Class 11 Economics Notes Chapter 6 (Rural development) – Indian Econimoc Development Book

Detailed Notes with MCQs of Chapter 6: Rural Development. This is a crucial chapter, not just for your exams but also for understanding the backbone of the Indian economy. Many government exam questions touch upon these themes, so pay close attention.

Chapter 6: Rural Development - Detailed Notes

1. What is Rural Development?

• Definition: Rural development refers to a continuous and comprehensive socio-economic process aimed at improving the quality of life and economic well-being of people living in rural areas.
• Scope: It's a broad concept encompassing improvements in various spheres:
  • Human Resources: Literacy (especially female), education, skill development, health (sanitation, public health).
  • Land Reforms: Ensuring equity in land ownership and access.
  • Infrastructure: Development of electricity, irrigation, credit facilities, marketing systems, transport (roads), communication, etc.
  • Poverty Alleviation: Specific programs targeting the rural poor.
  • Productive Resources: Development of agriculture and non-agricultural activities in rural areas.
• Why is it important? A significant majority of India's population and workforce resides in rural areas. Agriculture is the primary source of livelihood. Therefore, national development is intrinsically linked to rural development.

2. Key Issues in Rural Development

• Challenge of Rural Credit:
  • Need: Farmers require credit for productive purposes (seeds, fertilizers, implements), consumption needs during gestation periods, and emergencies.
  • Sources:
    • Non-Institutional: Moneylenders, traders, commission agents, relatives, landlords. Characteristics: Easily accessible but often exploitative with very high interest rates and unfair practices. Historically dominant.
    • Institutional: Cooperatives, Commercial Banks (since nationalization in 1969), Regional Rural Banks (RRBs - established to focus specifically on rural credit), Land Development Banks. NABARD (National Bank for Agriculture and Rural Development) established in 1982 as an apex body to coordinate rural financing.
  • Problems with Institutional Credit: Inadequate coverage, issues with collateral security, complex procedures, political interference, mounting overdues impacting recycling of funds.
  • Micro-credit & SHGs: Self-Help Groups (SHGs) have emerged as a significant mechanism, especially for the poor, promoting thrift and providing small loans on reasonable terms. The SHG-Bank Linkage Programme is a key initiative.
• Challenge of Agricultural Marketing:
  • Definition: Includes all activities involved in moving farm produce from the farm to the final consumer – assembling, storage, processing, transportation, packaging, grading, and distribution.
  • Problems Faced by Farmers:
    • Distress Sales: Forced sale of produce immediately after harvest at low prices due to lack of storage and urgent need for cash.
    • Lack of Storage Facilities: Leading to wastage and inability to wait for better prices.
    • Malpractices in Mandis: Faulty weighing, manipulation of prices by traders.
    • Lack of Market Information: Farmers often unaware of prevailing prices in different markets.
    • Inadequate Transport: Difficulty in reaching distant markets offering better prices.
  • Government Measures to Improve Marketing:
    • Regulation of Markets: Establishment of regulated markets (mandis) to ensure transparency and protect farmers.
    • Infrastructure Development: Provision of warehousing, cold storage, roads, railways.
    • Cooperative Marketing: Encouraging farmers' cooperatives to enhance bargaining power (e.g., Milk Cooperatives like Amul).
    • Policy Instruments:
      • Minimum Support Price (MSP): Assured minimum price offered by the government for selected crops to protect farmers from price falls.
      • Maintenance of Buffer Stocks: Food Corporation of India (FCI) maintains stocks of wheat and rice procured at MSP.
      • Public Distribution System (PDS): Distribution of essential commodities (including food grains procured by FCI) at subsidized rates.
  • Emerging Alternative Marketing Channels: Direct sales by farmers to consumers (e.g., Apni Mandis, Rythu Bazars), contract farming arrangements with domestic/multinational companies.
• Diversification of Productive Activities:
  • Need: Over-dependence on farming (often subsistence level) is risky. Diversification provides supplementary income, reduces risks associated with agriculture alone, and tackles disguised unemployment.
  • Types:
    • Crop Diversification: Shifting from subsistence farming to commercial farming, growing diverse and high-value crops.
    • Diversification into Non-Farm Activities: Shifting workforce from agriculture to other allied activities (livestock, poultry, fisheries) and non-agricultural sectors (cottage industries, food processing, IT etc.).
  • Key Areas for Diversification:
    • Animal Husbandry (Livestock Farming): Poultry, cattle, goats, etc. Provides stable income, utilizes by-products. 'Operation Flood' significantly boosted milk production.
    • Fisheries: Important source of livelihood, especially in coastal areas and near inland water bodies. High potential for income and export. Faces issues like overfishing and pollution.
    • Horticulture: Cultivation of fruits, vegetables, medicinal & aromatic plants, spices, flowers. India is a major producer. Contributes significantly to GDP, provides employment. Period of rapid growth termed 'Golden Revolution'.
    • Other Non-Farm Options: Cottage and household industries, food processing industries, rural tourism, IT services (providing information, kiosks).
• Sustainable Development and Organic Farming:
  • Need: Conventional agriculture relying heavily on chemical fertilizers and pesticides raises environmental and health concerns (soil degradation, water contamination).
  • Organic Farming: A system of farming that relies on ecosystem management rather than external synthetic inputs. It uses methods like crop rotation, green manure, compost, and biological pest control.
  • Benefits: Environmentally sustainable, provides healthier food (free from pesticide residues), can fetch higher prices/export potential, improves soil health.
  • Challenges: Lower yields initially compared to conventional farming, shorter shelf-life for some products, lack of adequate marketing infrastructure, need for farmer awareness and training.

Conclusion:

Rural development is a multi-faceted challenge requiring simultaneous action on credit, marketing, infrastructure, diversification, and sustainable practices. Empowering rural communities through better health, education, and access to resources is key to achieving inclusive national growth.

Multiple Choice Questions (MCQs)

1. Which of the following is the apex institution responsible for coordinating the functioning of different financial institutions working for rural development?
   a) Reserve Bank of India (RBI)
   b) State Bank of India (SBI)
   c) National Bank for Agriculture and Rural Development (NABARD)
   d) Regional Rural Banks (RRBs)

2. The sale of agricultural produce by farmers at low prices immediately after harvest due to lack of storage and credit facilities is known as:
   a) Buffer Stock Operation
   b) Distress Sale
   c) Cooperative Marketing
   d) Public Distribution

3. Which government policy ensures a minimum price to farmers for their produce to protect them from sharp falls in market prices?
   a) Public Distribution System (PDS)
   b) Buffer Stock Policy
   c) Minimum Support Price (MSP)
   d) Regulation of Markets Act

4. Diversification of agricultural activities involves:
   a) Shifting workforce only to the industrial sector
   b) Focusing solely on growing food grains
   c) Shifting from crop farming to other allied activities like livestock and fisheries, or adopting multi-cropping systems
   d) Relying completely on non-institutional sources of credit

5. 'Operation Flood' is associated with the significant increase in the production of:
   a) Fish
   b) Fruits and Vegetables
   c) Food Grains
   d) Milk

6. Which of the following is NOT considered a non-institutional source of rural credit?
   a) Moneylenders
   b) Regional Rural Banks (RRBs)
   c) Traders and Commission Agents
   d) Landlords

7. Organic farming aims to:
   a) Maximize the use of chemical fertilizers and pesticides
   b) Promote genetically modified crops
   c) Rely on ecological processes, biodiversity, and cycles adapted to local conditions
   d) Primarily focus on export markets ignoring domestic needs

8. The 'Golden Revolution' refers to the period of significant growth in:
   a) Milk Production
   b) Fisheries Sector
   c) Horticulture (Fruits, Vegetables, Flowers etc.)
   d) Cereal Production

9. Self-Help Groups (SHGs) primarily help in:
   a) Regulating agricultural markets
   b) Providing large scale industrial loans
   c) Pooling savings of members and providing micro-credit
   d) Implementing Minimum Support Prices

10. Which of the following is a major problem faced in the agricultural marketing system in India?
    a) Availability of too much market information
    b) Lack of adequate storage facilities leading to wastage
    c) Excessively high Minimum Support Prices
    d) Over-dominance of cooperative marketing societies

Answer Key for MCQs:

1. c) National Bank for Agriculture and Rural Development (NABARD)
2. b) Distress Sale
3. c) Minimum Support Price (MSP)
4. c) Shifting from crop farming to other allied activities like livestock and fisheries, or adopting multi-cropping systems
5. d) Milk
6. b) Regional Rural Banks (RRBs)
7. c) Rely on ecological processes, biodiversity, and cycles adapted to local conditions
8. c) Horticulture (Fruits, Vegetables, Flowers etc.)
9. c) Pooling savings of members and providing micro-credit
10. b) Lack of adequate storage facilities leading to wastage

Make sure you revise these notes thoroughly. Understanding the challenges and initiatives in rural development is critical for answering questions related to the Indian economy. Good luck with your preparation!