Rural India no longer an agrarian economy: Study

New Delhi, Apr 24 (PTI) Rural India is not solely about agriculture anymore and has made a transition from thatched-roof houses and muddy roads to factories and cell phones, says a study by Credit Suisse. Rural India has become less dependent on the erratic Indian monsoon rainfall and has been linked to the national economic cycles to which it was more or less immune thus far, it said. Since 1999-2000, per capita GDP in rural areas has grown at a 150 basis points (1.5%) faster rate than in urban India, contrary to the trend seen in other emerging economies where urban productivity growth is higher than rural. While 69 per cent of Indian population is still "rural", not all of it means thatched-roof houses and muddy roads. The transition from agriculture to industry and services has been very rapid in rural India over the past decade. "Rural India, in our view, is no longer an agrarian economy exposed to the vicissitudes of an erratic monsoon. All agriculture is rural by definition, but the converse is no longer true," said the report, authored by research analysts Neelkanth Mishra and Ravi Shankar. Agriculture is now only about one-fourth of rural GDP — from being close to half a decade back. In rural India, manufacturing is booming as almost 75 per cent of the new factories during the last decade have come up there, contributing to 70 per cent of all new manufacturing jobs created. As a result, manufacturing GDP in rural India witnessed an 18 per cent CAGR during 1999-2009, and is now 55 per cent of India's manufacturing GDP. Growth in services employment is equally robust, the study said. In rural India, jobs are switching away from agriculture. In 1978, around 81 per cent of rural males considered agriculture as their primary job. This ratio fell to 67 per cent in FY05 and 55 per cent in FY10. The trend is similar for female rural employment as well, it added. Indian villages are growing larger, merging together and are moving away from agriculture, and thus being classified as towns. This trend is clearly visible in the sharp increase in the number of 'census towns' in the 2011 census. The number of census towns has increased three fold in a decade. Census towns are habitats that are not statutory towns. They have no municipal body, but given population density and employment characteristics, they are classified as towns. India's urbanisation is therefore likely to take a different path as compared to other emerging economies. Consumption will continue to skew towards lower price points and "rural urbanisation" themes, the study said. The "new urban" consumption categories like two-wheelers, building materials/paints, media, tobacco, footwear, healthcare, personal products with low price points (like toothpaste) are thus likely to see sustained growth, it added. PTI