RURAL

ECONOMY
UNIT 1
(CONTINUATION)

MS. APURVA B
 INTRODUCTION
 India is known as an agricultural country, as most of the population of villages depends on agriculture. Agriculture forms the backbone of the
country’s economy. The agricultural sector contributes most to the overall economic development of the country.

 For centuries together, the Indian village has been a self-sufficient and self-contained economy. During the past forty years, rural reconstruction
and development have been the major thrust of economic planning, which has caused a rapid transformation in the Indian rural economic
structure.

 These changes have taken place in spheres, such as land reforms, agriculture, animal husbandry, supplies and marketing, village industries, rural
leadership, village administration, etc. With the help of the rural development programmes, a cultivator is able to take advantage of the modern
technological facilities in his agricultural operations. These cultivators are now using modern agricultural implements and high-yielding varieties
of seeds and fertilizers.

 Several other welfare services were introduced, such as opening up of schools, primary healthcare centers, improving the means of transport and
communication, and spread of mass media services to rural areas, etc. These welfare services have materially affected the rural life.
 INTRODUCTION
 India is known as an agricultural country, as most of the population of villages depends on agriculture. Agriculture forms the backbone of the
country’s economy. The agricultural sector contributes most to the overall economic development of the country.

 For centuries together, the Indian village has been a self-sufficient and self-contained economy. During the past forty years, rural reconstruction
and development have been the major thrust of economic planning, which has caused a rapid transformation in the Indian rural economic
structure.

 These changes have taken place in spheres, such as land reforms, agriculture, animal husbandry, supplies and marketing, village industries, rural
leadership, village administration, etc. With the help of the rural development programmes, a cultivator is able to take advantage of the modern
technological facilities in his agricultural operations. These cultivators are now using modern agricultural implements and high-yielding varieties
of seeds and fertilizers.

 Several other welfare services were introduced, such as opening up of schools, primary healthcare centers, improving the means of transport and
communication, and spread of mass media services to rural areas, etc. These welfare services have materially affected the rural life.
 CHARACTERISTICS OF RURAL ECONOMY
 a. Size of the Community:
The village communities are smaller in area than the urban communities. As the village communities are small, the population is also low.
 b. Density of Population:
As the density of population is low, the people have intimate relationships and face-to-face contacts with each other. In a village, everyone knows
everyone.
 c. Agriculture is the Main Occupation:
Agriculture is the fundamental occupation of the rural people and forms the basis of rural economy. A farmer has to perform various agricultural
activities for which he needs the cooperation of other members. Usually, these members are from his family. Thus, the members of the entire family
share agricultural activities. That is the reason why Lowry Nelson has mentioned that farming is a family enterprise.
 d. Close Contact with Nature:
The rural people are in close contact with nature as most of their daily activities revolve around the natural environment. This is the reason why a
ruralite is more influenced by nature than an urbanite. The villagers consider land as their real mother as they depend on it for their food, clothing and
shelter.
 e. Homogeneity of Population:
The village communities are homogenous in nature. Most of their inhabitants are connected with agriculture and its allied occupations, though there are
people belonging to different castes, religions and classes.
 f. Social Stratification:
In rural society, social stratification is a traditional characteristic, based on caste. The rural society is divided into various strata on the basis of caste.
CONT.….
 g. Social Interaction:
The frequency of social interaction in rural areas is comparatively lower than in urban areas. However, the interaction level possesses more
stability and continuity. The relationships and interactions in the primary groups are intimate. The family fulfills the needs of the members
and exercises control over them.
It is the family, which introduces the members to the customs, traditions and culture of the society. Due to limited contacts, they do not
develop individuality and their viewpoint towards the outside world is very narrow, which makes them oppose any kind of violent change.
 h. Social Mobility:
In rural areas, mobility is rigid as all the occupations are based on caste. Shifting from one occupation to another is difficult as caste is
determined by birth. Thus, caste hierarchy determines the social status of the rural people.
 i. Social Solidarity:
The degree of social solidarity is greater in villages as compared to urban areas. Common experience, purposes, customs and traditions
form the basis of unity in the villages.
 j. Joint Family:
Another characteristic feature of the rural society is the joint family system. The family controls the behavior of the individuals. Generally,
the father is the head of the family and is also responsible for maintaining the discipline among members. He manages the affairs of the
family.
 FACTORS CONTRIBUTES TO THE GROWTH IN RURAL MARKET
 1. Government initiatives:
The initiatives taken by the Government of India to promote rural markets are as follows:
a. Self sufficiency (Operation Flood, White Revolution, Blue Revolution) b. Integrated Rural Development Program (IRDP), TRYSEM
(Training Rural Youth for Self- Employment), REP (Rural Electrification Program).
c. PSU and cooperative banks lend farmers (for example, ‘Kisaan’ credit card by Canara and Andhra Banks).
d. Contract farming: Companies give high-yielding variety seeds and tied up with farmers to cultivate crops and sell them back to the
company.
 2. Rising literacy levels:
As per the 2001 census, about 50 per cent of the rural population is literate. This has contributed to the increase in rural demand. This has
changed the buying behavior of rural consumers and lifestyles. An increase in literacy levels has resulted in an increase in demand for
consumer goods.
 3. Infrastructural facilities: There is growth of infrastructure facilities and public service projects in rural India, which includes
construction of roads and transportation, communication network, rural electrification and public distribution system. Because of
these factors there is scope for rural marketing.
 4. New employment opportunities:
Various socio-economic policies of the government have resulted in the development of rural India, which has resulted in new
employment opportunities; for example, IRDP (Integrated Rural Development Program).
CONT.…

 5. Rising mass media:

 Improved penetration of mass media has resulted in the creation of awareness among rural consumers (Press, TV, hoardings, radio, etc.).

 6. Agricultural research:

 Research in the field of agriculture has resulted in increased scope for rural marketing. In India, agricultural research is being conducted by
Indian Council of Agricultural Research (ICAR) and other institutions. Use of new scientific methods has increased the crop yields by manifold.
It has led to Green Revolution.

 7. Marketing efforts: A large number of MNCs have entered rural markets. MNCs such as Hindustan Lever, LG Electronics, Godrej, Philips
and Bajaj have made innovative marketing efforts in the area of availability, affordability, acceptability and awareness.

 8. Urban influence:

 The people in rural areas are influenced by the urban people in their buying behaviour and lifestyle. This may be because of the exposure to mass
media and the villagers working in towns and cities influence the lifestyles and habits of youth in villages.
 WHAT ARE THE BASIC NEEDS OF RURAL ECONOMY?

To guarantee an increase in the standard of living of the

 As a country experiences urbanization, rural-urban disparity tends to increase. If, for example, labor productivity in rural areas rises at
a slower rate than in urban areas, the disparity between rural and urban areas will widen even if the proportions of the population in
rural and urban areas remain constant. he rural development programmes and interventions undertaken for study were as follows-

 1. The Mahatma Gandhi National Rural Employment Guarantee Programme.

 2. Swarn jayanti Gram Swarojgar Yojana.

 3. Indira AvasYojana.

 4. National Social Assistance Programme.

 5. Himalayan Action Research centre(HARC)

 6. Uttarakhand Parvatiya Aajeevika Sanvardhan Company (UPASaC).

 7. Appropriate Technology India(ATI)

 8. District Rural Development Agency

 The Government of India passed the Mahatma Gandhi National Rural Employment Guarantee Act, 2005 in
September, 2005. The Act gives legal guarantee of a hundred days of wage employment in a financial year to
adult members of a rural household who demand employment and are willing to do unskilled manual work.
The Act will be applicable to areas notified by the Central Government. The objective of the Act is to enhance
the livelihood security of the people in the rural areas by generating wage employment through works that
develop the infrastructure base of that area.
 Enhancement of livelihood security to the households in rural areas of the State by providing round the year
employment with minimum guarantee of one hundred days of wage employment in a financial year to every
household volunteer to do unskilled manual work. Secondary objective includes creation of assets for
development of rural areas.
 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

 SGSY was started on 1st April, 1999 after restructuring erstwhile IRDP ,TRYSEM, SITRA GKY and MWS. The basic
objective is to bring assisted poor families above the poverty line by providing income generating assets through mix
of bank credit and subsidy.
 The objective of SGSY is to bring every assisted family above the poverty line within three years by providing
them income generating assets through a mix of bank credit and Government subsidy.
 The Ministry of Rural Development, Government of India has launched a new. programme known as "Swarnjayanti
Gram Swarozgar Yojana" (SGSY) by restructuring the. existing schemes namely : • Integrated Rural Development
Programme (IRDP)
 The objective of Swarnjayanti Gram Swarozgar Yojana (SGSY) is to provide sustainable income to the rural poor.
The program aims at establishing a large number of micro-enterprises in the rural areas, building upon the potential
of the rural poor.
 INDIRA AVAS YOJANA.

Indira Awaas Yojana (IAY) is a sub-scheme of Rural Landless Employment Guarantee Programme (RLEGP) which was
launched by the Ministry of Rural Development. The main objective of the Indira Awaas Yojana is to provide a grant for the
construction of houses to members of Scheduled Caste (SC)/Scheduled Tribes (ST), freed bonded labours and to non-SC/ST
category below the poverty line. In this article, we look at the Indira Awaas Yojana (IAY) in detail.
To provide support during the construction of houses in rural areas.
• To support the construction of houses with adequate provisions, including workplaces within the house.
• To design the houses based on the requirements of the dweller.
• To promote the use of technology and material that is affordable, conductive for generating employment, environment-friendly
and sustainable.
• To empower and encourage Panchayats to take a lead role at the village level for the implementation of this housing scheme.
 NATIONAL SOCIAL ASSISTANCE
PROGRAMME
 15th August 1995

 The Prime Minister in his broadcast to the Nation on 28th July 1995 announced that the programme will come
into effect from 15th August 1995. Accordingly the Govt. of India launched NSAP as a Centrally Sponsored
Scheme w.e.f 15th August 1995 towards fulfilment of these principles.
 n providing social assistance benefits to poor households in the case of old age, death of the breadwinner and
maternity, the NSAP aims at ensuring minimum national standards, in addition to the benefits that the
States are currently providing or might provide in future.
ROLE OF AGRICULTURE IN THE ECONOMIC DEVELOPMENT OF INDIA

 Stimulates industrial expansion: Expansion in the agriculture sector also led to the expansion of
the industrial sector. When agriculturalists have savings, they can buy consumer goods, invest in
industries too. This results in an indirect expansion of the industrial sector.
 Providing employment: When there is an increase in the agriculture sector, its production, more
employment opportunities will also be generated. Direct employment in the crop raising, agriculture
expansion also provides work in the other sphere.
 Resources for Capital Formation: This is all more important because with the existing modern
capitalist sector being small, there is little that can come from this sector by way of surpluses or
profits for investments. On the other hand, agriculture, as is the case in India, is a big sized sector. It
can contribute more to the development of the industrial sector because the primary industries run
with the help of raw material which comes from agriculture. For example Sugar Industry, Juice
Factory, Cotton industry, etc
CONT.

 Supply of Foreign Exchange: Agriculture can contribute a great deal in earning foreign
currency through the export of agricultural products. The requirements for the expansion of
exports can be easily met by adding a crop or two within the existing crop pattern and that too
with perhaps no additional capital investments. Further, since such exports have to cater to the
existing and familiar international market, no additional costs are involved to discover or nurture
new markets.
 The Shift of Manpower: Provides work to the majority of the workforce in the country. In the
least developed countries, the majority of the workforce work in disguised unemployed
agriculture labour . Agricultural progress allows manpower to shift from the agricultural to the
non-agricultural sector. In the initial stages, it is more necessary to shift labour from the
agricultural to the non-agricultural sector from the point of view of economic growth as it
relieves the burden of surplus labour-power over the limited land. Consequently, the release of
surplus manpower from the agricultural sector is necessary to advance the agricultural sector
and to extend the non-agricultural sector.
CONT.

 Supply of Food and Raw Materials: Feeds the requirement of industrialization. Agriculture plays a very role in development.
Contributes in many consumer goods like oil, clothing, etc. Further food grains are very important for underdeveloped economies. In
case of shortage of food, it helps a lot in developing countries as the mass import is not possible and economically feasible for
them. So, agriculture should be given due importance so that this essential supply of food and raw material can be maintained.

 Helpful to Reduce Inequality: There is greater income inequality between the world’s rural and urban areas in a country which is
largely agricultural and overpopulated. To reduce this income inequality, greater priority must be given to agriculture. Agricultural
growth will increase the income of the majority of the rural population and hence the income inequality might be somewhat reduced.

 Create Effective Demand: Agricultural sector growth will tend to increase farmers’ purchasing power which will help the country’s non-
agricultural sector expand. It will provide a more productive market. It is well recognized that the majority of people in underdeveloped
countries rely on agriculture and it is they who must be able to afford to consume the goods produced. It will, therefore, be helpful in
boosting non-agricultural sector production. Similarly, an improvement in cash crop productivity can pave the way for the promotion of
the exchange economy that can help the growth of the non-agricultural sector. Buying agricultural goods such as chemicals, farm
equipment, etc. also improves agricultural dead-outs.
CONT.

 Source of Foreign Exchange for the Country: Majority of the world’s developing countries
are exporters of primary products. Such goods contribute 60 to 70 per cent of overall earnings
from exports. Thus the ability to import capital goods and industrial development machinery is
crucially dependent on the agricultural sector’s export earnings. If agricultural exports do not
increase at a sufficiently high rate, these countries will be forced to incur a heavy balance of
payments deficit resulting in a serious foreign-exchange problem. Primary goods, however, face
falling prices on the international market, and there is limited prospect of increasing export
earnings through them. Despite this, major developing countries such as India (with industrial
growth potential) are attempting to diversify their manufacturing structure and encourage the
export of manufactured goods even though this involves the introduction of protection measures
in the initial planning period.
 Launched in June 2000, 'e-Choupal', has already become the largest initiative among all Internet-based interventions
ITCout
in rural India. 'e-Choupal' services today reach E-toCHOUPAL
over 4 million farmers growing a range of crops - soyabean,
coffee, wheat, rice, pulses, shrimp - in over 35000 villages through 6100 kiosks across 10 states (Madhya Pradesh,
Haryana, Uttarakhand, Uttar Pradesh, Rajasthan, Karnataka, Kerala, Maharashtra, Andhra Pradesh and Tamil Nadu).
 ITC's Agri Business Division, one of India's largest exporters of agricultural commodities, has conceived e- Choupal
as a more efficient supply chain aimed at delivering value to its customers around the world on a sustainable basis.
 The e- Choupal model has been specifically designed to tackle the challenges posed by the unique features of Indian
agriculture, characterized by fragmented farms, weak infrastructure and the involvement of numerous intermediaries,
among others.
 e-Choupal' also unshackles the potential of Indian farmer who has been trapped in a vicious cycle of low risk taking
ability > low investment > low productivity > weak market orientation > low value addition > low margin > low risk
taking ability. This made him and Indian agribusiness sector globally uncompetitive, despite rich & abundant natural
resources.
 Such a market-led business model can enhance the competitiveness of Indian agriculture and trigger a virtuous cycle
of higher productivity, higher incomes, enlarged capacity for farmer risk management, larger investments and higher
quality and productivity.
 Further, a growth in rural incomes will also unleash the latent demand for industrial goods so necessary for the
continued growth of the Indian economy. This will create another virtuous cycle propelling the economy into a higher
growth trajectory.
 The problems encountered while setting up and managing these 'e-Choupals' are primarily of infrastructural
CONT..

 'e-Choupal' makes use of the physical transmission capabilities of current intermediaries - aggregation, logistics, counter-party risk and
bridge financing -while disintermediating them from the chain of information flow and market signals.
 With a judicious blend of click & mortar capabilities, village internet kiosks managed by farmers - called sanchalaks - themselves,
enable the agricultural community access ready information in their local language on the weather & market prices, disseminate
knowledge on scientific farm practices & risk management, facilitate the sale of farm inputs (now with embedded knowledge) and
purchase farm produce from the farmers' doorsteps (decision making is now information-based).
 Real-time information and customized knowledge provided by 'e-Choupal' enhance the ability of farmers to take decisions and align
their farm output with market demand and secure quality & productivity. The aggregation of the demand for farm inputs from individual
farmers gives them access to high quality inputs from established and reputed manufacturers at fair prices. As a direct marketing
channel, virtually linked to the 'mandi' system for price discovery, 'e-Choupal' eliminates wasteful intermediation and multiple handling.
Thereby it significantly reduces transaction costs.
 e-Choupal' ensures world-class quality in delivering all these goods & services through several product / service specific partnerships
with the leaders in the respective fields, in addition to ITC's own expertise.
 GODREJ AADHAR
 Offers great value proposition

 “Unnati Ghar Sansaar and Gaon”

 Multi category retail service and retail outlet

 Started in December 2003 in Manchar, Pune District.

 Aadhaar Centres - Maharashtra, Gujarat, Punjab, Haryana, Andhra Pradesh, Tamil Nadu, Orissa and
West Bengal.

 It services around 20 villages in its radius.

 Team of qualified Agronomists who interacts with farmers on a daily basis

 Educate the farmers on farm practices.

 Better productivity.
 OBJECTIVE
 Improve productivity
 Higher returns
 Improved cost benefit ratio
 Offers crop advisory services
 Soil and water testing services
 Buy back of output
 Crop finance
 Need to educate
GAP ANALYSIS
 Potential in rural areas

 Untapped market

 Rising income

 Few players in rural

 People are loyal towards the brand

 Inappropriate information flow

 Media dark

 Availability of products

dokumen.tips_godrej-aadhar.ppt
 SHAKTI AND TRADE MANAGEMENT BY HUL

 enables rural women in villages across India to nurture an entrepreneurial mindset and become
financially independent.
 In an attempt to provide regular income, these women entrepreneurs (called Shakti Amma's) are
trained on the basic principles of distribution management and familiarization with our company’s
products. Their role enables them to sell HUL products to the small retail outlets in their immediate
village as well as directly to the households within the community.
 Our team of Rural Sales Promoters (RSPs) coach these Shakti women entrepreneurs in rural
India by familiarizing them with HUL products to manage their businesses better. This includes
basics and troubleshooting, as well as enhancing their soft skills of negotiation and
communication.
 EVOLUTION OF THE INITIATIVE

 We continue to empower our Shakti entrepreneurs and have been able to raise the standard of living for the local communities. We
help impart training to Shakti entrepreneurs in sales, marketing and accounting by recruiting and training sales agents from villages.
 With the integration of technology, incentives to Shakti entrepreneurs are now directly transferred to their banks, helping them enter
the formal banking segment.
 For the last one and half years, we have also partnered with an Indian adhesive company to sell their products through our Shakti
network. This, in turn, has helped generate increased revenue for our Shakti entrepreneurs.
Resilience during COVID-19
 Project Shakti embraces HUL’s philosophy of ‘Doing Well by Doing Good’ – A philosophy that has been extended even during the
unprecedented times of COVID-19.
 With travel restrictions interrupting the distribution and affecting the timelines of our operations, our key challenge was to service
Shakti entrepreneurs in remote areas. To ensure uninterrupted supply of stock to our Shakti entrepreneurs, the HUL regional sales
team and distributors implemented innovative ways of demand capture and fulfilment for the Shakti Channel. We immediately switched
to taking orders via tele-calling and ensured that rural demand for essential products was captured effectively.
 OVERALL IMPACT
 At the end of 2020, we have nearly 1,36,000 Shakti entrepreneurs spread
across 18 states. Project Shakti has helped generate income by selling our
products and has created a great impact on the livelihoods of women. Thus,
not only helping them improve their confidence and self-esteem by gaining
selling skills and enhancing their communication skills, but it has also helped
build, as well as foster an entrepreneurial mindset amongst the women Shakti
entrepreneurs.
 Adapting the Shakti model to explore new ideas, we have launched similar
programmes across Sri Lanka, Pakistan, Ethiopia, Egypt and Columbia. As
we enter 2021, Team Shakti continues its journey of empowering more rural
women and driving consistent growth.
 RURAL RETAILING

 It was ITC's initiative that helped to establish the first footprint of rural malls in India through e-choupal paving the
way for Choupal Sagar where the farmer could come in with his harvest laden vehicle accompanied by his family, get
his produce weighed and off-loaded at a fair price while the female member of the family could have her pick of the
packaged food, cereals, clothes, spices etc. The young ones could try their funds at the various games and toys
displayed. The mall houses a soil testing laboratory, a pathology lab (in collaboration with Apollo Hospitals). a diesel
pump and a cafeteria. Moreover adequate space is there to display new brands of tractors. It implements, fertilizers,
motorbikes etc.
 Therefore, in this unit we discuss the rural scenario of retailing, its formats, concept and types of franchise. We also
discuss the e-tailing operations.
 INITIATIVES

 Tata Chemicals and Rallis India combine to come up with Tata Kisan Sansar- a network of one stop shops providing
Agri-inputs to loans to knowledge
 Mahindra Shubhlabh and Mahindra Krishi Vihar operate in 11 states offering a range of products and services to
increase farm productivity
 Godrej Agrovet and Gulinohar Foods part of the Godrej Group have based the rural initiative on two concepts called
Aadhar and Manthan. Through these the company sells not only animal feed, its own products but also other brands
as well as offers services like veterinary care and soil testing
 DCM Shriram Consolidated Ltd into consumer finance and insurance has 101 outlets in rural areas called as
Hariyali Kisan Sazaars (HKB) which provide not only Agri inputs but also consumer durables and FMCG products
 Triveni Engineering has set up 44 Triveni Khushali Bazaars (TKB) in four states
 The MP Government has proposed to set up rural shopping malls across the state to serve the area outside the
retail distribution network of manufacturing companies
 The UP State Agro Industrial Corporation plans to set up Agri Marts across Uttar Pradesh dealing in farm
implements, seeds, fertilizers, tractors and veterinary products .