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Rural Finance in an Indian Economy

Rural Finance in an Indian Economy

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Published by priyank_

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Published by: priyank_ on Nov 09, 2009
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10/07/2010

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Rural Finance In Indian Economy
o
To revise the financial capability of the lending agencies in rural ares toanalysis the drawbacks & advantage of flow of credit in rural areas.
o
The rural credit system should be strengthen
o
To study the role of rural finance in Indian Economy.Assigned project task is completed by going through various books, committeereports regarding Indian agriculture & non-farming sector, also role of variousfinancial institutions in this grassland.The project report entitled here is purely study project and does not include any predictions or forecast regarding the future trends in the rural sector.The project is based on various references taken from book & reportsmentioned in the bibliography at the end of the assign project.1
 
Rural Finance In Indian Economy
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Meaning of an Underdeveloped Economy:
There is a big difference between underdeveloped and developed countries.The United Nations group of experts states, “We have had some difficulty ininterpreting the term ‘underdeveloped countries’. We frankly consider that, per capitareal income is low when compared with the per capita real incomes of the UnitedStates of America, Canada, Australia & Western europe. Briefly a poor country.The term ‘underdeveloped countries’ is relative. In practical, those countrieswhich have real per capita incomes less than a quarter of the per capita income of theUnited States, are underdeveloped countries. But recently UN publication prefer todescribe them as ‘Developing economies’. The term ‘developing economies’ signifiesthat though still underdeveloped, the process of development has been initiated inthese countries. Thus, we have two economies ‘developing economies’ & ‘developedeconomies’. The World Bank issued in its World Development Report (1991)classified the various countries on the basis of Gross National Product (GNP) per capita. Developing countries are divided into: (a) Low income countries with GNP per capita of $580 and below in 1989; and Middle income countries with GNP per capitaranging between $ 580 and $ 6,000. As against them, the High-income Countrieswhich are mostly members of the Organisation for Economic Co-operation anddevelopment (OECD) and some others have GNP per capita of more than $ 6,000.The above data given in the table noted that in 1989 low income countriescomprise nearly 57 percent of the world population (2,948 million), but account for only 5 percent of total world GNP. The middle income countries, which are lessdeveloped than the highly developed than the low income countries comprise about 21 percent of world population but account for 11 percent of world GNP. Taking thesetwo groups which are popularly described as developing economies o‘underdeveloped economies’, it may be stated that they comprise over three-fourths of the world population but account for about one-sixth of the world GNP. Mostcountries of Asia, Africa, Latin America and some countries of Europe are included inthem.2
 
Rural Finance In Indian Economy
Distribution of World Population & World GNP among various groups of Countries in 1989
GNP(BillionUS $)TotalPopulation(million)GNP PeCapita(US $)1. Low Income Economies981 (4.7)2,948(56.6)3302. Middle IncomeEconomies2,253(10.9)1,105(21.2)2,0403. High Income Economies15,230(73,4)831 (16.0)18,3304. Other Economies
 ___ 
323 (6.2)
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World20,736(100.0)5,206(100)3,980India283 (1.4)832 (15.9)340India with its population of 832 million in 1989 and with its per capita income of $340is among poorest of the economies of the world. It had a share of 15.9 per cent inworld population, but a little more than 1 percent of world GNP.Three observation made here regarding the U.N. classification of developedand developing countries on the basis of per capita income. First, there is grossinequality of incomes between the rich and the poor countries. Second, the gap in per capita income (and naturally in the level of living) between the rich and poor countriesis even widening over the years—the annual rate of growth of per capita income of therich countries was higher during 1965-89 as compared with the poor countries. Morerecently, the growth rate among low-income countries has also shown an increase andif this is sustained, the gap may show a decline over a period. Third, all the highincome countries are not necessarily developed countries. For instance, the highincome oil-exporting countries have high per capita income but this is mainly due totheir exports of oil; really speaking, they are not developed economies. Recently, with3

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