(i) More than two-thirds of India’s population depends on agriculture and about 60% of India’s population lives in rural areas. The development of all aspects within rural communities is vital for the effective development of the country. Hence, India’s economic development requires speedy rural development. The following points highlight the need for rural development:
i. Increase in Productivity- Rural development is needed to provide rural people with various means that will help them increase productivity. This will make agriculture a profitable venture. There can be no development without rural development.
ii. Employment- Rural development is needed to create employment opportunities particularly in rural areas. This will be possible by promoting non-farm activities.
iii. Better Living- Rural development is needed to improve the standard of living of rural people by providing better access to healthcare, education and sanitation.
(ii) NABARD is an apex institution entrusted with all matters concerning policy, planning and operations in the field of rural credit and related economic activities. It does not lend to general public directly but serves as a funding agency for the institutions providing credit in rural areas. Those who lend to public directly can be categorised into:
a. Institutional Sources of Credit: Institutional credit institutions include Cooperative Credit Societies, Regional Rural Banks, Land Development Banks and Commercial Banks. Together they constituted only 7% of credit needs of the farmers in 1950-51 but by 1981 their share increased to 63% and at present it is 74%.
b. Non Institutional Sources of Credit: Landlords, village traders and moneylenders are major non institutional sources of credit. At the time of independence their share in total credit was 93% but it has declined sharply over years. But since these credits are not backed by written records, we can't be sure of the available statistics.