RURAL DEVELOPMENT

INTRODUCTION
 Mahatma Gandhi –Real progress of India did not mean
simply the growth and expansion of industrial urban
centres but mainly the development of the villages
 India is a land of villages. We have more than 6 lakh
villages in the country. Majority of the people still live in
villages.
 2/3 of our people still depends on agriculture for their
living.
 1/3 of rural people still lives in poverty.
 Therefore rural development is necessary
What is rural development?
 It is a comprehensive term which essentially focuses on
action for the development of areas that are lagging
behind in the overall development of village economy.
 The share of agriculture sector’s contribution to GDP has
decreased, the population dependent on this sector has
not shown much fall because there is decrease in public
investment.
Challenges or key issues of rural development
 Development of human resources
It is very basic input for production of goods and
services
It include focus on
 Literacy, female literacy, education and skill
development
 Health, addressing both sanitation and public
health.
 Land reforms
It is required for
 Improvement in agricultural productivity
  Abolition of intermediaries
 Protection of the rights of tiller of the soil
 Eliminating the exploitation of cultivators
 Development of infrastructure
Infrastructural development refers to the development
of
 Electricity ,irrigation,transport facilities
 Credit marketing, financial assistance
 Construction of village roads and feeder roads to
nearby highways
 Facilities for agricultural research and extension
 Informal dissemination
These are very important to increase overall production.
 Alleviation of poverty
1/3 of rural India still lives in poverty. That is why, we
would like to see
 Special measures for alleviation of poverty must
be under taken.
 Effort should be made to bring about significant
improvement in the living condition of weaker
section of the population
 Emphasis should be laid on access to productive
employment opportunities
 Development of productive resources of each locality
 Available resources can be utilised optimum
 Opportunities of investment and employment in
farm areas and nonfarm areas can be enhanced.

After the initiation of new economic reforms

 Economic growth rate has improved
 But the benefits of growth are not reaching a
majority of people especially agricultural sector.
 Growth rate of agriculture sector decelerated to
about 3% per annum during 1991-2012
 Therefore farmers and agricultural community face
problems

 Indebtness to village money lenders.

 Inadequate infrastructure
 Decline in public investment
 Low prices of agricultural products
 High cost of agricultural inputs like fertilizers,
pesticides etc.
 Poor storage and transportation facilities
 Lack of nonfarm employment opportunities.
 Casualisation of employment
Contribution from agriculture to GDP declined
during these years because of the above matters.
Against this background ,some of the changes
take place in india as follows

Credit and marketing in rural area

 Availability of credit and marketing facilities are
very important.
 In India majority of farmers are small and marginal.
Their income is low and they are in debt
 In agricultural there is time gap between sowing
and harvesting. This forces farmers to borrow not
only for meeting farming expenses but also for
their consumption expenditure.
 Village money lenders have been the most
important source of credit to farmers for a long
time. They exploited small and marginal farmers
by charging high rate of interest.
Rural credit
 It refers to credit for the farmers in rural areas.
Credit contributes to the growth in rural areas.
Classification of rural credit needs
 Credit needs of the farmers can be classified in
two categories.
1. According to time
2. According to purpose

1.According to time
According to time, credit needs of the farmers can be discussed
as:
I. Short term credit
 Short term needs
 6 months to 15 months
 It is required to buy seeds, tools, manure, fertilisers etc.
II. Medium term credit
 Medium term needs
 15 months to 5 years
 It is required to buy machinery, equipment, digging
wells, constructing cattle sheds.
III. Long term credit
 Long term needs
 5 years to 20 years
 Tractors, land, heavy machines and equipment.

2.According to purpose
On the basis of purpose
I.Productive purpose
 It is credit required to meet productive purpose
 It is required to enhance agricultural production
 It is required to buy
seeds,machines,fertilisers,constructing cattle sheds,
 digging wells, undertaking permanent land
improvements etc.
II. Unproductive purpose
 It is credit required to meet unproductive purpose
 To meet social obligation which do not enhance
agricultural productivity
 To meet expenditure as religious ceremony,
marriages, to pay back old debts etc.
Sources of rural credit
At the time of Independence
 Money lenders and traders exploited
small,marginal and landless labours by
lending money to them high interest
rate,manipulate the accounts to keep them
debt trap
After 1969
 India adopted social banking and multiagency
approach to adequately meet the needs of
rural credit.
 National bank for agriculture and rural
development was set up in 1982 as an apex
body to coordinate the activities of all
institutions involved in rural financial system
 With modernisation and upgradation of
agriculture, the requirement of credit has
increased
The sources of rural credit can be classified
into
 Non-institutional sources
 Institutional sources
Non-institutional sources
These are traditional sources of rural credit in
India.it include
 Money lenders
o Major share of rural credit.
o 94%of total credit(1951-52)
o High rate of interest
o They acquire land on failure to pay back
the loans
o They manipulate accounts
 Traders and commission agents
o Provide advance credit to farmers on the
mortgage of crops
o High rate of interest
o They force farmers to sell their crops to
them at low prices.
 Landlords
o High rate of interest
o They exploit small farmers by
manipulating accounts
 Relatives
o No interest
o Money is returned as per the
requirement of loan provider or after
harvest.
Institutional sources
 Cooperative credit society was established in
1904 which played major role in shifting the
role of informal sector to formal sector to
provide rural credit
 A major change occurred after 1969 when
India adopted social banking and multi-
agency approach adequately
 Nationalisation of commercial banks in July
1969 expanded the role of formal sector
  1980-six more commercial banks were
nationalised which helped in expanding the
role of institutional sources to grand credit.
The main institutional sources are
1) Cooperative credit societies
 1904
 A major role in shifting the role of informal
sector to formal sector to provide rural credit
 These societies advances credit at
reasonable rate of interest
 These contribute nearly 30% of rural credit
 The main objectives are following
o To free the farmers from the exploitation
of money lenders
o To advance credit at low rates of interest
o To spread credit facilities all over the
countries
o To ensure timely and continuous flow of
credit to rural areas
2) Land development banks
 These provide long term credit
 The credit is granted against the mortgage of
their lands.
 The main objectives of land development
banks are:
o To provide long term credit
o Purchasing agricultural inputs,
constructing permanent structure on
land etc
o These provides funds for productive
purposes.eg: giving subsidies to
agriculture
3) Commercial bank credit
 Nationalisation in 1969,major role is
advancing credit
 The main objectives of commercial banks
are
o To directly help the farmers by
expanding their branches in rural areas
o To indirectly help the farmers through
agents
o To create awareness about existence of
facilities being provided by them
through newspapers, radio, television
etc.
4) Regional rural banks
 These banks have been set up to cover the
gap in credit structure of available facilities in
rural areas
 RRB are formed as a part of 20 point
programme declared by prime minister Late
smt.Indira Gndhi
 1975-five rural regional banks were
established for this purpose
 South Malabar Gramin bank and North
Malabar Gramin bank in Kerala
 The main objectives are
o To open branches in those areas where
there are no banking facilities
o To provide credit facilities to small and
marginal farmers
5) Self help groups
 These have emerged to fill the gap in the
formal credit system because formal credit
delivery mechanism has not only proven
inadequate but also not been fully integrated
 into the overall rural social and community
development
 The main objectives are
o The SHGs promote thrift in small
proportions by minimum contribution
from each member. From this pooled
money credit is given to the needy
members to be repayable in small
instalments at reasonable interest rate
o There are 10-25 range members
o These have helped in empowerment of
women as easy loans are available for
women
o These borrowings are mainly confined to
consumption purpose.
o There are large number of micro
financing institutions in India as
ESAF,Ujjivan financial services
6) Kudumbasree
 It is a successful women empowerment
programme in Kerala based on SHGs model
 It is poverty eradication mission launched in
1998
 Inaugurated by A B Vajpay
 Kerala’s kudumbasree program has large
number of project implemented by women

7) NABARAD(National Bank for Agricultural and

Rural Development)
 1982
 Apex body to coordinate the activities of all
institutions involved in the rural financing
system
  The main functions are
o To act as an apex agency for institutions
which advance credit in the rural areas
o To promote the strength of credit
institutions in credit delivery system
o To provide assistance to nonfarm sector
also
o To control and evaluate the projects
financed by it
o To coordinates the functioning of
different financial institutions involved in
advancing rural credit

RURBAN MISSION
 FEBRUARY 21,2016
 Rural population in India stands at 833 million,
constituting almost 68%of the total population.
 The larger outcomes envisaged under this
mission are:
o Bridging the rural-urban divide , economic,
technological and those related to facilities
and devices.
o Stimulating local economic development
with emphasis on reduction of poverty and
unemployment in rural areas.
o Spreading development in the region
o Attracting investment in rural areas
Rural banking –a critical appraisal
 Rapid expansion of the banking system
had a positive effect on rural farm and non-
 farm output and employment after green
revolution
 It helped the farmers to avail services and
credit facilities and a variety of loans for
meeting their production needs
 Famines became events of past.
 We have achieved food security
 Abundant buffer stock of grains
But
 All credit requirements of farmers are not
fully met. Many small and marginal farmers
are still at the mercy of cut throat village
money lenders
 There are big defaults by farmers
 50% of defaults are wilful defaults
To improve the situation, it is suggested
that
 The culture of saving, credit and prompt
repayment has to be encouraged.
Agriculture marketing system
Prior to Independence, Indian farmers were
 Confined to subsistence farming
 They sold very small proportion of their
produce to pay old debts and some other
requirements
 They were forced to sell their produce at
low prices
 They had weak bargaining power
 They did not have the required information
on prevailing prices
 They did not have proper storage facilities
 They had very little knowledge about
organised market
All this required an improvement in the
system
We need some mechanism ie; agricultural
marketing
Agricultural marketing
It is a process that involves the assembling,
storage, processing, transportation,
packaging, grading and distribution of
different agricultural commodities across the
country.
 Measures initiated by government to
improve agricultural marketing system
after Independence
 Regulation of markets
o First step to create orderly and
transparent marketing conditions. This
policy benefited farmers as well as
consumers
o This measure targets organised
markets in order to protect the
farmers from exploitation by brokers
o Market committees ensure that the
farmers get reasonable price for their
products
o There is still need to develop about
27000 rural periodic markets to
realise the full potential of rural
marketing.
 Provision of physical infrastructure
o This measure attempts to make
provision of physical infrastructural
facilities like
 roads,railways,warehouses,godowns,
cold storage and processing units
o These facilities will help in
strengthening the market channels
o However the current infrastructural
facilities are quite inadequate. We
need to develop more infrastructure
facilities to ensure high growth rate of
economy.
 Cooperative marketing
o Third aspect of government initiative
Fair prices for farmer’s products
Gujarat-success of milk cooperatives
Here farmers get together and form
marketing societies to sell the
produce collectively and take benefit
of collective bargaining to secure a
better price
o However due to lack of appropriate
link between marketing and
processing cooperatives and lack of
finances, cooperatives have received
a setback during recent past.
 Minimum support price
o It gives assurance of Minimum
Support Prices for agricultural
products
o To encourage the farmers to sell their
product
Here government buys the excess
supply from farmers and maintain buffer
stocks of these products and uses these
during emergencies
o FCI purchases food grains (wheat and
rice) at the procurement prices in
order to maintain rational prices for
the farmers to give them sufficient
incentives
 Grading and quality control
o Agricultural marketing aims at
promoting standardisation and
grading of products to provide them
uniformity and make them competitive
o It helps farmers to fetch reasonable
price of their products
o It helps in international trade as goods
are valued on the basis of their
grading and standardisation

 Dissemination of information
o This refers to spread of market related
information to the farmers through
electronic media.
o It helps farmers in taking decision as
to what to produce ,how much to
produce ,how much to sell, when and
where to sell
o Spread of market information will help
farmers getting fair price for their
produce

Problems of agricultural marketing in

India
1. Predominance of private traders
 o Private trade by money
lenders, rural political elites,
big merchants and rich
farmers.
2. Distress sale and lack of market
information
o Most of the Indian farmers are
poor and under debts, so they
sell their products at low
prices.
o It brings low income to them
3. Lack of transport facilities
o There are no proper roads
and transport facilities to
help the farmers carry their
produce to the organised
markets
o Therefore they are forced to
sell their produce in the
village at low prices
4. Lack of regulated markets
o Regulated markets are less
in number
o There is need to develop
about 27000 rural periodic
markets to realise the full
potential of rural markets
5. Lack of infrastructural facilities
o Present infrastructure
facilities (warehouses,
godowns, cold storage etc.)
are quite inadequate to
meet the growing demand.
6. Long chain of intermediaries
 o Long chain of middlemen
between cultivators and
consumers
o They charge high rate for
their services
Suggestions to improve the agricultural marketing system
1. Government intervention should increase where private
traders predominate agricultural markets
2. More rural periodic markets should be developed
3. There should be increased provision of more
infrastructural facilities like warehouse, cold storage etc.
4. Abolition of intermediaries to be seriously undertaken
5. Provision of standardisation and grading of products
should be modernised
6. Dissemination of market related information should be
more properly and extensively done through electronic
media and print media
7. New cooperatives marketing societies should be
established and existing ones should be improved
8. All financial institutions, commercial banks should provide
easy credit to the farmers as when required by them.
Alternative marketing channels
Many new markets where farmers sell directly to
consumers have emerged
 Apni Mandi(Punjab, Haryana and
Rajasthan)
 Hadaspar Mandi(Pune)
 Rythu Bazar(vegetables and fruit
market in AP and Telangana
 Uzhavan Sandies (Tamil Nadu)
 Another trend (retail chain), big bazar,
reliance fresh, spenchers etc.
Diversification in agriculture
It means a major proportion of increasing labour force in the
agricultural sectors needs to find alternate employment
opportunities in other non-farm sector
Diversification
Diversification of crop production
Diversification of productive activities
Diversification of crop production
 It refers to change in cropping pattern to shift from
subsistence farming to commercial farming.(moving from
food grains to cash crops)
 It refers to shift from single cropping system to multi
cropping system
 Choice of cropping pattern can be done on the basis of
demand of crop and hence according to price structure
 Level of income would increase if price fluctuations and
cash crops are considered by minimising the market risk.
Diversification of productive activities
As agriculture is already overcrowded, a major proportion of
increasing labour force needs to find alternate employment
opportunities in other non-farm sectors. Nonfarm activities have
several sub sectors
 Dynamic subsectors: They have sufficient infrastructure to
grow. These include agro processing industries, food
processing industries, leather industries, tourism etc.
 Other subsectors include traditional home based
industries like pottery, crafts, handloom etc.
 The main non-farm areas of employment
1. Animal husbandry
2. Fisheries
3. Horticulture
 4. Other alternate livelihood options

1. Animal husbandry
o In India-mixed crop –livestock farming system-
cattle,goats,fowl are widely held species
o It provides increased income, food
security,transport,fuel and nutrition for family
o Livestock sector includes-70 million small and
marginal farmers, landless labours.
o Poultry accounts for the largest share with 59%.other
animals include camels,asses,horses,ponies and
mules
o India had about 300 million cattle-109
buffaloes(2012)
o Milk production has increased by more than 5 times
between 1960-2016 mainly due to “operation flood”
o Operation flood is a system whereby all farmers can
pool their milk according to different grading 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 areas
o Other products-meat,eggs,wool
2. Fisheries
o The fishing community-sea,oceans,river,lakes,natural
aquatic ponds,stream etc
o Fish production :inland-61%,marine sector-39%
o Total fish production 0.7 %of total GDP
o Kerala,Gujarat,Maharashtra,Tamil Nadu are major
producers of marine products
o Major problems of fishing community face today
a) Increasing underemployment
b) Low per capita earnings
c) Absence of mobility of labour to other sectors
 d) High rate illiteracy
e) Indebtness
o Even though women are not involved in active
fishing,60%of work force in export marketing and
40% in internal marketing
o There is need to increase credit facilities through
cooperatives and SHGs for fisherwomen to meet
working capital requirements for marketing.

3. Horticulture

o Fruits ,vegetables, tuber crops,flowers,medicinal and

aromatic plants ,species and plantation crops
o India blessed with a varying climate and soil
conditions
o These crops provide food, nutrition and addressing
employment concerns.
o Golden revolution- 1991-2003, the planned
investment in horticulture became highly productive
and sector emerged as a sustainable livelihood
option.
o India has emerged as a world leader in producing a
variety of fruits like mangoes, bananas, coconuts,
cashewnuts and a number of spices and the second
largest producer of fruits and vegetables.
o 2014-15: production of fruits and vegetables: around
87 million tonnes and 170 million tonnes.
o 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.
 4. Other alternate livelihood (increasing role of IT)
o IT play a critical role in achieving sustainable
development and food security in the 21st
century
o Government can predict areas of food
insecurity and vulnerability using appropriate
information and software tools
o It also has a positive impact on the agriculture
as it can disseminate information regarding
emerging technologies and it application,
prices, weather and soil conditions, quality
and quantity of crop.
o IT has potential of employment generation in
rural areas.
o IT acts as a tool for utilising the creative
potential and capabilities embedded in the
society.

Green Food
Golde Horticulture
n
White Milk
Silver Egg
Grey Fertiser
Blue Fish
Black Petroleum
yellow seeds

Sustainable development and organic farming

NAS (new agricultural strategy) leads to use of chemical
fertilizer, pesticides etc. The result
 Loss of soil fertility
 Poisoning of soil and water
 Contamination of food produce with pesticides
 Destruction of friendly pests and insects
 Damaging eco system

Sustainable development of the economy, we need to use

eco-friendly technological which help us to enjoy the
benefits of economic development for a long time with no
harm to environment. One such technology is organic
farming

Organic farming is a whole system of farming that

restores, maintains and enhances ecological balance. It is
needed because
o It is an economic farming technology. It can be
picked up by small and marginal farmers
o It promote sustainable development
o It uses eco-friendly technology
Benefits of organic farming
 Economical-low cost of inputs
 Generation of income: exports as the demand
for organically grown crops because people are
more concerned about reasonable standards of
their health
 It provides nutritious and Healthy foods
 The produce of organic agriculture is pesticides
free
 It generate employment opportunities because
it requires more labour input
 It maintains natural eco system
Challenges before organic farming
 It needs popularisation because most of the
farmers are not aware of it
 Inadequate infrastructure and marketing
 Reluctance of farmers to implement it
 It has shorter life
 Output is less than modern farming

Government initiatives in agriculture sector

 KISSAN credit card (kcc), RuPay
Short term loan to farmers
 Rehabitaion package
o First implemented 31 districts in India
o Kerala, Karnataka,AP
o Amount to dependent of farmers who
were drives to suicide
 Low interest rate(2007-08)
Near 4%
 Loan written off