rural vs urban growth
TRANSCRIPT
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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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i
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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ii
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.
http://urbanindia.nic.in/programme/ud/urban_devel.htmhttp://urbanindia.nic.in/programme/ud/urban_devel.htmhttp://jnnurm.nic.in/http://jnnurm.nic.in/http://jnnurm.nic.in/http://urbanindia.nic.in/programme/ud/urban_devel.htm -
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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.
http://en.wikipedia.org/wiki/Chicagohttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Chicago -
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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
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