Disguised Unemployment as a Potential Source of Capital Formation

Nurks recognized disguised unemployment as a saving potential. That is in Nurkse’s view there is a hidden saving in disguised unemployment which can be used for capital formation in the under- developed countries. According to Nurksd surplus labor can be withdrawn from agriculture and utilized for capital formation activities like road building , irrigation projects, railway construction, building of houses , factories etc. The question is Wherefrom should the finance be obtained for such  projects? How are the workers transferred from agriculture to these projects of capital formation to be fed? In Nurkse’s view , the best solution to this problem is that the surplus labor transferred from agriculture to capital formation projects should be given their own food that they left behind in the farm families. It is assumed that when surplus labor is withdrawn from agriculture there is surplus food which saws being consumed by the people who have not been withdrawn from agriculture. In a a nutshell , the work of capital formation should be carried on by the people transferred from agriculture supported by the very food that they were consuming before when they were attached to agriculture. That is capital formation effected by the surplus labor transferred from agriculture is the result of saving not from agriculture is the result of saving not from any other sector or of foreign aid but their own saving concealed in disguised unemployment in agriculture.