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Despite India’s per capita GDP doubling over the last decade, states like Goa compare to countries in Latin America, while states like Uttar Pradesh compare to low-income countries in sub-Saharan Africa in terms of their development outcomes. In this chapter, we identify that comparative advantages that arise due to resource availability, agro-climatic conditions, investments in human capital and the differential growth of the non-agricultural sector explain this subnational divergence. We show that states that continue to develop economic sectors in which they have no comparative advantages will remain locked into a low growth equilibrium. Reorienting agriculture based on comparative advantages in agricultural production, reducing entry barriers into the urban labor market and upskilling the rural and urban workforce are keys to develop equitable food systems for the future.
Structural transformation is a process of economic development during which an economy reallocates economic activities across its agriculture, industry and service sectors (Herrendorf, Rogerson, & Valentinyi, 2013). ST is characterized by the declining share of the agricultural sector and a declining share of agricultural employment (P. Pingali, 2007a) even as the value added of agriculture and agricultural productivity increases. This phenomenon is driven by either (1) faster growth of value added in other sectors, industry or services, which drives changes in employment patterns (Chenery, 1960), or (2) through agriculture-led productivity growth which itself can stimulate demand for non-agricultural products and non-agricultural employment (B. B. F. Johnston & Mellor, 1961). Both of these growth strategies increase rental incomes from factors of production whose productivity has increased through this process. This creates a virtuous cycle of economic growth. Over time, ST processes have come to be associated with greater economic growth, increase in productivity of factors of production, a reduction in the share of the agricultural sector in GDP, increase in the rates of urban-led growth, increase in incomes, poverty reduction, better nutritional security and greater diet diversity (Chenery, 1960; Pingali, Ricketts, & Sahn, 2015; P. C. Timmer, 1988; P. C. Timmer & Akkus, 2008; P. Webb & Block, 2013).
While some may argue that Nehruvian policies on industrial substitution enabled capital accumulation in the country, it is a well-recognized fact that it was the Green Revolution that spread technology into the rural heartland of India. This change played a greater role in poverty reduction, thus stimulating the Indian economy.
It is important to mention that India had already set in place national-level policies for import substitution industrialization policies in the 1950s. However in the 1960s, a burgeoning food deficit, high rural poverty and low rates of urbanization and lack of savings and capital resource accumulation turned policy focus towards development through agriculture. After the Green Revolution created agricultural surplus and put the economy on the process for ST, there was a renewed focus on industrial development. This allowed states where agriculture productivity was still low to invest more in other sectors.
In Pingali, Mittra, and Rahman ( 2017), authors discuss the MP transformation. Over the last two decades, MP has made tremendous progress towards reforming the agricultural system by utilizing low labor costs and high cropping area availability. MP is now a major supplier to the PDS system and has overtaken Punjab and other states in staple grain production. However, agricultural productivity, though increasing, continues to remain low.
In this chapter we interchangeably use the concept of the Green Revolution and the agriculture revolution. Here with the former we mean the introduction of new high-yielding varieties of wheat and rice, along with innovations in irrigation, water use and fertilizer and pesticide use that revolutionized agriculture in India. The agriculture revolution refers to the Green Revolution along with the diversification of cropping systems across the country that came up in response to changing local and global demand for high-value products such as tea, coffee, rubber and so on.
A caveat for this classification is that there exists a lot of inter-group variation in the ST experience of states. For example, the factors that led to Tamil Nadu’s growth are different from the factors that led Kerala to become urbanized. Similarly, agriculture-led transformation in Punjab is dominated by staple crops, but cash crops can better explain Himachal’s progress towards ST. However for the sake of parsimony, we bundle states together. This allows us to capture the broad historical experiences of states as well as identify some major trends by group as we look ahead. As we move forward, researchers would have to develop state-specific policies that reflect on the various trends within states. We leave this exercise to the future academic researchers and policy makers.
In this chapter, states from the North east are included into the ‘special category states’ classification since this region received concessions on central taxes and financial redistributions in order to develop their institutions and economies. While we acknowledge that there is a lot of variation between these states in terms of the ST experience, their economies remain weak compared to the rest of the country. This makes them comparable in outcomes to the lagging states. Thus, in other chapters, figures or tables, where there is no data on these states, the experience of lagging states will be assumed to represent their experience as well.
Many peri-urban areas continue to remain classified as rural based on a hard and fast census classification for urban areas. Experts who tend to use these census definitions tend to underestimate the amount of urbanization in the country, and hence migration rates at best underestimate the true migration rates between rural and urban areas.
While one would ideally like to have migration transition probabilities between states by sector, this data is not available. However, it is reasonable to assume that rural to rural migration rates from Bihar to Punjab are higher than rural to urban migration rates between these states.
Urban population growth doubled between 1901 and 2001, then increased 8% between 2001 and 2011. This growth has come from (1) high urban fertility rates (around 2.0), and urban fertility has reached this level only recently. Till 2001 it was above 2, which meant that urban population growth was driven by those living in urban areas. (2) Migration to cities—this has been a smaller portion of the total urban growth for now. However, it will change soon as migration has urban fertility rates that have fallen below replacement rates in 2011.
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- Economic Growth, Agriculture and Food Systems: Explaining Regional Diversity
- Chapter 2
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