Migration to urban centers for opportunities continues !!! India’s boom continues .... but it's "uneven" ::: Rural households see little of glittering growth :::: Why a disconnect between where people work and where wealth is created ??

India's growth is at a crossroads. Rural households, reliant on the vagaries of monsoons and market prices, see little of the glittering growth. India’s boom continues to be uneven, and its most enduring economic imbalance remains the disconnect between where people work and where wealth is created.  

The rural-urban divide in India's growth story is characterized by disparities in income, employment, and access to services, although some indicators suggest a narrowing gap in consumption patterns, particularly for the poorest segments. 

The growth has historically favored urban areas, creating an imbalance with rural areas suffering from lower agricultural productivity and limited access to quality education and healthcare. 

Migration to urban centers for better opportunities continues.

Consumption growth in rural areas is sometimes outpacing urban areas, indicating a complex and evolving economic landscape. 

Agriculture lags, forcing policymakers to confront the rural-urban divide and rising state debt. On the other hand, Manufacturing and Services see north bound graph. For many families, analysts say daily life remains a juggling act: paying for fertilisers, diesel for pumps, seeds and electricity.

But what they get in return is - crop prices fluctuation. 

 Urban consumption and discretionary spending drove much of the domestic economy, lifting Private Final Consumption Expenditure (PFCE) nearly 8 per cent in the quarter. 

From the vantage point of Mumbai’s highrises, Bengaluru’s tech corridors and Gurugram’s financial hubs, India seems unstoppable.

Yet, venture just a few hundred kilometres into the countryside and the story is markedly different. Agriculture, forestry and fishing, the sectors that still employ nearly half of India’s working population, are barely keeping pace. The Union ministry of statistics and programme implementation (MoSPI) records a mere 3.5 per cent growth in Q2 FY 2025-26 for these sectors, almost unchanged from Q1.

There is structural fault line that should worry the policy makers especially PM Narendra Modi, Finance Minister Nirmala Sitharaman and also Union Agriculture minister Shivraj Singh Chouhan. 

FMCG companies, such as Hindustan Unilever and Dabur, report flat or even negative volume growth in villages.

But double-digit gains in cities. 

The consumption story mirrors the divide: growth is strong, but not evenly shared.

Since the 1991 liberalisation, India has transformed. 

The economy has expanded at an average 6.8 per cent per year, but agriculture has grown at just 3.2 per cent. 

During phases of high growth, between 2003-08, while the GDP rose 8.8 per cent, what was not a real satisfactory story was  agriculture growth was 3.7 per cent.

Now see the comparison in the period 2016-19, agriculture growth was only 2.9 per cent but the GDP was 7.1 per cent.

Even during the post-Covid rebound from FY2022 to FY2025, the economy grew cumulatively 21.3 per cent while agriculture added just 10.2 per cent. 

Nearly half the country continues to rely on a sector that accounts for less than a sixth of the national income.

Some data may be matters of concern:

Agricultural exports, which had peaked at $50.2 billion in FY2021-22, fell to $45.9 billion in FY2024-25.

** This was due to curbs on staples such as rice, sugar and wheat. 

** Credit flows tell a similar story: 

-- Agricultural lending grew 7.4 per cent in the first half of FY26, well below the 15 per cent rise in industrial credit. 

** Then Crop production -- Kharif foodgrain output for 2025-26 is estimated at 150.2 million tonnes, down slightly from last year.

Due to shortfall in rainfall -- 5 per cent below normal and even unevenly distributed. 

Pulses and coarse cereals suffered declines while rice acreage expanded marginally.

Notable impacts:

Real rural wages have barely moved, rising only 2.1 per cent year on year in September 2025. 

Between 2018 and 2024, agricultural labourers’ cumulative real wage growth was just 8 per cent.  But rural consumer prices climbed 22 per cent. 

Two-wheeler sales—a modest barometer of rural income—rose only 2.5 per cent in Q2 FY26 

** Passenger cars in urban centres jumped over 10 per cent. 

(Widening gap between agricultural and non-agricultural sector incomes, particularly since late 1990s, and the inability of the industry to absorb “surplus” labour from agriculture, have worsened the disparity)

Expenditure difference: In 2017-2018, an average urban dweller could consume about 2.5 times more than an average villager, though this ratio has reportedly declined from 1.63 in 1993-94. 

While headline CPI has hovered near 4.4 per cent, food inflation fell from 6.2 per cent last year to 3.9 per cent this year. 

This has helped keep GDP numbers robust but dampened farm-gate prices. Fertiliser subsidies have risen to Rs 1.97 lakh crore in FY26 from Rs 1.81 lakh crore, shielding farmers from global price shocks but leaving incomes largely stagnant. 

Distress is addressed but he system is unable to fundamentally transform livelihoods. 

What may happen if the simmering socio-economic contradictions in rural India reach a boiling point ?

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