UPSC 2020EconomyModerate

With reference to 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 ?

A
1 and 2 only
B
3 and 4 only
Correct Answer
C
3 only
D
1, 2 and 4 only

Explanation

Statements 3 and 4 are correct because post-1991, the rural economy diversified significantly into non-farm sectors like construction and services, while the overall growth rate of rural employment decelerated due to mechanization and structural shifts. Statement 1 is a common misconception; it is incorrect because worker productivity (output per worker) actually increased in both rural and urban areas, rather than decreasing in rural regions. The core concept tested is the structural transformation of the Indian labor market and the shifting productivity dynamics between rural and urban sectors following economic liberalization.

Indian EconomyEconomic Reforms 1991 - Impact on Rural and Urban Economy1991 economic liberalizationworker productivityurban areasrural areasworkforcenon-farm economyrural employment

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