- Development of rural areas occupies a special significance in the overall socio-economic development of a country like India where nearly 68.84 percent of total population and 72.4 percent of workforce reside in rural areas.
- The major economic problems faced by the rural people are poverty, unemployment and inequality.
Rural Urban Divide
- The rural-urban divide in India is so prominent that per capita income in rural areas is even less than the half of that in urban areas.
- As per the Economic Survey 2019-20, the poverty head count ratio stood at 25.7 percent in rural areas as compared to 13.7 percent in urban areas in 2011-12.
- There is large gap between income of farm and non-farm workers An average non-farm worker earns nearly 2.8 times more than a farm worker.
Extent of Rural Financial Inclusion
- A large proportion of population in rural areas has an inadequate access to financial services at affordable prices, which is the major factor behind their economic backwardness.
- As per population census 2011, of the total 16.78 crore rural household, only 54.44 percent have access to formal banking facilities in India.
- According to NABARD All India Rural Financial Inclusion Survey (NAFIS) 2016-17, 30 percent of agricultural households still avail credit from non-institutional sources.
- Among the institutional sources of agriculture credit, a lion's share (79 percent) is contributed by scheduled commercial banks followed by 15 percent disbursed by cooperatives.
Initiatives to Bridge Rural-Urban Divide
- In order to achieve this gigantic goal of doubling the farmers' income by the year 2022 within the stipulated time period, impetus is being given to farm as well as non-farm activities.
- In addition to boosting income from crop cultivation, the focus of attention is on promoting allied and non-farm activities in rural areas so that farmers can get gainful employment in these activities during the slack season.
- In this context financial inclusion and digitisation can play a crucial to provide basic banking facilities to the poor and excluded sections of the society.
- In order to make growth truly inclusive, it is imperative to provide formal financial services to all sections of the society (particularly to the rural poor) at reasonable rates, insure them against income shocks during emergencies and above all mobilise their small savings.
Schemes for Financial Inclusion in India
- Many schemes and programmes have been launched by the Government with special impetus to bring the financially excluded persons to the mainstream and create financial awareness.
- Pradhan Mantri Jan Dhan Yojana (PMJDY) envisages universal access to banking facilities for every household with at least one basic bank account, easy access to credit, insurance & pension, remittance facility and financial literacy.
- Jan Dhan-Aadhaar-Mobile (JAM) trinity provides a unique opportunity to transfer all benefits and subsidies of various social welfare schemes in the form of Direct Benefit Transfer (DBT) to the account of beneficiaries. JAM trinity can act as a driving force to empower the rural communities by providing social security to them.
- Digital India is another flagship programme of Government of India to empower rural communities.
- It focuses on the three vision areas (i) development of secure and stable digital infrastructure (ii) electronically deliver integrated Government services across departments by improved internet infrastructure and connectivity and (iii) universal digital empowerment of citizens through digital literacy.
- In this context, National Optical Fibre Network, renamed as Bharat Net is also an ambitious initiative to trigger high speed broadband network in rural India.
- In order to impart digital literacy in the rural areas of the country, Pradhan Mantri Gramin Digital Saksharta Abhiyan (PMGDI5HA) was launched with the aim to empower at least one person per rural household with crucial digital literacy skills.
- The scheme aims at bridging the rural urban digital divide, with special emphasis on marginalised sections of society, SC/ST, minorities, BPL, women and differently-abled persons.
- In order to widen financial inclusion in hinterland, Small Finance Banks (SFBs) have been set up in India.
- The objective of setting up of these banks is to promote financial inclusion in those areas where extending banking services to the un-served and underserved sections of the population is a challenge to the commercial banks.
In a nutshell, a large number of schemes and programmes have been initiated by the Government to empower rural communities especially the marginalised sections of society.
- These programmes provide an excellent opportunity to the excluded sections to come forward at the forefront and actively participate in the process of inclusive growth and socioeconomic development of the country.
- The rural-urban digital divide needs immediate attention of the policy makers.
- In the process of rural empowerment there are some obstacles like low education, digital and financial illiteracy, poor access to technology, fewer livelihoods opportunities outside agriculture due to low growth of allied sector, lack of skill, etc., which can be easily overcome if Government pragrammes and policies are implemented in true spirit.
- It is imperative to strengthen rural financial institutions to give impetus to some of the under performed areas through extended outreach of banking, particularly in the hinterland of the country.
- The information technology based financial inclusion should take place of the traditional network-based inclusion.
- People should be encouraged to make extensive use of net banking and link their accounts to mobile and other hand-held connectivity devices.
- The banks may carry out a survey in their area of operation to find out the migrant labourers excluded from bank network and can relax the KYC norms to such labourers.
- The overdraft facility with some limits in 'no frills accounts' can also be extend to people of lower income groups.
- A federation of SHGs as an autonomous body, having no political affiliation should be formed for encouraging people to participate in the process of inclusive growth through financial inclusion.
- A joint effort on the part of Government, commercial banks, regional rural banks, cooperative banks, small finance banks, nonbanking financial companies and NGOs supported by general public can play a very important role in providing banking services to the excluded segment of the society and ultimately empower the rural communities.