Maharashtra Board Class 11 Economics Chapter 5 Rural Development In India PDF Download

Chapter 5: Rural Development In India

Introduction

Indian economy is predominantly a rural economy. Economic growth of the country is driven by its rural development. It is true that India lives in villages. The term 'rural development' is a subset of the broader term development. The term 'rural development' connotes overall development of rural areas with a view to improve the quality of life. According to 2011 census, the country's rural population is 83.25 crores (68.8% of total population). There has been a wide consensus that rural development should be inclusive and sustainable in order to alleviate the poverty.

Rural Development

The concept of 'Rural development' was born in the context of agriculture, and it remained for a long time with agricultural development in India.

A) Agriculture

1) Mechanisation

2) High yielding seeds

3) Credit and Transport

4) Marketing

B) Village Industries

1) Modernization

2) Technical training

3) Marketing

C) Education

1) Technical

2) Skill

3) Agricultural

D) Services

1) Health

2) Family welfare

3) Banking

4) Communication

World Bank Defines

"Rural development is a strategy designed to improve the economic and social life of a specific group of people - the rural poor. Rural development involves extending the benefits of development to the poorest among those who seek livelihood in the rural areas. The group includes small-scale farmers, tenants and the landless."

Rural Occupational Structure In General

a) Agricultural Sector

The rural population in India is classified into agricultural sector which has been subdivided as agriculture and allied activities. Agriculture consists of small, marginal and large farmers. Allied sector consists of plantation, forestry, fisheries, dairy and horticulture.

b) Industrial Sector

Industrial sector is defined as an economic activity concerned with the processing of raw materials and manufacture of goods in factories. This sector has been classified into the small scale, cottage and rural industries.

c) Service Sector

The service sector termed as 'tertiary sector' involves provision of services to businesses as well as final consumers such as accounting services, tradesman-ship (like mechanic or plumber services), computer services, restaurants, tourism etc. The service sector has been further classified into traders (wholesaler and retailer), transport operators, professional and technical.

Teacher's Note

Rural development means making villages better. In India, many people live in villages so we must help them get good roads, schools and hospitals.

Exam Trick

Remember: Rural = Village. And villages have three main jobs - farming, small factories, and services like shops and banks.

Points to Remember

Rural development means improving life in villages.
68.8% of Indians live in villages.
Three main jobs in villages are agriculture, industry, and services.
Rural development should be inclusive and sustainable.
World Bank says rural development helps poor farmers and landless workers.

Rural Development In India

Rural development in India has witnessed various plans and policies initiated by the government as well as at the non-government levels. Appropriate strategies for rural development will lead to economic growth and development of the country.

Significance Of Rural Development In India

1) Public health and sanitation

Rural development helps to improve sanitation and hygiene, providing safe drinking water and affordable health facilities. This would lead to an improvement in the quality of life of the rural people.

2) Literacy rate in rural area

Literacy is a powerful instrument of socio-economic change. However there is a considerable gap between the rural and urban literacy rates. Rural development helps to bridge this gap by making provisions for educational facilities at all levels.

3) Empowerment of women

Rural development helps to reduce gender disparity, meet the diverse needs of rural women as well as encourage their participation in community development programmes.

4) Enforcement of law and order

Rural development helps to safeguard the rights of the socially disadvantaged groups through proper enforcement of law and order.

5) Land reforms

Rural development ensures effective implementation of land reforms such as ceiling on land holdings, regulation of rent, protection of tenancy rights etc. This leads to reduction in rural inequality.

6) Infrastructure development

Rural development leads to further progress in basic facilities such as generation of electricity, road connectivity, irrigation etc.

7) Availability of credit

Rural development also facilitates the growth of financial institutions such as primary agricultural co-operative credit societies, regional rural banks, cooperative banks. This is vital for providing subsidised credit facilities to the farmers.

8) Eradication of poverty

Rural development leads to an increase in rural incomes and standard of living. This helps in the eradication of poverty.

Teacher's Note

Eight things make rural development important. Think about your own village - do people have good hospitals, schools, and banks? That is what rural development gives.

Exam Trick

Remember: 8 things for rural development - Health, Education, Women power, Law, Land, Roads, Banks, and No Poverty. Think of these 8 as 8 fingers helping villages grow.

Points to Remember

Good health and clean water make villages better.
Schools help people learn and get good jobs.
Women should have power and respect in villages.
Fair laws protect poor people from bad treatment.
Credit and banks help farmers buy seeds and tools.

Agricultural Credit In India

Agricultural credit is an important prerequisite for agricultural growth. Agricultural policies have been reviewed from time to time to provide adequate and timely finance to this sector. Rural credit system assumes importance because for most of the Indian rural families, savings are inadequate to finance farming and other economic activities.

Types Of Agricultural Credit

Agricultural credit can be classified on the basis of:

1) Tenure

It is credit requirement based on the time-period of loans. It is of three types:

a) Short-Term Credit

It refers to loans not exceeding two years. It is required for meeting the short-term requirements of the cultivators, e.g. loans required for the purchase of fertilizers, High Yielding Variety (HYV) seeds, for meeting expenses on religious or social ceremonies etc.

b) Medium-Term Credit

These loans are for a period upto 5 years. These are the financial requirements to make improvements on land, buying cattle or agricultural equipments, digging up of canals etc.

c) Long-Term Credit

These loans are for a period of more than 5 years and are generally required to buy tractor, making permanent improvements on land etc.

2) Purpose

The agricultural credit on the basis of purpose for which the credit is used can be of two types:

a) Productive

Productive loans are the loans that are related to agricultural production and economically justified, e.g. purchase of tractor, land, seeds etc.

b) Unproductive

Unproductive credit is used for personal consumption and unrelated to productive activity, e.g. loans for expenditure on marriages, religious ceremonies etc.

Teacher's Note

Farmers need money at different times. Sometimes they need it for seeds (short time), sometimes for a tractor (long time). Banks give them money for these needs.

Exam Trick

Remember: Short = 2 years (seeds), Medium = 5 years (cattle), Long = 5+ years (tractor). Think: Seed is quick, tractor takes years to pay back.

Points to Remember

Short-term credit is for less than 2 years.
Medium-term credit is for up to 5 years.
Long-term credit is for more than 5 years.
Productive credit is used to make crops or products.
Unproductive credit is used for personal needs.

Source Of Agricultural Credit In India

1) Non-Institutional Sources

The non-institutional finance forms an important source of rural credit in India, constituting around 40 percent of total credit in India. The interest charged by the non-institutional lenders is usually very high. The land or other assets are kept as collateral security. The important sources of non-institutional credit are as follows:

i) Money-Lenders

Money-lending has been a widely prevalent profession in the rural areas. The money-lenders charge huge rate of interest and mortgage the property of the cultivators.

ii) Other Private Sources

a) Traders, landlords, Commission agents, etc.

b) Credit from relatives, friends, etc.

2) Institutional Sources

The general policy on agricultural credit has been one of progressive institutionalization aimed at providing timely and adequate credit to farmers for increasing agricultural production and productivity. Providing better access to institutional credit for the small and marginal farmers and other weaker sections to enable them to adopt modern technology and improved agricultural practices has been a major part of the policy.

Following are some of the institutional sources of agricultural credit in India.

i) National Bank for Agriculture and Rural Development (NABARD)

It is the apex banking institution to provide finance for agriculture and rural development. National Bank for Agriculture and Rural Development (NABARD) was established on July 12, 1982 with a paid up capital of ₹ 100 crores by 50:50 contribution of Government of India and Reserve bank of India. NABARD is an apex institution in rural credit structure for providing credit for promotion of agriculture, small scale industries, cottage and village industries, handicrafts etc.

The paid up capital stood at ₹ 10,580 crores as on 31st March 2018. Consequent to the revision in the composition of share capital between Government of India and RBI, NABARD today is fully owned by Government of India.

ii) Rural Co-operative Credit Institutions

The rural credit co-operatives may be further divided into short-term credit co-operatives and long-term credit co-operatives.

A) Short-term credit co-operatives

It provides short-term rural credit and are based on a three-tier structure as follows

Primary Agricultural Credit Societies (PACS)

District Central Co-operative Banks (DCCB)

State Co-Operative Banks (SCB)

Teacher's Note

Money-lenders are bad because they charge very high interest. NABARD is good because it gives cheap loans to farmers. Banks help villages grow faster than money-lenders.

Exam Trick

Remember: Money-lenders = expensive (like buying from a fancy shop). Banks = cheap (like buying from a wholesale market). Always choose bank credit.

Points to Remember

NABARD was started in 1982 to help farmers.
Money-lenders charge very high interest rates.
Banks charge lower interest than money-lenders.
NABARD is owned by the Government of India now.
Co-operative banks have three levels - village, district, and state.

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