Development of Agricultural Sector and Situation of the Transformation Rural Areas in India

India is predominantly a rural country with two third population and 70% workforce residing in rural
areas. Rural economy constitutes 46 per cent of national income. Despite the rise of urhanisation more
than half of India's population is projected to be rural by 2050. Thus growth and developmentof rural
economy and population are a key to overall growth and inclusive development of the country.
Traditionally, agriculture is the prime sector of rural economy and rural employment. The transition
in composition of output and occupation from agriculture to more productive non-farm sectors is
considered asas an important source of economic growth and transformation in rural and totaleconomy
However, no serious attempt has been made to analyse and understand the transition in India's rural
economy. Economic studies on rural India have focused mainly on changes in rural employment, by
gender and at broad sectoral aggregation between agriculture and non-agriculture. The present study
examines long term changes in (i) sectoral composition of rural output and employment, (ii) their
relationships and implications for output growth and employment and (iii) income inequalities across
sectors and between rural and urban sectors. The findings of the study are used to suggest strategy for
future development of India's rural economy. The study highlights the profound changes experienced
by India's rural economy which have not been reckoned. Contrary to the common perception about
predominance of agriculture in rural economy, about two third of rural income is now generated in
non agricultural activities. Similarly, it looks amazing to find that more than half of the value added in
manufacturing sector in India is contributed by rural areas. However, the impressive growth of non
agricultural sector in rural India has not brought significant employment gains or reduction in
disparity in worker productivity. This underlines the need for a new approach to direct the transition
of rural economy.
Key words: Impact of Agriculture on Rural development in India: Implications for Employment and
Growth