A perspective on Shift from the Agrarian to Manufacturing Economy in India

Amey Subhedar , 21CHE104

India's agrarian crisis is not merely an economic issue, but a symptom of deeper
structural imbalances. The neoliberal reforms introduced in 1991 have driven high GDP
growth in urban sectors like services, yet have failed to benefit the rural population,
particularly the agricultural workforce. Agriculture, once central to India's economy,
now struggles with a shrinking contribution to GDP while still employing over half of the
country’s labour force. This has created a stark disconnect between rural livelihoods
and the broader economy, leading to stagnant rural employment and deepening
economic inequality.
The shift to market-driven policies has intensified the crisis in agriculture. Farmers,
especially smallholders, have been left exposed to market volatility with reduced state
support. The neoliberal agenda, with its focus on liberalization, has failed to address the
specific needs of the rural economy, making it harder for farmers to cope with rising
costs, indebtedness, and unpredictable global markets. This has not only trapped many
in poverty but has also contributed to alarming rates of farmer suicides. The underlying
issue is the lack of holistic rural development that integrates agricultural progress with
broader industrial and infrastructural growth.
The crisis also manifests in worsening food security and nutritional standards. As
economic policies shifted focus, the rural poor have been left more vulnerable to hunger
and malnutrition, unable to access or afford adequate food despite the broader narrative
of economic growth. This reflects a systemic failure to ensure that the fruits of economic
progress reach the most marginalized, particularly in rural India.
At the heart of the agrarian crisis is the rising inequality—both in terms of land
ownership and income distribution. Land reforms have largely been ineffective, with
wealthier rural elites consolidating their positions while small farmers remain trapped
in low productivity cycles. The benefits of economic liberalization have bypassed these
rural populations, deepening divisions between urban growth and rural stagnation.
India’s current path of economic development has widened this rural-urban divide. To
resolve the agrarian crisis, India must shift its focus from urban-centric, neoliberal
growth to a more inclusive model that prioritizes rural infrastructure, institutional
support for small farmers, and sustainable agricultural practices. Only by addressing the
structural roots of rural distress can India hope to balance growth with equity, ensuring
that rural communities share in the nation's progress.
This emphasizes that the agrarian crisis is not simply a matter of policy adjustment but
a fundamental challenge to India's development model, calling for a rethinking of
priorities that places rural livelihoods at the centre of the nation’s economic strategy.
References: -
i) http://www.vcdh.virginia.edu/solguide/VUS08/essay08b.html
ii) https://www.blackwellpublishing.co.uk/content/BPL_Images/
Content_store/Sample_chapter/0745623441/001.pdf
Aayush Ashish Bhoite, 21CHE112
India’s transition from an agrarian to a manufacturing economy is a complex process
shaped by historical, cultural, and economic contexts. Historically, agriculture has been
the backbone of India’s economy, providing livelihood to the majority of its population.
Even today, nearly half of India's workforce is engaged in agriculture, though its
contribution to the GDP has been steadily declining, reflecting the increasing
importance of industry and services.
After independence, India’s industrialization began with government-led initiatives such
as the Five-Year Plans, focusing on developing heavy industries and public sector
enterprises. However, the true shift towards a market-driven manufacturing economy
came after the 1991 economic reforms. These reforms opened the economy to private
sector participation and foreign investment, fueling growth in industries like textiles,
automobiles, and electronics. This transformation created employment opportunities
and increased India’s participation in global trade.
Despite these advancements, India’s transition faces several challenges. One significant
issue is the underemployment and low productivity in the agricultural sector, where
labor-intensive and outdated farming techniques limit income growth. As a result, many
rural workers migrate to cities in search of better opportunities. Furthermore, the skill
gap between rural laborers and the demands of industrial jobs hampers the smooth
transition from agriculture to manufacturing.
Another challenge is the uneven geographic distribution of industrial growth. While
regions like Maharashtra, Gujarat, and Tamil Nadu have experienced rapid
industrialization, other areas remain largely agrarian. This disparity has led to regional
inequalities, creating economic and social tensions.
For India to fully transition to a manufacturing economy, it is essential to invest in
human capital through education and skill development. This will help the labor force
shift from low-productivity agriculture to higher-paying industrial jobs. At the same
time, modernizing agriculture through new technologies, improved irrigation, and
sustainable practices is crucial for ensuring rural livelihoods while supporting industrial
demand.
The "Make in India" initiative aims to position India as a global manufacturing hub by
attracting foreign direct investment (FDI) and fostering entrepreneurship. However, its
success depends on addressing infrastructural bottlenecks and implementing labor and
regulatory reforms to create a conducive environment for growth.
In conclusion, India’s transition from an agrarian to a manufacturing economy is a work
in progress. By addressing the challenges of agricultural productivity and labor skill
gaps, while promoting inclusive and sustainable development, India can navigate this
shift successfully, leading to long-term economic prosperity.
Reference:
Economic Development and Cultural change, Vol. 34, The Transition from an
Agricultural to an Industrial Economy in East Asia, https://doi.org/10.1086/451559
Bhavya Dhami, 21CHE125
Industrialization signifies the shift of a society from an agrarian economy to a
manufacturing/industrial economy. This leads to rapid development of the society with
several changes to people’s way of life. There are pros and cons to this shift. There are new
jobs created, with perhaps a more reliable source of income for workers. New products and
commodities are made available to the masses, and investments from national as well as
international organizations are made in the region. A number of factors describe the shift from
an agrarian to a manufacturing economy that crucially involves the role of urbanization; but
the cities generally become the centre for conducting trade, production, population migration,
and state-building events culminating in industrial economies and the decline of agrarian-
based societies.

For all these economic drivers, commerce is one of the most important drivers in this process.
The development of urban centres as centres of commerce that link rural areas to regional and
international markets is an important aspect of this. Transport routes are also more setup more
extensively, allowing for better connectivity between urban and rural regions. This dynamic
is very much traceable in medieval Europe, where both Venice and Antwerp showed
themselves as strong centres of maritime trade. Cities also begin to exert domination over the
countryside, acquiring all necessary resources and exercising economic influence in the
vicinity.

The production process makes a similarly significant contribution. Urban areas thus benefit
from the division of labour and become manufacturing areas. Electricity is more accessible
and a proper power grid is setup in the cities, and stable jobs are provided to the people who
end up living in the cities. These things help increase the quality of life due to an
improvement in the infrastructure of the region. What is thus developed is the division
between the production in the cities and agriculture from rural areas, another great break from
the past when economies were mainly based on subsistence farming. Aggregated labour and
resources give way to greater efficiency and pave the road for mass industrialization while
concentrating labour and resources in cities.
However, industrialization has its fair share of problems as well. The setup of manufacturing
units leads to an inherent increase in pollution in the area. Waste in all three phases, solid,
liquid and gas are generated. This leads to a detriment in the health of people living near the
manufacturing units. Along with this, the waste will also have severe environmental impact,
leading to an imbalance in the ecosystem. Proper waste management policies are the only
way to avoid this increase in pollution, forcing the industries to deal with their waste
diligently.
Population movements are both a cause and effect of urbanization. As agricultural economies
become more mechanized and required fewer workers, rural populations migrated to cities in
search of employment. This demographic shift, often called demographic urbanization,
contributes to the rapid growth of urban centres. By the 1800s, the percentage of Europe’s
population living in cities had more than doubled from 5.6% in 1500 to 13%, highlighting the
significant migration from rural areas to urban settings. These migrations fuelled
industrialization by providing a ready supply of labour for factories and workshops.
As a whole, then, the move from an agrarian to a manufacturing economy is a multifaceted
process rooted in urbanization. Economic, political, and social developments which
constituted the transition of industrial civilizations were formed in cores: the cities. Cities
play a crucial role in the development of functions concerning trade, production, and
population movement during the course of this transition towards industrial modernity, but
also in building states.
Reference:
Fields, G. (1999). Urbanization and the transition from agrarian to industrial society. Berkeley
Planning Journal, 13(1), 102-128. https://doi.org/10.5070/BP313113032