The Hindu Business Line : Rural development and planned urbanisation are fully compatible

At the present juncture in the development history of the country it is perhaps right to pause and seek agricultural development with well-planned urban growth.

With a flute close to his lips, sitting on a tree branch overlooking a stream, and a young damsel alongside, the rural scene used to be idyllic in the films of yesteryear. Today, reflective of the times, films depict the distress of farmers, the tyranny of the landlords and money-lenders, and rural youth making the mark in an urban area or even in distant lands.

Crores of rupees have been spent not only on agricultural development, but also on rural development. As Table puts it eloquently, India is a predominantly rural nation and our democracy depends on the vast rural people for sustenance. Thus, orchestrating and articulating rural development is a political necessity, however uneconomical the various rural development projects may be and even if they are against the much applauded processes articulated in development economics.

Development process and urbanisation

One of the celebrated ideas in development economics is the long transition of a labour surplus economy assisting the process of industrialisation and urbanisation.

As the per capita income increases from low to middle and higher levels, it is the very essence of the development process for the level of urban population to rise, along with the declines in the total employment and income generated in agriculture and allied sectors. Thus, it is little wonder that economies as diverse as China, Indonesia, Korea and Malaysia have relatively large urban populations, even while enjoying a vibrant agricultural sector.

Twin Problems

Sir Arthur Lewis shared the 1979 Economics Nobel with another distinguished economist.

In his autobiographical essay for the Nobel, Sir Arthur writes about the two problems that attracted his attention. "From my undergraduate days, I had sought a solution to the question of what determines the relative prices of steel and coffee... Another problem that troubled me was historical. Apparently, during the first fifty years of the Industrial Revolution, real wages in Britain remained more or less constant while profits and savings soared."

Sir Arthur continues: "One day, in August, 1952, walking down the road in Bangkok, it came to me suddenly that both problems have the same solution... An `unlimited supply of labour' will keep wages down, producing cheap coffee in the first case and high profits in the second case. The result is a dual (national or world) economy, where one part is a reservoir of cheap labour for the other.

The unlimited supply of labour derives ultimately from population pressure, so it is a phase in the demographic cycle." Whether it is the US or the UK, Japan or Korea, Indonesia or the Philippines, the development process has all along been one way: Labour being transferred from rural to urban and agriculture to non-agriculture. Technological developments in agriculture and rural industries have been mostly of labour-saving nature and it is imperative that the growing surplus labour is absorbed in the non-agricultural sectors mostly located in the urban areas.

Successive Censuses in India have revealed the extent of population expansion as well as rural labour growth. Table 2 reveals the tripling of population in five decades, moderate decline in the rural population, the steep fall in the number of cultivators among the rural people, and the rise in that of agricultural labourers.

Even with little or no education, the rural youth look to the urban areas for making a living.

This is after leaving behind in the villages their elder brothers and sisters to eke out a living as rural labourers; often they are under-employed. They too would move on to industry and towns and cities if only opportunities are forthcoming.

Just a few days ago, addressing the nation on the occasion of the 60th Independence Day, the Prime Minister referred to the National Rural Employment Guarantee Act and Bharat Nirman. He termed them as weapons in the `War on Poverty'. He then went on to add: "The most effective weapon against poverty is employment. And, higher economic growth is the best way to generate employment. We must create an environment that encourages business to grow and create more employment, especially in the manufacturing sector." The speech also acknowledges that, "Cities and towns are centres of growth and generators of employment opportunities."

It would, thus, seem appropriate at the present juncture in the development history of the country to pause for a moment and articulate agricultural development to proceed hand-in-hand with well-planned urban growth. The process will also help raise the price and income for the farmers, whose numbers will dwindle as time goes on.

Country of thousand metros

An India of a thousand metros will be the inevitable future. More and more cities will become "greater this or that" embracing surrounding rural and semi-rural tracts within the jurisdictions of mega municipal corporations. If they are planned and nurtured, it will be laudable development. If they are unplanned and grow in a haphazard fashion, we will continue to be where we are and have been.

Agricultural advance and planned urbanisation are fully compatible. If rural development has been the overwhelming theme all along for political reasons, it is equally or even more feasible to please the electorate with planned township development that helps deliver quality social services such as education, water and sanitation along with decent inexpensive housing through appropriate cross-subsidisation strategies.

(The author, formerly with the National University of Singapore and the World Bank, currently holds a couple of honorary/visiting positions. He can be reached at bhanoji@gmail.com)

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