Economics Notes (Class 11)

CBSE Class 11 Economics Chapter 6 Rural Development

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Rural Development

Rural Development

Rural Development

Rural Development

Rural development is a comprehensive term which essentially focuses on the action for the development of the area which is lagging behind in the overall development of the village economy.

Objectives of Rural Development

  1. Increasing productivity of the agricultural sector.
  2. Generating alternative means of livelihood in the rural sector.
  3. Promoting education and health facilities in rural areas.

Key issues in Rural Development

  1. A robust system of rural credit.
  2. A system of marketing that ensures remunerative price to the farmer for his produce.
  3. Diversification of crops that reduce risks of production and induces commercialization of farming.
  4. Diversification of production activity with a view to finding alternative means of sustainable living other than crop-cultivation.
  5. Promotion of organic farming with a view to making crop cultivation environmental friendly as well as a sustainable process over a long period of time.
  6. The honest system of land reforms.
  7. Development of human resource like health, addressing both sanitation and public health.
  8. Development of human resource including literacy, education and skill development.
  9. Development of Infrastructure like electricity, irrigation, transport facility, etc.

Rural Credit

Rural credit means credit for the farming communities. Farmers require credit for various purposes like purchasing agricultural tools and machines, digging wells and tube wells, purchasing seeds, fertilizers, pesticides, etc.

The gestation period between sowing and harvesting is high. so, farmers have to borrow to fulfill their needs during this period.

Sources of Rural Credit in India

  1. Non-institutional sources are money lenders, traders and commission agents, landlord, relatives, and friends.
  2. Institutional sources are as follow:
  • Co-operative credit societies.
  • Commercial Banks
  • Regional Rural Banks
  • NABARD (National Bank for Agriculture and Rural Development.) (established in 1982)
  • Self Help Groups (SHGs)

The above institutional structure of rural banking which is called a multi-agency system which has initiated by govt. in 1969.

Agricultural Marketing

Agricultural marketing means all those activities which includes-gathering the produce after harvesting, processing the produce, grading the product according to its quality, packaging the produce according to preferences of buyers, storing the product for future sale and selling the product when the price is lucrative.

In other words, Agricultural marketing covers the services involved in moving an agricultural product from the farm to the consumer.

Defects of Agricultural Marketing

  • Inadequate warehouses
  • Multiplicity of middlemen
  • Malpractice in unregulated markets.
  • Lack of Adequate finance
  • Inadequate means of transport and communication.

Measures Adopted by the Government to improve the Marketing System

  • Regulation of markets.
  • Co-operative agricultural marketing societies.
  • Provision of warehousing facilities.
  • Subsidized transport.
  • Dissemination of marketing information.
  • Buffer stocks and minimum support price (MSP)
  • Public Distribution System (PDS)
  • Alternative marketing channels
  • Improvement of Physical Infrastructure


Diversification in Agriculture Activities-It has the two Aspects

1. Diversification of crop production refers to a system of multiple cropping rather than monocropping. It may also mean a shift from subsistence farming to commercial farming.

  • It has three advantages:
  • It lowers the risk of a farmer on account of the failure of monsoon.
  • It enhances the scope for commercialization of farming.
  • Minimize the market risk arising due to price fluctuation.

2. Diversification of productive activities implies a shift from crop farming to non-farming areas of employment. Non-farm areas of employment include.

  • Animal husbandry.
  • Fisheries.
  • Horticulture.
  • Cottage and household industry.
  • Information technology-every village a knowledge Centre

It has the following advantages:

  1. Reduce the risk from the agriculture sector.
  2. Provide ecological balance.
  3. Provide sustainable livelihood option to people living in the village.

Organic Farming

Organic farming is a system of farming that maintains, enhances and restores the ecological balance. It helps in the sustainable development of the agricultural sector, In organic farming, farmers use organic manure, biofertilizers and organic pesticides.

Organic farming is a system of farming that maintains, enhances and restores the ecological balance. It helps in the sustainable development of the agricultural sector, In organic farming, farmers use organic manure, biofertilizers and organic pesticides.

Advantages of organic farming:

  • Inexpensive process.
  • Generates income.
  • Healthier and tastier food.
  • Solves unemployment problem.
  • Environment-friendly.

Limitation of Organic farming:

  • Yields from organic farming are less than modern agricultural farming in initial years.
  • Organic products have shorter shelf life than sprayed produce.
  • Choice in the production of off-season crops is quite limited in organic farming.

Organic farming involves the labor-intensive process of production of labor so India has the comparative advantage in organic farming.

Operation Flood

It is a system of milk co-operatives, launched in 1966. This system emphasized the pooling of milk by farmers through co-operative societies.

This increased the quantum of sale as well the market value of the product. The production in milk increased four-fold. This system is commonly called operation flood.

Labour Force

It refers to an actual member of people available for work.

Non-farm Sector

It refers to jobs in govt. manufacturing, services, construction, mining, retail, etc.

Labour Intensive Process

It refers to the process of industry that requires a large amount of labor to produce its goods.

NCERT Solutions

Question 1. What do you mean by rural development? Bring out the key issues in rural development.

Answer. Rural development is a comprehensive term which includes various aspects of economic development. It mainly focuses on those areas which are lagging behind in the overall development of the rural economy. The key issues in rural development are as follows:

  • Development of human resources
  • Land reforms
  • Development of productive resources
  • Infrastructure development
  • Special measures for poverty alleviation

Question 2. Discuss the importance of credit in rural development.

Answer. The gestation period between crop sowing and income realization is quite long for farmers. Farmers need an infusion of capital at various stages of the farm cycle. This capital need is usually met by borrowings from various sources. Hence, credit is very important for rural development.

Question 3. Explain the role of micro-credit in meeting the credit requirements of the poor.

Answer. Lending by organized sector; like banks and cooperative banks has its own limitations. As collateral is required for availing loans from banks, the poor are automatically excluded from its ambit. Micro-credit works on the involvement of SHGs (Self Help Groups). Such groups pool money from their members and grant a loan to a member who is in need. SHGs promote spendthrift so that loan recovery can be realized. As the experience of many villages shows, micro-credit has definitely helped in improving the status of rural poor.

Question 4. Explain the steps taken by the government in developing rural markets.

Answer. The government has taken the following steps in developing rural markets:

  1. Regulation of markets to create orderly and transparent marketing conditions
  2. Provision of physical infrastructure facilities; like roads, railways, warehousing, cold storage, etc.
  3. Cooperative marketing for realizing fair prices for farm produce
  4. Policy instruments; like ensuring MSP (minimum support price), maintaining buffer stocks for wheat and rice and distribution of food grains and sugar through PDS (Public Distribution System).

Question 5. Why is agricultural diversification essential for sustainable livelihoods?

Answer. There are two major problems in agriculture; when ensuring sustainable livelihood is concerned. The first problem is over-dependence on cropping to earn a livelihood. The second problem is the oversupply of labor to the farming sector. In India, while most of the farm laborers get engaged during Kharif season, many of them remain unemployed during rabi season; especially in areas with poor irrigation facilities. Due to overcrowding of laborer in farming, many people suffer from disguised unemployment and seasonal unemployment. This does not ensure sustainable livelihoods for many. Hence, diversification in agriculture is essential.

Question 6. Critically evaluate the role of the rural banking system in the process of rural development in India.

Answer. The rural banking system has a positive effect on rural development. Especially after the green revolution, the rural banking system helped farmers to avail loans for various farm inputs. This ensured better farm productivity and as a result, famines are a thing of the past. However, the formal credit system has failed to ensure that credit reaches to poor farmers. With some exception of the commercial banks, most of the financial institutions have failed to ensure the availability of loans to the rural poor. The high default rate is another major problem among rural farmers. The banking sector needs to turn into customer relationship specialist to ensure proper disbursal and recovery of loans. This will help in better development in rural India.

Question 7. What do you mean by agricultural marketing?

Answer. Agricultural marketing is a process that involves the assembling, storage, processing, transportation, packaging, grading and distribution of different agricultural commodities across the country.

Question 8. Mention some obstacles that hinder the mechanism of agricultural marketing.

Answer. Some obstacles that hinder the mechanism of agricultural marketing are as follows.

  1. Very high involvement of private players in procurement means that many farmers are still at the mercy of moneylenders and merchants.
  2. Lack of proper connectivity through roads and railways debars the farmers from proper access to the market.
  3. Lack of cold storages and cold supply chain results in huge wastage of fruits, vegetables, and other perishable items.
  4. Lack of information on real-time prices prevents farmers from ensuring optimum profits.

Question 9. What are the alternative channels available for agricultural marketing? Give some examples.

Answer. There are two types of alternative channels available for agricultural marketing. In many states; like Punjab, Himachal Pradesh and Andhra Pradesh; Mandis are available where farmers can directly sell to the buyers. This helps the farmers in earning good profit. Another trend has recently developed and that is of contract farming. Large MNCs make contracts with farmers. As per the contract, a farmer has to grow a particular crop exclusively for the MNC. The company provides seeds and inputs and ensures that all the farm produce would be bought by the company. This has helped many farmers in getting a steady source of income.

Question 10. Distinguish between ‘Green Revolution’ and ‘Golden Revolution’.

Answer. While the Green Revolution is related to the improved production of wheat and rice, Golden Revolution is related to horticulture, i.e. production of fruits and vegetables.

Question 11. Do you think about the various measures taken by the government to improve agricultural marketing are sufficient? Discuss.

Answer. The government has taken various measures to improve agriculture marketing. Let us look at them from a critical perspective. To ensure a fair price for farm produce, the government announces MSP (Minimum Support Price) for some farm produce; like wheat, rice and sugarcane. On behalf of the government, the FCI (Food Corporation of India) procures farm produce from the farmers at MSP. The system of MSP helps in negating the impact of moneylenders and merchants to some extent but they still have a stranglehold on the major market share. Roads have been built but still, a major part of rural India needs to be connected with all weather road. Rail network has reached most parts of the country but lack of dedicated freight corridor means that farm produce often lie rotting in the warehouse of the railways. A number of cold storages are the bare minimum which results in wastage of a huge quantity of perishable items.

Question 12. Explain the role of non-farm employment in promoting rural diversification.

Answer. We know that there is a problem of over-dependency on a farming activity which creates the problem of disguised unemployment and seasonal unemployment. This necessitates that farmers should diversify into non-farm activities; like food processing or beekeeping. Promotion of non-farm activities will help farmers in acquiring new skills and alternate sources of income. This will help in diversifying the rural economy.

Question 13. Bring out the importance of animal husbandry, fisheries, and horticulture as a source of diversification.

Answer. Animal husbandry, fisheries, and horticulture can be very important as a source of diversification in the rural economy. While animal husbandry and horticulture can be practiced in almost every village, the fishery can be practiced only at select locations. However, these activities will help in ensuring alternate sources of income to the farmers. These activities are also more sustainable compared to farming which involves just two major cropping seasons in a year. The success of Operation Flood has shown that dairy farming can help in making the farmers prosperous. At present, about 70 million small farmers earn their livelihood from animal husbandry. Animal husbandry can be especially helpful in ensuring a livelihood for landless farmers. Similarly, the success of the Blue Revolution has helped in improving the condition of the fishing community. Today, the total fish production accounts for 0.7% of the GDP.

Question 14. ‘Information technology plays a very significant role in achieving sustainable development and food security’ — comment.

Answer. Many modern thinkers believe that IT can play a significant role in achieving sustainable development and food security. IT by itself cannot bring change but proper use of IT as a tool can help in changing the scenario. The government can use information technology to disseminate timely information about areas susceptible to food insecurity so that timely action could be taken. Farmers can get real-time information regarding weather, seed price and farm produce price. They can also get relevant information about the best practices of farming if they can be connected through the internet. Today, the mobile phone has reached most of the villages in India and it can be used as a tool to reach the benefits of information technology to the farmers.

Question 15. What is organic farming and how does it promote sustainable development?

Answer. Farming which is done without the use of synthetic fertilizers and pesticides is called organic farming. We know that excess use of chemical fertilizers and pesticides has resulted in soil pollution and groundwater pollution. It has also resulted in many harmful chemicals reaching our biological system through the food chain. Organic farming, on the other hand, does not carry the risk of soil pollution or groundwater pollution. Risk of harmful chemicals reaching our body through food is also minimized if we use organic farm produce. Thus, organic farming is the way which can be sustained in the long run. It can be said that organic farming promotes sustainable development.

Question 16. Identify the benefits and limitations of organic farming.

Benefits –
Organic Farming: Organic farming is more environmentally friendly than modern farming. It helps in preventing pollution of soil and groundwater. Organic farming helps in promoting sustainable development. Organic farming has the potential of generating income through exports because organic farm produce is in high demand in many countries. Organic farming is highly labor intensive and hence can create more employment opportunities.

Limitations –
Organic Farming: There is a need for increasing awareness about organic farming among the farmers. Proper infrastructure facilities need to be provided so that farmers can be encouraged to go for organic farming. Produce from organic farming may have a shorter life span and more quality issues. Growing more crops or getting large yields is not possible through organic farming; unlike modern farming. Small and marginal farmers are not in a position to adapt to organic farming on a larger scale.

Question 17. Enlist some problems faced by farmers during the initial years of organic farming.

Answer. Some of the problems faced by farmers during the initial years of organic farming can be as follows:

  • Lack of finance to buy farm inputs
  • Fear of losing revenue because of low farm output
  • Risk of losing farm produce because of shorter shelf life


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