A critical element in India’s 12th Five Year Plan (2012-2017) is the generation of productive and gainful employment on a sufficient scale. The aim of such planning is to systematically absorb the growing working population in the unorganized sector of an expanding economy. This sector contributes about sixty percent of the country’s GDP. Infact, it employs workers in micro enterprises, unpaid family work, casual labor and home based work on a mammoth scale. In addition, it also absorbs migrant laborers, farmers, artisans and more importantly out of school rural youth.
In the last decade, the Indian economy has witnessed a structural transformation from agricultural activities to manufacturing and services oriented activities. A distinct feature of this transition has been a substantial decline in the absolute number of people employed in agriculture. However, according to the Planning Commission, a crucial factor in the migration of the labor force from rural to urban areas is its temporary nature and occurrence only in lean agricultural seasons. Besides, this large chunk of labor force is not available to participate in the manufacturing or the services oriented activities due to severe lack of appropriate skill sets. According to the Commission, the latter reflects rural distress, driven by the fact, that more than eighty percent of India’s farming households are small and marginal, tilling only less than 2.5 acres of land.