Rural India: Challenges & Possibilities

Many decades ago Mahatma Gandhi had said that India lives in villages. It’s true even today, in spite of rapid urbanisation and substantial migration from villages. Still 68 per cent of India lives in villages and out of 572 Lok Sabha seats 342 are in rural areas. With such big numbers, rural India seems to be the dominant force in the country, not only politically but economically as well. But the reality is completely opposite. Of course India is the fastest growing major economy in the world, but rural India has very little contribution to it. It has rather been taken as a liability by the governments.

Rural India has been hardly getting any significance in the economic plans of the country. Majority of the schemes for rural India are just to help earn a very basic livelihood for the people and not for the upliftment of the rural economy. In last couple of years situation has changed on the ground and the farmers or rural India at large has taken centre-stage in the politics of the country. It is actually a good sign for the country that the agrarian class cutting across the caste, religion, region and economic state is emerging as a single segment in the political arena. And probably for first time, political parties are forced to take them seriously.

Loan waiver

In recent elections, political parties that have shown concern for this segment and offered to look into their grievances, have done well in the elections. But, loan waivers for farmers are not new. The first nation-wide farm loan waiver was done in 1990 and the then government had released Rs 10,000 crore for it. After that there have been many farm loan waivers, some far bigger than this. Yet, there is no end to the farmer’s plight. Is it that 68 per cent of India is always at risk of having such hopelessness in life? Is agriculture in this country, on which the rural economy depends, really so unprofitable? Just last week,  farmers have sold potato at 20 paisa per kg, but the retail price at which it is available to end-consumers in cities is Rs 20-25 per kg. In a few months’ time, this figure would have shot up to Rs 40-50 per kg.

The farmers are forced to sell their crop at a minimal price due to their financial limitations and non-availability of sufficient and economic storage facilities. And the same potato after being processed into potato chips is sold at Rs 20 for 200 grams. So, the margin here is 500 per cent. Of course, there are other costs involved but still there is huge margin. Hence, the agriculture as well as the food processing business both are profitable, but majority of the farmers get only a little share of this profit.

It is a very common scenario in India that in one year the price of some crops is too high and the next year it is too less or vice versa. Once, high onion prices had led to the ouster of a government in Delhi, and the next year itself the price was low. Let’s try to understand why this happens. In agriculture, unlike other industries, the producers and the market are at all not in sync. The producers, the market and the policy maker work in silos, there is no information sharing mechanism. This creates an obvious demand and supply mismatch problem often causing abnormally high or low price for some crops.

Let me explain this problem with an example. The 2018 rabi (winter) crop of onion was quite good, and so when the crop reached market, the prices were low, and the government decided to export onion. Then there was an anticipation that there may be a drought like situation and delay in the kharif (summer) crop of onion, so many farmers decided to delay the release of the rabi (winter) crop kept in the cold storages expecting good returns in a few months’ time. Due to all this, by mid-October onion prices shot up suddenly, but then the kharif (summer) crop was actually good against the anticipation, and once it reached the market, the old onion was not getting the value as the new crop. So, out of anxiety the farmers started releasing the old crop, and it caused over supply of onion in the market, and the price suddenly went down.


Here all the decisions taken by different stakeholders seems correct considering the limited information available to them. But, these decisions caused the price of onion to shoot up to abnormally high levels and then to reach abnormally low levels. Imagine if all these stakeholders are in sync and there is a system where all information can be shared and made available to all, then any decision by the stakeholders will be well informed. And it will help prevent abnormal price movements in both upward and downward direction.

Another major concern is the wastage of the crops. As much as 40 per cent of fresh produce is wasted annually before reaching the consumers due to lack of cold chain infrastructure. According to the ministry of food processing industries, the government of India, Rs 92,000 crore worth of agriculture produce is wasted annually, with fruits and vegetable contributing Rs 40,000 crore alone. Everyone in the supply chain gets impacted due to this, but the farmers and the end consumers are the two who are most badly impacted. If we look at the pre harvest problems, one major problem is the lack of proper irrigation infrastructure and the floods and draughts which effects many parts of the country every year. About 2/3 rd of the agriculture land in India is dependent on monsoons.

We have a separate water resources ministry in the union as well as in state governments. But, there has scarcely been any proper plan for developing irrigation infrastructure. During the rainy season, many parts of the country get flooded and just a few months after that there is draught in many parts. When there is scarcity of water, the neighbouring states fight for the water share of the common rivers, but they don’t take ownership of the river and its sources of water. There has been so much discussion about river linking, but apart from some localised projects, no serious efforts have ever been taken in this direction. Some environmentalist have raised certain concerns over the environment and ecological impact of such projects. While these concerns must be studied and the concerns allayed accordingly, river linking projects must be pursued. This will help address drought and flood-like situations and also help farmers and the rural economy in a big way.

In the event of crops getting damaged, the farmers are in a state of deep distress. Small and the marginal farmers are very badly affected and many get financially crippled. A proper insurance scheme is required to take care of the farmers in such situations. The Pradhan Mantri Fasal Beema Yojyna scheme started by the current union government is an approach in the right direction. But the scheme in its current form has many flaws which have to be fixed to make it useful for farmers.


A major hurdle in the rural economy growth is the fact that the farmland in the country is scattered as small fragmented holdings. According to the latest agriculture census, 67 per cent of the total farmland is held by the marginal farmers with holdings below one hectare, 85 per cent holdings are less than 2 hectares, and only 1 per cent holdings are of 10 hectares and above. There has been a continuous decline in the farm land size, and as per one estimate, by 2030 91 per cent of the total holdings will belong to small and marginal farmers. Whether it’s about the use of technology, irrigation schemes or implementation of any plans, it cannot be efficiently done with such badly fragmented farmland holdings. Such fragmentation also causes wastage of fertile land as they are taken over by boundaries around the holdings. Community or corporate farming is the only way going forward for economic development of the rural India. The government of India as well as state governments needs to urgently start working on it. In India majority of the farmers have got farm land in inheritance, and they have an obvious attachment to their land. The government needs to involve political parties and social organisations to bring awareness about the benefits of community farming and clarity over the ownership rights of the land in the community and corporate farming.

The union government and the state governments have to seriously work to build nationwide infrastructure for agriculture. But to utilise the available resources in the best possible way and ensure better earnings for the farmers and others in the rural areas, a technology based system needs to be developed. Such a technology system will analyse the large set of agriculture and corresponding market related data and will help in preparing an exhaustive agriculture plan and its execution.

Using IOT devices a set of data for each farmland will have to be collected and fed to the server implemented in the cloud. The data collected will include every minute detail about the farmlands including the soil properties, climate, rainfall, irrigation facilities in that area and any other information having impact on the cultivation. It will also be fed the data for the local, regional, national as well as well other markets of the world, trends in the food processing industry and any other information which may impact price of the crop. The system will use machine learning, artificial intelligence and data analytics techniques to bring out data points which can be used to prepare a yearly agriculture plan for the country, which should have detailed pre-harvest and post-harvest plan for each farmland holding.

As part of the pre-harvest plan, it will include which crop to be cultivated, where to get the seeds from, irrigation requirements and plan, fertilizer requirements and where to procure it from, real time monitoring plan for the crops using IOT devices and anything else required in the pre-harvest phase. The data collected while monitoring will be send to the server which will analyze it in real time and will keep updating the profile of the crop of the farmlands and will initiate necessary action as and when required, will as well initiate manual intervention when required. As part of the post-harvest plan for each farmland, it will have to estimate for the volume of expected crop production, plan for the storage, supply chain, sale of crops in the different markets and the volume of the crop to be used by the food processing industries. This way, it will ensure minimal wastage of the crop, best possible demand supply match, better earnings for the farmers and everyone in the supply chain.

The farmers and other people concerned can get the relevant real time information as and when needed through their mobile using an app or through SMS/USSD facilities. The farmers can as well set alerts to get regular updates for specific information for ex- health of a crop in his farmland, or overall in the country. To further increase income of the farmers and others in the rural areas, the government should bring a law to mandate the food processing companies to have some stake of the farming communities in the companies. For the stake the farming communities will contribute the required crops and the space required to build the setup for establishing the processing unit and the storage units. It will be a win-win situation for both the farmers and the food processing companies.

The farmers and rural India in general have the potential to not only become self-sustainable, but to largely contribute in the economic growth of the country. But the government has to provide the infrastructure and the required support. And probably one day agriculture of the country may become remunerative enough for governments to prepare and present annual agriculture plans in Parliament and the state assemblies.

(The writer is a researcher)