RURAL DEVELOPMENT

Question 1: What do you mean by rural development? Bring out the key issues in rural
development.
ANSWER: Rural areas support the bulk of India’s population. So, to accelerate the
process of growth and development of a country, rural development must be accorded
priority. Rural development refers to the actions and initiatives taken for the social and
economic development of the rural or backward areas. The key issues in rural
development are as follows:

1. Human Capital Formation- Rural development programmes should aim at

development of human resources by investing in education, technical skills development
through on-the-job training, health care, etc.

2. Development of Productive Resources- Productive resources help in generating

employment opportunities. Development of productive resources reduces excess burden
on the agricultural sector, thereby, increasing productivity and income of the rural
people.

3. Development of Rural Infrastructure- Infrastructure development is a very crucial

issue at the micro level. It provides a support system to all the production activities in the
economy, the absence of which makes economic growth and social development
impossible. Development of rural infrastructure includes development of bank, credit
societies, electricity, means of transport, means of irrigation, development of markets,
facilities for agricultural research, etc.

4. Land reforms- Land reforms along with technical reforms must be initiated in the rural
areas. Land reforms lead to efficient and optimum use of land, enabling large scale
production.

5. Lessening Poverty- . Poverty gives rise to many other interrelated problems like
unemployment, inferior human capital, underdevelopment and backwardness,
inequalities, etc. An important step that should be taken in order to tackle poverty is to
develop income-earning assets. Such assets would generate income, raise living
standards and make rural people self-sufficient.
Question 2: Discuss the importance of credit in rural development.
ANSWER: The rural areas often suffer from low income leading to low rate of savings.
Farmers find it very difficult to increase their productivity by investing on their farm lands.
Further, the limited number of banks that are available in the rural areas prefer to
forward credit to the farmers with large land-holdings. Getting credit from banks being
difficult, the small and marginal farmers fall easy prey to the money lenders
1. Credit helps the farmers to commercialise their farming. As the small and the marginal
farmers produce only for their subsistence, they fail to generate sufficient surplus to
reinvest on their lands leading to degradation of the land.

2. Secondly, given the long gestation period between sowing and harvesting of the
crops, credit is extended to the farmers for meeting their initial requirements of farm
inputs like seeds, fertilisers, etc.

3. The farmers require funds for meeting their living expenses, social, religious and
specific needs. These needs are to be fulfilled via credit.

4. Lastly, agriculture has always been dependent at the vagaries of climate. In the
absence of good monsoon or crop failure, farmers are worst hurt. Thus, in order to save
them from such tragedy, crop insurance and farm credit plays a vital role.
Question 3: Explain the role of micro-credit in meeting credit requirements of the poor.
ANSWER: Micro credit refers to credit and other financial services provided to the poor
through Self Help Groups (SHGs) and non-government organisations. The Self Help
Groups are playing a crucial role in meeting the credit requirements of the poor by
inculcating saving habits among the rural households. The individual savings of many
farmers are pooled together to meet the financial requirements of the needy members of
the SHGs. The members of these groups have been linked with the banks. SHGs
enable the economically poor individual to gain strength as part of a group. Also, the
financing done through SHGs reduces transaction costs for both the lenders and the
borrowers. The National Bank for Agricultural and Rural Development (NABARD) played
a key role in providing credit at special concessional rates. SHGs' programmes are
popular among the small and marginal borrowers owing to their informal credit delivery
mechanism along with minimum legal formalities.
Question 4: Explain the steps taken by the government in developing rural markets.
ANSWER: 1. Regulated Markets: The government came up with the concept of
regulated market where the sale and purchase of the products are monitored by the
Market Committee which consists of farmers, government agents and traders. This
practice infuses greater transparency in the marketing system through the use of proper
scales and weights. Such committees ensure the farmers and the consumers in
receiving fair price in exchange of their products

2. Infrastructure Development: Indian government provided cold storages and

warehouses that help the farmers to sell their product at the time when the price is
attractive. Also, railways offer subsidised transport facilities to the farmers. This enables
the farmers to bring their product to urban areas where they can earn huge profits.

3. Co-operative Agricultural Marketing Societies: The government also started co-

operative marketing under which the farmers get access to fair prices. This is due to the
better and enhanced bargaining power of the farmers via collective sale in the market.
4. MSP Policy: Minimum Support Price is a minimum legislated price that a farmer may
charge in exchange for his products. This enables them to sell their products in the open
market at a higher price. The MSP insulates the farmers in case of price fall.
Question 5: Why is agricultural diversification essential for sustainable livelihoods?
ANSWER: The agricultural diversification implies diversification of crop production and
shifting of agricultural workforce to other allied activities such as livestock, poultry,
fisheries, etc. and non-agriculture sector. The shift from the crop farming to non-farm
employment is essential in order to raise income and to explore alternative avenues of
sustainable livelihood.

1. A substantial portion of Indian farming is dependent on the vagaries of monsoon,

making it a risky affair to rely upon solely. Accordingly, the need for diversification is
required to enable the farmers to earn from other alternative non-farm occupations. This
lessens excess burden on agriculture by reducing disguised unemployment.

2. The kharif season opens up ample opportunities for agricultural employment.

However, owing to lack of irrigation facilities, the farmers fail to get gainful employment
opportunities during the Rabi season. Therefore, the need of diversification arises during
the Rabi season.

3. Agriculture being over crowded cannot further generate employment opportunities.

Therefore, the prospects of the non-farm sectors should be opened up in the rural areas
to provide job opportunities, thereby, diverting workforce from the already crowded
agricultural sector.

5. The non-farm sector provides employment opportunities for the whole year as
compared to the farming occupation. So, it helps to eradicate poverty from the rural
areas.

6. Most of the output of non-farm sectors acts as an input for the large scale industries.
For example, agro-processing industries, food processing industries, leather industry,
tourism, etc. This has two-fold benefits. First, the large scale industries can specialise in
their final output by relying on the processed inputs from the non-farm sectors. Secondly,
such dependence of the large scale industries provides impetus to the non-farm sectors
reducing the urban-rural regional disparities.

Question 6: Critically evaluate the role of the rural banking system in the process of
rural development in India.
ANSWER: With the nationalisation of the commercial banks after 1969, the concept of
social banking came into existence. It implies extending institutional credit at moderate
rate of interest. The National Bank for Agricultural and Rural Development (NABARD)
has made a significant progress in the field of rural credit. Institutional credit has freed
the farmers from the trap of money lenders. But institutional credit is not free from
deficiencies. The rural or institutional credit has invariably been associated with security
or collateral. Consequently, a substantial number of farmers cannot avail credit. Also, the
commercial banks failed to encourage the habit of thrift among farmers. In addition to
this, the leniency on the part of the government to collect back the loans was another
setback in the rural banking. This further led to the emergence of the feeling among the
farmers of not repaying the borrowed amount. This increased the defaulter’s rate and led
to financial unfeasibility for the rural banks.
Question 7: What do you mean by agricultural marketing?
ANSWER: Agricultural marketing refers to all those processes that are involved from
harvesting to final sales of the products by the farmers. These processes involve:

a) gathering the product after harvesting.

b) processing the product

c) grading the product, according to, different quality norms

d) packaging the product

e) storing the product for future use

f) selling the product at attractive prices

It includes all those activities that help the farmers to fetch the maximum price for his
product.
Question 8: Mention some obstacles that hinder the mechanism of agricultural
marketing.
ANSWER: i. Farmers are vulnerable to defective weighing techniques and
misappropriation of accounts.

ii. Farmers are often ill-informed about market prices and market conditions. Being
ignorant, farmers are forced to sell their product at lower prices.

iii. The farmers lack access to proper storage facilities to store their produce for future
sell at better prices.

iv. The farmers cannot avail agricultural credit, leading to their exploitation by the
moneylenders.

v. Transportation facilities are insufficient as a result of which the farmers are unable to
sell their produce at far off places.
vi. Due to the presence of large number of intermediaries farmers remain separated from
the actual consumers. The intermediaries purchase the produce from the farmers at a
very low price and sell them at a much higher price in the market. This implies that the
farmers receive a very small share of the actual return of the produce.
 Question 9: What are the alternative channels available for agricultural marketing?
Give some examples.
ANSWER: The small and marginal farmers, selling their product through the
middlemen, were exploited by these middlemen. The farmers were not given appropriate
price for their product. In this context; there arose a need for an alternative marketing
channel. Under this channel, the farmers can sell their product directly to the consumers
that would fetch them comparatively higher price, thereby, attractive profits. Some of the
examples of alternative agricultural marketing are Apni Mandi in states like Punjab,
Haryana and Rajasthan, Hadaspar Mandi in Pune, Rythu Bazars in Andhra
Pradesh, Uzhavar Sandies in Tamil Nadu. Another alternative channel for agricultural
marketing is the contract of direct sales between the farmers and the national and
international companies. These companies offer advance payments to the farmers for
supplying products at pre-determined rates. These alternative agricultural channels raise
farmer’s income and simultaneously reduce price risk for the small and marginal
farmers.
Question 10: Distinguish between ‘Green Revolution’ and ‘Golden Revolution’
ANSWER:

Green Revolution Golden Revolution

The combined use of HYV seeds and increased use The rapid growth in the production of the horticultural
of fertilisers and developed irrigation facilities crops such as fruits, vegetables, tuber crops, flowers,
jointly to increase the production of rice and wheat. etc. is known as Golden Revolution.
This increase in the production of the food grains is
known as the Green Revolution.

It led to increase in the production, especially, of It led to increase in production of fruits, vegetables,
rice and wheat. flowers, aromatic plants, spices, etc.

As a result of this revolution, India became self- As a result of this revolution, India became a world
sufficient in the production of wheat and rice. leader in the production of mangoes, bananas, coconut
and spices.

Question 13: Bring out the importance of animal husbandry, fisheries and horticulture
as a source of diversification.
ANSWER: Importance of Animal Husbandry

Animal husbandry is the most important non-farm employment in India. It is also known
as Livestock Farming. Poultry, cattle and goats/sheep are the important components of
livestock farming in India. Most of the rural families carry out livestock farming together
with crop farming in order to increase their income. Livestock farming provides
sustainable livelihood to the people in the semi arid and arid regions where farming can’t
be performed well. Further, capital investment in livestock farming is comparatively less
than that in crop farming. In addition, livestock farming is an important source of
employment for rural women. Besides providing employment, livestock farming has
resulted in increased production of milk, eggs, meat, wool and other by-products,
enhancing the consumption bundle qualitatively and nutritionally.

Importance of Fisheries

‘Fisheries’ are an important source of livelihood in the coastal states such as Kerala,
Maharashtra, Gujarat and Tamil Nadu. The fishing community in India depends on water
bodies- both inland and marine water bodies. Inland sources include rivers, lakes,
ponds, and streams, while, the marine sources include seas and oceans. But this
community remains one of the backward communities in the country due to low per
capita earnings, lack of labour mobility to other sectors, illiteracy and indebtedness.
Despite a significant segment engaged, this sector contributes only 1.4% to India’s total
GDP.

Importance of Horticulture

Horticulture is emerging as an important source of livelihood in the rural areas.

Horticultural crops include fruits, vegetables, medicinal and aromatic plants and flowers.
Presently, India is the second largest producer of fruits and vegetables that includes
mangoes, bananas, coconuts, cashew nuts and variety of species. There has been a
considerable rise in the income levels of families engaged in horticultural production.
The increase in horticultural production has lowered the vulnerability of small and
marginal farmers. This has provided a gateway of opportunities for employment for
women. It generates employment for 19% of India’s total labour [Link] does
not suffer from ecological and environmental problem. Hence, horticulture must be
promoted with sufficient investment and infrastructure.

Question 14: ‘Information technology plays a very significant role in achieving

sustainable development and food security’ — comment.
ANSWER: Information technology (IT) plays a very significant role in achieving
sustainable development and food security. IT enables to provide and store data related
to the past and future conditions providing inputs for policy decision and for adopting
various corrective measures. For example, with the help of IT, weather conditions can be
forecast. If ,for example, there is a probability of crop failure, then preventive measures
can be taken to avoid or mitigate the impact of food insecurity. Information technology
facilitates the storage and dissemination of information on emerging technologies,
weather and soil conditions for growing various crops, etc, which ease the decision
making process vis-a-vis production and productivity. Now days, the farmers can
consult Kisan Call Centres and various web sites providing valuable information
regarding measures to improve farm productivity and quality of farm inputs, seeds,
fertilisers and various modern techniques. It acts as a tool for identifying the experts on
food security and sustainable development. . IT sector also generates employment
opportunities in the backward areas via developing ‘info kiosk’ (i.e. PC with internet,
scanner, etc.) in the rural areas. Thus, it can be said that IT plays a vital role in assuring
food security and sustainable development in India.
Rural development is a comprehensive term which essentially focuses on action for
the development of area which is lagging behind in overall development of village
economy.
Objectives of rural development:
1. Increasing productivity of agricultural sector.
2. Generating alternative means of livelihood in rural sector.
3. Promoting education and health facilities in the rural areas.
Key issues in rural development.
(i) A robust system of rural credit.
(ii) A system of marketing that ensures remunerative price to the farmer for his
produce.
(iii) Diversification of crops that reduce risks of production and induces
commercialisation of farming.
(iv) Diversification of production activity with a view to find alternative means of
sustainable living other than crop-cultivation.
(v) Promotion of organic farming with a view to make crop cultivation environmental
friendly as well as a sustainable process over a long period of time.
(vi) Honest system of land reforms.
(vii) Development of human resource like health, addressing both sanitation and
public health.
(viii) Development of human resource including literacy, education and skill
development.
(ix) Development of Infrastructure like electricity, irrigation, transport facility, etc.

Rural credit means credit for the farming communities. Farmers require credit for
various purposes like purchasing agricultural tools and machines, digging wells and
tube wells, purchasing seeds, fertilizers, pesticides, etc.
The gestation period between sowing and harvesting is high. So, farmers have to
borrow to fulfil their needs during this period.
Sources of rural credit in India.
1. Non-institutional sources are money lenders, traders and commission agents,
landlord, relatives and friends.

2. Institutional sources are as follow:

(i) Co-operative credit societies.
(ii) Commercial Banks
(iii) Regional Rural Banks
(iv) NABARD (National Bank for Agriculture and Rural Development.) (established in
1982)
(v) Self Help Groups (SHGs)

Agricultural marketing means all those activities which includes-gathering the

produce after harvesting, processing the produce, grading the produce according to
its quality, packaging the produce according to preferences of buyers, storing the
produce for future sale and selling the produce when price is lucrative.
In other words, Agricultural marketing covers the services involved in moving an
agricultural product from the farm to the consumer.

Defects of agricultural marketing

(i) Inadequate warehouses
(ii) Multiplicity of middlemen
(iii) Malpractice in unregulated markets.
(iv) Lack of Adequate finance
(v) Inadequate means of transport and communication.

Measures adopted by the government to improve marketing system.

(i) Regulation of markets.
(ii) Co-operative agricultural marketing societies.
(iii) Provision of warehousing facilities.
(iv) Subsidised transport.
(v) Dissemination of marketing information.
(vi) Buffer stocks and minimum support price (MSP)
(vii) Public Distribution System (PDS)
(viii) Alternative marketing channels
(ix) Improvement of physical Infrastructure

Diversification in agriculture activities-It has the two aspects.

1. Diversification of crop production refers to a system of multiple cropping rather
than mono cropping. It may also mean a shift from subsistence farming to
commercial farming.
It has the three advantages:
(i) It lowers the risk of farmer on account of failure of monsoon.
(ii) It enhances the scope for commercialisation of farming.
(iii) Minimise the market risk arising due to price fluctuation.
2. Diversification of productive activities implies a shift from crop farming to non-
farming areas of employment. Non-farm areas of employment include.
(i) Animal husbandry.
(ii) Fisheries.
(iii) Horticulture.
(vi) Information technology-every village a knowledge Centre
It has following advantages:
1. Reduce the risk from agriculture sector.
2. Provide ecological balance.
3. Provide sustainable livelihood option to people living in village.

Operation Flood
It is a system of milk co-operatives, launched in 1966. This system emphasised the
pooling of milk by farmers through co-operatives societies.
This increased the quantum of sale as well the market value of product. The
production in milk increased four-fold. This system if commonly called operation
flood.
Organic farming is a system of farming that maintains, enhances and restores the
ecological balance. It helps in sustainable development of the agricultural sector, In
organic forming, farmers use organic manure, bio fertilizers and organic pesticides.
Advantages of organic farming:
(i) Inexpensive process.
(ii) Generates income.
(iii) Healthier and tastier food.
(iv) Solves unemployment problem.
(v) Environment friendly.

Limitation of Organic farming:

(i) Yields from organic farming is less than modern agricultural farming in initial
years.
(ii) Organic produce have shorter shelf life than sprayed produce.
(iii) Choice in production of off-season crops is quite limited in organic farming.