5.

RURAL DEVELOPMENT

5.1 INTRODUCTION

Rural development is really important in India because most of the country's population lives in rural
areas and relies on agriculture for their livelihoods. Even though India has rapidly growing cities and
modern industries, agriculture still struggles to provide enough for the people who depend on it. A
significant portion of the rural population lives in poverty. So, when we talk about rural development, we
mean making these rural areas better and more prosperous.

Rural development involves improving the lives of people in villages. This includes providing better
access to things like healthcare, education, clean water, and job opportunities. It also means making
farming more efficient so that farmers can produce more and earn a better income.

In simple terms, rural development aims to make rural areas better places to live and work, ensuring
that people there have the same opportunities and quality of life as those in cities. This is essential for
the overall progress of the country, as a strong and prosperous rural India is crucial for India's growth
and development.

5.2 WHAT IS RURAL DEVELOPMENT ?

Rural development involves various aspects aimed at improving the lives of people living in rural areas.
Some of the key areas of focus for rural development include:

1. Development of Human Resources: This includes efforts to improve literacy, especially female
literacy, education, and skill development. Additionally, it involves addressing issues related to
health, such as sanitation and public health.
2. Land Reforms: Land reforms aim to ensure equitable distribution of land among the rural
population, providing land to landless farmers, and reducing landlessness.
3. Development of Productive Resources: Enhancing the productivity of local resources, including
agriculture, is essential. This can involve improving farming techniques, introducing new crops, and
promoting sustainable agricultural practices.
4. Infrastructure Development: Rural areas need better infrastructure, such as access to electricity,
irrigation, credit, marketing facilities, and transportation. This includes building village roads and
feeder roads to connect villages to highways, facilitating agricultural research and extension
services, and ensuring information dissemination.
5. Poverty Alleviation: Special measures are required to alleviate poverty and improve the living
conditions of marginalized populations. This includes providing access to productive employment
opportunities.

The goal of rural development is to empower people engaged in both farming and non-farm activities in
rural areas. It aims to increase productivity, diversify income sources, and improve living standards.
Additionally, rural development emphasizes providing better access to healthcare, sanitation, and
education for all residents of rural areas.

However, despite these efforts, there have been challenges in the agriculture sector's growth, including
declining public investment and inadequate infrastructure. This has led to growing distress among
farmers. To address these issues, it's essential to consider aspects such as credit and marketing
systems, agricultural diversification, and the role of organic farming in promoting sustainable
development in rural India.

5.3 CREDIT AND MARKETING IN RURAL

AREAS

The availability of credit is crucial for the growth of the rural economy, as it helps farmers and rural
households meet their initial investment requirements and improve productivity. Historically,
moneylenders and traders exploited rural borrowers by offering loans at high-interest rates and
manipulating accounts to keep them trapped in debt.

However, significant changes occurred in the rural credit system after India's independence. Here are
some key developments:

1. Social Banking and Multi-Agency Approach: In 1969, India adopted social banking and a multi-
agency approach to address the rural credit needs. This approach aimed to provide rural credit
more effectively and at reasonable rates.
2. National Bank for Agriculture and Rural Development (NABARD): NABARD was established in
1982 as an apex body to coordinate the activities of all institutions involved in rural financing. It
played a crucial role in diversifying the portfolio of rural credit toward production-oriented lending.
3. Institutional Structure: The institutional structure of rural banking today includes various entities
such as commercial banks, regional rural banks (RRBs), cooperatives, and land development
banks. They are expected to provide adequate credit at affordable rates to rural borrowers.
4. Self-Help Groups (SHGs): SHGs have emerged as a valuable component of rural credit. These
groups promote thrift among members, with each member contributing a small amount. The pooled
funds are then used to provide credit to members for various purposes. SHGs have played a
significant role in empowering women in rural areas.
5. Micro-Credit Programs: Micro-credit programs, facilitated through SHGs, have helped in providing
credit for income generation and consumption purposes. However, there have been concerns about
whether borrowers are using these funds for productive purposes.
6. Jan Dhan Yojana: This government scheme encourages all adults to open bank accounts. Account
holders are eligible for various benefits, including accidental insurance coverage, overdraft facilities,
and government-related payments. This initiative has promoted financial inclusion and the efficient
allocation of financial resources in rural areas.

Despite these positive developments, there have been challenges in the rural banking sector, including
high default rates on agricultural loans. Farmers' refusal to repay loans has been a concern, and
addressing the underlying reasons for loan defaults is essential.

In recent years, the Jan Dhan Yojana has played a significant role in promoting financial inclusion and
thrift among rural populations, with millions of people opening bank accounts and mobilizing substantial
funds through these accounts.

5.4 AGRICULTURAL MARKET SYSTEM

Agricultural marketing is a crucial component of the agricultural sector, encompassing various activities
related to the production, distribution, and sale of agricultural commodities. In India, agricultural
marketing has undergone significant changes and government interventions to address the challenges
faced by farmers and consumers. Here are key points regarding agricultural marketing in rural areas:

1. Pre-Independence Challenges: Before independence, farmers faced challenges such as faulty

weighing, manipulation of accounts, and lack of information on market prices. These issues led to
farmers often selling their produce at lower prices and experiencing exploitation by traders.
2. Government Intervention: To regulate and improve agricultural marketing, the government initiated
several measures:
a. Regulation of Markets: The government established regulated markets to create orderly and
transparent marketing conditions, benefiting both farmers and consumers. However, there is still a
need to develop additional rural periodic markets.
b. Physical Infrastructure: Investment in physical infrastructure facilities like roads, railways,
warehouses, godowns, cold storages, and processing units aimed to enhance the marketing
infrastructure. Despite these efforts, there is a need for further improvements.
c. Cooperative Marketing: The government promoted cooperative marketing to ensure fair prices
for farmers' products. The success of milk cooperatives in Gujarat and other parts of the country
exemplifies the potential of cooperatives. However, cooperatives faced challenges like inadequate
membership coverage and financial management issues.
d. Policy Instruments: The government introduced policy instruments, including minimum support
prices (MSPs) for agricultural products, maintenance of buffer stocks of wheat and rice by the Food
Corporation of India, and the distribution of food grains and sugar through the Public Distribution
System (PDS). These measures aimed to protect farmers' income and provide subsidized food to
the poor.
3. Role of Private Sector: Despite government interventions, the private sector, including
moneylenders, rural political elites, big merchants, and wealthy farmers, continues to dominate
agricultural markets. Government intervention remains crucial, especially for commodities handled
by the private sector.
4. Emerging Alternate Marketing Channels: New marketing channels are emerging, allowing
farmers to sell their produce directly to consumers. Examples include Apni Mandi, Hadaspar Mandi,
Rythu Bazars, and Uzhavar Sandies. Fast-food chains are also forming contracts/alliances with
farmers to encourage cultivation of specific products with assured procurement at predetermined
prices.
 5. Reform Laws: In 2020, the Indian Parliament passed three laws aimed at reforming the agriculture
marketing system. These laws have sparked debates and differing opinions among farmers. Further
discussions and details of these laws are essential to understand their implications fully.

The debate over the role of government intervention in agricultural marketing continues. Some argue
that commercialization of agriculture offers opportunities for higher farmer incomes if government
intervention is limited. However, the balance between government support and market-oriented reforms
remains a subject of ongoing discussion and policy development.

5.5 DIVERSIFICATION INTO PRODUCTIVE

ACTIVITIES

Diversification into productive activities is essential for rural development in India. This diversification
encompasses changes in cropping patterns, a shift of the workforce from agriculture to allied activities,
and non-agricultural sectors. The need for diversification arises due to the inherent risks associated with
depending solely on farming for livelihoods. Here are some key points on diversification and various
sectors contributing to it:

1. Diversification Objectives: The main objectives of diversification are to reduce the risk faced by
agricultural-dependent communities and provide them with sustainable livelihood options.
Diversification helps in stabilizing income, ensuring food security, and creating supplementary
employment opportunities.
2. Allied Activities and Non-Farm Employment: To overcome the seasonality and underemployment
prevalent in agriculture, rural workers should explore other avenues. These include livestock rearing
(such as cattle, goats, and poultry), fisheries, and other non-farm sectors.
3. Animal Husbandry: Livestock farming, including cattle, goats, and poultry, plays a crucial role in
supplementing rural incomes. It provides stability in income, food security, and nutrition for rural
households. The success of milk cooperatives, particularly in Gujarat, has demonstrated the
potential of the livestock sector.
4. Fisheries: Fisheries, both inland and marine, contribute significantly to rural livelihoods. Inland fish
production accounts for about 65% of the total value of fish production in India. States like West
Bengal, Andhra Pradesh, Kerala, Gujarat, Maharashtra, and Tamil Nadu are major fish-producing
regions. However, the fishing community faces challenges related to underemployment, low
earnings, and lack of mobility.
5. Horticulture: India has favorable climatic and soil conditions for horticultural crops, including fruits,
vegetables, flowers, spices, and plantation crops. Horticulture contributes about one-third of the
value of agricultural output and six percent of the Gross Domestic Product (GDP). It provides
employment and income opportunities for rural households, particularly women, in areas like flower
harvesting, nursery maintenance, seed production, and food processing.
6. Livestock Productivity Improvement: Despite having a large livestock population, India's
livestock productivity remains low compared to other countries. Enhancing livestock productivity
requires improved technology, access to credit, and better veterinary care for small and marginal
farmers.
 7. Challenges in Fisheries: The fishing sector faces challenges related to overfishing and pollution.
Regulating and controlling these issues is essential for sustainable livelihoods. Welfare programs for
the fishing community need to be reoriented for long-term gains.
8. Promotion of IT: Information Technology (IT) can play a vital role in rural development by
disseminating information on emerging technologies, crop prices, weather conditions, and more. It
has the potential to generate employment opportunities in rural areas and enhance the knowledge
and skills of rural communities.

In summary, diversification into productive activities beyond traditional agriculture is crucial for rural
development. This diversification not only reduces the risks associated with agriculture but also creates
sustainable livelihood options, improves income stability, and ensures food security for rural
communities.

5.6 SUSTAINABLE DEVELOPMENT AND

ORGANIC FARMING

Organic farming is gaining popularity worldwide due to its numerous benefits and its environmentally
sustainable approach. Here are some key points about organic farming and its benefits:

1. Eco-Friendly Approach: Organic farming is an eco-friendly approach to agriculture that aims to

restore, maintain, and enhance the ecological balance of agricultural ecosystems. It avoids the use
of chemical fertilizers, synthetic pesticides, and genetically modified organisms (GMOs).
2. Increasing Awareness: In recent years, there has been a growing awareness of the harmful effects
of chemical-based fertilizers and pesticides on human health, soil quality, water sources, and
ecosystems. This awareness has led to a rise in demand for organically grown food products.
3. Benefits of Organic Farming:

Reduced Input Costs: Organic farming substitutes costly agricultural inputs like high-yielding
variety (HYV) seeds, chemical fertilizers, and pesticides with locally produced organic inputs,
which are often more cost-effective.
Income Generation: Organic agriculture can generate income through exports, as the demand
for organic crops is increasing globally.
Nutritional Value: Studies have shown that organic produce tends to have higher nutritional
value compared to conventionally grown crops.

Environmentally Sustainable: Organic farming practices are environmentally sustainable, as

they reduce soil and water pollution, protect biodiversity, and promote healthy ecosystems.
Pesticide-Free: Organic farming avoids the use of synthetic pesticides, making the produce
pesticide-free and safer for consumption.

4. Challenges: Popularizing organic farming faces several challenges, including:

Awareness and Willingness: Farmers need to be aware of and willing to adapt to new organic
farming techniques.
 Infrastructure: Inadequate infrastructure for organic farming and processing can be a barrier to
its expansion.
Marketing: Marketing organic products can be challenging, and there is a need for better
market linkages.
Initial Yield Reduction: Organic farming may result in lower yields during the initial years
compared to modern agricultural practices, which can be a concern for small and marginal
farmers.
Quality Standards: Organic produce may have more blemishes and a shorter shelf life than
conventionally grown produce, making it important to meet quality standards.
5. Advantages for India: India has a clear advantage in producing organic products for both domestic
and international markets due to its diverse agro-climatic conditions and agricultural practices.
Organic farming can contribute to sustainable agricultural development in the country.
6. Price Considerations: While organic farming may initially lead to slightly higher product costs, as
demand increases and economies of scale are realized, it is possible that organic food and non-
food items could become more competitively priced. The long-term benefits of healthier food and a
more sustainable environment may outweigh any short-term price differences.

In conclusion, organic farming offers a sustainable and environmentally friendly approach to agriculture
that can benefit both farmers and consumers. With the right infrastructure, awareness, and marketing
strategies, organic farming can play a significant role in India's agricultural development.

5.7 CONCLUSION

In conclusion, it is evident that rural development is crucial for the overall progress of India. The rural
sector, which constitutes a significant portion of the population, faces various challenges and
opportunities. To promote rural development and improve the quality of life in rural areas, several key
factors need to be considered:

1. Diversification: There is a need to promote diversification in rural areas by encouraging activities

such as dairying, poultry, fisheries, and horticulture. These activities can provide supplementary
income and reduce the risk associated with depending solely on agriculture.
2. Market Linkages: Connecting rural production centers with urban and export markets is essential
to realize higher returns on investments. Improved infrastructure, efficient credit and marketing
systems, and supportive agricultural policies are vital for facilitating these linkages.
3. Sustainable Agriculture: Sustainable agriculture practices, including organic farming, should be
encouraged to protect the environment and human health. Organic farming, in particular, offers
various benefits and has the potential to generate income and enhance food safety.
4. Infrastructure Development: Rural infrastructure, such as roads, irrigation, storage facilities, and
cold chains, needs improvement to support agricultural and non-agricultural activities. Adequate
infrastructure can reduce post-harvest losses and improve the overall economic prospects of rural
areas.
 5. Credit and Financial Inclusion: Access to credit and financial services is crucial for rural
development. Initiatives like Self-Help Groups (SHGs) have played a significant role in providing
micro-credit to rural households. Expanding financial inclusion and promoting savings can empower
rural communities.
6. Collaborative Efforts: Effective collaboration between farmers' groups and state agricultural
departments is essential. Continuous dialogue, feedback, and the exchange of best practices can
lead to informed policies and better outcomes for rural development.

7. Sustainable Practices: Environmental considerations should be integrated into rural development

efforts. Sustainable practices can help preserve natural resources, protect ecosystems, and
promote long-term well-being.

8. Learning from Success Stories: It is essential to learn from successful rural development
experiments carried out in different parts of India. These success stories can serve as valuable
examples and models for achieving rural development goals.

Rural development is not a one-size-fits-all approach. It requires tailored solutions that consider local
conditions and needs. By addressing these key factors and fostering a holistic approach to rural
development, India can work towards creating vibrant and sustainable rural communities that contribute
to the nation's overall progress.

Box 5.1: The Poor Women’s Bank

Kudumbashree - Empowering Women Through Community-Based Poverty Reduction

Kudumbashree is a pioneering community-based poverty reduction program that has been transforming
the lives of women in Kerala, India. Launched in 1995, this initiative has garnered recognition for its
remarkable impact on empowering women and promoting financial inclusion.

Key Features:

1. Thrift and Credit Society: At the heart of Kudumbashree is a thrift and credit society that was
established to encourage savings among impoverished women. This initiative started small but
quickly gained momentum.

2. Savings Mobilization: The thrift and credit society successfully mobilized savings from its
members, amassing an impressive Rs 1 crore. This achievement highlights the commitment of poor
women to saving for their future.
3. Largest Informal Bank in Asia: Kudumbashree's thrift and credit societies have earned the
distinction of being recognized as the largest informal banks in Asia. This recognition underscores
their significance in terms of participation and the substantial savings mobilized.

Impact and Significance:

Kudumbashree has had a profound impact on the lives of women in Kerala, offering them a platform for
economic empowerment and self-reliance. By fostering a culture of thrift and financial discipline, it has
enabled women to secure their financial futures and escape the cycle of poverty.
The program's success highlights the importance of community-based approaches to poverty reduction,
particularly when focused on women's empowerment. Kudumbashree serves as a powerful model for
similar initiatives aiming to uplift marginalized communities and promote financial inclusion.

Box 5.2: Tamil Nadu Women in Agriculture (TANWA)

Tamil Nadu Women in Agriculture (TANWA): Empowering Women in Agriculture

Tamil Nadu Women in Agriculture (TANWA) was a pioneering project launched in the late 1980s in
Tamil Nadu, India. This initiative aimed to empower women by providing them with training in modern
agricultural techniques and promoting organic farming practices. It encouraged active participation of
women in enhancing agricultural productivity and increasing family incomes.

Notable Aspects of TANWA:

1. Training in Modern Agricultural Techniques: TANWA provided women with training in the latest
agricultural methods, equipping them with the knowledge and skills needed to adopt modern and
sustainable farming practices.
2. Focus on Organic Farming: The project emphasized the importance of organic farming, promoting
environmentally friendly and chemical-free approaches to agriculture.
3. Income Generation: Women trained under TANWA were encouraged to actively engage in income-
generating activities related to agriculture. One example is the production and sale of
vermicompost, which not only benefited the environment but also generated income for these
women.

4. Micro-Credit System: Farm Women's Groups, established as part of TANWA, operated like mini
banks, creating a micro-credit system within their communities. Through these groups, women could
access funds for various activities, including small-scale household enterprises.

5. Diversification of Income: The accumulated savings within these groups were used to promote
diverse income-generating activities, such as mushroom cultivation, soap manufacturing, doll
making, and other small-scale ventures.

Relevance Beyond Tamil Nadu:

TANWA serves as an inspiring example of how empowering women in agriculture can lead to enhanced
livelihoods, increased family income, and the adoption of sustainable farming practices. This initiative's
success underscores the potential for similar projects to be implemented in other regions to uplift rural
communities, particularly women, by providing them with the skills and resources to thrive in agriculture
and related enterprises.

Box 5.3: Adoption of Village by Parliamentarians

Saansad Adarsh Gram Yojana (SAGY): Transforming Villages Through Parliamentary Initiative
In October 2014, the Government of India introduced the Saansad Adarsh Gram Yojana (SAGY), a
unique and ambitious initiative aimed at the holistic development of rural villages across the country.
The program's name translates to "Members of Parliament's Model Village Scheme." SAGY envisions
the transformation of villages into ideal or model villages through the concerted efforts of Members of
Parliament (MPs).

Key Features and Objectives of SAGY:

1. Parliamentary Involvement: Under SAGY, each Member of Parliament (MP) is responsible for
identifying and developing one village from their respective constituencies. The idea is to leverage
the political leadership and influence of MPs to drive rural development.

2. Phase-wise Development: The scheme operates in a phased manner. Initially, MPs are required to
choose and develop one village as a model village by the year 2016. Subsequently, they are
expected to adopt and develop two more villages by 2019. This gradual expansion aims to cover
over 2,500 villages across India.

3. Village Selection Criteria: MPs are encouraged to select villages that fall within the specified
population range, which is 3,000-5,000 for plains and 1,000-3,000 for hilly regions. It is crucial that
these villages are not the MPs' own or their spouses' native villages, ensuring an objective and
equitable approach to development.
4. Development Planning: The core of SAGY involves the formulation and execution of a
comprehensive Village Development Plan (VDP). MPs, in collaboration with local communities, are
expected to devise and implement these plans. The VDP should encompass various facets of
development, including health, nutrition, and education.

5. Community Participation: MPs play a critical role in motivating and mobilizing villagers to actively
participate in development activities. Encouraging community involvement ensures that the
development process is inclusive and responsive to local needs.

6. Infrastructure Development: SAGY emphasizes the creation and enhancement of essential

infrastructure in model villages. This may include improvements in healthcare facilities, educational
institutions, sanitation, clean drinking water, and other amenities crucial for a high quality of life.

Outcomes and Impact:

SAGY represents a visionary approach to rural development by involving political representatives at the
grassroots level. The scheme aims to address several critical issues faced by rural India, including
poverty alleviation, healthcare access, quality education, and improved living standards. By fostering
community participation and leveraging the expertise and resources of MPs, SAGY endeavors to uplift
villages and create sustainable models of rural development.

Since its launch, SAGY has seen varying degrees of success in different regions of India. It has
provided an opportunity for MPs to make tangible contributions to their constituencies' development
while encouraging a more holistic and integrated approach to rural welfare.
In summary, Saansad Adarsh Gram Yojana exemplifies the Indian government's commitment to rural
development and underscores the significance of parliamentary engagement in bringing about positive
changes in rural communities.

Box 5.4: Organic Food

Box 5.4: Organic Food - A Growing Global Trend

Organic food has witnessed a remarkable surge in popularity worldwide, reflecting an increasing global
awareness of health and environmental concerns associated with conventional agriculture. Many
countries are dedicating a significant portion of their agricultural systems to organic farming, with
approximately 10 percent of their food production coming from organic sources. This growing trend is
accompanied by various retail chains and supermarkets that have earned the distinction of being
"green" by offering organic food products to consumers. Furthermore, organic foods often command
higher prices, ranging from 10 to 100 percent more than their conventionally produced counterparts.

The demand for organic food can be attributed to several key factors:

1. Health and Wellness: Consumers are becoming increasingly health-conscious, seeking foods that
are free from synthetic chemicals, pesticides, and genetically modified organisms (GMOs). Organic
products are seen as a healthier choice due to their reduced exposure to chemical residues.

2. Environmental Sustainability: Organic farming practices prioritize soil health, biodiversity, and
ecological balance. These practices have a lower environmental impact, reducing soil and water
contamination and promoting long-term sustainability.

3. Animal Welfare: Organic standards often include guidelines for ethical treatment of animals, such
as providing access to pasture and avoiding the use of growth hormones or antibiotics. This appeals
to consumers concerned about animal welfare.
4. Taste and Quality: Many consumers find that organic fruits and vegetables, for example, have
superior taste and quality compared to conventionally grown counterparts. This perception drives
demand for organic produce.
5. Supporting Local and Small-scale Agriculture: Organic farming is often associated with small-
scale and local agriculture, which appeals to consumers interested in supporting local economies
and reducing food miles.

6. Certification and Transparency: Organic products are subject to certification standards that
ensure they meet specific organic criteria. This certification provides consumers with transparency
and confidence in their purchasing choices.

7. Nutritional Value: Some studies suggest that organic produce may have slightly higher nutritional
content, which further motivates health-conscious consumers.

8. Sustainability and Ethical Concerns: Organic farming practices align with sustainability principles
and ethical concerns about the impact of agriculture on the environment and communities.

While the organic food market continues to grow, it poses challenges for farmers, including the need for
certification, adherence to organic farming practices, and potentially higher production costs.
Nevertheless, the global trend toward organic food reflects a shift in consumer preferences toward more
environmentally friendly and health-conscious choices in the food industry.

Box 5.5: Organically Produced Cotton in Maharashtra

In 1995, Kisan Mehta, associated with the NGO Prakruti, proposed the idea of growing cotton
organically in Maharashtra. At that time, cotton was one of the major crops heavily reliant on chemical
pesticides. The suggestion was met with skepticism, and the Director of the Central Institute for Cotton
Research in Nagpur famously remarked, "Do you want India to go naked?" However, this marked the
beginning of a transformative journey.

Currently, around 130 farmers have dedicated approximately 1,200 hectares of land to cultivate cotton
organically, adhering to the standards set by the International Federation of Organic Agriculture
Movements. To verify the quality of the produce, it underwent testing by the German Accredited Agency,
AGRECO, which confirmed its high quality.

Kisan Mehta believes that roughly 78 percent of Indian farmers are marginal farmers who own less than
0.8 hectares of land but collectively account for 20 percent of India's cultivable land. For these farmers,
organic agriculture proves to be a more profitable and sustainable option in terms of both financial
returns and long-term soil conservation.

This success story highlights the transition to organic cotton cultivation in Maharashtra, showcasing the
potential for sustainable and environmentally friendly farming practices. Students are encouraged to
visit local farms that employ organic farming methods and explore the benefits associated with these
practices. They can then present their findings and experiences to their class, promoting awareness of
organic agriculture and its advantages.