rural economy a reality check

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.

rural economy a reality check

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