rural vs urban growth

8/3/2019 Rural vs Urban Growth

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Urban sector growth

vs. Rural sector

growth

9/27/2011


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A Report on

Urban Sector Growth vs. Rural Sector Growth

A report submitted in partial fulfilment of

ECON C341-Economic Growth and Planning

Prepared by

B.Jagadish Chandra : 2008AAB3065H

N.Sai Sankeerth : 2009B3AA642H

M.Haranath : 2009B3A7373H

T.Vineeth : 2009B3AA502H

P.Srikanth : 2009B3AA386H

BIRLA INSTITUTE OF TECHNOLOGY & SCIENCE, PILANIHYDERABAD CAMPUS

SEPTEMBER 2011


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6.2Reasons of migration ------- 22

7. International scenario ------- 25

8. Comparative study on rural and urban growth ------- 27

8.1 GDP ------- 32

8.2 poverty levels ------- 34

8.3 per-capita income ------- 35

8.4 literacy ------- 39

9. How to promote better rural urban linkages ------- 41

10. Conclusion ------- 44

11. Bibliography ------- 45


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a. ACKNOWLEGEMENTSWe take immense pleasure to express our deep sense of gratitude to our Instructor Dr.

Meera Lal, who has given us valuable advices and guidance whenever necessary and without

whose encouragement this work would not have been possible.


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b. Abstract:

The rural and urban sectors of an economy are interconnected economically, financially, and

socially. Ideally, resources such as capital and labour should move freely between these twosectors. In an undistorted economy, marginal returns to production factors should be equal.

As a result, labour productivity and consequently per capita income should be the same.

However, the relationship between urban and rural sectors in many developing countries is

still characterized by an economic dualism, in other words, by the coexistence of a modern

urban sector and a traditional rural sector. This duality arose because many developing

countries like India pursued a heavy industrialization development strategy based on the

transfer of resources and labour surpluses from the traditional (or rural) sector to the modern

(or urban) sector. India began its macroeconomic reforms in the early 1990s. These reform

policies have corrected the urban bias to some extent. But the urban bias still persists.

Whether measured in terms of income, literacy, or access to social services, a large gap is

present between the rural and urban areas.

Government policies should be designed to correct market failures in order to achieve higher

efficiency and also better income distribution. Further correcting urban bias would lead to

higher growth in agriculture and therefore larger poverty reduction in both rural and urban

areas, as a result of better rural-urban linkages. For India, poverty rates are higher in rural

than in urban areas. In addition, rural areas are still home to most of the total population.

Poverty is thus concentrated in rural areas. Therefore, any policy that leads to higher growth

in rural areas will also lead to greater poverty reduction. India implemented development

policies biased in favor of the urban sector. The terms of trade for agriculture have improved

as part of the reform process, leading to some correction in urban bias. But other types of

biases still exist. Among these, government investment has been one of the most important.

To achieve greater poverty reduction, both governments need to correct this bias urgently by

investing more in rural areas. Infrastructure such as transportation and communication, for

example, is crucial for achieving better rural-urban linkages as it facilitates mobility and

therefore access to markets, employment, and services for the rural population. The

government should also reform its policies to nurture the further development of rural

industries and small towns that play a key bridge role between rural farming communities and

urban centres.


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INTRODUCTION:

The father of our nation, Mahatma Gandhi, once said that the villages were the heart of our

country. But with the advent of globalization the pulse of our fast growing economy runs

through the cities.

In the early eighties and nineties, if you had asked a wayfarer the names of major Indian

cities, his answer would have been: Delhi, Bombay, Madras & Calcutta. However with the

turn of the millennium the answer has expanded to include new names.

With the arrival of the IT, cities have turned into a fast multiplying species. The growing gulf

between the rich & the poor has now turned into the gulf between the city dwellers & the

rural immigrants.

URBAN SECTOR:

An urban area is characterized by higher population density and vast human features in

comparison to areas surrounding it. Urban areas may be cities, towns or conurbations, but

the term is not commonly extended to rural settlements such as villages and hamlets.

Urban areas are created and further developed by the process of urbanization. Measuring

the extent of an urban area helps in analysing population density and urban sprawl, and in

determining urban and rural populations.

The level of urbanization is an index of transformation from traditional to modern one. It an

established generalisation that an increase in urbanisation which boosts the secondary

sector and reduces the dependence on primary sector is considered as a symbol of

economic growth and development. Urbanisation is an integral part of economic

development. Any increase in urbanisation is welcome. Most modern economic activity

takes place in cities, and growth in productivity and income is easier in an urban context.

Economics growth influences the urbanisation while urbanisation in turn affects the rate of

economic growth.


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RURAL SECTOR:

Rural areas or the country or countryside are areas that are not urbanized, though when

large areas are described, country towns and smaller cities will be included. They have a low

population density, and typically much of the land is devoted to agriculture. The degree to

which areas of wilderness are included in the term varies; very large wilderness areas are

not likely to be described by the term in most contexts.

In most parts of the world rural areas have been declining since the 19th cent ury or earlier,

both as a proportion of land area, and in terms of the proportion of the population living in

them. Urbanization encroaches on rural land, and the mechanization of agriculture has

reduced the number of workers needed to work the land, while alternative employment is

typically easier to obtain in cities. In parts of the developed world urban sprawl has greatly

reduced the areas that can be called rural, and land use planning measures are used to

protect the character of rural areas in various ways.


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Objectives:

The main objectives of our study are to

Study the basic aspects of Urban and Rural sectors. Comparative study of rural and urban sector growth. Suggest some measures for promoting better urban-rural linkages.

Methodology:

We have adopted a secondary study methodology for carrying out this study. We

studied the definitions of rural and urban sectors and their basic characteristics. We then

studied the pros and cons of each. Then we have seen the reasons for migration from rural

areas to urban sector. We have chosen the current trends in India as a case study in which we

studied the current trends of urbanization in India. We then focussed a little on the

International scenario. A comparative study of growth in rural sector and urban sector was

followed. We then concluded by suggesting some policy measures to be taken by the

government for promoting better rural-urban linkages.


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Urbanization has played an important role in the development of under developed and

developing countries. It is believed that the developed countries of the world could achieve

fast economic progress due to large scale urbanization. Urbanization during the industrial

revolution helped fast development of some European countries. However, the environmental

challenges of urbanization have been quite difficult to deal with. Before we know more about

the challenges of urbanization, let us know about its advantages in detail.

Advantages of Urbanization

Urbanization is a process in which overall development of a particular region takes place.

Industrial growth:As the industries of the world are growing fast, urbanisation is proceeding so rapidly that it is

generating a wide range of employment.New investments in various industries and this in

turn help to create large scale employment which is much needed in developing countries.

Due to employment, the per capita income of the people rises and the region achieves

prosperity. Urbanization provides plenty of opportunities for people from all sections of

society to excel and achieve their goals. Many factories are built in urban areas since

economic benefit was the sole purpose of the urbanisation from the beginning, which will

benefit to local economy, which goes to the wealth of government. Then the government find

another place to develop.

Technical growth:The major advantage of urbanization will be technical progression and there by developing

scientific attitude of the people .The result of technical advancement is mechanisation that

increases the countries output.

Major per cent of countrys GDP comes from urbansector.For example if we consider Indias GDP in the year 2008-09, it was 3339375cr (taking base

year as 99-00) out of which urban contribution was 2221347cr i.e. nearly 66%.

As many investments were favoured towards urban sector, many facilities are available in

many cities and thus favouring factor for people to migrate from rural to urban areas.
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Infrastructure:Urban infrastructure is a physical or structural part of the city that include its transportation

systems (roads, bridges, highways, public transportation, etc.), sewage system, utility systems

(gas, electricity, water treatment and delivery), and its buildings (schools, court houses, sports

facilities, and its public and private housing developments).

Urbanization provides better infrastructure facilities, medical facilities and educational

opportunities to millions of people .The overall standard of living of the people rises

considerably because of urbanization. It helps the region to prosper and cater to the needs of a

large population.

The well-developed schools and universities in the urban areas lead to increase in literacy rate

of population and thereby increase in skills of the labour.

For example literacy rate of Urban India was 84.97% while total literacy rate was 74.04%.

o Health care facilities:Urban areas continued to develop being the seats of power, money and intellect. They also

became the first places to experiment with ideas. As a result, various agencies of health

representing municipal, provincial and national levels developed simultaneously with

voluntary, private and philanthropic institutions.

For example:

In India,there are well-developed health care facilities available in urban sector because of the

governments various health care programmes. Some of the policies are:

Universal Immunization Programme (UIP) is an important step towards achieving thegoal of Health for All.

Urban Malaria Scheme : The main objective of the scheme is to control malariatransmission by eliminating aquatic stages of vector mosquitoes by weekly

application of larvicides in breeding sources.

National Filarial Control programme . Leprosy control programme.


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Challenges of Urbanization

Environmental pollution and Degradation:

Pollution and degradation of the environment is one of the most prominent challenges ofurbanization. The increased number of vehicles on the roads and industrial wastes are the

main sources ofair pollution. Urbanization also leads to a rise in the noise pollution levels.

Contamination of sea, river and lake water due to various human activities is also a serious

issue resulting out of fast urbanization. Land pollution is also a matter of great concern.

These types of pollution can cause adverse effects on the health and well being of people.

Population Explosion:

Population explosion means a great rise in the population of a particular area over a period of

time. It has been observed that industrialization and urbanization leads to an increase in the

population of the region at a very fast pace. The population growth results in a situation

where the facilities provided by the government are to be shared among many people. This

can further give rise to inequitable distribution of wealth and resources. Providing the huge

population with essential resources becomes a big challenge due to population explosion. It

also puts a tremendous strain on the finances of the country.

Sanitation, Water and Transport Problems:

The rise in the number of vehicles puts a huge strain on the infrastructure available for

transport such as roads and railways. Water problems are quite common in many parts of

urban c ities. Keeping the cities clean and well maintained is surely one of the biggest

challenges of urbanization.

Housing:

Providing shelter to a big population is indeed a big challenge posed by urbanization. The

lack of space for construction of houses and buildings results in deforestation which causes

several environmental problems. The problem of slums in urban cities is becoming more and

more difficult to tackle due to the issue of displacement that the huge population residing in

these slums will face.
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Rising Cost of Living and Wealth Inequality:

The cost of living in urban cities is quite high compelling many people to live in poverty.

Inequalities in the distribution of wealth which widens the gap between the rich and the poor

is also a serious problem to deal with.

Increase in Crime:

one of the biggest challenges of urbanization is the increase in the crime rate. Surveys

conducted suggest that the crime rate is much higher in urban cities as compared to backward

regions. The rise in the number of crimes is due to the need to earn wealth which results in

people resorting to unfair means. The common man in the urban areas suffers the most

because of the rise in cr iminal activities.


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Demographic trends:In India, the definition of urban is more rigorous. Both civic status as well as demographic

criteria is taken for declaring a settlement urban. The census of Indiadefined the urban places

on the basis of the following criteria (Census of India 2001).

All places with a municipality, corporation, cantonment board or notified town areacommittee, etc. (known as Statutory Town)

All other places which satisfied the following criteria (known as Census Town):o A minimum population of 5,000;o At least 75 per cent of the male main workers engaged in non-agricultural

pursuits; and

o A density of population of at least 400 per sq. km.In each census, the rural-urban framework is prepared based on the above definition of urban.

Many new towns are added and some existing towns revert to rural status if they do not

satisfy the criteria. Thus the rural-urban classification used in India is a dynamic process.

Urbanization trend:

Demographically speaking, the level of urbanisation is measured by the percentage of

population living in urban areas. Level of urbanization increased from 27.81% in 2001

Census to 31.16% in 2011 Census.For the first time since Independence, the absolute increase

inpopulation is more in urban areas that in rural areas. According to the 2011 census Rural

Urban distribution: 68.84% & 31.16%.

It is important to note that the comparison of the level of urbanisation at the world level is

affected by definition of urban areas followed in each country.

Urban population is usually presented in six-fold classification in Indian censuses.

While the first size-class comprises cities i.e., urban places having 100 thousand andmore

population, the last category consists of the tiny towns i.e., places havingpopulation less than

5000. In order to provide a meaningful analysis of the changesin size-class composition of

urban population, the last three categories namely townshaving population 10,000-19,999;

5000-9999; and less than 5000 are groupedtogether and termed as small towns. Medium


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towns are defined to have populationin between 20,000 to 49,999; and large towns constitute

population in the range of50,000 to 99,999. The places having more than 100 thousand

population are namedas cities. On the other hand, cities having population 1 million and more

are termedas million plus cities.

The urban population in India at the beginning of 20th century was only 25.9

millionconstituting 10.84 per cent of Indias population in 1901, which increased to

377.1million comprising 31.2 per cent of total population in 2011. The growth rate

washighest observed during 1971-81 (46.14 per cent) and there was subsequent slowingdown

of urbanisation.

The continuous increase in size cannot be sustained in the long run, and every town and cities

has to experience decline, but the threshold of decline could vary enormously and not easy to

predict.

The size of town and city is a negatively related to urban growth rates. It is quite natural that

as city grows it expands the economic base and activities of the cities leading to increased

advantage to the trade and commerce as well as to industries from the agglomeration

economy. But it cannot be sustained very long. The decline in growth rate will certainly set in


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with increase in the size of city in the long run. Hence, effort to restrict city size is not always

necessary and it could even be detrimental to the economic growth at the early stages of

economic development in a country (Mills and Becker (1986). Therefore, cities should be

allowed to grow naturally in order to reap the benefits of its growth momentum. In fact, the

optimality of city size is elusive and each c ity could find its own in due course of time.

This decreasing trend can be seen in the following graph

This is consistent with forces of privatisation and liberalisation of the economy,which have

more benefited the cities compared with towns. The growth of smalltowns might be due to

higher natural increase among them as they are not verydifferent from villages.Further, the

rural poor have little choice but to migrate only to short distances withsmall and medium

towns as their destinations. The cost of living in cities as well asmetros has also risen

enormously along with saturation of informal sector anddecline in jobs in organized sectors

(Kundu 1997; Planning Commission 2001). Insuch a situation migration to the nearby towns

is an alternate possibility left to therural poor.

Industrial growth in India:India has made considerable economic progress since its Independence. Most noticeable are

the expansion and diversification of production both in industry and agriculture. New

technologies were introduced in many industries. Industrial investment took place in alarge


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variety of new industries. Modern management techniques were introduced. An entirely new

class of entrepreneurs have come up with the support system from the Government, and a

large number of new industrial centres have developed in almost all parts of the country.

Over the years, the Government has built the infrastructure required by the industry and mademassive investments to provide the much-needed facilities of power, communications, roads

etc. A good number of institutions were promoted to help entrepreneurship development,

provide finance for industry and to facilitate development of a variety of skills required by

the industry as well as agriculture. The Government also followed a policy of encouraging

indigenous industries and provide them all facilities andencouragement. As a result, we have

now a widely diversified base of industry and an increased domestic production of a wide

range of goods and services. The index of industrial production has gone up from 7.9 in1950-51 to 154.7 in 1999-2000. Electricity generation went up from 5.1 billion Kwh to 480.7

billion Kwh in the same period.A variety of promotional policies were followed by the

Government to achieve this success. In the early years, Indian industry thrived within

protective tariff walls. The policy was to encourage Indian industries and though foreign

technical collaborations were encouraged, direct foreign investment in any corporate body

was restricted to 40%. In 1991, this policy was changed completely and foreign majority

investment was encouraged in a varietyof industries, import restrictions were removed,

customs tariff was brought down and the doors of the Indian economy were opened for

foreign competition.

Infrastructure development in India:The process of urbanization has gathered considerable momentum in recentyears and this has

put urban infrastructure and services under severe strain

Urban transport:

The major objective of urban transport initiative is to provide efficient and affordable public

transport. A National Urban Transport Policy (NUTP) has been formulated with the objective

of ensuring easily accessible, safe, affordable, quick, comfortable, reliable and sustainable

mobility for all.

Delhi and Kolkata have introduced Metro Rail system in their cities. Delhi Mass

RapidTransit System (MRTS), a joint venture between the Government of India and the


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Govt.ofNational Capital Territory of Delhi, is being implemented by the Delhi Metro Rail

Corporation (DMRC).

Educational institutions:

Development of Education in India has attained new level essentially after the independence

of the country. Development of education in India brought about a transformation and the

concept of education got modified. Literacy rate has increased from around 3% in 1880 to

around 65% in 2001. According to the 2011 Census, the Literacy Rate is recorded to be

around 74%. All levels of education in India, from primary to higher education portray a

challenge. India got well-known educational institutions such as theIITs,IISc,IIMs, NITs,

AIIMS, ISI, JU, BITS, and ISB. The higher education system of India is the third largest in

the world, after China and the United States.

Development of education in India regards that free and compulsory education should be

provided to all children up to the age of 14. Moreover, the 86th Amendment of the Indian

constitution makes education a fundamental right for all children aged 6-14 years.
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Urban Policies:

The government of India has introduced many policies for development of urban areas. Some

of them are as follows:

Urban DevelopmentJNNURM --- Jawaharlal Nehru Urban Renewal Mission Statement: The aim is toencourage

reforms and fast track planned development of identified cities. Focus is to be on efficiency

in urban infrastructure and service delivery mechanisms, community participation, and

accountability of ULBs/ Parastatal agencies towards citizens.

Expected Outcomes of the JNNURM:

On completion of the Mission period, it is expected that ULBs and parastatal agencies will

have achieved the following:

(1) Modern and transparent budgeting, accounting, financial management systems, designed

and adopted for all urban service and governance functions.

(2) City-wide framework for planning and governance will be established and become

operational

(3) All urban residents will be able to obtain access to a basic level of urban services

(4) Financially self-sustaining agencies for urban governance and service delivery will be

established, through reforms to major revenue instruments

(5) Local services and governance will be conducted in a manner that is transparent and

accountable to citizens

(6) E-governance applications will be introduced in core functions of ULBs/Parastatal

resulting in reduced cost and time of service delivery process.
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UIDSSMT--- Urban Infrastructure Development Scheme for Small and Medium Towns.

Introduction:

Urban infrastructure Development Scheme for Small & Medium Towns was launched on

3.12.2005 for improvement in urban infrastructure in towns and cities in a planned manner. It

subsumed the erstwhile schemes of Integrated Development of Small and Medium Towns

(IDSMT) and Accelerated Urban Water Supply Programme (AUWSP).

Coverage:

The scheme will apply to all cities/towns as per 2001 census, excepting cities/towns covered

under Jawaharlal Nehru National Urban Renewal Mission (JNNURM).

TAX FREE MUNICIPAL BONDS:

In 2000-01, the Government inserted a new clause (vii) in Section 10(15) of the Income Tax

Act, 1961, exempting interest income from bonds issued by local authorities. Funds raised

from Tax Free Municipal Bonds are to be used only for capital investments in urban

infrastructure for providing one or more of the following:-

i. Potable Water Supply

ii. Sewerage or Sanitation

iii. Drainage

iv. Solid Waste Management

v. Roads, Bridges and Flyovers; and

vi. Urban Transport (if this is a municipal function under respective state legislation)

Ministry of Urban Development has been designated as the nodal agency for processing

applications for issue of tax free bonds.
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NERUDP--- North Eastern Region Urban Development Programme (NERUDP)

The North Eastern Region Urban Development Programme (NERUDP) Phase-I is being

implemented by the Ministry of Urban Development (MoUD) with the financial assistance

from Asian Development Bank (ADB). It covers capital cities of 5 North Eastern States viz.

Agartala (Tripura), Aizawl (Mizoram), Gangtok (Sikkim), and Kohima (Nagaland). The

project covers priority urban services viz. (i) Water Supply, ( ii) Sewerage and Sanitation, and

(iii) Solid Waste Management. In addition, Project Management and Capacity Development

of the ULBs through institutional and financial reforms have also been included so that the

ULBs become capable of planning and implementing infrastructure projects.

Urban Water Supply and Sanitation Service Level Benchmarks Public Private Partnership National Urban Sanitation Policy

Urban Transport Delhi Metro Airport Express Line, GR, 2010 Bangalore Metro Railway GR, 2011 Bangalore Metro (Opening of Public Carriage for Passengers) Rules, 2011 CMC and AFC System Metro Railway Act 2009 Funding of Buses under JNNURM SUTP-Sustainable Urban Transport Project

Local Self Government NUIS--National Urban Information System RCUES --- Regional Centre for Urban and Environmental Studies SLB on E-Governance ------ Service Level Benchmarks Advisory on State Finance Commissions Centres of Excellences.
http://urbanindia.nic.in/programme/ud/nerudpbody.htmhttp://urbanindia.nic.in/programme/ud/nerudpbody.htmhttp://urbanindia.nic.in/programme/uwss/urban_uwss.htmhttp://urbanindia.nic.in/programme/uwss/urban_uwss.htmhttp://urbanindia.nic.in/programme/uwss/slb/slb.htmhttp://urbanindia.nic.in/programme/uwss/pp_partnership.htmhttp://urbanindia.nic.in/programme/uwss/slb/SubNUSP.htmhttp://urbanindia.nic.in/programme/ut/urban_transport.htmhttp://urbanindia.nic.in/programme/ut/urban_transport.htmhttp://urbanindia.nic.in/programme/ut/DMRC_General_Rules.pdfhttp://urbanindia.nic.in/programme/ut/1BMRC_General_Rules_2011.pdfhttp://urbanindia.nic.in/programme/ut/2BMRC_General_Rules_2011.pdfhttp://urbanindia.nic.in/programme/ut/CMCandAFCSystems.pdfhttp://urbanindia.nic.in/programme/ut/Metro.pdfhttp://jnnurm.nic.in/nurmudweb/FOB/Funding_of_Buses.htmhttp://urbanindia.nic.in/programme/ut/SUTP.htmhttp://urbanindia.nic.in/programme/ut/SUTP.htmhttp://www.sutp.org/http://urbanindia.nic.in/programme/lsg/lsg.htmhttp://urbanindia.nic.in/programme/lsg/lsg.htmhttp://urbanindia.nic.in/programme/lsg/nuis.htmhttp://urbanindia.nic.in/programme/lsg/nuis.htmhttp://urbanindia.nic.in/programme/lsg/nuis/MOU_TCPO.pdfhttp://urbanindia.nic.in/programme/lsg/nuis/MOU_TCPO.pdfhttp://urbanindia.nic.in/programme/lsg/nuis/MOU_TCPO.pdfhttp://urbanindia.nic.in/programme/lsg/RCUES.pdfhttp://jnnurm.nic.in/nurmudweb/e-Gov/SLB.pdfhttp://urbanindia.nic.in/programme/uwss/slb/slb.htmhttp://urbanindia.nic.in/programme/lsg/Advisory_State_Finance.pdfhttp://urbanindia.nic.in/programme/lsg/http://urbanindia.nic.in/programme/lsg/http://urbanindia.nic.in/programme/lsg/Advisory_State_Finance.pdfhttp://urbanindia.nic.in/programme/uwss/slb/slb.htmhttp://jnnurm.nic.in/nurmudweb/e-Gov/SLB.pdfhttp://urbanindia.nic.in/programme/lsg/RCUES.pdfhttp://urbanindia.nic.in/programme/lsg/nuis/MOU_TCPO.pdfhttp://urbanindia.nic.in/programme/lsg/nuis.htmhttp://urbanindia.nic.in/programme/lsg/lsg.htmhttp://www.sutp.org/http://urbanindia.nic.in/programme/ut/SUTP.htmhttp://jnnurm.nic.in/nurmudweb/FOB/Funding_of_Buses.htmhttp://urbanindia.nic.in/programme/ut/Metro.pdfhttp://urbanindia.nic.in/programme/ut/CMCandAFCSystems.pdfhttp://urbanindia.nic.in/programme/ut/2BMRC_General_Rules_2011.pdfhttp://urbanindia.nic.in/programme/ut/1BMRC_General_Rules_2011.pdfhttp://urbanindia.nic.in/programme/ut/DMRC_General_Rules.pdfhttp://urbanindia.nic.in/programme/ut/urban_transport.htmhttp://urbanindia.nic.in/programme/uwss/slb/SubNUSP.htmhttp://urbanindia.nic.in/programme/uwss/pp_partnership.htmhttp://urbanindia.nic.in/programme/uwss/slb/slb.htmhttp://urbanindia.nic.in/programme/uwss/urban_uwss.htmhttp://urbanindia.nic.in/programme/ud/nerudpbody.htm


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Rural is any territory that is not urban.

Advantages of rural sector:

More natural environments

Better social/support network

Less stressful environment

Perceived as safer

Class differences are not as distinctive

Pollution free environment


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Disadvantages of Rural Sector:

Illiteracy:

The main cause of this is lack of proper educational facilities. There are no corporate schools

in villages as in urban areas which provide better educational facilities. The available

facilities provided by government schools are inefficient which made rural sector lagging in

literacy compared to urban sector.

Limited employment opportunities :

The employment opportunities are limited because of lack of industrial growth. The main

occupation in rural sector is agriculture which doesnt provide much employment

opportunities .The other occupations in rural sector also face the same problem.

Lack of proper health facilities:

Rural sector lags a lot in health facilities. There are no proper hospitals with good

infrastructure. Even the health facilities provided by government are not efficient. There are

no proper medical camps organized and no emergency facilities like 108 , etc. which leaves

rural sector lagging behind the urban sector.

Lack of infrastructural facilities :

Limited transport available

Less immediately available social services

Slower social, political progress


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The Rural Development in India is one of the most important factors for the growth of the

Indian economy. India is primarily an agriculture-based country. Agriculture contributes

nearly one-fifth of the gross domestic product in India. In order to increase the growth of

agriculture, the Government has planned several programs pertaining to Rural Development

in India.

The Ministry of Rural Development in India is the apex body for formulating policies,

regulations and acts pertaining to the development of the rural sector. Agriculture,

handicrafts, fisheries, poultry, and diary are the primary contributors to the rural business andeconomy. The introduction of Bharat Nirman, a project set about by the Government of India

in collaboration with the State Governments and the Panchayat Raj Institutions is a major

step towards the improvement of the rural sector. The National Rural Employment Guarantee

Act 2005 was introduced by the Ministry of Rural Development, for improving the living

conditions and its sustenance in the rural sector of India.

Integrated development of rural areas is one of the abiding tasks before the Government of

India. The National Common Minimum Programme (NCMP) of the Central government

reiterates the cardinal importance of villages to the overall development of the country and

commits to work towards development of rural areas, which for various reasons could not

keep pace with urban areas in the past. In conformity with this commitment of the

Government, the Ministry of Rural Development accords foremost priority to development in

rural areas and eradication of poverty and hunger from the face of rural India. A number of

initiatives have been taken in the recent years for creation of social and economic

infrastructure in rural areas to bridge the rural-urban divide as well as to provide food

security and fulfil other basic needs of the rural populace.

The renewed emphasis on rural development is also visible in the commensurate progressive

increase in the allocation of resources for implementation of poverty alleviation programmes.

For the Tenth Five Year Plan, the allocation of funds for rural development programmes has

been enhanced to Rs. 76,774 crore as against Rs. 42,874 crore in Ninth Plan Addressing the

challenge of unemployment in the rural areas of the country is central to the development of


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rural sector for ameliorating the economic condition of the people. Wage employment is

provided in rural areas under

National Rural Employment Guarantee Act (NREGA) and

SampoornaGrameenRozgarYojana (SGRY) whereas self-employment is provided under

Swarnajayanti Gram SwarozgarYojana (SGSY). Besides generating employment these wage

employment schemes also ensure creation of durable assets in rural areas. Initiatives are also

taken by the Ministry to build and upgrade the basic rural infrastructure through various

schemes. Under PradhanMantri Gram SadakYojana (PMGSY) construction and repairing of

rural roads are taken up to ensure rural connectivity. It is expected under the scheme that an

expanded and renovated rural road network will lead to an increase in rural employment

opportunities, better access to regulated and fair market, better access to health, education and

other public services so as to accelerate the pace of economic growth in rural areas. Similarly

basic amenities for housing, drinking water and toilets, etc. are provided under Indira

AwaasYojana (IAY), Accelerated Rural Water Supply Programme (ARWSP) and Total

Sanitation Campaign (TSC) to enhance the welfare and well-being of the vulnerable sections

of rural population. Area Development is encouraged through Watershed Programmes to

check the diminishing productivity of waste land and loss of natural resources.

The aims of ministry of Rural Development are:

Bridging the rural-urban divide. To ensure rapid development, budgetary support

forimplementing the various rural development schemes has increased many fold over the

years.

Guaranteeing wage employment and ensuring food security. This is sought to be achieved

through the National Rural Employment Guarantee Act.

Making rural people the arbiter of their own destiny and to provide for their economic uplift

through promotion of self-employment.

For the development to be in consonance with the people's wishes aspirations,emphasis is

put on participation of people, as also social mobilization of rural poor through Self-Help

Groups and Panchayati Raj Institutions.


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Creating rural infrastructure for better economic opportunities and growth. Connectivity is

provided to all unconnected habitations through PradhanMantriGramSadakYojana (PMGSY)

and village infrastructure is also created through works undertaken under wage employment

schemes.

Providing for dignified living .The Ministry provides shelter, water and clean environment

through rural housing, drinking water and sanitation schemes.

Restoring lost or depleted productivity of the land. This is done through watershed

development programmes and initiating effective land reform measures for providing land to

the landless rural poor.

Rural Development (RD) programmes comprise of following:

Provision of basic infrastructure facilities in the rural areas e.g. schools, health facilities,

roads, drinking water, electrification etc.

Improving agricultural productivity in the rural areas.

Provision of social services like health and education for socio-economic development.

Implementing schemes for the promotion of rural industry, increasing agriculture

productivity, providing rural employment etc.

Assistance to individual families and Self Help Groups (SHG) living below poverty line by

providing productive resources through credit and subsidy.


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PradhanMantri Gram SadakYojana (PMGSY): This is a scheme launched and fully

sponsored by the Central Government of India. The main objective of the scheme is to

connect all the habitations with more than 500 individuals residing there, in the rural areas by

the means of weather-proof paved roads.

Swarnjayanti Gram SwarozgarYojana (SGSY):This was implemented as a total package

with all the characteristics of self-employment such as proper training, development of

infrastructure, planning of activities, financial aid, credit from banks, organizing self-help

groups, and subsidies.

SampoornaGraminRozgarYojana (SGRY): This scheme aims at increasing the food

protection by the means of wage employment in the rural areas which are affected by the

calamities after the appraisal of the state government and the appraisal is accepted by the

Ministry of Agriculture.

Indira AwaasYojana (Rural Housing): This scheme puts emphasis on providing housing

benefits all over the rural areas in the country

Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) : The

primary objective of this act is augmenting wage employment. Its auxiliary objective is

strengthening natural resource management through works that address causes of chronic

poverty like drought, deforestation and soil erosion and so encourage sustainable

development. MGNREGA aims at enhancing livelihood security of households in rural areas

of the country by providing at least one hundred days of guaranteed wage employment in afinancial year to every household whose adult members volunteer to do unskilled manual

work.

Provision of Urban amenities in Rural Areas( PURA):

The objectives of the scheme are to provide livelihood opportunities and urban amenities in

rural areas for bridging rural-urban divide and improving the quality of life. The scheme will


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be implemented under the frame work of Public Private Partnership (PPP) between Gram

Panchayats and Private Sector Partner.

In a country with 600 million farmers, of which 40 percent are willing to quit farming for

various reasons, mass migration from rural to urban areas has increased rapidly. Between

2001 and 2011, nearly 85 million people have migrated from the rural areas to elsewhere.

Mass migration is a phenomenon that is a consequence of various problems in the rural India.

There are umpteen number of reasons for this, namely: health, poverty and hunger, water

and sanitation, women and children, education and employment, environmental problems,resources, industries and corporates, etc.

HEALTH:

In terms of health, India has one of the most neglected health care systems in the world.

Indias ranks among top five countries in the world with most number of HIV positive cases,

present IMR in India is 52 deaths per 1000 live births and MMR is 230 per 100, 000 live

births according to WHO statistics. Though, private and corporate hospitals are blossoming inthe cities, villages in rural India still suffer from lack of proper health care services. Setting

up public health centers (PHC) and community health centers (CHC) have solved a few

problems in the villages. However, lack of proper equipment, operation theatres, paramedics,

technicians and doctors are leaving most of these health centers in shams.

Services like 108 have been introduced in villages in case of emergency, but the patient

will be driven in a van through roads which almost kill the person before reaching the PHC or

the CHC which is mostly located in towns, about an hour drive from any village.

Once we probe deeper into issues related to health, hunger and poverty stand tall in the list

of factors affecting the health of people. India ranks 63rd in poverty Index and its rank in the

standard of living compared to that of 186 countries is 126, which is much lower than many

other developing countries. More than 320 million people go hungry to bed every day. Of

these, many die, many suffer from various diseases. Most of them among the 320 million

hungry people are the ones who live on less than Rs. 20 a day.


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The government calls a family as below poverty line (BPL) family if a person consumes

less than 2100 calories a day. And if it is greater than 2100 calories a day, it is an above

poverty line (APL) family. Poverty line provides conceptual rationalization for looking at the

poor as a category to be taken care of. It does not take into account important aspects of

poverty such as ill health, low educational attainments, geographical isolation, ineffective

access to law, powerlessness in civil society and caste and gender based disadvantages.

Apart from food security, what we also need to look at is water and sanitation problems.

Even today, many people in the rural areas walk 10 kilometers or more to get water from the

nearest drinking water sources. They are infected with various diseases because of sanitation

problems. Depletion in ground water level and water pollution due to prevalence of toxics,

sewage and other pollutants is also a trouble.

EDUCATION:

Education is another aspect one has to concentrate on. The Right To Education (RTE) act

that came into force last year made it compulsory for every child to get free education

between 6 to 14 years of age. The government sees this as an achievement of its own.

However, what matters is the quality of education. Government schools in villages do not

have enough teachers. In some schools, one teacher teaches many subjects irrespective of

whether she knows the subject or not. The poor do not have enough money to send their kids

to the school .On the other hand, the schools in the cities demand high fee, and therefore,

impart better quality of education.

Unemployment is another section one has to explore about. Even the ones who are

educated do not have jobs.

Forty million people in India are unemployed. India has the largest share of illiterate

women in the world. The literacy rate is 65.5% for males and 37.7% for females.

Even environment is one of the most significant areas one has to talk about when it comes

to rural to urban migration. In the name of environmental sustainability, entire rural set-up is

being destroyed.


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AGRICULTURE:

Farming has been major occupation in India. But, in the past decade, 200,000 farmers

deaths were reported. With this came food crisis, food inflation and agrarian crisis as if

they are new schemes introduced in the country. A report on farmer suicides stated that the

past six years recorded the worst number i.e. 17,036 farmer suicides. Crop failure due to the

entry of GM crops, less rainfall or floods or drought, infertile soil, soil erosion and many

other aspects have taken a toll on the lives of people in rural areas.

For Example: GM crops are being distributed in market. Many farmers think they would

produce high yield, but the crop fails and the farmers cannot save some of it for their next

cultivation. Apart from this, allergens, weeds affect crops and weedicides, pesticides are

sprayed which make the pests immune to them, often damaging the crop.

In the name of Special Economic Zones (SEZs), the government has been on a land

grabbing spree, promising to rehabilitate the displaced ones. The land that is grabbed from

the poor people is resource rich and income-generating one .In this whole process, ecosystem

people are converted into ecological refugees .For several years, these people have lived on

those lands, generating income through agriculture, producing food for the country and now,

in the name of development, food is snatched away from them, their homes demolished and

they are asked to leave the place.

What one needs to understand is that, the government in the name of development is

destroying peoples lives and depriving them of basic rights they are entitled to. This

deprivation leads to mass migration and therefore, the migration rate has increased rapidly.

All the above mentioned factors are better off in the cities in terms of facilities, infrastructure

and basic amenities. So, there is migration from rural to urban areas. After all every person

has the right to live a dignified life.


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As more and more people leave villages and farms to live in cities, urban growth results. The

rapid growth of cities like Chicago in the late 19th century and Mumbai a century later can be

attributed largely to rural-urban migration. This kind of growth is especially commonplace

in countries. This growth can also be attributed to new job opportunities.

The rapid urbanization of the worlds populat ion over the twentieth century is described in

the 2005 Revision of the UN World Urbanization Prospects report. The global proportion of

urban population rose dramatically from 13% (220 million) in 1900, to 29% (732 million) in

1950, to 49% (3.2 billion) in 2005. The same report projected that the figure is likely to rise

to 60% (4.9 billion) by 2030. However, French economist Philippe Bocquier, writing in THE

FUTURIST magazine, has calculated that:

"the proportion of the world population living in cities and towns in the year 2030 would be

roughly 50%, substantially less than the 60% forecast by the United Nations (UN), because

the messiness of rapid urbanization is unsustainable.

Both Bocquier and the UN see more people flocking to cities, but Bocquier sees many of

them likely to leave upon discovering that theres no workfor them and no place to live.

Percentage of World Population: Urban vs. Rural.
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According to the UN State of the World Population 2007 report, sometime in the middle of

2007, the majority of people worldwide will be living in towns or cities, for the first time in

history; this is referred to as the arrival of the "Urban Millennium" or the 'tipping point'. In

regard to future trends, it is estimated 93% of urban growth will occur in developing nat ions,

with 80% of urban growth occurring in Asia and Africa.

Urbanization rates vary between countries. The United States and United Kingdom have a far

higher urbanization level than China, India, Swaziland or Niger, but a far slower annual

urbanization rate, since much less of the population is living in a rural area.

Urbanization in the United States never reached the Rocky Mountains in locations suchas Jackson Hole, Wyoming; Telluride, Colorado; Taos, New Mexico; Douglas County,Colorado and Aspen, Colorado. The state ofVermont has also been affected, as has the

coast ofFlorida, theBirmingham-Jefferson County, AL area, the Pacific Northwest and

the barrier islands ofNorth Carolina.

In the United Kingdom, two major examples of new urbanization can be seenin Swindon, Wiltshire andMilton Keynes, Buckinghamshire. These two towns show

some of the quickest growth rates in Europe.
http://en.wikipedia.org/wiki/Asiahttp://en.wikipedia.org/wiki/Africahttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Swazilandhttp://en.wikipedia.org/wiki/Nigerhttp://en.wikipedia.org/wiki/Jackson_Hole,_Wyominghttp://en.wikipedia.org/wiki/Telluride,_Coloradohttp://en.wikipedia.org/wiki/Taos,_New_Mexicohttp://en.wikipedia.org/wiki/Douglas_County,_Coloradohttp://en.wikipedia.org/wiki/Douglas_County,_Coloradohttp://en.wikipedia.org/wiki/Aspen,_Coloradohttp://en.wikipedia.org/wiki/Vermonthttp://en.wikipedia.org/wiki/Floridahttp://en.wikipedia.org/wiki/Birmingham,_Alabamahttp://en.wikipedia.org/wiki/Jefferson_County,_ALhttp://en.wikipedia.org/wiki/Pacific_Northwesthttp://en.wikipedia.org/wiki/North_Carolinahttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Swindonhttp://en.wikipedia.org/wiki/Wiltshirehttp://en.wikipedia.org/wiki/Milton_Keyneshttp://en.wikipedia.org/wiki/Buckinghamshirehttp://en.wikipedia.org/wiki/Buckinghamshirehttp://en.wikipedia.org/wiki/Milton_Keyneshttp://en.wikipedia.org/wiki/Wiltshirehttp://en.wikipedia.org/wiki/Swindonhttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/North_Carolinahttp://en.wikipedia.org/wiki/Pacific_Northwesthttp://en.wikipedia.org/wiki/Jefferson_County,_ALhttp://en.wikipedia.org/wiki/Birmingham,_Alabamahttp://en.wikipedia.org/wiki/Floridahttp://en.wikipedia.org/wiki/Vermonthttp://en.wikipedia.org/wiki/Aspen,_Coloradohttp://en.wikipedia.org/wiki/Douglas_County,_Coloradohttp://en.wikipedia.org/wiki/Douglas_County,_Coloradohttp://en.wikipedia.org/wiki/Douglas_County,_Coloradohttp://en.wikipedia.org/wiki/Taos,_New_Mexicohttp://en.wikipedia.org/wiki/Telluride,_Coloradohttp://en.wikipedia.org/wiki/Jackson_Hole,_Wyominghttp://en.wikipedia.org/wiki/Nigerhttp://en.wikipedia.org/wiki/Swazilandhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Africahttp://en.wikipedia.org/wiki/Asia


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In this section we will present a comparative study on the growth in Rural Sector with

the growth in the Urban Sector. This section is organized as follows.

We will first show the importance of rural-urban linkages for the overall growth of an

economy. Then we will argue about the existence of disparities between these two sectors in

Indian economy followed by the causes for the existence of such disparities. This section

ends with a focus on the extent to which these d isparities are present in Indian Economy.

Importance of Rural-Urban Linkages :

These linkages matter because rural and urbanlivelihoods are interconnected

economically, financially, and socially. From a ruralperspective, most farmers depend on

urban markets to secure their livelihoods. Ruralhouseholds also depend on urban centers or

small towns for various services (e.g., hospitals, banks, and government offices) and for the

provision of various private andpublic goods. Likewise, urban areas are linked to the rural

Forexample; various urban businesses and enterprises depend on rural demand for their

goods and services. They also rely on rural areas for the supply of raw materials. Urban

consumers, on the other hand, benefit from cheap and sustained food supply from rural

areas. Furthermore, many poor urbanhouseholds partly depend on rural activities (e.g.,

farming) for their livelihoods. The rural sector can also act as a buffer from the impact of

macroeconomic shocks on the urban economy by providing labor when the urban economy

flourishes and absorbing labor back in times of economic contraction. Links between the

rural and urban sectors also include flows of information, such as markets and employmentopportunities, as well as flows of people moving between rural and urban centers on a

temporary or permanent basis. Development policies that facilitate these rural-urban

linkages can promote economic growth and poverty reduction.


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Economic theory suggests that resources should move freely so that marginal returns

are equalized between sectors and regions. An increase in agricultural productivity may

precede the growth of urban settlements. But as new innovations take place in the urban

sector, urban labor productivity and wages rise, making migration from the rural to urban

sector attractive. In the meantime, urban development may also improve access to capital,

inducing further mechanization or other innovations relevant to agricultural production. As

a result, agricultural productivity grows, narrowing the productivity and income gaps

between rural and urban areas. When innovations take place again in the urban sector the

gap in productivity and income widens between the two sectors. Rural labor begins to

migrate to the urban sector, and capital moves to ruralareas. A new equilibrium

emerges.This process of moving from disequilibrium to equilibrium due to

technologicalinnovations in both sectors is the major source of economic growth and

development.But many developing countries disrupt this natural economic development

process. Veryoften governments interfere in favor of the urban sector, distorting capital and

labormarkets to favor urban over rural areas, in an attempt to jumpstart development

orleapfrog this process. As a result, overall efficiency is lost, as resources do not flow

totheir free-market locations where they would naturally earn the highest rate of return.As

a consequence, the rural-urban gap increases, and the natural growth that would occurin

rural areas, as well as in urban areas, is circumvented.

This rural-urban divide evolves whengovernments in developing countries give

preference to the urban sector in their publicpolicies. Such preferential practices may include,

for example, price policies, publicinvestment, and welfare transfers that favor the urban over

the rural population. In part this urban bias may also occur because urban centers in

developing countries may be better organized politically and thus have greater influence on

policy makers than therural population. We see the effect of urban bias in the gap between

urban and rural areas in terms of labor productivity, per capita income, and poverty rates. The

greater the gaps among these indicators, the larger is the bias. Naturally, per capita income

and productivity differences have to be adjusted by labor quality and cost of living in the two

sectors.


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Rural-Urban divide in India:

For India, urban bias has usually arisen from the combination of three different but

related policies. The first and most common one relates to policies affecting the terms of

trade (i.e., price policies). Very often agricultural outputs are underpriced, with levels that

are much lower than those that would result from a free market situation or in the

international market. Second, overvalued exchange rates in most developing countries

exacerbate this bias, adversely affecting all traded goods, but frequently agricultural

products in particular. Third, governments tendencies to favor urban centers are reflected in

their spending policies. Like other government policies, public spending endeavors topromote more equitable development and increase efficiency by correcting market failures.

The consequences of urban-biased policies are obvious. First, these policies leadto larger

gaps between rural and urban areas in terms of many development indicators, such as

education, health, nutrition, per capita income, and poverty.

Rural-Urban Dynamics: A Historical Perspective in India:

During the first three Five-Year Plan periods (1951-1966), the newly independent

India emphasized self-reliance and gave priority to rapid industrialization. This

development strategy required a substantial amount of investment in urban industries from

the state at the expense of the agricultural sector. The first Five-Year Plan (1951-56)

allocated 31 percent of thebudget to the agricultural sector.Rural outlays, however,

decreased thereafter to 20-25 percent as India formally adoptedthe socialist strategy of

heavy industrialization during the Second Five Year Plan(1956-61). Under this strategy,

agricultural policy was infused with a pro-urban bias. Inorder to provide cheap food and

cheap basic inputs for industrial development, farmprices were kept artificially low and

agricultural exports were curtailed throughquantitative restrictions and an overvalued

exchange rate. Moreover, basic food productswere made available at subsidized prices in

urban areas and food deficit regions. Thegovernment concerned itself with controlling the

price of foodgrains because the relative price of foodgrains was thought to be an important


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determinant of savings and investmentrates. [It was thought that high food grain prices

would discourage investment in the industrial sector as theywould increase pressure to raise

wages, which would in turn increase labor costs and consequently decrease profits ].

An important element of Indias food policy and food security system is thePublic

Distribution System (PDS), which started as a rationing system in the 1940s. ThePDS aimed

at protecting low-income groups from increases in retail prices bypurchasing grain from

farmers (at the support price) and selling it to consumers atsubsidized prices. But the urban

sector profited most from the PDS.

After the mid-1960s, Indias government began to prioritize the development ofthe

agricultural sector. The government adopted an agricultural strategy aimed atimprovingproductivity in the agricultural sector. Under thisstrategy, various agricultural price support

mechanisms and input subsidies wereintroduced, which helped the success of Indias Green

Revolution.Emphasis was alsogiven to the development of small-scale industries in rural

areas. Various measures wereadopted, including subsidized loans to promote the

development of rural industries.Beginning in 1991, India adopted a series of sweeping

macroeconomic andstructural reforms in non-agricultural sectors including industry,

exchange rate, foreigntrade, and investments. Although the reforms were implemented in the

nonfarm sector,they affected agriculture in at least two important ways. First, the reforms

adoptedbetween 1991 and 1993 resulted in rapid economic growth and therefore to a rise in

percapita income. These improvements had a significant impact on food demand. Higher per

capita incomeswhich grew at 4.5 per cent per annum in the early 1990s compared to 3.6

per cent in the 1980s led to the diversification of food demand for non-food grain crops

such as fruits and vegetables, as well as meat, poultry, and dairy products from a rising

middle class. Second, the decrease in industrial protection significantly enhanced the

incentive framework for the sector, as the domestic Terms of Trade (TOT) between

agricultural and industrial prices improved during the 1990s. The TOT rose from 0.9 to 1.2

between 1991 and 2000.The improved TOT for agriculture resulted in an increase in the

profitability of the primary sector relative to industry. As a result, private investments in

agriculture rose substantially and are now double the amount invested by the public sector.

These private investments were increasingly directed to horticulture, and poultry, fish, milk,

and egg production, in response to booming consumer demand for these high-value


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agricultural products. These changes in demand led to a remarkable growth in the production

of these high-value commodities during the 1990s relative to the previous decade.

Despite these improvements, government fiscal and investment policy is still oriented

towards the urban areas. New investments under the Structural Adjustment Policies (SAPs)

privileged mostly urban areas as well as more prosperous regions. Gujarat and Maharashtra,

for example, received 37 per cent of industrial investments between 1991 and 1994 and

within these two states a large share of the investment was concentrated near the large city of

Mumbai. Moreover, the focus of government policies, subsidies, and fiscal incentives has

shifted away from agriculture towards industry under the SAPs. For example, government

subsidies are directed mainly towards high-skilled industries such as the software sector.

These industries also benefit from exemptions from custom duties and corporate income

taxes.

Likewise, government subsidies in the health sector tend to favour urban areas while

the provision of basic health services in rural areas is still lacking. Overall expenditures on

social services have declined under the SAPs in relative terms. Even more disturbingly,

subsidies have been redirected away from rural areas towards urban industrial centres. While

the rural sector is home to about 65 per cent of the Indian population, only 20 per cent of the

health subsidies are directed towards this sector, for example. Political intervention and

economic forces, as well as government policies, have been identified as the sources of the

skewed distribution of health-care services in favour of the urban sector. A similar disparity

exists between urban and rural areas in terms of literacy. Typically urban populations have

better access to schools and also enjoy better quality education. As a result of this urban bias

in policies, an income gap also exists between rural and urban residents in India, even after

adjusting for cost-of-living differences.

In 1951, the ratio of urban to rural per capitamean income was 1.4, and gradually

increased to 1.6-1.7 during 1954-55. It thendeclined to a historic low of 1.3-1.4 during

1966-69 due to the adoption of newtechnologies and greater agricultural production during

this initial stage of the GreenRevolution. But the ratio has stayed at 1.5-1.6 since then.


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Empirical Evidences of Rural-Urban dsiparities in INDIA :

GDP:

The contribution of rural urban sectors in the GDP of India in the Post-Independent era

evaluated at constant Prices of 1999-00 are as shown :

GDP of India showing the Rural and Urban Contributions:

YearGDP (at 99-00prices)

(inCroresRs.)Rural Contribution Urban Contribution

1950-51 224097 147058 77039

1960-61 328566 208393 120173

1970-71 473592 277714 195878

1980-81 678033 365299 312734

1990-91 1083572 530886 552686

2000-01 1864300 772563 1091737

2008-09 3339375 1118028 2221347

Note: GDP is measured at constant prices of 1999-2000.


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Graph showing the Rural and Urban contributions to GDP of India :

The increasing share of Urban Sector Contribution to GDP and the decreasing

contribution of Rural Sector :

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

1950-51 60-61 70-71 80-81 90-91 2000-01 2008-09

GDP

Rural

Urban

0

10

20

30

40

50

60

70

1950-51 60-61 70-71 80-81 90-91 2000-01 2008-09

% Rural

%Urban


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Poverty Levels :

Poverty is widespread in India, with the nation estimated to have a third of the

world's poor. According to a 2005 World Bankestimate, 41.6% of the total Indian

population falls below the international poverty line of US$ 1.25 a day (PPP, in nominal

terms 21.6 a day in urban areas and 14.3 in rural areas). According to a new UN

Millennium Development Goals Report, as many as 320 million people in India and China

are expected to come out of extreme poverty in the next four years, while India's poverty

rate is projected to drop to 22% in 2015. The report also indicates that in Southern Asia,

however, only India, where the poverty rate is projected to fall from 51% in 1990 to about

22% in 2015, is on track to cut poverty in half by the 2015 target date

The Rural-Urban disparities are clearly reflected in this aspect also. But the positive

sign is thet the disparity in terms of Poverty seems to be coming down.

Per-Capita Income:
http://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/World_Bankhttp://en.wikipedia.org/wiki/International_poverty_linehttp://en.wikipedia.org/wiki/Purchasing_power_parityhttp://en.wikipedia.org/wiki/Purchasing_power_parityhttp://en.wikipedia.org/wiki/International_poverty_linehttp://en.wikipedia.org/wiki/World_Bankhttp://en.wikipedia.org/wiki/India


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The NSSO survey on household consumer Expenditure assumes heightened

significance as India relies on it to measure income growth across the country, in the

absence of an official income survey. The survey brings to light, the prevalence of the deep

urban-rural divide in terms of consumption spending (and hence, income).

NSSO survey brings Indias deep urban-rural divide into focus :

The survey estimated average MPCE in 2009-10 to be INR1054/USD23.71 and

INR1984/USD44.63 in rural India and urban India respectively implying per capita

expenditure level of the urban population was on an average 88% higher than the rural

counterpart.

Urban-rural disparity is accentuated at the state level:

Ironically, the flip side of Maharashtras successful urban story is that the state also had the

greatest urban-rural divide with urban MPCE being 110% of rural MPCE. Other examples of


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states where urban MPCE was double that of rural MPCE, are Chhattisgarh, Karnataka and

West Bengal. West Bengal is an example of a state where on the one hand both rural

(INR952/USD21.42) and urban MPCE (INR1965/USD44.21) were below the corresponding

national averages and on the other, the urban-rural disparity (106%) was one of the greatest.

The state of Punjab showed a very balanced pattern of urban growth across the size

categories of towns and cities in the state. As the development process in the state is rooted in

agricultural sector in the wake of green revolution unlike other states, the cities benefited as

much as the small and medium towns as a result of expansion of agro based industries and

marketing of agricultural products. The rural-urban trade-off is, therefore, much balanced in

Punjab compared with other states in the country

An overview of the trend based on the data on per capita consumption expenditure

from NSS at current prices gives a similar trend. The growth rates in both have picked up

slowly during seventies and eighties (Graph). The rise, however, has been particularly very

steep in urban expenditures in the nineties and subsequent years. It may be mentioned that

figures up to the year 2004-05 are based on the large sample data of NSS while that for the

subsequent years - shown in the Graph in dotted lines - are from the small sample. The trend

of growing inequality however emerges clearly from both the data sets.


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Graph All-India Per Capita Consumption Expenditure (Rs.)

1972-73 to 2007-08

References

Central Statistical Organisation. 2007. National Accounts StatisticsSources and Methods, Government

of India, New Delh i.

Deaton, A. 2005. "Measuring Poverty in a Growing World (or Measuring Growth in Poor Wor ld)." The

Review of Economics and Statistics. MIT Press. 87(1). pp. 1-19,04.


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All-India Average Per Capita Income

1970-70 to 2004-2005

Some Positive Points from the Survey:

Rising rural MPCE in absolute terms is a reflection of Indias economicgrowth:

It would however, not be correct to state that rural India has not benefited at all from the

nations economic progress. During the latest survey (between 2004-05 and 2009-10) the

Indian economy grew at an average annual rate of above 8%. Coinciding with such

economic growth, rural MPCE rose 64.5% in absolute terms during the same period, only

marginally trailing the 68% rise in urban MPCE. A section of the experts opine that in case

of developing countries like India, a growing urban-rural divide is, to a


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greatextent,inevitable and should not be a major cause for concern as long as rural income

levels also improve in absolute terms.

Composition of the consumer expenditure basket :Decline in share of food and rise in the share of non-food items like durables in consumption

portfolio indicates economic progress. The survey also concludes that consumers spent more

on non-food items such as durables and services. Share of durables for example, rose from

3% to 5% for the rural population and from 3% to 7% in urban areas since 1987-88. The 10

percentage point rise in expenditure of non-food items byte rural population since 1987-88

can be viewed as another indication of economic growth benefiting rural India.

Literacy:

Similar trends can be seen in the Literacy Rates in the Rural and Urban areas.Because of the

availability of better facilities for Education, the urban areas are having the better literacy

rates than the rural areas. But, the gap seems to converge which is a positive sign for the

rural sector.


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How to Promote Better Rural-Urban Linkages :

In this section, we see some measures to be adopted by the government to curb these

disparities and to promote better rural-urban linkages.

India historically followed development strategies favouring the urban sector. However, in

the past two decades, the terms of trade for agriculture have improved as part of the reform

process, and have somewhat countered the previous urban b ias.

However, various types of urban bias still prevail, particularly in terms of

governmentinvestment priorities, which disproportionately favour urban areas in both

countries. To some extent, this impedes the efficient allocation of factors, therefore

contributing to the unequal development between the rural and urban sectors.

Increasing public investment in rural areas is therefore crucial in order to achieve greater

poverty reduction. Adequate provision of infrastructure such as transportationand

communication, for example, is essential for achieving better rural-urban linkages asthis

would facilitate mobility and therefore access to markets, employment, and servicesfor the

rural population. In addition, promoting nonfarm employment, rural-to-urbanmigration, and

the development of rural towns can also lead to much stronger rural/urbanlinks and greater

synergies between the two sectors.

We recommend the following policies to help correct urban bias, strengthen the links

between rural and urban sectors, and promote growth and poverty reduction.

Increase Public Spending in Rural Areas:Past studies have consistently shown that public investment in the rural sector promotes

rural growth in India. Growths in the rural sector can also benefit urban areas in many ways.

Growth in the rural economy also generates fiscal and financial outflows from rural to urban

areas(taxes from rural-based industries for example).In a recent study, Fan and Chan-Kang

(2005) estimated the returns of rural and urban road development on rural and urban growth

as well as on rural and urban poverty reduction. The study finds that benefit/cost ratios for

rural roads are about four times larger than for urban roads when the benefits are measured


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as a contribution to nationalGDP. Even in terms of urban GDP, these ratios are much

greater for rural roads than forurban roads.

In another study, RoopaPurushottam found out that

A 10% increase in:

Urban expenditure is associated with a 3.9% increase in rural household income per head;and

Public investment in agriculture is associated with a 1.1% increase in rural householdincome per head.

Rural economic growth consequently generates employment, income, and growth to the rest

of the economy. Therefore, India needs to continue to increase spending in rural areas in

order to promote growth and reduce poverty in both urban and rural areas.

Develop the Rural Nonfarm Sector:The rural nonfarm sector is important for the growth of the rural economy as well as for

poverty reduction. It also provides opportunities for livelihood diversification for poor rural

households.

Roopa Purushottam found out that

A 10% increase in rural nonfarm employment translates into a 1.7% increase in ruralhousehold incomes, at a 98% significance level.

Related work shows that a 10% increase in urban expenditure could lead to a 4.8%increase in rural nonfarm employment

In India, Dev. (1986) indicated the bulk of the poor are landless or live on small farms with

inadequate land for their own food needs. Consequently they depend heavily on earnings

from supplying unskilled wage labour to other farms or to nonfarm enterprises. Public

investment in physical infrastructure (road, transportation, communication) as well as in

education and health is crucial for the small farms to establish their own business and to

access nonfarm jobs in the rural nonfarm sector.


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Develop Small R ural Towns:The proximity and accessibility to small rural towns and urban centres by rural residents is

crucial for the rural economy, especially for the development of the rural nonfarm sector

and for livelihood diversification (Bhalla 1997; Shukla 1992; Jayaraj1994; Eapen 1995).

These linkages are well discussed in Wandschneider (2004), who studied the impact of

small rural towns in local economic development in Madhya Pradesh and Orissa, two poor

states of India. The author found that small rural towns and nearby villages are strongly

linked through consumption, production, employment, and financial linkages, and various

types of economic and social service provision. While villages benefit strongly from small

towns through these linkages, the reverse is also true. Small towns and urban centres depend

and benefit from labour, inputs, and markets of nearby villages. The development of small

rural towns is also associated with better infrastructure (in terms of quantity and quality),

which in turn will facilitate access to markets and lower transportation costs. Moreover, by

absorbing agricultural labour surplus, small rural town development in India helps to

alleviate the pressure on bigger cities, while contributing to the growth of the national

economy.

Increasing private investment:A section of the experts have blamed the plight of the agricultural sector and inefficacy of

the rural social safety net programs as the chief factors responsible for widening of the

urban-rural divide. Decline in per capita food production, poor state of rural infrastructure

such as power, roads etc. and underperformance of social safety net programs like rural job

schemes and public distribution systems have restricted rural income growth. The positive

impact of Indias thrust on economic growth has so far been largely limited to the urban

population and is yet to widely percolate to the rural population. Such a premise implies the

need for the government to adopt effective strategies tailor-made for the rural population.

Encouraging private sector participation, unilaterally and via public-private partnerships

(PPP), to create inclusive and innovative business models to cater to the needs of the rural

population is one such strategy being experimented and implemented successfully in other

developing countries.


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Conclusion

Like many developing countries, India followed development strategies biased in

favour of the urban sector over the last several decades. These development schemes haveled to overall efficiency losses due to misallocation of resources among rural and urban

sectors. It also led to large income gaps between rural and urban areas. India has corrected

the rural-urban divide to some extent as part of reform processes. But the bias still exists.

Other studies also support the idea presented here that correcting this imbalance will not

only contribute to higher rural growth, but also secure future urban growth. More important,

correcting the urban bias will lead to larger reductions in poverty as well as more balanced

growth across sectors and regions. Correcting a governments bias towards investment in

urban areas is one of the most important policies to pursue. In particular, more investment

in education, infrastructure, and agricultural research and development has proved to be

both pro-growth and pro-poor. Facilitating the mobility of productive factors, such as

labour, is another means to correct any bias. In particular, providing health, education,

housing, and pension services for rural migrants in urban areas is essential to promoting

human capital movement from rural to urban areas or to the industrial sector. Promoting the

development of the rural non-farm economy and rural small towns is another effective way

to correct rural/urban bias and to create significant synergies between the two sectors.

Today we have enough money, food, resources and technology to rid the world of

hunger and poverty. It is just that some key people have to make up their minds. The

Planning commission of India must therefore work efficiently to meet the needs of both the

urban & rural population.

As a parting note, we can say that though urban life is advantageous, rural life does

have its merits. With proper development of infrastructure even rural areas can become as

good as urban areas.


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Urban Growth by City and Town Size in Indiaby Ram B. Bhagat PhD Rural and Urban Dynamics and Poverty: Evidence from China and Indiaby

Shenggen Fan, Connie Chan-Kang, and Anit Mukherjee.

Is Urban Growth Good For Rural India by Roopa Purushottaman Rural Urban distribution of Population by Dr.C.Chandramouli. Urbanization, inequality and economic growth: evidence from Indian states by Massimiliano

Cali

NSSO Household Expenditure Survey 66th Round www.wikipedia.org www.rural.nic.in www.mhupa.gov.in www.india.gov.in www.urbanindia.nic.in www.re-emergingworld.com
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rural vs urban growth

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