Growth, Structural Change and Wage Rates in Rural India

Examining the structural transformation in India and its developed states to know whether they have passed the Lewis turning point, this paper finds that there was slow structural change in labour markets at the national level. But states such as Kerala, Tamil Nadu, Himachal Pradesh, Punjab and Haryana are on the verge of the Lewis turning point with faster non-farm sector growth, high per capita income, urbanisation, higher agricultural labour productivity, and higher wage rates. On the other hand, states with rapid economic growth such as Gujarat, Andhra Pradesh, West Bengal and Maharashtra have lower wage rates and higher rural poverty. But they too have the potential to pass the Lewis turning point if structural change occurs soon.