Rural Development Class 12 Economics

Introduction

• The term rural development refers to the implementation of initiatives aimed at improving the economic and social conditions of rural areas. Enhancing employment opportunities and increasing agricultural productivity are the key areas that require improvement in the rural sector.
• In the current context, rural development remains central to the overall development of the country. With more than two-thirds of the population dependent on agriculture for their livelihood, and one-third of rural India still living below the poverty line, the government must be proactive and provide adequate facilities to enhance the living standards of the rural population.

Objectives of Rural Development

•  Enhancing agricultural sector productivity.
• Creating supplementary sources of income in rural areas.
• Improving the availability of education and healthcare facilities in rural communities.
• Developing infrastructure.
• Enhancing human resource development in rural regions.
• Mitigating poverty.

Key Initiatives in Rural Development:

• Diversifying crops mitigates production risks and fosters agricultural commercialization.
• Encouraging organic farming to ensure environmentally friendly and sustainable crop cultivation over the long term.
• Enhancing human resources.
• Improving healthcare by addressing cleanliness and public health concerns.
• Expanding production activities to identify sustainable alternatives to crop cultivation for livelihoods.

Rural Credit in India

• The growth of the rural economy is typically dependent on funding from one period to the next to achieve higher productivity in both agricultural and non-agricultural sectors. However, the time gap between sowing seeds and earning post-production revenue is considerably long, leading farmers to borrow money from various sources to cover initial investments in fertilizers, seeds, tools, and personal expenses.
• Following India's independence, traders and moneylenders took advantage of poor peasants and landless workers by lending money at exorbitant interest rates and manipulating their accounts, trapping them in debt. In 1969, India introduced social banking and established various agencies to provide rural credit. In 1982, the National Bank for Agriculture and Rural Development (NABARD) was established as an apex body to regulate and organize all financial activities related to the rural financial system.
• This effort gained further momentum with the advent of the Green Revolution, which transformed the country's credit system, resulting in a more productive rural credit system. Today, rural banking includes various financial institutions, such as regional rural banks (RRBs), cooperatives, commercial banks, self-help groups, and land development banks. They provide sufficient credit at lower interest rates to support rural development.

Sources of Rural credit:
The availability of rural credit can be divided into two categories:

• Informal Sources: These are the conventional sources of agricultural credit in India, such as moneylenders, relatives, traders, commission agents, and landlords.
• Formal Sources: Formal sources comprise cooperative credit, commercial banks, regional rural banks, government institutions, land development banks, National Bank for Agriculture and Rural Development (NABARD), self-help groups, and others.

Rural Credit is needed for the following reasons:

Extended time lag

• The duration between planting crops and receiving revenue from their sale is very long.
• Consequently, farmers require credit to bridge this gap.

Input purchases

• Farmers require money to purchase seeds, fertilizers, tools, etc.

Personal expenditures

• They need funds for personal expenditures such as marriages, funerals, religious ceremonies, debt repayment, etc.

Agricultural Marketing System

Agricultural Marketing involves the integration of activities such as assembling, storing, processing, transporting, packaging, grading, and distributing different agricultural commodities across the country.

Measures to Improve Agricultural Marketing

After independence, the government has taken several initiatives to strengthen India's agricultural marketing system. The government has implemented the following measures to regulate the markets:

• Regulated Markets: The first step was to regulate the markets to ensure a transparent and organized marketing system. This was intended to protect farmers from the deceitful practices of sellers and brokers.
• Cooperative Marketing: Farmers formed marketing societies to sell their produce collectively and negotiate better prices through collective bargaining. However, cooperatives have struggled to operate effectively in recent years due to poor membership coverage and inefficient management.
• Infrastructural Facilities: The government also provided infrastructural facilities such as roads, railways, warehousing, cold storage, and processing units to promote rural development in India.
• Standardization and Grading: Grading and quality control assist farmers in obtaining better prices for their high-quality produce. Proper segregation and categorization of the output of different grades and standards enhance the efficiency of their work.
• Policy Instruments:
  • Minimum Support Price: The government sets a price, known as the Minimum Support Price, for agricultural products such as wheat, rice, maize, cotton, sugarcane, pulses, and others to safeguard farmers' interests. The government is willing to purchase any amount of crops from farmers at a price higher than the market price to help them recover their losses.
  • Buffer Stock: The Food Corporation of India maintains a stock of crops like wheat and rice to manage price discrepancies caused by demand and supply or emergencies.
  • Public Distribution System: The Public Distribution System is used to distribute food grains and sugar. These tools are designed to guarantee farmers' revenue while also providing food grains to the poor at a reduced price.

Diversification of Agricultural Activity

The promotion of crop diversification involves shifting from a single cropping system to various cropping systems, including a shift from food grains to cash crops. This aims to encourage the transition from subsistence farming to commercial farming. Additionally, the agricultural sector is already overcrowded, so many labourers are seeking work in non-agricultural industries and related activities such as livestock, poultry, fisheries, etc. These options provide an alternative source of income while also promoting sustainable livelihoods. The diversification of productive activities includes animal husbandry, which involves breeding and caring for livestock to gain economic benefits. Fisheries have also made significant progress due to increased financial allocations and the adoption of new technologies. Horticulture is another branch of agriculture that involves growing plants for various purposes. Finally, IT has played a critical role in exploring alternative options for sustainable development beyond farming and agricultural activities.

Role of IT Industries in Agriculture Development

• Information technology has had a significant impact on various sectors of the Indian economy. It is widely acknowledged that IT will play a crucial role in achieving sustainable development and food security in the 21st century.
• The government has been able to predict areas of food insecurity and vulnerability through the use of proper information and software tools. This helps to prevent or reduce situations of emergency food requirements.
• IT has also had a positive impact on the agricultural sector by circulating information regarding technologies, prices, weather, and soil conditions for growing different crops. This has resulted in a greater understanding of agriculture and its related aspects.
• The ultimate goal of increasing the role of information technology is to make every village a knowledge centre, where IT provides a sustainable option for employment and livelihood.

Organic Farming

Organic farming involves the cultivation of food through natural methods without the use of synthetic chemical fertilizers or genetically modified organisms. It is an eco-friendly practice that is crucial for sustainable development and has minimal impact on the environment.

Advantages of Organic Farming

• Instead of relying on costly agricultural inputs like high-yield variety seeds, chemical fertilizers, herbicides, etc., organic farming employs locally sourced organic inputs that are affordable and yield favourable returns on investment.
• Organic farming can be a source of income through exporting crops due to the increasing demand for organically grown produce.
• By cultivating crops organically, we can ensure that the food we consume is more nutritious compared to chemically farmed food since organic produce has a higher nutrient content.
• Organic farming has the potential to create more employment opportunities in India as it requires more labour-intensive work compared to conventional farming practices.

Disadvantages of Organic Farming

• Farmers' lack of awareness and education about organic farming is a significant challenge. However, by increasing their knowledge and willingness to adopt new methods, this situation can be improved.
• Insufficient infrastructure and marketing facilities hinder the growth of organic crops. An adequate agricultural policy that supports organic farming can help overcome this challenge.
• The high production costs associated with growing organic crops, as well as the absence of subsidies in this sector, also impede the development of organic farming.

Limitations of Organic farming:

• Initially, organic farming yields were lower than those of modern agricultural farming.
• Organic produce has a shorter shelf life compared to sprayed produce.
• The range of choices for off-season crop production is limited in organic farming.
• Due to the labour-intensive nature of organic farming, India has a comparative advantage in this sector.

Operation Flood

• Operation Flood is a network of milk cooperatives that was launched in 1966. This system focuses on the collection of milk from farmers through cooperative societies, which helps improve the quality and quantity of milk sales in the market.
• By pooling milk from farmers based on different grading and quality standards, Operation Flood has been successful in increasing both the volume and market value of the product.
• Thanks to Operation Flood, milk production has reportedly increased fourfold, as this system has encouraged farmers to adopt better milk production practices and management techniques.

Conclusion

• Unless significant changes take place, it is apparent that the rural sector will likely remain underdeveloped.
• Currently, there is a pressing need to revitalize rural areas by diversifying into various industries such as dairy farming, poultry farming, fisheries, and growing fruits and vegetables. Additionally, connecting rural production centres to both urban and international markets will enable farmers to achieve higher returns on their investments.
• To fully realize the potential of the rural sector, it is essential to develop key infrastructure elements such as credit and marketing systems, establish farmer-friendly agricultural policies, and facilitate ongoing communication between farmer groups and state agricultural departments.