This paper looks at past and likely future agricultural growth and rural poverty reduction in the
context of the overall Indian economy. The growth of India’s economy has accelerated sharply
since the late 1980s, but agriculture has not followed suit. Rural population and especially the
labor force are continuing to rise rapidly. Meanwhile, rural-urban migration remains slow,
primarily because the urban sector is not generating large numbers of jobs in labor-intensive
manufacturing. Despite a sharply rising labor productivity differential between non-agriculture
and agriculture, limited rural-urban migration, and slow agricultural growth, urban-rural
consumption, income, and poverty differentials have not been rising. Urban-rural spillovers have
become important drivers of the rapidly growing rural non-farm sector—the sector now
generates the largest number of jobs in India. Rural non-farm self-employment has become
especially dynamic with farm households rapidly diversifying into the sector to increase income