Issues of Rural Development


  • Rural development is the process of improving the quality of life and economic well-being of people living in rural areas, often relatively isolated and sparsely populated areas.
  • Rural development has traditionally centered on the exploitation of land-intensive natural resources such as agriculture and forestry. However, changes in global production networks and increased urbanization have changed the character of rural areas. Increasingly tourism, niche manufacturers, and recreation have replaced resource extraction and agriculture as dominant economic drivers.
  • Good quality infrastructure is critical to sustainable growth, especially for rural areas.
  • As over 60 per cent of the population lives in rural areas, with low levels of per capital income, there is need to impart greater attention in improving rural infrastructure.
  • Currently the rural infrastructure is inadequate to support over 600,000 villages. Investment in rural transport infrastructure stimulates the rural economy and hence acts as a tool for poverty reduction.
  • The services in the rural sector, like market access, education, health, and communication depend on the availability of infrastructure.
  • A common observation has been that the rural areas with better connectivity also lead on the development scale. Inadequate transport infrastructures in rural areas cause lack of mobility and constraint to rural development.
  • However, providing infrastructure entails huge dose of capital investment. Rural infrastructure growth is thus dependent on financial resources.
  • Improved transportation infrastructure and services undoubtedly contribute to reduced costs of transport, market expansion, improved productivity and competitiveness. Still, within the economic function of transport, the sector contributes to pro-poor growth patterns by targeting transport interventions to support the development of markets and businesses that serve and employ the poor.
  • To address the issue of rural infrastructure the government launched the Bharat Nirman programme and there are independent schemes to boost Road building, Irrigation, Housing, Water Supply, Electrification, and Telecommunication Connectivity. In this issue we focus on the relevance of rural infrastructure in raising economic development in rural areas.
  • There has been a virtual telecom revolution in the last ten years connecting all villages. In fact the growth of rural teledensity is remarkable and is growing at a much faster rate than urban teledensity.
  • Information Communication Technology, (ICTs) is known to be a facilitator of socio-economic development. Rural areas which lag behind facilities by way of health, education, financial services and employment avenues are using the benefits of ICT.
  • Certainly, the growth of rural telephony, especially mobile telephony has brought improved connectivity and this has contributed significantly to socio-political and economic mainstreaming of rural India in the past decade.

The importance of infrastructure to economic development: an example from China

  • The fact that infrastructure provides critical support to the growth of an economy can be clearly seen when bottlenecks arise. One of the most striking examples is that of China’s intercity transport system, with its links to the supply of raw materials, coal, and electricity.
  • The coverage of China’s intercity transport networks is one of the thinnest in the world: the total route length per capita or per unit of arable landfor highways or railwaysis similar to, or lower than, that in Brazil, India, and Russia. This has resulted mainly from chronic underinvestment in China’s transport infrastructure. China’s transport investments amounted to only 1.3 percent of GNP annually during 1981-90, a period of rapid growth in transport demand.
  • Since the onset of China’s open door policy in 1979, economic growth averaging 9 percent a year has resulted in an unprecedented expansion in intercity trafficwith growth averaging 8 percent a year for freight and 12 percent a year for passengers.
  • This traffic growth has imposed tremendous strains on the transport infrastructure, as manifested by the growth of bottlenecks in the railway network, the severe rationing of transport capacity on railway lines, and the poor quality of service experienced by shippers and passengers.
  • Transport shortages have adversely affected the supply of coal in particular. Coal is the source of some 73 percent of China’s commercial energy and represents about 43 percent of the total tonnage of freight handled by the railways.
  • The shortage of coal has in turn adversely affected supplies of electricity, about 76 percent of which is generated by thermal plants. In 1989, China was experiencing a shortfall in available power of about 20 percent of industrial electricity requirements. Central and local authorities established quotas for allocating electricity and rationed new connections, but power cuts have nevertheless been frequent.
  • A conservative estimate is that the annual economic costs of not having adequate transport infrastructure in China during the past several years amount to about 1 percent of China’s GNP.


  • Rural infrastructure is not only a key component of rural development but also an important ingredient in ensuring any sustainable poverty reduction programme.
  • The proper development of infrastructure in rural areas improves rural economy and quality of life. It promotes better productivity, increased agricultural incomes, adequate employment; etc. Development of rural areas is slow due to improper and inadequate provision of infrastructure with compare to urban areas. That’s why rural share in GDP is always less.
  • Infrastructure is important for the services it provides. It is an important input to the production process and raises the productivity of other sectors.
  • Infrastructure connects goods to the markets, workers to industry, people to services and the poor in rural areas to urban growth centers. Infrastructure lowers costs, enlarges markets and facilitates trade.
  • Thus, infrastructure provides services that support economic growth by increasing the productivity of labor and capital thereby reducing the costs of production and raising profitability, production, income and employment.

Areas of Rural Infrastructure 

  • A set of basic facts define the constraints within which the economic growth and development of India’s rural population must be addressed. Fundamentally, they relate to resource constraints, the nature of infrastructure, and the future trajectory of the geographical distribution of the population.
  • These services include, at a minimum market access, educational, health, financial, entertainment, transportation, and communications. Further, services depend on the availability of infrastructure.
  • 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.
  • 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 geographical structure of population distribution will change once India shifts from being agriculture based country to industry based nation. The Government has launched “Bharat Nirman” for the development of rural infrastructure. Plans proposed for the development of India Rural Infrastructure are –
  1. Irrigation,
  2. Roads,
  3. Housing,
  4. Water Supply,
  5. Electrification,
  6. Telecommunication Connectivity.

Growth of financial infrastructure in rural India

  • Financial Infrastructure: It comprises the underlying foundation for a country’s financial system, including all institutions, information, technologies, rules and standards that enable financial intermediation.
  • Poor financial infrastructure in many developing countries poses a considerable constraint upon financial institutions in expanding their financial services to the underserved segments of the society. It also creates risks to financial institutions and resultant lack of adequate credit facilities leads to financial crises.

Interventions for Achievement of Financial Inclusion

Goal of Financial Inclusion (F.I.) is difficult, but not unattainable:

  1. State Driven Interventions by Central, State and Local Governments.
  2. Voluntary Interventions by Banks, Micro-finance Institutions (MFI), Cooperatives, Self Help Groups (SHGs) and other social organizations.


  1. Harnessing advances in the Information & Computer Technology (I.C.T.), like Smart Cards, Internet Kiosks and Cell Phone Messaging.
  2. Developing, testing and implementing appropriate products and suitable delivery channels for financial services to be extended.
  3. Attention to the 5 Ps of marketing-Product, Price, Place, Process and Promotion.

Boosting Rural Development through Agri-infrastructure

  • Most of the perishable items are produced in the villages which remain confined to these due to the absence of road networks. The existing road and rail facilities are inadequate. Most of the areas which produce good quality fruits are still inaccessible. This coupled with the rough terrain of the area and lack of regulatory markets make the farming community to suffer a lot at the hands of the local traders.
  • Farmers have no information about the market price. There is an urgent need to establish suitable infrastructure like the use of information communication technology (ICT) for benefit of farming community.
  • The technology like e-kiosks and e-choupals of Indian Tobacco Company in Madhya Pradesh and other states of the country are doing a great job. Each electronic kiosk is connected to a number of villages.
  • The villagers can obtain any information easily from these kiosks regarding various aspects of crop production. Communication with different markets and among different stakeholders is also possible through the use of ICT.
  • Irrigation is another area which requires infrastructure upgradation. With suitable infrastructure the irrigation potential can be increased. The utilization of available water for agriculture too is far from efficient. Wastage of water is huge in surface irrigation systems.
  • The inability to conserve adequate water and curb its indiscriminate utilization, including rampant wasteful exploitation of water is also a cause of concern. The problem is more severe in dry land area of the country which accounts for more than 60 percent of the total cultivable area. Suitable water conserving infrastructure like the drip irrigation and sprinkler irrigation should be installed in these areas.
  • Water conservation techniques like water sheds, rainwater harvesting and other measures can bring additional area under irrigation in these water scarce regions. Similarly we can also invest in creating community grain storage Banks where the farmers can store their excessive food grains. This will also prevent them from distress selling as they can wait for the right time to sell their produce.
  • To meet the energy needs of farming sector solar energy can be used and for that solar panels should be set up jointly in the villages to cater to the energy requirements of the farmers.
  • There is a need to invest in developing infrastructure of agricultural supply chain. Moreover, the government has emphasized on increasing investments of private sector in marketing, transportation and storage facility of fast degradable agricultural products.
  • The private sector should also come forward and invest in creating agriculture assets. They can use it on a built operate transfer basis.
  • At the same time greater emphasis has to be laid on research infrastructure by establishing a number of new institutes, national research centers for several crops and livestock to address the local problems and come out with site specific solutions.
  • To conclude, infrastructure potentially can influence rural economic performance through three ways. These are
  1. Individual development by the increased use of existing resources-land, labor, capital, etc.
  2. Bringing additional resources to rural areas and
  3. Socio-economic development by creating assets and making rural economies more productive.
  • I Suvrathan, Secretary in the ministry of Food Processing has rightly said, “ Opportunities given to farmers to run post harvest facilities all by themselves in a professional way will empower them, as farmers can hold on to their harvest more than 24 hours and have a say in fixing price for their produce.

BharatNet Programme of India for Rural Connectivity

  • BharatNet focuses on bringing high-speed broadband connectivity to rural India. In collaboration with Bharat Broadband Network Limited (BBNL), the Government has taken a step forward to connect nearly 2,50,000 Gram Panchayats.
  • BharatNet for various e-Government services like tele-medicine, tele-education, e-Health, and e-Entertainment, etc. the project is meant to create local employment opportunities and drive socio-economic growth in the area.


  1. Connectivity of Gram Panchayat level offices like schools, panchayat offices, post offices etc
  2. Services like certificates, telehealth, e-Education, agriculture information etc. to rural population
  3. Help in reducing the digital divide across socio-economic strata
  4. Learning & employment opportunities for rural youth

Benefits: Majority of Indians live in rural areas and therefor the initiative will serve as a backbone for transforming India into a digitally empowered knowledge economy, by ensuring internet service to one and all

Government Programmes towards Rural Infrastructure

  • Government of India continued to implement specific infrastructure strengthening programmes in sectors like irrigation, rural electrification, rural connectivity and rural drinking water supply.

Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA):

  • Mahatma Gandhi National Rural Employment Guarantee Act, aiming at ensuring 100 days’ guaranteed employment for every rural household in a financial year – has put a major emphasis on creation of durable community assets as well as social and economic infrastructure in rural areas.
  • Since its inception, in September 2005, the program has been instrumental in enhancement of rural livelihood opportunities on a sustained basis, by developing need-based rural infrastructures

Pradhan Mantri Gram Sadak Yojana and Rural Roads

  • Rural Road Connectivity is not only a key component of Rural Development by promoting access to economic and social services and thereby generating increased agricultural incomes and productive employment opportunities in India, it is also as a result, a key ingredient in ensuring sustainable poverty reduction. Notwithstanding the efforts made, over the years, at the State and Central levels, through different Programmes, about 40% of the Habitations in the country are still not connected by All-weather roads.
  • It is well known that even where connectivity has been provided, the roads constructed are of such quality (due to poor construction or maintenance) that they cannot always be categorised as All-weather roads.
  • With a view to redressing the situation, Government have launched the Pradhan Mantri Gram Sadak Yojana on 25th December, 2000 to provide all-weather access to unconnected habitations.
  • The Pradhan Mantri Gram Sadak Yojana (PMGSY) is a 100% Centrally Sponsored Scheme. 50% of the Cess on High Speed Diesel (HSD) is earmarked for this Programme.

PMGSY Programme Objectives

  • The primary objective of the PMGSY is to provide Connectivity, by way of an All-weather Road (with necessary culverts and cross-drainage structures, which is operable throughout the year), to the eligible unconnected Habitations in the rural areas, in such a way that all Unconnected Habitations with a population of 1000 persons and above are covered in three years (2000-2003) and all Unconnected Habitations with a population of 500 persons and above by the end of the Tenth Plan Period (2007).
  • In respect of the Hill States (North-East, Sikkim, Himachal Pradesh, Jammu & Kashmir, Uttaranchal) and the Desert Areas (as identified in the Desert Development Programme) as well as the Tribal (Schedule V) areas, the objective would be to connect Habitations with a population of 250 persons and above.
  • The PMGSY will permit the Upgradation (to prescribed standards) of the existing roads in those Districts where all the eligible Habitations of the designated population size have been provided all-weather road connectivity.

Rural infrastructure key to inclusive growth

  • The recurrent theme of public discourse during the last one decade has been ‘inclusive growth.’ Inclusive growth is essential for social and economic equity. Since India’s majority of people live in villages, it is easily seen that rural infrastructure is a major component for ensuring inclusive growth.
  • Development of Infrastructure envisages creation of values through engineering consultancy.
  • Rural development entails structural changes in the socio-economic situation to achieve improved living standard of low-income population and making the process of their development self sustained. It includes economic development with close integration among various sections and sectors; and economic growth, specifically of the rural poor.
  • In fact, it requires area based development as well as beneficiary oriented programmes. No wonder, rural development is one of the main and important tasks of development planning in India.
  • Development of rural areas is slow due to improper and inadequate provision of infrastructure with compare to urban areas. That’s why rural share in GDP is always less. The planning and development of human settlements and provision of required infrastructure are much better in urban areas.
  • Rural population migrates to urban cities for employment opportunities and better facilities. Besides, the limited capacity of rural economy to accommodate the increasing population sends the labour force as surplus to migrate large cities.
  • There is then a need to encourage reverse migration to rural areas through proper development of rural infrastructure and basic amenities by creation of income generation avenues and improving the quality of life Rural infrastructure is not only a key component of rural development but also an important ingredient in ensuring any sustainable poverty reduction programme.
  • The proper development of infrastructure in rural areas improves rural economy and quality of life. It promotes better productivity, increased agricultural income.
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