CBSE Class 11 Economics Rural Development Notes

Rural Development

Concept of Rural Development

Rural development focuses on action for the development of areas that are lagging behind in the overall development of the village economy. Areas which need development are:

• Development of human capital resources including education & health services.
• Land reforms
• Development of productive resources of each locality.
• Infrastructure development.
• Opportunities to diversify in non farm activities.
• Special measures for alleviation of poverty.

Rural Credit

Rural credit means credit for the farming families.

Need

Most farming families in India are small & marginal holders having small amount of savings. Also the gestation between crop sowing & realization of income after production is quite long. Hence, farmers need money for buying various inputs.

Sources of Rural Credit

The various sources can be classified into two groups:

Non Institutional Sources or Informal Sector: it includes money lenders, traders, landlords, friends, relatives etc.

Institutional Sources: it includes:

• Co- operative Credit Societies: They provide adequate credit at reasonable rate of interest. They also provide financial guidance in the planning of agricultural operations, assistance in raising crops & its productivity. Currently, cooperatives account for 43% share in credit flow of agricultural credit.
• Regional Rural Banks (RRBs): These were set up in 1976 to provide adequate credit at cheaper rates. Nearly, 90% of the loans of RRBs are provided to the weaker sections.
• Commercial Banks: Commercial banks provide both direct & indirect loans for the agriculture & allied activities for a maximum period of 15 years.
• National Bank for Agriculture & Rural Development (NABARD): It was set up in July 1982 with an authorized share capital of Rs.500crores on a 50- 50 basis between RBI & the Union govt. Deputy Governor of RBI is the chairman of NABARD. It gives loan to state cooperatives, RRB & land development banks. It coordinates the activities of govt. in the development of small scale industries, village industries & rural craft.
• Self Help Groups (SHGs): The SHGs promote thrift among rural households by minimum contribution from each member. From the pooled money, credit needs are fulfilled. The members have to repay the credit in small installments at low rate of interest. By March 2003, mare than 7lakh SHGs have been reported. They have helped in empowerment of women. Such credit provisions are generally referred as Micro Credit Programs.

Critical Appraisal of Rural Banking:

• Rapid expansion of banking system had a positive impact on rural farm & non farm output, income & employment.
• It helped farmers to avail services & credit facilities for meeting their production needs.
• We have been able to achieve food security. But at the same time there are certain defaults observed in this system. These are:

Agricultural Market System

Agricultural marketing is a process that involves the assembling, storage, processing, transportation, packaging, grading & distribution of different agricultural commodities. Defects in Agricultural Marketing

• Malpractices in unregulated markets.
• Lack of information on prices prevailing in markets.
• Inadequate storage facilities.
• Lack of adequate finance.
• Inadequate means of transportation & communications.
• Lack of appropriate link between marketing & processing cooperatives & inefficient financial management.

Steps undertaken by the Govt. for Improving Agricultural Marketing

• Regulation of market to create orderly & transparent marketing conditions to prevent farmers form exploitation.
• Provision of physical infrastructure like road, railways, warehouses, godowns, cold storages & processing units.
• Cooperative marketing for getting fair prices for the farmer product. Member farmers sell their surplus to the cooperative societies which substitute collective bargaining in place of individual bargaining.
• The policy instruments like fixation of minimum support price (MSP), maintenance of buffer stock & distribution of food grains through PDS.

Agricultural Diversification in India

Diversification is an emerging challenge in the context of rural development. It has two aspects:

• Diversification of Crop Production- it includes growing of variety of crops i.e. multiple cropping system.
• Diversification of Productive Activity- it includes shift from agriculture to other activities like livestock, poultry, fisheries etc.

Q. Why is agricultural diversification essential for sustainable livelihoods?
A. The need for diversification arises from the fact that there is a greater risk in depending exclusively on farming for livelihood. Diversification towards new areas is necessary not only to reduce the risk from agricultural sector but also to provide productive sustainable livelihood options to rural people. It also promotes ecological balance.

Q. Explain the role of non farm employment in promoting rural diversification.
A. Much of the agricultural employment activities are concentrated in the Kharif season. But during the Rabi season, in areas where there are inadequate irrigation facilities, it becomes difficult to find gainful employment. Therefore expansion into other sectors is essential to provide supplementary gainful employment & realizing higher levels of income for rural people to overcome poverty & other problems.

• The water bodies consisting of sea, oceans, rivers, lakes, etc. are an integral & life giving source for the fishing community. 
• In India, fish production from inland sources contributes about 49% & the balance of 51% is from marine sources (seas & oceans). 
• Total fish production accounts for 1.4% of GDP. 
• Kerala, Tamil Nadu, Maharashtra & Gujarat are the major producers of marine products. 
• Major problems faced by fishermen are: 

• The main horticulture crops are fruits, vegetables, flowers, medicinal & aromatic plants, spices & plantation crops. 
• The period between 1991- 2003 is called ‘Golden Revolution’ as in this period; planned investment in horticulture became highly productive. 
• India has emerged a world leader in producing fruits like mangoes, bananas, coconut, spices etc. 
• Flowers harvesting, nursery maintenance, hybrid seed production & tissue culture & food processing are highly profitable for rural women. 

Important Notes for Class 11 Economics Chapter 6 Indian Rural Development

Introduction

Agriculture is the major source of livelihood in the rural sector. Mahatma Gandhi once said that the real progress of India did not mean simply the growth and expansion of industrial urban centres but mainly the development of the villages.

What is Rural Development?
Rural development is a comprehensive term. It 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 which are challenging and need fresh initiatives for development in rural India include ff Development of human resources including
- Literacy, more specifically, female literacy, education and skill development
- Health, addressing both sanitation and public health
- Land reforms
- Development of the productive resources of each locality
- 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
- 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.

Credit and Marketing in Rural Areas

Credit
Growth of rural economy depends primarily on infusion of capital, from time to time, to realise higher productivity in agriculture and non-agriculture sectors.
At the time of independence, moneylenders and traders exploited small and marginal farmers and landless labourers by lending to them on high interest rates and by manipulating the accounts to keep them in a debt-trap.
A major change occurred after 1969 when India adopted social banking and multiagency approach to adequately meet the needs of rural credit.
Later, the National Bank for Agriculture and Rural Development (NABARD) was set up in 1982 as an apex body to coordinate the activities of all institutions involved in the rural financing system.
The institutional structure of rural banking today consists of a set of multi-agency institutions, namely, commercial banks, regional rural banks (RRBs), cooperatives and land development banks
Recently, Self-Help Groups (henceforth SHGs) have emerged to fill the gap in the formal credit system because the formal credit delivery mechanism has not only proven inadequate but has also not been fully integrated into the overall rural social and community development.

Agricultural Market System

Agricultural marketing is a process that involves the assembling, storage, processing, transportation, packaging, grading and distribution of different agricultural commodities across the country.
Prior to independence, farmers, while selling their produce to traders, suffered from faulty weighing and manipulation of accounts.
Four such measures that were initiated to improve the marketing aspect.
- The first step was regulation of markets to create orderly and transparent marketing conditions.
- Second component is provision of physical infrastructure facilities like roads, railways, warehouses,godowns, cold storages and processing units.
- The current infrastructure facilities are quite inadequate to meet the growing demand and need to be improved. Cooperative marketing, in realising fair prices for farmers’ products, is the third aspect of government initiative.
- The fourth element is the policy instruments like
I. Assurance of minimum support prices (MSP) for agricultural products
II. Maintenance of buffer stocks of wheat and rice by Food Corporation of India.
III. Distribution of food grains and sugar through PDS.

Sustainable Development and Organic Farming

In recent years, awareness of the harmful effect of chemical-based fertilisers and pesticides on our health is on a rise.
Conventional agriculture relies heavily on chemical fertilisers and toxic pesticides etc., which enter the food supply, penetrate the water sources, harm the livestock, deplete the soil and devastate natural eco-systems

Benefits of Organic Farming: -
Organic agriculture offers a means to substitute costlier agricultural inputs (such as HYV seeds, chemical fertilisers, pesticides etc.) with locally produced organic inputs that are cheaper and thereby generate good returns on investment.
Organic agriculture also generates income through exports as the demand for organically grown crops is on a rise.

Conclusion

It is clear that until and unless some spectacular changes occur, the rural sector might continue to remain backward.
There is a greater need today to make rural areas more vibrant through diversification into dairying, poultry, fisheries, vegetables and fruits and linking up the rural production centres with the urban and foreign (export) markets to realise higher returns on the investments for the products.
Moreover, infrastructure elements like credit and marketing, farmer friendly agricultural policies and a constant appraisal and dialogue between farmers’ groups and state agricultural departments are essential to realise the full potential of the sector.
Today we cannot look at the environment and rural development as two distinct subjects. There is need to invent or procure alternate sets of eco-friendly technologies that lead to sustainable development in different circumstances.