Economics 6 Marks Question

In the pre-Independence period, and also during the period just after Independence, Indian agriculture was characterised by subsistence farming. Under this system, the small landholdings of farmers enabled them to produce just enough to fulfill the needs of their families and to provide seeds for the next sowing season. The farmers did not sell their produce in the market.
However, after Independence, the government introduced a number of reforms, such as abolition of zamindari system, consolidation of landholdings, etc which led to substantial increase in agricultural output and led to commercialisation of agriculture. The farmers started selling their produce in the market for money. This led to improvement in their living conditions.
However, This also proved to be insufficient as agricultural infrastructure was not enough to enable agricultural activity all round the year. This led to the need for encouraging diversification of non-farm activities such as animal husbandry, fishing, etc. These activities helped the farmers to supplement their earning. The value which is highlighted are the attempts to improve the living standards of the farmers.

The agricultural sector in India is overcrowded, a major portion of labour force needs to find alternate employment opportunities in other non-farm sectors. Diversification towards non-farm sectors not only to reduce the risk from agriculture sector but also to provide productive sustainable livelihood options to rural people. Non-farm economy has several segments in it; some possess dynamic linkages that permit healthy growth while others are in subsistence, low productivity propositions. The dynamic sub-sectors include agro-processing industries, food processing industries, leather industry, tourism, etc. Those sectors which have the potential but seriously lack infrastructure and other support include traditional home-based industries like pottery, crafts, handlooms etc. Majority of rural women find employment in agriculture while men generally look for non-farm employment. In recent times, women have also begun looking for non-farm jobs.

Various measures taken by the government to improve agricultural marketing have improved the condition but a lot still need to be done to realise full potential to agricultural sector.
Government is maintaining buffer stocks, providing the facilities of storage but still these storage facilities are not sufficient. Even today more than 10% of goods produced in farms are wasted due to lack of storage.
The infrastructure facilities which are currently available in India are inadequate to meet the growing demand. These facilities need to be improved in terms of quality and quantity.
Except few cooperatives many have received setbacks in last few years because there is inadequate coverage of farmers, lack of appropriate link between marketing and processing cooperatives and inefficient financial management.
Though the government is intervening in the market through various measures, still private traders like money lenders, rural political elites, big merchants and rich farmers pre-dominate agricultural markets.

Information technology (IT) plays a very significant role in achieving sustainable development and food security. Governments can predict areas of food insecurity and vulnerability using appropriate information and software tools so that action can be taken to prevent or reduce the likelihood of an emergency. It also has a positive impact on the agriculture sector as it can disseminate information regarding emerging technologies and its applications, prices, weather and soil conditions for growing different crops etc. Though IT is, by itself, no catalyst of change but it can act as a tool for releasing the creative potential and knowledge embedded in the society. It also has potential of employment generation in rural areas. Thus, it can be said that IT plays a vital role in assuring food security and sustainable development in India.

NABARD was set up in 1982 as an apex body to coordinate the activities of all institutions involved in rural credit. The main functions of NABARD are:

1. To grant long-term loans to the State Government for subscribing to the share capital of cooperative societies.
2. To take the responsibility of inspecting cooperative banks, Regional Rural Banks (RRBs) and primary cooperative societies.
3. To promote research in agriculture and rural development.
4. To serve as a refinancing agency for the institutions providing finance to rural and agricultural development.
5. To help tenant farmers and small farmers to consolidate their landholdings.

Organic farming is a system of farming that maintains, enhances and restores the ecological balance. The demand for organically grown food is increasing to ensure food security by almost all the countries of the world. It helps in sustainable development in agricultural sector.Benefits of organic farming which make us adopt it are as follows:

1. It enhances soil structure, conserves water and ensures the conservation and sustainable use of natural resources.
2. It reduces damage to environment by refraining from the use of synthetic fertilizers and pesticides, genetically modified organisms and pharmaceuticals. Pests and diseases are controlled with naturally occurring means and substances according to both traditional as well as modern scientific knowledge, thereby increasing both agricultural yields and disease resistance.
3. It adheres to globally accepted principles, which are implemented to encourage sustainable development and protection of environment.
4. It eliminates the risk of human and animal hazards by eliminating chances of filteration of chemical residues in the food chain.

Organic farming is a form of agriculture which makes use of organic inputs for the supply of nutrients and management of pests and diseases. It makes use of organic inputs for cultivation. It is a whole system of farming that restores, maintains and enhances the ecological balance. It offers a way to substitute costlier agricultural inputs with locally produced inputs. These inputs are cheaply available and generate good returns on investment. These inputs help soil to gain nutrients. Production from conventional farming is toxic and less nutritious which harms the livestock, depletes the soil and devastates natural eco-system. When chemical fertilizers are used in farming, it drains to water bodies and pollute them. In organic farming, production is toxic- free. Owing to this reasons, the use of factory made fertilizers is getting reduced over time. Studies reveals that organically produced food has more nutritional value. With organic farming penetration of chemical fertilizers in water bodies has reduced. Organic produce is pesticides free and promote sustainable development.

Agricultural marketing is a process that involves the assembling, storage, processing, packaging, transportation, grading and distribution of various agricultural products across the country. Before independence the agricultural marketing system that existed was far from satisfactory because.

• The farmers suffered from faulty weighing, while they sold their output to the traders and there was also manipulation of accounts by them.
• Ignorance of the farmers w.r.t the prevalent price also led to their exploitation.
• They also lacked proper storage facilities for their produce. As a result they could not hold back their produce for selling later, at a better/ higher price. All this led to a "wastage" of farm products on account of inadequate storage facilities.

State could intervene in the marketing aspect by adopting following measures:

1. Creating orderly and transparent marketing conditions for regulation of markets.
2. Providing physical infrastructural facilities like roads, railways, godowns, cold-storage, warehouses etc.
3. Co-operative marketing to help in realising fair price for the farmer's product. (The success mantra of the milk co-operatives at Anand in Gujarat stands a testimony to the important role of co-operatives in an economy but in the recent past, the co-operatives have received a setback.)
4. Policy instruments like:

1. Assurance of Minimum Support Price (MSP) for agricultural products.
2. Maintenance of Buffer Stocks of wheat and rice by FCI.
3. Distribution of the essential food grains and sugar through the system of Public Distribution i.e. P.D.S.

To achieve the objective of rural development, following measures related to finance can be taken:

1. The supply of finance should be fully institutionalised and dependence on private sources for credit should be eliminated.
2. The general interest rate should be low. The banks should charge different rates for different uses.
3. The basis of credit should not be mortgage of any security. Production or productivity of land should be the basis for the approval of loans.
4. The conditions of repayment of loans should be different so as to suit different circumstances. (v) It should be ensured that finance is used for production. Loans can also be given in the form of goods like seeds, fertilisers, etc.
5.  There should be adequately trained and devoted personnel to manage the financial institutions. The persons should have full knowledge of agriculture and interest of farmers.

It has been considered necessary to replace the private moneylenders by institutional sources of credit because:

1. The supply of credit was irregular and depended largely on personal relations between the borrower and the lender
2. The moneylenders often took advantage of the ignorance and helplessness of the cultivator to exploit him.
3. Since, the borrower was generally illiterate, the moneylender often resorted to downright cheating such as failure to record the repayments in full.
4. The landless tenants and farm workers, who had no land to offer as security, found it difficult to borrow. The loans were available on very difficult terms, and the borrowers were often burdened with permanent debt.

On account of agriculture being overcrowded, a major part of the population calls for alternate employment opportunities in the other non-farm sector. These include the agro-processing industries, food processing industries, leather industry, tourism etc. Majority of the rural women are employed in agriculture but it is the men who take to non-farm jobs like Animal Husbandry' based on mixed crop-livestock farming system.

• Fisheries.
• Horticulture On account of bounties of nature, we find India has taken to the growing of various crops such as fruits, vegetables, flowers, plants-medicinal and aromatic, spices and plantation crops.

Economic conditions of many farmers engaged in horticulture has become better-off. Many areas of production in horticulture are very lucrative employment options for women in rural India.

• Another important area which offers livelihood option is the Information Technology (IT) sector, which has succeeded in revolutionising many sectors of our economy.
• IT sector disseminates information regarding emerging technologies and their application to rural development. This proves beneficial for the rural development, in particular and economic development at large.

The various steps taken by the government in developing rural markets are:

• Regulated Markets: The regulation of markets to creates orderly and transparent market conditions. The sale and purchase of the products are monitored by the Market Committee which consist of farmers, government agents and traders. It helps in enforcement of standard weights, fixation of charges, setting of disputes etc. which is helpful for both farmers and consumers.
• Development of Infrastructure: The government has taken measures to develop infrastructure like roads, warehouses, railways, cold storages etc. which help in transportation and storage facilities.
• Co-operative marketing: It is a measure to ensure a fair price to farmers Member farmers sells their surplus to the cooperative society which substitutes collective bargaining in place of individual bargaining.
• Policy Instruments: Various policy instrument has also been initiated by the government such as fixation of minimum support price, Buffer stock and Public Distribution system which aimed at increasing the income of farmers as well as providing food grains at subsidised rate to poor.

The agricultural diversification implies diversification of crop production and shifting of agricultural workforce to other allied activities such as livestock, poultry, fisheries, etc. and non-agriculture sector. The shift from the crop farming to non-farm employment is essential in order to raise income and to explore alternative avenues of sustainable livelihood.
The importance of agricultural diversification can be explained with the help of the following points:

1. A substantial portion of Indian farming is dependent on the vagaries of monsoon, making it a risky affair to rely upon solely. Accordingly, the need for diversification is required to enable the farmers to earn from other alternative non-farm occupations. This lessens excess burden on agriculture by reducing disguised unemployment.
2. The kharif season opens up ample opportunities for agricultural employment. However, owing to lack of irrigation facilities, the farmers fail to get gainful employment opportunities during the Rabi season. Therefore, the need of diversification arises during the Rabiseason.
3. Agriculture being over crowded cannot further generate employment opportunities. Therefore, the prospects of the non-farm sectors should be opened up in the rural areas to provide job opportunities, thereby, diverting workforce from the already crowded agricultural sector.
4. The non farm sector has several segments that possess dynamic linkages. Such linkages enhance the healthy growth of an economy.

Benefits of organic farming:

1. It enhances soil structures, conserves water and ensures the conservation and sustainable use of natural resources.
2. It reduces damage to environment by refraining from the use of synthetic fertilizers and pesticides, genetically modified organisms and pharmaceuticals. Pests and diseases are controlled with naturally occurring means and substances according to both traditional as well as modern scientific knowledge, increasing both agricultural yields and disease resistance.
3. It adheres to globally accepted principles, which are implemented to encourage sustainable development and also protect environment.

Limitations of organic farming:

1. It has been observed that the yield from organic farming is much less than modern agricultural farming and the goods produced organically command a higher price.
2. Small and marginal farmers may not adapt to this type of farming due to lack of awareness and limited choice of alternate production in off-season.
3. Organic produce may have blemishes and a shorter shelf life.

Difference between 'Green Revolution' and 'Golden Revolution’

Green Revolution	Golden Revolution
The introduction of High-Yielding Varieties (HYV) of seeds and the increased use of fertilisers, pesticides and irrigation facilities which led to substantial increase in output of cereals is known as the Green Revolution.	The rapid growth in the production of diverse horticultural crops such as fruits, vegetables, tuber crops, flowers, medicinal and aromatic plants, spices and plantation crops is known as Golden Revolution.
It led to increase in the production of rice and wheat.	It led to increase in the production of fruits, vegetables, flowers aromatic plants, spices, etc.
Green Revolution made India self-sufficient in the production of foodgrains.	Golden Revolution made India a world leader in the production of mangoes, bananas, coconut and spices.
Green Revolution provided food security and raised agricultural incomes.	Golden Revolution provided nutrition and sustainable livelihood options.

The institutional structure of rural banking today consists of a set of multi-agency institutions, namely, commercial banks, Regional Rural Banks (HHBs), co-operatives and land development banks Recently, Self-Help Groups (henceforth SHGs) have emerged to fill the gap in the formal credit system. Such credit provisions are generally referred to as micro-credit programmes.
Micro-credit has played an important role in meeting credit requirements of the poor in the following ways:

1. Formal credit system has not been able to dispense adequate credit at cheaper rates to the rural poor. Micro-credit thus fills gap in the formal credit system.
2. The formal credit delivery mechanism has not been fully integrated into the overall rural social and community development. Hence, poor people in rural areas are hesitant in approaching formal credit institutions while they can freely approach SHGs which have become a part of the community.
3. Poor rural households all out of the credit network as they do not have any kind of collateral required by formal credit institutions for providing credit. Such collateral is not required by micro-credit institutions.
4. Micro-credit programmes promote thrift in small proportions by a minimum contribution from each member. From the pooled money, credit is given to the needy members to be repayable in small instalments at reasonable Interest rates.
5. SHGs have helped in the empowerment of women through provision of sell employment opportunities with the help of micro-credit. But micro-credit borrowings are mainly confined to consumption purposes and very small proportion goes into productive purposes.

After 1969, when Indian banks were nationalised and a multi-agency approach was used adequately.

• An apex body to co-ordinate the activities of all institutions dealing with rural financing system called "National Bank for Agriculture and Rural Development (NBARD) was set up in 1982.
• Today multi-agency institutions like commercial banks, regional rural banks, land development banks and co-operatives are expected to deliver rural credit at reasonable rates of interest.
• Most noticeable landmark on this front has been the emergence of "Self Help Groups" (SHGs), whose main purpose is to fill the gap in the formal credit system, which had been inadequate and called for some kind of collateral in all credit activities.

With the emergence of SHGs thrift in small proportions is being encouraged by a minimum contribution from each member. Money thus pooled is given in the form of credit to the needy members of the groups, at reasonable rate of interest and to be repaid in the form of small installments.
Such credit provisions through SHG's are generally known as "micro-credit programmes". SHGs have brought about empowerment of women, which is a welcome move. By March 2003, about 7 lakh SHGs had been credit linked. This is indeed a laudable achievement on the rural credit front.

Rural development is a comprehensive term. It essentially focuses on action for the development of areas that are lagging behind in the overall development of the village economy. Some of the areas which are challenging and need fresh initiatives for development in rural India include:

• Development of human resources including – literacy, more specifically, female literacy, education and skill development – health, addressing both sanitation and public health.
• Land reforms with technical reforms allow the farmers to use modern techniques and methods which increase the productivity and aggregate volume of farm output. Land reforms also lead to efficient and optimum use of land, enabling large scale production.
• Development of the productive resources of each locality.
• Infrastructure development like electricity, irrigation, credit, marketing, transport facilities including construction of village roads and feeder roads to nearby highways, facilities for agriculture research and extension, and information dissemination.
• Special measures for alleviation of poverty and bringing about significant improvement in the living conditions of the weaker sections of the population emphasising access to productive employment opportunities.

The advantages of organic farming are:

1. Inexpensive Process: Organic agriculture offers a means to substitute costlier agricultural inputs (such as HYV seeds, chemical fertilizers, pesticides, etc.) with locally produced organic inputs that are cheaper and thereby generate more return on investment.
2. Generates Income: It generates income through international exports as the demand for organically grown crops is on a rise.
3. Healthier and Tastier Food: Organically grown food has more nutritional value than food grown with chemical farming. It, thus, provides us with healthy foods.
4. Solves Unemployment Problem: Since organic farming requires more labour input than conventional farming, it will solve unemployment problem.
5. Environment Friendly: The produce is pesticide-free and produced in an environmentally sustainable way.

Limitations of organic farming are:

1. It has been observed that the yield from organic farming is much less than modern agricultural farming. Thus, goods produced organically command a higher price.
2. Small and marginal farmers may not adapt to this type of farming due to lack of awareness and limited choice of alternate production in off-seasons.
3. Organic produce may have a shorter shelf life.

Since 1969, when the nationalisation of commercial banks took place, rural banking has expanded a great deal. Significant expansion of rural banking system played a positive role in:

1. Raising farm and non-farm output by providing services and credit facilities to farmers.
2. Providing long term loans with better repayment options. It, thus helped in eliminating moneylenders from the scene.
3. Generating credit for self-employment schemes in rural areas.
4. Achieving food security which is clear from the abundant buffer stocks of grains.

Limitations of rural banking are:

1. The sources of institutional finance are inadequate to meet the requirements of agricultural credit. Farmers still depend on money-lenders for their credit needs.
2. There exist regional inequalities in the distribution of institutional credit.
3. Rural banking is suffering from the problems of large amount of overdues and default rate.
4. Small and marginal farmers receive only a very small portion of the institutional credit. A large portion of institutional credit is taken away by the rich farmers.

Some of the institutional weaknesses in Indian agriculture are as follows:

1. We need to involve the small and marginal farmers and the landless labour in deriving benefits of increased agricultural exports through integrated co-operatives like the mother dairy, and other service co-operatives; contract farming, etc.
2. Present system of credit does not ensure timely availability of credit. In many states, land reform remains woefully unfinished and tenancy regimes need urgent reform.
3. Indian agricultural credit system is suffering from the problems of subsidized interest rates, poor recovery of loans, high intermediation costs of cooperatives and commercial banks and debt write-offs.
4. We also need to make efforts to develop new technologies for the farming sector and making it available for small farmers so that they may diversify their production towards high value commercial and export commodities.
5. We need to create institutions like trading houses, market intelligence services and creation of network of information on national and international prices.
6. We also need infrastructure for processing, marketing and grading of produce, investment in information etc.

1. Importance of Animal Husbandry: In India, the mixed crop-livestock farming system with mainly cattie, goats and fowl is prevalent. Livestock production provides increased stability in income, food security, transport, fuel and nutrition for the family.

1. Today, livestock sector alone provides alternate livelihood options to a significant number of women and over 70 million small and marginal farmers including landless labourers.
2. Milk production of the Indian dairy sector has increased by more than five times between 1960-2009 with the successful Implementation of ‘Operation Flood’. It is a system whereby all the farmers can pool their milk produced according to different grading (based on quality) and the same is processed and marketed lo urban centres through co-operatives. In this system, the farmers are assured of a fair price and income from the supply of milk to urban markets. Meat, eggs, wool and other by products are also emerging as important productive sectors for diversification.

2. Importance of Fisheries: The water bodies consisting of sea, oceans, rivers, lakes, etc are a source of living for the fishing community. Presently, Fish production from Inland sources contributes about 61% to the total fish production and the balance 39% comes from the marine sector (sea and ocean) today, total fish production accounts for 0.7% of the total GDP. This has become possible with progressive increase in budgetary allocations and introduction of new technologies in fisheries and aquaculture. Kerala, Gujarat, Maharashtra and Tamil Nadu are the major producers of marine products. Fishing has become a source of women empowerment. Even though women are not involved in active fishing, about 60% of the workforce in export marketing and 40% in internal marketing are women.
3. Importance of Horticulture: Diverse horticultural crops such as fruits, vegetables, tuber crops, flowers, medicinal and aromatic plants, spices and plantation crops die grown in India. These crops play a vital role in providing food and nutrition, along with sustainable employment opportunities. During 1991-3003, 'Golden Revolution took place. Horticulture became highly productive during this period due to planned Investment and the sector emerged as a sustainable livelihood option. India has emerged as a world leader in producing a variety of fruits tike mangoes, bananas, coconuts, cashew nuts and a number of spices and is the second largest producer of fruits and vegetables Economic condition of farmers engaged in horticulture has improved flower harvesting, nursery maintenance, hybrid seed production and tissue culture, propagation of fruits and flowers and food processing are highly remunerative employment options for women in rural areas.