Rurl economics

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Rurl economics

  1. 1. AGRICULTURE AND RURAL ECONOMY
  2. 2. <ul><li>RURAL PRODUCTION SYSTEM AND RESOURCES: </li></ul><ul><li>Production System :- Under Production system, various crops are produced. </li></ul><ul><li>BASIC NEEDS : (i) Land (own) </li></ul><ul><li>(ii) Land on Tenancy. (Private or Govt. Land). </li></ul><ul><li>Crops are (i) Food-grains (ii) Other Crops for sale to get Cash. Farmers produce food-grain-crops for own use or for sale in market. </li></ul>
  3. 3. <ul><li>Farmers are producing those crops which give more benefits called CASH-CROPS e.g. Cotton, Sugarcane, Mustard etc. </li></ul><ul><li>Production system is based on the Agro-Climatic condition. </li></ul><ul><li>Every Crop cannot be raised every-where, </li></ul><ul><li>because the requirements are different for every crop along-with climate. </li></ul>
  4. 4. <ul><li>ESSENTIALS FOR PRODUCTION OF CROPS:- </li></ul><ul><li>1. Land (Fertile soil) </li></ul><ul><li>2. Water </li></ul><ul><li>3. Inputs (Seed and Fertilizers) </li></ul><ul><li>4. Pesticides & Insecticides </li></ul><ul><li>5. Cutting of Crops & Storage </li></ul><ul><li>6. Marketing of Crops (Mandi, KUMS) </li></ul>
  5. 5. TYPES OF CROPS <ul><li>1. Kharif Crops (Rain-fed Crops). </li></ul><ul><li>2. Rabi Crops (Irrigated area crops) </li></ul><ul><li>Time Period for Crop raising: </li></ul><ul><li>1. For Kharif – April to September. </li></ul><ul><li>2. For Rabi -- October to March </li></ul><ul><li>Classification of Crops: (1) Food-grain (2)Oilseeds (3) Cash-Crops (4) Vegetables and (5) Horticulture-Fruit crops </li></ul>
  6. 6. <ul><li>FOOD-GRAINS: - Wheat, Rice, Maize, </li></ul><ul><li>Bajra. (Cereals) </li></ul><ul><li>OIL-SEEDS: - Ground Nut, Mustard, </li></ul><ul><li>Soyabean, Sesamum etc. </li></ul><ul><li>CASH CROPS: - Cotton, Sugarcane, </li></ul><ul><li>Tobbacco, Vegetables,Chilli, </li></ul><ul><li>Onion, Garlic etc. </li></ul><ul><li>VEGETABLES :All types of Vegetables. </li></ul><ul><li>FRUITS: Citrus, Gauwa, Mango, Orange,Grapes </li></ul>
  7. 7. <ul><li>Norms of Crops : Scale of Finance- DLTC </li></ul><ul><li>Land-holding and Kharif-Rabi Crops. </li></ul><ul><li>Maximum Limit for Finance for raising Crop. </li></ul><ul><li>Average Crop Finance is Rs. 25,000/- in India. </li></ul><ul><li>To Big Farmers Finance : Rs.3 Lacs Max. </li></ul><ul><li>Maximum Loan Amount Rs. 50,ooo to 70,000 per farmer. </li></ul>
  8. 8. <ul><li>Total Geographical Area of India is 329 Million Hectares of Land. </li></ul><ul><li>Total Cropped area & net sown-area is 190 Million Hectare (62%) </li></ul><ul><li>Double cropped area is 49 Million Hectare i.e. 16% only. </li></ul><ul><li>Food Requirement is 350 MT </li></ul><ul><li>Food Production is 330 MT (There is a need to grow more). </li></ul>
  9. 9. <ul><li>CROPPING PATTERN : Distribution of the cropped area over different crops is known as pattern of cropping. There is no major change in cropping pattern in India. Presently the coverage of Land is as under :-- </li></ul><ul><li>1. Food-grains 40% cropped area </li></ul><ul><li>2. Oil-seeds 5% ,, </li></ul>
  10. 10. <ul><li>3. Cotton 2% </li></ul><ul><li>4. Sugarcane 8% </li></ul><ul><li>5. Vegetables 5% </li></ul><ul><li>6. Fruits 8% </li></ul><ul><li>7. Other crops 30% </li></ul><ul><li>8. Jute 2% </li></ul><ul><li>------------------------------- </li></ul><ul><li>Total 100 </li></ul>
  11. 11. <ul><li>RESOURCES FOR PRODUCTION SYSTEM:-- Production system is a part of Rural Development. RD is now looked into by NABARD: NABARD is Apex Rural Development Bank in India. </li></ul><ul><li>AGENCIES FOR AGRIL. FINANCE: </li></ul><ul><li>(Financing Institutions): </li></ul><ul><li>I Institutional Agencies </li></ul><ul><li>II Non-Institutional Agencies. </li></ul>
  12. 12. <ul><li>I-INSTITUTIONAL AGENCIES: </li></ul><ul><li>R.B.I. | N.A.B.A.R.D. </li></ul><ul><li>Comm. Banks | Comm. Banks -SCB </li></ul><ul><li>Nationalised- Private| R.R.Bs. - DCCB </li></ul><ul><li>Branches-Branches.| Branches PLDB </li></ul><ul><li>Farmers Farmers | Farmers PACS </li></ul><ul><li>Farmers </li></ul>
  13. 13. <ul><li>NON-INSTITUTIONAL AGENCIES: </li></ul><ul><li>- Relatives & Friends, </li></ul><ul><li>- Land-Lords, </li></ul><ul><li>- Money-lenders, </li></ul><ul><li>- Traders & Commission Agents. </li></ul><ul><li>RBI IS THE LENDER OF LAST RESORT. </li></ul>
  14. 14. <ul><li>FLOW OF FUNDS FOR AGRIL.FINANCE: </li></ul><ul><li>Funds availability to Banks </li></ul><ul><li>Finance to Farmers </li></ul><ul><li>Rate of Interest and Margin of Banks. </li></ul><ul><li>Govt. is making available the Agril. Loan to farmer at 7% rate (subsidised). </li></ul><ul><li>INSURANCE OF CROPS.(10-15% Farmers are covered under Insurance) </li></ul><ul><li>PROCUREMENT OF CROPS : </li></ul>
  15. 15. 1. <ul><li>Procurement by Govt. (through FCI) </li></ul><ul><li>Procurement by Agents of FCI/Govt. </li></ul><ul><li>Procurement by Coop. Mkg. Societies. </li></ul><ul><li>Procurement by Mandi Samities (KUMS) </li></ul><ul><li>Procurement by Private Agents/Dealers. </li></ul><ul><li>MINIMUM SUPPORT PRICE (MSP): </li></ul><ul><li>For common variety of Food-grains, MSP were as under :-- </li></ul>
  16. 16. <ul><ul><ul><li>MSP of Important Food-grains: A Comparison: </li></ul></ul></ul><ul><ul><ul><li>2003-04 2008-09 </li></ul></ul></ul><ul><ul><ul><li>Wheat Rs.630/- Rs.1080/- </li></ul></ul></ul><ul><ul><ul><li>Rice Rs.550/- Rs. 900/- </li></ul></ul></ul><ul><ul><ul><li>Bajra Rs.450/- Rs. 600/- </li></ul></ul></ul><ul><ul><ul><li>Like wise for other crops the MSP have been fixed by the Central Govt. and increased from time to time. </li></ul></ul></ul>
  17. 17. <ul><li>Storage is done at following places by Govt.: </li></ul><ul><li>1. State FCI Godowns </li></ul><ul><li>2. Central Warehousing Corporation </li></ul><ul><li>3. Govt. Market Yards. </li></ul><ul><li>4. Cooperative Marketing Society’s Godowns. </li></ul><ul><li>5. Military Barracks and Air Strips (vacant) </li></ul>
  18. 18. <ul><li>CONTRIBUTION OF AGRIL. IN NATIONAL INCOME </li></ul><ul><ul><li>1950-51 56.5% </li></ul></ul><ul><ul><li>1990-91 34.O% </li></ul></ul><ul><ul><li>2006-07 20.5% </li></ul></ul><ul><ul><li>2007-08 17.8% </li></ul></ul><ul><ul><li>7008-09 17.1% (Reducing year after year) </li></ul></ul>
  19. 19. <ul><li>PATTERN OF LAND-HOLDING: </li></ul><ul><li>1. Marginal holdings: Maximum farmers are covered under this type of holding. </li></ul><ul><li>Marginal (< 1 Hect.) 0.40 Hect.(1 Ac) </li></ul><ul><li>Small (1 to 2 Hect.) 1.41 Hect. </li></ul><ul><li>Semi-medium(2 to 4 H) 2.72 Hect. </li></ul><ul><li>Medium (4 to 10 H) 5.80 Hect. </li></ul><ul><li>Large (10 Hect. & above) 17.18 Hect. </li></ul><ul><li>Source: Ministry of Agriculture-Annual Report 2007 </li></ul>
  20. 20. <ul><li>Thus land-holdings are : </li></ul><ul><li>1. Marginal holding </li></ul><ul><li>2. Small holding </li></ul><ul><li>3. Semi-medium holding </li></ul><ul><li>4. Medium holding and </li></ul><ul><li>5. Large holdings. </li></ul><ul><li>Average size of holding in India is 2.3 Hectare and operational holding is 1.32 hactres. </li></ul>
  21. 21. <ul><li>Causes for small size of holdings in India: </li></ul><ul><li>(i) Growing population in the country. </li></ul><ul><li>(ii) The Law of inheritance – Division of holding is reducing the size of holding. </li></ul><ul><li>(iii) The Decline of joint family system: Joint families have broken down – so division and sub-division of holding is going on. </li></ul>
  22. 22. <ul><li>(iv) The decline of handicrafts and village industries. Artisans have to leave their work due to machine-made goods. The Artisan have reverted to Agriculture activity hence size of land holding have reduced. </li></ul><ul><li>(v) Rural indebt-ness and money-lenders :The money-lender has only one interest to lend to farmers and grab the land. Plot of land pass from the farmers to the money-lenders in lieu of debt payment. </li></ul>
  23. 23. <ul><li>REMEDIES FOR SUB-DIVISION OF LAND OF FARMERS: </li></ul><ul><li>1. Creation of Economic holdings. </li></ul><ul><li>2. Setting up of new Industries in rural area to provide employment. </li></ul><ul><li>3. Shifting from small holding to other occupational work – allied to agril. work. </li></ul><ul><li>4. Consolidation of holdings (compact land holding – from scattered holdings. </li></ul>
  24. 24. <ul><li>5. Cooperative Farming. It can be a permanent solution to small holding. </li></ul><ul><ul><li>(a) Collective cooperative farming. </li></ul></ul><ul><ul><li>(b) Cooperative joint farming. </li></ul></ul><ul><ul><li>(c) Cooperative tenant farming. </li></ul></ul><ul><ul><li>(d) Cooperative better farming (by improved methods of operation. Ploughing, weeding, harvesting is done in a combined system. Mechanical equipments are used. ====== ** </li></ul></ul>
  25. 25. 3 <ul><li>ROLE OF AGRICUFLTURE AND ALLIED ACTIVITIES IN INDIAN ECONOMY: </li></ul><ul><li>1. Indian Agricultural have reached the stage of development and Maturity. </li></ul><ul><li>2. Earlier Agriculture was done for own use (Food-grains)- It is pre-independence period. </li></ul><ul><li>3. Green Revolution in 1966. </li></ul><ul><li>4. Agril. on Commercial Basis. </li></ul>
  26. 26. Role of Agri. In Indian Economy can be discussed in following way: <ul><li>(i) Share in National Income. </li></ul><ul><li>(ii) Large Employment Providing sector. </li></ul><ul><li>(iii) Provision of Food-surplus to the expanding population. </li></ul><ul><li>(iv) Contribution to Capital Formation. </li></ul><ul><li>(v) Providing Raw Materials to industries. </li></ul><ul><li>(vi) Market for industrial products. </li></ul><ul><li>(vii) Importance in International Trade. </li></ul>
  27. 27. (i) SHARE IN NATIONAL INCOME: <ul><li>(a) In 1950-51 Share of Agril. in NI-55.1% </li></ul><ul><li>(b) In 1981-82 Share of Agril. in NI -37.6% </li></ul><ul><li>(c) In 2006-07 Share of Agril. in NI -18.5% </li></ul><ul><li>(d) In 2008-09 Share of Agril. in NI -17.8% </li></ul><ul><li>Developed Economies are less depedent on Agriculture as compared under/developing countries. </li></ul>
  28. 28. <ul><li>In USA & U.K. the contribution to GDP by agriculture is 2%. </li></ul><ul><li>As the country progresses, the dependence on Agriculture declines. </li></ul><ul><li>(ii) AGRIL. IS LARGEST EMPLOYMENT PROVIDING SECTOR.:- </li></ul><ul><li>(a) In 1950-51 – 69.5% working population was engaged in Agril. </li></ul><ul><li>(b) In 1991-92- 66.9% working population was engaged in Agriculture. And (c) in 2001- 56.7% working population was engaged in Agriculture. </li></ul>
  29. 29. (iii) PROVISION OF FOOD SURPLUS TO THE EXPANDING POPULATION. <ul><li>a) There is heavy pressure of population so there is increasing demand for food also. </li></ul><ul><li>b) There is regular need of surplus food grains in our country. Thus there is regular demand of food in India. </li></ul>
  30. 30. DOMESTIC DEMAND : <ul><li>YEAR DOMESTIC DEMAND </li></ul><ul><li>2004-05 207.00 Million Tonnes </li></ul><ul><li>2007-08 215.00 Million Tonnes </li></ul><ul><li>2011-12 235.40 Million Tonnes. </li></ul><ul><li>2020-21 280.60 Million Tonnes </li></ul><ul><li>Required growth rate of Food-grain is 1.86% p.a. to meet out the growing demand of future. </li></ul>
  31. 31. (iv) CONTRIBUTION TO CAPITAL FORMATION: <ul><li>Economic development of a country is assessed by is increase in Capital Formation also. Without high-degree Capital formation, it cannot be said as Economic Development is there. </li></ul><ul><li>Agriculture is the largest industry in India so it plays very important role in pushing up the rate of Capital Formation. </li></ul>
  32. 32. (v) PROVIDING RAW MATERIALS TO INDUSTRIES: <ul><li>a) Agril. provides raw-materials to various industries of National Importance. </li></ul><ul><li>Examples are (1) Sugar (2) Jute (iii) Cotton Textile (4) Vanaspati Oil (5) Food- processing industries (Tomato, Potato etc). </li></ul><ul><li>Thus the role of Agriculture is important. </li></ul>
  33. 33. (vi) MARKET FOR INDUSTRIAL PRODUCTS: <ul><li>(a) The majority of population lives in rural area and they are the buyers for products produced by various industries. </li></ul><ul><li>(b) Due to Green Revolution, the Big farmers have good income out of Agril. Production and they need not to pay Tax on their income. So these big farmers have more purchasing power and they are buying Industrial goods in Rural area. </li></ul>
  34. 34. <ul><li>Manufacturers of Household items, such as items of daily use are :- </li></ul><ul><li>i. Soap </li></ul><ul><li>Ii Tea/Coffee </li></ul><ul><li>Iii Detergents </li></ul><ul><li>Iv Clothes </li></ul><ul><li>V Cycles/ Motor cycles. </li></ul><ul><li>Vi Radio-TV- Mobiles, Jeep/Car. Computers etc. </li></ul>
  35. 35. (vii) IMPORTANCE IN INTERNATIONAL TRADE: <ul><li>Agril. based Exports of India :(1950 to 1960) </li></ul><ul><li>(i) Cotton Textile| </li></ul><ul><li>(ii) Jute |--  More than 50% </li></ul><ul><li>(iii) Tea | of export earnings. </li></ul><ul><li>Other items are : Cashew Kernels, Sugar, Tobacco, Coffee, Vegetable Oil,>--20% </li></ul><ul><li>Share of Agriculture is about 70%. </li></ul><ul><li>( in total export). </li></ul>
  36. 36. <ul><li>With economic progress & diversification of production base, now the share of Agril. goods to total exports has constantly fallen. The present possition is as under : </li></ul><ul><li>1960-61 44.2% share % of Agril. </li></ul><ul><li>1980-81 30.7% share % of Agril. </li></ul><ul><li>2006-07 10.3% share % of Agril. </li></ul><ul><li>2007-08 11.6% share % of Agril. </li></ul>
  37. 37. <ul><li>During drought conditions in the country, India imports – Food-grains, Dairy Products, Fruits, Vegetables, Vegetable Oils and Raw materials. </li></ul><ul><li>Population engaged in Agriculture: </li></ul><ul><li>Agril. provides livelihood to 127.3 million people as cultivators. And another 106.8 million people as Agricultural labour.============ **** </li></ul>
  38. 38. AGRICULTURAL PLANNING AND REFORM <ul><li>Contents : Agricultural Planning and Reform –Planning Commission—Various reforms in Agril—MSP for Agri. Produce and Minimum Wage for labour. </li></ul><ul><li>OBJECTIVES OF ECONOMIC PLANNING FOR THE AGRICULTURAL SECTOR :(During First Plan 1951-56): </li></ul>
  39. 39. <ul><li>(a) To increase Agricultural production. </li></ul><ul><li>(b) To increase employment opportunities. </li></ul><ul><li>(c) To reduce the pressure of population on land. </li></ul><ul><li>(d) To reduce inequality of incomes in the rural sector. </li></ul><ul><li>The above 4 objectives are generally followed in all our five year plans. </li></ul>
  40. 40. <ul><li>Strategy used in the agricultural sector: </li></ul><ul><li>(a) Setting up of Community Development Programmes and Agricultural Extension Services throughout the country; </li></ul><ul><li>(b) Expansion of irrigation facilities, fertilizers, pesticides, agricultural machinery, High-yielding varities of seeds </li></ul><ul><li>(c) Expansion of Transportation, power, marketing and of Institutional credit. </li></ul>
  41. 41. <ul><li>(d) To Set-up of Agro-based industries and handicrafts in rural areas; </li></ul><ul><li>(e) To promote rural transport and communications; </li></ul><ul><li>(f) To encourage the movement of people from agriculture to industries and service sectors. </li></ul><ul><li>(g) To protect the tenants through tenancy legislation, ceiling of land holding, </li></ul>
  42. 42. <ul><li>And to distribute the surplus land of ceiling to land less labourers and small and marginal farmers. </li></ul><ul><li>GREEN REVOLUTION DURING 1965-66 TO 1975-76. </li></ul><ul><li>Fourth plan failed to achieve the agricultural targets. </li></ul><ul><li>Fifth plan (1974-79) was given more outlay </li></ul>
  43. 43. <ul><li>In budget to the tune of Rs. 39,430 Crores, Rs. 8740 crores (24% of total plan) was given for Agriculture. Plan targets were achieved after 1973-74. Agricultural progress was steady and plan targets were almost realized during 1975. </li></ul><ul><li>Sixth plan (1980-85) was hailed as a great success particularly in Agricultural front. </li></ul>
  44. 44. <ul><li>The growth rate was 4.3% as against 3.8% in previous plan periods. </li></ul><ul><li>During Sixth plan Oilseed programme was successful in Agril sector. </li></ul><ul><li>The Seventh plan (1985-90) was not so successful (except cotton production) so faar as Agril. sector is concern. </li></ul>
  45. 45. <ul><li>The Eighth Plan (1992-97) was sound and in Agril. production area,In Oilseeds, Sugarcane, Cotton and Jute the achievement was more than targets. But the food grain production was little bit on lower side of the target. (Target was 210 MT but production was 199 MT) </li></ul>
  46. 46. <ul><li>The IXth Plan(:1997-2002): During ninth plan there was not a success in Agricultural targets. </li></ul><ul><li>The Xth Plan (2002-2007) : During tenth plan period, the Agricultural production had increased to 216 MT. There was clear growths in OILSEEDS, Sugarcane, and Cotton. In general, it is estimated that the Annual rate of Growth in Agriculture ... </li></ul>
  47. 47. <ul><li>Was 2.3 per cent as against the targeted 4% growth rate. </li></ul><ul><li>Eleventh Plan : (2007-12):- </li></ul><ul><li>The Planning Commission (PC) has fixed the target of 4%, rate of growth in Agriculture. </li></ul>
  48. 48. VARIOUS REFORMS IN AGRICULTURE: <ul><li>. Economic Reform in Terms of Trade: </li></ul><ul><ul><li>Reform policy has Two phases in its impact on agriculture. </li></ul></ul><ul><ul><li>Ist Phase: Economic Libralisation (1985-95). </li></ul></ul><ul><ul><li>2 nd Phase: (from 1995 ) when India joined the WTO and signed the agreement on Agriculture. Trade in Agriculture has been liberalised. We see a change in price of Agriculture products. </li></ul></ul>
  49. 49. <ul><li>Major Agricultural crops are competitive. Economic reforms by liberalization in trade of Agriculture products have shown a favourable condition. </li></ul><ul><li>The average annual percentage change of gross terms of trade for the year 1980s is 0.87 as against 2.68 in the 1990s. It means due to liberalization the trade in </li></ul>
  50. 50. <ul><li>Agriculture was 3 time (increased) in 10 years period. </li></ul><ul><li>MINIMUM SUPPORT PRICE OF AAGRICULTURE PRODUCTS: </li></ul><ul><li>The Govt. has been announcing MSP for 24 major crops. The main objectives of announcing MSP are :- </li></ul>
  51. 51. <ul><li>1. To prevent fall in prices in the situation of over production. </li></ul><ul><li>2. To protect the interest of farmers by ensuring them a minimum price for their crops in the situation of a price fall in the market. </li></ul><ul><li>3. MSP is that price at which Govt. is ready to purchase the crop from the farmers directly if crop price becomes </li></ul>
  52. 52. <ul><li>Lower to MSP. </li></ul><ul><li>4. As a result, market price of the crfop never comes down from the level of MSP. </li></ul><ul><li>5. This minimum price security gives incentives to farmers to increase their production. </li></ul><ul><li>These MSPs of various crops are announced on the basis of recommendations made by Agriculture </li></ul>
  53. 53. <ul><li>Cost & Price Commission (ACPC) which takes into consideration the inputs costs and favourable return to the farmer while recommending MSP. </li></ul><ul><li>Crops 2007-08 2008-09 Increase </li></ul><ul><li>Paddy 745 900 155 </li></ul><ul><li>Paddy Gr.A 775 930 155 </li></ul><ul><li>Maize 620 840 220 </li></ul>
  54. 54. <ul><li>Crops 2007-08 2008-09 Increase </li></ul><ul><li>Bajra/Jwar 600 840 240 </li></ul><ul><li>Arhar (Tur) 1590 2000 410 </li></ul><ul><li>Moong/Urad 1740 2520 780 </li></ul><ul><li>Ground-nut 1550 2100 550 </li></ul><ul><li>Soyabean(B) 910 1350 440 </li></ul><ul><li>Soyabean(Y)1050 1390 340 </li></ul>
  55. 55. <ul><li>Sunflower 1510 2215 705 </li></ul><ul><li>Seasmum 1580 2750 1170 </li></ul><ul><li>Nigerseed 1240 2405 1165 </li></ul><ul><li>Cotton (Med) 1800 2500 700 </li></ul><ul><li>Cotton (Long)2030 3000 970 </li></ul><ul><li>Wheat 950 1080 130 </li></ul>

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