Rural development means an action plan for the social and economic growth of rural areas. The action plan is to focus on lingering & employment challenges in rural areas.
Lingering challenges include:
1) Rural Credit
2) Rural Marketing
Emerging challenges include:
a) Exploring options for sustainable livelihood
b) The challenges of organic farming
Topics Discussed
Challenge of Rural Credit
Rural credit means credit for farming. Credit is the lifeline of farming activities in the rural areas because:
- Most of the farming families are small & marginal landholders. They are producing just enough for subsistence. They seldom generate a surplus for further investment.
Hence, the need for credit is unavoidable. - The gestation lag between saving & harvesting of the crops is quite long which compounds the need for credit.
Types of Credit Needs
There are three types of Credit Needs:
| Short Term | Medium Term | Long Term |
| It is basically required for the purchase of inputs. | The loans are generally raised for a period ranging between 12 months to 5 years. | The period such loans ranges between 5 to 20 years. |
| The loans are raised generally for a period ranging between 6 to 12 months. | This credit is required for the purchase of machinery, constructing fences, and digging wells. | Long-term credit is required for the purchase of additional land and for carrying out permanent improvements on existing land. |
Sources of Rural Credit
There are mainly two sources of rural credit:
- Non Institutional Sources
- Institutional Sources
1) Non Institutional Sources
These accounted for 93% of the total borrowings of the farmers in the first five-year plan. These include landlords, village traders & money lenders.
2) Institutional Sources
These accounted for only 7 % of the credit needs of the farmers at the beginning of the first five years but presently it has increased to 66 %.
Important Institutional Agencies Offering Rural Credit in India
1) Cooperative Credit Societies
These societies provide adequate credit to the farmers at a reasonable rate of interest. These societies make sure:
- To provide a rapid & timely flow of credit to the farmers.
- Elimination of money lenders as credit agencies.
- To spread credit facilities across all regions of the country.
- Provision of adequate credit in the areas covered by special programs of development.
Currently, corporate societies account for 16-17% of rural credit flow.
2) State Bank of India & Other Commercial Bank
The State Bank of India was set up in 1955 with a focus on rural credit. The government realized that rural credit needs could not met by credit cooperative societies alone & hence commercial banks should play an important role.
This prompted the nationalization of certain banks in 1969. The nationalized commercial banks were directed to offer credit directly to farmers as well as indirectly through cooperative societies.
3) Regional Rural Banks & Land Development Banks
RRBs & Land Development Banks were set up to promote credit supply, particularly in the remote rural areas & backward districts.
These banks operate at the district level & are under obligation to focus on the credit needs of the weaker section of the rural population.
4) National Bank for Agriculture & Rural Development (NABARD)
NABARD is an apex institution handling policy, planning & operations in the field of rural credit & related economic activities. Its main functions are:
- To serve as an apex funding agency for the institutions providing credit in rural areas.
- To take appropriate measures to improve the credit delivery system.
- Coordinate the rural financing activities of all credit institutions & maintain good relations with the government of India, Reserve Bank, and other national-level institutions concerned with policy formulation.
- To undertake monitoring & evaluation of projects refinanced by it.
Challenge of Agricultural Marketing
Agricultural marketing may be defined as a process that involves:
- Gathering the produced after harvesting
- Processing the produced
- Grading the product according to its quality
- Packaging the produced according to the buyer’s preference
- Storing the produced for future sale
- Selling the produced when the price is profitable.
Initiatives Taken by Govt. to Improve Marketing System
a) Cooperative Agricultural Marketing Societies
The government is encouraging the promotion of cooperative agricultural marketing societies. As a member of these societies, farmers find themselves better bargainers in the market getting better prices of their produce through collective sales.
2) Provision of Warehousing Facilities
To avoid distress sales, the govt. is offering warehousing facilities to the farmer. The central & state warehousing corporations are the principal government agencies offering storage space to the farmers.
Storage helps the farmers to sell their produce at a time when the market price is lucrative (profitable).
3) Subsidised Transport
Railways are offering subsidized facilities to the farmers to bring their produce to an urban market where they get a better deal.
4) Discrimination of Information
Electronic media & print media are actively engaged in offering market-related information to farmers particularly information related to price behavior. This helps the farmers in deciding how much to sell and when to sell.
5) MSP Policy
MSP policy is an important step initiated by the government to improve the agricultural marketing system. MSP is an assurance to the farmers that their produce will be purchased by the government at the specified price.
Also, the farmers are free to sell their produce at a higher price than MSP in the open market. Thus, the farmers are always assured of some minimum income from the sale of their crops.
Emerging Challenges of Rural Development
Employment Outside Agriculture
Finding options for sustainable livelihood is an important emerging challenge of rural development in India. Some options for employment other than agriculture are:
- Animal Husbandry: It is an important area of employment in India different from crop farming. It is also known as livestock farming.
Poultry, cattle, and goats/sheep are important components of livestock in India. Poultry accounts for 42%, cattle 25%, & goat/sheep for 20% of total livestock in India. - Fisheries: Kerala, Maharashtra, Gujrat, and Tamilnadu are the principal states in India where fisheries are the important source of livelihood in rural areas.
The fishing community depends almost equally on land sources & marine sources of fish.
Land sources include – rivers, ponds, lakes & streams while marine sources include oceans and seas. - Horticulture: This is another alternative source of employment in rural areas. It is like the diversification of crop production. Horticulture crops include – Fruits, vegetables, and flowers among several others.
Presently, India is the second largest producer of fruits & vegetables in the world and emerging as a leading producer of mangoes, bananas, coconuts, cashews & a variety of spices. - Cottage & Household Industries: Cottage & household industry have been a traditional source of non-farm production activities in rural areas.
Traditionally the industry has been dominated by activities like spinning, weaving, dyeing & bleaching. However, with the growth of the urban textile industry, these activities have been hit hard in rural areas.
Now, a day some new household activities like soap manufacturing, doll making, mushroom cultivation & beekeeping are coming.
Employment Indian Economic Development Class 12 Notes
Organic Farming & Sustainable Development
Organic farming is a system of farming that relies upon the use of organic inputs for cultivation. Organic inputs include – Animal manure & compost.
It totally discards the use of chemical inputs like chemical fertilizers, insecticides & pesticides. It is a system of farming that focuses on soil health rather than plan health so that farming becomes a long-term sustainable process along with an eco-friendly environment.
Advantages of Organic Farming
1) Discards the use of non-renewable resources
Unlike conventional farming, organic farming does not use synthetic chemicals which are petroleum-based. We all know, that petroleum is a non-renewable resource.
2) Environment Friendly
Organic farming is environment friendly, chemical fertilizers pollute the groundwater by raising the nitrate content. Nitrates are health hazards & pollute the environment. Organic farming discarded the use of chemical fertilizers.
3) Sustain Soil Fertility
The use of animal manure & compost helps sustain soil fertility. On the other hand, chemical fertilizers erode soil fertility accordingly. Organic farming is conducive to the sustainable development of agriculture.
4) Healthier & Tasty Food
Organic farming offers healthier & tastier food as compared to conventional farming. According to recent studies, organically grown food is more nutritious than food from chemical farming.
These are the notes of rural development in the Indian Economic Growth Book of class 12. If you have any doubt, you can ask in the comment section.