Rural Development 6

Rural development is the process of improving the quality of life, economical and
social conditions of people living in rural areas.
Today, rural development still remains the core of the overall development of the
country.
It has become more than two-third of the Country's people is dependent on
agriculture for their livelihood and one-third of rural India is still below the
poverty line.
So government should take steps to develop the rural area also.
PROCESS OF RURAL DEVELOPMENT
(i) Land reforms:  There was a great need for land reforms in a country like
India, where majority of its population still depends on Agriculture.
It includes various rural and regulation of land ownership, abolition of
intermediaries, regulation of rent, land ceiling, etc.
(ii) Development of infrastructure: It involves the development of trans-
portation system, electricity, permanent irrigation facility, credit and
marketing facilities for rural people. without these infrastructural
facilities it is very difficult to develop rural areas.
(iii) Development of human resources: To develop the rural area,
development of human resources is necessary. It includes education and
health. Government should provide education and health facility to every
people of rural area and focus on female literacy.
(iv) Poverty Alleviation Programme: Around 30% of population is still
below the poverty line. So, there is a serious need for taking serious steps
for alleviation of poverty and bringing significant improvement in living
conditions of weaker section.
(v) Development of Productive resources: Government should provide
employment opportunity to the people living in rural areas.
People should be trained for doing activities other than agriculture.

Rural Credit
Growth of rural economy generally depends on the funds required to development
of agriculture and non agriculture activities.
Farmer’s need money for seeds, fertilizers, insecticides, pesticides, etc. even
funds are required for technological advancement.
So rural credit is one of the crucial factor which contribute to agriculture
production.

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Sources of Rural Credit

The following two sources of credit area:
(i) Non-institutionals sources
(ii) Institutionals sources
Non-institutionals sources:  Agricultural credit given by these sources are called
non-institutionals sources of rural credit. Traditionally farmers are obtaining
loans from these sources.
1. Moneylenders: They are the person whose business is lending money
to farmers and charged high rate of interest they also manipulated their
accounts without their knowledge due to lack of knowledge farmers are
bound to take loan from moneylenders.
2. Relatives: Farmers generally borrow money from their relatives and
return the money after harvest without any interest.
3. Traders and Commission Agents: Traders and commission agents
are also advancing loan to the farmers for productive purposes before
the maturity of crops and then force farmers to sell their crops at very
low prices and charge heavy commission. This type of loans is mostly
advanced for cash crops.
4. Landlords: Small as well as marginal farmers and tenants, take loans
from landlords for meeting their financial requirements landlords also
charge high rate of interest on such loan and exploit them.

Institutional Sources: When credit is given by the Government approved

agencies then such sources of credit is called institutional sources. 
Following are some of the important institutional sources of agricultural credit
in India.
1. Co-operative Credit Societies: The cheapest and the best source of
rural credit in India is definately the Co-operative finance.
2. Land development banks: Land development banks are advancing
long term loans for 15-20 years to the farmers against the mortgage
of their lands for its permanent improvement, purchasing agricultural
implements and for repaying old debts.
3. Commercial Banks:  In the initial period, the commercial banks of our
country have played a marginal role in advancing rural credit in 1950-
51, only 1 percent of the agricultural credit was advanced by the banks
but after nationalisation of commercial banks in 1969, the commercial
banks started to extend financial support to farmers.
4. Regional Rural Bank: These Banks are operated in rural area where
no banking facilities are available. the aim of these Banks is to provide
credit and other facilities, especially to small and marginal farmers.
5. The Government:  The loans provided by the government are known as
taccavi loans and are lent during emergency or distress, like famines,
RURAL DEVELOPMENT 3

floods, etc. The rate of interest charged against such loan is as low as
6%.
Taccavi loan was a short term loan given to poor farmers to purchase
seeds, fertilizers, insecticides, pesticides, etc.
6. National Bank for Agricultural and Rural Development (NABARD):  It is
an apex development bank authorised for providing and regulating credit
and other facilities for the promotion and development of agriculture,
small scale industries, cottage and village industries, handicrafts and
other activities in rural areas with a view to promote rural area.
It is established in year 1982.
7. (SHG) Self-help group bank linkages programme for micro
finance:  Self-help groups (SHGs) are informal associations of people who
choose to come together to find ways to imrpove their living conditions.
Here people are helping each other.
Self-help group promote thrift in small proportions by a minimum
contribution from each member. From the pooled money, credit is given
to needy members at reasonable interest rates, which is to be repaid
in small installments. SHGs have also helped in the empowerment of
women. However, the borrowings are mainly for consumption purpose.
Problems in Rural Credit System
Insufficiency:  In spite of expansion of rural credit structure, the volume
1.
of rural credit in the country is still insufficient in comparision to its
demand.
Inadequate amount of sanction:  The amount of loan sanctioned to the
2.
farmers by the agencies is also very much inadequate for meeting their
different aspects of agricultural operations.
Lack of institutional sources: Due to heavy demand for credit
3.
institutional credit sources are not sufficient to fulfill the demand.
Lesser Attention of poor farmers:  Rural credit agencies and its schemes
4.
have failed to meet the needs fo the small and marginal farmers. On the
other hand well to do farmers are getting more attention from the credit
agencies for their better credit worthiness.
Growing overdues: The problem of over-dues in agricultural credit
5.
continues to be an area of concern. The recovery of agricultural advances
to various institutions is also not at all satisfactory. There are few
allegations that farmers are deliberately rufising to pay back loans as a
result of that, the credit agencies are becoming wary of granting loan to
farmers.
Agricultural Market System
The agricultural market system refers to the system through which agricultural
products reach our tables.
4 MACRO ECONOMICS

It is a process that involves assembling, storage, processing, transportation,

packaging, grading and distribution of different agricultural commodities across
the country.

Problems faced by farmers

Manipulations by Big Traders:  Prior to independence, farmers suffered
a.
from faulty weighing and manipulation of accounts while selling their
produce to traders.
Lack of market information:  Due to lack of market information farmers
b.
were bound to sell their produce at low price.
Lack of storage facilities: Farmers were bound to sell their produce
c.
at low price because there were no proper storage facilities to keep back
their produce for selling later at a better price.
Measure to Improve Agricultural Marketing
Measures initiated by the government to improve agricultural marketing are as
follows:
1. Regulated markets:  Regulation of market is required to create orderly
and transparent marketing conditions. In regulated markets, sale and
purchase of the produce is checked by the market committee consisting
the representatives of government, farmers and the traders. This policy
benefited farmers as well as consumers.
2. Infrastructural facilities:  Improvement in physical infrastructure is to
improve the agricultural marketing. As the current existing facilities such
as roads, railways, warehouses, processing units are not sufficient to
meet the growing demand. Hence, government ensures the improvement
in physical infrastructure.
3. Co-operative marketing: Co-operative marketing is the measure
taken by the government in realising the fair prices for farmer products.
Farmers, as members of these societies bargain well for better prices for
their produce through collective sale.
Milk cooperatives in Gujarat have been very successful in transforming
the social and economic conditions of Gujarat and some other parts of
the country.
4. Different Policy Instruments: In order to protect the farmers, the
government has initiated the following policies:
• Minimum support prices (MSP): To protect the interest of farmers,
government fixed the minimum support prices of agricultural products,
like wheat, rice, maize, cotton, sugarcane, pulses, etc. Such a price may
be regarded as an offer price, at which the Government is willing to buy
any amount of grains from the farmers.
• Maintenance of Buffer Stocks: The food corporation of India (FCI)
purchases wheat and rice at the minimum support price to maintain
Buffer stock. Buffer stock is created in the years of surplus production
and is used during shortages and areas of natural calamities.
It helps to ensures regularity in supply and stability in prices.
RURAL DEVELOPMENT 5

• Public distribution system (PDS): The public distribution system in

our country operates through a network of ration shops and fair price
shops. Fair shops offer essential commodities like wheat, rice, kerosene,
etc. at a price below the market price, to the weaker sections of the
society.
Emerging Alternate Marketing Channels
An alternate way for agriculture marketing that has emerged are channels where
farmers can directly sell their produce to consumers.
These channels are Apni Mandi (Punjab, Haryana and Rajasthan), Hadaspar
Mandi (Pune), Rythu Bazars (Vegetables and fruits market in Andhra Pradesh)
and Uzhavar Sandies (Tamilnadu). A number of national and multinational
chains are joining with farmers by helping them to produce better quality farm
products by providing seeds and other inputs at certain price.
In this way farmer will have larger markets for their produce and will also reduce
price risk.

DIVERSIFICATION OF AGRICULTURAL ACTIVITIES

Agriculture diversification refers to either a change in cropping pattern or the
farmers opting for other non-farming options like poultry farming, animal
husbandry, etc. This practice allows farmers to expand the production, which
helps generate a higher level of income. Changing a cropping pattern implies
the diversification between food and non-food crops, conventional crops and
horticulture, high value and low value crops, etc.

Benefits of Diversification
1. It helps in reducing risk factors as it ensures that the farmers do not lose
all of their resources if the weather does not favour the crop production.
2. Since multiple crops can be harvested from a small field, the production
increases ten-fold, which ensures an increase in income of farmers.
3. The agriculture sector is already crowded in India; therefore it makes
provision for additional employment in rural areas.
4. The importance of crop diversification lies in the fact that it effectively
increases soil fertility and controls pest incidences.
Non-Farm Areas of Employment
Animal Husbandry/live stock farming: It includes breeding, rearing
1.
and caring for farm animals. It provides livelihood to over 70 million rural
farmers. India owns one of the largest livestock populations in the world.
Livestock is also used by farmers as an instrument in a farm for transport
and carrying agricultural inputs, and animal like cows are used in the
field for conventional ploughing method.
Poultry has the largest share of total livestock in India. Livestock production
provides increased stability in income, food security, transport, fuel
and nutrition for the family, without disrupting other food producing
activities.
6 MACRO ECONOMICS

2. Dairying:  It is the branch of agriculture which involves breeding, raising

and utilisation of dairy animals for the production of milk and the various
dairy products processed from it.
(Operation flood) white revolution: It was started by national
dairy development board (NDDB) in 1970 under the expert guidance of
Dr. Verghese Kurien. All farmers pool their milk produce according to
different grades and same is processed and marketed to urban centres
through cooperatives. The farmers are assured of a fair price and income.
After successful implementation of operation flood by Gujarat India ranks
first in the world in milk production.
3. Fisheries:  With the increase in population, burden on land has increased,
fisheries have became an important non farm area of employment. It is
an important source of livelihood for people living in backward coastal
areas.
Kerala, Maharashtra, Gujarat and Tamilnadu are the principal states
in India where fisheries is an important source of livelihood in the rural
areas.
The fishing community in India depends almost equally inland and
Marine sources of fishing. All the sources are called “Waterbodies”. The
fishing community calls the “Water bodies” as the “Mother” or “provider”.
In India after progressive increase in budgetary allocation and introduction
of new technology in fisheries and agriculture, the development of fisheries
has come a long way. Despite a significant segment of rural population
engaged in fisheries, this sector contributes merely 2% to GDP. A large
share of fish-worker families are poor. Widespread underemployments
low per capita earnings, high illiteracy rate and indebtedness are the
major problems faced by the fishing community.
4. Horticulture: It refers to the art or science of cultivating fruits,
vegetables, tuber crops, flowers, medicinal and aromatic plants, spices
and plantation crops.
Over times there has been a substantial increase in area under these
crops. These crops play a vital role in providing food and nutrition,
besides providing opportunities for employment. Economic condition of
many farmers engaged in horticulture has improved. Presently, India
is a second largest producer of fruits and vegetables in the world. We
are emerging as leading producer of mangoes, bananas, coconuts,
cashewnuts, etc. for enhancing the role of horticulture, more investments
should be made in infrastructure like electricity, cold storage systems,
marketing linkages, etc.
Horticulture provide great scope for women employment.
(Golden Revolution: The period betwen 1991 to 2003 is known as
the period of Golden Revolution in India. The golden revolution in India
is related to the production of honey and horticulture. It is a part of the
important agricultural revolutions of India.)
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(Yellow Revolution: It was launched in 1986-1987 to increase the

production of edible oil, especially mustard and seasame seeds to achieve
self-reliance.)
Information Technology: It refers to that branch of engineering that
5.
deals with the use of computers and telecommunications to retrieve and
store and transmit information.
Through appropriate information and software tools, government has
been able to predict areas of food insecurity and vulnerability to prevent
or reduce the likelihood of an emergency.
Organic Farming
It is the form of agriculture that relies on techniques such a crop rotation, green
manure, compost and biologial pest control.
his method avoids the use of synthetic chemical fertilizers. Organic farming
T
produce safe and healthy food, without leaving any adverse impact on environment.
Organic farming take care the health of soil.

Benefits of Organic Farming

1. Organic farming method uses the natural environment to enhance the
productivity of an agriculture.
2. The produce of organic farming is pesticide free and is produced in an
environmentally sustainable way.
3. Crop diversity can be seen in organic farming. In conventional farming
mass production of one crop in one location is focused while in organic
farming it is possible to grow multiple crops in the same place.
4. It impvoes soil fertility and feeds nutrients to the soil to feed the plant.
5. Organic farming improves the health of people, soil and eco-system.
6. Using fertilizers and pesticides ground water is polluted but organic
farming replaces it with organic fertilizers hence it helps to prevent water
pollution.
Major Problems and Constraints for organic farming in India
Lack of Awareness:  The most important constraint felt in the progress
1.
of organic farming is the inability of the government policy making level
to take a firm decision to promote organic agriculture.
Lack of infrastructure and marketing facilities:  Organic farming faces
2.
problems of inadequate infrastructure and marketing facilities.
High input costs:  The small and marginal farmers in India have been
3.
practicing a sort of organic farming in the form of the traditional farming
system. They we local or own farm renewable resources and carry on the
agrilcutural practicies in an ecologically friendly environment.
However, now the costs of the organic inputs are higher than those of
industrially produced chemical fertilizers and pesticides including other
inputs used in the conventional farming system.
8 MACRO ECONOMICS

Low output:  It has a lesser output in initial years as compared to Modern

4.
agriculture farming. As a result small marginal farmers find difficult to
adapt organic farming.
Sorter food life:  According to research, the shelf life of organic foods are
5.
shorter. Because, organic fruits and vegetables are not treated waxes or
preservatives to the same degree that conventional fruits and vegetables
are, they may indeed spoil faster.