RURAL DEVELOPMENT

Rural development refers to continuous and comprehensive socio-economic process

attempting to improve all aspects of rural life.

Objectives of Action Plan:

a) Increase in crop productivity so that income of the farmers increases, and farming is
taken as a commercial venture, not merely as a means of subsistence.
b) Generating alternative means of employment (outside agriculture), so that the rural
development attains comprehensiveness, and no longer is identified merely with
agricultural development.
c) Promoting access to education and health facilities so that rural development is
achieved with human development.
Key of Action-Plan for Rural Development
a) Development of Human Resources: It includes
• Improvement in literacy rate especially female literacy rate, education, and
skill development.
• Better access to health, sanitation and water supply.
b) Land Reforms: These include
• Agrarian relation (or production relation between the owners and tillers of the
soil) which are to be conducive to the growth of farming.
• Size of holdings which is to be economically and technically viable for
cultivation.
c) Development of Infrastructure: This includes
• Provision of credit facilities in the rural areas.
• Development of rural markets and their integration with the urban markets.
• Development of the means of transport, particularly road and rail links with
the rural area.
• Availability of power, for farming and non-farming activities.
• Permanent means of irrigation.
• Facilities of agricultural research and effective means of communication.
• Organic farming
d) Poverty Alleviation: Special measures for eradication of poverty and bringing about
significant improvement in the living conditions of the weaker section of the
population were undertaken. Creation of productive employment opportunities in
areas other than farming is emphasised.
e) Development of the Productive Resources of each Locality: Productive resources
of each locality in the rural areas are to be identified and developed. This is to
enhance the opportunities of employment, particularly in the areas other than farming.

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 RURAL CREDIT
Credit is the lifeline of farming activities. This is because of two reasons:
• Most farming families in India are small and marginal farmers, producers just enough
for subsistence. They are not able to generate surplus for further investment. The need
for credit is therefore unavoidable.
• The gestation lag between sowing and harvesting of the crops is quite long. This
compounds the need for credit.
Types of Credit:
1. On the basis of Time:
Types of Credit Time Period Purpose

Short Term Credit 6—12 months For the purchase of inputs like
seeds, fertilisers, pesticides and
insecticides
Medium Term Credit 1 Year—5 years a) The purchase of
machinery
b) Construction of fences
c) Digging the wells
Long Term Credit 5 years—20 years a) The purchase of additional
land
b) Carrying out permanent
improvement on the
existing land
2. On the basis of Purpose
a) Productive purpose: The credit requirement of farmers related to production
activity.
b) Unproductive purpose: The credit requirement of farmers related to consumption
activity.

Sources of Rural Credit:

1. Non-Institutional Sources: The major non-institutional sources are
a) Moneylenders
b) Friends and relatives
c) Traders and Commission Agents
d) Large farmers

2. Institutional Sources:
Objectives:
• To provide adequate credit to farmers at a cheaper interest rate
• To assist small and marginal farmers in raising their agricultural productivity
and maximising their income.

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Important institutional sources of agricultural credit:
a) Co-operative Credit Societies:
• The co-operative credit societies provide adequate credit to the farmers at a
reasonable interest rate.
• These societies provide guidance in diverse agricultural operation with a view
to raising crop productivity
• They ensure timely and rapid flow of credit to the farmers.
• They spread credit facilities across all regions of the country.
• They provide adequate credit in areas covered by special programmes of
development.
• Their aim is to liberalise the peasants from the clutches of moneylenders
b) Regional Rural Banks:
REGIONAL RURAL BANKS were established under the REGIONAL RURAL
BANKS ACT,1976. They provide loans to small and marginal farmers,
agricultural labourers, and artisans.
The main objective of setting up RRBs is to provide financial facilities for
development of agriculture and other productive activities in rural areas.
The performance of RRBs however, has not been quite satisfactory due to poor
recovery rates. Many sponsoring banks had their own branches in rural areas and
the revenue earning capacity of RRBs was very poor due to various restrictions
placed on them. The govt therefore initiated a reform process of the RRBs in
2004, as a result of which the performance of the RRBs improved after 2010
c) National Bank for Agricultural and Rural Development (NABARD):
NABARD was set up in 1982. The main functions of NABARD are as follows:
• It serves as an apex funding agency for the institution providing credit in
rural areas.
• It takes measures towards improving the credit delivery system,
restructuring of credit institutions, training of personnel etc.
• It coordinates the rural functioning activities of all institutions engaged in
developmental work at the field level and maintains liaison with the
Government of India, State Governments, Reserve bank of India and other
national level institutions concerned with policy formulation.
• It undertakes monitoring and evaluation of projects refinanced by it.
d) Commercial Banks:
The government realised that rural credit needs could not be met by the co-
operative credit societies alone, and that commercial bank should play an
important role. In 1969 nationalisation of certain banks took place. The
nationalised commercial banks (through their branch expansion programmes)
were directed to offer credit directly to the farmers as well as indirectly through
cooperative societies.
Self-Help Group (SHG) Bank Linkage Programmes for Micro Finance:
• Their focus is largely on those rural poor, who have no sustainable access to
the formal banking system.

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 • Their target group comprise of small and marginal farmers, agricultural and
non-agricultural labourers, artisans etc.
• It is the cost-effective way of financing the rural poor
• Credit is offered at a moderate rate of interest as the transaction costs of
borrowers as well as lenders are considerably reduced.
• It inculcates the habit of thrift among members and provides them timely
credit.
• It involves minimum legal formalities owing to the informal credit delivery
mechanism.
• SHGs have helped in the empowerment of women.
Kisan Credit Card (KCC) Scheme:
• The KCC Scheme aims at adequate and timely support to the farmers for their
short-term credit need.
• Under the scheme banks may issue KCC to the farmers who are otherwise
eligible for short-term credit for crop production, allied activities and other
non-farm activities.
RBI and Rural Credit:
It focuses on
• Short term refinance facilities for agriculture and allied activities
• Development of cooperative credit societies
• Provision of long-term funds to bring about state partnership in cooperative
credit agencies.
• Training and professionalism of cooperatives
• Conducting rural credit surveys to determine the coverage of rural households
by credit institution
• Helping in bank-branch expansion programme to provide cheaper remittance
facilities for banks operating in rural areas
• Guidance to all concerned on matters relating to rural credit.

RURAL BANKING – A CRITICAL EVALUATION:

Rural banking has made a positive impact on the income and employment in our rural
sector. It helped farmers to purchase modern agricultural inputs through its credit
facilities. As a result of it, we could overcome famine and achieve food security. Apart
from it, non-farm sector is also benefitted from the credit facilities extended by the rural
banking Though the overall share of institutional credit in the total agricultural credit has
increased over the years, yet there are a lot of problems in this area.

The main problems with regard to institutional finance in rural India are:

a) The sources of institutional finance are inadequate to meet the requirement of

agricultural credit. That is why it could not make farmers free from the clutches of
money lenders.

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 b) Banking credit or institutional credit has invariably been tied to collateral (security or
guarantee of a property for the loans), because of which a large section of small and
marginal farmers is often left out.
c) Rural banking is suffering from the problems of high level of over dues. Recovery of
agricultural loans has become a serious problem in functioning of rural banking
institution. Increasing number of willful defaulters constitute a threat to the very
existence of rural banking. If this trend is not reversed, the banking system will be
unable to provide more credit to meet the growing needs of the farmers.
d) There are regional inequalities in the distribution of rural credit.
e) Apart from commercial banks, most financial institutions have failed to develop a
culture of thrift (saving for the future) among the farming families. Mobilization of
deposit has remained rather subdued.
Measures to solve the problems of Rural Credit
a) Credit facilities should be extended to Indian farmers by the commercial banks on
easy terms.
b) An effective mechanism for the recovery of agricultural loans should be evolved at
the earliest.
c) Cooperative credit societies in rural areas should be strengthened and their working
should be made more efficient.
d) More Regional Rural Banks should be set up to meet the credit needs of the rural and
backward areas.
AGRICULTURAL MARKETING:
Agricultural marketing may be defined as the process that involves:

• Gathering the produce after harvesting

• Processing the produce
• Grading the produce according to its quality
• Packaging the produce according to buyers’ preference
• Storing the produce for future sale
• Selling the produce when the price is lucrative

Measures Initiated by the Government to Improve Marketing System:

a) Regulated Markets:
Regulated markets have been established where sale and purchase of the produce is
monitored by the Market Committee including representatives of government, farmers
and the traders.
• Market system is made transparent with a strict vigil on the use of proper scales
and weights.
• The market committees ensures that the farmers get appropriate price for their
produce.

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b) Co-operative Marketing:
• Cooperative marketing is a significant progressive step in the context of
agricultural market system.
• Cooperatives can enable small and marginal farmers to obtain fair price for their
produce through collective sale.
• Cooperatives increases bargaining power of the farmers and can provide
infrastructure facilities, establish linkage between credit, processing and farming,
ensure the supply of agricultural inputs and consumer goods to the farmers at
cheaper rates.
• Cooperative marketing system can arouse the spirit of self-confidence and
collective action in the farmers.
• The Co-operative Marketing Structure in the country is working at various levels. We
have Primary Marketing Co-operative Societies at the Mandi level, Central Federations
and the National Agricultural Co-operative Marketing Federation of India Limited at the
national level.
• NAFED is the apex co-operative marketing organisation dealing in procurement,
distribution, export and import of selected agricultural commodities.
(The success of Milk Co-operative in Gujarat is indeed praiseworthy.
They have not only changed the socio-economic fabric of the economy of Gujarat, but
also have played a key role in bringing white revolution in the country.)
c) Provision of Infrastructural Facilities:
• Central and state warehousing corporations are the principal government agencies
offering storage space to the farmers. Storage helps the farmers to sell their
produce at a time when the market price is lucrative.
• Railways are offering subsidized transport facility to the farmers to bring their
produce to the urban markets where often they get a better deal.
• 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.
d) Important Instrument to Safeguard the Interest of Farmers:
In this regard three instruments are noteworthy:
• Fixation of Minimum Support Price (MSP) for agricultural products:
Announcement of MSP ensures fair returns to the farmers. It safeguards them
from the danger of selling their output at low prices in the market. (Distress sale)
• Maintenance of buffer stocks of wheat and rice by the Food Corporation of
India.
• Public Distribution System through fair price shops: it makes provision for
supplying these commodities at reasonable prices to the ultimate consumers
besides meeting food requirements during periods of scarcity.

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 DIVERSIFICATION OF PRODUCTIVE ACTIVITIES
It refers to re-allocation of some of Farms’ productive resources into new activities or
crops reducing market risk. Diversification has two aspects
a) Diversification of crop production
b) Diversification of production activities
The need and importance of diversification of productive activities in our rural sector
arises mainly from the following grounds:
a) There is greater risk in depending exclusively on Farming for livelihood
b) It is essential and useful to provide productive sustainable livelihood options to
rural people in India
c) Agriculture is seasonal activity. Therefore, Diversification is essential to provide
supplementary gainful employment for the rural people to overcome poverty and
to raise their level of living.

Diversification of Crop Production. -

It implies production of a diverse variety of crops rather than one specialised crop. It
implies a shift from Single Cropping System to Multi Cropping System. It enables
choice of cropping pattern in accordance with the price structure in the market. It
would minimise the market risk arising due to price fluctuation.
Diversification of Production Activities. -
It implies a shift from crop farming to other areas of production activity. It raises
income as well as stabilises it.
Following are some notable options of employment outside agriculture:
Non-Farm Areas of Employment
1. Animal Husbandry
• India owns one of the largest livestock populations in the world.
• Livestock production provides increased stability in income, food security,
transport, fuel and nutrition for the family without disrupting other food producing
activities.
• Livestock sector provides alternate livelihood options to a large number of small
and marginal farmers, including landless labourers.
• A significant number of women also find employment in the livestock sector.
Two important problems related to livestock are
➢ Low productivity owing to backward know-how
➢ Deficient veterinary care

2. Dairy farming
• Performance of the Indian dairy sector over the last three decades has been quite
impressive.

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• Milk production in the country has increased by more than four times between
1960—2002.
• This can be attributed by the successful implementation of Operation Flood from
1966 onwards.
➢ It is a system whereby all the farmers can pool their milk produce
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
(Gujarat state is held as a success story in the efficient implementation of milk
cooperatives, which has been followed by many states.)

3. Fisheries
• Kerala, Gujarat, Maharashtra, and Tamil Nadu are the principal states in India
where fisheries are an important source of livelihood in the rural area.
• The fishing community in India depends almost equally on inland sources and
marine sources of fishing.
• Inland sources include rivers, lakes, natural aquatic ponds, streams while marine
sources include seas and oceans.
• Together these sources (marine and inland sources) are called ‘water-bodies’
which are regarded as ‘provider’ (of subsistence) by the fishing communities.
• But fishing community continues to be one of the most backward communities in
the country.
• Widespread indebtedness of the fishing communities makes fishing vulnerable
occupation. It is suggested that:
➢ Micro- financing through SHGs may go a long way in redressing credit
needs of the marginal fishing families in rural areas.
➢ Fisheries technology need to be upgraded and made available to the
fishing community.

4. Horticulture:
Horticulture refers to the science or art of cultivating fruits, vegetables, tuber crops,
flowers, medicinal and aromatic plants, spices and plantation crops. These crops play
a vital role in providing food, nutrition, besides addressing employment concern.
• The period of 1991—2003 is known as ‘Golden Revolution’ because during
this period, the planned investment in horticulture become highly productive
and the sector emerged as a sustainable livelihood option.
• India has emerged as a world leader in producing a variety of fruits, like
mangoes, bananas, coconuts, cashew nuts, and a number of spices.
• Horticulture has improved economic condition of many farmers and has
become a means of improving livelihood for many unprivileged classes too.
• Flower harvesting, nursery maintenance, hybrid seed production and tissue
culture, propagation of fruits and flower processing are highly remunerative
employment options for women in rural areas.

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5. Information Technology:
Information Technology has revolutionized many sectors in the Indian economy.
There is broad agreement that it will play a critical role in achieving sustainable
development and food security in the 21st century.
• Through appropriate information and software tools , government has been
able to predict areas of food security and vulnerability, to prevent or reduce
the likelihood of an emergency.
• It also has a positive impact on the agriculture sector as it circulates
information regarding emerging technologies and its applications, prices,
weather and soil conditions for growing different crops, etc.
• It has ushered in a knowledge economy, which is thousand times more
powerful than the industrial revolution.
• It acts as a tool for releasing the creative potential and knowledge embedded
in our people. It also has potential of employment generation in rural areas.
The aim for increasing the role of IT is to make every village a knowledge centre,
where it provides a sustainable option of employment and livelihood.

Every Village – A Knowledge Centre (For Knowledge Enrichment)

M.S. Swaminathan Research Foundation, with support from Sri Ratan Tata Trust,
established ‘Jamshedji Tata National Virtual Academy’ for the Rural Prosperity.
• The academy provides training to rural people to run their own ‘info-kiosks’
• It provides computer with internet, scanner, photocopier, etc. at a low cost and
trains the kiosk owner.
• The kiosk owner is able to earn a reasonable income by providing different
services like e-mail, video-conferencing, etc.
• The government of India has decided to join the alliance by providing
financial support of Rs. 100 crores.

ORGANIC FARMING
It is a system of farming that relies upon the use of organic inputs for cultivation. Animal
manures and composts are the basic organic inputs. It discards the use of chemical inputs like
chemical fertilisers, insecticides and pesticides.

Benefits
1) Organic Farming uses cheaper organic manures and requires less water and
other inputs. Thus, it generates good returns on investment for small and
marginal farmers who cannot afford packaged inputs including HYV seeds,
Fertilisers and Pesticides besides good irrigational facilities.
2) Environment friendly – Organic Farming is environment friendly. Chemical
fertilisers on the other hand pollute the ground water by raising its nitrate content.
Nitrates are health hazards and pollute the environment.

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3) Healthier and Tastier Food – Organic farming offers healthier and tastier food
compared with conventional farming. Recent studies have found that organically
grown food is more nutritious than that of chemical farming.
4) Organic Farming discards the use of chemical fertilisers thereby reducing soil
erosion and water contamination, increases bio-diversity and thus sustains the
health of eco-system and organisms.
5) Conventional farming is capital Intensive whereas organic farming requires
more labour. Thus, in a labour abundant country like India Organic Farming can
solve the problem of disguised unemployment in rural area.
6) Organic Farms withstands severe weather conditions better than conventional
farms. It generally sustains better yield during draught conditions.

It is true that Organic Farms yield less than Conventional Farms but the lower yield
can be balanced by fewer input costs and higher profit margins. Therefore Organic
Farming is now consistently becoming more profitable than conventional way of .
Farming.
The limitations of organic farming
Less popular: Organic farming needs to be popularised by creating awareness and
willingness on the part of the farmers for adoption of new technology. There is a
serious need for an appropriate agricultural policy to promote organic farming.
Lack of infrastructure and marketing facilities: organic farming faces problems of
inadequate infrastructure and marketing facilities.
Low yield: Organic farming has a lesser yield in the initial years as compared to
modern agricultural farming.
Shorter food life: Organic produce has a shorter shelf life as compared to sprayed
produce

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