The pandemic and the subsequent lockdown imposed to curb its spread had a significant impact on the supply, demand, and wages of Agri-labour at the all-India levels.

New Delhi (ABC Live India): The COVID-19 pandemic is the greatest global humanitarian challenge the world has faced since World War II. The virus has spread widely, and the number of cases is rising daily as governments work to slow its spread.

The Covid-19 induced lockdown in India was a huge economic shock. It started across the country on 24 March 2020 and is still ongoing with restrictions in one form or another. It stalled the economy with complete closure imposed on enterprises across all sectors. Even though agricultural activities were exempted, in the initial phases of the lockdown the agriculture value chain also faced large-scale disruptions. This had a seriously detrimental effect on the rural Indian economy.

The Coronavirus pandemic has also triggered a massive reverse migration from the urban to rural areas in large parts of the country.

The ABC Research team led by our Agriculture expert Dr, Vasudeva working on assessing the impact of COVID-19 on the Agriculture sector has referred to a report titled Impact Assessment of COVID-19 on Indian Agriculture and Rural Economy published by Department of Economic Analysis & Research of National Bank for Agriculture and Rural Development Mumbai in August 2020, wherein the report concluded that at all-India level, the wage rate was estimated to increase by 8.36%. This A slight increase in wage rate could be attributed to the decline in the supply of labour due to restricted mobility and increase in demand of labour at all India level.

Why Agriculture Sector Matters?

The agricultural & allied sector carries immense importance for the Indian economy. It contributes nearly one-sixth to the Indian national income and provides employment to nearly 50% of the workforce.

It is fundamental for ensuring food security of the nation and also influences the growth of secondary and tertiary the sector of the economy through its forward and backward linkages.

The performance of the agricultural sector greatly influences achievements on many other fronts. For instance, World Development Report 2008 released by World Bank emphasises that growth in agriculture is, on average, at least twice as effective in reducing poverty as growth outside agriculture.

 Agricultural growth reduces poverty directly, by raising farm incomes, and indirectly, by generating employment and reducing food prices. In other words, a thriving agricultural sector is a boon for most sectors of the Indian economy.

Impact of COVID-19 on Supply, Demand and Wages of Agri-labour

The pandemic and the subsequent lockdown imposed to curb its spread had a significant impact on the supply, demand and wages of Agri-labour at the all-India level.

The country has also witnessed a large number of migrant labourers attempting to return back to their native places. This had significantly impacted the supply of labour in some of the states.

Agricultural labour supply had shown a decline in 70% of the districts covered in the survey. The labour supply had remained the same only in 17% of the districts. Labour supply had also seen an increase in 13% of the districts which may be attributed to returning of migrant labour to their native places.

As regards the demand for labour, at all India level, the demand for labour had increased in 43% of the districts whereas it had declined in 25% of the districts. In 32% of the districts, the demand for labour had remained the same.

As far as wages were concerned, it was reported during the survey that the wage rate had increased by 41% in the districts decreased in 13% of the districts and remained the same in 46% of the districts.

The dynamics of supply and demand in rural areas showed a mixed trend due to outflux of labourers from agriculturally advanced states to influx of labour in relatively backwards states.

The aggregate magnitude of the decline in labour supply was estimated to be about 20% per cent at the all-India level whereas aggregate magnitude in the increase in demand for labour was estimated to be about 6%.

At the all-India level, the wage rate was estimated to increase by 8.36%. This slight increase in wage rate could be attributed to the decline in the supply of labour due to restricted mobility and an increase in demand for labour at all India level.

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