Chapter-1 Introduction



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Four major factors influence these changes: increased concerns about the persistent and deepening of rural poverty; changing views about the concept of development itself; emergence of a more diversified rural economy in which rural nonfarm units play an increasingly important role; and increased recognition of the importance of reducing the non-income dimensions of poverty to achieve sustainable improvements in socio-economic well being of the poor.

The World Bank assists its partners to achieve rural development in accordance with its vision; the farm and nonfarm growth should widely shared with private and competitive agriculture; agribusiness should be the main engine of growth; family farms and nonfarm enterprises should provide ample employment opportunities to the society; rural people should use soils, water, forests, grasslands and fisheries in sustainable manner; rural areas should endowed with proper linkages for markets, products, inputs and finance; proper health and sanitary facilities; family planning services; educational opportunities; and essential legal frameworks, public investments, and productive and social services.1

Despite of so many drastic changes the concept of rural development is still changing on. The concept is so dynamic and important for the economic policies of the country that every country has to formulate the policies according to its changing dimensions. With the changing rural circumstances and development thinking, governments and donor agencies are applying different perspectives regarding the concept and pursuing different combinations of rural development policies to cope up with these changes. These changes become more important for developing countries as a major portion of their population is still in rural areas.



Table 1.4: Changing Context of Rural Development

Changing Context

Illustrative Data

Diversification is taking place in rural incomes.

Studies for India show a range of 50 to 70% reliance on non-farm income.

Companies producing consumer products are seeing bright prospects in rural markets.

FMCG market in rural India is tipped to touch US$100 billion by 2025 & accounts for more than half of sales. (The Nielson Company)

Rural areas are becoming scientifically & technologically advanced.

India's organic products exports jumped from $12 million to $125 million in a span of eight years and aims to touch $1 billion in next 5 years.


Developing countries are spending a huge amount of their budgets on rural development.

Indian government is spending approx. 6 to 8 % of its union budget on rural development.

Most of the rural poor are in Less Favoured Areas (LFAs).

About 42% of the rural population of developing countries is living in LFAs.

There are growing environmental concerns.

About 40% of the world's agricultural land & 53% of India’s total land area is seriously degraded. (Earth Policy Institute & Forest Survey of India)

The geographical distribution of poverty and human (under) development is changing.

15.3% of Indians fail to reach the age of 40 (NSSO), as compared to only 1% of British.

Hunger, poverty and malnutrition are affecting the efficiency of natives.

About 578 million people are hungry in Asia and the Pacific in 2010. ( 2011 World Hunger and Poverty Facts and Statistics)

Reducing farm productivity due to spread of severe diseases in rural areas.

About 2.3 million people are HIV positive in India out of which 60% are estimated to be in rural areas. (United Nations 2011 Aids report)

The share of the population in rural areas is falling. (Problem of rural-urban migration)

By 2030, 60% of the world’s population and 40% of Indian population will be in cities. (UN estimates)

The contribution of agriculture is declining.

Share of agriculture in India’s exports has been declined to 33.9% during 1960-2010.

Urbanization and rising incomes are changing the pattern of demand for food.

To bridge the demand and supply gap of milk in India, its production must be increased by 5.5% annually over the next 12 years. (Economic Survey 2011)

Recessionary conditions have influenced the employment.

160 million people are unemployed globally in 2011 and 40% of this comes from the youth sector. (ILO)

Increasing globalization in world economy.

World trade expanded in 2011 by 5%, a sharp deceleration from the 2010 rebound of 13.8%, and growth is expected 3.7% in 2012. (WTO)

International trade expansion is not uniform.

During 2011–12, India's foreign trade grew by an impressive 30.6% to reach $ 792.3 billion. (Exports-38.33% and Imports-61.67%).

Access to FDI is uneven.

FDI in India spiked 34% to a record $46.8 billion in 2011-12. (Business Line)

Increasing liberalization, though slowly in agriculture.

During 5 decades from 1950/51-1959/60 to 1990/91-1999/00 agricultural growth was only 0.35% against industrial growth of 2.49%.


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