Rural development: Strategy for incorporating it into India's overall economic development agenda.

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Rural development: Strategy for incorporating it into India's overall economic development agenda.

Presented By

Anant A. Tapadia

PGDCM class of 2005

Indian Institute of Management Calcutta

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Executive summary

The rural economy, as much as urban economy, is an integrated part of the overall Indian economy. Any talk of overall development without rural development is flawed and unsustainable as far as India is concerned. If we consider these as two parts of the overall national structure and try to understand the effects different policies have on them and so on the overall economy (measured by development indicators), we will realize that efforts put in one area will not necessarily mean endangering the other. There is an interrelationship between the rural and urban development and so if we frame our policies properly, invest wisely and utilize resources efficiently then there can be an all round development.

There is an imbalance in the way the Indian economy functions presently. The main reason for it is that resources are being transferred from urban economy to rural economy just for short term political motives. This is affecting both areas, not letting rural economy develop on its own and hampering growth and investments in urban economy.

A proper planned approach of rural development which will include the Center (having the hold and power to enforce regulatory frameworks), panchayats and key village personals (who enjoy the faith of the village people), NGOs (who have the right intent and deep reach) and private companies (who have the resources and can efficiently utilize conditions) will not only help reduce this imbalance but will have a multiplier effect on the overall economy.

Development of Industry sector will play an important role in such a scenario as it can provide a link between rural and urban development. This has been explored further. Also there is a need for development of non-agricultural sectors in a rural economy to hedge monsoon and other agricultural risks. Monetary measures may also have to be taken initially and it may lead to temporary problems like devaluation, inflation etc.

        By aligning the goals of the two parts we can convert this seemingly zero sum game into a win-win situation. It would be a very long drawn and difficult battle with conventions but the reward is worth the effort. This paper touches upon the plan and discusses a few issues involved.

Introduction 

India Shining, but only 30 %. Even though the NDA government did good work there's no disputing the fact that India can't develop into a modern economy while 300 million people subsist on less than $1 a day. The middle and upper classes thrived as growth averaged 6.2% annually in the 1990s. But far from the marble-and-glass research and office parks in Bangalore, Bombay, Hyderabad, and Delhi, 70% of Indians live on agriculture, a sector that has stagnated. Nearly 40% of Indians remain illiterate. Indeed, through the hot growth years, the gaps between rich and poor and between urban and rural areas grew dramatically wider. This cannot be called development. Given such unbalanced growth, many experts say it would have been difficult for India to sustain its success without a dramatic change in policy.

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This paper proposes a major fundamental change in the way Indian economy works, so as to help ‘rural development’ in developing India. In this paper we first try to understand the whole Socio-Economic structure of India. The factors affecting the rural economy have been discussed in the first section. Then we will discuss the change agents- those who have the say or will or resources to bring about the change, then the proposed structure/model, how and why it will work. Because of the space constraints the model couldn’t be discussed in detail but we have tried to give an overview.

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