Rural marketing

SIR VISHVESHWARAIAH INSTITUTE OF SCIENCE AND TECHNOLOGY, MADANAPALLE
©CopyRightsbyNagabhushanam.P,-MBA-
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RURAL MARKETING STRATEGIES
Product Strategies: A prime need for any firm to emerge as a strong player in the rural market
is by carefully identifying gaps in the rural market and crafting the right product offering for
consumers. Chalking out a product strategy for rural market differs in many aspects when
compared to urban counter parts. Needs and demand of rural consumer might be contrasting to
that of urban consumer and therefore its necessary to hit the right chord when entering the rural
market. The prime objective is to design products to suit rural requirements.
Though marketers are still trying and experimenting ways to successfully tap the rural arena,
below are few product strategies which have been widely adopted and have proved themselves to
work in the rural landscape:
Small unit packing: This method has been tested by products life shampoos, pickles, biscuits,
Vicks cough drops in single tablets, tooth paste, etc. Small packings stand a good chance of
acceptance in rural markets. The advantage is that the price is low and the rural consumer can
easily afford it.
Another example is the Red Label tea Rs. 3.00 pack which has more sales as compared to the
large pack. This is because it is very affordable for the lower income group with the deepest
market reach making easy access to the end user satisfying him.
The small unit packings will definitely attract a large number of rural consumers.
New product designs: Keeping in view the rural life style the manufacturer and the marketing
men can think in terms of new product designs.
For e.g. PVC shoes and chappals can be considered sited ideally for rural consumers due to the
adverse working conditions. The price of P.V.C items is also low and affordable.
Sturdy products: Sturdiness of a product is an important factor for rural consumers. The
experience of torch light dry battery cell manufacturers support this because the rural consumers
preferred dry battery cells which are heavier than the lighter ones. For them, heavier weight
meant that it has more over and durability. Sturdiness of a product either or appearance is an
important for the rural consumers.

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Utility oriented products: The rural consumers are more concerned with utility of the product
and its appearance Philips India Ltd. Developed and introduced a low cost medium wave
receiver named BAHADUR during the early seventies. Initially the sales were good but declined
subsequently. On consumer research, it was found that the rural consumer bought radios not only
for information and news but also for entertainment.
Brand name: For identification, the rural consumers do give their own brand name on the name
of an item. The fertilizers companies normally use a logo on the fertilizer bags though fertilizers
have to be sold only on generic names. A brand name or a logo is very important for a rural
consumer for it can be easily remembered.
Many times rural consumers ask for ‘peeli tikki’ (Yellow Bar) in case of conventional and
detergent washing soap. Nirma made a ‘peeli tikki’ (Yellow Bar) specially for those peeli
tikki users who might have experienced better cleanliness with the yellow colored bar as
compared to the blue one although the actual difference is only of the color.
PRICING STRATEGIES:
Price is the exchange value of the product. It is the amount of money needed to acquire a
product/service.
Pricing strategy can help a company use pricing to achieve its goals, such as achieving
penetration, market share or profits. However, much of the pricing theory fails in rural
marketing.
This is because companies have to work around low purchasing power, availability of
local brands that are priced cheaply and price points that are convenient for customers. That is
why, prices for rural markets must fit market conditions and satisfy the need for affordability. In
addition, the pricing must cover costs, which are quite high in rural markets.
Some of these methods are:
1. Cost-Based pricing.
2. Value-Based pricing.
3. Demand-Based pricing.
4. Competition-Based pricing.

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1. Cost-Based Pricing:
Cost-based pricing policy rests on the principle of recovering all costs in manufacturing and
selling a product. It is a pricing method in which a fixed sum or a percentage is added to the total
cost of producing and selling a product to arrive at its selling price. The company thus recovers
the costs incurred and achieves a profit as well.
A purely cost-based pricing may lead to high prices that turn away rural consumers. By bearing
in mind the prices they can charge and the costs they can pay, companies have to determine
whether their costs will enable them to compete in low-cost markets where customers are
concerned primarily with price, or find richer customers in the premium-price market in which
they are primarily concerned with quality and features.
2. Value-Based Pricing:
Value-based pricing is a method in which price is set on the basis of the value perceived by the
customer in buying and using a product. The perceived value of a product is the sum of attributes
and psychological value. Consumers derive value from a product or service from their needs,
preferences, expectations and desires. The job of a manager is to find out from customers and
research the market to determine how value is placed on a product or service.
Value-based pricing is a psychological pricing strategy. Value in the minds of the consumer is
achieved by creating desire by product attributes, advertising or adding status to products. Value
has to be communicated and this is not so easy in rural markets. Much of communication and
consumer engagement has to be done directly by companies in the absence of mass media.
Except for high-end brands, rural consumers are more likely to be swayed by functional benefits
than by features that merely enhance aesthetics.
3. Demand-Based Pricing:
Demand-based pricing follows the classic demand curve taught in basic economics classes; it
simply means that if prices are low, demand will be high and vice versa. Demand-based pricing
focuses on the level of demand for a product or service, not on the cost of materials or of making
it. According to this policy, companies try to assess demand at different prices, or the amount of
products or services they can sell at different prices.
Some companies, selling luxury or aspiration goods, limit supplies in order to sell their products
at high prices. Others, dealing with mass production goods, use pricing policy to sell goods at
low prices and hope to achieve volumes because of that. Production and sales are based on these
calculations.
4. Competition-Based Pricing:
Competition-based pricing is relatively simple, because the company sets its prices by looking at
prices of similar products offered by competitors. Prices of competing products are used as a
benchmark for setting prices.

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Objectives:
1. Profit Maximization
2. Minimum returns
3. Deeper penetration
4. Keeping up with the competition
Distribution Strategies:
Distribution of agricultural produce is also stymied by government intervention. The
result is that despite huge subsidies, distribution of agricultural produce is marked by wastage,
loopholes and in efficiencies.
In the absence of investments by the government or the private sector, distribution of
agricultural goods is done by agents and traders. The system is marked by inefficiencies at all
levels. The consumer ends up paying high prices for farm produce while the farmer is unable to
get good prices. Some companies build rural outlets to get over these problems and helps farmers
with raw materials and buy their produce as well.
i. Directly to the consumer at a highway near the farm or in a market near the village (farm gate
sales).
ii. To retailers and traders at the village who transport and sell it in nearby towns.
iii. At agricultural produce market committee (APMC) designated mandis.
iv. To brokers who facilitate trade with city-based wholesalers.
v. To a cooperative organization or union of farmers.
vi. To government procurement agencies.
vii. To food processing factories situated near the farm.
APMCs are intended to be responsible for:
i. Ensuring transparency in pricing system and transactions taking place in market area.
ii. Providing market-led extension services to farmers.
iii. Ensuring payment for agricultural produce sold by farmers on the same day.
iv. Promoting agricultural processing including activities for value addition in agricultural
produce.
v. Publicizing data on arrivals and fates of agricultural produce brought into the market area for
sale.
vi. Setting up and promoting PPP in the management of agricultural markets.
Here, only the distribution aspects are described:
i. Directly to the Consumer.
ii. To Retailers and Traders.
iii. At APMC Designated Mandis.

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i) Directly to the Consumer:
Farmers living near a highway often set up stalls displaying their produce for passing motorists.
They can also sell at a market near the farm or in the village. In some places, the APMC sets up
Apni Mandis for direct marketing. Farmers bring their produce to the town on fixed days and sell
to consumers at these mandis. Such a process eliminates the middleman but requires the farmer
to be present at the site for long hours or hire a person, thereby increasing the cost. This method
involves high-cost as the stock that is left by evening—if it is perishable in nature—has to be
thrown away.
ii. To Retailers and Traders:
To get over the problems in direct selling, farmers prefer to sell the entire stock to a local retailer
or trader, who in turn transports it to a nearby APMC mandi. The farmer gets a lump sum in
hand and thus avoids wastage and the costs of direct selling, but is at the mercy of traders who
generally offer exploitative prices. In such a system, the trader makes a hefty commission while
the producer gets low prices.
iii. At APMC Designated Mandis:
Farmers can transport the goods to APMC designated mandis where they have to sell to
authorized agents, who again exploit the farmers, squeezing them.

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Private Agencies Involved in Agricultural Marketing
Beoparies: He collects the agricultural produce from villages and Haats and brings it to the
wholesale market. They normally purchase when the prices are low and sell it when the prices
are high. Beoparies act as a financer to poor farmers.
1. Tolas: They are the weighman who not only weigh the produce but also collects samples
of the produce from the villages and takes it to the dealers in town. He gets a commission
for this.
2. *Arhtias: There are two Arhtias, Kaccha Arhtia is concerned with assembling the
produce and Pakka Arhtia is concerned with the distribution.
METHODS OF SALES :
*Under Cover of a Cloth (Hatta) System: In this system the Kaccha Arahtias or Dalal decides
the price of products on behalf of the farmer and bidding starts. When all the buyers have
finished giving offers. The name and offers price of highest bidder is announced and sales takes
place when the Arahtias twist his finger under the cover of a cloth. This system has been banned
by government because of the possibility of cheating.
1. *Open Auction System: In this system, the seller piles-up his produce at one place. Dalal
visits each piled-up stocks, pick samples and shows it to the buyers. The agent then
invites bids and the produce is sold to the highest bidder. Three types of open auctions
are prevalent in different markets.
1. Phar System: One bid is given for all the lots in a particular shop.
2. Random Bid System: Dalal invites only few buyers, everyone is not informed
3. Roster Bid System: Bidding starts from a particular shop in the market and the
bidders after the auction of produce at one shop move to the next in a clockwise
or anticlockwise direction till the auction at all shops is over.
2. *Closed Tender System: In this system the bidders are asked to quote their offer price in
a prescribed form and submit it to the seller. All the bidders are invited on a fix date and
time and sealed tender are opened in presence of all bidders. The name and price of
highest bidders is announced and goods are sold to him.
3. Mogum Sale: In this system, farmers take advance from the buyer before the harvest
without fixing the price, with an understanding that the buyer will pay the prevailing rate
after the harvest.
4. Private Negotiations: In this method, buyer comes to the shops of agent, inspects the
sample and offers his price. If price is accepted the agent convey the decisions to the
seller and the produce is weighed and given.
5. Dara Sale: In this system, the produce of different quality is mixed and sold as one lot at
one rate.
6. State Trading: Government purchases huge quantity of food grains for distribution.
7. Forward Sale: In this system, Process of purchase and sale is done but goods and money
are exchanged at some specific date
8. *Jalap Sale: as

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9. Sale by Sample: In this system, buyer purchases the produce before the harvest at a fixed
price. E.g. Dealer of different fruits like mangoes, approach the mango growers and enter
into a verbal agreement with them by just looking at the flowers setting.
ROLE OF GOVERNMENT IN THE DEVELOPMENT OF AGRICULTURAL MARKETING
Agricultural Market System
The agricultural produce that we consume daily reach to us after a long journey down the market
system from its origin. The efficiency of this system has a direct impact on our everyday lives. The
agricultural market system refers to the system through which agricultural products reach our tables, from
their origins spread all over parts of the country.
Agricultural marketing is a mechanism through which these goods reach different places depending
on marketplaces. Agricultural marketing is a process that involves assembling, storage, processing,
transportation, packaging, grading and distribution of different agricultural commodities across the country.
Definition: Cooperative Marketing
Cooperative marketing can be defined as an agreement between two companies to
promote or sell each other’s product while selling their own. The products can either be
complementary or might have different seasonal cycles.
To explain in simpler terms, if you and your neighbour sell different products from a common
premise it will be called as cooperative marketing. The arrangements in cooperative marketing
are usually free from any legal bindings and are informal.
Advantages:
• Economies of Scale: Through collaborative efforts from the involved parties economies of
scale can be achieved. For example; if you are buying supplies, bulk orders can be placed and
thus cost can be reduced for the whole order.
• Exposure: Cooperative marketing offers added exposure to the involved companies as well.
Companies can advertise together and can attain more penetration in the market with the help of
each other’s marketing network. The common advertising can be done through direct mails, print
media or it may be online.
• Financial: The cost of both the parties is also reduced at many points. It can be done by either
giving common advertisements or by attaining higher bargaining power to negotiate a price to a
retailer.

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Disadvantages:
• Lack of commitment from members: Members in the agreement may become less concerned
or less committed during the course of time and it may affect the other party’s business
adversely.
• Applicability on target audience: The cooperative marketing strategy created may be
applicable to only a part of the target audience of the whole business.
• Information sharing: Some businesses have operated individually for years and when they
enter into an agreement for cooperative marketing it gets difficult for them to trust the partners
with crucial information and it may hamper the marketing of the products.
Council of State Agricultural Marketing Board (COSAMB):
National Council of State Agricultural Marketing Boards (COSAMB) is a national level organization
of all State Agricultural Marketing Boards (SAMBs) with head quarter at New Delhi.
The Executive body of the COSAMB is headed by the Chairman who is elected among the Chairmen of
the members Boards (prime members), along with other office bearers. The Managing Director of the
COSAMB is working for the day to day functioning of the organization.
It plays a vital role to bring uniformity in area of agricultural marketing system throughout India.
COSAMB provides common forum to members SAMBs to discuss problems and issues relating to
development of agricultural marketing. COSAMB is a non-political autonomous body at national level
which works as bridge between Central Government, Provincial Governments and State Agricultural
Marketing Boards. COSAMB plays a role while formulating policies in the interest of agricultural
producers, traders, functionaries and consumers to encourage healthy growth of marketing system for
agricultural produce and its bye products.
COSAMB intends to disseminate the knowledge through seminars, conferences, workshops,
meetings and also discussions. It also exchange experience, skills, knowledge and expertise between
members for the overall improvements in the agricultural marketing system and infrastructure required
thereof.
VALUES:
 A total dedication to food safety;
 preference for fresh produce over industrialized products;
 A special interest for quality segmentation and diversity of product variety. We do not believe in mass
standardized production, a system that leads only to lowering quality;
 A deep concern for environmental issues. Wholesale and retail markets take care of waste management,
cleanliness, sanitation, and allow for the optimization of transport and logistical services;
State Trading corporation(STC):
The State Trading Corporation (STC) was set up by the Government in May 1956 incorporated
under the Indian Companies Act, 1956. It was designed as the sole import export agency as may be
decided by the Government of India from time to time. Initially, it was established to deal with bilateral

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trading partners largely in the socialist block. It has now become a wholly owned holding company of the
Project and Equipment Corporation of India Limited.
The Ministry of Commerce considered a proposal for setting up a corporation for international
trade. The proposal was given a serious thought after the devaluation of rupee in September 1949. The
government appointed a committee to consider the question of state trading in India under the
Chairmanship of Dr. P. S. Deshmukh.
The committee submitted its report in 1950 but due to changes in economic conditions of the country, the
government again set up a Three Member Committee in 1956 under Shri S. V. Krishna Murti Rao. The
committee recommended the setting up of the State Trading Corporation in India. Consequently, the State
Trading Corporation of India was set up in 1956.
On the recommendation of the Deshmukh Committee chaired by Dr. P. S. Deshmukh and the review
committee headed by Shri S.V. Krishna Murti Rao. The Government accepted the proposal of
establishing the State Trading Corporation a registered body under Indian Companies Act.
Objectives:
To organise and undertake trade in socialist countries as well as other countries in commodities entrusted
to the company from time to time by the Government of India and to undertake the purchase, sale and
transport of such commodities in India or elsewhere in the world.
2. To undertake at the instance of the Union Government of India import and/or internal distribution of
any commodity in short supply with a view to stabilising prices and rationalizing distribution.
3. To implement such special arrangement for imports/export, internal trade or distribution of particular
commodities as the Union Government may specify in the public interest.
4. To arrest the declining trend in exports or to boost export by introducing new products in new markets.
5. To assist small exporters in their export trade.
6. To assist export-oriented organisations in their export and financial and organisational activities

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NATIONAL COOPERATIVE DEVELOPMENT CORPORATION (NCDC):
National Cooperative Development Corporation (India) National Cooperative Development
Corporation (NCDC) was established by an Act of Parliament in 1963 as a statutory Corporation under
Ministry of Agriculture & Farmers Welfare.
The Management vests in 51 member widely represented General Council to give shape to its
policies and programmes and Board of Management with 12 members to cater to day-to-day activities.
Besides its Head Office, NCDC functions through 18 Regional/State Directorates. The Managing Director
is the Chief Executive. Various functional divisions look after the programmes. The field offices play an
important role in project identification/formulation and oversee its implementation.
NCDC is endowed with in-house technical and managerial capabilities in the areas of
Cooperation, Organisation & Methods, Financial Management, Management Information Systems, Sugar,
Oilseeds, Textiles, Fruits & Vegetables, Dairy, Poultry and Live stock, Fishery, Handlooms, Civil
Engineering, Refrigeration and Preservation to help cooperatives to identify/formulate projects and
successfully implement them.
PUBLIC DISTRIBUTION SYSTEM (PDS):
Public distribution system is a structure that is sponsored by a government and includes
chain of shops trusted with the work of distributing basic food and non-food commodities to the
disadvantaged group of the society at very low prices. The central and state governments shared
the accountability of regulating the Public distribution system. While the central government is
responsible for procurement, storage, transportation, and bulk allocation of food grains, state
governments hold the responsibility for distributing the same to the consumers through the
established system of Fair Price Shops.
State governments are also responsible for operational responsibilities including
allocation and identification of families below poverty line, issue of ration cards, supervision and
monitoring the functioning of FPSs system (PDS) is an Indian food security system. Established
by the Government of India under Ministry of Consumer Affairs, Food, and Public Distribution
and managed cooperatively with state governments in India, it distributes sponsored food and
non-food stuffs to poor community of India.
Some of the commodities distributed by food department include staple food grains, such
as wheat, rice, sugar, and kerosene, through as ration shops established in several states across
the nation. Food Corporation of India, a Government-owned corporation, acquires and maintains
the Public distribution system.
It is whispered that Public distribution system can be differentiated from private
distribution in terms of control exercised by public authority and the intention primarily being
social welfare in contrast to private gain. In broad sense, the system includes all the agencies that
are involved from procurement stage to the final delivery of goods to the customer. The agency
that is involved in the process of procurement, transportation, storage and distribution are Food
Corporation of India.
At the state level, it is the civil supply departments/ corporations and fair price shops,
which are the agencies, involved in provision of Public distribution system. The fair price shops
are the last linkage in this process, which are generally owned by private individuals. Therefore,

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significant aspect that differentiates Public distribution system is the involvement of government
agencies and government control over the whole distribution structure.
The objectives of the Public Distribution System are as follows:
1. To protect the low income groups by guaranteeing the supply of certain minimum
quantities of food grains at affordable price.
2. Ensuring equitable distribution.
3. Controlling the price rise of Essential Commodities in the open market.
The Public Distribution System has been premeditated and implemented by both the central and
state governments. Central government primarily deals with the buffer stock operations (though
FCI) and also controls the external and internal trade of food grains. The Central government
through its procurement activity tries to even out the differences of surplus and deficit food grain
producing states.
Public distribution system flow:

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Features of the Public Distribution System:
1. Public Distribution System is a system of distribution of selected essential goods through
the fair price shops (ration shops or co-operatives owned by the government) which are
operated by private dealers under the government's control and direction.
2. Rice, wheat and sugar are main food grains throughout the period. The other important
items are kerosene, edible oil which are distributed to disadvantaged group of society.
3. The working of the Public Distribution System did not hamper the functioning of the free
market mechanism except in the limited statutory rationing areas but works along with it.
Therefore, this could be observed as a "dual economy" in the vital commodities.
Customers have liberty to either purchase through Fair Price Shops or from the open
market.
4. The required amounts of food grains and other items are acquired by the government
through internal procurement and or through imports and a buffer stock is maintained
with meet the demand of shortage period. The government feeds the Public Distribution
System with supplies, bears the cost of subsidy, and decides as to which goods to supply,
at what rates, what amount to be sold per head or per family.
5. The purpose of Public Distribution System is to offer basic minimum quantity of
essential commodities at lowest prices especially to poorer sections of society and also to
stabilise their open market prices or at least to stop an unwarranted rise in such prices
under crisis period. The prices charged are usually lower than open market prices and
also lower than the procurement and other costs incurred by the government.
6. It has been principally an urban oriented system. Its origin as well as development has
been in sensitive urban areas where a scarcity of food grains and other essential
commodities could become political obligations of administration.

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AGRICULTURAL CREDIT AND CROP INSURANCE
Agriculture credit is an important prerequisite for agricultural growth. Agricultural policies have
been reviewed from time to time to provide adequate and timely availability of finance to this sector.
Rural credit system assumes importance because for most of the Indian rural families, savings are
inadequate to finance farming and other economic activities. This coupled with the lack of simultaneity
between income realization and expenditure and lumpiness of agricultural capital investments. The
institutional credit system is critical for agricultural development and its role has further increased in the
liberalized economic environment. In India a multi-agency approach comprising co-operative banks,
scheduled commercial banks and regional rural banks (RRBs) has been followed to allow credit to
agricultural sector.
Types of Agriculture Credit:
The agriculture credit can be classified on the basis of:
(1) According to Tenure of Agricultural Credit i.e. the credit requirement based on the time-period of
loans. It can of three types:
(a) Short-Term: It refers to the loans required for meeting the short-term requirements of the
cultivators. These loans are generally for a period not exceeding and repaid after the harvest. For example
loans required for the purchase of fertilizers, HYV seed, for meeting expense on religious or social
ceremonies etc.
(b) Medium-Term: These loans are for a period up to 5 years. These are the financial
requirements to make improvements on land, buying cattle or agricultural equipments, digging up of
canals etc.
(c) Long-Term: These loans are for a period of more than 5 years and are generally required to
buy additional land or tractor or making permanent improvements on land.
(2) According to Purpose of Agriculture Credit: The agriculture credit on the basis of purpose for
which the credit is used can be of two types:
a) Productive: Productive loans are the loans that are related to agricultural production and
economically justified. For example purchase of tractor, land, seeds etc.
b) Unproductive: Unproductive credit are used for personal consumption and unrelated to
productive activity for example loans for expenditure on marriages, religious ceremonies etc.
Source of Agricultural Credit in India:
There are two broad sources of agricultural credit (Chart1) in India:
(1) Non-Institutional Sources
(2) Institutional Sources

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(1) Non-Institutional Sources: The non-institutional finance forms an important source of rural credit in
India, constituting around 40 percent of total credit in India. The interest charged by the non-institutional
lenders is usually very high. The land or other assets are kept as collateral. The important sources of non-
institutional credit are as follows:
(i) Money-Lenders: Money-lending has been the widely prevalent profession in the rural areas.
The money-lenders charge huge rate of interest and mortgage the property of the cultivators and in some
cases even the peasants and members of his family are kept as collateral.
(ii) Other Private Sources:
(a) Traders, landlords and commission agents: The agents give credit on the
hypothecation of crops which when harvested is used to repay loans.
(b) Credit from relatives: These credits are generally used for meeting personal
expenditure.
(2) Institutional Sources: The general policy on agricultural credit has been one of progressive
institutionalization aimed at providing timely and adequate credit to farmers for increasing agricultural
production and productivity. Providing better access to institutional credit for the small and marginal
farmers and other weaker sections to enable them to adopt modern technology and improved agricultural
practices has been a major thrust of the policy. National Bank for Agriculture and Rural Development
(NABARD) is an apex institution established in 1982 for rural credit in India. It doesn’t directly finance
farmers and other rural people. It grants assistance to them through the institutions described as follows:
1. Rural Co-Operative Credit Institutions:
Rural Credit cooperatives are the oldest and most extensive form of rural institutional financing in
India. The major thrust of these cooperatives in the area of agricultural credit is the prevention of
exploitation of the peasants by moneylenders. The rural credit cooperatives may be further divided
into short-term credit cooperatives and long-term credit cooperatives.
The short-term credit cooperatives provide short-term rural credit and are based on a three-tier
structure as follows:
(a) Primary Agricultural Credit Societies (PACs): These are organized at the village level. These
societies generally advance loans only for productive purposes. The main objective of a PACS is to raise
capital for the purpose of giving loans and supporting the essential activities of the members such as
supply of agricultural inputs at cheap price, improving irrigation on land owned by members, encourage
various income-augmenting activities such as horticulture, animal husbandry, poultry etc. In India, around
99.5 percent of villages are covered by PACs.
(b) District Central Cooperative Banks: These cooperatives are organized at the district level. The
PACS are affiliated to the District Central Co-operative Banks (DCCBs). DCCBs coordinate the activities
of district central financing agencies, organize credit for PACs and carry out banking business.

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(c) State Co-Operative Banks: The DCCBs are affiliated to State Co-operative Banks (SCBs), which
coordinate the activities of DCCBs, organize provision of finance for credit worthy farmers, carry out
banking business and act as leader of the Co-operatives in the States.
Long-term credit Cooperatives: These cooperatives meet long-term credit of the farmers and are
organized at two levels:
(i) Primary Co-Operative Agriculture and Rural Development Banks: These banks operate at
the village level as an independent unit.
(ii) State Co-Operative Agriculture and Rural Development Banks: These banks operate at
state level through their branches in different villages.
2. Commercial Banks:
Commercial Banks(CBs) provide rural credit by establishing their branches in the rural areas. The
share of commercial banks in rural credit was very meager till 1969. The All India Rural Credit Review
Committee (1969) recommended multi agency approach to the rural and especially agricultural credit. It
suggested the increasing role of the CBs in providing agricultural credit. Further, under the Social Control
Policy introduced in 1967 and subsequently the nationalization of 14 major CBs in 1969 (followed by
another six banks in 1980), CBs have been given a special responsibility to set up their advances for
agricultural and allied activities in the country. The major expansion of rural branches took place and CBs
introduced Lead Bank scheme and district credit plans for rural areas. Banks were asked to lend 18
percent of their total advances to agriculture within the quota of 40 percent of priority sector lending. This
expansion of rural credit remained till the late 1980s. However, during late 80’s, CBs suffered huge losses
due to waiving of agricultural loans by the government. The financial liberalization process with the
adoption of Narasimham Committee report in 1993 has necessitated the banks to focus on profitability
and adopt prudential norms. The proportion of bank credit to rural areas especially small borrowers has
come down steadily.
3. Regional Rural Banks (RRBs):
RRBs are the specialised banks established under RRB Act, 1976 to cater to the needs of the rural
poor. RRBs are set-up as rural-oriented commercial banks with the low cost profile of cooperatives but
with the professional discipline and modern outlook of commercial banks. Between 1975 and 1987, 196
RRBs were established with over 14,000 branches. As a result of the amalgamation, the number of RRBs
was reduced from 196 to 133 as on 31 March, 2006 and to 96 as on 30 April 2007. RRBs covered 525 out
of 605 districts as on 31 March 2006. After amalgamation, RRBs have become quite large covering most
parts of the State. Increased coverage of districts by RRBs makes them an important segment of the Rural
Financial Institutions (RFI). The branch network of RRBs in the rural area form around 43 per cent of the
total rural branches of commercial banks. A large number of branches of RRBs were opened in the un-
banked or under-banked areas providing services to the interior and far-flung areas of the country. RRBs
primarily cover small and marginal farmers, landless laborers, rural artisans, small traders and other
weaker sections of the rural community. However, even after so many years, the market share of RRBs in
rural credit remained low and have suffered huge losses. In recent years Government has initiated reform
process to improve the functioning of RRBs.

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Government of India & Reserve Bank of India: In order to increase credit flow to the agriculture
sector, the policy of doubling of agricultural credit in three years was introduced in 2004-05. In order to
expand the outreach of the banking services, banks made available basic banking ‘no-frills’ account with
low or nil minimum balances as well as low or no charges in 2005. The regional rural banks were also
specifically advised to allow limited overdraft facilities in ‘no-frills’ accounts without any collateral or
linkage to any purpose.
National Agricultural Insurance Scheme (NAIS): NAIS is implemented since Rabi 1999-2000 season
with the objectives to provide insurance coverage and financial support to the farmers in the event of
failure of any of the notified crops as a result of natural calamities, pests and diseases and to encourage
the farmers to adopt progressive farming practices, high value in-puts and higher technology in
agriculture and to help stabilize farm incomes particularly in disaster years.
Government of India & NABARD
i. Rural Infrastructure Development Fund: RIDF was established in 1995-96 with a corpus of Rs.
2,000crores with the major objective of providing funds to state governments and state owned
corporations to develop rural infrastructure such as rural roads, rural bridges, irrigation works, soil
conservation, flood protection, drinking water, infrastructure for rural education etc. The total corpus of
RIDF till 2007-08 (RIDF-I to RIDF-XIII) amounted to Rs.72, 000 crores with 2008-09 budget further
adding the amount of RIDF XIV of Rs. 14,000 crores to this corpus. The total sanctions and
disbursements as on 30 June 2007 aggregated Rs. 61312.27 crores and Rs.38581.82 crores respectively.
ii. Micro Finance Innovations: The credit accessibility for the poor from conventional banking is
limited due to lack of collaterals and information. Micro finance has emerged as an alternative financial
vehicle that provides micro credit or small loans granted to the poor without any collateral. These loans
are provided through micro finance institutions (MFIs). NABARD plays a key role in developing the
MFIs by providing them refinance facility at low interest rates.
iii. Kisan Credit Card Schemes: The kisan credit cards (KCC) scheme was introduced in 1998-99 to
facilitate short-term credit to farmers. Each farmer is given with a kisan credit card and a pass book for
providing revolving cash credit facilities. NABARD provide refinance facility to commercial banks and
cooperatives to provide credit under this scheme.
iv. Refinance under Swarnajayanti Gram Swarozgar Yojna (SGSY): NABARD provides refinance
facility to institutions that support SGSY.
v. Co-operative Development Fund: NABARD has set up the cooperative development fund in 1993
with objective of strengthening the co-operative credit institutions in the areas of resource mobilization,
recovery position etc. the assistance is provided to cooperatives by way of soft loans or grants.

17
Weaknesses in Rural Credit Structure
1. Overemphasis of Monetary Credit: The rural credit institutions have given overemphasis on the
financial assistance to the cultivators. While the finance is very important factor but it should be
complemented with the extension of services in form of guidance, expertise and counseling on
agricultural issues.
2. Multiplicity of Institutions: The rural credit structure is based on multi agency credit system whereby
there exist numerous organizations providing similar kind of financial services. There is a lack of
coordination in the system and the commercial viability is adversely affected in this scenario.
3. Lack of Motivation: In order to fill the gap that occurred due to the failure of rural cooperative
societies Government gave increasing role to the commercial banks. However, commercial banks lack the
desired skills and expertise in the agro-credit. The banks have enough financial resources but the service
consultancy is not available. Thus, there is a failure to provide complete package of assistance to the
farmers. Further, financial sector reforms have put pressure on banks to improve their financial position
and so these banks are now concentrating on selected clientele of large borrowers
4. Financial Exclusion: Despite of a large network of the institutional credit system, it has not been able
to adequately penetrate the informal rural financial markets and the non-institutional sources continue to
play a dominant role in purveying the credit needs of the people residing in rural areas. The results of the
All-India Debt and Investment Survey (AIDIS, 2002) also indicate that the share of the non-institutional
sources, in the total credit of the cultivator households, had increased from 30.6 percent in 1991 to 38.9
percent in 2002.
5. High Interest Rates: The rate of interest charged by rural financial institutions (RFIs) from farmers
continues to be considerably higher than those charged by financial institutions from urban consumers.
The owners of small or marginal farms, which are non-viable or viable at the margin, and self-employed
in the informal sector, cannot afford to bear the level of interest charged by RFIs.
6. Procedural Delays: There is a problem of considerable delays in processing of loan applications and
collaterals. Thus farmers shy away from institutional financing and increase their dependency upon non-
institutional sources.
7. Poor Recoveries: Banks are shying away from rural financing mainly because of poor recoveries
which is inflicting the system. It is ironical that the recoveries position is adverse amongst rich farmers
than amongst the small farmers. The political decisions of waiving off loans are further putting pressures
on the financial system.
Suggestions for Improving Institutional Rural Credit System:
1. Financial Discipline to Improve Recovery: A national consensus among political parties should be
evolved for not politicizing the RFIs and resist from announcement of loan or interest waiver schemes and
giving calls for not repaying the institutional loans. However, given the risk involved in the agriculture
credit the recovery system should be flexible and humane.

18
2. Revamping the Cooperative Credit Structure: The Cooperative Credit Structure should be
strengthened to make use of its wider reach. These have to be recapitalised so as to provide funds for
improving their financial positions. There is a need of capacity building, human resource development,
institutional restructuring to ensure democratic functioning, and improving the regulatory regime to
empower the Reserve Bank of India (RBI) to enforce prudent financial management.
3. Better Physical, Social and Economic Infrastructure: The long term policy framework needs to be
designed to improve infrastructure facilities so as to boost rural economic growth. This
requires increased public expenditureon social infrastructure (like education, availability of drinking
water, health facilities), physical infrastructure (like roads, power) and economic infrastructure like
(irrigation, modern agricultural techniques). These measures would help to improve the debt paying
capacity of rural poor and provide greater opportunities to RFIs.
4. Financial cum Consultancy Approach: RFIs needs to provide extension services like consultancy
about seeds, availability and use of modern inputs, marketing strategies etc to the cultivators so that a
holistic package of assistance can be provided to them.
5. Group Approach to Lending: The lending to homogenous farmer’s groups needs to be organized to
improve credit delivery. This would help to improve recovery because of peer pressure. Further, group
lending tends to be cost-effective. Involving NGOs or rural educated youths in organizing farmers or
rural families in groups, scrutinizing applications, disbursement of loan and effecting recoveries would
help RFIs in reducing lending costs.
6. Autonomy to RRBs: RRBs should be given more autonomy and flexibility in planning and lending
policies, so that their comparative advantage in rural lending is restored.
7. Greater involvement of Micro Finance Organizations: The banks need to involve micro-finance
agencies like SHGs, NGOs etc. and other grass root level financial intermediaries who have better
understanding of the credit needs and recovery situations.
8. Technological Up Gradation: Technological improvements like computerization can be critical in
building up a reliable credit information system and database on customers, reducing transaction costs
and facilitating better pricing of risk, improving the efficiency of the financial system, and thereby
increasing the access of un-banked rural people in an efficient manner.
9. Information Dissemination to Rural Poor: Credit counseling, awareness and financial education
regarding the benefits of institutional financing are important for effective expansion of financial services
in rural areas. To do this, banks may utilize the services of non-governmental organisations, village youth
clubs, village panchayats, farmer clubs and self-help groups into confidence.

19
Agricultural Insurance:
It is highly susceptible to risks like droughts and floods. It is necessary to protect the farmers
from natural calamities and ensure their credit eligibility for the next season. For this purpose,
the Government of India introduced many agricultural schemes throughout the country.
 Pradhan Mantri Fasal Bima Yojana
 Farm Income Insurance Scheme
 National Agricultural Insurance Scheme(NAIS)
 Pradhan Mantri Fasal Bima Yojana:
The Pradhan Mantri Fasal Bima Yojana (Prime Minister's Crop Insurance Scheme) was launched
by Prime Minister of India Narendra Modi on 18 February 2016. It envisages a uniform premium of only
2 per cent to be paid by farmers for Kharif crops, and 1.5 per cent for Rabi crops. The premium for annual
commercial and horticultural crops will be 5 per cent
The government has decided to come out with a new set of guidelines to make the ambitious crop
insurance scheme — Pradhan Mantri Fasal Bima Yojana (PMFBY) — more efficient even as insurance
companies received claims worth around Rs 19,000 crore from farmers across the country for Kharif
2017.
According to an official of the Ministry of Agriculture & Farmers’ Welfare, the new guidelines will
be in various parts to incentivize the insurers to improve their services for the nation-wide scheme. It
would include how to use the district-wise crop cutting data.
Highlights:
 A uniform premium to be paid by all farmers
 2% to be paid by farmers for all Kharif crops
 1.5% for all Rabi crops.
 5 % for annual commercial and horticultural crops, the premium to be paid by farmers will be only 5%.
 The premium rates to be paid by farmers are very low and balance premium will be shared by the
central and state governments equally.
 Claims of Sum Insured to be provided in full to the farmers against crop loss on account of natural
calamities.
 In cases where majority of the insured farmers of a notified area, having intent to sow/plant and
incurred expenditure for the purpose, are prevented from sowing/planting the insured crop due to adverse
weather conditions, shall be eligible for indemnity claims upto a maximum of 25 per cent of the sum-
insured.
 When crop yield is less than the guaranteed yield of notified crops, the claim payment equal to
shortfall in yield is payable to all insured farmers.
 On account advance payment, upto 25% of likely claims will be paid as immediate relief.
 Losses caused due to inundation, hail storm and landslide would be assessed at individual farm level.
 In post-harvest losses, coverage will be available up to a maximum period of 14 days from harvesting
for those crops which are kept in “cut & spread” condition to dry in the field.

20
 Use of remote sensing and drones to supplement Crop cutting experiments for faster settlement of
claims
OBJECTIVES OF THE SCHEME
 To provide insurance coverage and financial support to the farmers in the event of failure of any of
the notified crop as a result of natural calamities, pests & diseases.
 To stabiles the income of farmers to ensure their continuous process in farming.
 To encourage farmers to adopt innovative and modern agricultural practices.
 To ensure flow of credit to the agriculture sector.
Coverage of the farmers
All farmers including sharecroppers and tenant farmers growing the notified crops in the notified areas
are eligible for coverage. The non-loanee farmers are required to submit necessary documentary evidence
of land records prevailing in the State Records of Right (RoR), Land possession Certificate (LPC) etc.
moreover, applicable contract, agreement details, other documents notified permitted by concerned State
Government.
 Compulsory Component All farmers availing Seasonal Agricultural Operations (SAO) loans from
Financial Institutions (i.e. loanee farmers) for the notified crops would be covered compulsorily.
 Voluntary Component The Scheme would be optional for the non-loanee farmers.
 Special efforts shall be made to ensure maximum coverage of SC/ ST/ Women farmers under the
scheme. Budget allocation and utilization under this should be in proportion of land holding of SC/
ST/ General along with Women in the respective state cluster. Panchayat Raj Institutions (PRIs)
may be involved for the implementation and also obtaining framers feedbacks on these crop
insurance schemes.
Coverage of the crops
 Food crops (Cereals, Millets and Pulses)
 Oilseeds
 Annual Commercial / Annual Horticultural crops
Coverage of the Risk
Following stages of the crop and risks leading to crop loss are covered under the Scheme.
 Prevented Sowing/ Planting Risk: Insured area is prevented from sowing planting due to deficit
rainfall or adverse seasonal Conditions.
 Standing Crop (Sowing to Harvesting): Comprehensive risk insurance is provided to cover yield
losses due to non- preventable risks, viz. Drought, Dry spells, Flood, Inundation, Pests and
Diseases, Landslides, Natural Fire and Lightening, Storm, Hailstorm, Cyclone, Typhoon, Tempest,
Hurricane and Tornado.
 Post-Harvest Losses: coverage is available only up to a maximum period of two weeks from
harvesting for those crops which are allowed to dry in cut and spread condition in the field after
harvesting against specific perils of cyclone and cyclonic rains and unseasonal rains.

21
 Localized Calamities: Loss/ damage resulting from occurrence of identified localized risks of
hailstorm, landslide, and Inundation affecting isolated farms in the notified area.
Exclusion of the Risk
The insurance cover will not be applicable in the damage of crops due to any of the following reasons.
 War & kindred perils
 Nuclear risks
 Riots
 Malicious damage
 Theft or act of enmity
 Grazed and/or destroyed by domestic and/or wild animals and other preventable risks shall be
excluded.
Management and Monitoring of the Scheme:
The existing State Level Co-ordination Committee on Crop Insurance (SLCCCI), of the
concerned State will be responsible for monitoring of the schemes programme in their state. However, a
National Level Monitoring Committee (NLMC) under the chairmanship of Joint Secretary
(Credit), Department of Agriculture cooperation and farmers welfare (DAC & FW) will monitor the
scheme at the national level.
It is proposed to take following monitoring measures for effective implementation during each crop
season to ensure maximum benefits to the farmers:
 The Nodal Banks intermediaries may collect the list of individual insured farmers (both loanee and
non-loanee) with requisite details like name, fathers' name, Bank Account number, village,
categories - Small and Marginal group, Women, insured holding, insured crops, sum insured,
premium collected, Government subsidy etc from concerned branch in soft copy for further
reconciliation. This will be done online once the E platform is put in the place.
 After receiving the claims amount from the concerned Insurance Companies, the financial
institutions/banks should remit/transfer the claim amount to the account of beneficiaries within a
week. This will be transferred online directly by the Insurance company into the accounts of
farmers.
 The list of the beneficiaries (bank-wise and insured area-wise) may also be uploaded on the crop
insurance portal and website of the concerned insurance companies.
 About 5% of the beneficiaries may be verified by the Regional Offices/ Local level Offices of
Insurance Companies who will send the feedback to concerned District Level Monitoring
Committee (DLMC) and State Government/ State Level Coordination Committee on Crop
Insurance (SLCCCI).
 At least 10% of the beneficiaries verified by the insurance company may be cross verified by the
concerned District Level Monitoring Committee (DLMC) and they should send the feedback to
State Government.
 1 to 2% of the beneficiaries may be verified by the Head Offices of the insurance company/
Independent Agencies appointed by the Central Government/ National Level Monitoring
Committee and they should send the necessary feedback to Central Government.

22
Moreover, District Level Monitoring Committee (DLMC) already overseeing the implementation &
monitoring of the ongoing crop insurance schemes like National Agricultural Insurance Scheme (NAIS),
Weather Based Crop Insurance Scheme (WBCIS), Modified National Agricultural Insurance Scheme
(MNAIS) and Coconut Palm Insurance Scheme (CPIS) shall be responsible for proper management of the
Scheme.
Farm Insurance Scheme (FIS):
Farm Income Insurance Scheme. The Central Government formulated the Farm Income
Insurance Scheme (FIIS) during 2003-04. The two critical components of afarmer's income are yield
and price. FIIS targeted these two components through a single insurance policy so that the
insured farmer could get a guaranteed income.
The Central Government formulated the Farm Income Insurance Scheme (FIIS) during 2003-04.
The two critical components of a farmer’s income are yield and price. FIIS targeted these two
components through a single insurance policy so that the insured farmer could get a guaranteed income.
The scheme provided income protection to the farmers by insuring production and market
risks. The insured farmers were ensured minimum guaranteed income (that is, average yield multiplied by
the minimum support price). If the actual income was less than the guaranteed income, the insured would
be compensated to the extent of the shortfall by the Agriculture Insurance Company of India. Initially, the
scheme would cover only wheat and rice and would be compulsory for farmers availing crop loans. NAIS
(explained in the section below) would be withdrawn for the crops covered under FIIS, but would
continue to be applicable for other crops.
The FIIS was withdrawn in 2004. The recent attempt by the Gujarat government to reintroduce the Farm
Income Insurance Scheme (FIIS) can reform agricultural insurance and prevent farm-level distress.
National Agricultural Insurance Scheme (NAIS):
The Government then introduced in 1999-2000, a new scheme titled “National Agricultural Insurance
Scheme” (NAIS) or “Rashtriya Krishi Bima Yojana” (RKBY). NAIS envisages coverage of all food
crops (cereals and pulses), oilseeds, horticultural and commercial crops.
The approved scheme has the following features:
(i) Actuarial premiums will be paid for insuring the crops, hence the claims liability would be on the
insurer;
(ii) The unit area of insurance for major crops is village panchayat;
(iii) Indemnity amount shall be payable for prevented sowing/planting risk and for post harvest losses due

23
to cyclone;
(iv) On account payment up to 25% of likely claims would be released as advance for providing
immediate relief to farmers;
(v) Uniform seasonality discipline for loanee and non-loanee farmers;
(vi) More proficient basis for calculation of threshold yield and minimum indemnity level of 70% instead
of 60%;
(vii) Modified NAIS with improved features will have two components i.e. compulsory and voluntary.
Loanee farmers will be insured under ‘compulsory category’ while non-loanee farmers will be insured
under ‘voluntary category’;
(viii) Private sector insurers with adequate infrastructure and experience would also be allowed in the
implementation of MNAIS.
CROP INSURANCE:
Crop insurance is purchased by agricultural producers, and subsidized by the federal
government, to protect against either the loss of their crops due to natural disasters, such as hail, drought,
and floods, or the loss of revenue due to declines in the prices of agricultural commodities.
In India a multiperil crop insurance called National Agriculture Insurance Scheme (NAIS) was
implemented. This scheme is being implemented by Agriculture Insurance Company of India, an Indian
government owned company. The scheme is compulsory for all farmers who take agricultural loans from
any financial institution. It is voluntary for all other farmers. The premium is subsidized for farmers who
own less than two hectares of land. This insurance follows the area approach. This means that instead of
individual farmers, a specific area is insured. The area may vary from gram panchayat (an administrative
unit containing 8-10 villages) or block or district from crop to crop or state to state. The claim is
calculated on the basis of crop cutting experiments carried out by agricultural departments of respective
states. Any shortfall in yield compared to past 5 years average yield is compensated

24
ROLE OF IT IN RURAL MARKETING
Introduction-
In recent years, rural markets have acquired significance, as the overall growth of the economy
has resulted into substantial increase in the purchasing power of the rural communities
Rural areas are evolving into strategic market for companies which include not only domestic but
MNCs too. There is great potential that lies in rural market. More and more stress is therefore
being given on marketing products. It is very interesting to notice that the rural markets are at par
with the urban markets. The credit for this scenario goes to the marketing policies.
ITC e-Choupal is the greatest example of information technology in rural marketing. Launched
in June 2000, 'e-Choupal', has already become the largest initiative in all internet-based
interventions in rural India. ITC followed a different media/communication strategy which is
more elaborate and extensive in rural marketing so far, which benefits both the farmers and the
organization. The strategy use the Information Technology and bridge the information and
service gap in rural India which gives an edge to market its products like seeds, fertilizers and
pesticides and other products like consumer goods etc.
They use the e-Choupal to order seed, fertilizer, and other products such as consumer good from
ITC or its partners, at prices lower than those available from village traders. In this Paper we
discuss about the role of IT in rural market, e-Chou pal, different strategy, vision and planning
behind the e-Chou pal.
Significance
In recent years, rural markets have acquired significance in countries like China and India, as the
overall growth of the economy has resulted into substantial increase in the purchasing power of
the rural communities. On account of the green revolution in India, the rural areas are consuming
a large quantity of industrial and urban manufactured products. In this context, a special
marketing strategy, namely, rural marketing has taken shape. Sometimes, rural marketing is
confused with agricultural marketing – the later denotes marketing of produce of the rural areas
to the urban consumers or industrial consumers, whereas rural marketing involves delivering
manufactured or processed inputs or services to rural producers or consumers. Also, when we
consider the scenario of India and China, there is a picture that comes out, huge market for the
developed products as well as the labor support. This has led to the change in the mindset of the
marketers to move to these parts of the world.
Also rural market is getting an importance because of the saturation of the urban market. As due
to the competition in the urban market, the market is more or so saturated as most of the capacity
of the purchasers have been targeted by the marketers. So the marketers are looking for
extending their product categories to an unexplored market i.e. the rural market. This has also led
to the CSR activities being done by the corporate to help the poor people attain some wealth to
spend on their product categories. Here we can think of HLL (now, HUL) initiatives in the rural
India. One of such project is the Project Shakti, which is not only helping their company attain

25
some revenue but also helping the poor women of the village to attain some money which is
surely going to increase their purchasing power. Also this will increase their brand loyalty as
well as recognition in that area. Similarly we can think of the ITC E-Chou pal, which is helping
the poor farmers get all the information about the weather as well as the market price of the food
grains they are producing. In other view these activities are also helping the companies increase
their brand value. So as it is given above the significance of the rural market has increased due to
the saturation of the urban market as well as in such conditions the company which will lead the
way will be benefited as shown by the success of HUL and ITC initiatives.
Strategies
Dynamics of rural markets differ from other market types, and similarly rural marketing
strategies are also significantly different from the marketing strategies aimed at an urban or
industrial consumer. This, along with several other related issues, have been subject matter of
intense discussions and debate in countries like India and China and focus of even international
symposia organized in these countries.
Rural markets and rural marketing involve a number of strategies, which include:
 Client and location specific promotion
 Joint or cooperative promotion..
 Bundling of inputs
 Management of demand
 Developmental marketing
 Unique selling proposition (USP)
 Extension services
 Business ethics
 Partnership for sustainability
Client and Location specific promotion- involves a strategy designed to be suitable to the
location and the client.
Joint or co-operative promotion- strategy involves participation between the marketing
agencies and the client.
'Bundling of inputs'- denote a marketing strategy, in which several related items are sold to the
target client, including arrangements of credit, after-sale service, and so on.
Management of demand- Involves continuous market research of buyer's needs and problems
at various levels so that continuous improvements and innovations can be undertaken for a
sustainable market performance.
Developmental marketing- refer to taking up marketing programmers keeping the development
objective in mind and using various managerial and other inputs of marketing to achieve these
objectives.

26
Media- both traditional as well as the modern media, is used as a marketing strategy.
Unique Selling Propositions (USP)- involves presenting a theme with the product to attract the
client to buy that particular product. For examples, some of famous Indian Farm equipment
manufactures have coined catchy themes, which they display along with the products, to attract
the target client that is the farmers. English version of some of such themes would read like:
 The heartbeats of rural India
 With new technique for a life time of company
 For the sake of progress and prosperity
Extension Services- denote, in short, a system of attending to the missing links and providing
the required know-how.
Ethics in Business- form, as usual, an important plank for rural markets and rural marketing.
Partnership for sustainability- involves laying and building a foundation for continuous and
long lasting relationship.
''' Building sustainable market linkages for rural products: Industry's role, scope,
opportunities and challenges'''
E-Chou pal Concept-
ITC Limited is one of India's leading diversified conglomerates. Traditionally a tobacco and
cigarette producer, it has grown into a conglomerate dealing in hotels, packaging, agribusiness,
information technology, and fast moving consumer goods (FMCGs). ITC initiated its e-Chou pal
project in 2000 to streamline its dealings with Indian farmers. This is a project on a massive scale
that ultimately aims to cover every sixth Indian village. Each Chou pal covers around six villages
and 36,000 villages have been covered to date in Madhya Pradesh, Uttar Pradesh, Maharashtra,
Rajasthan, Karnataka, and Andhra Pradesh.
Objectives and Goals-
E-Chou pal aims to provide Indian farmers ready access to crop-specific real-time information
and customized knowledge in their native language. By doing so, ITC wants to improves the
farmers' decision-making ability, thereby helping them to better align their farm output to the
projected demand in Indian and international markets.
Technologies-
Typically, the Chou pals use Pentium computers along with a dot matrix printer and a UPS
(500VA). ITC had initially upgraded telephone exchanges by using RNS (RAX Network
Synchronization) kits, but eventually in most of the e- Chou pals, wireless VSAT links have been
installed by bypassing the exchanges. Even with these improvements, the bandwidth often
remains limited. Hence, e-Chou pals have started compensating by caching static content locally.

27
ITC also uses a specially designed template for managing data combined with new imaging
techniques in order to speed up downloads and to optimize bandwidth use. To overcome the
problem of sporadic electricity, several kiosk computers use back-up batteries recharged with
solar panels
Conclusion-
E-Chou pals deliver relevant technology in the hands of the farmers, which can improve the
economic condition of the entire village. E-Chou pal is one of the very few ICT projects in India
that has effectively utilized e-commerce transactions for poverty alleviation. One of the key
lessons is that ICT can reduce the number of middlemen involved between agriculture
commodity producers and final consumers. Another key factor is that very simple technology
solutions are available to create networks in rural areas, which can function as virtual agricultural
commodity market places.

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