Urbanisation is good

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: A country’s per capita income is an indicator of its level of well-being, or poverty. Without getting into differences between gross national income and gross domestic product, per capita national income is national income divided by total population. Not all of that population is in the work-force. Everything else remaining the same, the higher the average productivity of the working-age population, the greater will be a country’s per capita income and level of well-being. That’s how every country in the world has developed and prospered, by increasing the productivity of the work-force. That’s exactly what India has to do—increase the productivity of its young population. Increasing productivity in the same occupation is always difficult. However, what distinguishes a rapid period of demographic transition and fast development is that productivity increases don’t have to occur in the same occupation, or even for the present working generation. The next generation moves up the ladder, not just vertically, but horizontally too. In the history of economic development, four occupational shifts have gone hand in hand with progress—a shift from rural to urban, a shift from farm to non-farm, a shift from the unorganised to the organised and a shift from subsistence self-employment to decent wage employment. There are policy constraints that inhibit these shifts in India. The argument is that had it not been for policy-induced constraints, these shifts would have occurred naturally and India would have been a less poor country than it is today. In this article, we will take up the first transition— rural to urban.

Where is India’s work-force employed? The NSS (National Sample Survey) doesn’t provide large-sample answers to this question every year. On an average, that answer is available once every five years. The last year for which that answer is available is 2004-05, the 61 st Round of the NSS.