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8/9/2019 Rural Economy a Reality Check
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Rural Economy : A RealityCheck
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Introduction
The economy was characterized by extensive
regulation, protectionism and public ownership
This lead to pervasive corruption and slow growth
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Economic scenario in Rural India
The Rural Economy in India is wholly agriculture
based
In India, agriculture accounts for almost 19% of
Indian GDP
The Ministry of Agriculture, the Ministry of Rural
Infrastructure, and the Planning Commission ofIndia
- Governing bodies
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A target of Rs 225,000 crores for farm credit has been set
for the financial year 2007-2008. 50 lakh new farmers have been brought under the banking
system.
Agricultural Insurance to facilitate agricultural loans to the
farmer.Allocation for the Rural Infrastructure Development Fund
to be increased substantially.
In the financial year 2006-07, 35 projects were
successfully completed.
Additional irrigation of 900,000 hectares has been targeted
in the financial year 2007 - 2008.
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Changing face of Rural India
When we talk of rural economy we talk about mainly
economy, education and health
Handloom weaving, oil pressing, bidi manufacturing
etc
Generate more than half the national income
Flow of agricultural credit Increase in rural literacy rate and social status
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Population below the poverty line
Period No. ofpersons
(millions)
% ofpersons
1983 252 46
1993-94 244 37
1999-2000 193 27
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Government, NGOs, social welfare organizations etc
Microfinance and Micro credit
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FIVE YEAR PLANS
The economy ofIndia is based in part on planningthrough its five-year plans, developed, executed and
monitored by the Planning Commission.
Montek Singh Ahluwalia is currently the DeputyChairman of the Commission.
First five year plan (1951-1956) presented byJawaharlal Nehru.
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THE FIVE-YEAR PLANS
SECTORALALLOCATIONS DURING THE 5-YR PLANS (Rs. billion)
Heads of development 7th plan
(1985-90)
8TH Plan
(1992-97)
9th Plan
(1997-02)
10th Plan
(02-07)
1AGRICULTURE
105 225 372 589
2 RURAL
DEVELOPMENT89 344 890 1,219
Source: Planning Commission 2002
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CURRENTLY..
11TH five year plan (2007-2012)
Objectives:
Income and poverty
GDP growth from 8% to 10%
Create 70 million new work opportunities
Education
Reduce dropout rates of children from elementary school from52.2% in 2003-04 to 20% by 2011-12
Literacy rate for persons of age 7 years or above to 85%
Health, women and children
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cont..
Infrastructure
Ensure electricity connection to all villages and BPLhouseholds
Connect every village by telephone networks andprovide broadband connectivity to all villages by 2012
Environment
Increase forest and tree cover area by 5 %
Attain WHO standards of air quality in all major citiesby 2011-2012
Increase energy efficiency by 20% by 2016-2017
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PERCENTAGESHAREOFTHE DIFFERENTSECTORSIN GDP
YEAR
PRIMARY
(agri and
allied)
SECONDARY
(manufacturing)TERTIARY
(services)
TOTAL
1950-51 57.214.8
28.0 100.0
1980-81 39.7 23.7 36.6 100.0
2001-02 23.9 26.6 49.5 100.0
SOURCE: National Account Statistics, 1951-2001
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THE TRANSITION OF THE RURAL
ECONOMY
1. FOOD GRAIN
CROPS
2. ON-LAND
ACTIVITIES
3. FARM
ACTIVITIES
1. NON-FOOD GRAIN
CROPS, CASH
CROPS
2. OFF-LANDALLIED
ACTIVITIES
(livestock, fisheries)
3. NON-FARMACTIVITIES
(manufacturing and
services)
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THE RURAL ECONOMIC STRUCTURE
RURALECONOMY
FARM SECTOR
(agri & allied)
AGRO-PROCESSING
(sugarcane, oilseed)
AGRICULTURE
NON-FARM SECTOR
ANIMALHUSBANDRY
(dairy, poultry)
HORTICULTURE
FORESTRY
MANUFACTURING
(handloom, handicrafts)
MINING &QUARRYING
CONSTRUCTION
RURALINDUSTRIES
TRANSPORT &
STORAGE
COMMUNITY &
SOCIALSERVICE
RETAILING & TRADING
RURALSERVICES
COMMUNICATIONFISHING
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Farm sector: Agriculture and Allied Activities
Ranks second in farm output
Contributed nearly 19% of the GDP in 2007,emplyed 60% of
the workforce
Second largest producer in the world of milk, cashew nuts,
coconuts, tea, ginger, turmeric and black pepper.
Worlds largest cattle population: 193 million
Second largest producer of wheat, rice, sugar, cotton, silk,
peanuts, and inland fish
Second largest producer and consumer of silk in the world
Third largest producer of tobacco
Largest fruit producer accounting for 10%of the world fruit
production.
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Non-farm sector and Rural industries
Industry accounts for 26.6% of the GDP and employs
17% of the total work force
Textile manufacturing second largest source ofemployment after agriculture
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RURAL ENTERPRISES
RURAL ENTERPRISES IN INDIA
1980 1990 1998
AGRICULTURALENTERPRISES
(million)
NONAGRICULTURAL
ENTERPRISES (million)
TOTALRURALENTERPRISES
(million)
TOTALNUMBEROF WORKERS
EMPLOYED (million)
GROWTHOF WORKERS (%)
1.27 2.08 3.18
9.74 12.28 14.01
11.01 14.36 17.19
24.23 32.17 38.13
--- 2.88 2.15
Source: CSO, Economic Census 1998, AllIndia Report.
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FIFTH ECONOMIC CENSUS, 2005.
S.No.ITEM RURAL
COMBINED
(RURAL+URBAN)
1 a) Number of enterprises ( in 000) 25809 42124
b) Percentage share 61.3 5 100.0 %
2 Percentage of agricultural enterprises 23.2 % 15.3 %
3
a) Number of enterprises (in 000)
i) With out premises
ii) Having 10 or more workers
b) Percentage share in total enterprises
i) Without premises
ii) Having 10 or more workers
5384 7912
225 583
20.9 % 18.8 %
0.9 % 1.4 %
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Sl.No ITEM RURALCOMBINED
(RURAL+URBAN)
Average annual growth rate (%)
in enterprises over EconomicCensus 1998
4
5.5
3% 4
.80 %
5 a) Number of persons employed
(in 000)
50186 98968
b) Percentage share 50.7 % 100.0 %
Percentage to hired workers in
the total persons employed6 41.6 % 52.4 %
Percentage of total adult female
workers in the total persons
employed
7 24.3 % 19.3 %
Average annual growth rate (%)
in total employment over
Economic Census 1998
8 3.33 % 2.49 %
Source: CSO, Economic Census 2005, All India Report.
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Non agricultural activities increased by 7%
Migration down from 62.2% to 56.5%
Size and distribution of rural assets
50% (poor households) owned 10% of the
assets
10% (rich households) owned 50% of the
assets
40% of the middle income group households
more than 40 % of the total assets.
Land ownership
Landholdings increased by 50%
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Labour Force Characteristics
Urban Share (in %)
Male Female Total
1. Employed 51.8 13.9 33.7
2. Unemployed 2.4 0.8 1.6
3. LabourForce
(Total) 54.2 14.7 35.3
4. Not counted in
the labour force 32.8 71.7 51.4
5. Working age
population (Total) 87 86.4 86.7
6. Non-working
age population 13 13.6 13.3
7. Population
(Total) 100 100 100
Rural Share (in %)
Male Female Total
1. Employed 53.1 29.9 41.9
2. Unemployed 0.9 0.3 0.6
3. LabourForce
(Total) 54 30.2 42.5
4. Not counted in
the labour force 30.3 53.9 41.7
5. Working agepopulation (Total) 84.3 84.1 84.2
6. Non-working age
population 15.7 15.9 15.8
7. Population (Total) 100 100 100
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Rural income (farm + non farm) contributes around 57% of the totalincome in India
Considering (93 94) per capita income for rural sector increased from Rs.5783 to 9481 Rs in (99 00).
Share of non farm income has increased rapidly from 32% to 47%
Rural employment is classified into 1. Self employed
2. Wage labourers
Self employment farmers purchasing power has increased, since value ofoutput increased by 9.2% compared to past 7.7% increase in input.
Distribution of land holdings and the cropping pattern are the key
determinants of farm profitability
Wage laboureres 33% of the total rural workforce works as agriculturalwork labourers
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Rural income
1st non farm sector
2nd
farmer3rd wage earner
Over the last 20 years non food expenditure has gone up 5 times
where as food expenditure increased by 4 times.
Rural spending per person is 5830 Rs per annum compared to urban
- Rs 10260
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Rural Infrastructure :1. Transport and communication
Road connectivity
- Pradhan Mantra Gram Sadak Yojna
Post Offices
- Largest postal network in the world
(1,55,000 + offices)
- Postal Circle , Divisions
- Categorized as head, sub, branch post office
Radio
- Coverage to 98 % of the population.
- Broadcast farm programs and home programs
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Television
- Doordarshan (one of the largest terrestrial networks in the
world)
- Reach 87% of the population.
Print and Press Media
- Registrar of Newspaper forIndia (RNI)
- Not reaching rural areas.
Telecom Services , Mobile Services
- Villages connected through Village Public Telephones
(VPT).- More than 84% of villages covered
- 3.6 crore mobile users ,15% in rural areas.( as per 2005)
- Mobile Postman Scheme
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Rural Health Services:3 tier system
1. Sub Centres
- Contact Point b/w PHC & community
- One multi purpose worker (male) and
Auxilary Nurse-midwife (ANM)
2. Primary Health Centres (PHC)
- First contact point b/w community & a
medical officer.
- Medical officer and 14 paramedical and
other staffs.
- Referal unit for 6 sub centres, 6 beds.
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3. Community Health Centres (CHC)- 4 medical specialists
(Surgeon,physician,gynaecologist &
paediatrician) and 21 paramadecial and
other staffs.- Referal unit for 4 PHC , 34 beds
Education
Electricity
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PUBLIC DISTRIBUTIONSYSTEM
PDS means the distribution of essential commodities to a large number of
people through a network of fair prices shops on a regular basis.
PDS with a network of about 4.76 lakh FPS is the largest distribution
network of its kind in the world.
80% (i.e 3.8 lakh) FPS are in rural areas.
Targeted Public Distribution System - to reform and improve the PDS by
focusing on the poor and needy sections of the society.
There should be a Fair Price Shop within a radius of 3kms Per every 2000
card population in rural areas
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Agri Infrastructure
Govt ofIndias intervention in the agricultural marketingsystem is limited to protecting the interests of producersand consumers and promoting the organized marketingof agricultural commodities.
7161 regulated markets to which the central governmentprovides assistances in the establishment of infrastructure
Various central government organizations are involved inagricultural marketing.
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Mandis
They are agricultural markets set up by state governments to procure
agricultural products directly from framers.
Located in high production centres of different crops, these markets
may be categorized as grain mandis, cotton mandis etc
Most agricultural area with a population of more than 10,000 have
mandis
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Marketing Infrastructure
Haats
Periodic markets still play an important role in the ruraleconomy as well as in the social life of villagers
First point contact for villagers with the market
A means of distributing local products and exchangingrural surplus
An opportunity for buying daily necessities
Melas
These occasions serve as the meeting ground for peoplefrom different communities and religious groups , forlivelihood and agricultural commodities , for crafts andcraftsmen and for displaying various skills
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Commercial Infrastructure
Regional rural banks
Set under an Act of parliament in 1976
Objective Developing the rural economy through thepromotion of agriculture, trade and commerce , industry
by extending credit , particularly to small and marginalfarmers, agricultural labourers and small entrepreneurs.
Credit provided by a combination of central government,state government and the sponsoring commercial bank
Scheduled commercial banks
Cooperative banks
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Government Policies And The
Rural Face Of Reforms
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Who is responsible for Rural developmental
activities in India?
Ministry ofRural Development. Infrastructural Development
Agricultural Sector DevelopmentActivities
Non-Farm Sector
Social Sector
Issues Handled
Production
Productivity
Skills
Access to Institutional Credit Marketing of Produce and Services
Educational and Health
Social Restructuring and Empowermentof Women
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Areas Focused and Programs
1. Changing Rural Infrastructure
Prime Ministers Village Development Program
Primary Health Care
Universalisation of primary education
Safe drinking water
Public housing assistance to all shelter less poor families
Nutrition
Connectivity of all villages and habitations by roads, and
streamlining of the public
Distribution system with a focus on the poor.
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2. Employment Opportunities
New credit linked subsidy programme called Prime Ministers
Employment Generation Programme (PMEGP)
Merged two schemes that were in operation till 31.03.2008
namely Prime Ministers Rojgar Yojana (PMRY) and Rural
Employment Generation Programme (REGP) for generation of
employment opportunities through establishment of microenterprizes
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3. District Rural Development Agency
Aims at alleviating Poverty
Different Wings
* Self Employment Wing* Wage Employment Wing
* Engineering Wing
* Accounts Wing
* Monitoring and Evaluation Wing
* General Administration Wing
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Land Reforms
Economic Holding
One that could provide a reasonable standard of living
Land CeilingNo individual farmer should own more than three times
the economic holding
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CURRENT BUDGET PROVISIONS For Rural Development
Swarnajayanthi Gram Swarozgar Yojana
This scheme is to provide self-employment
to the poor.
Objective of the SGSY is to bring the assisted poor familiesabove the Poverty Line by providing them income-generatingassets through a mix of Bank Credit and GovernmentalSubsidy.
Monitoring-programme is monitored from the Central level
down to the grassroot level.
Indira Awaz Yojana
The objective of this scheme is to provide dwelling unitsto the homeless Scheduled Castes and Scheduled Tribes
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Priority in Selection of Beneficiaries
SC/ST households who are victims of atrocity.
SC/ST households, headed by widows and unmarried woman.
SC/ST households affected by flood, fire, earthquake, cyclone and
similar natural calamities.
Other SC/ST households
Non- SC/ST households Physically handicapped
Appropriate Construction Technology and local
materialsDrinking Water Supply
Sanitation and Sanitary
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Conclusion
Analysis of the rural economy- 5 year plans
It takes a close look at rural economic structure.
Growth in purchasing power.
Government policies and rural economies and their impact.
Pace of progress has been set. It needs to be accelerated.