Page 100 - Nuvama | IC Report 2023

• MANUFACTURING • NEW ENERGY • URBANISATION • CONSUMPTION PREMIUMISATION • EQUITY SAVINGS CULT

Even among villages, the bigger ones are getting bigger. During 2001–11, the share of villages with a
population of less than 1,000 fell from 61% to 57%. On the whole, even though the share of small villages
is still high (57% in 2011), the number of people that inhabit them is just a handful (just 18% as of 2011).

Exhibit 4: Share of villages with < 1000 people Share of population in villages with < 1000 people
Even among
villages, the share 62 61 22 21
of smaller ones is
shrinking
60
20
(%) 58 (%) 18
57 18
56

54 16
2001 2011 2001 2011
Source: Census of India, CMIE, Nuvama Research
Drivers: Push and pulls of urban growth

As argued in the Demography section, a young and growing population fosters rapid growth in an
economy. With an abundant supply of labour and a high savings rate, a country becomes cost-
competitive and is capable of entering a high-growth orbit.
As a country starts to reap the benefits of higher investment rate, its urban centres tend to be the first
beneficiaries as they offer readymade ecosystems to new firms. For firms, it is much easier to plug into
that ecosystem rather than start everything from scratch.
In India, agriculture’s contributions to GDP has undergone a secular decline while industry and services
– both urban-dominated – have taken over.
Exhibit 5: 45
Share of
agriculture in
India’s GDP is on a 40
secular decline
35

(%) 30

25

20

15
1961 1971 1981 1991 2001 2011 2021
Share of agriculture in India’s GDP (%)
Source: CMIE, Nuvama Research
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