Employment transformation of JK economy

Modern economic growth means more than increases in per capita output and rise in total factor productivity. As the per capita income increases the structural transformation in terms of employment and output of the economy changes. The best known structural shift is the decline in the number of people working in the agriculture and its allied sectors and rise in their number in industry and the service sector. One clear pattern of changing economic structure in the course of economic development is that as the per capita income raises the share of industry in gross national product rises. It is the point at which the country can move from a condition of poverty to richness. If the state of Jammu and Kashmir wants to achieve the sustained rate of growth by structural shifting of the working population from primary to non- primary sector, then the state has a clash with a certain economic parameters which will not be very easy to overcome. So it needs a strategical wisdom in the long run.

In our state, there is extremely large structural transformation in employment from primary sector to non primary sector, but without considering the above mentioned factors i.e. rise in per capita income and progress of industrial development. In 1961, 78 percent of working population of state working in the primary sector, while as in 2008-09 only less than 50 percent are workers in the secondary and service sector i.e. there is a 28 percent decline of working population in the primary sector as against in 1961, 22.0 percent of workers are engaged in the secondary and service sector while 2008-09 more than 50.0 percent workers are engaged in the same. The primary sector of the state grows at the rate of 2.2 percent while secondary and service sector grow at 4.65 percent and 9.60 percent respectively. The growth rate of agriculture has declined from 8 percent in 2003-4 to 2.2 percent 2011-12. The contribution of primary sector to Net State Domestic Product (NSDP) is 28.06 percent in 2004-05 while as in 2011-12 it contributes only 19.36 percent to NSDP of state. The secondary and service contributes 6.12 percent and 43.71 percent in 2004-05 while as 7.76 and 54.23 percent in 2011-12 respectively. As per the above figures the industries in the state has not shown any good performance in terms of output, income and employment to the state.

The second important determinant of shifting population from the primary sector to other sectors is per capita income of the state. There is not any impressive increase in the per capita of the state. The state of Jammu and Kashmir has only 25, 600 INR per capita income at constant prices. The state has a sixth rank in terms per capita income both at constant and current prices in northern states of India and twenty-first rank at national level. We are also lagging behind in terms of per capita income at the national level also. There is a structural transformation of employment but without increasing industrial growth rate and per capita income. It is very difficult for us to achieve the modern and sustained economic growth rates with higher per capita income.

As per the dualistic theories of economic development, it is permissible for an economy to make the shifting of working population from the primary to the other sectors up to a certain point at which the Average Agricultural Surplus (AAS) is positive. Average agricultural surplus means the total agricultural surplus which is for market use divide by the total labor force in agriculture.  Both work participation rate and average agriculture surplus in agriculture sector has declined up to minimum level in the state. Because we have not enough agricultural produce to export, but the import of food grains in the State has registered a regular increasing trend in the last many years ( from 2002-03 to 2009-10), rising from 503 thousand metric tons to 887.6 thousand metric tons showing an increase of 384.6 thousand metric tons i.e. about 76 percent increase. The consequences of shifting employment structure have not only to increase the deficit balance of trade, but also the high inflation rates of consumer items in the state.

The important component of primary sector is the live stock which contributes 17 percent to the GSDP of state. The state is highest consumer of mutton and milk in India. Jammu and Kashmir has the highest live stock population in the country, even though we are importing 45 percent of live stock from rest of the country. If state of Jammu and Kashmir is self-sufficient in live stock then it contributes near about 30 percent to 35 percent to GSDP of state. However if the trend of structural transformation remains same in the agricultural sector, and then in near future we will import all live stock from rest of the country and also reduces GSDP growth rates of state 1.5 percent.

If the state of Jammu and Kashmir is committed to reducing poverty and achieving sustainable growth, the powers of agriculture for development must be unleashed. But there are no magic bullets for development of agriculture in the state. Using agriculture for development is a complex process. It requires broad consultations at the state level to customize agendas and define implementation strategies. It also requires having agriculture work in concert with other sectors and with actors at local, national, and global levels. It requires building the capacity of smallholders and their organizations, private agribusiness, and the state. It requires institutions to help agriculture serve development and technologies for sustainable natural resource use. And it requires mobilizing political support, skills, and resources.  For the development of the state employment transformation is necessary, but up to a point at which the agricultural sector has a capacity to absorb given labor force.

The author is a PhD Scholar in Department of Economics, University of Kashmir, Srinagar. His focus is on prospects and problems of Jammu and Kashmir Economy. 

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