Non-agriculture activities have emerged as a major source of income in rural areas but they have not led to any significant employment gains, says a paper co-authored by Niti Aayog member Ramesh Chand.
More than half the value added in manufacturing sector in India is contributed by rural areas, it said.
"Contrary to the common perception about predominance of agriculture in rural economy, about two-third of rural income is now generated in non agricultural activities," said the paper -- 'Changing Structure of Rural Economy of India, Implications for Employment and Growth'.
It said however that "the impressive growth of non agricultural sector in rural India has not brought significant employment gains or reduction in disparity in worker productivity".
This underlines the need for a new approach to direct the transition of rural economy, it added.
During the four decades, from 1970-71 to 2011-12, rural output increased almost seven times, the paper said, adding that the rural employment during this period could not even double.
"In fact, the employment growth decelerated over time and reached a negative range after the year 2004-05," it said.
The paper further said that there was defeminisation of rural workforce between 2004-05 and 2011-12 as female workers withdrew from agriculture work in large numbers.
Workers moving out of agriculture and those entering rural labour-force are getting largely absorbed in construction activity, it said.
Citing a United Nations report, the paper observed that population projections indicate that India will continue to be predominantly rural till 2050, after which urban population is estimated to overtake rural population.
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