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Rural Development in India: Challenges & Transforming Agricultural Markets

December 5, 2023 1861 0

Rural Development in India – Land Reforms & Infrastructure Development

Rural development in India involves various aspects that require attention and fresh initiatives for improving the overall development of rural areas. These areas include:

  • Human Resource Development: Efforts are needed to enhance human resources, with a focus on female literacy, education, and skill development. Health-related aspects such as sanitation and public health are also essential components.
  • Land Reforms: Addressing issues related to land ownership, distribution, and utilization is crucial for rural development in India.
  • Productive Resource Development: It is vital to develop productive resources in each locality, including initiatives to increase agricultural productivity and diversify into non-farm activities such as food processing.
  • Infrastructure Development: Rural areas require infrastructure development, including access to electricity, irrigation, credit facilities, marketing opportunities, transportation (including road construction), and facilities for agricultural research and extension.
  • Poverty Alleviation: Special measures are required to alleviate poverty and improve the living conditions of marginalized populations. Access to productive employment opportunities is a key aspect.

Rural Development in India: Sustainable Future for Agriculture

  • The challenges faced by the agriculture sector in India include declining contribution to GDP and stagnant employment. 
  • Slowed Growth Rate: Additionally, after economic reforms of 1991, the agriculture sector’s growth rate slowed to around 3 percent per year from 1991 to 2012 in the context of Rural Development in India, a rate  lower than in previous years. 
  • Gross Value Added (GVA) of Agriculture: Recently, this sector has experienced volatility, with the GVA growth rate in 2014-15 being less than one percent
  • Contributing Factors to Decline in Indian Agriculture Sector: It includes reduced public investment, inadequate infrastructure, limited non-farm employment opportunities, and increased casualization of labor.
  • Way Forward: In this context, a critical examination of rural development aspects, including credit and marketing systems, agricultural diversification, and the role of organic farming in promoting sustainable development, is necessary.

Rural Development in India: Banking for Sustainable Agricultural Growth

The availability of credit facilities and efficient marketing mechanisms play a crucial role in Rural Development in India, contributing significantly to the overall economic growth of rural areas. 

Credit Facilities:

  • The rural economy’s growth depends significantly on capital infusion to enhance productivity in both agricultural and non-agricultural sectors. 
  • Farmers often need to borrow funds to cover initial investments, such as seeds, fertilizers, equipment, and various family expenses in the context of Rural Development in India, especially considering the lengthy-time period between crop sowing and income realization after production.

Emergence of Formal Banking Centres:

    • Exploitation of Farmers: Historically, at the time of India’s independence, moneylenders and traders exploited small farmers, marginal farmers, and landless laborers by offering loans at high-interest rates and manipulating accounts to keep them in a debt trap. 
    • Transformation in Rural Credit: However, a significant shift occurred in 1969 when India adopted social banking and a multi-agency approach to meet rural credit needs. 
    • Establishment of NABARD:  Subsequently, the National Bank for Agriculture and Rural Development (NABARD) was established in 1982 to coordinate the activities of all institutions involved in rural financing.
    • Role of the Green Revolution: IT played a pivotal role in reshaping the credit system by diversifying the rural credit portfolio toward production-oriented lending.  
  • Modern Institutional Structure for Rural Banking:
    • Today’s institutional structure for rural banking includes various multi-agency institutions such as commercial banks, regional rural banks (RRBs), cooperatives, and land development banks
    • These institutions are expected to provide adequate credit at more affordable interest rates.

The Poor Women’s Bank

‘Kudumbashree’ is a women-oriented community-based poverty reduction programme being implemented in Kerala. In 1995, a thrift and credit society was started as a small savings bank for poor women with the objective to encourage savings. The thrift and credit society mobilised Rs 1 crore as thrift savings. These societies have been acclaimed as the largest informal banks in Asia in terms of participation and savings mobilised. 

Role of SHGs in Rural Development in India: 

  • Empowerment through Self-Help Groups (SHGs): To bridge gaps in the formal credit system, Self-Help Groups (SHGs) have emerged, addressing the inadequacy of the formal credit delivery mechanism and its limited integration into overall rural social and community development. 
  • Economic Empowerment and Microcredit:  SHGs promote small-scale savings through contributions from each member. 
    • Pooled funds are then provided as a credit to members in need, repayable in small installments at reasonable interest rates. 
  • Concerns Regarding Fund Utilization  in the context of Rural Development in India: This approach, often referred to as micro-credit programs, has empowered women, but concerns exist regarding the utilization of funds primarily for consumption rather than productive purposes.
  • Positive Outcomes of Rural Banking: Rural banking expansion had a positive impact on rural farm and non-farm output, income, and employment, especially after the Green Revolution. 
    • It helped farmers access services, credit facilities, and various loans to meet their production needs. 
    • Famines became rare events, and food security was achieved, which is evident in abundant grain buffer stocks.
  • Issues in Credit Decentralization and Advancements in Rural Development in India: 
    • Deposit Mobilization, Lending, and Loan Recovery: Formal banking institutions, except for commercial banks, have struggled to develop a culture of deposit mobilization, lending to deserving borrowers, and effective loan recovery. 
    •  Agricultural Loan Repayment: Agricultural loan default rates have remained high, and farmers’ refusal to repay loans is a significant issue. 

Recent initiatives like the Jan-Dhan Yojana have encouraged all adults to open bank accounts, indirectly promoting thrift habits and efficient financial resource allocation, particularly in rural areas. Over 40 crore people have opened bank accounts through this scheme, and banks have mobilized funds exceeding Rs. 1,40,000 crores through these accounts.

Challenges and Government Interventions for Rural Development in India

Agricultural marketing involves various processes, including assembling, storage, processing, transportation, packaging, grading, and distribution of agricultural commodities across India.

  • Challenges in Pre-Independence Agricultural Marketing and the Imperative for Rural Development in India: Before independence, farmers faced issues such as faulty weighing, manipulation of accounts, lack of price information, and inadequate storage facilities.
    • These challenges necessitated government intervention to promote efficient agricultural marketing.

Government Initiatives in Agricultural Marketing

Four key measures were introduced to enhance agricultural marketing , shaping the landscape of Rural Development in India:

  • Market Regulation: Government-regulated markets to ensure transparency and fair conditions, benefiting both farmers and consumers.
    • However, more rural periodic markets need development.
  • Infrastructure Development: Investment in physical infrastructure like roads, warehouses, and cold storage is crucial due to the current inadequacies.
  • Cooperative Marketing: Cooperative marketing initiatives aimed to secure fair prices for farmers’ products, with the success of milk cooperatives serving as a notable example. 
    • Challenges include insufficient farmer participation and inefficient financial management.
  • Policy Instruments: Policy instruments like minimum support prices (MSP), buffer stocks, and public distribution systems (PDS) were implemented to safeguard farmers’ income and provide subsidized food to the poor
    • Despite these measures, private trade still dominates agricultural markets.

Transforming Agricultural Markets: Exploring Alternate Channels for Rural Development in India

  • Several alternative marketing channels have emerged to benefit farmers and increase their incomes, shaping the landscape of Rural Development in India. 

Regulated market yards benefit farmers as well as consumers

Regulated market yards benefit farmers as well as consumers

  • Examples:
    • Apni Mandi: Operational in Punjab, Haryana, and Rajasthan, where farmers directly sell produce to consumers.
    • Hadaspar Mandi: Located in Pune, Maharashtra, provides a direct sales platform for farmers.
    • Rythu Bazars: Vegetable and fruit markets in Andhra Pradesh and Telangana, allowing direct farmer-to-consumer transactions.
    • Uzhavar Sandies: Farmers markets in Tamil Nadu, facilitating direct sales.
  • Fast-food Chains: 
    • National and multinational fast-food chains are forming alliances with farmers, offering seeds, inputs, and assured procurement at pre-decided prices. 
    • These arrangements aim to reduce price risks for farmers and expand markets for farm products. 
    • The impact of these arrangements on small farmers’ incomes is debatable and requires further analysis.

2020 Agriculture Reforms: Controversies and Perspectives on Rural Development in India

  • In 2020, the Indian Parliament passed three agricultural reform laws aimed at transforming the marketing system. 
  • These laws have generated mixed reactions in the realm of Rural Development in India, with some farmers supporting them and other sections of farmers opposing them.

Conclusion: 

Thus government intervention in agricultural marketing has evolved over time, prompting debates in the context of Rural Development in India. While some argue for reduced intervention to encourage agricultural commercialization, the extent of government involvement remains a subject of debate. 

 

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 Final Result – CIVIL SERVICES EXAMINATION, 2023.   Udaan-Prelims Wallah ( Static ) booklets 2024 released both in english and hindi : Download from Here!     Download UPSC Mains 2023 Question Papers PDF  Free Initiative links -1) Download Prahaar 3.0 for Mains Current Affairs PDF both in English and Hindi 2) Daily Main Answer Writing  , 3) Daily Current Affairs , Editorial Analysis and quiz ,  4) PDF Downloads  UPSC Prelims 2023 Trend Analysis cut-off and answer key

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 Final Result – CIVIL SERVICES EXAMINATION, 2023.   Udaan-Prelims Wallah ( Static ) booklets 2024 released both in english and hindi : Download from Here!     Download UPSC Mains 2023 Question Papers PDF  Free Initiative links -1) Download Prahaar 3.0 for Mains Current Affairs PDF both in English and Hindi 2) Daily Main Answer Writing  , 3) Daily Current Affairs , Editorial Analysis and quiz ,  4) PDF Downloads  UPSC Prelims 2023 Trend Analysis cut-off and answer key

Quick Revise Now !
AVAILABLE FOR DOWNLOAD SOON
UDAAN PRELIMS WALLAH
Comprehensive coverage with a concise format
Integration of PYQ within the booklet
Designed as per recent trends of Prelims questions
हिंदी में भी उपलब्ध
Quick Revise Now !
UDAAN PRELIMS WALLAH
Comprehensive coverage with a concise format
Integration of PYQ within the booklet
Designed as per recent trends of Prelims questions
हिंदी में भी उपलब्ध

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