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Missed in budget 2017: rural employment, a perfect cure for demonetisation

Manoj Gupta
8th Feb 2017
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Handloom, according to government records, is the second largest economic activity in rural India after agriculture. The sector employs more than 10 million people directly and indirectly with more than two million handlooms across India. It is estimated to generate more than 20 percent of Indian textile value. Other allied sectors related to rural India like silk, jute, and woolen are also big employers. While power looms in India generate more than three times the handloom value, they employ lesser workforce. Usually, one handloom unit provides employment for about three to four people in rural India. However, in the case of power looms the equation is reverse, where three to four power looms generate employment for one person. In Budget 2017, there was no reference on handloom and a lot other potential areas which could impact rural employment.

The biggest impact of demonetisation has been unemployment across India, especially for low-skilled workers. This is a big threat to our economy and society and it needs to be addressed at the earliest. What is shocking is that the government has made feeble attempt to address this issue in Budget 2017. They have supposedly increased the allocation to MGNREGA, but we all are aware of the fact that the impact of MGNREGA in rural India has been adverse. MGNREGA has made workforce in rural India unproductive, where today it is harder to find farm labor or handloom weavers.

The rural employment generation by the government should have been based on healthy economic activity rather than charity schemes. What the government needs to do is to become an enabler rather than the food giver. In my view, they could have addressed the following areas in Budget 2017:

  1. Industrial scale handloom parks: Large-scale handloom parks with a capacity of more than 1,000 handlooms in various clusters of India so that existing unemployed workforce can be trained and converted to a weaver. This can potentially stop urban migration and allow weavers to earn more. In fact, wherever there have been interventions by private players in handloom clusters like Chanderi and Pochampally, the wages of weavers have doubled and handloom has grown. There are instances in clusters like Maheshwari where reverse migration has happened.
  2. Rural and agri-tourism parks: Build world-class rural tourism parks across India where the government can help enable or create good accommodation facilities, cafes, tourism centers, rental cars, and restaurants. There is a lot of potential for tourists given how rich rural India experience is but the enabling infrastructure is a big deterrent. Handloom linked to tourism can create a healthy economic cycle in rural India.
  3. Heritage highways: Making our heritage accessible to tourists by creating dedicated high-speed highways like Hampi or Ajanta or Kutch. India, despite being a heritage-rich country, only contributes to two percent of global tourism and gets lesser tourists than Croatia, Morocco, or Indonesia. By making our heritage accessible and by protecting them better, we can very easily come in the list of top 5 visited countries by tourists globally. Tourism has been a great employment generator globally and can help rural India, as the rural parts of India have a rich cultural heritage.
  4. Skill enhancement centres: The rural India wages are still low, which leads to urban migration. By up-skilling the rural workforce, we can help weavers to, for example, sell directly to consumers or farmer to sell produce through e-commerce. There is also a possibility that more innovation starts to happen in farm productivity or allied industries like irrigation. The government needs to start thinking how to create rural IITs and rural NIITs, which are relevant for rural India.
  5. Clean energy infra: Clean energy like wind and solar are very well suited for rural India. There is demand for energy in villages and also they have vast space to facilitate generation of clean energy. The biggest advantage of clean energy is that it can be dis-aggregated rather than concentrated. Hence, we can make rural India the powerhouse of energy generation and thereby create more employment.

This list does not cover a multitude of other areas which can also impact employment generation in rural India. The point here is to cover a subset of those and highlight the opportunities which exist for rural India and a different path that the government can take, which can be more productive and help mitigate the impact of demonetisation in the short run and grow rural India in the long run.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)

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Authors
Manoj Gupta
Manoj Gupta is Founder/CEO of Craftsvilla.com and was previously Principal at Nexus Venture Partners.

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