Role of Rural Economy of India

Abstract

India is the second highest  populated country in the world. India is known as an agricultural country, as most of the population of villages depends on agriculture. Agriculture forms the backbone of the country’s economy. The agricul­tural sector contributes most to the overall economic development of the country. For centuries together, the Indian village has been a self-sufficient and self-contained econ­omy. India is predominantly a rural country with two third populations and 70 per cent workforce residing in rural areas. Rural economy constitutes 46 per cent of national income. Despite the rise of urbanisation more than half of India’s population is projected to be rural by 2050. Thus growth and development of rural economy and population are a key to overall growth and inclusive development of the country. Traditionally, agriculture is the prime sector of rural economy and rural employment. The transition in composition of output and occupation from agriculture to more productive non-farm sectors is considered as an important source of economic growth and transformation in rural and total economy The study analyses changes in rural economy and employment during the last forty years covering the period 1970-71 to 2011-12. The new economic policy of 1991 was the turning point of the Indian economy. A lot of changes in the economy have been occurring due to the adoption of ‘The New Economic Policy’ especially, in the services sector. The current situation in India is that the growth rate of services has overtaken both agriculture and industry. Service sector has contributed 63 per cetin the GDP which is highest, as compared to agriculture and industry sector.