Chapter 5 — Rural Development

Chapter 5 is about Rural Development in India. It explains what rural development means, why it matters given that more than two-thirds of India's population depends on agriculture, and critically examines rural credit and marketing systems, diversification into allied activities like livestock and fisheries, and the role of organic farming in sustainable development.

According to the chapter, rural development is a comprehensive term that focuses on action for the development of areas that are lagging behind in the overall development of the village economy. It includes development of human resources (literacy, female literacy, health, sanitation), land reforms, productive resources, infrastructure like electricity, irrigation, credit, marketing and transport, and special measures for poverty alleviation.

NABARD — National Bank for Agriculture and Rural Development — was set up in 1982 as an apex body to coordinate the activities of all institutions involved in the rural financing system. The Green Revolution was a key trigger for diversifying rural credit towards production-oriented lending. NABARD oversees commercial banks, regional rural banks (RRBs), cooperatives and land development banks.

SHGs emerged to fill gaps in the formal credit delivery system, which required collateral that poor rural households could not provide. Each SHG promotes thrift through minimum contributions from members; pooled money is lent to needy members at reasonable interest rates in small instalments. By May 2019, nearly 6 crore women in India had become members of 54 lakh women SHGs. SHGs have also promoted women's empowerment.

Jan-Dhan Yojana is a scheme that encourages all adults to open bank accounts without a minimum balance requirement. Account holders receive Rs. 1–2 lakh accidental insurance, an overdraft facility of Rs. 10,000, and can receive wages under government employment schemes and old-age pensions directly. The scheme led to more than 50 crore people opening bank accounts and helped banks mobilise more than Rs. 2,00,000 crores in funds, promoting thrift and efficient allocation of financial resources in rural areas.

Agricultural marketing is a process that involves the assembling, storage, processing, transportation, packaging, grading and distribution of different agricultural commodities across the country. Prior to independence, farmers suffered from faulty weighing, manipulation of accounts and lack of price information, forcing them to sell at low prices. Even today, more than 10 per cent of farm produce is wasted due to lack of proper storage facilities.

The chapter identifies four measures: (1) regulation of markets to create orderly and transparent marketing conditions, with about 27,000 rural periodic markets still needing development; (2) provision of physical infrastructure like roads, railways, warehouses, godowns, cold storages and processing units; (3) cooperative marketing, citing the success of milk cooperatives in Gujarat; and (4) policy instruments including minimum support prices (MSP), buffer stocks of wheat and rice by the Food Corporation of India, and distribution of food grains through the PDS.

The chapter mentions Apni Mandi (operating in Punjab, Haryana and Rajasthan), Hadaspar Mandi in Pune, Rythu Bazars (vegetable and fruit markets in Andhra Pradesh and Telangana) and Uzhavar Sandies (farmers' markets in Tamil Nadu). These channels enable farmers to sell directly to consumers, increasing their incomes. The e-National Agriculture Market (e-NAM) portal was also launched in 2016 to connect mandis across India.

Diversification is necessary because exclusive dependence on farming carries greater risk. Much of agricultural employment is concentrated in the Kharif season; in areas with inadequate irrigation, gainful employment during the Rabi season becomes difficult. Diversification into allied activities like livestock, poultry, fisheries and horticulture, as well as non-farm sectors such as agro-processing, food processing, leather and tourism, provides supplementary income and helps rural people overcome poverty.

The livestock sector alone provides alternate livelihood options to over 70 million small and marginal farmers including landless labourers. India had about 303 million cattle, including 110 million buffaloes in 2019. Milk production increased by about twelve times between 1951 and 2021, mainly due to the successful implementation of 'Operation Flood', which allows farmers to pool milk, have it processed and sell to urban centres through cooperatives. Gujarat is held as a success story in milk cooperative implementation.

Horticulture contributes nearly one-third of the value of agriculture output and six per cent of India's GDP. India has emerged as a world leader in producing fruits like mangoes, bananas, coconuts, cashew nuts and spices, and is the second largest producer of fruits and vegetables. Horticulture has improved the economic condition of many farmers and has become a means of livelihood for unprivileged classes; flower harvesting, nursery maintenance, hybrid seed production, tissue culture and food processing are remunerative employment options for rural women.

Organic farming is described as a whole system of farming that restores, maintains and enhances the ecological balance, avoiding chemical fertilisers and toxic pesticides. Its benefits include: substituting costly inputs (HYV seeds, chemical fertilisers, pesticides) with cheaper locally produced organic inputs; generating income through exports as global demand for organically grown crops is rising; producing more nutritious food; and being pesticide-free and environmentally sustainable. Since organic farming requires more labour input than conventional farming, India finds it an attractive proposition.

The chapter notes that yields from organic farming are less than modern agricultural farming in the initial years, making it difficult for small and marginal farmers to adapt to large-scale production. Organic produce may also have more blemishes and a shorter shelf life than conventionally sprayed produce. The choice in producing off-season crops is quite limited in organic farming. Additionally, inadequate infrastructure and problems with marketing organic products are major concerns that need to be addressed.

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