Chapter 6: RURAL DEVELOPMENT

Rural Development& Agriculture

• Agriculture, with a maximum share of the rural economy, has grown at a meager rate of 2.7% in the last fifty years. During 2007-12, agriculture output has grown by 3.2%.
• The share of the agriculture sector to GDP was on a decline and there has been increasing in the share of the industrial and service sector. However, the population dependent on the agricultural sector did not show any significant change.
• Moreover, after the economic reforms of 1991, the growth rate of the agriculture sector decelerated to 3% p.a. during 1991-2012, which was lower than the earlier years.

Meaning of Rural Development

Definition: Rural Development refers to the continuous and comprehensive socio-economic process, of attempting to improve all aspects of rural life.

• In India, agriculture is the major source of livelihood in the rural sector, with more than two-thirds of India's population depending on it. Therefore, development in agriculture will contribute to the betterment of rural areas and rural people. However, the term rural development includes not only agricultural development, but it involves all those aspects, which improve the quality of life of people. It aims at improving the economic and social conditions of people living in villages.
• Rural people account for about 34% of the total population. However, they have always lagged much behind the overall progress of the economy.
• In order to overcome this undesirable trend, special programs for rural development began to be designed in the seventies, in addition to provisions of the Five-Year Plans of the country.

Process of Rural Development

• Development of Human Resources: The quality of the human resource needs to be improved through the following measures:
  • Proper attention to literacy (specifically on female literacy), education and skill development; and
  • Better Health facilities for physical growth.
• Development of Infrastructure: It involves:
  • Improvement in electricity, irrigation, credit, marketing and transport facilities (including the construction of village roads and feeder roads to nearby highways);
  • Better facilities for agriculture research and extension and information dissemination.
• Land Reforms: It includes the following objectives:
  • Elimination of exploitation in land relations;
  • Actualization of the goal of 'land to the tiller';
  • Improvement of socio-economic conditions of rural poor by widening their land base;
  • Increasing agricultural productivity and production.
• Alleviation of Poverty: Around 30% of the total population is still below the poverty line. So, there is a serious need for taking serious steps for alleviation and bringing significant improvement in living conditions of weaker sections. –
• Development of the productive resources of each locality to enhance opportunities for employment (particularly other than farming).

Rural Credit

• Growth of the rural economy depends on the timely infusion of capital, to realize higher productivity in agriculture and non-agriculture sectors.
• In agriculture, farmers are in strong need of creant due to the long time gap between crop sowing and realization of income.
• Farmers borrow from various sources to meet initial investments on seeds, fertilizers, implements and other family expenses of marriage, death, religious ceremonies, etc.
• So, credit is one of the important factors, which contribute to agricultural production. An efficient and effective rural credit delivery system is crucial for raising agricultural productivity and incomes.

Sources of Rural Credit

There are two sources, from which the farmers can raise loans:

• Non-Institutional Sources
• Institutional Sources

Non-Institutional Sources

Non-institutional sources have been the traditional source of agricultural credit in India. Major non-institutional sources are:

1. Moneylenders: From the very beginning, moneylenders have been advancing a major sh. 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 crops at high rates of interest, on the 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 were used to exploit small and marginal farmers by lending to them at high-interest rates and by manipulating the accounts to keep them in a debt-trap.Ă 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 maximizing 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 repaying old debts.
3. Commercial Bank Credit: Initially, commercial banks played a marginal role in advancing; rural credit. However, after nationalization 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 bank facilities. Their main objective is to provide credit and other facilities, especially to small and marginal farmers, agricultural laborers, artisans and small entrepreneurs in rural areas.
5. The Government: The loans provided by the government are known as taccavi loans and are lent during emergencies or distress, like famines, floods, etc. The rate of interest charged against such a loan is as low as 6%.
6. National Bank for Agricultural and Rural Development (NABARD): It is the Apex Bank that coordinates the functioning of different financial institutions, working for the expansion of rural credit.
   1. Its objective is to promote the health and strength of credit institutions (namely, cooperatives, commercial banks and regional rural banks).
   2. 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.
7. Self-Help Group (SHG) Bank Linkages Programme for Micro Finance: SHG has emerged as the major microfinance program in the country in recent years.
   1. Their focus is largely on those rural poor, who have no sustainable access to the formal banking system.
   2. So, their target groups comprise small and marginal farmers, agricultural and nonagricultural laborers, artisans, etc.
   3. 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 installments
   4. By March 2012. more than forty-three lakh SHGs had reportedly been credit-linked.
   5. SHGs have also helped in the empowerment of women. However, the borrowings are mainly confined to consumption purposes and a negligible proportion is borrowed for productive purposes.

Critical Appraisal of Rural Banking

Rapid expansion of the banking system had a positive effect on a rural farm and non-farm output, income and employment. After the green revolution, credit facilities helped famines avail a variety of loans for meeting their production needs. With buffer stocks of grains, famines became events of the past.

Some of the problems faced in rural banking are:

1. Insufficiency: The volume of rural credit in the country is still insufficient in comparison to its demand.
2. Inadequate Coverage of institutional sources: The institutional credit arrangement continues to be inadequate as they have failed to cover the entire rural farmers of the country.
3. Inadequate Amount of Sanction: The amount of loan sanctioned to the farmers is also inadequate. As a result, farmers often divert such loans for unproductive purposes, which dilute the very purpose of such loans.
4. Less attention to poor or marginal farmers: Lesser attention has been given to the credit requirements of needy (small and marginal) farmers. On the other hand, well-to-do farmers are getting more attention due to better creditworthiness.
5. Growing Overdue: The problem of overdue agricultural credit continues to be an area of concern.
   1. The basic reason for growing overdue is the poor repaying capacity of farmers. As a result, credit agencies are becoming cautious about granting loans to farmers.
   2. Agriculture loan default rates have been chronically high. It is alleged that farmers are deliberately refusing to pay back loans. It is a threat to the smooth functioning of banking system and needs to be controlled.

2. Except the commercial banks, other formal institutions failed to develop a culture of deposit mobilization, lending to needy borrowers and effective loan recovery.

To improve the situation:

1. Banks need to change their approach from just being lenders to building up relationship banking with the borrowers; and
2. Farmers should also be encouraged to inculcate the habit of thrift (saving) and efficient utilization of financial resources.

Agricultural Market System

Meaning of Agricultural

Definition: Marketing Agricultural marketing is a process that involves assembling, storage, processing, transportation, packaging, grading and distributing different agricultural commodities across the country.

Agricultural marketing system is an efficient way by which the farmers can dispose of their surplus produce at a fair and reasonable price. It involves different activities for the movement of farm produce from the producer to the ultimate consumer.

Problems faced by Farmers

• Manipulations by Big Traders: Prior to independence, farmers suffered from faulty weighing and manipulation of accounts while selling their produce to traders.
• Lack of Market Information: Farmers were often forced to sell at low prices due to a lack of required information on prices prevailing in markets
• Lack of Storage Facilities: They also did not have proper storage facilities to keep back their produce for selling later at a better price. Even today, more than 10% of goods produced on farms are wasted due to a lack of storage.

Therefore, government intervention became necessary to regulate the activities of private traders.

Measures to Improve Agricultural Marketing:

1. Regulated Markets: The first measure was the regulation of markets, to create orderly and transparent marketing conditions. Regulated markets have been organized with a view to protecting the farmers from the malpractices of sellers and brokers. This policy benefitted farmers as well as consumers.
2. Infrastructural Facilities: The Government aims to provide physical infrastructure facilities like roads, railways, warehouses, godowns, cold storage and processing units. The current infrastructure facilities are quite inadequate to meet the growing demand and need to be improved
3. Cooperative Marketing: The aim of cooperative marketing is to realize fair prices for farmer’s products. Under this, marketing societies are formed by farmers to sell the output collectively and to take advantage of collective bargaining, in order to obtain a better price. Milk Cooperatives Gujarat has been very successful in transforming the social and economic conditions in Gujarat and some other parts of the country. However, cooperatives have received a setback in the recent past because of:
   1. Inadequate coverage of farmer members;
   2. Lack of appropriate link between marketing and processing cooperatives;
   3. Inefficient financial management
4. Different Policy Instruments: In order to protect the farmers, the government has initiated the following policies:

1. Minimum Support Prices (MSP): To safeguard the interest of farmers, government the minimum support prices of agricultural products, like wheat, rice, maize, cotton, sugarcane, pulses, etc. Such a price may be regarded as an offer price, at which Government is willing to buy any amount of grains from the farmers.
2. Maintenance of Buffer Stocks: The Food Corporation of India (FCI) purchases wheat and rice at the procurement prices, to maintain buffer stock. Buffer stock is created CS years of surplus production and is used during shortages. It helps to ensure regularity in supply and stability in prices.
3. Public Distribution System (PDS): The public distribution system in our country operates through a network of ration shops and fair price shops. Fair price shops offer essential commodities like wheat, rice, kerosene, etc. at a price below the market price, to the weaker sections of the society.

Conclusion

• Agricultural markets are still dominated by private traders like moneylenders, rural political leaders, big merchants and rich farmers.
• The quantity of agricultural products, handled by the government agencies and consumer cooperatives, constitutes only 10%, while the rest is handled by the private sector.
• It is often argued by some scholars that the commercialization of agriculture offers tremendous scope for farmers to earn higher incomes provided the government intervention is restricted.

Emerging Alternate Marketing Channels

1. Origin of Farmers Market: Farmers can increase their incomes if they directly sell their products to consumers. As a result, the concept of "Farmers Market" was started, to give a boost to the small farmers by providing them direct access to the consumers and eliminating the middlemen Some examples of these channels are:
   • Apni Mandi in Punjab, Haryana and Rajasthan;
   • Hadapsar Mandi in Pune; "Apni Mandi" is an initiative to encourage farmers to directly
   • Rythu Bazars in Andhra Pradesh; and market their products without being exploited by middlemen or traders
   • Uzhavar Sandies (farmers market in Tamil Nadu).
2. Alliance with National and Multinational Companies: Several national and multinational fast-food chains are increasingly entering into contracts/alliances with farmers.
   • They encourage the farmers to cultivate farm products (vegetables, fruits, etc.) of the desired quality.
   • They provide them with not only seeds and other inputs but also assure procurement of the produce at pre-decided prices.
   • It is argued that such arrangements will help in reducing the price risk of farmers and expand the market for farm products.

DIVERSIFICATION OF AGRICULTURAL ACTIVITIES

Reason for Diversification

The need for diversification arises because:

• There is a greater risk of depending exclusively on farming for livelihood; and
• To provide productive sustainable livelihood options to rural people.

Benefits of Diversification

Much of the agricultural employment activities are concentrated in the Kharif season. During the Rabi season, it becomes difficult to find gainful employment in areas where there are inadequate irrigation facilities. Therefore, diversification into other sectors is essential:

• To provide supplementary gainful employment;
• To enable them to earn higher levels of income; and
• To enable rural people to overcome poverty and other troubles.

Types of Diversification

Diversification includes two aspects:

• Diversification of Crop Production (Change in Cropping Pattern);
• Diversification of Productive Activities (shift of workforce from agriculture to other allied activities and non-agriculture sectors).

Diversification of Crop Production

• It involves a shift from a single-cropping system to a multi-cropping system.
• Diversification involves a shift in cropping patterns from food grains to cash crops. The main aim is to promote a shift from subsistence farming to commercial farming.
• In India, agriculture is still dominated by subsistence farming and farmers give prime importance to the cereals in the cropping system.
• Multi-cropping system reduces the dependence of farmers on one or two crops as they are engaged in growing a wide variety of crops.
• There is a need to encourage farmers to take up the cultivation of a wide variety of crops. It will also raise their income.

Diversification of Productive Activities

• It would provide alternative avenues of sustainable livelihood and would raise the level of income.

• Non-farm Activities have several segments. Some segments of non-farm activities possess dynamic linkages that permit healthy growth, while others are in subsistence, low productivity propositions.
• The dynamic sub-sectors include agro-processing industries, food processing industries, leather industry, tourism, etc.
• Those sectors, which have the potential but seriously lack infrastructure and other support, include traditional household-based industries, like pottery, crafts, handlooms, etc.

NON-FARM AREAS OF EMPLOYMENT

Animal Husbandry and Dairying

Animal Husbandry

Meaning: Animal Husbandry (or Livestock farming) is that branch of agriculture, which is concerned with the breeding, rearing and caring of farm animals.

• Under livestock farming, cattle, goats and fowls (duck, goose, etc.) are the widely held species.
• India owns one of the largest livestock populations in the Sheep Rearing is an important Income augmenting activity in rural areas world.
• Livestock production provides increased stability in income, food security, transport, fuel and nutrition for the family, without disrupting other food-producing activities.
• The livestock sector provides alternate livelihood options to over 70 million small and marginal farmers, including landless laborers.
• A significant number of women also find employment in the livestock sector.
• In India, poultry accounts for the largest share of 58%, followed by others (camels, asses, horses, ponies and mules). Poultry has the largest share of total livestock in India.

Dairying

Meaning: Dairying is that branch of agriculture, which involves breeding, raising and utilization of dairy animals for the production of milk, and the various dairy products processed from it.

• Dairying is the business of producing, storing and distributing milk and its products.
• The performance of the Indian dairy sector over the last three decades has been quite impressive.
• Due to the successful implementation of Operation Flood', India ranks first in the world in milk production. India's milk production increased from 17 million tonnes in 1950-51 to 102.6 million tonnes in 2006-07 and increased to 165.4 million tonnes in 2016-17.
• Operation Flood (or White Revolution) was started by National Dairy Development Board (NDDB) in 1970 under the expert guidance of then-chairperson, Dr. Verghese Kurien. The objective of this program was to create a nationwide milk grid.
  • Under the Operation Flood system, all the farmers pool their milk produce according to different grades and the same is processed and marketed to urban centers through cooperatives. The farmers are assured of a fair price and income.
  • Gujarat state is held as a success story in the efficient implementation of milk cooperatives, which has been followed by many states.
• Meat, eggs, wool and other by-products are also emerging as important productive sectors for diversification.

Evaluation of Livestock Farming

1. In terms of numbers, our livestock population is quite impressive. However, its productivity is quite low as compared to other countries.
2. (ii) There is a need for improved technology and the promotion of good breeds of animals, to enhance productivity.
3. (ii) Improved veterinary care and credit facilities for small and marginal farmers and landless laborers would enhance sustainable livelihood options through livestock production.

Fisheries

Meaning: Fisheries refer to the occupation devoted to the catching, processing, or selling of fish and other aquatic animals.

Important Points about Fishing

• Fishing community regards water bodies as 'mother': The water bodies (sea, oceans, rivers, lakes, natural aquatic ponds, streams) are considered as 'mother' or 'provider' as they provide a life-giving source to the fishing community.
• The volume of Fish Production: Presently, fish production from inland sources contributes shout 64% of the total fish production and the balance of 36% comes from the marine sector (sea and oceans).
• Share of Fishing in GDP: The total fish production accounts for 0.8% of the total GDP. In India, West Bengal, Andhra Pradesh, Kerala, Gujarat, Maharashtra and Tamil Nadu are major fish-producing states.
• Women Participation in Fishing: Even though women are not involved in active fishing, still, 60% of the workforce in export marketing and 40% in internal marketing are women. There is a need to increase credit facilities in the form of cooperatives and self-house groups (SHG) for fisherwomen to meet their working capital requirements for marketing.
• Problems faced in Fishing: A large share of fish worker families are poor. Some of the major problems faced by these communities include:
  • Widespread Underemployment;
  • Low per capita earnings;
  • Absence of mobility of labor to other sectors;
  • High Illiteracy rate and indebtedness.

Evaluation of Fishing

• Problems like over-fishing and pollution need to be regulated and controlled.
• Welfare programs for the fishing community have to be reoriented in a manner, which can provide long-term gains and sustenance of livelihoods.

Horticulture

Meaning: Horticulture refers to the science or art of cultivating fruits, vegetables, tuber crops, flowers, medicinal and aromatic plants, spices and plantation crops.

• India has adopted horticulture as it is blessed with varying climate and soil conditions.
• It is an important sector for potential diversification and Emphasis on Horticulture value addition in agriculture. is on a continuous increase in the country

Important Points about Horticulture

• Contribution: The horticulture sector contributes nearly one-third of the value of agricultural output and 6% of the Gross Domestic Product of India.
• Share in World's Production: India has emerged as a world leader in producing a variety of fruits, like mangoes, bananas, coconuts, cashew nuts and a number of spices. With the production of 74.877 million tonnes of fruits and 146.554 million tonnes of vegetables in 2010-11, India is the second-largest producer of both fruits and vegetables in the world.
• Improvement in Economic Condition: Horticulture has improved the economic condition of many farmers and has become a means of improving livelihood for many unprivileged classes too.
• Great Scope for Women Employment: Flower harvesting, nursery maintenance, hybrid seed production and tissue culture, propagation of fruits and flowers and food processing are highly remunerative employment options for women in rural areas.

Evaluation of Horticulture

Horticulture has emerged as a successful sustainable livelihood option and needs to be encouraged significantly. Enhancing its role requires investment in infrastructure, like electricity, cold storage systems, marketing linkages, small-scale processing units and technology improvement and dissemination.

Information Technology

Meaning: Information Technology (IT) refers to that branch of engineering that deals with the use of computers and telecommunications to retrieve and store and transmit information.

Important points about Information Technology.

• Through appropriate information and software tools, the government has been able to predict areas of food insecurity and vulnerability, to prevent or reduce the likelihood of an emergency.
• It also has a positive impact on the agriculture sector as it circulates information regards emerging technologies and their application applications, prices, weather and soil conditions for growing different crops, etc.
• It acts as a tool for releasing the creative potential and knowledge embedded in society. It also has the potential for employment generation in rural areas.
• The aim of increasing the role of Information Technology is to make every village a knowledge center; it provides a sustainable option for employment and livelihood.

SUSTAINABLE DEVELOPMENT AND ORGANIC FARMING

Conventional agriculture relies heavily on chemical fertilizers and toxic pesticides etc., which enter the food supply, penetrate the water sources, harm the livestock, deplete the soil and devastate natural ecosystems. So, efforts have been made to evolve technologies, which are eco-friendly and are essential for sustainable development. One such eco-friendly technology is ‘Organic Farming'.

Meaning of Organic Farming

Meaning: Organic farming is the form of agriculture that relies on techniques such as crop rotation, green manure, compost and biological pest control.

• Organic farming is the process of producing safe and healthy food, without leaving any adverse impact on the environment.

• In short, organic agriculture is a whole system of farming that restores, maintains and enhances the ecological balance.
• There is an increasing demand for organically grown food, to enhance food safety throughout the world.

Benefits of Organic Farming

• Economical Farming: Organic Farming offers a means to substitute costlier agricultural inputs (such as HYV seeds, chemical fertilizers, pesticides, etc.) with locally prod cheaper organic inputs.
• Generates income through exports: It generates income through international export demand for organically grown crops is on a rise.
• Provides Healthy Food: It provides healthy food as organically grown food has more nutritional value than food grown through chemical farming.
• Source of Employment: Organic farming generates more employment opportunities as requires more labor input than conventional farming.
• Safety of environment: The produce of organic farming is pesticide-free and is produced in an environmentally sustainable way.

Challenges before Organic Farming

• Less Popular: Organic farming needs to be popularized by creating awareness willingness on the part of farmers, to the adoption of new technology. There is a serious for an appropriate agriculture policy to promote organic farming.
• Lack of infrastructure and marketing facilities: Organic farming faces problems with inadequate infrastructure and marketing facilities.
• Low Yield: Organic farming has a lesser yield in the initial years as compared to modern agricultural farming. As a result, small and marginal farmers find it difficult to adapt to large-scale production.
• A Shorter food life: Organic produce has a shorter shelf life as compared to sprayed produce.
• Five-Limited choice of crops: The choice in the production of off-season crops is quite limited in organic farming. Inspire of all these limitations, organic farming helps in the sustainable development of agriculture

Evaluation of Rural Development

• The rural sector will continue to remain backward until and unless some spectacular changes occur. Some of the changes which need to be taken for the development of the rural sector are outlined below:
• Stress on Diversification: There is a need to make rural areas more vibrant through diversification into dairying, poultry, fisheries, vegetables and fruits.
• Rural and Urban Linkage: Efforts should be made to link up the rural production centers with the urban and foreign (export) markets to realize higher returns on the investment for the products.
• Better facilities: Proper efforts should be made to develop:
  • Infrastructure elements like credit and marketing;
  • State agricultural departments;
  • Farmer-friendly agricultural policies;
  • Constant appraisal and dialogue between farmer's groups.
• The aim is to achieve the full potential of the rural sector.
• More emphasis on Sustainable Development: There is a need to invent or procure alternate sets of eco-friendly technologies that lead to sustainable development in different circumstances.