Dipankar Gupta, professor of sociology, Center for the Study of Social Systems, Jawaharlal Nehru University, New Delhi, and Woodrow Wilson Center Fellow; John Echeverri-Gent(Commentator), associate professor, Department of Government and Foreign Affairs, University of Virginia

Woodrow Wilson Center Fellow Dipankar Gupta spoke at an Asia Program event on the shrinking of India's village economy, providing an overarching perspective of the problems of what he calls "the vanishing village" in India. Contrary to the situation two decades ago, when landowners possessed large tracts of land that ensured job security and pride for farmers, today rural Indian farmers are struggling for survival.

Gupta reported that the diminishing size of landholders' plots in rural India (the average plot has dwindled from five to three acres or less) also makes farmable land scarce. This has a negative effect on agricultural productivity, cutting down prospects for naukry, or long-term jobs for farmers. Landless laborers are thus pitted against landowners, while both sides compete from positions of poverty.

As a result, the landless laborers or "marginal farmers" supplement their income by taking on day-labor jobs or mazdoori. Because of the scarcity of available mazdoori, marginal farmers build social networks for job seekers that, in turn, provide them with assignments far away from their villages. The quest for mazdoori gives members of the lower caste the courage to move away from the village. Thus, departure from the village contributes to the breakdown of the social fabric of the village.

Urbanization may have imposed new stresses on the village. Chances for small farmers to sign contracts with large corporations remain slim because the big companies usually prefer working with large landholders. Gupta also noted a simultaneous divergence in the urban workforce: the number of organized labor workers is stagnant while the number of unregistered labor units has risen (the number of such units grew 38 percent from 2000-2005). These unregistered labor units, 85 percent of which employ 10 people or less, remain at the bottom of the supply chain tied to large business corporations. This is particularly the case for the information technology (IT), information technology enabled services (ITES), banking, and communication sectors.

Drawing on Gupta's observations, commentator John Echeverri-Gent suggested that the uneven distribution of India's accelerated economic growth in certain sectors engenders financial insecurity for the Indian laborer and, more importantly, shows the failure of sophisticated and highly productive service sectors to absorb the labor force, as evident in India's IT sector. In Echeverri-Gent's view, the Indian economy is adopting a market-based rural development model, which he described as a race to the bottom in which investment in infrastructure and capital are insufficient and weak.

One possible solution is investing in segments of rural infrastructure, such as cooperatives, that have the potential to transform the agricultural sector. According to Echeverri-Gent, the Indian government has been encouraging private-sector corporations to get more involved with contract farming. This solution, nonetheless, may suffer setbacks. Small farms have little or no leverage over big companies, which tend to favor large farms. Furthermore, if big companies only invest in areas with high productivity, they will generate regional concentrations of investment, which, in turn, promote geographic disparities and deepen rural inequality.

Drafted by Susan L. Levenstein, Asia Program Assistant
Robert M. Hathaway, Director, Asia Program, Ph: (202) 691-4020