Q. With reference to the Indian economy after the 1991 economic liberalization, consider the following statements :

(1) Worker productivity (Rs per worker at 2004-05 prices) increased in urban areas while it decreased in rural areas.
(2) The percentage share of rural areas in the workforce steadily increased.
(3) In rural areas, the growth in the non-farm economy increased.
(4) The growth rate in rural employment decreased.

Which of the statements given above is/are correct?

• 1 and 2 only
• 3 and 4 only
• 3 only
• 1, 2 and 4 only

Answer: (b) 3 and 4 only

Notes:

• Productivity is a measure of the efficiency with which resources, both human and material, are converted into goods and services. There is wide disparity in worker productivity between rural and urban areas. India’s labour productivity grew by over 14 per cent every year. But between financial years of 2011 and 2015, this rate fell to just half of that (7.4 per cent) and continued its deceleration to just 3.7 per cent between financial years of 2016 and 2018.
• The rate of growth in population and workforce during the last four decade in rural areas have always been lower than of the urban areas.
• After the 1991 economic liberalization, non-farm economy (industries and services not related to agriculture) in rural areas did see substantial growth, as it provided alternative employment opportunities to the rural workforce.
  • Rural non-farm economy, in recent times, is considered as an effectual strategy for decentralization of economic activities to rural India.
  • The Economic Census of India estimates that around 41.89 million rural people are employed in non-agricultural establishments which registered a growth rate of 4.56 % during 1998-2005.
• As per the 2011 Census, 68.8 per cent of country’s population and 72.4 per cent of workforce resided in rural areas. However, steady transition to urbanization over the years is leading to the decline in the rural share in population, workforce and GDP of the country.