Sunday, July 31, 2005

Myths about rural India

Towards the end of his essay in Nature supplement on the state of biosciences in India, Inder Verma says, "More than 700 million people, nearly 70% of the population, live in rural areas but contribute only 20% of the GDP".

This seems to be a common myth. Sure, agriculture contributes about 20% to India's economy. However, rural India has much more than just agriculture, doesn't it? Yes, probably, but how much more? And, what are the components of 'much more than just agriculture'?

In a recent Rediff piece titled India is not just about agriculture, Omkar Goswami and Rama Bijapurkar present some solid evidence to answer these and other questions about rural (and urban) India. A key excerpt from their piece:

Since April last year, we have constructed what is probably the most comprehensive picture of India's rural economy -- a digitised database of economic, demographic, consumption data that has been extracted and harmonised across various sources, goes back over two decades, down to 530 districts.

All the evidence that we have collected, processed and analysed tells us that rural is much more than agriculture.

This is true not just for the present, but has been so for quite some time. In 1993-94, the Central Statistical Organisation conducted its last rural-urban classification of India's net domestic product (NDP, which is GDP minus depreciation).

It showed that rural India accounted for 54 per cent of the country's NDP, while agriculture contributed to 31 per cent of India's GDP. So, even if one were to account for depreciation, the rural economy of 1993-94 was quite a bit more than just agriculture, forestry and fishing.

The share of rural economy is more or less the same seven years later. Our analysis shows that in 2000-01, out of India's NDP of Rs 1,062,400 crore (Rs 10,624 billion) at constant 1993-94 prices, the share of rural India was 52 per cent.


  1. Anonymous said...

    Not sure if you noticed it, but I have linked to this post of yours while linking to the entire set of those articles on nature.

  2. Abi said...

    Thanks, Neelakantan, for the link. I too linked to the whole set of articles in an earlier post.