Sixty years on-A 5 times income divide between urban and rural India and growing further
-K. Ramasubba Reddy

As agri sector GDP fell year after year since 1950s from 48% to 18% now, per capita income of agri workforce also dwindled sharply. Studies by the planning commission and others show that while the income ratio between agri workers and non-agri workers during 1951 was 1:1.8, it got widened to 1:2.8 by 1984, it further widened to 1:5.2 by 2004.

It is estimated by the Centre for Development Economics that whereas agricultural sectoral GDP stood at nearly Rs.3 lakh crore in 2002-03, it will rise to no more than Rs.4 lakh crore (+33%) a decade later in 2011-12 at the agricultural growth rate forecast for the Eleventh Plan. Meanwhile, the combined manufacturing and services sectors would have soared from Rs. 9 lakh crore to around Rs. 20 lakh crore (+120%), further widening the gap between the relatively stagnant sectors of the economy and the boom sectors from Rs.6 lakh crore to Rs.16 lakh crore. The disparity between agri and non-agri sectoral GDP is going to increase from 1:3 in 2003 to 1:5 by 2012.

Thus in India Rural Urban disparities in incomes have widened 5.3 times during the past 60 years. In China too per capita income of an urban resident is now 3.3 times that of a rural one, the biggest gap in the country’s history. In the three decades since the country’s “opening up”, prosperity has come to urban China, but so has a widening income gap between urban and rural areas.  Rural Chinese make up 55 per cent of the country’s 1.3 billion population and rural Indians 70% of the population.

Recent and projected growth rates in income

Particulars	1993-94to 2004-05	2004-05 to 11-12	2011-12 to 2020-21
*N.N.P at factor cost	6.85	9	9
Per Capita Income
Rural	2.27	3.46	3.58
Urban	7.75	11.81	12.19
Total	4.97	7.57	7.81

Source: NCAP-Policy Brief 28- *NNP-Net National Product

It is assumed that Indian Economy in next 5 to 15 years would grow at average rate of 9%, which implies 7.57% growth in per capita income during 11th Plan and 7.81 percent growth rate beyond that. Growth rate in urban income would be more than 3 times the growth rate in per capita income of rural people.

Total Demand: Total demand for cereals is projected to grow to 218.9 million tonne by the end of 11th Plan and it would reach 261.5 million tonne by the year 2020-21. Demand for pulses in the same period would grow to 16.1 and 19.1 million tonne. Domestic demand for foodgrains is projected to reach 235.4 million tonne by the end of 11th Five Year Plan and 280.6 million tonne by the year 2020-21. It is important to mention that these projections do not include export demand.

Meeting the projected demand for foodgrains would require 1.86 percent annual growth in foodgrain production during 11th Plan. Beyond that, growth rate in foodgrain demand would increase to 2 percent despite slow down in population growth rate. As compared to these growth rates, India’s foodgrain production during last 10 years (1997-98 to 2006-07) increased annually by meager 0.48 %.

Despite dietary diversification, involving sharp decline in per capita direct consumption of foodgrains, demand for cereals and pulses is projected to grow at about 2 percent per year on account of increase in population and growth in indirect demand. This growth rate is almost four times the growth rate experienced in domestic production of foodgrains during the last decade. This has created serious imbalances between domestic production and demand which for some time was met by liquidating stock and cutting down on export. If growth rate in domestic production of foodgrain fails to rise to the required level, it would results in decline in export of rice and eventually lead to increased dependence on import of wheat and rice and pulses for meeting domestic demand for foodgrains. NCAP-Policy Brief 28

Pulses Crisis

Per capita production of pulses declined from 19 kg during 1971-75 to 12 kg during 2004-07. Demand for pulses is projected at 16 million tons by 2011-12. Pulses in India are traditionally considered to be a residual crop, only suited for growth under rain-fed conditions when one can’t grow wheat or rice. The Green Revolution saw the country taking great strides in increasing the yields of rice and wheat. Along with this, the government’s procurement policy and strategy helped in the promotion of these cereals.

There have been no great technology breakthroughs with respect to pulses. Equally, no aggressive plan, commensurate with the crisis, is in place for pulses. At 638 kg a hectare, India’s pulses yield is way below that of best-in-class countries, which produce about 1,800 kg a hectare. It is obvious that inadequate pest and nutrient management have led to lower yields, and then there are issues such as farmer perceptions of risk and cost, the absence of government procurement, lack of high-yielding varieties of seeds, and poor agricultural infrastructure. BL 300909