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The Indian Economist Rural Development- Providing meaning to the Indian Economy

The Indian Economist Rural Development- Providing meaning to the Indian Economy

By Krutika Kshirsagar

It was not for nothing that the Father of the Nation rightly remarked ‘India is not Calcutta and Bombay. India lives in her seven hundred thousand villages’. It is also not uncommon for the chieftains in our country to be reminded of this part of the world only during elections.
However, a larger picture emanating every year increasingly exemplifies the importance of these hamlets and their contributions. In order to bridge the gap between rural and urban India, the Government has been inviting the private sectors to participate in the nation building process for bringing about changes in the rural scenario. The economic fundamentals underline the necessity of an all inclusive economic growth pattern and financial inclusion if we are to make our economy self sustaining. A total of Rs. 80194 crore have been allocated for Rural Development Ministry, an increase by 46 percent in the 2013-14 fiscal year. The budget allocation to the Ministry of Agriculture was Rs. 27049 crore and Rs. 500 crore have been allocated for initiating the programme on crop diversification. The primary reason for this increase in allocation is attributed to unparalled urgency and importance when applied to the rural Indian economy because it presents an enormous challenge, and consequently, an equally great opportunity for making a
difference in the lives of hundreds of millions of people. Self-sustaining models developed by the rural folks have enabled their primary growth fuelled by infrastructural developments in rural roads, electrification, water supply and cell phones. This has together led to increasing job opportunities and raising wages in the thousands of villages. The use of cell phones has benefited a diverse set of people—from fishermen to sari weavers. Most of the studies focused on price discovery in agricultural markets or on skilled artisans have shown improvement in customer service and price realizations. Over the last five years, rural wages have increased at an exceptional
20% CAGR.

There has also been a steady appreciation in the land prices. This has increased the purchasing power of the people. Fast-moving consumer goods companies are enthused with the strong rural demand as it augments their sales. However, rural India is caught in what can be called a development ensnare. Because of lack of economic opportunities, the incomes in rural areas are low. Thus, they are unable to pay for goods and services that would enable them to increase their incomes. This has consequently led to low demand for goods and services, making it repulsive for private firms to engage in profitable businesses. The FMCG industry has tried well to capture this market by introducing several low cost essential products. But the lack of necessary income has consequently led to an inadequate provision of infrastructure, which in turn has led to lack of economic opportunities, and so on, thus leading to an unyielding cycle. This can be fixed when we realize that human capital is a scarce resource globally. Fortunately India is lavishly endowed with immense human capital.

 A little bit of background study tells us about some vital beginnings towards enabling the rural economy. At its June 2003 summit, the G8 group of countries recognized the need to increase investment in rural and agricultural development to achieve lasting food security. It pledged to reverse the decline in ODA for agriculture and to increase trade opportunities for developing countries. Canada, for example, announced a five-fold increase in allocations to agricultural development in poor countries in 2003. European countries too revised their policies. This was indeed a good beginning. While higher productivity and output are prerequisites for sustained poverty reduction, without access to efficient markets, small-scale farmers and entrepreneurs in developing countries are at an enormous disadvantage. Today, many markets are hostile or inaccessible to the rural poor. And the efforts of poor farmers in some of the most remote areas of the world can be undone by international processes far beyond their control.

Provision of subsidies has had its share of pros and cons (depending on the countries) while protectionist trade policies have dented the developing nations. For example, cotton farmers in Western and Central Africa lost US$ 301 million in 2001 because they could not contend in world markets against cotton producers of the US, who received US$ 3.4 billion in subsidies.

Agricultural productivity in India is facing a wide variety of issues – farmers are expected to grow more from less due to competition for land, water, and energy from urban populations and industry. At the same time, they are under increasing pressure to manage and protect the environment. A sustainable production system needs to be put into place to help famers increase productivity while reducing environmental impacts. For instance, farmers can improve soil and water management through minimum tillage agriculture, which preserves the soil and helps water retention. They can adopt more restorative crops and integrated pest management systems. Research and development aimed at providing improved seeds and products that increase water efficiency and make the best use of the land is necessary. Looking to the future, investments and partnerships will be necessary for accelerating innovation.

A mission by the Government towards ‘greening’ rural development in India talked about achieving sustainability through improving resource conservation, improving resource efficiency, reducing negative environmental impact, strengthening the climate resilience of communities and contributing to climate change mitigation. Substituting the concept of greening with that of economy, it is not very difficult to understand the steps that need to be taken in order to achieve economic sustainability of the rural populace. Thus in this changing rural and economic landscape, the coactions in dynamics cannot be ignored.

Krutika Kshirisagar: After completing B.Tech from Institute of Chemical Technology (UDCT), I’m currently pursuing MBA in Energy and Infrastructure from School of Petroleum Management, PDPU. I have been working as a co-ordinator of CII-Young Indian for the last one year. My strengths are good analytical ability, proficiency in public speaking, good writing, oratory and communication skills, zest and determination to explore new ideas and working in unison with various groups as a group member as well as a leader.

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