However, these averages probably serve to hide very significant differences among workers, both across regions and between groups of relatively more privileged and more disadvantaged workers. Although such increases in employment and wages did improve the condition of the poorest rural workers, their employment diversification into non-agriculture continued to have many characteristics of a "distress" process, given the overall tendency of labour use in agriculture. Dictated by the need to ensure economic survival, they increasingly entered into casual work not only in agriculture but also in non-agriculture.
 
The main sectors providing this type of non-agricultural employment were secondary sectors like construction, mining, and manufacturing, and here too the agency of the state was important in terms of the effect, at the margin, of rural employment and income generation schemes. Thus, 22.3 per cent of all casual labour days spent on non-agricultural activity in 1987-88 were on public works programmes of the government, this percentage having increased from 17.7 in 1977-78 and 14.9 in 1983. Indeed, the expansion of public works programmes was a critical element in increasing both access to lean-season incomes and boosting the bargaining power of rural labour.
 
This is of course an extremely schematic presentation of what is a much more multifarious and regionally diverse scenario, and there were variations in the pattern across states and over time. However, the fact that the developments described above occurred in almost every state, irrespective of the rate of growth in agriculture or organised industry, does point to the increased importance of external stimuli to rural employment and, in particular, the crucial role of the state. More importantly, these trends mean that the rural labour demand is no longer determined only by what is happening within the agricultural sector, but is determined crucially also by macro-economic processes and policies which do not at first appear to have any direct link with rural well-being.
 
In this context, it is not difficult to see why the macro-economic policies of the 1990s should have contributed to the reversal of two important processes in the rural areas in the 1980s : the diversification of employment and the reduction of poverty. The pattern of structural adjustment and government macro-economic strategy since 1991 has been one which has involved a continued stagnation in employment generation in the organised sector, both public and private.
 
Moreover, this strategy involved the following measures which specifically related to the rural areas :
 
(1) Actual declines in Central government revenue expenditure on rural development (including agricultural programmes and rural employment and anti-poverty schemes), such that there has been an overall decline in per capita government expenditure on rural areas.
 
(2) Very substantial declines in public infrastructure and energy investments which affect the rural areas. These have not related only to matters like irrigation but also to transport and communications which indirectly contribute significantly even to agricultural productivity, besides being an important source of rural non-agricultural employment.
 
(3) Reduced transfers to state governments which have been facing a major financial crunch and have therefore been forced to cut back their own spending, particularly on social expenditure such as on education and on health and sanitation, which had provided an important source of public employment over the 1980s.
 
(4) Reduced spread and rising prices of the public distribution system for food.
 
(5) Financial liberalisation measures which effectively reduced the availability of rural credit.
 
Thus, in the 1990s, several of the public policies which contributed to more employment and less poverty in the rural areas in the earlier decade have been reversed. It should, therefore, not be entirely surprising that rural non-agricultural employment appears to have declined fairly sharply as soon as these policies began to be put into place from 1991 onwards.
 
There is a natural question of whether this increase in agricultural employment was a positive development or a distress outcome related to lower rural non-agricultural opportunities and higher poverty. Those supporting the market-based reforms have argued that export orientation and increased prices of cash crops have operated as incentives for more output and investment in agriculture, and this has in turn meant more agricultural employment as well.
 
In fact, however, the rate of growth of agricultural output has slowed down after the reforms, rather than increase. This suggests that the growth of labour demand in agriculture is likely to have decelerated as well, especially given the known fact of declining employment elasticities in cultivation. Consequently what is being observed is almost certainly a rise in labour supply into the agricultural sector from certain segments of the rural population, particularly casual labourers and subsidiary workers.
 
This in itself suggests that the higher growth of agricultural employment in the 1990s was driven more by distress factors, specifically the lack of productive employment opportunities elsewhere in the rural economy.
 
The shift to agriculture in the 1990s also fits in with the hypothesis that the observed large increase in rural poverty following the reforms was caused primarily by the factors which caused rural non-agricultural employment to decline. This is also supported by changes in the nature of employment, that is whether it was regular, casual or self-employment.

Chart 5 >> Click to Enlarge

Chart 6 >> Click to Enlarge
 
Charts 5 and 6 present these data for men and women workers respectively. Over the entire period from 1977-78 to 1998, there appears to be a continuous trend of increase in casual contracts in employment, mostly at the expense of regular employment. This tendency is sharpest in the case of male workers over the 1990s. Thus, while casual work as a proportion of all work increased from 27 per cent in 1977-78 to 31 per cent in 1990-91 (an increase of 4 percentage points over 14 years) it had increased again to nearly 38 per cent by 1998 (an increase of 7 per cent in 7 years). The decline in male regular employment has been very sharp, but even self-employment appears to have declined as a proportion of all work.
 
For women workers, by contrast, the increase in casual work (from 35 per cent in 1977-78 to 41 per cent in 1990-91 to 44 per cent in 1998) has been largely at the expense of self-employment. This has declined particularly over the 1990s, from 60 per cent in 1992 to 53 per cent in 1998.
 
Data on unemployment are notoriously poor indicators in rural India, for a number of reasons. Firstly, it should be borne in mind that open unemployment is usually not an option for poor people, who have to force themselves into some activity, however low-paying, so that changes in open unemployment rates are not necessarily very good indicators of changes in levels of economic activity. This is one reason for the relatively low and stable nature of the unemployment rates reported by both the NSS and the Census over time. Effectively these incorporate possibly high and varying rates of disguised unemployment.
 
Secondly, as mentioned earlier, the continued under-reporting of much household-based labour contributes to wrong assessments of the extent of female economic activity in particular. Finally, there is the point mentioned above, that the small samples may not be able to capture changes in this variable simply because the rates are relatively low in the size of the total population.

Chart 7 >> Click to Enlarge

Chart 8 >> Click to Enlarge
 
With these caveats in mind, Charts 7 and 8 present the data on open unemployment rates for men and women in rural India since 1993-94. While the male rates are close to the norm for the period since the 1970s, the female rates are much higher than before, and show that the decline in female work participation observed from Chart 2 is related not to women's movement away from the labour force, but the sheer absence of available employment opportunities.
 
The overall picture, then, is one of a relative decline in productive employment opportunities, especially in non-agriculture, and the growth of less attractive casual work for both men and women in rural India over the 1990s. This corresponds with the observed persistence and even increase in the ratio of people below the poverty line that has already become the focus of much concern. It is clear that the macro-economic policies of the 1990s have played an important role in both of these processes.