Urban Development and Rural - Urban Linkages. Case Study of Two Towns in Bihar


Urban development characterizes the economic transformation of any region today. Urbanization is usually associated with industrialization and reflects the transition from an agriculture-dependent economy to an industrialized one, accompanied by transfer of labour from the less productive agriculture sector to other sectors. The development process of an urban centre is likely to be linked with the nearby rural economy through exchange of goods, services, labour, capital, etc. In this backdrop, the current study attempts to examine the urban development of Bihar on the basis of detailed survey in two sample towns Biharsharif and Madhubani. The paper attempts to identify the sources of urban output in the two towns and trace the rural-urban linkages with the help of primary data.

The paper is based on data from enterprise surveys conducted in two towns in Bihar. Biharsharif, a class I town, is located in Nalanda district and Madhubani, a class-II town, is located in Madhubani district. The sources of urban output in the two towns have been analysed with the help of information obtained from the enterprise survey regarding identification particulars of the firms, enterprise and worker related details, details of the members of the household which has enterprise/shop located within their living premises, related information about the own account enterprises, details of factory workers, and challenges and problems faced by different types of enterprises. The rural-urban linkages were also traced with the help of the primary data.

The findings indicate that both towns have seen a gradual decline in industrial activity over the years. They are characterized by small-sized enterprises, which are largely informal in structure. Trading activity was found to be the most important segment of urban development in the two towns. Rural-urban linkages were found to be strong in terms of employment of rural labour in urban enterprises, use of raw material from surrounding rural areas as well as in terms of urban areas providing a market for rural produce. There was also evidence of reverse linkage in terms of rural consumers providing a market for some of the urban products.

The employment linkage was found to be strongest for manufacturing activities, indicating its potential to absorb labour from rural areas in more productive activities, but in both towns manufacturing activities have witnessed a decline during the past two to three decades, and at present most of the manufacturing units surveyed are either contracting or stagnating. In this context, electricity supply was identified as the most important bottleneck for industrialization, along with deficits in other infrastructural facilities, lack of funds, inflation, corruption, lack of skilled workers, etc.


Endow, T.; Mishra, S.K.; Kumar, A. Urban Development and Rural - Urban Linkages. Case Study of Two Towns in Bihar. Institute for Human Development, New Delhi, India (2016) 41 pp. ISBN 978-81-88315-44-4 [IHD Working Paper Series, WP 01/2016]

Urban Development and Rural - Urban Linkages. Case Study of Two Towns in Bihar

Published 1 January 2016