Previous Page Table Of ContentsNext Page

Rebuilding rural India: potential for further investments in forestry and green jobs

J.R. Matta

Jagannadha Rao Matta is Conservator of Forests, Tamil Nadu Forest Department,
Chennai, India.

A moderate increase in funds allocated to forestry under India’s National Rural Employment Guarantee Act could revitalize the rural economy and the environment.

Green jobs are receiving unprecedented attention as signs of a more sustainable economy and a society that conserves the environment for present and future generations (ILO, 2008). The current economic crisis presents unique opportunities for moving towards a greener future by giving a major thrust to the forest sector that will generate employment, create real and durable assets and help rebuild rural India. Unemployment has been a serious problem in India since well before the current crisis, and it is a major cause of political and social unrest. Creating employment could also help resolve societal conflicts.

India is the fourth largest economy in the world by gross domestic product (GDP, measured on a purchasing power parity basis) and has achieved an average annual growth rate of 7.5 percent in GDP in the current decade. However, despite this extraordinary growth, the overall unemployment rate in the formal sector increased from 6.1 percent in 1994 to 8.3 percent in 2005 (Ministry of Finance, 2009). Although job opportunities increased, the labour force grew faster, at a rate of 2.8 percent between 2000 and 2005, leaving about 35 million unemployed as of 2005. The informal sector, lacking social security coverage, constitutes 93 percent of the country’s workforce (EPWRF, 2009). The situation is particularly grim in rural areas where 74 percent of India’s unemployed population is located. With traditional farming becoming economically less viable, and the recent economic downturn rendering several thousand workers jobless, the condition of rural people has become even worse.

Most of the growth in non-agricultural employment has been in the informal sector and in low-productivity self-employment activities such as petty trade, hotel management and construction. The share of the manufacturing sector has increased only marginally (NSSO, 2008). Many people are unable to find regular employment and must resort to self-employment, which is often precarious and therefore likely to be distress driven (Centre for Science and Environment, 2008). As the current trend of more women seeking jobs continues, the number of unemployed will increase further. To meet the growing demand for additional jobs, the growth in non-agricultural employment would need to accelerate to around 6 percent.

This article analyses the benefits that India could obtain by investing about US$4 billion in forestry, in terms of employment as well as other social, economic and environmental benefits.


The economic downturn that began to affect advanced economies in mid-2007 has exacerbated the unemployment situation in India through pernicious feedback loops (Mohan, 2008). The total net capital inflows to India, for example, fell from US$17.3 billion in the period April to June 2007 to US$13.2 billion in the same months of 2008. The investment demand has decelerated and the index of industrial production has shown negative growth. The software industry was severely affected, and exports declined as a result. The crisis has particularly slowed down the services sector, India’s prime growth engine in recent years (Subbarao, 2009). It has also had negative consequences for construction, transport and communication, trade and the hotel and restaurant sector, significantly moderating GDP growth (Mohan, 2008). According to the Indian Labour Ministry, the total employment in eight key sectors of the economy fell from 16.2 million to 15.7 million between September and December 2008. Some trade unions put the number of jobs lost at 2 million. The average earnings of Indians also declined by 3.5 percent during the last quarter of 2008 (Indian Express, 2009).

The economic crisis has also led to substantial reverse migration. From the city of Surat alone, for example, it is said that 200 000 to 400 000 workers in the diamond industry have returned to their villages (EPWRF, 2009). Similarly, half of Bangalore’s migrant construction workers (about 500 000) left the city in search of employment elsewhere. The job losses were primarily among contractors and low-paid workers in the informal sector. The return of thousands of unemployed workers has had a negative impact on the quality of life in rural areas that were already under severe economic stress. This situation calls for a serious rethinking of rural development priorities and an immediate effort to promote employment opportunities across the country.


Resource challenges

India has a forest area of 67.7 million hectares, or 22.8 percent of the country’s land area (FAO, 2006). Forestry is the second largest land use after agriculture and accounts for about 1.5 percent of the nation’s GDP (World Bank, 2006). A fourth of India’s population, or roughly 250 million people, depend on forests either wholly or partially for their livelihoods; of these, residents of the forest fringes, which make up the majority, are among the poorest and most vulnerable groups.

Thanks to afforestation and reforestation efforts, India is one of the only countries in South Asia to have maintained its forest cover in recent years. Yet the country’s forests are under tremendous pressure. About 41 percent of the forest is degraded to some extent. About 78 percent of the forest area is subject to heavy grazing, and 50 percent is exposed to wildfires. Shifting cultivation threatens another 10 million hectares (National Forest Commission, 2006). The loss of forests leads to irreversible erosion, reduced soil fertility, diminished water catchment function, downstream flooding, diminished biodiversity and additional rural poverty.

Non-wood forest products (NWFPs) are an important source of livelihoods for millions of forest-dependent people and account for 75 percent of total forest export revenue. Yet as their economic potential has improved, they have become overexploited.

The nation also faces significant deficits in terms of meeting its growing fodder, fuel and timber needs. Forests provide grazing for over 50 percent of India’s 500 million livestock, and 175 to 200 million tonnes of green fodder are collected annually. About 75 percent of all forest production in India is fuelwood, mostly collected from natural forests. Forestry is the largest employer in the Indian energy sector, with about 11 million people engaged in fuelwood trade (both formally and informally) worth over US$17 billion. But in 2006, harvested fuelwood exceeded the amount that could sustainably be removed from forests by 139 million metric tonnes (National Forest Commission, 2006).

Almost 33 million hectares of forest plantations were established from 1951 to 1999 (see Box). Yet wood-based industries are plagued by severe shortage of raw material to meet steeply rising demand. India is a net importer of forest products (see Box). The deficit in timber supply, which was estimated to be about 39 million cubic metres in 2006, is also partially met from unrecorded removals from natural and planted forests.

Forest plantations in India

The area under forest plantations in India is about 32.57 million hectares, which accounts for 17 percent of the global forest plantation area and is the second largest in the world after China. India has the largest share of teak and rosewood plantations in the world. Industrial plantations account for 37 percent of total plantations and play a major part in supplying raw material to wood-based industries (National Forest Commission, 2006).

Forestry imports

India’s forest product imports accounted for US$1.6 billion in 2001, as compared with exports of US$94 million. India is the third largest importer of tropical logs, mostly from Malaysia and Indonesia but with increasing supplies from Africa. In 2000–2001, the import value of pulp and paper alone was US$800 million, and it is projected to reach US$3.2 billion by 2011 (National Forest Commission, 2006).

Forest policy initiatives

The Ministry of Environment and Forests has set a goal of enhancing forest and tree cover to 33 percent of the nation’s geographical area. The government spends roughly 4 percent of the national GDP (in nominal terms) towards this end, through the flagship National Afforestation Programme (US$250 million invested during the tenth Five Year Plan, 2002–2007) and other national initiatives such as the Grants-in-Aid for Greening India scheme and the recently launched Gram Van Yojana to support tree planting on community and non-forest public lands. State governments have also taken up afforestation, reforestation and biodiversity conservation projects.

Participatory forest management is implemented on a large scale through Joint Forest Management, which involves villagers collaborating with government forest departments in forest protection and restoration, in exchange for a share of the products such as NWFPs and small timber. By February 2007, 100 000 local village institutions were managing 22 million hectares of forests.

The National Rural Employment Guarantee Act promotes water conservation activities such as the construction of percolation ponds and water harvest channels in forest fringes to recharge groundwater and help local agriculture

Tamil Nadu Forest Department


The National Rural Employment Guarantee Act (NREGA) of 2005 legally guarantees 100 days of employment to India’s rural population – the first nationwide employment scheme of this kind. The act is significant in three ways: it aims at eradicating acute poverty in villages by ensuring that the poorest of the poor are given sufficient employment; it aids in empowering local governments, as the act’s implementation is vested with them; and it supports activities that create productive assets that could potentially make villages self-sustaining. During 2006–2007, more than 100 000 villages implemented the scheme, each spending on average US$20 000. Since April 2008, NREGA has been extended to all 596 districts in the country (Ministry of Finance, 2009) and around US$6 billion is expected to be spent on it annually. As of April 2009, about 45 million workers, half of them women, were provided employment under the act (Ministry of Rural Development, 2009).

Since the main thrust of NREGA is enhancing the natural resource base in rural areas, it is regarded as the world’s largest ecological restoration programme (Centre for Science and Environment, 2008). Many villages have already benefited from its support to water conservation programmes – critical in rainfed areas of India, which sustain 40 percent of the nation’s population. A good water harvesting structure can aid in growing a supplementary crop, and 1 hectare of irrigation can create additional employment for 2.5 persons.

However, a major challenge currently facing NREGA is the insufficient attention given to the sustainability of the employment opportunities generated. In view of the target-based approach, implementation of the act emphasizes easily executable works such as road building (Centre for Science and Environment, 2008).


Currently, activities related to tree plantation and drought proofing account for around 8 percent of NREGA funding, but forestry could be included more fully to help trigger real economic growth. Indeed, the National Forest Commission has recommended a substantial increase in the allocation of funds to forestry and watershed operations, to reach 20 percent of Rural Development Programme funding.

Even a moderate increase in NREGA funds allocated to forestry could easily generate about US$4 billion in five years. Based on the employment already generated by NREGA, it can be estimated that an investment of this size could create about 1 533 million person-days of employment. If a job is expected to provide 150 to 200 days of employment in a year (since year-round employment is not anticipated in forestry and other rural sectors), this investment could create 8 million to 10 million jobs. And besides NREGA, there are also other regular forestry programmes with a strong focus on employment generation.

Forest activities can be taken up on three types of land as follows.

On areas currently classified as forests

These forests are typically meant to meet the national conservation objectives and livelihood needs of forest-fringe communities through Joint Forest Management. Natural forests are also important for the continued provision of environmental goods and services.

Forestry as a community enterprise

With just 20 hectares under production, a community could remove up to 5 m3 per year of sawlogs from a high-quality Sal (Shorea robusta) forest and earn annual gross revenues of US$15 000 (based on an average market price of US$150 per cubic metre). This would represent an additional income of US$150 a year if shared among 100 households (World Bank, 2006). 

On other public and community lands

Areas in this category include public lands, mangroves and wetlands along the coast, barren areas often classified as wastelands, areas along roads, highways and canal banks, and other institutional areas such as school and office campuses. About 12 million hectares of land in this category can be made available for tree planting.

Restoration activities such as land preparation, nursery production and planting employ a large number of people – degraded forest in Tamil Nadu in 1997 (left, background) and view of the same forest in 2004 after restoration

Tamil Nadu Forest Department

On private lands

As economic efficiency and competitiveness become increasingly important, private-sector involvement in wood production is gaining prominence (Nair, 2008). Currently the private forest plantation area in India is just 6 million hectares. To meet the increasing demand for wood and wood products, farmers and private industries need to be engaged in tree growing through farm forestry, agroforestry and large-scale plantation forestry. Appropriate agroforestry models can enhance the nation’s forest and tree cover by 5 percent (National Forest Commission, 2006). In southern China, farm forestry contributes as much as 40 percent of farm income (World Bank, 2006). The following areas require particular attention.

Check dams and other water harvest structures to control erosion are labour intensive to construct

Tamil Nadu Forest Department


The potential benefits of investing in forestry and progressing towards a green economy are manifold. Jobs can be provided for millions of unemployed rural people right at their doorstep. The enhanced resource base could also lead to new enterprises and infrastructure in wood product industries, biorefineries, aromatic oil extraction, etc. Income earned through more jobs could be expected to enhance consumption, which would stimulate production and further employment. The revitalization of villages would also alleviate pressures on cities for employment. Forestry jobs require less capital and other inputs than jobs in other sectors such as information technology. They vary widely in terms of the nature of operations and level of technology, and they are adaptable to local conditions and capacities.

Investing in green jobs would also help achieve the goal of bringing 33 percent of the country’s area under green cover, while rendering environmental benefits. A “Green India” was one of the eight priorities identified by the National Action Plan on Climate Change announced by the Prime Minister in June 2008. Prevention of deforestation and degradation and augmenting carbon sequestration will contribute to climate change mitigation efforts. Agroforestry, for example, has the potential to sequester up to 25 tonnes of carbon per hectare per year. Use of bioenergy will contribute to reduced greenhouse gas emissions while reducing India’s dependence on imported oil. (Of India’s total imports of US$24.38 billion during September 2008, US$9 billion were spent on crude oil.) Controlling wildfires would also help to reduce carbon emissions while conserving critical biodiversity.

More importantly, additional livelihood opportunities in forest-fringe villages will mitigate social unrest and civil agitation.


Despite the phenomenal economic growth the country has witnessed in recent years, chronic unemployment has become a pervasive feature of rural India. The current economic downturn has worsened the plight of rural people, aggravating loss of livelihoods, poverty and social disturbances. A movement towards a green future, predicated on enhancing the use of renewable resources and mitigating the adverse affects of climate change, could provide impetus to the forest sector, create real and durable assets and help rescue rural India from this crisis.

Complementarity between poverty reduction and meeting critical national conservation goals makes forestry an excellent means for rural economic growth in India. Increased investment in forestry and its integration in programmes such as NREGA and other economic recovery packages could help revitalize the rural economy.

A moderate increase in NREGA funds allocated to forestry, as recommended by the National Forest Commission, could generate about US$4 billion in five years. By investing this amount to improve degraded forests, promote agroforestry and enhance the green cover of the country, India could create 8 to 10 million jobs. Besides rendering significant social, economic and environmental benefits, this strategy could also provide better focus and direction to current employment programmes. The timing seems to be right to give forestry a prime place in India’s pursuit of more equitable, inclusive and sustainable development.


Centre for Science and Environment. 2008. The National Rural Employment Guarantee Act (NREGA): opportunities and challenges. New Delhi, India.

EPWRF. 2009. An overview [of the financial year 2008–2009]. Mumbai, India, Economic and Political Weekly Research Foundation. Available at:

2006. Global Forest Resources Assessment 2005 – Progress towards sustainable forest management. FAO Forestry Paper No. 147. Rome.

2008. Green jobs: facts and figures. Geneva, Switzerland, International Labour Organization.

Indian Express.
2009. Earnings of workers fall by 3.45 percent in Q3: Report. 12 March. Available at:

Ministry of Finance, Government of
India. 2009. Economic survey 2007–2008. New Delhi, India. Available at:

Ministry of Rural Development, Government of India.
2009. National Rural Employment Guarantee Act. New Delhi, India. Available at:

Mohan, R.
2008. Global financial crisis and key risks: impact on India and Asia. Remarks prepared for the IMF–FSF [International Monetary Fund–Financial Stability Forum] High-Level Meeting on the Recent Financial Turmoil and Policy Responses, Washington, DC, USA, 9 October. Available at:

Nair, C.T.S.
2008. Public sector forestry agencies at the cross-roads: are they fading into irrelevance? In Re-inventing forestry agencies experiences of institutional restructuring in Asia and the Pacific, pp. 7–17. Bangkok, Thailand, FAO Regional Office for Asia and the Pacific. Available at:

National Forest Commission.
2006. Report of the National Forest Commission 2006. New Delhi, India, Ministry of Environment and Forests, Government of India.

2008. Employment and unemployment situation in India 2005–06. National Sample Survey 62nd Round. Kolkata and New Delhi, India, National Sample Survey Organisation, Government of India.

Subbarao, D.
2009. Impact of the global financial crisis on India: collateral damage and response. Speech delivered at the Institute for International Monetary Affairs, Tokyo, Japan, 18 February 2009.

World Bank.
2006. Unlocking opportunities for forest-dependent people in India. Report No. 34481–IN. Washington, DC, USA.

Previous Page Table Of Contents Next Page