Indian Economic Development Chapter 5 Rural Development VBQs Set 02

Reason-based Questions 

Read the following statements carefully. Write True or False with a reason.

Question. Fertilisers restore crop health, not the soil health.
Answer: True. Reason: Fertilisers are meant to raise crop productivity. In fact, continuous use of fertilisers erodes fertility of the soil.

Question. Subsistence farming reduces market risk.
Answer: True. Because: (i) Subsistence farming focuses on the production of those crops which are meant for self-consumption by the farming families. The farmers do not have to buy these crops from the market. Accordingly, the market risk is avoided. (ii) Unlike the production of commercial crops, the production of subsistence crops does not involve market expectations. Accordingly, there are no market risks.

Question. It is easier to obtain institutional credit rather than non-institutional credit.
Answer: False. Because: (i) Institutional credit (like from banks) involves lots of banking formalities, while non-institutional credit does not. (ii) Institutional credit is available only against collateral (tangible security) while non-institutional credit is just a matter of faith between the borrower and the lender.

Question. Lack of warehousing causes loss of revenue to the farmers.
Answer: True. Because, in the absence of warehousing, the farmers are compelled to sell their produce immediately after harvesting it. It causes a glut (excess supplies) in the market, leading to a fall in crop price. Accordingly, there is a loss of revenue to the farmers.

Question. Cattle farming (rather than crop farming) is more popular in arid and semi-arid areas than in those where rainfall is not deficient.
Answer: True. Reason: Arid and semi-arid areas are those where rainfall is highly deficient. Accordingly, crop productivity in these areas becomes highly unpredictable and often remains low. Implying low income from crop farming. With a view to supplementing farm income, the farmers in these areas resort to cattle farming. In areas where rainfall is not deficient, crop yield is high. Accordingly, the farmers need not resort to cattle farming as a supplementary source of income.

HOTS & Applications

Question. How organic farming promotes sustainable development?
Answer: Organic farming focuses on 'soil health' rather than 'crop health'. Fertility of soil is maintained over a long period of time. Accordingly, organic farming promotes sustainable development.

Question. How is diversification of crop production different from diversification of production activity?
Answer: Diversification of crop production implies a shift from mono-cropping to multi-cropping system of crop production. Diversification of production activity implies a shift from (say) farming to non-farming areas of employment.

Question. How grading of output raises revenue of the farmer?
Answer: Grading of output refers to division of output in different categories on the basis of 'quality'. The farmer can charge higher price for the high-graded of output. This increases his total revenue from the sale of his output.

Question. India has an edge over other countries in the adoption of organic farming. How?
Answer: It is in two ways: (i) Organic farming involves a labour-intensive process of production. India has an edge because it has abundance of labour supply in the rural areas. (ii) Organic farming depends on cattle manure as a significant farm input. India has an edge as it has huge stock of cattle population.

Question. How is Green Revolution different from Golden Revolution?
Answer: 'Green Revolution' refers to a series of research, development, and technology transfer initiatives that increased agriculture production remarkably. On the other hand, 'Golden Revolution' refers to a series of research, development and technology transfer initiatives that increased production of horticulture crops (vegetables and fruits) and honey.

Question. Why does a farmer require credit? Write your observations.
Answer: Credit need of the farmer may be split into three parts: (i) Short-term Credit : Needed for the purchase of inputs. (ii) Medium-term Credit : Needed for the purchase of equipments/appliances. (iii) Long-term Credit : Needed for the purchase of land or improvement of the existing land.

Analysis & Evaluation

Question. As a minister for rural development, what will be your action-plan for the development of rural India?
Answer: As a minister for rural development, my action-plan would focus on three basic objectives: (i) Crop productivity must be increased to increase income from farming. Agriculture should no longer remain merely as a means of subsistence. It must be transformed into a commercial activity that generates profit. (ii) Avenues of employment outside agriculture must be explored and developed. This is to ensure that rural development no longer remains farm-centric. It becomes more comprehensive and meaningful. (iii) Rural development must be integrated with human development. This can be achieved only when a significant focus is placed on education and health in the rural areas. Briefly, action-plan for rural development must be holistic. It must focus on the overall rural development. It should not be restricted merely to the development of agriculture.

Question. Write your views on 'information technology' as an option of livelihood in rural areas.
Answer: Information technology is an important element of 'knowledge economy'. It highlights the significance of human capital as an instrument of growth. It is widely believed that the 21st century will see the spread of knowledge economy across rural areas of the country. A plan is already underway to establish 'Info-Kiosks' in rural areas, and to impart operational training to the rural youth. These Kiosks are to be equipped with computers, scanners, copiers and printers. These are to provide services like e-mail, video conferencing and transfer of documents. Thus, every village will acquire a knowledge centre which would serve as a source of employment. It is important to highlight the fact that the mechanisation of agriculture leads to the emergence of surplus labour. It adds to the problem of rural unemployment. The surplus labour can be absorbed if info-kiosks are established across all parts of the rural economy. Thus, information technology will not only be an option of livelihood, it would also help solve the problem of rural unemployment in rural areas.

Question. Do you think a shift from subsistence farming to commercial farming is a useful proposition for the Indian farmers?
Answer: A shift from subsistence farming to commercial farming is always useful. Provided, that the shift is economically viable. In India, most farming land is held by a small number of big farmers. A large number of farmers operate small farm-holdings, smaller than even one hectare in size. Shifting from subsistence farming to commercial farming is economically viable only when holdings are large. So large, that mechanisation is possible on these holdings. Only when mechanisation is adopted that the productivity would rise. Only when productivity rises, that the cost of farming would reduce. Only when the cost of farming reduces that the farming becomes economically viable. Mechanisation is not economically viable when holdings are small. This deters the small farmers from shifting to commercial farming. Instead, they stick to subsistence farming. It does not generate any surplus or profits. But, it certainly ensures them the necessary supplies of grains for self-consumption. They are not exposed to the uncertainties of the market.

Question. Do you think loans should be written off in case farmers find it difficult to pay off?
Answer: Reasons behind inability to pay must be assessed before the government arrives at a decision to waive-off the loans. The reason should not be political or a part of the election manifesto of the political parties. Instead, it should be related to economic hardship of the farmers arising out of such factors as crop-failure due to droughts, floods or other natural calamities.

Question. Given the fact that organic farming offers lower yield than conventional farming, should it be promoted in our country where millions of people are not getting enough to eat? Write your observations in brief.
Answer: It is not denying the fact that organic farming is environment-friendly. But the hard fact cannot be denied that organic farming is less productive compared with conventional farming (using chemical fertilizers, insecticides and pesticides). We must strike a balance between environment and productivity. The planners and politicians in the country must see to it that environmental degradation is minimised without suffering a substantial loss of productivity. Rejection of conventional farming in favour of organic farming should not push us to a point where food problem becomes an emerging challenge.

NCERT Questions 

Question. What do you mean by rural development? Bring out the key issues in rural development.
Answer: Rural development means an 'action-plan' for the economic and social growth of the rural areas. The action-plan is to focus on the lingering and emerging challenges in rural areas. The principal lingering challenges of rural development are: (i) challenge of rural credit, and (ii) challenge of rural marketing. Emerging challenges of rural development include basically: (i) exploring options of sustainable livelihood, other than farming, and (ii) the challenge of organic farming.

Question. Discuss the importance of credit in rural development.
Answer: (i) Most rural people are poor and most farmers are small and marginal holders. As the small and the marginal farmers produce only for their subsistence, they fail to generate sufficient surplus to reinvest on their lands leading to degradation of the land. Thus, credit helps the small and marginal farmers to carrying out permanent improvements on their land and commercialise their farming. (ii) Owing to a long gestation lag between sowing and harvesting of the crops, short-term credit is required for the purchase of inputs (seeds, fertilizers, etc.). (iii) Rural artisans and farmers require funds for meeting their general and specific needs. (iv) Agriculture continues to depend on uncertain monsoon. In order to save them from natural calamities, farm credit becomes essential.

Question. Explain the role of micro-credit in meeting credit requirements of the poor.
Answer: Micro-credit refers to small loans (available through SHGs) and meant for the impoverished people. These loans are offered without any security and at a moderate rate of interest. Presently, more than seven lakh SHGs are operating across different rural areas. Credit provisions by the SHGs is known as Micro-Credit Programme. These programmes are becoming popular among small borrowers owing to their 'informal credit delivery mechanism' involving minimum legal formalities.

Question. Explain the steps taken by the government in developing rural markets.
Answer: In order to develop rural markets (or agricultural marketing), the government has initiated a series of steps, as under: (i) Regulated markets have been set up. (ii) Cooperative agricultural marketing societies have been formed. (iii) Provision of warehousing facilities. (iv) Subsidised transport for the transportation of farm output. (v) Dissemination of marketing information for the benefit of the farming population. (vi) MSP policy, focusing on some stable income to the farmers.

Question. Why is agricultural diversification essential for sustainable livelihoods?
Answer: Agricultural diversification refers to the allocation of farm's productive resources to diverse areas of crop output, so as to reduce market risk. Owing to changes in the relative price structure, if one crop fetches low revenue, the other may fetch high. Thus, diversification helps stabilisation of farm income by lowering the market risk. Diversification also minimises risk occurring due to monsoon failure.

Question. Critically evaluate the role of the rural banking system in the process of rural development in India.
Answer: Rural banking in India has significantly expanded over time. Its advantages are as under: (i) Nationalisation of commercial banks marked the beginning of social banking in rural areas, implying provision of institutional credit at moderate rates of interest. (ii) Establishment of NABARD has made a substantial difference in the institution of rural credit. Rural financing has become much more organised than ever before. (iii) Institutional credit has liberated the farmers from the debt trap of mahajans and moneylenders. Also, institutional credit has promoted commercialisation of agriculture. But deficiencies of rural banking system are equally glaring. Important ones are: (i) Banking credit or institutional credit has often been tied to collateral (security or guarantee of a property for the loans), because of which a large section of small and marginal holders are often left out. (ii) Owing to political populism, the government has often shown laxity (lack of strictness) in the recovery of loans. As a result, default rate has tend to swell over time. (iii) Apart from commercial banks, most financial institutions have failed to develop a culture of thrift (saving for the future) among the farming families. Mobilisation of deposits has remained rather subdued.

Question. What do you mean by agricultural marketing?
Answer: Agricultural marketing may be defined as the process that involves: gathering the produce after harvesting, processing the produce, grading the produce according to its quality, packaging the produce according to buyers' preferences, storing the produce for future sale, and selling the produce when price is lucrative.

Question. Mention some obstacles that hinder the mechanism of agricultural marketing.
Answer: Major obstacles that hinder the mechanism of agricultural marketing are as follows: (i) Lack of transportation facilities. (ii) Distress sale by the farmers. (iii) Lack of credit facilities. (iv) Lack of storage facilities. (v) Presence of middlemen. (vi) Lack of standard weights and measures. (vii) Inadequate market information.