Brahm,
I agree that we can't really ape any country's developmental model. India has its unique set of conditions, and any solution has to keep that in mind. Having said that, one can always learn from others' experiences. A car may need some different features keeping in mind Indian roads, but one doesn't need to reinvent the engine from the scratch.
The key point, in my opinion, is that you can't have more than 70% of population contributing to only 20% of GDP. I fully agree that the infrastructure for rural India needs to be improved by leaps and bounds. Better roads, information on prices, availability of seeds/fertilisers, etc. is going to give the agriculture sector a boost. But only till a point. The huge labor oversupply would mean that:
1. The wage of a laborer working in agriculture is going to be low.
2. Land holdings would become even smaller, making farming more inefficient. Successful farmers have huge tracts of land that give them economy of scale.
3. Outright unemployment, or disguised/seasonal unemployment (You have 5 people working on a piece of land where 1 is enough.) Apart from depressing income, unemployment also leads to other social problems as the unemployed youths' energy gets diverted to less desirable areas (crime, alcohol, drugs, etc.)
So even if you remove all other bottlenecks that are stifling agriculture right now, you can't go beyond a point as long as you have this huge labor oversupply. On the other hand, you have the manufacturing/service sector that is constrained by labor undersupply. There is a huge shortage of skilled work force in India, be it, engineers, doctors, scientists, teachers, etc. Even the govt. sector is hugely understaffed in police, defence, health, education, etc. The obvious conclusion is that labor needs to shift from rural agrarian society to the maufacturing/service sector. If you don't plan for it, it'd happen anyways leading to urban slums, congestion, crime and the associated jazz. The problem is not urbanization, but not doing it in a planned way.
My point about civilization and cities was to stress that any organized industry needs a critical no. of people and resources to come together and that is not possible in a standard sized village. So, yes, urbanization is the solution. But that doesn't mean mega-cities only. In fact mega-cities like Delhi and Mumbai become inefficient due to governance issues. However, we still need more metropolitan cities than we have right now. But more than that we need towns and smaller cities like Jamshedpur set up by TATAs (never been there, but heard it is very well planned). Is there any town/city that GoI has planned since independence? We need to develop Rohtak so that people don't land up in a Delhi suburb hunting for opportunities. Or much worse, from Azamgarh to Dharavi.
A town like Rohtak can act as nerve center for villages surrounding it (It already does to an extent but the scale needs to be much bigger). For example, food processing industry bordering Rohtak can provide employment to the surrounding population; while benefiting from the availability of raw materials. The farmers can then grow what is needed in the industry rather than growing what is going to be bought by the govt. at Min Support price. Once you have a big enough industry employing a large no. of people, you need all kinds of services from restaurants to schools to shopping complexes, which employ more people. The govt. having to spend less on subsidies to the farmers in form of MSP and making additional money from taxation of industry can use that money to hire teachers, police and doctors and build roads, hospitals and schools. So you systematically take care of the labor inequilibrium and unemployment, while improving the standard of living of everyone. The above is a very crude representation of how urbanization can transform rural landscape, but the attempt is to convey the basic idea.
