People living in villages, who are migrating in large numbers to urban spaces in search of livelihoods, could be victims of our economic development or perhaps the dismal income growth of farm households is semi-deliberate to keep labor costs low
Till about 1990 since Independence, our country followed what may be broadly termed an import-substitution strategy for economic growth. This meant high import duties and rigid non-tariff barriers on imports and encouragement to domestic manufacture through a slew of policy measures. This was further buffered by a policy aimed avoiding concentration of economic power as well as at regional diversification of industry. While on one hand, this gave rise to a large number of very small capacity, unviable and inefficient industrial units, it also built an industrial base as also created much larger employment that was well unionized and paid well.
Since the first wave of liberalization in the nineties, things have changed a great deal. The urban middle class has grown massively by then. Post-liberalization and with much reduced import duties, they became a high consuming class. It became almost irrelevant if industry grew by substituting imports for these demanding mass of consumers with money or by actual exports. They had to become equally efficient in either case. In fact, the face of the industry and the character of the dominant classes in it changed from those who specialized in merely managing government regulations — and its officers — to those who could survive global competition due to their inherent technical and production competitiveness.
Farming’s share in economy
The observable reality at the same time is this. Nearly two-thirds of the workforce is engaged in agriculture but produces barely a seventh of the gross domestic product (GDP). This puts the per capita contribution to GDP of the farm household to about a tenth of its urban counterpart. The disparities in living standards perhaps are less stark, though quite bad. Measured in terms of monthly per capita expenditure, a rural household in Bihar spends at best 30% of what an urban household in Maharashtra does.
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