NOTES

RURAL DEVELOPMENT
Real progress of India is possible only when rural areas and rural people are
developed, so that overall growth of India could be achieved.

Why should we attach such significance to rural development when we see

around us fast growing cities with large industries and modern information
technology hubs? It is because more than two-third of India’s population
depends on agriculture that is yet to become productive enough to provide for
them; one-fourth of rural India still lives in abject poverty.

[Link]

 Rural Development refers to continuous comprehensive socio-economic

process, attempting to improve all aspects of rural life
 Areas that need fresh initiatives for development:
 Development of Human Resources (attention on literacy, specially
female, education and skill development and better health facilities
both sanitation and public health)
[Link]
 Development of Infrastructure (electricity, irrigation, credit,
marketing and transport facilities, better facilities for agriculture
research and extension and information dissemination.
 Land reforms (elimination exploitation, achieving land to tiller goal,
improvement of social-economic conditions of rural poor by widening
land base, increasing agriculture productivity)
 Alleviation of Poverty - bringing about significant improvement in
the living conditions of the weaker sections of the population
emphasizing access to productive employment opportunities
 Development of the productive resources

During 2023-24, the GVA growth rate of agriculture and its allied sectors
was about two per cent. Scholars identify decline in public investment since
1991 as the major reason for this. They also argue that inadequate
infrastructure, lack of alternate employment opportunities in the industry
 or service sector, increasing casualisation of employment etc., further
impede rural development. The impact of this phenomenon can be seen
from the growing distress witnessed among farmers across different parts
of India.

 RURAL CREDIT
 Farmers require credit majorly as the time of gestation period between
crop sowing and realization of income after production is quite long,
farmers borrow from various sources to meet their initial investment on
seeds, fertilizers, implements and other family expenses of marriage,
death, religious ceremonies etc.
 Farmers take loan for two purposes:
 Productive purposes: like for agriculture, fertilizers, seeds etc.
 Unproductive purposes: for religious purposes, settling old debts,
supporting family.
 Sources of rural credit
 Institutional Sources (Co-operative credit, land development banks,
commercial bank credit, Regional rural bank, the government,
NABARD, Self-help groups)
 Non-institutional Sources- (Money lenders, Relatives, Traders and
commission agents and rich landlords)
Non-institutional sources exploited farmers by charging high rates,
manipulation of accounts and unfavorable conditions.
[Link]
So major change occurred after 1969, when Institutional credit
approach came into existence. The Green Revolution was a harbinger
of major changes in the credit system as it led to the diversification of
the portfolio of rural credit towards production oriented lending.

 NABARD
 National Bank for Agriculture and Rural Development (NABARD) was set
up in 1982 as an apex body to coordinate the activities of all institutions
involved in the rural financing system.
 Objective of NABARD:
 o To promote health and strength of credit institutions (cooperatives,
commercial banks and regional rural bank)
o Also provides finance to non-farm sector
o To promote integrated rural development and prosperity of
backward rural areas.
[Link]

 SHG bank linkages program for Micro Finance

Self-Help Groups (henceforth SHGs) have emerged to fill the gap in the
formal credit system because the formal credit delivery mechanism has
not only proven inadequate but has also not been fully integrated into
the overall rural social and community development.

Since some kind of collateral is required, vast proportion of poor rural

households were automatically out of the credit network.

The SHGs promote thrift in small proportions by a minimum contribution

from each member. From the pooled money, credit is given to the needy
members to be repayable in small instalments at reasonable interest
rates. About ` 10- 15,000 per SHG and another `2.5 lakhs per SHG as a
Community Investment Support Fund (CISF) are provided as part of
renovating fund to take up self-employment for income generation.
Such credit provisions are generally referred to as micro-credit
programmes.

SHGs have helped in women empowerment. By May 2019, nearly 6

crore women in India have become member in 54 lakh women SHGs.

[Link]

[‘Kudumbashree’ is a women-oriented community-based poverty reduction

programme being implemented in Kerala. In 1995, a thrift and credit society
was started as a small savings bank for poor women with the objective to
encourage savings. [Link]
These societies have been acclaimed as the largest informal banks in Asia in
terms of participation and savings mobilized.]
Critical Appraisal
 Helped farmers to avail services and credit facilities and a variety of loans
for meeting their production needs.
[Link]
 Famines became events of the past.
 Achieving food security which is reflected in the abundant buffer stocks of
grains.
[Link]

 Problems faced in rural banking

[Link]
 Formal institutions except commercial banks have failed to develop a
culture of deposit mobilization — lending to worthwhile borrowers and
effective loan recovery.
 Insufficiency
 Inadequate coverage of institutional sources
 Inadequate amount of sanction
 Less attention to poor or marginal farmers
 Agriculture loan default rates have been chronically high. (Loan default
rate is very high and alleged that farmers deliberately not paying loans.)

To improve the situation, in recent years, all the adults are encouraged to
open bank accounts as a part of a scheme known as Jan- Dhan Yojana.
Those bank account holders can get Rs. 1-2 lakh accidental insurance
coverage and overdraft facilities for Rs. 10,000 and get their wages if they
get any government-related jobs and works under MNREGA, old age
pension and other social security payments of the government. There is no
need to keep minimum bank balance. This has led to more than 50 crore
people opening bank accounts. Indirectly it has promoted thrift habit and
efficient allocation of financial resources particularly in rural areas.

[TANWA (Tamil Nadu Women in Agriculture) - launched in 1986 to

train women in latest agricultural techniques and in organic and induce
women to participate in agriculture and family income. Farm women’s
groups function like SHG]
 Agricultural Marketing System
Agricultural marketing is a process that involves the assembling, storage,
processing, transportation, packaging, grading and distribution of different
agricultural commodities across the country.

 Problems faced by farmers

Farmers, while selling their produce to traders, suffered from faulty
weighing and manipulation of accounts. Farmers who did not have the
required information on prices prevailing in markets were often forced
to sell at low prices. They also did not have proper storage facilities to
keep back their produce for selling later at a better price. More than 10
per cent of goods produced in farms are wasted due to lack of storage.
[Link]

 Measures to improve Agriculture Marketing

1. Regulated Markets- to protect farmers from mal practices of sellers and
brokers and to create orderly and transparent marketing conditions.
(there is still a need to develop about 27,000 rural periodic markets as
regulated market places to realise the full potential of rural markets)
[Link]

2. Infrastructural facilities to provide facilities like roads, warehouses, etc.

3. Cooperative Marketing to realize fair price for farmers’ products.

Marketing societies are formed by farmers to sell the output collectively
and to take advantage of collective bargaining, in order to obtain better
price (The success of milk cooperatives in transforming the social and
economic landscape of Gujarat and some other parts of the country is
testimony to the role of cooperatives.)
Problems of Cooperatives-Inadequate farmer members, lack of
appropriate link between marketing and processing cooperatives
and inefficient financial management.

4. Different Policy Instruments like

  MSP (minimum support price) on products like wheat, rice, maize,
cotton, sugarcane, pulses, etc. offer price at which government is
willing to buy any amount of grains from farmers.
 Maintenance of Buffer Stocks in years of Surplus production and
used during shortages. It helps in regulating supply and stability in
prices by FCI (Food Corporation of India) by purchasing wheat and
rice at procurement prices.
 Public Distribution System ration shops and fair price shops
offering commodities like wheat, rice, kerosene, etc. at price
below market price to weaker section of society.
Despite after this, agricultural markets still dominated by private
traders and only 10% of agriculture is handled by the govt. and
cooperative agencies.

Emerging alternate Marketing Channels

 Origin of farmers Market as farmers can increase their income if
they sell directly in market eliminating middlemen. Eg: Apna
mandi in Punjab, Haryana and Rajasthan, Hadaspar mandi in
Pune, Rythu Bazars in Andhra Pradesh and Uzhavar Sandies in
Tamil Nadu.
 Alliance with National and Multinational Companies and farmers
entering in contracts and encourage farmers to cultivate
vegetables/fruits of desired quality, and provide them with seeds
and other inputs and purchasing produce at pre-determined
prices

 DIVERSIFICATION OF AGRICULTURAL ACTIVITIES

A major proportion of the increasing labour force needs to find alternate
employment opportunities in other non-farm sectors. Non-farm
economy has several segments in it; some possess dynamic linkages that
permit healthy growth while others are in subsistence, low productivity
propositions. The dynamic sub-sectors include agro-processing
industries, food processing industries, leather industry, tourism, etc.
Those sectors which have the potential but seriously lack infrastructure
and other support include traditional home-based industries like
pottery, crafts, handlooms etc. Majority of rural women find
employment in agriculture while men generally look for non-farm
employment. In recent times, women have also begun looking for non-
farm jobs.
 Need for diversification arises because of greater risk in depending
exclusively on farming and to provide productive sustainable
livelihood to rural people.
 Benefits of diversification (much employment activities in agriculture
is during Kharif season) – to provide supplementary gainful
employment, to enable them to earn higher and to help them
overcome poverty
 Types of diversification
 Crop production (change in cropping pattern from single-cropping
to multi-cropping system, subsistence farming is still dominated in
which cereals is main crop)
 Productive activities (shift from agriculture to non-agriculture like
agro-processing industries, food processing industries, leather
industry, tourism, etc.)

 NON-FARM AREAS for Employment

 Animal Husbandry or livestock farming - Breeding, Rearing and
Caring for farm animals like cattles, goats and fowls (duck, goose,
etc). In India, the farming community uses the mixed crop-
livestock farming system —cattle, goats, fowl are the widely held
species. Livestock production provides increased stability in
income, food security, transport, fuel and nutrition for the family
without disrupting other food-producing activities. India owns
largest livestock and provides alternate option to 70 million small
and marginal farmers specially women.
Chart shows the distribution of livestock in India. Poultry accounts
for the largest share with 61 per cent followed by others. Other
animals which include camels, asses, horses, ponies and mules are
 in the lowest rung. Performance of the Indian dairy sector over
the last three decades has been quite impressive.
Milk production in the country has increased by about twelve
times between 1951-2021. This can be attributed mainly to the
successful implementation of ‘Operation Flood’. It is a system
whereby all the farmers can pool their milk produced according to
different grading (based on quality), processed and marketed to
urban centres through cooperatives. In this system the farmers
are assured of a fair price and income from the supply of milk to
urban markets. Meat, eggs, wool and other by- products are also
emerging as important productive sectors for diversification.
Though, in terms of numbers, our livestock population is quite
impressive but its productivity is quite low as compared to other
countries. It requires improved technology and promotion of good
breeds of animals to enhance productivity. Improved veterinary
care and credit facilities to small and marginal farmers and
landless labourers would enhance sustainable livelihood options
through livestock production.

[Link]

 Fisheries catching, processing or selling of fish and other aquatic

animals. Fishing community regards water body as “Mother”. In
India, after progressive increase in budgetary allocations and
introduction of new technologies in fisheries and aquaculture, the
 development of fisheries has come a long way. 65% comes from
inland sources and rest 36% comes from sea and oceans.
Total fish production is 0.9% of total GDP (West Bengal, AP,
Kerala, Gujrat, Maharashtra and Tamil Nadu).
Problems in Fishing- Widespread underemployment, low per
capita earnings, absence of mobility of labour to other sectors and
High illiteracy rate and indebtedness.
There is a need to increase credit facilities through cooperatives
and SHGs for fisherwomen to meet the working capital
requirements for marketing. However problems related to over-
fishing and pollution need to be regulated. Welfare programmes
for the fishing community have to be reoriented in a manner
which can provide long-term gains and sustenance of livelihoods.
[Link]
[Link]
zaGluZyBmZXZpcXVpY2sgYWQ%3D

 Horticulture- science or art of cultivating fruits, vegetables, tuber

crops, flowers, medicinal and aromatic plants, spices and
plantation crops. These crops play a vital role in providing food
and nutrition, besides addressing employment concerns.
Contributes 6% of GDP and 1/3rd of total value of agriculture
output. India has emerged as a world leader in producing a variety
of fruits like mangoes, bananas, coconuts, cashew nuts and a
number of spices and is 2nd largest in producing vegetables and
fruits. Flower harvesting, nursery maintenance, hybrid seed
production and tissue culture, propagation of fruits and flowers
and food processing are highly remunerative employment options
for women in rural areas. Horticulture has emerged as a successful
sustainable livelihood option and needs to be encouraged
significantly. Enhancing its role requires investment in
infrastructure like electricity, cold storage systems, marketing
linkages, small-scale processing units and technology
improvement and dissemination.
[Link]
 [Link]

 Information Technology branch of engineering deals with use of

computers and telecommunication to retrieve and store and
transmit information. Through IT, government can see food
insecurity areas; circulate information regarding emerging
technologies and employment generation in rural areas. It also
has a positive impact on the agriculture sector as it can
disseminate information regarding emerging technologies and its
applications, prices, weather and soil conditions for growing
different crops etc. It also has potential of employment generation
in rural areas.

Saansad Adarsh Gram Yojana (SAGY) on Oct 24, 2014 in which each
MP identify and develop one village of their constituencies.

 SUSTANIABLE DEVELOPMENT AND ORGANIC FARMING

Conventional agriculture relies heavily on chemical fertilisers and toxic
pesticides etc., which enter the food supply, penetrate the water
sources, harm the livestock, deplete the soil and devastate natural eco-
systems.
[Link]
[Link]

Organic farming relies on techniques such as crop rotation, green

manure, compost and biological pest control for producing safe and
healthy food. It restores, maintains and enhances the ecological balance.

 Benefits
 Economical farming - Organic agriculture offers a means to
substitute costlier agricultural inputs (such as HYV seeds, chemical
fertilisers, pesticides etc.) with locally produced organic inputs
that are cheaper and thereby generate good returns on
investment.
  Generate income through exports- Organic agriculture also
generates income through exports as the demand for organically
grown crops is on a rise.
 Healthy food - organically grown food has more nutritional value
than chemical farming thus providing us with healthy foods.
 Source of employment- Organic farming requires more labour
input than conventional farming; India will find organic farming an
attractive proposition.
 Safety of environment- The produce is pesticide-free and
produced in an environmentally sustainable way
 Challenges
 Less popular- Popularising organic farming requires awareness
and willingness on the part of farmers to adapt to new
technology.
 Lack of infrastructure and marketing facilities- Inadequate
infrastructure and the problem of marketing the products are
major concerns which need to be addressed apart from an
appropriate agriculture policy to promote organic farming.
 Low yield- It has been observed that the yields from organic
farming are less than modern agricultural farming in the initial
years. Therefore, small and marginal farmers may find it difficult
to adapt to largescale production.
 Shorter food life- Organic produce may also have more blemishes
and a shorter shelf life than sprayed produce.
 Limited choice of crops- Choice in production of off-season crops
is quite limited in organic farming.
Q1: State the meaning of ‘Agricultural Marketing’.

Q2: “Ujjawala Yojana has been a game changer for rural India.” State any three
conventional fuels being targeted under the Ujjawala Yojana.

Q3: Which of the following is not a benefit of organic farming?

(a) Cheaper inputs.

(b) Attractive returns on investment.
(c) Greater import possibilities.
(d) Higher nutritional value.

Q4: State the meaning of Cooperative Marketing.

Q5: Name the apex institution for rural financing in India

Q6: Critically evaluate the role of rural banking system in the process of rural
development in India.

Q7: Discuss briefly the importance of micro credit programme in rural India.

Q8:

Q9:
Q10:

Q11:

Q12:

Q13:

Q14: State the importance of rural banking in an economy like India.

Q15: __________ markets were organised to protect the farmers from

malpractices in mandis.

(a) Regulated (b) Periodic

(c) Daily (d) Weekly

Q16: Discuss briefly, why agricultural diversification is essential for sustainable

livelihoods.

Q17:

Q18: Explain the role of micro credit system in meeting credit requirements of
poor.

Q19:
Q20:

Q21:

Q22:
Q23:

Q24:

Q25:

Q26:
Q27:
Q28:

Q29:

Q30:

Q31: