Push service economy in rural areas, raise income: Assocham

An Assocham note says, In most of the developed world, the rural areas are much more prosperous than the cities. This is possible in India by creating necessary infrastructure.

Push service economy in rural areas, raise income: Assocham

Economic hardships of farmers and the entire rural landscape with near about 70 per cent of the population can be mitigated only when their claim on national income is substantially increased from a mere 17 per cent, which is possible by taking key service sectors like trade, hotels, transport and housing to the hinterland through massive investment in rural infrastructure, an Assocham Concept Note has said.
Of India’s total income, measured by the Gross Value Addition (GVA) of Rs 136.69 lakh crore for 2016-17, the share of agriculture, forestry and fishing was just about Rs 23.72 lakh crore or 17 per cent.

“In other words, of the total national income (GVA based) close to 70 per cent of our people got just a slice which is less than one-fifth of the cake. This defies social equity and is economically unsustainable. Though migration continues from rural to urban areas, our cities are choked and hardly have any more absorption capacity. The answer lies in revisiting in all sincerity the laudable idea of former President late APJ Abdul Kalam–(Providing Urban Amenities and Rural Areas).

“Creation of rural infrastructure like roads, broadband telecom, financial services through technology based inclusion would lead to substantially enhanced economic activities in the rural landscape and result in a big jump in their income,” said the Assocham Concept Note, authored by senior political –economic analyst and commentator Prakash Chawla.

In the total services pack, the trade itself contributes a major portion. Though India’s consumption demand is significantly driven by the larger proportion of the population in the rural and semi-urban areas, the multiplier impact remains restricted as the purchasing power of the people there is just one-fifth of the total national resource.

“There is a limit. How much multiplier can you have with just about 17 per cent of the national income at the hands of those 70 per cent living in the villages; but imagine the kind of a trigger which can be generated by raising their income. If we double their income in the next 5-7 years which is possible through integrating the city based services economy to rural India as well, the country’s Gross Value Addition and then the Gross Domestic Product can be enhanced to well above US$ 3.5-4 trillion in the same period,” the note says. The entire great India consumption story so often parroted by the stock market analysts could be realised effectively. 

On the hardships of the farmers, Assocham Secretary General, DS Rawat said, “In most of the developed world, the countryside is much more prosperous than the cities. This is eminently possible even in our country. It all depends how soon the governments both at the Centre and states can create the required infrastructure in terms of all-weather motorable roads, electricity, telecommunication, hospitals, schools to villages, tehsils and other semi-urban clusters.”

Given the cultural, geo-climatic diversity of our country, even small hotels and motels can spring up on the highways, state express ways and even in interiors if each of states takes up promoting short-duration tourism in the earnest. “Lakhs of personal vehicles from big cities like Delhi, Mumbai, Chennai, Bengaluru, Pune, Ahmedabad and other big cities crowd the holiday get-aways nearby during the weekends. Why should rural tourism not be promoted, for which the state governments must follow pragmatic policies like easy land use change and other clearances. Such propositions would generate a real multiplier for the employment in the rural areas” the concept note suggested.

Same is true about schools, hospitals and dispensaries. “Once the basic infrastructure for a good life is created, the hesitation on the part of doctors and teachers to work in rural areas would also go away. Kerala is a good example of integrating cities with small towns and villages. As they say, there are no villages in Kerala.”

Services, including construction, real estate, transport contribute near 40 per cent to the country’s GVA and their participation in the rural economy is indispensable though efforts to increase share of manufacturing in the economy must also continue on a parallel track.

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