आRम्भ INSTITUTE 9654260963

RURAL DEVELOPMENT
❖ Rural development means an action- plan for the social subsistence farming. They have no surplus for further
and economic upliftment of the rural areas. Rural production.
development aims at comprehensive change and • The gestation period between sowing and harvesting is
improvement of rural life in all the aspect sum of the quite high. So, farmers have to borrow to fulfill their
areas which a challenging and need fresh initiatives for various needs during this period.
development of India includes.
❖ Sources of Rural Credit
❖ Development of human resources including
• Institutional sources / Formal sector
✓ literacy, more specifically, female literacy,
• Non-institutional sources / Informal sector
education and skill development
✓ health, addressing both sanitation and public ❖ Difference between formal and informal sector of
health credit
• Land reforms Institutional sources Non-institutional
• Development of the productive resources of each sources
locality Banks, cooperatives, Individual lenders,
• Infrastructure development like electricity, financial institutions, moneylenders, relatives,
irrigation, credit, marketing, transport facilities and other regulated friends and cooperative
including construction of village roads and feeder organizations. societies.
roads to nearby highways, facilities for agriculture They are registered by These are not controlled
research and extension, and information the government and or supervised by any
dissemination follow the rules and government or regulatory
The basic objectives of rural development are regulations. body.
• Increasing the productivity of the agricultural sector, so Interest rates are usually Interest rates can be
that the income of the formers increase. low and fixed. erratic and often very
• Generating alternative means of livelihood in the rural high.
areas, so that dependency on agriculture sector is There are required No formal process or
reduced. documents and formal documentation is
• Promoting education and health facilities in the rural procedures for a loan. required, making it fast
areas, so that human development is also achieved. but uncertain.
Rural Development and Rural credit Often for larger financial Usually used for small
❖ Rural Credit purposes. personal or immediate
needs.
❖ Borrowings of a farmer can before the following Note:-
purpose ➢ Social banking was established in 1969.
• Productive Borrowings These borrowings include loans to ➢ National Bank for Agriculture and Rural Development
buy seeds, fertilizers and agricultural equipment’s and (NABARD) was established in 1982.
implements. ➢ The Poor Women’s Bank Kudumbashree is women-
• Un-productive Borrowings These borrowings include oriented community based poverty reduction program
loans for social purposes such as marriage and festive being implemented in Kerala. In 1995, a thrift and credit
occasions. Credit is the life line of the farming activity. society was started as a small savings for poor women
Rural credit means providing credit for the forming with an objective to encourage savings. These societies
community. Farmers need credit because most farmers have been acclaimed as largest informal banks in Asia in
in India are small and marginal land holders who practice terms of participation and savings mobilized.

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AADRESS – STREET NO- 1 AGARWAL DHARAMSHALA LANE, NEAR BY TOMER BAKERY AND PRINCE PUNJABI DHABA, MAIN MUBARAK PUR ROAD, KIRARI, DELHI – 110086
 आRम्भ INSTITUTE 9654260963
RURAL DEVELOPMENT
1. National Bank for Agriculture and Rural Development • So, their target groups comprise of small and marginal
(NABARD) It was set up in 1982 as an apex body to farmers, agriculture and non-agriculture laborers,
coordinate the activities of all institutions involved in the artisans, etc..
rural financing system. It has an authorized share capital • SHGs promote thrift in small proportions by a minimum
of Rs. 500 crore. contribution from each member.
The RBI has contributed half of the share capital while • From the pooled money, credit is given to the needy
the other half has been contributed by Government. members at reasonable interest rates, which is to be
❖ Functions of NABARD are repaid in small proportion installments.
✓ To grant long-term loans to the State Government • By march 2012, more than forty three lakh SHGs had
for subscribing to the share capital of cooperative reportable been credit linked.
societies. • SHGs have also helped in the empowerment of women.
✓ To take the responsibility of inspecting cooperative However, the borrowings are mainly confined to
banks, Regional Rural Banks (RRBs) and primary consumption purpose and negligible proportion is
cooperative societies. borrowed for agricultural purposes.
✓ To promote research in agriculture and rural 3. Regional Rural Banks (RRBs) As a supplement to
development. commercial banks, the regional rural banks have also been
✓ To serve as a refinancing agency for the institutions opened. These have been set up under the Regional Rural
providing finance to rural and agricultural Banks Act-of 1976. Their banking services are meant for
development. small and marginal formers and artisans, etc. They cater
✓ To help tenant farmers and small farmers to exclusively to the needs of weaker section. Nearly 90% of
consolidate their land holdings. the loan of RRBs were provided to the weaker section.
❖ The national agricultural credit fundi’s been
transferred from RBI to NABARD to form a part of its Rural Banking: A Critical Appraisal
national rural credit fund. ❖ Advantages of Rural Banking
• Raising farm and non-farm output by providing services
2. Self Help Groups (SHGs) Formal credit system has and credit facilities to farmers.
proven inadequate. It has also not been fully integrated • Generating credit for self-employment schemes in rural
into the overall rural, social and community development. areas.
Due to the demand of some kind of collateral, vast • Achieving food security which is clear from the abundant
proportion of poor rural households were automatically out buffer stocks of grains.
of the credit networks. Self Help Groups emerged to fill ❖ Limitations of Rural Banking
this gap, created by formal credit system. • Small and marginal formers receive only a very small
• Self-help groups (SHGs) have proportion of poor rural portion of the institutional credit.
households could not avail credit facilities because of • Rural banking is suffering from the problems of large
their inability to provide some kind of collateral. amount of over dues and default rate.
• Self-help group (SHG) bank linkages programme for • The sources of institutional finance are inadequate to
micro finance: SHG has emerged as the major micro meet the requirements of agricultural credit.
finance programme in the country in recent years. • There exist regional inequalities in the distribution of
• Their focus is largely on those rural poor, who have institutional credit.
no sustainable access to the formal banking system. It is suggestible that more and more regional rural banks
should be set up to need the credit need of the rural
and backward areas of India.

BATCH (GT + Domains) Leads you to the Universities... DELHI UNIVERSITY / AMBEDKAR UNIVERSITY
11TH & 12TH - ECONOMICS | ENGLISH | ACCOUNTS | MATHS | HISTORY | POL. SCIENCE 1 ST TO 10TH - All Subjects
AADRESS – STREET NO- 1 AGARWAL DHARAMSHALA LANE, NEAR BY TOMER BAKERY AND PRINCE PUNJABI DHABA, MAIN MUBARAK PUR ROAD, KIRARI, DELHI – 110086
 आRम्भ INSTITUTE 9654260963
RURAL DEVELOPMENT
❖ Agriculture Marketing 4. Different policy instruments;
• It includes all those activities or processes which help In order to protect the farmers, the government has
a former getting maximum price for his produce among initiated the following policies;
others, these processes include grading packaging and ✓ Minimum supporter price (MSP) : to safeguard the
storage. interest of farmers government fixes the minimum support
• Agricultural marketing is a process that involves prices of 24 agricultural products like wheat, rice ,maize ,
assemble, storage, processing, transportation, cotton, sugarcane pulses , etc… such a price may be
packaging, grading and distribution of different regarded as an offer price , at which government is willing
agriculture commodities across the country. to buy any amount of grains from the farmers.
❖ Problems faced by farmers ✓ Maintenance of buffer stocks: the food corporation of
• Manipulations by big traders: Prior to independence, India (FCI) purchases wheat and rice at the procurement
farmers suffered from faulty weighing and prices, to maintain buffer stock. Buffer stock is created in
manipulation of accounts while selling their produce to the years of surplus production and is used during shortages.
traders. It helps to ensure regularity in supply and stability in prices.
• Lack of market information: Farmers often forced to ✓ Public distribution system (PDS): the public distribution
sell at low prices due to lack of required information system in our country operates through a network of ratio
on prices prevailing in markets. shops and fair price shops. Fair price shops offer essential
• Lack of storage facilities: They also did not have commodities like wheat, rice, kerosene, etc... At a price
proper storage facilities to keep back their produce in below the market price, to the weaker of the society.
farms are wasted due to lack of storage. Note:-
❖ Measures Initiated by the Government to Improve ❖ Emerging Alternative Marketing Channels in India,
Market System alternative marketing channels are emerging. Through
1. Regulated markets: The first measure was regulation of these channels, farmers directly sell their products to the
markets, to create orderly and transparent marketing consumers. This system increases farmers’ share in the
conditions. Regulated markets have been organized with prices paid by the consumers.
a view to protect the farmers from the malpractices of Important examples of such channels are
sellers and brokers. With a view to protect the farmers ▪ Apni mandi (Punjab, Haryana and Rajasthan).
from the malpractice of sellers and brokers this policy ▪ Hadaspar mandi (Pune);
benefited farmers as well as consumers. ▪ Rythu Bazars (Vegetables and fruit market in Andhra
2. Infrastructural facilities: The government aims to Pradesh).
provide physical infrastructure facilities like roads, ▪ Uzhavar sandies (Farmers’ Markets in Tamil Nadu).
railways, warehouses, godowns, cold storage and
processing units. The current infrastructure facilities are ❖ Diversification is an emerging challenge in the context
quite inadequate to meet the growing demand and need of rural development.
to be improved. It has two aspects.
3. Cooperative marketing: The aim cooperative marketing ▪ Diversification of Crop Production It implies
is to realize fair price for farmer’s products. Under this, production of diverse variety of crops rather than one
marketing societies are formed by farmers to sell specialized crop. It means a shift from single-cropping
the output collectively and to take advantage of system to multi-cropping system.
collective bargaining, in order to obtain better price. ▪ Diversification of Production Activity/Employment It
implies a shift from crop farming to other areas of
production activity employment.

BATCH (GT + Domains) Leads you to the Universities... DELHI UNIVERSITY / AMBEDKAR UNIVERSITY
11TH & 12TH - ECONOMICS | ENGLISH | ACCOUNTS | MATHS | HISTORY | POL. SCIENCE 1 ST TO 10TH - All Subjects
AADRESS – STREET NO- 1 AGARWAL DHARAMSHALA LANE, NEAR BY TOMER BAKERY AND PRINCE PUNJABI DHABA, MAIN MUBARAK PUR ROAD, KIRARI, DELHI – 110086
 आRम्भ INSTITUTE 9654260963
RURAL DEVELOPMENT
▪ Need of Diversification into Productive Activities 4) Source of Employment: Organic farming generates more
Agriculture sector is a seasonal based activity, most of employment opportunities as it requires more labour input
agriculture employment activities are concentrated in than conventional farming.
Kharif season. But during Rabi season, in the areas where 5) Safety of environment: The produce of organic farming
irrigation facilities are inadequate, it becomes difficult to is pesticide-free and is produced in an environmentally
find gainful employment. sustainable way.
So, there is a need to focus on allied activities, non-farm
employment and other emerging alternatives of livelihood. ❖ Challenges before Organic Farming
Also agriculture sector is already overcrowded, a major i. Less Popular: Organic farming needs to be popularized
proportion of the increasing labour force needs to find by creating awareness and willingness on the part of
alternate employment opportunities in other non-farm farmers, for adoption of new technology. There is a
sectors. serious need for an appropriate agriculture policy to
Organic Farming and Sustainable Development promote organic farming.

Organic farming is the form of agriculture that relies on ii. Lack of infrastructure and marketing facilities:

techniques such as crop rotation, green manure, compost Organic farming faces problems of inadequate

and biological pest control. This method avoids the use of infrastructure and marketing facilities.

synthetic chemical fertilizers and genetically modified iii. Low Yield: Organic farming has a lesser yield in the

organisms. initial years as compared to modern agricultural

✓ Organic farming is the process of producing safe and farming. As a result, small and marginal farmers find

healthy food, without leaving any adverse impact on the difficult to adapt to large-scale production.

environment iv. Shorter food life: Organic produce has a shorter shelf

✓ In short, organic agriculture is a whole system of life as compared to sprayed produce.

farming that restores, maintains and enhances the

ecological balance.
✓ There is an increasing demand for organically grown
food, to enhance food safety throughout the world.

❖ Benefits of Organic Farming

Organic Farming is beneficial because of following
reasons:
1) Economical Farming: Organic Farming offers a means
to substitute costlier agricultural inputs (such as HYV
seeds, chemical fertilizers, pesticides, etc.) with locally
produced cheaper organic inputs.
2) Generate income through exports It generates income
through international exports as demand for organically
grown crops is on a rise.
3) Provides Healthy Food: It provides healthy food as
organically grown food has more nutritional value than
food grown through chemical farming.

BATCH (GT + Domains) Leads you to the Universities... DELHI UNIVERSITY / AMBEDKAR UNIVERSITY
11TH & 12TH - ECONOMICS | ENGLISH | ACCOUNTS | MATHS | HISTORY | POL. SCIENCE 1 ST TO 10TH - All Subjects
AADRESS – STREET NO- 1 AGARWAL DHARAMSHALA LANE, NEAR BY TOMER BAKERY AND PRINCE PUNJABI DHABA, MAIN MUBARAK PUR ROAD, KIRARI, DELHI – 110086