Open Elective
RURAL ECONOMICS
Unit 1
Chapter 1: Introduction to Rural Economy
Meaning of Economics: the state of a country or region in terms of the
production and consumption of goods and services and the supply of money.
Meaning of Rural Economy : is a process of bringing change among rural
community from the traditional way of living to progressive way of living. It describes
the economic activity in which a person living in rural areas gains an income and well
being generated with that income which improves social and economic status of the
rural people.
Objectives of Rural Economy:
1. To improve productivity and wages of rural people
2. To guarantee increased and quick employment possibilities
3. To demolish unemployment and bring a notable decline in underemployment
4. To guarantee an increase in the standard of living of the underprivileged
population
5. To provide the basic needs: elementary education, healthcare, clean drinking
water, rural roads, etc
Characteristics of Rural Economy
1. Village is an Institution:
The Village is a primary institution and it satisfies almost all the needs of the rural
community. The rural people have a feeling of belongingness and a sense of unity
towards each other.
2. Dependence on Agriculture:
The rural economy depends much on nature and agricultural activities. Agriculture
and allied activities are the main occupation in rural areas.
3. Life of Rural People:
Lifestyles in villages are very simple. Public services like education, housing, health
and sanitation, transport and communication, banking, roads and markets are limited
and unavailable. Rural people rely much on faith, superstitions and traditional
cultural practices. The standards of living of the majority of rural people are poor and
pitiable. In terms of methods of production, social organisation and political
mobilisation, the rural sector is extremely backward and weak. In recent years, the
incidence of alcohol drinking has gone up.
4. Population Density:
Population density, measured by number of persons living per sq.km is very low and
houses are scattered in the entire villages.
5. Employment:
There exists unemployment,seasonal unemployment and underemployment in rural
areas. Unemployment refers to the situation of people with willingness and ability to
work but are not getting employed. Underemployment also called disguised
unemployment is the situation of people employed in excess, over and above the
requirement. Disguised unemployment is a situation Where people work but no
increase in production. Both the situations are common in rural areas.
6. Poverty:
Poverty is a condition where the basic needs of the people like food, clothing and
shelter are not being met. According to the 2011-12 estimates, About 22 crores of
people in rural areas are poor and live below the poverty line.
7. Indebtedness:
People in rural areas are highly indebted owing to poverty and underemployment,
lack of farm and non-farm employment opportunities, low wage employment,
seasonality in production, poor marketing network etc. A famous British writer Sir
Malcolm Darling (1925) stated that ‘Indian farmers are born in debt, live in debt, dies
in debt and bequeaths debt’. Since formal loan facilities are not available to the
villagers, they depend on local money lenders who, like a parasite, squeeze the
villagers. Hence the villagers commit suicide frequently.
8. Rural Income:
The income of the rural people is constrained as the rural economy is not sufficiently
vibrant to provide them with jobs or self – employment opportunities.Large proportion
of labourers and skilled persons are underemployed and the scope for increasing
their income is limited.
9. Dependency:
Rural households are largely dependent on social grants and remittances from family
members working in urban areas and cities.
10. Dualism:
Dualism means the coexistence of two extremely different features like developed
and underdeveloped, organised and unorganised, traditional and modern, regulated
and unregulated, poor and rich, skilled and unskilled and similar contradicting
situations in a region. These characteristics are very common in rural areas.
11.Inequality:
The distributions of income, wealth and assets are highly skewed among rural
people. There are a number of historical, social, economic and political reasons
behind the existence of inequality. Landlords and landowners dominate the rural
activities. Land, livestock and other assets are owned by a few people.
12.Migration:
Rural people are forced to migrate from villages to urban areas in order to seek
gainful employment for their livelihood. This character of the development gives rise
to the formation of cities. Enmity and Lack of basic amenities in rural areas also push
the people to migrate to urban areas.
Indicators of Rural Development
Rural development indicators are calculated taking different domains into
consideration. The cause and effect relationship that leads to the development of the
specific domain forms the basis for the index development.
The indicators of Rural development is composed of five domains as given below:
1. Economy
2. Education
3. Health
4. Environment
5. Culture and Leisure
Agricultural Income - The various factors that enhance the annual agriculture such
as Agriculture Infrastructure, Production and Distribution and are directly proportional
to the agricultural income. Agriculture infrastructure includes water sources,
irrigation, storage facilities which are essential requirements that supports and
sustains agricultural activities.
Agriculture production is dependent on land available for cultivation, capital and
extent of the mechanisation or the usage of modern equipment in agriculture, the
availability of agriculture technology centres for providing necessary technical inputs
for the farmers. All the above parameters are directly linked in enhancing the annual
income from agriculture.
Healthcare- The present research considers life expectancy as an indicator of the
health status among the people in the rural areas. It takes into account the
availability of the medical facility such as infrastructure, availability of ambulances
and critical medicines etc. The very important aspect here is the availability of the
manpower such as Doctors, Nurses, Paramedical Staff and Pharmacists.
Assessment of the health status can also be made from the disease prevention point
of view such as vaccination given to newborn babies, infants, pregnant and lactating
mothers. Medical check- up camps also indicate the health status and the level of
health education imparted by the PHC’s or the panchayath or the local governance is
also taken into consideration that will enhance the status of health among the rural
community.
Education- Changes in literacy, schooling, literacy rate and life expectancy are also
important indicators of rural development. Rural areas are deprived of basic
amenities and education is one among them. Most of the schools do not have
teachers in rural areas. The capacity building for teachers is necessary to enhance
their competency levels. The availability of the teachers available in rural areas
directly impacts the educational level.
Environment- Climate change will exercise its influence on Indian agriculture
directly and indirectly affecting the lives as well as livelihood of Indians who are
relying on agriculture. Research studies reveal that climate change will have an
effect on the basic elements of life around the world like production of food, access
to water, healthcare and the environment. It is anticipated that as the world gets
warmer people will suffer from scarcity of food grains, dearth of water and flooding in
coastal areas.
Culture and Leisure- The amount of money spent on the culture and leisure
aspects also will indicate the economic status of the rural community. Rural people
spend mostly on the local festivals in India such as during Diwali, Bihu, Durga Puja
and Ugadi time. The amount of the money spent on entertainment such as movies,
fairs etc needs to be taken into account. The spending of the rural community is
important as it is directly proportional to their earnings. The higher the earnings the
higher will be the spending on the culture and leisure aspects and this will also
reflect on the economic status of the rural community.
Concepts of Inclusive and Sustainable Development
Inclusive Growth
● Inclusive growth means economic growth that creates employment
opportunities and helps in reducing poverty.
● It means having access to essential services in health and education by the
poor.
● It includes providing equality of opportunity, empowering people through
education and skill development.
Elements of Inclusive Growth:
1. Poverty Reduction
2. Employment generation and Increase in quantity & quality of employment.
3. Agriculture Development
4. Industrial Development
5. Social Sector Development
6. Reduction in regional disparities
7. Protecting the environment.
8. Equal distribution of income
9. Major elements of Inclusive Growth
10. Agriculture Development
11. Industrial Development
12. Environment
13. Protection
14. Poverty Reduction
15. Employment Generation
Sustainable Development
It is development that meets the needs of the present without compromising the
ability of future generations to meet their needs. Development, which leads to
economic development and at the same time fairly distributes the results, restoring
the environment to a greater extent than destroying it, increases opportunities for
people, not impoverishes them. This is, people centred development, focused on
preservation of nature, employment, women's and youth’s empowerment.
Sustainable development of rural areas: is defined as stable socio-economic
development of rural areas, optimising agricultural and fisheries production,
increasing the effectiveness of agriculture and fisheries industry, the achievement of
full employment of the rural population and improving his life.
Spheres of Sustainable Development:
Social
● Fighting Poverty
● Increasing welfare
● Equal opportunities for generations
● Culture/tradition. Preserving and increasing.
● The right to participate in decision making process
Economic
● Effective, socially oriented Economy
● Consideration of environmental constraints
● Preserving natural resources for future generations
Ecological
● A clean environment
● Biodiversity
● Ability for self recovery
Sustainable Development Goals
The Sustainable Development Goals (SDGs), also known as the Global Goals, were
adopted by the United Nations in 2015 as a universal call to action to end poverty,
protect the planet, and ensure that by 2030 all people enjoy peace and prosperity.
There are 17 SDGs which are listed below.
