RURAL DEVELOPMENT AND POVERTY ALLEVIATION PROGRAMMES
APPROACH AND STRATEGY FOR THE SEVENTH PLAN 2.1 Poverty alleviation programmes have to be viewed in the wider perspective of socioeconomic transformation in the country. While the present strategy of direct attack on poverty through specific poverty alleviation programmes is justified on account of insufficient percolation of benefits to the poor from overall economic growth, it should be appreciated that the strategy of direct attack on poverty cannot be sustained and would not yield the desired results, if the overall growth of the economy itself is slow and the benefits of such growth are inequitably distributed. For one thing, the resources and the capabilities needed for running such programmes cannot be generated in the system unless the economy itself is buoyant and there is a sustained increase in output. Secondly, the demand for goods and services produced by the poorer household enterprises rises significantly in response to the overall increase in incomes in the country so that the viability of these household enterprises depends critically on the sustained increase in national income. Further, it is necessary to ensure that the pattern of overall economic growth itself is such as to generate adequate incomes for the poorer sections through its greater impact on employment-generation and on the development of the less developed regions. The programmes for poverty alleviation should thus be regarded as supplementing the basic plan for overall economic growth, in terms of generating productive assets and skills as well as incomes for the poor.
2.2 The economic betterment of the poorer sections cannot be achieved without social transformation involving structural changes, educational development, growth in awareness, and change in out-look, motivation and attitudes. The social framework should be such as to provide opportunities for the poorer sections to display initiative and to stand on their legs. Moreover, such a framework can ensure that the benefits of poverty alleviation programmes really reach the poor and are not frittered away through various leakages. Strict enforcement of land reforms and revamping of credit institutions can provide the necessary access to assets and resources for the poor as well as promote a more equitable social structure. Greater participation of the poor through the elected institutions at the grassroots level as well as through their own organisations is another means to achieve social change. Improvement of literacy and education, both through formal and non-formal means, and the imaginative use of various mass media for communicating useful information and knowledge as well as for changing the outlook of the people by instilling in them the egalitarian spirit the urge for and confidence in achieving self-betterment through co-operative endeavour, are essential for speeding up the process of socioeconomic transformation.
2.3 Admittedly, there have been various deficiencies in the implementation of the poverty alleviation programmes. However, there has been a distinct improvement in the actual implementation of these programmes over the Sixth Plan. The Approach to the Seventh Plan reiterates the goal of bringing down the percentage of population below the poverty line to less than 10 by 1994-95. Therefore, the special programmes for income generation for the poor through assets endowment and wage employment for them will be continued at an accelerated pace during the Seventh Five Year Plan.
2.4 In view of the deficiencies noticed in the implementation of the Integrated Rural Development Programme (IRDP), it has been suggested that greater priority should be assigned to rural employment programmes by shifting resources away from IRDP. The argument is two- fold. First, the household enterprises of the type visualised are inherently uneconomic and are in any case handicapped for lack of necessary infrastructure. Secondly, owing to the illiteracy and weak economic position of the beneficiaries and the existence of a chain of intermediaries, only a small portion of the intended outlay reaches the actual beneficiaries. Employment programmes on the other hand, it is argued, can provide secure wage-income to the poor, through the creation of durable community assets.
2.5 However, the experience of the working of poverty alleviation programmes is by no means uniform in the country. In general, the performance of IRDP has been better in the relatively developed regions which are well provided with infrastructure and where level of awareness among the beneficiaries is high. Even in the less developed areas, performance has been satisfactory wherever special efforts have been made for undertaking
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the necessary follow-up measures and for greater involvement of people through their representatives.
2.6 As to the economic viability of the household-enterprises, it should be noted that such enterprises are already in existence on a wide scale in the developed as well as the less developed regions. In fact, they are a major source of employment and income for the poor in rural areas-next only to land. But they suffer from various handicaps in regard to the supply of raw materials, access to credit, facilities for marketing, etc. As a result, there is considerable exploitation of these households by the middlemen. Public intervention to provide the necessary services to these already existing enterprises would contribute to a substantial increase in their income. Government- sponsored programmes for the poor, such as dairy and poultry, account for only a small proportion of the total market for such products now, sometimes even less than one per cent.
2.7 The demand for such products, and for a number of other rural crafts, is highly responsive to increase in income and, therefore, there is no reason for pessimism about the prospects for income generation for the poor from such activities so long as overall economic growth is satisfactory. Besides, the possession of productive assets and skills confers other advantages such as economic security, social status and creditworthiness. Such activities are labour-intensive and not land-intensive and, therefore, typically suit the marginal holdings and the landless. Even though the capital- output ratios (investment per unit of output) for some of these activities are higher than that for crop production, they are still very much lower than for many of the small-scale industrial enterprises. In many cases, where traditional skills are available and remain underutilised for want of resources, the capital-output ratio turns out to be much lower than even for crop production. These activities, in general, require government support for resources, training in skills, and marketing.
2.8 IRDP and employment programmes are not mutually exclusive. As it is, most of the IRIDP beneficiaries supplement their incomes through wage earning in agriculture as well as from projects under National Rural Employment Programme (NREP) and Rural Landless Employment Guarantee Programme (RLEGP). These activities supplement one another and together ensure a more stable flow of incomes to the poor throughout the year. The problem of ensuring maximum benefits to the target groups by minimising leakages is common for all the poverty alleviation programmes and indeed for the rural development programmes in general. Apart from the necessary restructuring of the administrative set-up, there is no alternative to raising the awareness of the rural poor and involving representative institutions from below in the formulation as well as implementation of such programmes.
2.9 Cost-effectiveness of the programmes and minimisation of leakages should be the two guiding principles in the implementation of poverty alleviation programmes. Economic viability should be understood primarily in terms of cost effectiveness, i.e., maximum income generation per unit of total expenditure incurred. This is to be distinguished from economic viability defined as level of investment sufficient to enable a family to cross the poverty line. The ability of a poorer household to cross the poverty line depends on its overall income, i.e., income from the poverty alleviation programmes and other wage and non-wage incomes accruing to it.
2.10 Cost-effectiveness or efficiency of programmes depends to a considerable extent, on the nature of activities chosen. In view of the significant regional diversities in the country in regard to resource endowments, availability of infrastructure, administrative arrangements, etc., there need to be sufficient flexibility in the choice of activities in different regions in keeping with the specific circumstances of the area concerned. One should thus expect considerable diversity in the mix of activities from region to region.
2.11 The total impact of the programme depends on the degree to which the different poverty alleviation programmes, including the Minimum Needs Programme (MNP), are integrated with one another and with the overall development of the area. For example, endowment of land under land reform measures can enable a family to grow fodder for the animal given under the IRIDP; development of house. sites under MNP can be integrated with the construction of the houses under NREP or RLEGP and vice-versa, and both in turn integrated with the IRIDP by developing work sheds and production estates around the housing complex. NREP and RLEGP can also be used extensively for raising productivity in agriculture through construction of field channels for irrigation and for drainage.
2.12 To achieve the above objectives of cost-effectiveness and minimisation of leakages by imparting the necessary flexibility in the choice of activities and by achieving integration in the programmes, a three-pronged strategy is envisaged in the Seventh Plan. (a) Poverty alleviation programmes would be formulated and implemented in a decentralised manner with the participation of people at the grassroots level through village panchayats, panchayat samities, zilla parishads, etc. Such an approach will contribute to the selection of project suited to local conditions, and to the integration of poverty alleviation programmes with area development. This framework will also help in the timely provision of services
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in their appropriate sequence and in ensuring that the benefit of such programmes really reach those for whom they are intended. The Working Group on District Planning constituted by the Planning Commission had recommended a gradual approach towards decentralisation for achieving the objectives of effective implementation of poverty alleviation programmes and balanced regional development. During the Seventh Plan, decentralisation of the planning process and full public participation in development will be pursued on the lines suggested by the Working Group.
(b) The launching of a large number of programmes both through the normal sectoral efforts and other steps designed to cater to target-group households has resulted in a multiplicity of organisations, leading to duplication of management efforts. Further, the delivery system at various levels has proved to be inadequate. The effective implementation of poverty alleviation programmes would call for better planning at the district level involving various disciplines or departments, tighter organisational set-up to ensure optimal use of resources and closer monitoring. A High Level Committee has been set up by the Planning Commission to review the existing administrative arrangements for Rural Development and Poverty Alleviation Programmes and to recommend an appropriate structural mechanism to ensure that they are planned in an integrated manner and effectively implemented. Measures will be taken during the Seventh Plan for strengthening, proper training and orientation of the lacal administrative machinery within the framework of an integrated administrative Organisation.
(c) Keeping in view the limited absorptive capacity of the poorest households, the Approach to the Seventh Plan has also emphasised the need for taking up group-oriented activities for beneficiaries, to the extent possible, through the promotion of co- operatives, registered societies, informal groups, etc., so that the economies of scale, inherent in some of these activities, especially in the provision of services, are fully realised while, at the same time, group initiative and effort of the poor are promoted. This is necessary to protect the beneficiaries from the adverse operation of market forces whether on supply of inputs or on the sale of their produce. The mass media will have to be geared for increasing awareness among the rural poor and for disseminating information, non- formal education and functional skills and knowledge required by them. For purposes of bringing about a greater degree of awareness among, and participation of, beneficiaries, a Central scheme is proposed to be launched for the Organisation of the beneficiaries both in terms of group-oriented economic activities and increased conscientisation. Further, voluntary agencies would be increasingly involved in the formulation as well as implementation of poverty alleviation programmes during the Seventh Plan, especially for ensuring greater participation of the people.
INTEGRATED RURAL DEVELOPMENT PROGRAMME (IRDP)
Review of Performance 2.13 The programme of asset-endowment under IRDP was designed to develop self-employment ventures in a variety of activities like seri- culture, animal husbandry and land-based activities in the primary sector; weaving handicrafts, etc., in the secondary sector; and service and business activities in the tertiary sector. With a view to diversifying the occupational structure, it had been stipulated that 33 per cent of the beneficiary coverage should, as far as possible, be in the secondary and tertiary sectors. The assets provided to the selected households were financed through a mix of government subsidies and institutional credit on an average subsidy credit ratio of 1:2. The capital cost of the assets was subsidised to the extent of 25 per cent for small farmers, 33-1/3 per cent for marginal farmers, agricultural labourers and rural artisans and 50 per cent for the scheduled tribes. A family could receive upto Rs. 3,000 by way of subsidy. In drought prone areas, the limit of subsidy ceiling was Rs. 4,000 while for tribal beneficiaries it was Rs. 5,000.
2.14 The key indicators of performance in the Sixth Plan are given in Table 2.1. It would be seen that at the national level the targets have been achieved in respect of all the quantitative parameters set out in the programme guidelines. However, the performance has been uneven as between States.
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2.15 The Programme Evaluation Organisation of the Planning Commission, RBI, NABARD, Institute of Financial and Management Research, Madras, and a number of other institutions have conducted studies in respect of IRDP. Most of these studies were based on the experience of the first one or two years of the programme, when it had yet to stabilise and when the per household investment levels were very meagre.
2.16 The number of persons who would have crossed the income level of Rs. 3500 according to these studies would not exceed around 40 per cent (PEO 49 per cent), although additional incomes have accrued in the case of 55 to 90 per cent of the beneficiaries, and the relative consumption expenditure of households assisted under these programmes has been found to be generally higher than for comparable non-beneficiary households. The Sixth Plan had assumed an ICOR of 1.5 and resources had been allocated in such a manner as to enable average investment per household of around Rs. 3000. The studies made so far indicate that ICOR assumptions were too optimistic and the investment levels per household were inadequate, in quite a few cases, to generate enough additional income to carry the beneficiaries, particularly those with a large income gap, above the income level of Rs. 3500. Some of the other significant issues brought out by the evaluation studies are as follows:
(i) The financial allocations and physical targets under the Programme were determined on a uniform basis per block, without regard to the incidence of poverty, or even the size of population, which in some cases also, resulted in the selection of ineligible families.
(ii) The extent of wrong identification was quite high at around 15-20 per cent. The main reasons for wrong identification were: (a) reliance on lists of households identified under the SFDA where the identification was based on land holding rather than income; (b) non- involvement of people's institutions in the survey and selection process; (c) better bank-ability of those having an asset base; and (d) collusion between the government functionaries and vested interests in some cases.
(iii) There have also been complaints of outright leak- ages through corruption and malpractices which, however, have not been quantified by any of the studies. Some factors which could have promoted this are:
(a) non-involvement and lack of awareness among the beneficiaries; and (b) methodology of administration of subsidy; and (c) insufficient investment in terms of project cost norms resulting in purchase of substandard assets.
(iv) The selection of schemes under the Programme has shown an overwhelming bias towards animal husbandry, more particularly milch cattle. While this activity has considerable employment and income generation potential, this was vitiatedly by: (a) the shortage of good quality animals; (b) artificial increase in prices of animals; and (c) absence of linkages and support structures for feed, health cover and marketing. On the other hand, the predominance of this activity can be explained by factors such as the familiarity of the beneficiaries and block functionaries alike, and absence of expertise in projectisation with respect to secondary and tertiary activities.
(v) While the Programme guidelines stipulated that 33 per cent of the beneficiaries should be assisted under the secondary and tertiary sectors, the actual percentage in earlier years was much lower (Table 2.1). Though there has been a distinct improvement in the later years, there has been a tendency even now to concentrate on petty business activities. While these can yield quick returns with relatively low project investment levels, the life of the investment is likely to be short, and in many cases they may not become selfsustaining.
(vi) A disturbing distinction between the so-called production programmes and beneficiary-oriented prog- rammes has been noticed. Even the banks have sometimes referred to IDRP loaning as credit at the expense of priority production sectors, although most of the activities taken up under IRDP would fall within that category.