Meaning:-

Rural development is a comprehensive term that focuses on action for the development of areas that
are lagging behind in the overall development of the village economy.

Focus areas of rural development:-

i. Development of Human resource by focusing on health, education, skill development,
sanitation and public health.
ii. Development of productive resources in each locality.
iii. Infrastructure development like electricity, irrigation, credit, marketing, transport facilities,
agriculture research and information technology.
iv. Land reforms
v. Special measures for alleviation of the poverty and raising standard of living of the weaker
sections

Process of rural development:-

Rural development aims at comprehensive change and improvement of rural life in all aspects.
Some of the areas, which are challenging and need fresh initiatives for development in India
include:

1. Development of Human Resources: The quality of the human resource needs to be improved
through following measures:
• Proper attention to literacy (specifically on female literacy), education and skill development; and
• Better and more affordable Health facilities for the physical growth and sanitation facilities at
workplaces and homes.

2. Development of Infrastructure: It involves:

• Improvement in electricity, irrigation, credit, marketing and transport facilities (including
construction of village roads and feeder roads to nearby highways);
• Better facilities for agriculture research and extension and information dissemination.

3. Land Reforms: It includes the following objectives:

• Elimination of exploitation in land relations;
• Actualisation of the goal of 'land to the tiller's;
• Improvement of socio-economic conditions of rural poor by widening their land base;
• Increasing agricultural productivity and production.

4. Alleviation of Poverty: As stated earlier, around 22% of total population is still below the poverty
line. So, there is a serious need for taking serious steps for alleviation of poverty and bringing
significant improvement in living conditions of weaker sections.

5. Development of the productive resources of each locality to enhance opportunities of

employment (particularly other than farming).

A. Credit in rural areas

Need for rural credit:-
• The gestation time between crop sowing and realisation of income after harvest is quite long.
• This forces the farmers to borrow money to meet their initial investment on seeds,
fertilisers and other family expenses of day-to-day nature as well as for religious
ceremonies.

Non-Institutional Sources:- Non-institutional sources have been the traditional source of

agricultural credit in India. The major non-institutional sources are:

1. Moneylenders: From the very beginning, moneylenders have been advancing a major share of
farm credit. The peasants are exploited through exorbitant (very high) rates of interest. Quite
frequently, their accounts are manipulated without their knowledge.

2. Relatives: Cultivators borrow funds from their own relatives in times of crisis. These loans are a
kind of informal loans and carry no interest and are normally returned after harvest.

3. Traders and commission agents: They provide credit to the peasants on the mortgage of crops at
high rates of interest, on a condition, that the crops will be sold to them at low prices.

4. Rich Landlords: Small as well as marginal farmers and tenants, take loans from landlords, for
meeting their financial requirements. Landlords also charge high rates of interest on such loans
and exploit the peasants, particularly small farmers and tenants.

Institutional Sources:-
The various non-institutional sources used to exploit small and marginal farmers 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 the institutional credit approach
through various agencies.

Government established the institutional sources with the following 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.

Some of the important institutional sources of agricultural credit are:-

1. Co-operative Credit: The primary objective of the co-operatives is to liberate the Indian
peasantry from the clutches of moneylenders and to provide them credit at low rates of interest.

2. Land Development Banks: They provide credit to the farmers against the mortgage of their
lands. Loans are provided for permanent improvement of land, purchasing agricultural implements
and for repaying old debts.

3. Commercial Bank Credit: Initially, commercial banks played a marginal role in advancing rural
credit. However, after nationalisation in 1969, they expanded their branches in rural areas and
started directly financing the farmers.

4. Regional Rural Banks: They are opened up in those areas where there are no banking facilities.
Their main objective is to provide credit and other facilities, especially to small and marginal
farmers, agricultural labourers, artisans and small entrepreneurs in rural areas.

5. National Bank for Agricultural and Rural Development (NABARD): It is the Apex Bank which
coordinates the functioning of different financial institutions, working for expansion of rural credit.
• Its objective is to promote health and strength of credit institutions (namely, cooperatives,
commercial banks and regional rural banks).
• Besides providing finance to credit institutions, NABARD also provides financial assistance to the
non-farm sector, to promote integrated rural development and prosperity of backward rural areas.
6. Self-Help Group (SHG) Bank Linkages Programme for Micro Finance: SHG has emerged as the
major micro finance programme in the country in recent years.
• Their focus is largely on those rural poor, who have no sustainable access to the formal banking
system.
• So, their target groups comprise of small and marginal farmers, agricultural and non-agricultural
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 reasonable interest rates, which
is to be repaid in small instalments.
• By March 2012, more than forty-three lakh SHGs had reportedly been credit linked.
• SHGs have also helped in the empowerment of women. However, the borrowings are mainly
confined to consumption purposes and negligible proportion is borrowed for productive purposes.

Positive effects of rural banking:-

i. Productive lending by institutional sources have increased farm and non-farm output,
income and employment.
ii. It helped farmers to avail credit facilities and a variety of loans for meeting their
production needs.
iii. With increase in farm output, India has achieved food security and has abundant buffer stock
of grains.

Problems of rural banking:-

i. Formal institutions have failed to develop a culture of thrift and deposit mobilisation
ii. It is proven to be totally inadequate
iii. It is not fully integrated into the overall rural, social and community development
iv. Go to requirement of collateral, last proportion of quote rural households are excluded
v. Due to lending to unworthy borrowers, there is lack of effective loan recovery. As a result,
loan default rates are very high.

Suggestions:-
i. Banks need to change their approach from just being lenders to building up relationship
banking with the borrowers.
ii. The need to inculcate the habit of thrift among the rural households.
iii. Farmers should be taught about efficient utilisation of financial resources.

B. Agricultural Marketing
Meaning:-
It is a process that involves assembling, storage, processing, transportation, packaging, grading and
distribution of different agricultural commodities across the country.

Traditional system and problems:-

i. Prior to independence, farmers used to sell their produce the local traders or money lenders
ii. This system suffered from under weighing and manipulation of accounts
iii. In the absence of information about prevailing prices, the farmers were forced to sell their
produce at low prices.
iv. There was complete absence of storage facilities and this would force farmers for distress
sale

Measures initiated by the government:-

1. Regulation of market:-
• This was done to create orderly and transparent marketing conditions.
• Each regulated market has representatives of traders, farmers and the government for
transparent transactions.
• However, in India 27,000 rural periodic market are yet to be regulated.

2. Physical infrastructure:-
• Provision of physical infrastructure facilities like roads, railways, warehouses, cold storages
and processing units are being developed by the government.
 • However, much needs to be done as the current infrastructure facilities are quite
inadequate to meet the growing demand.

3. Cooperative marketing:-
• For realising fair prices for the farmers’ products, cooperating farming is being promoted.
• Milk cooperatives in Gujarat have been successful in changing the landscape of rural
economy there.
• Cooperatives have received set back due to:
i. Inadequate coverage of farmer members
ii. Lack of link between marketing and processing cooperatives
iii. Inefficient financial management

4. Policy instruments:-
• The government has introduced policy instruments like,
i. Assurance of minimum support price for agricultural products to the farmers
ii. Maintenance of buffer stock of wheat and rice by Food Corporation of India (FCI)
iii. Distribution food games and sugar through public distribution system
• However, farmers insist that the minimum support price should be a legal guarantee and
should cover all the crops.

Conclusion:-
• Despite government intervention, private trade by money lenders, rural political elites, big
merchants and rich farmers still dominates agricultural markets.
• Some scholars argue that commercialization of agriculture will result in higher incomes for
the farmers provided the government intervention is restricted.

Emerging alternative marketing channels:-

• Direct sale by farmers to consumers

This can be done through alternative channels like Apni Mandi In Punjab, Haryana and
Rajasthan, Hadaspar Mandi in Pune, Uzhavar Sandis in Tamil Nadu, Rythu Bazaar in Andhra
Pradesh.

• Contract farming
o Several national and multinational fast-food chains are entering into contracts with
farmers to encourage them to cultivate farm products of the desired quality.
o For this, they not only provide seeds and other inputs but also guarantee purchase
the produce at pre-determined prices.
o This helps in reducing the price risk to the farmers and also in expanding the markets
for farm products.

C. Diversification of Agriculture
Aspects:-
• Change in cropping pattern i.e., growing new crops or growing crops in new seasons.
• Shift in workforce from agriculture to allied activities like livestock, poultry, fisheries etc.

Need for diversification:-

i. There is a greater risk in depending exclusively on farming for livelihood.
ii. Diversified activities provide productive sustainable livelihood options to rural people.
iii. It provides gainful employment during the Rabi season especially in areas where there are
inadequate irrigation facilities.
iv. It helps to address the problem of disguised unemployment in the agriculture sector.

Segments of non-farm economy:-

• The dynamic sub-sectors in non-farming economy include:
o Agro processing industries like food processing industries, leather industries
o Tourism industry
o Traditional home-based industries like pottery, crafts and handlooms
• Despite the potential, these sectors seriously lack infrastructure and support services.

Animal Husbandry/ Livestock farming:-

Scope:-
• Farming communities traditionally use mixed ‘crop- livestock’ farming system.
• Livestock sector provides alternative livelihood options to over 70 million small and marginal
farmers including landless labourers.
• A significant number of women also find employment in livestock sector.
• Meet, eggs, wool and other by products are also emerging as important productive sectors
for diversification.

Benefits:-
i. It provides increased stability of income especially to small and landless farmers.
ii. It also provides food security.
iii. The nutritious value of the food increases due to high protein content of meat and eggs.
iv. The draught animals also serve as means of transport.
v. It also serves as source of fuel as it provides raw material for setting up of global gas plant.

Distribution of livestock in India:-

i. Poultry accounts for the largest share of 61%.
ii. Cattle and buffaloes account for 22%.
iii. Sheep and goats for 16%.
iv. Other animals like camels, horses, ponies, asses and mules constitute the rest.

Operation Flood:-
• It is a system whereby all the dairy farmers can pool the milk produced at a central location.
• On the basis of quality, it is then classified under different grades.
• The graded milk is processed and marketed to urban centres through cooperatives.
• Farmers are assured of a fair price and income from the supply of milk to urban centres.
• Milk production in the country is increased by more than eight times between 1951 and 2014
due to Operation Flood.
• Gujarat State is held as a success story in milk cooperatives.

Fisheries:-

Sources:-
• Marine sources -includes seas and oceans and account for 36% of the total value of fish
production.
• Inland sources - include rivers, lakes, aquatic ponds, streams etc. and account for about 64%
of the total value of fish production.
• West Bengal, Andhra Pradesh, Kerala, Gujarat and Maharashtra are the major fish
producing states.

Contribution:-
Total fish production accounts for 0.9% of the total GDP of India.

Problems:-
• A large number of fishing families are poor.
• This results in unemployment, low per capita income, indebtedness, high rate of illiteracy
and absence of mobility.

Role of fisherwoman:-
Though not engaged in active fishing, fisherwomen account for 60% of the workforce in export
marketing and 40% of the workforce in internal marketing of fishery products.

Suggestions:-
i. Credit facility should be increased through cooperatives and self-help groups.
ii. Problems leading to overfishing and pollution need to be regulated and controlled.
iii. Welfare programmes for the fishing communities should be designed to provide long term
gains and sustainable livelihoods.

Horticulture:-

Common crops:-
Horticulture crops includes fruits, vegetables, tuber crops, flowers, medicinal and aromatic plants,
spices and plantation crops
Allied activities:-
Flower harvesting, nursery maintenance, hybrid seed production, tissue culture, propagation of
fruits and flowers and food processing.

Contribution:-
i. Horticulture sector contributes nearly one third of the value of agriculture output.
ii. It contributes to 6% of gross domestic product of India.
iii. India is the world leader in producing variety of fruits like mangos, bananas, coconuts,
cashew nuts and a variety of spices.
iv. India is the second largest producer of fruits and vegetables.

Suggestions:-
• Investment is required in infrastructure facilities like electricity, cold storage system and
marketing linkages.
• Small scale processing units should be encouraged
• Technology should be Improved and disseminated for everyday use.

Role of Information technology:-

Achieving food security:-

Governments can predict areas of food insecurity using appropriate information and software tools
and make combat plans.

Dissemination of information:-
Information technology can disseminate information important for the agriculture sector like
emerging technologies, prices, weather and soil conditions for growing different crops.

Releasing creative potential:-

The traditional wisdom and knowledge embedded in the society can be assimilated and its creative
potential can be realised through information technology.

Employment generation:-
It has the potential of employment generation in rural areas.

Sustainable development (Organic Farming):-

Perils of conventional agriculture

It relies heavily on chemical fertilisers and toxic pesticides which can:-
• enter the food supply
• penetrate in the water sources
• harm the livestock
• deplete the soil
• devastate the natural ecosystem

Benefits of Organic Farming:-

1.High return on investment:-

It is a means to substitute costlier agriculture inputs such as high yielding variety of seeds, chemical
fertilisers, pesticides
with locally produced cheap organic inputs.

2. Export potential:-
It generates income through exports as the demand for organically grown crops is increasing on the
world stage.

3. Nutritious value:-
Organically grown food has more nutritious value then chemical farming as it provides us with
healthy chemical free foods.

4. Labour intensive:-
it is more suitable for India as it requires more labour inputs than conventional farming.

5. Eco friendly:-
Organic crops are pesticide free and produced on an environmentally sustainable way.

Problems associated with Organic Farming:-

1.Lack of awareness:-
There is lack of awareness and willingness on the part of the farmers to new technology.

2. Limited supply of inputs:-

Whereas industries producing inputs for green revolution are in abundance, inputs required for
organic farming are in short supply.

3. Marketing problems:-
Organic foods require certification and quality assurance. Small and marginal Indian farmer finds it
difficult obtain them.

4. Lower yield:-
The yields from organic farming are less than modern farming especially in the initial years. Therefore
farmers are not keen to adopt it on a large scale.

5. Shorter shelf life:-

Organic produce may have more blemishes and a shorter shelf life than sprayed products.

6. Limited off season crops:-

Choices in production of off-season crops is quite limited in organic farming.