With reference to the Indian economy after the 1991 economic liberalization, consider the following statements:
- 1.Worker productivity (₹ 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 non-farm economy increased.
- 4.The growth rate in rural employment decreased.
Which of the statements given above is/are correct?
Answer & explanation
Answer: (b) 3 and 4 only
After liberalisation, rural India's non-farm economy grew faster while rural employment growth slowed and even turned negative, so statements 3 and 4 are correct. Statements 1 and 2 are wrong: output per worker rose in rural areas too, and the rural share of the workforce kept falling.
- ✗ 1. Rural productivity did not fall. Rural output at 2004-05 prices rose from Rs 3,199 billion (1970-71) to Rs 21,107 billion (2011-12) while rural employment rose only from 191 to 336 million, so output per rural worker went up from about Rs 16,700 to about Rs 62,800 (our calculation from these figures).
- ✗ 2. The rural share of the workforce fell, from 84.1 per cent in 1970-71 to 70.9 per cent in 2011-12, as urbanisation proceeded.
- ✓ 3. Growth of rural non-farm output rose from 5.70 per cent a year (1971-94) to 7.93 per cent (1994-2005) and 9.21 per cent (2005-12), while agriculture lagged.
- ✓ 4. Total rural employment growth fell from 2.16 per cent a year (1973-94) to 1.45 per cent (1994-2005) and turned negative (-0.28 per cent) in 2005-12.
Remember · Since liberalisation, rural non-farm output has grown faster and faster, but rural employment growth has fallen; the rural share of India's workforce has kept declining.
Sources
- NITI Aayog Discussion Paper, Changing Structure of Rural Economy of India (Chand, Srivastava and Singh, November 2017) ↗ “During the post-reform period (1993-94 and 2004-05), growth in agricultural sector decelerated to 1.87 per cent, whereas growth rate in non-farm economy accelerated to 7.93 per cent. … After 2004-05, the rural areas have witnessed negative growth in employment in- spite of high growth in output. … 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. … India‟s rural economy expanded from Rs. 229 billion to Rs. 34167 billion at current prices and from Rs. 3199 billon to Rs. 21107 billion at 2004-05 prices. In the same period, employment expanded from 191 million to 336 million.”
Question and answer: UPSC's official GS Paper I (2020, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·