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The New Era of Technology to

Disrupt India’s Rural-Urban
Divide

Source: India’s growing rural-urban divide, Al Jazeera 2009

Background:

India, a land of stark contrasts, grapples with a unique urbanization dynamic. While the
country boasts a massive rural population, its economic engine is driven primarily by four or
five major urban centres. Even the next set of towns and cities, which may boast of being
urban have also not been able to come up significantly in terms of creating economic
opportunities as the major four or five.
This urban-rural divide in India stands in stark contrast to several other developed and
developing countries like China, France, the USA, Brazil, and South Africa, where
urbanization is more evenly distributed, and rural areas and smaller cities play a significant
role in the nation's economic growth.
India's Urban-Rural Divide:
India's population of over 1.3 billion is primarily rural, with approximately 65% residing in
rural areas. India has the world’s largest rural population. According to the most recent
census of 2011, rural markets comprise more than 6,40,000 villages with 850 million people.
Around 15 per cent of the rural population lived in poverty as of 2020. The average size of
the Indian rural household is 4.7.

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 However, the nation's economic growth is heavily concentrated in major urban hubs like
Mumbai, Delhi, Bangalore, Chennai, and Hyderabad. These cities not only attract a
significant portion of investments but also offer better quality jobs and higher living
standards compared to rural areas. Smaller cities like Jaipur, Kanpur, Coimbatore, Kochi,
Mysuru, Durgapur, Guwahati etc. have all tried to pick up the mantle, but have lagged
behind for one reason or another.
India's urban population is expected to surpass
its rural population by 2050, reflecting a slow
but steady trend towards urbanization. While
urban areas contribute over 60% to India's
GDP, rural areas primarily rely on agriculture
and related activities. Even within the domain
of agriculture, the bulk of value addition in
this case via agricultural processing still
happens in cities. If one were to include this
Source: UN DESA, Urban and Rural Population - India (2018)
fact as well, the contribution of cities to the
nation’s is almost 72%!
This represents a stark reality where nearly 70% of the nation’s population contributes to less
than 30% of the nation’s GDP. Naturally, a significant wage gap also exists between urban
and rural India, with urban workers earning higher wages on average. Not just this, the
quality of jobs between an average rural worker and an average urban worker in India are
vastly different. This is however, not the case, in many of India’s global competitors.
Global Comparisons:
China: China's urbanization is characterized by a more balanced growth across its tier 1, tier
2, and tier 3 cities. This even distribution has contributed to reducing the rural-urban divide,
with many smaller cities offering quality job opportunities.
Approximately 61% of China's population resides in urban areas, while the remaining 39% is
rural. Smaller cities like Chengdu, Wuhan, and Chongqing have experienced rapid
urbanization and economic growth, providing quality jobs and a higher standard of living.
France: France showcases a relatively uniform urbanization pattern, with smaller cities and
towns playing a significant role in the nation's economic development.
France's urban population stands at approximately 82%, with rural areas accounting for the
remaining 18%. Smaller cities like Lyon, Toulouse, and Nantes contribute significantly to
the country's economy and offer quality job opportunities.
USA: In the United States, economic activity is dispersed across major cities, smaller urban
centers, and rural areas. This decentralized approach contributes to a less pronounced rural-
urban divide compared to India.
About 82% of the U.S. population resides in urban areas, leaving 18% in rural regions.
Smaller cities like Austin, Nashville, and Raleigh-Durham have experienced rapid growth,
attracting businesses and talent.

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Brazil: Brazil's urbanization is marked by a
network of mid-sized cities that have grown
alongside major metropolitan areas. This
broader urbanization has improved access to
jobs and services for rural and smaller city
populations.
Approximately 87% of Brazil's population
lives in urban areas, with 13% residing in
rural regions. Smaller cities like
Campinas, Source: UN DESA, Urban and Rural Population - Brazil (2018)

Fortaleza, and Recife have seen economic

development, offering diverse employment opportunities.
South Africa: South Africa's urbanization reflects a mix of large metropolitan areas and
smaller cities that contribute to economic growth and reduce rural-urban disparities.
Around 67% of South Africa's population lives in urban areas, while 33% resides in rural
regions. Cities like Durban, Port Elizabeth, and Bloemfontein play key roles in regional
development and employment.

Will Producing More Jobs Be Enough?

Globally, the urban-rural employment divide remains a persistent concern. The International
Labor Organization (ILO) reports that rural areas worldwide tend to lag behind their urban
counterparts in terms of employment rates, access to technology, and income levels. In India,
a country where a significant portion of the population resides in rural areas, this divide
reflects a broader trend in economic development, social equity, and technological
integration.
In India, the difference between the quality of jobs for rural and urban workers is significant,
reflecting a multifaceted disparity that persists into the 21st century.

Wages:
Predictably so, rural workers in India typically earn lower wages compared to their urban
counterparts. Agriculture, which remains the primary occupation in rural areas, often offers
seasonal and low-paying jobs. Urban areas provide access to a wider range of industries and
low-paying jobs. Skilled professionals in urban centres often earn considerably more than
rural workers

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 While the world talks of fastest growing and fastest declining jobs, rural workers have to contend to doing the same low-quality jobs across decades in almost every country.
Source: World Economic Forum (WEF), Future of Jobs Report, 2023.

Nature of Job:
Rural jobs in India are predominantly agrarian, relying on traditional farming practices.
These jobs are often labour-intensive and subject to seasonal variations in income. Urban
areas offer diverse employment opportunities, including jobs in manufacturing, services,
technology, and healthcare. Urban jobs tend to be more varied and have a higher potential
for skill development and career growth.
Access to Benefits:
Urban employment often comes with better access to social security, healthcare, and
educational institutions. Formal jobs in urban areas generally offer more comprehensive
benefits and job stability. Rural workers, or even urban workers from rural areas, often have
limited access to social security benefits, healthcare facilities, and education. Informal
employment is prevalent, which lacks job security and benefits.
Potential Factors Behind the Disparity:
Several factors can be said to contribute to the persistent rural-urban job disparity in India:
 Agricultural Dependence: The dominance of agriculture in rural areas,
characterized by fragmented land holdings and traditional farming practices, limits
income potential and job diversity.
 Limited Skill Development: Rural areas often lack access to quality education and
skill development programs, limiting the ability of rural workers to transition to
higher- paying urban jobs.

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  Infrastructure Gaps: Rural areas face infrastructure deficits, including limited
access to healthcare, transportation, and digital connectivity, which hinders economic
development.
 Urbanization Challenges: Rapid urbanization in India has led to an influx of rural
migrants to urban centres, putting pressure on urban job markets and sometimes
resulting in underemployment or informal employment.
 Policy Interventions: Government policies and programs aimed at bridging the rural-
urban divide have shown progress but remain a work in progress.
Comparison with Other Countries:
The rural-urban job disparity in India is not unique and has parallels in other countries:
In China, rural-urban income disparities persist, with urban workers enjoying higher wages
and better job opportunities compared to rural workers. Factors include disparities in
industrial development and access to education.
In Brazil, income inequality is influenced by rural-urban disparities, but policies aimed at
reducing poverty have shown progress in improving rural livelihoods.
In the USA, while rural areas contribute significantly to sectors like agriculture and
manufacturing, urban areas tend to offer a wider range of high-paying jobs, driven by
technology and services.
In France, urbanization is more evenly distributed, resulting in a narrower rural-urban income
gap. Smaller cities and towns play a significant role in economic development.
In South Africa, urbanization trends have contributed to significant rural-urban income
disparities, with urban centres offering more formal job opportunities and access to services.

Is All Bleak on the Indian Rural Front Then?

While rural India faces significant challenges, it is by no means a bleak landscape. Beyond
the reach of governmental policies, private enterprise and technological disruptions hold
immense potential to uplift rural lives, create quality jobs, and enable rural India to contribute
more effectively to the growing Indian economy.
The Potential of Private Enterprise:
Private enterprises can play a transformative role in rural development. They can create
quality jobs, spur entrepreneurship, and bridge infrastructure gaps. For example:
 Agritech Innovations: Startups like AgroStar and DeHaat leverage technology to
connect farmers directly to markets, offer access to credit, and provide agricultural
know-how. This not only improves farmers' income but also creates jobs in the tech-
agriculture ecosystem. CropIn offers technology-driven solutions to farmers,
including farm management, traceability, and market access. It helps farmers make
informed decisions and improve crop yields.

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 Hyperlocal Retail: Companies like ITC's e-Choupal and Reliance Fresh have
expanded into rural areas, creating a demand for local labour in logistics, retail, and
distribution. Online marketplaces like GoCoop connects rural artisans and weavers
directly to consumers and retailers, enabling them to showcase and sell their
handcrafted products. It promotes traditional Indian crafts and helps artisans access
wider markets.
 Rural Tourism: Rural tourism initiatives like Airbnb's 'Ama Stays' and rural
homestays offer rural households new income streams by opening their homes to
tourists.
 Digital Financial Inclusion: The proliferation of digital payment platforms and
mobile banking is providing rural residents with access to financial services, reducing
dependency on physical banks. Rang De is a social lending platform that enables
individuals to provide microcredit to rural entrepreneurs and artisans. It empowers
rural borrowers by providing affordable credit options.
 E-Learning and Skilling: Platforms like BYJU's, EduMitra and Khan Academy are
making quality education accessible to rural students, bridging the urban-rural
education divide. Various skills universities such as TeamLease Skills University
provide vocational training and skill development programs to rural youth, enhancing
their employability and connecting them with job opportunities in various sectors.
 Telemedicine: Telehealth services connect rural patients with healthcare
professionals, reducing the need for long journeys to urban centres for medical
treatment. Telemedicine platforms such as mFine connect rural patients with doctors
and specialists through video consultations and AI-driven health assessments. It
brings quality healthcare to remote areas, while also ensuring jobs as part of call
centres and peripheral supply chain networks in rural areas.
Technology to the Rescue:
These enterprises represent a diverse range
of sectors, from agriculture and healthcare
to education and finance. They leverage
technology, innovation, and inclusive
business models to bridge the rural-urban
divide, create employment opportunities,
and integrate rural India into the
mainstream economy. Their efforts
contribute to the overall development and
prosperity of rural communities while
aligning with India's
Source: Role of 5G Technology in Empowering Rural Digital India, economic growth.
Representational Image

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The Technological Epochs

The beginning of the 21st century marked India’s advent onto an entirely different trajectory
on the global stage in terms of productivity and opportunity, one that hinged upon the
harnessing of emerging technologies to unlock its vast workforce's potential. The adoption of
these technologies not only elevated the nation to a global economic player but also laid the
foundation for a new era of employment opportunities.
As India ventures into the digital age, these technologies hold the key not only to shaping the
future of its urban population but also to uplifting the next generation of rural communities,
offering a path toward equitable development and inclusive prosperity.
The Web Dominance Epoch (2000-2010):
IT and Software Services: India emerged as a global IT hub, providing software development
and outsourcing services. This era created a surge in software engineering and IT support
jobs.
E-commerce and Online Marketplaces: The rise of online shopping platforms like Flipkart
and Amazon led to job opportunities in logistics, customer support, and digital marketing.
Web Content Creation: Content writing, web design, and digital marketing jobs saw
significant growth as businesses established their online presence.
The App Dominance Epoch (2010-2020):
Mobile App Development: The app boom led to increased demand for mobile app
developers, UX/UI designers, and quality assurance specialists.
Digital Marketing and Content Creation: Businesses leveraged social media and mobile apps
for advertising, leading to job roles in social media management, search engine optimization
(SEO), and online advertising. Content creators on social media really democratized the
medium and cheap mobile internet ensured that these creators were able to tap into mass
audiences and earn from them for the first time, regardless of where they came from.
E-commerce Expansion: Companies like Flipkart, Snapdeal, Paytm, and Zomato expanded
their e-commerce offerings, creating jobs in online retail, delivery services, and restaurant
aggregators.
Fintech and Payments: The growth of mobile payment platforms like Paytm and PhonePe
generated job opportunities in fintech, digital wallets, and payment processing.

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 The Technology Epochs have also ensured evolution in the way people and organizations interact with technologies as well as their own work and experiences.
Source: From Industry 4.0 towards Industry 5.0: A Review and Analysis of Paradigm Shift for the People, Organization and Technology, MDPI

The New-Age Technologies Epoch (2020 and Beyond):

Artificial Intelligence (AI) and Data Science: AI and data science are driving innovations in
predictive analytics, automation, and machine learning, leading to job roles in data analysis,
AI development, and automation.
Cybersecurity: With the increasing digital footprint, cybersecurity professionals are in high
demand to protect data and privacy.
IoT and Smart Devices: IoT technologies create jobs in IoT development, sensor integration,
and smart device management.
Renewable Energy and Sustainability: Renewable energy technologies, such as solar and
wind, are leading to job opportunities in clean energy production and management.
Biotechnology: Biotech innovations are driving growth in pharmaceuticals, healthcare, and
agriculture, creating jobs in research, development, and bioinformatics.
The evolving technology landscape in India is not only creating new job roles but also
reshaping existing ones. To remain competitive, individuals must adapt to these changing
requirements by upskilling and acquiring expertise in emerging technologies. The New-Age
Technologies Era presents vast opportunities for innovation, entrepreneurship, and
sustainable economic growth in India – especially in its vast untapped rural potential.

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The Way Forward

According to the Internet and Mobile Association of India (IAMAI), rural India's internet
user base reached 264 million in 2020, which stands at 399 million in 2023, indicating
substantially growing digital penetration.
E-commerce companies like Flipkart and Amazon report significant growth in rural sales,
indicating increased rural consumer participation, and a growth in disposable income among
rural Indians. According to a similar report by the Boston Consulting Group, rural India's
consumption is expected to reach $1.8 trillion by 2030, presenting a substantial market for
businesses. This indicates a vast potential for private enterprises and startups to leverage rural
India’s population as an opportunity to integrate them into the mainstream of Indian
company, and unlock shared value with inclusive business models that empower local
communities, address their unique needs, and create value that results in a positive sum game,
for both the enterprise as well as the people who contribute to it.
The Role of Technology and Innovation:
As you saw, technological interventions in private enterprises can play a pivotal role in
creating jobs and opportunities in rural India while integrating these areas into the
mainstream economy. We saw these in action as part of some of the existing business models
in e-retail, tourism, financial inclusion etc.
But, with the new epoch and access to more disruptive and cutting-edge know-how, there’s a
better possibility for technology to be able to drive this transformation and lead widespread
impact. Some of the ways in which this can happen are:
 Renewable Energy:
Solar power solutions bring electricity to rural areas, enabling new businesses and job
opportunities that require electricity. With more and more e-vehicles entering the market,
rural areas can also become hubs and suppliers of electricity that provide to the grid,
rather than currently where they are seen as liabilities to the grid.
Reliable power sources also encourage rural entrepreneurship, such as small-scale
manufacturing, agribusiness, and micro-enterprises. Examples include SELCO
Foundation and Husk Power Systems.
 Rural Logistics and Distribution:
Mobile apps and supply chain management systems optimize rural logistics and
distribution networks. Blockchain technology could potentially ensure transparency and
traceability in supply chains and land records, enabling consumers to track the origin and
authenticity of products.
Efficient logistics reduce the cost of goods and services, stimulate trade, and create jobs
in transportation and warehousing. Examples include Milk Mantra and Rivigo.

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  Embedded Devices and Artificial Intelligence:
Data-driven insights and AI-powered tools help businesses make informed decisions,
tailor products and services to rural needs, and identify growth opportunities. IoT-based
smart irrigation systems could optimize water usage in agriculture. Drones equipped with
sensors and cameras provide real-time data on crop health and pest infestations.
Enhanced decision-making can lead to increased productivity, cost savings, and job
creation in roles related to data analysis and AI development.
 Connectivity and Internet Services:
Expanding broadband and mobile internet coverage in rural areas ensures that digital
services reach underserved populations. While this is already underway, Low Earth Orbit
(LEO) satellite constellations could potentially provide high-speed internet to remote
areas.
This improved connectivity could open up opportunities for remote work, e-commerce,
and digital services, creating jobs in customer support and online sales across various
sectors, not to mention set up a reverse migration from urban to rural areas in the longer
run.
 3D Printing and Robotic Process Automation (RPA) for Local Manufacturing:
3D printing allows for on-demand local manufacturing of parts and products, while small
robots could be customized to such terrains to automate processes and drive efficiencies.
Rural areas could potentially set up 3D printing hubs for manufacturing customized
products and spare parts, generating jobs in production and design, aside from the usual
blue-collar jobs of operating machinery in present manufacturing setups.
Incorporating these technologies into private enterprises in rural India not only creates jobs
directly related to technology implementation but also catalyses job growth across the entire
value chain. Moreover, technology empowers rural residents with skills and knowledge that
enhance their employability and entrepreneurial capabilities. As a result, these technological
interventions contribute to the inclusive and sustainable development of rural communities,
fostering economic growth and integration into the mainstream Indian economy.

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Case Questions

You are a talented and a passionate entrepreneur who has taken up the mantle to usher in this
new epoch for India, and use technological innovations in the best way to ensure you are able
to create significant impact through attempting to bridge the nation’s rural-urban divide,
while also ensuring your business model is sustainable and creates value for its shareholders.
Through no more than 12 slides, work through the following entrepreneurial problems, in no
particular order:
1. The Big Idea:

In light of the disruptive technologies mentioned in the case and any others that you
might think will be able to help in the near future, outline a comprehensive plan for
your business, its operational strategies and technological integration to bridge the
rural-urban employment gap in India. Your response should address four fundamental
facets:

a. Business Model Alignment: How can the chosen technologies seamlessly align
with the business model to enhance its core functions? Assess the potential impact
of the technology on various operations, ensuring it complements the
organization's mission and objectives. Outline any infrastructural assumptions you
may have to take in the process.
b. Process Optimization: Provide insights into how technologies can optimize
existing processes, improving efficiency and reducing costs. Highlight plans, if
any, for training and capacity building to equip the workforce with the necessary
skills.
c. Scalability and Inclusivity: Design a strategy for scaling the enterprise to reach a
broader rural population. Ensure that your solution is accessible and inclusive,
considering factors like connectivity and affordability. How will the use of
emerging technologies be able to address the specific challenges faced by the
region, including digital literacy, limited access to finance, and infrastructure
gaps, while also ensuring quality employment for nearby areas and if possible, for
a reverse migration?
d. Monitoring and Adaptation: Define key performance indicators (KPIs) to measure
your enterprise's impact on employment and economic growth. Establish feedback
mechanisms for ongoing adaptation and refinement based on real-world outcomes.
Offer a well-structured response that considers these facets as part of an integrated plan,
emphasizing the potential benefits, challenges, and how the chosen technologies can be
effectively deployed to uplift rural India and bridge the employment gap.
2. Target Market and TAM (Total Addressable Market):
Within the expansive canvas of India’s rural and semi-urban areas, what types of
businesses hold the potential to effectively bridge the urban-rural employment gap?
Evaluate the demographics, skills, and aspirations of the rural workforce to quantify the
TAM for these businesses.

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 3. Business Landscape and Revenue Analysis:
Conduct a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis for this
potential enterprise operating in India. Where will you set up offices? Manufacturing
unit? Who shall be hired, and from where? What capex will be required upfront, and
which bits can be variabalized? Dive deep into the strengths and weaknesses of the rural
workforce, uncovering opportunities and threats within the regional business landscape,
and how these factors will play into your revenue and cash flow models.
4. Go to Market and Customer Acquisition:
Without a successful go-to-market strategy, any business even with the noblest of
intentions is bound to fail. What is yours? What is your distribution strategy? Are you
D2C, or do you sell via intermediaries? Can technology be utilized there too? How will
you promote your product or service? Look at all these facets to arrive at a robust CAC
Model and compute when you can potentially break even to also generate profit to
distribute amidst communities.
Propose innovative business concepts that can thrive in India’s rural and semi-urban areas,
strategically leveraging disruptive technologies. The challenges of bridging the rural-urban
employment gap in India are complex and multifaceted.
However, it is precisely in such complexity that innovative solutions emerge. We encourage
you to approach this case with an open mind, a willingness to think outside the box, and a
commitment to exploring new horizons. By doing so, you not only contribute to the
betterment of India's rural communities but also usher in a new epoch of problem-solving,
where technology, entrepreneurship, and a spirit of inclusive growth unite to create a
brighter, more equitable future. No doubt the task at hand may seem daunting at first, but if
you push the frontiers of your imagination a little, you may end up surprising yourself—
even if you feel that your proposed solutions are short of perfect, you may end up uncovering
sites of great potential, which is no mean feat by itself. So, embrace the case with
enthusiasm, for within it lies the potential to shape the contribution of India’s hinterlands to a
whopping 10 trillion economy!
Good luck!

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