Rural India shifts to services-led economy

New Delhi

Rural India is rapidly progressing, with key economic shifts underway. A recent report by HDFC Securities shows that in 112 rural districts—home to nearly 291 million people—the average income per person has now exceeded USD 2,000. This rise in income is expected to increase demand for items like smartphones, vehicles, and branded goods.

States such as Maharashtra, Tamil Nadu, Kerala, and Andhra Pradesh are leading this transformation, driven by strong economic policies. Only Uttar Pradesh and Madhya Pradesh still have rural per capita incomes below USD 2,000.

The rural industrial sector, valued at ₹29 trillion in FY25, grew at 7.1% over three years. While manufacturing grew slowly at 5%, mining (13.5%), construction (8.7%), and utilities (6.9%) grew steadily. Uttar Pradesh led industrial growth at 10.6%, followed by Tamil Nadu and Rajasthan.

The rural services sector is the fastest-growing, worth ₹62 trillion in FY25, and grew 8.8% from FY22 to FY25. Sectors like trade, finance, logistics, and real estate performed well. Tamil Nadu and Maharashtra saw close to 10% growth, with average rural service income now above USD 3,000 in many states.

Agriculture, contributing ₹61 trillion in FY25, grew more slowly at 3.9%. Crops grew 2.8%, livestock 5%, and aquaculture 7.4%. Uttar Pradesh and Maharashtra posted decent growth, but Karnataka declined slightly. Despite slower growth, average agriculture income per person reached USD 1,145 in FY25. Rural India is steadily shifting from an agriculture-led to a services-driven economy.