Introduction to Rural Development

The Significance of Rural Development

Despite the rapid growth of urban centres with large industries and modern IT hubs, rural development remains at the core of India's overall progress. The father of the nation, Mahatma Gandhi, rightly said that the real progress of India lay not in the expansion of industrial urban centres, but in the development of its villages. This idea is profoundly relevant even today for several compelling reasons:

• Population Dependence: More than two-thirds of India's population is dependent on agriculture for its livelihood.
• Low Agricultural Productivity: The agricultural sector is yet to become productive enough to adequately provide for this vast population.
• Rural Poverty: A staggering one-fourth of the rural population in India still lives in conditions of abject poverty, lacking access to the basic necessities of life.

Therefore, to achieve real national progress, it is imperative to focus on the development of rural India. The nation cannot be considered developed if its villages remain backward.

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What is Rural Development?

Rural development is a comprehensive and multi-faceted concept. It essentially focuses on taking action for the development of areas that are lagging behind in the overall progress of the village economy. It involves a broad range of initiatives aimed at improving the quality of life and economic well-being of people living in rural areas.

The key areas that pose challenges and require fresh initiatives for development in rural India include:

• Development of Human Resources: This includes focusing on literacy (especially female literacy), education, skill development, and health (covering both sanitation and public health).
• Land Reforms: Implementing effective land reform measures to ensure equity and justice.
• Development of Productive Resources: Enhancing the productive resources unique to each locality.
• Infrastructure Development: Building critical infrastructure like electricity, irrigation, credit facilities, marketing systems, transport (village roads and feeder roads), and facilities for agricultural research and information dissemination.
• Poverty Alleviation: Implementing special measures to reduce poverty and significantly improve the living conditions of the weaker sections of the population, with an emphasis on creating productive employment opportunities.

Scholars argue that the deceleration in agricultural growth (to about 3% per annum during 1991-2012) is largely due to a decline in public investment since the 1991 reforms. Inadequate infrastructure, lack of alternative employment opportunities, and increasing casualisation of employment further impede rural development.

Credit in Rural Areas

The Need for Rural Credit

The growth of the rural economy is heavily dependent on the timely infusion of capital. Farmers and non-farm workers require credit for various reasons. The gestation period between crop sowing and the realisation of income is often very long. During this period, farmers need to borrow to meet their initial investments on seeds, fertilisers, and implements, as well as for family expenses related to events like marriage, death, or religious ceremonies.

Historically, at the time of independence, small and marginal farmers were exploited by non-institutional sources like moneylenders and traders, who charged exorbitant interest rates and manipulated accounts to trap them in a perpetual cycle of debt.

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Sources of Rural Credit: A Multi-agency Approach

A major shift occurred after 1969 with the nationalisation of banks and the adoption of a multi-agency approach to meet the credit needs of rural areas. The institutional structure of rural banking today comprises:

• Commercial Banks
• Regional Rural Banks (RRBs)
• Cooperatives and Land Development Banks

In 1982, the National Bank for Agriculture and Rural Development (NABARD) was established as an apex body to coordinate the activities of all institutions involved in the rural financing system. The Green Revolution also led to a diversification of rural credit towards production-oriented lending.

Self-Help Groups (SHGs)

Recently, Self-Help Groups (SHGs) have emerged to fill the gaps left by the formal credit system. The formal system often requires collateral, which automatically excludes a vast proportion of poor rural households. SHGs function by promoting thrift, where each member contributes a minimum amount. This pooled money is then given as credit to needy members at reasonable interest rates, repayable in small instalments. Such credit provisions are known as micro-credit programmes.

By May 2019, nearly 6 crore women in India had become members of 54 lakh women SHGs. These groups have been crucial for the empowerment of women. Funds ranging from $\text{₹} \ 10,000$ to $\text{₹} \ 15,000$ per SHG, along with another $\text{₹} \ 2.5$ lakhs per SHG as a Community Investment Support Fund (CISF), are provided to support self-employment activities.

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Rural Banking: A Critical Appraisal

The expansion of the banking system has had a positive effect on rural farm and non-farm output, income, and employment, especially after the Green Revolution. It has helped India achieve food security, making famines a thing of the past. However, the system is not without its flaws.

• Failures of Formal Institutions: With the exception of commercial banks, other institutions have largely failed to develop a culture of deposit mobilisation and effective loan recovery.
• High Default Rates: Agriculture loan default rates have been chronically high. This is partly due to genuine issues like crop failure and insufficient income, but deliberate refusal to repay loans is also alleged.

To improve financial inclusion, the government launched the Jan-Dhan Yojana, encouraging all adults to open bank accounts. This has led to over 50 crore new accounts, promoting savings and enabling direct transfer of wages (like MNREGA) and social security payments, thereby improving the efficient allocation of financial resources in rural areas.

The Agricultural Market System

Understanding Agricultural Marketing

Agricultural marketing is a comprehensive process that includes all the activities involved in moving an agricultural product from the farm to the consumer. This process involves:

• Assembling and gathering the produce.
• Storage in warehouses, godowns, or cold storages.
• Processing the raw produce.
• Transportation to different markets.
• Packaging and grading based on quality.
• Distribution across the country.

Before independence, farmers were heavily exploited in the market. They suffered from faulty weighing, manipulation of accounts, and were often forced to sell at low prices due to a lack of market information. Without proper storage facilities, they could not hold their produce to sell later at a better price. Even today, it is estimated that more than 10% of farm produce is wasted due to a lack of storage.

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Government Measures to Improve Agricultural Marketing

To regulate the activities of private traders and protect farmers, the government initiated several measures.

1. Regulation of Markets

The first step was the establishment of regulated markets to create orderly and transparent marketing conditions. This policy has largely benefited both farmers and consumers. However, there is a need to develop about 27,000 rural periodic markets into regulated marketplaces to realise their full potential.

2. Provision of Physical Infrastructure

The government focused on providing physical infrastructure like roads, railways, warehouses, godowns, cold storages, and processing units. However, the current infrastructure is quite inadequate to meet the growing demand and needs significant improvement.

3. Cooperative Marketing

The third initiative was to encourage cooperative marketing to help farmers get fair prices. The success of milk cooperatives in Gujarat (Amul) is a prime example of the transformative power of cooperatives. However, in recent times, many cooperatives have faced setbacks due to issues like inadequate farmer membership and inefficient financial management.

4. Policy Instruments

The fourth element involves specific policy instruments:

• Assurance of Minimum Support Prices (MSP) for agricultural products to protect farmers' incomes.
• Maintenance of buffer stocks of wheat and rice by the Food Corporation of India (FCI).
• Distribution of food grains and sugar through the Public Distribution System (PDS) at subsidised rates to the poor.

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Emerging Alternate Marketing Channels

It has been realised that if farmers sell their produce directly to consumers, it can significantly increase their incomes. Several such alternate marketing channels have emerged:

• Apni Mandi in Punjab, Haryana, and Rajasthan.
• Hadaspar Mandi in Pune.
• Rythu Bazars (vegetable and fruit markets) in Andhra Pradesh and Telangana.
• Uzhavar Sandies (farmers' markets) in Tamil Nadu.

Additionally, national and multinational fast-food chains are entering into contracts with farmers for assured procurement of farm products of a desired quality at pre-decided prices. Such arrangements, known as contract farming, can reduce the price risk for farmers and expand the market for their products.

Diversification of Agricultural Activities

The Need for Diversification

Diversification in the context of rural development includes two key aspects:

1. A change in the cropping pattern (moving from subsistence crops to commercial crops).
2. A shift of the workforce from agriculture to other allied activities (like livestock, poultry, fisheries) and the non-agriculture sector.

Diversification is necessary to reduce the risk of depending solely on farming for livelihood. Since much of the agricultural employment is concentrated in the Kharif season, diversification provides supplementary gainful employment during the Rabi season, especially in areas with poor irrigation. This helps in raising incomes and overcoming poverty.

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Major Areas of Diversification

Animal Husbandry

In India, farmers traditionally use a mixed crop-livestock farming system. Livestock production provides income stability, food security, fuel, and nutrition. It offers an alternative livelihood to over 70 million small and marginal farmers. The distribution of livestock in India is varied:

Livestock Category	Share (%)
Poultry	61
Cattle & Buffaloes	24
Goats & Sheep	14
Others (Pigs, Mules, Camels etc.)	1

The dairy sector has performed impressively, with milk production increasing tenfold between 1951-2016, largely due to the success of ‘Operation Flood’. This system allows farmers to pool their milk, which is then processed and marketed through cooperatives, assuring them a fair price.

Fisheries

The fisheries sector is a vital source of livelihood for the fishing community. Today, inland sources (rivers, lakes) contribute about 65% of the total fish production, while the marine sector (seas, oceans) contributes 35%. The sector accounts for 0.9% of India's total GDP. However, the fishing community faces problems like poverty, underemployment, illiteracy, and indebtedness.

Horticulture

With its varied climate and soil, India grows diverse horticultural crops like fruits, vegetables, flowers, spices, and plantation crops. This sector contributes nearly one-third of the value of agricultural output and 6% of India's GDP. India is a world leader in producing mangoes, bananas, coconuts, and many spices. Horticulture has become a successful sustainable livelihood option, especially for women in rural areas who find employment in flower harvesting, nursery maintenance, and food processing.

Other Alternate Livelihood Options

Information Technology (IT) is emerging as a critical tool for rural development. It can help disseminate information on new technologies, prices, weather, and soil conditions. It also has the potential to generate employment in rural areas and can be used to release the creative potential and knowledge embedded in society.

Sustainable Development and Organic Farming

The Need for Sustainable Agriculture

In recent years, there has been a growing awareness of the harmful effects of chemical-based fertilisers and toxic pesticides. Conventional agriculture relies heavily on these inputs, which can contaminate the food supply, pollute water sources, harm livestock, and deplete the soil. For sustainable development, it is essential to evolve eco-friendly technologies.

Organic farming is one such technology. It is a whole system of farming that restores, maintains, and enhances the ecological balance. It avoids the use of synthetic chemicals and relies on natural methods for cultivation.

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Benefits of Organic Farming

• Cost-Effective: It substitutes costly agricultural inputs (like HYV seeds, chemical fertilisers) with locally produced, cheaper organic inputs, generating good returns.
• Export Earnings: It generates income through exports, as the global demand for organically grown crops is rising.
• Nutritious Food: Studies show that organically grown food often has more nutritional value than food from chemical farming.
• Labour Intensive: It requires more labour input than conventional farming, making it an attractive proposition for a country like India with a large labour force.
• Environmentally Sustainable: The produce is pesticide-free and grown in a way that protects the environment.

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Challenges in Adopting Organic Farming

Despite its benefits, popularising organic farming faces several challenges:

• Lack of Awareness: It requires awareness and a willingness among farmers to adapt to new technologies.
• Inadequate Infrastructure: There is a lack of adequate infrastructure and marketing facilities for organic products.
* Lower Initial Yields: Yields from organic farming can be lower than modern farming in the initial years, making it difficult for small and marginal farmers to adapt. * Shorter Shelf Life: Organic produce may have more blemishes and a shorter shelf life than sprayed produce.

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Conclusion and Path Forward

The rural sector will continue to lag unless significant changes are made. There is a greater need today to make rural areas more vibrant through diversification into dairying, poultry, fisheries, and horticulture. It is crucial to link rural production centres with urban and export markets to ensure higher returns.

Furthermore, infrastructure elements like credit and marketing, farmer-friendly policies, and constant dialogue between farmers and the state are essential to realise the full potential of the rural sector. Environment and rural development must be viewed together, and we must adopt eco-friendly technologies that lead to sustainable development. Learning from successful rural development experiments ("best practice" illustrations) across India can help speed up this process of "learning by doing."

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