Indian Economy Objectives , Scope and Methodology of Economic Reforms in India

India’s Economic reform programme began in the middle of a macroeconomic crisis that erupted in early 1991.* This led to what is known as the New Economic Policy announced by the Govt. of India in July 1991, which was also followed by the announcement of the New Industrial Policy, which included the abolition of the location policy. During the last decade the Govt. of India have initiated as well as implemented a number of economic and financial reforms in various sectors of the Indian Economy. These reforms are mostly related to the process of Liberalization, Privatization and Globalization of the Indian Economy. The most important impact of this LPG model on the Indian Economy has been a very high rate of growth of Gross Domestic Product, ranging between 7% and 8.2%. India has never achieved such a high growth rate of the economy since Independence in 1947. This could be considered as a major achievement of the country during the last decade.

Jobless Growth: But, this high rate of growth of the GDP is not accompanied by a high growth of employment during the same period. In fact, in certain sectors of the economy the rate of growth of employment has been negative (Agriculture and Mining) during 1999-2000. This happened mainly because of up - gradation of technology by Indian industries to become Globally competitive. The Voluntary Retirement Schemes (VRS) were implemented by public sector as well as private sector enterprises and institutions during the post reform period. All these changes in the economy led to the situation of the “Jobless Growth”.

III. Employment, Un-employment Situation: - Recent data published by the National Sample Survey Organization (NSSO) in its 50th round and 60th round (January-June 2004), indicated that the un-employment rates for females in rural areas have increased, during this period.

A comparison between un-employment rates (per 1000 persons) for females, during the period, 1993-94 and 2004, have increased from 14 to 22 (Usual status) from 30 to 45 in case of Current Weekly Status and from 56 to 93 in case of Current Daily Status female workers in rural areas. This may be considered as a negative impact of economic reforms undertaken during the last decade.


IV. WTO and Agriculture: India is one of the Founder Members of the World Trade Organization, which was established in 1995. There are various agreements, made by member countries, during the last decade. Especially, the Agreement on Agriculture is closely related to the development of rural India. The Sharp reduction in Customs Duties on various agricultural products by the Central Govt. is likely to affect the employment and level of incomes of the Indian Farmers. This impact of foreign competition in the agricultural sector needs to be evaluated. Similarly, huge subsidies given by the US, and European Union Countries, to their farmers, under the Green Box, Blue Box, System, have depressed the international prices of various agricultural products in recent years. This situation has created great difficulties for the Indian Farmers in exporting their products, as well as to face foreign competition. However, the Doha Round of negotiations launched in 2001, received a fillip with a position outcome at the Sixth Ministerial conference at
Hong-Kong, important.*

The resolutions are

i. In cotton, export subsidies to be eliminated by developed countries in 2006, and trade distorting domestic subsidies to be reduced more ambitiously and over a shorter period of time.

ii. To eliminate export subsidies in agriculture by 2013 with a substantial part in the first half of the implementation period.

These two measures will have a positive impact on the International prices of agri-products and make Indian agri-products competitive and profitable.

* Economic Survey 2005-06, Govt. of India, PP-119,120, New Delhi. Another important development which has taken place recently is the abolition of the Multi-Fibre Agreement, since 1st January 2005. This is likely to boost the Indian cotton textile and garment industry in the coming years. This has opened up huge global market for Indian Textile industry, which is considered as the second largest employer after agriculture in India.

V. Impact of Economic Reforms on Non-Farm Un-organized Rural Sector in Maharashtra: - As this impact study is related to the employment in Non-farm un-organized sector in Maharashtra, we are presenting briefly the major results of the Study undertaken by the Directorate of Economics & Statistics Govt. of Maharashtra* Recently.

a. The total number of manufacturing enterprises in Un-organized Sector in Maharashtra, was 9.7 lakhs; of which more than 53% (or 5.14 lakhs) were operating in rural areas. Of the rural enterprises 89% (or 4.57 lakhs) belonged to the category of “Own Account Manufacturing Enterprises”, which are run by household labour, usually without any hired labour. They are run fairly on regular basis.

b. Non-Directory Manufacturing Enterprises (NDME), usually have 1 to 5 workers, which include both household and hired labour together.

c. Directory Manufacturing Enterprises (DME) are those, which employ six or more than six workers; in terms of employment, they are the largest among the 3 categories, of enterprises in rural area.

It was also revealed by this study that of the total rural enterprises, about 17% were owned by female proprietors.

d. An attempt was made to assess the economic condition of all types of rural manufacturing enterprises in Maharashtra, prior to the immediate 3 years of the survey. The results were as follows: -

i. 27.6% of the total enterprises, had expanded their business operations; while 65.1% had stagnant business.

ii. 5.7% of them had contracting business operations, while the remaining 1.6% enterprises operated for less than 3 years.

Major problems faced by these rural manufacturing enterprises, were reported as follows: -

i. 37.9% of the rural enterprises experienced shortage of capital; while 12.5% stated power-cut as a major problem.

ii. Non-availability of raw material was reported by 12.4% of the total enterprises, while 10.8% stated that they faced the problem of marketing.
VI.

Changing Structure of Employment: -

Due to various economic reforms implemented by the Govt. since the last decade, the structure of employment in the Indian Economy has been changing, affecting the level of incomes as well as the quality of employment. For example, the proportion of workforce employed in the organized sector was about 10% of the total workforce in 1991; now this proportion has declined to only 7% of total workforce. It means the rank of un-organized labour force has increased from 90% in 1991 to 93% in 1999-2000. As is well known, the working conditions, wage rates and regularity in employment is quite uncertain and without any social security measures, in this sector. Under this background, the present study has been undertaken with following major objectives.

OBJECTIVE OF THE STUDY:

i. To Study the impact of economic transformation on rural women entrepreneurs and wage earners.
ii. To find out the growth of infrastructure in rural areas of the study area.
iii. To examine whether there is an improvement in employment opportunities for women in un-organized sector of the economy.
iv. To Study the extent of migration of women working in un-organized sector.
v. To Study the extent and relationship between skill development and employment opportunities for women working in un-organized sector.
vi. To Study the impact of transformation of the rural economy on the level of income and the quality of life of women working in un-organized sector.
vii. To examine the closure of rural industries / business enterprises, run by women entrepreneurs, due to such transformation.
viii. To Study the growth of new industries / business enterprises leading to the creation of employment opportunities for women.
ix. To suggest suitable strategies to equip women in rural areas to utilize the opportunities created by various economic reforms and transformation of the rural economy.

HYPOTHESES TO BE TESTED: -

The hypotheses to be tested under this study are focused on the following points.
i. Whether the process of rural transformation was a supporting factor for the development of women in the un-organized sector.
ii. Whether rural women are partners in the development process of the Society / Community.
iii. Whether Socio-Economic conditions of rural women have improved; and whether they are empowered along with their rights.

METHODOLOGY AND STATISTICAL DESIGN:-

This study is based on Stratified Multi-stage Random Sampling Method, (with replacement); that is in case a selected final household or unit refuses to cooperate or refuses to be included in the sample, a new unit of similar characteristics may be included or replaced in the sample. A simple “Lottery Method” was adopted for random sampling at all stages

ii) Stratification at various stages: - The stratification stages.

a) Selection of developed and under-developed districts in the State of Maharashtra, was the first stage of sampling. There are 30 districts in the State of Maharashta; of which 17 districts have been identified as under-developed by the Planning Department of the Govt. of Maharashtra, in 1992. Region-wise distribution of these 17 districts is as follows:

Vidarbha
Marathwada
Konkan

in sampling has been made at following We have selected by random sampling one Under-developed District (Beed) from Marathwada Region and another one (Ratnagiri) from Konkan Region, of Maharashtra State. These two regions are considered as under-developed regions of the State.

The remaining 13 Districts of the State have been classified as developed districts of the State. Mumbai District has been identified as 100% Urban; as our study is related to the women workers in rural areas, we have excluded Mumbai district from our sampling. Hence, there are only 12 developed districts, with rural population in the State. As we are required to give representation to all the four regions of the state in our study, we have selected by random sampling one district (Kolhapur) from Western Maharashtra Region and another one (Nagpur) from the Vidarbha Region of the State. Now the sample consists of 2 under-developed districts and 2 developed districts representing all the four regions of the State as follows:

Selection of District
Under-developed(Region)
i) Beed (Marathwada)
ii) Ratnagiri (Konkan)

Developed (Region)
iii) Kolhapur (West Maharashtra)
iv) Nagpur (Vidarbha)

The second stage of the sampling procedure is the selection of two blocks from each of the 4 selected districts. Generally, each district has on an average about 6 to 8 development blocks. Hence, by using random sampling method we have selected two blocks each from (i) Beed, (ii) Ratnagiri, (iii) Kolhapur, and (iv) Nagpur. In this way, the total number of blocks selected for the study is 8; of which 4 blocks representing under-developed districts while another 4 blocks representing developed districts. The names of these 8 selected blocks are as follows: -

Blocks Selected (Under-developed)

i) Beed
iii) Ratnagiri
i) Karvir
iii) Nagpur
ii) Kaij
iv) Lanja
ii) Hatkanangale
iv) Sawner

Blocks selected (Developed)

iv) Selection of Villages is the third stage in our sampling procedure: As this study is relating to the impact of economic reforms on rural women entrepreneurs and women wage earners, we had to face certain difficulties in obtaining adequate number of women entrepreneurs, in small villages.

Therefore, to have adequate size of sample (10 women entrepreneurs, wage earners), we had to identify bigger villages with different type of women entrepreneurs, like, dairy, grossery shops, bangle shops, tea-stalls, beauty parlours, etc. villages Hence, in each block, we prepared a list of adequate number of women Out of these villages 10 The names of these 80 with entrepreneurs/wage earners. villages from each block were selected for the study or a total number of 8 X 10 = 80 villages. villages are given separately.

v) Selection of final household or rural women entrepreneurs/wage earners is the last stage of our sampling procedure. The number of women entrepreneurs and women wage earners, selected block-wise is shown below: District-wise coverage of the sample:

(Under-Developed) Districts
1 Beed022012476200
2 Ratnagiri022013268200
Total0440256144400
(Developed) Districts
3 Nagpur022012080200
4 Kolhapur022012476200
Total0440244156400
Grand Total0880500300800
i) Beed and Ratnagiri (Backward Areas)
a. 256 women entrepreneurs.
b. 144 women wage earners.

ii) Nagpur and Kolhapur (Developed Areas)
a. 244 women entrepreneurs
b. 156 women workers.

In this way a total number of units in the sample is 800; which included both women entrepreneurs (500) ; wage earners (300). (See Table No. 1.2 & 1.3)


Opinion of Employers and Employees engaged in Rural Areas:

A separate questionnaire was designed for 100 employers (25 employers from each of the 4 districts, by random sampling procedure) which included different type of employers in the district. This questionnaire was designed to understand the socio-economic conditions of women employees, employed in their firms, over a period of 10 years. The changes in the level of wages, benefits, quality of leadership

6.MAJOR VARIABLES AND DATA COLLECTION:-

Tools for collection of data: - The Following tools have been used
for the collection of primary data.

i. An Interview Schedule has been designed to identify the perceptions of the employers about the impact of transformation of the rural economy on their enterprises, during the last decade.

ii. A questionnaire for women employers / workers has been canvassed to know their opinion and the impact of rural transformation on their wages / salaries.

iii. In addition to this interview of 100 employers would be conducted to understand the impact of economic reform on the level of their output, and employees, wage rates etc.

B. Secondary data published by Central Govt., State Government, and other research studies would be used at relevant places or at District / State Levels.

7. Relevance of the Study: After Independence India has accepted to achieve the goal of a “Welfare State”, which specifically focuses its attention on the welfare of the weaker sections of the society. Since the last 15 to 20 years, more attention is being given to the objective of empowerment of women, their socio-economic development and making them a partner in the process of economic development. Therefore, this study specially addresses the impact of various economic reforms on the socio-economic conditions of women entrepreneurs and wage earners over a period of one decade. This impact is likely to be of different nature and magnitude in backward and developed districts, under study.
Therefore, proper conclusions can be drawn from the findings of this study and appropriate suggestions could be made on the basis of such findings.

8. The nature and magnitude of rural female work force in un-organized sector in India.

i. Changing Structure of employment: - Due to various economic reforms implemented by the Govt. of India and the State Governments, since 1991, the structure of employment is undergoing a change. For example, the proportion of employment in organized sector is slowly declining, due to down sizing of the Government; reduction in labour force in organized private sector owing to introduction of modern technology to be competitive in Global markets, etc.

9. MEASURABLE AND MONITORABLE PARAMETERS: - The following are the important measurable and monitorable parameters of this study on which policy decisions could be taken.

(a) Changes in the level of incomes of the rural women entrepreneurs and wage earners is the most important objective of this study. Whether the level of income has increased or Secondly, we decreased due to economic reforms during the decade (1994-95 to 2004-05) has to be quantified or measured. must also measure the relative changes in the levels of incomes of the sample units in developed and underdeveloped blocks separately and to find out the extent of positive and negative impact on these two set of sample families. This is an important part of this study.

(b) The second measurable parameter of this study is to find out, the proportion of sample rural women entrepreneurs, who could cross the poverty-line (of Rs.2400 per annum) during the decade of transformation. What is the proportion of families crossing the Poverty Line, in developed block and under-developed blocks, has to be measured separately.

(c) The third important measurable parameters of this study relates to the Impact of Economic Reforms on the level of employmentof the Rural Women Entrepreneurs and wage earners. This has to be measured in terms of the mandays of employment created, due to economic reforms. The conclusion drawn from this data will have important policy implications. The relative position of sample families in developed and under-developed blocks, relating to their employment opportunities will have to be
ascertained, separately.

(d) Impact on Enterprises: Due to various economic reforms, between 1994-95 and 2004, it is possible that the impact might be negative (or closure of units) or positive (or starting new units).

This study intends to measure both negative and positive impact of economic reforms on the units started by the Rural Women Entrepreneurs, both in developed and under- developed blocks of this study.

(e)Migration: This is yet another important measurable parameter of this study. What proportion of women workers had to migrate to other villages, or other blocks or other districts, in search of jobs is an important part of this study.