Simplified Rural Development Notes for Class 12 Students

Unlock the secrets of Rural Development with our comprehensive Class 12 notes. Explore key concepts, important topics, and expert insights to ace your exams and gain a deeper understanding of rural development. Get ready to excel with our in-depth study guide!

rural development class 12 notes

BoardCBSE and State Boards
Book NameIndian Economic Development
Chapter No.5
Chapter NameRural Development

"It Doesn't matter what others are doing. It matters what YOU are doing."

Rural Development Class 12 Notes

Rural Economic development is essential for Indian Economic development

  • Mahatma Gandhi had always maintained that the real growth of India lies in the growth of villages. The
  • importance of rural development in India lies in the fact that 2/3rd of the population still (directly or indirectly) depends on agriculture.
  • Around 1/3rd of the rural population still lives in abject poverty.

What is Rural Development?

Rural development is quite a comprehensive term but it essentially means a plan of action for the development of rural areas which are lagging behind in socio-economic development.

graph TD A[Focus areas of Rural Development] --> B[Development of Human Capital] A --> C[Land reforms] A --> D[Development of productive resources] A --> E[Infrastructure development] A --> F[Alleviation of poverty]

Two-thirds of the Indian population is dependent on agriculture, yet its contribution to GDP is low:

  • A decline in public investment since 1991.
  • Inadequate infrastructure
  • Lack of alternate employment opportunities in the secondary or tertiary sector
  • Increasing casualization of employment.

Credit and Marketing in Rural Areas

Role of Credit:

  1. To realize higher productivity in agriculture and non-agriculture sectors.
  2. Farmers borrow from various sources to meet their initial investment in seeds, fertilizers, implements, and other family expenses of marriage, death, religious ceremonies, etc.

Sources of Credit:

Informal Sources: Money lenders, traders, friends, etc.

Formal Sources: Institutions like commercial banks, regional rural banks (RRBs), cooperatives, and land development banks.

  • The National Bank for Agriculture and Rural Development (NABARD) was set up in 1982 as an apex body to coordinate the activities of all institutions involved in the rural financing system.
  • The Green Revolution brought major changes in the credit system as it led to the diversification of the portfolio of rural credit towards production-oriented lending.

Self-Help Groups (SHGs)/Micro-credit Programmes:

  • Poor women or women who do not have any collateral, were excluded from formal institutions of credit.
  • With Self-Help Groups, women are able to avail credit, with reasonable repayment plans.
  • Further, SHGs also receive funds as Community Investment Support Funds, to create self-employment
  • SHGs not only make credit accessible to poor women but also provide them with opportunities to generate their own income and make decisions.
  • SHGs foster a sense of community since the credit is disbursed from a pool of money contributed by all. This also holds them accountable to the group.
  • SHGs allow rural women to be financially empowered.

Critical Appraisal of Rural Banking

Rapid expansion of the banking system had a positive effect on rural farm and non-farm output, income, and employment. In spite of this, the following problems have been faced in rural banking such as-

  • The volume of rural credit in the country is still insufficient in comparison to its demand and institutional sources have failed to cover the entire rural farmers of the country.
  • With the possible exception of commercial banks, other formal institutions have failed to develop a culture of deposit mobilization — lending to worthwhile borrowers and effective loan recovery.
  • Agriculture loan default rates have been chronically high.

Jan Dhan Yojana

All adults are encouraged to open bank accounts as a part of a scheme known as Jan-Dhan Yojana. Those bank account holders can get ₹ 1-2 lakh accidental insurance coverage and overdraft facilities for ₹ 10,000 and get their wages if they get any government-related jobs and works under MNREGA; old age pension and other social security payments of the government are transferred to bank accounts.

This has led to more than 40 crore people opening bank accounts; indirectly it has promoted thrift habit and efficient allocation of financial resources particularly in rural areas.

Agricultural Market System

Agricultural Marketing: It is a process that involves the assembling, storage, processing, transportation, packaging grading, and distribution of different agricultural commodities across the country.

Problems in Agricultural Marketing

  • Farmers, while selling their produce to traders, suffer from faulty weighing and manipulation of accounts.
  • Farmers who do not have the required information on prices prevailing in markets are often forced to sell at low prices.
  • They also do not have proper storage facilities to keep their produce for selling later at a better price.

Steps taken by the government in developing rural markets.

  • Regulation of markets to create orderly and transparent marketing conditions.
  • provision of physical infrastructure facilities like roads, railways, warehouses, godowns, cold storage, and processing units.
  • Cooperative marketing, in realizing fair prices for farmers’ products, is the third aspect of government initiative.
  • The fourth element is the policy instruments like
    • assurance of minimum support prices (MSP) for agricultural products
    • maintenance of buffer stocks of wheat and rice by the Food Corporation of India and
    • distribution of food grains and sugar through PDS.

Emerging Alternate Marketing Channels

  • It has been realized that if farmers directly sell their produce to consumers, it increases their incomes. Some examples of these channels are
    • Apni Mandi
    • Hadaspar Mandi
    • Rythu Bazars
    • Uzhavar Sandies.
  • Further, several national and multinational fast food chains are increasingly entering into contracts/alliances with farmers to encourage them to cultivate farm products (vegetables, fruits, etc.) of the desired quality by providing them with not only seeds and other inputs but also assured procurement of the produce at pre-decided prices.

Diversification into Productive Activities

Diversification includes two aspects -

  • Change in cropping pattern
  • A shift of workforce from agriculture to other allied activities (livestock, poultry, fisheries etc.) and non-agriculture.

Need for Diversification in rural areas

  • Reduces the risk of depending on farming for livelihood.
  • To provide productive sustainable livelihood options to rural people.
  • To provide supplementary employment during rabi season.
  • To remove surplus labor from the agricultural sector to non-farm sectors.

Animal Husbandry

  • Livestock production provides increased stability in income, food security, transport, fuel, and nutrition for the family without disrupting other food-producing activities.
  • Provides alternate livelihood options to small and marginal farmers including landless laborers.
  • A significant number of women also find employment in the livestock sector.

Poultry accounts for the largest share in the distribution of livestock in India.

Milk production in the country has increased by about ten times between 1951-2016. This can be attributed mainly to 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), processed, and marketed to urban centers through cooperatives.

In this system, the farmers are assured of a fair price and income from the supply of milk to urban markets.


pie title Fish Production Distribution "Inland Sources" : 65 "Marine Sector" : 35

Problems in this sector:

  • Low per capita earnings
  • Underemployment and rampant poverty among fishermen
  • High illiteracy and indebtedness
  • Absence of mobility to other sectors.


India has adopted the growing of diverse horticultural crops such as fruits, vegetables, tuber crops, flowers, medicinal and aromatic plants, spice, and plantation crops.

Role of horticulture:

  • The horticulture sector contributes nearly 1/3rd of the value of agriculture output and 6% of the Gross Domestic Product of India.
  • The economic condition of many farmers engaged in horticulture has improved and it has become a means of improving livelihood for many unprivileged classes.
  • 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.

Other Alternate Livelihood Options (Role of IT)

  • Governments can predict areas of food insecurity and vulnerability using appropriate information and software tools.
  • It also has a positive impact on the agriculture sector as it can disseminate information regarding emerging technologies and their applications,
  • It also has potential for employment generation in rural areas.

Sustainable Development and Organic Farming

Oraganic Farming: Organic farming is a method of agricultural production that focuses on cultivating crops and raising livestock in a way that is environmentally sustainable and minimizes the use of synthetic chemicals and artificial additives. It emphasizes natural and holistic approaches to farming, with the aim of promoting soil health, biodiversity, and the overall well-being of the ecosystem.

Benefits of Organic Farming:

  • 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 good returns on investment.
  • Organic agriculture also generates income through exports as the demand for organically grown crops is on the rise.
  • Organically grown food has more nutritional value than chemical farming thus providing us with healthy foods.
  • Since organic farming requires more labor input than conventional farming, it generates employment opportunities.
  • Finally, the produce is pesticide-free and produced in an environmentally sustainable way.

Challenges in Organic Farming:

  • Needs to be popularized
  • Inadequate marketing
  • Less output as compared to traditional farming
  • Shorter shelf life of products
  • Limited choice of produce.
Must See:
Rural Development Class 12 Important Questions & Answers
Human Capital Formation in India Class 12 Notes
Liberalization, Privatization, and Globalization Class 12 Important Questions Answers
Indian Economy 1950-1990 Class 12 Notes
National Income and Related Aggregates Class 12 Notes
Also Read:
Class 12 Important Questions
Class 12 Notes

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