Chapter – Rural Development

Q) Define rural development. What are the challenges or key issues of ruraldevelopment?
A) Rural development is a wide term referring to the plan of action for the development of backward areas
in the rural part of the country, which lack in socio-economic development. Rural development covers
agricultural development as well as all those aspects which improve the living conditions of people in the rural
areas. Rural development is a comprehensive process which targets betterment in all aspects of rural areas.
Thus developing agricultureimplies improvement of rural areas.

Challenges or Key Issues of Rural Development:-

Rural development attempts to improve all aspects of rural life.
Some of the areas which are challenging and need fresh initiatives for development in rural India include:

1. Development of human resources:-

Human resources being very basic input for production of goods
and services need to be developed extensively.
It includes focus on
 Literacy, more specifically, female literacy, education and skill development
 Health, addressing both sanitation and public health.

2. Land reforms:-
Land reforms are very urgently required because land is very strategic in rural
development. Land reforms are required for
 Improvement in agricultural productivity
 Abolition of intermediaries
 Protection of the rights of tiller of the soil
 Eliminating the exploitation of cultivators.

3. Development of infrastructure:-
Infrastructure includes those facilities which are important to increase
overall production. Infrastructural development refers to the development of:
 electricity, irrigation, transport facilities
 credit marketing, financial assistance
 transport facilities – construction of village roads and feeder roads to nearby highways
 facilities for agricultural research and extension
 information dissemination

4. Alleviation of poverty:-
One third of rural India still lives in abject poverty. That is why, we would like to
see a developed rural India. For this:
 Special measures for alleviation of poverty must be undertaken.
 Efforts should be made to bring about significant improvement in the living conditions of the weaker
sections of the population.
 Emphasis should be laid on access to productive employment opportunities.

5. Development of the productive resources (means) of each locality:-

We need to recognise
and then develop productive resources of each locality so that:
 available resources can be utilised to the optimum
 opportunities of investment and employment in farm areas and non-farm areas such as food processing
can be enhanced.
 Better and affordable access to healthcare, sanitation facilities at workplaces and homes should be
provided along with ‘education for all’ for rapid rural development.

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Q) Classify the need of credit on the basis of time.
A)
A. Short term credit:-
 It is credit required to meet short term needs.
 The period of this loan ranges between 6 months to 15 months.
 It is required to buy seeds, tools, manure, fertilisers etc.

B. Medium term credit:-

 It is credit required to meet medium term needs.
 The period of this loan ranges between 15 months to 5 years.
 It is required to buy machinery, equipments, digging wells, constructing cattle sheds etc.

C. Long term credit:-

 It is credit required to meet long term needs.
 The period of this loan ranges between 5 to 20 years.
 It is required to buy assets like tractors, land, heavy machines and equipments etc.
Q) Explain the various sources of agriculture credit?
A) Sources of rural credit can be classifieds as follows:-
1. Non-Institutional sources:-
The major non-institutional sources are as follows:-
A. Moneylenders:-
Moneylenders have been advancing a major share of farm credit. This peasents are
exploited through exorbitant (very high) rates of interest.

B. Relatives:-
Farmers borrows fund from their own relatives in times of crisis. These loans are a kind of
informal loans and carry no interest and are normally returned after harvest.

C. Traders and commission agents:-

They provide credit to the peasents on the mortgage of crops at
high rates of interest, on a condition, that the crops will be sold to them at low prices.

2. Institutional sources:-

A. Cooperative credit societies:-

These societies advance credit to the farmers at reasonable rates of
interest. These contribute nearly 30% of the rural credit.

These focus on the following objectives:

 To free the farmers from the clutches of moneylenders.
 To advance credit at low rates of interest.
 To spread credit facilities all over the country.
To ensure timely and continuous flow of credit to the rural areas

B. Land development banks:-

These provide long term credit. The credit is granted against the
mortgage of their lands Objective of land development banks are:
 To provide long term credit.
 To provide credit for purchasing agricultural inputs, constructing permanentstructure on land etc.
These provide funds for other productive purposes also e.g., giving subsidies toagriculturists.

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 C. Commercial bank credit:-
After the nationalisation in 1969, commercial banks played a major
role in advancing credit. The objectives of commercial banks are:
 To directly help the farmers by expanding their branches in rural areas
 To indirectly help the farmers through agents.
 To create awareness about existence of facilities being provided by them through newspapers,
radio, television etc.

D. Regional rural banks:-

These banks have been set up to cover the gap in credit structure of the
available facilities in the rural areas. Their main objectives are:
 to open the branches in those areas where there are no banking facilities available
 to provide credit facilities to small and marginal farmers

E. Self help groups:-

Recently self help groups have emerged to fill the gap in the formal credit system
because the formal credit delivery mechanism has not only proven inadequate but has also not been fully
integrated onto the overall rural social and community development. It came up as the micro finance
programme.
The objectives are :
 Since some kind of collateral is required, vast proportion of poor rural households were automatically
out of the credit network. The SHGs promote thrift in small proportions by a minimum
contribution from each member. From this pooled money, credit is given to the needy members to be
repayable in samll instalments at reasonable interest rates. By March end 2003 more than 7 lakh SHGs
had reportedly been credit linked. Such credit provisions are generally referred to as micro-credit
programmes.
 These have helped in the empowerment of women as easy loans are available for women.
 These borrowings are mainly confined to consumption purposes and are not used for productive
purposes.

F. National Bank for Agricultural and Rural Development (NABARD):-

NABARD was set up in 1982 as an
apex body to coordinate the activities of all institutions involved in the rural financing system.
Its main functions are:
 To act as an apex agency for the institutions which advance credit in the ruralareas.
 To promote the strength of the credit institutions in credit delivery system e.g., of commercial banks,
cooperatives and regional rural banks.
 To provide assistance to the non-farm sectors also.
 To control and evaluate the projects financed by it.
 It coordinates the functioning of different financial institutions involved inadvancing rural credit.

Q) Explain the steps taken by the government in developing rural markets.

A)
1. Regulation of markets:-
 This was the first step to create orderly and transparent marketing conditions. By and large, this policy
benefitted farmers as well as consumers.
 Regulated markets have been established where sale and purchase of the produce is monitored by the
Market Committee including representatives of government, farmer etc.
 This measure targets organised markets in order to protect the farmers from exploitation by the brokers.
 The market committees ensure that the farmers get reasonable price for their produce.
 However there is still a need to develop about 2700 rural periodic markets to realise the full potential of
rural marketing.

2. Provision of physical infrastructure:-

 This measure attempts to make provision of physical infrastructural facilities like roads, railways,
warehouses, godowns, cold storages and processing units.
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  These facilities will help in strengthening the market channels.
 However the current infrastructural facilities are quite inadequate. We need to develop more
infrastructural facilities to ensure high growth rate of economy.

3. Subsidised transport:-
Railways are offering subsidised transport facility to the farmers to bring their produce
to the urban area where often they get better deals.
4. Dissemination of information:-
 Electronic media and print media are actively engaged in offering market related information to the
farmers, particularly information related to price behaviour in the market.
 This helps the farmers in deciding how much to sell and when to sell.

5. Cooperative marketing:-
 As the government is encouraging the formation of cooperative agriculture marketing societies.
 Cooperative marketing, in realising fair prices for farmer’s products, is the third aspect of government
initiative.
 The success of milk cooperatives in transforming the social and economic landscape of Gujrat and some
other parts of the country is testimony to the role of cooperatives.
 Under this system, farmers get together and form marketing societies to sell the produce collectively and
take benefit of collective bargaining to secure a better price of their product.
 However due to lack of appropriate link between marketing and processing cooperatives and lack of
finances, cooperatives have received a setback during the recent past.

6. Minimum Support Price:-

 It is an important step initiated by government to give assurance of Minimum Support Prices (MSP) for
agricultural products.
 Maintenance of buffer stocks of wheat and rice by FCI.
 The govt. fixes minimum support price to encourage the farmers to sell their produce.
 The government buys the excess supply ( of unsold stock) from the farmers and maintains buffer stocks of
these products and uses these during emergencies.
 The Food Corporation of India (FCI) purchases foodgrains (wheat and rice) at the procurement prices in
order to maintain rational prices for the farmers to give them sufficient incentives.
 Distribution of food grains and sugar through public distribution system (PDS).

Q) What are the some challenges facing for rural development?

A)
A. Employment outside agriculture:-

1. 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. A significant number of women also find employment in the
livestock sector.
 Poultry accounts for the largest share with 58 per cent followed by others. Other animals include camels,
asses, horses, ponies and mules are in the lowest rung. India had about 300 million cattle, including 108
million buffaloes, in 2012.
 Performance of Indian dairy sector over the last 3 decades has been quite impressive. Milk production in
the country has increased by more than eight times between 1951- 2014.
 This can be attributed mainly to the successful implementation of ‘Operation Food’.

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  Operation flood 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. Gujarat state is held as a success story in the efficient implementation of milk cooperative
which has been emulated by many states.
Meat, eggs, wool and other by-products are also emerging as important productive sectors for
diversification.

2. Fisheries:-
 The fishing community regards the water body as ‘mother’ or ‘provider’. The water bodies consisting of
sea, oceans, rivers, lakes, natural aquatic ponds, streams etc. are, therefore, an integral and life-giving
source for the fishing community.
 In India, after progressive increase in budgetary allocations and introduction of new technologies in
fisheries and aquaculture, the development of fisheries has come a long way.
 Presently, fish production from inland sources contributes about 64 per cent to the total fish production
and the balance 36 per cent comes from the marine sector (sea and oceans).
 Today total fish production accounts for 0.8 per cent of the total GDP. Among states, Kerala, Gujarat,
Maharashtra and Tamil Nadu are the major producers of marine products.
 A large share of fish worker families are poor. Increasing underemployment, low per capita earnings,
absence of mobility of labour to other sectors and a high rate of illiteracy and indebtedness are some of the
major problems fishing community face today.
 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.

3. Horiculture:-
 It is an important sector for diversification in agriculture. Blessed with a varying climate and soil
conditions, India has adopted growing of diverse horticultural crops such as 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.
 Horiculture sector contributes nearly one third of the value of agricultural output and 6% of GDP 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. In the
year 2014-15, production of fruits and vegetables was around 87 million tonnes and 170 million tonnes
respectively.
 Economic condition of many farmers engaged in horticulture has improved and it has become a means of
improving livelihood for many unprivileged classes.
 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.

B. Organic farming and sustainable development:-

Organic farming is the form of agriculture that relies
on techniques such as crop rotation, green manure & biological pest control.Organic farming is a whole
system of farming that restores, maintains and enhances the ecological balance. There is a great demand of
organic food which is free from chemical based fertilisers and toxic pesticides etc. Organic food is growing in
popularity across the world. Many countries have around 10 per cent of their food system under organic
farming. There are many retail chains and supermarkets which are accorded with green status to sell organic
food. Moreover, organic foods command higher price of around 10-100 per cent than conventional ones.

Organic farming is needed because:-

 It is an economic farming technology. It can be picked up by small and marginal farmers.
 There is urgent requirement to optimally utilise our scarce resources so that they can be preserved for future
generations too, to promote sustainable development.
 Conventional farming methods use chemical based fertilisers and toxic pesticides which deplete the soil and

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 devastate natural eco system, so there is urgent need of an eco-friendly technology like organic farming.
Benefits of Organic Farming:-
Some of the important benefits of organic farming are:
1. Economical:-
Organic farming offers a means to substitute costlier agricultural inputs (such as HYV seeds,
chemical fertilisers, pesticides etc) with locally produced organic inputs which are cheaper and generate
profitable returns on investment.

2. Generation of income:-
Organic agriculture also generates income through exports as the demand for
organically grown crops is on a rise. It is because now people are more aware of maintaining reasonable
standards of their health.

3. Healthy foods:-
Studies have shown that organically grown food has more nutritional value than food grown
by chemical farming. Thus, organic farming provides us with healthy foods. Present day trends show that
demand for organic food is rising as it is more nutritious.

4. Environment friendly:-
The produce of organic agriculture is pesticide free and produced in an
environmentally sustainable way. Organic farming discards the use of chemical fertilisers.

5. Generates employment:-
Organic farming requires more labour input than required in traditional farming.
Thus organic farming will help in solving the problem of unemployment to some extent. So India will find
organic farming an attractive propositions.

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