The perceptible change in the composition of the gross domestic product (GDP) of the rural areas, as reflected in the faster growth of rural industry and services vis-à-vis agriculture, is a welcome development. Analysis of Central Statistical Organisation (CSO) data, done by the National Council of Applied Economic Research (NCAER), reveals that while the share of agriculture in rural GDP has dropped from 52 per cent in 1999-2000 to 42 per cent, that of industry and services, taken together, has surged from 48 per cent to 58 per cent. Industry alone now accounts for nearly 30 per cent of rural GDP, and services the remaining 28 per cent. By the middle of the next decade, therefore, industry in the rural areas could well outstrip agriculture as a contributor to rural GDP. In a quite unplanned manner, India may be achieving the rural industrialisation that China’s Township and Village Enterprises model achieved in that country.
The growth of alternative occupations in the countryside should be a matter of relief, given the low employment growth taking place in agriculture, a result of the poor absorptive capacity in an area where there is already significant under-employment. Also, the same people who work in the fields during the busy agricultural seasons of sowing and harvesting can and do take up non-agricultural work at other times. This may be why the CSO’s economic census of 2005 showed that about a fifth of the rural workforce was employed in agricultural establishments, while four-fifths worked in non-agricultural establishments. There could of course be definitional issues too, as to what is a rural area, because several large villages in the country are de facto urbanised, while some mandi (or wholesale market) towns are still categorised as rural.
There are several reasons for welcoming the diversification of the rural economy. It indicates, for one thing, that the robust performance of the manufacturing and services sectors in recent years has not been confined to the urban areas and has percolated through to the semi-urban and rural areas as well. The diversification of job patterns also indicates reduced dependence on agriculture for livelihood, a shift that is particularly desirable when over 50 per cent of the population lives off a sector which accounts for just 18 per cent of the country’s overall GDP. As such, this bodes well for poverty alleviation as well. Equally significantly, it could help curb migration from rural to urban areas and thereby ease the pressure on cities that are struggling to cope with the influx.
Government policy should be aimed at bolstering this trend. There will have to be greater emphasis on programmes like the Provision of Urban Facilities in Rural Areas (Pura). Given the lower cost of living in a rural area with its own cultural moorings, usually in a dwelling that one owns, most people would in fact prefer to live in a semi-rural area or small town, provided there is good telecom connectivity (including broadband), a good road network and proper education and healthcare options. The National Commission on Farmers, headed by M S Swaminathan, has suggested the launching of a national rural, non-farm employment initiative, in addition to the on-going national rural employment guarantee programme, to expand opportunities for non-farm employment and additional income generation for the rural population. There has been talk of rural BPO initiatives, but as yet little action. Institutions such as the Khadi and Village Industries Commission, the Small Farmers’ Agri-business Consortium, and other bodies should all get involved.
