By Prof. Raj Kishore Panda*in Bhubaneswar, May 30, 2021: Over the last three months India is fighting with second wave of the corona virus which has been found to be more infectious with higher fatality rate as compared to its first wave. More so, unlike the first wave which was found largely concentrated in big cities and metropolis and villages remained mostly unaffected, the second wave has been found fast spreading into rural areas raising worries and concerns.

However, realizing that there was heavy economic fallout owing to the imposition of national lockdown during the first wave of the pandemic, the central government this time has adopted a changed strategy to fight against the disease. To keep a balance between saving the lives and protecting livelihoods it has kept the economy open and running, leaving for the state governments to impose regional lock down/containment measures as and when required.

Perhaps this strategy has paid dividends. Now there are reports that the economy has been showing signs of returning to the path of quick recovery – a ‘V’ shaped one as experts call it. Estimating the extent of recovery of the economy for 2020-21 it is reported that the GDP growth for full year 2020-21 will contract by around 7 percent which is much less than the record contraction of 23.9 percent witnessed in the first quarter.

On the issue of achieving faster recovery with high and sustainable growth of the economy there is now ongoing debate among the economists about the development strategy to be followed by the country. Looking at the gradual shift in the structure of the Indian economy and particularly the rural economy over time strong opinion has emerged among some economists for prioritizing our development strategy in favour of the rural economy.

Analyzing time series data these economists argue that over the years the rural economy has witnessed structural transformation in which the importance of agriculture including allied activities contributing to rural output and employment has declined and that of non-farm activities have gone up. This has remained largely un-responded by the policy makers and our development strategies so far continue to remain urban biased.

Recent study of NITI Aayog (2017) reveals that over the period from 1970-71 to 2011-12 the share of agriculture in the rural output which was 72.4 percent in 1970-71 has nearly halved to 39.2 percent in 2012 and during this period the share of non-farm activities ( including services)has gone up from 27.6 percent to 60.8 percent. In the context of employment the share of farm sector which was 85.5 percent in 1970-71 has fallen to 64.1 percent and that of non-farm employment has gone up from 14.5 to 34.8 percent.

Surprisingly, contrary to common expectation, last year in the face of the adversities the agriculture sector has shown a positive growth. It is reported that the agriculture sector has exhibited a positive growth of 4.3 percent in 2019-20 while all other sectors during this year have shown negative growth. Besides, the recent advance estimates worked out by the government of India also add testimony to the encouraging performance of rural economy in coming year as it forecasts a positive growth of 3 percent for the agriculture sector in the FY 2020-21 while the non-agricultural sectors like that of manufacturing, mining and quarrying and services are projected for a negative growth during the year.

India has never faced such an unprecedented crisis as the present Covid-19 pandemic before. But the present crisis has given us the opportunity to revisit the development strategy. As per the United Nations’ population projection (2012), India will continue to be predominantly rural with about 50 percent of its population residing in villages by 2050. Hence the misplaced economic policies so far followed in the country leading to exclusion of a majority of rural society from taking part in India’s development journey need to be rectified at this hour.

Decline in the share of agriculture in rural output should not be seen as negative indicator towards achieving higher economic growth. As news report shows in the last five years the potential of rural India is seen in the number of agri-startups coming up in the country raising nearly $130 million. In the changed rural economy scenario let the rural India be the growth engine to reduce rural-urban income gap and lead the country to high and sustainable growth path.

Formerly Professor of Economics, Utkal University and Director, Nabakrushna Choudhury Centre for Development Studies, Odisha, Bhubabneswar.

Leave a Reply

1 Comment on "Rural Revitalization Key to Sustainable Economic Growth of India"

avatar
  Subscribe  
newest oldest most voted
Notify of
Ashis Mahapatra
Guest

The matrix of farm sector Vs non-firm sector and rural transformation with ref to agriculture nicely picturised by Prof Panda. I feel such write ups need to be published in local Odia nes papers likecDharitri & The Samaj for reaching the subject to people who are not conversant with magazine reading/ digital media.