ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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The Stunted Structural Transformation of the Indian Economy

Agriculture, Manufacturing and the Rural Non-Farm Sector

India's economy has accelerated sharply since the late 1980s, but agriculture has not. The rural population and labour force continue to rise, and rural-rban migration remains slow. Despite a rising labour productivity differential between non-agriculture and agriculture, limited rural-urban migration and slow agricultural growth, urban-rural consumption, income, and poverty differentials have not been rising. Urban-rural spillovers have become important drivers of the rapidly growing rural non-farm sector, which now generates the largest number of jobs in India. Rural non-farm self-employment is especially dynamic with farm households diversifying into the sector to increase income. The bottling up of labour in rural areas means that farm sizes will continue to decline, agriculture will continue its trend to feminisation, and part-time farming will become the dominant farm model.

This is a short version of a paper presented at Stanford University, the US, on 10 May 2012, and the material is used with the permission of Stanford University. The research was supported by the Centennial Group, Washington DC, and the Syngenta Foundation for Sustainable Agriculture, Basel. The analytical work was also supported by Integrated Research and Action for Development, New Delhi. The sections on the structural transformation of the Indian economy are based on Binswanger and d’Souza (2011).

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