6 Salient features of rural economy

In the previous blog, we have learned about the important profile of the rural communities, in the following article, we shall learn about salient features of rural economic structure. The most important aspects of a rural economy are related to the conditions of farming, which is the main source of income. The rural economy is made up of both farming and non-farming activities, which are called the "farm and non-farm economy.


  1. Agricultural Sector
  2. Dryland agriculture 
  3. Allied Agriculture Activity
  4. Non-Agriculture Activity
  5. Rural Asset and Poverty
  6. Rural Credit Market
  7. Conclusion

6 Salient features of the rural economy

  1. Agricultural Sector
  2. Dryland agriculture 
  3. Allied Agriculture Activity
  4. Non-Agriculture Activity
  5. Rural Asset and Poverty
  6. Rural Credit Market

1-Agricultural Sector

The agricultural sub-sector is made up of things like crop husbandry, animal husbandry, dairying, fisheries, poultry, and forestry. The non-agricultural economy is made up of things like industry, business, and service businesses. khadi, handloom, and other things made by people in their homes and on their farms are examples of things that are made this way. People who do business are small businesses that sell general goods, like small shops and petty traders. People who do service are people who transport goods and people who communicate, like bankers and people who sell the farm and non-farm produce. Farmers, artisans, traders, money lenders, and people who provide services like transportation and communication, processing, banking, and education and extension are some of the main people in the rural sector. Agriculture is the backbone of the Indian economy, even though it only makes up a small percentage of the country's GDP. This is because it makes up a lot of jobs and helps people make a living. A steady drop in the share of agriculture in the gross domestic product has been going on since 1982-83, when it was 36.4 percent. In 2006-07, it was 18.5 percent. Yet, this sector still employs more than half a billion people and provides jobs for more than half of the people who work. This means that the value of goods and services made by the agricultural sector has dropped much more than the number of people who depend on this sector has dropped.
It is also an important source of raw materials and demand for many industrial products, such as fertilisers, pesticides, agricultural tools, and a lot of other things people buy. People who worked in agriculture didn't grow as quickly as people who worked in businesses that didn't work in agriculture. Since 1981-82, the gap between the growth of agriculture and the growth of the non-agriculture sector has gotten bigger. This is because the growth of industry and services has sped up.

2-Dry Land Agriculture

Dryland farming isn't usually thought of when people think about farming as a whole. In India, it is thought that 410 million people live on the dry land and make a living. Dryland farming is another economy in rural areas that is closely linked to the "poverty geography" of the country. There are parts of the drylands where even farming with rainwater is difficult. The heart of the drylands is in the semi-arid zones, which aren't as dry as the arid parts. Drylands make up more than 70% of the land that can be used to grow food in this country. Even though they have a lot of problems, they still produce about 42% of the country's food. People say that 83 percent of sorghum, 81 percent of pulses, and 90 percent of oilseeds are grown in these places.
Most people who live in rural areas in dry areas make money from natural resources, non-natural resources, and migrant jobs. These things have stayed the same for a long time because of the green revolution policy. The nature of agricultural strategy changed a lot from the early plans to the current ones. These have a big impact on the way we can help people in rural areas make a living. The strategy of the green revolution and the spread of irrigation was talked about.
This undifferentiated agriculture policy doesn't give enough attention to the needs or problems of farmers who grow crops on dry land. Many of the technologies, subsidies and public support systems that are available under this policy don't work for farmers who grow crops on dry land, which leads to inequity (minimum support price and procurement price mechanisms). Similar trends can be seen in agriculture research, technology development, and investment in research and development.

3-Allied Agricultural Activities

Examples of allied activities, which are closely linked to farming, include animal husbandry, horticulture, pisciculture, apiculture, and sericulture. These activities provide a small or significant source of income for rural communities.

4-Non-agricultural Activities

This is a big part of the workforce in rural areas. It makes up 20% to 25% of the rural workforce. This includes the making of tools and the work of artisans and craftsmen who help with agricultural work.
Rural industries that fall into the Khadi and village industries are an important source of jobs for people in the area. Another thing is that some of the people work in rural services like health care, education, and market places, as well A lot of people work in rural industries. They make up 3.8% of the rural workforce and more than 3% of the total workforce of the country in 2001.

5-Rural Assets and Poverty

The picture of what people have in rural areas isn't right. Over 78% of the farmers who fall into the category of marginal and small operators work less than one-third of the land. It turns out that less than two percent of the growers who own more than 10 hectares of land each cultivate about 29 percent of the land each.
It's more common for people to own more land in states like Punjab, Haryana, and Gujarat. Bihar and West Bengal are both in the east. In both states, the size of these holdings is very small when they are being used. It should be kept in mind that the structure of holdings in different parts of the country is different because of how many people live there, how much land there is, how much soil there is, and how much water there is. Also, it might be more profitable and productive to have a small amount of land in an area that is irrigated than to have a lot of land in an area where farming is mostly dependent on rain.
People's jobs, environment, and ethnicity all play a role in how likely they are to be poor. The type of job a person has determines whether or not they are poor or not. People who live in rural areas are more likely to be poor because they don't own land and grow low-value crops for their families to eat. People who are self-employed artisans or service providers and cater to low-income customers and markets are also more likely to be poor because they don't have a lot of money and don't have a lot of skills (e.g people affected by the breakdown of traditional occupations because of macroeconomic changes, construction of big projects, the decimation of forests, etc).

6- Rural Credit Markets

Credit is needed in rural areas for things like buying things and making things. Needs like food, clothing, shelter and education can't be met without small amounts of money. Credit requirements are usually met by informal money lenders, like shaukars or money lenders. However, there is more and more evidence that the growing SHG movement in many parts of the country, especially in the south, is able to get into traditional money lenders. It's not as much as before, but it's getting bigger. The traditional institutions that have been around for a long time are still around because they have quick and easy access to credit, as well as informal connections with their clients that could be caste, family, or village-based. There has been a lot of work to get credit from formal institutions, but there have been few of them and a lot of bureaucratic problems in the way.
People started to use formal banking institutions more after 1969 when the government took over the banks. This led to a lot of growth in the 1970s and 1980s. Even so, there has been a decline in the number of formal banking services in rural areas since the 1990s Rural areas also saw a drop in the flow of credit.


Our study of rural communities has shown us how they can be viewed by looking at things like their population size, structure, social and economic way of life, and more. In addition, we have seen that even though the people are very different, there are some things that they have in common, like the social system of caste and inter-caste relations that are very closely linked to their economic activities. The lower you are on the social ladder, the less money and assets you have. Developing the livelihoods of farmers and other people who work in agriculture and related fields is important for the development of communities at the edges of the world. This is especially true in the dryland region. We have also learned that the living conditions of these communities can change both from outside and inside factors, especially from government policy changes. If you want to help people in a meaningful way, you should think about these things.


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