UPSC Prelims 2020 Q58: Indian Economy – Agriculture & Rural Development
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?
- (a) 1 and 2 only
- (b) 3 and 4 only
- (c) 3 only
- (d) 1, 2 and 4 only
Answer: (b) 3 and 4 only
Explanation
Rural economy after the 1991 liberalization
The statements are drawn from a NITI Aayog paper on the changing structure of the rural economy (2017).
| Statement | Verdict | Fact |
|---|---|---|
| 1. Worker productivity (per worker at 2004-05 prices) increased in urban areas while it decreased in rural areas | Incorrect | Productivity per worker rose in both rural and urban areas |
| 2. The percentage share of rural areas in the workforce steadily increased | Incorrect | The rural share fell, from about 78 per cent (1993-94) to about 71 per cent (2011-12) |
| 3. In rural areas, the growth in non-farm economy increased | Correct | Construction, manufacturing and services grew faster than farming |
| 4. The growth rate in rural employment decreased | Correct | Rural job growth slowed, and turned negative between 2004-05 and 2011-12 |
What the paper showed:
| Trend | Detail |
|---|---|
| Rural output | Grew well, led by the non-farm sector |
| Rural jobs | Did not keep pace: jobless growth |
| Agriculture | Share in rural output fell, but it still employs most rural workers |
Answer: (b) 3 and 4 only.
Why each option is right or wrong
- (a) Incorrect. Rural productivity did not fall, and the rural share of the workforce did not rise.
- (b) CORRECT. The rural non-farm economy grew faster, while growth in rural employment slowed.
- (c) Incorrect. Statement 4 is also true; rural employment growth decreased.
- (d) Incorrect. Statements 1 and 2 are both false, so this combination fails.
Key point
After 1991 (NITI Aayog, 2017): productivity rose in rural and urban areas; rural share of workforce fell (78 to 71 per cent); rural non-farm growth up; rural job growth down.
Remember
Rural non-farm growth up; rural employment growth down.
Common mistakes
- Assuming rural productivity fell because farming lagged; it still rose.
- Accepting 'steadily increased' for the rural workforce share, which went down.
- Thinking faster non-farm growth must mean faster job growth.
Exam tip
Rural India after 1991: output grew, jobs did not. That one line settles statements 3 and 4.
Sources
- NITI Aayog — Changing Structure of Rural Economy of India: Implications for Employment and Growth (Ramesh Chand, S.K. Srivastava and Jaspal Singh, 2017)
- NSSO — Employment and Unemployment Surveys, 1993-94 to 2011-12