Intra and Inter regional trade and the role of rural Market centers

The services which involve the activities of buying and selling of goods are termed as trade. Like transport, communication, banking etc. it is also a tertiary service and an important infrastructure for the development of economy including agriculture and industry in the country. Trade may take place at various levels -local, regional,
national or international.The growth of trade depends on accessibility of a well developed market and well advanced communication system.

A regional analysis of trade and payments is particularly relevant for a country like India where the balance of payments deficit has already set a limit to the possible rates of her economic development.
It can be demonstrated how the changes in the directional pattern of merchandise and non-merchandise transactions over the past decade implied a changed significance of some countries (and currency areas) in India’s balance of trade and payments.

India geographically is a vast country with highly variable terrain .the northern plains which are irrigated by the perennial rivers produce huge food grains and have a complex network of roads and railways. the plateau region is a source of several mineral resources like coal and iron ore. the northern hilly region produce vast amount of dry fruits apples and other fruits. in the country there are 8 major industrial belts and several other smaller belts where different types of products are manufactured .thus all these factors cause the inter-regional trade within the country.

The importance of domestic trade in a country is that it facilitates exchange of goods within the country. By doing this it also makes sure that factors of production reach to the right places so that the economy of the country can grow. By allowing all different types of goods and services to reach to all parts of the country it improves the standard of living of the residents of the country as well as the employment rate of the country. And it helps the growth of an industry by ensuring the availability of raw materials.

Internal trade is made up of trade in goods and services across the country. The major problems faced by the trading community are the diversity of controls exercised by multiple authorities at different levels, restrictions on inter-state and inter-district movement of goods, lack of uniformity in standards laid down by different authorities and agencies and in taxes. Pricing strategies get affected by differential tax rates and become localised.

Trade in agricultural products is overshadowed by various restrictions imposed on account of ‘food security’ considerations under the Essential Commodities Act. These restrictions may encompass sale and purchase of agricultural produce in organised mandis, storage of essential commodities, transportation of food grains,processing and distribution. Storage controls, together with selective credit policies, severely restrict the capacity of private operators to undertake storage thus reducing their capacity to cover price risks through hedging on futures market. Currently, as part of its selective credit control policy, the RBI sets ‘minimum margins’ on commercial bank advances against a range of ‘sensitive commodities’ such as, food grains, pulses, oilseed, vegetable oils,sugar, gur, khandsari and kapas/cotton.

Rural marketing involves a bunch of processes that includes developing, pricing, promoting, distributing rural specific product and service which satisfies the consumer demand and also achieves organizational objectives as expected from the target market. Initially prior to 1960 Rural marketing referred to selling of rural products in rural and urban areas and agricultural inputs in rural markets. It was treated as synonymous to ‘agricultural marketing’. Agricultural produces like food grains and industrial inputs like cotton, oil seeds, sugarcane etc. occupied the central place of discussion during this period. The supply-chain activities of firms supplying agricultural inputs and of artisans in rural areas received secondary attention. The local marketing of products like bamboo baskets, ropes, window and door frames, small agricultural tools like ploughs by sellers like black smiths, carpenters, cobblers, and pot makers were emphasised in general. This was totally an unorganized market where all banias and mahajans (local business people) dominated this market.

Later on green revolution resulted from scientific farming and transferred many of the poor villages into business centers. As a result, the demand for agricultural inputs went up especially in terms of wheats and paddies. Better irrigation facilities, soil testing, use of high yield variety seeds, fertilizers, pesticides and deployment of machinery like powder tillers, harvesters, threshers etc. changed the rural scenario. In this context, marketing of agricultural inputs took the importance. Two separate areas of activities had emerged- during this period ‘marketing of agricultural inputs’ and the conventional “Agricultural Marketing”.

Since 1990s, India’s industrial sector had gained in strength and maturity. Its contribution to GNP increased substantially. A new service sector had emerged signifying the metamorphosis of agricultural society into industrial society. Meanwhile, due to the development programmes of the central and state governments, service organizations and socially responsible business groups like Mafatlal, Tatas, Birlas, Goenkas and others, the rural area witnessed an all round socio-economic progress. The economic reforms further accelerated the process by introducing competition in the markets. Steadily, the rural market has grown for household consumables and durables.



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