Unit 5

Introduction
❖ Crucial for growth of rural economy
❖ Addressing the problems of agricultural labourers
❖ Inclusive national development
❖ Balanced industrialization
❖ Preservation of India’s rich culture
❖ Promoting Micro and Small Enterprises
❖ Women empowerment
❖ Achieving Sustainable Development Goals (SDGs)
Rural industrialization: Key to eradicate poverty

❖Industrialization in rural economy can generate high, productive

employment which could lift a majority of families from poverty:
❖ As per RBI data, states with higher reduction in rural unemployment (Goa, Himachal
Pradesh, Tripura, Kerala and Punjab) excelled in poverty reduction between 2004-05 to
2011-12.
❖Case study: Rural transformation model of Kerala:
❖ Historically, Kerala was characterized by a high incidence of rural non- agricultural
employment, particularly rural manufacturing, given its rich natural resource base.
❖ Some of these resources were processed into industrial goods, largely linked to external
markets.
❖ Due to the economic diversification in rural areas more than 100 villages were
transformed into urban areas during 1971-91
Rural industrialization: Key to eradicate poverty

❖Case Study: Women empowerment through dairy enterprises

❖ India is the largest producer accounting for about 23% of global milk production. Milk is
our biggest agri-commodity in terms of value contributing 5% of the national economy.
❖ The credit for this feat goes largely to women dairy farmers who represent 70% of
workforce in India's dairy sector and more than a third of the members of dairy
cooperatives.
❖ Involvement of women in dairy business has enabled them to become financially
independent and self-driven micro-entrepreneur.
Rural Industrialization amid changing climate: What is
needed to sustain the sustainability of rural industries?

❖Although traditional rural industries have less carbon footprint, their

nature of sustainability depends on economic and rural development
policies.
❖Vietnam is a case in point where progressive but unchecked
industrialization in rural areas generated environmental challenges.
❖ The renovation policy in Vietnam led to an accelerating growth of craft villages
and industrial clusters in rural areas increasing rural income, significant
reduction in poverty, etc.
❖ However, the rapid expansion of craft villages and intense market competition
without a sound environmental policies has led to environmental pollution and
resource depletion like deforestation particularly around the Red River Delta.
This has significant negative impact on climate change mitigation efforts.
Rural Industrialization amid changing climate: What is
needed to sustain the sustainability of rural industries?

❖The above case is a reminder of the need for climate friendly

industrialization in rural areas in India as well.
❖But what prevents rural industries to become climate friendly?
❖ Rural policies on climate change tend to have disproportionate focus on
agriculture neglecting other industries.
❖ Smaller administrations often lack knowledge, ability, skills, and funds to
manage clean energy transitions.
❖ Limited economic resources and remoteness reduces the choices for clean energy
adoption.
❖ Low quality physical and digital infrastructure.
Rural Industrialization amid changing climate: What is
needed to sustain the sustainability of rural industries?

❖Therefore, rural industrialisation policy must strive for:

❖ Building local capacity for net zero emission
❖ Fostering renewable energy
❖ Promoting sustainable land management
❖ Higher valorisation of ecosystem services
❖ Accelerating the circular and bio-economy
❖ Decarbonising transport
❖Rural industries existed in India since the ancient times. However,
despite the attached significance, these industries have faced a period
of decline particularly during the British era. This has significantly
shaped the government’s policy framework for these industries after
independence.
 Cottage Industries vs Small
Scale Industries (SSI)

❖Cottage Industries are usually established in cottages or dwelling

places, uses family labor and depend on traditional techniques of
production.
❖Small Scale Industries (SSI) are industries in which manufacturing,
production and rendering of services are done on a small or micro scale.
The investment limit is up to Rs.10 crore and annual turnover is up to
Rs.50 crore and SSIs use both modern and traditional techniques.
❖Development of cottage and small industries is primarily the
responsibility of State Governments. However, the Ministry of Micro,
Small and Medium Enterprises (MSME) supplements the efforts of
State Governments by implementing a number of schemes.
 Rural Industrialization in action

❖With the above policy support and enabling environment, SSIs functioning in
non-farm activities are today an engine of growth in rural economy.
❖Economic contribution
❖ Share in GDP: Of the total net value added (NVA) in the economy, 47.7% comes from
rural India.
❖ Rural Income: About two third of rural income is generated in non-agricultural
activities.
❖ Share in employment generation: According to the 38th round of NSS and PLFS
(2018-19) reports:
❖ Contribution of rural non-agricultural employment is 42% now (up from 19% in
1983).
❖Resilience from outer shocks: According to the Rural Business Confidence
Index by the Confederation of Indian Industry, despite COVID-19 pandemic
during FY 2018-19 to FY 2020-21:
❖ Disbursement of retail and commercial loans in rural India witnessed a growth of
30% and 100% by volume respectively
 What are the major hurdles in the path of Rural
Industries to flourish?

❖ The Protection Syndrome

❖Access to Credit
❖ For instance, against the total estimated credit requirements of Rs.9,750 crore, hardly Rs.100 crore
have reached rural artisans.
❖Inadequate marketing infrastructure
❖Procuring Raw Materials
❖Technological barriers
❖Human resource challenges
 Sambalpur sarees of Odisha: India’s
glory, weavers ordeal
❖ Sambalpur sarees are woven on handlooms typically featuring motifs like the conch shell, the
spinning wheel and flowers created with the complex Ikat technique.
❖ It takes at least 4-5 days of weaving for 2-3 weavers to complete one Sambalpuri saree.
❖ The saree was given the Geographical Indication (GI) tag in 2010, yet handloom weavers are
struggling to make ends meet as cheaper fake replicas flood the market and pose a threat to
their livelihood.
❖ Additionally, these weavers face lack of adequate remuneration, skill development training and
an absence of patronage for their customized products.
❖ Few decades ago, there were around 100 families in the area who were weaving the
Sambalpuri saree but today there are only a few left.
 What initiatives have been taken by the government to
overcome the challenges and promote Rural Industrialization?
 What initiatives have been taken by the government to
overcome the challenges and promote Rural Industrialization?
 What initiatives have been taken by the government to
overcome the challenges and promote Rural Industrialization?
 What initiatives have been taken by the government to
overcome the challenges and promote Rural Industrialization?
 What initiatives have been taken by the government to
overcome the challenges and promote Rural Industrialization?
 Emerging technologies in rural areas: A support to rural
industries or an added challenge?

❖While emerging technologies are being increasingly used in rural economy, they surely
have the potential to take the rural business to a new level. Following developments are
worth mentioning:
❖Digital agriculture: Digital Agriculture is using ICT and data ecosystems to support the
development and delivery of timely, targeted information and services to make farming
profitable and sustainable while delivering safe nutritious and affordable food for all. All
these technology facilitate precision farming which results in sustainable utilization of
resources, enhanced productivity, etc.
❖ Digital Agriculture Initiatives in India:
❖ Digital Agriculture Mission 2021–2025 to support and accelerate projects based on new technologies,
like AI, block chain, remote sensing and GIS technology and use of drones and robots.
❖ Agricultural Digital Infrastructure (ADI) solution to enhance farming and knowledge sharing.
❖ Proposed National Agri Stack to help farmers choose best inputs (like seed varieties), best practices,
updates on weather, agricultural credit, insurance, etc.
❖ PM Fasal Bima Yojana (PMFBY) encourages the use of modern technology, such as satellite imagery,
remote-sensing technology, drones, artificial intelligence, and machine learning, to accelerate crop
loss assessments.
 Emerging technologies in rural areas: A support to rural
industries or an added challenge?

❖Fintech: Several fintech companies are promoting financial penetration in rural areas
through easy and swift banking services and digital payment. It not only enhances
the credit availability in rural areas but also generates job opportunities for youth.
❖Trace Maps: It has been prepared by the National Rural Infrastructure Development
Agency (NRIDA) under PMGSY-III. It simulates the traffic from habitations to
nearby facilities to identify and calculate road usage in rural areas. This information
is then used to suggest important routes and major rural links to field engineers to
help them with planning.
❖Geo-Tagging: Geotagging helps in better monitoring of various projects which in turn
reduces corruption. Under PMGSY-III, more than 7.70 lakh rural facilities such as
medical, educational and markets have been geo-tagged assets, like water harvesting,
drought relief, flood control activities, created under MGNREGS are also being
geotagged.
❖Challenges that inhibit the large scale application and adoption of technologies:
❖ High cost of technology adoption
❖ Lack of technical expertise and knowledge
❖ Difficulty in application of digital agriculture due to small land holdings, heterogeneity of cropping
systems and market imperfections
 What needs to be done to revitalise and fast track the process
of rural industrialisation?

❖Formulation of Rural Industrial Policy

❖Defining rural industries
❖Technological upgradation
❖Integrated approach to rural skills development
New Education Policy 2020 which integrates vocational education into school and
higher education institutions is the step in the right direction. In short term, following
initiatives need to be taken for effectively imparting skills to rural workforce:
❖ Collect and analyze data disaggregated by gender, age, ethnicity, disability and other
relevant dimensions to be able to design appropriate services and programmes.
❖ Enhance awareness around the opportunities, and numerous government skilling
initiatives.
❖ Strengthen coordination and collaboration with the private sector.
❖ Assess labour market needs and economic opportunities, and link training to the skills
requirements in the particular rural context.
 What needs to be done to revitalise and fast track the process
of rural industrialisation?

❖Harnessing the potential of rural women

❖Fulfilling the gaps in Infrastructure
❖Robust backward and forward linkages
❖Rural-urban linkage
❖Cooperative federalism
❖Strengthening the role of MSMEs
❖Harnessing export potential of rural Industries
❖Banking on opportunities created by COVID-19