Short Questions with Answers - Rural Development Commerce Notes | EduRev

Economics Class 11

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Commerce : Short Questions with Answers - Rural Development Commerce Notes | EduRev

The document Short Questions with Answers - Rural Development Commerce Notes | EduRev is a part of the Commerce Course Economics Class 11.
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Q.1. Define rural development.
Ans. 
Rural development refers to the action plan for the economic and social upliftment of rural areas.

Q.2. Name the key initiatives required for infrastructural development in rural areas.
Ans. 
Key initiatives required for rural development include:
(i) Expansion of rural credit
(ii) Development of irrigation facilities
(iii) Construction of roads
(iv) Organised agricultural marketing
(v) Information dissemination

Q.3. What has happened to the growth rate of agriculture sector during 1991-2011?
Ans. 
The growth rate of agriculture sector decelerated to about 3 per cent per annum during the 1991-2011.

Q.4. Why is rural development important?
Ans. 
The real progress of a country does not mean simply the growth and expansion of industrial urban centres. It is mainly the development of the villages, the rural sector. Development of rural sector is important because:
(i) agriculture is the major source of livelihood in the rural sector of India;
(ii) more than two-third of India’s population depends on agriculture; and
(iii) bulks of raw materials for industries come from agriculture and rural sector.
However, the level of agricultural productivity is so low that one-third of rural India still lives in abject poverty. Thus, it is important to develop rural India if our nation has to realise real economic and social progress.

Q.5. What efforts has the government made for rural development?
Ans. 
The government has made the following efforts for rural development:
(i) Prepared a road map for agricultural diversification with focus on horticulture, floriculture, animal husbandry and fisheries
(ii) Started Vishesh Krishi Upaj Yojana on 1st April, 2004 as a special agricultural produce scheme with the objective of promoting exports of fruits, vegetables, flowers, minor forest produce, dairy and poultry
(iii) Focused on micro irrigation, finance, insurance and rural credit
(iv) Strengthened agricultural marketing infrastructure

Q.6. Discuss the changes that have taken place in Indian agriculture and rural sector since initiation of reforms.
Ans. 
After the initiation of reforms, the growth rate of agriculture sector decelerated to about 3 per cent per annum during the 1991–2012. Decline in public investment has been the major reason for this. The share of agriculture sector’s contribution to GDP has been declining while the population dependent on this sector has not shown any significant change. There has been inadequate infrastructure, lack of alternate employment opportunities in the industry or service sector and increasing casualisation of employment, which further impedes rural development. During 2007–12, agriculture output has grown only at 3.2 per cent.

Q.7. Define credit.
Ans. 
Credit is the amount of money available to be borrowed by an individual, which must be paid back to the lender at some point in the future.

Q.8. What is the function of micro-credit programme?
Ans. 
Micro-credit programme provides small loans to the needy for self-employment projects that generate income.

Q.9. Classify rural credit.
Ans. 
Rural credit can be classified into:
(i) Institutional Sources – commercial banks, regional rural bank, cooperatives, land development banks
(ii) Non-institutional Sources – moneylenders, traders, employers, relatives and friends

Q.10. Why are moneylenders a popular source of rural credit?
Ans. 
The moneylenders are a popular source of rural credit due to easy availability of credit.

Q.11. When was NABARD set up?
Ans
. NABARD was set up in 1982.

Q.12. What are the limitations of non-institutional sources of credit?
Ans. 
The following are the limitations of non-institutional sources of credit are:
(i) Moneylenders and traders exploit small farmers by charging very high rate of interest on loans.
(ii) They manipulate poor farmers’ credit accounts and keep them in debt trap.
(iii) They compel the farmers to sell their produce to him at low prices.
(iv) They do not issue any receipt after the payment is made by the farmer.
(v) They get the work done by members of farmer’s family without any wages.

Q.13. What are significant features of moneylenders as a source of rural credit?
Ans. 
The significant features of moneylenders as a source of rural credit are:
(i) Moneylender provides credit both for productive and unproductive purposes.
(ii) The money lending method is very simple. He provides loans for short-term, medium-term as well as long-term requirements of the farmer, without any legal formalities.
(iii) Moneylender provides loans with or without security.
(iv) If the farmer pays the interest on regular basis, the moneylender does not compel the farmer to pay back the principal amount.

Q.14. Discuss in brief the defects of agricultural credit.
Ans. 
In India, the main defects in the agricultural credit system are as given under:
(i) Agriculturist needs to pay a very high rate of interest.
(ii) Moneylender and traders are still the prominent source of agricultural finance.
(iii) There is a lack of coordination among the various agencies of rural credit.
(iv) Despite many institutions, adequate agricultural credit is not available. The institutional finance is only 50 per cent of the total requirements of the farmer.
(v) The commercial banks hesitate to provide credit to agriculturist. Banks demand collateral as the risk involved is greater.
(vi) There is no systematic arrangement in New Agricultural Finance Corporations for agricultural credit.

Q.15. Write a short note on the role and performance of SHGs as a source of credit.
Ans. 
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. A vast proportion of poor rural households tend to remain out of the credit network as some kind of collateral is required to take loan from banks. Self-Help Groups (SHGs) have emerged to fill the gap in the formal credit system. A typical SHG consists of 15-20 members. These members usually belong to one neighbourhood, who meet and save regularly. Saving per member depends on the ability of the people to save. The SHG can extend these savings as small loans or micro-credit to the needy members from the group itself. Although the group charges interest on these loans, it is still less than what the moneylenders charge. Total SHG savings with banks increased from ₹ 23.9 billions as on 31st March, 2006 to around ₹ 70 billion as on 31st March, 2011.

Q.16. What should the rural banking sector do to improve the situation of rural credit in India?
Ans. 
In order to improve the situation of rural credit in India, the rural banking sector should change their approach from being merely lenders to building up relationship banking with the borrowers. Developing the habit of savings and efficient utilisation of financial resources must be encouraged among the farmers.

Q.17. What is agricultural marketing?
Ans. 
Agricultural marketing is a process that involves the assembling, storage, processing, transportation, packaging, grading and distribution of different agricultural commodities across the country.

Q.18. Name a few defects of agricultural marketing.
Ans. 
Defects of agricultural marketing include:
(i) Sale at only village level
(ii) Inadequate transport facilities
(iii) Malpractices
(iv) Inadequate credit facilities

Q.19. What is cooperative marketing?
Ans. 
Cooperative marketing is a system through which a group of farmers join together to undertake some or all the processes involved in bringing goods to the consumer instead of individual sale.

Q.20. What was the need for state intervention to regulate the activities of the private traders?
Ans. 
State intervention is required to regulate the activities of the private traders:
(i) to ensure adherence to standardised and open marketing procedures;
(ii) to avoid collusion between brokers and traders that may cause disadvantage to the farmers;
(iii) to ensure use of standardised weights and measures;
(iv) to promote fair marketing fees; and
(v) to keep a check regarding unauthorised deductions from the purchase price payable to the framers.

Q.21. Explain the policy instruments introduced by the government to safeguard the interests of farmers.
Ans. 
Government has developed certain policy instruments to safeguard the interests of farmers. These instruments are:
(i) Fixation of Minimum Support Price (MSP): At present, the government has fixed MSP for 24 agricultural products. MSP is announced before the sowing season and assures agricultural producers against any sharp fall in farm prices. It provides long-term guarantee to the farmer.
(ii) Buffer Stock: The Food Corporation of India purchases wheat and rice from the farmers in states where there is surplus production and maintain it as buffer stock. Buffer stock is maintained by the government to stabilise prices. It helps in making the foodgrains available in the deficit areas and hence, resolves the problem of food shortage during adverse weather conditions or during the periods of calamity.
(iii) Public Distribution System (PDS): The PDS operates through fair price shops, also known as ration shops. The government offers essential commodities like wheat, rice, sugar, kerosene, edible oils, coal, cloth, etc. at a price below the market price to poor section of the society.

Q.22. Write a short note on cooperative marketing societies.
Ans. 
The cooperative marketing societies has been started in India in 1954 to assure reasonable prices to the farmers for their produce. The aim was to eliminate all the existing intermediaries from the market. It is a method of linking credit, farming and processing in order to help the farmers to get maximum advantage. Cooperative marketing is responsible for collecting the produce from the members and disposing it off in the mandi (market) at a favourable time. The cooperative marketing societies, therefore, remove the defects of the present marketing system. The government sets up a cooperative credit society, commonly known as the Primary Agricultural Cooperative Societies (PACS), which can be initiated with 10 or more persons of the village. PACSs also provide loans to the farmers for productive purposes.

Q.23. Discuss the objectives of cooperative marketing societies.
Ans. 
The objectives of cooperative marketing societies are:
(i) To sell the products of its members at fair prices and distribute the sale proportionately among the members
(ii) To provide loans to members in need
(iii) To provide marketing information to the members
(iv) To provide seeds, fertilisers, pesticides and other inputs to the members
(v) To stabilise the prices of agricultural products

Q.24. Why should organic farming be adopted?
Ans. 
Modern farming methods make excessive use of chemical fertilisers and pesticides, which led to loss of soil fertility; soil, water and air pollution, and high chemical contents in foodgrains. Therefore, there is an urgent need to conserve the environment and eco-system and hence, promote sustainable development. Organic farming is an eco-friendly and inexpensive farming technology, which can be easily purchased by small and marginal farmers. It restores, maintains and enhances the ecological balance. Moreover, organically grown food is considered more nutritious and healthier than chemically grown food.

Q.25. What is the need for agricultural diversification?
Ans. 
Agricultural diversification is essential due to the following reasons:
(i) There is a greater risk associated with exclusive dependence on farming for livelihood.
(ii) Diversification provides productive sustainable livelihood options to rural people, thereby realising higher level of incomes for them.

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