This paper analyzes the phenomenon that the transfer of agricultural land and water resources for urban use with adverse consequences to agricultural production has not been adequately addressed in the Indian context, through a case study of the state of Tamil Nadu which stands in the forefront of industrialization and urbanization. Results show that urbanization and land put to non-agricultural uses have strong negative impact on agricultural sector. Therefore, it is important to give priority for decentralized growth through rural industrialization, and public investment on road network should be increased not only to reduce the growth of urbanization but also to promote rural industrialization. The impact of industrialization especially around a few large cities is undesirable both from the point of view of balanced regional development and also from the viewpoint of the serious negative impacts of the growth of large urban centres on the neighbouring rural economies.


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