This week’s faculty seminar will be presented by Dr. Anviksha Drall, Assistant Professor, Social Science, NLSIU on ‘Do Efficient Farmers Always Move to Non-Agricultural Sectors? Exploring Efficiency and Rural Transformation in India.’

Abstract

To ensure income smoothening due to various agro-climatic and price fluctuations, farmers often engage in activities other than farming. The impact of participation in non-farm work on labour efficiency is vastly explored. However, how labour-specific efficiency of agricultural activities influence decisions on whether to participate in non-farm activities is less known.

In the context of structural rural transformation, the current study investigates if efficient farmers move towards the non-agricultural sector or stick to farming activities only. This study attempts to answer this question based on empirical analysis. The empirical estimation utilises Village Dynamics of South Asia panel data on eight Indian semi-arid and eastern states for a panel of five years (2010-2014).

Anviksha’s empirical results show that farmers highly efficient in agricultural activities decrease their labour supplied to non-agricultural sectors. Further, results based on sub-samples indicate that the result holds true for only medium sized farmers owning 2-10 hectares of land. The mechanism analysis shows that technology adoption influences non-farm labour supply via increased labour efficiency, rendering vital policy implications on structural transformation and role of farming technology.