6th Five Year Plan
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28 || Appendix

Chapter 11:

Development of the rural areas has been one of the abiding concerns of the successive five year plans. Beginning with Community Development /programme in the early 50's which helped to establish a net-work of basic extension and development services in the villages, thereby creating awareness in the rural communities of the potential and means of development which made quicker adoption of major technological advances later in the mid 60's in agriculture possible, reinforced with abolition of intermediary landlords and reform of land tenure system, the investments in the successive five year plans have led to the creation of essential pliysical and institutional infrastructure of socio-economic development in many rural areas. Later, realising that the benefits of various development programmes were in the main being taken by those better endowed in terms of land resources, programmes specifically designed for the development of small and marginal farmers and the landless and agricultural labourers were taken up in the early 70's. A special programme for the development of Drought Prone Areas (DPAP) was introduced in the mid 70's and a programme of development of desert areas in the late 70's. A programme of Food 'for Work was launched in 1977 to provide opportuniities of work for the rural poor particularly in slack employment periods of the year which would at the same time create durable community assets. Irrigation facilities have been expanded manifold. With a view to removing regional disparities, particularly in less endowed or dis-advantaged areas, like the hill and tribal areas, special sub-plans of development were introducd. Special financial and fiscal concessions, credit on softer terms and subsidies have also been made available to under-developed areas to attract increased industrial investment. A Minimum Needs Programme was designed to secure to the rural areas within a reasonable time-frame certain basic amenities in the field of education, health, drinking water, electrification, roads and house-sites.

The major thrust of the Five Year Plan 1980-85 will be on strengthening the socio-economic infrastructure of development in the rural areas, alleviating rural poverty and reducing regional disparities. The specific programmes and strategies to be adopted during the Plan period to achieve these goals have been dealt with in relevant chapters. This Chapter deals only with special employment and income generation programmes for the rural poor, special area development programmes and the institutional means for rural development.



11.2 The Small Farmers Development Agencies (SFDA) programme, aimed at the target group of small and marginal farmers and agricultural labourers, has been in operation since 1971 covering 1818 blocks in the country. The objective of the Programme was to assist persons specifically identified from this target group in raising their income level. This was to be achieved by helping them, on tlie one hand, to adopt improved agricultural technology and acquiring means of increasing agricultural production like minor irrigation sources, and on tlie other hand, to diversify their farm economy through subsidiary activities like animal husbandary, dairying, horticulture etc. The Agencies were to make particular efforts to ensure that the needed inputs and credit were made available to these persons by respective credit agencies. Enrolling them as members of the credit'cooperatives was one of the operational objects ^of the programme so that they could draw necessary assistance from them. Up to March, 1980 the Agencies had identified 16.7 million persons from the target group for assistance. Of these, 8 million beneficiaries including 1.3 million belonging to the scheduled castes and scheduled tribes, have been assisted. 6.1 million or 75 per cent of these beneficiaries have been helped in acquiring access to improved agricultural practices through subsidised supply of inputs, improved implements and field demonstrations. Bulk of the remaining I.9 million beneficiaries have been covered under the more substantive asset development programme like acquisition of milch cattle, sheep, poultry, piggery etc. (0.9 million), minor irrigation (0.9 million), and other categories including forestry and village industries (0.1 million).

11.3 Short term credit advanced to the beneficiaries of this programme through cooperatives was Rs. 27.76 crores during 1979-80 and through commercial banks Rs. 6.03 crores. The cumulative medium and long-term loans advanced through cooperatives upto March, 1980 amounted to Rs. 112.82 crores and Rs. 140.20 crores respectively. The total outlay utilised by way or subsidy to beneficiaries and other grants, and expenditure on execution, amounted to Rs. 156.10 crores during the period 1974-79. It will be seen that while the numbers identified for assistance represented only a segment and not the whole of the target group, the numbers benefited are only about half the number identified. Furthermore, the nature of assistance given to the bulk of them comprised items which did not lead to any specific additional asset creation. The actual impact of these items of assistance on the income of the beneficiaries therefore varied a great deal and in many cases has been of doubtful significance. Where, however, assistance has been given lor developing minor irrigation sources or for acquiring milch cattle, sheep, goats, poultry etc. the impact has been significant. The principal reason for a lower coverage under such asset creation purposes has been the progressive erosion in the integrated functioning of the Block agency which is the main implementation agency, inadequacies of the credit institutions and lack of coordination and adequate support 'from concerned departments to tlie Agencies' -programmes.

11.4 The concept of an Integrated Rural Development Programme was first proposed in the Central budget of 1976-77, and a beginning was made. This programme was intended to' assist the rural population to derive economic benefits from the developmental assets of each area. The programme with some modifications was introduced on an expanded scale in 1978-79, beginning with 2300 blocks, of which 2000 were under coterminus coverage with SFDA, DPAP and CAD programmes. With another 300 blocks added during 1979-80, its coverage was 2600 blocks as on 31-3-1980. Besides the small and marginal farmers, this programme was more specific in regard to agricultural workers and landless labourers and additionally brought within its purview rural artisans also. The programme emphasised the family rather than individual approach in identification of beneficiaries. 5.3 million families had been identified under the programme for assistance as on 31-3-1980. Of these, 2 million families have been already given assistance in some form. Under this programme, as in the SFDA Programme, largest coverage has been under the 'improved agriculture' category (60 per cent in 1979-80), followed by animal Iiusbandry (15 per cent in 1979-80). Though conceptually this programme was comprehensive in scope and sought to secure, through a process of block level planning, fuller exploitation of the local growth potential with a view to making an optimum impact on the local poverty situation, in point of fact it has also tended to operate on the same lines as the SFDA. Undoubtedly the programme has only recently begun and has yet to firmly establish itself. It has also been subject to the same constraints as the ones earlier mentioned in respect of SFDA.

11.5 Drought Prone Areas Programme (DPAP) is currently being implemented in 557 blocks spread over 74 districts in thirteen States. This programme has been in operation since the Fourth Plan. Since its inception upto March, 1980 a total expenditure of Rs. 426 crores has been incurred on this programme. Under this programme upto December, 1979 13.30 lakh hectares of land had been treated with soil and moisture conservation measures, irrigation potential of 2.72 lakh hectares cicatcd, afforestation and pasture development taken up on 4.77 lakh hectares and 72,000 milch animals distributed to individual beneficiaries. The weakest aspect of its operation has, however, been its lack of effort and impact on the development of better dry land farming practices and cropping patterns.

11.6 The Desert Development Programme is operating in 128 blocks covering arid areas in 20 districts in 5 States in the country, including the two cold desert areas of Ladakh and Spiti. The main aim of the programme is to check desertification and combine it with projects which facilitate development of productivity and productive resources of the area and its inhabitants. Under this programme since its inception in 1977-78 upto March, 1980, an expenditure of Rs. 23.21 crores has been incurred. The expenditure has mainly been on schemes of afforestation, water harvesting, rural electrification and animal husbandry. Investments under this programme have been somewhat slow in picking up; particularly in forestry and pasture development. This has been largely due to the forestry organisation in the States being inadequately equipped to meet the particular requirements ol the desert areas. However, Rajasthan which has the largest coverage under the programme has now established a specialised Directorate of Desert Forestry and Pasture Development.

11.7 A Food for Work Programme was initiated in 1977-78, aimed at creation of additional employment in rural areas on works of durable utility to the community, with the use of surplus foodgrains available in the buffer stock for payment as wages. Beginning somewhat haltingly, the programme gained momentum in 1978-79 when over 12 lakh tonnes of foodgrains were utilised creating 372.8 million mandays of employment. During 1979-80, the utilisation has been provisionally estimated at 23 lakh tonnes of foodgrains inclusive of the special allotments which were made to the States affected by drought in that year, resulting in about 600 to 700 million mandays of employment as estimated on incomplete reports. The programme, besides creating substantial additional employment in the rural areas during lean employment periods, more particularly in areas affected by the wide spread drought of 1979, has made a favourable impact on stabilisation of wafes in the rural areas and also helped check the rise in prices 01 foodgrains. Notwithstanding, however, its very substantial achievements in respect of employment generation and even more so its popularity and promise, the programme suffered from severe limitations in respect of planning and supervision of works. The operation of this programme on a year-to-year basis had resulted in uncertainty about its continuance for the full Plan period. In the circumstances, the State Governments were disinclined to build the needed technical and administrative support to effectively plan, monitor and oversee the programme. No serious attempt appeared to have been made by the State Governments to develop for each block where the programme was being implemented, a shelf of projects which would be the most useful from the point of view of local needs and would also, fit in with overall national priorities. As a result, works of low priority with dubious utility have been taken up at several places. For want of a back-up financial provision in many States, which could be used to finance the cost of materials required for works, the tendency has been to take up kachha roads on a large scale, which unless brought to at least a semi-pacca stage would not be able to survive one or at best two monsoons. Due to lack of the needed administrative and technical back-up, the work was often executed through contractors. This is, however, not to say that work everywhere has been of this nature. A great deal of durable assets whether in tlie nature of irrigation tanks or school buildings, panchayat buildings, drinking water wells, paving of village streets and drainage and such like have also been created.

11.8 As brought out above the SFDA, IRD, DPAP, DDP and the Food for Work programmes have over the years achieved their objectives only partially. The size of the problem which these programmes, especially the individual beneficiary oriented programmes like SFDA and IRD, have to deal with is enormous. The pace and the manner in which the problem of rural poverty has been dealt with so far leaves much to be desired both qualitatively and quantitatively. Only a small fraction of the rural poor has so far been covered effectively by these poverty amelioration programmes. Even amongst those covered, a sizable portion is of those who had some land. The bottom deciles of the rural poor i.e., the landless and the rural artisans, who are the poorest, have in most cases been left untouched. In the area development programmes (DPAP/ DDP) also, while significant progress has been made in expanding minor irrigation and dairying, the same measure of effort has not gone into the programmes of soil and water conservation on a scientific watershed development basis, and on afforestation and pasture development. These are programmes of critical importance to these areas. Of all elements, the weakest has been the introduction of changes in agronomic practices and cropping patterns most advantageous in the particular agro-climatic potential of the area. Marginal lands continue to be over exploited through crop husbandry even though optimal utilisation in many cases would be through pasture and grass land? development. Animal husbandry is an important and promising activity for these areas but while afiout a million beneficiaries hnve been enabled to acquire milch cattle and other nnima's, the back-up effort in respect of better feed and fodder, health care and breed improvement has been grossly inadequate. The constraints from which these programmes have suffered have not been financial but organisational inadequacies and lack of a clear-cut plan of development for the area to which coordinated effort of all concerned agencies could be directed.

Strategy for the Sixth Plan

11.9 Alleviation of rural poverty will be the prime objective of the Sixth Plan. An increase in the productive potential of the rural economy is an essential condition for finding effective solutions to the problems of rural poverty. At the same times, recognising the constraints which limit the scope for higher growth rate in medium-term, more direct means of reducing the incidence of poverty and destitution would have to be employed. It is well known that the hard core of poverty is to be found in rural areas. The poorest sections belong to the families of landless labourers, small and marginal farmers, rural artisans, Scheduled Castes, Scheduled Tribes and socially and economically backward classes. House-holds below the p'overty line will have to be assisted through an appropriate package of technologies, services and asset transfer programmes.

11.10 The strategy and methodology for accelera* ted rural development will be as follows:

  1. increasing production and productivity ifl agriculture and allied sectors;
  2. resource and income development of vulnerable section of the rural population through development of the primary, secondary and tertiary sectors;
  3. skill formation and skill upgrading programmes to promote self and wage employment amongst the rural poor;
  4. facilitating adequate availability of credit to support the programmes taken up fcr the rural poor;
  5. promoting marketing support to ensure the viability of production programmes and to insulate the rural poor from exploitation in the marketing of their products;
  6. provision of additional employment opportunities to the rural poor for gainful employment during the lean agricultural season through a national rural employment programme (NREP);
  7. provision of essential minimum needs; and
  8. involvement of universities, research and technical institutions in preparing a shelf of projects both for self-employment and NREP and in preparing strategies for the scientific utilisation of local resources.

11.11 The development of the rural areas is the concern of all sectors of the economy and these areas draw benefits of development in varying des-re'ss from various sector. In this chapter programrnes which are directly aimed at the development of the target group of the rural poor and the principal institutional instruments relevant therefor have been dealt with. There are three broad categories of these programmes:—

  1. Resource and income development programme for the rural poor.
  2. Special Area development programme.
  3. Works programme for creation of supplementary employment opportunities.


11.12 A number of programmes have been operating in the country, some for as much as the last ten years (SFDA/MFAL) and some introduced recently, aimed at improving the economic conditions of the rural poor. None of these programmes covered the whole country, though a large number of blocks in the country had more than one of these programmes operating simultaneously in the same area for the same target group. This territorial overlap combined with the different funding patterns of these programmes, not only created considerable difficulties in effective monitoring and accounting, it often blurred the programme objectives. In practice, therefore, these programmes were reduced to mere subsidy giving programmes shorn of any planned approach to the development of the rural poor as an inbuilt process in the development of the area and its resources. It is proposed that such multiplicity of programmes for the rural poor operated through a multiplicity of agencies should be ended and be replaced by one single integrand programme operative throughout the country. The programme will be called the Integrated Rural Development Programme (IRDP). Of the 350 million people below the poverty line in the country, around 300 million are in the rural areas. These consist largely of the landless labourers, small and marginal farmers, rural artisans, and other workers. The hard core of poverty is constituted by the marginal farmers, agricultural labourers (about half of whom are landless), rural artisans and fishermen constituting nearly one-third of the rural work force. Possessing little or virtually no assets, they need to be enabled to acquire productive assets and/or appropriate skills and vocational opportunities and then backed effectively with services to increase produc-ion and productivity. If through special programmes of specific beneficiary oriented assistance this group could be brought above the poverty line. a major impact would have been secured on the overall economic levels of the country.

11.13 The main objective of the IRD programme will be to evolve an operationally integrated strategy for the purpose, on the one hand, of increasing rro-duction and productivity in agriculture and "allied sectors based on better use of land, water and sunlight, and on the other, of the resource and income development of vulnerable sections of the population in all the blocks of the country. Any developmental strategy which aims at improving the lot of the rural poor must aim at creating new productive assets for them. Improving the productivity of land by providing access to inputs like water, improved seeds, and fertilizers would be an essential means to help those categories of the rural poor, who have some land asset. Diversification of agriculture through animal husbandry, dairying, forestry, fishery, sericulture etc. will benefit both the landless and the land holders and this would form an important plank of the programme. Processing and manufacturing activities based on local resources will also have to be identified and fully exploited. Post harvest technology will have to be improved so that both producers and consumers benefit from enhanced production.

11.14 Since the bulk of the rural poor are landless or marginal farmers, a significant part of the activities for their benefit will have to be in the non-farm sector. While subsidies will continue on the existing pattern to help the rural poor to acquire productive assets their role which has been overplayed will have to be brought in the correct perspective. Formulation of schemes to launch the prospective beneficiaries in viable economic activities is the linch pin of this programme. Identification of these activities, formulation of projects based on these, provision of forward and backward linkages, arranging of credit and choosing the right beneficiary, are the most important aspects of the process of helping the intended beneficiaries. Village and cottage industries and the services sector offer considerable untapped potential for self and wage employment. These sectors have heretofore received only scant attention in the poverty amelioration programmes. The potential of these sectors needs to be optimally exploited by strengthening the arrangements for the supply of raw materials, consumer-based designs and marketing facilities. It is proposed to cover a sizable number of beneficiaries in each block through programmes in these sectors. Suitable support will be provided through programmes of skill formation. In these tasks, the educational, research and technical institutions will be fully involved through sui'able agreements between them and the concerned development departments. An All India Coordinated Research Project for the development of technologies for increasing the income of landless labour families will be initiated.

11.15 The operational strategy of IRDP will have the following main elements:—

(1) A five year development profile will be drawn up for each district dis-aggregated into blocks, based on practical (achievable) possibilities of development in agriculture and allied sectors. This plan will be based on a scientific understanding of the developmental assets of the district and will particularly deal with optimum development of ground and surface water (minor irrigation) resources, fuller water utilisation (including private sources like wells and tubewells), and dairy, animal husbandry, fisheries, forestry and local manurial and fuel resources includingbio-gas, development. The plan so formulated will become the framework of action for the relevant . schemes of development in these sectors.

(2) While access to agricultural extension services is to be provided to all tanners, the programme will ensure that a farm guidance is provided on a systematic basis to the small and marginal farmer families. A specific operational programme will be drawn up by the extension agency for this purpose.

(3) A special programme of assistance to the poorest of the rural households will be drawn up to raise the specific households, so identified, above the poverty line. This programme will be implemented on a phased basis. A household rather than individual approach will be followed, implying that the economic uplift of the household will be sought through a package of activities involving all working members, with particular attention being given to economic programmes for women. In the identification of families to be assisted, the village council (Gaon Sabha) must be involved, and the identification done in a manner which would ensure that only those belonging to the target group are identified.

(4) A blueprint for exploiting the available potential in the secondary and tertiary sectors, which also spells out linkages for training and marketing will be prepared for each block and families from among the target group identified for assistance based on such a blueprint.

(5) A suitable mechanism should also be developed to secure representation of the poor on the implementing agencies at the district, block and village levels to facilitate better planning and implementation of the programme. A village plan register indicating details of all the identified families and the development programmes drawn up for them should be maintained at each village.

(6) The credit plan for the District/Block while taking into account ^h_e total credit needs of the area, must also specifically indicate the credit programme for the target groups. It must also be ensured that their needs are met on a priority basis.

(7) IRDP will be implemented through a single agency in each district. Such agencies already exist in most districts in the country. In others new agencies will be set up. Adequate autonomy for these agencies to enable them to formulate and implement An unambiguous organisational arrange-the programmes effectively is necessary. ment for making available the needed support from various concerned departments is essential and must be clearly spell out. Each district agency will have a multi-disciplinary planning team which may be funded out of the programme provision. the planning teams will take up the preparation of block plans in each district, and will also prepare specific development projects within the framework of such plans with the help, where necessary, of appropriate technical personnel available in the district or higher levels in concerned departments.

(8) Effective implementation of the programme is largely dependent on an efficient and well-equipped field level organisation. Block organisation which has necessarily to be the field level agency for implementation has been greatly eroded over the years, and needs to be strengthened adequately in the terms of staff, both specialised and village level. Where the T and V extension scheme has been introduced, clear linkages will need to be established between the personnel working with this scheme, both at the specialist and V.L.W. level and the plan of work to be undertaken under IRDP.

(9) IRDP has been conceived essentially as an anti-poverty programme. This objective is proposed to be achieved by enabling the poorest families to acquire productive assets, technology and skills as would make their economic activities viable. These families will also need support from social services like health, education and housing. It will be necessary to link to the extent possible the prospective beneficiaries under the IRDP to these social services, particularly programmes like applied nutrition, compulsory primary education, adult education, family welfare, children's and women's welfare, activities etc. The prospective beneficiaries having been identified, these lists should be made available to the departments concerned for them to follow up these persons in respect of the services handled by them. The house-hold-centered poverty alleviation strategy will thus come to consist of steps not only for the economic emancipation of the family, the but also the education of the children, health and welfare of the vulnerable members, adoption of small family norm etc.

11.16 Of the approximately 20,000 families in a block, about 10,000—12,000 families on an average would be below the poverty line, though undoubtedly in individual blocks this number would vary from area to area. It is proposed to provide specific assistance under this programme to 3,000 families on an average in each block during the Sixth Plan. These families should be from the bottom deciles of the rural population below the poverty line. It is essential that specific income generating projects are developed for each identified beneficiary family. Though the nature and scope of development projects for these families will vary from block to block depending upon opportunities, it is assumed that of the 3,000 families approximately 2,000 could on an average be covered by schemes broadly falling in the area of agriculture and allied activities, 500 in villages and cottage inlus-tries and another 500 in the services sector. It is important that the identification of an economic acivity(s) for a household is done in full consultation with the beneficiary household concerned so that the project is appropriate to its inclination and management capability. The project must also be able to give enough net income to take it across the poverty une. ^

11.17 The scale of funding under the Programme will be Rs. 5 lakhs per block in the first year of the plan, Rs. 6 lakhs in the second year and Rs. 8 lakhs each' in the last three years, this gradual stepping up will take care of the time that will initially be taken in developing the district/block plans, identifying all the eligible beneficiaries, building up the organisation and putting the programmes on a firm fooling. In consonance with the funding pattern the target of beneficiary coverage could be lower in the first two years and higher in the last three years, with about 3,000 families covered on an average in each block over a full five year period.

Credit for Weaker Sections

11.18 Small and marginal farmers who constitute over 70 per cent of the farming population have little input mobilising power and risk taking capacity. Hence credit is a key input in achieving a rapid diffusion of benefits from new technology. It is also essential for promoting self-employment and in the creation of productive assets. The success of Integrated Rural Development Programme will mainly hinge on the preparation of viable schemes for these identified for assistance and the provision of investment credit therefore on and assured basis. While over the years there has undoubtedly been an impressive step-up in credit availability to the weaker sections, its dispersal among various strata of the rural poor has been extremely disparate. Among them the main beneficiaries have been Ihe small and marginal farmers, the former distinctly more than the latter. The least to benefit have been the landless and the rural artisans, who as a category account for as much as one-fourth of the rural work force. The policy of stipulating a minimum percentage for the entire target group of weaker sections has done little to prevent glaring intra-group distortions. Experience shows that bracketing those who have some resource (land) with those who have none generally tends to operate to the disadvantage of the latter. It, therefore, appears necessary that the strategy of credit deployment should be so oriented as to equitably serve the needs of each category. This will call for more effective credit planning and prescription of separate targets of credit for the sub-group of the landless and the artisans, alongwith arrangements for the formulation of economically viable projects for them.

11.19 While attempting to do this, it needs to be stressed that the credit delivery systems, of both cooperative and commercial banks, will require considerable toning up. Simplification of procedures, systematic identification of the most needy among the target group and preparation of appropriate investment projects for them and re-orientation from security-based lending to project-based lending are some of the important aspects of an improved delivery system. Crcdit-cum-input supply melas Or other effective credit and input delivery systems will have to be adopted on a large scale before the onset of kharif and rabi sowings. Full support will need to be given by the extension agency in building up the awareness and motivation of the rural poor in respect of their production and investment needs. It is also proposed to devise suitable credit insurance schemes for insulating weaker sections from total loss due to factors beyond their control. Alongside, fullest emphasis will be given to recovery disciplines, pressures which have lately developed in some parts of the country for general writing off of overdues can only be viewed with extreme concern, for the consequences of this will be disastrous for the credit system as a whole. The aim of the Sixth Plan is to secure a high rate of rural credit expansion to serve the productive needs of all with priority being given to the credit needs of the various economic groups among the poor. Recycling of credit is an imperative of the process of expansion.

Drought Prone Area Programme

11.20 The DPAP which covers 557 blocks spread over 74 districts in the country is an integrated area development programme in agricultural sector and aims at optimum utilisation of land, water and livestock resources, restoration of ecological balance and stabilising the income of the people particularly the weaker section of the society. Some of the important elements of the programme are:—

  1. Development and management of water resources.
  2. Soil and Moisture conservation measures.
  3. Afforestation with special emphasis on social and farm forestry.
  4. Development of pasture lands and range management in conjunction with development of sheep husbandry. (v) Live-stock development and dairy development.
  5. Restructuring of cropping pattern and changes in agronomic practices, and
  6. Development of subsidiary occupations.

11.21 The programme will be continued during the Sixth Plan period with the strategy for development of these areas being re-oriented to insulating the economy of these areas from the effects of recurring droughty through diversification of agriculture and promoting afforestation, pasture development and soil and water conservation. Of late, operational plans for these areas are being prepared from year to year.This is inconsistent with the long-term perspective which is essential for these areas. What is needed is to evolve a medium-term strategy for development of these areas from which should flow the annual action programmes. Mere spending of money even on ac-cepied priority programmes would not meet the objective unless this Is done as a part of clearly conceived perspective of development. Economic development of tnese areas would be achieved through activities which in the long run contribute actively in creating conditions which mitigate the effects of drought in these areas. Watershed management will receive the highest priority and steps will be taken to promote the cooperative management of the watershed by the people in the area. Medium term project profiles which aim at achieving the objectives of the programme would be prepared for each drought prone district as also five year and one year project profiles which will be scrutinised and approved by the competent authority. An inter-disciplinary Task Force has been set up to review the scope and coverage of this programme. Individual beneficiary content of these programmes will be supported thiough the IRDP. The DPAP has a large potential for generating avenues of employment. This will be optimally utilised in conjunction with the National Rural Employment Programme. Overlap of areas under this programme with those under the Desert Development Programme will be eliminated.

Desert Development Programme

11.22 The Desert Development Programme aims at checking further desertification of the desert areas and raising productivity of the local resources to raise the income and employment levels of the local inhabitants. The programme will continue to be implemented both in the hot and cold arid zones of the country during the Sixth Plan. The emphasis will be on arresting desertification through activities which restore ecological balance, stabilise sand dunes, and facilitate soil and water conservation. Plantation of shelter belts, adoption of water harvesting techniques and development of pastures to sustain the livestock economy will be vigorously pursued. Exploitation of the natural resources of these areas will be closely linked to replenishment of these resources, It is proposed to encourage innovative use of land for fodder crops, pastures and fuel and fodder plantations. This diversification can substantially improve the economy of the desert areas in keeping with the ecological requirements of the area. In the cold arid zones of Ladakh and Spiti, irrigated agriculture and improved animal husbandry practices would be among the activities to be encouraged.

Outlays for IRDP and related Programmes

11.23 The outlay on the IRDP programme during the Plan period 1980-85 will be Rs. 750 crores in the central sector. It is a Centrally Sponsored Scheme and the outlay will be matched on an equal basis by the States. The IRDP which will be operative in all the blocks in the country will replace the on-going SFDA/IRD/SLPP programmes. No separate prevision also would need to be made for minor irrigation subsidy. The scheme of Training of Youth for Self-Employment (TRYSEM) will be operated as a part of IRDP for the benefit of the identified households. A small provision, however of Rs. 5 crores is being made separately for TRYSEM to meet some exceptional needs in suitable cases to strengthen the institutional infrastructure.

The Drought Prone Areas Programme will continue to be financed at the rate of Rs. 15 lakhs per block per year with a total plan outlay of Rs. 175 crores in the central sector which will be matched on an equal basis by the States.

The outlay for the Desert Development Programme will be Rs. 50 crores in the central sector with a similar provision in the State Plans.

There is a provision of Rs. 17.55 crores in the central sector for other programmes of rural development including the scheme for Rural Godowns.

The provisions in the State Plans for Rural Development amount to Rs. 1509.22 crores (Details in Annexure 11.2). This includes the matching contribution of States for IRDP, DPAP, DDP along with the provision for the National Rural Employment Programme.


11.24 The problem of employment in rural areas is mainly of seasonal unemployment and underemployment. Fuller employment opportunities for the rural work force will in the main have to be found within the agricultural and allied sectors themselves, through intensification and diversification of agriculture based on expansion of irrigation and improved technology. However, the very dimensions of the problem call for a multi-pronged strategy which aims on the one hand at resource development of vulnerable sections of the population, and' on the other, provides supplementary employment opportunities to the rural poor, particularly during lean periods, in a manner which will at the same time contribute directly to the creation of durable assets for the community. Programmes in the nature of Small Farmers' Development Agencies. Integrated Rural Development, Drought Prone Areas Programme, Desert Development Programme, Command Area Development Programme, TRYSEM and the like, aim at resource development on individual or area basis. As for the object of providing supplementary employment opportunities, a beginning was made in this direction through the Food for Work Programme. Based on the experience of this programme, it is possible to build it into a well directed and sustained national programme for providing supplementary employment opportunities to those seeking work, during lean employment periods of the year. In the past, however, special programmes for solving the problem of unemployment and under-employment have often tended to be formulated and implemented in isolation of the on-going developmental projects. It is necessary to view employment as an indivisible component of development and ensure that both in concept and implementation, employment and development become catalysts of each other, and the benefits to the community from the limited resources available maximised.

11.25 During the Plan period, additional opportunities for employment will become available through the large number of developmental projects to be undertaken in the public and private sectors Such opportunities will, however, not be sufficient to absorb the growing numbers of the rural work force. Rural development programmes in the form of individual beneliciary and area development schemes and other sectoral programmes in the Plan will also provide opportunities to many of the rural poor for gainful employment through production enhancing activities. Beneficiaries of these activities will in the main be those with an asset base. A large number of people in the rural areas are without assets or with grossly inadequate assets and need to be provided wage employment. This segment of the rural poor which largely depends on wage employment virtually has no source of income during the lean agricultural period. The National Rural Employment Programme is conceived, in the main to take care of this segment of the rural poor. Under this programme, development projects and target group oriented employment generation projects will be closely intertwined.

11.26 NREP will be implemented as a Centrally sponsored scheme on 50:50 sharing basis between ttie Centre and the States. The Centre will provide its 'share in the form of foodgrains to the extent surplus foodgrains are available, and the rest in cash. Inter-State allocation of foodgrains will be made on a rational criteria related to the population size of the target group i.e. a States' population of marginal farmers and agricultural labourers and its rural population below the poverty line. The States will be encouraged to procure sorghum, millets and other locally grown foodgrains and utilise them under the scheme. Suable financial and operational arrangement will be worked out in each State in this behalf. This would besides, making additional foodgrains available for NREP, help in insulating the producers from uneconomical sale of their produce and also save substantially on cost of movement of foodgrains from distant godowns to the work sites. For the storage of foodgrains so procured, rural godowns programme and other programmes for building up storage capacity in rural areas e.g., cooperative societies godowns, can be suitably used.

11.27 The wage paid under the programme should be on par with the minimum agricultural wage prescribed for the area. The quantum of foodgrains as part of i he wage should 'be such as to be adequate for the family's need. It should be adequate if the two components of the wage (foodgrains and cash) are in equal proportion. In any case the foodgrains component should not exceed 2 Kgs. per head per day.

11.28 Efforts will also be made to organise mobile fair price shops at the centres where rural works are in progress so that cloJi, vegetable oil, salt and other essential items of consumption could also be made available.

11.29 Contractors are to be totally excluded from the execution of the rural works on which employment is offered through NREP. Neither will the distribution of foodgrains be entrusted to middlemen or contractors.

11.30 Only about half the States had involved Pancha'yati Raj institutions in the Food for Work Programme. Given proper technical and administrative supervision, these institutions have the capability of planning and executing works answering to local needs, at comparatively low costs. The P-EO Evaluation Study of the Food for Work Programme has also highlighted this fact. It is, therefore, desirable that these institutions are involved in planning and execution works under NREP in all States to the extent possible, considering local conditions and nature of the work. The educational research and technical institutions in the block would be associated with the Panchayati Raj institutions in preparing a shelf of projects which will help to ensure that the assets created are at least equal in value to the wages paid.

11.31 It is contemplated that a district level employment plan disaggregated blockwise, will be formulated. This plan will estimate the numbers likely to be seeking work, separately for skilled and unskilled workers, and the work opportunities likely to be available under various plan and non-plan works in the district. The work opportunities and shortfalls will be identified, preferably in terms of blocks and the programme of works under NREP formulated accordingly. The aim of the NREP should be to provide employment opportunities during the lean agricultural period.

11.32 It i's necessary that the State Governments have a shelf of projects on a sufficiently dispersed scale prepared for each block so that the programme may be implemented on a planned and systematic basis and technical soundness of the works ensured. Preparation of projects will be a continuous process. For this purpose the State Governments will have to strengthen/build up adequate technical personnel at the block and higher supervisory levels. Some of the States have a rural engineering organisation or seme technical personnel at the block level, but considering the size and spread of the programme, it is quite inadequate. Some States have none at all. It is necessary that each Block should have a reasonable complement of technical staff (overseers). To ensure effective monitoring of the programme, suitable strengthening of staff will be necessary at all levels. The locally available expertise of technical institutions like IITs, Agricultural Universities, Engineering Colleges etc. as well as of voluntary organisation should be fully utilised. Block level project preparation and monitoring group's could be set up wherever the size of the programme warrants it.

11.33 The implementation agencies would be required to give priority to works relating to social forestry and pasture development, soil and water conservation, irrigation, flood protection and drainage, field channels in irrigation command area's, construction and improvement of village tanks and ponds, school and dispensary buildings and works to improve village environments, hygiene and sanitation. Only those roads may come in the priority category which can be made at least scmi-pucca with culverts or have a reasonable prospect of being brought within the regular road programmes of the State or Panchayati Raj Institutions, as the case may be. While only such works as create community assets should be taken up, an exception may be made in tlie case of works benefiting individuals belonging to Scheduled Castes and Scheduled Tribes in respect of group housing and land development projects. Special attention will be paid to programmes where women can be gainfully employed.

11.34 In order {o ensure that benefits of this programme reach the weaker sections of the society, at least 10 per cent of the allocation under the programme would be earmarked for utilisation exclusively on programmes of direct benefit to Sche-d iled Castes, viz. drinking water wells in Harijan Bastis, community irrigation schemes in which majority of the beneficiaries are Harijans, environmental improvement works in Harijan localities and horsesites/group housing for the Harijans. Another at least 10 per cent of the allocation under the Programme would be specifically earmarked for utilisation on programmes of social forestry and fuel plantations. The utilisation of provisions by the States on these two activities will be specially monitored.

11.35 It will be desirable to regulate employment on the rural works taken u'p' under the NREP and other Plan works so as to take particular care of the needs of the families in the target group. Specific attention will also be paid to promoting women's participation in this programme.

Outlays for NREP and Specie Employment Programmes

11.36 An outlay of Rs. 980 crores has been provided for the programme for the Sixth Plan period in the Central Sector. There will be a provision in the State Plans for this programme from 1981-82 onwards as it is being operated on 50:50 sharing basis. This is included in the provision of Rs. i 509.22 crores for rural development programmes in State plans. (Statewise details in Annexure 11.2). This wil! be supplemented from the provisions made for special employment programmes in some states.

The outlay for NREP includes both the wage as well as the 'materials' component of works. For no individual work should 'material' component exceed 40 per cent though for the programme as a whole 33 per cent should normally be the proportion. The outlays provided in the central and state plans are expected to generate 300-400 million mandayS of employment on an average per year during the plan p'eriod. The Planning Commission will review tha performance of the programme and depending on the actual experience, consideration will be given to expanding its scope and size.

There is also a provision in some State plans for sp'ecial employment schemes as under:—

(Rs. crores)

Karnataka 55.90
MaharaShtra 450.00
Uttar Pradesh 100.00
West Bengal 4.75

11.37 NREP will confer concurrent benefits on those seeking daily wage employment and on the local village community only if the portfolio of projects indicating the precise man-days of labour1 needed for completing each specific task is prepared carefully. The project preparation and task implementing agencies should ensure that the economic output of the project is at least equal to the wages paid and total amount spent.

11.38 A high-level NREP Committee will be set up to provide overall guidance and organise continuous monitoring of the programme so that timely corrective measures can be initiated, wherever structural weaknesses become apparent. All State programmes will be submitted to this Committee for the entire PSan period.



11.39 Democratic decentralisation, symbolised by the establishment of Panchayati Raj institutions at the village, block and district levels in the wake of the Balwant Rai Mehta Committee Report (1958) is a natural extension of democracy at tlie national and state levels. Transfer of authority to and sharing of the state functions and responsibilities v/ith the local communities and geographical units was considered crucial to the whole process and meaning of development. Besides having a better appreciation of local needs and capability of eliciting local participation in the formulation and imple mentatiori oT their plans of development, these institutions were expected to act as nurseries and training ground for leadership. This called for a new administrative culture and a faith in the capacity of our people to take decisions and execute them and to consider decentralisation of State's power and functions to these institutions not only as a means of development but an end in itself.

11.40 In the above backdrop, most of the States enacted laws establishing Panchayati Raj institutions at various levels, vested with financial developmental, and in some cases judicial powers and responsibilities for their areas. In some States, e.g. Maha-rashtra, Gujarat, Andhra Pradesh and Rajasthan, fthese bodies were made quite strong and the devolution of functions were significant. In some other States like J and K, Manipur, Sikkim and Tripura, only Gram Panchayats are functioning in the North Eastern region where tribal population predominates, historically and culturally, the traditional panchayats still command a decisive voice on a number of issues and disputes. In other States also a three tier Panchayati Raj structure with varying degrees of powers and functions has been established. In Kerala, which earlier had only Gram Panchayats, a strong District level Panchayati Raj body is proposed to be established through a recent enactment. At present there are 228593 Gram Panchayats, 4478 Block Panchayat Samitis and 252 Zila Pan-shads in the country. A potentially viable and useful structure of Panchayati Raj thus exists in form, but its effectiveness has been limited in practice. There has been considerable erosion in the powers and functions of these institutions in many States. Adequate financial support has generally been denied to these institutions in most States, often even in respect of the "transferred" schemes, and programmes. These institutions themselves have shown little inclination to raise their own resources locally. Besides, there has been a general apathy at the administrative and political levels towards strengthening these bodies.

11.41 All theses factors—exogenous as well as endogenous have left these potentially dynamic peoples' institutions, in a virtually moribund State in most parts of the country. A Committee was consequently set up in 1977 under the Chairmanship of Shri Asoka Mehta to review the present status and to consider the restructuring necessary to secure their close involvement in the planning and implementation of programmes of rural development. The Committee submitted its report in 1978, which was considered by a conference of Chief Ministers in May, 1979. Besides suggesting larger devolution of funds and functions to these bodies, the Committee had recommended in favour oT making Zila Parishad as the principal executive organ of Panchayati Raj with the Block Panchayat Samiti being converted in effect to a block level committee of the Zila Parishad. In regard to the lowest level unit, i.e., the Panchayat, the Committee recommended the concept of Mandal Panchayats comprising of 15,000 to 20,000 population and 10 to 15 villages, with a somewhat smaller size in tribal and other sparsely populated areas. There was general agreement in the Chief Ministers' Conference to the need for increased devolution and clear definition of functions and funds to be transferred to these institutions. There was, however, considerable opposition to the idea of Mandal Panchayats. As regards Zila Parishad vis-a-vis Block Panchayat Samiti also the general opinion was that one structural pattern cannot be universalised for the whole country and that it was neither easy nor necessary to upset the existing structural patterns in different States. The Conference recommended that a Model Bill may be prepared which could then be considered by each State in the light of its own context and adapted with such modifications as it considered necessary.

Strategy for Sixth Plan

11.42 During the Sixth Plan it is proposed to strengthen the process of democratic decentralisation. Irrespective of whatever structural pattern that is existent or that may be devised, effort will be to devolve on these instiiutions all such functions, appropriate to each level, which are capable of being planned and implemented at that level. These institutions v/ill be particularly involved in the planning and execution of Integrated Rural Development Programme and the National Rural Employment Programme. They will also have prominent role in District and Block level planning and in 'the planning of Minimum Needs Programme for their area of operation.

11.43 Any set of programmes aimed at the transformation of rural societies, with their complex sets of social values and goals, would be meaningless and in fact self-defeating, if they do not involve effeclivelv the rural women. This subject has been dealt with in a separate chapter. Suffice here to say that the women in the villages suffer from a number of social, economic and educational handicaps and inequalities, perhaps even more than their urban counterparts. They share almost the whole burden of household chores, besides significantly helping their menfolk in farming operations. The need for organising and informing the women as will enable them to effect better home management and thereby reduce their own drudgery as well as promote family welfare is imperative. Indeed, with the increased diversification of agriculture to animal husbandry etc. envisaged in the Plan the role and participation of women in the economic activities of the family gets even more accentuated. A useful institutional means for mobilising women in rural areas is through their organisations like Mahila Mandals centred around both social and economic activities. A large number of such Mahila Mandals had been formed under the Community Development Programme, estimated at around 66,000. Most of them, however, have languished for lack of proper guidance and follow-up. Even the small complement of tv/o gram scvikas and one mukhya sevika, which was part of the original Block staffing pattern, has ceased to exist \n most blocks. It is proposed during this Plan to take up a programme of strengthening activities oT interest to women, both social and economic through revitalised Mahila Mandals in a phased manner in a substantial number of blocks, as an integral part of the Integrated Rural Development Programme.

11.44 The Block agency is, and will continue to be, the main agency for implementing or assisting in implementation of various programmes of rural development. The effectiveness of this agency as an instrument for coordination of all development activities has been eroded over time. Now that the Integrated Rural Development Programme is proposed to be extended to the whole country, along with the National Rural Employment Programme and the increased demands of the Panchayati Raj system, this agency in it's present weak state will not be able to cope with the magnitude and the diversity of the task it will be called upon to handle. The need for strengthening it is, therefore, imperative. The situation, however, varies from state to state. The present status and strength of the block agency will, therefore, be examined State-wise and the State Governments assisted in suitably strengthening it on a mutually agreed basis within the provisions of the Integrated Rural Development Programme. The aim is to devise a compact multidisciplinary apparatus at the block level which will be able to effectively service the needs of diverse rural development activities. Suitable linkages will also be established with the village and higher level functionaries of the T and V extension scheme. To cater to the training needs of the developmental functionaries particularly at the district and the State levels, the National Institute of Rural Development would be further strengthened in its research and training services.


11.45 The outlay for various schemes of Panchayati Raj and Community Development would be Rs. 7.17 crores in the Central Sector and Rs. 344.90 crores in the States and UTs sector, aggregating thus to Rs. 352.07 crores. (Statewise details in Annexure 11.2)


11.46 Cooperation as an instrument of economic development of the disadvantaged, particularly in the rural areas has received considerable emphasis during the successive Plans. The founders of planning in the country saw a village Panchayat, a village cooperative and a village school, as the trinity of institutions on which a self-reliant and just economic and social order was to be built. The non-exploitative character of cooperatives, voluntary nature of their membership, the principle of one man one vote, decentralised decision making and self-imposed curbs on profits eminently qualified'ihem as an instrument of development combining the advantages of private ownership with public good.


11.47 Having begun ^primarily in the field of credit as a defensive mechanism against the usurious money lenders, cooperatives have througli the last three decades of planning come to embrace a large gamut of activities to serve the interests of the producers and consumers. Credit, however, still continues to be the predominant [activity. Taking the latest published figures, there were 1.16 lakh Primary Agricultural Credit Societies including LAMPS, FSSS etc. In 1978-79, with a membership of 5.18 crores. The number of borrowing members was around 37 per cent of the total membership. The cooperatives today cover almost all the villages in the country and their working capital stood at Rs. 2950 crores on 30th June, 1979. In 1979-80, the figure of short term credit advanced is provisionally estimated at around Rs. 1300 crores and medium and long term investment credit at Rs. 400 crores. While all round progress has been made in the field of credit by cooperatives, a few disconcerting features deserve special notice. Firstly, the rate of growth of agricultural credit advanced by the cooperatives has lately slowed down. Notwithstanding the needs of a rapidly developing agriculture, the short term credit advanced by the cooperatives has stayed around Rs. 1200 to Rs. 1300 crores during the last 3 years. The position of medium and long term credit representing investment loans is distinctly worse, with a loaning of about Rs. 339 crores an 1977-78, Rs. 448 crores in 1978-79 and only Rs. 400 crores i.n 1979-80. The most important reason for this stagnation in credit flow is the mounting overdues which are clogging the process of credit recycling. While the sheer volume of overdues in some states make it impractical to recover these in one instalment and demand's some practical solutions for recovery over a phased period, the tendency which has developed in some States to write off the debts can only 'be viewed with extreme concern. It sets in undesirable precedent and will hamper recovery efforts in future. Secondly, while it is satisfying to note that the share of the weaker sections of the rural community has been steadily increasing over the years and is at present placed at over 40 per cent of the total, this share falls short of their essential oroduction needs. Though the small and marginal farmers are apparently getting credit in larger proportion (35 per cant) than the land area held by them (21 per cent), considering that these farmers have to depend m-'unly on credit for the purchase of their inputs, unlike the larger fanners who can use their own surpluses, the flow of cooperative credit to the small and marginal farmers is still inadequate. However, in case of tenants, share croppers, landless agricultural labourers and rural artisans, who are the poorest ,and therefore the most needy, the flow of cooperative credit in terms of percentage share has continued to range only around 3 to 5 'percent over the years. There have also been considerable ''"gional disparities in credit availability. Partly dna to the poor absorptive capacity and partly due to lack of coordination among concerned developmental agencies, the cooperatives have not been able _to ensure an increasing flow of production loans and investment credit in most of the tribal and hill areas. Thirdly, though the cooperative's have now come to cover almost the entire country-side, the membership is only around 45 per cent of the total rural families. The weakest •sections of the rural community are still not adequately represented in the membership roll.

11.48 Cooperatives are playing an important role in the supply of fertilisers on credit or cash to farmers and carrying it to the remotest parts of the country. In quantitative terms, it is estimated that 23.5 lakh tonnes of NPK (Rs. 900 crores worth) of chemical fertilisers would have been distributed by the net work of 47000 cooperative outlets in 1978-79. However, private retailers have been progressively eating into their share of the total sales. Stagnation in credit flow has also affected their sales which are to a large extent on credit. Consequently their share in total sales has come down to about 43 per cent in 1979-80 ;as against 55—60 per cent a few jyears ago.

11.49. Linking of production credit with input supply on the one hand and marketing and processing of agricultural produce on the other has 'been considered critical to the success of the production programme. Cooperative marketing infrastructure has now come to cover almost 'all the important secondary and terminal markets in the country, comprising 3370 primary marketing societies at the mand'-level (including 550 Special Commodity Agricultural Marketing societies), 173 Central/District Cooperative Marketing Societies, 27 State/A pcx co-operative marketing federations and the National Agricultural Cooperative Marketing Federation (NAFED) and its 25 main branches. During the last two decades, the marketing cooperatives have attained significant growth in business operations and have also diversified their activities manifold; yet their total share in the market still continues to be small, pxcept in procurement operations (for the buffer stock) in some States, nor has their share kept pace with the rapidly "rowing output and volume of agricultural produce. Tn nominal value terms, agricultural produce marketed by the cooperatives hay risen from Rs. 1100 crores in the terminal year of the Fourth Plan to Rs. 1750 crores at the end of 1979-80. During 1978-79. sugarcane followed by foodgrains and cotton constituted the bulk of the value of agricultural produce marketed by the cooperative system. Bulk of the;turnover is accounted for by only the five States of ^un^ab, Hpryana, Kerala. Madhya Pradesh and Uttar Pradesh. Tn the marketing of horticultural and other products, the role of cooperatives is only marginal compared to the potential. One of the constraints in the development of agricultural marketing Ins ben the \vv'k financial base at the primary level. They also suffer from lack of suitable personnel for such conTnercial operation^ and there iv not "nough linkage and business relationship among the different cooperative sectors c.f.. between producers rooperativf": a"r) consumers cooperatives. Some of these problems have wakened the ability of the cooperatives to undertake larger marketing operations on behalf of their members. Tn the field of agricultural processing, the most conspicuous success has been the one achieved bv sugar cooperatives and cooperative milk up''ons in some parts of the country. Rice mills, dal rm'lls, cotton Tinning and processing units, spinning mills, oil crushing and processing, fruits and vegetable processin" units, poultry food, jute baling etc.. are some of the other processing activiies in the cooperative sector which are steadily expanding. Tn terms of im'pact. however, except for sugar and milk, cooperatives account for rather a small share.

11.50 Adequate and Scientific storage facilities with cooperatives are essential to their operational efficiency in the marketing of iagricultural produce, agricultural inputs and consumer goods. The programme now is to ensure that all re-organised primary agricultural credit societies and marketing societes are assisted to build up owned storage of appropriate capacity within a phased period. The total sanctioned storage capacity at the end of 1979-80 in the cooperative sector comprised 67.8 lakh tonnes of which 47 lakh tonnes has been established. The completed capacity comprises 22000 godowns at the primary societies' level with a capacity of 22 lakh tonnes and 5040 godowns of 25 lakh tonnes capacity at the marketing societies' level. Within a period of 10 years, 1969-79, the completed storage capacity in the cooperative sector has gone up from 26 lakh tonnes to 47 lakh tonnes, though, undoubtedly the intensity ot coverage has been uneven among States. Occasional scarcity of building materials, delays in acquisition of land. lack of centralised arrangement for technical supervision, cost escalation and in some cases the indifferent attitude of managements have been responsible for slow progress in construction. With a view to meeting the growing needs of producers especially of potato, fruits, onion, etc., a systematic programme iq establish cold storage facilities at. strategic pincrs has been taken in hand. At the end of March 1980, the number of cold stores organised in the cooperative sector was 204 with licensed capacity of 4.6 lakh tonnes, accounting for approximately 15 per cent of the total cold storage capacity ip the country. Of this, 125 units with a capacity of 2.14 lakh lonnes had already be^n installed and the rest were at various stages of installation. An assessment carried out of th" cold stores indicates that these units were being utilised bv the small and middle farmers also and that there had been propressive increase in the level of capacity utilisation during the last three years. Taking into consideration the need for more cold storage rapacity for a variety of perishables and the trends of potato production in certain areas, an expanded programme of cold storage capacity in the cooperative sector is being contemplated in the Sixth Plan.

11.51 Of all the maior cooperative activities, consumer activity is the most recent. Tt has. however, made headway and come to occupy a'n important role in the distribution of consumer articles in rural as well as urban areas. A tour tier system comprising the National federation. State federations. Central society at the district and the primary societies at the base level, I1""1 been operating in tip's field. As on 30th Tune 1979, thi" structure consisited of a National federation. 14 State consumer cooperative federations, 8 State cooperative marketing-rMW-consumer federations. 481 Central/Wholesale consumer societies at the district level and 16348 primary consumer cooperatives at the base level. The d;':'tr''ct level who1^-s'llc societies v'^ro ilso operating 3690 branches including about 700 departmental stores. Over 5W)("! cooperative societies have also been functioning arnong i"dustri;i1 workers, "mriloyees of railways, posts and telegraphs, etc. Tn the rural area's, a^out 1900 primary marketing societies and over 37000 villages/service cooperatives anti other cooperative societies were connected with the distribution of consumer articles. During 1979-80, the total retail trade handled 'by the urban consumer cooperatives was estimated at Rs. 800 crores. In the rural areas, the total value of consumer articles sold by the cooperatives is also estimated at Rs. 800 crores in 1979-80. One of the major problems concerning these cooperative stores both in the rural as well as in the urban areas has, however, been inadequate marketing finance, uncertainties in the procurement of supplies and lack of trained and skilled manpower.

11.52 It would thus be seen that the progress of cooperatives over the years presents a mixed picture. There has been much progress quantitatively and yet there are a number of indicators which point to serious lacunae in their development. The cooperatively weak States, particularly in the eastern region do not seem to have made up any of their lag. In fact, some of the so-called cooperatively advanced States have also slided down particularly in the field of credit due to mounting overdues. Nearly 37 per cent of the total primary marketing cooperatives are not doing any business and are virtually defunct. Only five States account for more than 80 per cent of the total marketing of agricultural produce done by cooperatives. Even in the'se States, the management studies undertaken have pointed to the scope for bringing about considerable managerial improvements. The cooperative share of total fertiliser sales which was at one time around 55 per cent has come down to around 43 per cent. Sluggishness in credit development due to heavy overdues in a large number of States has eroded the overall viability 01 primary cooperatives and has thus affected all other fields of activity like marketing of agricultural produce, farm inputs and consumer goods. In the ultimate analysis, the most outstanding of the deficiencies, which indeed is at the root of many of the palpable shortfalls in cooperative performance, is in the area of management. In spite of considerable discussion over the years in regard to the need for proper manpower development, the cooperatives have by themselves shown a singular lack of appreciation of this problem.

Strategy for the Sixth Plan

11.53 In the light of the problems and constraints discussed above, it is proposed to specifically direct attention during the Five Year Plan to the following tasks on a priority basis:

  1. A clearly conceived action programme to be drawn up for the strengthening of primary village societies so that they are able to effectively act as multi-purpose units catering to diverse needs of their members.
  2. Re-examination of the existing cooperative policies and procedures with a view to ensuring that the efforts of the cooperatives are more systematically directed towards ameliorating the economic conditions of the rural poor.
  3. Re-orientation and consolidation of the role of the cooperative federal organisations so that they are able through their constituent organisations to effectively support a rapidly diversifying and expanding agricultural sector, including horticulture, food processing, poultry, dairying, fishery, animal husbandry, sericulture etc., with credit, input supply, marketing and other services.
  4. Development of professional manpower and appropriate professional cadres to man managerial positions.


11.54 The primary village (multi-purpose) society is the base on which the entire cooperative structure rests. A programme of re-organisation of these societies had been undertaken a few years ago based on certain stipulated viability criteria and such a re-organisation has already been carried out in 'form in most States of the country. Nevertheless, even where this programme is said to have been completed, the basic objective of re-organisation has not yet been achieved in substance. A very large number of re-organised societies still continue without even One full time manager. Furthermore, a large number of managers so appointed have either received no training or extremely inadequate training. Stable arrangements still do not exist in many States for regular payment of salaries to managers. Financial constraint is said to be one of the reasons for this state of affairs. Nevertheless, this particular task is of such importance that it must take precedence over 'other schemes and projects of development on which considerable funds are presently being expended. Without a stable and prop'erly staffed, primary society, the base of all cooperative activity will continue to remain weak. The Centrally sponsored scheme for assistance to States to contribute towards the deficit in the salary fund of managers of reorganised societies will be continued during the Sixth Plan. Besides, the share capital of these societies will be strengthened, subject to certain norms of performance, to enable them to take up diversified activities on an expanded scale.

11.55 The cooperatives have for some time been alive to their responsibility towards the rural poor. The percentage of short and medium term credit to weaker sections has moved up from 29 per cent of the total cooperative credit disbursed in 1973-74 to about 40 per cent presently and in long-term credit to about 38 per cent. However, on further examination, it is observed that the bulk of this credit has gone to the small and marginal farmers, namely, those who have a land base. The share of tenants, agricultural labourers and rural artisans has continued to stagnate around 3 to 5 per cent of the total cooperative credit during the last decade. The membership pattern of village cooperatives also reveals a similar trend. While small and marginal farmers constituted about 44 per cent of the total membership in 1977-78, agricultural labourers and rural artisans constituted only around 10 per cent. Without, therefore, minimising in any way the efforts which have already been made by the cooperatives t and direct their benefit to the weaker sections, a much greater thrust in that direction is called for with a view particularly, to giving greater coverage to the poorest among the target group of the weaker sections. It would be necessary lor tne cooperatives to mount a systematic programme for enrolling the landless workers, members of the scheduled castes and scheduled tribes, fishermen, artisans and others among the poorest as members, so that they could get the benent of facilities offered by the cooperatives. Mere enrolment, however, of these persons as members will not be enough. It will be necessary that each primary society systematically identifies the members who are below the poverty line and draws up a specific credit plan for them in the light of individual possibilities of development and carries it out within a reasonable time-frame. This will need to be closely coordinated with the Integrated Rural Development Programme.

11.56 A tendency has developed among cooperative federal organisations often to promote their own business at the cost of their constituents. The programmes and policies of cooperative federations at the State as well as the national level would be so oriented as to make these institutions more effective as federations of affiliated cooperatives. They would thus be called upon to enlarge not only their own business but at the same time provide leadership to their affiliated organisations and lend full support to them in their business operations. In respect of commodities, which have inter-State marketing possibilities, the State and national federations would be expected to undertake larger inter-State trade. Coordination and linkage between marketing and consumer cooperatives would be strengthened so that the latter may be able to procure farm produce directly from the farmers through the marketing cooperatives instead of resorting to procurement through private wholesalers and intermediaries. Special attention will be given to strengthening the activities of consumer cooperatives in the urban areas and to the development of consumer business of primary village cooperatives and marketing societies in rural area's to serve as a dependable adjunct to the public distribution system. The Central sector scheme for strengthening NAFED; NCCF and other Federations and the Centrally sponsored scheme for the development of cooperative marketing, processing and storage etc. in underdeveloped States would be continued during the Sixth Plan. The capital base of National Cooperative Development Corporation, which is the principal financing and promotional organisation at the national level for the development of cooperative marketing, storage, processing, supply of farm inputs and rural consumer activity, will be further strengthened during the Sixth Plan with a view to enabling it to lend support to these activities on an expanded scale.

11.57 Irrespective of whatever objectives that may be laid down in terms of expected levels of performance and whatever programmes of assistance that may be developed, it is ultimately in the area of management and man-power development that the key to successful implementation lies. In spite of a number of committees and frequent discussions that have been devoted to this subject over the last three decades, the picture does not seem to have altered in any significant way. Neitner the scheme of organisation or "Pools" 01 personnel nor of formation of cadres for different sectors of cooperative activity have made much headway so far. The main resistance has come from cooperative organisations themselves, who have been averse to taking personnel recmned on a centralised basis either by the cooperative departments or by special "cadre" societies or the sectoral federations. As most cooperative institutions by themselves are not big enough to either oiler suitable salary scales or career advancement prospects to be able to attract the right kind of personnel, it appears necessary that a system be devised by which key personnel are recruited for the whole range of small and medium cooperatives in an organised manner, which should make it possible to otter adequate wages to the persons employed, provide them opportunities of career advancement within the sector as a whole and make them feel part of a larger system with potentialities of development to eacn according to his capacity and competence. In other words, a cooperative sector must operate as one inter-linked whole in this manner rather than as a mere collection of small scattered institutions. Special attention will be given during the Sixth Plan to devising a suitable system in this behalf which will make available to the cooperatives, caders of properly qualilied and trained personnel to handle their diverse activities. Care will, however, have to be taken that the system contemplated is such as reconciles to the extent possible, the sensitivity and the autonomy of the individual organisations where the persons recruited will actually be employed. Along side, sector-wise surveys of cooperative activities will be undertaken on a scientific basis to identify their organisational, operational and managerial deficiencies and to work out measures for their sound growth. Another aspect of management is in regard to the commitment and quality of the elected office bearers. The cooperatives are often criticised for being dominated by vested interests. The solutions sought so far have been in the nature of limiting the number of terms of office etc. While these measures are useful as far as they go, thdy still do not impinge on the basic question of commitment of an office bearer to the objectives of the society. An office bearer of a marketing society, who does not market his own produce through his marketing cooperative, is hardly likely to have any stake in the performance of that society, likewise, of a credit cooperative bank, who is himself a defaulter in payment of dues is hardly likely to pursue recovery discipline in his society. It will be necessary to take a close look at the bye-laws of various types of cooperatives and to suitably revise these, wherever necessary to ensure that such commitments are built into the bye-laws as to eliminate mere office seekers from the management of the society. In fact, dairy cooperatives of the "Anand Pattern" have a specific clause built into the bye-laws about the supply of miJk to the cooperative for a certain minimum number of days in a year as an essential qualification for office. A similar provision needs to be built in the bye-laws of other type of cooperatives also.

11.58 ah agriculture which is projected to grow at an annual compound rate of about 4 per cent during the Sixth Plan period would demand substantial credit, farm inputs, and marketing and storage support. Within this overall growth rate, the rate of growth of production in dairying, animal husbandry, poultry, fishery and fruits and vegetables has been projected at a rate higher than for crops. The Integrated Rural Development Programme "which would now cover the entire country would demand much larger multi-sided support from the cooperatives. Particular attention will be given to the development and strengthening of dairy cooperatives in the context of Operation Flood II, in which cooperatives constitute the organisational frame-work of the project almost wholly. The role of the fishery cooperatives has only been somewhat marginal so far, both qualitatively and quantitatively. Fishermen have been one of the poorest and the most exploited sections of the rural community. A specific programme of strengthening the cooperative structure in this field will therefore be drawn up. Minor Irrigation Development and water management is another important area of activity in which corporations will have to be particularly encouraged. Cooperatives are also expected to play an expanded role in the public distribution system and in the supply of essential consumer articles in rural and urban areas. Considerable expansion in the storage capacity of cooperatives is envisaged during the Sixth Plan with a view to strengthening and enlarging their role in the marketing of agricultural produce, supply of farm inputs and retailing of consumer articles. Substantial increase is proposed during the Plan in the oil-seeds processing capacity, particularly for soyabean to encourage increased production and in cold storage capacity to support expanded programmes of potato, fruits and vegetables production. Programmes for setting up cooperative sugar factories and spinning mills would be suitably accelerated. The cooperative training and education programmes would also be intensified and increasingly linked to the growing and diversified needs of the various sectors of cooperative movement. Taking into consideration. the demand for cooperative services and the reasonable capabilities of the cooperative system, the following targets of physical performance in important cooperative activities have been projected for the period 1980-85.

Table No. 11.1 Targets for Cooperative Operations

Sl. N.

Physical Programmes

Unit Base level anticipated achievement 1979-80 Level for the terminal year 1984-85
(0) W (2) (3) (4)
1 Short term loans Rs. crores 1300 2500
2 Medium term loans Do. 125 240*
3 Long term loans Do. 275 555*
4 Value of agricultural produce to be marketed through Coops. Do. 1750 2500
5 Fertiliser to be distributed through Coops.
(a) Quantity Lakh tonnes 23.50 45.00
(b) Value Rs. crores 900 1600
6 Value of consumer goods to be distributed through Coops, in rural areas Do. 800 2000
7 Value of Consumer goods to be distributed in urban areas through Coops. Do. 800 1600
8 Construction of additional godowns '.
(a) Rural godowns
(i) No. 22000 52000
(ii) Capacity Lakh tonnes 22 44
(b) Marketing godowns
(i) No. 5040 7500
(ii) Capacity Lakh tonnes 25 38
(c) Total storage capacity to be completed Do. 47 82
9 Construction of Cold Storage
(i) No. 125 276
Lakh tonnes 2.14 7.48
10 Processing Units installed
(i) Sugar factories 142 185
(ii) Spinning Mil's 62 90
(iii) Oil Units (including Copra Units) 304 390
(iv) Others 1529 1694
Total 2037 2359

* Total cumulative target of medium and long term loans during the period 1980/85 is Rs. 3100 crores.


11.59 The total Central Plan outlay for various schemes of cooperation for the Sixth Plan period 1980-85, is Rs. 330.15 crores. The outlay in the State and Union Territories Sector is Rs. 584.08 crores. Thus, total public sector outlay on various schemes of cooperation is Rs. 914.23 crores. This outlay is mainly for strengthening the capital base of the cooperatives and to assist them in building the necessary infrastructure and capacities to enable them to undertake higher level of business and improve their services. The level of their development and operational efficiency will' however, depend very largely on the quality of management and leadership that they can bring to bear on their operations. (Details are given in Annexure 11.1 and 11.2).


11.60 The Plan provides for special Central assistance totalling Rs. 1370 crores for certain area programmes. These are described in Chapter 25 (Hill Areas and North Eastern Council) and Chapter 26 (Tribal Areas). Some State Governments have also made allocations in the Sixth Plan for accelerated development of certain identified special areas. The Statewise Sixth Plan outlay is as follows:

Outlay for the Development of Special/Backward Areas:States

(Rs. crores)

l Gujarat 2.50
2 Jammu and Kashmir 45.00
3 Kerala 2.50
4 Meghalaya 10.00
5 Nagaland 5.00
6 West Bengal 45 00
Total 110.00

The areas for which this provision has been made are indicated below:

  1. Gujarat: 25 backward talukas have been identified by the State Government and a special provision of Rs. 2 lakhs annually is envisaged for each taluka i.e. Rs. 50 lakhs annually for 25 tnlukas.
  2. Jammu and Kashmir: The provision has been made for Leh and Kargil areas in Ladakh. Outlay also includes provision for beneficiary-oriented programmes for nomadic tribes in the State—Gujjars and Bakarwals.
  3. Kerala: There area number of regions in the State which have been considered as backward economically and socially. They include areas like Kasargode and Cannanore districts, Wynad in Kozhi-kode District and areas in Malappuram and Idukki districts.
  4. Meghalaya: The outlay is for border areas regarded as special areas for purposes of accelerated development.
  5. Nagaland: The following areas have been identified as backward by the State Government:
    1. Tuensang District
      1. Tuensang Sadar Sub-Division
      2. Kiphere Sub-Division
    2. Mon District
    3. Meluri Area in Phek District
    4. Aghunato area in Zunheboto District
    5. Peren in Kohima District
    6. West Bengal: The outlay is meant for the following backward regions in the State:
      1. Hill Areas
      2. North Bengal
      3. Jhargram
      4. Sundarbans


11.61 The Planning process in a democratic country can acquire fuller meaning and depth if the people not only associate themselves in planning lor their development but also participate consciously in plan implementation. The successive five year Plans have emphasised the need for promoting peoples' organisations to secure this end. Tile very raison d'etre of Panchayati Raj was to ensure peoples' participation in local planning and implementation. Likewise the emphasis through the Plans on building np cooperatives was to strengthen peoples' involvemeflt in the management of their economic development. Panchayati Raj and cooperative institutions though peoples' organisations are, however, creatures of the Government through various statutes. These have been dealt with in earlier sections of the Chapter. What is of equal importance is the promotion of purely non-governmental organisations, formal or informal in nature, which could motivate and mobilise people in specific or general developmental tasks. Experience suggests that the task of educating and mobilising the people in this direction is more effectively accomplished when it is institutionalised. Individual action though important can only be sporadic in nature, whereas institutionalised action can be distinctly more effective in mobilising local resources, articulating needs and coordinating the developmental tasks which are undertaken by the people. The following are some of the forms of institutionalised action.

  1. Youth and Women's organisations operating at different spatial levels, particularly for promoting eco-development and environmental sanitation.
  2. Voluntary organisations engaged in general developmental work in an area or on a specific activity like education or health or a combination of a few such activities.
  3. Organisations of specific beneficiary or interest groups like self-employed women, or farmers or of people who have common economic interest such as marketing.
  4. Organisation of the farmers living in command area of irrigation projects catchment areas in the hills and watershed areas in unirrigated regions into cooperatives for improving land and water management without affecting the individuality of holdings.
  5. Religious, social or cultural organisations or clubs (Rotary. Jaycees. Lions etc.) which often undertake developmental activities in selected areas.
  6. Professional organisations or educational institutions which take up study, research and social action programmes as part of their professional or social Commitments.

11.62 Success stories in the field of voluntary action are many. To recount only i few of the ones which have attracted country-wide notice are the Jamkhed Project in child and health care in Maharashtra. Bharat Agro Industries Foundation Programe in animal husbandry and social forestry. I Wat Paoads ip the fields of cottage ir>dn!trv and Self-employed Women's Association (SIEWA.) of Ahmedabad. The country is indeed dotted with numerous examples of highly successful voluntary action of this nature. However, considering the vast nool of motivated Individuals avEnlabI0 in the country, pver in the smallest hamlet, whit has fructified so far bv wav of organisational effort m this behalf is not even a fraction nf the -potential. An t'rnriortant objective of the Sixth Plan is to meaningfully tap this potential.

11.63 Peonies' participation is to be sought in fields of activity. The following, however, is an illustrative list of some of the actwities in which awareness and conscious participation of the people rs nti("'l for success and would, therefore, be pursued with earnestness:

  1. Optimal utilisation and development of renewable sources of energy, including forestry through the formation of renewable energy associations at the block level.
  2. Family welfare, health and nutrition education and relevant community programmes in this field.
  3. "Health for all" programmes.
  4. Water Management and Soil Conservation (warabandi, watershed development etc.)
  5. Social Welfare programmes for weaker sections.
  6. Implementation of minimum needs programme.
  7. Disaster preparedness and management (floods, cyclones etc.).

In all Government programmes touching upon the above areas of development, care will be taken to see that the existing policies and procedures are reviewed and reoriented to motivate, encourage and suport peoples' participation in an organised way through local groups and associations, or voluntary organisations.

11.64 Further, supplemental action by voluntary agencies in promoting activities for self-employment as well as development of the rural poor will he of invaluable help in optimising the results of Plan programmes, by enhancing the effectiveness and efficiency of the services provided by governmental functionaries and bv motivating the concerned beneficiaries and rendering suitable guidance to them in the formulation of viable projects and sources of funding.

11.65 Another area of voluntary action is through business houses, which have been given an added incentive of exemption from income tax under section 35CC and 35CCA of the Income Tax Act for expenditure incurred by them on certain permissible items of rural development. There is increasing interest among the business houses for involvement in rural development work. However, the efforts made so far are scattered and sporadic. It is proposed that during this Plan the business houses and their chambers will be persuaded to coordinate their efforts so that a comprehensive programme of development is taken up in selected areas/blocks with the combined resources of the participating business houses. If so required certain specific blocks will be selected in each State for such action. T1"1" input of financial and managerial assistance from business houses will need to be utilised as far as possible through local peoples' groups or voluntary organisations.

11.66 The role of Government agencies should be to help people to help themselves. Success in achieving a rapid improvement in the quality of life of the rural and urban poor will depend upon the extent of involvement of our vast human resourcea in national development.

Annexure 11.1 Sixth Plan Outlays : Special Programmes of Rural Development, C.D. and
Panchayati Raj and Cooperation—Central Sector

(Rs. in crores)

Outlays for 1980-85
Sl. No. Special Programmes of Rural Development
1 RDP 750.00
2 DPAP 175.00
3 DDP 50.00
4 National Grid of Rural Godowns 17.50
5 TRYSEM 5.00
6 1 Council for Advancement of Rural Technology 0.05
sub-total (1- 6) 997.55
NREP 980.00
Total (I) 1977.55
II. C. D. and Panchayati Raj 7.17
III. Cooperation
1 Cooperative Credit 35.00
2 Cooperative Marketing, Processing and Storage 178.50
3 Consumer Cooperatives 56.00
4 Cooperative Training and Education 10.50
5 Miscellaneous 0.15
sub-total (III) 333.15
Grand Total (I+II+III) 2314.87

Annexure 11.2 Sixth Plan Outlays: Special Programmes of Rural Development, C.D. and
Panchayati Raj and Cooperation—states, U.Ts.

Sl.No. Name of the State (Rs. in crores) Sixth Plan Outlays
Special Programmes of Rural Develop merit including NREP C.D. and
Panchavati Raj
(0) (1) (2) (3) (4)
1 Andhra Pradesh 87.25 59.50 29.5
2 Assam 42.25 8.00 25.60
3 Bihar 190.00 22.35 27.25
4 Gujarat 144.00 6.30 32.00
5 Haryana 28.93 16.50* 26.80
6 Himachal Pradesh 16.90 3.00 6.75
7 J and k 24.10 6.00 5.00
8 Karnataka 49.15 2.50 50.00
9 Kerala 25.10 41.40 22.00
10 Madhya Pradesh 155.00 15.00 47.90
11 Maharashtra 81.00 0.51 57.44
12 Manipur 7.00 2.00 1.80
13 Meghalaya 3.00 2.40 3.28
14 Nagaland 6.50 7.00 1.50
15 Orissa 105.00 5.25 30.00
16 Punjab 36.00 18.15 41.50
17 Rajasthan 105.75 0.33 24.3S
18 Sikkim 0.25 1.60
19. Tamil Nadu 120.00 78.00 25.33
20 Tripura 6.55 4.48 5.00
21 Uttar Pradesh 147.96 18.37 55.36
22 West Bengal 126.00 18.00 46.00
Total States 1507.44 335.29 566.00
U.Ts. 1.78 9.61 18.08
Grand Total States and U.Ts. 1509.22 344.90 584.08
* Includes Rs. 10 crores for National Rural Employment Programme.
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