India grapples with endemic backwardness in over 200 districts while some sectors and sections make global headlines. The Centre on Market Solutions to Poverty's report, Creating Vibrant Public-Private-Panchayat Partnerships for Inclusive Growth through Inclusive Governance explores this paradox by looking at the ground-level realities in local governance through the Panchayati Raj, the issues of agricultural productivity and value addition, and the role that the business sector could play in rural transformation.
A recent study in sixteen poorest districts shows that despite teething problems, Panchayati Raj Institutions (PRIs) have come to occupy an important role in the lives of the poorest. In many districts, their importance was rated next only to the food public distribution system, but higher than institutions such as schools and hospitals. Yet in most states, panchayats remain weak and inadequate in delivering on the promise of inclusive growth through inclusive governance. The vertical framework confining delivery of public programmes through government agencies has tended to exclude local leadership and initiative as also the vast capacity that exists outside the governmental system. The weak and narrow mandate that PRIs have tended to adopt for themselves is also responsible for their unfulfilled role in the rural economy. Panchayat leaders often see their role as confined to resolving local disputes and implementing small works sanctioned by the governments and place the main responsibility (in fact, the opportunity!) for agriculture with other agencies such as cooperatives and government departments. This study concludes that PRIs must transform the narrow and lop-sided vision of their mandate and accept a direct leadership role in agriculture which is the mainstay of the rural economy.
Keeping pace with challenges
Public extension services in the agricultural sector have not kept pace with new challenges and opportunities. Overall, the reform measures initiated by the government are yet to penetrate agriculture and allied rural sectors. While many state governments have ushered in policy and legislative changes, lack of clarity on basic models, regulatory mechanisms and modalities for the involvement of non-state actors continues. Insofar as the delegation of power to local governance institutions is concerned, often the measures suggested are partial or incremental in nature. The attitude towards a role for the organised business sector is by and large negative despite the fact that a number of business enterprises have built impressive capacities and networks in input supply and extension services. The study concludes that rural transformation requires a robust framework for local development with these two important stakeholders at the very core. It recommends a PPPP-based rural service enterprise framework as a relevant starting point.
A CII action research study in Dungarpur district of Rajasthan outlines the key elements of such a model. The evidence emerging from the ground work over the last four years suggests that it is possible for the tribal families to achieve an income of over Rs.25,000 per annum per family on half hectare plots even in the context of a hostile eco-environment. The model offers an opportunity for further enhancement of incomes through investments in milch animals, horticulture and productivity gains. This model envisages public investments in augmenting water resources and creating suitable access for farmers while private investments create various support services in agriculture. Specifically, public investments are required for infrastructure creation aimed at water harvesting and recharge. Private investments could provide water delivery and irrigation services, farm mechanisation services, agri-inputs, insurance and risk management, credit access, and market linkages. A business organisation for parking private investments and groups of local semi literate youth for actually delivering the support services are important parts of this model. The institutional mechanism at the community level includes water user groups and community-based organisations for governance of water and other natural resources. This model envisages an important governance role for PRIs.
Such models are already operational in various mutations but on a micro-scale. The IMI study concludes that the time is ripe for an organised and broad-based effort in this direction. The rural service enterprise model that it recommends envisages pooling in a good portion of the existing public assets and funding relevant for agricultural extension and related services and channeling it to enable universal provision of a basic menu of extension services (for example, soil mapping, pre-harvesting advice, disease surveillance and guidance, local implications of weather forecasts, post harvesting guidance etc.) through a competent agency selected on competitive basis.
The above framework could be implemented through a Special Purpose Vehicle (SPV). The SPV could be at the state level or at the district or at the block level depending on the feasible scale for extension services. To draw-in the best agencies for supply of services, the net needs to be cast wide and public agencies, private agencies, NGOs and cooperatives that qualify on certain eligibility criteria should be encouraged to bid. The contract should be for a period long enough to enable the selected agencies to make complimentary investments and recoup them through provision of the value-added services.
Protecting small farmers
There is a potential risk of the small farmers being excluded in the framework. But evidence that leads to contra conclusions exists. While individually, the small and marginal farmers are weak, as a group they have significant strength. Eighty-eight per cent of small farmers own almost 50 per cent of cultivated land and more than 50 per cent of irrigated land. They lease-in more than 30 per cent cultivated land (mostly irrigated). Thus it is not surprising that institutional innovations are taking place to cater to the needs of the small farmers. For example, Tata Chemicals Limited is organising a Producer Company for small vegetable growers in Punjab.
Panchyati Raj Institutions would have a dual role in this model. First is a two-way interaction with the extension agency in the context of local planning to promote convergence of development activities at the local level. Second is monitoring of services delivery by the extension agency. For the latter, suitable participatory mechanisms need to be created to minimise the chances of corruption in certification of compliance.
There is growing awareness in the business sector regarding the potential in the backward linkage chain. However, this potential has not been realised due to the high transaction costs of PPP in rural development activities. Such high costs arise not only because of weak physical infrastructure in large parts of rural India but also on account of unclear and at times restrictive rules governing partnerships. Overall, PPP/PPPP projects are likely to fail if they are handled like any other departmental programme. Thus public policy must focus on resolving the institutional bottlenecks and high transaction costs. Furthermore, currently a lot of reliance is being placed on the voluntary corporate social responsibility type approach. This needs to change to a more formal legal and institutional framework-based approach which carries both carrots and sticks.
The recommendations of the current study entail enhanced public responsibility for rural livelihoods. But the roles of various stakeholders would change with reforms that ease the monopoly of government institutions in implementation of public programmes, and in the use of public assets and financial resources. The report concludes that the rural service enterprise model will create the momentum for a broader systemic change that includes the social sectors. — Courtesy: U.N. Information Centre, New Delhi
(Harsh Singh is the head of the Centre on Market Solutions to Poverty at the International Management Institute, New Delhi, and the author of the report referred to above.)
