Top Menu

Occupational Structure in India: An Overview


The below mentioned article provides an overview on Occupational Structure in India. After reading this article you will learn about: 1. Economic Development of Occupational Structure 2. Occupational Distribution of Population 3. Factors Responsible for Failure.

Economic Development of Occupational Structure:

Economic development creates various types of occupations in an economy. All these various occupations can be broadly classified into three categories, viz., primary, secondary and tertiary. The primary occupations include all those essential activities such as agriculture and allied activities like animal husbandry, forestry, fishery, poultry farming etc.

Secondary activities include manufacturing industries composed of both large and small scale and mining. Tertiary activities include all other activities like transport, communication, banking, insurance, trade etc. The occupational structure indicated the distribution as well as absorption of population into these various types of occupations.


In underdeveloped countries, majority of the population are still engaged in agriculture and other primary activities. Even in some developed countries like Japan, England, Norway fishing continues to be an important occupation, providing employment to a substantial number of populations.

Development experience shows that with the gradual development of a backward economy, the importance of primary occupations gradually declines with the growth of industries and tertiary activities. In the secondary sector, large scale industries, being more capital-intensive cannot provide much employment opportunities.

But it is the development of small scale and cottage industries, mining activities etc., being largely labour-intensive, can provide huge number of employment opportunities.

Again the tertiary occupations are also considered very important as these have a huge employment potential. In developed countries, the absorption capacity of this sector is very high. According to World Development Report, 1983, whereas about 45 to 66 per cent of the work force of developed countries was employed in the tertiary sector but India could absorb only 18 per cent of total force in this sector.


Changes in occupational structure are very much associated with economic development. The rate of economic development and the level of per capita income increase as more and more work force shifts from primary sector to secondary and tertiary sector.

As A.G.B. Fisher writes, “We may say that in every progressive economy there has been a steady shift of employment and investment from the essential ‘Primary activities’…………………………… to secondary activities of all kinds and to a still greater extent into tertiary production.”

While putting importance on the change in occupational structure, Colin Clark observes, “A high average level of real income per head is always associated with a high proportion of working population engaged in tertiary industries low real income per head is always associated with a low proportion of the working population engaged in tertiary production and a high percentage in primary production.”

Thus to attain a high rate of economic development inter-sectoral transfer of work force is very much necessary. This would be possible only when productivity of agriculture increases due to introduction of improved technology in it.


The increase in productivity in agriculture transfers surplus work force from agriculture to other sectors. The extent and pace of inter-sectoral transfer of work force depend very much on the rate of increase in productivity in the primary sector in relation to other sectors.

Occupational Distribution of Population in India:

Occupational distribution of population reflects on the degree of development and the diversification achieved in an economy. Let us now turn our discussion on the occupational structure of India. The occupational structure of India clearly reflects a high degree of backwardness prevailing in Indian economy.

Since the turn of the present century the occupational structure in India was tilted towards the primary sector. Over the last 80 years (1901-1981), the proportion of working force engaged in primary occupations remained very steady, i.e., around 70 per cent and that in secondary and tertiary sector was ranging between 28 to 30 per cent only.

Let us now make a detailed study on the occupation structure of India during this long 100-years period.

Occupational Structure during 1901-1951:

During the first half of the present century, occupational distribution of population in India did not report any appreciable change. Agriculture occupied the dominant position and its absorption capacity had increased marginally from 66.9 per cent in 1901 to 69.7 per cent in 1951.

The commercial policy of the British had paved the way for the introduction of British machine-made goods in Indian market leading to destruction of traditional Indian handicrafts. This forced the labourers of this household industry to engage themselves in agricultural operations for earning their livelihood.

All these led to a marked increase in the proportion of landless agricultural labourers to total labour force from 17 per cent in 1901 to nearly 20 per cent in 1951. The percentage of population engaged in other allied activities like forestry, livestock, fishery etc. declined from 4.3 per cent in 1901 to only 2.3 per cent of the total work force in 1951.

During this period, industrial activity was very much restricted to plantation and textile industry and was also supported by imported machinery resulting limited backward linkage effects and lack of diffusion of spread effect of industrialisation. Thus this process of industrialisation had created a very little impact on the generation of employment opportunities.

On this industrialisation issue, Priyatosh Maitra rightly observed, “In Indian experience employment multiplier seems to be small and, therefore, occupational structure remained almost static……………………. Limited employment horizons, resulting from a process of industrialisation devoid of ‘built-in technological process’ effects, strengthen the hold of production techniques with built-in under employment.”


Moreover,’ the depressed and overcrowded agriculture could not offer a significant portion of marketable surplus which could raise the demand for industrial goods and the tertiary sector could not increase its absorption capacity significantly.

However, T. Krishnamurty wrote, “Between 1901 and 1951 factory employment expanded partly at the expense of non-factory sectors, the modern branches grew at the cost of a number of traditional ones; and manufacturing output per head increased. While the share of transport, storage and communications rose, for the other branches of services trends are unclear.

Many services associated with modernisation under colonial rule expanded, in particular, public, educational, medical and legal services.”

Occupational Structure during 1951-2000:

After independence and especially after the introduction of planning in India, attempt was made by the planning to accelerate the process of industrialisation and also to change the occupational structure by transferring a section of working force from agriculture to secondary and tertiary sectors.


Accordingly, the Second Plan observed, “By 1975-76, the proportion of agricultural labour force to the total should come down to 60 per cent or so. But for this to happen something like a fourfold increase in the numbers engaged in mining and factory establishment has to be brought about, and the investment pattern in the plans has to be adjusted to these requirements.”

Just to fulfill these requirements it was necessary to increase the agricultural productivity through adoption of modern technology for meeting food and raw material requirements of the developing economy. It was also necessary to reduce the dependence on agriculture by generating alternative employment opportunities in the rural areas.

All these technological changes in agriculture along-with land reforms measures were introduced in India in order to increase agricultural production and productivity and to transfer surplus labour force from agricultural sector to secondary and tertiary sector.

On the other hand, to change the occupational structure in India, importance of designing a suitable employment policy was felt. With the introduction of planning, a considerable increase in employment opportunities was expected.


The planned economic development anticipated a rapid progress in the expansion of irrigation, power, basic industries, other manufacturing and household industries and the expansion of tertiary activities in the service sector like expansion of trade, banking, insurance, transportation and communication etc. But after two decades of planning occupational structure in India could not show any remarkable change.

Although both secondary and tertiary sector expanded and their absorption capacity also increased substantially but the rate of increase in employment opportunities fell far short of rate of increase in the labour force.

Moreover, another important condition for realising the change in occupational structure, viz., a significant increase in agricultural productivity could not be fulfilled. Again the allied activities of the primary sector and development of village industries could not make much headway in engaging the surplus population from the agricultural sector. All these led to growing pressure of population on agricultural sector and resulted in wide­spread disguised unemployment in rural areas.

Considering this situation, the Planning Commission in its Fifth Plan document mentioned, “At the present pace of industrialisation any mass-scale transfer of the labour force from agriculture to non-agriculture sectors is ruled out. The growing labour force in agriculture has to be provided with fuller employment within agriculture.”

Thus, Table 6.11 shows that during the period 1951-71, the proportion of work force engaged in the primary sector remained constant at 72.1 per cent. In-spite of heavy investment made on manufacturing and service sector during these two decades of planning the absorption capacity of secondary and tertiary sectors jointly remained the same at 28 per cent of the total work force.

Occupational Distribution of Working Population in India


Again during the next 1971-2000 period, the proportion of work force engaged in the primary sector declined marginally to 56.7 per cent. Another noticeable change that was recorded was that the proportion of cultivators declined from 50 per cent in 1951 to 38.4 per cent in 1991 and that of agricultural labourers increased horn 20 per cent to 26 per cent during the same period.

This shows the growing concentration of land in the hands of rich and well-to-do farmers and the transformation of small and marginal farmers into landless agricultural labourers. Moreover, the proportion of work force engaged in the secondary sector increased marginally from 11.2 per cent to 17.5 per cent during the 1971-2000 period and that of engaged in tertiary sector increased slightly from 16.7 per cent to 25.8 per cent during the same period.

The absorption capacity of both the secondary and tertiary sector jointly increased from 28 per cent to 43.3 per cent during this 1971-2000 period.

Again the World Development Report, 1995 shows that in 1993, the percentages of work force, both wages and non-wages engaged in agriculture, industry and services were to the extent of 63.2 per cent, 14.2 per cent and 22.6 per cent respectively.

Considering the earlier mentioned position we can conclude that there was virtually no clear shift of working population from primary sector to secondary and tertiary sectors. Thus the planning process in India has totally failed to bring any change in its occupational structure.

Factors Responsible for Failure of Occupational Structure:

1. Indian planners failed to make any serious attempt for the development of rural economy for utilizing the vast idle labour force and also to raise the productivity of labourers. Due to poor organisation, the programmes of reducing unemployment and under-employment problem in the rural areas failed miserably.


Moreover, planners did not make any serious attempt to enlarge the scope of non-agricultural rural employment.

2. Land reforms in India failed miserably to realise its goal and to create small owner holding. These reforms could not diffuse the ownership of land among a large number of marginal cultivators.

3. Various other facilities provided by the Government such as cheaper credit, marketing, subsidy on fertilizer price etc. only benefitted rich farmers and poor and marginal farmers could not reap any benefit from these facilities leading to a failure in raising their agricultural productivity.

4. Efforts of the planners to develop industries helped the large scale capital goods sector and the plans could not create much response to the development of small scale and cottage industries. This development of large scale highly capital-intensive industries could not create much employment potential and thus created no impact on the occupational structure of the country.

5. The high rate of growth of labour force is also an important factor which has been creating serious drags on the path of changing the occupational structure in India. This fast growing labour force without getting any subsidiary occupation open to them in the rural areas stated to eke out their living from agricultural sector alone.

This led to a huge dependence as well as a high degree of disguised unemployment in the agricultural sectors.


Thus under this present situation occupational structure in India can be amended suitable only when the country will start to develop its labour-intensive sectors that include small scale and cottage industries, allied activities in the primary sector such as animal husbandry, fishing, poultry farming etc. and the service sectors as well as so to foster the growth of non-agricultural employment side by side with modern large scale industrial sector.

Development of this huge labour-intensive sector will raise the level of employment and income both in the rural and urban areas leading to an enlargement of aggregate demand for various goods and services produced by large scale industries.

Thus the development of this labour intensive sector will be able to bring changes in the occupational distribution of population from agricultural to non-agricultural occupations and will also be able to support the large scale manufacturing sector by enlarging the demand for their products and while doing so they can save these large scale industries from recession.

hit counter