1. Rural Livelihood Diversification and its Measurement Issues: Focus India   Rajiv Mehta  
Wye City Group on
Rural Statistics and Agricultural Household Income
Second Annual Meeting,
11-12 June 2009,
FAO, Rome
Parallel Session 1. a
“Two views of diversification and non farm income”

2. Rural Livelihood Diversification and its Measurement Issues: Focus India
Structure of presentation
Postulations on rural economy
Rural Economic Diversification: multiple dimensions
Analytical inferences: focus India
Suggestions to further the Wye City Group agenda

3. The scope of increasing real income of farmers and bringing sustained improvement in their well being, solely through farming operations is seriously constrained.
There is concern on the incidence of deep rooting of poverty amongst the households depending on single income from farm activities
(Wye Group, 2007)

4. Rural - Urban Structural Differentiation
Rural Distinctiveness in factors of production
Intense and intrinsic relationship with natural endowments,
Oriented to production of primary goods
Net suppliers of primary produce and generally, the net consumers of secondary and tertiary goods and services.
Rural sectors are rigid /less dynamic in restructurings
Shrinking share of primary sector in GDP
Commitment to ensure food security
Sustainability and conservation commitment
Constraints in economic activities and income generation
Inter and intra regional differentiations in livelihood and well-being.

5. Issues Diversification of rural economy
Creation of non-agricultural income opportunities,
Expansion of Rural Non Farm Employment
Integral to rural development strategies and for bringing meaningful structural change in rural socio-economic conditions
Opportunities, Empowerment & Security
three factors have complimentary and supplementary role in neutralization of rural economic deprivation
these three factors are also closely associated with the process of rural economic diversification.

6. Rural Economic Diversification - Multiple dimensions
Production of diverse goods and services in a production boundary
Pursuance of diverse economic activities for producing larger range of goods and services
Diverse production & activities results into income flows from diverse sources
Rural livelihood diversification – an adjunct to rural economic diversification
measurements,
indicators,
data profile,
development correlates

7. Rural livelihood diversification
Rural employment diversification
Individuals or households to engage in the alternative choices in the labour market and undertake different forms of employment (rural / urban); both farm as well as nonfarm
Rural income diversification
Individuals or households to have income sourced from the diversified sources.
both are broadly complementary but not synonymous
employment diversification is measured in terms of labour force participation in diverse industries and occupation.
wages and remunerations from different employment would add up to income.
income diversification is more comprehensive, since it would also account for transfer payments (rents, interests, dividends etc.) to individuals.
Measurement as domain aggregate
Aggregate of individuals or of household

8. Measurement of Rural Economic Diversification

9. Different rural diversification indices (India – sub national)
Simpson Index of Diversity: ( 1 -  Pi2) where, Pi is the proportionate area of ith factor

10. Percent distribution of usually employed persons by broad industry division Data Source: NSS 61st Round Report no. 515 INDIA - Rural

11. India - Rural

12. Percentage distribution of rural households by size class of land owned Data Source: NSS 61st Round Report no. 515 INDIA - Rural

13. Relationships between incidence of rural poverty and rural livelihood diversification

14. Key inferences
Despite low employment elasticity, rural employment continues to be predominantly agrarian
There is slow but steady decline in rural work participation in agriculture.
The work participation in non agriculture is also becoming diversified
The pace of diversification in respect of females is much slower compared to the male counterparts
Manufacturing and services are not having that pronounced a role in stimulating rural labour force engagement
Varying sub national pattern in RNFE
Significance of “push factor” in the preponderant land marginalization
Inverse relation in rural poverty and rural livelihood diversification
Poverty and illiteracy are positively correlated
Negative correlation between illiteracy and rural livelihood diversification
Coexistence of advanced agriculture with rural livelihood diversification

15. Concluding observations
The Wye city Handbook 2007
stepping stone for further profiling the statistical indicators on livelihood stability and security of rural and particularly farm households.
Measurements of rural livelihood diversification and its impact on and relationship to empowerment, opportunity and security of rural population is proposed for furthering the agenda of Wye Group
Data needs for deeper synthesis of rural economic composition

16. Concluding observations
Suggested areas for furthering the work of Wye Group
status and composition of rural non-farm employment - national / sub-national;
measures for promotion of rural diversification and responses;
interventions for capacity building of farm households through HRD, knowledge dissemination, awareness etc.;
institutional support mechanism to encourage and facilitate non-farm employment such as marketing, credit etc.;
provision of infrastructure, specially for promoting diversified employment;
measuring involvement of local government bodies, NGOs, cooperatives and
policy and programme intervention to facilitate and stimulate rural non-farm employment.

17. Thanks
Dr. Rajiv Mehta Additional Director General, Survey Design and Research Division, National Sample Survey Organisation, Ministry of Statistics and Programme Implementation Govt. of India “Mahalanobis Bhawan” 164, G. L. T. Road, Kolkata, India
Tel: (o):