INDIAN ECONOMY

REVISION NOTES
CHAPTER-6
RURAL DEVELOPMENT

 Rural Development
It is a comprehensive term which essentially focuses on action for the development of
area which is lagging behind in overall development of village economy.

• Objectives of Rural Development

1) Increasing productivity of agricultural sector.
2) Generating alternative means of livelihood in rural sector.
3) Promoting education and health facilities in the rural areas.

• Key issues in rural development

1) Diversification of crops that reduce risks of production and induces commercialisation of
farming.
2) Promotion of organic farming with a view to make crop cultivation environmental
friendly as well as a sustainable process over a long period of time.
3) Development of human resource like health, addressing both sanitation and public
Health.
4) Diversification of production activity with a view to find alternative means of sustainable
living other than crop-cultivation.
5) A system of marketing that ensures remunerative price to the farmer for his produce.

 Rural Credit
means credit for the farming communities. Farmers require credit for various purposes
like purchasing agricultural tools and machines, digging wells and tube wells, purchasing
 seeds, fertilizers, pesticides, etc. The gestation period between sowing and harvesting is
high. so, farmers have to borrow to fulfill their needs during this period.

• Sources of Rural credit

Rural Credit availability can be broadly classified into 2 categories:

1) Non-institution Sources: These are the traditional sources of agricultural credit in India.
They include money lenders, relatives, traders, commission agents and land lords.

2) Institutional Sources: They are cooperative credit, land development banks, commercial
banks, regional rural banks, govt., national bank for agricultural and rural development
(NBNR) and also self-help groups.

 Agricultural Marketing System

Agricultural marketing is a process which involves assembling, storage, processing,
transportation, packaging, grading and distribution of different agricultural commodities
across the country.

• Measures to Improve Agricultural Marketing

After Independent govt. has adopted various measures to improve of the system of
agricultural marketing in the country. It has brought about following measures in order to
regulate the markets:

1) Regulated Markets: The first measure was regulation of markets, to create orderly and
transparent marketing condition. This is organized in order to protect farmers from
malpractices of sellers and brokers.

2) Cooperative Marketing: Marketing societies are formed by farmers to sell the output
collectively and to take advantages of collective bargaining, for obtaining a better price.
Cooperatives are not functioning properly in a recent past due to inadequate coverage of
farmer members and processing cooperatives and also inefficient management.
3) Infrastructural facilities: Govt. had also provided infrastructural facilities like roads,
railways, warehousing, old storage and processing units.

4) Standardization and Grading: Grading and quality control helps farmers to get good
price for quality products produced by them.

5) Minimum Support Price: To safeguard the Interest of the farmers, government fixes the
minimum support price for agricultural products like wheat, rice, maize, cotton,
sugarcane, pulses etc. the government willingly will buy any amount of grains from the
farmers at a price higher than the market price in order to help them recover their loss.

• Defects of Agricultural Market in India

The existing system of Agricultural marketing has no. of defects the following are some
of the defects due to which the marketing system is not properly organized.

1) Lack of storage facility for food grain and crops has damaged the products either by rats
or insects or due to rain.

2) Distress Sale: Most Indian farmers are poor and they have no capacity to wait for better
price. They sell the commodities at whatever the price available immediately. As a result,
they go for distress sale of their output, to the village money lenders or traders for poor
price.

3) Lack of transportation as a result farmer cannot reach nearly market to sell their produce
at a fair price.

4) Long chain of middleman or intermediaries between the cultivator and the consumer will
also reduce the profit of the producer.
5) There are also other defects like lack of institutional finance, lack of guiding etc. This
makes Indian marketing system disorganized.

• Diversification of Agricultural Activity

Diversification includes 2 aspects:

1) Diversification of crop production: This involves shift from single cropping system to
multiple cropping system. This also involves shifting cropping pattern from food grains
to cash crops. The main aim is to promote shift from subsistence farming to commercial
farming.

2) Diversification of Productive Activities: As agricultural is already overcrowded the

major portion of the increasing labour force needs to find alternate employment
opportunities inn other non-farm sectors. This will provide alternate sustainable
livelihood and would raise the level of income.

 Organic farming
Organic farming is the process of producing food naturally. This method avoids the use
of synthetic chemical fertilizers and genetically modified organisms. It is very eco-
friendly and very essential for sustainable development. It has a zero impact on
environment.

• Advantages of Organic Farming

1) It substitutes costlier agricultural inputs such as HYV seed, Chemical fertilizers,
pesticides etc. locally produced organic inputs, which are cheaper and thereby generate
good returns on Investments.

2) It generates income through export as the demand, for organically grown crops are on the
raise.

3) It provides healthy food as organically grown food has more nutritional value than food
 grown through chemical farming.

4) It can provide more employment opportunities in India as it requires more labourers for
production than chemically produced goods.

5) Organic food is a pesticide free and is produced in an environmentally sustainable way.

• Disadvantages of Organic Farming

1) Organic farming needs to be popularized by creating awareness and willingness on the
part of the farmers for adoption of new methods.

2) There is no proper infrastructure and marketing facilities for these products alone. An
appropriate agricultural policy should be brought in for organic farming.

3) The fields from organic farming are less than modern agricultural farming in the initial
years. Therefore, small and marginal farmers may find it difficult to adapt to large scale
production.

 Sustainable Development
It is the development which aims to develop the present generation without effecting the
quality of life of future generation. Sustainable development does not prohibit the use of
any resources, but aims to restrict their use in such a way it is left for the future
generation.

 Operation Flood
It is a system of milk co-operatives, launched in 1966. This system emphasised the
pooling of milk by farmers through co-operatives societies. This increased the quantum
of sale as well the market value of product. The production in milk increased four-fold.
This system if commonly called operation flood.

 Labour Force
 It refers to actual member of people available for work.

 Cooperative Marketing
It refers to a system in which marketing societies are formed by farmers to sell the output
collectively and to take advantage of collective barging.

 Non-farm sector
It refers to jobs in govt. manufacturing, services, construction, mining, retail, etc.

 Labour intensive Process

It refers to the process or industry that requires a large amount of labour to produce its
goods.

 Role of IT Industries in the Development of Agriculture

1) Information Technology has revolutionized many sectors in Indian economy. There is a
broad agreement that IT will play critical role in achieving sustainable development and
food security in the 20th century.

2) Through proper information and software tools, govt. has been able to predict area of
food insecurity and vulnerability to prevent or reduce the livelihood of an emergency.

3) It also has a posture impact on the agricultural sector as it circulates information

regarding technologies and its application prices, weather and soil condition for growing
different crops.

4) This has increased the knowledge about agriculture.

5) The aim for increasing the role of information technology is to make ever village a
knowledge Centre, where IT provides a sustainable option of employment and livelihood.