CHAPTER - 6
RURAL DEVELOPMENT
Rural development essentially focuses on action for the development of areas that are lagging
behind in the overall development of the village economy. Some of the areas on which it focusses on
include:
i) Development of human resources including:-
● health (both sanitation and public health) as well as
● literacy, education and skill development especially female.
ii) Land reforms
iii) Development of the productive resources of each locality
iv) Infrastructure development like electricity, irrigation, credit, marketing, transport facilities
including construction of village roads and feeder roads to nearby highways, facilities for agriculture
research and extension, and information dissemination.
v) Special measures for alleviation of poverty and bringing about significant improvement in the living
conditions of the weaker sections of the population emphasising access to productive employment
opportunities
All this means that people engaged in farm and non-farm activities in rural areas have to be provided with
various means that help them increase the productivity. They also need to be given opportunities to
diversify into various non-farm productive activities such as food processing. Enabling them better and
more affordable access to healthcare, sanitation facilities at workplaces and homes and education for all
would also need to be given top priority for rapid rural development.
Factors That Impede Rural Development:
⮚ Although the share of agriculture sector’s contribution to GDP was on a decline, the population
dependent on this sector did not show any significant change.
⮚ After the introduction of reforms, the growth rate of agriculture sector declined to about 3
per cent per annum during the 1991-2012, which was lower than the earlier years.
♦ The major reason for this setback in the agricultural sector and hence rural
development was decline in public investment since 1991. In addition the problem
was further compounded by
♦ inadequate infrastructure,
♦ lack of alternative employment opportunities in the industry or service sector,
♦ increasing casualisation of employment etc.
The impact of this phenomenon can be seen from the growing distress witnessed among farmers
across different parts of India. During 2014-15, the GVA growth rate of agriculture and
its allied sectors was less than one per cent.
Some of the crucial aspects of rural India are:
i. Agricultural credit
ii. Agricultural marketing systems,
iii. Agricultural diversification and
iv. The role of organic farming in promoting sustainable development.
Credit And Marketing In Rural Areas
, Agricultural Credit: Higher productivity in agriculture and non-agriculture sectors can be realised
through, adequate and timely availability of capital. As the time gestation (period between crop
sowing and realisation of income after production) is quite long, farmers borrow from various sources
to meet their productive needs e.g.initial investment on seeds, fertilisers, implements as well as
unproductive needs e.g. expenses of marriage, death, religious ceremonies etc.
Sources of Agricultural Credit: They can be divided into two broad categories
i) Non-institutional/informal credit channel a) money lenders
b) b) traders
c) c) friends & relatives
ii) Institutional Structure of Rural Banking: A set of a) commercial banks
multi-agency institutions b) Regional Rural Banks (RRB)
c) Cooperatives
d) Land Development Banks(LDB)
e) NABARD
Self help Groups - Micro- credit programme
⇒ At the time of independence, Moneylenders and traders were a major source of credit to the
rural people. However they exploited small and marginal farmers and landless labourers: i)
lending to them on high interest rates and ii) manipulated the accounts to keep them in a
debt-trap.
⇒ Following are the major changes that occurred after 1969 which were expected to make
available adequate credit at cheaper rates:
a. India adopted social banking and multi- agency approach to adequately meet the needs of rural
credit.
b. In 1982 the National Bank for Agriculture and Rural Development (NABARD) was set up as an apex
body to coordinate the activities of all institutions involved in the rural financing system.
c. The Green Revolution was a harbinger that brought about major changes in the credit system as it
led to the diversification of rural credit towards production-oriented lending.
The formal credit delivery mechanism suffered from the following shortcomings:
i) Inadequate credit availability
ii) Unsuccessful in fully integrating into the overall rural social and community development.
iii) Collateral requirement automatically rendered the credit network out of reach for a vast
proportion of poor rural households
d. To fill this gap/shortcoming in the formal credit system and supplement the credit delivery
mechanism towards reaching the poor in a cost effective and sustainable manner has recently seen
the emergence of Self-Help Groups (SHGs). They have played an important role towards:
i) promoting thrift in small proportions by ensuring a minimum contribution from each member.
ii) Providing credit from the pooled money,to the needy members.
iii) Giving loans, repayable in small instalments at reasonable interest rates.
iv) Empowerment of women.
By May 2019, nearly 6 crore women in India have become member in 54 lakh women SHGs. About Rs
10-15,000 per SHG and another Rs 2.5 lakh per SHG as a Community Investment Support Fund (CISF) are
RURAL DEVELOPMENT
Rural development essentially focuses on action for the development of areas that are lagging
behind in the overall development of the village economy. Some of the areas on which it focusses on
include:
i) Development of human resources including:-
● health (both sanitation and public health) as well as
● literacy, education and skill development especially female.
ii) Land reforms
iii) Development of the productive resources of each locality
iv) Infrastructure development like electricity, irrigation, credit, marketing, transport facilities
including construction of village roads and feeder roads to nearby highways, facilities for agriculture
research and extension, and information dissemination.
v) Special measures for alleviation of poverty and bringing about significant improvement in the living
conditions of the weaker sections of the population emphasising access to productive employment
opportunities
All this means that people engaged in farm and non-farm activities in rural areas have to be provided with
various means that help them increase the productivity. They also need to be given opportunities to
diversify into various non-farm productive activities such as food processing. Enabling them better and
more affordable access to healthcare, sanitation facilities at workplaces and homes and education for all
would also need to be given top priority for rapid rural development.
Factors That Impede Rural Development:
⮚ Although the share of agriculture sector’s contribution to GDP was on a decline, the population
dependent on this sector did not show any significant change.
⮚ After the introduction of reforms, the growth rate of agriculture sector declined to about 3
per cent per annum during the 1991-2012, which was lower than the earlier years.
♦ The major reason for this setback in the agricultural sector and hence rural
development was decline in public investment since 1991. In addition the problem
was further compounded by
♦ inadequate infrastructure,
♦ lack of alternative employment opportunities in the industry or service sector,
♦ increasing casualisation of employment etc.
The impact of this phenomenon can be seen from the growing distress witnessed among farmers
across different parts of India. During 2014-15, the GVA growth rate of agriculture and
its allied sectors was less than one per cent.
Some of the crucial aspects of rural India are:
i. Agricultural credit
ii. Agricultural marketing systems,
iii. Agricultural diversification and
iv. The role of organic farming in promoting sustainable development.
Credit And Marketing In Rural Areas
, Agricultural Credit: Higher productivity in agriculture and non-agriculture sectors can be realised
through, adequate and timely availability of capital. As the time gestation (period between crop
sowing and realisation of income after production) is quite long, farmers borrow from various sources
to meet their productive needs e.g.initial investment on seeds, fertilisers, implements as well as
unproductive needs e.g. expenses of marriage, death, religious ceremonies etc.
Sources of Agricultural Credit: They can be divided into two broad categories
i) Non-institutional/informal credit channel a) money lenders
b) b) traders
c) c) friends & relatives
ii) Institutional Structure of Rural Banking: A set of a) commercial banks
multi-agency institutions b) Regional Rural Banks (RRB)
c) Cooperatives
d) Land Development Banks(LDB)
e) NABARD
Self help Groups - Micro- credit programme
⇒ At the time of independence, Moneylenders and traders were a major source of credit to the
rural people. However they exploited small and marginal farmers and landless labourers: i)
lending to them on high interest rates and ii) manipulated the accounts to keep them in a
debt-trap.
⇒ Following are the major changes that occurred after 1969 which were expected to make
available adequate credit at cheaper rates:
a. India adopted social banking and multi- agency approach to adequately meet the needs of rural
credit.
b. In 1982 the National Bank for Agriculture and Rural Development (NABARD) was set up as an apex
body to coordinate the activities of all institutions involved in the rural financing system.
c. The Green Revolution was a harbinger that brought about major changes in the credit system as it
led to the diversification of rural credit towards production-oriented lending.
The formal credit delivery mechanism suffered from the following shortcomings:
i) Inadequate credit availability
ii) Unsuccessful in fully integrating into the overall rural social and community development.
iii) Collateral requirement automatically rendered the credit network out of reach for a vast
proportion of poor rural households
d. To fill this gap/shortcoming in the formal credit system and supplement the credit delivery
mechanism towards reaching the poor in a cost effective and sustainable manner has recently seen
the emergence of Self-Help Groups (SHGs). They have played an important role towards:
i) promoting thrift in small proportions by ensuring a minimum contribution from each member.
ii) Providing credit from the pooled money,to the needy members.
iii) Giving loans, repayable in small instalments at reasonable interest rates.
iv) Empowerment of women.
By May 2019, nearly 6 crore women in India have become member in 54 lakh women SHGs. About Rs
10-15,000 per SHG and another Rs 2.5 lakh per SHG as a Community Investment Support Fund (CISF) are
