STUD·Y CENTh t=

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• •• ; ~t....

REVIS ION OF KEV POINT S

• Rural Develo pment refers to continu ous and comprehensive socio-ec onomic
process, attempt ing to
improve all aspects of rural life.
• Process of Rural Develop ment: Followin g areas need fresh initiatives for develop
ment in India:
(i) Develop ment of Human Resources: Quality of human resources need to
be improve d through proper
attentio n to educati on and better health facilities.
(ii) Develop ment of Infrastructure: It involves improve ment in electrici
ty, irrigatio n, credit, marketi ng,
transpo rt facilities and agricultu re research.
(iii) Land Reforms: It includes eliminat ion of exploita tion in land r~lations
; providin g land to the tiller;
improve ment of socio-ec onomic conditio ns of rural poor and increasing agricultu
ral product ivity and
product ion.
(iv) Alleviati on of Poverty: It involves taking steps for bringing improve ment in
living conditio ns of weaker
sections.
(v) Develop ment of product ive resources of each locality to enhance opportu
nities of employm ent.
• Rural Credit: Growth of rural econom y depend s on timely infusion of rural
capital.
• Sources of Rural Credit: There are two main sources of rural credit: (i) Non-Ins
titutiona l Sources; and
(ii) Instituti onal Sources.
• Non-Ins titution al Sources or Informa l Sources: These are the tradition al
source of agricultu ral credit in
India. The major non-ins titutiona l sources are:
(i) Moneyl enders (iii) Traders and Commis sion Agents
(ii) Relatives (iv) Rich Landlord s

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• Institutional Sources or Formal Sources: Some of the Important ln5titutional sources~f agricultural Ctedlt are•
(i) Co-operative Credit (vi) National Bank for Agriculture and Rural •
(Ii) Land Development Banks Development (NABARD)
(iii) Commercial Bank Credit (vii) Self-Help Group (SHG) Bank Linkages
(iv) Regional Rural Banks Programme for Micro Finance
(v) The Government
• Problems faced in Rural Banking
(i) Insufficiency (iv) Inadequate Amount of Sanction
(ii) Dependence on Informal Credit System (v) Less attention to poor or marginal farrners
(iii) Inadequate Coverage of institutional sources (vi) Growing Overdues
• Agricultural Marketing 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 • Lack of Storage Facilities
• Lack of Market Information
• Measures to Improve Agricultural Marketing: Government adopted the following measures to improve
the system of agricultural marketing:
1. Regulated Markets: Regulated markets have been organised with a view to protect the farmers from
the malpractices of sellers and brokers.
2. Infrastructural Facilities: Governme~t aims to provide physical infrastructure facilities like roads, railways,
warehouses, godowns, cold storages and processing units.
3. Cooperative Marketing:_ The aim is to realise fair price for farmers' products.
4. Dlfkrent Policy Instruments: In order to protect farmers, government initiated following policies:
• Minimum Support Prices (MSP): To safeguard farmers' interest, government fixes MSP of various
agricultural products.
• Maintenance of Buffer Stocks: Buffer stock is created in the years of surplus production and is used
during shortages.
• Public Distribution System (PDS): It operates through a network of ration shops and fair price shops.
Fair price 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
(i) Origin ofFarmers Market: Th~ concept of Farmers' Market was started to give boost to the small farmers
by providing them direct access to the consumers and eliminating the middlemen.
(ii) Alliance with National and Multinational Companies: Several national and multinational fast food chains
are increasingly entering into contracts/alliances with farmers.
• Agricultural Diversification relates to change in cropping pattern or shift of workforce from agriculture
to other allied activities.
• R~ason for Diversification: The need for diversification arises in order to provide supplementary gainful
employment and to enable them to earn higher levels of Income.
• Benefits of Diversification: It reduces risk from agriculture sector and provides sustainable livelihood
options to the rural people. It also provides supplementary gainful employment during the off season period.
• Types of Diversification: It Includes two aspects:
(i) Diversification ofCrop Production: It involves ashift from single-cropping system to multi-cropping system.
(II) Diversification of Product,ve Activities: It involves shift of workforce from agriculture to other allied
activities and non-agriculture sector.

◄
 Non-Farm Areas of Employm t· some of the Important non•farm areas of employment are:
• . H b "' en • •h h
(i) Ammo1 us anury (or Uvestock Farmlng) Is that branch of agriculture, which is concerned wit t e
ding re I
bree ' ar ng and caring of farm animals. 1
• 1
(Ii) Dairying Is that branch of agnc breeding raising and utilisation of dairy anlma s
u ture which involves '
for the production of milk and the various dairy products processed from It.
·
(iii) Fisheries refer to the occupat'ion devoted to the catching, processing or selling of fish and other aq uat,c
animals.
th , vegetables, tuber crops, flowers, medicinal
(iv) Horticulture. refers to e science or art of cultivating fruits
and aromatic plants, spices and plantation crops.
(v) Information Technology {IT) refers to that branch
of engineering that deals with the use of computers
information.
and telecommunications to retrieve and store and transmit
techniques such as crop rotation, green manure,
• Organic Farming is the form of agriculture that relies on
compost and biological pest control.
• Benefits of Organic Farming
(i) Economical Farming (ii) Generates income through exports
(iii) Provides Healthy Food (iv) Source of Employment
(v) Safety of environment (vi) Sustains Soil Fertility
• Challenges before Organic Farming
(i) Less Popular (ii) Lack of infrastructure and marketing facilities
(iii) Low Yield (iv) Shorter food life
(v) Limited choice of crops
are required for development of rural sector:
• Evaluation of Rural Development: Following changes
(i) Stress on Diversification (ii) Rural and Urban Linkage

(iii) Better Facilities (iv) More Emphasis on Sustainable Development

Important Dates Relevant to this Chapter

1969
Nationalisation of Banks
Dairy Development Board 1970
Operation Flood or White Revolution started by National
e a nationwide milk grid.
(NDDB) under the guidance of Dr. Verghese Kurien to creat
lopment (NABARD) 12th July, 1982
Establishment of National Bank for Agriculture and Rural Deve
1991 to 2003
Period of Golden Revolution
rnment to ensure access 28th August, 2014
'Pradhan Mantri Jan-Ohan Yojana' was launched by Indian Gove
gs bank account, financial
to various financial services like availability of basic savin
literacy, access to credit, insurance and pension.

IA HOTS: HIGHER ORDER THINKING SKILLS QUESTIO

Q. 1. Government established the 'Institutional Sources of

NS

Credit' with certain objectives. Mention the

objectives.
the following objectives:
Ans. Government established the institutional sources with
st rate.
• To provide adequate credit to farmers at a cheaper intere
l productivity and maximising their income.
• To assist small &marginal farmers In raising their agricultura
 --_::: •c
Q. 2. Discuss the importance of credit in rural development.
. .
Ans. In agriculture, due to long time gap between crop sowing and realisation
of i_ncom ~, farmers are In stron
need for credit. Farmers need money to meet Initial inve_stment on seed~, f~rtilize
rs, implements and Oth!
family expenses of marriage, death, religious ceremonies, etc. So,_ credit is
one of t~e important factors
which contribute to agricultural production. An efficient and effective rural
credit delivery system is crucia;
for raising agricultural productivity and incomes.
Q. 3. Explain the role of micro-credit in meeting credit requirements of the
poor.
OR
Discuss briefly the Importance of micro-credit programmes in rural develo
pment.
{C~S~ Sample Paper 2022-23, 2023 (SBJJ/l)J
Ans. Micro-credit or Self-Help Group (SHG) has emerged as the major micro
.
in recent years.
finance programme in the count
~
• Their focus is largely on those rural poor, who have no sustainable access to
the formal banking S}'Ste
So, their target groups comprise of small and marginal farmers, agricultural
and non-agricultu:j
labourers, artisans, etc.
• SHGs promote thrift in small proportions by a minimum contribution from
each member.
• From the pooled money, credit is given to the needy members at reason
able interest rates, which ls
to be repaid in small installments.
• By May 2019, nearly 6 crore women in India have become member in
54 lakh women SHGs. Such
credit provisions are generally referred to as micro-credit programmes. SHGs
have also helped in the
empowerment of women.
Q. 4. Explain the steps taken by the government in developing
rural markets.
Ans. The steps taken by the government in developing rural markets, includ
e the following measures:
1. Regulated Markets: Regulated markets have been organised with a view
to protect the farmers from
the malpractices of sellers and brokers. This policy benefited farmers as well
as consumers.
2. Infrastructural Facilities: The Government aims to provide physical infrast
ructure facilities like roads,
railways, warehouses, godowns, cold storages and processing units.
3. Cooperative Marketing: The aim of cooperative marketing is to realise
fair price for farmers' products.
Cooperative Marketing is a system in which the farmers po_ol their marke
table surplus of crops and
distribute the sale proceeds on the basis of each individual share.
4. Different Policy Instruments: In order to protect the farmers, the govern
ment has initiated the following
policies:
(i) Minimum Support Prices (MSP): To safeguard the interest of farmers, govern
ment fixes the minimum
support prices, which is regarded as an offer price, at which the Government
is willing to buy any
amount of grains from the farmers.
{ii) Maintenance of Buffer Stocks: The Food Corporation of India (FCI) purcha
ses wheat and rice at
the procurement prices, to maintain buffer stock. Buffer stock ensures regula
rity in supply and
stability in prices.
{iii) Public Distribution System (PDS): PDS operates through a netwo
rk of ration shops and fair price
shops, in which essential commodities like wheat, rice, kerosene, etc. are
offered at a price below
the market price, to the weaker sections of the society.
Q. 5. Why is agricultural diversification essential for sustainable livelihoods?
Ans. Agricultural diversification is essential for sustainable livelihoods becaus
e:
{i) There Is greater risk in depending exclusively on farming for livelihood;
(Ii) To provide supplementary gainful employment to rural people and
to enable them to overcome
poverty by earning higher levels of income.

d
 . . .
Q. 6, Critically evaluate the role of the r develo pment m India.
Rapid expansion of th b k.mg syural banking system in the process of rural
e an t h
Af1S,
and employment. After th s em ~d a positive effect on rural farm and non-farm output, income
variety of loans for
meeting their product· e green revolution, credit facilities helped farmers to avail
th of the past.
Even then the followi ion needs. Wi buffer stocks of grains, famines became events
' ng problems are b • faced In the rural banking:
(i) lnsufficien~· Th eing
Iume of rural credit in the country Is still insufficient in comparison to its demand.
'') d t c· e vo be
(11 1na egua e overaoe of inst't 1 f I es to
inadequate as the hav . u iona sources: The institutional credit arrange ment continu
... Y e faded to cover the entire rural farmers of the country.
(~u) lnadequat~ Amount of Sanction: The amount of loan sanctioned to the farmers
is also inadequate.
• •
(1v) Less attention to POor Or margina
•
1&
,armers : Lesser attentio n has been given on the credit require ments
f d f
o nee y armers.
g Overdues·•The probl em of overdues in .
(v) Growin
. agricultural credit continues to be an area of concern.
deliberately
Agnc_u1ture loan default rates have been chronically high. It is alleged that farmers are
and needs
refuSmg to pay back loans, which Is a threat to the smooth functioning of banking system
to be controlled.
reforms. Except
Thus, the exp~nsion and promotion of the rural banking sector has taken a backseat after
ation, lending
the commercial banks, other formal institutions failed to develop aculture of deposit mobiliz
to needy borrowers and effective loan recovery.
To improve the situation:
ship banking
• Banks need to change their approach from just being lenders to building up relation
with the borrowers; and
on of financial
• Farmers should also be encouraged to inculcate the habit of thrift and efficient utilisati
resources.
Q. 7. What do you mean by agricultural marketing?
packaging,
Ans. Agricultural marketing is a process that involves assembling, storage, processing, transportation,
grading and distribution of different agricultural commodities across the country.
Q. 8. Mention some obstacles that hinder the mechanism of agricultural marketing.
Ans. Some of the obstacles that hinder the mechanism of agricultural marketing are:
(i) Agricultural markets are still dominated by the private traders like moneylenders,
rural political leaders,
big merchants and rich farmers.
er cooperatives,
(ii) The quantity ofagricultural products, handled by the government agencies and consum
constitutes only 10%, while the rest is handled by the private sector.
rcial crops are
(iii) Lack of Storage Facility: The facilities available for storing the food grains and comme
far from satisfactory.
have to sell their
(iv) Lack ofTransportation: Due to absence of proper road transportation facilities, they
produce at the village markets itself.
to lack of required
(v) Lack of Market Information: Farmers were often forced to sell at low prices due
information on prices prevailing in markets.
examples.
Q. 9. What are the alternative channels available for agricultural marketing? Give some
Ans. Some of the alternative channels available for agricultural marketing are:
small farmers by
(i) Farmers Market: The concept of farmers market has been started to give boost to the
examples of
providing them direct access to the consumers and eliminating the middlemen. Some
in Pune; (iii)
these channels are: (i) Apnl Mandi in Punjab, Haryana and Rajasthan; (ii) Hadaspar Mandi
Tamil Nadu).
Rythu Baza rs In Andhra Pradesh and Telangana; (iv) Uzhavar Sandies (farmers market in
tional fast food
(Ii) Alliance with National and Multinational Companies: Several national and multina
chains are Increasingly entering Into contracts/alliances with farmers.
the desired
• They encourage the farmers ·to cultivate farm products (vegetables, fruits, etc.) of
quality.

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 (ii) Lack of infrastructure and marketing facilities: Organic farming faces problems of inadequate
infrastructure and marketing facilities.
(iii) Low Yield: Organic farming has a lesser yield in the initial years as compared to modern agricultural
farming. As a result, small and marginal farmers find difficult to adapt to large-scale production.
(iv) Shorter food life: Organic produce has a shorter shelf life as compared to sprayed produce.
(v) Limited choice of crops: The choice in production of off-season crops is quite limited in organic farming.

Q. 17. Enlist some problems faced by farmers during the initial years of organic farming.
{CBSE, Sample Paper 2022-23)
Ans. Some of the problems faced by farmers during the initial years of organic farming are:
(i) In the initial years, organic farming has a lesser yield as compared to modern agricultural farming. As
a result, small and marginal farmers find difficult to adapt to large-scale production.
(ii) Organic farming faces problems of inadequate infrastructure and marketing facilities.
(iii) Organic produce has a shorter shelf life as compared to sprayed produce.
(iv) The choice in production of off-season crops is quite limited in organic farming.
Q. 18. ''Jan-Ohan Yojana helps in the rural development." Do you agree with this statement? Explain.
Ans. I totally agree with the given statement. The Pradhan Mantri Jan-Ohan Yojana (PMJOY) is a financial inclusion
scheme launched by Indian Government. The term 'financial inclusion' means that more and more people
should be included in the country's financial system and avail financial services. In a country like India, there
are millions of individuals living in rural areas that do not have a bank account and cannot avail the benefits
that a banking account can provide. The Jan-Ohan Yojana aims to help such persons and make sure they can
get affordable financial products like bank accounts, remittances, credit services, pensions and insurance.
Account holders under Jan-Ohan Yojana are entitled to get f 1-2 lakh accidental insurance coverage and
overdraft facilities upto f 10,000 and get their wages, old age pension and other social security payments
of the government transferred to bank accounts. There is no need to keep minimum bank balance. It has
indirectly promoted thrift habit and led to efficient allocation of financial resources in rural areas.