UPSC Prelims 1996·GS1·economy·economic sectors and development

In India, rural incomes are generally lower than the urban incomes. Which of the following reasons account for this? I. A large number of farmers are illiterate and know little about scientific agriculture. II. Prices of primary products are lower than those of manufactured products. III. Investment in agriculture has been low when compared to investment in industry. Select the correct answer by using the codes given below: Codes:

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  1. AI, II and IIICorrect
  2. BI and II
  3. CI and III
  4. DII and III

Explanation

The correct answer is A because all three factors contribute significantly to the income disparity between rural and urban India. First, a lack of literacy and awareness about modern scientific farming techniques prevents many rural farmers from maximizing their crop yields and efficiency, which keeps their earning potential low. Second, there is a structural price disadvantage. Primary agricultural products generally have lower market value and thinner profit margins compared to the high value added manufactured goods produced in urban industrial sectors. Third, historical and economic trends show that the industrial and service sectors located in cities have received much higher levels of public and private investment. This has led to better infrastructure and higher productivity in urban areas compared to the relatively underfunded agricultural sector. Together, these educational, economic, and investment factors explain why rural incomes trail behind urban incomes.
economy: In India, rural incomes are generally lower than the urban incomes. Which of the following reasons account for this? I.

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