Chapter-1 Introduction



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Rapid economic growth has created a growing need for dependable and reliable supplies of electricity, gas and petroleum products also. India targets to electrify 14500 villages and release electricity connection to 52 lakh BPL rural households in 2011-12. With increasing primary education students, the need for teachers in rural areas can be tapped as alternative livelihood option by the literate youths. To establish a sizable network of rural education Gandhigram Rural Institute was established and 5,200 Community Development Blocks (an authority under national programme to control education in up to 100 villages) were established. Nursery schools, elementary schools, secondary school, and schools for adult education for women were set up in rural India. Under National Rural Health Mission, almost 106949 more skilled service providers were added in the public health system by March 2010. Besides this agro processing industry is employing about 13 million people directly and 35 million people indirectly in India.


In the services sector Retail Industry accounts for 14-15% of India’s GDP. In 2011, retail reforms have been announced for both multi-brand stores and single-brand stores (100% FDI in single brand retailers, and 51% FDI in multi-brand retailers). These reforms paved the way for retail competition and innovation with multi-brand retailers i.e., Walmart, Carrefour and Tesco, and as well single brand majors i.e., IKEA, Nike, and Apple.

Thus NFS is continuously grooming in our Indian economy in terms of its share in both employment and output. Out of the all non-farm activities Trade, hotel, transport and communication is the highly grooming activity followed by Financing, Insurance, Real Estate and Business Services; Manufacturing; Construction; Community, Social and Personal Services; and lastly Mining and quarrying.

Out of the non-farm sector during 1973-74 to 2009-10, tertiary sector had shown a remarkable growth of 12% and 23% in employment and output respectively as compared to growth of 11% and 3% in secondary sector in employment and output respectively. Proportion of agriculture in total employment has declined over the years from 74% in 1972-73 to 51% in 2009-10. It is particularly important to note that the decline in the employment share of farm sector has been much slower than the share of GDP from agriculture. The share of agriculture in GDP declined from 41% in 1972-73 to 15% in 2009-10 (Table 1.21).


graphic1.tif

Linkages between Farm and Non-Farm Sector-


Rural development totally depends upon the performance of farm and non farm sector. The growth of both the sectors is mutually reinforcing with employment and incomes increasing in a dispersed pattern and lack of one result the cost of other and leads to overall degradation of rural development. Whereas agriculture provides food, raw materials, and export earnings for the growth of non-farm sector, on the other hand, non-farm sector supports farm sector by supplying farm inputs. Consequently, the deficiency in production of one sector becomes the limiting factor for the growth of other one, thereby affects the overall growth of the economy.

As a result of emerging green revolution technologies, increased farm activities and productivity magnified the incomes of farmers by multiple linkages and effect across the rest of the economy, particularly in closed economies, which was in practice the case of many developing rural economies. A large subsistence farm sector now exists only along with modern non-farm sectors of the economy. Basically both the sectors share two types of linkages. These are production linkages, both backward, via the demand of farmers for inputs (plows, engines, tools, fertilizers, insecticides, irrigation structures etc.), and forward, via the need to process many farm produces, e.g., spinning, milling, canning etc. Consumption linkages are also important: as farm income rose, it would feed primarily into an increased demand for goods and services produced by non-farm sector. Moreover the increased farm productivity will provide new farm surpluses as an automatic source of investment funds for the non-farm sector.



Farm and allied produces (fruits, vegetables, tea, coffee, spices, livestock, fisheries, forestry products etc) are the backbone of NFS. Farm produces provide various raw materials to the industrial sector i.e., horticulture products in Food processing Industries; Flowers in Cosmetics Industry; silk, wool, cotton in Garment Industry; honey in industries manufacturing honey products; Poultry products in industries manufacturing various bakery products etc. In the same way the farm sector is also getting various inputs (fertilizers, insecticides, irrigation structures, infrastructure, markets for farm produce etc) and services (transportation, communication, banking, financial services etc) from NFS.



Under these linkages Food Processing Industries and Garment Industries (silk, cotton, wool etc.) are growing rapidly in India. Thus farm production needs to be stepped up in order to support production in other sectors and to earn foreign exchange earnings. These linkages may be change as the development process proceeds of our country.

Table 1.22: SWOT Analysis: A Comparison of Indian Farm Sector & RNFS

Farm Sector

Rural Non-Farm Sector

Strengths

  • Strong distribution & R & D support

  • Capitalization of finance Institution

  • Diversification of farm products

  • Varied & diversified agro climatic base

  • Cheap, abundant, scientific & technical labour

  • Globally leading production in some commodities

  • Providing huge employment

  • Government initiatives

  • High demand due to low product cost

  • Potential alternate to farm activities

  • Institutional basis & well developed & organized finance system with great state-led credit facilities

  • Checks rural-urban migration with better employment opportunities

  • Promotes equitable distribution of income

  • Helps in alleviating the poverty

  • Strong raw material base

  • Higher demand & huge market

  • Local technology based on the area resources

Weaknesses

  • Narrow product mix, poor quality seeds & low credit rating

  • Poor sales forces & product prices

  • High taxes & transportation costs

  • Poor industrial relations &

  • Poor irrigational & infrastructural facilities

  • Poor morale, quality & sanitary standards

  • Lack of grading & sorting, & contemporary cultural & cultivation practices

  • Excess manpower & market intermediaries

  • Lack of proper government support

  • Based on seasonality with delayed & limited use of irrigation & technologies

  • Small landholdings & slow development of harvest & post harvest technologies

  • Inadequate infrastructure, marketing & credit facilities

  • Excessive regulatory restrictions

  • Poor quality of manpower due to illiteracy, skill & inadequacy of proper Training/Research Institutes

  • Backward linkages with agro - sector

  • Absence of appropriate quality control & forward-backward integration

  • Lack of basic amenities in rural areas

  • Poor law & order situations

  • Erratic power supply

  • Low public investment in villages

  • Enormous diversification in rural regions

  • Indifference of financial institutions towards RNFS

Opportunities

  • Developing economy

  • Delicensing & liberalization

  • Capital market reforms

  • Export potential & scope for better marketing, advertisement & for demand for processed product

  • Favourable/ encouraging government support

Threats

  • Over population

  • Environment concerns (soil degradation)

  • Political & Economic instability

  • Excessive liberalization & delicensing

  • Rapid rural industrialization

  • Rapid urbanization & domestic policy threats

  • Globalization & inflow of foreign subsidies

  • Competition from big houses with strong marketing channels, huge advertising budget & attractive packaging


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