August , 2021
Rural India needs new approach to drive growth
11:26 am

Tushar K. Mahanti


With growth comes transformation, both economic and social. The growing urbanisation and widespread access to information generate new aspirations across all sections of society and when they are not met, they create a sense of antagonism among the disadvantaged. In this highly disruptive phase of India’s economic phase, the government must therefore ensure that the benefits of economic growth reach every single citizen of India. If the fruits of economic growth do not percolate down to economically backward millions, the efforts to build a prosperous India cannot be realised.


Economic policies till date have largely excluded a majority of rural society from being a partner of the growth process resulting in a sense of deprivation and dissatisfaction among a huge percentage of people in the Indian villages.


And this is now a widely accepted fact that India’s high GDP growth of the new millennium had left behind the lower strata of the society. In fact, in a newspaper column on the occasion of 30 years of economic liberalisation, the richest Indian Mukesh Ambani has said that “So far economic reforms have benefited Indians unevenly. The disparity is neither acceptable nor sustainable. Therefore, the Indian model of development should focus on creating wealth for the people at the bottom of the economic pyramid. Nations become prosperous when they expand their markets and ascend steadily on the value chain, inclusively”.


Thus, while the number of billionaires is rising, the number of empty stomachs too is increasing. According to Forbes World’s Billionaires list 2021, the number of Indian billionaires, at 140, is the third highest in the world behind the US and China. The number rose to 140 this year from 102 in 2020 despite the Covid-19 pandemic shattering the economy and multiplying unemployment. 

Poverty in rural India is widespread with the average monthly earning of an average farm household Rs 6,426 at the base year 2015-16 according to the Committee on Doubling of Farmers’ Income. The disparity in per capita rural and urban income has remained persistently high, with an average urban worker earning over eight times an average agricultural worker according to NITI Aayog discussion paper Changing Structure of Rural Economy of India, Implications for Employment and Growth.


Further as shown in the NITI Aayog report, even before the pandemic, about 52% of all agricultural households in India were in debt with average outstanding loan amount of Rs 47,000 against the average monthly income of Rs. 6,426 per agricultural household.


With two-thirds of India’s billion-plus people living in villages, a head-start to energise the rural economy will have a multiplier effect on investment, consumption, government expenditure and exports. The potential of rural India can be gauged by the fact that agricultural start-ups have raised nearly $130 million in about 70 deals in the past five years to 2018, according to a news report.

What is rural development?


But to energise the rural economy one must have a clear idea about what rural development actually stands for. Rural development is the process of improving the quality of life and economic well-being of people living in rural areas. According to the 2011 Census 68.84% of the population lives in villages. The backwardness of the rural sector would be a major impediment to the overall progress of the economy. India is predominantly an agricultural country and farming is their main occupation. More than 60% of India’s population is dependent on agriculture for its livelihood.


Until the 1970s rural development was synonymous with agricultural development and hence focused on increasing agricultural production. Today, inclusive rural development is a more specific concept than the concept of rural development of earlier. Inclusive rural development is about improving the quality of life of all rural people. More specifically, inclusive rural development covers three different but interrelated dimensions; economic, social and political.


Economic dimension relates to providing both capacity and opportunities for the poor and low-income households to benefit from the economic growth. Social dimension supports social development of poor and low- income households, promotes gender equality and women’s empowerment and provides social safety nets for vulnerable groups. Political dimension improves the opportunities for the poor and low income people in rural areas to effectively and equally participate in the political processes at the village level.


Economic growth would ensure adequate access to food, shelter, clothing, education and employment. With proper opportunities proportional to the same in urban areas, individuals residing in rural areas will be able to get a level ground for income options. Introduction of modern techniques for agriculture in rural areas would contribute to an increased productivity rate. As a result, the role of rural development is to establish sustainable and affordable technology to increase production in a national market


The infrastructural condition of a rural area has a direct link with its scale of development. Primarily, infrastructure consists of pucca roads, consistent supply of electricity, fresh drinking water and availability of transport.

Progress of rural development


If higher agricultural growth were the key to the improvement of farmers’ fortune, Indian villages would have been economically much better now. But it does not. There are various reasons including unremunerative prices of agricultural products to increasing indebtedness.


Foodgrains production in the last two decades has increased by over 100 million tonnes making India a food surplus country and yet nearly 52% of agricultural households in India are indebted according to NSSO survey.


That is, increasing agricultural production alone will not assure development of the rural economy. Being the nodal agency, the ministry of Rural Development plays a pivotal role in the overall rural development strategy of the country. The ministry accordingly aims at sustainable and inclusive growth of rural India through a multipronged strategy for eradication of poverty by increasing livelihoods opportunities, providing social safety net and developing infrastructure for growth.


The ministry adopted a number of development schemes to address different dimensions of development. Major Schemes are: (i) Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) (ii) Pradhan Mantri Awaas Yojana, Gramin (PMAY-G) (iii) Pradhan Mantri Gram Sadak Yojana (PMGSY) (iv) Deendayal Antyodaya Yojana, National Rural Livelihood Mission DAYNRLM (v) National Social Assistance Programme (NSAP) (vi) Shyama Prasad Mukherjee Rurban Mission (SPMRM) (vii) Saansad Aadarsh Gram Yojana (SAGY).


That the government is aiming to develop the rural economy is seen in the rising expenditure on these schemes. The budgetary allocation on rural development has increased by about 70% in last five years, between 2016-17 and 2021-22 







Surprisingly although the rural sector was the worst hit by coronavirous pandemic as millions of migrated workers were back to villages, the allocation on rural development was lower in 2020-21 Budget against the revised estimates of the previous year.


This was reflected in the decline in outlay of Centrally Sponsored Schemes. Aggregate allocation on these schemes was down from Rs 1,99,998 crore in the revised estimates for 2019-20 to Rs 1,22,541 crore in 2020-21 Budget estimates. The major schemes such as Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Pradhan Mantri Awaas Yojana - Gramin (PMAY-G), Pradhan Mantri Gram Sadak Yojana (PMGSY) and Deendayal Antyodaya Yojana - National Rural Livelihood Mission DAY-NRLM also shows meagre increase of 2.50%, 2.63%, 2.63% and 2.06% respectively in the BE of 2020-21 compared to BE of 2019-20.


The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is probably the most important rural development scheme. It aims to enhance livelihood and security in rural areas by providing at least 100 days of wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work. The programme mandates that at least 60 percent of the works undertaken must be related to land and water conservation. The creation of these productive assets boosts rural incomes as the majority of villages are agrarian.


The scheme has generated more than 31 billion person-days of employment in the last 15 years. The government has spent over Rs 6.4 lakh crore in the last 15 years on this demand-driven program. Since 2006, more than 30 million water conservation-related assets have been created in the country’s rural areas.

The government’s effort to provide housing to rural poor, another significant aspect of rural development, seems to have been a great success. The erstwhile Indira Awaas Yojana restructured as Pradhan Mantri Awaas Yojana - Gramin (PMAY-G) w.e.f 1st April, 2016 aims to provide “Housing for All” through provision of pucca house with basic amenities to all houseless households and households living in kutcha and dilapidated house in rural areas by 2022. The overall target is to construct 2.95 crore houses during the period 2016-17 to 2021-22, wherein 1 crore houses were targeted to be constructed in Phase-I (2016-17 to 2018- 19) and 1.95 crore houses in Phase-II (2019-20 to 2021-22)



Poverty is one of the most critical and common problems in rural India. This problem can be solved only if free education or education at a very minimal fee is being offered. Education is the doorway to the wider world and an exposition on rural infrastructure is incomplete without an assessment of the extent to which we have been able to open this door for the children of rural India. India has the largest education system in the world after China


The Annual Status of Education Report 2019 finds that education in rural India has improved dramatically over the last three decades. Schools have become accessible to most children; both student enrolment and attendance are at the highest level


Improving education is a critical area of investment and can be a game changer to achieve sustained economic growth by tapping into its young workforce. The weak foundation in primary education derails the lives, careers, and productivity of millions of our citizens. With 65% of the population residing in rural India, education in the rural belt truly deserves much more attention.


India has a total of 15 lakh schools (government and private) and only 15% of them are in urban areas. This percentage share has been constant between 2013 and 2018. Seventy-one percent of enrollment in the country is concentrated in rural locations.


The total number of teachers has increased in both urban and rural areas. Between 2013 and 2018, urban areas saw a rise from 21 lakh to 25 lakh teachers and rural areas saw a rise from 61 lakh to 67 lakh.

However, despite such an increase in school infrastructure the report finds that more than 50% of the children of age 3 to 16 years are not able to read and perform arithmetic abilities in the age group of 5to 16 years.

Fresh drinking water


Despite having a huge demand, with limited water resources, India has committed to provide the population safe and adequate drinking water. Jal Jeevan Mission has played a significant role in ensuring adequate water and sanitation. In addition, all districts in India have achieved the target of Open Defecation Free (ODF) under the Swachh Bharat Mission. This Goal has 8 targets to ensure the availability and sustainable management of water and sanitation for all. A sum of 16 indicators has been identified at national level to measure and monitor the progress of these targets.


Percentage of the rural population getting safe and adequate drinking water through pipes has increased about seven percentage points from 35.76% in 2015-16 to 42.49% in 2019-20. Understandably a huge gap still exists but the task is enormous and a beginning has been made.

Power to every rural home


Another very important infrastructure to facilitate growth of the rural economy is availability of power. Electricity has many prominent uses in rural India not just for power supply but also for farming as farmers can use machinery to ease their work. Also, electricity can provide internet in the area and it can help them to improve their skills. Availability of electricity can reduce the manual work load for food processing and can provide a positive impact at the individual and community level.


Narendra Modi pledged to bring reliable power to all villages after assuming office in 2014. In the year after his election, an audit identified 18,452 villages without electricity, and he promised that every village would be electrified within 1,000 days. April 28, when Leisang, a tiny hamlet in the remote north-eastern state of Manipur, was connected to the grid, was 988 days since that promise. Modi tweeted that it would be “remembered as a historic day in the development journey of India.”


Maybe, in paper Indian villages are all electrified. But then the government has changed the very definition of electrified village by accounting that a village should have basic electrical infrastructure, availability of electricity in public places and 10% of households should be electrified.


Admittedly, India is spending more on rural infrastructure and benefits of these investments too are visible but they appear to be far too inadequate to change the rural economy. After all, according to the latest counting 25.7% of the rural population is living below the poverty line. In the urban areas, the situation is a little better with 13.7% of the population living below the poverty line. Altogether, around 22% Indians are living below the poverty line.



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