UPSC Prelims 2020 Question:

With reference to the Indian economy after the 1991 economic liberalisation

consider the following statements:

1. Worker productivity (Rs 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 the non-farm economy increased.
4. The growth rate in rural employment decreased.
   
   

Which of the statements given above is/are correct?

Explanation:

• According to NITI Aayog, worker productivity (Rs per worker at 2004-05 prices) has increased for both rural and urban areas. For rural areas it was Rs. 37273 in 2004 -05 and Rs. 101755 in 2011 -12, while for urban areas it was Rs. 120419 in 2004 -05 and Rs. 282515 in 2011 -12. So, point 1 is not correct.
  
  
• According to 2011 Census data, 68.8% of India’s population and 72.4% of workforce resided in rural areas. However, the proportion of rural workers in the workforce has decreased over time, from 77.8% in 1993–1994 to 70.9% in 2011–2012, as a result of the continuous transition to urbanisation. So, point 2 is not correct. 
  
  
• Presently, Non-agricultural activities produce almost two thirds of rural income. Rural areas have seen a growth in the non-farm economy. Agriculture's contribution to the rural economy has declined from 57 percent in 1993–1994 to 39 percent in 2011–12, and from 70.9 percent in 2011–12. So, point 3 is correct. 
  
  
• Despite significant increase in  output, the rural areas saw negative employment growth after 2004–2005. In the period from 1994 to 2005, the growth rate of employment in rural areas was 1.45%; however, between 2005 and 2012, it decreased to -0.28%. So, point 4 is correct. 
  
  

Therefore, option (2) is the correct answer.

Subject: Economics | Economic Reforms