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“Rural communities are most disadvantaged when it comes to infrastructure, education, sanitation and healthcare”-World Economic Forum Report-2008
PROBLEMS-FACTS SHEET

Rural populations are highly dependent on agriculture.Almost 65% of India’s population is directly or indirectly dependent on agriculture, although it only accounts for approximately 16% of GDP. Water for agricultural use currently represents 92% of renewable water resources, compared with 3% for industry and 5% for domestic use.
Increasing pressures on land: 600 million people are directly or indirectly dependent on agriculture in India. The size of India’s rural population dependent on arable land has increased from just over 400 people per square kilometre of arable land in 1994 to nearly 500 people per square kilometre in 2003.
Increasing pressures on water: Agriculture usage accounts for 93% of India’s renewable water supply and is depleting water tables. Other elements are increasing the pressure on water supply and quality: poorly managed and wasteful irrigation practices; a shift to more water-intensive crops, such as horticultural produce.
Slow progress on productivity: India is second only to the US in the amount of cultivable land within its borders (147 million hectares). However, in comparison with other high-growth economies such as China or Brazil, its yields are lower and agricultural productivity is climbing at a slower pace. Per capita productivity in India only rose by 7% between 1995 and 2004, compared with 25% in China.

Approximately 25% of India’s population is malnourished and lives below the poverty line despite current self-sufficiency in food production. Child malnutrition is responsible not only for 22% ofIndia’s disease burden, but also for 50% of the 2.3 million child deaths in India each year.
Food security: Relatively high self-sufficiency and government subsidies for the poor have sheltered India from the effects of the higher food prices seen over the past 18 months. While international prices for processed wheat increased by as much as 67% in the first half of 2008, Indian wheat prices rose by only 7%.

Changing consumption patterns: Nutritional patterns have changed since the 1960s, with the successive introduction of cereals, dairy and poultry, vegetables and meat. From a nutritional and Production standpoint, this diversification is advantageous. However, this represents a shift to more perishable goods and necessitates more sophisticated supply and retail structures to ensure both health and safety for consumers and returns for the producers.
Economic disparities: India’s economic growth is not benefiting rural populations as much as those living in urban areas. Rural communities are most disadvantaged when it comes to infrastructure, education, sanitation and healthcare.
Disputes over access to land and land sale agreements: Given their reliance on land, rural communities are reluctant to sell land for infrastructure development or industrial use unless they feel they can share in some of the generated advantages.
Shortage of Energy: The gap between energy demand and supply will worsen as India's energy needs grow with population growth and economic development. Stagnant production of crude oil has increased dependence on oil imports, which is more than 70 per cent. One-third of the power supplied fails to reach consumers. Inexpensive and reliable electricity supply is vital to India's prosperity, especially for the 400 million people, mostly in rural areas, who don't have access to electricity. To ensure adequate energy supply and maintain an average growth of even eight per cent, there needs to be a ten-fold increase in energy capacity generation. Diversifying India's energy supplies will also help India mitigate the energy risks. Energy risks remain one of the biggest for a country which sources most of its energy supplies from outside. India's energy security is a vital part of its strategic national security. Geopolitical tensions with energy suppliers and energy transit countries pose a threat to uninterrupted energy supplies, even as competition for limited conventional energy resources mount.
Effect of International Financial Crisis on Indian Economy The deterioration of the global financial environment has affected the national economy and the spill-over effects on the real economy are still unfolding, indicating the risk of a threat to economic security. Slower global growth will mean sluggish demand from developed economies and affect Indian exports in the coming quarters. Growth in the second quarter of 2008 fell by 1.3 per cent to 7.9 per cent, compared with the same period last year. The financial crunch has also sucked out liquidity from India's domestic markets, because foreign investors started to pull out their capital to support themselves on their home turf. Dependence on such capital inflows to finance its current account deficit suffered. The Indian rupee's volatility poses another risk. As on October 2008, it depreciated by 24 per cent in the previous 12 months. While currency depreciation led to growth in exports (mitigating low demand) by 35 per cent during April-August 2008, compared with the same period last year, importers have been feeling the heat.

Important Initiatives and Action Needed Now

Managing crop diversity: The biggest shift in the agricultural sector has been the move to more horticultural products. Rising demand for fruit and vegetables and shorter growing cycles, which allow several harvests a year, enable farmers to spread their risk over several crops.
ACTION: Horticultural produce is highly perishable and requires better storage, distribution and retail conditions. These crops also place pressure on water resources.
Infrastructure: Power, water and sanitation are key to human and economic development in rural areas. Road links will allow farmers rapid access to markets and agro-industry to scale up its logistics. The government is working to link rural villages to the Golden Quadrilateral infrastructure project (linking Delhi, Kolkata, Chennai and Mumbai). It is estimated that India is adding an average of three kilometres of roads to its network each day.
Improving food security by enabling a more efficient market system: The lack of infrastructure for distribution and of an organized retail sector means that access to wider markets is limited.
ACTION: Policies are required to remove barriers between internal markets and thus allow emergence of an efficient market system.
Fair price assistance may still be necessary for the 25% of India’s population that fall below the poverty line, but agricultural prices should vary less if a common internal market can be established.
Rural development and employment: India’s agriculture sector alone cannot provide sufficient growth to enable its rural population of 600 million to significantly improve their livelihoods.
ACTION: ith better infrastructure and investment in education, it will be possible to develop more value-adding aspects of agriculture, from
Processing to better product grading, logistics and retail. Several states are successfully attracting industry to rural areas, allowing populations to remain in their villages but to move into non agricultural based employment.
Increase investment to prevent malnutrition: urrent initiatives already provide food to children, but many focus more on young school children. It is critical to extend these programmes to those under the age of three, where malnutrition has the greatest negative effects on physical and cognitive development.
ACTION: Initiatives also need to incorporate parental education and guidance on health and nutrition.