Employment Generating Potential of Capital on Small Farms

It has generally been hypothesized thta the HYV-based new farm technology has strong land saving and labour absorbing effects. Accordingly a case for additional capital flow to farm sector through new technology is made. This paper attempts to examine the employment generating potential of this additional capital on small farms in the West Godavari District of Andhra Pradesh. The findings of this paper reveal that the employment implications of additional provision of capital would not be uniform in all regions and one needs to be cautioned in pushing ahead with the said approach. Depending upon the agro-climatic conditions and consequent suitability of cropping patterns, additional capital may encourage the capital intensive cash crops on land released from food crops by the adoption of High Yielding Varieties. In such a situation a part of the additional capital made available for High Yielding Varieties would get diverted to capital intensive crops. In view of the recent shortages of crucial inputs and some unfavourable changes in the net profitability of high yielding varieties, this tendency has become more pronounced. Unless this tendency is checked, progress of rural employment through High Yielding Varieties (with additional provision of capital) is likely to be impeded seriously in several areas.