How China Reduced the Urban-Rural Economic Chasm – and How India Can Do it Too -Mahesh Uniyal

-TheWire.in

Unlike China which supported productivity-enhancing R&D investments, India’s focus has been on politically-driven subsidies that mainly benefit large farmers.

We saw the trailer two years ago. TV news visuals of the plight of thousands of rural poor marching to Mumbai shocked the relatively affluent residents of India’s financial capital.

The March 2018 Maharashtra farmers’ march and now the nationwide COVID-19 lockdown-triggered migrant exodus has exposed the stark duality of India –  an urban class in its bubble of affluence created by three decades of economic liberalisation, insulated from the harsh reality of life in rural India.

Decades of rural distress has been driving tens of millions of Indians to leave their village homes to seek low-paid, low-skill jobs in big cities. The opening up of the economy in 1991 transformed the lives of the educated urban classes, but rural India has been left way behind.

India’s GDP increased at 7-9% starting in the mid-1990s, but agricultural growth averaged only 2.5-3.5%. The sector’s contribution to GDP declined from 23% in 2003-04 to about 14.6% in 2018, without a corresponding reduction in the population dependent on farming and related activities. The ratio of farm to non-farm incomes has worsened from 1:3 to 1:5, resulting in increasing rural indebtedness and marginalisation.

According to the latest estimates by the UN Food and Agriculture Organization (FAO), nearly 200 million Indians are undernourished. High levels of undernutrition in the country are estimated to annually cost about 3% of GDP.

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