Rural Development: The action - plan for the social and economic growth of rural areas is called Rural Development.


  • Challenge of rural credit
  • Challenge of rural marketing

The Challenge of Rural Credit

Two main challenges to the rural credit are subsistence farming and the time between the sowing and harvesting of the crops. Credit needs divided into three categories:

  1. Short - Term Credit: Loans generated for the period ranging between 6 to 12 months for the purchase of inputs like seeds, fertilisers, pesticides, insecticides etc.
  2. Medium - Term Credit: Loan period ranges between 12 months to 5 years, credit  required in the rural areas for the purchase of machinery, construction fences, digging wells.
  3. Long - Term Credit: Loan period ranges between 5 to 20 years. Credit required for the purchase of new land or  for improvement on existing land. 


  1. Institutional -  Government,  Cooperatives, Commercial Banks, Regional Rural Banks.
  2. Non - Institutional - Landlords, Moneylenders, Village Traders.


  1. Cooperative Credit Societies:
  • Providing adequate credit at reasonable or affordable rate of interest.
  • Ensure rapid flow of credit by sidelining moneylenders.

2. State Bank of India and Other Commercial Banks:

  • Providing direct credit to the farmers and indirectly through cooperatives as a result of nationalisation of banks in 1969.

3. Regional Rural Banks and Land Development Banks:

  • Providing credit in remote areas and working on district level.

4. National Banks for Agricultural and Rural Development (NABARD)

  • Top funding agency providing rural credit for institutions, appropriates measure to improve credit delivery system.
  • Coordinates  rural functioning activities with G.O.I, Reserve Bank etc  national institutions concerned with the policy formulation.


  1. Necessary tie - up of institutional credit with guarantee of a property for loans leaves a large section of small and marginal farmers from its benefits.
  2. Lack of strictness in recovery of loans leading to high default rates and consequently,
  3. Asa result of mounting debt that requires to be paid frequent suicides committed by farmers.


Agricultural marketing includes all the processes between harvesting and final sale of produce by farmers.

Measures Initiated by the Government to Improve Marketing System:

  1. Regulated Markets -

Sale and purchase of produce supervised by Market Committee who also ensure that farmers get best price for their produce.

  1. Cooperative Agricultural Marketing Societies -

Encouraged by government so that farmers as a member of them can bargain better in the market and get better price through collective sale.

  1. Provision of Warehousing Facilities -

Government agencies offering storage space to the farmers; Central and State Warehousing Corporations.

  1. Subsidised Transport - Railways offering subsidised transport facility to bring their produce to urban markets.
  2. Dissemination of Information - Directing farmers to decide the quantity that should be sold and when to sell through electronic and print media.
  3. MSP Policy - Minimum Support Policy as an assurance to farmers that their produce would be purchased by the government at the given price.


Agricultural diversification means diversifying the farm’s productive resources into new activities in order to achieve stabilisation of farm income by lowering market risk. This can be done in two ways:

  1. Diversification of Crop Production -  production of variety of crops.m It implies a shift from single - cropping system to multi - cropping one.
  2. Diversification of Production Activity - engaging in sustainable livelihood that is  away from farming.


Employment outside Agriculture:

  1. Animal Husbandry - Also called livestock farming which includes poultry, cattle, sheep/goat the components of livestock in India. Combined with crop farming by rural families to supplement their income. Its significance increases when there is change inn area unlike crop farming.

In India faces the problem of low productivity due to lack of required knowledge and deficient veterinary care.

  1. Fisheries - In states like Kerala, Tamil Nadu, Gujarat, fisheries is an important source of livelihood in rural areas and it depends upon inland sources(ponds, rivers etc) and marine sources of fishing. Fisheries in India should be provided credit facilities, the needs of marginal fishing families should be met through micro - financing (SHGs) and the technology should be upgraded and equally accessible too.
  2. Horticulture - practicing of garden cultivation and management of crops that are grown on farmlands. It is an emerging means of sustainable living in rural areas as it reduces the economic uncertainty or vulnerability of small or marginal farmers. High crop productivity led to Golden Revolution  in horticulture farming.
  3. Cottage and Household Industry - Dominated by spinning, weaving, dyeing and bleaching but with urban textile industry these activities had been hit hard in the villages.


It is a system of farming that depends upon organic inputs for production and not the chemical inputs like chemical fertilisers, insecticides etc.  It focuses on maintaining soil health in order to make it long period sustainable process and eco- friendly.

Advantages of Organic Farming:

  1. No use of Non- Renewable Resources: No use of synthetic chemicals that are petroleum - based as it is a non - renewable resource.
  2. Eco - friendly: Nitrate content in chemical fertilisers pollute groundwater, however organic farming restrain from using any such pollutants.
  3. Sustains soil fertility: Animal manures and compost sustain soil fertility unlike chemicals that erode soil fertility therefore it is  a way to sustainable development of agriculture.
  4. Better food Quality: Organically grown food is rich in nutrition  and is therefore much healthy.
  5. Economically feasible for small and marginal farmers: It offers an inexpensive farming technology unlike the expensive new like HYV seeds, fertilisers, pesticides etc. It does not require expensive inputs that lead farmers to debt trap.