Standard : FYJC
SUBJECT : ECONOMICS TIME– 1 Hour
Chapter 5 : Rural Development in India MARKS - 25
Q.1 (A) Assertion & Reasoning – Choose: [03]
1. Assertion (A): Literacy is a powerful instrument in socio-economic change.
Reasoning (R): Empowerment of women helps to reduce gender disparity.
(a) (A) is True but (R) is False
(b) (A) is False but (R) is True
(c) Both (A) and (R) are True and (R) is the correct explanation of (A).
(d) Both (A) and (R) are True but (R) is not the correct explanation of (A)
Ans. (d) Both (A) and (R) are True but (R) is not the correct explanation of (A)
2. Assertion (A): Agricultural credit is mostly for unproductive purposes.
Reasoning (R): Agricultural credit is an important pre-requisite for agricultural growth.
(a) (A) is True but (R) is False
(b) (A) is False but (R) is True
(c) Both (A) and (R) are True and (R) is the correct explanation of (A)
(d) Both (A) and (R) are True but (R) is not the correct explanation of (A).
Ans. (b) (A) is False but (R) is True
3. Assertion (A): NABARD Was established on July 12, 1982.
Reasoning (R): There was no institution providing short-term credit back then.
(a) (A) is True but (R) is False
(b) (A) is False but (R) is True
(c) Both (A) and (R) are True and (R) is the correct explanation of (A).
(d) Both (A) and (R) are True but (R) is not the correct explanation of (A).
Ans. (a) (A) is True but (R) is False
Q. 1 (B) Complete the following statements: [03]
1. Medium-term credit is required for ___________
(a) digging up canals, buying cattle, improvements on land etc.
(b) buying tractor, making permanent improvements on land etc.
(c) purchase of land
(d) purchase of fertilizers, high yielding variety of seeds etc.
Ans. (a) digging up canals, buying cattle, improvements on land etc.
2. The quality of life of the rural people can be improved by _________
(a) providing safe drinking water, health and hygiene facilities.
(b) effective implementation of land reforms.
(c) providing subsidized credit facilities.
(d) reducing rural inequality
Ans. (a) providing safe drinking water, health and hygiene facilities.
2. Small farmers are unable to access rural credit provided by banks due to
(a) presence of money lenders.
(b) no branches in rural areas.
(c) high transaction costs.
(d) preference given to large farmers.
Ans. (c) high transaction costs.
Q.1 (C) Find the odd word out: [03]
1. Purchase of fertilizers, Buying cattle, Digging up canals, Making improvements on land
Ans. Purchase of fertilizers
2. Purchase of tractor, Making permanent improvements on land, Buying cattle,
Expenditure on religious ceremonies.
Ans. Expenditure on religious ceremonies
3. Landlords, Regional Rural Banks (RRBS), Money lenders, Commission agents
Ans. Regional Rural Banks (RRBS
Q.2 Identify and explain the concepts : [04]
1. Raoji purchased a new tractor for his farm by taking a loan
Ans. Concept: Long-term credit & Productive loan
Explanation:
(i) Agricultural credit can be classified on the basis of tenure as well as purpose.
(ii) Long-term credit refers to loans for a period of more than five years.
(iii) Normally, long term credit is provided by banks for buying tractor, making
permanent improvements on land etc.
(iv) Productive loans are those loans that are related to agricultural production and
economically justified.
(v) Raoji has taken a loan to purchase a new tractor for his farm. It is related to
agricultural production
(vi) Therefore, the given illustration relates to concepts of long-tern credit and
productive loan.
2. Damaji borrows loan from a credit society established in his village this season rather
than taking it from
Ans. Concept: Rural co operative credit institutions & Moneylenders
Explanation:
Money-lending has been a widely prevalent profession in rural areas.
Money lenders charge huge rate of interest and mortgage the property of cultivators.
Rural co-operative credit institutions provide short-term as well as long term rural credit
at concessional rates of interest
Damaji borrows a loan from a credit society rather than taking it from a moneylender to
avoid high interest rates and get credit at concessional rates of interest.
Thus, the given illustration relates to concept of rural co-operative credit institutions
and moneylenders.
Q.3 Answer the following: [04]
Explain Institutional sources of agricultural credit in India.
Ans. 1) INSTITUTIONAL SOURCES
The general policy of the_ government on agricultural credit has been one of progressive
institutionalization'. Progressive most institutionalization means bringing of the
agriculture sector under the purview (scope) of institutional finance in step- by-step
manner, It is aimed at providing timely and adequate credit to farmers for increasing
agricultural production and The productivity. following are some of the institutional
sources of credit in India:
(i) National Bank for Agriculture and Rural Development NABARD was (NABARD): S0:50
established on 12th July, 1982 with a paid-up capital of I00 crores by contribution
of Government of India and Reserve Bank of apex India (RBI), It is on institution in
rural Credit structure tor providing credit for promotion of agriculture, small scale
industries, cottage and village industries, handicrafts etc. The paid-up capital stood
at `IO,580 crores as on 31st March 2018, Consequent to the revision in the
composition of share capital between Government of India and RBINABARD today is
fully owned by Government of India.
(ii) Rural Co-operative Credit Institutions:
The rural credit co-operative institutions may be further divided into:
(a) Short-term Credit Co-operatives: They provide short-term rural credit and are
based on the three-tier structure as follows:
1 Primary Agricultural Credit Societies (PACS)
2.District Central Co-operative Banks (DCCB)
3. State Co-operative Banks (SCB)
(b) Long-tem Credit Co-operatives: They provide long-term credit and are
organized at two levels:
1. Primary Co-operative Agriculture and Rural Development Banks
These banks operate at the village level as an independent unit.
2. State Co-operative Agriculture and Rural Development Banks These
banks operate at the state level through their branches in different
villages.
(ii) Commercial Banks (CBS):
Commercial banks provide rural credit by establishing their branches in the
rural areas.
(iv) Regional Rural Banks (RRBS):
(a) Regional Rural Banks (RRBs) are specialised banks established under RRB Act,
1976 to cater to the needs of rural poor.
(b) RRBs are set up as rural-oriented commercial banks ie, they have low cost
profile of a co-operative banks but _professional discipline and modern
outlook of commercial banks.
(v) Micro Finance Institutions (MFls):
Banks offer concessional interest rates for rural credit but small farmers are
unable to access them because of high transaction costs, unfriendly products
& procedures, delays in disbursement etc. Such people can approach Micro
Finance institutions (MEIs).
MEls are the institutions that provide financial services such as Small loans to poor
people or new businesses that cannot use traditional banking services.
Further, Non-Government Organisations NGOS) also provide credit to poor since
mid-70's.
Q.4 Explain significance or importance of rural development In India. [08]
Ans. Rural development in India has taken place due to various plans and policies initiated by 9overnment
as well as non-government agencies. If the right strategies are adopted for rural development, it will
lead to economic Growth and development of the country. The significance of rural development in
India can be explained with the help of the following points:
1. DEVELOPMENT OF INERASTRUCTURE
Rural development leads to further progress in basic infrastructural facilities like
generation of electricity, road connectivity, irrigation etc. A good infrastructure is a
basic requirement for a development of any area.
2. ENFORCEMENT OF LAW AND ORDER
Rural development helps to safeguard the rights of the socially disadvantaged groups
rural poor through proper enforcement of law and order.
3. LITERACY RATE IN RURAL AREAS
At present, there is a huge gap between the literacy rates in urban & rural India. Rural
development helps to bridge this gap by making provisions for educational facilities at
all levels. Literacy is a powerful tool to bring about a change in the social & economic
status of the rural people.
4. LAND REFORMS
Rural development ensures effective implementation of land reforms such as:
1. Ceiling (limit) on land holdings
2. Regulation of rent
3. Protection of rights of tenant (person who has taken land or house on rent)
All of the above lead to reduction in rural inequality.
5. PUBLIC HEALTH AND SANITATION
Rural development helps to improve:
(i) Sanitation and hygiene
(ii) Provision of safe drinking water
(iii) Affordable health facilities
6. CREDIT AVAILABILITY
Famers need credit (loan) at lower rotes because they need money (now) for farming
operations & growing crops. They earn money later later selling their crop and then
return funds to lenders, Rural development facilitates the growth of financial institutions
such as primary_ agricultural co-operative credit societies, regional rural banks, co-
operative banks etc. They provide subsidised credit facilities to the farmers.
7. WOMEN EMPOWERMENT
Rural development helps to:
1. Reduce gender disparity.
2. Meet the diverse needs of rural women.
3. Encourage their participation in community development programmes.
8. ERADICATION OF POVERTY
Due to various factors like improvement in Literacy rate, effective implementation of
land reforms, infrastructural development and availability of cheap credit, rural
development leads to an increase in incomes and standard of living of the rural people.
This helps in eradication of poverty.
