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Rural Development | Class 12 Indian Economic Development Notes

What is Rural Development?

Rural development is a comprehensive term. It essentially focuses on action for the development of areas that are lagging behind in the overall development of the village economy.

Some of the areas which are challenging and need fresh initiatives for development in rural India include Development of human resources including literacy, more specifically, female literacy, education and skill development, health, addressing both sanitation and public health

Land reforms

Development of the productive resources of each locality

Infrastructure development like electricity, irrigation, credit, marketing, transport facilities including construction of village roads and feeder roads to nearby highways, facilities for agriculture research and extension, and information dissemination

Special measures for alleviation of poverty and bringing about significant improvement in the living conditions of the weaker sections of the population emphasizing access to productive employment opportunities.

Credit and Marketing in Rural Areas


Growth of rural economy depends primarily on infusion of capital, from time to time, to realize higher productivity in agriculture and non-agriculture sectors.

As the time gestation between crop sowing and realization of income after production is quite long, farmers borrow from various sources to meet their initial investment on seeds, fertilizers, implements and other family expenses of marriage, death, religious ceremonies etc.

At the time of independence, moneylenders and traders exploited small and marginal farmers and landless laborers by lending to them on high interest rates and by manipulating the accounts to keep them in a debt-trap.

A major change occurred after 1969 when India adopted social banking and multiagency approach to adequately meet the needs of rural credit.

Later, the National Bank for Agriculture and Rural Development (NABARD) was set up in 1982 as an apex body to coordinate the activities of all institutions involved in the rural financing system.

The Green Revolution was a harbinger of major changes in the credit system as it led to the diversification of the portfolio of rural credit towards production-oriented lending.

Rural Banking

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.

Famines became events of the past; we have now achieved food security which is reflected in the abundant buffer stocks of grains. However, all is not well with our banking system.

Agricultural Market System

The mechanism through which the goods reach different places depends on the market channels.

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

Prior to independence, farmers, while selling their produce to traders, suffered from faulty weighing and manipulation of accounts.

Farmers who did not have the required information on prices prevailing in markets were often forced to sell at low prices. They also did not have proper storage facilities to keep back their produce for selling later at a better price.

Diversification into Productive Activities

Diversification includes two aspects - one relates to change in cropping pattern and the other relates to a shift of workforce from agriculture to other allied activities and nonagriculture sector.

The need for diversification arises from the fact that there is greater risk in depending exclusively on farming for livelihood. Diversification towards new areas is necessary not only to reduce the risk from agriculture sector but also to provide productive sustainable livelihood options to rural people.

Much of the agricultural employment activities are concentrated in the Kharif season. But during the Rabi season, in areas where there are inadequate irrigation facilities, it becomes difficult to find gainful employment.

Therefore expansion into other sectors is essential to provide supplementary gainful employment and in realizing higher levels of income for rural people to overcome poverty and other tribulations.

Hence, there is a need to focus on allied activities, non-farm employment and other emerging alternatives of livelihood, though there are many other options available for providing sustainable livelihoods in rural areas.

Animal Husbandry

In India, the farming community uses the mixed crop-livestock farming system cattle, goats, fowl are the widely held species.

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

Today, livestock sector alone provides alternate livelihood options to over 70 million small and marginal farmers including landless laborers. A significant number of women also find employment in the livestock sector.


The fishing community regards the water body as mother or provider. The water bodies consisting of sea, oceans, rivers, lakes, natural aquatic ponds, streams etc. are, therefore, an integral and life-giving source for the fishing community.

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.

Presently, fish production from inland sources contributes about 49 per cent to the total fish production and the balance 51 per cent comes from the marine sector.

Today total fish production accounts for 1.4 per cent of the total GDP. Among states, Kerala, Gujarat, Maharashtra and Tamil Nadu are the major producers of marine products.

Large shares of fish worker families are poor. Rampant underemployment, low per capita earnings, absence of mobility of labour to other sectors and a high rate of illiteracy and indebtedness are some of the major problems fishing community face today.

Even though women are not involved in active fishing, about 60 per cent of the workforce in export marketing and 40 per cent in internal marketing are women.

There is a need to increase credit facilities through cooperatives and SHGs for fisherwomen to meet the working capital requirements for marketing.


Blessed with a varying climate and soil conditions, India has adopted growing of diverse horticultural crops such as 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. The period between 1991-2003 is also called an effort to heralding a Golden Revolution because during this period, the planned investment in horticulture became highly productive and the sector emerged as a sustainable livelihood option. India has emerged as a world leader in producing a variety of fruits like mangoes, bananas, coconuts, cashew nuts and a number of spices and is the second largest producer of fruits and vegetables.

Economic condition of many farmers engaged in horticulture has improved and it has become a means of improving livelihood for many unprivileged classes.

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.

Other Alternate Livelihood Options

The IT has revolutionized many sectors in the Indian economy. There is broad consensus that IT can play a critical role in achieving sustainable development and food security in the twenty-first century.

Governments can predict areas of food insecurity and vulnerability using appropriate information and software tools so that action can be taken to prevent or reduce the likelihood of an emergency.

It also has a positive impact on the agriculture sector as it can disseminate information regarding emerging technologies and its applications, prices, weather and soil conditions for growing different crops etc.

Though IT is, by itself, no catalyst of change but it can act as a tool for releasing the creative potential and knowledge embedded in the society.

It also has potential of employment generation in rural areas. Experiments with IT and its application to rural development are carried out in different parts of India

Sustainable Development and Organic Farming

In recent years, awareness of the harmful effect of chemical-based fertilizers and pesticides on our health is on a rise.

Conventional agriculture relies heavily on chemical fertilizers and toxic pesticides etc., which enter the food supply, penetrate the water sources, harm the livestock, deplete the soil and devastate natural eco-systems.

Efforts in evolving technologies which are eco-friendly are essential for sustainable development and one such technology which is eco-friendly is organic farming.

In short, organic agriculture is a whole system of farming that restores, maintains and enhances the ecological balance.

There is an increasing demand for organically grown food to enhance food safety throughout the world

Organic food is growing in popularity across the world. Many countries have around 10 per cent of their food system under organic farming.

There are many retail chains and supermarkets which are accorded with green status to sell organic food. Moreover, organic foods command higher price of around 10-100 per cent than conventional ones.

Benefits of Organic Farming

Organic agriculture offers a means to substitute costlier agricultural inputs with locally produced organic inputs that are cheaper and thereby generate good returns on investment.

Organic agriculture also generates income through exports as the demand for organically grown crops is on a rise.

Studies across countries have shown that organically grown food has more nutritional value than chemical farming thus providing us with healthy foods.

Since organic farming requires more labour input than conventional farming, India will find organic farming an attractive proposition.

Finally, the produce is pesticide-free and produced in an environmentally sustainable way


It is clear that until and unless some spectacular changes occur, the rural sector might continue to remain backward.

There is a greater need today to make rural areas more vibrant through diversification into dairying, poultry, fisheries, vegetables and fruits and linking up the rural production centers with the urban and foreign (export) markets to realize higher returns on the investments for the products.

Moreover, infrastructure elements like credit and marketing, farmer-friendly agricultural policies and a constant appraisal and dialogue between farmers groups and state agricultural departments are essential to realize the full potential of the sector.


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