Q.1. Discuss the key issues of action plan for rural development in India.
Ans. The following are the key issues of action plan for rural development in India:
(i) Land Reforms: Land reforms are the measures to bring about changes in the ownership of land holdings to encourage equity. Land reforms providing a land system conducive for agricultural development should not only be enacted but also be faithfully implemented. The official land tenure system must aim at land to the tiller as self-cultivation can induce maximum improvement in farming.
(ii) Poverty Alleviation: Action plan for rural development includes high priority to poverty alleviation in the rural areas. For the overall development of each locality and in the rural areas special schemes like MNREGA should be launched.
(iii) Human Capital Formation: Human capital formation is still a major task in rural areas of the Indian economy. India has a huge pool of manpower resources but the available manpower lacks basic skill and training. Therefore, in order to make the available resources strong and efficient, the action plan for rural development should consider the challenging issues like literacy, healthcare, education, on the job training, etc.
(iv) Development of Infrastructure: Development of infrastructure includes the following:
- Provision of credit facilities to the farmers in the rural areas
- Permanent water supply throughout the year in the areas receiving less or low rainfall
- Availability of agricultural research facilities to enhance the crop yield and productivity
- Development of efficient means of transport, communication and power resources
Q.2. Explain the various non-institutional sources of rural credit in India.
Ans. The various non-institutional sources of rural credit in India are:
(i) Moneylenders: Moneylenders typically offer small personal loans to farmers at high rates of interest. They charge high interest rates due to the level of risk involved. They lend to people with limited access to banking activities.
(ii) Traders and Commission Agents: Traders and commission agents are also non-institutional source of agricultural finance. They advance loans to agriculturists for productive purposes against their crops without any legal agreement. They force them to sell their produce at low prices and charge heavy commission for themselves.
(iii) Landlords: Small and marginal farmers mostly depend on landlords for credit in order to satisfy their day-to-day requirements. However, with the abolition of zamindari system, this source has lost its importance to a large extent.
(iv) Relatives: Sometime the farmers have to borrow from their relatives and friends to meet their financial crisis. This type of loan does not carry interest.
Q.3. What are the sources of institutional credit in India? Explain.
Ans. The sources of institutional credit in India include the following:
(i) Government: The government provides loans to the farmer for his short-term as well as longterm needs. Normally, these loans are given at the time of natural calamities such as droughts, floods, etc. Long-term loans are given for making permanent improvements and a very low rate of interest is charged for the same.
(ii) Cooperative Credit: The cooperative credit societies meet the requirements of only short-term credit. However, to bring about permanent improvement on land and to introduce modern technology, long-term heavy investment is required. Land development banks are supposed to advance long-term loans for this purpose.
(iii) Commercial Banks: After the nationalisation of 14 big banks in 1969, the commercial banks have also started taking keen interest in farm financing. A number of schemes have been introduced to help the farmers so that they may introduce the modern technology in agriculture. Most families covered by these banks are big landlords, who could give adequate security to the bank in the form of land mortgage.
(iv) Regional Rural Banks: A new rural credit agency has been set up to provide loan to the agriculturists. RRBs have been opened by the joint efforts of the central and state governments and commercial banks. These banks have been set up in the rural areas where enough credit has not been available but there are substantial potentialities of agricultural development.
(v) National Bank for Agriculture and Rural Development: NABARD was set up on 12th July, 1982 as an apex body to look after the credit needs of the rural sector. It has got an authority to oversee the functioning of the cooperative sector through its agricultural credit department. It provides long-term loans by way of refinance of land development banks, cooperative banks, commercial banks and regional rural banks.
(vi) Kisan Credit Card (KCC) Scheme: This scheme was introduced in 1998–99 and it has made rapid progress, with the banking system issuing more than 556 lakh cards by November, 2005. This scheme has helped in augmenting the flow of short-term crop loans for seasonal agricultural operations to farmers. Besides the existing facilities, the KCC scheme has been enlarged to include long-term loans for agriculture and allied activities along with a component to meet the consumption needs.
Q.4. Suggest some measures for the improvement of rural credit.
Ans. The following measures should be adopted for the improvement of rural credit:
(i) Coordination: The different agencies of agricultural credit must be coordinated to facilitate efficient disbursal and utilisation of financial resources.
(ii) Deposit Insurance Scheme: The cooperative banks should start the Deposit Insurance Scheme to attract the maximum deposits from the public.
(iii) Cooperative Marketing Societies: The credit and cooperative marketing societies should be integrated. It will ensure the paying back of loans as the farmers sell their produce to cooperative markets.
(iv) Increase in Capital Resources: It is necessary to increase capital resources of the cooperative credit societies to meet the need of the farmers.
(v) Easy Availability of Loans: The loan process should be made simpler. The main reason for popularity of the moneylender is simple methods of lending the amount. The formalities should be minimised.
(vi) Efficient Management: The credit agencies should be efficiently managed. The managers should have complete knowledge about agriculture and they should be sympathetic towards the agriculturist.
(vii) Promotion of Savings: To promote savings, the farmers should be given incentives. The government should use its mechanism to encourage farmers to save more and avoid unnecessary spending.
Q.5. Explain the significance of agricultural marketing in rural development.
Ans. An efficient marketing system is of great significance for the development of agricultural economy like that of India. Proper marketing of agricultural products is undoubtedly favourable to the farmers because it ensures fair price for their produce. The fair price encourages them to produce for the market. The needs of urban sector are better satisfied and the process of industrialisation gets a boost. As a result, the income of the farmers rises, increasing their demand for industrial output. Thus, improvement in farm marketing helps the process of development. Naturally, an important problem of Indian agriculture concerns the marketing of its produce. In order to increase the income of the farmers and to promote economic growth of India, it is necessary that the problem of agricultural marketing be solved. It is a fact that economic prosperity depends upon a sound system of marketing. In India, it becomes important because some states produce much more than their requirements and have to supply to other deficit parts of the country.
Q.6. Discuss the conditions required for efficient agriculture marketing in India.
Ans. Following are the conditions necessary for efficient marketing in India:
(i) Storage Facilities: Efficient marketing needs adequate storage facilities so that they should be able to wait for times when they could get better prices of their produce. Moreover, they do not have to dispose off their surplus produce immediately after harvesting.
(ii) Freedom from Moneylenders: In India, there is large number of moneylenders who compel farmers for distress sale. Thus, credit facilities should be extended to save them from the clutches of moneylenders.
(iii) Transportation Facilities: Farmers should have cheap and adequate transport facilities so that they may be able to take their surplus to the regulated markets instead of selling it away at the village level.
(iv) Reduced Intermediaries: The number of intermediaries should be minimised so that the profits of middlemen may be reduced. This in turn will increase the returns to the farmers.
(v) Adequate Information: Farmers should have adequate and clear information regarding the market conditions as well as about the prevailing prices otherwise they may be cheated. There should be organised and regulated markets where they can directly sell their produce.
Q.7. Discuss the importance of cooperative marketing in India.
Ans. The following are the advantages of cooperative marketing in India:
(i) End of Middle Man: The agricultural cooperative marketing has ended the presence of middle man in the process of sale and purchase of products. With the help of cooperative marketing, agriculturists get fair price of their products.
(ii) Increased Bargaining Power of the Producers: With the help of cooperative marketing, farmers are less prone to exploitation and malpractices. Instead of marketing their produce individually, they market it together through one agency. This increases their bargaining strength as merchants and intermediaries.
(iii) Direct Dealing with Final Buyers: The cooperatives can altogether skip the intermediaries and enter into direct dealing with the final buyers, which eliminates exploiters and ensure fair prices to both the producers and the consumers.
(iv) Standardisation and Gradation of Agricultural Produce: This task could be done more easily by a cooperative agency than by an individual farmer. Thus, each member can take advantages of standardisation and gradation of produce.
(v) Control Over the Supply of Produce: Prices of the produce fall down during cropping season due to excess supply in the market. The cooperative marketing societies provide storage facilities. As a result, there remains a control over the supply of produce. The farmers can wait for better prices.
(vi) Credit Facilities: The cooperative marketing societies provide credit facilities to the farmers to save them from the necessity of selling their produce immediately after harvesting. This ensures better returns to the farmers.
(vii) Provide Training of Commercial Methods: The cooperative societies also provide training to the farmers for cooperative efforts and commercial methods in the marketing, which develops the cooperative tendencies in the rural areas.
(viii) Advertisement and Publicity: Through advertisements and publicity services, cooperative marketing increases the sale of farmer’s produce, which enlarges the size of the market.
Q.8. Explain the advantages and limitations of organic farming.
Ans. Advantages of Organic Farming
(i) Inexpensive Process: Organic agriculture substitutes costlier agricultural inputs with locally produced organic inputs, which are cheaper and hence, generate more return on investment.
(ii) Generates Higher Income: It generates higher income by means of international exports as the demand for organically grown products is rising.
(iii) Healthier Food: Organically grown food has more nutritional value than chemically grown food. It, therefore, provides us with healthier and tastier foods.
(iv) Creates Employment: Since organic farming organic farming requires is a labour-intensive process, it will solve the problem of unemployment.
(v) Eco-friendly: Organic goods are pesticide-free and produced in an environmentally sustainable way.
Limitations of Organic Farming
(i) Yields from organic farming are less compared to the yield from modern agriculture farming, at least in the initial years.
(ii) Organic produce may also have more blemishes and a shorter shelf life than sprayed produce.
(iii) Infrastructural facilities are inadequate to encourage small farmers to adapt organic farming
(iv) There is a limited choice to produce off-season crops in organic farming.
