The current status of India’s rural economy and the importance of livelihood creation in rural areas.
The Gandhian idea of Poorna Swaraj states that people in villages in India have to have the social and economic freedom to become fully independent. India is primarily a rural economy, with 70 percent of its population residing in rural areas. While India is paving the way for rapid urbanization, rural India to date remains the prime contributor to India’s Gross Domestic Product (GDP) growth with a contribution of 46 percent to National Income. Even in 2020, when the Indian economy registered its worst-ever contraction since Independence, the farm sector grew by 3.6%. Rural India has emerged as the savior of the crumbling Indian economy.
However, this rosy picture is not the actual state of the rural economy in India. India’s rural economy is agrarian in nature. Around two-thirds of the country’s population is dependent on agriculture for their livelihood, and one-third of rural India is still below the poverty line. From its inception, the government of India has been focusing on rural development, but the economy has not quite flourished over time. Given that 70% of Indians living in rural areas generate only 46% of national income, the other 30% of urban beings contribute to more than 50% of the country’s GDP. This shows that most of India’s rural society was unable to partake in the country’s development story, which led to a sense of deprivation and dissatisfaction among the rural masses. However, there has been a transformation in the rural economy from mainly agrarian to more non-farm activities for the last few decades. Rural economies are not still dominated by agriculture, as the common perception would indicate. Approximately two-thirds of rural income comes from non-agricultural activities.
Nearly all of the agricultural production of the country come from rural, but the sector is overburdened. More than 50% of the people depend on agriculture, generating only 21% of the national income. So, this over-dependence on agriculture is one of the major problems of the rural economy. The manufacturing sector, on the other hand, doubled and exceeded the manufacturing production in urban areas. Nevertheless, the increase in the manufacturing sector’s production in rural areas did not actually increase employment in the sector. The increase in population has helped the rural construction sector. Rural employment has risen at a much faster rate in relatively low-paid construction activities. Another important phenomenon in the rural economy is the migration of rural youth to urban areas for employment.
Most recently, due to the pandemic, rural India has positioned itself to lead the demand resurgence. This has been possible due to technology adaptation and increased disposable income of the rural population. However, there still are several whitespaces for economic innovation.
The World Bank reports that global poverty has steadily declined over the last 25 years. Despite this, India faces a critical challenge in rural poverty that affects millions of people. Rural Indian families have a difficult time breaking out of poverty, mainly because agriculture incomes are still largely dependent on the monsoon season. So, there is a need to create alternative livelihood provisions for these people. The most significant government initiative of the current century to create employment in rural India was the introduction of the Mahatma Gandhi National Rural Employment Guaranty Scheme in 2005. There is no denying that this program has been quite successful till now. In June 2011, the National Rural Livelihoods Mission was launched to create institutional platforms for the rural poor to increase household incomes through livelihood support and financial services. However, the migrant crisis seen during the nationwide lockdown after the covid outbreak was an eye-opener. The migrant crisis is inherent because of the lack of livelihood opportunities in rural areas.
A significant reason why livelihood opportunities need to be improved for individuals is due to the current state of the endowment of the factors of production, the distribution of productive assets, and the present abilities that are grossly out of alignment. Economic development is not sufficiently developed to create employment opportunities, mainly for individuals who aspire to obtain them. A great deal of hardship falls on individuals living in rural areas due to poverty, illiteracy, unemployment, and malnutrition. Natural catastrophes like droughts, floods, and earthquakes can also affect them, needing assistance to recover. Obtaining lucrative employment opportunities is a crucial step toward alleviating these problems.
The state must implement the measures necessary to ensure that individuals have chances to earn a living. Implementing new policies and programs for rural development is vital to ensure economic and social sustainability. Additionally, the policies and programs must be designed in a manner that facilitates innovative thinking.
