QUESTION

Hard

Economy

Prelims 2020

With reference of the Indian economy after the 1991 economic liberalization, consider the following statements:

  1. Worker productivity (per worker at 2004-05 prices) increased in urban areas while it decreased in rural areas.
  2. The percentage share of rural areas in the workforce steadily increased.
  3. In rural areas, the growth in non-farm economy increased.
  4. The growth rate in rural employment decreased.

Which of the statements given above is/are correct?

Select an option to attempt

Explanation

Statement 1 is incorrect. After the 1991 economic liberalization, worker productivity increased both in urban and rural areas. While urban areas experienced higher growth, rural areas also saw improvements, especially with the rise in non-farm activities.

Statement 2 is incorrect. The percentage share of rural areas in the workforce has steadily decreased since liberalization. This is because more people have moved to urban areas for employment in the industrial and service sectors, contributing to the growing urban workforce.

Statement 3 is correct. In rural areas, the growth of the non-farm economy increased significantly. With liberalization, the diversification of rural economies into sectors like manufacturing, construction, and services grew, reducing the dependency on agriculture.

Statement 4 is correct. The growth rate in rural employment decreased after 1991. While the rural economy diversified, the agricultural sector did not provide enough employment opportunities to absorb all the labor, leading to lower growth in rural employment.

Hence, option B is the correct answer.

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