With reference of the Indian economy after the 1991 economic liberalization, consider the following statements:
- Worker productivity (per worker at 2004-05 prices) increased in urban areas while it decreased in rural areas.
- The percentage share of rural areas in the workforce steadily increased.
- In rural areas, the growth in non-farm economy increased.
- The growth rate in rural employment decreased.
Which of the statements given above is/are correct?
Detailed Explanation:
Answer: Option 2 — 3 and 4 only
After the 1991 economic liberalization, rural India underwent structural changes with the expansion of non-farm sectors and a relative slowdown in rural employment growth. Statements 3 and 4 correctly capture these post-liberalization trends, while Statements 1 and 2 misrepresent the actual outcomes.
✅ Statement 3 – Correct: Rural non-farm economy growth expanded significantly post-1991 as diversification into manufacturing, construction, retail, and services provided alternative income sources beyond agriculture.
❌ Statement 1 – Incorrect: Worker productivity increased in both urban and rural areas after liberalization; it did not decrease in rural areas despite sectoral shifts.
❌ Statement 2 – Incorrect: The percentage share of rural areas in the workforce steadily decreased (not increased) as rural-to-urban migration accelerated due to better employment opportunities in industrial and service sectors.
✅ Statement 4 – Correct: The growth rate in rural employment decreased because agricultural sector contraction and inadequate labor absorption in new rural sectors created employment bottlenecks despite economic diversification.
Question 1 of 2 LPG Reforms 1991
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First question in this topic
Which of the following has/have occurred in India after its liberalization of economi...