1

RURAL DEVELOPMENT CHAPTER 6

Agriculture is the major source of livelihood in the rural sector. Mahatma Gandhi once said that
the real progress of India did not mean simply the growth and expansion of industrial urban
centers but mainly the development of the villages.
This idea of village development being at the center of the overall development of the nation is
relevant even today. Why is this so? Why should we attach such significance to rural
development when we see around us fast growing cities with large industries and modern
information technology hubs? It is because more than two-third of India’s population depends
on agriculture and one-third of rural India still Lives in abject poverty. That is the reason why we
have to see a developed rural India if our nation has to realize real progress. Although the share
of agriculture sectors contribution to GDP was on a decline, the population dependent on this
sector did not show any significant change. After the initiation of reforms, the growth rate of
agriculture sector decelerated to about 3% per annum during the 1991-92. Scholars identify
decline in public investment since 1991 as the major reason for this.
So, real progress of India is possible only when rural areas and rural people are developed, so that
overall growth of India could be achieved.

MEANING OF RURAL DEVELOPMENT

Rural development refers to continuous and comprehensive term, but it essentially means a
plan of action for the development of rural areas which are lagging behind in socio economic
development.
In adequate infrastructure, lack of alternate employment opportunities in the industry or
service sector, increasing casualization of employment impede rural development.
The impact of this phenomenon can be seen from the growing distress witnessed among
farmers across different parts of India.
During 2007-2012 the growth of agriculture output was only 3.2 per cent.

KEY ISSUES IN RURAL DEVELOPMENT

Rural development aims at comprehensive change and improvement of rural life in all aspects.
Some of the areas, which are challenging and need fresh initiates for development in India
include:
1. Development of Human Resources: The quality of the human resource needs to be improved
through following measures:
▪ Proper attention to literary (specifically on female literacy), education and skill
development.
▪ Better Health facilities for the physical growth.
2. Development of Infrastructure: It involves:
▪ Improvement in electricity, irrigation, credit, marketing and transport facilities (including
construction of village roads and feeder roads to nearby highways);
▪ Better Health facilities for agriculture research and extension and information
dissemination.
3. Land Reforms: It includes the following objectives;
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▪ Elimination of exploitation in hand 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.
4. Alleviation of Poverty:-Around 30 per cent of total population is still below the poverty line.
So, there is a serious need for taking serious steps for alleviation of poverty and bringing
significant improvement in living conditions of weaker sections.
5. Development of the productive resources of each locality to enhance opportunities of
employment (particularity other than farming).

All this means that people engaged in farm and non-farm activities in rural areas have to be
provided with various means that help them increase the productivity. They also need to
begiven opportunities to diversify into various non-farm productive activities such as food
processing. Enabling them better and more affordable access to healthcare, sanitation facilities
at workplaces and homes and education for all would also need to be given top priority for
rapid rural development.
INTEXT QUESTIONS

CREDIT AND MARKETING IN RURAL AREAS

Growth of rural economy depends on timely infusion of capital, to realize higher productivity in
agriculture and non-agriculture sectors. In agriculture, farmers are in strong need for credit due
to long gap between crop sowing and realization of income.
Farmers borrow from various sources to meet initial investment 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 credit delivery system is crucial for raising agricultural productivity and incomes
 3

SOURCES OF CREDIT
With growing modernization of agriculture during post-green revolution period, the requirement
of agricultural credit has also increased in the recent years. Broadly, there are two sources, from
which the farmers can raise loans:
(i) Non-Institutional Sources (ii) Institutional Sources
Non-Institutional Sources
Non-Institutional sources have been the traditional sources of agricultural credit in India. The
major non-institutional sources are;
1. Moneylenders: From the very beginning, moneylenders have been advancing a major share
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 of
crops at high rates of interest, on a 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.

The institutional structure of rural banking today consists of a set of multi-agency institutions,
namely, commercial banks, regional rural banks (RRBs), cooperatives and land development
banks
A 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 maximising
their income.
National Bank for Agricultural and Rural Development (NABARD): It is the Apex Bank which was
set up in 1982 coordinates the functioning of different financial institutions, working for
expansion of rural credit

RURAL BANKING SYSTEM A CRITICAL EVALUATION /APPRAISAL.

Role of banking system in the process of rural development in India.

1. Rapid expansion of the banking system had a positive effect on rural farm and non-farm
output,
income and employment, especially after the green revolution — it helped farmers to avail
services and credit facilities and a variety of loans for meeting their production needs.

2. we have now achieved food security which is reflected in the abundant buffer stocks of
grains.
 4

Criticisms/ drawbacks

1. Except commercial banks, other formal institutions have failed to develop a

culture of deposit mobilisation lending to worthwhile borrowers and effective
loan recovery.
2. Agriculture loan default rates have been chronically high.

Thus, the expansion and promotion of the rural banking sector has taken a backseat
after reforms.
Suggestions
1. Banks need to change their approach from just being lenders to building up
relationship banking with the borrowers.

2. Inculcating the habit of thrift and efficient utilisation of financial resources needs
to be enhanced among the farmers too.

Role of SHG (micro credit) in meeting credit requirements of the POOR

Recently, Self-Help Groups (henceforth SHGs) have emerged to fill the gap in the formal credit
system
because 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. Since some kind of
collateral is required, vast proportion of poor rural households were automatically out of the
credit
network.
By March end 2003, more than seven lakh SHGs had reportedly been credit linked.
▪ 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
▪ SHGs have also helped in the empowerment of women.
▪ Such credit provisions are known as micro credit programmes.
CRITICISMS
▪ However, the borrowings are mainly confined to consumption purposes and negligible
proportion is borrowed for agricultural purposes.

Tamil Nadu Women in Agriculture (TANWA)

TANWA is a project initiated in Tamil Nadu to train women in latest agricultural techniques.
▪ It induces women to actively participate in raising agricultural productivity and family
income.
▪ Women are forming Farm Women’s Groups, which function like SHG.
▪ Many other Farm Women’s Groups are creating savings in their group by functioning like
mini banks through a micro- credit system.
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▪ With the accumulated savings, they promote small-scale household activities like
mushroom cultivation, soap manufactures, doll making or other income- generating
activities.

The Poor Women’s Bank

‘Kudumbashree’ is a women-oriented community-based poverty reduction
programme being implemented in Kerala. In 1995, a thrift and credit society
was started as a small savings bank for poor women with the objective to
encourage savings. The thrift and credit society mobilised Rs 1 crore as thrift
savings. These societies have been acclaimed as the largest informal banks in
Asia in terms of participation and savings mobilized

INTEXT QUESTIONS

AGRICULTURAL MARKETING
Agricultural marketing is a process that involves assembling, storage, processing,
transporation, packaging, grading and distribution of different agricultural commodities across
the country.
Agricultural marketing system is an efficient way by which the farmers can dispose their surplus
produce at a fair and reasonable price. It involves different activities for movement of farm
produce from the producer to the ultimate consumer.
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OBSTACLES THAT HINDER THE MECHANISM OF AGRICULTURAL MARKETING

▪ 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 Facilities: Farmers were often forced to sell at low price due to 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 per cent of goods
produced in farms are wasted due to lack of storage.
Therefore, government intervention became necessary to regulate the activities of the private
traders.
(MEASURES INITIATED BY THE GOVERNMENT TO IMPROVE AGRICULTURAL MAREKTING. )(ans
to Q 11 of NCERT)
1. After Independence, the Government of India adopted the following measures to improve the
system of agricultural marketing:
1. Regulated Markets: The first measure was regulation of markets, to create orderly and
transparent marketing conditions. Regulated markets have been organized with a view to
protect the farmers from the malpractices of sellers and brokers. This policy benefitted
farmers as well as consumers.
Drawback
However, there is still a need to develop about 27,000 rural periodic markets as regulated market
places in order to realise the full potential of rural markets.
2. Infrastructural Facilities: The Government aims to provide physical infrastructure facilities
like roads, railways, warehouses, godowns, cold storages and processing units.
Drawback
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 price 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 better price. Milk
Cooperatives in Gujarat have been very successful in transforming the social and economic
condition of Gujarat and some other parts of the country.
Drawback
However, cooperatives have received a setback during the recent past because of:
Inadequate coverage of farmer members;
Lack of appropriate link between marketing and processing cooperatives
Inefficient financial management.
4. Different policy Instruments: In order to protect the farmers, the government has initiated
the following policies:
▪ Minimum Support Prices (MSP): To safeguard the interest of farmers, government fixes
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 the
Government is willing to buy any amount of grains from the farmers.
 7

▪ Maintenance of Buffer Stock: The Food Cooperation of India (FCI) purchases wheat and
rice at the procurement prices, to maintain buffer stock. Buffer stock is created in the
years of surplus production and is used during shortages. It helps to ensure regularity in
supply and stability in prices.
▪ 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.
These instruments aim to protect the income of farmers and to provide food-grains at a
subsidized rate to the poor.
Drawback
However, despite of government intervention:
▪ Agricultural markets are still dominated by the private traders like money lenders, rural
political lenders, big merchants and rich farmers.

Emerging alternate marketing channels for agricultural marketing.

1. Origin of Farmers Market: Farmers can increase their share in the price paid by the
consumers, if they directly sell their produce to consumers. As a result, the concept of
“farmers market” was started, to give boost to the small farmers by providing them provide
direct access to the consumers and eliminating the middlemen. Some examples of these
channels are:
▪ ApniMandi in Punjab, Haryana and Rajasthan;
▪ HadasparMandi in Pune;
▪ Rythu Bazars in Andhra Pradesh; and
▪ UzhavarSandies (farmers market in Tamil Nadu).
2. Alliance with National and Multinational Companies: Several nation 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.

Benefit of such arrangements

Such arrangements help in reducing the price risk of farmers and expand the market for farm
product
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INTEXT QUESTIONS

DIVERSIFICATION INTO PRODUCTIVE ACTIVITIES

Reason for diversification
Agriculture plays a very important role in the economic development. However, the vast majority
of rural people work on land and there is greater risk in depending only on agriculture.

Diversification includes two aspects:

(i) Diversification of Crop Production;
(ii) Diversification of Productive Activities (shift of workforce from agriculture to other allied
activities and non- agriculture sector).
The need for diversification arises because:
(i) There is greater risk in depending exclusively on farming for livelihood; and
(ii) To provide productive sustainable livelihood options to rural people.
(iii) Much of the agricultural employment activities are concentrated in theKharif season.
During the Ravi season, it becomes difficult to find gainful employment in the areas
where there are inadequate irrigation facilities. So, diversification into other sectors
is essential:
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(iv) To provide supplementary gainful employment;

(v) To enable them to earn higher levels of income; and
(vi) To enable rural people to overcome poverty and other trouble
Diversification of Crop production
It involves a shift from single-cropping system to multi-cropping system.
▪ Diversification involves a shift in cropping pattern from food grains to cash crops.
Basically, the main aim is to promote shift from s 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 cultivation of a wide variety of crops. It
will also raise their income.

ROLE OF NON FARM EMPLOYMENT IN PROMOTING RURAL DIVERSIFICATION

As agriculture is already overcrowded, a major proportion of the increasing labour force needs to
find alternate employment opportunities in other non-farm sectors.

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

▪ Non-farm Activities has several segments. Some segments of non-farm activities possess
dynamic linkage 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 infrastructures and other support,
include traditional household-based industries, like pottery, crafts, handlooms, etc.

NON-FARM AREAS OF EMPLOYMENT

Animal Husbandry and Dairying
Animal Husbandry: (or Livestock farming) is that branch of agriculture, which is concerned with
the breeding, rearing and caring for farm animals.
▪ Under livestock farming, cattles, goats and fowls (duck, goose, etc.) are the widely held
species.
▪ India owns one of the largest livestock populations in the world.
▪ Livestock production provides increased stability in income, food security, transport, fuel and
nutrition for the family, without disrupting other food producing activities.
▪ Livestock sector provides alternate livelihood options to over 70 million small and marginal
farmers, including landless labourers.
▪ A significant number of women also find employment in the livestock sector.
▪ In India, poultry accounts for the largest share of 58 per cent, followed by others (camels,
asses, horses, ponies and mules).
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Measures to increase livestock productivity

India had about 300 million cattle, including108 million buffaloes, in 2012.Performance of the
Indian dairy sector over the last three decades has been quite impressive but its productivity is
quite low as compared to other countries.
(i) It requires improved technology and promotion of good breeds of animals to
enhance productivity.
(ii) Improved veterinary care and credit facilities to small and marginal farmers and
landless labourers would enhance sustainable livelihood option through livestock
production

DAIRYING
Dairying: It is that branch of agriculture which involves breeding, raising and utilization of dairy
animals for the production of milk and the various dairy products from it.
▪ 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. Milk production has increased by more than 8 times between 1951-2014.
▪ Operation Flood (or white Revolution) was started by National Dairy Development Board
(NDDB) in 1970 under the expert guidance of then chairman, Dr. VergheseKurien. The
objective of this programme was to create a nationwide milk grid.
❖ Under the Operation Food System, all the farmers pool their milk produce according to
different grades and 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.

FISHERIES
Fisheries refer to the occupation devoted to the catching, processing or selling of fish and other
aquatic animals. Fisheries sector plays an important role in the socio-economic development of
the country.
In India, after progressive increase in budgetary allocations and introduction of new technologies
in fisheries and aquaculture, the development of fisheries has come a long way.
Important Points About Fishing
1. Fishing community regards water body as ‘mother’: The water bodies (sea, oceans, rivers,
lakes, natural aquatic ponds, streams) are considered as ‘mother’ or ‘provider’ as they
provide life-giving source to the fishing community.
2. Volume of Fish Production: Presently, fish production from inland sources contributes about
64 per cent to the total fish production and the balance 36 per cent comes from the marine
sector (sea and oceans).
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3. Share of Fishing in GDP: The total fish production accounts for0.8per cent of the total GDP.
Among states, Kerala, Gujarat, Maharashtra and Tamil Nadu west Bengal, and Andhra
Pradesh are major fish producing states.
4. 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.
5. Problems faced in Fishing: The overall socio-economic status of fishermen is comparatively
lower than that of other backward sectors of our economy. Some of the major problems
faced by these communities include;

(i) Widespread Underemployment;

(ii) Low per capita earnings;
(iii) Absence of mobility of labour to other sectors;
(iv) High Illiteracy rate and indebtedness.

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

HORTICULTURE

Horticulture refers to the science or art of cultivating fruits, vegetables, tuber crops, flowers,
medicinal and aromatic plants, spices and plantation crops. These crops play a vital role in
providing food and nutrition, besides addressing employment concerns.
▪ India has adopted horticulture as it is blessed with a varying climate and soil conditions.
▪ It is an important sector for potential diversification and value in agriculture.
▪ It has been estimated this sector provides employment to around 19 per cent of total
labour force.
Important Points About Horticulture
1. Golden Revolution Period: The period of 1991-2003 is known as ‘Golden Revolution’ because
during this period, the planned investment in horticulture became highly productive and the
sector emerged as a sustainable livelihood option.
2. 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
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.
3. Improvement in Economic Condition: Horticulture has improved economic condition of many
farmers and has become a means of improving livelihood for many unprivileged classes too.
4. 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.
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Evaluation of Horticulture Requirement for enhancing the role of horticulture.

Horticulture has emerged as a successful sustainable 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
• technology improvement and dissemination.

Information Technology
Information Technology (IT) refers to that of engineering that deals with the use of computers
and telecommunications to retrieve and store and transmit information.
Information Technology has revolutionized may sectors in the Indian economy. There is broad
agreement that it will play a critical role in achieving sustainable development and food security
in the 21st century.

Important points about Information Technology

predicting areas of food insecurity : Through appropriate information and software tools,
government has been able to predict areas of food insecurity and vulnerability, to prevent or
reduce the likelihood of an emergency
Disseminate information: It also has a positive impact on the agriculture sector as it circulates
information regarding emerging technologies and its applications, prices, weather and soil
conditions for growing different crops etc.
Releasing the creative potential and knowledge
It acts as a tool for relating the creative potential and knowledge embedded in our people.
Employment generation.
It also has potential of employment generation in rural areas.
The aim for increasing the role of Information Technology is to make every village a knowledge
center, where it provides a sustainable option of employment and livelihood.
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INTEXT QUESTIONS

NCERT QUESTION AND ANSWERS

. 1. What do you mean by rural development? Bring out the key issues in rural
development.
Ans. Rural development refers to continuous and comprehensive socio-economic process,
attempting to improve all aspects of rural life.
1. Development of Human Resources:The quality of the human resource needs to be
improved through following measures:
Proper attention to literary (specifically on female literacy), education and skill
development; and Better Health facilities for the physical growth.

2. Development of Infrastructure:It involves:

Improvement in electricity, irrigation, credit, marketing and transport facilities

(including construction of village roads and feeder roads to nearby highways);
 14

Better Health facilities for agriculture research and extension and information
dissemination.

3. Land Reforms:It includes :

(i) Elimination of exploitation in hand relations;

(ii) Actualisation of the goal of ‘land to the tiller’.
(iii) Improvement of socio-economic conditions of rural poor by widening their land
base;
(iv) Increasing agricultural productivity and production.

4. Alleviation of Poverty:As stated earlier, around 30 per cent of total population is still
below the poverty line. So, there is a serious need for taking serious steps for alleviation
of poverty and bringing significant improvement in living conditions of weaker sections.

5. Development of the productive resources:of each locality to enhance opportunities of

employment (particularity other than farming).
2. Discuss the importance of credit in rural development.
Ans. In agriculture, due to long time gap between crop sowing and realization of income.
Farmers are in strong need for credit. Farmers need money to meet initial investment on seeds,
fertilisers, implements and other family expenses of marriage, death, religious ceremonies, etc.
So, credit is one of the important factors, which contribute to agriculture production. An
efficient and effective rural credit delivery system is crucial for raising agricultural productivity
and incomes
3. Explain the role of micro-credit in meeting credit requirements of the poor.
Ans. Micro-credit or Self-Help Group (SHG) has emerged as the major micro finance
programme in the country in recent years.
• Their focus is largely on those rural poor, who have no sustainable access to the
formal banking system. So, their target groups comprise of small and marginal
farmers, agricultural and non-agricultural labourers, artisans etc.

▪ 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 rapid in small installments.

▪ By March 2003, more than seven lakh SHGs had reportedly been credit linked. Such
credit provisions are generally referred to as micro-credit programmes. SHGs have also
helped in the empowerment of women.
4. Explain the steps taken by the Government in developing rural markets.
Ans. The steps taken by the government in developing rural markets, include the following
measures:
 15

1. Regulated Markets:The first measure was regulation of markets, to create orderly and
transparent marketing conditions. Regulated markets have been organised with a view
to protect 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 storages and processing units.

3. Cooperative Marketing: The aim of cooperative marketing is to realize fair price 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
better price

4 Different policy Instruments:In order to protect the farmers, the government has initiated the
following policies:
▪ Minimum Support Prices (MSP):To safeguard the interest of farmers, government fixes
the minimum support prices of 24 agricultural products, like wheat, rice, maize,
cotton, sugarcane, pulses, etc. Such a price may be regarded as an offer price, at
which the Government is willing to buy any amount of grains from the farmers.

▪ Maintenance of Buffer Stock: The Food Cooperation of India (FCI) purchases wheat
and rice at the procurement prices, to maintain buffer stock. Buffer stock is created in
the years of surplus production and is used during shortages. It helps to ensure
regularity in supply and stability in prices.

▪ 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.
5. Why is agricultural diversification essential for sustainable livelihoods?
Ans. Agriculture diversification is essential for sustainable livelihoods?
(i) There is greater risk in depending exclusively on farming for livelihood.

To provide supplementary gainful employment to rural people and to enable them to overcome
poverty by earning higher levels of income

6. Critically evaluate the role of the rural banking in the process of rural development in India?
Ans. Rapid expansion of the banking system had a positive effect on rural farm and non-farm
output, income and employment. After the green revolution, credit facilities helped
farmers to avail variety of loans for meeting their production needs. With buffer stocks
of grains, famines became events of the past.
Even then, there are number of problems faced by the agricultural credit structure of
the country. Some of the problems faced in rural banking are:
 16

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 loan.

4. Less attention to poor or marginal farmers: Lesser attention has been given on the credit
requirements of needy (small and marginal) farmers. On the other hand, well-to-do
farmers are getting more attention due to better credit worthiness.
5. Growing Overdues: The problem of overdues in agricultural credit continues to be an
area of concern.

▪ The basic reason for growing overdues is the poor repaying capacity of farmers. As a
result, credit agencies are becoming cautious of granting loan to farmers.

▪ Agriculture loan default rates have been chronically high. Moreover, 50 per cent of
the defaulters were categorized as ‘willful defaulters’, which is a threat to the
smooth functioning of banking system and needs to be controlled.
Thus, the expansion and promotion of the rural banking sector has taken a backseat after
reforms. 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:
• Banks need to change their approach from just being lenders to building up
relationship banking with the borrowers; and

Farmers should also be encouraged to inculcate the habit of thrift (saving) and efficient
utilisation of financial resources

7. What do you mean by agricultural marketing?

Ans. Agricultural marketing is a process that involves assembling, storage, processing,
transporation, packaging, grading and distribution of different agricultural commodities
across the country.
Q. 8. Mention some obstacles that hinder the mechanism of agricultural marketing.
Ans. Some of the obstacles that hinder the mechanism of agricultural marketing are:
(i) Agricultural markets are still dominated by the private traders like moneylenders, rural
political leaders, big merchants and rich farmers.
 17

(ii) The quantity of agricultural products, handled by the government agencies and
consumer cooperatives, constitutes only 10 per cent while the rest is handled by the
private sector.

(iii) Lack of storage facility: the facilities available for storing the food grains and commercial
crops are far from satisfactory.

(iv) Lack of Transporation: Due to absence of proper road transporation facilities, they have
to sell their produce at the village markets itself.

(v) Lack of market information: Farmers were often forced to sell at low prices due to lack of
required information on prices prevailing in markets.
Q. 9. What are the alternative channels available for agricultural marketing? Give some
examples.
Ans. Some of the alternative channels available for agricultural marketing are:
(i) Farmers Market:the concept of farmers market has been started to give boost to the
small farmers by providing them provide direct access to the consumers and
eliminating the middlemen. Some examples of these channels are:

▪ ApniMandi in Punjab, Haryana and Rajasthan;

▪ HadasparMandi in Pune;

▪ Rythu Bazars in Andhra Pradesh; and

▪ UzhavarSandies (farmers market in Tamil Nadu).

(ii) Alliance with National and Multinational Companies: Several nation 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.

▪ Such arrangements help in reducing the price risk of farmers and expand the market
for farm products.
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Q. 10. Distinguish between Green Revolution and Golden Revolution.

Green revolution Golden revolution

Green Revolution refers to the large increase The rapid growth in the production of the
in production of food grains due to use of horticulture crops such as fruit, vegetables,
high yielding variety (HYV) seeds especially flowers etc, is known as golden revolution
for wheat and rice.

It led to increase in the production, It led to increase in production of fruits, ,

especially, of rice and wheat. vegetables, flowers aromatic plants, spices,
etc

As a result of this revolution, India became As a result of this revolution, India became a
self-sufficient in the production of wheat and world leader in the production of mangoes,
rice bananas, coconut and spices.
The period of mid 1960s to 1970s was the The period of 1991-2003 is known as ‘Golden
first phase of green revolution. Second phase Revolution’ because during this
of green revolution took place between period, the planned investment in
1970s to 1980s and the spread of green horticulture became highly productive
revolution enabled India to achieve self and the sector emerged as a
sufficiency in food grains. sustainable livelihood option.

Q11. Do you think various measures taken by the government to improve agricultural
marketing are sufficient Discuss?

Refer to page 6 & 7 of notes.

Q. 12. Explain the role of non-farm employment in promoting rural diversification.
Ans. The following are the importance of non-farm employment opportunities in in promoting
rural diversification:
(i) There is greater risk in depending exclusively on farming for livelihood. Non-farm
employment provides productive sustainable livelihood options to rural people.

(ii) Most of the agricultural employment activities are concentrated in the Kharif season.
However, during the Ravi season, it becomes difficult to find gainful employment in the
areas where there are inadequate irrigation facilities. So, diversification into non-farm
areas proves to be crucial.

(iii) Non-farm Activities has several segments. Some segments of non-farm activities possess
dynamic linkage that permit healthy growth.

(iv) The output non-farm sectors acts as an input for the large scale industries. For example,
agro-processing industries, leather industry, etc.
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Q. 13. Bring out the importance of animal husbandry, fisheries and horticulture as a source of
diversification.
Ans. The importance of animal husbandry or livestock farming will be clear from the
following points:
▪ Animal husbandry provides alternate livelihood options to over 70 million small and
marginal farmers, including landless labourers.

▪ It provides increased stability in income, food security, transport, fuel and nutrition for the
family, without disrupting other food producing activities.

▪ A significant number of women also find employment in the livestock sector.

Fisheries Sector plays an important role in the socio-economic development of the country.
(i) Fisheries are an important source of livelihood for states like Kerala, Gujarat,
Maharashtra and Tamil Nadu.

(ii) A significant number of women also find employment in the fishing. 60 per cent of the
workforce in export marketing and 40 per cent in internal marketing are women.

(iii) Fish production contributes 1.4 per cent to India’s GDP.

Horticulture is an important sector for potential diversification and value addition in agriculture.
India has emerged as a world leader in producing a variety of fruits, vegetables and a number of
spices.
(i) Horticulture generates employment for 19 per cent of India’s total labour force.

(ii) Horticulture has improved economic condition of many farmers and has become a
means of improving livelihood for many unprivileged classes too.

(iii) Flower harvesting, nursery maintenance, etc are highly remunerative employment
options for women in rural areas.
Q. 14. ‘Information technology plays a very significant role in achieving sustainable
development and food security’. Comment.
Ans. Information Technology (IT) has revolutionized many sectors in the Indian economy. It is
widely accepted that IT will play a critical role in achieving sustainable development and
food security in the 21st century.
▪ Through appropriate information and software tools, 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

regarding emerging technologies and its applications, prices, weather and soil
conditions for growing different crops etc.
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▪ It has ushered in a knowledge economy, which is thousand times more powerful than
the industrial revolution.

▪ It acts as a tool for relating the creative potential and knowledge embedded in our
people. It also has potential of employment generation in rural areas.