Rural economy | SACHI SHIKCHA

rural economy

Introduction: From the beginning, India’s economy was rural in nature and accounted for more than half of the country’s population. There are three sectors in the economy namely primary, secondary and tertiary with secondary and tertiary contributing more to the growth and development of India’s GDP.

The manufacturing and services sector involves very few people, but it provided more impetus than the primary sector. But the rural economy is encouraged because a lot of potential in the rural society is still untapped and it is important to meet the needs of the rural people because our villages are the real India. Gandhi Ji was a great proponent of village economy and grassroots growth.

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The rural economy deals with-

  • Agricultural and non-agricultural industry.
  • Economic growth, development and change.
  • Government policies on development, investment, regulation and transport.
  • Land use.
  • Housing etc.

Rural sector:

The rural sector is essentially agrarian in nature. This means that most people are involved in agricultural activities. Agriculture is the most important sub-sector of the rural economy, contributing around 37% of total rural GDP in 2019-20. Other activities include animal husbandry, animal husbandry, trade, arts and crafts, etc.

MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) has given many employment opportunities to people belonging to rural areas under programs such as PMGSY (Pradhan Mantri Gram Sadak Yojana) which has also boosted the economy by increasing the connectivity in rural areas. . About 225,000 kilometers of new roads have been built in the past five years, bringing the total of new roads to 681,000 kilometers. India’s rural ecosystem is large and growing. The rural economy contributed almost half of the country’s overall GDP in 2019-2020 and employs 350 million people (68% of the total workforce).

Changes and progress in the rural economy:

Over the past decade, the rural ecosystem has evolved and progressed significantly, driven by multiple government and private sector initiatives and the PPP model. There have been continuous improvements in physical infrastructure, connectivity with significant advances in digital infrastructure and digital literacy. This is attributed to the digital revolution which has facilitated efficient services with transparency and better handling of complaints. Training and development of farmers’ organizations of producers (OPF).

FBOs become essential access points for farmers and can generate awareness and support new initiatives. Initiatives like ENAM (e-commerce platform for agricultural products), better research, biotechnology, Krishi Vigyan Kendras have helped boost the rural economy. The need for faster and better access to cash and credit is growing. While cash is still the dominant payment method in rural India, Unified Payment Interface (UPI) transactions have doubled over the past year.

Pradhan Mantri Jan Dhan Yojana (PMJDY), which is part of the National Mission on Financial Inclusion, has opened more than 40 Cr bank accounts by 2021. Agriculture Infrastructure Fund and Pradhan Mantri MUDRA Yojana (PMMY) offer loans at low interest rates to farmers. NABARD has also helped to provide credit facilities to people in need. It provided credit to over 15 million people in 2020-21. Simplified loan and credit facilities are also driving the rural economy.

Therefore, better and efficient credit penetration is very evident. The rural economy is mainly based on agriculture. Horticulture, beekeeping and sericulture are other activities practiced by the people. Construction activities, employment in primary health care centers, village clinics, panchayats, workers in factories, small industries are non-agricultural activities in which people are involved. Other non-agricultural activities involve transportation and keeping stores.

Craft skills:

The villages have also retained their craftsmanship which not only makes them economically strong but also adds to the already rich and composite culture of the country. One of the many things that India boasts of is its generational skills in arts and crafts, which are more than visually appealing. Pottery and handicrafts are a perfect example. Many women’s SHGs (self-help groups) accumulate funds to credit members’ economic activities. FPOs and SHGs have boosted the rural economy by providing credit facilities.

Women also participated in agricultural activities. They are involved in post-harvest activities like sieving, grain storage, winnowing, etc. They even work in food processing industries near farms. Some programs like Deen Dayal Upadhyay Grameen Kaushal Yojna, Antyodaya Anna Yojna (AAY), Pradhan Mantri Awas Yojana – Gramin, National Rural Livelihood Mission, MGNREGA, Bharat Nirman, etc. are set up by the government for rural development of India.

The Shyama Prasad Mukherji Rurban Mission (SPMRM)

aims to develop these rural areas by providing economic, social and physical infrastructure. The Mission aims to develop 300 rural hubs over the next five years. The objective of the National Rurban Mission (NRuM) is to stimulate local economic development, improve basic services and create well-planned rurban clusters. The NSAP represents an important step towards the realization of the guiding principles of state policy enshrined in the Constitution of India, which enjoin the state to undertake, within its means, a number of measures of well-being.


These aim to ensure adequate livelihoods, raise living standards, improve public health, provide free and compulsory education for children, etc.

The International Labor Organization asserts that the rural economy holds significant potential to create decent and productive jobs and contribute to sustainable development and economic growth. It accounts for a significant share of employment and production in many developing countries. The rural economy must be encouraged to eradicate poverty and promote growth and development. Per capita income must be targeted to ensure development for all.

This is recognized in the 2030 Agenda for Sustainable Development, which aims to increase the focus on rural development and agriculture and food security in particular. Thus, the rural economy is encouraged by the government but there are still gaps in the implementation of the programs.

The discrepancies must be examined and addressed in order for growth and development of the economy to take place. The rural economy needs to be primarily targeted because of the large number of people involved and also to harness India’s demographic dividend which is going to be in our favour. Science and technology as well as research and development driven growth must be targeted to ensure promising results.

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