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Why Is That The Work-Force Participation Rate in Rural Areas Is More Than in Urban Areas, But The Level of Economic Development Is Lower in Rural Areas Than in Urban Areas - BSc@gipe
Why Is That The Work-Force Participation Rate in Rural Areas Is More Than in Urban Areas, But The Level of Economic Development Is Lower in Rural Areas Than in Urban Areas - BSc@gipe
BSc Economics Research
Why is that the work-force participation rate in rural areas is more than in urban areas, but the level of economic development is lower in rural areas than in urban areas?
I
t is a truth universally acknowledged that an Indian in search of a higher income, a better standard of living,
must necessarily migrate to an urban area.
Well, it may not be universally acknowledged just yet, but it should be!
One reason for rural-urban migration is opportunities that the urban centres provide. However more than 68% of
the population lives in rural areas as per 2011 census report.
The work-force participation rate in rural areas is higher at 41.8% as compared to urban areas at 35.31%.
Agriculture is the primary occupation of nearly 53–60% of the population but contributes only around 20% of the
GDP. The urban population, on the other hand, contributes about 63% to Indian GDP at present. And not just
that, it is expected to rise to 75% by 2030, a joint report by CBRE and CREDAI.
According to the report published by the Ministry of Statistics and Program Implementation in 2011, the average
wage/salary received by regular wage/salaried employees of economically active age group was Rs. 428.66 per
day for females compared with Rs. 550.23 per day for males in rural areas.
For urban areas, it was Rs. 609.70 and Rs. 805.52 per day for females and males respectively.This suggests there
was a wide disparity of wages not only between the rural and urban population but also across genders.
One could argue that there is surplus labour in rural areas as compared to urban areas. This may well push wages
down. As well as, that old, omnipresent spectre of disguised unemployment.
But the shortage of skilled labour is always felt, and that, inevitably, results in a high unemployment rate.
Reasons:
1. First, nearly 59.3% of people in rural areas are categorized as self-employed, which consists of agriculture as the
main activity with fishing, weaving, cottage industry, handicrafts, etc in its wake.
As much as 67 % of India’s farmland is held by the marginal farmers with holdings below one hectare, against less
than 1 percent in large holdings of 10 hectares and above.
Agriculture in itself is a seasonal activity, largely dependent on the vagaries of monsoon and is often exposed to
the ill effects of natural and man made calamities like flood, drought, spurious seed etc. This leaves the rural
households vulnerable and in perpetual poverty.
2. Also, in rural areas, there is seasonal and disguised unemployment. The anti-poverty measures and policies by
the government such as National Rural Employment Guarantee Act (NREGA), 2005, Prime Minister Rozgar
Yojana (PMRY), 1993, Swarna Jayanti Gram Swarozgar Yojana (SGSY), 1999, perform poorly at the ground level
and often do not benefit the grass root level.
3. The remaining working population (about 35.5%) are categorised as casual labourers(landless labourers).
Other problems relating to infrastructure are:
4. Also the Agricultural Produce Market Committee (APMC) Act, 1963, had some flaws, such as promoting
Monopoly among others. Monopoly of any trade is bad, whether it is by some MNC corporation by the
government or by any APMC. It deprives farmers of better customers, and consumers from original suppliers.
Other activities such as weaving, handicrafts, fishing and cottage industries face similar challenges. Government
ought to create fertile grounds for non-agricultural activities as well.
(iii) Access to competitive input markets and remunerative output markets; iv) Adoption of productivity-
enhancing technology, and
(v) Real income growth in the non-agricultural agricultural sector. (vi) Improving the infrastructure.
References: