(The Gist of Kurukshetra) Rebooting Rural Economy

(The Gist of Kurukshetra) Rebooting Rural Economy

Rebooting Rural Economy


  • The economic behaviour of the developed and developing countries have been hugely hit by the pandemic COVID-19. India, with its visionary steps in all segments of the economy, has been taking many bold steps to sustain the economy even during the crisis. 
  • In view of the fact that India has an estimated 497 million workers, of which about 94 percent work in the private or unorganised sector, the government is emphasising more on the unorganised sector which primarily affects the rural economy.
  • With many strategic and utilitarian schemes aimed at rebooting and boosting the rural economy to achieve doubling of farmers’ income, the government has now written a new chapter in the history of Indian economy by launching Atma Nirbhar Bharat Abhiyaan (Self-Reliant India Mission) with a huge package of Rs.20 lakh crore to accelerate the pace of growth in rural economy by introducing systemic changes in the near future.

COVID-19 Pandemic and the Economy:

  • With the outbreak of COVID-19 pandemic, the world has witnessed unprecedented crisis in the areas of consumption, manufacturing, exports, and capital flows, which has posed numerous challenges before the economy in general and the rural economy in particular. 
  • Considering the impact of slowdown on these four issues, the Government of India launched ‘Self-Reliant India Mission’ with special focus on health care, employment and financial support. The package provides enough budget for emergency healthcare requirements of the hospitals, safeguarding the employees and employment during the crisis as well as post-crisis, and for the support of the poor and vulnerable sections in the form of direct financial assistance, food and livelihood support.

Doubling of Farmers’ Income (DFI) by 2022:

  • The Government of India has set a target of doubling the farmers’ income (DFI) by the year 2022. To administer this strategically, the Government has set up the Inter-Ministerial Committee on Doubling Farmers’ Income (DFI) to examine and prepare the blueprint considering all the issues and challenges relating to DFI. The Committee identified seven sources to double farmers’ income by 2022 which include;
  • Within the Domain of Agriculture:
  • a) Improvement in crop productivity;
  • b) Improvement in livestock productivity;
  • c) Efficiency in the use of resources/ savings in the cost of production;
  • d) Increase in the cropping intensity;
  • e) Diversification towards high value crops; and
  • f) Improvement in real prices received by farmers.
  • Outside the Domain of Agriculture Shift from farm to non-farm occupations (like backyard poultry; goat rearing; fisheries; dairy; vegetables-fruit, and food processing, etc. which are high value-yielding).

This whole DFI drive is challenging but it is certainly attainable if 

  • development initiatives
  • technology and 
  • policy reforms in agriculture are focused to achieve increase in the farmers’ income. Several steps have already been taken to implement the recommendations of DFI Committee (to double the farmers’ income). 

These include:

  • Advocating progressive market reforms through the State Governments and Union Territories;
  • Supporting contract farming through the State Governments by promulgating of Model Contract Farming Act, Up-gradation of Gramin Haats to work as centers of aggregation and for direct purchase of agricultural commodities from the farmers;
  • Providing e-NAM to farmers which is an electronic online trading platform;
  • Distributing soil health cards to farmers so that the use of fertilizers can be rationalised;
  • Increasing water efficiency through Pradhan Mantri Krishi Sinchayee Yojana (PMKSY)-"Per drop more crop";
  • Better insurance coverage to crops for risk mitigation under Pradhan Mantri Fasal Bima Yojana (PMFBY);
  • Making loans available to farmers at a reduced rate of 4 percent per annum and extending the facility of Kisan Credit Card (KCC) for animal husbandry and fisheries related activities to the farmers;
  • Increase in the Minimum Support Price (MSPs) for all Kharif and Rabi crops; and
  • Providing old age pension of Rs. 3000 to the eligible small and marginal farmers and cover around 5 crore beneficiaries in the first three years.

Aatmanirbhar Bharat Abhiyaan:

  • The concept of Atma Nirbhar Bharat Abhiyaan was integrated with the announcement of the economic package to tackle the coronavirus pandemic on 12:’ May 2020. The policy initiatives of the mission were announced by the Finance Minister in five tranches from 13th May to 17th May, 2020. Under the mission, special provisions have been made for the poor, including migrants and farmers. Some of these are listed below.
  • 25 lakh new ICis3n Credit Cards sanctioned with a loan limit of Rs.25000 crore. It will, in turn, incentivise the rural farmers to continue their farming without being affected fay the pandemic;
  • Approximately 63 lakh loans or worth Rs.86,600 crore approved in agriculture between March, 2020 to April, 2020;
  • Further, the support of Rs.4,200 crore is also provided under Rural Infrastructure Development Fund to states during March, 2020 for rural infrastructure;
  • The government has also announced Rs. 3 lakh crore Emergency’ Credit Line Guarantee Scheme (ECLGS) especially for the Micro, Small and Medium Enterprises (MSMEs) to come out of the stress created by the pandemic. Through this scheme, loans will be sanctioned by 12 public sector banks and 16 private sector banks to the MSME borrowers.
  • Along with that, various benefits have also been given under the MUDRA scheme. Rs.1500 crore Shishu loan shall be provided along with an interest discount of 2 percent for fast recipients for a period of 12 months. This move will encourage the entrepreneurs to invest in the Shishu industries.
  • MGNREGA has emerged as an efficient tool to fight the unemployment crisis especially in the rural sector. Recently, the wage rate under MGNREGA has been increased to Rs. 202 (from Rs.182). This will benefit approximately 13.62 crore families. Awareness drives are being undertaken to enroll returning migrants under MGNREGA;
  • Moreover, free food grain supply (5 kg of grains per person and1kgChana per family per month) is also being provided to the migrants. The free food grain supply is also extended to the existing beneficiaries of Pradhan Mantri Garib Kalyan Ann Yojana in addition to their existing entitlements. Migrant workers are seriously affected by the outbreak of novel CoronaVirus as majority of them were forced to go back to their native places without any certainty about the source of income to meet their needs. Keeping this under consideration, Government of India has made provision for migrant workers to access the Public Distribution System (PDS) through One Nation One Card scheme;
  • Through Pradhan Mantri Kisan Yojana, Rs.2000 has been transferred directly to the 8.7 crore farmers. This move will provide a good amount of financial support to the rural farmers;
  • Another point that has been the main focus of the current government is ‘Vocal for Local’. Finance Minister Smt. Nirmala Sitharaman, in her policy briefing, stated that the locally available product will be given importance in order to promote the rural economy. Rs.10000 crore has been assigned to the unorganised food processing industries in this context. Therefore, it is a good initiative to develop the rural economy and thus improve the income of the farmers.

Way Ahead:

  • Despite the substantial rise of urbanisation, nearly more than half of India’s population is projected to be rural by 2050. Therefore, boosting the rural economy is a key to overall growth and inclusive development of the country. The government is revamping its strategies to ensure the productivity of the schemes enabling the nation to realise the outcome of Atma Nirbhar Bharat Mission. Some of the crucial areas which require immediate reforms include:
  • Streamlining the MGNREGA so as to provide maximum benefit to the poor by avoiding any sort of mismanagement in implementation and execution. With government’s emphasis on Aadhar-linked Direct Benefit Transfers (DBT) through Jan Dhan bank accounts, the mismanagement has been largely taken care of;
  • Grooming and promoting youth as Entrepreneurs or Self-employed (YSE), who are linked to local livelihood eco-systems;
  • Promoting backyard poultry and goat rearing with provisions for improvement on sheds, vaccines and other support;
  • Encouraging Farmer Producer Organisation (FPOs) to support Small and Marginal Farmers (SMFs);
  • Working with farmers towards a new paradigm by shifting from intensive chemical-based agriculture to adopting sustainable eco-friendly agriculture practices;
  • Connecting villages physically and digitally is essential for village enterprise to prosper. In this case, the roads/highways will improve the last-mile delivery of relief and welfare programmes;
  • Development of cluster-based specialised farming, promotion of organic farming, support for farmers’ organisations, extension of farmer credit to fisheries and animal husbandry farmers;
  • Livestock, fisheries, dairy, vegetables, fruit and food processing are more labor-intensive and high value-yielding. After many decades of neglect in research and development, lack of market access, on-off policies for exports, and market distortions, the present adversity may be a timely opportunity for this sector. The government is focusing on this through its schemes concerning rural development.


  • To sum up, the success of India’s economy is strongly rooted in the rural areas. As the Prime Minister rightly said that India doesn’t advocate a self-centered system by becoming self-reliant, but in India’s self-reliance there is a concern for the whole world’s happiness, cooperation and peace.
  • Today, rural India is the growth engine not just for fast moving consumer goods, but also durables, two-wheelers, farm equipment, construction and many other sectors. So, without uplifting the rural economy first, the rest of India v/ill not pick up momentum that easily. Therefore, revisiting the rural segment with strategic financial plans is inevitable.



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Courtesy: Kurukshetra