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Country case studies: India


11 Decentralization: The Indian experience, Raghav Gaiha, India
12 Decentralization of rural development in India: The role of cooperatives/self help groups, Mr P.K. Mishra, India
13 Decentralization of democratic institutions in India: With special reference to Madhya Pradesh, Amitabh Kumar Singh, India
14 The role of self help groups in rural development: A case study of 18 Indian organizations in 10 states, Mr B.H. Gowda,Bangalore

11 Decentralization: The Indian experience, Raghav Gaiha, India

Decentralization of the socio-economic planning process and plan implementation to the grass-roots level has been a matter of continuing concern. Strengthening panchayats (assemblies) as effective local self-governing institutions is enshrined in India's constitution. Over the years, a heterogeneous structure emerged but effectiveness varied. The 73rd Constitutional (Amendment) Act, designed to revive and strengthen the panchayats, was a landmark. As a result, the panchayats have become the third tier of governance, after union and state governments. There is now a greater recognition of the important role that non-governmental organizations (NGOs) can play in rural development, through effective delivery of various programmes/services and empowerment of the rural poor.[9] But above all, grass-roots initiatives are rooted in the belief that participation of the people in the development process is an appropriate end in itself. Among policy concerns, an important one is how to strengthen linkages between official agencies and panchayats and other rural organizations on the one hand, and between panchayats and other rural organizations on the other, in the context of poverty alleviation.

The Eighth Plan (1992-1997) reaffirms the need for a participatory strategy of development and aims to create and strengthen institutions at district, block and village levels. Panchayats are to be entrusted with adequate financial resources, technical/managerial inputs and decision-making authority. The rationale of this strategy, as enunciated in the plan, lies in the ability of panchayats to better diagnose the needs of the community and their greater accountability to the community.

The amendment is in some ways a culmination of the evolutionary process of decentralization of democratic power. It confers constitutional status on panchayats at village, block and district level in each state; mandatory elections after five years; quotas for vulnerable sections, including women; financial devolution and a broad delineation of areas of responsibility. State legislation conformed to the constitutional amendment, so that by 1998, most state governments (except Bihar) had conducted panchayat elections under new legislation.

Rural organizations

Panchayat organization, design and structure

Following the constitutional change, each state enacted its own provisions within the directed framework. Despite the flexibility in the framework and political differences, there is remarkable similarity in the structures enacted. Some were unavoidable in view of the directed provisions. The key features are: a three-tier structure of district, block and village panchayats with the Gram Sabha as foundation; direct and periodic elections; quotas for scheduled castes (SCs) and scheduled tribes (STs), backward classes and women; delineation of major financial and administrative responsibilities, budget and audit requirements; a supposedly rational basis for resource sharing between the state and panchayats; provision for executive/support staff and a rather strict procedure for dissolution/suppression of panchayats and mandatory elections within six months of dissolution.

However, some aspects of this broad structure were neglected or left largely unresolved. While the Gram Sabha is viewed as foundational, its power and functions are vague and limited. No state acts attempted to reduce financial and administrative responsibilities, let alone specify functions and duties at panchayat level. Reproduced unchanged or with minor modifications were lists from the 11th Schedule, added to India's constitution following the amendment. Nor were bureaucratic domination and political interference minimized. Maharashtra was the only state to exclude local political personages (MLAs, MLCs and MPs) from Panchayat Samiti and Zilla Parishad membership. Furthermore, the collector (district administrative head) was not assigned a formal role. At the same time responsibility for two centrally sponsored poverty alleviation schemes, the Integrated Rural Development Programme (IRDP) and Jawahar Rozgar Yojana (JRY), remained vested in an official agency, the District Rural Development Agency (DRDA), which functions independently of the Zilla Parishad. Although financial viability of panchayats was emphasized, state concerns were largely confined (to a more rational) allocation of resources between the state and panchayats. Given that many states are perpetually in deficit, regardless of allocation criteria, deficits at panchayat level will likely persist. Little attention was given to tax assignment to and other forms of resource mobilization by panchayats to enhance financial autonomy and capability.

Structural inadequacies are more evident when viewed in terms of coordination between panchayat levels on one hand and between panchayats and official agencies on the other; incentive compatibility between panchayats and line agencies and their accountability to the Gram Sabha. Overlapping areas of responsibility, rigid and elabourate procedures, and weak monitoring and evaluation systems impede coordination between panchayats and official agencies. Coordination failures result in delays in disbursal and utilization of funds - especially at Gram Panchayat level. In fact, slow and uncertain disbursal of funds forces them to undertake small uneconomic projects.

State acts addressed this concern, but difficult problems remain unresolved. Financial reporting procedures have been streamlined, but the Gram Panchayat reports to the Block Panchayat and it reports to the Zilla Parishad. Information and other requirements are far too demanding, especially at Gram Panchayat level. Delimitation of multi-level panchayat roles envisaged in state acts are not helpful without clear demarcation of specific responsibilities/duties. Despite the primacy given to panchayats in rural development, some key centrally sponsored plans such as IRDP and JRY remain largely controlled by official agencies. They ensure that prescribed norms/guidelines are adhered to, while panchayats have different but more specific concerns, some antagonism is unavoidable. However, if Gram Panchayats have greater accountability, some grants could be channeled directly to them reducing substantially, if not eliminating altogether, the coordination failures.

A key issue is whether there are incentives in the present structure for elected panchayat representatives to respond to community needs. More specifically, will programmes/schemes assigned to panchayats be implemented to meet community needs? Both the constitutional amendment and the state acts emphasize the key role of the gram sabha in this regard. Two meetings a year are mandatory; all development, financial statements and other activities must then be reported. Elections after five years are mandatory. As this enforcement mechanism may not work well, the Uttar Pradesh and Karnataka state acts provide for dismissal of the Gram Panchayat chair by the Gram Sabha. While this cannot be dismissed as inconsequential, it would be na´ve to overstate its importance. An incentive incompatibility also exists between elected representatives of Gram Panchayats and staff drawn from government service. Although the latter are placed at the disposal of the former, their transfer and promotion decisions are vested in the state bureaucracy. As a result, compliance of line agencies with Gram Panchayat concerns is problematic. Whether common performance indicators could circumvent the incentive incompatibility merits serious consideration.

The state acts emphasize panchayat financial accountability to the funding authority and not so much to the community. This is reflected in the importance given to financial reporting, budget preparation and account auditing at each panchayat level. Their concern is not limited to balancing revenue and expenditure but extends to expense compliance to guidelines/norms prescribed for various schemes. In consequence, limited panchayat autonomy is likely to delay implementation.

Serious doubts persist regarding accountability of the Gram Panchayat to the Gram Sabha despite the key role assigned to the latter. Specific provisions for maintaining minutes of Gram Sabha meetings and displaying decisions in public are missing; with no monitoring system, it is not obvious how the Gram Sabha can check if expenditures accord with decisions; in case of deliberate default (e.g. embezzlement), the Gram Sabha has no power to dissolve the former. With a multiplicity of goals and vague definitions it is difficult to assess the performance of the Gram Panchayat.

Is there an explanation for similarities in organizational structure? It is usually the fate of top-down initiatives; there were no political compulsions to evolve more specific or rigid structures and no administrative imperatives to design a completely new organizational structure. Consequently, the broad organizational structure embodied in the amendment was substantially reproduced.

Implementation

The Uttar Pradesh experience sharply contrasted with that of Karnataka; Karnataka was relatively quick in holding elections, the former was not. Elections to 30 percent of the Zilla Panchayats had not been held and more seriously, officials in Kshettra Panchayats had been elected. Although the delay was partly due to political uncertainty (including a demand for separate statehood for hill areas), a major factor was social resistance to quotas. That this delayed elections in Karnataka is evident from the controversy over reserved constituencies. While there were differences in panchayat membership as well, Uttar Pradesh members were younger, with more land, education and social connection than those in Karnataka. There was nonetheless a striking similarity: chairpersons and deputy chairpersons at block and district levels were generally from relatively affluent sections.

Devolution

Both the Uttar Pradesh and Karnataka case studies point to serious aberrations, which took different forms: arbitrary reassignment of areas of responsibility, shortfalls in financial allocations and lack of administrative and other support. Of all areas assigned in theory to panchayats in the Uttar Pradesh Act, only rural sanitation was in fact assigned. Other areas remained under control and supervision of district/state agencies: e.g. the district agriculture officer was in charge of agriculture; a government engineer had responsibility for minor irrigation schemes. Given that the district magistrate chairs the District Rural Development Agency and the CEO of the Zilla Parishad reports to him in the official hierarchy, overall responsibility for some of the most important programmes (including the JRY and IRDP) vests in the magistrate. The Karnataka study points to another source of aberration: relative bargaining strength and skills of panchayats at different levels. Given a relatively stable political environment and a well-carved out role for the bureaucracy, the battlefield shifted to the panchayats. Most major schemes were monopolized by either Zilla Panchayats or Taluk Panchayats. Within agriculture, seed farms were assigned to both the Zilla Panchayat and Taluk Panchayat, but are in fact handled by the former. In animal husbandry, improvement of livestock, promotion of dairy farming, poultry and piggery were assigned in the act to the Gram Panchayat but are dealt with by the Zilla and Taluk Panchayats. Likewise with fisheries. Rural industry promotion is assigned to all panchayats but is in fact handled only by the Zilla Panchayat. Women and child development schemes are assigned to all but are in fact implemented only by the Taluk Panchayat. Implementation of the JRY follows the Act (it is a duty of the Gram Panchayat), but land reform responsibility has not been transferred.

Shortfalls in grant use are largely procedural in nature - grants are seldom given directly to the implementing agency, or if they are they directly involve an elaborate procedure (e.g. submission of a utilization certificate for the previous instalment) to which panchayats - especially Gram Panchayats - find it hard to comply. Since procedures have not been simplified and provisions for supporting staff are far from adequate, shortfalls in utilization are likely. Administrative and other support systems are weak and inadequate. The Karnataka case study draws attention to the ambiguity in the roles of the Taluk Panchayat executive officer and the block development officer (the latter usually combines both roles). The Executive Officer is not provided support staff (though Taluk Panchayats were given larger scheme-wise allocations than Zilla Panchayats). Similar failures are reported at Gram Panchayat level. The constraints were not merely financial: a weak organizational structure, largely at the mercy of district administration and technical departments, had much to do with such failures

Autonomy

Greater autonomy to panchayats to design and implement schemes/projects and mobilizing resources could reduce significantly the mismatch between their original and agency functions. Although the amendment sought to correct this mismatch, serious aberrations have appeared. In Kerala as part of preparation of the Ninth Plan it was stipulated that 35-40 percent of outlays would be devoted to schemes/projects formulated by local bodies. In other schemes too, suggestions of local bodies would be accorded due importance. As a result, sectorial/programme outlays reflected better the needs of the village community. Some 45 percent of the resources were to be contributed by the community/ beneficiaries in labour, material and money. Evidence suggests that resource mobilization exceeded optimistic expectations. In another village, farmers were encouraged to cultivate vegetables to supply nearby cities as a supplemental income activity. Different sections of the community contributed to this scheme with the Gram Panchayat coordinating their efforts and covering a major part of the cost. Additional annual household income was increased. Initial success led to more ambitious plans for the next year and triggered similar experiments in neighbouring villages. Thus, both the original and agency functions were transformed larger share of the latter would impart with a narrowing of the mismatch between them. Financial autonomy of panchayats is a major concern in itself. Government grants are usually tied and revenue collected from taxes and fees levied by panchayats is relatively uncommitted, the latter offer greater financial autonomy. This share (at the level of the Gram Panchayats) varies from a low of 1.0 percent in Punjab to a high of 63.40 percent in Kerala. A study of Mandal Panchayats in Karnataka confirms an ample scope for enlarging the share through the initiative and resourcefulness of chairpersons. Unfortunately, most state acts (after the amendment and designed to deal with the distribution of functions and finances of panchayats) simply reproduce subjects listed in the Eleventh Schedule. As tax and fee assignments are not generally liberal - especially in the context of enhancing areas of responsibility of the Gram Panchayats - it is necessary to review them with a view to augmenting their share.

Empowerment

Whether the constitutional amendment contributed significantly to empowering the rural poor (i.e. do they have a larger role in Gram Panchayat decision making) cannot be assessed for lack of data, but it is seen that quotas for them - especially women - have mixed effects. That quotas divide or weaken the poor cannot be ruled out. Also to the extent that the local power structure is deep-rooted, those elected typically are supported by influential groups and thus serve their interests. Conversely, quotas may legitimize power sharing over time. On balance, their impact on the poor may be favourable but limited. If the amendment combined quotas with stricter guidelines for implementing anti-poverty programmes, e.g. land reform and special employment programmes, the impact would have been greater. Without improved incomes, despite quotas, the poor will likely have a minor role in Gram Panchayat decision-making. The claim therefore that the 73rd Constitutional (Amendment) Act signifies "power to the people" is exaggerated, if not largely mistaken.

Other rural organizations

Rural organizations in three states were surveyed: Andhra Pradesh, Karnataka and Maharashtra. Five major types of rural organizations included: cooperatives, producer associations, labour unions, women's and youth associations and NGOs. Data were collected on membership, funding, frequency of elections, activities performed and results and constraints in 1991-1993, coinciding with the initial phase of policy reforms (structural adjustment). Since much evidence was descriptive/qualitative in nature and warrants careful interpretation. The cases below focus on participation of the poor, their autonomy in these organizations, their impact on the poor and constraints under which they operated.

Cooperatives

Three cooperatives provide an interesting cross section: a milk producers' cooperative in Andhra Pradesh, a credit cooperative in Maharashtra and a milk producers' cooperative in Karnataka. Ninety percent of the Andhra Pradesh milk cooperative members were either landless or small cultivators, but participation of women was low (just 6 percent). Its executive committee comprised mainly landless and small cultivators (11 of 12). The representation of women (two of 12) was high relative to membership. Government was not represented on the executive committee. Elections were held once in three years and the general body met annually, with 40 to 60 percent of members present on average. The cooperative was entirely self-financed by member contributions. While milk sales exceeded Rs. 0.3 million in 1991-1992 (half contributed by landless and small cultivators), surplus was barely Rs. 1600 (0.53 percent of sales revenue). Sales rose to Rs. 0.4 million in 1992-1993 with a slightly higher surplus of Rs. 2 500 (0.62 percent of revenue). Failure to expand was largely due to financial constraints. Weak infrastructure (lack of office space) impeded smooth functioning; limited managerial and technical skills further constrained the cooperative's performance.

The Maharashtra credit cooperative had many members (248 in 1991-1992), growing by 20 in 1992-1993. Most members (75 percent) were large cultivators, but women's membership was low (14 percent). The nine-member executive committee had no small cultivator representative but one woman sat on it. Elections were held every five years. The general body met monthly; attendance was usually good. The cooperative was financed mainly by members and NGOs. Most credit (71 percent) accrued to large cultivators and a small share (6 percent) to small cultivators. Following a loss in 1991-1992, credit disbursed (Rs. 91 000) in 1992-1993 was lower than in the previous year (Rs. 132 000), but earned a moderate surplus (8.8 percent of credit disbursed) in 1992-1993.

The Karnataka milk producers' cooperative is unusual. Dominated by women (80 of 109 members in 1991-1992, rising to 85 of 114 in 1992-1993), eight of its nine executive committee members were women in 1991-1992. It had negligible surplus, however, partly due to limited technical skills. It was also felt that the executive committee lacked familiarity with cooperative rules and procedures and, more importantly, entrepreneurial skills.

Labour unions

The Andhra Pradesh Labour Union (Hyderabad) illustrates the potential of a mass-based rural organization. Affiliated to a political party, implementation of minimum wages, distribution of surplus land, house sites and loans for self-employment were its main concerns. It extended maternity and pension benefits to agricultural labour, but was less successful in securing land tenure rights due mainly to weaknesses in official enforcement machinery. Diversified skill training for rural labourers was not a high priority, nor was it enthusiastic about raising membership fees to compensate for services provided. The Labour Union (Bangalore, Karnataka) provides sharp contrast: although it too was affiliated to a political party, it demonstrated a strong urban bias, expressing concern for minimum wages, safely standards and regulated working hours in rural areas, but did not pursue these goals. Neither were concerns raised for agricultural labour facing inflation due to policy reforms.

Farmers' unions and associations

The Andhra Pradesh Farmers' Union (Hyderabad) demonstrates the potential for such organizations to protect the interests of small and marginal farmers during policy changes. Affiliated to a political party with a mass base, its membership was large, financed entirey by member contributions. Members and union representatives often consulted. The union concentrated on ensuring small farmer access to subsidized fertilizers, increasing prices for agricultural products and protecting tenant rights. It succeeded in lowering interest rates charged by local moneylenders, ensured uninterrupted release of irrigation water for standing crops. A major element conspicuously absent was a concern to help small farmers adjust to the new policy framework with its emphasis on deregulation of price and quantity restrictions, withdrawal of subsidies and promotion of tradables. The changing product mix and associated changes in technology and skill requirements warrants stronger extension services for small farmers. Collaboration of the union and extension agencies may bring about a workable programme. Limited union finances will likely become acute with rising service costs (especially transportation). To remain self-financed, the union can raise membership fees, charge for training and other services to augment such support, but this will require recruitment of qualified staff.

Self-management, economic betterment and empowerment

SEWA, founded in 1972, has played an important role organizing self-employed women for economic betterment and empowerment. It has promoted a wide range of cooperatives - providing income-earning opportunities in dairy, gum collection, patchwork and block printing and social security support through health care, childcare and insurance. It has performed both collaborative and advocacy work vis-Ó-vis government agencies and local groups/organizations. Women's empowerment came about as a direct consequence of financing and managing the cooperatives by the women themselves. Of strong interest is the collaboration of SEWA and the government sponsored DWCRA in Banaskantha District of Gujarat where SEWA first helped women or their DWCRA or producer groups, which later federated into the Banaskantha DWCRA Women's Association (BDWA). Organizing women into DWCRA groups was not easy, as reflected in the formation of the patchwork and embroidery group. There was widespread scepticism of government sponsored programmes. When resistance was overcome, the group was encouraged to self-manage its affairs. BDWA provides a marketing outlet. On average, women now earn Rs. 500 per month. Patchwork and embroidery are full-time activities. Migration has stopped. From their added income women buy assets such as cattle and invest in housing improvements. Economic empowerment has had important implications for gender roles at household and community levels. In some cases, given women's involvement in income generating activities and organizational workmen have started sharing domestic work. At the community level, women have become agents of change through successful management of producer groups.

The Cooperative Development Foundation (CDF) founded in 1982 promotes women's credit and thrift societies to empower women economically, socially and politically. In Andhra Pradesh the process is illustrated by the Mulukanoor and Narsampet cooperatives. CDF helped with group formation and enhancement of management skills. Preparation of bylaws, conduct of meetings, accounting and monitoring of loan repayments is done by the members themselves. External financing is discouraged. From 1991 to 1995, membership, savings and loans grew rapidly. New businesses were begun and old ones expanded. Membership of cooperatives enhanced credit-worthiness with other financial institutions. Because of cooperative membership, women now enjoy greater self-confidence, security and independence both within and outside the household. They have a sense of solidarity; caste divisions have weakened. Women now advise their husbands on crop decisions and their advice is sought on community matters such as sanitation. Greater political awareness has led to more participation in local elections.

Government's role

Drawing upon the experiences of panchayats, cooperatives and other rural organizations, the promotional role of the government is discussed below. Broadly, the strategy has two parts: a) the nature and scale of government involvement and b) reforms within the organizations. While it is recognized that government has an important catalytic role in helping rural populations mobilize their own human, financial and other resources, far too often government agencies become overinvolved in managing rural institutions - with unfavourable effects on future growth potential. An appropriate role for government agencies is therefore to create an enabling environment allowing rural organizations to grow and to perform their functions more effectively. To the extent that some such organizations are unable to function effectively because of a lack of professionalism, technical competence and entrepreneurial skills, the government also has an important capacity building role so that they develop into self-reliant organizations over time. On the other hand, organizational reforms must take into account the conditions under which specific forms of cooperation among the members of a community are likely to succeed. Finally, for such organizations to be effective a process of interest representation is also required.

External environment

An important component is the legislative framework for rural organizations. Government's role should be limited to regulatory functions relating to: arbitration in disputes, liquidation or dissolution (e.g. cooperatives); enforcement of basic administrative requirements such as the conduct of annual general body meetings, submission of annual reports and audited accounts (e.g. panchayats). However, when organizations have a less formal structure (such as women's associations), greater flexibility is needed to allow them to create their own internal group rules according to existing social links and practices. Another major environmental factor is the economic policy framework. Although significant macro policy changes have occurred in recent years, the framework within which cooperatives and other rural organizations operate has remained largely unchanged. Marketing cooperatives (i.e. selling fertilizer), would benefit from greater competition from private marketing; and credit cooperatives would become more viable if refinance and other financial support are linked to deposit mobilization.

Organizational reforms

The first issue is selection of activities. Unless the organization responds to a felt need of the community, it is unlikely to attract participants. Also if a service is provided (e.g. marketing) for which the members are willing to pay, it is imperative that it is provided cost-effectively. Participation of members is usually better when they have a financial stake. While government may act as a catalyst in promoting such organizations, the core groups have a key role in ensuring that the community participates. This issue is important since many organizations fail when membership is small. Finally, overburdening an organization with multiple objectives must be avoided as it could stifle its growth. Management capacities grow gradually; once an organization is viable, it can diversity its activities.

Capacity building

If rural organizations are weak, government has an important role in building their capacities so that they develop into self-reliant organizations. This process, however, must not be imposed from above: the organizations themselves must be closely involved. Without careful analysis of past experience and a complete understanding of their constraints, capacity building by government could become an exercise in futility. Some more specific considerations are outlined below:

1) Before promoting an organization, it must be carefully determined whether it is appropriate. Some organizations such as cooperatives are appropriate for large volume business covering operational and overhead costs while less formal or informal groups may be more appropriate for activities that are seasonal and small in volume. The latter may also be more appropriate to ensure wider participation of disadvantaged groups in economic activities. Depending on whether a formal or informal structure is more appropriate, the training and other needs of the organization could be addressed.

2) In providing financial assistance to cooperatives engaged in a business activity, which could pay for itself, targets must be set in terms of some performance indicators for them to dispense with financial assistance in a few years. The financial assistance to a cooperative engaged in export of horticultural products for example could be linked to reinvestment of surplus. This would of course involve close monitoring.

3) The organizational survey pointed to the absence of appropriate management systems and staff training in some cases. At the very least, efforts must be made to acquaint the executives and staff members with the basics of accounting, recording and other management systems which contribute to efficient internal control and provide data necessary for planning, execution and monitoring of business activities. This must be supplemented by periodic job-oriented staff training. In the context of women's associations, a general problem was the illiteracy of the members. As part of capacity building of such groups, it is, therefore, vital to include education of the general membership as an important concern.

4) Associations of disadvantaged groups such as labourers in rural areas warrant special treatment. As the survey illustrated, even with a large membership labour unions were not self-supporting. While it may be possible to raise the membership fee moderately, it is unlikely that this will make a significant difference. As skill formation for a diversified rural economy is a high priority in the context of adjustment, it may be worthwhile for labour unions to engage in training rural workers in collaboration with government agencies. This could generate additional revenue for the labour unions. Government agencies and the firms likely to benefit from the skill formation could offer financial and technical assistance. As skill formation may have important externalities, the marginal social benefit of a given public expenditure may well be substantial. Setting of precise targets for government withdrawal may therefore not be advisable. As such activities may not become self-supporting in a short period of time, government support on a longer-term basis may be necessary.

Conclusion

The strategic role of government in creating an enabling environment for rural organizations - panchayats, cooperatives, labour unions and women's associations - and in building their capacities was reviewed. It is seen that some reforms within the organizations be carried out. However, it must be recognized that their transformation into self-reliant organizations would be slow as management and other capacities take time to develop, especially in informal groups/associations.

12 Decentralization of rural development in India: The role of cooperatives/self help groups, Mr P.K. Mishra, India

The new Indian Constitution committed Central and State governments to decentralize planning and administration to institutions of local self-governance. A major step for involving local people in development was initiated through community development/extension programmes in 1952-1953. A three-tier system of rural local self-government (Panchayati Raj) was initiated in 1959; through constitutional amendment, these institutions were given statutory status in 1993, followed by a Panchayat Act for tribal areas in 1996.

Cooperatives were recognized as instruments of agro-economic change and State participation was advocated in 1954. Cooperatives providing services to members include rural multi-purpose cooperatives, marketing cooperatives, agro-processing and consumer cooperatives and in fisheries, handlooming and dairy sectors were initiated. Reforms in cooperatives include their gaining autonomy, strengthening institutional arrangements for their development, professionalising management besides member's education etc. Government programmes as alternative models of rural development included those for the self-employed, wage employment and food security. Government programmes are now implemented and monitored through elected bodies.

SHGs providing microcredit for economic activities at village level is fast catching up. Many NGOs already operate and are promote by government sponsored institutions/banks. Village level cooperatives are ideal institutions for promoting SHGs. NCDC is deeveloping methodologies for encouraging PACS. For this, the bylaws and Acts of cooperatives need modification. As an apex institution, NCDC promotes and finances varied income generating rural based programmes through cooperatives. Tts ICDP programme is meant for primary level cooperatives. Various ways of securing linkages between cooperatives and NGOs are being worked out. The Indian experience offers lessons on decentralization and people's participation. There is greater need for interaction and coordination between the grass root level political and economic institutions to help reach overall development in the rural areas. Linkages between the two types of institutions at village level should include representation in each other's governing bodies, joint planning and coordination committees to prepare and implement development action plans, enabling powers for the joint committee, enabling village level cooperatives to enroll SHGs and amendment of cooperative laws and bylaws.

In 1919, the colonial government transfered all concerns having a bearing on rural development - rural welfare, agriculture, veterinary, cooperation, local self-governments, public health, sanitation and education - to provincial (now state) governments. This was the first conscious attempt of government to decentralize the processes of rural development. The entry of the father of the nation, Mahatma Gandhi, into the national freedom struggle in 1915 imparted a new orientation to rural development. Gandhiji held that India's economic development ccould not be thought of without development of its 0.58 million villages. His prescription for rural development included promotion of village industries, provision of basic and adult education, women's upliftment and the promotion of hand-spun cloth. He wanted villages to be microcosms of representative democracy. The idea gained momentum on the eve of independence when discussions of far-reaching constitutional and political reforms were taking place.

By independence in 1947, it was realized that despite agricultural development during the previous three to four decades, no appreciable impact had been made on poverty and developmental disparities. Lack of land, low productivity and absence of employment opportunities for a growing population accentuated the situation. Rural transformation required several measures: alleviation of rural indebtedness, providing cheap institutional credit, land reform, promoting post-harvest activities, developing allied sectors and subsidiary occupations and ensuring food security. To achieve this, the constitution committed central and state governments to decentralize planning and administration to local institutions of self governance. Successive Five-Year Plans furthered decentralization and held that effective participation, initiative and self help of the people are pre-conditions for the success of any rural development strategy. The plans also advocated development of cooperatives particularly at the village level for bringing economic development to rural areas.

Grass-roots level governance

The Community Development Programme: The Community Development Project (1952) and the National Extension Programme (1953) were attempted in independent India to transform people's outlook by inculcating self-reliance and cooperative action. With government funds at one end and the people's own efforts at the other, the attempt came to be characterized as "aided self help". Community Development and National Extension Programmes visualized preparation and implementation of plans for agricultural production, irrigation facilities, soil conservation, rural industries, education, adult literacy and rural sanitation. Committees at state and district levels monitored the programme. Within the district, developmental blocks were carved out for effective implementation. The programmes extended to over 5 000 blocks throughout the country.

Institutions of local self-governance: The impact of the Community Development Programme on people's involvement and initiatives left much to be desired. An evaluation in 1957 identified this problem when it stated that rural development cannot come about without an agency at the village level to represent the entire community, assume responsibility and provide leadership for implementing the development programmes. Public participation in community works, it observed, must be organized through statutory representative bodies. A three-tier system of rural local government called "Panchayati Raj" was thus ushered in at the village, intermediate and district levels. The focus was on shifting the decision-making centres closer to the people thereby encouraging their participation and putting bureaucracy under popular control.

Paradigm Shift: Panchayati Raj Institutions (PRI) began in 1959; by the mid-1960s more than 0.22 million village panchayats serving 96 percent of the 0.58 million villages and 92 percent of the rural population had been established. On average, a panchayat contained a population of 2 400 persons in two to three villages. The institutions remained under official control as elections were seldom held, nor were funds made available; this situation was rectified in 1993 when the Panchayati Raj institutions were given constitutional recognition, elections made mandatory, reservation of representation for weaker sections made compulsory and specific powers and responsibilities were assigned for preparing and implementing developmental programmes on a variety of areas. They were authorized to receive grants from Governments and to raise funds through taxes, duties, levies and fees. Statutory finance commissions at state level were to review funding needs of PRI. Almost all states have passed new legislation on panchayats, organized elections and set up finance commissions. Today, there are 226 108 panchayats at village level, 5 736 at the intermediate level and 457 at the district level - with 3.4 million elected representatives. A separate Panchayats Act in 1996 covered tribal areas with enable tribal society to assume control over its own destiny and preserve and conserve traditional rights regarding natural resources. Similar legal status was accorded to other local bodies, e.g. municipalities. These measures, although belated, marked another watershed in the strengthening of grass-roots level institutions.

Cooperatives as rural economic institutions

Recognition of the role of cooperatives: cooperatives as formal associations came to be set up in India from 1904 mainly as credit societies, followed by non-credit societies from 1912. The Royal Commission on Agriculture in 1928 underlined the importance of cooperatives: "if cooperation fails, there will fail the best hope of rural India". Eventually, the village level credit cooperative came to be recognized as having multi-purpose potential not only to finance crop production, but also to supply agro-inputs to farmers, aid them in selling their produce and also distribute articles of daily consumption requirements in the rural areas.

Concept of government participation: With three-fourths of the population in rural areas, cooperatives were considered necessary instruments of agro-socio-economic change. The All-India Rural Credit Survey in 1954 advocated equity participation by government in cooperatives. It proposed measures to promote rural cooperatives. To develop post-harvest and income generation in poultry, dairy, handlooming, horticulture, fisheries and sericulture through cooperatives, a national level institution, the National Cooperative Development Corporation was formed in 1962. Subsequently, disbursement of agro-rural production credit was institutionalized by creation of National Bank for Agriculture and Rural Development (NABARD) in 1981. Such measures marked the transfer of development functions from government departments to statutory and autonomous institutions. Coupled with local initiatives, these steps had a tremendous impact on organization of cooperatives. The result was horizontal and vertical growth of cooperatives such as in banking, agro-marketing, agro-processing, dairy, fisheries, poultry, consumer, labour, industrial, housing, irrigation, electricity and fertilizer production. With 450 000 cooperatives and 205 million members, India today has one of the largest networks of cooperatives. Rural finance cooperatives number 140 000 and 310 000 village level non-finance cooperatives, with 147 million and 46 million members respectively.

Cooperatives as service providers: Government promotion of cooperatives has evolved with a bias toward agriculture as the predominant segment of the rural population. Thus, cooperatives as service providers has been largely confined to agro-allied areas. Some important production and service oriented cooperative ventures include:

Rural multi-purpose cooperatives or Primary Agricultural Credit Societies (PACS) account for 60 percent of funds disbursed. Non-finance business includes fertilizer and seed distribution, storage, stocking agro-inputs and consumer goods, as well as procurement, produce processing and marketing. Cooperative capacity building has been a focus of development institutions like NCDC: it helped 60 percent of 90 000 PACS create office and/or godown space. Cooperatives may receive financial and technical aid under a new NCDC programme: the Integrated Cooperative Development Project. PACS provide financial services such as deposit mobilization, pledge and consumer loans and production credit for agriculture. Some 12 000 PACS in 80 projects have been helped.

Marketing Cooperatives have a federal structure, with 8 800 societies at primary level, 545 units and federations at district/central level, 29 state-level apex federations, one national federation and 22 commodity-specific national federations. Marketing cooperatives procure, process and sell produce, for lower costs, ensuring competitive performance and higher return to members and channel agro-inputs such as fertilizer from production centres to farmers.

Agro-processing cooperatives: Many marketing cooperatives undertake value addition activities to enhance member profits. Some grower members have formed processing units for sugar, cotton and oilseeds. Thus cooperatives enjoy a predominant role in sugarcane processing, accounting for 60 percent of India's sugar production. Cotton cooperatives handle one-third of India's production. In oilseed processing, the strategy includes price support to farmers to encourage more cultivation and creation of modern facilities for processing.

New frontiers in cooperation

University students studying cooperation began it to provide themselves jobs. A few doctors and legal professionals volunteered to join them. Initial problems were formidable: the Kerala Registrar of Cooperatives refused registration fearing liability - the department might need to deal with death cases once the new venture was established. Persistence yielded results and registration was granted following a surety deposit of Rs. 10 000. Kerala's first cooperative hospital, begun in 1969 in rented premises, is today a 236-bed hospital with 40 doctors and 10 specialist departments. Kerala now has 108 cooperative hospitals, leading other states. Collective membership is 60 000 with paid capital of Rs.20.6 million. The hospitals are socially beneficial; benefits flow largely to the poor. Charges are generally lower than private hospitals. Such hospitals now exert a moderating influence on private hospitals.


Government also supports primary oilseed cooperatives in delivery of inputs, extension and education. The cooperative thus can coordinate input supply according to factory requirements.

Consumer cooperatives have a large presence in urban and rural areas. To ensure regular supplies of consumer goods, village level consumer cooperatives have organized wholesale federal stores in district/urban centres. In Kerala and Tamil Nadu, the consumer movement spread into schools and colleges as Student Consumer Cooperatives. India today has 26 000 consumer cooperatives at primary level, 675 wholesale stores at secondary level, 29 state level federations and one national level federation. Over 1300 student consumer stores also function at educvational institutions.

Emerging issues in re-engineering cooperatives: Cooperatives have been described as institutions that have contributed to the modernization of small-scale production in agriculture, fisheries, handicrafts and industry in general. Cooperatives have stimulated productive capital formation among large numbers of persons. In this way and in a wider sense, cooperative growth has become an effective alternative stimulant to economic growth and development, both in rural and urban settings. However, in recent years, policy makers, researchers, economists, and management specialists have tended to look at cooperatives more empirically from a managerial-organizational vantage point instead of as instruments of macro-development policy. The advent of the era of liberalization, economic decontrol and financial reforms has hastened this process of thinking.

There is a growing advocacy for freeing the cooperative sector from over-regulation and providing it with a level playing field with private and public sectors. The cooperatives should no longer look for concessions or favoured treatment from Government. In fact, one of the direct impacts of liberalization and the growing strain on State resources has been the prospect of gradual withdrawal of State involvement in cooperatives. The emerging scenario thus calls for commensurate changes in the existing legal dispensation of governance of cooperatives. First and foremost in this direction relates to changes in the Cooperative Societies Acts based on the Model Cooperative Societies Bill already circulated by the Government of India to various States, which seeks to restore the autonomous character in the functioning of cooperatives. Andhra Pradesh and Bihar have already passed new laws liberating cooperatives from State control.

A model for freshwater fisheries cooperatives

The Mudiali Fisherman's Cooperative Society (MFCS) on wetlands leased from the Calcutta Port Trust is the result of a prolonged struggle by fishermen dating to 1932. Its novelty lies in the evolution of a balanced ecological approach to fisheries. Using an indigenous method, it has promoted a nature park. It has been purifying Calcutta's wastewater, and nourishing pisciculture, horticulture, floriculture, animal husbandry and farm forestry. All thrive on micro-nutrients in the purified wastewater. MFCS has carefully designed a governance structure and management system consistent with the prevailing State ideology. It taps the full potential of its technology and converts profit into welfare and permanent community benefits, and generates income and employment. Although currently trapped in legal complications, the Mudiali experiment has shown that under a reasonable policy regime, it is possible to provide an effective check to the ever-increasing threat of encroachment of water bodies by industry and housing complexes; not merely by aesthetic appeals, but more importantly by the hard calculus of costs and benefits.


The second important aspect is strengthening institutional arrangements for cooperatives in line with those available to enterprises in other sectors. The action plan should include replacement of the existing practice of direct funding by state governments by funding through autonomous institutions; creation of a national/state level cooperative equity fund on the lines of national equity fund for small industries to meet the needs of promoters' contribution; and institutional arrangements for addressing the problem of sick units in the cooperative sector.

The third aspect relates to helping cooperatives to professionalize their management through enhancement of facilities for human resources development and managerial training. In this regard, federal cooperatives should assume a greater role towards their member-societies. India's cooperatives will have to come out of their isolated existence and foster closer partnership and alliance with other cooperatives as well as private sector to cash in on the opportunities opened up by a globally integrated economy.

This is not to say that the relationship between the State and cooperatives may altogether cease. The effects of liberalization and private investment may lead to large scale investment within India but may not encompass relatively backward areas and activities which are predominantly undertaken by disadvantaged sections of the rural poor. State responsibility to ensure the development for such backward regions and activities affecting the weaker sections will continue to require active state involvement and financial support. Nevertheless, the concept of decentralization demands that the government continues the process of institutionalizing its functioning in the interest of prudent deployment of resources, improved management and better results.

Improving the service quality of cooperatives: The changing economic environment has not only led to less resources being available to cooperatives but at the same time it has made it necessary for the cooperatives to provide quality services in a competitive atmosphere. Such a scenario necessarily leads to restructuring of cooperative support services in terms of: education and training; audit; and business advisory services, including finances. One might think of three models to bring about necessary changes in the cooperative sector:

Model No. 1 - The Private Sector

The first option consists of assigning responsibility for delivering support services to the private sector and the responsibility for financing them to the cooperative movement. High cost is clearly the most serious problem associated with private service providers. Smaller and younger cooperatives are unable to send their staff to private colleges, hire private auditors and seek the advice of private management consultants. We therefore believe that the full privatization of cooperative support services is not a realistic option.

Model No. 2 - The Cooperative Movement

The second option consists of handing over responsibility for both delivery and finance of cooperative support services to the cooperative movement itself as it is familiar with cooperative values, and is cost effective and service oriented. This is by far the most desirable solution, because it strengthens the self-reliance of the movement and ensures that cooperatives receive fair, appropriate and timely support services. Yet, most movements in the region are not yet ready to take this responsibility because they do not own the necessary human, material and financial resources and technical-managerial competence. This, notwithstanding, the cooperativization of cooperative support services should remain the long-term goal of each movement.

Model No. 3 - Building a partnership between the state, cooperative and private sectors

This partnership would be based on the consensus that the state, in principle, is not responsible for the delivery and/or financing of cooperative support services, but acts as a service provider or funding agency of last resort in case neither the private sector nor the cooperative movement is (yet) able to offer appropriate, affordable support services. One could, for example, say that cooperatives must in principle be audited by private auditors or a cooperative audit company, but if that cooperative cannot afford these services, the state would provide audit services for a nominal fee. For the system to work, a deadline must be set after which the cooperative must become self-reliant, regardless of its finances.

Restructuring cooperative support services would need certain essential prerequisites to be fulfilled, including: (i) legal reforms; (ii) institutional reforms; (iii) capacity building and (iv) financial arrangements.

(i) Legal reforms: Legal reforms should be intended to make cooperative institutions autonomous, democratic and accountable. The state should be a facilitator and a promoter rather than that of a monopolistic controller. The necessary amendments in the state cooperative laws in terms of model cooperative act, amendments in the Multi State Co-operative Act and the NCDC Act must be pursued to their logical conclusion.

(ii) Institutional reforms: The cooperative movement should create the necessary institutions like colleges, audit companies and consultancy firms and must take concrete steps for cooperativization of support services. There must be a national apex cooperative organization having subsidiary organizations in different parts of the country and the necessary capital must be generated by the cooperative movement. Initially, however, it might require the support of the central and state governments. Each subsidiary organization must specialize in certain support services like audit, education and training, computerization, consultancy and project formulation, etc. In order to improve the viability of these subsidiary organizations, they could offer their services to non-cooperative customers also. The institutional reforms should also include not only cooperativization of the essential support services but also the strategic alliance between the state, cooperative sector and the private sector. There should also be linkages between cooperative institutions, NGOs and SHGs.

(iii) Capacity building: The technical competence of the people manning the delivery of the cooperative support services must be enhanced and adopted to the specific requirements of the cooperative societies. Keeping in view the present state of economic liberalization, immediate necessary measures must be taken by government institutions, cooperative sector, private sector, NGOs, national and international agencies to sufficiently equip the cooperatives with information, knowledge, technology, training and managerial techniques, including sound financial management, market intelligence etc. to make them operationally efficient and economically productive so that they can meet the challenges of open market forces within a reasonable period of time.

Financial Arrangements: Ideally finances for cooperative societies should come from within their own resource. However, if the cooperatives cannot afford the full cost of the various services then they must meet their financial requirements from other cooperatives, state, NGOs and private sector and international agencies. Where the cooperative movement has not taken roots or is very weak, these the state cannot escape its responsibility of developing and supporting this important sector which has become an integral part of the economic system of the country. At present, there are many development financing institutions in the cooperative sector: the National Cooperative Development Corporation (NCDC), the National Bank for Agricultural and Rural Development (NABARD), state cooperative banks, state land development banks etc. Unfortunately, there is no apex level cooperative bank at the national level to assess the genuine financial requirements of cooperatives in a coordinated manner. Government might think of creating such an institution to fill the void and, in NCDC's opinion, given the necessary back up support by the Government, NCDC has the experience and the infrastructure to take up this onerous responsibility.

Alternative models of rural development

Government sponsored developmental programmes: Even as the transfer of governance to local bodies has progressed unevenly, development programmes with specific focus on alleviating poverty and creating employment opportunities were initiated by government for the rural poor. These fell into three broad categories: self-employment programmes, labour intensive public works schemes and programmes of income transfers.

Under the self-employment category, the Integrated Rural Development Programme (IRDP) with its sub-components like Development of Women and Children in Rural Area (DWCRA) and Training of Rural Youth for Self-Employment (TRYSEM) aimed at providing income-generating assets in agriculture, village industries and services besides training to rural youth for acquiring skills and technology for various livelihood occupations. The DWCRA targeted rural women by helping them in organizing themselves and providing training along with infrastructure for chosen economic activities.

The Jawahar Rozgar Yojana (JRY) under the labour intensive public works category sought to generate gainful employment and create community and social assets. Thirty percent of employment opportunities are earmarked for women. The programme differed from others in that it incorporated decentralized decision-making by the village panchayats. Another important programme under this category is the Employment Guarantee Scheme (EGS) in operation in Maharashtra. EGS has contributed to reducing under-employment up to 30 percent of total days of under-employment.

Under the third category falls the Public Distribution System (PDS), a priority programme of the Government. Evolved in the wake of critical countrywide food shortages in the 1960s, the programme sought to contain upward pressure on food prices and ensure access to food for both urban and rural consumers. National Sample Surveys however showed that PDS' reach in rural areas was only 16 percent. The Government has recently re-targeted the scheme to cover particularly remote areas and areas of high incidence of poverty.

These anti-poverty and employment generation programmes have been critically analyzed by experts. One common criticism relates to their conception and implementation without involvement of the people for whom they were meant. It needs to be appreciated that decentralization in India has been a continuing process, which has gained further momentum recently following the constitutional mandate to accord statutory status to the grass-roots level bodies. State governments are now constitutionally bound to delegate administrative functions and powers to such institutions and mount awareness-building campaigns for popular empowerment.

The State of Kerala proceeded with decentralization on the above pattern, under which its Ninth Five-Year Plan was to be a bottom-up plan prepared by the people themselves. In the process, 10 percent of Kerala's population will have been involved, which is probably the largest popular participatory planning exercise of its kind in the world. Eventually, state-driven implementation of such rural development programmes is scheduled to undergo a paradigm change with the focus shifting from the centre to the periphery.

A village shows the way for the state

Kalliasseri inspired much decentralized planning in Kerala. In the early 1990s, activists created a voluntary group to promote local development. Led by a teacher who used Kalliasseri's volunteerism, mutual aid and mass organizing to produce successes that now inspire aspects of the Ninth Plan. Volunteers built an 825-metre canal, drained a previously waterlogged area, mapped local resources, reorganised schools, installed efficient stoves and solar street lights, set up a shrimp farm and formed vegetable cooperatives to generate employment and reduce food costs. If the Ninth Plan is about democratic development, Kalliasseri's cooperative network is a long-term direction.


In spite of varying opinions on the role of the State in implementing rural development programmes itself, the programmes themselves or their objectives that have a country-wide focus, have only been well-received. As Robert Chambers put it, "the pervading sense, supported by the best development wisdom of the time, was that the Government could and should do more". According to him, "In rural development policy and its application, South Asia, especially India, contrasts with most of sub-Saharan Africa in adhering to neo-Fabian approaches. It was, indeed, in India, that some of the policies advocated in redistribution-with-growth originated, and where attempts to implement them have subsequently been most sustained. To my knowledge, India is alone among developing countries in itspersistence with massive administered programmes targeted to individuals or households. In a neo-Fabian mode, rural development programmes in India have been standardized, subsidized, packaged and targeted".

A certain amount of institutionalization in planning and implementation of the rural development programme had already been built into them through agencies like the District Rural Development Agencies (DRDA). Following the Constitutional amendment making the PRIs statutory bodies, the state governments can empower the Zilla Parishad (elected bodies at the district level) to discharge all functions of DRDA for planning and development under various government sponsored programmes. The Zilla Parishad will select projects; the project implementing agency (PIA) which may include the cooperatives, NGOs, public sector bodies or other departments; approve plans, release funds to PIA and monitor implementation. While at the intermediate block level, the Panchayat Samitis have been given the right to monitor implementation, at the village level the Gram Panchayats are fully involved in mobilizing the community, training, dovetailing of the programme and maintenance of community resources besides monitoring implementation. It may thus be seen that a reasonable amount of peoples' participation has come to be built into the implementation of rural development programmes.

Self help groups (SHGs): It was long realized that State programmes alone will be insufficient to achieve India's anti-poverty and employment objectives. For instance, India has about 150 000 credit outlets in the rural institutional sector comprising commercial banks, regional rural banks and cooperatives. The total disbursements made by these institutions for agriculture purposes during 1996-1997 amounted to Rs.282 billion. Yet institutional credit meets only 55 percent of total credit demand in the agro-rural sector. From the borrower's vantage point, credit received from institutional sources form only 12-13 percent of actual requirements, with the remainder being met from own sources, friends and relatives, traders, money lenders and land lords. With the result, roughly 2.4 billion deserving rural borrowers have little or no access to funds. Those left out by the formal credit system are the poorest of the poor inhabiting remote areas. Their financial needs are small. Experiments in South and South-East Asian countries, especially Bangladesh and Indonesia which have demonstrated that people's own organizations based on mutual help and trust, i.e Self Help Groups (SHGs), offer the most practical way of reaching the poor in the far-flung areas have greatly influenced Indian thinking and planning. SHGs represent the quintessence of decentralization at the micro level. A SHG is "a group or association of individuals with common economic needs who undertake an economic activity in a systematic manner, participating directly in decision-making and sharingbenefitson an equitable basis".

SHGs, although initiated in India for the first time in 1984 by the Mysore Resettlement and Development Agency (MYRADA), have caught on rapidly with encouraging support from organizations such as the National Bank for Agricultural and Rural Development (NABARD). Subsequently, at the instance of the Reserve Bank of India (the central banking institution), commercial banks started promoting SHGs. From around 250 SHGs linked to banks in 1992-1993, the number of SHGs at the end of 1996-1997 has passed 8 500 with a total membership of over 150 000. Banks have lent to the tune of Rs.111 million.

Liberated village of Jahnitala

Jahnitala in Orissa is a small village with no overdue loans: all 93 borrowers repaid their loans to the Canara Bank. They formed a SHG and raised a common fund with all households depositing. Needy members take/repay loans within a year at 25% annually. The interest adds to common funds, so borrowers do not mind the higher rate. Fifty years ago village elders began reforestation of common wastelands guarded at village expense. All households must be represented at village meetings: a fine is imposed for non-attendance, so no household is unrepresented. Since 1947, no police case has been registered. No political meetings, smoking or drinking are permitted.


However, because of their lack of legal status, SHGs often encounter difficulties in entering into transactions and thus establishing formal linkages with lending agencies. Since a formal nature of existence does not fit their pattern, the practical way for SHGs is to develop interfaces with legally registered self help promotional institutions such as NGOs.

Apart from the Government-sponsored institution, Council for Advancement of People's Action and Rural Technology (CAPART), which promotes voluntary action and propagates rural technologies through NGOs, financing institutions such as the Small Industries Development Bank of India (SIDBI) and the National Bank for Agriculture and Rural Development (NABARD) have also promoted micro financial services through NGOs. Among NGOs, MYRADA (the Mysore Resettlement and Development Agency), Mysore, Karnataka, and SEWA (the Self-Employed Women's Association), Ahmedabad, Gujarat offer good examples of NGOs.

Importance of linkages:If micro-finance programmes are to be successful, linkages between the financing agency (bank), NGO and SHG must be strong and durable. The following linkage models, depending on workability and other practical aspects, have evolved over the years: Direct bank lending to SHG: Under this linkage, the financial agency deals directly with SHG and provides credit for further lending to individual members. Since no intermediary in the form of NGO is involved, only registered and highly efficient SHG can deal directly with financial agencies. Lending by bank to SHG with NGO as facilitator: Here also the lending agency p rovides credit directly to the SHG, but through the mediation of the NGO. The NGO acts as a facilitator, and also provides training and other services to the SHG members. Lending by banks to SHG, with NGO working as financing intermediary: Under this model (widely prevalent in South East Asia), the linkage between the financial agency and the SHG is indirect. The NGO, which functions as a financial intermediary, accepts the contractual responsibility for lending to the SHG and for repayment of the credit to the bank. The NGO is also responsible for providing training and consultancy services to SHGs. Bulk lending by financing agencies through revolving fund arrangement: Under this model, the NGO is provided with a revolving fund, which it lends to SHGs based on viability and demand. The NGO also adopts project-based approach to promote livelihood activities among the poor and provides access to various financial services. NGOs play an important role in training and guiding SHGs besides monitoring, supervising and collecting loans/repayments.

Cooperatives as institutions for promoting SHGs: A village cooperative generally known as Primary Agricultural Cooperative Society (PACS) is a formalized form of SHG. A cooperative however tends to be large, heterogeneous and formal, and in the process lose cohesiveness and proximity with members. As such, the village level cooperative may not necessarily fulfil the characteristics of a SHG: informal set-up, limited number of members (up to 20), commonality of needs to fulfil, etc. Nevertheless, the cooperative can easily fit into the role of an SHG promotional agency. As a promotional agency, PACS can identify sub-groups among their members based on occupation/livelihood activity/service needs or other such norms that bring them together as identifiable groups. On the other hand, several informal SHGs can join together to form a formal cooperative.

The advantage is that both SHGs and cooperatives are owned by the members, unlike SHG-NGO relationships where ownership rests with different entities. Further, SHGs under cooperatives will not only retain their informal and individual identity, but will enjoy institutional identity through the cooperative. Such a federation of SHGs can attract financial, technical and managerial assistance besides institutional support from cooperative development organizations like NCDC. Although a government- appointed committee designed a plan for building linkages between varied tiers of cooperatives and SHGs conceived as a sub-system of the village level cooperative, the cooperatives should be free to adopt their own model for promotion and development of SHGs.

As a promotional and developmental institution, it has been NCDC's experience that the Primary Agricultural Credit Societies (PACS) in the cooperative sector have contributed substantially to the agricultural and economic development of the rural areas. These village level societies numbering over 90 000 still remain the closest institutional link with the rural masses, their operations extending to the remotest parts of the country. Their strategic location in the villages among those who are their beneficiaries, put them in an eminently suitable position to interact and intervene on behalf of the members/beneficiaries in matters of development germane to local needs.

Participation and involvement of these societies in the above manner, besides their mandated role, may not only enhance their usefulness and worth for the social environment in which they operate but also pave the way for better member-relations and strengthening of the cooperative bond. Cultivation of a genuine sense of awareness and interest in developmental issues and dissemination of appropriate information to the village level cooperatives would be essential for mobilizing, motivating and nurturing their leadership potential and securing their whole-hearted participation. NCDC is undertaking studies, analyzing feedback and evolving a broad strategy to help the village society become the nucleus of socio-economic development by facilitating and coordinating activities encompassing the whole of rural life.

PACS need to be prepared for assuming the role of SHG promotional agencies through capacity building. First, the bylaws of PACS would need suitable amendment to enable PACS to enroll and promote SHGs. Second, the managers and other personnel of PACS should be provided adequate exposure to the experience of NGOs/cooperatives/SHGs through appropriate orientation. Suitable training module/member education programme needs to be evolved for the benefit of personnel/members of PACS. Third, adequate financial provision has to be set apart by the government, banks and the promotional and developmental institutions for assisting the cooperatives to promote activities of SHGs.

Role of Cooperative Developmental Institutions: As an apex institution, the National Cooperative Development Corporation (NCDC) promotes and finances a variety of income-generating activities for the small and marginal farmers, rural artisans and other vulnerable sections. The activities include marketing, processing and storage of agricultural, horticultural and minor forest produce; supply of agro-inputs besides vocations like spinning, handloom, sericulture, coir, dairy, fishery and poultry. Especially in the agro- processing projects, the thrust has been on securing a high level of forward and backward integration through strengthening the structural and functional linkages among the individual participants and the cooperatives and other client organizations. This integrated organizational factor has particularly helped in reduction of transaction costs, retention of competitive edge by the cooperatives and higher return to the members.

More areas like rural/cottage industries and village crafts in the production sector and a number of activities in the services sector are to be brought within NCDC's ambit. This would help in strengthening the technical and financial capabilities and performance of a number of cooperatives already in existence in these sectors. A series of new initiatives for cooperativization in farm forestry, irrigation, water harvesting and management, livestock rearing, production and use of bio-fertilizers etc., have been mooted. These programmes would benefit a large segment of population in the rural and semi-urban areas besides helping prudent utilization of natural resources and promotion of eco-based agriculture.

The emphasis of NCDC has been on organizing cooperative models to enable members to earn a higher return through group-action. Besides financial support, NCDC provides institutional support in the form of project preparation, managerial and technical guidance, and manpower development and training. Financial help on concessional terms is offered to cooperatives of weaker sections and those located in the "cooperatively" least and under-developed areas. The pattern of funding comprises a mix of loan, subsidy and equity towards infrastructure and development.

Among the schemes, those on provision of margin money/working capital would be of particular utility to SHGs as they aim at sustaining and enhancing production and improving business. Programmes like Integrated Cooperative Development Projects (ICDP) conceived by NCDC focuses on primary level cooperatives and would, therefore, stimulate group action through SHGs. This is so because not only does it lay stress on savings and deposits from members but also on provision of adequate quantum of loans for individual borrowers for carrying on their economic/livelihood activities.

As part of its future strategy, NCDC intends to build up an effective interface with NGOs at the primary level and also encourages cooperatives to establish such linkages. A number of tasks, as already outlined, can be entrusted to NGOs vis-a-vis promotion and development of SHGs and their linkage with cooperatives. If need be, NCDC would seek amendment of its statute for effective involvement of NGOs. NCDC would persuade the State Governments to modify the cooperative laws to facilitate informal groups being admitted as members of cooperatives.

Conclusion

There is a growing interest in decentralized planning and implementation among various countries. Essentially, the objectives of decentralization cannot be over-stressed. These include increasing popular participation in planning and development, making plans and programmes more relevant to the local institutions; increasing the speed and flexibility of decision-making, generating additional resources, and bringing efficiency in the use of resources.

In India, transfer of planning and administrative functions from Centre to States and from the States to sub-State levels is well pronounced and over the years, several developmental and functional areas have been decentralized through institutionalization. The process continues and the thrust is on further devolution to and strengthening of the grass-root level institutions.

However, Indian experience offers lessons on decentralization and ensuring people's participation in development. Indian approach has been multi-pronged, as it should be for a country of sub-continental size, diversity, population and underdevelopment. The last few years have witnessed significant developments in the empowerment and equipment of people's organizations (POs) at the regional and local levels in varying degrees. While political representative institutions like panchayats have acquired statutory sanctity and recognition for their existence, growth and functioning, economic developmental institutions like cooperatives and other micro level people-centred bodies are yet to inherit similar autonomy and dispensation. It is only in the recent past, particularly after the onset of economic liberalization, that some positive thinking in de-control and de-regulation of cooperatives is getting concretized. The process is bound to gain momentum and strength in the coming years as awareness and awakening deepen among the people.

Nevertheless, the dream of rural democracy by "the people and of the people" will remain elusive if village level political and economic institutions operate in isolation. Increasing need is felt for greater formal and informal interface and interaction among these bodies, between the cooperatives, NGOs, SHGs, Youth Groups etc., on the one hand and the Panchayati Raj Institutions on the other. The following suggestions with regard to operationalizing a linkage mechanism need consideration:

a) Both the panchayat and the cooperative/NGO/SHG should be enabled to be represented in each others' governing bodies and managing committees;

b) A joint planning and coordination-cum-monitoring committee of the panchayat, PACS, developmental agencies and voluntary bodies may be set-up with the President of the Panchayat as Chairman, President of PACS as Secretary and the Secretary of the Panchayat and the PACS as the Convenor and Joint Convenor respectively;

c) A comprehensive panchayat plan for the development of human, land and environmental resources, promotion of traditional arts and crafts, cottage and village industries, housing and infrastructure, water supply etc. may be formulated and implemented by the joint committee;

d) The joint committee should be enabled and equipped with necessary powers for conducting socio-economic surveys, organizing education and training, resource mobilization campaigns, recovery drives, festivals and fairs, sports meets and other such activities that involve mobilization and participation of people;

e) SHGs may be promoted by PACS within its own membership-clientele based on commonality of livelihood activities, common need etc. as already suggested in this study, along with special provision of funds and facilities.

f) Appropriate legislative amendments may be made in the acts/charters/bylaws governing panchayats and PACS to give effect to the above measures. The Cooperative Societies Acts and the bylaws of PACS in particular need modification to enable enrolment of informal SHGs/Youth Groups as members.

For decentralization to be effective, vigorous linkages among these organizations are absolutely essential. Among the third sector institutions, the cooperatives emerge as the most suitable agencies being more popular, closely-linked to the rural population, as well as being people-centered and user-controlled, when compared to NGOs and voluntary groups. Besides, cooperatives are legal entities and their functioning is based on voluntary membership and equal voting right. Given the potential of cooperatives in promoting rural socio-economic development, their linkage with units of local self-government would act as a new dimension and acquire a sense of relevance and essentiality.

There are no easy or off-the-shelf remedies for decentralization and securing effective participation of people. Understanding, learning from experience and trial and error have been an integral part of India's efforts in this direction. The success of grass-root level democracy would depend largely on the strength and relationship of the political institutions as represented by the Panchayati Raj Institutions on the one hand, and the economic institutions as represented by the cooperatives and self help groups on the other. The significance of this alliance will be a high degree of people's participation and empowerment, the objectives that decentralization seeks to achieve.

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13 Decentralization of democratic institutions in India: With special reference to Madhya Pradesh, Amitabh Kumar Singh, India

For nearly 50 years, India followed a centrally planned development strategy for all socio-economic schemes and programmes. Development initiatives made in this period reflect some achievement. The country has, to some extent, tackled the problems of food shortages and famine and has been able to build necessary infrastructure to support a growing economy. Important strides have been made in reducing the mortality rate. Despite these successes, concerns continue and are many. A centrally planned strategy for governance has, to a large extent, been unable to solve the basic problems of poverty, population explosion, reduction in diseases, continuing low levels of literacy, lack of safe drinking water facilities and other core issues.

In India the issue of decentralized planning and decentralization in decision-making gains importance as rural areas still face more or less the same problems as they faced after independence. When the fifth five-year plan was formulated, it was widely felt that planning had paid insufficient attention to the problems of poverty. This realization brought the debate on decentralized planning to the forefront. The debate has its roots in the pre-independence period. The father of the nation, Mahatma Gandhi, was a strong supporter of decentralized planning. The Gandhian approach was widely discussed and appreciated but, unfortunately, poorly followed.

There have been efforts and initiatives to decentralize the implementation of centrally prepared plans. However, India's bureaucracy has been the biggest barrier to decentralization of the planning process. In 1957, the Balwant Rai Mehta Committee reviewed India's development planning. They recommended constitutions of the statutory elected local bodies with necessary power and authority devolved on them. This decentralized administrative system became the genesis of the Panchayati Raj system. Two committees were appointed in 1977, one chaired by Ashok Mehta and a planning commission-appointed committee chaired by M.L Dantwala to prepare guidelines for block level planning. Both committees submitted their reports in 1978 recommending a decentralization process. In 1983 and 1984, the planning commission prepared and presented two reports on decentralized planning and district planning to the Prime Minister.

During the late eighties the debate for decentralization and strengthening Panchayati Raj system came under serious discussion. Government began sincere efforts to amend the constitution to make panchayats more powerful. The political process of amending the constitution took nearly five years and in 1993, with the 73rd constitutional amendment, Panchayat Raj systems became constitutional bodies of governance as Parliament and the state assemblies.

The issue

Planners have been attempting to create alternative strategies for rural development. In recent years the debate over decentralization has become the core issue. This study attempts to understand the nature of institutional change and changes taking place through decentralization and the Panchayati Raj system. In India, decentralization not only incorporates components of economic change but also political change, which has wider implications for social change. Through the Panchayati Raj system, the decentralization of democratic institutions has taken place. The assumption behind this change is that through the Panchayati Raj system, popular participation in the decision-making process will ensure decentralization. Further, decentralization encouraging community involvement allows for democratic institutions such as PRIs to act as pressure groups for change.

Constitutional change

In 1993, Parliament passed the 73rd and 74th constitutional amendments, the former dealing with rural areas, the latter provideing more power and authority to urban bodies such as municipalities and municipal corporations. The 73rd amendment concerns the Panchayati Raj system in rural areas. After the Balwant Mehta committee recommendations, rural areas were divided into three levels: district, block and village.

The amendments provide a constitutional and institutional framework to practice and implement decentralization in planning as well as in decision-making. They are complementary in nature. The 73rd amendment states that panchayats will plan for social justice and economic development of their respective villages. Plans prepared by village assemblies (panchayat) will be aggregated at block levels, block plans will be aggregated at district panchayat level. Similarly, the urban bodies will prepare their annual plans and the aggregation will take place accordingly at a higher level. Both urban and rural plans will be submitted to the District Planning Committee (DPC); the district plan would be prepared on the basis of these plans, while the State plan will affect the national plan and planning process. The constitutional changes made are historic in nature, because due to these amendments, panchayats became the constitutional body like Parliament and State assemblies. For the first time the electorates received constitutional status in the shape of the Gram Sabha.

State specific changes in Madhya Pradesh

Madhya Pradesh is India's first state to make necessary changes and amendments in the State Panchayati Raj Act under the 73rd amendment and to conduct panchayat elections (1994). Following are highlights of the initiatives taken by the state government: a) a three-tier Panchayati Raj system was established at district, block and village levels; b) a State Election Commission was constituted; c) a State Finance Commission was also constituted; d. Recommendations/suggestions of the Gram Sabha made mandatory for the Gram Panchayat; e. Specific rules and regulation were prepared so that new system could work effectively; f. Each state government department prepared and circulated documents/orders clarifying relationships with PRIs.

Soon after the election, the state government began transferring powers and authority to the panchayat. The first step was to link line departments with respective panchayats. The second step was to merge the Block Development Administration with the Janapad Panchayats (block level panchayat) and the third step involved merging the District Rural Development Agency with the Zilla Panchayat (district panchayat). Besides these major announcements, functions of 22 government departments were gradually transferred to the PRIs. Simultaneously, the State government began the process of amendment and change in the State Panchayat Raj Act. These initiatives addressed the difficulties faced in implementing and strengthening the new system of governance.

The 73rd amendment states that panchayats shall plan for social justice and economic development of the village and discharge this constitutional responsibility. Panchayats require funding resources which were rarely available before 1994. It became understood that if panchayats as units of self-governance were to function, they would require resources. In the initial years there were few provisions for resources except for the limited JRY funds. JRY is a central government scheme to provide work and wages to the poor. However, even within the new changes, it must be understand that the panchayats started their term with high expectations and with very limited funds. Further, although functions of various government departments were transferred to panchayats, actual control over employees and resources remained with the departments. Keeping this in mind, let us try to understand the changes that took place through the process of decentralization at the grass-roots level.

Experience at the grass-roots level

Despite favourable inputs in the new Panchayati Raj system, the realities reflected many contradictions. This is not to say that the act was faulty; rather, ita implementation act spelt out many concerns. This reflected that only policy level change was not enough to bring about democratization and decentralization at the grass roots. Some of the concerns included are:

The vast number of changes in the new amendment called for an aggressive campaign for awareness building specially of panchayat representatives in areas such as simplification of the various component of the act, understanding and maintenance of the finances, clarity of role and responsibility of PR members. Despite efforts taken by government and agencies, impact assessment reveals low success rate of various training and capacity building initiatives undertaken.

The political climate in Madhya Pradesh reflects a political will in the implementation of LSG in the state. The same however cannot be said about the bureaucracy. The bureaucracy in MP views LSG as a threat to their existence.

The focus of the new amendment towards increased participation of the marginalized and the oppressed, especially women was not an easily accepted change among the dominant male centric powers at the grass roots. An environment of fear and distrust prevailed guided by tradition and mores of the existing society.

Although the election process was not based on political alliances, soon afterward the political parties became keenly interested in building party linkages with panchayats, resulting in conflict in the panchayats on a number of party-led issues, and the panchayat which enjoyed the benevolence of the ruling party received maximum benefits.

While the reservation policy has helped in redefining centers of power in governance structure it also led to a widening crevice among the various caste in a panchayat. This led to increase in caste alliances and caste conflicts.

SAMARTHAN initiatives

SAMARTHAN works to promote people centered development. The PRI initiatives too stress the need for building governance that is pro people. When it began work in MP, it was very clear from various baseline studies that there was need to support and build efforts being undertaken by civil society, in strengthening the base of Panchayati Raj there. That without appropriate support, the existing social scenario could not be conducive, or allow panchayats to grow, as envisioned by the policies and amendments.

Besides undertaking the various support activities, two panchayats, namely Raipura and Jamunia, were selected for intensive support interventions. They were our labs, where we could explore with the community, attempt to strengthen the panchayats, and have learnings which would be then replicated and/or be used in other interventions. We were aware that work in two panchayats was hardly representative of the 31 000 Madhya Pradesh panchayats and that was why stress was laid on replication and civil society involvement, in order to cover the wide area. With this background we started working in a limited number of panchayats. We will take the examples of two panchayats for understanding the process of change brought through decentralization and PRIs.

Jamonia Tank

Jamonia Tank is a village of 163 households. Its panchayat is part of Sehore Janapad Panchayat of Sehore district; Bhopal, the state capital, is 45 km distant. Gram Panchayat Jamonia Tank is divided into 12 wards. In 1994, the post of chairperson (Sarpanch) of the village panchayat was reserved for a "backward" caste woman and Geeta Rathore became Sarpanch. Ninety percent of the community are farmers. Some have their own land, some are landless day labourers. Among the 163 households at least 35 families are from scheduled castes. Most have either no land or land insufficient for their livelihood; only 10 to 12 percent have sufficient land. Forty percent earn their livelihood from sources other than their own land, which forces them to search for wages and alternative sources of earnings.

In 1996, a study of Jamonia Panchayat indicated that the road from the village to the town was in poor condition; the school had two rooms (five classes and over 100 students); drinking water supply was a problem (with only four hand pumps); a small river was the link to a nearby irrigation department-controlled tank: no social security programmes served the poor; traditional hygiene and sanitation systems prevailed; no modern latrines had been built and people were unaware of disease carried by water and garbage. Before 1994 the panchayat institution had a nominal annual income of some Rs. 12 000 per annum. The state government had no separate budget for the panchayats; they had no internal or local source of income. In 1994, with a newly elected panchayat, popular expectations regarding it suddenly increased due to publicity about the Panchayati Raj system.

The Central government acted: the Ministries for Rural Areas and Employment linked the central fund for rural development to the panchayats. Because of this central government action, panchayats began to receive money to discharge their constitutional responsibilities. Madhya Pradesh government transferred functions of various government departments. Despite these initiatives, Jamonia received minimal funding, Rs. 22 000 per annum. The panchayat change of status led to great expectations in the community. It was generally perceived that as panchayats had been given power they would receive money and would become powerful bodies of governance, equal to the State. However, after the election this did not happen. Frustration arose among panchayat representatives and the community and led to conflict between the two, coming to a focus when the community decided what public works and programmes to undertake with limited funds.

Jamunia Tank was selected as a recipient of panchayat public works and prgrammes due to the following factors: It is close to the town; It has a medium size panchayat; It is economically strong but not rich, with moderately developed agriculture; Its Sarpanch has a "medium level of awareness; Its Sarpanch is a woman without previous political experience, yet she is educated; There is a concentration of poor and landless; and It has more than 70 percent illiteracy.

SAMARTHAN's interventions focused on these problems. The support extended involved strengthening mechanisms to make the panchayat effective in social change; initiating participation to strengthen community role in Panchayat activities; helping the panchayat initiate its bottom up planning process; helping the panchayat and Gram Sabha to gain access to information.

Jamunia initiated ward-level meetings to undertake planning. A series of meetings and follow-ups began the process of participatory planning in which the community prepared its plan on the basis of its available resources. The panchayat tried to generate internal resources for solving long pending issues. In Jamunia Tank there was an long time demand from the Scheduled Caste community to build a small culvert on the river adjacent to their homes; now the effort was made and community and panchayat together planned to do the job. After assessing their existing resources they realized there was a huge gap between the actual need and resources available. They collected local resources and contributed around half the total cost: even then there was a shortfall of Rs. 25 000. To bridge this gap, they approached SAMARTHAN, which decided to support them.

Within two years the information flow increased. This initially organized the Gram Sabha. Due to this there were many tensions between the Sarpanch, Panchayat members and Gram Sabha. The information flow invited conflicts and tension among Sarpanch, Panchayat and the Gram Sabha. In many cases the Sarpanch and the Panchayat members were also not aware about many rules, government schemes and programmes. This tension put pressure on the Panchayat representatives to collect more facts and information. This desire led towards more interactions between government departments and Panchayat representatives. Initially there was strong resistance towards sharing the facts and information and this resistance led towards unity, not only among members but also among Sarpanch, members and the Gram Sabha. This process started the flow of information to the Gram Sabha. Facilitating each issue, the tension gradually changed into a working relationship among them.

The Gram Sabha in turn forced the Panchayat to more effectively monitor programmes and schemes. Panchayat representatives started realizing that their role had become more transparent and acceptable to the community and now they have a greater responsibility of providing information and helping community to benefit from these programmes.

The Public Health and Engineering Department (PHE) started building sanitary latrines in the Panchayat. Initially the contract was given to the contractor and the Panchayat was merely informed. On one hand construction started, while at the same time representatives began collecting information on the scheme. They were surprised to know that government had actually provided Rs. 2300 per latrine while the materials used for the construction is just half the actual money received. Next day a delegation met the supervising engineer, who refused to listen to them. Both community and SAMARTHAN representatives petitioned the district collector, who listened and halted construction. PHE officials visited the village and met with Gram Sabha and Panchayat representatives. When it was determined that the substandard latrines needed major repairs, government funds were granted to the affected households so that they could buy materials themselves and build latrines themselves. With this incident and because of a very active Gram Sabha, the monitoring role of the Gram Panchayat on development programme increased. Later the panchayat pressed for various pending problems; it received funds for building an added schoolroom. Later, the Sarpanch and Panchayat members organized other Panchayats and Gram Sabhas to pressure the Public Works Department to build a new road and demonstrated at district headquarters. Finally the road was built.

Empowerment of the Panchayats is largely influenced by its milieu. One issue is the participation of women in this system. Since this Panchayat was headed by a woman who was a simple housewife, major efforts addressed the establishment of leadership of women. Male community members, caste leaders and other influential people were organized. Similarly, a special separate meeting of women Panchayat and Gram Sabha members were held. These initiatives helped the Sarpanch develop as an effective leader. Today not only Jamunia but the entire Sehore block accepts her as the most effective leader who is a woman. The panchayat and community still have various problems but they have learned the skill of negotiation and analysis of their problems. Other changes include: visits by agricultural, land record and other government officials increased; 54 families took possession of land allotted to them (10 SCs, 20 OBCs); A Public Distribution System shop was opened in the village; Scheduled Castes began to receive seed for farming; and small/marginal farmers were forced to sell crops at lower prices to repay their agricultural loans.

Previously there was no funding or government assistance for storage of food grains. After analysis the panchayat and community decided to form a bank for this purpose. Initially 30 persons contributed Rs. 1 000 "seed money", which was available to needy farmers who could borrow from the fund. The community is still finalizing the formalities. The overall experience is that the community has built a capacity to decide, plan and implement efficiently. The exercise revealed that planning resulted in generating additional resources. It also tells us that community ownership helps local people analyze their own issues, reducing cost and increasing the quality of work.

Gram Panchayat Shivpurva

Shivpurva Panchayat is situated in the Churhat block of Sidhi district of Madhya Pradesh. Most residents are scheduled castes and OBC. The total population is 1 411 (774 women and 637 men). The village economy depends on agriculture. Agriculture is rainfed; no alternative sources for irrigation water or livelihood. Irregular rainfall for the last 15 years has made their lives vulnerable, with most families becoming labourers. There is a river close to the village, 300 feet below the village level. During the last 15 years the community tried to get resources for a lift irrigation project. Before the panchayat elections they contacted local politicians (MLA and MP) and the district administration to get the resources. After the new Panchayati Raj system came into practice, a local voluntary organization began to help strengthen panchayats. After initial interaction, the organization came to know about the problem and they realized that without taking up this issue further and helping villagers resolve the problem, other interventions would have no effect. The organization began organizing community members and panchayat members around the issue of irrigation. After initial analysis, community and panchayats began to prioritize problem areas, thereby initiating activities.

The community and the organization together planned the activities and calculated the cost, which came to about Rs. 1 lakh (Rs. 100 000). As the water lifting required technical assistance, the community sought help from the irrigation department, which raised projected costs to Rs.22 lakhs - over 20 times. Later, considering the high cost, community members asked help from engineers in other government departments to review cost estimates, leading to a reduction of Rs.14 lakhs from the original figure, or about one-third the irrigation department figure.

Interestingly, when the community, the local engineer and a voluntary agency worked further on the cost further, the total was reduced to Rs.3 lakhs. The panchayat and community have limited resources; they are ready to contribute Rs. 50 000 and they are also ready to contribute their labour so that the construction cost can be reduced. For the rest of the amount they have approached various banks and financial institutions. The community expressed its willingness to repay the loan in the shortest time possible, but despite their well meaning efforts no bank or government department is ready to loan out money for their work.

The above case is a good example of participatory planning undertaken by the community and village panchayat. At the same time this case echoes certain important questions. The panchayat has the primary responsibility of planning through community which has been completed in this case the panchayat has also tried to mobilize resources, whatever possible internally. The concern centres around issues of management of remaining resources. A remote panchayat like Shivpurva has poor access to government offices, which in itself sometimes becomes a hurdle. Moreover the existing government set-up, policies and attitudes are unfavourable to encourage and support such an initiative. Both cases have some very important learning as far as decentralization is concerned.

Important lessons

A number of important lessons were gained in the process: well-established decision-making set-ups by the Gram Sabha were helpful mechanisms for promoting decisions in favour of the poor and marginalized; the process helped community in developing better collaborative links with other tiers of panchayats and administration; internal cohesiveness of various institutions at local level with strong capacity and awareness strengthens them to undertake effective campaigning and advocacy with the local administration; participation of the community in planning/follow-up and monitoring has improved the overall situation of the village and additional resources have been located; strong decentralization mechanisms and effective functioning of local democratic institutions also helps the leadership to perform its functions in a democratic legal framework, collectively laid down by the law and Gram Sabha.

Conclusion

In both cases the bureaucracy and government officials were initially resistent, especially at the lower level where there is a negotiation of transfer of power to the panchayats in the decentralization process. Changes in democratic institutions and the decentralization process forces similar changes in the bureaucratic structure. The biggest hurdle in making panchayats more efficient is the state bureaucracy, which does not want to leave the power and authority they have enjoyed for the last five decades. The Madhya Pradesh experience shows that the existing power groups are not ready to recognize that panchayats and the people can organize and plan priority issues. Secondly, there is a very slow process of institutional reforms required to make panchayats more efficient. At present, the existing government departments, involved in providing services to the rural area, are trying to either continue with their old pattern of working or they are parallel in structure vis-a vis the panchayats.

Under the new act, Gram Panchayats have separate education committees. In 1995 the state government and the education department began a new programme to universalize primary education.

The programme was supported by the European community where community participation is an important precondition. In order to ensure community participation the state project office promoted the formation of VECs (Village Education Committee) and no effort made to establish institutional linkages between the Panchayat and the VEC. The District Planning Committee is unable to exercise its power in the given institutional framework and bureaucratic culture therefore becomes a weak link in the decentralization process. In Madhya Pradesh, the District Planning Committees were constituted with a minister nominated as a chairperson. However, the DPC does not perform its desired function of sanctioning budgets and disbursing resources in constraint of availability of resources with them. The committee is only formalizing the existing resource disbursement pattern of the government under JRY scheme. Panchayat Raj Institutions has been proved a better mechanism and institution for planing and rural development ,but it requires speedy reform process. Apart from this the resource sharing mechanism has to be worked out other wise the whole process will lead towards frustration only.

The experience however reflects a positive hope in favour of decentralized functioning with empowerment of local institutions of governance. The "centralized functioning" in the country, for more than fifty years, will take its due course for correction. However, the growing civil society forces supporting decentralization will accelerate and give directions for decentralized and institutional system of local self-governance.

References

Amitabh Kumar Singh 1993. Seventy-third constitutional amendment, New Delhi. Government of India Gazette.

Amitabh Kumar Singh 1994, 1995, 1996, 1997. Madhya Pradesh panchayat adhiniyam: seventy-third amendment, Government of Madhya Pradesh

Amitabh Kumar Singh 1995. Report of the state finance commission: draft report.

Amitabh Kumar Singh 1996. Report of the state finance commission: final report

Amitabh Kumar Singh 1996. Women in PRI, (unpublished study) Samarthan.

Amitabh Kumar Singh 1998. Impact assessment of voluntary agencies to strengthen PRI, (unpublished study) Samarthan.

Amitabh Kumar Singh 1997. Effective functioning of gram panchayats, (unpublished study) Samarthan.

Amitabh Kumar Singh 1998. Cases of exemplary panchayat, (unpublished study) Samarthan.

Chackravarty, S. 1998. Development planning: the Indian experience, Oxford India Paperbacks.

Chaudhuri, P. 1978. Indian economy: poverty and development, Vikas Publishing House.

Datta, C., A. Dhar & N. Sharma. 1998. Study of decentralized governance in India, New Delhi, Society for Participatory Research in Asia.

Mukeshwaran , A. K. 1994. Why poverty persists in India, Oxford India Paperbacks.

Sen, A. & J. Dreze, 1998. India: economic development and social opportunity, Oxford India Paperbacks, 1998

Vaidyanathan, A. 1995. The Indian economy: crisis, response and prospects. Orient Longman Ltd.

14 The role of self help groups in rural development: A case study of 18 Indian organizations in 10 states, Mr B.H. Gowda,Bangalore

SEARCH, a support organization, primarily works with voluntary agencies with the dual objectives of human resource development and mobilizing people around development issues. It carries out policy reviews and plays advocacy roles in addition to operating in 150 villages in Dharmapuri district of Tamil Nadu, South India where SEARCH intervened to guide women's development by an empowerment process, organizing women to bring specific changes to their lives, including: creating space for women; mobilization; social leadership; economic independence; personal autonomy and political leadership. Its core competence includes women in development and gender relations, NGO management and institution building, empowerment and participatory development and strengthening Panchayat Raj institutions. It publishes a quarterly journal titled Search Bulletin which provides periodic information on development themes pertaining to the NGO sector and is widely circulated in the development field in India and abroad. SEARCH collaborates with around 300 NGOs.

Mission statement

To facilitate and strengthen NGOs and consolidate developmental efforts through multiple support interventions such as training, research, publication, networking and coalition building, thereby enhancing their capacity to bring about the empowerment of marginalized people for sustainable development; to contribute to this end directly through collabourative efforts with NGOs and others who share this mission.

SEARCH views development as a multi-dimensional process involving quantitative and qualitative changes in human life. It encompasses all facets of the masses, i.e. economic, social, political, educational and cultural, which have strong bearing on their lives. Further, it firmly believes that these changes are interrelated and interdependent and that these go hand in hand. These aspectual changes contributing to development, influence and are influenced by each other. Therefore, development is perceived as a long, multi-focal process whereby transformation is brought about in the lives of the poor and marginalized groups. It is a long process as contemplated changes occur slowly and over a long time. Again, it is a process as it involves the operation of a number of factors. Development, therefore, calls for concerted, systematic and planned efforts.

SEARCH believes that development becomes effective, meaningful and sustainable only if and when there is popular participation. People are the main actors in the development drama and development workers are merely the supporting cast. So, development programmes need to be planned and implemented with the participation of the people and development must be made fully and wholly participatory in nature and in content. Search has functioned since 1975. It has taken upon itself dual roles. One, it performs the functions of a support institution such as provision of training and institutional support to the NGOs in the fields of human resource development and people's organization, policy formation and review, lobbying and advocacy, promotion and development of issue based networks. Second, it operates as a field agency implementing development programmes for the benefit of the poor and marginalized sections of rural society. It has been striving with the avowed objective of empowerment of the marginalized groups such as dalits, tribals, agricultural labourers, women and children. Its Search Extension Programme (SEP) launched in 1986, is working in 150 villages in the backward and drought-prone section of Palacode taluk in the district of Dharmapuri, Tamil Nadu. It provides an interesting role-model for NGO field staff, particularly in three important aspects, i.e. the concept of transfer of power from NGOs to POs, the Women's Bank and women's political empowerment. It has promoted POs, called Sangams and these are used as catalysts or instruments of development-oriented changes. Thus, there is a synthesis or harmonious blend of teaching what is practiced in the field and practicing what is taught in the training programmes. This unique feature makes Search clearly distinct from other NGOs. Search activities reflect an underlying philosophy that the most effective form of development is the development of people, through their own organizations. Programme beneficiaries are involved in all stages and aspects of development activity both as individuals and communities, for there to be any real positive impact on their lives. The emphasis has always been on a holistic approach to development.

The role of CSOs and SHOs

Search extension programme The Search extension programme launched in 1986 extends over 150 villages in Palacode taluk of Dharmapuri district, Tamil Nadu. The main strategy of the programme is to identify the poor families and assist them in improving their living conditions. Development is viewed as a multi-dimensional process and hence all the aspects of human life are touched in the programmes.

Sangams (POs/SHGs) Sangams (POs) are focal points perceived as grass root agencies for planning and executing development programmes. They are 'nodal points' around which bottom-up programmes revolve. This is an easily accessible forum for women to discuss problems related to daily routines, children, health, fuel, fodder, drinking water and education, problems related to their status and role within society and the family; as well as problems related to their own personalities and self-image as women. With the Sangams comprising mixed groups of women, the goal of social integration is being actively pursued. This is particularly important in the context of the exacerbation of tensions based on differences in caste and religion. Even when communal passions ran high, the women did not allow divisive forces amidst them and did maintain the sanctity of the Sangam.

Linkages of SHGs to other activities Sangam women are increasingly becoming expert at negotiating with government officials to get work done - often for the good of the whole community. Thus, many villages owe their streetlights, repaired bore wells, water tanks, community halls to the activism of the Sangams. The active participation of women has given them a sense of pride. Their views are now respected and accepted. These groups are also linked to the existing economic groups which undertake income generation programmes like sheep rearing, dairy, farming etc. These groups are focussing on the issues of poverty alleviation, food security, consumer rights, dalits issues, special focus on girl child, health needs and right on reproductive health, female infanticide, domestic violence against women and political empowerment of women.

Economic programmes Its economic programmes are structured to tackle the basic problems of poverty, unemployment and underemployment, exploitation and disabilities-socio-economic and political. Economic programmes comprised sheep rearing, dairy, coir, small farmer development and quarrying. The objectives of economic programme include: generating employment, increasing incomes, arresting migration and empowering marginalized sections.

Impact As a result of economic programmes: income levels of the beneficiaries increased considerably as evidenced by such factors as investment, position of assets and rises in consumption; employment opportunities increased significantly; the problem of migration is effectively tackled; and purchasing power and the bargaining capacity of the poor women has been increased. Increased incomes and improved social status have contributed to clearer realization that they are playing a better role in development process. Obvious economic benefits have altered community and male attitudes towards the SEP and Sangams. Men now openly support their women participating in SEP programmes. As a man pointed out, "From now onwards we men should think anew on women's issues.... Women's status in society can improve if we provide support and cooperation... As men we must acknowledge the strength and worth of women and treat them as equals".

Women's political empowerment

Search has been working with marginalized women for the past 10 years to bring about social change and economic independence. In addition, the ultimate aim has been to bring these women into the political process, so that they can assert themselves as a decision-maker in the local self-government institutions.

In 1995, with Tamil Nadu passing a Panchayat Raj bill providing for panchayat elections, a need for training women candidates was felt. Search helped the Karimangalam women's federation start offering different types of training to suit the need of Sangam member, PTAs and women activists. Election funds were also created. They have taken the responsibility to talk to their follow sangam members, and to identify the contestants. For 45 members, Search executive director and extension programme staff were involved in a "Do's and Dont's" orientation for candidates. A vigilance committee consisting of staff, women activists, PTAs and representatives of people's organization was formed for each zone. Another committee organized canvassing. NGO staff were not put on this committee for tactical reasons. Only the women activists, PTAs and people's representatives were part of it. A committee of zonal coordinators and cvommunity organizers looked after nominations and withdrawals. One week after filing nominations, 17 women were declared elected unopposed. The table below shows members who contested, withdrew, selected as unopposed and elected.

Women's bank

A women's bank at the SEP was set up in 1996 as a result of the increase in SHG members' savings. People started availing of the loan facility by the bank. At present there are Rs. 70 lakhs in the bank, which is registered under the Co-operative Societies Act and is run by women only. This helped women to handle money transactions independently, which in turn increased their status in their families and villages. It helped the development of women by giving them an opportunity to save and take loans when in need. It is easy to take loan to meet the emergency needs. Interest to be paid on the loan is very low: 6 percent. The interest is once again circulated among themselves and gives the feeling that the bank is theirs; a real people's bank!

Women's federation

The need for a common forum of all SHGs in the extension area was felt to initiate joint action on issues of common concern as well as issues that cannot be resolved by one SHG individually. The women's federation has now taken up the entire responsibility of monitoring POs. The federation has a separate office where meetings are held once a week. The expenses of the federation are taken care of by collecting an amount equal to a month's subscription from each PO.

Election participants

Sl. No.

Type of Candidate

Won

Lost

Withdrawn

Total contested

1.

Women Activist

3

4

1

8

2.

Part Time Animators

8

6

3

17

3.

Sangam members

17

9

9

35

Total


27

20

13

60

Sl.No.

Type of Candidates

Unopposed

Elected

1.

Women Activists

1

2

2.

Part Time Animator's

5

3

3.

Sangam Members

11

5

Total


17

10


Collaboration between local government and CSOs

Intervention to strengthen the Panchayat Raj in Karnataka

SEARCH has been strengthening Panchayat Raj institutions since 1994. It initiated a dialogue between various government departments in Karnataka and NGOs to discuss the need of training Gram Panchayat women members. Subsequently it evolved a training module, prepared materials and trained 586 master trainers from 12 districts of Karnataka. Training was done in three phases with participatory methodologies; trainers conducted training for Gram Panchayat women members. Master trainers trained 11 081 women members of Gram Panchayat in these districts.

SEARCH conducted three regional conventions in 1998 with 350 women Gram Panchayat members participating. They used the platform to share their achievements and constraints in family, panchayat and community, with each other. They recommened changes in the PRI Act for more efficiently and effectively operation, and considered ways to identify and use local resources to develop their areas rather than depending solely on Government grants. Finally, they found a need to have a common platform for all of them to build solidarity, which resulted in forming a statewide network of these Gram Panchayat women members.

A convention of master trainers was also held. They not only shared their views about the impact of training the women but also offered to take the responsibility of facilitating, mobilizing and accompanying them to conventions. The role of the trainers throughout this intervention was creditable, as they have taken it as their own commitment and their own movement. To facilitate women members of GPs to interact and cooperate with each other, an exchange visit programme is planned wherein they can visit other panchayats and study various aspects of women's situation, their problems and status of implementation through the GPs. Presently the exchange programmes are being arranged and carried out. SEARCH also conducts research on achievements and constraints of Gram Panchayat women members and gender role transformations in families.

SEARCH intervention in Madhya Pradesh (Central India)

At the invitation of the Department of Forests, Search will study SHGs at work in training interventions. The department initiated the SHGs through Joint Forest Management. Most groups are starting to come together with savings. They need to have clarity on SHGs. Hence, they requested SEARCH to intervene through the training programme for strengthening staff who in turn will strengthen the SHGs.

Training interventions to build and strengthen SHGs

Economic independence is essential for women's empowerment, particularly in a patriarchal society, which imposes severe constraints on women. Economic interventions by NGOs like microcredit and income generation programmes can become indicators of women's economic independence. In this context, women require special skills to organize the community and to manage various programmes for them. One programme carried out by NGOs on a large scale in Asia has been microcredit for women. In order to manage microcredit and SHGs, staffs require managerial capability. To meet this requirement Search is offering various training programmes to enable NGO staff to build appropriate knowledge and skills to plan, implement and manage microcredit programmes and self help groups that would facilitate women's empowerment. These programmes were offered in different regional languages and in English. Many NGOs have utilized these programmes to upgrade their staff in order to facilitate and strengthen the self help groups in their respective areas

The content of these programmes includes the relevance and importance of self help groups, socio-political analysis in the micro context, constraints in forming self help groups, microcredit and women's empowerment, skills in leadership, facilitation and problem-solving roles and responsibilities of members, planning, monitoring and documentation of microcredit and self help groups. We also offered Training of Trainers to develop trainers in their respective organizations who in turn trained their leaders of self help groups

Conclusions and recommendations

Conclusions

The unique features of the Search Extension Programme are:

The Search Extension Programme is a role model for other NGOs in such aspects as the transfer of power to POs, women's empowerment and women's banks. The role of SHGs in bringing about women's development in six dimensions - psychological and personal, cultural, social, economic, political and organizational cannot be overemphasized. The SHGs helped develop awareness of the conditions that dominate women's lives and their subordinate role. Hence they became able to participate in the process of social change.

Group meetings are enabling them to critically assess their own situation, organize themselves as a powerful group and creatively work to change society towards building up a new world. The success of the programmes has generated greater confidence in the minds of programme beneficiaries. That is the reason why the number of people aspiring to join the programmes is on the increase. The changes that are occurring in their lives seem to be irreversible and sustainable. Hence, they are strongly motivated to participate actively in the SEP. High appreciation and active participation of women is being witnessed since the SEP helps them to free themselves from social and economic drudgery. Support and cooperation extended to SEP and sangams by a wide range of individuals, groups and institutions is a testament to the level of integration of the programmes into the local community.

Recommendations

Efforts should be made to develop the skills and knowledge of sangam members to enable them to handle sangam affairs independently which is a requirement for sustainability of Management skills. More guidance, assistance, exposure should be given to members to fight about issues like wage disparities, female infanticide etc.

The strategies are responsive to beneficiaries┤ immediate as well as long term needs. The income generating potential of the economic programme is relatively more certain. Nevertheless, it still depends for its success on the right fit. For example in the multi-component dairy project, adequate fodder, and health services have to be available before the income for the women can be assured. Similarly, the income generating potential of the coir project depends on several factors including the raw material availability, labour capacity of coir workers and marketing of the product. However short term profits are important to sustain the interest of the beneficiaries in participating in programmes.


[9] The Seventh Plan (1987-1992) for the first time made a financial provision for voluntary organizations.

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