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India Rural Development Report

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A few months earlier IDFC Foundation had prepared the “India Rural Development Report 2012/13” which provided a wide perspective on the rural landscape covering the Rural dynamics, Livelihoods, Inclusion, Infrastructure, Sustainability and a review of major central government rural programmes and schemes and, in particular, the flagship MGNREGA. We had invited Mr. Cherian Thomas, CEO, IDFC Foundation to do a guest post on the report which we present below. 

By Cherian Thomas, CEO, IDFC Foundation

The India Rural Development Report 2012|13 (IRDR 2013) was prepared by IDFC Foundation in collaboration with its institutional partners Centre for Economic and Social Studies (CESS), the Institute for Rural Management Anand (IRMA), and the Indira Gandhi Institute of Development Research (IGIDR), with contributions from several other researchers, experts and civil society organisations. IRDR 2013 contains a comprehensive review of rural India and brings into a single publication a unique analysis of the following aspects of rural development:

  1. The evolving rural economy and the consequent social changes;
  2. Broad features of regional inequality, social and economic deprivation;
  3. Inequalities in access to education, health care and physical infrastructure;
  4. Changing nature of livelihoods in rural areas, given the reduction in farm holdings, growing commercialisation of agriculture and increase in non-farm opportunities;
  5. Sustainability of natural resources and conflicts over these; and
  6. Changing role of the state, with increasing local self-governance.

The report also reviews most major central government rural programmes and schemes and, in particular, provides an in-depth assessment of the flagship rural employment guarantee programme, MGNREGA. The report highlights some very compelling narratives in the background of a sweeping transformation across rural India. These narratives vary from positive features like rural resurgence and expanding consumption on one side, to the harsh realities of conflicts, poverty and distress on the other.


It is important to develop new strategies for farm livelihoods, since income from farm livelihoods is no longer sufficient for a household, especially for smaller and marginal farmers, who make up 85% of farm holdings, and for dry-land farmers who occupy over half the cultivated area. It is equally necessary to encourage new cropping patterns, while at the same time reviving traditional crops which are more suitable for arid lands. The cultivation of millets, one such traditional cereal, which is both hardy and nutritious, could be promoted by their procurement through the public distribution system (PDS). Collective farming has helped small farmers overcome problems of scale, insecure land tenancy and the lack of adequate access to credit, modern supply chains and storage. Nearly 2 million farmers in Andhra Pradesh have successfully adopted community managed sustainable agriculture (CMSA) practices, significantly reducing cost of cultivation and soil toxicity by doing away with chemical inputs while at the same time either  increasing or maintaining yields. The efficient use of water, which needs to be considered a community resource, is also critical since almost 80% of the total water use is for agricultural purposes. Management of both ground and surface water should therefore, be undertaken holistically across all uses.

A marked trend over the last several years is the increasing importance of non-farm employment as a major income source, sustaining 43% of rural families (in 2009) for reasons such as better wages and social mobility. There is also some evidence that higher non-farm wages have actually helped increase agricultural wages. Non-farm work is predominantly casual in nature, much of it offered by the construction and trade sectors. Manufacturing employment too has become increasingly informal, and often denies workers benefits of formal employment. Other barriers to non-farm livelihoods are the lack of adequate access to credit, markets and skills. To deal with the issue of skill development, Government of India (GoI)  has recently launched a programme called Aajeevika,  which seeks to assist the poor set up small businesses and providing access to capital through SHGs.

Poverty & Infrastructure

Poverty, though reducing, is concentrated in certain regions and social groups.  In 1993–94, nearly 50% of the rural poor lived in seven states — Jharkhand, Bihar, Assam, Odisha, Chhattisgarh, Madhya Pradesh and Uttar Pradesh. This rose to 65% in 2011–12, though states like Bihar, Chhattisgarh and Uttar Pradesh have reduced poverty significantly since 2009-10. These states, along with Rajasthan, also fare worst on education (learning levels), child & maternal health, and penetration of healthcare services. Only 18% of rural households have access to all three basic services – drinking water within premises, sanitation and electricity; 20% have none of them.  Almost all the bottom two quintiles of districts in terms of access to the three basic services are in Rajasthan and the seven states excluding Assam. There are, however, pockets of deprivation in richer states as well – notably in Andhra Pradesh, Maharashtra and Karnataka, in dry-land areas. Poverty is markedly higher among scheduled castes (SCs) and scheduled tribes (STs); these 2 groups together constituted 44% of the rural poor in 2009-10. Despite legislation, SCs and STs continue to face discrimination, limiting their economic, social and political participation in spheres. They also have the highest rates of malnutrition, child mortality, and access to public health services. Among the two – STs are worse off.

It is also observed that government spending on productivity-enhancing infrastructure has a more significant and lasting impact on poverty reduction than disbursal of subsidies. Village-level connectivity has improved especially with roads, electricity and telecommunications. However, household-level access continues to be poor, especially for the vulnerable, and the assets created are either of poor quality, incomplete, or badly maintained. While most villages are connected to the grid, 45% of rural households lack electricity connections. Water supply is unavailable or polluted. Around 70% of rural households lack sanitation facilities. Widespread absenteeism of government employees engaged in the delivery of these services, have resulted in poor outcomes in education, nutrition and health. Community ownership of assets, life-cycle planning for assets, greater flexibility to states and panchayati raj institutions (PRI) in implementation of schemes and increased use of performance based incentives and private service delivery are some of the approaches that have worked on a limited scale.


PRIs, which were set up to create more participatory, accountable and resource-efficient governance, have not succeeded for several reasons. States need to devolve more funds, provide support staff and ensure dependable revenue flows to PRIs. It is also necessary to minimise overlap in responsibilities in service delivery and interference from local elites by increasing gram sabha awareness on participation rights and through social audits. MGNREGA has provided an average of 40-50 days of employment per year to about 25% of rural households making it the largest public works programme in India’s history. The scheme has served more poor and disadvantaged households, women, SCs and STs, than better-off households. It has also helped empower women by providing employment on equal terms. Women account for almost half the total person days of employment. All in all, MGNREGA has contributed to reducing poverty, both directly as well as indirectly, by putting upward pressure on agricultural wages. The scheme has even more potential that can be unlocked by increasing coverage especially in states with a high incidence of poverty, better work planning and providing adequate technical support.

To read the full report click here.

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