Professional Documents
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Assigned project task is completed by going through various books, committee reports
regarding Indian agriculture & non-farming sector, also role of various financial institutions in
this grassland.
The project report entitled here is purely study project and does not include any
predictions or forecast regarding the future trends in the rural sector.
The project is based on various references taken from book & reports mentioned in the
bibliography at the end of the assign project.
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There is a big difference between underdeveloped and developed countries. The United
Nations group of experts states, “We have had some difficulty in interpreting the term
‘underdeveloped countries’. We frankly consider that, per capita real income is low when
compared with the per capita real incomes of the United States of America, Canada, Australia &
Western europe. Briefly a poor country.
The term ‘underdeveloped countries’ is relative. In practical, those countries which have
real per capita incomes less than a quarter of the per capita income of the United States, are
underdeveloped countries. But recently UN publication prefer to describe them as ‘Developing
economies’. The term ‘developing economies’ signifies that though still underdeveloped, the
process of development has been initiated in these countries. Thus, we have two economies
‘developing economies’ & ‘developed economies’. The World Bank issued in its World
Development Report (1991) classified the various countries on the basis of Gross National
Product (GNP) per capita. Developing countries are divided into: (a) Low income countries with
GNP per capita of $580 and below in 1989; and Middle income countries with GNP per capita
ranging between $ 580 and $ 6,000. As against them, the High-income Countries which are
mostly members of the Organisation for Economic Co-operation and development (OECD) and
some others have GNP per capita of more than $ 6,000.
The above data given in the table noted that in 1989 low income countries comprise
nearly 57 percent of the world population (2,948 million), but account for only 5 percent of total
world GNP. The middle income countries, which are less developed than the highly developed
than the low income countries comprise about 21 percent of world population but account for 11
percent of world GNP. Taking these two groups which are popularly described as developing
economies or ‘underdeveloped economies’, it may be stated that they comprise over three-
fourths of the world population but account for about one-sixth of the world GNP. Most
countries of Asia, Africa, Latin America and some countries of Europe are included in them.
Distribution of World Population & World GNP among various groups of Countries in
1989
Indiawith its population of 832 million in 1989 and with its per capita income of $340 is among
poorest of the economies of the world. It had a share of 15.9 per cent in world population, but a
little more than 1 percent of world GNP.
Three observationmade here regarding the U.N. classification of developed and
developing countries on the basis of per capita income. First, there is gross inequality of
incomes between the rich and the poor countries. Second, the gap in per capita income (and
naturally in the level of living) between the rich and poor countries is even widening over the
years—the annual rate of growth of per capita income of the rich countries was higher during
1965-89 as compared with the poor countries. More recently, the growth rate among low-income
countries has also shown an increase and if this is sustained, the gap may show a decline over a
period. Third, all the high income countries are not necessarily developed countries. For
instance, the high income oil-exporting countries have high per capita income but this is mainly
due to their exports of oil; really speaking, they are not developed economies. Recently, with a
decline in world oil prices, the GNP per capita has started showing a decline in this group.
Definition:
“A country which has good potential prospects for using more capital or more labour or more
available natural resources, or all of these, to support its present population on a higher level of
living or if its per capita income level is already fairly high, to support a large population on a
not lower level of living.” As per this definitions the problem of development is mainly the
problem of development is mainly the problem of poverty and prosperity. The basic criterion
then becomes whether the country has good potential prospects of raising per capita income, or
of maintaining an existing high level of per capita income for an increased population.”
5. Low rate of capital formation:Another basic characteristic of the Indian economy is the
existence of capital deficiency which is reflected in two ways— first, the amount of
capital per head available is low; and secondly, the current rate of capital formation is
also low. Following table reveals that gross capital formation in India is less than that of
developed countries.
Gross Domestic Investment and Saving (As per cent of Gross Domestic Product)
Gross Domestic Gross Domestic
Investment Saving
As per Colin Clark to maintain the same level of living a country requires an additional
investment of 4 percent per annum if its population increases at the rate of 1 percent per annum.
In a country like Indiawhere the rate of population growth is 2.11 percent (during 1981-91),
about 8 percent investment is needed to offset the additional burdens imposed by a rising
population. Thus, Indiarequired as high as 14 percent level of gross capital formation in order
that it may cover depreciation and maintain same level of living. A still higher rate of gross
capital formation alone can give a way for economic growth to improve living standard of the
population.
b. Classes of Village India: There were three distinct classes in village India: (i) the
agriculturists, (ii) the village artisans and menials, and (iii) the village officials. The
agriculturists could be further divided into the land-owning and the tenants. Labourand
capital needed was either supplied by the producers themselves out of their supplied by
the producers themselves out of their savings or by the village moneylender. These credit
agencies supplied finance at exorbitant rates of interest but since the moneylender and the
landlord were the only sources of credit, the peasants and even the artisans were forced to
depend on them. The village artisans and menials were the servants of the village. Most
of the villages had their panchayatsor bodies of village elders to settle local disputes.
The panchayats were the court of justice.
Statistics
Population: 966,783,171 (July 1997 est.)
Age structure: 0-14 years: 35% (male 173,420,822; female 163,433,648)
15-64 years: 61% (male 304,048,569; female 281,625,342)
65 years and over: 4% (male 22,536,104; female 21,718,686) (July 1997est.)
Population growth rate: 1.72% (1997 est.)
Birth rate: 26.19 births/1,000 population (1997 est.)
Death rate: 8.87 deaths/1,000 population (1997 est.)
Net migration rate: -0.08 migrant(s)/1,000 population (1997 est.)
Sex ratio: at birth: 1.05 male(s)/female
under 15 years: 1.06 male(s)/female
15-64 years: 1.08 male(s)/female
65 years and over: 1.04 male(s)/female
total population : 1.07 male(s)/female (1997 est.)
Infant mortality rate: 65.5 deaths/1,000 live births (1997 est.)
Life expectancy at birth: total population: 62.41 years male: 61.68 years female: 63.18 years
(1997 est.)
Total fertility rate: 3.29 children born/woman (1997 est.)
7. Fallow lands 26 9
2. Forest Resources: Forest are an important natural resource of India. They have a
moderating influence against floods and thus they protect the soil against erosion. They
provide raw materials to a number of important industries, namely, furniture, matches,
paper, rayon, construction, tanning, etc. The total area under forests was 67 million
hectares in 1986-87 which was about 22 percent of the total geographical area,a recent
estimate has put it at 75 million hectares or 23 percent of the total geographical area.
Forests in India are mostly owned by states (95%); a small portion is under the ownership
of corporate bodies and private individuals.
3. Water Resources: India is one of the wettest countries in the world, with average annual
rainfall of 1100 m.m. India’s water policy, since Independence, has mainly concentrated
on highly visible large dams, reservoirs and canal systems, but has ignored minor water
works such as tanks, dugwells and tubewells.
4. Fisheries: Broadly speaking, fishery resources of Indiaare either inland or marine. The
principal rivers and their tributaries, canals, ponds, lakes, reservoirs comprise the inland
fisheries. The rivers extend over about 17,000 miles, and other subsidiary water channels
comprise 70,000 miles. The marine resources comprise the two wide arms of the Indian
Oceanand a large number of gulf and bays along the coast. About 1.8 million fishermen
draw their livelihood from fisheries, though they generally live on the verge of extreme
poverty. Out of a total catch of 3 million tones of fish in 1988-89, over 1 million tones
came from inland fisheries and nearly 2 million tones from marine sources. India is the
seventh largest producer of fish in the world and is second in inland fish production,
which contributes 45 per cent of total production in the country. Fish production reached
the level of 5.4 million tonnes in 1997-98, comprising 3.0 million tonnes of marine
fishery and 2.4 million tonnes of inland fishery and is expected to reach 5.6 million
tonnes in 1998-99 with 3.0 million tonnes of marine fishery and 2.6 million tonnes of
inland fishery, respectively. During 1998-99, the export of marine products came down to
US$ 1,038 million from US$ 1,208 million during 1997-98
3. Transport: If agriculture and industry are regarded as the body and the bones of the
economy, which help the circulation of men and materials. The transport system helps to
broaden the market for goods and by doing so, it makes possible large-scale production
through division of labour. It is also essential for the movement of raw materials, fuel,
machinery etc., to the places of production. The more extensive and continuous the
production in any branch of activity the greater will be the need for transport facilities.
Transport development helps to open up remote regions and resources for production.
Regions may have abundant agricultural, forest and mineral resources but they cannot be
developed if they continue to be remote and inaccessible.
Roads & Road Transport: Road transport plays an important role in rural economy of
country, since it is most suitable for short distances. It has also the advantage of door-to-
door service, flexibility, speed and reliability. The utility of other modes of transport such
as railways, internal waterways, ports, etc. increase when linked to the road transport
system.Road construction and maintenance generate sizeable employment opportunities
—factor of great importance in the context of growing population and growing
unemployment in the country. The rural road network now connects about 70 percent of
our villages.
Inland water transport: Inland water transport is the cheapest mode of transport, for both
long and short distances, so far as the points of origin and destination of traffic are
concerned. It is cheap as energy consumption is low. India has over 14,500 kms. Of
navigable inland waterways comprising a variety of river systems, canals, backwaters,
creeks, etc.
Traditional
Industries:
Value
33.00 92.00 157.62 186.30 285.95 353.49
(Rs. crores)
Value
840.00 1740.00 2880.00 2953.60 3633
(Rs. crores)
Lakh Kgs. of
Sericulture 29.00 48.00 76.70 78.97 12836 13909
raw
silk
(value
63.00 131.00 345.69 310.14 868
Rs.crores)
(Rs. crores)
Lakh tonnes
Coir 1.50 1.85 1.49 1.83 2.11 2.63
of
fibre
Value
60.00 86.00 100.50 139.51 161.00
(Rs. crores)
Modern
Industries:
Value
1980.00 3250.00 6423.00 7668.51 12337
(Rs. crores)
Value
Sub-total (B) 9180.00 24885.00 56943.00 64768.51 167677 219968
(Rs. crores)
(Rs.
Total (VSI) 11353.00 29332.00 64733.87 73058.44 183949.95 245521.48
crores)
Traditional
Industries:
Value
N.A.
(Rs. crores)
Value
(Rs. crores)
Lakh Kgs. of
Sericulture 12.00 16.00 20.43 53.60 52.00 59.50
raw
silk
(value
Rs.crores)
(Rs. crores)
Coir Lakh tonnes of 5.00 5.59 5.89 8.00 5.46
fibre N.A.
Value
(Rs. crores)
Value
Sub-total (A) 102.21 130.72 168.41 203.80 246.74 253.00
(Rs. crores)
Value
(Rs. crores)
Rice 77.0 81.0 81.7 6.1 83.0 82.3 0.7 84.2 84.5 2.7
Wheat 62.1 65.0 69.4 11.8 68.5 65.9 (-) 5.0 70.0 70.6 7.1
Coarse 29.0 29.0 32.5 34.1 17.6 33.5 31.1 (-) 8.8 34.3 30.6
Cereals
Pulses 12.3 15.0 14.2 15.4 15.0 13.1 (-) 7.7 15.5 15.2 16.0
Total 180.4 193.5 199.4 10.5 200.0 192.4 (- 3.5 204.0 200.9 4.4
Foodgr-
ains
Oilseeds 22.1 23.0 24.4 10.4 25.5 22.0 (-) 9.8 27.0 25.3 15.0
Sugarca 281.1 270.0 277.6 (-) 1.2 280.0 276.3 (-) 10.5 300.0 282.7 2.3
-ne
Cotton* 12.9 13.0 14.2 10.0 14.8 11.1 (-) 21.8 14.8 13.3 19.8
The share of exports of agriculture and allied products in the total exports had declined
marginally, from 18.9 per cent during 1997-98 to 17.8 per cent during 1998-99. During the same
period, the value of exports of agriculture and allied products amounted to US$ 5,994 million,
showing a decline of 9.6 per cent from a level of US$ 6,634 million in 1997-98. Major items of
agricultural exports were basmati and non-basmati rice, raw cotton, meat, oilmeals, tea, coffee,
unmanufactured tobacco, cashew, spices, fresh and processed fruits and juices, vegetables and
marine products, etc.
Agricultural imports related to food and other items constituted 5.8 per cent of the total
imports during 1998-99, as against 4.0 per cent during corresponding period of the previous year.
Important agricultural items imported during the year were vegetable oils (edible), sugar, wheat
and fruits & nuts. During 1998-99, the volume of agricultural imports aggregated US$ 2,409
million, as against US$ 1,678 million during the corresponding period of the previous year,
recording a growth of 43.6 per cent.
Agricultural markets:
There were 7,062 agricultural regulated markets operating in India, 162 agricultural
commodities considered for grading standards and 3,253 cold storage with capacity of 8.73
million tonnes as on end March 1998. With the introduction of economic reforms, futures trading
was permitted in coffee, cotton, castor oil and jute goods during 1997-98. Earlier futures trading
were permitted in gur, potato, castor seed, pepper, turmeric, etc. Further, during 1998-99, futures
trading was introduced in oilseeds, oil cakes and edible oils. A network of co-operatives at the
national, state and primary level operates to help farm producers with access and further reach
for sale of produce. As per the Annual Report (1998-99) of Ministry of Agriculture, Government
of India, the value of agricultural produce marketed through co-operatives has registered a
remarkable growth of 21.6 per cent, from Rs.9,500 crore in 1994-95 to about Rs.11,551 crore in
1995-96.
5.5 Agriculture role in Indian Economy
Agriculture for Industrial Development:
Indian agriculture has been the source of supply of raw materials to our leading
industries. Cotton and jute, textiles, sugar, plantations— all these directly depend on agricultural
output. There are many industries, which depend on agriculture indirectly. Many of our small
scale and cottage industries like handlooms, oil crushing, etc depend on agriculture for their raw
materials.
But then, in recent years, agriculture is losing its significance to industries such as iron
and steel, engineering, chemicals, etc. However in recent years, the importance of food
processing industries is being increasing recognized both for generation of income and
generation of employment.
Agriculture in economic planning:
Importance ofagriculture in the national economy is indicated by many facts. For
example, agriculture is main support for transport sector as railways and roadways secure bulk of
their business from the movement of agricultural goods. Further it is seen that good crops
implying large purchasing power with the farmers lead to greater demand for manufactures and
therefore better prices. In other words prosperity of farmers is also the prosperity of the
industries and vice-versa. Agriculture is backbone of the Indian economy and the prosperity of
agriculture can also stand for the prosperity of the economy. At the same time it is true that per
capita productivity in agriculture is less than in the industry. Many scholars think that so long as
the Indian Economy is dominated by agricultural activity, per capita income will not rise to an
extent, which is necessary and desirable.
5.4 Capital Formation in Agriculture
The Gross Capital Formation in agriculture, at 1993-94 prices, increased from Rs.18,214 crore in
1994-95 to Rs.20,995 crore in 1997-98. The share of private sector investment in agriculture has
been registering
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