RURAL PRODUCTION AND

LIVELIHOOD SYSTEMS
 RURAL PRODUCTION
SYSTEM

DEFINE
SCOPE
RELATIONS WITH LIVELIHOOD
 What is Rural Industry?

Rural Industries mean any Industry located

in rural area of township, which produces
any goods or senders, any services with or
without the use of power and in which the
fixed capital investment per head of an
artisan or worker does not exceed fifty
thousand rupees in plant and machinery,
land and building. Rural Industries are also
known as Village Industries.
 HISTORY OF RURAL
INDUSTRIALIZATION
The muslins, the textile handicrafts including
chintzes of Lucknow, dhotis and dupattas of
Ahmedebad. Silk bordered cloth of Nagpur and
Murshidabad, shawls from Kashmir, Amritsar
and Ludhiana were very famous and were
exported to different parts of the world.
Well known for artistic industries like marble
work, stone carving, jewellery, brass, copper and
bell metal wares wood carvings etc.
Spices like pepper, cinnamon, opium indigo etc
which were exported to different parts of the
world.
 Major export destinations

Middle east

China

Rome

England
 Major rural industries
Mineral Based Industries - Pottery, Lime, Stone
Carving.
Khadi Sericulture, Handloom, Powerloom, Jute
Processing,
Wool Knitting
Coir
Forest Based Industry
Medicinal Plants Industry, Bee Keeping Industry
(Honey), Minor Forest Based Industry.
 Agro Based/Allied and Food
Processing Industry Pulses &
Cereals Processing Industry, Gur &
Khandsari Industry, Palmgur Industry,
Fruit & Vegetable Processing
Industry, Village, Oil Industry,
Poultry, Fisheries, Livestock,
Dairy.
Polymer & Chemical Based
Industry Leather Industry,
Non Edible Oils and Soaps Industry,
Cottage Match Industry, Plastic Industry.
 Hand Made Paper & Fibre Industry
Hand Made Paper Industry, Fibre
Industry.

Rural Engineering &

Bio-Technology Industry Non
Conventional Energy, Carpentry & Black
smithy, Electronics
 Growth of rural industries

1st FIVE YEAR PLAN (1951-56)

0.4 Billion rupees were allocated for rural and cottage
industries.
Additional impetus on agriculture.
National income rose 18%, per capita income 11% and per
capita consumption 9% during the plan period.

2nd FIVE YEAR PLAN (1956-61)

1.9 Billion rupees were allocated in this plan.
Additional thrust is given to industry
Unfavorable monsoons in 1957-58 and 1959-60 lead to
moderate success.
3rd FIVE YEAR PLAN (1961-66)
2.4 Billion rupees were allocated.
The plan targeted a 30% increase in agricultural production and 70% in industry.
Additional impetus was laid on integrated development of village and khadi
industries.
These targets are marred by the Chinese war in 1962 and the Pakistan war in
1965.

4th FIVE YEAR PLAN (1969-74)

The allocation was 2.4 Billion rupees once again.
In this plan Ashok Mehta committee was set up to critically review the
functioning of the Khadi and village industries.
Industrial growth was only 3.9% against the targeted
8% pa.
5th FIVE YEAR PLAN (1974-79)
The allocation was 5.9 billion crores
Arresting the displacement of traditional artisans from
existing crafts.
Targets relating to agriculture were met.

6th FIVE YEAR PLAN (1980-85)

19.5 Billion rupees were allocated.
IRDP extended to 5011 blocks in the country.
National Rural Employment Project) was also started
Industry achieved 6% growth rate against 5.3%.
7th FIVE YEAR PLAN (1985-90)
Industrial growth also accelerated during this plan period to
8.7% pa.
32.5 billion rupees were allocated.
Jawahar Rozgar Yojana was introduced to give a fillip to the
rural industry.

8th FIVE YEAR PLAN (1992-97)

63.3 billion rupees were allocated.
This plan targeted an annual growth of 5.6% in GDP and
7.5% pa in industry.
This plan achieved success in attaining the targets.
9th FIVE YEAR PLAN (1997-02)
An outlay of Rs. 2000 crores was provided.
Additional thrust to improve the agricultural income and to
improve the living conditions of small, medium and marginal
farmers and landless labourers.
Goals were attained to a large extent.

10th FIVE YEAR PLAN (2002-07)

The allocation of funds for the rural development programmes
has been enhanced to Rs. 76,774 crores were allocated in this
plan.
The path breaking, National Rural Employment Guarantee Act
2005 (NREGA) was passed guaranteeing 100 days of
employment in a financial year to a rural households. Sampoorna
Grameen Rozgar Yojana (SGRY) and Swarnjayanti Gram
Swarozgar Yojana (SGSY) were also launched to give fillip to the
rural industries.
Finally, additional thrust on cost cutting and technical up gradation
of the rural artisans were given due importance.
 ROLE OF GOVERNMENT
AGENCIES
Ministry of Agro & Rural Industries (ARI) was set
up in September, 2001 with the objective of
integrating efforts for the development of agro and
rural industries and creating more employment
opportunities in the rural areas based on the local
raw materials, skills and technology.

The Ministry is the nodal agency for coordination

and development of village and khadi industries
and tiny and micro enterprises in both urban and
rural areas as well as for the implementation of the
Prime Ministers Rozgar Yojana (PMRY)
 The various policies, programmes/ schemes related
to agro and rural industries are implemented by the
Ministry, through the Khadi and Village Industries
Commission (KVIC) and the Coir Board.

In May 1994 the KVIC launched Rural Employment

Generation Programme (REGP) with effect from 1st
April, 1995 for generation of two million jobs under
the KVI sector in the rural areas of the country. The
broad objectives of the REGP are -
1. To generate employment in rural area.
2. To develop entrepreneurial skill among the rural
unemployed youth.
3. To achieve the goal of rural industrialization.
4. To facilitate participation of Financial
Institutions for higher Credit to rural industries
 Following are the achievements of
REGP upto December 2005
Details Upto 2004-05 2005-06
2003-04 upto
Dec'05

No.ofProjects 186252 23453 12893

Sanctioned

MarginMoney 1079.47 295.87 164.93

Utilised(Rs.in
Crores)
Employment 22.75 5.30 2.89
Generated(Persons
inlakhs)
 Central Sector Scheme titled the Scheme
of Fund for Regeneration of Traditional
Industries (SFURTI) has been drawn up
and approved at a total cost of Rs. 97.25
crores on 3.10.2005.

NABARD has identified financing,

development and promotion of RNFS (RURAL
NON FARM SECTOR) as one of its thrust areas.

NABARD has evolved several refinance

and promotional schemes over the years
and has been making constant efforts to
liberalize, broad base and refine/
rationalize the schemes in response to the
field level needs.
 The Rural Industries Programme (RIP) of
the Small Industries Development Bank
of India (SIDBI) provides a cohesive and
integrated package of basic inputs like
information, motivation, training and
credit, backed by appropriate technology
and market linkages for the purpose of
enterprise promotion
 ROLE OF NON-
GOVERNMENTAL AGENCIES

Providing assistance at the grassroots level

for assimilation of technological extensions in
rural areas
To create awareness, build skills, introduce
technology and develop capacities for
maintenance and sustainability
Governmental programmes are given shape
by these organisations
 PROBLEMS
Some of the reasons for the underdevelopment of
rural industry/Productions system are:

Lack of good infrastructure. Due to this there is

inability to supply the required quality of raw
material in time.
Inability to provide loans both short term and long
term
No procurement policy from the artisans and no
uniform pricing either
No system of feedback information
No identification of potential demand
 PROBLEMS

No efforts to undertake training

Mismanagement
Political and bureaucratic interference
Excessive manpower
Low productivity
Low incentive for performance
Technological obsolesce
Lower level worker and managerial skill.
No efforts towards product development,
packaging and designing
 STRATEGIES FOR
GROWTH

Provision of credit
Skill up gradation
Organisation
Identification of products
Procurement
Marketing
 STRATEGIES FOR
GROWTH

Creating Local awareness

Selling points
Encouragement to exports
Sales services
Deepening of local consumption
Developing network of small sales
department
 CONCLUSION
This sector is ideally suited to build on the
strengths of our traditional skills and
knowledge, by infusion of technologies,
capital and innovative marketing practices.
The diversity in production systems and
demand structures will ensure long term co-
existence of many layers of demand for
consumer products / technologies /
processes
The bane of the sector has been the
inadequacies in capital, technology and
marketing. But this can be rectified by the
process of liberalization coupled with
Government support.