Role of the Institutional Finance in Rural Development with Special Reference to NABARD

Abstract

newline Rural development has always been an important issue in all discussions pertaining to economic development, especially of developing countries, throughout the world. In the developing countries and some formerly communist societies, rural mass comprise a substantial majority of the population (Pandey, 1988). The importances of agriculture and rural economy have several views. In this regard, many traditional thinkers like Baker, Wilson etc. were of the view that agriculture is par excellence the fundamental industry. Further, the simple explanation is that because agriculture feeds the world, so, it is the basis of the existence of human being. The second stream emphasizes that in modern times, agriculture is not uniquely basic, and the prosperity of a nation has depended largly on other factors (David, 1949). Another view stresses that any part of the country cannot be happy and prosperous if another part is in distress (Brandt, 1959). Lastly, some other economists, like, Simon Kuznets, W.W. Rostow argue that development of agricultural sector is a precondition for the development of the industrial sector as well as for the overall development of economy. Agriculture and allied sector occupies an important place in all corners of economy. Finance is an important source and every sector of the national economy- agriculture, industry, trade and various services need credit both for carrying on day to day activities and also for growth and progress, and Institutional Finance means the finance which is provided to various sectors from the different agencies. The three main objectives of institutional finance for the agricultural and rural sector are (a) promoting growth, (b) ensuring better equity, and (c) making financial operations viable (Desai, 1989). Agricultural Development mainly aims at increasing agricultural products such as crops, livestock, fish and etc. On the other hand, Rural Development mainly targets on people and institutions. Rural development includes agricultural development