RURAL ECONOMY

SIVAKUMAR P

INTRODUCTION

Five year plans objective was improve quality of life and focus on growth with equity Slow growth of rural economy Regional disparities and inequalities among different sections of the society

100 crore indians will be almost equally divided between haves & have nots Middle class 50 crore Indians have provided vast market Other 50 crore indians majority in rural areas are living BPL Human development index shows that India ranks 136 in 156 countries

Changes in Rural India

Diverse change levers in rural India The pull of the cities & towns migration and its side effects

Effect of government programmes

Civil society interventions Natural & manmade disasters Slow but sure change

Transitions In Rural India

Non food, cash crops Food Grain Crops Livestock & fisheries Manufacturing & services

On land activities
Farm Activities

Rural Employment Patterns( Male)

Sector Year 1987 ( % share in employment) Year -2004 ( % share in employment)

Agriculture
Transport & Communicatio n Trade & Hotels

75
2

67
8

Construction

Manufacturing

Source: NSSO data, Mckinsey Global Institute Study, 2004-05

Rural India Population Trends

1971 Total Population (in million) Rural Population (in million) As a proportion of total population Decadal Variation 548.2 1981 683.3 1991 848.3 2001 1026.9

524.0

628.8

741.6

76.7

74.3

72.2

19.8

16.7

15.2

Source: Census 2001

Contd

The joint family system is being replaced by the nuclear family system

The occupational pattern shows a predominance of

cultivators and wage earners

Cultivators( 40.86 %) and Wage Earners( 35.28 %) according to NCAER studies (2002)

Rural Settlement & Habitation Trends

Key findings from 2001 census Population density 253/ sq kilometer and total number of villages is 638, 588

Villages having less than 500 population are falling

Villages having 2000 + population most prosperous What are the implications of these trends?

Contd

Size of villages/ habitations are changing Role & influence of towns is changing Social interaction is a mix of rural and urban

Lets look at some key trends in detail

Rural Income Trends

Annual Income ( at 1998-99 prices) <= 35,000 35,001- 70,000 70,001 1,05,000 1,05,0011,40,000 > 1,40,000 Income Class 1989-90( % Households) 67.3 23.9 7.1 1.2 0.5 1998-99 ( % Households) 47.9 34.8 10.4 3.9 3.0 Low Low Middle Middle Upper Middle High

Source: National Council for Applied Economic Research, 2000

Rural Vs Urban

Income & consumption Sources of income Education to head Literacy levels Social indicators

Diagnosis of the failure

Low priority to agriculture Subsistence orientation of agriculture Failure of land reforms Inadequate food supplies Slow growth of infrastructure Inadequate inputs Slow down of rural industrialisation

Policy intervention required

Objectives- improving quality of life of rural people & reducing urban rural disparities Agriculture needs proper attention Focus has been more on cropping system research than farming system research

Effective linkage is essential among agriculture research system and agricultural administration and farmers Regionally differentiated strategies will be necessary to raise the full potential of growth in every region The emphasis must be on raising the capabilities of small peasants and promoting sustainable farming systems

Collective farming Higher investment in farm operations & related rural infrastructure is necessary condition for speedier farm growth Give more importance to productivity and stability of crop production Credit & insurance needs to revitalized to respond to the changing trends

Credit facilities

Farm credit facilities Give more importance to panchayat raj institution at village level Innovative credit delivery system like involvement of SHG, small & Micro banking RRB, PACS Utilization of NABARD fund of rural infrastructure

Kisan credit cards Crop insurance against natural calamities Improve communication technology to link villages to rest of the world

Rural Face to Reforms

Pradhana mantri gramodaya yojana Prime minister rojgar yojana IRDP Employment guarantee program Janashree bima yojana RIDF Micro finance development fund

National commission on land use policy National movement of watershed development Comprehensive agricultural development program Rural housing Farm credit Rural industries Encouraging corporate social responsibility Digital revolution