May 03, 2007

Can India afford its villages?

IDFC Institute CEO Reuben Abraham and Atanu Dey write in Mint: "Clearly, anyone who lives in the average Indian village and has access to information and money would like to leave for towns and cities."

Excerpts below:

"The conflating of the development of rural people with the development of villages perhaps explains the misplaced emphasis on the latter... Every developed economy has followed a path which begins with agriculture being the main source of income for the majority of the population, and ends with agricultural employment being a very small fraction of the total labour force. The shift has always been from a village-centric, agriculture-based economy to a city-centric, non-agricultural economy—as agriculture becomes more productive, labour is released into manufacturing and services, which have higher productivity and incomes... 

Consider the supply of an essential infrastructural service such as electricity. The economics of power generation and distribution do not allow decentralization to the level of villages that are home to a few hundred people. The average cost of per unit of power makes it prohibitive...

In fact, the answer to Mumbai’s or Delhi’s problems is, interestingly enough, that these cities lose their centrality to the Indian economy as other regional centres come up and mass migration to large cities ceases..."

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