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Widening urban-rural divide, and need of economy’s structural transformation

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  • Published
    21st Jun, 2022


There are some serious concerns about growing inequality or disparity between rural and urban areas in India.

Disparities in income distribution, consumption, and quality of life between the rural and urban area are known as the rural-urban divide. The rural-urban disparity, as measured by the ratio of urban-to-rural expenditure, has gone up from 1.63 in 1993-’94 to 2.42 in 2017-’18.


Role of rural economy

Rural areas

  • As per the last census (2011) 68.84 percent of India’s population (833m) live in 640867 villages.
  • All the areas not covered by Notified Area Council (NAC), Municipal Corporation, Cantonment Area are basically rural area.

The rural-urban divide

There are glaring disparities in income distribution, consumption and quality of life between rural and urban India.

  • Income disparity: The rural-urban divide in India is so prominent that the income of an average person in the rural parts of India is less than even half of the urban counterpart.
  • Lack of opportunities: There is a lack of livelihood opportunities, modern amenities and services, necessary for decent living in rural areas.
  • Insufficient public healthcare infrastructure. A majority of health infrastructure is in the private sector, which is limited to the middle classes in urban India. Rural areas are catered by government-run dispensaries which lack infrastructure and medicines.
  • Exclusion: A majority of rural society remains excluded from India’s journey of development.
  • Lack of infrastructure: There is improper and inadequate provision of infrastructure when compared to urban areas. 
  • Decline in profitability and productivity within agriculture: The decline of India’s agriculture and the rise of the urban-centric service-led economic growth has led to the widening of rural-urban disparities.

What are the challenges?

  • Social customs: In closed rural societies, social institutions such as caste system, joint family system and various social customs play a major role in the day-to-day life of an individual.
    • For example, the rigid caste system does not allow a low caste person to give up his traditional work. While in urban areas, the emphasis is on individual’s merit and qualification.
  • Pushing factor: The rural area characterised by lower wages, a small size of landholdings, lack of opportunities and amenities have been a pushing factor for migration from rural area to urban area.
  • Multiple issues: Although there is no dearth of schemes for rural development, the benefits of these schemes are not reaching the target population mainly due to
    • corruption in the disbursal of funds
    • non-transparency in financial transactions
    • wrong identification of the beneficiaries
    • lack of involvement of Gram Panchayats in planning and implementation
    • lack of political and administrative accountability

What measures are required?

  • Reforms in farm sector: To address the longstanding economic problems of agriculture, the farm sector needs reform to raise productivity, enhance farmers’ income, built market infrastructure and address declining soil fertility.
  • A concomitant industrial policy that takes into account the structural relationship between agriculture-industry that also provides urban infrastructure and social sector support, particularly investments in education and health.
  • Policies needs to be crafted to increase productivity simultaneously diversify the workforce to accelerate the structural transformation of the Indian economy.
  • Equitable access to quality education and healthcare. 

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