Rural India is now about cellphones, not bullock carts

New Delhi: If you thought rural India is all about agriculture, thatched- roof houses and muddy roads–you are wrong. A studyby Credit Suisse shows rural India is no longer an agrarian economy whose fortunes are dependent upon an erratic monsoon, it has made a transition from bullock carts to cellphones.

Rural India has been linked to the national economic cycles to which it was more or less immune thus far, it said.

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Since 1999-2000, per capita GDP in rural areas has grown at a 150 basis points faster rate than in urban India, contrary to the trend seen in other emerging economies where urban productivity growth is higher than in rural.

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While 69 percent 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 percent of the new factories during the last decade came up there, contributing to 70 percent of all new manufacturing jobs created.

As a result, manufacturing GDP in rural India witnessed an 18 percent CAGR during 1999-09, and is now 55 percent 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 percent of rural males considered agriculture as their primary job. This ratio fell to 67 percent in FY05 and 55 percent 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 times 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.

With inputs from PTI