Deepika Sharma 1 Indian Economic Development

Chapter – 5
RURAL DEVELOPMENT

Meaning of Rural Development

Rural development means an action plan for the social and economic growth of the rural areas. Some of
the areas for development in rural India, which are challenging and need fresh initiatives include/ Process
of Rural Development:
• Development of human resources Human Capital Formation is still a far cry in rural areas.
Action-plan for rural development must focus on issues like literacy, education, health care, on the
job training, migration etc.
• Land reforms Technical reforms in agriculture must be supplemented with land reforms. These
include: (i) agrarian relations (ii) size of holdings which is to be economically and technically
viable for cultivation.
• Development of the productive resources At the micro level, productive resources of each
locality in the rural areas are to be identified and developed. This is to enhance employment.
• Infrastructure development This includes provision of credit facilities in the rural areas,
development of rural markets and their integration with the urban markets, development of the
means of transport, availability of power, for farming and non-farming activities, irrigation,
facilities for agricultural research and communication.
• Special measures for alleviation of poverty Action-plan for rural development includes high
priority to poverty alleviation

All this means that people engaged in farm and non-farm activities in rural areas have to be provided
with various means that help them increase the productivity. They also need to be given opportunities
to diversify into various non-farm productive activities such as food processing. Enabling them better
and more affordable access to healthcare, sanitation facilities at workplaces and homes and education
for all would also need to be given top priority for rapid rural development.

Credit And Marketing In Rural Areas

Rural or agricultural credit means credit for the farming families. Credit is the lifeline of farming
activity.

The time gestation between crop sowing and realisation of income after production is quite long, farmers
borrow from various sources to meet their initial investment on seeds, fertilisers, equipments and other
family expenses of marriage, death, religious ceremonies etc. Moneylenders and traders exploited small
and marginal farmers and landless labourers by lending to them on high interest rates and by
manipulating the accounts to keep them in a debt-trap.

After 1969 when India adopted social banking and multi-agency approach to adequately meet the needs
of rural credit. Later, the 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.
 Deepika Sharma 2 Indian Economic Development

Sources of Rural Credit are:

(i) Non-Institutional Sources
a. Money lenders: The peasants are exploited through exorbitant rate of interest.
b. Traders: They provide credit to the farmers on the mortgage of crops at high rates of interest on
a condition that the crops will be sold to them at low prices.
c. Rich landlords: Small farmers, take loans from landlords for meeting their financial
requirements at a very high interest rate.
(ii) Institutional Sources
a. Co-operative credit societies: It provides adequate credit to the farmers at reasonable rate of
interest. They also provide guidance in diverse agricultural operations.
b. Land development banks: They provide credit to the farmers against the mortgage of their lands.
c. Commercial Bank Credit: The State Bank of India was set up in 1955 with a focus on rural
credit. This prompted nationalization of certain banks in 1969. The nationalized commercial
banks were directed to offer credit directly to the farmers as well as indirectly through co-
operative societies.
d. Regional Rural Banks: RRBs were set up to boost credit needs to weaker section, focusing on
the remote rural areas as well as backward districts.
e. National Bank for Agricultural and Rural Development (NABARD): It is an apex institution set
up in 1982 for handling policy, planning and operations in the field of rural credit and related
economic activities. They co-ordinate the rural financing activities of all credit institutions and
maintain liaison with government of India.
They undertook monitoring and evaluation of projects refinanced by it.
f. Self-Help Group (SHG): Recently, Self-Help Groups (henceforth SHGs) have emerged to fill
the gap in the formal credit system. Since some kind of collateral is required for the loan, so 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 installments at
reasonable interest rates. By May 2019, nearly 6 crore women in India have become member in
54 lakh women SHGs. About Rs.10 - 15,000 per SHG and another Rs. 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 the empowerment of women.
However, it is alleged that the borrowings are mainly confined to consumption purposes
and negligible proportion is borrowed for productive purposes.
 Deepika Sharma 3 Indian Economic Development

Rural Banking – A critical evaluation

Rapid expansion of the banking system had a positive effect on rural farm and non-farm output, income
and employment, especially after the green revolution — it helped farmers to avail services and credit
facilities and a variety of loans for meeting their production needs. We achieved food security, which is
reflected in the abundant buffer stocks of grains. However, rural banking system had some flaws:
 Problem in mobilizing the credit Formal institutions other than commercial banks have failed to
develop a culture of deposit mobilisation — lending to worthwhile borrowers and effective loan
recovery. Agriculture loan default rates have been chronically high. It is also alleged that farmers
are deliberately refusing to pay back loans.
 Insufficient credit and inadequate amount of sanctions The volume of rural credit in the
country is still insufficient in comparison to its demand. Also, the amount of loan sanctioned to
the farmers is also inadequate. As a result farmers fail to use this loan for productive purpose and
instead use it for consumptional purposes.
 Less attention to poor farmers Lesser attention has been given on the credit requirements of
needy farmers. On the other hand, well-to-do farmers are getting more attention due to better
credit worthiness.
The problem of agricultural/rural credit in India can be solved in the following ways:
 Credit facilities should be extended to Indian farmers by the commercial banks on easy terms.
 An effective mechanism for the recovery of agricultural loans should be evolved at the earliest.
 Cooperative credit societies in rural areas should be strengthened and their working should be
made more efficient.
 Inculcating the habit of thrift and efficient utilisation of financial resources needs to be enhanced
among the farmers too.
 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 holders can get Rs. 1-2 lakh accidental
insurance coverage and overdraft facilities for Rs. 10,000 and get their wages, old age pension and
other social security payments of the government transferred to bank accounts. There is no need to
keep minimum bank balance.

Agricultural Marketing
Marketing is a process whereby the producer and the buyer are brought together. Agricultural marketing
is a wide term. It involves the process of assembling, storage, processing, transportation, packaging,
grading and distribution of different agricultural commodities across the country.

Prior to independence, farmers, while selling their produce to traders suffered from faulty weighing,
manipulation of accounts, lack of storage facility and lack of market information. It was full of many
defects and obstacles that hinder the mechanism of agricultural marketing. Therefore, state intervention
became necessary to regulate the activities of the private traders.

Measures to improve Agricultural Marketing

The measures that were initiated to improve the marketing aspect are as follows:
1. Organisation of regulated market: The first step was regulation of markets to create orderly and
transparent marketing conditions. Currently agricultural markets are regulated under Agricultural
Produce Marketing Committee Act (APMC Act). By and large, this policy benefited farmers as well
as consumers from various malpractices. However, there is still a need to develop about 27,000 rural
periodic markets as regulated market places.
2. Provision of Infrastructure Facilities: The Second component is provision of physical infrastructure
facilities like transportation, roads, railways, warehouses, godowns, cold storages and processing
units. The current infrastructure facilities are quite inadequate to meet the growing demand and need
 Deepika Sharma 4 Indian Economic Development

to be improved.
Besides this, the government has also taken steps for the creation of grading and standardization
facilities in the country. AGMARK seals are issued for certain graded agricultural products.
3. Cooperative marketing: Cooperative marketing helps in realising fair prices for farmers’ produce.
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. As members of these
societies, farmers find themselves better bargainers in the market, getting better price of their produce
through collective sales.
However cooperatives have received a setback during the recent past due to
 Inadequate coverage of farmer members.
 Lack of appropriate link between marketing and processing cooperatives.
 Inefficient financial management.
4. Various Policy Instruments: In a view to avoid distress sate, the government is offering various
policy instruments like
(i) Assurance of minimum support prices (MSP) for agricultural products.
(ii) Maintenance of buffer stocks of wheat and rice by Food Corporation of India.
(iii) Distribution of food grains and sugar through PDS.
Conclusion
On account of these measures by the government, agricultural marketing system has made some
notable improvement. However, despite government intervention, private trade (by moneylenders, rural
political elites, big merchants and rich farmers) pre-dominates agricultural markets. The need for
government intervention is imminent particularly when a large share of agricultural products, is handled
by the private sector.
Some scholars argue that commercialisation of agriculture offers tremendous scope for farmers to earn
higher incomes provided the government intervention is restricted.

Alternative Marketing channels- A Ray of Hope

Emerging alternatives of agricultural marketing are ray of hope to the small and marginal farmers who
have been silent sufferers at the hand of middlemen.
 It has been realised that if farmers directly sell their produce to consumers, it increases their
incomes. Some examples of these channels are Apni Mandi (Punjab, Haryana and Rajasthan);
Hadaspar Mandi (Pune); Rythu Bazars (vegetable and fruit markets in Andhra Pradesh and
Telangana) and Uzhavar Sandies (farmers markets in Tamil Nadu).
 Further, several national and multinational fast food chains are increasingly entering into
contracts/ alliances with farmers to encourage them to cultivate farm products (vegetables, fruits,
etc.) of the desired quality by providing them with not only seeds and other inputs but also assured
procurement of the produce at pre-decided prices.
It is argued that such arrangements will help in reducing the price risks of farmers and would also expand
the markets for farm products.

* In 2020, Indian Parliament passed three laws to reform agriculture marketing system. While some
section of farmers support these reforms, the rest of the farmers oppose and these Acts are still being
debated.
 Deepika Sharma 5 Indian Economic Development

Diversification of Agricultural Activities

Agricultural diversification refers to the re-allocation of some of farm’s productive resources into new
activities or crops. Diversification has two aspects:
 Diversification of crop production: It implies production of a diverse variety of crops rather than
one specialized crop. It implies a shift from single cropping system to multi-cropping system. It
also means a shift from subsistence farming to commercial farming.
It minimizes the market risk arising due to price fluctuations. It also minimizes risk occurring due
to monsoon failure.
 Diversification of production activity: It implies a shift from crop farming to other areas of
production activity. It is important because it increases both income as wells as stabilises it. It
provides productive sustainable livelihood options to rural people. Expansion into other sectors is
essential to provide supplementary gainful employment and in realising higher levels of income
for rural people to overcome poverty and other tribulations. Hence, there is a need to focus on
allied activities, non-farm employment and other emerging alternatives of livelihood, though there
are many other options available for providing sustainable livelihoods in rural areas.
As agriculture is already overcrowded, a major proportion of the increasing labour force
needs to find alternate employment opportunities in other non-farm sectors.

Non-Farm Areas of Production Activity for the Rural Population:

 Animal Husbandry: 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. Today, livestock sector alone provides alternate livelihood
options to over 70 million small and marginal farmers including landless labourers. India owns
one of the largest livestock populations in the world. A significant number of women also find
employment in the livestock sector. Poultry accounts for the largest share with 61 per cent
followed by others (camels, asses, horses, ponies and mules)
 Dairying: Dairying is the business of producing, storing and distributing milk and its products.
Milk production in the country has increased by about ten times between 1951-2016. 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) and
the same is 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. As
pointed out earlier Gujarat state is held as a success story in the efficient implementation of milk
cooperatives which has been emulated by many states. Meat, eggs, wool and other byproducts are
also emerging as important productive sectors for diversification.
 Fisheries: Fisheries refer to the occupation devoted to the catching, processing or selling of fish
and other aquatic animals. The fishing community regards the water body as ‘mother’ or
‘provider’. In India, presently fish production from inland sources contributes about 65 per cent to
the total value of fish production and the balance 35 per cent comes from the marine sector (sea
and oceans).
Currently total fish production accounts for 0.9 per cent of the total GDP. In India, West
Bengal, Andhra Pradesh, Kerala, Gujarat, Maharashtra and Tamil Nadu are major fish producing
states. Even though women are not involved in active fishing, about 60 per cent of the workforce
in export marketing and 40 per cent in internal marketing are women. There is a need to increase
credit facilities through cooperatives and SHGs for fisherwomen to meet the working capital
requirements for marketing.
Some of the problems faced by the fishing community are rampant underemployment, low
per capita earnings, absence of mobility of labour to other sectors and a high rate of illiteracy and
indebtedness.
Deepika Sharma 6 Indian Economic Development

 Horticulture: Horticulture refers to the science or art of cultivating fruits, vegetables, tuber crops,
flowers, medicinal and aromatic plants, spices and plantation crops. India being blessed with a
varying climate and soil conditions, has adopted growing of diverse horticultural crops. These
crops play a vital role in providing food and nutrition, besides addressing employment concerns.
Horticulture sector contributes nearly one-third of the value of agriculture output and 6%
of Gross Domestic Product of India. 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 the second
largest producer of fruits and vegetables. 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.
High crop productivity led to Golden Revolution (Horticultural crops and honey) in
horticultural farming during 1991-2012.

Tamil Nadu Women in Agriculture (TANWA)

Tamil Nadu Women in Agriculture (TANWA) is a project initiated in Tamil Nadu to train
women in latest agricultural techniques. It induces women to actively participate in raising
agricultural productivity and family income. At a Farm Women’s Group in Thiruchirapalli,
run by Anthoniammal, trained women are successfully making and selling vermin compost
and earning money from this venture. Many other Farm Women’s Groups are creating
savings in their group by functioning like mini banks through a micro-credit system. With
the accumulated savings, they promote small-scale household activities like mushroom
cultivation, soap manufacture, doll making or other income generating activities.

 Other Alternate Livelihood options: Since the revolution in IT (Information Technology) in

Indian Economy has been quite visible. With IT, governments can predict areas of food insecurity
and vulnerability using appropriate information and software tools so that action can be taken to
prevent or reduce the likelihood of an emergency. 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 can act as a tool for
releasing the creative potential and knowledge embedded in the society. It also has potential of
employment generation in rural areas.

Adoption of Village by Parliamentarians

In October, 2014, The Government of India introduced a new scheme called
Saansad Adarsh Gram Yojana (SAGY). Under this scheme, Members of India's
Parliament need to identify and develop one village from their constituencies. To
begin with, MPs can develop one village as a model village by 2016, and two
more by 2019, covering over 2,500 villages in India. According to the scheme,
the village can have a population of 3,000-5,000 in the plains and 1,000-3,000 in
the hills and should not be MPs' own or their spouse's village. MPs are expected
to facilitate a village development plan, motivate villagers to take up activities
and built infrastructure in the areas of health, nutrition and education.
 Deepika Sharma 7 Indian Economic Development

Sustainable 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. Efforts in evolving technologies which are eco-friendly are essential for sustainable
development and one such technology which is eco-friendly is organic farming. Organic farming is a
system of farming that relies upon the use of organic inputs for cultivation.

Benefits of Organic Farming

 Discards the use of Non-renewable resources: 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 substituting these non-renewable resources.
 Generates high income: As the demand for organically grown crops is on a rise, so it generates
income through exports also.
 Healthier and tastier food:Studies have shown that organically grown food has more nutritional
value than chemical farming thus providing us with healthy foods.
 Provides Employment: Since organic farming requires more labour input than conventional
farming, India will find organic farming an attractive proposition.
 Environment friendly: Organic farming is environment friendly whereas chemical fertilisers
pollute the ground water and creates health hazards. Thus under organic farming, the produce is
pesticide-free and produced in an environmentally sustainable way.

Problems in 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 large scale production.
 Less Popular: Popularising organic farming requires awareness and willingness on the part of
farmers to adapt to new technology.
 Lack of infrastructure: Inadequate infrastructure and the problem of marketing the products are
major concerns which needs to be addressed apart from an appropriate agriculture policy to
promote organic farming.
 Organic produce also have a shorter shelf life than sprayed produce.
 Choice in production of off-season crops is quite limited in organic farming.

NCERT QUESTIONS
 Deepika Sharma 8 Indian Economic Development

Q1 : What do you mean by rural development? Bring out the key issues in rural development.
Ans : Rural areas support the bulk of India's population. Simultaneously, these areas are the breeding ground of
poverty, hunger and starvation. 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 areas lack quality human capital. Therefore, 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. In
rural areas, the main occupation is agriculture that usually suffers from low productivity, lack of infrastructure and
disguised unemployment. Thus, rural development must aim at development of alternative sources of occupation.
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. These enable the
use of modern techniques and methods, thereby, increasing the productivity and aggregate volume of farm output.
In addition, land reforms lead to efficient and optimum use of land, enabling large scale production.
5. Lessening Poverty- Poverty is one of the main causes of rural underdevelopment. Poverty is not a problem in
itself; in fact, it 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 t
poverty is to develop income-earning assets. Such assets would generate income, raise living standards and make
rural people self-sufficient.

Q2 : Discuss the importance of credit in rural development.

Ans : Finance and credit are the two essential requirements for rural development. 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. The infusion of credit is very essential for the growth of
agricultural sector, leading to rural economic development. The importance of credit in rural development is
highlighted in the following points:
1. Credit helps the farmers to commercialise their farming. In other words, commercial farming requires funds that
are provided via credit. 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. Credit saves the farmers from the vicious circle of poverty. The farmers require funds for meeting their general
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.

Q3 : Explain the role of micro-credit in meeting credit requirements of the poor.

Ans : 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. In other words, 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. Presently, more than seven lakhs SHGs are operating across
 Deepika Sharma 9 Indian Economic Development

different rural areas. SHGs' programmes are becoming popular among the small and marginal borrowers owing to
their informal credit delivery mechanism along with minimum legal formalities.

Q4 : Explain the steps taken by the government in developing rural markets.

Ans : The following are the various steps initiated by the Indian government to develop the rural markets:
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. This Market Committee 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: The present infrastructure is not sufficient to meet the growing demands of the
farmers. 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 as this is the minimum price that they can receive. The need of such assurance to the
farmers is of immense importance as farming in India is subject to many uncertainties.

Q5 :Why is agricultural diversification essential for sustainable livelihoods?

Ans : 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. The importance of agricultural diversification can be explained with the help of
the following points:
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 Rabiseason.
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.
4. The non farm sector has several segments that possess dynamic linkages. Such linkages enhance the healthy
growth of an economy.

Q6 : Critically evaluate the role of the rural banking system in the process of rural development in India.
Ans : 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. It cannot be denied
that the institutional credit has freed the farmers from the trap of money lenders and mahajans. But, on the other
hand, 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 taxes 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.

Q7 : What do you mean by agricultural marketing?

Ans : Agricultural marketing refers to all those processes that are involved from harvesting to final sales of the
products by the farmers. These processes involve:
 Deepika Sharma 10 Indian Economic Development

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
In other words, it does not simply refer to the farmers' act of bringing their product to the market for the purpose of
sale. But it also includes all those activities that help the farmers to fetch the maximum price for his product.

Q8 : Mention some obstacles that hinder the mechanism of agricultural marketing.

Ans : Agricultural marketing does not simply refer to the farmers' act of bringing their product to the market for
the purpose of sale. But it also includes all those activities that help the farmers to fetch the maximum price for
their product. The following are some of the obstacles that hinder the mechanism of agricultural marketing:
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 and mahajans.

Q9 : What are the alternative channels available for agricultural marketing? Give some examples.
Ans : 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.

Q10 : Distinguish between 'Green Revolution' and 'Golden Revolution'

Ans : Green Revolution Golden Revolution The combined use of HYV seeds and increased use of fertilisers and
developed irrigation facilities jointly to increase the production of rice and wheat. This increase in the production
of the food grains is known as the Green Revolution.
The rapid growth in the production of the horticultural crops such as fruits, vegetables, tuber crops, flowers, etc. is
known as Golden Revolution.
It led to increase in the production, especially, of rice and wheat.
It led to increase in production of fruits, vegetables, flowers, aromatic plants, spices, etc.
As a result of this revolution, India became self- sufficient in the production of wheat and rice.
As a result of this revolution, India became a world leader in the production of mangoes, bananas, coconut and
spices.

Q11 : Explain four measures taken by the government to improve agricultural marketing.
Ans : The following are the various steps initiated by the Indian government to develop the rural markets:
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. This Market Committee consists of farmers, government
agents and traders. This 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: The present infrastructure is not sufficient to meet the growing demands of the
farmers. The government of India has 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.
 Deepika Sharma 11 Indian Economic Development

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 of 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 as this is the minimum price that they can receive. Given the uncertainties faced by the
farmers, the need of such assurance to them is of immense importance.

Q12 : Explain the role of non-farm employment in promoting rural diversification.

Ans : The non-farm areas of employment are essential with a view to raise income and exploring alternative
avenues of sustainable livelihood besides agriculture. The following are the importance of non-farm employment
opportunities in promoting rural diversification:
1. A substantial portion of Indian farming is dependent on the vagaries of monsoon, making it a risky affair to rely
upon solely. Hence, non-farm employment opportunities are to be explored to enable the farmers to earn from
alternative non-farm occupations. This will lessen the excess burden on agriculture by reducing disguised
unemployment.
2. The kharif season opens up ample opportunities for agricultural employment. However, due to lack of irrigation
facilities, the farmers fail to get gainful employment opportunities during the Rabi season. Therefore, absence of
opportunities in agriculture sector should be compensated in non-farm sectors.
3. Agriculture being over crowded cannot further generate employment opportunities to the farmers. 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.
4. The non-farming sector has several segments that have dynamic linkages. Such linkages enhance the healthy
growth of the rural areas.
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.

Q13 : Bring out the importance of animal husbandry, fisheries and horticulture as a source of
diversification.
Ans : 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. The share of
livestock farming is comparatively higher in the semi arid and arid areas than the irrigated areas. This is because
the arid areas have lesser access to irrigation facilitiesand thereby, crop farming is less feasible. Thus, in other
words, it can be said that 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. Presently, animal husbandry is the most important source of alternative employment, employing
approximately 70 million small and marginal farmers. 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. The
increasing efforts by the state governments have attracted funds in this sector, boosting the production. 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
 Deepika Sharma 12 Indian Economic Development

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 force. In
contrast to fishing, Horticulture does not suffer from ecological and environmental problem. Hence, horticulture
must be promoted with sufficient investment and infrastructure.

Q14 : 'Information technology plays a very significant role in achieving sustainable development and food
security' comment.
Ans : 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.

Q15 : What is organic farming and how does it promote sustainable development?
Ans : Organic farming refers to a system of farming that sustains and enhances the ecological balance. In other
words, this system of farming relies upon the use of organic inputs for cultivation. The traditional farming involves
the use of chemical fertilisers, toxic pesticides, etc. that harms the eco system drastically. So, this type of farming
is practiced to produce toxic-free food for the consumers while simultaneously maintaining the fertility of the soil
and contributing to ecological balance. This type of farming enables eco friendly sustainable economic
development.

Q16 : Identify the benefits and limitations of organic farming.

Ans : Organic farming has some notable advantages as compared to the conventional farming. The advantages of
the organic farming are as follows:
1. Discards Use of Chemicals: Unlike conventional farming, organic farming is free from synthetic chemicals. The
chemicals present in the chemical fertilisers penetrate into the ground water and raises its nitrate content. This
cause health hazards and also pollutes the environment. So, organic farming is an environment friendly method of
farming.
2. Sustains Soil Fertility: The use of chemical fertilisers leads to erosion of soil fertility. Organic farming discards
the use of chemical fertilisers. Therefore, this farming is practiced to produce non-toxic food for the consumers
without degrading the soil fertility.
3. Healthier Food: Organically grown crops have high nutritional value than the conventionally grown crops.
Also, the demand for organic farming rises rapidly even at a higher price.
4. Inexpensive Technology for Small and Marginal Farmers: The small and marginal farmers constitute the bulk
of the farming. Organic farming offers an inexpensive farming technique to these small and marginal farmers.
5. Generates Income from Exports: It generates higher income from exports as there is huge international demand
for organic crops.
Limitations of Organic Farming:
Despite the above mentioned benefits, Organic Farming suffers from the following limitations:
1. Organic Farming offers lesser yield than the conventional farming. Therefore, the productivity of the Organic
Farming is lower than that of the conventional farming.
2. The popularity of organic farming depends on the awareness and willingness of the farmers to adopt this
technology. Due to lower productivity, farmers lack initiative to adopt Organic Farming techniques.
3. The inadequate infrastructure and problem of marketing are the major concerns that need to be addressed to
promote Organic Farming.
 Deepika Sharma 13 Indian Economic Development

4. As Organic Farming offers lesser yield than conventional farming, this farming is not financially viable for the
small and marginal land-holdings farmers.

Q17 : Enlist some problems faced by farmers during the initial years of organic farming.
Ans : In the initial years, it has been observed that the yields from Organic Farming are lesser than the modern
agricultural farming. So, the farmers found it difficult to undertake large scale production. Also, due to the low
yield per hectare, this technique was not financially viable for the small and marginal workers. The products
obtained from organic farming have shorter life and are quickly- perishable. Moreover, the choice in production
during off-season is quite limited in Organic Farming. Despite these shortcomings in the initial years, India has
attained comparative advantage in Organic Farming due to labour intensive techniques. Hence, the availability of
labour in abundance popularised Organic Farming in India.