Billionaire Sridhar Vembu recently shared a unique insight on why the urban and rural divide is so prominent and continues to be one of the institutional issues that plague the nation. In a detailed post on X, he explained that this divide is deeply rooted in basic economics, not just social disparity.
According to him, rural areas in India consistently suffer from a massive trade deficit in relation to urban centers. This deficit reflects a harsh reality: the low value addition in agriculture as compared to the high value addition in urban-based manufacturing and services like healthcare, finance, law, and accounting.
Vembu summarized the imbalance with a striking comparison: “We sell rice paddy at ₹25 per kilogram and buy smartphones at ₹1 lakh per kilogram.” This disparity isn’t just about products—it signifies a deeper cash drain from rural communities into cities. Over time, this persistent outflow of money fuels migration and leads to the selling off of rural land. It also underpins the popularity of government-sponsored cash transfer schemes meant to alleviate the resulting economic pressure.
On a broader scale, Vembu pointed out that India runs a consistent trade deficit in manufactured goods, much of which are imported from countries like China. This deficit is only partially offset by India’s exports of services—such as software, global capability centers (GCCs), and business process outsourcing (BPO)—which are largely centered in urban India. He aptly summarized the imbalance: “We import goods from China and export services to the West.”
What’s particularly troubling, Vembu noted, is that the way India balances its external accounts further worsens the urban-rural imbalance. Even remote areas, with large pools of surplus labor—such as the districts of Tenkasi and Tirunelveli, where an estimated 3 to 5 lakh women earn a living by rolling beedis—are buying goods manufactured in China by workers who earn significantly more than India’s rural laborers. This model is only sustainable because of urban service exports, but it fails to empower rural India.
The end result is that rural residents see migration as their only viable economic option. India’s booming cities, especially Bengaluru, which leads in service exports to the West, have become magnets for this internal migration. But this growing influx is also creating pressure on urban infrastructure, making cities like Bengaluru victims of their own success.
To address this, Vembu called for a rural manufacturing revolution. Without it, the migration will not slow, and urban centers will continue to strain under the weight of imbalance. He concluded with a powerful illustration of the inequality:“ “The urban-rural services imbalance can be captured with "we struggle to make Rs 50 an hour and when we fall sick, we have to pay the doctor Rs 1000 an hour and pay for the transport and pay for medicines.”
Meet Sridhar Vembu: The Visionary Behind Zoho
Sridhar Vembu, born in 1968, is a renowned Indian billionaire and the pioneering force behind Zoho Corporation, a leading global software company. Widely respected for his unconventional approach to entrepreneurship and commitment to rural development, Vembu served as the CEO of Zoho before stepping down to focus on broader strategic initiatives within the company.
As of 2024, Forbes ranked him as the 39th richest person in India, estimating his personal net worth at $5.85 billion. In recognition of his remarkable contributions to the fields of business and technology, the Government of India awarded him the prestigious Padma Shri in 2021—the nation’s fourth-highest civilian honor.
Sridhar Vembu’s wealth is not solely individual. Along with his siblings, he features prominently on the Forbes list of India’s 100 richest, released on October 9, 2024. The Vembu family collectively secured the 51st spot, with a combined net worth of $5.8 billion.
More than just a tech mogul, Sridhar Vembu is admired for his mission-driven leadership. He is known for relocating to a rural village in Tamil Nadu and championing the idea that world-class technology can be developed from non-urban centers. His belief in decentralization, education, and economic empowerment continues to inspire a generation of entrepreneurs across India.
According to him, rural areas in India consistently suffer from a massive trade deficit in relation to urban centers. This deficit reflects a harsh reality: the low value addition in agriculture as compared to the high value addition in urban-based manufacturing and services like healthcare, finance, law, and accounting.
Vembu summarized the imbalance with a striking comparison: “We sell rice paddy at ₹25 per kilogram and buy smartphones at ₹1 lakh per kilogram.” This disparity isn’t just about products—it signifies a deeper cash drain from rural communities into cities. Over time, this persistent outflow of money fuels migration and leads to the selling off of rural land. It also underpins the popularity of government-sponsored cash transfer schemes meant to alleviate the resulting economic pressure.
Bengaluru aspires to join the first world but we have the harsh reality of a vast population in poverty whose vote depends on cash transfer schemes, even as rural joblessness leads to unchecked migration to Bengaluru.
— Sridhar Vembu (@svembu) May 20, 2025
This is not a rant against politicians. My rural life has… https://t.co/SQOQBKu8vS
On a broader scale, Vembu pointed out that India runs a consistent trade deficit in manufactured goods, much of which are imported from countries like China. This deficit is only partially offset by India’s exports of services—such as software, global capability centers (GCCs), and business process outsourcing (BPO)—which are largely centered in urban India. He aptly summarized the imbalance: “We import goods from China and export services to the West.”
What’s particularly troubling, Vembu noted, is that the way India balances its external accounts further worsens the urban-rural imbalance. Even remote areas, with large pools of surplus labor—such as the districts of Tenkasi and Tirunelveli, where an estimated 3 to 5 lakh women earn a living by rolling beedis—are buying goods manufactured in China by workers who earn significantly more than India’s rural laborers. This model is only sustainable because of urban service exports, but it fails to empower rural India.
The end result is that rural residents see migration as their only viable economic option. India’s booming cities, especially Bengaluru, which leads in service exports to the West, have become magnets for this internal migration. But this growing influx is also creating pressure on urban infrastructure, making cities like Bengaluru victims of their own success.
To address this, Vembu called for a rural manufacturing revolution. Without it, the migration will not slow, and urban centers will continue to strain under the weight of imbalance. He concluded with a powerful illustration of the inequality:“ “The urban-rural services imbalance can be captured with "we struggle to make Rs 50 an hour and when we fall sick, we have to pay the doctor Rs 1000 an hour and pay for the transport and pay for medicines.”
Meet Sridhar Vembu: The Visionary Behind Zoho
Sridhar Vembu, born in 1968, is a renowned Indian billionaire and the pioneering force behind Zoho Corporation, a leading global software company. Widely respected for his unconventional approach to entrepreneurship and commitment to rural development, Vembu served as the CEO of Zoho before stepping down to focus on broader strategic initiatives within the company.
As of 2024, Forbes ranked him as the 39th richest person in India, estimating his personal net worth at $5.85 billion. In recognition of his remarkable contributions to the fields of business and technology, the Government of India awarded him the prestigious Padma Shri in 2021—the nation’s fourth-highest civilian honor.
Sridhar Vembu’s wealth is not solely individual. Along with his siblings, he features prominently on the Forbes list of India’s 100 richest, released on October 9, 2024. The Vembu family collectively secured the 51st spot, with a combined net worth of $5.8 billion.
More than just a tech mogul, Sridhar Vembu is admired for his mission-driven leadership. He is known for relocating to a rural village in Tamil Nadu and championing the idea that world-class technology can be developed from non-urban centers. His belief in decentralization, education, and economic empowerment continues to inspire a generation of entrepreneurs across India.
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