Jyotimoyee Kar, ICFAI, Bhubaneshwar

Over-dependence on agriculture (disguised unemployment) and other sectors like forestry has been identified as a major cause of poverty and a major consequence of the non-availability of alternative avenues of employment in the rural sector. Yet, it is difficult to identify the factors that have constrained the rural poor: is it the non-availability of employment opportunities or the high cost of availing such opportunities? Various studies have shown that rural India offers ample scope for non-farm employment, especially in the areas of food processing, horticulture, pisciculture, floriculture, and traditional artefacts. Rural people also possess acumen and expertise in these fields. In addition, these products have sound onshore and offshore marketing potential. Then what obstructs the rural populace from opting for these business avenues? This exercise attempts to provide a theoretical insight along with an empirical explanation of the factors that influence individuals’ decisions to opt for non-farm employment. On the basis of a primary survey of 130 households conducted in two villages in Mayurbhanj district, the study reveals that skill-based education, income, possession of landed assets, and membership of self-help groups (SHGs) significantly influences the decision to opt for non-farm activities. When the opportunity cost of working in the field increases, people shift to non-farm jobs. The opportunity cost can be high when the benefits from off-farm jobs are high, which is possible when the cost of credit that is essential for these jobs is low. This article submits that the opportunity can could be increased by facilitating the timely availability of low-cost formal credit support, which could help in siphoning off surplus labour from the fields to the firms, thereby reducing rural poverty.