Published on 18 Feb 2025
About two-third of rural income is now generated in non-agricultural activities and more than half of the value added in the manufacturing sector in India is contributed by rural areas. It is contrary to the common perception about predominance of agriculture in the rural economy.
Classification of Rural Industries
There are different types of rural Industries in India, classified on the basis of scale and primary functions. According to the Eighth Plan (FYP), four groups of industries are classified that can be expanded or developed in rural areas:
Traditional Village Industries: These include Khadi, leather tanning, woodwork, artisan industries, cotton cloth, handloom, power loom and fabrics, handicrafts, coir, sericulture and wool development, etc.
Heavy Industries: These include mini-steel plants, fertilizer plants which use biomass, pesticide manufacturing plants using biological inputs, ancillary engineering units, etc.
Medium Group Industries: These include mini-cement plants which use molasses or coal as energy, minor paper plants, etc.
Light Industries: These include animal feed and fodder industries, industries producing binding materials like hinges, screens, doors, windows frames and roofing materials etc.
Need to focus on the development of Rural Industries
Boost Economic Growth: Contribute to achieving a $5 trillion economy by boosting overall economic activity and GDP.
Employment Generation: Create various job opportunities and address high unemployment rates, especially crucial considering India's large working population to avoid a "demographic disaster."
Regular employment for educated youth.
Casual daily wage jobs for less-educated individuals.
Self-employment opportunities for entrepreneurs.
Improved Social Indicators: Lead to better living standards through:
Reduced poverty levels.
Lower hunger rates.
Improved literacy rates.
Increased life expectancy.
Reduced Urban Migration: Provide job opportunities in rural areas, discouraging mass migration to already overcrowded cities and reducing pressure on urban resources.
Reduced Pressure on Agriculture: Diversify employment options, lessening dependence on agriculture, which often suffers from disguised unemployment (underemployment). Ensure income generation even during off-seasons for agricultural work.
Growth of Contract Farming: Facilitate contract farming agreements between farmers and industries like food processing or apparel, creating a reliable market for agricultural produce.
Improved Standard of Living: Attract infrastructure development and services to support industries, leading to overall improvement in living conditions in rural areas.
Women Empowerment: Capitalize on the high female labour force participation rate in rural areas, creating opportunities for women's economic participation and empowerment.
In 2011-12, rural female workforce participation was 24.8% compared to 14.7% in urban areas.
Government measures to improve the rural industries and their progress (Source: Kurukshetra)
Prime Minister's Employment Generation Programme (PMEGP): Credit-linked subsidy scheme for new micro-enterprises in rural areas.
Progress: 7.38 lakh new units set up since inception, 80% in rural areas.
Scheme for Promoting Innovation, Rural Industry and Entrepreneurship (ASPIRE): Provides training and incubation support to rural entrepreneurs.
Progress: 61 Livelihood Business Incubators functional, trained over 54,800 people.
Innovation and Agri-Entrepreneurship Development (IAED): Offers technical and financial support for agri-business startups.
Progress: Supported 799 startups in agriculture and allied sectors.
. Pradhan Mantri Kisan Sampada Yojana (PMKSY): Ministry of Food Processing Industries (MoFPI) initiative for development of the food processing sector.
Progress: Approved 41 Mega Food Parks, 353 Cold Chain projects, and more.
Scheme of Fund for Regeneration of Traditional Industries (SFURTI): Supports traditional industries and artisans.
Progress: Approved 434 clusters benefiting an estimated 2.5 lakh artisans.
Geography
DEVELOPMENT OF RURAL INDUSTRIES
Classification of Rural Industries
Need to focus on the development of Rural Industries
Government measures to improve the rural industries and their progress
General Studies Paper 1
Resources Distribution
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