In rural area, mainly parents are uneducated. Because parents are not aware hence they don't know how to raise their kids and the importance of education which effect their kids. Basically lack of awareness and recourse cause illiteracy among rural people.
I think poverty is the most important reason behind illiteracy. There are other reasons too like absence of educational infra structure etc, But illiteracy is complete ignorance and this can be attributed only to poverty.
one of the major reason for illetracy is uneducated parents also, and sometimes parents listen to their relatives and friends suggestion that there is no need to educate your daughter because she wil get married and not be able to earn money.
other reason is money, every where in India where you go, you will find donation is there for higher studies. That's why middle class parents can't afford their child for education.