Niti Mehta RURAL TRANSFORMATION IN POST LIBERALIZATION THE PERIOD GUJARAT IN Economic and Social Consequences Rural Transformation in the Post Liberalization Period in Gujarat Niti Mehta Rural Transformation in the Post Liberalization Period in Gujarat Economic and Social Consequences Niti Mehta Sardar Patel Institute of Economic and Social Research Ahmedabad, Gujarat, India ISBN 978-981-10-8961-9 ISBN 978-981-10-8962-6 (eBook) https://doi.org/10.1007/978-981-10-8962-6 Library of Congress Control Number: 2018944582 © The Editor(s) (if applicable) and The Author(s) 2018 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover illustration: Sagar Lahiri, Kolkata West Bengal/Getty Images Printed on acid-free paper This Palgrave Macmillan imprint is published by the registered company Springer Nature Singapore Pte Ltd. part of Springer Nature. The registered company address is: 152 Beach Road, #21- 01/04 Gateway East, Singapore 189721, Singapore P R T raise for uRal RansfoRmaTion in The P l P G osT ibeRalizaTion eRiod in ujaRaT “The book in the classical tradition deals with agriculture and rural development in a fast growing economy, deftly managing diversification, infrastructure besides the rural-urban space. It is for a real life example, Gujarat, making it a must read. I did this for India; but India is too big and the models and simulations remain abstract. The book is important for the businessman, policy maker, scholar and student.” —Professor YK Alagh, Eminent Economist and Former Union Minister “The rural transformation process in going on for quite some time, but it appears that the speed has accelerated with the advent of improved connectivity. Many rural areas by definition have amenities in common with small towns. I am happy that this book brings forth several of these dimensions.” —Professor SP Kashyap, Eminent Economist having extensive work on issues related to economic development “The book vividly demonstrates how urbanization can turn a powerful vehicle of rural transformation if we address the problems faced by small towns and promote rural and urban linkages through them. As agriculture has limited capacity to gen- erate gainful employment, rural diversification of the sources of income and employment opportunities is the need of the hour. This book would be very useful in guiding the policy makers in ameliorating agrarian distress and promoting rural development.” —Professor RB Bhagat, Head, Department of Migration and Urban Studies, International Institute for Population Sciences, Mumbai v vi PRAISE FOR RURAL TRANSFORMATION IN THE POST LIBERALIZATION… “…The running theme of the book is ‘inclusive and sustainable urbanisation’. Based on the case studies of 15 diverse towns in Gujarat, the author tries to understand the intricacies of urban growth and its socio-economic ramifications. The policy makers could take a leaf of two from the work, especially when the exercise of crafting a National Policy for Urban Development is currently underway in the country”. —Professor Dinesh Awasthi, Former Director, Entrepreneurship Development Institute of India, Ahmedabad P reface Rapid structural changes are evident in the rural sector with economic reforms as manifested in the expanding share of rural non-farm employ- ment to almost one-third of rural employment. Concomitantly rural incomes have shown a dramatic shift towards non-primary activities. Such changes in rural economic sector have also had an impact on the urbaniza- tion process in India, notably the rising numbers of census towns that are also emerging as a major source of overall urbanization. The focus of the study is on these newly emerging urban settlements that have not been re-designated as statutory towns and economic factors underlying the growth of villages leading to their reclassification. Rural transformation is driven by the diversification of rural economies away from the reliance on agriculture, growth of non-agricultural activities, adoption of multiple livelihood strategies by individuals and households, urban ward migration as well as urbanization of rural regions that reduces the relative isolation of rural areas and people. In Gujarat as in some other pockets of the nation, urbanization is get- ting equitably spread out besides the concurrent process of peripheral expansion. The momentum of urban growth is fuelled by the lower levels of settlement hierarchy or the smaller towns. It is also evident that struc- tural changes and employment diversification has enabled a large number of villages to be elevated to town status. The present study makes an attempt at understanding the on-going changes in the rural economic structure of Gujarat as manifested in emergence of large numbers of cen- sus towns and the underlying economic, social and environmental dimen- sions. A large chunk of the urban population remains unrecognised that vii viii PREFACE leads to problems of service provision, resource generation and gover- nance. Clearly, policy focus is desired on all of these fronts for a smooth process of rural transformation. This is also imperative in the interest of emergence of a sustainable settlement system that eases the constraints being faced by the explosive metropolitan expansion. Timely policy inter- ventions are desirable to make agriculture a more profitable venture for the communities dependent on the sector. In addition expansion and pro- vision of urban amenities and regulation of land use changes in these set- tlements are of utmost importance for equitable growth. The study is the result of financial support received from the Indian Council of Social Science Research, New Delhi (ICSSR) under the major research programme scheme. We acknowledge with gratitude the financial support from ICSSR and administrative support received from Mrs. Revathy, Director at the ICSSR. This report has been prepared with the help of several individuals whose help is acknowledged. First and fore- most, I would like to express my gratitude to Prof. S.P. Kashyap for his advice in designing the methodology of the study. He also offered insight- ful comments on all the chapters. The support of Research Associates, Ms. Monu Yadav and Ms. Indu Pareek, along with the Research Assistants, Mr. Ashwin Rawal and Mr. Pradeep Chauhan, in conducting the field surveys, focus group discussions and in tabulating the primary and sec- ondary information has been invaluable. The involvement of Ms. Reena Narendran and Mr. Satheesan in providing timely computational and sec- retarial assistance is also gratefully acknowledged. The study has benefitted immensely from the comments and sugges- tions made by Professor Dinesh Awasthi and Professor AK Singh as mem- bers of the Research Advisory Committee appointed for the Project. Their valuable insights have given direction to the research work. The compo- nents of the study have been presented in seminars organized by NIRD&PR, Hyderabad, SPIESR, Ahmedabad, and ISLE, New Delhi. For that, we are thankful to the organizers and to the discussants for their sharp comments. The study also benefitted from the suggestions of two anonymous referees. Last but not the least, discussions with numerous officials, Panchayat functionaries and the residents and enterprise owners of the towns selected as case studies have enriched the final outcome. The respondents of the field investigation spared their valuable time in parting with PREFAC E ix information and also deserve our heartfelt gratitude. The support offered by the publishing team at Springer (Palgrave Macmillan) India, especially Ms. Sagarika Ghosh and Ms. Sandeep Kaur has enabled the study to be published and be available for wider dissemination. Any shortcomings, and there are bound to be numerous, are entirely the author’s. Ahmedabad, Gujarat, India Niti Mehta c ontents 1 I ntroduction 1 Conceptual Framework 1 Rural Non-farm Sector and Process of Urbanisation 5 Selection of Case Study 12 Objectives and Methodology 14 References 18 2 Occupational Diversification and Rural Transformation 23 Introduction 23 Overview of Rural Non-farm Diversification: Insights from Literature 26 Occupational Diversification After 2000 29 Overview of Macro Tendencies 37 Employment and Income in Economic Sectors 46 Sectoral Employment and Income Shares 46 Labour Productivity Across Sectors 48 Correlates of Rural Non-farm Sector 50 Dynamics of Structural Changes in Rural Economy 54 Concluding Remarks 61 Annexure 63 References 68 xi