Rural Business and Economy

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The growth of Rural Business and Economy of India and its subsequent development is predicated to a large extent upon the development of its 700-million strong rural population. The policy statement for the Rural Business and Economy is drafted according to the needs of rural India since majority of the population lives in about 600,000 small villages. The main livelihood of this section of Indian population is primarily agriculture and its allied area.

A major portion of India’s current agricultural labor force had to move to non-agriculture sectors for making a livelihood. The main challenge for the Indian Rural Business and Economy is to manage the transition of the 80% of the rural population from a village-centric agriculture-based economy to an industry based village economy. The Ministry of Rural Infrastructure under Government of India and the Planning Commission of India, envisages the development of Rural Business and Economy of India on the following lines -

  • Irrigation
  • Flexible financial loans and grants
  • Subsidies
  • Roads
  • Housing
  • Drinking water supply
  • Rural electrification
  • Telecommunication
The Government of India has launched “Bharat Nirman” program for the development of rural infrastructure in India. Further, it has also initiated programs for the development of industries in rural India. Some of the notable programs taken up so far are as follows -

  • To connect 66,800 habitations with population over 1000, with all modern metal roads
  • Total investment of ` 1,74,000 crore envisaged under “Bharat Nirman”, investment on rural roads estimated to be at ` 48,000 crore
  • To facilitate a corpus of ` 8000 crore to Rural Infrastructure Development Fund (RIDF)
  • To construct additional 1,46,000 Km of new rural roads
  • To repair and modernize 1,94,000 Km of existing rural roads
  • To add to clean drinking water facility
  • To engage faster electrification and telecommunication process
The main bottlenecks for the development of Rural Business and Economy in India are as follows -

  • A set of basic facts defines the constraints within which the economic growth and development of India’s rural population must be addressed immediately. Fundamentally, they relate to resource constraints, the nature of infrastructure, and the future trajectory of the geographical distribution of the population
  • Infrastructure investment is irregular and inadequate to support 600,000 villages and the average cost of providing infrastructure is inversely related to the scale of the operation
  • These services include, at a minimum market access, educational, health, financial, entertainment, transportation, and communications. Further, services depend on the availability of infrastructure
  • Limitations on the financial and other resources available for providing infrastructure made it impossible to provide infrastructure at every village in India. Even if they were provided at every village, it will not be commercially sustainable
  • The basic demography of population distribution will change once India shifts from being agriculture based country to industry based nation

(Last Updated on 19 May 2011)