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Rural Development in India- NCERT Notes UPSC

May 24, 2022

Rural Development in India

Due to a vast section of the country residing in rural areas and many of them living under the conditions of poverty, the development of rural areas has become the central focus point in the overall growth and development of the country. 

Navigate through this detailed article to get valuable insights on the topic Rural Development in India and enhance your UPSC Preparation.

Mahatma Gandhi once said that the real progress of India did not mean simply the growth and expansion of industrial urban centres but mainly the development of the villages.

Aspects of Rural Development

  • It comprehensively encompasses the development of various areas which are lagging behind in the context of the overall village economy. Some areas include: 
  • Factors of Human Resource Development – literacy (specifically female), education and skill development, health (sanitation and public health).  
  • Land reforms
  • Development of the productive resources of each locality. 
  • Infrastructure development like electricity, irrigation, credit, marketing, transport facilities etc.  
  • Poverty alleviation measures. 

By means of interventions in these areas, the rural population can be equipped for higher productivity and further diversification into non-farm productive activities. 

Credit and Marketing in Rural Areas

Due to the long gestational time period between sowing and receiving income from the produce, farmers take loans for meeting various social and economic expenses. 

  • Historically rural credit largely originated from money lenders and traders, which wasn’t fair and often led to exploitation of the borrower, leading to a situation of debt-trap. 
  • In 1969, an adaptation of social banking and a multi-agency approach was adopted to meet the demand for rural credit.
  • As an apex body of the rural financing system NABARD (National Bank for Agricultural and Rural Development) was set up in 1982. 
  • Production oriented lending due to Green Revolution. 
  • Today a vast institutional structure of Commercial banks, Regional Rural Banks (RRBs), Cooperatives and Land Development Banks are present with the aim of providing adequate and cheap credit. 
  • But to bridge the limitations of the formal credit system, like lack of collateral etc. Self Help Groups (SHG’s) are today playing a major role in the rural credit framework. 
  • By May 2019, 54 lakh women SHGs have nearly 6 crore women members in India, signifying the role of SHGs in Women Empowerment. 
  • About Rupees: 10- 15,000 per SHG and another Rupees 2.5 lakhs per SHG are being provided as a Community Investment Support Fund (CISF) to help them take up self-employment opportunities. 
  • These credit provisions are generally referred to as micro-credit programmes. 

Rural Banking — a Critical Appraisal

Positive Impacts of Rural Banking

  • Better availability of credit facilities to meet production needs due to expansion of the rural banking system.
  • Food security due to enhanced production. 

Gaps in the rural banking system

  • Other institutions except Commercial Banks have not been able to mobilise deposits and conduct effective loan recoveries
  • This has led to high loan default rates. 
  • In the post-reform period, the focus has shifted away from reforms in the rural banking sector. 

Also, watch our Daily Current Affairs video by Vishakah Dagur, our Current Affairs faculty, to enhance your UPSC CSE preparation:


Agricultural Market System

It refers to the process that involves the assembling, storage, processing, transportation, packaging, grading and distribution of different agricultural commodities across the country. 

Pre-Independence Scenario:

  • Faulty weighing of produce and account manipulation by traders while purchasing from the farmers. 
  • Forced sales at low prices due to farmers’ lack of information about prevailing market prices.
  • Lack of storage facilities, which could have enabled delayed sales at better prices. 

This made a case for government intervention post-independence. 

Corrective measures Taken:

  • Regulation of markets to enable rule-based and transparent exchange. 
  • Developing enabling infrastructure like roads, warehouses, railways, cold storage etc. 
  • Cooperative marketing for realizing better value for farmer’s produce. 
  • Introducing policy instruments like: 
  • Assurance of Minimum Support Prices (MSP) for agricultural products.
  •  Maintenance of buffer stocks of wheat and rice by Food Corporation of India.
  • Distribution of food grains and sugar through PDS.
  • However, despite government intervention, private trade (by moneylenders, rural political elites, big merchants and rich farmers) predominates in agricultural markets.

Also read: Government Budget and the Economy

Determination of Income and Employment

Basic Concepts of International Trade

Emerging Alternate Marketing Channels

  • Farmers directly selling their produce to consumers results in increased incomes for the farmers. E.g., Apni Mandi (Punjab, Haryana and Rajasthan); Hadaspar Mandi (Pune); Rythu Bazars (vegetable and fruit markets in Andhra Pradesh and Telangana). 
  • National and multi-national fast-food chains are now entering into contracts with farmers to get the produce of desired quality.  

Diversification into Productive Activities:

  • Diversification has two aspects; one is the change in cropping pattern; and 
  • The shift of workforce from agriculture to other allied activities (livestock, poultry, fisheries etc.) and non-agriculture sector. 

The need for diversification:

  • Greater risk in depending exclusively on farming for livelihood. 
  • Provide productive, sustainable livelihood options to rural people.
  • In areas with limited irrigation facilities, difficulty in finding alternate meaningful employment during the Rabi season (Non-Monsoon season).
  • Therefore, expansion into other sectors is essential to provide supplementary gainful employment and in realising higher levels of income for rural people to overcome poverty and other tribulations. 

Various sub-sectors which permit diversification into them include agro-processing industries, leather industry, tourism etc. Also, traditional home-based industries like crafts, pottery etc., lack infrastructural and other support.  Various sub-sectors in detail are as follows: 

Animal Husbandry

  • In India, the farming community uses the mixed crop-livestock farming system (the livestock sector alone provides alternative livelihood options to over 70 million small and marginal farmers.)
  • It increases stability in income, food security, transport, fuel and nutrition for the family. 

Performance of the Indian dairy sector

  • Over the last three decades, they have been quite impressive. 
  • Milk production in the country has increased by about ten times between 1951-2016. Mainly due to ‘Operation Flood’.
  • It is a system whereby all the farmers can pool their milk produced according to different grading (based on quality), and the same is processed and marketed to urban centres through cooperatives. 
  • In this system, the farmers are assured of a fair price and income from the supply of milk to urban markets.
  • Meat, eggs, wool and other by-products are also emerging as important productive sectors for diversification.

Distribution of Poultry and Livestock in India, 2012


  • In India, after a progressive increase in budgetary allocations and the introduction of new technologies in fisheries and aquaculture, the development of fisheries has come a long way. 
  • Fish production in terms of value is 65 and 35 percent, from inland and marine sources, respectively. 
  • In India, West Bengal, Andhra Pradesh, Kerala, Gujarat, Maharashtra and Tamil Nadu are major fish producing states. 
  • Poverty, underemployment, and low per capita incomes are problems facing the people engaged in fisheries. 
  • There is a need to increase credit facilities through cooperatives and SHGs for fisherwomen to meet the working capital requirements for marketing.


Horticultural crops consist of crops such as fruits, vegetables, tuber crops, flowers, medicinal and aromatic plants, spices and plantation crops. (wide variety due to India’s varying soils and climate).

  • These crops play a vital role in providing food and nutrition, besides addressing employment concerns. 
  • The horticulture sector contributes nearly one-third of the value of agriculture output and six per cent of the Gross Domestic Product of India. 
  • India has emerged as a world leader in producing a variety of fruits like mangoes, bananas, coconuts, cashew nuts and a number of spices and is the second-largest producer of fruits and vegetables. 
  • Improved economic conditions of farmers engaged in Horticulture have been there.
  • Flower harvesting, nursery maintenance, hybrid seed production and tissue culture, propagation of fruits and flowers and food processing are highly remunerative employment options for women in rural areas. 
  • Enhancing its role requires investment in infrastructures like electricity, cold storage systems, marketing linkages, small-scale processing units and technology improvement and dissemination.

Other Alternate Livelihood Options

  • Information Technology can play a major role in enhancing the creative potential and knowledge embedded in the society, along with the better prediction of areas of food insecurity and weather vulnerability.
  • Acting as a change catalyst, it has the potential to create many new opportunities in the rural areas of the country. 

Sustainable Development and Organic Farming

  • Chemical fertilizers and toxic pesticides are polluting water sources, harming soils, livestock and natural ecosystems.
  • As an alternative, organic agriculture is a whole system of farming that restores, maintains and enhances the ecological balance. 

Benefits of Organic Farming

  • Substitute costlier agricultural inputs with cheaper locally produced organic inputs. 
  • Income through exports on the back of rising demand for organic crops.
  • Better nutritional value as compared to chemical farming. 
  • The produce is pesticide-free and produced in an environmentally sustainable way.

Limitations with Organic Farming (Indian Context)

  • Awareness and willingness to adopt new technology on account of farmers are needed.
  • Inadequate infrastructure and the problem of marketing the products.
  • Yields from organic farming are less than modern agricultural farming in the initial years.
  • Small and marginal farmers may find it difficult to adapt to largescale production
  • Organic produce may also have more blemishes and shorter shelf life than sprayed produce. 
  • Choice in production of off-season crops is quite limited in organic farming. 

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