The financial sector constituting of banks and the securities markets finance economic growth as they channelise savings to investments and thereby decouple these two activities. But, Banks and the Securities Markets are two competing mechanisms to channelise Savings to Investments. The banks have always managed to score over the Securities market, keeping the risk averse psychology of the Indian investor in mind, in terms of guaranteed return and low risk.
On the other hand, the securities markets score over banks in terms of allocation efficiency, as it allocates savings to those investments which have potential to yield higher returns. This inevitably leads to higher returns to savers on their savings and higher productivity on investments to enterprises. Hence to the extent economic growth depends on the rate of return on investments, securities market promotes economic growth.
The Sensex has shown high volatility since the start of the present bull run (March 2003). In the recent times, in the month of May 2006, the BSE Sensex lost 1705 points and the BSE lost around $100 Billion in market capitalization. The Net FII for the same month in BSE was an outflow of Rs. 2488 Crores. During the same month, the Mutual Funds reported a drop in their Assets under Management by around Rs. 45.17 Billion. U.S. Federal Interest Rate, FII Flow, Overheated commodities market, Global Meltdown of the Capital markets were some of the reasons put forth by many analysts for the Sensex plunge of May, 2006. According to recent estimates (as on October 5, 2006), the current foreign exchange reserves are around $150 Billion and the current market value of the FII portfolio is roughly $130 Billion dollars. These astounding figures not only put a big question mark on the stability of the returns of the Indian Capital market, they also add on to the uncertainty about the sustainability of the Indian Growth Story.
Literatures on the empirical investigation about the impact of foreign interest rates on the
economy of emerging markets are now documented. It is thus possible to understand the episodes in the Indian context. On introducing a shock to the Federal Interest Rate an immediate response from the MSCI (Morgan Stanley Capital Index) Index is witnessed. The American Indices have a substantial percentage in the MSCI world index and hence, any shock in the federal rate would effect the domestic US indices and hence the MSCI World Index. The Indian government also reacts in coherence and hence, a significant effect in the MIBOR (Mumbai Interbank Offer rate) can be noticed with the effect staying up to 18-20 months. As interest rates and inflation go hand in hand, even WPI shows a significant reaction to the shock with effect tapering off only after 18 months. Exchange rate, being a managed float, does not show a very significant change but even for this variable, the effect tapers to zero only around the 16th month. Due to the effect on the domestic macro-economic variables, the Index of Industrial Production also shows a significant reaction but the effect on this variable is the shortest lived with the effect minimizing from the 8th month. Finally, it can be viewed that the Sensex also shows a significant response to the shock in US Federal Interest Rate and this can be attributed to the effect of the macro-economic variables on the Capital markets.
It is also possible to study the causes of variation (due the above mentioned variables) in the Sensex returns. The Impulse response functions showed that the shock in the US federal interest rate causes a change in Indian macro-economic variables such as MIBOR, WPI, Exchange Rate and the Index of Industrial Production. The shock introduced to the federal interest rate also produced a significant response from both the BSE Sensex as well as the MSCI World Index. T`he above shows that the MSCI Return followed by the WPI has the maximum effect on the variation of the BSE Sensex. Federal Interest Rate and MIBOR have a gradual and a similar effect on the variation of the BSE Sensex. The exchange rate also has significant effect. The Index of Industrial Production has the least effect on the variation in the BSE Sensex returns.
Hence, it appears that the variation in the Indian Capital markets and the various macro-economic components can be explained by the movements in the US Federal Interest Rate and the World Indices.
The above investigation, of the effect of U.S. economy and Globalization on the Indian economy, can have a plethora of policy implications for India. There can be two schools of thought on this issue as there have been in the past for the effect of globalization. US is the largest and most technologically powerful economy in the world, with a per capita GDP of $42,000. Its GDP in terms of PPP is the highest in the world at $12.36 trillion followed by European Union. India ranks at 6th on this list behind China and Japan. According to the BRIC report (Wilson et al, 2003), of the G6 only U.S. and Japan will be among the top 6 economies by 2050. Currently, India’s export to US has the maximum share of the total Indian exports. The current and the past governments have tried to maintain as well enhance the relationship with U.S. in order to maintain the export led growth and also since, the main growth in the world consumption is U.S. driven (currently, 40% of the total consumer spending in the world is by U.S.).
On the other hand, an overdependence on the U.S. market can have dire implications on India’s growth. The US Federal interest rate has been on the upswing since January 2004, where it was around 1%, to the present where it is around 5.25% (September , 2006). U.S. ranks second in terms of cumulative Foreign Direct Investment (around $5.3 Billion from August, 1991 to July, 2006) after Mauritius in India and also accounts for around 40.5% of the total $25.3 billion FII flow (as on June 30, 2004) into India. May 2006 saw the biggest plunge ever in the Indian Capital markets, which is said to be fuelled by FII outflow (Rs. 8.2 Billion net outflow for May, 2006) following an increase in the U.S. federal interest rate, where a lot of Indians lost their lifetime savings. Conversely, only around $2 billion (up to 2004-2005) direct investments from India are to U.S., which is the maximum outward Indian investments followed by Russia and Mauritius. This, hence, brings in the concept of Immiserizing growth that whether the current growth experienced by the Indian economy is working towards social welfare or not and also questions the sustainability and equitability of the growth experienced in the recent years.
The government needs to take quick as well as gradual policy decisions to make the Indian growth story more domestic sector (Infrastructure, industry etc.) driven than external sector (Trade flow, exchange rates, etc.) driven. The need of the hour is to make the Indian growth story more inclusive. The current Bull Run of the Sensex (post May 2006-November ,2006) has seen only three sectors in the positive zone – Telecom, Infrastructure and Banking. The government needs to formulate policies so as to increase the purchasing power of the Indian consumer. Increase in the domestic demand would help the existing companies to achieve the economies of scale and would also attract new businesses to mushroom. To increase the per-capita consumption expenditure the government can either work towards increasing employment or take some liberal steps for the financial services sector. If the financial services sector policies are made more liberal, new businesses would be encouraged and also consumer demand shall increase (owing to availability of credit at easier terms), thus allowing the existing industries to increase both their bottom line as well as the top line and hence, expand. The government also needs to increase the accessibility and coverage of credit and banking services to the bottom of the pyramid. Out of the total loans passed on by the Banks only 8% are consumer loans compared to 13% and 26% in other developing nations like Thailand and Malaysia. Emphasizing on growth in Domestic savings is also imperative for sustainable and inclusive growth. In 2005-2006, 46% of the household assets were in the form of Bank deposits while around 20% were in real estate and only 5% as shares and debentures. The government needs to take steps for increasing the domestic savings (In 2002-2003, Household savings were 22.65% of the Indian GDP)so that the funds generated can be channelised to the productive sectors to attain the desired growth objectives. This would also help the government achieve the objective of increasing the employment prospects and this further drives in the argument of increasing the financial service sector penetration to attain inclusive growth.
Every developed or developing nation directly or indirectly is dependent on the U.S. because of the consumer base it has. India, cannot escape the effect of globalization and neither can totally immunize itself from it. But, it can learn from the boom-bust stories of the other emerging countries and hence, develop policies and framework to ensure that the higher growth is more inclusive so as to make the growth story sustainable. But, the Indian investor as well as the government would need to brace itself for any harsh reaction following any of the policy decisions targeted towards increased inclusive growth and reduced participation from the foreign institutional investors (Recent Thailand case in context). But, till than one can only expect an appreciating rupee and a Sensex scaling newer heights and also, more volatility as the sensex moves with the mood swings of these Institutional investors.
Thursday, December 27, 2007
Understanding Stock Market Crash in May, 2006
The financial sector constituting of banks and the securities markets finance economic growth as they channelise savings to investments and thereby decouple these two activities. But, Banks and the Securities Markets are two competing mechanisms to channelise Savings to Investments. The banks have always managed to score over the Securities market, keeping the risk averse psychology of the Indian investor in mind, in terms of guaranteed return and low risk.
On the other hand, the securities markets score over banks in terms of allocation efficiency, as it allocates savings to those investments which have potential to yield higher returns. This inevitably leads to higher returns to savers on their savings and higher productivity on investments to enterprises. Hence to the extent economic growth depends on the rate of return on investments, securities market promotes economic growth.
The Sensex has shown high volatility since the start of the present bull run (March 2003). In the recent times, in the month of May 2006, the BSE Sensex lost 1705 points and the BSE lost around $100 Billion in market capitalization. The Net FII for the same month in BSE was an outflow of Rs. 2488 Crores. During the same month, the Mutual Funds reported a drop in their Assets under Management by around Rs. 45.17 Billion. U.S. Federal Interest Rate, FII Flow, Overheated commodities market, Global Meltdown of the Capital markets were some of the reasons put forth by many analysts for the Sensex plunge of May, 2006. According to recent estimates (as on October 5, 2006), the current foreign exchange reserves are around $150 Billion and the current market value of the FII portfolio is roughly $130 Billion dollars. These astounding figures not only put a big question mark on the stability of the returns of the Indian Capital market, they also add on to the uncertainty about the sustainability of the Indian Growth Story.
Literatures on the empirical investigation about the impact of foreign interest rates on the
economy of emerging markets are now documented. It is thus possible to understand the episodes in the Indian context. On introducing a shock to the Federal Interest Rate an immediate response from the MSCI (Morgan Stanley Capital Index) Index is witnessed. The American Indices have a substantial percentage in the MSCI world index and hence, any shock in the federal rate would effect the domestic US indices and hence the MSCI World Index. The Indian government also reacts in coherence and hence, a significant effect in the MIBOR (Mumbai Interbank Offer rate) can be noticed with the effect staying up to 18-20 months. As interest rates and inflation go hand in hand, even WPI shows a significant reaction to the shock with effect tapering off only after 18 months. Exchange rate, being a managed float, does not show a very significant change but even for this variable, the effect tapers to zero only around the 16th month. Due to the effect on the domestic macro-economic variables, the Index of Industrial Production also shows a significant reaction but the effect on this variable is the shortest lived with the effect minimizing from the 8th month. Finally, it can be viewed that the Sensex also shows a significant response to the shock in US Federal Interest Rate and this can be attributed to the effect of the macro-economic variables on the Capital markets.
It is also possible to study the causes of variation (due the above mentioned variables) in the Sensex returns. The Impulse response functions showed that the shock in the US federal interest rate causes a change in Indian macro-economic variables such as MIBOR, WPI, Exchange Rate and the Index of Industrial Production. The shock introduced to the federal interest rate also produced a significant response from both the BSE Sensex as well as the MSCI World Index. T`he above shows that the MSCI Return followed by the WPI has the maximum effect on the variation of the BSE Sensex. Federal Interest Rate and MIBOR have a gradual and a similar effect on the variation of the BSE Sensex. The exchange rate also has significant effect. The Index of Industrial Production has the least effect on the variation in the BSE Sensex returns.
Hence, it appears that the variation in the Indian Capital markets and the various macro-economic components can be explained by the movements in the US Federal Interest Rate and the World Indices.
The above investigation, of the effect of U.S. economy and Globalization on the Indian economy, can have a plethora of policy implications for India. There can be two schools of thought on this issue as there have been in the past for the effect of globalization. US is the largest and most technologically powerful economy in the world, with a per capita GDP of $42,000. Its GDP in terms of PPP is the highest in the world at $12.36 trillion followed by European Union. India ranks at 6th on this list behind China and Japan. According to the BRIC report (Wilson et al, 2003), of the G6 only U.S. and Japan will be among the top 6 economies by 2050. Currently, India’s export to US has the maximum share of the total Indian exports. The current and the past governments have tried to maintain as well enhance the relationship with U.S. in order to maintain the export led growth and also since, the main growth in the world consumption is U.S. driven (currently, 40% of the total consumer spending in the world is by U.S.).
On the other hand, an overdependence on the U.S. market can have dire implications on India’s growth. The US Federal interest rate has been on the upswing since January 2004, where it was around 1%, to the present where it is around 5.25% (September , 2006). U.S. ranks second in terms of cumulative Foreign Direct Investment (around $5.3 Billion from August, 1991 to July, 2006) after Mauritius in India and also accounts for around 40.5% of the total $25.3 billion FII flow (as on June 30, 2004) into India. May 2006 saw the biggest plunge ever in the Indian Capital markets, which is said to be fuelled by FII outflow (Rs. 8.2 Billion net outflow for May, 2006) following an increase in the U.S. federal interest rate, where a lot of Indians lost their lifetime savings. Conversely, only around $2 billion (up to 2004-2005) direct investments from India are to U.S., which is the maximum outward Indian investments followed by Russia and Mauritius. This, hence, brings in the concept of Immiserizing growth that whether the current growth experienced by the Indian economy is working towards social welfare or not and also questions the sustainability and equitability of the growth experienced in the recent years.
The government needs to take quick as well as gradual policy decisions to make the Indian growth story more domestic sector (Infrastructure, industry etc.) driven than external sector (Trade flow, exchange rates, etc.) driven. The need of the hour is to make the Indian growth story more inclusive. The current Bull Run of the Sensex (post May 2006-November ,2006) has seen only three sectors in the positive zone – Telecom, Infrastructure and Banking. The government needs to formulate policies so as to increase the purchasing power of the Indian consumer. Increase in the domestic demand would help the existing companies to achieve the economies of scale and would also attract new businesses to mushroom. To increase the per-capita consumption expenditure the government can either work towards increasing employment or take some liberal steps for the financial services sector. If the financial services sector policies are made more liberal, new businesses would be encouraged and also consumer demand shall increase (owing to availability of credit at easier terms), thus allowing the existing industries to increase both their bottom line as well as the top line and hence, expand. The government also needs to increase the accessibility and coverage of credit and banking services to the bottom of the pyramid. Out of the total loans passed on by the Banks only 8% are consumer loans compared to 13% and 26% in other developing nations like Thailand and Malaysia. Emphasizing on growth in Domestic savings is also imperative for sustainable and inclusive growth. In 2005-2006, 46% of the household assets were in the form of Bank deposits while around 20% were in real estate and only 5% as shares and debentures. The government needs to take steps for increasing the domestic savings (In 2002-2003, Household savings were 22.65% of the Indian GDP)so that the funds generated can be channelised to the productive sectors to attain the desired growth objectives. This would also help the government achieve the objective of increasing the employment prospects and this further drives in the argument of increasing the financial service sector penetration to attain inclusive growth.
Every developed or developing nation directly or indirectly is dependent on the U.S. because of the consumer base it has. India, cannot escape the effect of globalization and neither can totally immunize itself from it. But, it can learn from the boom-bust stories of the other emerging countries and hence, develop policies and framework to ensure that the higher growth is more inclusive so as to make the growth story sustainable. But, the Indian investor as well as the government would need to brace itself for any harsh reaction following any of the policy decisions targeted towards increased inclusive growth and reduced participation from the foreign institutional investors (Recent Thailand case in context). But, till than one can only expect an appreciating rupee and a Sensex scaling newer heights and also, more volatility as the sensex moves with the mood swings of these Institutional investors.
On the other hand, the securities markets score over banks in terms of allocation efficiency, as it allocates savings to those investments which have potential to yield higher returns. This inevitably leads to higher returns to savers on their savings and higher productivity on investments to enterprises. Hence to the extent economic growth depends on the rate of return on investments, securities market promotes economic growth.
The Sensex has shown high volatility since the start of the present bull run (March 2003). In the recent times, in the month of May 2006, the BSE Sensex lost 1705 points and the BSE lost around $100 Billion in market capitalization. The Net FII for the same month in BSE was an outflow of Rs. 2488 Crores. During the same month, the Mutual Funds reported a drop in their Assets under Management by around Rs. 45.17 Billion. U.S. Federal Interest Rate, FII Flow, Overheated commodities market, Global Meltdown of the Capital markets were some of the reasons put forth by many analysts for the Sensex plunge of May, 2006. According to recent estimates (as on October 5, 2006), the current foreign exchange reserves are around $150 Billion and the current market value of the FII portfolio is roughly $130 Billion dollars. These astounding figures not only put a big question mark on the stability of the returns of the Indian Capital market, they also add on to the uncertainty about the sustainability of the Indian Growth Story.
Literatures on the empirical investigation about the impact of foreign interest rates on the
economy of emerging markets are now documented. It is thus possible to understand the episodes in the Indian context. On introducing a shock to the Federal Interest Rate an immediate response from the MSCI (Morgan Stanley Capital Index) Index is witnessed. The American Indices have a substantial percentage in the MSCI world index and hence, any shock in the federal rate would effect the domestic US indices and hence the MSCI World Index. The Indian government also reacts in coherence and hence, a significant effect in the MIBOR (Mumbai Interbank Offer rate) can be noticed with the effect staying up to 18-20 months. As interest rates and inflation go hand in hand, even WPI shows a significant reaction to the shock with effect tapering off only after 18 months. Exchange rate, being a managed float, does not show a very significant change but even for this variable, the effect tapers to zero only around the 16th month. Due to the effect on the domestic macro-economic variables, the Index of Industrial Production also shows a significant reaction but the effect on this variable is the shortest lived with the effect minimizing from the 8th month. Finally, it can be viewed that the Sensex also shows a significant response to the shock in US Federal Interest Rate and this can be attributed to the effect of the macro-economic variables on the Capital markets.
It is also possible to study the causes of variation (due the above mentioned variables) in the Sensex returns. The Impulse response functions showed that the shock in the US federal interest rate causes a change in Indian macro-economic variables such as MIBOR, WPI, Exchange Rate and the Index of Industrial Production. The shock introduced to the federal interest rate also produced a significant response from both the BSE Sensex as well as the MSCI World Index. T`he above shows that the MSCI Return followed by the WPI has the maximum effect on the variation of the BSE Sensex. Federal Interest Rate and MIBOR have a gradual and a similar effect on the variation of the BSE Sensex. The exchange rate also has significant effect. The Index of Industrial Production has the least effect on the variation in the BSE Sensex returns.
Hence, it appears that the variation in the Indian Capital markets and the various macro-economic components can be explained by the movements in the US Federal Interest Rate and the World Indices.
The above investigation, of the effect of U.S. economy and Globalization on the Indian economy, can have a plethora of policy implications for India. There can be two schools of thought on this issue as there have been in the past for the effect of globalization. US is the largest and most technologically powerful economy in the world, with a per capita GDP of $42,000. Its GDP in terms of PPP is the highest in the world at $12.36 trillion followed by European Union. India ranks at 6th on this list behind China and Japan. According to the BRIC report (Wilson et al, 2003), of the G6 only U.S. and Japan will be among the top 6 economies by 2050. Currently, India’s export to US has the maximum share of the total Indian exports. The current and the past governments have tried to maintain as well enhance the relationship with U.S. in order to maintain the export led growth and also since, the main growth in the world consumption is U.S. driven (currently, 40% of the total consumer spending in the world is by U.S.).
On the other hand, an overdependence on the U.S. market can have dire implications on India’s growth. The US Federal interest rate has been on the upswing since January 2004, where it was around 1%, to the present where it is around 5.25% (September , 2006). U.S. ranks second in terms of cumulative Foreign Direct Investment (around $5.3 Billion from August, 1991 to July, 2006) after Mauritius in India and also accounts for around 40.5% of the total $25.3 billion FII flow (as on June 30, 2004) into India. May 2006 saw the biggest plunge ever in the Indian Capital markets, which is said to be fuelled by FII outflow (Rs. 8.2 Billion net outflow for May, 2006) following an increase in the U.S. federal interest rate, where a lot of Indians lost their lifetime savings. Conversely, only around $2 billion (up to 2004-2005) direct investments from India are to U.S., which is the maximum outward Indian investments followed by Russia and Mauritius. This, hence, brings in the concept of Immiserizing growth that whether the current growth experienced by the Indian economy is working towards social welfare or not and also questions the sustainability and equitability of the growth experienced in the recent years.
The government needs to take quick as well as gradual policy decisions to make the Indian growth story more domestic sector (Infrastructure, industry etc.) driven than external sector (Trade flow, exchange rates, etc.) driven. The need of the hour is to make the Indian growth story more inclusive. The current Bull Run of the Sensex (post May 2006-November ,2006) has seen only three sectors in the positive zone – Telecom, Infrastructure and Banking. The government needs to formulate policies so as to increase the purchasing power of the Indian consumer. Increase in the domestic demand would help the existing companies to achieve the economies of scale and would also attract new businesses to mushroom. To increase the per-capita consumption expenditure the government can either work towards increasing employment or take some liberal steps for the financial services sector. If the financial services sector policies are made more liberal, new businesses would be encouraged and also consumer demand shall increase (owing to availability of credit at easier terms), thus allowing the existing industries to increase both their bottom line as well as the top line and hence, expand. The government also needs to increase the accessibility and coverage of credit and banking services to the bottom of the pyramid. Out of the total loans passed on by the Banks only 8% are consumer loans compared to 13% and 26% in other developing nations like Thailand and Malaysia. Emphasizing on growth in Domestic savings is also imperative for sustainable and inclusive growth. In 2005-2006, 46% of the household assets were in the form of Bank deposits while around 20% were in real estate and only 5% as shares and debentures. The government needs to take steps for increasing the domestic savings (In 2002-2003, Household savings were 22.65% of the Indian GDP)so that the funds generated can be channelised to the productive sectors to attain the desired growth objectives. This would also help the government achieve the objective of increasing the employment prospects and this further drives in the argument of increasing the financial service sector penetration to attain inclusive growth.
Every developed or developing nation directly or indirectly is dependent on the U.S. because of the consumer base it has. India, cannot escape the effect of globalization and neither can totally immunize itself from it. But, it can learn from the boom-bust stories of the other emerging countries and hence, develop policies and framework to ensure that the higher growth is more inclusive so as to make the growth story sustainable. But, the Indian investor as well as the government would need to brace itself for any harsh reaction following any of the policy decisions targeted towards increased inclusive growth and reduced participation from the foreign institutional investors (Recent Thailand case in context). But, till than one can only expect an appreciating rupee and a Sensex scaling newer heights and also, more volatility as the sensex moves with the mood swings of these Institutional investors.
Low Growth to Prosperity- Do We Have Any Human Resource Development Strategy?
The condition of endogenous growth may have a strong link with basic foundation of human capital. This human capital may be defined by different grades that enter the production function differently and affect, in turn, the rates of return to physical capital. Thus the development of human capital may be defined in two ways, one with basic education and the other with the knowledge, skills, competence and other attributes embodied in individuals that are complementary according to the structural condition of the country. Accordingly, human capital may also be viewed as a factor of production just like – but distinct from – physical capital and labor. The physical capital may provide a necessary, but not sufficient condition for the production of goods and services. Developing economies suffer not only from a shortage of physical capital but also from a severe shortage of human capital, although they might simultaneously have an abundance of labor with basic education. This is also borne out by studies reporting higher rates of return on investments in human capital in developing economies than in developed ones.
Development of human capital in the form of basic education may be considered as a primary requirement for achieving economic development. Economists’ stress the importance of human development for societies to prosper economically and also for sustainable development. It is often argued that human capital in the form of basic education can make economic transactions more efficient by providing economic participants with access to more information, thus enabling them to coordinate activities for mutual benefit.
Many experts point to a number of possible benefits of knowledge, human skill development for developing countries. It is often argued that incentives that are built into the institutional framework for skill development and accordingly play a decisive role in shaping the kinds of skills and knowledge are more effective. In the East Asian context, for example, it is the egalitarian education policies, which have played a pivotal role in their economic growth. It is further argued that the increased equality has led to enhanced political and social stability, thereby creating a better investment environment. The lack of complementary factors such as non-availability of skilled labor further added to the problem of capital flow to the capital-poor countries such as Caribbean economies with all features of successful intervention in the basic education.
There is a strong relationship between investments in human capital and economic growth. The need to improve the quality of human resources is particularly important for developing nations, given its importance in the attraction of foreign direct investment. Although the developing world accounts for a steadily increasing share of world manufacturing (partly driven by lower wages and costs in that world), competitive advantage based on low wages is inherently a transitory phenomenon: sooner or later, developing countries will face the need to improve their skill as other lower cost producers emerge. This has led to the researchers to understand the structure of human capital development of a country. This is particularly true in the Caribbean economies where secondary level of education is very high due to the governments’ successful intervention but education at tertiary level is equally poor. Primary education generates the highest rates of return; secondary level has lower returns while tertiary level has higher returns than the secondary level.
Many have argued that the level of education is below the performance required to integrate entrants to the labor force. They emphasized the need for a well-educated work force as the key determinant of development in the region. According to them part of the low productivity levels in the region are partly explained by ineffective education. A significant number of populations have been at the highest risk of low academic achievement. The boys generally perform below girls are part of the people under poverty level. They group in addition to rural children are vulnerable to the inequities in the structure of some education systems. The fact that the poor have low levels of education in all countries highlights the need to address educational issues.
It is useful to examine the rate of unemployment according to education level across Caribbean economies. Table reveals an interesting picture. The large number of unemployment is concentrated upto secondary education level in the region. Some of them may have been retrenched and are perhaps not capable of retrained may affect the figures.
It is true that there is a strong connection between the key achievements of human development in the form of basic education and the importance of the investments made in this respect in the Caribbean. Of late, the quality of service is declining. The studies (for example World Bank 1996) find that real expenditures on education and health have fallen in many island nations over the past decade. As a consequence, physical structures have deteriorated, equipment is lacking, and teaching aids are non-existent in most school.
The skill development program of Singapore may have accelerated growth for many developing economies. Key aspects of Singapore’s context (small size, export orientation, the need to attract foreign direct investment) are also exists in other developing economies including Caribbean economies. The countries may not however have all the institutional preconditions that prevailed in Singapore.
There are many different types of public and private training programs in the Region in order to address issues such as low skill levels and high rate of unemployment rates among youth. In some economies, ineffective training schemes impede an effective labor market for growth. This is due to limited labor market information systems and weak dialogue between public educational institutions and employers. Government programs in particular have found it difficult to respond to the changing needs of the labor market, and to provide up-to-date equipment because of bureaucratic and fiscal pressures (World Bank 1997). There may be few exceptions.
It is useful to cite the example of Singapore in this context due to the fact that Singapore’s growth has largely been driven by larger inputs of capital and labor rather than productivity growth. It is often argued that Singapore’s acclaimed skills development system may be considered as an example of a concerted national and integrated effort, given its multilevel focus and private sector collaboration. It is successful because it is linked to other national policies (e.g., economic development, technology transfer), and various institutions appear to work together. One can examine several key actors and institutions in this respect. The Ministry of Trade and Industry (MTI) played a key role for broad economic development policies. A range of semi-autonomous agencies played an active role. For example the Economic Development Board (EDB) has the primary function of attracting foreign direct investment and foreign investor’s demands for the required skill personnel. Likewise the Productivity and Standards Board (PSB), the Institute of Technical Education (ITE), and other industry-specific bodies such as the Precision Engineering Institute (PEI), to meet the skills demands of foreign investors. The National Manpower Council (NMC) of Singapore as a second key institution consults MTI and Ministry of Education( MoE), Polytechnics and Universities in order to prepare the intake and output targets of ITE. The council for Professional and Technical Education (CPTE) has over all responsibility for matching the demand and supply for skills in the economy. Based on existing levels and estimated future needs, this body works together with different parts of the education system (Universities, polytechnics and schools) and skills development institutions (ITE, and other industry specific training institutes) to ensure the supply of sufficient numbers of workers with the desired level of skills for industry requirements. A third key actor is the MoE, which has direct jurisdiction over schools, polytechnics, universities and the ITE.
The region is known for her efficient and effective public intervention in education; health and related services that has contributed immense benefit to the quality of life. This may be considered as powerful ingredient of development in the region. However, education and the skill development strategy of the region need to be reexamined. The institutional aspect of Singapore model may have strong relevance in this context. The system may play an important role in enhancing long- term growth. According to various statistics, about a million call -center jobs may be generated in USA and UK in the forthcoming year. The lion share of them may shift to India and China. A significant percentage should have been shifted to this English-speaking region. Unfortunately, our existing structure is too weak to transform. Such transformation should be the only way to move our economy from low growth to prosperity.
Development of human capital in the form of basic education may be considered as a primary requirement for achieving economic development. Economists’ stress the importance of human development for societies to prosper economically and also for sustainable development. It is often argued that human capital in the form of basic education can make economic transactions more efficient by providing economic participants with access to more information, thus enabling them to coordinate activities for mutual benefit.
Many experts point to a number of possible benefits of knowledge, human skill development for developing countries. It is often argued that incentives that are built into the institutional framework for skill development and accordingly play a decisive role in shaping the kinds of skills and knowledge are more effective. In the East Asian context, for example, it is the egalitarian education policies, which have played a pivotal role in their economic growth. It is further argued that the increased equality has led to enhanced political and social stability, thereby creating a better investment environment. The lack of complementary factors such as non-availability of skilled labor further added to the problem of capital flow to the capital-poor countries such as Caribbean economies with all features of successful intervention in the basic education.
There is a strong relationship between investments in human capital and economic growth. The need to improve the quality of human resources is particularly important for developing nations, given its importance in the attraction of foreign direct investment. Although the developing world accounts for a steadily increasing share of world manufacturing (partly driven by lower wages and costs in that world), competitive advantage based on low wages is inherently a transitory phenomenon: sooner or later, developing countries will face the need to improve their skill as other lower cost producers emerge. This has led to the researchers to understand the structure of human capital development of a country. This is particularly true in the Caribbean economies where secondary level of education is very high due to the governments’ successful intervention but education at tertiary level is equally poor. Primary education generates the highest rates of return; secondary level has lower returns while tertiary level has higher returns than the secondary level.
Many have argued that the level of education is below the performance required to integrate entrants to the labor force. They emphasized the need for a well-educated work force as the key determinant of development in the region. According to them part of the low productivity levels in the region are partly explained by ineffective education. A significant number of populations have been at the highest risk of low academic achievement. The boys generally perform below girls are part of the people under poverty level. They group in addition to rural children are vulnerable to the inequities in the structure of some education systems. The fact that the poor have low levels of education in all countries highlights the need to address educational issues.
It is useful to examine the rate of unemployment according to education level across Caribbean economies. Table reveals an interesting picture. The large number of unemployment is concentrated upto secondary education level in the region. Some of them may have been retrenched and are perhaps not capable of retrained may affect the figures.
It is true that there is a strong connection between the key achievements of human development in the form of basic education and the importance of the investments made in this respect in the Caribbean. Of late, the quality of service is declining. The studies (for example World Bank 1996) find that real expenditures on education and health have fallen in many island nations over the past decade. As a consequence, physical structures have deteriorated, equipment is lacking, and teaching aids are non-existent in most school.
The skill development program of Singapore may have accelerated growth for many developing economies. Key aspects of Singapore’s context (small size, export orientation, the need to attract foreign direct investment) are also exists in other developing economies including Caribbean economies. The countries may not however have all the institutional preconditions that prevailed in Singapore.
There are many different types of public and private training programs in the Region in order to address issues such as low skill levels and high rate of unemployment rates among youth. In some economies, ineffective training schemes impede an effective labor market for growth. This is due to limited labor market information systems and weak dialogue between public educational institutions and employers. Government programs in particular have found it difficult to respond to the changing needs of the labor market, and to provide up-to-date equipment because of bureaucratic and fiscal pressures (World Bank 1997). There may be few exceptions.
It is useful to cite the example of Singapore in this context due to the fact that Singapore’s growth has largely been driven by larger inputs of capital and labor rather than productivity growth. It is often argued that Singapore’s acclaimed skills development system may be considered as an example of a concerted national and integrated effort, given its multilevel focus and private sector collaboration. It is successful because it is linked to other national policies (e.g., economic development, technology transfer), and various institutions appear to work together. One can examine several key actors and institutions in this respect. The Ministry of Trade and Industry (MTI) played a key role for broad economic development policies. A range of semi-autonomous agencies played an active role. For example the Economic Development Board (EDB) has the primary function of attracting foreign direct investment and foreign investor’s demands for the required skill personnel. Likewise the Productivity and Standards Board (PSB), the Institute of Technical Education (ITE), and other industry-specific bodies such as the Precision Engineering Institute (PEI), to meet the skills demands of foreign investors. The National Manpower Council (NMC) of Singapore as a second key institution consults MTI and Ministry of Education( MoE), Polytechnics and Universities in order to prepare the intake and output targets of ITE. The council for Professional and Technical Education (CPTE) has over all responsibility for matching the demand and supply for skills in the economy. Based on existing levels and estimated future needs, this body works together with different parts of the education system (Universities, polytechnics and schools) and skills development institutions (ITE, and other industry specific training institutes) to ensure the supply of sufficient numbers of workers with the desired level of skills for industry requirements. A third key actor is the MoE, which has direct jurisdiction over schools, polytechnics, universities and the ITE.
The region is known for her efficient and effective public intervention in education; health and related services that has contributed immense benefit to the quality of life. This may be considered as powerful ingredient of development in the region. However, education and the skill development strategy of the region need to be reexamined. The institutional aspect of Singapore model may have strong relevance in this context. The system may play an important role in enhancing long- term growth. According to various statistics, about a million call -center jobs may be generated in USA and UK in the forthcoming year. The lion share of them may shift to India and China. A significant percentage should have been shifted to this English-speaking region. Unfortunately, our existing structure is too weak to transform. Such transformation should be the only way to move our economy from low growth to prosperity.
India’s Business Interest in the Caribbean: Do We Need Certain Policy Interventions?
Gravity model is popular to predict movement of people, information, and commodities between cities and even continents. This takes into account the population size of two places and the distance between them. Since larger places attract people, ideas, and commodities more than smaller and places closer together have a greater attraction, the gravity model incorporates these two features. Such attraction, in turn, can explain certain economic flows such as investment, market access and trade.
The Caribbean economies may be considered as an attraction for the Indians. The economies may not have locational advantages such as large markets, lower costs of resource or superior infrastructure. Investment decisions in the Caribbean have been strongly influenced by historical ties with member states’ colonial past. In the Bahamas for example, the main sectoral and industrial recipients of FDI are tourism, financial services and infrastructure. The key players are Belgium, France, Germany, Hong Kong, UK, USA and the Netherlands. Canada, UK and the USA are the major players in Barbados’ tourism, agriculture, manufacturing, financial services and informatics sectors The major players in Belize’s agriculture/mariculture (shrimp farming), manufacturing (agro-processing), tourism and infrastructure (telecommunications) sectors are China, Taiwan, UK and USA. In Guyana, Canada, South Korea/Malaysia, UK, and US Virgin Islands dominate the sectors of mining (gold), forestry, Infrastructure (power and telecommunications), and trade. Tourism, mining and manufacturing in Jamaica are dominated by Canada, UK and USA respectively. In the other Eastern Caribbean economies, Caribbean, USA, UK, and other European countries – particularly Italy – are the main sources of FDI in agriculture, tourism and manufacturing. The Netherlands and USA are the major players in Suriname’s mining and manufacturing. In Trinidad and Tobago, energy (petroleum and petrochemicals, natural gas), electricity, transportation and communications and manufacturing are dominated by select Asian countries, Spain, UK and the USA.
To a large extent, CARICOM (Caribbean community) economies have pursued liberal foreign investment policies with limited restrictions on FDI. Some of these restrictions include: administrative foreign exchange control; land acquisition and reservation of certain sectors for local operations. The legal and institutional framework for investment promotion in the Caribbean has been well established. While the legal framework addresses the needs of investors – particularly the offshore sectors – in the form of international business legislation, the policy statements by the government translate the framework into the administrative arrangements and procedures for the approval of investments. Emphasis has been on all types of investment. The Caribbean has a very weak capital goods sector due to non-availability of high-tech and high value-added activities. In general, the Caribbean economies are classified as natural resource based or service oriented or a combination of both.
The Caribbean region has potential for high-tech industries. The Free Trade Area of the Americas (FTAA) – tentatively scheduled for completion in 2007 will encompass some 34 countries in the Americas, including the United States, creating a market with a population of approximately 800 million and a GDP of some $8.5 trillion English speaking Caribbean economies, despite their small sizes may play an important role by providing fiscal incentives to foreign investors (with particular reference to Indian IT investors) in the areas of services and manufacturing. The decision is strategic since it will help the foreign investors to explore markets in developed economies like USA and Canada. In recent times Mexico is taking full advantage in the NAFTA region. Private investors are more interested in financing projects in the Caribbean due to little risk involved. Given the inter-island synergies between the British West Indies, economies of scale are sometimes difficult to attain. However, the region follows the models laid down by countries such as Canada or Ireland that have built their industries on accommodation to the United States. In this context there are immense prospects of establishing strong India-CARICOM trade and investment relationships under the changing scenario.
Unfortunately, India’s share, as a source of imports and destination of Caribbean exports has been marginal. For example, exports to India from Barbados in 2001 was US$37,000 of the total exports of US$272.8 million, Imports from India was US$1.6 million of the total imports of US$1156 million,
India enjoys a special position in the context of the Caribbean economies due to its historical, ethnic and emotional relationships. It may be possible to develop strong economic linkages leveraging on these old relationships. The Caribbean countries need to reduce their dependence on the US (and to some extent the EU) markets for their imports and exports so as to dampen the wide fluctuations in their economic activity from year to year. The Indian economy has many complementarities vis-à-vis the Caribbean and these could be used synergistically to result in a win-win situation for both. On the other hand, there are many areas, covering primary, secondary and tertiary sectors of the economy where India has done exceedingly well and there is scope for developing economic linkages based on the same.
Investment from South, East and South-East Asia to the Caribbean is on the rise. Incentives to export-oriented investment as well as privileged access to the United States market have played a role in attracting, for instance, garments and other labour intensive industries form Asian to Caribbean countries. Interestingly, China is one of the largest investors in the Caribbean in recent times
Indian diaspora are not only strong in the USA and Europe, they form an equally strong business community in both Africa and the Caribbean. These roots may help the Indian business community to export capital in the form of foreign direct investment of its own to the region. Under the FTAA regime more and more multinationals may shift the operation and control of key business functions away from their head office to the English speaking Caribbean. This may happen at a rapid rate as IT skills and networks make the spread of digital information increasingly easy. Indian companies can take full advantage of the changing scenario by establishing their businesses and then explore their potential in the integrated region. This may be possible in the areas of IT and other financial services. Other possible areas of cooperation in order to create a win-win situation are, service sector development, manpower and training, Indian high technology applications – satellite remote sensing, oceanography, IT, biotechnology, Indian industrial joint ventures, offshore financial operations, oil and gas-production, refining and transportation, Indian entertainment industry (Indian Hindi films), exchange of academics, technical cooperation in economy, finance, science & technology, pharmaceutical industry. The Caribbean is the region hardest hit by HIV/AIDS in the world outside sub-Saharan Africa. India can take advantage of its cheap anti-AIDS drugs in this region. Likewise, the region may be treated as an entry point for Indian goods & services to the Latin American and North American markets.
It is now open to question why China is active and then grown fast. The Caribbean economies are culturally and socially closer to India. Yet, the India could not take advantage of this proximity. Still there is opportunities .But it requires well-thought policy interventions. Are the Ministry of External affairs listening?
The Caribbean economies may be considered as an attraction for the Indians. The economies may not have locational advantages such as large markets, lower costs of resource or superior infrastructure. Investment decisions in the Caribbean have been strongly influenced by historical ties with member states’ colonial past. In the Bahamas for example, the main sectoral and industrial recipients of FDI are tourism, financial services and infrastructure. The key players are Belgium, France, Germany, Hong Kong, UK, USA and the Netherlands. Canada, UK and the USA are the major players in Barbados’ tourism, agriculture, manufacturing, financial services and informatics sectors The major players in Belize’s agriculture/mariculture (shrimp farming), manufacturing (agro-processing), tourism and infrastructure (telecommunications) sectors are China, Taiwan, UK and USA. In Guyana, Canada, South Korea/Malaysia, UK, and US Virgin Islands dominate the sectors of mining (gold), forestry, Infrastructure (power and telecommunications), and trade. Tourism, mining and manufacturing in Jamaica are dominated by Canada, UK and USA respectively. In the other Eastern Caribbean economies, Caribbean, USA, UK, and other European countries – particularly Italy – are the main sources of FDI in agriculture, tourism and manufacturing. The Netherlands and USA are the major players in Suriname’s mining and manufacturing. In Trinidad and Tobago, energy (petroleum and petrochemicals, natural gas), electricity, transportation and communications and manufacturing are dominated by select Asian countries, Spain, UK and the USA.
To a large extent, CARICOM (Caribbean community) economies have pursued liberal foreign investment policies with limited restrictions on FDI. Some of these restrictions include: administrative foreign exchange control; land acquisition and reservation of certain sectors for local operations. The legal and institutional framework for investment promotion in the Caribbean has been well established. While the legal framework addresses the needs of investors – particularly the offshore sectors – in the form of international business legislation, the policy statements by the government translate the framework into the administrative arrangements and procedures for the approval of investments. Emphasis has been on all types of investment. The Caribbean has a very weak capital goods sector due to non-availability of high-tech and high value-added activities. In general, the Caribbean economies are classified as natural resource based or service oriented or a combination of both.
The Caribbean region has potential for high-tech industries. The Free Trade Area of the Americas (FTAA) – tentatively scheduled for completion in 2007 will encompass some 34 countries in the Americas, including the United States, creating a market with a population of approximately 800 million and a GDP of some $8.5 trillion English speaking Caribbean economies, despite their small sizes may play an important role by providing fiscal incentives to foreign investors (with particular reference to Indian IT investors) in the areas of services and manufacturing. The decision is strategic since it will help the foreign investors to explore markets in developed economies like USA and Canada. In recent times Mexico is taking full advantage in the NAFTA region. Private investors are more interested in financing projects in the Caribbean due to little risk involved. Given the inter-island synergies between the British West Indies, economies of scale are sometimes difficult to attain. However, the region follows the models laid down by countries such as Canada or Ireland that have built their industries on accommodation to the United States. In this context there are immense prospects of establishing strong India-CARICOM trade and investment relationships under the changing scenario.
Unfortunately, India’s share, as a source of imports and destination of Caribbean exports has been marginal. For example, exports to India from Barbados in 2001 was US$37,000 of the total exports of US$272.8 million, Imports from India was US$1.6 million of the total imports of US$1156 million,
India enjoys a special position in the context of the Caribbean economies due to its historical, ethnic and emotional relationships. It may be possible to develop strong economic linkages leveraging on these old relationships. The Caribbean countries need to reduce their dependence on the US (and to some extent the EU) markets for their imports and exports so as to dampen the wide fluctuations in their economic activity from year to year. The Indian economy has many complementarities vis-à-vis the Caribbean and these could be used synergistically to result in a win-win situation for both. On the other hand, there are many areas, covering primary, secondary and tertiary sectors of the economy where India has done exceedingly well and there is scope for developing economic linkages based on the same.
Investment from South, East and South-East Asia to the Caribbean is on the rise. Incentives to export-oriented investment as well as privileged access to the United States market have played a role in attracting, for instance, garments and other labour intensive industries form Asian to Caribbean countries. Interestingly, China is one of the largest investors in the Caribbean in recent times
Indian diaspora are not only strong in the USA and Europe, they form an equally strong business community in both Africa and the Caribbean. These roots may help the Indian business community to export capital in the form of foreign direct investment of its own to the region. Under the FTAA regime more and more multinationals may shift the operation and control of key business functions away from their head office to the English speaking Caribbean. This may happen at a rapid rate as IT skills and networks make the spread of digital information increasingly easy. Indian companies can take full advantage of the changing scenario by establishing their businesses and then explore their potential in the integrated region. This may be possible in the areas of IT and other financial services. Other possible areas of cooperation in order to create a win-win situation are, service sector development, manpower and training, Indian high technology applications – satellite remote sensing, oceanography, IT, biotechnology, Indian industrial joint ventures, offshore financial operations, oil and gas-production, refining and transportation, Indian entertainment industry (Indian Hindi films), exchange of academics, technical cooperation in economy, finance, science & technology, pharmaceutical industry. The Caribbean is the region hardest hit by HIV/AIDS in the world outside sub-Saharan Africa. India can take advantage of its cheap anti-AIDS drugs in this region. Likewise, the region may be treated as an entry point for Indian goods & services to the Latin American and North American markets.
It is now open to question why China is active and then grown fast. The Caribbean economies are culturally and socially closer to India. Yet, the India could not take advantage of this proximity. Still there is opportunities .But it requires well-thought policy interventions. Are the Ministry of External affairs listening?
My roots
I have been awarded a Ph.D. at the Delhi School of Economics, University of Delhi, India on “H Y V technology and Relative Productivity of Small Farms: Case Study Bangladesh” in May 1993. It seems useful to mention a few highlights of my Ph. D. thesis in the light of both academic and policy perspectives.
It used to be claimed, notably in developing countries, that imperfection of factor markets is the determinant factor in explaining unemployment and poverty. Solutions such as supply of inputs and land reforms etc were suggested. Yet in poorer countries the odds are, that even within a village and during a peak farm operation, the question of disguised unemployment is liable to be troublesome as these are time specific and water management specific. What is thus interesting and seems to have been missed out by the existing literature is that several of the factors can be exacerbated or minimized depending on the management of water in question. Likewise, there was a time when researchers argued against adoption of the new technology in agriculture, as it may compound the misery of the poor. This is perhaps not the case in Bangladesh. In fact,
adoption of new technology averted widespread starvation and helped millions of people to escape hunger once and for all. I have re-explored the problem and have addressed various policy implications with economic incentives.
The above facets are exclusively explained my rural roots with immense curiosity of village, people and institutions. I worked for World Bank (Delhi Office), International Development Research Center (Delhi Office) and International Labour Organisation (Delhi Office) as a Development Economist immediately submission of my Ph.D. dissertation. My experiences were diverse. In fact, I found an opportunity to develop myself in various aspects of development and policy there of.
In 1994, I decided to join as associate professor at International Management Institute ((IMI), New Delhi. Since then, I have been teaching Microeconomics, Macroeconomics, International economics, Statistics and International finance. In addition, I designed and coordinated 10 -short term programmes on “ Farm Management” for the participants of Nigeria. The programmes were sponsored by the World Bank. I am quite satisfied with my teaching performance. I was one of the most highly rated teachers among both local and foreign participants (mostly from South Asia, Africa, Central Asian Republics and Russia).
At IMI, I exposed to diverse research areas. For example, we conducted a survey in 199-2000 to investigate the factors explaining beneficiary artisans’ increase in income across 129 districts in India. In addition, the study aims at examining the impact of beneficiary households’ assets, education, social group and extent of experience on the income effect of The Supply of Tool Kits to Rural artisans (SITRA).
The Supply of Improved Toolkits to Rural Artisans (SITRA) was launched as a sub-scheme of the Integrated Rural Development Programme (IRDP) of the Government of India in July 1992 with the objective of enabling rural artisans below the poverty line
(BPL) to enhance the quality of their products, increase their production and income and ensure a better quality of life for themselves. This was also expected to help reduce their migration to urban areas.
The study was based on information gathered from three main sources, namely, the implementing agency which was the District Rural development Agency (DRDA), the Gram Panchayat and the individual beneficiary artisans from the target group. The number of districts for the study was fixed at 20 per cent of the total number of districts subject to a minimum of two districts in each state. The districts were selected through purposive sampling to ensure that these districts were adequately representative of the state with respect to geographical distribution and special conditions of the state, if any. A total of 6788 beneficiary artisan households were chosen. These households were under the BPL households enumerated by the Government of India in 1992/1997.
The estimate of the logit regression reveals that the backward classes as a broad social group were more likely to have benefited from the programme. The importance of ‘using kits’ appears to be the second-most significant factor in enhancing the income of artisans’ households. Interestingly, the number of years of education at the artisan household level is reflected in the negative coefficients. This may be due to the non-availability of skill-specific education at the beneficiary artisan level. The small, though significant, negative estimated coefficient of the ‘number of assets’ variable shows that the artisan will have to contribute from other sources of household income to create the assets.
I was also involved in other research areas such as technology transfer, comparative analysis of foreign investment in India and China, trade pattern in the south Asian region and so on.
I took leave from IMI, New Delhi to join the Department of Economics, University of the West Indies, Cave Hill Campus, Barbados (West Indies) in January 2001. I taught Elements of Macro economics, Intermediate macroeconomics, Economic planning and project appraisal, International Finance and development economics. There, too I showed my potentiality in teaching. In addition, I published several research papers on “foreign Capital transfers in the Caribbean region” and “new growth theories “.
My book entitled “Foreign Capital Inflows to the China, India and the Caribbean: Trends, Assessments and Determinants” was published by Palgrave-Macmillan’s Global Academic Publishing, Macmillan Publishing Limited, London in July 2006. It is in this context to be mentioned here that foreign capital inflows are large and diverse in the context of both developing and developed countries. Generally, foreign capital flows are believed to be influenced by economic indicators like market size and export intensity, institutions etc., irrespective of the source and the destination countries. My book looks at the foreign capital inflows in an alternate approach based on the concepts of neighbourhood and extended neighbourhood. While a substantial fraction of foreign inflows may be explained by select economic variables, the country-specific factors and the idiosyncratic component account for more of investment inflows in China, India and the Caribbean. My book also investigates the spillovers of foreign capital-particularly technology transfer in the vibrant economies of China, India and the Caribbean. It hosts a number of research issues and brilliantly captures the background of why India and China are likely to dominate the world in future.
It used to be claimed, notably in developing countries, that imperfection of factor markets is the determinant factor in explaining unemployment and poverty. Solutions such as supply of inputs and land reforms etc were suggested. Yet in poorer countries the odds are, that even within a village and during a peak farm operation, the question of disguised unemployment is liable to be troublesome as these are time specific and water management specific. What is thus interesting and seems to have been missed out by the existing literature is that several of the factors can be exacerbated or minimized depending on the management of water in question. Likewise, there was a time when researchers argued against adoption of the new technology in agriculture, as it may compound the misery of the poor. This is perhaps not the case in Bangladesh. In fact,
adoption of new technology averted widespread starvation and helped millions of people to escape hunger once and for all. I have re-explored the problem and have addressed various policy implications with economic incentives.
The above facets are exclusively explained my rural roots with immense curiosity of village, people and institutions. I worked for World Bank (Delhi Office), International Development Research Center (Delhi Office) and International Labour Organisation (Delhi Office) as a Development Economist immediately submission of my Ph.D. dissertation. My experiences were diverse. In fact, I found an opportunity to develop myself in various aspects of development and policy there of.
In 1994, I decided to join as associate professor at International Management Institute ((IMI), New Delhi. Since then, I have been teaching Microeconomics, Macroeconomics, International economics, Statistics and International finance. In addition, I designed and coordinated 10 -short term programmes on “ Farm Management” for the participants of Nigeria. The programmes were sponsored by the World Bank. I am quite satisfied with my teaching performance. I was one of the most highly rated teachers among both local and foreign participants (mostly from South Asia, Africa, Central Asian Republics and Russia).
At IMI, I exposed to diverse research areas. For example, we conducted a survey in 199-2000 to investigate the factors explaining beneficiary artisans’ increase in income across 129 districts in India. In addition, the study aims at examining the impact of beneficiary households’ assets, education, social group and extent of experience on the income effect of The Supply of Tool Kits to Rural artisans (SITRA).
The Supply of Improved Toolkits to Rural Artisans (SITRA) was launched as a sub-scheme of the Integrated Rural Development Programme (IRDP) of the Government of India in July 1992 with the objective of enabling rural artisans below the poverty line
(BPL) to enhance the quality of their products, increase their production and income and ensure a better quality of life for themselves. This was also expected to help reduce their migration to urban areas.
The study was based on information gathered from three main sources, namely, the implementing agency which was the District Rural development Agency (DRDA), the Gram Panchayat and the individual beneficiary artisans from the target group. The number of districts for the study was fixed at 20 per cent of the total number of districts subject to a minimum of two districts in each state. The districts were selected through purposive sampling to ensure that these districts were adequately representative of the state with respect to geographical distribution and special conditions of the state, if any. A total of 6788 beneficiary artisan households were chosen. These households were under the BPL households enumerated by the Government of India in 1992/1997.
The estimate of the logit regression reveals that the backward classes as a broad social group were more likely to have benefited from the programme. The importance of ‘using kits’ appears to be the second-most significant factor in enhancing the income of artisans’ households. Interestingly, the number of years of education at the artisan household level is reflected in the negative coefficients. This may be due to the non-availability of skill-specific education at the beneficiary artisan level. The small, though significant, negative estimated coefficient of the ‘number of assets’ variable shows that the artisan will have to contribute from other sources of household income to create the assets.
I was also involved in other research areas such as technology transfer, comparative analysis of foreign investment in India and China, trade pattern in the south Asian region and so on.
I took leave from IMI, New Delhi to join the Department of Economics, University of the West Indies, Cave Hill Campus, Barbados (West Indies) in January 2001. I taught Elements of Macro economics, Intermediate macroeconomics, Economic planning and project appraisal, International Finance and development economics. There, too I showed my potentiality in teaching. In addition, I published several research papers on “foreign Capital transfers in the Caribbean region” and “new growth theories “.
My book entitled “Foreign Capital Inflows to the China, India and the Caribbean: Trends, Assessments and Determinants” was published by Palgrave-Macmillan’s Global Academic Publishing, Macmillan Publishing Limited, London in July 2006. It is in this context to be mentioned here that foreign capital inflows are large and diverse in the context of both developing and developed countries. Generally, foreign capital flows are believed to be influenced by economic indicators like market size and export intensity, institutions etc., irrespective of the source and the destination countries. My book looks at the foreign capital inflows in an alternate approach based on the concepts of neighbourhood and extended neighbourhood. While a substantial fraction of foreign inflows may be explained by select economic variables, the country-specific factors and the idiosyncratic component account for more of investment inflows in China, India and the Caribbean. My book also investigates the spillovers of foreign capital-particularly technology transfer in the vibrant economies of China, India and the Caribbean. It hosts a number of research issues and brilliantly captures the background of why India and China are likely to dominate the world in future.
Friday, December 21, 2007
North-East India Revisited-Mishandling of the Poverty Alleviation Programmes
Arindam Banik and Pradip K Bhaumik
Economic growth, necessary as it is, does not ‘benefit’ in equal proportion all regions and sections of the population. Historical factors, resource endowments, social and political compulsions and of course, government policies are very uneven across regions in India. Further, regions which are poorly developed to begin with have also grown at a slower rate than average. This trend may be a short-run phenomenon which will get corrected over time. Indeed, government interventions at various stages in the less developed regions are aimed at correcting regional imbalances. A similar argument holds for imbalances across economic resource endowments of individuals and families.
The foregoing arguments acquire a greater force in relation to the people in the North-East provinces. Take the case of Assam. Uncertainty, and fear of the future, backwardness convinced some the local investors to put their money in to other states. This has only helped to rise poverty , unemployment and hence uncertainty. This is a place where people are struggling to survive. The escape routes are complicated because politicians so far ignored the development aspect in the region.
We thought it appropriate to look in to the magnitude of development aspect in a district. Take Nagaon district in this context. A large number of the state’s poor reside in this district. Certain social groups suffer from the cumulative consequences of systematic exclusion. In order to tackle these anomalies the central government has designed programmes for the benefit of the poor. However, these programmes are being implemented in an unorganised way and in some respects even overlapping.
The programmes are being implemented in Nagaon district such as Programmes (notably SGSY) designed to help the poor to acquire or add to their productive assets and enable them to make more productive use of such assets; various special programmes to provide additional employment to the poor; Schemes to ensure that all villages have access to a minimum standard of educational and health facilities, safe drinking water and roads; various forms of direct transfers by pension and assistance schemes for the aged destitutes, pregnant women and families who have lost their breadwinners.
Nearly 90 percent of the population of the district lived in rural areas. They were mainly dependent on agriculture, fishery and livestock. Although most of them were cultivators, they had little landholding for cultivation. The land is fertile, but lack of proper canal and well irrigation facilities, as well as flood control systems makes the situation worse for the farmers, many of whom can hardly cultivate two crops a year. Next to agriculture and allied economic activities, handloom and weaving was the main industrial activity in the district.
Living conditions of the people were also very poor. Majority of them were seen to live in temporary dwelling units in unhealthy conditions. These dwelling units were vulnerable to fire and other natural calamities like rain and storm. Majority of the poor people had no sanitation facilities. Open ground and pits were the only toilet facility they had. The medical facilities were in a dismal state. Malaria and goitre were chronic diseases in the hill areas of this district.
According to the provisional figures for 2001 census, the total population of Nagaon district was 23,15,387, of which 11,94,327 were males and 11,21,060 were females. As much as 88 per cent of the total population lived in villages – the percentage being slightly higher among women than among men. Of the total population, according to the 1991 census 10 per cent were SC, a small 4 per cent were ST, while the remaining 86 per cent were from other castes. The decadal growth rate of population of the district has been 22 per cent, which is slightly higher than the corresponding figure of 19 per cent for the state.
The literacy rate of the district was only 55 per cent in 1991, with female literacy at 46 per cent. Both these rates were marginally better than the corresponding figures for the state. Although male literacy rate has also increased from 63 per cent in 1991 to 69 per cent in 2001, the female literacy rate has had a more significant increase from 46 per cent to 56 per cent during the same period. More importantly, Nagaon district is now lagging behind Assam state in literacy rate as per 2001 census, whereas it was marginally ahead in 1991.
In 1991, there was no educational institution of any kind in about 13 per cent of the villages of the district. Only 1174 out of 1375 inhabited villages had primary or elementary schools. About 13 per cent of the villages had schools with classes beyond class VIII, while approximately 60 per cent of the villages had only primary or elementary schools upto class IV.
Although not very far from the state capital Guwahati (123 km), the district has poor transport infrastructure. About 60 per cent of the villages in the district could be reached only through kutcha roads or foot paths in 1991. Only 546 villages out of 1375 could be reached using pucca roads. Being located at the heart of the North East, the district has relatively good road and rail connectivity. Two National highways – NH 36 and NH 37 – run through the district. A total of 180 km of National highways and even more of railway lines pass through the district. A network of 196 km of state highways connects the district to other parts of the state. But the backbone of the transport infrastructure is provided by the Gram Panchayet (GP) roads. Most villages had no connection with the outside world. Only 43 per cent villages had some connectivity, largely through bus. There were only 20 villages with rail connectivity in the entire district.
In 1991, 303 out of 1375 villages had post offices, while only 17 villages had access to telegraph services. It must be said that the telephone connection status has undergone significant change since the 1991 census. Although data for all the blocks is not available, there are about 2,200 telephone connections in Dolongghat block, 667 in Raha, 2,408 in Kathiatoli and 1,855 connections in Bajiagaon block at present as reported to us during the field survey, with 50 telephone exchanges in the district.
There are as many as 95 bank branches in the district. The district has reported to have 509 cooperative societies. There are few NGOs in the district – only 9 NGOs are reported by the district while Dolongghat block has reported to have 15 NGOs operating in the block. Raha and Kathiatoli blocks have reported to have 14 and 13 markets respectively, while Dolongghat block has reported only 3 markets in the block.
According to the 1991 census, the largest number of workers in the district (303,587 of them) were cultivators followed by agricultural labourers (81,800). After agriculture, a large number of workers were engaged in other services (52,618), which included private and public services. Trade and commerce was the occupation of about 41,202 workers. Manufacturing, Processing, Servicing and repairs provided occupation to another 23,865 workers – relatively few in household (3417) and mostly in other than household industries (20,448). Relatively few workers followed other occupations. This pattern was more or less the same across all sample blocks.
Agriculture is the main occupation of the people of Nagaon district. Soil fertility is very good due to the relatively heavy rainfall – an average rainfall of 1750 mm and the presence of the Brahmaputra and many of its tributaries. But the intensity of cultivation was reported to vary between 120 and 300 per cent. Paddy, wheat, oilseeds, sugarcane, pulses and vegetables are the main food crops of the district, whereas tea, jute, cotton and bamboo are the major non-food crops. A very large percentage of the total geographical area was under cultivation. Similarly, a large part of the area under cultivation was used to grow food crops.
In 1991, 436 of the 1375 inhabited villages (32 per cent) had no electricity. 815 villages had power for only domestic use, 11 villages had power for only agricultural use and another 47 villages had power for both agricultural and domestic use. Although the number of villages electrified has gone up significantly since then, it should be kept in mind that having electricity connection does not necessarily mean availability of power - as in some villages in the hills power was available for only a few hours a day on an average.
The number of post offices per lakh population was the highest in Bajiagaon block (19.1) and the lowest in Kathiatoli block (14.0). The average number of telegraph offices per lakh of population in the sample GPs was 1.6, whereas the number of telephone exchanges per lakh of population stood at a much higher level of 3.9. Tele density was the highest in Bajiagaon block (1.0) followed by Dolongghat block (0.8).
With the coming into force of the Constitution (73rd Amendment) Act on 24th April, 1993, constitutional status has now been provided to a three-tier Panchayati Raj system to ensure people’s participation in rural governance. The Act provides for devolution of functions, funds and functionaries to the PRI institutions. It provides for a three-tier system of Panchayati Raj for all states having population of over 20 lakh; holding of Panchayat elections regularly every 5 years; reservation of seats for scheduled caste, scheduled tribe and women (not less than 33 per cent); appointment of State Finance Commission to make recommendations regarding financial powers of the Panchayats; and constitution of District Planning Committee to prepare draft development plan for the district as a whole.
In Assam, the District Planning Committees have not yet been constituted. A State Finance Commission was constituted on 23 June, 1995 and the Commission submitted its report on 29 February, 1996. However, its recommendations have been accepted only in part and no action has been taken on the recommendations and the second Finance Commission has not yet been constituted. By a gazette notification in September 2001, the Assam government has devolved the functions of 29 subjects to the PRIs of the state. Moreover, it is clearly mentioned in the notification about the sources of funds and functionaries (officials of line departments) to assist the PRIs against each activity. After Karnataka, Assam is thus the second state in India to transfer 29 subjects to the PRIs.
Panchayat elections were held in Assam on December 27 and 31, 2001 after a gap of about ten years. Before this, the previous panchayat elections were held in April 1992.
The new state administration after the May 2001 assembly elections, initiated the Raijor Padulit Raijor Sarkar (RPRS) programme for redressal of public grievances and for creating public awareness on the various government sponsored developmental schemes. Under this programme, RPRS meetings were convened at district, block and GP levels where MLAs, MPs, ZP/AP/GP presidents and members were invited for active participation.
The reference period of our study was the three years immediately preceding the current financial year, that is, 1999-2000, 2000-2001 and 2001-2002 and no elected GPs were in place in Assam for most of this period. The role and functioning of PRIs as mentioned in this report is based on the actual position during the period of the field work – i.e. during October – November, 2002.
In Nagaon district, the Additional Development Commissioner (ADC) was the secretary to the Zilla Parishad. The DRDA executed all the development programmes of the MoRD as per the direction of its District Governing Body.
During the Panchayat elections of December 2001, there was reservation for SC, ST and women members. More than one third of the sabhapatis in Nagaon district were seen to be women and nearly 30 percent of the sabhapatis belonged to SC or ST. Although 37.5 per cent of the sabhapatis among the 40 GPs surveyed were women, very few among the women sabhapatis were found to be capable of handling the administrative work of the GP. In Nagaon district each GP has 10 elected ward members irrespective of population and geographical area out of which more than 45 percent are women and nearly 40 percent belong to SC or ST.
For JGSY programme, funds were transferred to the block directly from DRDA and the selection of beneficiaries was also done by block. GP had no role in the JGSY programme. Beneficiaries under IAY, PMGY (GA) and NOAPS programmes were also selected by the block but from 2001-2002 NOAPS beneficiaries were selected at the meetings convened under the RPRS programme at GP level. From the year 2002-2003, IAY and PMGY (GA) beneficiaries are being selected by GP in consultation with gram sabha. The block office used to disburse the old age pension to the NOAPS beneficiaries directly but from 2002-2003 the cheques are being distributed by the GPs. In case of IAY programme, constructed houses were being given to the beneficiaries.
It seems that in Nagaon district, the BPL list was also not available in all block offices. It was also observed that in many cases the households included later in the list were from service holders, businessmen, landlord, etc. with steady sources of income. The annual income of many of these BPL households was in the range of Rs 50 thousand to Rs 1 lakh and in some cases even more than that. Many of them had assets like pucca houses, motorcycles, television sets, refrigerators, etc.
The GPs had no financial power in JGSY programme. For JGSY programme, the blocks after finalising the action plan also selected the projects to be undertaken and the individual beneficiaries to be assisted in a year within the allocation. The EAS programme was implemented at the block level and the GPs had no role in their planning and implementation.
Many of the sample GPs in Nagaon district were seen to have no GP office. Similarly, shortage of staff seems to be a universal problem in most GPs studied. In almost all GPs, the GP office was not opened regularly due to shortage of staff. The availability and quality of information maintained by the GPs was far from satisfactory. GP office did not maintain any record of physical or financial achievement for any of the MoRD programme. No record of Annapurna, Antyodaya, BPL food grain and Relief package received and distributed by GPs was available. Another major handicap was the non-availability of BPL lists from the GPs.
In the year 2000-2001 no JGSY fund was allocated to the district. As a result, not much of community assets could be created in the sample GPs except construction of very few link roads, drains, school buildings and market yards. Though the GPs received the Tenth Finance Commission (TFC) funds for the maintenance of GP assets, assets were increasingly becoming non-durable due to shortage of funds. GPs were also found to maintain a separate cash book for their Bazaar share (share of revenue raised from bazaar levies etc.) received from district and block.
In Nagaon district, gram sabha meetings have been held only after the elections in December 2001. No records were found of any gram sabha meetings in the sample GPs during the period 1999-2001. While conducting the fieldwork between October and November 2002, it was found that only one or two gram sabha meetings have been held in the sample GPs in the post-panchayat election period and between 150 and 350 members were found to attend the gram sabha meetings.
At the district level, the planning and execution authority for the MoRD poverty alleviation programmes was the DRDA with the advice of its governing body. They created new rules and guidelines from time to time and did not always follow the rules laid down by the central government for the schemes.
The implementing authority of the Jawahar Gram Samridhi Yojana (JGSY) was the Block Development Office. Instead of maintaining a separate record for each GP, blocks have maintained one physical record and one cashbook for all GPs for the JGSY programme. The funds for the rest of the programmes except NFBS, NMBS, SGSY, CCSSRH and IWDP were sent to the block office. NFBS and NMBS funds were administered by the ADC (Development) through Circle Office and the Additional Chief Medical Officer (Family Welfare) through PHC respectively. In case of SGSY and CCSSRH, the DRDA sent the subsidy amount directly to the bank, while the names of beneficiaries were recommended by the block office for final selection and disbursement, which was made by the bank. DRDA directly implemented the IWDP scheme with the help of the Extension Officer of the concerned block office.
The guidelines for selection of beneficiaries or the implementation of the above mentioned programmes were not available in the GP offices and so the elected GP functionaries were not aware of the details of the programmes. Muster Roll under JGSY and EAS programmes was maintained at the block office by office staff not by contractor or group leader. No beneficiary had signed or put thumb impression on the muster roll. No contractor or group leader got the official work order for the construction of roads, buildings, etc. under EAS and JGSY programmes. Before the election of the GPs, the block administered all the programmes and so no records were available in GP offices for that period.
The state government has authorised the GPs to collect tax on government tanks, markets, forests, river bunds, etc. but the actual implementation has not yet begun. GPs get some bazaar share funds for office maintenance from block office and TFC fund from district for maintenance of assets in the GP. The GP secretaries are untrained permanent employees of state government and are getting fixed amount of salary. Both GP Sabhapatis and Secretaries require some training about the functioning of PRIs and implementation of new and existing programmes of MoRD.
The sabhapati or the head of the GP was an elected member in all the sample GPs. There were 10 elected members in each GP of each block – an average of 4.6 women and 5.4 men per GP. Social group-wise, on an average a GP had 0.7 male SC members and 1.1 female SC members. Similarly, there were 1.0 male and 1.1 female ST members per GP.
A large number of sabhapatis (29 out of 40) had studied up to SSC/HSC or degree levels. About 50 per cent of the elected sabhapatis were cultivators, while another 35 per cent were housewives. The average annual household income of a sabhapati was the highest in Dolongghat block (Rs 39,300) and the lowest in Kathiatoli block (Rs 28,950). The average landholding of sabhapatis was 4.8 acres in Raha block and as low as 2.3 acres in Kathiatoli and Bajiagaon blocks. All the 40 sabhapatis were first-time sabhapatis and had no previous experience as head of a GP. There were 34 full-time secretaries and 6 part-time secretaries in the 40 GPs studied.
Food grain under Annapurna scheme has started arriving and has been distributed only during 2001-02 and not in the two years before that. No food grain was distributed as part of wage or under the Annapurna scheme in any sample GP in 1999-2000. However, BPL food grain was distributed by the cooperative societies through village dealers. Elected gram panchayats were in place towards the end of the year 2001-2002. During the year, food grain was also distributed as part of wage as well as under the Annapurna scheme besides the BPL food grain.
No JGSY funds were released to the DRDA in 2000-2001. In turn, the DRDA released little funds to blocks or GPs from its opening balance. Funds were released only during 2001-2002 after the panchayat elections.
Not only was the JGSY programme not implemented by the GPs, records were also not kept at the GP offices. The block office maintained records of JGSY funds for the whole block and not GP-wise. In Kathiatoli block, the opening balance in each sample GP was nil in the year 1999-2000 and so was the closing balance. An average amount of only about Rs 40,000 was received and spent per GP. No amount was received or spent under JGSY during 2000-2001 in Kathiatoli block. On the other hand the amount received per GP under JGSY increased to Rs 4.693 lakh in 2001-2002 while the amount spent also increased to Rs 3.791 lakh per GP, resulting in an average closing balance of Rs 97,000 per GP.
JGSY and EAS programmes have had the largest number of beneficiaries covered for each of the three years of study except during 2000-2001 when no funds were released from the Centre under this programme. Projects under the IWDP programme were funded only during 2000-2001 and 2001-2002. IAY and SGSY programmes had about 2000 to 3500 beneficiaries every year, with a marginal reduction in the year 2000-2001.
The three NSAP programmes have had different coverage in different years. The year 2000-2001 registered a sharp increase in the number of beneficiaries under each of the three programmes while there was a decrease in 2001-2002 in the number of beneficiaries under NFBS and NMBS. NOAPS, on the other hand, have had a steady increase in the number of beneficiaries from year to year.
In all types of community assets, there was general reduction in the level of their creation during 2000-2001. In most cases the number of works started and completed during the year were identical. Rural roads and minor irrigation works appeared to be the major community assets created. Houses for SC/ST also formed a significantly high proportion among different types of assets, followed by houses for others.
There was no watershed development project implemented in Nagaon district in 1999-2000, although money was received during the year which was spent in the later years. PMGY (GA) was implemented in Nagaon district in 2001-2002, although it was launched on 1 April, 2000 in the country. Similarly, some money was received under CCSSRH in the year 2000-2001 itself, but was actually spent in 2001-2002. Except IAY and the three programmes under NSAP, the fund squeeze in 2000-2001 was clearly discernible in all the other programmes. The funds flow revived in 2001-2002, perhaps because of the holding of the panchayat elections during the year.
Among the four sample blocks, the funds flow was the minimum in Bajiagaon block in all the three years for each of the programme. In each of the four sample blocks, the drying up of funds in 2000-2001 could be clearly seen. After that, the increased funds flow in 2001-2002 could not be spent effectively and showed up as increased closing balance in almost all the programme closing balances.
A total sample of 600 beneficiaries was considered in the Dolongghat, Raha, Kathiatoli and Bajiagaon blocks across all the programmes. Of this number, 53.2 per cent were males and 46.8 per cent were females and in Kathiatoli block as many as 63.3 per cent were males. The average household size of beneficiaries was quite large, about 5.90 for our sample. In spite of such large household size, the number of earning members per household was only 1.38 in total with the highest in Kathiatoli block (1.45).
The highest average cultivated area operated was 1.85 acres in Bajiagaon block, while the lowest was only 1.26 acres in Dolongghat block. The intensity of cultivation of a piece of land was between 1.21 and 1.27 among the four sample blocks. In the four blocks studied, a total of 36 beneficiaries operated more than 5 acres of land.
A large number (390) of the sample beneficiaries reported that they did not belong to the BPL category although they were beneficiaries under various programmes. Similarly, 464 beneficiaries reported that they were not eligible to be listed under BPL category. Apparently, the benefits of the poverty alleviation programmes did not reach the targeted segments in most cases.
Slightly less than half the beneficiaries (44.0 per cent) maintained their livelihood based on earnings from wage labour or agricultural labour. Nearly 25.2 per cent of the total respondent beneficiaries across all the sample blocks reported cultivation as their primary occupation. After wage/agricultural labour and cultivation, the third most common primary occupation was ‘trade/business’ followed by ‘other services’. Relatively few beneficiaries belonged to the other categories.
The Government of India conducted two BPL censuses in 1992 and 1997, to identify BPL households. For the 1992 BPL census, the poverty line was fixed at Rs 11,000 income per annum per household. However, in 1997 the government of Assam defined a BPL household as one having an annual household income of upto Rs 19,650. Another BPL census was expected to be carried out in 2002 for which the survey had been completed till the time of our field work. But the preparation of BPL list was awaiting the finalisation of the definition of BPL, which was proposed as an annual household income of between Rs 22,000 and Rs 24,000.
The average income of the beneficiary household was Rs 23,226.52 per annum before receiving the benefit. In all the four sample blocks, the maximum contribution to household income was from cultivation. Surprisingly, the second highest contribution in Bajiagaon block was from ‘others’ which included private and public services, while it was from wage labour in the remaining three sample blocks. After receiving the benefit, the average annual income was reported to be Rs 24,825.48 at the total sample block level. As regards sources of income, there was no significant variation in the contribution of different sources between the pre- and the post-benefit period.
The average annual household income was quite high. Similarly, the sources of income and their contributions, was also significantly different from what is normally expected from BPL households. Given the fact that the primary occupation of 14.0 per cent beneficiaries was ‘trade/business’ and that of another 11.8 per cent was ‘other services’, it appears that many of the beneficiaries were actually not from BPL category. Because of the relatively high household income before the benefit, the change in income after the benefit appears insignificant as a proportion of the pre-benefit income.
As many as 37.7 per cent beneficiary households reported a pre-benefit income above Rs 20,000 per annum. Relatively few BPL households have been able to move APL after getting the benefit. This figure was only 13.7 per cent in the aggregate – with a low of 8.0 per cent in Kathiatoli block and a high of 16.0 per cent in Dolongghat block.
In all the four sample blocks, the highest number of beneficiaries has been from IAY/ PMGY(GA) – which contributes to about 25.6 per cent of all the sample benefits. This is followed by NOAPS/ Annapurna, JGSY/ EAS or SGSY. The beneficiaries under PMGY(GA) could not be identified separately as neither the beneficiaries, nor the GPs could tell whether a particular beneficiary got the house under IAY or under PMGY(GA). Just 10 beneficiaries were found under the IWDP. The average number of benefits per sample beneficiary household was 1.12 in Dolongghat block and 1.05 in Kathiatoli block, the latter being the lowest figure.
The awareness programmes of the government, gram sabhas and members of local bodies were found to be totally ineffective as sources of information about the various poverty alleviation programmes. This could be because of absence of the PRIs in Assam during most of our study period. Friends and public figures acted as the major sources of information across all sample blocks. Surprisingly, All India Radio was the source of information for about 14.1 per cent of the beneficiaries.
An analysis of the beneficiary respondent’s perception of transparency of the selection process in Nagaon district revealed that among the responses ‘applied for it’ dominated as the perceived reason in selection of a beneficiary across all sample blocks. This was followed by ‘met all requirements’ and ‘knew sanctioning person’ in that order at the aggregate level. In Dolongghat block, as many as 16.7 per cent beneficiaries thought that they were selected as they met all requirements.
The benefit received as a percentage of the amount sanctioned has been the highest in Kathiatoli and Bajiagaon blocks in 1999-2000 (91.9 per cent) and the lowest in Raha block in 2001-02 (80.4 per cent). Interestingly, there has been no difference between the sanctioned and the received amount in the loan component under the loan schemes. The difference between the sanctioned and the received amount was increasing year to year in the aggregate. The three most common reasons cited for the difference between the amount sanctioned and the amount received were ‘Contractor’, ‘Block office PC’, and ‘Bank PC’.
The average number of days for receiving the benefit was reported to be 212.9 days between application and sanction, and 34.1 days between sanction and disbursement. Applying in application formats was the dominant application procedure. On an average, a beneficiary visited concerned offices 7.3 times and spent Rs 266.33 in getting the benefit including the application fee, travel and other associated expenses.
Overall, 43.5 per cent of the beneficiaries were satisfied with the government functionaries’ role at the aggregate level, while another 33.3 per cent were somewhat satisfied and the remaining 23.2 per cent not satisfied. Of the total beneficiaries, 47.2 per cent reported facing problems in receiving the benefits. Among the problems cited, the majority were unhappy with the cumbersome process. About 20 per cent also reported non-cooperation of officials.
The percentage of beneficiaries having pucca houses has gone up from 12.7 per cent to 45.0 per cent after receiving the benefit. Similarly, the average number of living rooms in the house has also gone up from 2.2 to 2.6 after receiving the benefit. An overwhelming majority used open ground or pits for toilet purposes – both before and after receiving the benefit. There has been a marginal increase in beneficiary households having own sanitary latrine from 8 to 11 percent after receiving the benefit. There has been some improvement in having secure and proximate source of drinking water among the sample beneficiaries. The number of beneficiaries using own tube well or public tube wells has increased, while the corresponding number using own well, other wells or public wells has decreased in almost all the sample blocks.
There was little variation in terms of availability of medical facilities during the periods of before and after benefits received – the percentage of beneficiaries reporting having medical facility available going up from 88.8 per cent to 90.3 per cent across all four sample blocks.
Only 34.5 per cent beneficiaries sent all their children to school, while another 36.8 per cent sent some of them. In almost all cases, the educational institution was within 3 km from home. Most of the children who went to school studied to the primary/middle school level in all the sample blocks, with about 13.3 per cent households sending their children to high school levels. The trend in higher education like degree and technical training was insignificant.
Nearly 95.7 per cent of the total beneficiaries felt that the benefit had helped them. An overwhelming majority also reported improvement in the quality of their life. Only 50.3 per cent beneficiaries reported an increase in total output, 76.7 per cent perceived that they now earned more; only 57.8 per cent thought they could save more and only 46.8 per cent felt that they were in a position to borrow less after receiving the benefit.
Quite a number of the beneficiaries across all the sample blocks were able to repair their houses. Likewise, a significant proportion was able to spend more on the education of their children. In addition, a significant number of beneficiaries were able to consume better food and afford better medical care. About 53.3 per cent of the beneficiaries reported that they now have access to safe drinking water, while about half of them had access to improved sanitation.
Three non-beneficiary respondents were also covered from each GP in this study to serve as a control group. A total sample of 120 non-beneficiaries were studied – 30 from each of the four sample blocks. The average annual household income of the sample non-beneficiary households for all the four blocks was Rs 12,687.4 in the aggregate. Wage labour and ‘others’ including public and private service, were the two main sources of household income contributing to about 70 per cent of the aggregate household income.
Not only were aggregate incomes of non-beneficiary households about half the corresponding figure for the pre-benefit beneficiary households, the sources were also quite different. For example, income from agriculture contributed 32.8 per cent of the total income for beneficiary households while it constituted only 8.8 per cent of the total income for non-beneficiary households. Correspondingly, 60.8 per cent of the non-beneficiary households’ income came from wage labour and agricultural labour, while these sources contributed to only 32.1 per cent of the beneficiary households’ income.
Comparing the annual household expenditure and its components for the non-beneficiary households in the four blocks of Nagaon district with the same for the beneficiary households, it was observed that a large part (30.5 per cent) of the beneficiary households’ consumption was of food grain produced, while the same component comprised only 12.9 per cent of the non-beneficiary households’ total expenditure.
Similarly, comparing the quality of life indicators of the non-beneficiary households with those of the pre-benefit beneficiary households, the stark difference in their toilet facilities and ownership of pucca houses could be observed. For instance, while only 2.5 per cent non-beneficiaries lived in pucca houses, the corresponding figure for beneficiaries before the benefit was 12.7 per cent. Similarly, while none of the non-beneficiaries used own sanitary latrine and others – all of them were forced to use open ground and pits – the corresponding figure for beneficiaries was 8.0 per cent pre-benefit.
The non-beneficiaries perceived that the benefit would have helped them and the quality of their work would have improved. They also felt that they could have repaired/improved their house and spent more on better food and improved medicare, if they had got the benefit. On the other hand, they did not feel that they could have borrowed less or spent more on their children’s education or on improved sanitation, if given the benefit. There were mixed feelings on whether their total output would have gone up, whether they would have earned or saved more or if they could have had safe drinking water.
In Nagaon district, the block office was the implementing authority for both JGSY and EAS. The DRDA sent the funds and the guidelines for implementation to the block offices and the implementation was carried out by the block office. The selection as well as the execution of projects under JGSY and EAS programmes was carried out by BDO with the help of JE, Extension Officer and Gram Sevak, but priority was also given to the recommendation of the local MLA. In 2001-2002, the selection of projects under JGSY and EAS was made through RPRS meetings convened at GP level. In Nagaon district, working committees have been formed at block level and at village level to execute the works under EAS and JGSY programmes respectively. Under JGSY programme, work was assigned to the respective village level working committee president.
No record of any work under the JGSY programme – either financial or physical was kept at any GP office. Apparently, the situation has changed after the gram panchayat elections in December, 2001. Action plans for implementation of the SGRY programme in 2002-03 have been prepared by the sabhapatis through the gram sabhas. The DRDA released JGSY funds to the block office in the name of respective GPs. But the block office, which executed the works, maintained a single account for JGSY funds of all the GPs and therefore neither the block offices nor the GP offices could report the financial figures for JGSY GP-wise. No GP secretary was also involved in the execution of any of the MoRD programme at the village level.
Under the wage employment programmes under JGSY and EAS, the beneficiaries got less than two months of work in a year on an average. The wage rates also varied from block to block and from GP to GP – some beneficiaries reported to have received wages at less than the government rate while some others at more than the government wage rate. Neither the beneficiaries nor the implementing authorities are satisfied with the rice component of the wages. Assets like rural roads, school buildings, community halls, market sheds, agricultural bunds, hume pipe culverts and minor irrigation projects were created under the JGSY and EAS programmes. None of the beneficiaries were registered in the GP and none of them have been issued the family card. The average number of household members employed under the programmes was about 1.2 across all four blocks. Most of these projects were executed by the block – 44 out of 64 cases, while the contractor was the executing agency in the remaining 20.
Individual beneficiaries have been given assistance to develop projects related to fisheries or plantation. By and large the IBS has not been much successful in Nagaon district. However, a few IBS beneficiaries under fisheries assistance from Dolongghat and Raha blocks have been able to complete the projects and augment their incomes. Similarly some of the plantation projects assisted under IBS in Bajiagaon block have also performed satisfactorily.
The awareness level about the poverty alleviation programmes of the MoRD was very low among the beneficiaries and non-beneficiaries as well as among presidents, ward members and office staff of the GPs. Practically no awareness programme has been conducted either by the DRDA or by the block offices.
The implementation of the SGSY programme was carried out by the BDO with the help of the Extension Officer and the gram sevak. However, for all practical purposes this programme was implemented by the bank. The DRDA released the subsidy amount of SGSY funds directly to the bank and the targeted number of SGSY beneficiaries to the block office. The block office then recommended the names of proposed SGSY beneficiaries to the bank – without any gram sabha resolutions. The bank selected the beneficiaries from the proposed names as per the guidelines of the SGSY programmes.
Three types of beneficiaries were covered under the SGSY programme in Nagaon district. There were individual beneficiaries, group beneficiaries as well as beneficiaries belonging to a self-help group (SHG). Most of the individual swarozgaris set up shop with the assistance but a few were engaged in fishery and pottery trades. Group beneficiaries received equipment like power tiller, thresher etc. across all sample blocks and also cash and material for fishing trade. Most of the SHGs were found to be active and many were engaged in animal husbandry activities developing piggery, goatery, dairy, poultry and also agricultural activities but the largest number among them were engaged in weaving trade. Women participated more actively in the SHGs as compared to men.
Beneficiaries were not satisfied with the material supplied by the bank-authorized or DRDA-authorized suppliers as they claimed it was either of poor quality or at exorbitant prices. In some but very few cases, it was found the beneficiaries spent the benefit amount in household expenses instead of for self-employment. In our sample study, many of the SGSY beneficiaries were not found to be BPL.
A large number of SHGs have been formed in the last three years in this district. About two-third of the SHG beneficiaries had received revolving fund, while slightly more than one-third of the beneficiaries had taken loan. The average loan amount was Rs 80,108.78 per SHG and some of them had also received the subsidy. About 75 per cent of the beneficiary SHGs sold their products directly, while about 20 per cent sold through middlemen and the remaining were selling through government channel.
Both IAY and PMGY-GA were implemented by the BDO whereas the CCSSRH was implemented by the block with active participation of the bank. DRDA released the funds and guidelines of IAY and PMGY-(GA) to the block while the subsidy amount of CCSSRH was released to the bank. In the case of CCSSRH, the beneficiaries were selected by the bank with the recommendation of the block development office, but for IAY and PMGY-(GA) the selection was done by BDO with the help of EO, JE and gram sevak. Over and above that, recommendation of MLA and other political persons have also been given priority. In the sample study, beneficiaries under IAY and PMGY (GA) were found to belong to both BPL and APL categories.
The bulk of the houses were given as constructed houses built by contractors. However, a few of the beneficiaries or their family members provided labour in the construction and some of them were also paid daily wages for the construction work. The satisfaction level with the constructed houses was rather low and the respondents complained of problems like quality of material used being poor, insufficient space in the house, leakages in the roof, no door and window, no wall in the house, walls not plastered, etc.
Most of the beneficiaries were not aware about the unit cost of the house, nor did they know under which programme they had received the house. Beneficiaries were afraid to ask about the IAY and PMGY (GA) programmes for fear of loss of their benefit. Neither the district nor the block offices have conducted any awareness programme about the IAY and PMGY (GA) schemes. Very few beneficiaries got assistance under the CCSSRH programme.
District Social Welfare Office released the funds and the target number of beneficiaries under the NOAPS to the block development office and the block office implemented the programme directly with the help of the Extension Officer. But in 2001-2002, the procedure was changed slightly. Before 2001-2002, the selection of beneficiary was done by the block office without any official notification but after implementation of the RPRS programme, NOAPS beneficiaries were selected through RPRS village level meetings.
Field study reported that some beneficiaries not belonging to BPL were receiving benefit as were some others below 65 years of age. A beneficiary received two account payee cheques in a year each for Rs 450, but the time period of distribution of the cheque was variable. Also the amount credited varied between Rs 410 and Rs 425 as the bank also charged some commission. Similarly, in case the beneficiary was absent on the scheduled date of pension distribution, he either lost his benefit or got harassed by block officials.
The National Family Benefit Scheme (NFBS) of the NSAP was implemented by the Additional Deputy commissioner (Development) in Nagaon district through the Subdivision and the Circle Offices. The selection procedure for this programme was very complicated. This programme was not properly implemented and neither the beneficiaries nor the public were satisfied with this programme. In Raha and Kathiatoli blocks, some beneficiaries reported that they have received Rs 3500 to Rs 5000 in cash from middlemen without going to office and bank but other beneficiaries the payment in the form of account payee cheques received. Almost all the beneficiaries received the benefit after a year or more of application and a few beneficiaries received the benefit even when the deceased person died after 65 years of age.
The breadwinners had been in the prime of their lives in the majority of cases. In almost all cases the breadwinners were the husbands or wives of the respondents. In most cases the money received was used for household expenses, medical expenses, settling of dues and on children’s education. It usually took very long to receive the benefit – an average of 22.5 months.
National Maternity Benefit Scheme (NMBS) was implemented by the Additional Chief Medical Officer (Family Welfare) through the Primary Health Centres. ADCMO (Family Welfare) released the fund to PHC and PHC distributed to the beneficiary. An anganwadi worker identified the pregnant women under the selection criteria of NMBS and reported to the local ANM. After verification by the ANM and being certified by the PHC doctor, the beneficiary had to fill up the application form and deposit the same in PHC. The PHC recommended the final list of proposed beneficiaries to Additional Chief Medical Officer. As per the availability of funds, the District Office released the fund to PHC and the beneficiaries got the benefit from PHC with the help of the ANM. In most cases beneficiaries received the benefit after one to two years of the delivery. Therefore most of the beneficiaries spent the money on household expenses instead of on baby care. For better utilisation of the benefit it should be disbursed during the time of pregnancy of the beneficiaries.
Out of 56 respondents who received NMBS benefits, 17 reported having only one delivery while 32 had two deliveries. Almost all of them received the benefit only once while one of them received it twice. Four of the beneficiaries received it at the time of their third delivery and a further 2 at their fourth delivery in contravention of the NMBS guidelines. All of them received the benefit after the delivery with bulk of them receiving the benefit six months to one year after the delivery. In most cases the benefit was used to meet baby care and household expenses.
DRDA directly implemented the IWDP with the help of the Extension Officer of the concerned block office. In Nagaon district, this programme was started in 2000-2001 but the funds were received in 1999-2000 by DRDA. The official data regarding this programme was not clear in the whole district. Out of four sample blocks and forty sample GPs, only two blocks and six GPs were covered under this programme, with Kathiatoli block having four GPs and Bajiagaon block having two GPs where IWDP projects were under execution. IWDP is a five year project plan; within two and a half years nearly 20 percent fund was invested and the outcome was not completely satisfactory.
We could find ten IWDP beneficiaries from 6 different IWDP projects in our sample. All the beneficiaries carried out contour bunding and almost all (9) construction of water harvesting structures and nala bunding. Many (5 to 6) of them completed gully contour/measures, loose builders checks, earthen structures and percolation tanks while some of (2 to 4) earned out bench terracing, contour vegetative hedges and construction of anicuts. 9 beneficiaries had average land reclamation of 2.8 acres, 3 each had average agro forestry on 0.6 acres and afforestation on 0.4 acres while 6 of them had horticultural plantation on 1.8 acres.
The production as well as the yield has increased for both paddy and for vegetables produced during Kharif, Rabi or Summer season. For kharif paddy, as a result of using improved varieties, more fertiliser and irrigation, the average yield increased from 819.7 to 2041.9 kg/acre after the benefit. There were similar improvements in the crops produced in the other seasons too. There were some changes in the livestock resources of the beneficiaries after receiving the IWDP benefit, but such changes were significant only in Kathiatoli block and not so in Bajiagaon block.
For the success of JGSY or SGRY programme, the GP should be made the implementing authority. Similarly, the power to supervise the EAS projects should also be vested with the GP. Guidelines for each of the MoRD programme should be provided to the GP and these should also be presented and discussed while preparing the action plans in gram sabha meetings.
The selection procedure for SGSY needs a major overhaul to make the programme more successful. Benefit should be given to the beneficiary not necessarily in a trade decided by the local governing body as was happening but in a trade in which the beneficiary had skill and interest. It would be better to have beneficiaries selected through gram sabhas by joint committees having representation from the bank, the block office and the GP. The recovery problems might get reduced if the GP was given the power to monitor the economic activities of the beneficiary. The minimum number of members in a group or SHG might be reduced to reduce the number of dummy members and to reduce the conflict among group members.
SHGs functioning under NGOs were found to be more active and more durable than the other SHGs according to field observation. Relatively few SHGs received both loan and the revolving fund and many of them got only revolving fund. In many trades, the revolving fund assistance alone cannot bring much success to the SHG in their trade activity. While appraising projects, the bank should find out the need for loan and revolving fund carefully and both should be made available at the appropriate time for the success of the project.
Beneficiaries, villagers, and officials from GP, block and district appreciate the rural housing programmes. But to increase the success rate of these programmes, it is better to give the power of selection of the beneficiaries under IAY and PMGY (GA) programmes to gram sabha. The construction work should be done by beneficiaries themselves and GP officials should supervise the construction of the houses at the time of construction. If needed by the beneficiary, the panchayat office may make necessary arrangement for material for the IAY and PMGY (GA) house.
For the betterment of NOAPS beneficiaries, the pension should be distributed regularly at GP office in cash so that the beneficiaries can save the commission, travel and associated expenses. The distribution of food grain under the Annapurna programme was very irregular and in a few cases the same BPL family received both NOAPS and Annapurna benefits.
The awareness level of NFBS was very low and people were not aware about the programme. No awareness programme was conducted by the district or block offices. For this programme, the selection procedure should be simplified, GP should be given the power to recommend beneficiary and the cheque should be distributed from the block office.
In most cases the NMBS beneficiaries received the benefit after one to two years of the delivery. Therefore most of the beneficiaries spent the money on household expenses instead of on baby care. For better utilisation of the benefit it should be disbursed during the pregnancy of the beneficiaries.
In Nagaon district in the years covered by this study, although some assets have been created and the quality of life of the beneficiaries have improved, the targeting of beneficiaries left much to be desired. The absence of panchayati raj institutions in the study period has contributed to improper selection of beneficiaries.
Policy
There is immense scope for improving the efficacy of poverty alleviation programmes by better targeting the beneficiaries, reducing waste and corruption, making the programmes more meaningful in terms of relevance to local needs and priorities, and creating institutional conditions for greater accountability. The focus should be on rationalising the approach, organisation and priorities of the poverty alleviation programmes.
Identification of the poor, the kind of assets to be provided, ensuring the back-up needed for the programme cannot, as experience has shown, be managed efficiently by governments. The difficulties are compounded when they involve heavy subsidies and are implemented by a bureaucracy subject to political interference. Instead, public investment ought to concentrate on providing infrastructure to facilitate overall development and according to region-specific resource potential, thereby opening up greater and more diverse opportunities for employment and entrepreneurial activity.
The poor, of course, need special help by way of information, technical advice and training to take advantage of growing investment opportunities. The government has a key role in providing this help. But it is neither necessary nor desirable for the government to decide what assets are to be provided, to whom and on what terms. These tasks are better left to individual choices. Those who want to invest in an enterprise can seek credit from financial institutions that must be left free to judge the viability of the loan and the borrowers. The government’s role here would be essentially to lay down guidelines (such as priority sector lending) and provide interest subsidies or insurance of loans given to the poor.
The other, and in many ways more important, issue is targeting. The search for ways to reduce chances of wrong targeting has largely focused on more effective monitoring of beneficiary selection; and creating credible checks against wrong selection and creating incentives for ‘self-selection’. Incomes are notoriously difficult to ascertain. If they determine eligibility for benefits, there is a strong general incentive to understate income. It is therefore better to rely on more easily verifiable attributes (family size, landholding, caste, etc.) associated with poverty. Though this does not eliminate the scope for falsification, it certainly reduces the scope for it.
The role of self-governing institutions can not be overemphasised in this regard. As has been clearly brought out in this study, the selection procedure in Nagaon district has significantly improved after the panchayat elections were held and elected sabhapatis have been in place. Some reward and punishment mechanism needs to be developed to link the allocation and disbursement of funds for the poverty alleviation programmes with the continuation of effective and vibrant PRIs.
There is need for imparting proper training to the elected sabhapatis as well as the panchayat secretaries to make them aware of the panchayati raj system, its philosophy, structure, role and functions as well as the details of the many poverty alleviation programmes and the procedural and record keeping nuances of the same.
The role of gram sabhas in selection of beneficiaries and implementation of the programmes cannot be overemphasised. The involvement of gram sabhas should be made mandatory even when there are no elected panchayats to ensure transparency of the selection process as well as improve the awareness about the various poverty alleviation programmes.
The implementation of the poverty alleviation programmes need to be made more transparent. Information about the benefits and the beneficiaries at all stages of the selection as well as disbursements should be made more easily available to all concerned up to the villagers and potential beneficiaries.
The monetary value of the benefits should have provision for automatic adjustments with price changes. These could be revised every year along with the budgetary provisions. This will ensure that the purpose for which the benefit is given can be achieved with the monetary payment. Although the monetary amounts are revised even now, this is done on an ad hoc basis and sometimes quite late.
Clearly, targeting errors can be reduced if conditions of eligibility and/or the scale of benefits are so defined as to reduce the incentives for those above the poverty line to get into the programme. Insisting on a certain portion of beneficiaries being drawn from poor/vulnerable groups (SC, ST, women) and providing wage employment in employment schemes at wages somewhat below the market/minimum wage rate and at locations away from the residence would be a more effective way of reaching the target population than relying on discretionary authority. The reservation idea is now incorporated in the guidelines for all Ministry of Rural Development projects. But the idea of lowering wage rates on works programmes below the legal minimum is not favoured, as the government cannot violate its own laws.
Economic growth, necessary as it is, does not ‘benefit’ in equal proportion all regions and sections of the population. Historical factors, resource endowments, social and political compulsions and of course, government policies are very uneven across regions in India. Further, regions which are poorly developed to begin with have also grown at a slower rate than average. This trend may be a short-run phenomenon which will get corrected over time. Indeed, government interventions at various stages in the less developed regions are aimed at correcting regional imbalances. A similar argument holds for imbalances across economic resource endowments of individuals and families.
The foregoing arguments acquire a greater force in relation to the people in the North-East provinces. Take the case of Assam. Uncertainty, and fear of the future, backwardness convinced some the local investors to put their money in to other states. This has only helped to rise poverty , unemployment and hence uncertainty. This is a place where people are struggling to survive. The escape routes are complicated because politicians so far ignored the development aspect in the region.
We thought it appropriate to look in to the magnitude of development aspect in a district. Take Nagaon district in this context. A large number of the state’s poor reside in this district. Certain social groups suffer from the cumulative consequences of systematic exclusion. In order to tackle these anomalies the central government has designed programmes for the benefit of the poor. However, these programmes are being implemented in an unorganised way and in some respects even overlapping.
The programmes are being implemented in Nagaon district such as Programmes (notably SGSY) designed to help the poor to acquire or add to their productive assets and enable them to make more productive use of such assets; various special programmes to provide additional employment to the poor; Schemes to ensure that all villages have access to a minimum standard of educational and health facilities, safe drinking water and roads; various forms of direct transfers by pension and assistance schemes for the aged destitutes, pregnant women and families who have lost their breadwinners.
Nearly 90 percent of the population of the district lived in rural areas. They were mainly dependent on agriculture, fishery and livestock. Although most of them were cultivators, they had little landholding for cultivation. The land is fertile, but lack of proper canal and well irrigation facilities, as well as flood control systems makes the situation worse for the farmers, many of whom can hardly cultivate two crops a year. Next to agriculture and allied economic activities, handloom and weaving was the main industrial activity in the district.
Living conditions of the people were also very poor. Majority of them were seen to live in temporary dwelling units in unhealthy conditions. These dwelling units were vulnerable to fire and other natural calamities like rain and storm. Majority of the poor people had no sanitation facilities. Open ground and pits were the only toilet facility they had. The medical facilities were in a dismal state. Malaria and goitre were chronic diseases in the hill areas of this district.
According to the provisional figures for 2001 census, the total population of Nagaon district was 23,15,387, of which 11,94,327 were males and 11,21,060 were females. As much as 88 per cent of the total population lived in villages – the percentage being slightly higher among women than among men. Of the total population, according to the 1991 census 10 per cent were SC, a small 4 per cent were ST, while the remaining 86 per cent were from other castes. The decadal growth rate of population of the district has been 22 per cent, which is slightly higher than the corresponding figure of 19 per cent for the state.
The literacy rate of the district was only 55 per cent in 1991, with female literacy at 46 per cent. Both these rates were marginally better than the corresponding figures for the state. Although male literacy rate has also increased from 63 per cent in 1991 to 69 per cent in 2001, the female literacy rate has had a more significant increase from 46 per cent to 56 per cent during the same period. More importantly, Nagaon district is now lagging behind Assam state in literacy rate as per 2001 census, whereas it was marginally ahead in 1991.
In 1991, there was no educational institution of any kind in about 13 per cent of the villages of the district. Only 1174 out of 1375 inhabited villages had primary or elementary schools. About 13 per cent of the villages had schools with classes beyond class VIII, while approximately 60 per cent of the villages had only primary or elementary schools upto class IV.
Although not very far from the state capital Guwahati (123 km), the district has poor transport infrastructure. About 60 per cent of the villages in the district could be reached only through kutcha roads or foot paths in 1991. Only 546 villages out of 1375 could be reached using pucca roads. Being located at the heart of the North East, the district has relatively good road and rail connectivity. Two National highways – NH 36 and NH 37 – run through the district. A total of 180 km of National highways and even more of railway lines pass through the district. A network of 196 km of state highways connects the district to other parts of the state. But the backbone of the transport infrastructure is provided by the Gram Panchayet (GP) roads. Most villages had no connection with the outside world. Only 43 per cent villages had some connectivity, largely through bus. There were only 20 villages with rail connectivity in the entire district.
In 1991, 303 out of 1375 villages had post offices, while only 17 villages had access to telegraph services. It must be said that the telephone connection status has undergone significant change since the 1991 census. Although data for all the blocks is not available, there are about 2,200 telephone connections in Dolongghat block, 667 in Raha, 2,408 in Kathiatoli and 1,855 connections in Bajiagaon block at present as reported to us during the field survey, with 50 telephone exchanges in the district.
There are as many as 95 bank branches in the district. The district has reported to have 509 cooperative societies. There are few NGOs in the district – only 9 NGOs are reported by the district while Dolongghat block has reported to have 15 NGOs operating in the block. Raha and Kathiatoli blocks have reported to have 14 and 13 markets respectively, while Dolongghat block has reported only 3 markets in the block.
According to the 1991 census, the largest number of workers in the district (303,587 of them) were cultivators followed by agricultural labourers (81,800). After agriculture, a large number of workers were engaged in other services (52,618), which included private and public services. Trade and commerce was the occupation of about 41,202 workers. Manufacturing, Processing, Servicing and repairs provided occupation to another 23,865 workers – relatively few in household (3417) and mostly in other than household industries (20,448). Relatively few workers followed other occupations. This pattern was more or less the same across all sample blocks.
Agriculture is the main occupation of the people of Nagaon district. Soil fertility is very good due to the relatively heavy rainfall – an average rainfall of 1750 mm and the presence of the Brahmaputra and many of its tributaries. But the intensity of cultivation was reported to vary between 120 and 300 per cent. Paddy, wheat, oilseeds, sugarcane, pulses and vegetables are the main food crops of the district, whereas tea, jute, cotton and bamboo are the major non-food crops. A very large percentage of the total geographical area was under cultivation. Similarly, a large part of the area under cultivation was used to grow food crops.
In 1991, 436 of the 1375 inhabited villages (32 per cent) had no electricity. 815 villages had power for only domestic use, 11 villages had power for only agricultural use and another 47 villages had power for both agricultural and domestic use. Although the number of villages electrified has gone up significantly since then, it should be kept in mind that having electricity connection does not necessarily mean availability of power - as in some villages in the hills power was available for only a few hours a day on an average.
The number of post offices per lakh population was the highest in Bajiagaon block (19.1) and the lowest in Kathiatoli block (14.0). The average number of telegraph offices per lakh of population in the sample GPs was 1.6, whereas the number of telephone exchanges per lakh of population stood at a much higher level of 3.9. Tele density was the highest in Bajiagaon block (1.0) followed by Dolongghat block (0.8).
With the coming into force of the Constitution (73rd Amendment) Act on 24th April, 1993, constitutional status has now been provided to a three-tier Panchayati Raj system to ensure people’s participation in rural governance. The Act provides for devolution of functions, funds and functionaries to the PRI institutions. It provides for a three-tier system of Panchayati Raj for all states having population of over 20 lakh; holding of Panchayat elections regularly every 5 years; reservation of seats for scheduled caste, scheduled tribe and women (not less than 33 per cent); appointment of State Finance Commission to make recommendations regarding financial powers of the Panchayats; and constitution of District Planning Committee to prepare draft development plan for the district as a whole.
In Assam, the District Planning Committees have not yet been constituted. A State Finance Commission was constituted on 23 June, 1995 and the Commission submitted its report on 29 February, 1996. However, its recommendations have been accepted only in part and no action has been taken on the recommendations and the second Finance Commission has not yet been constituted. By a gazette notification in September 2001, the Assam government has devolved the functions of 29 subjects to the PRIs of the state. Moreover, it is clearly mentioned in the notification about the sources of funds and functionaries (officials of line departments) to assist the PRIs against each activity. After Karnataka, Assam is thus the second state in India to transfer 29 subjects to the PRIs.
Panchayat elections were held in Assam on December 27 and 31, 2001 after a gap of about ten years. Before this, the previous panchayat elections were held in April 1992.
The new state administration after the May 2001 assembly elections, initiated the Raijor Padulit Raijor Sarkar (RPRS) programme for redressal of public grievances and for creating public awareness on the various government sponsored developmental schemes. Under this programme, RPRS meetings were convened at district, block and GP levels where MLAs, MPs, ZP/AP/GP presidents and members were invited for active participation.
The reference period of our study was the three years immediately preceding the current financial year, that is, 1999-2000, 2000-2001 and 2001-2002 and no elected GPs were in place in Assam for most of this period. The role and functioning of PRIs as mentioned in this report is based on the actual position during the period of the field work – i.e. during October – November, 2002.
In Nagaon district, the Additional Development Commissioner (ADC) was the secretary to the Zilla Parishad. The DRDA executed all the development programmes of the MoRD as per the direction of its District Governing Body.
During the Panchayat elections of December 2001, there was reservation for SC, ST and women members. More than one third of the sabhapatis in Nagaon district were seen to be women and nearly 30 percent of the sabhapatis belonged to SC or ST. Although 37.5 per cent of the sabhapatis among the 40 GPs surveyed were women, very few among the women sabhapatis were found to be capable of handling the administrative work of the GP. In Nagaon district each GP has 10 elected ward members irrespective of population and geographical area out of which more than 45 percent are women and nearly 40 percent belong to SC or ST.
For JGSY programme, funds were transferred to the block directly from DRDA and the selection of beneficiaries was also done by block. GP had no role in the JGSY programme. Beneficiaries under IAY, PMGY (GA) and NOAPS programmes were also selected by the block but from 2001-2002 NOAPS beneficiaries were selected at the meetings convened under the RPRS programme at GP level. From the year 2002-2003, IAY and PMGY (GA) beneficiaries are being selected by GP in consultation with gram sabha. The block office used to disburse the old age pension to the NOAPS beneficiaries directly but from 2002-2003 the cheques are being distributed by the GPs. In case of IAY programme, constructed houses were being given to the beneficiaries.
It seems that in Nagaon district, the BPL list was also not available in all block offices. It was also observed that in many cases the households included later in the list were from service holders, businessmen, landlord, etc. with steady sources of income. The annual income of many of these BPL households was in the range of Rs 50 thousand to Rs 1 lakh and in some cases even more than that. Many of them had assets like pucca houses, motorcycles, television sets, refrigerators, etc.
The GPs had no financial power in JGSY programme. For JGSY programme, the blocks after finalising the action plan also selected the projects to be undertaken and the individual beneficiaries to be assisted in a year within the allocation. The EAS programme was implemented at the block level and the GPs had no role in their planning and implementation.
Many of the sample GPs in Nagaon district were seen to have no GP office. Similarly, shortage of staff seems to be a universal problem in most GPs studied. In almost all GPs, the GP office was not opened regularly due to shortage of staff. The availability and quality of information maintained by the GPs was far from satisfactory. GP office did not maintain any record of physical or financial achievement for any of the MoRD programme. No record of Annapurna, Antyodaya, BPL food grain and Relief package received and distributed by GPs was available. Another major handicap was the non-availability of BPL lists from the GPs.
In the year 2000-2001 no JGSY fund was allocated to the district. As a result, not much of community assets could be created in the sample GPs except construction of very few link roads, drains, school buildings and market yards. Though the GPs received the Tenth Finance Commission (TFC) funds for the maintenance of GP assets, assets were increasingly becoming non-durable due to shortage of funds. GPs were also found to maintain a separate cash book for their Bazaar share (share of revenue raised from bazaar levies etc.) received from district and block.
In Nagaon district, gram sabha meetings have been held only after the elections in December 2001. No records were found of any gram sabha meetings in the sample GPs during the period 1999-2001. While conducting the fieldwork between October and November 2002, it was found that only one or two gram sabha meetings have been held in the sample GPs in the post-panchayat election period and between 150 and 350 members were found to attend the gram sabha meetings.
At the district level, the planning and execution authority for the MoRD poverty alleviation programmes was the DRDA with the advice of its governing body. They created new rules and guidelines from time to time and did not always follow the rules laid down by the central government for the schemes.
The implementing authority of the Jawahar Gram Samridhi Yojana (JGSY) was the Block Development Office. Instead of maintaining a separate record for each GP, blocks have maintained one physical record and one cashbook for all GPs for the JGSY programme. The funds for the rest of the programmes except NFBS, NMBS, SGSY, CCSSRH and IWDP were sent to the block office. NFBS and NMBS funds were administered by the ADC (Development) through Circle Office and the Additional Chief Medical Officer (Family Welfare) through PHC respectively. In case of SGSY and CCSSRH, the DRDA sent the subsidy amount directly to the bank, while the names of beneficiaries were recommended by the block office for final selection and disbursement, which was made by the bank. DRDA directly implemented the IWDP scheme with the help of the Extension Officer of the concerned block office.
The guidelines for selection of beneficiaries or the implementation of the above mentioned programmes were not available in the GP offices and so the elected GP functionaries were not aware of the details of the programmes. Muster Roll under JGSY and EAS programmes was maintained at the block office by office staff not by contractor or group leader. No beneficiary had signed or put thumb impression on the muster roll. No contractor or group leader got the official work order for the construction of roads, buildings, etc. under EAS and JGSY programmes. Before the election of the GPs, the block administered all the programmes and so no records were available in GP offices for that period.
The state government has authorised the GPs to collect tax on government tanks, markets, forests, river bunds, etc. but the actual implementation has not yet begun. GPs get some bazaar share funds for office maintenance from block office and TFC fund from district for maintenance of assets in the GP. The GP secretaries are untrained permanent employees of state government and are getting fixed amount of salary. Both GP Sabhapatis and Secretaries require some training about the functioning of PRIs and implementation of new and existing programmes of MoRD.
The sabhapati or the head of the GP was an elected member in all the sample GPs. There were 10 elected members in each GP of each block – an average of 4.6 women and 5.4 men per GP. Social group-wise, on an average a GP had 0.7 male SC members and 1.1 female SC members. Similarly, there were 1.0 male and 1.1 female ST members per GP.
A large number of sabhapatis (29 out of 40) had studied up to SSC/HSC or degree levels. About 50 per cent of the elected sabhapatis were cultivators, while another 35 per cent were housewives. The average annual household income of a sabhapati was the highest in Dolongghat block (Rs 39,300) and the lowest in Kathiatoli block (Rs 28,950). The average landholding of sabhapatis was 4.8 acres in Raha block and as low as 2.3 acres in Kathiatoli and Bajiagaon blocks. All the 40 sabhapatis were first-time sabhapatis and had no previous experience as head of a GP. There were 34 full-time secretaries and 6 part-time secretaries in the 40 GPs studied.
Food grain under Annapurna scheme has started arriving and has been distributed only during 2001-02 and not in the two years before that. No food grain was distributed as part of wage or under the Annapurna scheme in any sample GP in 1999-2000. However, BPL food grain was distributed by the cooperative societies through village dealers. Elected gram panchayats were in place towards the end of the year 2001-2002. During the year, food grain was also distributed as part of wage as well as under the Annapurna scheme besides the BPL food grain.
No JGSY funds were released to the DRDA in 2000-2001. In turn, the DRDA released little funds to blocks or GPs from its opening balance. Funds were released only during 2001-2002 after the panchayat elections.
Not only was the JGSY programme not implemented by the GPs, records were also not kept at the GP offices. The block office maintained records of JGSY funds for the whole block and not GP-wise. In Kathiatoli block, the opening balance in each sample GP was nil in the year 1999-2000 and so was the closing balance. An average amount of only about Rs 40,000 was received and spent per GP. No amount was received or spent under JGSY during 2000-2001 in Kathiatoli block. On the other hand the amount received per GP under JGSY increased to Rs 4.693 lakh in 2001-2002 while the amount spent also increased to Rs 3.791 lakh per GP, resulting in an average closing balance of Rs 97,000 per GP.
JGSY and EAS programmes have had the largest number of beneficiaries covered for each of the three years of study except during 2000-2001 when no funds were released from the Centre under this programme. Projects under the IWDP programme were funded only during 2000-2001 and 2001-2002. IAY and SGSY programmes had about 2000 to 3500 beneficiaries every year, with a marginal reduction in the year 2000-2001.
The three NSAP programmes have had different coverage in different years. The year 2000-2001 registered a sharp increase in the number of beneficiaries under each of the three programmes while there was a decrease in 2001-2002 in the number of beneficiaries under NFBS and NMBS. NOAPS, on the other hand, have had a steady increase in the number of beneficiaries from year to year.
In all types of community assets, there was general reduction in the level of their creation during 2000-2001. In most cases the number of works started and completed during the year were identical. Rural roads and minor irrigation works appeared to be the major community assets created. Houses for SC/ST also formed a significantly high proportion among different types of assets, followed by houses for others.
There was no watershed development project implemented in Nagaon district in 1999-2000, although money was received during the year which was spent in the later years. PMGY (GA) was implemented in Nagaon district in 2001-2002, although it was launched on 1 April, 2000 in the country. Similarly, some money was received under CCSSRH in the year 2000-2001 itself, but was actually spent in 2001-2002. Except IAY and the three programmes under NSAP, the fund squeeze in 2000-2001 was clearly discernible in all the other programmes. The funds flow revived in 2001-2002, perhaps because of the holding of the panchayat elections during the year.
Among the four sample blocks, the funds flow was the minimum in Bajiagaon block in all the three years for each of the programme. In each of the four sample blocks, the drying up of funds in 2000-2001 could be clearly seen. After that, the increased funds flow in 2001-2002 could not be spent effectively and showed up as increased closing balance in almost all the programme closing balances.
A total sample of 600 beneficiaries was considered in the Dolongghat, Raha, Kathiatoli and Bajiagaon blocks across all the programmes. Of this number, 53.2 per cent were males and 46.8 per cent were females and in Kathiatoli block as many as 63.3 per cent were males. The average household size of beneficiaries was quite large, about 5.90 for our sample. In spite of such large household size, the number of earning members per household was only 1.38 in total with the highest in Kathiatoli block (1.45).
The highest average cultivated area operated was 1.85 acres in Bajiagaon block, while the lowest was only 1.26 acres in Dolongghat block. The intensity of cultivation of a piece of land was between 1.21 and 1.27 among the four sample blocks. In the four blocks studied, a total of 36 beneficiaries operated more than 5 acres of land.
A large number (390) of the sample beneficiaries reported that they did not belong to the BPL category although they were beneficiaries under various programmes. Similarly, 464 beneficiaries reported that they were not eligible to be listed under BPL category. Apparently, the benefits of the poverty alleviation programmes did not reach the targeted segments in most cases.
Slightly less than half the beneficiaries (44.0 per cent) maintained their livelihood based on earnings from wage labour or agricultural labour. Nearly 25.2 per cent of the total respondent beneficiaries across all the sample blocks reported cultivation as their primary occupation. After wage/agricultural labour and cultivation, the third most common primary occupation was ‘trade/business’ followed by ‘other services’. Relatively few beneficiaries belonged to the other categories.
The Government of India conducted two BPL censuses in 1992 and 1997, to identify BPL households. For the 1992 BPL census, the poverty line was fixed at Rs 11,000 income per annum per household. However, in 1997 the government of Assam defined a BPL household as one having an annual household income of upto Rs 19,650. Another BPL census was expected to be carried out in 2002 for which the survey had been completed till the time of our field work. But the preparation of BPL list was awaiting the finalisation of the definition of BPL, which was proposed as an annual household income of between Rs 22,000 and Rs 24,000.
The average income of the beneficiary household was Rs 23,226.52 per annum before receiving the benefit. In all the four sample blocks, the maximum contribution to household income was from cultivation. Surprisingly, the second highest contribution in Bajiagaon block was from ‘others’ which included private and public services, while it was from wage labour in the remaining three sample blocks. After receiving the benefit, the average annual income was reported to be Rs 24,825.48 at the total sample block level. As regards sources of income, there was no significant variation in the contribution of different sources between the pre- and the post-benefit period.
The average annual household income was quite high. Similarly, the sources of income and their contributions, was also significantly different from what is normally expected from BPL households. Given the fact that the primary occupation of 14.0 per cent beneficiaries was ‘trade/business’ and that of another 11.8 per cent was ‘other services’, it appears that many of the beneficiaries were actually not from BPL category. Because of the relatively high household income before the benefit, the change in income after the benefit appears insignificant as a proportion of the pre-benefit income.
As many as 37.7 per cent beneficiary households reported a pre-benefit income above Rs 20,000 per annum. Relatively few BPL households have been able to move APL after getting the benefit. This figure was only 13.7 per cent in the aggregate – with a low of 8.0 per cent in Kathiatoli block and a high of 16.0 per cent in Dolongghat block.
In all the four sample blocks, the highest number of beneficiaries has been from IAY/ PMGY(GA) – which contributes to about 25.6 per cent of all the sample benefits. This is followed by NOAPS/ Annapurna, JGSY/ EAS or SGSY. The beneficiaries under PMGY(GA) could not be identified separately as neither the beneficiaries, nor the GPs could tell whether a particular beneficiary got the house under IAY or under PMGY(GA). Just 10 beneficiaries were found under the IWDP. The average number of benefits per sample beneficiary household was 1.12 in Dolongghat block and 1.05 in Kathiatoli block, the latter being the lowest figure.
The awareness programmes of the government, gram sabhas and members of local bodies were found to be totally ineffective as sources of information about the various poverty alleviation programmes. This could be because of absence of the PRIs in Assam during most of our study period. Friends and public figures acted as the major sources of information across all sample blocks. Surprisingly, All India Radio was the source of information for about 14.1 per cent of the beneficiaries.
An analysis of the beneficiary respondent’s perception of transparency of the selection process in Nagaon district revealed that among the responses ‘applied for it’ dominated as the perceived reason in selection of a beneficiary across all sample blocks. This was followed by ‘met all requirements’ and ‘knew sanctioning person’ in that order at the aggregate level. In Dolongghat block, as many as 16.7 per cent beneficiaries thought that they were selected as they met all requirements.
The benefit received as a percentage of the amount sanctioned has been the highest in Kathiatoli and Bajiagaon blocks in 1999-2000 (91.9 per cent) and the lowest in Raha block in 2001-02 (80.4 per cent). Interestingly, there has been no difference between the sanctioned and the received amount in the loan component under the loan schemes. The difference between the sanctioned and the received amount was increasing year to year in the aggregate. The three most common reasons cited for the difference between the amount sanctioned and the amount received were ‘Contractor’, ‘Block office PC’, and ‘Bank PC’.
The average number of days for receiving the benefit was reported to be 212.9 days between application and sanction, and 34.1 days between sanction and disbursement. Applying in application formats was the dominant application procedure. On an average, a beneficiary visited concerned offices 7.3 times and spent Rs 266.33 in getting the benefit including the application fee, travel and other associated expenses.
Overall, 43.5 per cent of the beneficiaries were satisfied with the government functionaries’ role at the aggregate level, while another 33.3 per cent were somewhat satisfied and the remaining 23.2 per cent not satisfied. Of the total beneficiaries, 47.2 per cent reported facing problems in receiving the benefits. Among the problems cited, the majority were unhappy with the cumbersome process. About 20 per cent also reported non-cooperation of officials.
The percentage of beneficiaries having pucca houses has gone up from 12.7 per cent to 45.0 per cent after receiving the benefit. Similarly, the average number of living rooms in the house has also gone up from 2.2 to 2.6 after receiving the benefit. An overwhelming majority used open ground or pits for toilet purposes – both before and after receiving the benefit. There has been a marginal increase in beneficiary households having own sanitary latrine from 8 to 11 percent after receiving the benefit. There has been some improvement in having secure and proximate source of drinking water among the sample beneficiaries. The number of beneficiaries using own tube well or public tube wells has increased, while the corresponding number using own well, other wells or public wells has decreased in almost all the sample blocks.
There was little variation in terms of availability of medical facilities during the periods of before and after benefits received – the percentage of beneficiaries reporting having medical facility available going up from 88.8 per cent to 90.3 per cent across all four sample blocks.
Only 34.5 per cent beneficiaries sent all their children to school, while another 36.8 per cent sent some of them. In almost all cases, the educational institution was within 3 km from home. Most of the children who went to school studied to the primary/middle school level in all the sample blocks, with about 13.3 per cent households sending their children to high school levels. The trend in higher education like degree and technical training was insignificant.
Nearly 95.7 per cent of the total beneficiaries felt that the benefit had helped them. An overwhelming majority also reported improvement in the quality of their life. Only 50.3 per cent beneficiaries reported an increase in total output, 76.7 per cent perceived that they now earned more; only 57.8 per cent thought they could save more and only 46.8 per cent felt that they were in a position to borrow less after receiving the benefit.
Quite a number of the beneficiaries across all the sample blocks were able to repair their houses. Likewise, a significant proportion was able to spend more on the education of their children. In addition, a significant number of beneficiaries were able to consume better food and afford better medical care. About 53.3 per cent of the beneficiaries reported that they now have access to safe drinking water, while about half of them had access to improved sanitation.
Three non-beneficiary respondents were also covered from each GP in this study to serve as a control group. A total sample of 120 non-beneficiaries were studied – 30 from each of the four sample blocks. The average annual household income of the sample non-beneficiary households for all the four blocks was Rs 12,687.4 in the aggregate. Wage labour and ‘others’ including public and private service, were the two main sources of household income contributing to about 70 per cent of the aggregate household income.
Not only were aggregate incomes of non-beneficiary households about half the corresponding figure for the pre-benefit beneficiary households, the sources were also quite different. For example, income from agriculture contributed 32.8 per cent of the total income for beneficiary households while it constituted only 8.8 per cent of the total income for non-beneficiary households. Correspondingly, 60.8 per cent of the non-beneficiary households’ income came from wage labour and agricultural labour, while these sources contributed to only 32.1 per cent of the beneficiary households’ income.
Comparing the annual household expenditure and its components for the non-beneficiary households in the four blocks of Nagaon district with the same for the beneficiary households, it was observed that a large part (30.5 per cent) of the beneficiary households’ consumption was of food grain produced, while the same component comprised only 12.9 per cent of the non-beneficiary households’ total expenditure.
Similarly, comparing the quality of life indicators of the non-beneficiary households with those of the pre-benefit beneficiary households, the stark difference in their toilet facilities and ownership of pucca houses could be observed. For instance, while only 2.5 per cent non-beneficiaries lived in pucca houses, the corresponding figure for beneficiaries before the benefit was 12.7 per cent. Similarly, while none of the non-beneficiaries used own sanitary latrine and others – all of them were forced to use open ground and pits – the corresponding figure for beneficiaries was 8.0 per cent pre-benefit.
The non-beneficiaries perceived that the benefit would have helped them and the quality of their work would have improved. They also felt that they could have repaired/improved their house and spent more on better food and improved medicare, if they had got the benefit. On the other hand, they did not feel that they could have borrowed less or spent more on their children’s education or on improved sanitation, if given the benefit. There were mixed feelings on whether their total output would have gone up, whether they would have earned or saved more or if they could have had safe drinking water.
In Nagaon district, the block office was the implementing authority for both JGSY and EAS. The DRDA sent the funds and the guidelines for implementation to the block offices and the implementation was carried out by the block office. The selection as well as the execution of projects under JGSY and EAS programmes was carried out by BDO with the help of JE, Extension Officer and Gram Sevak, but priority was also given to the recommendation of the local MLA. In 2001-2002, the selection of projects under JGSY and EAS was made through RPRS meetings convened at GP level. In Nagaon district, working committees have been formed at block level and at village level to execute the works under EAS and JGSY programmes respectively. Under JGSY programme, work was assigned to the respective village level working committee president.
No record of any work under the JGSY programme – either financial or physical was kept at any GP office. Apparently, the situation has changed after the gram panchayat elections in December, 2001. Action plans for implementation of the SGRY programme in 2002-03 have been prepared by the sabhapatis through the gram sabhas. The DRDA released JGSY funds to the block office in the name of respective GPs. But the block office, which executed the works, maintained a single account for JGSY funds of all the GPs and therefore neither the block offices nor the GP offices could report the financial figures for JGSY GP-wise. No GP secretary was also involved in the execution of any of the MoRD programme at the village level.
Under the wage employment programmes under JGSY and EAS, the beneficiaries got less than two months of work in a year on an average. The wage rates also varied from block to block and from GP to GP – some beneficiaries reported to have received wages at less than the government rate while some others at more than the government wage rate. Neither the beneficiaries nor the implementing authorities are satisfied with the rice component of the wages. Assets like rural roads, school buildings, community halls, market sheds, agricultural bunds, hume pipe culverts and minor irrigation projects were created under the JGSY and EAS programmes. None of the beneficiaries were registered in the GP and none of them have been issued the family card. The average number of household members employed under the programmes was about 1.2 across all four blocks. Most of these projects were executed by the block – 44 out of 64 cases, while the contractor was the executing agency in the remaining 20.
Individual beneficiaries have been given assistance to develop projects related to fisheries or plantation. By and large the IBS has not been much successful in Nagaon district. However, a few IBS beneficiaries under fisheries assistance from Dolongghat and Raha blocks have been able to complete the projects and augment their incomes. Similarly some of the plantation projects assisted under IBS in Bajiagaon block have also performed satisfactorily.
The awareness level about the poverty alleviation programmes of the MoRD was very low among the beneficiaries and non-beneficiaries as well as among presidents, ward members and office staff of the GPs. Practically no awareness programme has been conducted either by the DRDA or by the block offices.
The implementation of the SGSY programme was carried out by the BDO with the help of the Extension Officer and the gram sevak. However, for all practical purposes this programme was implemented by the bank. The DRDA released the subsidy amount of SGSY funds directly to the bank and the targeted number of SGSY beneficiaries to the block office. The block office then recommended the names of proposed SGSY beneficiaries to the bank – without any gram sabha resolutions. The bank selected the beneficiaries from the proposed names as per the guidelines of the SGSY programmes.
Three types of beneficiaries were covered under the SGSY programme in Nagaon district. There were individual beneficiaries, group beneficiaries as well as beneficiaries belonging to a self-help group (SHG). Most of the individual swarozgaris set up shop with the assistance but a few were engaged in fishery and pottery trades. Group beneficiaries received equipment like power tiller, thresher etc. across all sample blocks and also cash and material for fishing trade. Most of the SHGs were found to be active and many were engaged in animal husbandry activities developing piggery, goatery, dairy, poultry and also agricultural activities but the largest number among them were engaged in weaving trade. Women participated more actively in the SHGs as compared to men.
Beneficiaries were not satisfied with the material supplied by the bank-authorized or DRDA-authorized suppliers as they claimed it was either of poor quality or at exorbitant prices. In some but very few cases, it was found the beneficiaries spent the benefit amount in household expenses instead of for self-employment. In our sample study, many of the SGSY beneficiaries were not found to be BPL.
A large number of SHGs have been formed in the last three years in this district. About two-third of the SHG beneficiaries had received revolving fund, while slightly more than one-third of the beneficiaries had taken loan. The average loan amount was Rs 80,108.78 per SHG and some of them had also received the subsidy. About 75 per cent of the beneficiary SHGs sold their products directly, while about 20 per cent sold through middlemen and the remaining were selling through government channel.
Both IAY and PMGY-GA were implemented by the BDO whereas the CCSSRH was implemented by the block with active participation of the bank. DRDA released the funds and guidelines of IAY and PMGY-(GA) to the block while the subsidy amount of CCSSRH was released to the bank. In the case of CCSSRH, the beneficiaries were selected by the bank with the recommendation of the block development office, but for IAY and PMGY-(GA) the selection was done by BDO with the help of EO, JE and gram sevak. Over and above that, recommendation of MLA and other political persons have also been given priority. In the sample study, beneficiaries under IAY and PMGY (GA) were found to belong to both BPL and APL categories.
The bulk of the houses were given as constructed houses built by contractors. However, a few of the beneficiaries or their family members provided labour in the construction and some of them were also paid daily wages for the construction work. The satisfaction level with the constructed houses was rather low and the respondents complained of problems like quality of material used being poor, insufficient space in the house, leakages in the roof, no door and window, no wall in the house, walls not plastered, etc.
Most of the beneficiaries were not aware about the unit cost of the house, nor did they know under which programme they had received the house. Beneficiaries were afraid to ask about the IAY and PMGY (GA) programmes for fear of loss of their benefit. Neither the district nor the block offices have conducted any awareness programme about the IAY and PMGY (GA) schemes. Very few beneficiaries got assistance under the CCSSRH programme.
District Social Welfare Office released the funds and the target number of beneficiaries under the NOAPS to the block development office and the block office implemented the programme directly with the help of the Extension Officer. But in 2001-2002, the procedure was changed slightly. Before 2001-2002, the selection of beneficiary was done by the block office without any official notification but after implementation of the RPRS programme, NOAPS beneficiaries were selected through RPRS village level meetings.
Field study reported that some beneficiaries not belonging to BPL were receiving benefit as were some others below 65 years of age. A beneficiary received two account payee cheques in a year each for Rs 450, but the time period of distribution of the cheque was variable. Also the amount credited varied between Rs 410 and Rs 425 as the bank also charged some commission. Similarly, in case the beneficiary was absent on the scheduled date of pension distribution, he either lost his benefit or got harassed by block officials.
The National Family Benefit Scheme (NFBS) of the NSAP was implemented by the Additional Deputy commissioner (Development) in Nagaon district through the Subdivision and the Circle Offices. The selection procedure for this programme was very complicated. This programme was not properly implemented and neither the beneficiaries nor the public were satisfied with this programme. In Raha and Kathiatoli blocks, some beneficiaries reported that they have received Rs 3500 to Rs 5000 in cash from middlemen without going to office and bank but other beneficiaries the payment in the form of account payee cheques received. Almost all the beneficiaries received the benefit after a year or more of application and a few beneficiaries received the benefit even when the deceased person died after 65 years of age.
The breadwinners had been in the prime of their lives in the majority of cases. In almost all cases the breadwinners were the husbands or wives of the respondents. In most cases the money received was used for household expenses, medical expenses, settling of dues and on children’s education. It usually took very long to receive the benefit – an average of 22.5 months.
National Maternity Benefit Scheme (NMBS) was implemented by the Additional Chief Medical Officer (Family Welfare) through the Primary Health Centres. ADCMO (Family Welfare) released the fund to PHC and PHC distributed to the beneficiary. An anganwadi worker identified the pregnant women under the selection criteria of NMBS and reported to the local ANM. After verification by the ANM and being certified by the PHC doctor, the beneficiary had to fill up the application form and deposit the same in PHC. The PHC recommended the final list of proposed beneficiaries to Additional Chief Medical Officer. As per the availability of funds, the District Office released the fund to PHC and the beneficiaries got the benefit from PHC with the help of the ANM. In most cases beneficiaries received the benefit after one to two years of the delivery. Therefore most of the beneficiaries spent the money on household expenses instead of on baby care. For better utilisation of the benefit it should be disbursed during the time of pregnancy of the beneficiaries.
Out of 56 respondents who received NMBS benefits, 17 reported having only one delivery while 32 had two deliveries. Almost all of them received the benefit only once while one of them received it twice. Four of the beneficiaries received it at the time of their third delivery and a further 2 at their fourth delivery in contravention of the NMBS guidelines. All of them received the benefit after the delivery with bulk of them receiving the benefit six months to one year after the delivery. In most cases the benefit was used to meet baby care and household expenses.
DRDA directly implemented the IWDP with the help of the Extension Officer of the concerned block office. In Nagaon district, this programme was started in 2000-2001 but the funds were received in 1999-2000 by DRDA. The official data regarding this programme was not clear in the whole district. Out of four sample blocks and forty sample GPs, only two blocks and six GPs were covered under this programme, with Kathiatoli block having four GPs and Bajiagaon block having two GPs where IWDP projects were under execution. IWDP is a five year project plan; within two and a half years nearly 20 percent fund was invested and the outcome was not completely satisfactory.
We could find ten IWDP beneficiaries from 6 different IWDP projects in our sample. All the beneficiaries carried out contour bunding and almost all (9) construction of water harvesting structures and nala bunding. Many (5 to 6) of them completed gully contour/measures, loose builders checks, earthen structures and percolation tanks while some of (2 to 4) earned out bench terracing, contour vegetative hedges and construction of anicuts. 9 beneficiaries had average land reclamation of 2.8 acres, 3 each had average agro forestry on 0.6 acres and afforestation on 0.4 acres while 6 of them had horticultural plantation on 1.8 acres.
The production as well as the yield has increased for both paddy and for vegetables produced during Kharif, Rabi or Summer season. For kharif paddy, as a result of using improved varieties, more fertiliser and irrigation, the average yield increased from 819.7 to 2041.9 kg/acre after the benefit. There were similar improvements in the crops produced in the other seasons too. There were some changes in the livestock resources of the beneficiaries after receiving the IWDP benefit, but such changes were significant only in Kathiatoli block and not so in Bajiagaon block.
For the success of JGSY or SGRY programme, the GP should be made the implementing authority. Similarly, the power to supervise the EAS projects should also be vested with the GP. Guidelines for each of the MoRD programme should be provided to the GP and these should also be presented and discussed while preparing the action plans in gram sabha meetings.
The selection procedure for SGSY needs a major overhaul to make the programme more successful. Benefit should be given to the beneficiary not necessarily in a trade decided by the local governing body as was happening but in a trade in which the beneficiary had skill and interest. It would be better to have beneficiaries selected through gram sabhas by joint committees having representation from the bank, the block office and the GP. The recovery problems might get reduced if the GP was given the power to monitor the economic activities of the beneficiary. The minimum number of members in a group or SHG might be reduced to reduce the number of dummy members and to reduce the conflict among group members.
SHGs functioning under NGOs were found to be more active and more durable than the other SHGs according to field observation. Relatively few SHGs received both loan and the revolving fund and many of them got only revolving fund. In many trades, the revolving fund assistance alone cannot bring much success to the SHG in their trade activity. While appraising projects, the bank should find out the need for loan and revolving fund carefully and both should be made available at the appropriate time for the success of the project.
Beneficiaries, villagers, and officials from GP, block and district appreciate the rural housing programmes. But to increase the success rate of these programmes, it is better to give the power of selection of the beneficiaries under IAY and PMGY (GA) programmes to gram sabha. The construction work should be done by beneficiaries themselves and GP officials should supervise the construction of the houses at the time of construction. If needed by the beneficiary, the panchayat office may make necessary arrangement for material for the IAY and PMGY (GA) house.
For the betterment of NOAPS beneficiaries, the pension should be distributed regularly at GP office in cash so that the beneficiaries can save the commission, travel and associated expenses. The distribution of food grain under the Annapurna programme was very irregular and in a few cases the same BPL family received both NOAPS and Annapurna benefits.
The awareness level of NFBS was very low and people were not aware about the programme. No awareness programme was conducted by the district or block offices. For this programme, the selection procedure should be simplified, GP should be given the power to recommend beneficiary and the cheque should be distributed from the block office.
In most cases the NMBS beneficiaries received the benefit after one to two years of the delivery. Therefore most of the beneficiaries spent the money on household expenses instead of on baby care. For better utilisation of the benefit it should be disbursed during the pregnancy of the beneficiaries.
In Nagaon district in the years covered by this study, although some assets have been created and the quality of life of the beneficiaries have improved, the targeting of beneficiaries left much to be desired. The absence of panchayati raj institutions in the study period has contributed to improper selection of beneficiaries.
Policy
There is immense scope for improving the efficacy of poverty alleviation programmes by better targeting the beneficiaries, reducing waste and corruption, making the programmes more meaningful in terms of relevance to local needs and priorities, and creating institutional conditions for greater accountability. The focus should be on rationalising the approach, organisation and priorities of the poverty alleviation programmes.
Identification of the poor, the kind of assets to be provided, ensuring the back-up needed for the programme cannot, as experience has shown, be managed efficiently by governments. The difficulties are compounded when they involve heavy subsidies and are implemented by a bureaucracy subject to political interference. Instead, public investment ought to concentrate on providing infrastructure to facilitate overall development and according to region-specific resource potential, thereby opening up greater and more diverse opportunities for employment and entrepreneurial activity.
The poor, of course, need special help by way of information, technical advice and training to take advantage of growing investment opportunities. The government has a key role in providing this help. But it is neither necessary nor desirable for the government to decide what assets are to be provided, to whom and on what terms. These tasks are better left to individual choices. Those who want to invest in an enterprise can seek credit from financial institutions that must be left free to judge the viability of the loan and the borrowers. The government’s role here would be essentially to lay down guidelines (such as priority sector lending) and provide interest subsidies or insurance of loans given to the poor.
The other, and in many ways more important, issue is targeting. The search for ways to reduce chances of wrong targeting has largely focused on more effective monitoring of beneficiary selection; and creating credible checks against wrong selection and creating incentives for ‘self-selection’. Incomes are notoriously difficult to ascertain. If they determine eligibility for benefits, there is a strong general incentive to understate income. It is therefore better to rely on more easily verifiable attributes (family size, landholding, caste, etc.) associated with poverty. Though this does not eliminate the scope for falsification, it certainly reduces the scope for it.
The role of self-governing institutions can not be overemphasised in this regard. As has been clearly brought out in this study, the selection procedure in Nagaon district has significantly improved after the panchayat elections were held and elected sabhapatis have been in place. Some reward and punishment mechanism needs to be developed to link the allocation and disbursement of funds for the poverty alleviation programmes with the continuation of effective and vibrant PRIs.
There is need for imparting proper training to the elected sabhapatis as well as the panchayat secretaries to make them aware of the panchayati raj system, its philosophy, structure, role and functions as well as the details of the many poverty alleviation programmes and the procedural and record keeping nuances of the same.
The role of gram sabhas in selection of beneficiaries and implementation of the programmes cannot be overemphasised. The involvement of gram sabhas should be made mandatory even when there are no elected panchayats to ensure transparency of the selection process as well as improve the awareness about the various poverty alleviation programmes.
The implementation of the poverty alleviation programmes need to be made more transparent. Information about the benefits and the beneficiaries at all stages of the selection as well as disbursements should be made more easily available to all concerned up to the villagers and potential beneficiaries.
The monetary value of the benefits should have provision for automatic adjustments with price changes. These could be revised every year along with the budgetary provisions. This will ensure that the purpose for which the benefit is given can be achieved with the monetary payment. Although the monetary amounts are revised even now, this is done on an ad hoc basis and sometimes quite late.
Clearly, targeting errors can be reduced if conditions of eligibility and/or the scale of benefits are so defined as to reduce the incentives for those above the poverty line to get into the programme. Insisting on a certain portion of beneficiaries being drawn from poor/vulnerable groups (SC, ST, women) and providing wage employment in employment schemes at wages somewhat below the market/minimum wage rate and at locations away from the residence would be a more effective way of reaching the target population than relying on discretionary authority. The reservation idea is now incorporated in the guidelines for all Ministry of Rural Development projects. But the idea of lowering wage rates on works programmes below the legal minimum is not favoured, as the government cannot violate its own laws.
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