Livelihood Diversification and Rural Poor. Forced Choice or Golden Opportunity? A Case Study of Andhra Pradesh State in India

The significance of the rural non-farm sector in the rural economy and total rural incomes is increasingly being emphasized in the recent rural development literature (Ellis, 2000; Lanjouw and Shariff, 2004; Ellis and Freeman, 2005). Recent trends in the rural Indian economy suggest that rural non-farm employment is growing and making a significant contribution to the total incomes of the rural households (Bhalla, 2002). The economic reforms and structural adjustment process undertaken in the country since the early 90s have contributed to reduced significance of agriculture and enhanced the role of non-farm productive activity in the rural economy (Harris-White and Janakarajan 1997, Haggblade and Hazzel 2002). The rise of non-farm economy coincides with the relative reduction in contribution of the agriculture sector to the national GDP, and a trend of movement of labour to urban areas for industrial work. Explaining the rise of non-farm economy in rural areas Start (2001) says 'Declining global terms of trade and population densities above carrying capacity -amongst other factors - present a bleak prospect for smallholder agriculture as a fulltime livelihood for the majority. Likewise, rapid growth in urban employment through labour intensive industrialization has not been realized. The rural non-farm economy(RNFE), which lies between these two sectors and in many countries is growing.' The non-farm sector is being looked at increasingly by policy makers as an important factor in reduction of rural poverty levels both by growth as well as by employment generation and absorption of surplus labour from agriculture (Nayyar and Sharma, 2005).