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Q48 (IAS/2020) Economy › Growth, Development, Poverty & Employment › Employment trends India Official Key

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 ?

Result
Your answer:  ·  Correct: B
Explanation

The correct answer is Option 2 (3 and 4 only). Post-1991 reforms significantly altered the rural economic landscape.

  • Statement 3 is correct: Liberalization facilitated a structural shift. The rural non-farm sector (construction, manufacturing, and services) grew as dependence on traditional agriculture declined, leading to increased non-farm output and income.
  • Statement 4 is correct: Despite the shift to non-farm sectors, the overall growth rate of rural employment slowed down. This period was characterized by "jobless growth," where productivity gains did not translate into proportional employment generation in rural regions.
  • Statement 1 is incorrect: Worker productivity actually increased in both urban and rural areas due to technological interventions and better capital access, not just urban areas.
  • Statement 2 is incorrect: The percentage share of the rural workforce in the total workforce has generally decreased over time due to rapid urbanization and migration to cities for better opportunities.

Thus, statements 3 and 4 accurately reflect the post-reform trends of non-farm expansion and sluggish employment growth.

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Q. With reference to the Indian economy after the 1991 economic liberalization, consider the following statements : 1. Worker productivity (…
At a glance
Origin: Mostly Current Affairs Fairness: Low / Borderline fairness Books / CA: 0/10 · 10/10

This is a classic 'Macro-Trend' question disguised as a data question. You don't need the NITI Aayog report; you need the 'Story of Indian Economy' since 1991: Urbanization, shift to Non-Farm jobs, and the infamous 'Jobless Growth'. If you understand the direction of these vectors, the data points become irrelevant.

How this question is built

This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.

Statement 1
After India's 1991 economic liberalization, did worker productivity (rupees per worker at 2004-05 prices) increase in urban areas?
Origin: Web / Current Affairs Fairness: CA heavy Web-answerable

Web source
Presence: 4/5
"Table 6.1. Trends in worker productivity (at current prices) across different worker categories in India (Rs/worker) Year Agricultural labour Cultivator Farm workers Non-farm rural workers All rural workers Urban 1970-71 821 1114 1018"
Why this source?
  • This passage presents Table 6.1 which lists worker-productivity figures including an 'Urban' series across years.
  • Presence of urban time-series data in the table implies changes (increases/decreases) in urban worker productivity over the decades.
Web source
Presence: 3/5
"The absolute level of income per worker has increased at modest rate over time."
Why this source?
  • States that the absolute level of income per worker has increased over time.
  • An overall rise in income per worker supports the inference that worker productivity increased (including in urban areas).
Web source
Presence: 3/5
"During 2011-12, urban workers earned 64 per cent higher income as compared to the non-farm workers of rural areas."
Why this source?
  • Reports that by 2011-12 urban workers earned substantially more than rural non-farm workers (64% higher), indicating higher urban per-worker incomes.
  • Higher urban per-worker income in 2011-12 is consistent with an increase in urban worker productivity over the period.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 7: Indian Economy after 2014 > 7.2 Manufacturing > p. 228
Strength: 5/5
“After India liberalized its economy in 1991, the services sector was among the fastest growing part of the economy, contributing significantly to GDP, economic growth, international trade and investment. Manufacturing contributes just 16 percent to India's GDP, compared to a 54 percent contribution by services. But the services sector employs fairly skilled people and India's most abundant resource is unskilled labour, that is why”
Why relevant

States that after 1991 liberalisation the services sector became the fastest growing part of the economy and now contributes a large share of GDP while manufacturing's share is much smaller.

How to extend

A student could combine this with the fact that services typically generate higher output per worker than low-productivity manufacturing/agriculture to suspect urban (service-dominated) productivity rose; then check urban GDP and urban worker counts to compute rupees per worker.

Understanding Economic Development. Class X . NCERT(Revised ed 2025) > Chapter 4: GLOBALISATION AND THE INDIAN ECONOMY > IMPACT OF GLOBALISATION IN INDIA > p. 65
Strength: 4/5
“In the last twenty years, globalisation of the Indian economy has come a long way. What has been its effect on the lives of people? Let us look at some of the evidence. Globalisation and greater competition among producers - both local and foreign producers - has been of advantage to consumers, particularly the well-off sections in the urban areas. There is greater choice before these consumers who now enjoy improved quality and lower prices for several products. As a result, these people today, enjoy much higher standards of living than was possible earlier. Among producers and workers, the impact of globalisation has not been uniform.”
Why relevant

Notes that globalisation benefited well-off urban consumers with better choices and higher standards of living, implying rising urban incomes and consumption.

How to extend

Use this as a clue that urban per-worker output or wages may have increased post-liberalisation and then compare urban nominal/real income series or urban GDP per worker (converted to 2004–05 prices).

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 8: Inclusive growth and issues > Need for inclusive growth in India > p. 253
Strength: 4/5
“Economic liberalization which began in the early 1990's has accelerated India's growth rate to 6% in the 1990's and about 7% to 8% in later decades from the meagre 3.5% growth achieved in the first three decades after independence. During this period India transformed itself from an agricultural economy to a services economy. Services now form 55% of the Indian economy. The growth and development of the Information Technology and Information Technology enabled services have had a significant role in changing the face of the economy. And India has become the fastest growing among the big economies. However, this high growth continues to bypass a large section of people.”
Why relevant

Reports that liberalisation accelerated GDP growth (to ~6–8%) and transformed India toward a services-dominated economy (services ~55% of GDP), while also noting many people were left out.

How to extend

A student could infer rising aggregate output (numerator) and, if urban employment growth was slower than output growth, expect higher urban output per worker; they would then compare urban employment and value-added time series to test the statement.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 8: Inclusive growth and issues > 8.13 Rising Income Inequality > p. 276
Strength: 3/5
“However, these may not be pragmatic solutions. The tax/GDP ratio has to be raised with a wider tax base rather than increasing the tax rate. The new and aspiring India wants equality of opportunity rather than redistributive measures. As we initiated the reforms in 1991, the Indian economy moved on a higher growth trajectory of 6.3%, which helped the government to raise more resources and it also pulled in a lot of population in the growth process. The proportion of nationwide population living below the poverty line (as per the planning commission estimates) fell from 36% (40.7 cr) in 1993-94 to 27.5% (35.5 cr) in 2004-05 and 21.9% (26.9 cr) in 2011-12.”
Why relevant

Gives evidence of falling national poverty rates and higher overall growth after 1991, indicating rising real incomes for many (aggregate welfare/productivity signals).

How to extend

Combine national per-capita/poverty improvements with urban bias of globalization to hypothesize stronger urban productivity gains, then verify by calculating urban rupees-per-worker from urban GDP and urban workforce data at 2004–05 prices.

Geography of India ,Majid Husain, (McGrawHill 9th ed.) > Chapter 11: Industries > Impact of Liberalisation > p. 80
Strength: 3/5
“materials, machinery, and finished products. Despite heavy imports, there has been a tangible improvement in the balance of payment. • 7. Increase in Regional Disparities: The policy of liberalisation and New Industrial Policy (1991) could not reduce the regional inequalities in economic development. In fact, investments by the Indians and foreign investors have been made in the states of Andhra Pradesh, Gujarat, Haryana, Karnataka, Maharashtra, Rajasthan, Tamil Nadu, and West Bengal. The states like Bihar, Himachal Pradesh, Jammu and Kashmir, Kerala, Meghalaya, Mizoram, Nagaland, Odisha, Tripura, Uttar Pradesh, and Uttarakhand are lagging behind. This has accentuated the regional imbalance. The maximum investment so far has been done in Maharashtra, Gujarat, Karnataka, Andhra Pradesh, West Bengal, and Tamil Nadu.”
Why relevant

States that liberalisation produced regional disparities with concentration of investment in particular states (many of which contain large urban centres).

How to extend

A student could use this to argue productivity gains were likely concentrated in specific urban areas (states listed), so they should check urban productivity trends at state/city level rather than only national urban aggregates.

Statement 2
After India's 1991 economic liberalization, did worker productivity (rupees per worker at 2004-05 prices) decrease in rural areas?
Origin: Web / Current Affairs Fairness: CA heavy Web-answerable

Web source
Presence: 5/5
"The absolute level of income per worker has increased at modest rate over time."
Why this source?
  • Directly states the trend in income per worker: it increased modestly over time, which contradicts a decrease in rural worker productivity.
  • Notes a recent decline in disparity but affirms absolute levels rose, so overall rural productivity did not fall.
Web source
Presence: 4/5
"worker productivity in non-farm sector was 2.25 times the worker productivity in farm sector. Subsequently, due to significantly higher growth in non-farm sector, the share of agriculture in rural output declined by 33.5 percentage points till the year 2004-05 but agriculture share in rural workforce declined by meagre 12.9 percentage points. Consequently, the disparity in worker productivity between farm and non-farm sectors increased to more than four times by the"
Why this source?
  • Describes how non-farm productivity was already higher and that by 2004-05 disparity between farm and non-farm increased (implying non-farm gains rather than a general rural decline).
  • Shows agricultural share in output fell while workforce share fell little, indicating shifts that raised per-worker gaps rather than an overall rural decline.
Web source
Presence: 4/5
"that among rural workers, agricultural labours are at the bottom in terms of worker productivity. Rural non-farm sector offers 2.76 times productive employment than the farm sector."
Why this source?
  • States that agricultural labourers are at the bottom in worker productivity and rural non-farm sector is substantially more productive, indicating increases in some rural categories rather than an overall fall.
  • Refers to trend tables of worker productivity, implying examination of levels over time (noting disparity remained high).

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 6: Indian Economy [1947 – 2014] > A comparison with China > p. 219
Strength: 5/5
“Reforms of the SOEs, in turn, triggered macroeconomic reforms, opening up the economy further. In Contrast, India liberalized the industrial and services sector in 1991 and it did not touch the agriculture sector where reforms are being introduced now (A Top-down approach). When in India, industrial/manufacturing and services sector liberalized in 1991, most of the companies went into services and did not enter into manufacturing as major bottlenecks were present for the manufacturing sector like issues in land acquisition, costly transport, costly electricity, labour laws etc. As our rural economy remained week, the demand of manufactured products never came from this section and resulted in less and inefficient production and whatever was required we started importing from China as this period also coincided with WTO's free trade policies.”
Why relevant

States that agriculture was not touched by 1991 reforms and the rural economy ‘remained weak’, implying limited productivity gains in rural sectors compared with industry/services.

How to extend

A student could compare sectoral GDP per worker time series (rural/agriculture vs national/services) before and after 1991 to see if rural rupees-per-worker stagnated or fell.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 8: Inclusive growth and issues > Need for inclusive growth in India > p. 253
Strength: 5/5
“Economic liberalization which began in the early 1990's has accelerated India's growth rate to 6% in the 1990's and about 7% to 8% in later decades from the meagre 3.5% growth achieved in the first three decades after independence. During this period India transformed itself from an agricultural economy to a services economy. Services now form 55% of the Indian economy. The growth and development of the Information Technology and Information Technology enabled services have had a significant role in changing the face of the economy. And India has become the fastest growing among the big economies. However, this high growth continues to bypass a large section of people.”
Why relevant

Notes that liberalisation shifted India from an agricultural to a services economy and that high growth bypassed a large section of people — suggesting gains concentrated outside rural/agricultural workers.

How to extend

One could use national accounts to partition growth by sector and infer rural worker productivity trends by comparing agricultural value-added per worker pre/post-1991.

Understanding Economic Development. Class X . NCERT(Revised ed 2025) > Chapter 2: SECTORS OF THE INDIAN ECONOMY > How to Protect Workers in the Unorganised Sector? > p. 31
Strength: 4/5
“Since the 1990s, it is also common to see a large number of workers losing their jobs in the organised sector. These workers are forced to take up jobs in the unorganised sector with low earnings. Hence, besides the need for more work, there is also a need for protection and support of the workers in the unorganised sector. Who are these vulnerable people who need protection? In the rural areas, the unorganised sector mostly comprises of landless agricultural labourers, small and marginal farmers, sharecroppers and artisans (such as weavers, blacksmiths, carpenters and goldsmiths). Nearly 80 per cent of rural households in India are in small and marginal farmer category.”
Why relevant

Explains that since the 1990s many organised-sector workers lost jobs and took low-earning unorganised jobs, and rural unorganised sector comprises low-income categories (landless labourers, small/marginal farmers).

How to extend

A student might check wage and employment composition data (organised vs unorganised; rural wages) to judge whether average rupees-per-worker in rural areas fell.

Geography of India ,Majid Husain, (McGrawHill 9th ed.) > Chapter 11: Industries > Impact of Liberalisation > p. 80
Strength: 4/5
“materials, machinery, and finished products. Despite heavy imports, there has been a tangible improvement in the balance of payment. • 7. Increase in Regional Disparities: The policy of liberalisation and New Industrial Policy (1991) could not reduce the regional inequalities in economic development. In fact, investments by the Indians and foreign investors have been made in the states of Andhra Pradesh, Gujarat, Haryana, Karnataka, Maharashtra, Rajasthan, Tamil Nadu, and West Bengal. The states like Bihar, Himachal Pradesh, Jammu and Kashmir, Kerala, Meghalaya, Mizoram, Nagaland, Odisha, Tripura, Uttar Pradesh, and Uttarakhand are lagging behind. This has accentuated the regional imbalance. The maximum investment so far has been done in Maharashtra, Gujarat, Karnataka, Andhra Pradesh, West Bengal, and Tamil Nadu.”
Why relevant

Points out liberalisation increased regional disparities with investments concentrated in certain states, implying many rural regions may not have benefited and thus could see stagnant/declining productivity.

How to extend

A student could map investment and state GDP-per-worker changes to test if lagging, largely rural states experienced declines in rupees-per-worker after 1991.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 3: Poverty, Inequality and Unemployment > 3.22 Indian Economy > p. 52
Strength: 3/5
“• Rate of Unemployment: As per the UPS method; Rural: 5.1%; Urban: 4.9%; Total: 5% • Rate of Unemployment: Rate of Unemployment; Rural: Male; Urban: Female; Total: Total From the analysis of the said report, it is also observed that - • LFPR in India is around 50.4 per cent and WFPR is 47.8 per cent. \bullet • About 70 per cent of the workforce comprises male workers. • 70 per cent of the workforce is found in rural areas. • Female workforce in rural areas is nearly 30 per cent, while it is 20 per cent in urban areas. ^{\circ} • Unemployment in rural areas is more. ë• As compared to males, unemployment is more in case of females (more in case of urban females).”
Why relevant

Provides labour-force distribution facts: about 70% of workforce in rural areas and higher rural unemployment — important context for interpreting aggregate rural productivity measures.

How to extend

Using labour-force shares and unemployment trends, a student could compute rupees-per-worker (total rural value-added divided by rural employed) to see direction of change post-1991.

Statement 3
After India's 1991 economic liberalization, did the percentage share of rural areas in India's total workforce steadily increase?
Origin: Web / Current Affairs Fairness: CA heavy Web-answerable

Web source
Presence: 5/5
"The rural areas engaged 84.1 per cent of the total workforce and produced 62.4 per cent of the total net domestic product (NDP) in 1970-71. Subsequently, rural share in the national income declined sharply till 1999-00. Rural share in total employment also witnessed a decline but its pace did not match with the changes"
Why this source?
  • Gives baseline and trend: rural areas engaged 84.1% of workforce in 1970-71 but rural share in total employment 'witnessed a decline'.
  • States rural share in national income declined sharply till 1999-00, implying employment share did not steadily rise after liberalization (1991).
Web source
Presence: 4/5
"In case of 5 services sector, rural areas lost to urban areas in a big way after 2004-05 and accounted for ... The most striking change in rural share was observed in the case of manufacturing sector. Between 1970-71 and 2011-12, the share of rural areas in output of manufacturing sector doubled ... However, this sharp increase in the rural share in"
Why this source?
  • Documents sectoral shifts after 2004-05, noting that 'rural areas lost to urban areas in a big way after 2004-05', which indicates rural employment share did not steadily increase.
  • Notes that increases in rural manufacturing output were not matched by commensurate increases in rural employment, further undermining a steady rise in rural workforce share.

CONTEMPORARY INDIA-I ,Geography, Class IX . NCERT(Revised ed 2025) > Chapter 6: Population > Activity On a map, trace the migration of each of your grandparents and parents since their birth. Try and analyse the reasons for each move. > p. 53
Strength: 5/5
“In India, most migrations have been from rural to urban areas because of the "push" factor in rural areas. These are adverse conditions of poverty and unemployment in the rural areas and the "pull" of the city in terms of increased employment opportunities and better living conditions. Migration is an important determinant of population change. It changes not only the population size but also the population composition of urban and rural populations in terms of age and sex composition. In India, the rural-urban migration has resulted in a steady increase in the percentage of population in cities and towns. The urban population has increased from 17.29 per cent of the total population in 1951 to 31.80 per cent in 2011.”
Why relevant

States that rural→urban migration has caused a steady increase in urban population (1951:17.29% → 2011:31.80%), implying a declining rural share of population (and plausibly workforce).

How to extend

A student could combine this with census/workforce time-series to check if rising urban population coincides with falling rural workforce share after 1991.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 3: Poverty, Inequality and Unemployment > OCCUPATIONAL STRUCTURE IN INDIA > p. 54
Strength: 5/5
“Source: PLFS 2017-18. From the above graph and other analysis, it is observed that • In rural areas, workforce is mainly engaged in the primary sector.• In urban areas, tertiary sector has the largest chunk of workforce. • Overall, the primary sector has the largest proportion of workforce employed. • The percentage of female workforce engaged in the primary sector is 57.3 per cent, whereas for male workforce, it is 45 per cent. Occupational Structure in | In 1950-51 | In 2017-18 • Primary sector | 72.7% | 42.4% (decreased) • Secondary sector | 10% | 24.9% (increased) • Tertiary sector | 17.3% | 32.6% (increased)”
Why relevant

Gives occupational-structure trend: primary-sector employment fell from 72.7% (1950–51) to 42.4% (2017–18), and rural workforce is mainly in primary sector — indicating long-run decline in rural/primary employment share.

How to extend

One can map primary-sector decline to rural workforce share using labour surveys (PLFS/ census) to test post‑1991 trends.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 6: Indian Economy [1947 – 2014] > A comparison with China > p. 219
Strength: 4/5
“Reforms of the SOEs, in turn, triggered macroeconomic reforms, opening up the economy further. In Contrast, India liberalized the industrial and services sector in 1991 and it did not touch the agriculture sector where reforms are being introduced now (A Top-down approach). When in India, industrial/manufacturing and services sector liberalized in 1991, most of the companies went into services and did not enter into manufacturing as major bottlenecks were present for the manufacturing sector like issues in land acquisition, costly transport, costly electricity, labour laws etc. As our rural economy remained week, the demand of manufactured products never came from this section and resulted in less and inefficient production and whatever was required we started importing from China as this period also coincided with WTO's free trade policies.”
Why relevant

Notes that rural economy remained weak after 1991, demand for manufactured goods from rural areas stayed low, and agricultural sector was largely untouched by reforms — suggesting limited rural job growth from liberalization.

How to extend

Use this pattern to hypothesize that post‑1991 growth favored services/urban jobs; then compare workforce shares before and after 1991 to confirm.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 8: Inclusive growth and issues > Need for inclusive growth in India > p. 253
Strength: 4/5
“Economic liberalization which began in the early 1990's has accelerated India's growth rate to 6% in the 1990's and about 7% to 8% in later decades from the meagre 3.5% growth achieved in the first three decades after independence. During this period India transformed itself from an agricultural economy to a services economy. Services now form 55% of the Indian economy. The growth and development of the Information Technology and Information Technology enabled services have had a significant role in changing the face of the economy. And India has become the fastest growing among the big economies. However, this high growth continues to bypass a large section of people.”
Why relevant

Describes transformation from an agricultural economy to a services economy after liberalization, with services forming ~55% of GDP — implying employment growth concentrated outside agriculture/rural areas.

How to extend

A student could check sectoral employment data (agriculture vs services) over 1991–present to infer corresponding rural workforce share changes.

INDIA PEOPLE AND ECONOMY, TEXTBOOK IN GEOGRAPHY FOR CLASS XII (NCERT 2025 ed.) > Chapter 3: Land Resources and Agriculture > Land-use Changes in India > p. 23
Strength: 3/5
“Five categories have undergone increases, while four have registered declines. Share of area under forest, area under non-agricultural uses, current fallow lands and net area sown have shown an increase. The following observations can be made about these increases: (i) The rate of increase is the highest in case of area under non-agricultural uses. This is due to the changing structure of Indian economy, which is increasingly depending on the contribution from industrial and services sectors and expansion of related infrastructural facilities. Also, an expansion of area under both urban and rural settlements has added to the increase.”
Why relevant

Reports increase in area under non-agricultural uses and expansion of urban/rural settlements due to growth in industry/services — consistent with structural change and urban-centric development.

How to extend

Combine land-use/urban expansion evidence with migration and employment statistics to test whether rural workforce share fell rather than rose post‑1991.

Statement 4
After India's 1991 economic liberalization, did growth in the rural non-farm economy increase?
Origin: Web / Current Affairs Fairness: CA heavy Web-answerable

Web source
Presence: 5/5
"During the period 2004-05 to 2011-12, agriculture sector witnessed revival and registered impressive annual growth rate of 4.27 per cent. Similarly, non-farm sectors growth accelerated to 9.21 per cent."
Why this source?
  • Provides explicit post-reform period growth rates showing a strong acceleration in non-farm sector growth.
  • Quantifies non-farm growth (9.21%) for 2004-05 to 2011-12, indicating increased non-farm activity in the rural economy after reforms.
Web source
Presence: 4/5
"sector as compared to 5.70 per cent annual growth in non-farm sectors (Table 3.1). As a consequence, the share of agriculture in the rural NDP declined from 72.4 per cent to 57 per cent by the year 1993-94 (Table 3.2). Among the non-farm sectors, manufacturing, construction and services sectors experienced 5.18, 3.94 and 6.10 per cent annual growth, and their share in rural NDP increased by 2, 2 and 10 percentage points during the pre-reforms period, respectively. 7 During the post-reform period (1993-94 and 2004-05), growth in agricultural sector decelerated to 1.87 per cent, whereas growth rate in non-farm economy"
Why this source?
  • Describes changes across pre- and post-reform periods, noting a decline in agricultural share and highlighting non-farm sector growth rates.
  • Specifically contrasts decelerating agricultural growth with continued activity in non-farm sectors during the post-reform period.
Web source
Presence: 4/5
"After 2004-05, the rural areas have witnessed negative growth in employment in-spite of high growth in output."
Why this source?
  • Notes that after 2004-05 rural areas saw high output growth despite negative employment growth, consistent with rising output in non-farm (and other) rural sectors.
  • Supports the view that rural output (including non-farm activity) increased in the post-reform period even if employment did not keep pace.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 6: Indian Economy [1947 – 2014] > A comparison with China > p. 219
Strength: 4/5
“Reforms of the SOEs, in turn, triggered macroeconomic reforms, opening up the economy further. In Contrast, India liberalized the industrial and services sector in 1991 and it did not touch the agriculture sector where reforms are being introduced now (A Top-down approach). When in India, industrial/manufacturing and services sector liberalized in 1991, most of the companies went into services and did not enter into manufacturing as major bottlenecks were present for the manufacturing sector like issues in land acquisition, costly transport, costly electricity, labour laws etc. As our rural economy remained week, the demand of manufactured products never came from this section and resulted in less and inefficient production and whatever was required we started importing from China as this period also coincided with WTO's free trade policies.”
Why relevant

States that India's rural economy remained weak after 1991 while services and industry liberalized, implying limited demand from rural areas for manufactured goods.

How to extend

A student could combine this with labour-market or district-level data (e.g., rural employment by sector) to check whether non-farm rural activity expanded despite weak rural demand.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 8: Inclusive growth and issues > Need for inclusive growth in India > p. 253
Strength: 4/5
“Economic liberalization which began in the early 1990's has accelerated India's growth rate to 6% in the 1990's and about 7% to 8% in later decades from the meagre 3.5% growth achieved in the first three decades after independence. During this period India transformed itself from an agricultural economy to a services economy. Services now form 55% of the Indian economy. The growth and development of the Information Technology and Information Technology enabled services have had a significant role in changing the face of the economy. And India has become the fastest growing among the big economies. However, this high growth continues to bypass a large section of people.”
Why relevant

Shows post‑1991 growth concentrated in services and that this high growth 'bypassed a large section of people', suggesting uneven spread of gains to rural areas.

How to extend

Use regional/state-level GDP or sectoral growth breakdowns to see if rural regions saw rising non-farm output or remained excluded from the services boom.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 7: Indian Economy after 2014 > 7.2 Manufacturing > p. 228
Strength: 4/5
“After India liberalized its economy in 1991, the services sector was among the fastest growing part of the economy, contributing significantly to GDP, economic growth, international trade and investment. Manufacturing contributes just 16 percent to India's GDP, compared to a 54 percent contribution by services. But the services sector employs fairly skilled people and India's most abundant resource is unskilled labour, that is why”
Why relevant

Notes services were the fastest-growing sector after 1991 while manufacturing remained small (16% of GDP) and India's abundant resource was unskilled labour—characteristic of the rural workforce.

How to extend

Compare occupational shifts in rural districts (agriculture → services/manufacturing) to infer whether rural non‑farm employment rose.

INDIA PEOPLE AND ECONOMY, TEXTBOOK IN GEOGRAPHY FOR CLASS XII (NCERT 2025 ed.) > Chapter 3: Land Resources and Agriculture > Land-use Changes in India > p. 23
Strength: 3/5
“Five categories have undergone increases, while four have registered declines. Share of area under forest, area under non-agricultural uses, current fallow lands and net area sown have shown an increase. The following observations can be made about these increases: (i) The rate of increase is the highest in case of area under non-agricultural uses. This is due to the changing structure of Indian economy, which is increasingly depending on the contribution from industrial and services sectors and expansion of related infrastructural facilities. Also, an expansion of area under both urban and rural settlements has added to the increase.”
Why relevant

Reports increase in 'area under non‑agricultural uses' and expansion of rural settlements, a land‑use pattern often associated with growth of rural non‑farm activities and infrastructure.

How to extend

A student could link land‑use changes with local industrial/commerce growth (e.g., rural markets, agri‑processing units) to assess growth in rural non‑farm economy.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 8: Inclusive growth and issues > 8.13 Rising Income Inequality > p. 276
Strength: 3/5
“However, these may not be pragmatic solutions. The tax/GDP ratio has to be raised with a wider tax base rather than increasing the tax rate. The new and aspiring India wants equality of opportunity rather than redistributive measures. As we initiated the reforms in 1991, the Indian economy moved on a higher growth trajectory of 6.3%, which helped the government to raise more resources and it also pulled in a lot of population in the growth process. The proportion of nationwide population living below the poverty line (as per the planning commission estimates) fell from 36% (40.7 cr) in 1993-94 to 27.5% (35.5 cr) in 2004-05 and 21.9% (26.9 cr) in 2011-12.”
Why relevant

Documents a fall in poverty and that reforms pulled a lot of population into the growth process, which could reflect increased non‑farm opportunities for some rural households.

How to extend

Cross‑check timing and location of poverty reduction against rises in rural non‑farm incomes/employment to test whether non‑farm growth contributed.

Statement 5
After India's 1991 economic liberalization, did the growth rate of rural employment decrease?
Origin: Web / Current Affairs Fairness: CA heavy Web-answerable

Web source
Presence: 5/5
"Rural employment showed 2.16 per cent annual growth rate during the pre-reform period, which decelerated in the post-reform period to 1.45% and turned negative (-0.28%) in the period of economic acceleration."
Why this source?
  • Gives explicit annual growth rates for rural employment before and after reform, showing a decline.
  • States rural employment decelerated post-reform and turned negative during the later high-growth period.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 3: Poverty, Inequality and Unemployment > JOBLESS GROWTH > p. 55
Strength: 5/5
“It is a phenomenon where the level of GDP increases in the economy without a perceptible rise in the level of employment; i.e. GDP growth happens to be faster than employment growth. Jobless growth leads to chronic unemployment even when there is a rise in the GDP growth rate. It occurs due to the greater use of efficient technology rather than greater use of manpower in achieving the desired level of GDP growth. In India between 1951 and 2000, while annual GDP growth rate had risen from 3.6 per cent to around 8 per cent, the growing rate of employment has tended to slide down from 1.5 per cent to just about 1 per cent, thereby resulting in jobless growth.”
Why relevant

Defines 'jobless growth' and gives a historical pattern: GDP growth rose while employment growth 'tended to slide down' (employment growth from ~1.5% to ~1%).

How to extend

A student could check whether the slide in employment growth after 1991 was concentrated in rural employment by comparing pre- and post-1991 employment growth rates from labour surveys.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 8: Inclusive growth and issues > Need for inclusive growth in India > p. 253
Strength: 4/5
“Economic liberalization which began in the early 1990's has accelerated India's growth rate to 6% in the 1990's and about 7% to 8% in later decades from the meagre 3.5% growth achieved in the first three decades after independence. During this period India transformed itself from an agricultural economy to a services economy. Services now form 55% of the Indian economy. The growth and development of the Information Technology and Information Technology enabled services have had a significant role in changing the face of the economy. And India has become the fastest growing among the big economies. However, this high growth continues to bypass a large section of people.”
Why relevant

Notes post‑1990s liberalisation transformed India toward a services economy and that this high growth 'bypasses a large section of people'.

How to extend

A student could infer that growth concentrated in services (urban/skill‑intensive) might not generate rural jobs, then test this by comparing sectoral employment shares over time (rural vs urban, agriculture vs services).

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 7: Indian Economy after 2014 > 7.2 Manufacturing > p. 228
Strength: 4/5
“After India liberalized its economy in 1991, the services sector was among the fastest growing part of the economy, contributing significantly to GDP, economic growth, international trade and investment. Manufacturing contributes just 16 percent to India's GDP, compared to a 54 percent contribution by services. But the services sector employs fairly skilled people and India's most abundant resource is unskilled labour, that is why”
Why relevant

States services became fast‑growing after 1991 while manufacturing remained small and services 'employ fairly skilled people' whereas India has abundant unskilled labour.

How to extend

One could extend this to hypothesise that rural (often less‑skilled) workers had fewer opportunities post‑1991, then verify via data on rural employment by sector and skill level.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 10: Agriculture - Part I > 10.2 Agriculture in India: A brief history > p. 302
Strength: 4/5
“Agriculture is the most important sector of Indian economy from the perspective of poverty alleviation and employment generation and contribution to nation's GDP. The share of agriculture in national GDP has been declining from over 50% in 1950-51 to 16% in 2019- 20. In 1950-51, agriculture provided 70% employment which has now decreased to around42%. Hence the growth of Indian agriculture can be considered necessary condition for 'inclusive growth'. A report published by the World Bank says that "Growth in agriculture is critical for any economy as research has revealed that GDP growth originating in agriculture is at least twice as effective in reducing poverty as GDP growth originating outside agriculture".”
Why relevant

Documents long‑term decline in agriculture's GDP share (over 50% to 16%) and a fall in agriculture's employment share (70% to ~42%).

How to extend

A student might use this pattern to ask whether the rate of decline in rural/agricultural employment accelerated after 1991 by examining decade‑wise employment shares.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 6: Indian Economy [1947 – 2014] > A comparison with China > p. 219
Strength: 3/5
“Reforms of the SOEs, in turn, triggered macroeconomic reforms, opening up the economy further. In Contrast, India liberalized the industrial and services sector in 1991 and it did not touch the agriculture sector where reforms are being introduced now (A Top-down approach). When in India, industrial/manufacturing and services sector liberalized in 1991, most of the companies went into services and did not enter into manufacturing as major bottlenecks were present for the manufacturing sector like issues in land acquisition, costly transport, costly electricity, labour laws etc. As our rural economy remained week, the demand of manufactured products never came from this section and resulted in less and inefficient production and whatever was required we started importing from China as this period also coincided with WTO's free trade policies.”
Why relevant

Argues the rural economy remained weak after 1991, reducing demand for manufactured goods and limiting rural‑led industrial growth.

How to extend

This suggests a mechanism for declining rural employment growth; a student could look for regional/sectoral employment trends and manufacturing rural linkages after 1991 to test it.

Pattern takeaway: UPSC tests 'Economic Logic' over 'Economic Data'. Any statement claiming a 30-year trend that contradicts fundamental development economics (e.g., productivity falling, rural workforce share rising) is almost certainly a trap.
How you should have studied
  1. [THE VERDICT]: Conceptual Sitter disguised as Data Bouncer. Solvable by eliminating anti-development trends (Statements 1 & 2).
  2. [THE CONCEPTUAL TRIGGER]: Structural Transformation of the Economy. The Lewis Model transition from Agrarian to Industrial/Service economy.
  3. [THE HORIZONTAL EXPANSION]: Memorize the 'Vectors of Change' (1991–2020): 1) Ag Share in GDP: ~30% -> ~18%. 2) Ag Share in Employment: ~60% -> ~45%. 3) Rural Non-Farm Sector (RNFS): Now contributes >50% of Rural Income. 4) Employment Elasticity: Sharp decline (Jobless Growth). 5) Urbanization: ~25% -> ~34%.
  4. [THE STRATEGIC METACOGNITION]: Do not memorize absolute numbers (like ₹ per worker). Memorize the *Slope*. Is the graph going up or down? Productivity generally goes up; Rural workforce share generally goes down. Apply this 'Directional Logic' to validate statements.
Concept hooks from this question
📌 Adjacent topic to master
S1
👉 Post-1991 structural shift to services
💡 The insight

Economic liberalisation shifted India's output composition toward services, altering where value-added and skilled employment concentrated.

High-yield for UPSC: explains changes in GDP composition, links to urban employment and productivity questions, and frames policy debates on manufacturing vs services-led growth. Useful for answering questions on structural transformation, labor market outcomes, and sectoral productivity.

📚 Reading List :
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 8: Inclusive growth and issues > Need for inclusive growth in India > p. 253
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 7: Indian Economy after 2014 > 7.2 Manufacturing > p. 228
🔗 Anchor: "After India's 1991 economic liberalization, did worker productivity (rupees per ..."
📌 Adjacent topic to master
S1
👉 Regional concentration and rising regional disparities
💡 The insight

Liberalisation led to investment concentrating in specific states, increasing regional imbalances in economic development.

Important for UPSC: informs answers on migration, urbanization pressures, uneven employment growth, and the need for regional policy interventions. Helps connect industrial policy to spatial productivity and labor market outcomes.

📚 Reading List :
  • Geography of India ,Majid Husain, (McGrawHill 9th ed.) > Chapter 11: Industries > Impact of Liberalisation > p. 80
🔗 Anchor: "After India's 1991 economic liberalization, did worker productivity (rupees per ..."
📌 Adjacent topic to master
S1
👉 Growth acceleration and poverty reduction post-reforms
💡 The insight

The 1991 reforms raised average growth rates and corresponded with a decline in measured poverty between the early 1990s and 2004–05.

Valuable for UPSC: links macro growth to welfare outcomes and allows evaluation of whether growth was inclusive; assists in constructing arguments about growth's impact on livelihoods, productivity, and urban-rural differences.

📚 Reading List :
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 8: Inclusive growth and issues > 8.13 Rising Income Inequality > p. 276
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 8: Inclusive growth and issues > Need for inclusive growth in India > p. 253
🔗 Anchor: "After India's 1991 economic liberalization, did worker productivity (rupees per ..."
📌 Adjacent topic to master
S2
👉 Sectoral shift from agriculture to services
💡 The insight

India moved from an agriculture-dominated economy toward services after the early 1990s, changing where growth and jobs were created.

High-yield for UPSC because structural transformation explains trends in GDP composition, employment, and rural incomes; connects to questions on inclusive growth, employment policy, and macroeconomic outcomes. Enables analytical answers on how services-led growth can bypass rural/agricultural sectors.

📚 Reading List :
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 8: Inclusive growth and issues > Need for inclusive growth in India > p. 253
🔗 Anchor: "After India's 1991 economic liberalization, did worker productivity (rupees per ..."
📌 Adjacent topic to master
S2
👉 Growth of unorganised rural employment and lower earnings
💡 The insight

Many workers displaced in the 1990s moved into unorganised rural jobs that typically yield lower earnings and weaker protection.

Important for questions on labour markets, social protection and rural poverty; helps link unemployment, informalisation, and policy responses (welfare, rural employment schemes). Useful for evaluating impacts of economic reforms on vulnerable workers.

📚 Reading List :
  • Understanding Economic Development. Class X . NCERT(Revised ed 2025) > Chapter 2: SECTORS OF THE INDIAN ECONOMY > How to Protect Workers in the Unorganised Sector? > p. 31
🔗 Anchor: "After India's 1991 economic liberalization, did worker productivity (rupees per ..."
📌 Adjacent topic to master
S2
👉 Post‑1991 regional and sectoral unevenness of investment
💡 The insight

Liberalisation concentrated investment in selected states and sectors, leaving large rural areas and certain states lagging behind.

Crucial for questions on regional disparities, federal development policy, and migration; helps frame policy prescriptions to promote balanced growth and rural development. Enables comparison of state-wise outcomes of liberalisation.

📚 Reading List :
  • Geography of India ,Majid Husain, (McGrawHill 9th ed.) > Chapter 11: Industries > Impact of Liberalisation > p. 80
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 6: Indian Economy [1947 – 2014] > A comparison with China > p. 219
🔗 Anchor: "After India's 1991 economic liberalization, did worker productivity (rupees per ..."
📌 Adjacent topic to master
S3
👉 Agriculture-to-Services Structural Shift
💡 The insight

India moved from an agriculture-dominated economy toward a services-led economy after the early 1990s, changing sectoral contribution to GDP and employment patterns.

High-yield for UPSC: explains broad economic transformation, links liberalisation to sectoral growth and employment outcomes, and helps answer questions on growth-without-employment or sectoral imbalance. Useful for essays/GS mains and economy polity linkages on rural distress and policy responses.

📚 Reading List :
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 8: Inclusive growth and issues > Need for inclusive growth in India > p. 253
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 7: Indian Economy after 2014 > 7.2 Manufacturing > p. 228
🔗 Anchor: "After India's 1991 economic liberalization, did the percentage share of rural ar..."
🌑 The Hidden Trap

The 'Feminization of Agriculture'. While the overall rural workforce growth slowed (Statement 4), the share of women in agriculture increased relative to men, as men migrated to urban areas for non-farm work. Expect a statement on 'Male vs Female' trends in rural employment.

⚡ Elimination Cheat Code

Apply the 'Development Axiom': Over a 30-year liberalization period, economies modernize. Modernization means: 1) Productivity rises (Technology), 2) People move to cities (Urbanization). Statement 1 says Rural Productivity *decreased* (Impossible with Green Revolution/Tech). Statement 2 says Rural Workforce Share *increased* (Contradicts Urbanization). Eliminate 1 and 2. Options A and D are gone. You are left with B or C.

🔗 Mains Connection

Mains GS-3 (Inclusive Growth): The deceleration in rural employment growth (Statement 4) directly links to 'Distress Migration' and the necessity of MGNREGA. It explains why rural distress persists despite rising productivity.

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SIMILAR QUESTIONS

IAS · 2017 · Q77 Relevance score: 3.55

Which of the following has/have occurred in India after its liberalization of economic policies in 1991 ? 1. Share of agriculture in GDP increased enormously. 2. Share of India's exports in world trade increased. 3. FDI inflows increased. 4. India's foreign exchange reserves increased enormously. Select the correct answer using the codes given below :

IAS · 2015 · Q81 Relevance score: 2.93

With reference to Indian economy, consider the following statements : 1. The rate of growth of Real Gross Domestic Product has steadily increased in the last decade. 2. The Gross Domestic Product at market prices (in rupees) has steadily increased in the last decade. Which of the statements given above is/are correct?

IAS · 2010 · Q87 Relevance score: 2.64

With reference to India economy, consider the following statements: 1. The Gross Domestic Product (GDP) has increased by four times in the last 10 years 2. The percentage share of Public Sector in GDP has declined in the last 10 years Which of the statements given above is/are correct?

IAS · 2022 · Q92 Relevance score: 1.80

With reference to the Indian economy, consider the following statements : 1. An increase in Nominal Effective Exchange Rate (NEER) indicates the appreciation of rupee. 2. An increase in the Real Effective Exchange Rate (REER) indicates an improvement in trade competitiveness. 3. An increasing trend in domestic inflation relative to inflation in other countries is likely to cause an increasing divergence between NEER and REER. Which of the above statements are correct ?

IAS · 2011 · Q81 Relevance score: 1.25

In the context of Indian economy, consider the following statements : 1. The growth rate of GDP has steadily increased in the last five years. 2. The growth rate in per capita income has steadily increased in the last five years. Which of the statements given above is/ are correct?