. It should have three components;  A “think tank” for analysis and strategy  A “financial catalyst” for attracting investments and and extending credit to farmers and micro-enterprises  An “agricultural and business development services” entity to provide training, extension, marketing support, etc. in both farm and non-farm sectors as well as in the urban informal sector.

16 Specific steps for the future 1: A “think tank” for analysis and strategy  This is the proposed Rajasthan Centric Livelihoods and Investment Promotion (RCLIP) Mission for which a detailed proposal was already made to the UNDP (earlier called Livelihood Mission).  It would have a high level Board of Advisors and a full-time, small group of professionals to carry out ongoing analysis and strategy formulation.  It would be attached to the CM’s Office and the Bureau of Investment Promotion (BIP).

17 Specific steps for the future 2: A “financial catalyst” for attracting investments and credit to farmers and micro-enterprises  This will be the Rajasthan Rozgar Sahakari Bank Ltd to be established with technical assistance from BASIX and the Canadian Desjardins Cooperative ($90 billion assets, 6 million members).  Being a cooperative will enable providing savings services to members and also lead to a producer owned institution.  It will do both short-term and long-term lending to both farm and non-farm, rural and urban.

18 Specific steps for the future 3: An “agricultural and business development services” entity  An “agricultural and business development services” entity to provide training, extension, marketing support, etc. to agriculture, horticulture, livestock, etc. This agency can be called Rajasthan Agriculture Development Agency (RADA).  The Rural Non-Farm Development Agency (RUDA) can be given a wider mandate and its name changed to Non-Farm Livelihoods Development Agency (NLDA) to cover both rural and urban areas.  RADA and NLDA Board and management needs to be professionalized and taken out of the purview of normal bureaucracy. They should be registered as Section 25 companies with 24% share capital from Rajasthan Govt.

19 Summary  Promoting 7 lakh new livelihoods per year  Improving incomes of the 200 lakh+ “working poor”, mostly in the agriculture, livestock rearing, the rural non-farm sector and the urban informal sector, through productivity enhancement  This requires a comprehensive mission approach, with three prongs: A “think tank” for the Rajasthan Centric Livelihood and mission Investment Promotion (RCLIP) A financial catalyst institution – the Rajasthan Rozgar Coop Bank and An ‘agricultural and business development services’ agency (may be two, RADA and NLDA).

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