Farm distress: Agro labour wage growth turns negative in Odisha in 2018-19

RBI & ILO studies clearly link fall in farm labour wage to subdue agriculture growth

Bhubaneswar: Signalling an intense rural distress gripping the State, Odisha’s average annual wages of farm labour for the first time in last 5-years had posted a negative growth in 2018-19. The State finished at the bottom in farm wage growth.

Moreover, Odisha farm labourers were the worst hit nationally as wages remain a whopping 23 per cent below the minimum agriculture wage benchmark of Rs 300.

As per an analysis of the farm labour data available with the Commission for Agricultural Cost and Prices (CACP), the average annual growth in wages of agricultural labour in Odisha in 2018-19 at constant prices was a negative 3.7 per cent. In contrast, the national average grew by 5 per cent.

Even, when seen at current prices (means rate of inflation factored in), the average annual growth in farm labour wage rate in Odisha was mere 0.6 per cent in 2018-19. The national average growth rate was 6.4 per cent.

It needs mentioning that the inflation rate in rural Odisha was measured at around 4 per cent in 2018-19, which is far higher than the growth in farm wages.

The wage rate a farm labourer was receiving for agro work in Odisha in 2018-19 was Rs 230 vis-a-vis the set minimum benchmark nationally of Rs 300 in 2017.

An interesting fact is MP was the only State that had a wage rate lower than Odisha. And only in last December elections, ruling BJP lost narrowly to Congress in MP. The defeat was attributed to farm and rural distress.

It is in this context, Odisha government hurriedly launched the Krushak Assistance for Livelihood and Income Augmentation (KALIA) scheme for farmers and landless agriculture labour.

According to RBI working paper ‘The Rural Wage Dynamics’, strong agro growth is directly linked with growth in average annual wages of farm labour in the country, including Odisha. In accordance with the labour market dynamics, farm labour rates go up when there is a high demand. High demand in turn indicates spurt in agro growth, it explained.

How this points to rural distress in Odisha? According to the State Government’s Eco-Survey 2018-19 released recently, a whopping 56 per cent of workers are engaged in agro sector in rural Odisha. Since they (farmers and farm labour) dominate the rural Odisha landscape, negative growth in farm labour wage rate clearly points at gripping farm distress.

Even, ILO in its recent report has outlined factors like agricultural growth, labour force supply, non-farm employment, minimum wages and food prices that play a determining role in the growth of farm labour wage rate.

A look at ILO factors in Odisha portrays the real picture. The Odisha Eco-Survey 2018-19 didn’t measure any rise in employment in non-farm sector in rural Odisha. Moreover, the food inflation in rural Odisha hadn’t seen any deflation. And minimum wages in non-farm sector hadn’t also shown any deceleration.

Though the Odisha Eco-Survey 2018-19 measured 8 per cent growth in agriculture, the fact is,  only in the previous fiscal the growth was minus eight per cent.