As a part of the development process, India is currently going through a transformation from agriculture based economy to industry and service lead urbanized economy. However, no formal quantitative research has been done on this phenomenon. In this perspective, based on Matsuyama's (1992) theoretical framework and using panel data model, the impact of agricultural activities on urbanization in India is analyzed in this paper. For the analysis 15 major agricultural states of India are considered for the period of 1981 to 2015 by sourcing data from mainly Census of India and Ministry of agriculture, government of India. The empirical estimations reveal that the higher share of agriculture in GDP, amount of cultivated land area, and rural male employment in agriculture have had a negative effect on urbanization in India. On the other hand, higher consumption of fertilizer, state government expenditure on agriculture, production of major crops (wheat, maize, jowar, and bajra), rural female employment in agriculture, and rural literacy rate have had a positive impact on urbanization. The results also show that the effect of agriculture productivity is positive on urbanization for a less trade open economy like India. Finally, it is suggested that there is need of higher agricultural development in order to achieve a higher level of urbanization in India. For this purpose use of technology in agriculture sector along with higher level rural education is required. Finally, we need to have balanced rural and urban policy for a smooth rural-urban transformation in India.

From a national perspective it is unclear whether the continued expansion of urban development seriously affects America's potential food production over the long run. Yet there are clearly regional biases toward conversion of farmland to urban uses and locally important changes in the appearance of the landscape at the rural-urban fringe. Urbanization also generates spillover effects causing the idling of farmland and the shifting from one type of agriculture to another.Land use controls aimed at directly addressing the use of the land may be effective in preventing some conversion of farmland to urban uses but the methods are costly and possibly very complex. Incentives to farmers to keep land in agriculture are generally too weak to be effective in retaining agricultural land in the face of strong urban pressures.

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