AL NOOR INTERNATIONAL SCHOOL
[Link] 85, KINGDOM OF BAHRAIN
C.B.S.E SECTION
GRADE 12 SUB: ECONOMICS
Chapter-6- Rural Development
Rural development [What do you mean by rural development? Bring out the key
issues in rural development ]
Rural development is a comprehensive term. It essentially focuses on action for the
development of areas that are lagging behind in the overall development of the
village economy.
Key issues of Action – Plan for rural development
1. Development of human resources – The quality of the human resource
needs to be improved through following measures-
● Proper attention to literacy, more specifically female literacy, education and
skill development.
● Health, addressing both sanitation and public health.
2. Development of infrastructure
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It involves:
● Improvement in electricity, irrigation, credit, marketing and transport
facilities including construction of village roads and feeder roads to the
nearby highways.
● Better facilities for agriculture research and extension, and information
dissemination.
3. Land reforms
It includes the following objectives:
● Improve agrarian relations between owners and tillers of the soil which are
important to the growth of farming.
● Size of land holdings which is suitable for cultivation.
● Increasing agricultural productivity and production.
4. Development of productive resources of each locality
Development of Productive resources of each locality in the rural areas to
increase employment opportunities .
5. Poverty alleviation
Action – plan for rural development includes high priority to poverty
alleviation
● By taking Measures to improve the living conditions of the weaker sections
of the population.
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● Emphasizing access to employment opportunities.
● Rural credit[Discuss the importance of credit in rural development]
Rural or agricultural credit means credit for farming. Credit is the life line of
farming activities in rural areas.
❖ Need of credit: . 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. The importance of credit in rural
development is highlighted in the following points:
● To increase productivity in agriculture and non- agriculture sectors.
● Most farming families in India are small and marginal [Link] helps
the farmers to commercialise their farming.
● The gestation lag between sowing and harvesting of crops is quite long.
● To purchase inputs for farming. like seeds, fertilisers, etc.
● To meet family expenses. The farmers require funds for meeting their
general and specific needs like expenses of marriage,religious ceremonies
etc.
● Lastly, agriculture has always been dependent on climate changes. 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
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a vital role.
Credit needs of the farmer are broadly classified into three categories as under:
● Short- term credit
● Medium- term credit
● Long- term credit
❖ Sources of credit
Sources of rural credit are broadly classified as:
● Non- institutional sources
● Institutional sources
✔ Non- institutional sources
● Moneylenders
● Landlords
● Traders
● Relatives and friends
● Institutional sources
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1. Cooperative credit societies – The cooperative credit societies provide credit
to the farmers at reasonable rate of interest. These societies also provide
guidance in different agricultural operations with a view to raising crop
productivity.
Role of cooperatives
● Main aim of the cooperative was to get the poor and indebted farmers out
of poverty and out of the clutches of moneylenders.
● Cooperatives help farmers by providing seeds, fertilizers, insecticides ,
pesticides etc at a reasonable price.
● Farmers also get marketing, warehousing facility and transportation support
from the cooperatives.
● Cooperatives societies help poor and marginal farmers with
tractors ,threshers etc on rent.
2. Regional rural banks – Regional rural banks were set up to promote credit
supplies, particularly in remote rural areas and backward districts.
3. National bank of agriculture and rural development (NABARD) – It is an
apex institution in the field of rural credit and related economic activities .Its
main functions are:
● To serve as an apex funding agency for the institutions providing credit in
rural areas.
● To take appropriate measures to improve the credit delivery system.
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● To coordinate the rural financial activities of all credit institutions.
● To undertake monitoring and evaluation of projects refinanced by it.
4. Self help groups and micro- credit programme – [Explain the role of micro-
credit in meeting credit requirements of the poor]
● Self help group bank linkages programme for micro finance. SHG has
emerged as the major micro finance programme in the country in recent
years.
● Their focus is largely on those rural poor, who have no sustainable access to
the formal banking system.
● Self help groups promote thrift among rural households. Small savings are
mobilized by the SHGs and offered as credit to its different members,
depending on their need. Credit is offered without any security and at a
moderate rate of interest.
● More than seven lakh SHGs had reportedly been credit linked.
● SHGs have also helped in the empowerment of women. The borrowing are
confined to consumption purpose.
● Agricultural marketing[What do you mean by agricultural marketing?]
Agricultural marketing is a process that involves the assembling, storage,
processing, transportation, packaging, grading and distribution of different
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agricultural commodities across the country.
● Measures to improve agricultural marketing[Explain the steps taken by
the government in developing rural markets]
1. Regulated market – Regulated markets have been established where sale
and purchase of the products is monitored by the market committee
including representatives of government, farmers and traders. They
regulate markets to create orderly and transparent marketing conditions.
The market committee ensure that the farmers get appropriate price for
their product.
2. Cooperative marketing – The aim of cooperative marketing is to realize fair
price for farmers products, under this, marketing societies are formed by
farmers to sell the output collectively to obtain better price.
3. Provision of warehousing facilities – The government is offering
warehousing facilities to the farmers.. Storage helps farmers to sell their
produce at a time when the market price is high.
4. Subsidized transport – Railways are offering subsidized transport facility to
the farmers to bring their produce to the urban markets where often they
get a better price.
5. Minimum support price policy (MSP) – MSP policy is an important step
initiated by the government to improve agricultural marketing system. .At
that MSP government purchase the product from farmers.
Emerging alternative marketing channels[What are the alternative channels
available for agricultural marketing? Give some examples.]
1. Origin of farmers market – It has been realised that if farmers directly sell
their produce to consumers, it increases their incomes. small farmers will
get direct access to the consumers and eliminating the [Link]
examples of these channels are:
● Apni Mandi (Punjab, Haryana and Rajasthan);
● Hadaspar Mandi (Pune);
● Rythu Bazars (vegetable and fruit
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● markets in Andhra Pradesh and
● Telangana) and Uzhavar Sandies(farmers markets in Tamil Nadu).
2. Alliance with National and Multinational companies – Several national and
multinational fast foods chains are increasingly entering into contracts /
alliances with farmers. They encourage the farmers to cultivate farm
products like vegetables, fruits etc of the desired quality.. They provide
them with not only seeds and other inputs but also assured procurement of
the produce at pre- decided prices. Such arrangements will help in reducing
the price risk of farmers and expand the market for farm products.
● Agricultural diversification
Agricultural diversification refers to re- allocation of some of farm’s productive
resources into new activities or crops to reduce market risk..Diversification
helps stabilization of farm income by lowering market risk.
❖ Need of agricultural diversification
1. There is greater risk in depending exclusively on agriculture.
2. To provide productive sustainable livelihood options to rural people.
❖ Benefits of diversification[Why is agricultural diversification essential for
sustainable livelihoods?]
The importance of agricultural diversification can be explained with the help
of the
following points:
● 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
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other alternative non-farm occupations. This lessens excess burden on
agriculture by reducing disguised unemployment.
● 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.
● 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.
The non farm sector has several segments that possess dynamic linkages.
Such linkages enhance the healthy growth of an economy.
❖ Types of diversification
● Diversification of crop production – It involves a shift from single- cropping
to multi- cropping system. Diversification involves a shift in cropping pattern
from food grains to cash crops. The main aim is to shift from subsistence
farming to commercial farming. Multi- cropping system reduces the
dependence of farmers on one or two crops as are engaged in growing a
wide variety of crops.
● Diversification of production activity – It implies a shift from crop farming
to other areas of production activity. It would provide alternative avenues
of sustainable livelihood and would raise the level of income .Some
important non- farm areas of production activity are as follows:
● Animal Husbandry
● Animal husbandry is an important area of employment in India different
from crop farming. It is also called livestock farming .Under livestock
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farming, cattle, goats, fowl etc are widely held species.
● Livestock production provides increased stability in income, food security,
transport, fuel and nutrition for the family.
● Livestock sector provides livelihood options to over 70 million small and
marginal farmers including landless labourers.
● A significant number of women also find employment in the livestock
sector.
● In India, poultry accounts for the largest share of 58% followed by others
like camels, asses, horses etc.
● Meat, eggs, wool and other by products are also emerging as important
sectors of diversification.
● Dairying
Dairying is the business of producing, storing and distributing milk and its
products.
The performance of the Indian dairy sector has been quite impressive. Due to the
successful implementation of operation flood, India’s milk production has
increased.
Operation flood or white revolution was started by National Dairy Development
Board in [Link] objective of the programme was to create a nation wide grid.
Under operation flood system, all the farmers can pool their milk produced
according to different grading and the same is processed and marketed to urban
centres through cooperatives. The farmers are assured of a fair price and income.
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.
● Fisheries
Fishing community regards water body as ‘mother’ or ‘provider’. The water bodies
consisting of sea, oceans, rivers, lakes, natural aquatic ponds, streams etc. are
therefore integral and life- giving source for the fishing community.
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❖ Importance of fishing.
● Volume of fish production – Fish production from inland sources
contributes about 64% to the total fish production and the balance 36%
comes from the marine sector.
● Share of fishing in GDP – The total fish production accounts for 0.8% of the
total GDP. In India west Bengal, Kerala, Maharashtra and Tamil Nadu are
major fish producing states.
● Women participation in fishing – Women are not involved in active fishing,
about 60% of the workforce in export marketing and 40% in internal
marketing are women.
❖ Problem faced in fishing
A large share of fish worker families are poor some of the major problems
faced by these communities include:
1. Wide spread underemployment
2. Low per- capita earning
3. Absence of mobility of labour to other sectors as they are not skilled or
educated.
4. 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.
● Horticulture
Horticulture refers to the 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. India has adopted horticulture as it is blessed with
varying climate and soil conditions. It is an important sector for potential
diversification and value addition in agriculture.
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● Contribution – Horticulture sector contributes nearly one – third of
the value of agriculture output and six percent of Gross Domestic
Product of India.
● Share in world’s production – India has emerged as a world leader in
producing a variety of fruits, like mangoes, bananas, coconuts,
cashew nuts and a number of spices. India is the second largest
producer of fruits and vegetables in the world.
● Improvement in economic condition – Horticulture has improved
economic conditions of many farmers and has become a main
sources of income.
● Greater scope for women employment – 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 India.
● Information Technology[‘Information technology plays a very significant role
in achievingsustainable development and food security’ — comment]
Information technology refers to that branch of engineering that deals with
the use of computers and telecommunications to retrieve and store and
transmit information. Information technology has revolutionized many
sectors in the Indian economy. There is broad consensus that IT can play a
critical role in achieving sustainable development and food security in the 21 st
century.
● Through appropriate information and software tools government can
predict areas of food insecurity and vulnerability, to prevent or reduce the
likelihood of an emergency.
● It also has a positive impact on agriculture sector as it can disseminate
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information regarding emerging technologies and its applications, price,
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.
● Experiments with IT and its application to rural development are carried out
in different parts of India.
Extra Question Answers
✔ Critically evaluate the role of the rural banking system in the process of
rural development in India.
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
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financial unfeasibility for the rural banks.
✔ Mention some obstacles that hinder the mechanism of agricultural
marketing.
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:
▪ Farmers are vulnerable to defective weighing techniques and
misappropriation of accounts.
▪ Farmers are often ill-informed about market prices and market
conditions. Being ignorant, farmers are forced to sell their product at
lower prices.
▪ The farmers lack access to proper storage facilities to store their
produce for future sell at better prices.
▪ 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. The farmers cannot avail
agricultural credit, leading to their exploitation by the moneylenders
and mahajans.
✔ Distinguish between ‘Green Revolution’ and ‘Golden Revolution’
Green Revolution Golden Revolution
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The combined use of HYV seeds The rapid growth in the production of the
and increased use of fertilisers horticultural crops such as fruits, vegetables,
and developed irrigation facilities tuber crops, flowers, etc. is known as Golden
jointly to increase the production Revolution.
of rice and wheat. This increase in
the production of the food grains
is known as the Green Revolution.
It led to increase in the It led to increase in production of fruits,
production, especially, of rice and vegetables, flowers, aromatic plants, spices,
wheat. etc.
As a result of this revolution, India As a result of this revolution, India became a
became self-sufficient in the world leader in the production of mangoes,
production of wheat and rice. bananas, coconut and spices.
✔ Do you think the various measures taken by the government to improve
agricultural marketing are sufficient? Discuss.
To improve the system of agricultural marketing the government initiated a
number of measures such as organisation of regulated markets,
infrastructural development (cold storage, warehouses, etc.), propagation of
market information through agriculture based programmes on radio and
television, Minimum Support Price Policy, etc. However, despite various
attempts by the government the system of agricultural marketing in India
has only been partly successful. The following are some of the obstacles in
the successful agricultural marketing system.
1. It is found that farmers often fall prey to defecting weighing techniques
and misappropriation of accounts.
2. Farmers lack knowledge of market prices and market conditions which
forces them to sell their produce at a lower price.
3. Storage facilities are insufficient which forces the farmers to sell their
produce at a lower price right after harvesting. Also, insufficient storage
makes the crops vulnerable to pests and bad weather.
4. There is lack of institutional sources of finance which forces the farmers to
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fall back on moneylenders for obtaining credit.
5. Transportation facilities are insufficient as a result of which the farmers
are unable to sell their produce at far off places.
6. 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.
✔ Explain the role of non-farm employment in promoting rural diversification.
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
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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.
✔ Bring out the importance of animal husbandry, fisheries and horticulture as
a source of diversification.
Importance of Animal Husbandry
● . Animal husbandry is an important area of employment in India different
from crop farming. It is also called livestock farming .Under livestock farming,
cattle, goats, fowl etc are widely held species.
● Livestock production provides increased stability in income, food security,
transport, fuel and nutrition for the family.
● Livestock sector provides livelihood options to over 70 million small and
marginal farmers including landless labourers.
● A significant number of women also find employment in the livestock sector.
● In India, poultry accounts for the largest share of 58% followed by others like
camels, asses, horses etc.
● Meat, eggs, wool and other by products are also emerging as important
sectors of diversification.
Importance of fishing.
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● Volume of fish production – Fish production from inland sources contributes
about 64% to the total fish production and the balance 36% comes from the
marine sector.
● Share of fishing in GDP – The total fish production accounts for 0.8% of the
total GDP. In India west Bengal, Kerala, Maharashtra and Tamil Nadu are
major fish producing states.
● Women participation in fishing – Women are not involved in active fishing,
about 60% of the workforce in export marketing and 40% in internal
marketing are women.
Importance of Horticulture
These crops play a vital role in providing food and nutrition, besides
addressing employment concerns. India has adopted horticulture as it is
blessed with varying climate and soil conditions. It is an important sector for
potential diversification and value addition in agriculture.
● Contribution – Horticulture sector contributes nearly one – third of the value
of agriculture output and six percent of Gross Domestic Product of India.
● Share in world’s production – India has emerged as a world leader in
producing a variety of fruits, like mangoes, bananas, coconuts, cashew nuts
and a number of spices. India is the second largest producer of fruits and
vegetables in the world.
● Improvement in economic condition – Horticulture has improved economic
conditions of many farmers and has become a means of livelihood for many
unprivileged classes too.
● Greater scope for women employment – Flower harvesting, nursery
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maintenance hybrid seed production and tissue culture, propagation of fruits
and flowers and food processing are highly remunerative employment
options for women in rural India.
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