Is Urbanization good for Villagers / Rural Economy?

One should avoid following the straight jacketed approach followed by our smartest of all political leaders to comment on such issues. A 'Neta' [ Perhaps we need to change the meaning of this word in Hindi dictionaries now] vouching for rural votes will say 'No' and someone vouching for urban votes will say 'Yes'. An interesting and intriguing incident has been the down fall of BJP government, a government riding high on 'India Shinning' campaign. The down fall has been associated with observations that BJP was concentrated on Urban India only. Such was the depth of the analysis that the fact that the campaign was in worded in English was pointed towards BJP's urban India approach. Ahem!!!!



The Congress therefore followed their slogan as 'Aam-Aadmi ki sarkar', worded in Hindi and worded for rural people. They made their huge plans {I have deliberately used the word 'Plans'} to associate with the rural people. Such developments may lead to conclude that "Yes- urbanization has hindered the growth of rural people". Infact, I have also been to an extent convinced with this philosophy though I have thought that why concentrate on one side, why cannot both sides develop in parallel. However, an interesting point that I noticed in my recent read at India Knowledge@Wharton leads to a series of interesting facts based on pure data:

1. A study of consumption in last 26 years reveals that an increase in Urban Household consumption of Rs100 leads to an increase of Rs39 in the rural household income. The driver of such increase is non-farm sector of rural economy such as manufacturing, construction and trade, hotels and restaurants.

2. During the last decade, the rural economy is estimated to have grown by 7.3% as compared to 5.4% of urban economy.

3. The rural economy is nearly as big as the urban. In 2000, the rural economy accounted for 49% of the India's GDP.

4. Share of agriculture in Rural economy has dropped from 72% in 1970s to 64% in 1980s to 51% in 2000

5. The rural-urban migration has fallen from 6.5% in 1981 to 2.8% in 2001.


I love data. The indications pointed by each point noted above leads to refute a number of myths such as rural people are suffering due to urbanization; there is an India – C waiting to shine and many more- an encouraging realization !!!



The major reason for this change, as noted by eminent researcher and economists is the growing and strengthening integration of the rural economy with the urban economy. Granted that logistics and supply chain for the route is no less than a shame for the progress we hope to achieve, yet the hope does exist. Perhaps an integration of the rural supply chains with the urban ones, steered by the boom in organized retail would provide the impetus to pass on the benefits lower down the pyramid. Just one problem though – Who will help Mayawati understand on the recent Reliance Fresh issues? Someone ready to bell the cat? CAT????? !!!