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Rural development: Strides forward and pitfalls of discrimination

Dr. M M  Akash

Dr. M M Akash

Wed, 7 Feb 24

A gradual transformation has been silently occurring in the rural economy for quite some time now. Upon observation, it becomes evident that the agriculture sector's contribution to the GDP is steadily declining, at least in terms of GDP production. Some sources claim that the current contribution of the agriculture sector to the GDP is merely 14 percent, while others argue that it may reach a maximum of 18 percent. Without delving into the ongoing debate regarding the precise percentage of the agriculture sector's contribution to the GDP, it is undeniable that its significance is diminishing.

Once upon a time, the agriculture sector accounted for approximately 50 percent of our country's GDP. So, why has the progress in the rural agricultural economy slowed down significantly? Has it resulted in an overall reduction in agricultural production? The answer is no. In recent times, total agricultural production has actually increased, albeit at a rate of around 3 to 4 percent per year. However, when compared to the overall GDP growth of 6 to 7 percent per year, the relative importance of agriculture has naturally declined. Nevertheless, agriculture still remains the most crucial sector in terms of generating employment. Some sources suggest that the employment rate in the agricultural sector constitutes 40 percent of the total workforce, while others argue that it is closer to 50 percent. Regardless, neither the service nor the industry sector has surpassed agriculture in terms of employment significance. It is now universally acknowledged that the rural economy is rapidly adopting an agrarian character. The village is no longer solely an agricultural village.

A significant transformation in the rural economy has occurred recently, whereby many individuals in villages who were traditionally employed in agriculture are now seeking employment in non-agricultural sectors. This shift is gradually leading to an increase in migration to cities or other non-agricultural sectors. Some individuals are involved in non-agricultural activities within the village itself, while others are venturing abroad in search of better financial prospects. Migration entails relocating families to different places or sectors, while still maintaining a connection with the village, either by physically residing there most of the time or through ongoing ties. Families of those who migrate to cities or abroad for employment often continue to reside in the villages, maintaining their existing relationship with the village, albeit potentially weakened to some extent. Additionally, individuals who perform menial jobs in cities or villages often move from one location to another in pursuit of higher wages. Many individuals from villages temporarily migrate to cities to work as rickshaw drivers or in other occupations, while their families continue to reside in the village.

Now, the question arises regarding the interrelationship between those who migrate from villages to cities or non-agricultural sectors while their families remain in the village. It has been observed that there is a disparity in wealth accumulation between those who remain in rural areas and those who migrate to urban or non-agricultural areas. People who engage in non-agricultural sectors, whether in rural or urban areas, tend to have higher incomes compared to those solely involved in agriculture within the rural economy. Consequently, there is a growing inclination among village residents to shift towards non-agricultural sectors. The allure of higher income and wealth among those who migrate from villages to cities or engage in non-agricultural activities has diminished the desire to remain as full-time farmers. As a result, the rural economy is now predominantly influenced by individuals associated with cities or non-agricultural sectors.

The rural economy is no longer dominated solely by pure farmers who are directly involved in agricultural production. Gradually, those engaged in agricultural activities in villages are being marginalized. The situation for those solely focused on crop production has changed. However, those who are able to diversify their involvement in agriculture and engage in non-agricultural activities are relatively better off. Families that can diversify or send some members to the non-agricultural sector are accumulating wealth. As a result, they are gaining economic power within rural society.

In most cases, villagers who migrate to cities do not sell their land unless absolutely necessary. Selling land is not a common desire in our country, as there is an emotional attachment to ancestral life. Additionally, the per capita land in our country is limited, leading to a gradual increase in land demand. The value of land is expected to rise in the future, and it may become scarce even at high prices. There is a popular saying in our country that investing in land with correct title deeds brings no loss. Land prices have significantly increased in recent years, surpassing other commodities. Those transitioning from the rural agricultural system to non-agricultural sectors often transfer their land to those directly involved in agricultural production for square cultivation or contract farming. Land is considered a valuable asset for the future, and absent landowners grant land use rights to those engaged in crop production.

However, they are not acquiring land ownership in any manner. This is because the landowner is unwilling to relinquish ownership unless they are directly involved in agriculture. Currently, the percentage of landless individuals in the rural economy or social system stands at 60%. Nevertheless, absentee landowners have created opportunities for these landless farmers to improve their economic conditions, albeit to a certain extent, by allowing their land to be utilized by those directly engaged in agricultural production through various processes. The chance to enhance their financial status has primarily been established through two main avenues. Despite being landless, they no longer possess cultivable land. Therefore, individuals in the labor and agriculture sectors who require additional land for skill development and livelihood purposes can lease land through contractual agreements.

Conversely, those transitioning from agriculture to non-agriculture sectors, particularly those migrating to urban areas, are granting land to landless families based on the 'San Jama' agreement, which ensures the maintenance of their land and provides additional income. In this manner, even though the ownership remains with the wealthy as before, the land is temporarily allocated to the landless. This approach proves beneficial in terms of practical distribution from an economic standpoint. Moreover, it contributes to increased production as the land recipients diligently work to maximize productivity. This system is gradually reducing the inequality, polarization, and imbalance in land ownership that was previously caused by zamindars or large landowners in the rural economy. As a result, entrepreneurial farmers are emerging in villages.

On the contrary, the impoverished individuals who transition to non-agricultural sectors or migrate abroad for employment are experiencing relatively improved earnings. When land is sold in the village, some of the poor individuals choose to purchase that land or upgrade their homes. In the market economy, many affluent individuals in the village are selling their arable land and utilizing the proceeds to acquire assets in the city. They are well aware that the utility and value of urban land will increase at a rapid pace. Overall, it can be observed that the previous trend in the rural economy and social system, where the poor would become poorer, the rich would become richer, and the village would divide into two extremes, is no longer as evident. This transformation has created an opportunity to enhance the economic status of those at the bottom of the rural economy. The shift away from agriculture by some landowners has opened up possibilities for improving the economic conditions of the impoverished individuals who continue to engage in agriculture. This represents a new change in the rural economy that should be taken into account. As we have witnessed globally, relinquishing ownership of land is not an easy task. This brings to mind a quote by Carl Kausky, who compares the poor farmer's attachment to their land to a precious jewel that they are unwilling to part with. Even if a small plot of land becomes unproductive, a farmer will not want to let go of it. They hold onto their land as if it were a cherished possession, despite its unprofitability. Therefore, capitalist production in agriculture does not assume a straightforward and uncomplicated form.

Agriculture has transformed into a lucrative business venture, requiring financial investment for obtaining necessary resources. However, certain land-owning farmers lack sufficient funds, hindering their ability to consistently acquire agricultural inputs. Nevertheless, these farmers have found a solution by obtaining loans from NGOs to meet their financial requirements. The production of agricultural goods is now heavily influenced by market demands, with the market system playing an active role in the agricultural sector. Additionally, farmers are now opting to work in non-agricultural sectors during the off-season to save money, which they can then utilize during the peak agricultural season.

A common complaint is that remittances sent by migrants from rural areas are not being used for rural economic development. However, this allegation is not entirely accurate. The money sent by individuals abroad is actually being utilized for various infrastructural developments, including the construction of houses in the villages. It is important to note that many of those who migrate for employment come from lower-class families, and their initial priority is to improve their living conditions by repairing and enhancing their houses. This is done with the aim of creating better opportunities for their families, including providing education for their children.

Currently, the remittances sent by expatriate Bangladeshis are playing a significant role in changing land ownership patterns in the rural economy. Once their basic needs are met, many local beneficiaries of these remittances are using the surplus money for non-agricultural activities in order to increase their income. Expatriate Bangladeshis are investing in land that is not cultivated by the owners themselves but is instead leased to others for cultivation. This has led to an increase in production. Therefore, it would be incorrect to make a general statement that remittances from expatriate Bangladeshis are not being invested in creating human capital or providing incentives for non-agricultural activities. While the amount of land may not increase, capital investments other than land are growing. In a land-based production system, it is not sustainable for individuals to solely rely on agriculture. They seek to engage in production systems that offer unlimited production potential and higher profit rates.

The current government has made a special election promise to create a smart Bangladesh, which entails using modern information technology to develop the country. However, our rural areas lack access to this technological knowledge. It is crucial to prioritize the development of smart villages in order to achieve a smart Bangladesh, as the majority of the population still resides in rural areas. This includes establishing schools and hospitals in villages, creating a conducive environment where people do not have to travel to cities for basic necessities. Additionally, ensuring electricity reaches every village is essential. Without making the village smart, it is not feasible to build a smart Bangladesh as a whole.

o address this issue, the national budget should be adjusted to reduce the additional expenditure allocated for cities and increase the allocation for villages. Currently, banks with branches in villages tend to keep deposits in cities instead of utilizing them locally, leading to an economic disparity between rural and urban areas. By developing industries in villages, loans and savings can be effectively utilized there, preventing the accumulation of wealth and capital solely in cities. A mechanism should be implemented to prevent the outflow of capital from villages to cities, similar to how good health cannot be achieved if all the blood accumulates in the mouth. The government must find ways to redirect surplus capital towards villages, starting with the development of rural physical and social infrastructure.

The government has consistently discussed the relocation of city services to rural areas. Several amenities that were once exclusive to cities have now been expanded to villages. However, it is imperative that we take more proactive measures in this regard. If the development of villages does not match that of cities, the aspiration of building a smart Bangladesh will remain unfulfilled.

Author: Economist and Professor of the Department of Economics, University of Dhaka.

Transcribe: M A Khaleque

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