Lesson 22: Rural Industrialization- its need in India- a critical review of programs for rural industrialization Structure: 22.

1 Introduction 22.2. Main approaches to Rural Industrialization 22.3 Objectives of Rural Industrialization 22.4 Programs for Rural Industrialization 22.4.1 Rural Industries Project 22.4.2 Rural Works Program 22.4.3 Marginal Farmers and Agricultural Laborers 22.4.4 Small Farmers Development Agency 22.4.5 Integrated Dry Land Agricultural Development 22.4.6 Agro Service Centres 22.4.7 Area Development Schemes 22.4.8 National Rural Employment Program 22.4.9 Rural Landless Employment Guarantee Program 22.4.10 Integrated Rural Development Program 22.4.11 Jawahar Rozgar Yojana

22.5 Critical Assessment of the Programs 22.6 Summary

Objective:

After studying this lesson, you will be able to understand

Meaning of Rural industrialization Need for Rural industrialization Role of Rural industry in economic development Programs for Rural Industrialization

22.1 Introduction;
Rural industrialization as a core program for rural development had been given due recognition in the 1970s. In India this program had received much impetus even as early as 1951 when the First Five Year Plan had been drafted. In almost all developing economies the transition from traditional economy to modern economies had been tardy due to certain structural constraints in the development process. These structural constraints relate to the socio-political power structure preventing in these societies. Within the existing network of social relationship these economies are trying to modernize their societies. In that process specially in the sixth Five Year Plan drafted during the Janata Government had shifted the plan priorities where the rural development had been given a central place in the strategy of development. Even the UN study on agrarian reforms and rural development had highlighted the importance of rural development for curing many ills of the developing economies. The strategy of integrated rural development as adopted by Indian planners consisted of programs for agriculture development and besides all these programs rural industrialization had been given a new impetus for the development of rural areas.

Emphasis on strengthening of village industries as an imperative need to bring about integrated rural development, though has been laid time and again, the implementation of these programs has always remained a distant goal. This is due to the conflicting approaches regarding rural industrialization program. 22.2. Main approaches to Rural Industrialization:

The first approach the approach an Idealistic school pleads for the revival and promotion of village industries as a part of the broader program fro reorganizing the entire socio-economic structure on a decentralized basis. The second approach considers the problem in the perspective of location and spatial diversification of manufacturing activity in a balanced manner and the third approach highlights the employment potentiality of village industries and looks at the problem from the socio-economic distributional aspect.

All these approaches had been experimented at one time or other by planners in this country. On the first plan itself the importance of rural industrialization has been recognized and it implicitly mentioned that the existing occupational imbalance between agriculture and industry between village and town be controlled. But the first approach was clearly spelled out in the second plan where one of the objections for promoting rural industries was to meet the local demand through locally processing and utilization of locally available resources. Even though the first three plans emphasized the need for the dispersal of industries, there was a natural tendency on the part of the new enterprise and new investment to gravitate towards the already crowded areas. This naturally accentuated rural urban inequalities and led to regional imbalances instead of correcting them.

22.3 Objectives of Rural Industrialization: As mentioned earlier, though in all other plans this aspect of planned development has been emphasized, a new thrust had been given to Rural Industrialization in the Sixth Plan. The objectives of rural industrialization program are: To cover all the existing artisans by the development programs of the khadi and village industries and to ensure continued and fuller employment to them in their present occupation.

To widen the employment base by expanding and diversifying the existing schemes and by undertaking additional schemes
To strengthen infrastructural facilities To undertake research and development To process at the village level locally available raw-materials for intermediate and semi-finished products of other industries

To undertake industrial activities connected with agriculture, poultry, horticulture, animal husbandry, dairy, rural housing etc that strengthen integrated rural development. To aim at the level of earnings or wages for rural artisans adequate enough to meet the basic necessities of life and To create socio-economic conditions in the life of the people for the sustained growth and development of these activities. Thus for the first time rural industrialisation program as a core program for rural development, received much impetus during the Janata regime. Basic thrust of the sixth plan was the creation of employment opportunities by the village industries as quickly as possible with a view to serve the national objective of removal of destitution. Therefore, an important place had been accorded for village and small industries sector for improving the incomes of rural poor as these industries have a low capital output ratio and high employment potential.

Thus a discernible shift can be observed from Sixth Plan onwards to a new strategy of rural industrialization which has been accorded an important place in the rural development strategy framed during the Janata Government. With little modifications the integrated rural development strategy had been adopted even in the modified Sixth Plan where rural industrialization is still being considered as a core program . Thus the planned development in this country had witnessed many changes in the policy orientation towards rural industry and the government has given due recognition to this program of rural industrialization as a part of a strategy that was intended to bring about rural development and this approach is different from the earlier approach where the state was giving projection to khadi and other handicrafts. Thus Rural Industries are now in the phase of expansion where due to their low capital output ratio and high employment potential were expected to bring about more employment opportunities on a full time basis in the rural areas. Their development is also need for spatial diversification of manufacturing activity and they were expected to provide balanced regional development.

22.4 Programs for Rural Industrialization: The development of rural industries as sine qua non for rural development had drawn the attention of the planners even from the first five year plan. Thus, one of the constant objectives of planned development beginning with the First Five Year Plan has been the rapid widespread development of small inducers including cottage, household and small scale. In the second plan however, an independent position was carried out for the development of rural and small scale sector. The Karve Committee which was appointed to recommend the program of development of small industries for second plan suggested organization of industrial co-operatives for the implementation of the whole program. In the third plan emphasis was on integration of village industries with the rural economy. The rural industries projects also came up during this period.

22.4.1 Rural Industries Project: A centrally sponsored scheme for rural industries projects was taken up in 1962-63. To start with, 45 areas were selected in the state and union territories each covering 3 to 5 development blocks with a population of 300500 thousand, for intensive development of small industries in rural areas. Later on four more areas, near large scale projects of Durgapur, Bhilai, Bhadravati and Ranchi were added in 1965. The progress made so far in these projects varies considerably from one area to another. On the whole, of 45 areas which were selected initially, progress in about one of these has been encouraging. The government of India set up a committee with Bhagvati as chairman to suggest measures to solve the un-employment problem. Following the publication of Bhagvati report in 1973, the government took the following measures/programs to provide employment and alleviate under-employment in India. They are:

22.4.2 Rural Works Program: The emphasis under the program was on the construction of civil works of permanent nature as would contribute to the mitigation. If not the total eradication of the scarcity condition in the areas concerned.

22.4.3 Marginal Farmers and Agricultural Laborers:

Under the scheme, families were to be assisted with subsidized credit support for agricultural and subsidiary occupations like dairy, poultry, fishery, piggery-rearing horticultural operations etc., 22.4.4 Small Farmers Development Agency: The object of the scheme was to make available to small farmers credit to enable them to make use of the latest technology to practice intensive agriculture and diversity their activities.

22.4.5 Integrated Dry Land Agricultural Development:

Under the scheme, permanent works like soil conservation, land development and water harnessing were undertaken these programs were labor intensive and it was estimated that for an expenditure of every one crore of rupees, about 15,000 persons would get employment. 22.4.6 Agro Service Centres: The schemes provided for assistance for self employment to the unemployed graduates and diploma holders in mechanical agricultural and electrical engineering and allied fields and graduates in agriculture and science with experience in industry or agriculture it aimed to help in establishing work shops organizing agricultural machinery, repairing and hiring facilities and other technical services like supply of spare parts, inputs, etc., 22.4.7 Area Development Schemes: These Schemes relate to the development of adequate infrastructure facilities like roads, market complexes etc., in areas commanded by ten major irrigation projects.

22.4.8 National Rural Employment Program:

The Food for Work Program was restructured and renamed as NREP (National Rural Employment Program) from October, 1980. This is being implemented as centrally sponsored program with 50 per cent central assistance. Additional employment of order of 300-400 million mandays per year for the unemployed and under employed is envisaged under the NREP.
22.4.9 Rural Landless Employment Guarantee Program: It was launched on the 15th August 1983 (RLEGP) with the objective of generating gainful employment, creating productive assets in rural areas and improving the overall quality of rural life. The guarantee part of the Program has not been operational zed so far, due to paucity of resources. Preference in employment is given to landless laborers, women, scheduled castes and scheduled tribes. 22.4.10 Integrated Rural Development Program:

A multiplicity of agencies has been carrying on the task of providing rural employment. They include: Employment Guarantee Schemes, Food for work programs, SFDA, MFAL, Drought prone area program, Desert development program, Command area development program etc., The Sixth plan proposed that such multiplicity of programs for the rural poor operated through a multiplicity agencies should be ended and replaced by one single program operative throughout the country. This program has been named as the Integrated Development Program (IRDP).

 IRDP was initiated on October 2, 1980 in the entire 5011 block in the country. During the 5 year period in each block 600 poor families were to be assisted. In this way, a total of 15 million families of about 75 million persons below poverty line were targeted to be beneficiaries. Jawahar Rozgar Yojana: Then Prime Minister Rajiv Gandhi announced on 28th April 1989. All the existing rural wage employment programs were merged into JRY. This implies that NREP and RLEGP have been merged so as to be brought under this umbrella program referred to as JRY. The objective of the program is to provide gainful employment for the unemployed in rural areas. Thereafter also several other programs implemented in rural areas by considering rural industrialization as a part of over rural development strategy. However it is useful to asses the impact of above programs.

 22.5 Critical Assessment of the Program: During the process of implementation, several programs are affected to the extent of deviations from the avowed objectives take place. For instance, the various schemes under the Fourth plan or the Crash Program could not succeed in removing rural unemployment and under employment because efforts were not made to organize the army of the rural unemployed into appropriate supply camps to shift to places of demand at the desired minimum wage. Employment Guarantee Scheme which was implemented in Maharashtra provides only subsistence wages to workers. Thus this experiment could well be a model for similar schemes in other states so that minimum level of living is guaranteed to every citizen in India. Similarly in the process of implementation, integrated area development programs are affected to the extent of deviations from the avowed objectives take place. Various evaluation studies about the IRDP have been made which reveal that the actual percolation effect of the program has been much less in terms of poverty alleviation as compared with the impressive figures doled out by government reports in terms of subsidies bank credit and poverty line crossers.

22.6

Summary

Rural Industries are now in the phase of expansion where due to their low capital output ratio and high employment potential were expected to bring about more employment opportunities on a full time basis in the rural areas. Their development is also need for spatial diversification of manufacturing activity and they were expected to provide balanced regional development. As a part of rural development Strategy, rural industrialization activities also considered by the government of India. Several programs implemented in India time to time for the development of rural areas. During the process of implementation, several programs are affected to the extent of deviations from the avowed objectives take place. For instance, the Crash Program could not succeed in removing rural unemployment and under employment because efforts were not made to organize the army of the rural unemployed into appropriate supply camps to shift to places of demand at the desired minimum wage. Various evaluation studies about the IRDP have been made which reveal that the actual percolation effect of the program has been much less in terms of poverty alleviation as compared with the impressive figures doled out by government reports in terms of subsidies bank credit and poverty line crossers.

22.9

Self-Assessment Questions

Short answer type questions

1. What is Rural Industrialization 2. Explain the important approaches of Rural Industrialization. 3. Briefly explain the objectives of Rural Industrialization

Long answer type questions

4. Critically evaluate the performance of the Rural development Programs 5. Enumerate the various Rural Industrialization Programs implemented in India