Rural Development- an Critical Appraisal for Indian Economy

Almost 2/3 of the Indian population lives in rural areas and among that, 1/3 lives in abject poverty.So there is a need for rural development.Rural development is a comprehensive terms means it is a wider term.Focus should be given on the development of the regions which are lagging behind in the overall development of rural economy.
houses in rural areas

What is rural development?
It refers to an action plan for economic and social upliftment of the rural areas in the country.Economic upliftment means uplifting the poverty whereas social upliftment means upliftment of basic facilities like education,healthcare etc.

There are few key issues that needs to be addressed by rural development-
1.Development of Human resources
Means increase in the literacy rate,especially women literacy rate,education and skill development.

2.Land reforms
Land reforms include land ceiling,means fixing the maximum amount of land owned by an individual and agrarian relation,means the farmers should have a direct relation with the farmers so that they can contribute in it's development.

3.Development of productive resources in each locality
Key resources should be identified and tapped with proper step.Like fertile land can be used for horticulture and small lakes can be used for fishing.

4.Infrastructure development
There should be something to support and connect the rural areas with urban.Development of infrastructure like irrigation facilities,electricity,transportation,road can serve this purpose.

5.Special measures for the alleviation of poverty and access to productive employment opportunities should be strengthen.

Why there is a need for credit(loans)?
Timely and adequate credit at a low interest rate could help to increase the production and productivity of agriculture.

There are two types of credit purposes-
1.Productive purpose
Includes all those credit which affects the productivity like buying of land,buying of seeds,fencing of land will affect the productivity.

2.Non-Productive purpose
Includes all those credit which are used for personal consumption like health,education,religious ceremonies etc.

There are two sources of credit-
1.Non-institutional sources
Includes credit from moneylenders,traders,friends,relatives,co-workers etc.Prime position is occupied by the moneylenders.But there are few problems associated with this like the moneylenders exploit the farmers and indulge in malpractices like they give loans at high rate of interest,manipulate the accounts of farmers.

2.Institutional sources
Multi-agency system-Institutional structure of rural banking is known as multi-agency system.It was designed with the main objective to give credit to small and marginal farmers at a reasonable rate of interest.

Sources of institutional credit-
1.Co-operative credit societies
They provide credit facilities to farmers at reasonable rate of interest to meet the their requirements.
They also provide a sort of help to plan agriculture and give assistance to increase the productivity.

2.Commercial banks
SBI was the first bank in India to give rural credit to small and marginal farmers.SBI was established in 1955.It provides both direct and indirect loans i.e they lend loans to co-operative societies and these societies lend to the farmers.

3.Regional Rural Bank(RRBs)
RRBs were established in 1975 with a main objective to give credit facilities to small and marginal farmers at a reasonable rate of interest and to save them from the clutches of moneylenders.Today there are almost 196 RRBs and 14600 branches.

4.Kisan Credit Card(KCC)
Kisan Credit card Federal bank
The card can be issued by both,government and RBI for a period of 3 years or renewable to farmers.The program was first started in August 1998-1999.Almost 645 lakhs card were issued by October 2006.

5.Self Help Groups(SHGs)
This initiative was first stared by Grameen Bank in Bangladesh headed by Mohammad Yunus(Nobel Prize winner).The main objective is that the members pool their resources and lend to needy people at a reasonable rate of interest.This is known as Micro-Credit Programme.

What are the problem associated with these institutional credit sources?
1.The sources are insufficient mean there are not enough banks,Co-operative credit societies in the rural areas.
2.Most of the benefits of institutional credit is only reaped by the rich farmers and then there is very little left for those who actually need this credit facilities.
3.There is regional inequality in distribution of credit as partiality is present in various parts of the country.
4.The main problem associated with rural credit is that there is a very high level of overdue of loans which the farmers are not able to repay.

Ways to solve the problems of institutional credit sources-
1.Regional Rural Bank(RRBs) should be increased in the country so that credit facilities can be accessed by small farmers.
2.Co-operative credit societies in the rural areas should be strengthen.
3.Commercial banks should provide loans on easy terms of credit as most of the farmers are illiterate.
4.A proper mechanism should be developed to keep a close eye on institutional credit in rural areas. 

Rural Development- an Critical Appraisal for Indian Economy Rural Development- an Critical Appraisal for Indian Economy Reviewed by Saurabh Jadhav on October 19, 2017 Rating: 5
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