IIMA



INDIA
Research and Publications
Page No. 2
W.P.
No.
2011
-
09
-
02
ESTIMATING URBAN AND RURAL INCOMES IN GUJARAT, 1993
-94 TO 2004-05
Ravindra H. Dholakia
Indian Institute of Management, Ahmedabad
Manish B. Pandya
DE&S, Government of Gujarat, Gandhinagar
Abstract
Income originating within geographical boundaries o
f urban and rural areas of Gujarat is estimated
for three benchmark years – 1993-94, 1999-00 and 20
04-05 - at current prices following the broad
methodology and data sources prescribed by the CSO.
This is the first such effort made at the
state level. It considers all sub-sectors and sourc
es used for the state income to point out data
gaps and suggest minor modifications in the methodo
logy to improve such estimation for
replication in other states.
The study finds that urban – rural income inequalit
y in Gujarat (2.3) was almost the same as at
the national level (2.4) in 1993-94, but declined s
ubstantially to 2.0 by 2004-05, while it increased
to 2.7 for the nation. Thus, rural areas grew faste
r than urban areas in Gujarat, but grew slower
than urban areas in the nation. In private consumpt
ion, the urban – rural inequality, though lower
than in income, increased both in Gujarat and the c
ountry over the same period. While at the
national level rural population seriously lagged be
hind its urban counterpart in income,
consumption and savings; in Gujarat rural populatio
n is fast catching up with urban population in
income and savings.
There are considerable structural changes in the ur
ban and rural economies over time in Gujarat.
Urban areas are becoming more service oriented, whe
reas rural areas are becoming more
industrialized. Contrary to the general perception,
large-scale industries are predominantly rural
activities and small-scale industries are largely u
rban activities. Implications of these findings on
the local resource generation through different sav
ing behaviour and natural trends in economic
integration and linkages of the two areas for plann
ing are important. Undue concerns about rural
employment generation at artificially high wages an
d about allocating land for industries in rural
areas need to be viewed in the context of the findi
ngs here. After all, urban areas account for only
2.8% of geographical area, 43% of the population, a
nd 56% of the income of the state. Rural
areas account for 97.2% geographical area, 57% of p
opulation, and 44% of the income of the
state.