What does the story of India’s rural development say? 

Data shows that India has been witnessing a decline in budget allocation for essential social sectors. For instance, the budget allocations for different programmes under the National Food Security Act (NFSA) have seen a steady decline since before 2019. 

While MGNREGS has seen a minimal increase in its allocated budget, the number of families working under the scheme has come down from 7.25 crore in 2021-22 to 5.79 crore in 2024-25. With around 65 per cent of the country’s population living in rural areas, alongside the ongoing rural distress, such declining welfare allocations have serious implications for rural development.

What is rural development?

Rural development as a concept gained traction in the 1970s with renewed emphasis on rural policies and programmes. This stemmed from the failure of state-led modernisation projects and industrialisation policies that fell short of expectations. With growth concentrated in certain areas and widespread rural poverty persisting in the 1970s, it was recognised that the dispersion of basic services is central to equitable distribution of resources and poverty alleviation. 

Thus, rural development can be understood as a package of policies that aim to foster socio-economic development in rural areas. Notably, agriculture is crucial to both rural growth and development. 

According to economic theories on development, agricultural development is a pre-requisite for rural industrial growth. These theories further suggest that as agriculture grows, the relative size of farms declines. Hence, a high growth agricultural sector along with a declining farm size are seen as markers of agricultural development. 

Structural transformation is, thus, shaped by the movement of both output and labour away from agriculture to the modern industrial sector. In the Indian context, it is often noted that the nature of the structural transformation has been slow and has been linked to “premature” service-led growth. At the same time, the employment share of the manufacturing sector has failed to increase. 

According to the Periodic Labour Force Survey (PLFS) data, this is primarily because of the rapid growth of the service sector, which has restrained the growth of the secondary sector. Another interesting observation about the Indian economy is that most of the service sector is led by self-employment rather than wage employment.

Policies on rural development 

Rural development policies need to be understood against this backdrop. Two important schemes – the Integrated Rural Development Programme (IRDP) and the National Rural Employment Programme (later became MGNREGS) – can be discussed in this context. 

The IRDP was launched in 1978-79 and implemented from 1980 until it was merged with five other rural development programmes in 1999. As a self-employment programme for poverty alleviation, the core objective of the IRDP was to enable identified rural poor families to increase their incomes and cross the poverty line through the acquisition of credit-based productive assets. 

The MGNREGS, on the other hand, provides a one-off wage payment to the workers for developing infrastructure such as roads and irrigation works that can generate long-term benefits for the propertied classes. 

While IRDP was focused on self-employment, MGNREGS emerged as a guarantor of 100 days of wage employment to rural individuals. MGNREGS, however, has faced an inadequate budget allocation in the last few years, even as there has been a renewed interest in policies and schemes around self-employment. Examples of some schemes and initiatives include:

— The Pradhan Mantri Employment Generation Programme (PMEGP): It offers subsidies to establish micro-enterprises.

— The Pradhan Mantri Mudra Yojana (PMMY): It facilitates self-employment through loans to micro and small businesses. 

— Initiatives like the Rural Self-Employment and Training Institutes (RSETIs) and the Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY): Here, the focus is on skill development and entrepreneurship training, etc. 

States like Assam have also launched schemes like the Chief Minister’s Atmanirbhar Asom Abhijan (CMAAA) to promote self-employment among youth through grants.  

In the context of such rural policies, self-employment is perceived as dynamic and capable of generating further employment. However, the other side of the debate views India’s persistent reliance on self-employment as a sign of distress, not very different from wage-employment, and an alternative in the absence of wage or other gainful employment.   

Socio-economic indicators of rural development

Rural development can also be understood in terms of social indicators like access to electricity, drinking water, health, and education. While data from the National Family Health Survey 2019-21 suggests improvement in these indicators compared to 2015-16, a deeper analysis shows a different picture. 

For instance, rural health care is often marked by informal private doctors or providers, which national-level data sets often fail to capture. While numbers suggest that people in rural areas do visit doctors and seek medical care, the quality of this healthcare needs to be discussed.

Similarly, a comparative analysis of indicators for rural and urban India shows a higher prevalence of stunting among children (37.3%) in rural areas as compared to urban areas (30.1%). Children from Scheduled Tribes and Scheduled Castes are more likely to be seen as disproportionately affected in these indicators. 

Education presents similar challenges. The findings of the Annual Status of Education Report (ASER) 2023 reflect serious structural and quality issues in rural education. The report shows that many students in rural India are more likely to have progressed through the education system without acquiring foundational learning skills. Huge shortage of teachers and human resources further exacerbates the problems. 

Moreover, PLFS data also suggests that despite the focus on skill-building and training programmes in rural India, meaningful rural employment generation has yet to materialise. 

What then can be understood from India’s story of rural development? While skill and entrepreneurship development are important, they cannot deliver full benefits without adequate investment in social sectors such as health, education, and nutrition. Livelihood generation needs to be aligned with a deeper understanding of the rural economy’s structure. 

A sustainable rural policy must integrate welfare and employment generation by strengthening budgetary support for social infrastructure. At the same time, investments in rural infrastructure can expand economic opportunities, support human development, and promote more inclusive and equitable growth.

Post read questions

How did the early modernisation projects shape the rural development policies in India from the 1970s onwards? 

Can rural development be effectively measured through social indicators such as health, education, nutrition, or through purely economic growth metrics?

The welfare schemes like MGNREGS and self-employment schemes like PMEGP, Mudra Yojana reflect different models of rural development. Discuss. 

What do persistent gaps in health and education outcomes between rural and urban India reveal about the existing rural development programmes?

(Ritwika Patgiri is a doctoral candidate at the Faculty of Economics, South Asian University.)

Share your thoughts and ideas on UPSC Special articles with ashiya.parveen@indianexpress.com.

Subscribe to our UPSC newsletter and stay updated with the news cues from the past week.

Stay updated with the latest UPSC articles by joining our Telegram channel – IndianExpress UPSC Hub, and follow us on Instagram and X.