From sociological point of view, the term rural society implies the following:

In comparison with the urban society, it is a small society, meaning thereby that
it has a small population and extends over a shorter physical area. Various
institutions (such as police stations, hospitals, schools, post-offices, clubs, etc.)
may or may not be there, and if existent, they are not available in plenty.
Density of the rural population is also low, and it may be clustered according to
the criteria of social status. In other words, people occupying the same status
may share the same neighbourhood, and may observe considerable social, and
sometimes physical, distance from others, especially those lower in hierarchy.
A sizable number of rural people are engaged in agriculture, which is the
mainstay of their lives. In addition, a rural society has several other groups,
engaged in various other occupations of arts and crafts, usually known as
artisans and craftsmen, who regularly supply their services to agriculturalists in
exchange for grains and cereals.
Rural society has some full-time and a large number of part-time specialists.
Craftsmen and artisans also indulge in agricultural pursuits, especially during the
monsoon and the agricultural produce of such specialists and small agriculturalists
is mainly for domestic consumption.
Rural society is regarded as the repository of traditional mores and folkways.
It preserves the traditional culture, and many of its values and virtues are carried
forward to urban areas, of which they become a part after their refinement.
When scholars say that India lives in villages, they mean not only that villages
constitute the abode of three-quarters of Indians, but also that the fundamental
values of Indian society and civilization are preserved in villages, wherefrom
they are transmitted to towns and cities. One cannot have an idea about the
spirit of India unless her villages are understood.
Tribe And Peasants
a tribe, emphasis is laid on the isolation
of its members from the wider world. Because a tribe has almost negligible relations
with the other communities, it tends to develop its own culture, which has little
resemblance with the culture of those communities that have enjoyed long-term
interaction among themselves. That is the reason why tribal communities in
anthropological literature are known as cultural isolates. The implication of this
metaphor is that one can understand a tribal society without bothering to study the
external world, of which the tribe may be an island. A tribal society is characteristically
a holistic (i.e. complete) society.
The term peasant also shot into prominence with the works of Robert Redfield. For
the first time, however, the term was defined in the writings of the American
anthropologist, A.L. Kroeber. His oft-quoted definition of peasants is as follows:
Peasants are definitely rural yet live in relation to market towns; they form a class
segment of a larger population which usually contains also urban centers, sometimes
metropolitan capitals. They constitute part-societies with part-cultures. They lack the
isolation, the political autonomy, and the self-sufficiency of tribal populations; but their
local units retain much of their old identity, integration, and attachment to soil and

cults.

1.5 RURAL AND URBAN SOCIETIES: DIFFERENCES

AND RELATIONSHIPS
After having learnt about the various characteristics of the rural society, it will now
be easier for us to compare it with the urban society. Just to revise: rural and urban
societies, or the village and the city, constitute two ends of the continuum. Over a
13

period of time, rural societies undergo a variety of changes. Some of them are Rural Poverty
assimilated into urban societies; some start resembling urban societies in certain
material and social terms, but retain their identity as a village; while some remain
less affected by the forces emerging from cities. It may be so because of their
location. Villages closer to the centers of urban growth are likely to change appreciably
and faster than their counterparts located in interior areas. With the passage of time,
villages may grow into towns, which later on grow into cities. Continuity may, thus,
be unmistakably noticed in the transition from the village to the city.
For cities, which grow from the village, the term used by Robert Redfield and Milton
Singer is orthogenetic cities. These cities emerge from below, i.e. from the village,
rather than get imposed on a population from outside. When a city is imposed on a
populace, as happened during the colonial period in India, it is called heterogenetic
city. Such a city, emerging from above, does not have its origin in local villages.
The social consequences of these two types of city are not alike. In an orthogenetic
city, the migrants coming from villages will have less of a culture shock on
encountering the city and will not suffer much from any sort of cultural inadequacy
while dealing with the city dwellers. By contrast, both the experience of a culture
shock and the feeling of cultural inadequacy will be tremendously high for rural
migrants in a heterogenetic city. It is so, because an orthogenetic city carries forward
the traditions of the village and the villagers can identify the segments of their culture
in it and can relate with them easily. In a heterogenetic city, by contrast, members
will feel completely out of place, because such a city contains the elements of a
tradition which grew somewhere else, with which the local people have no familiarity.
Consequently, they will feel out of place in it.
The point that has been stressed through out this lesson is that generally rural and
urban areas are dependent upon each other. There is a mutually supportive relationship
between them. Sociologists have analyzed these relations in economic, political, social,
and cultural terms.
Rural Society : This term is used for a small society, which comprises only
a few hundred households, who mostly produce their own
food. Agriculture is the mainstay of their life. In this society,
the number of people engaged in non-agricultural pursuits
is small, but these members also practice agriculture.
Tribal Society : This term is used for a small society, smaller than the
typical agriculture-based society. It is largely isolated from
other societies and the centers of civilization. The tribal
communities practice a large number of economic pursuits,
ranging from hunting and food gathering to settled
agriculture. There are many villages in India where tribes

and non-tribal people live together.

Urban Society : This term is used interchangeably with two termstowns
and cities. Characterized by a much larger area and
population, an urban society grows faster because of the
migration of people from villages to cities. An urban society,
whether pre-industrial or industrial, is basically a nonagrarian
society. It is heterogeneous, complex, and futureoriented.
Great Tradition : It is the tradition of the intellectual class called literati
who live in cities.
Little Tradition : It is the tradition of the unlettered people in villages and
cities.
Universalization : The process, by which cultural traits from the little tradition
get carried forward, reflected upon, and systematized to
become a part of the great tradition, is called universalization.
Parochialization : The process, by which cultural traits from the great tradition
get carried downwards to the village where they become
a part of the little tradition, is called parochialization.
Fringe Villages : These are the villages that are found at the meeting
points of typical rural and urban areas. They depict the
characteristics of both the types of social organization.

1.2 CONCEPT OF DEVELOPMENT

You know that some countries are considered to be more developed than others. It
is not uncommon to come across references to the Less Developed Countries (LDCs)
as compared to the Developed Countries (DCs). Similarly, within out own country,
some states are said to be more developed than others. Clearly, development therefore
involves making relative comparisons.
Development implies on overall positive change in the physical quality of life. This
positive change for the better encompasses economic as well as social aspects.
Therefore, development not only calls for economic growth but also the equitable
distribution of the gains made from economic growth. In other words, development
implies growth with justice. It means an improvement in the quality of life through
better health, education, housing and overall material and social welfare. The basic
elements of development are the following:
i) Removal of inequality and poverty;
ii) Increase in material welfare of the people;
iii) Increase in social well-being (education, health, housing, etc.);
iv) An equitable distribution of the gains of development among different groups of
people in a region or country;
v) An enhancement in technology and the capacity to produce a wider range of
goods and services in the economy leading to a better quality of life;
vi) Building institutional structures which permit participation in decision-making
at all levels, equalization of opportunities for development and removal of
disparities.
For a long time, it was assumed that development depends primarily on economic
growth and would automatically occur if economic growth took place. This view of
development has, however, been criticized on the ground that it ignores the distribution
of the gains from growth; and also, how the growth has been achieved and at what

costs. An increase in production in a country does not automatically mean that there
has been better distribution of what has been produced. For instance, though the
production of food-grains has grown almost four-fold since Independence, this does
not imply that every Indian gets enough to eat. This has meant that the question of
distributive justice has assumed greater importance. Also, the composition of the set
of goods produced is important.
It is necessary to understand the difference between the concepts of economic
growth and development. Economic growth means an increase in the value of all
goods and services produced in an economy. The sum total of all goods and services
in an economy is termed as the Gross Domestic Product (GDP). Growth is, therefore,
a sustained expansion in the productive capacity of an economy leading to
sustained rise in its GDP. Development, on the other hand, is a sustained
improvement in material welfare, particularly for those who are poor and afflicted
by poverty, illiteracy and poor health conditions. Development is, therefore, a
qualitative concept involving a qualitative improvement in the general standard of
living in a country or economy.

1.3.1 Characteristics of Underdevelopment

Most developing countries are characterized by the following conditions:
i) Mass poverty;
ii) Low levels of income and concentration of incomes in a few hands;
iii) High levels of unemployment and under-employment;
iv) Poor nutrition, health, housing, literacy and welfare status;
v) Preponderance of primary sector and low levels of industrialization; and
vi) Lower status of women and that of a variety of social groups such as scheduled
castes in India.

1.5 MAJOR ISSUES IN DEVELOPMENT

It must be emphasized that there cannot be a single well defined path towards
development. Different countries and regions will have to take their own specificities
into account in order to develop their societies. This is one reason why development
has been a much debated subject. In this section we will highlight some of the major
issues, which have featured in this debate.

1.5.1 Growth vs Distribution

For a long time it was assumed that economic growth would be an engine that will
lead naturally towards development. Consequently, little or no attention was paid to
the question of distributive justice. One of the major outcomes of this situation was
the trickle down theory, which stated that if there was sufficient growth everybody
would benefit from it. India, during the first three plans, made heavy investments of
capital and sought to take the country on to a new growth path. During the early
11
Rural Development
Experiences An Asian
Perspective

1970s, however, it was realized that the living conditions had not changed significantly
for the better. It was then that the question of distributive justice assumed greater
importance. The problem, however, continues to affect the developing countries as
assets such as land and capital are concentrated in a few hands. This perpetuates
the problem further and the question of distributive justice remains unsolved. The

major result of this debate has been the realization that economic growth alone is not
enough to lead a country towards rapid development. Growth by itself does not
guarantee an improvement in the quality of life for the vast numbers of people.
Therefore the state has to formulate policies and design instruments to ensure that
development benefits flow to those categories of people who need them most.

1.5.2 Agricultural vs Industrial Development

This has been one of the most important issues at stake in the debate on development.
In Indias own case, it was thought that rapid industrialization would lead the country
to self-sufficiency. In the 1960s, however, the country experienced severe food
shortages that led to the realization that the agricultural sector could not be ignored.
This led to increasing attention to this sector. New varieties of seeds and the use
of fertilizers on a larger scale have led to an increase in agricultural production.
However, it has now become clear that a balance between agricultural development
and industrial growth will have to be maintained for genuine economic development.
If the agricultural sector does not grow there may be sharp increase in the prices of
food-grains that will affect the poor. On the other hand, industrial stagnation will
mean that surplus labour from the agricultural sector cannot be usefully employed.
Therefore, both agriculture and industry will have to grow so that the pace of
development is fast enough to improve the living conditions of the people.

1.5.3 Capital vs Labour Intensive Technologies and Development

You may have heard the term technology being used quite often in debates pertaining
to development. What is technology and what is its role in the development of a
country and its people? Technology is the means by which goods are manufactured
in an economy. Any goods, however crude or sophisticated, can actually be
manufactured by several means. The development in technology is the process by
which the manufacture of goods is made cheaper, faster and more efficient. What
is the role of technology in development?
You may be aware of the fact that tractors, harvesters, etc. are being used on a
wider scale now than a couple of decades ago. They are now used to perform many
of the agricultural operations, which were thitherto performed manually using ploughs
and other equipment; this change may be termed a technological change.
Now that you are familiar with this concept you must be able to appreciate that at
any given point of time, we may have a number of technologies to choose from in
order to produce the same goods. Cloth can be woven on traditional looms in your
village or town, or it can be manufactured in the factories located in bigger cities. The
end product is more or less the same, but the process of making it is different. What
are the implications of these facts for the process of development?
An improvement in technology calls for investment to make this change feasible.
Sophisticated technology, when it uses less labour, is termed labour displacing
technology. On the other hand, an improvement in technology can also be made
without displacing labour and also less expensively. This is called labour intensive
technology. Capital intensive and labour displacing technologies are often
expensive and call for large investments. Labour intensive technologies, on the other
hand, have the advantage of being able to absorb the surplus labour in a developing
country.
12
Rural Development
Concept, Strategies and
Experiences

During the late 60s and the early 70s, a new trend of thinking on technology suitable
to developing societies became popular. The question raised was that of Appropriate
Technology. It was said that developing countries should adopt technologies that
were suitable for their own specific needs, situations and socio-cultural framework
rather than copy the western technologies blindly. Thus, it was suggested that countries
like India should use technologies that have evolved over many decades and adapt
them to make the best use of their cost-effectiveness.
The choice between these types of technology, however, is not easy for a developing
country. On the one hand, rapid increase in output is necessary to solve the problems
of the people and, on the other, the problem of unemployment (thus created)
accentuates the problem of poverty. A balance is, therefore, required so that both
technology and living conditions of the people improve.

1.5.4 Centralization vs Decentralization

This has been another major issue in the debate on development. Generally, it is
agreed that development is a long-term phenomenon and, therefore, needs to be
planned. While a certain degree of centralization is necessary to coordinate the
efforts towards development, too much of centralization in the case of decision
making powers can weaken the process of popular participation. It also leads to the
formulation of programmes and projects, which have limited local relevance. In
recent times, the need to devolve decision making powers to the panchayats has
caught the attention of policy makers in India. Important steps, including constitutional
amendments, have been taken since the late 1980s to empower local level institutions.
It is hoped that decentralization of the development process would also lead to
greater accountability of those who are actually involved in the decision making
process. Devolution of powers is very vital for development. This ensures that the
administration is brought closer to the people. Consequently, there is greater
accountability of planners towards those whom programmes and policies are meant
to reach.

1.5.5 Urban vs Rural Development

The vast majority of the population in India and other developing countries live in rural
areas. There is a continuing influx of people into the cities looking for jobs as the rural
economy is not been able to provide employment to them. It needs to be pointed out,
however, that the problem of poverty, poor health and illiteracy is widespread in both
rural as well as urban areas. The problem of rural poverty and unemployment is the
crux of the problem. Without solving it, there cannot be genuine development. Hence,
rural development has come to acquire critical importance. Sustained improvement in
the quality of life in rural areas is likely to slacken the pace of large-scale migration
of villagers to cities in search of jobs.

1.5.6 Respective Roles for the State and the Market

One of the most contentions issues in Economics has been the scope and extent of
government intervention in the economy of the country. During the immediate postWorld War II era, there was a near consensus among economists, for a variety of
reasons, such as important developments in economic theory around the idea of
market failure (which had several dimensions), that governments have to play major
roles in the economic sphere. Thus around the time India gained independence from
the British, the need for planning had come to have wide acceptance in the developing
countries for them to break free from stagnation and backwardness. The debate in
our country at that time was not about the need for planning but about what kind of

planning and quite a few alternative suggestions and frameworks were widely discussed.
In the recent years, however, government intervention in economic spheres has come
13
Rural Development
Experiences An Asian
Perspective

under much fire, particularly during the last couple of decades, and a sort of neoliberal
market orthodoxy which insists that the market knows and does the best
has become dominant. We cannot go into a detailed discussion of the reasons for
such an extreme swing here, but it may be stressed right away that to a large extent
such a swing is based on shaky theoretical foundations and faulty empirical associations.
This will be briefly discussed, in the next section, with reference to Indian economic
development.
Check Your Progress II
Note: a) Use the space provided for your answers.
b) Check your answers with the possible answers provided at the end of
this unit.
1) Explain briefly in your own words the role that technology plays in the
process of development.
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................

1.6 PLANNED DEVELOPMENT AND SHIFTS IN

STRATEGIES IN INDIA
Development is a long-term phenomenon. In order to achieve something in the long
run, it is essential to plan keeping in mind the goals that we wish to attain. We have
already seen that there is no single path towards development. Any country will have
several objectives that it may wish to achieve in a given time-frame. Among these
various objectives, it will be necessary to establish priorities. This is what a plan
essentially does. It is a conscious attempt to achieve the set of objective that it has
set for itself. Taking into account the particular set of priorities that it seeks to attain,
a country may have to adopt a particular planning strategy.
India, after Independence, decided to opt for a planned course towards development
and coordinate the process of planning. The Planning Commission was set up in
1950.
It may be useful to view the past half-a-century of Indian economic story as a
chronological sequence of the following phases:
i) the preparatory phase in planning for development (from independence to the
mid-1950s);
ii) the phase of industrialization led by heavy industry (from the mid- 1950s to the
mid-1960s);
iii) the phase of pulling up agriculture (the late 1960s and 1970s);
iv) the phase of pump-priming of aggregate demand (the decade of the 1980s); and
v) the phase of economic liberalization (from July 1991 to the present).
The logic of distinguishing one phase from the other in the above sequence, as
hopefully will become evident from the subsequent discussion, is based mainly on the

shifts in official perceptions regarding the overriding economic issues and problems
14
Rural Development
Concept, Strategies and
Experiences

the country was confronted with at different occasions and the associated policy
thrusts and changes.
Let us come to the salient features of the first plan (1951-56). This plan, in terms
of a simple model, emphasized the importance of raising the level of savings in the
economy to accelerate the rate of growth; however, as has been noted often enough,
beyond this simple model, it was a sort of a loose affair to put together a set of
important projects, and not an analytically rigorous formulation in terms of coordinating
investment decisions in different sectors. Projects pertaining to infrastructure and
agriculture, in particular public irrigation, received emphasis. The fact that the increase
in national income during this plan actually surpassed the modest target that the
planners had set must have been a very pleasing and encouraging experience for
them, particularly in the light of the pre-independence long-term record of near
stagnation (for aggregate as well as sectoral pre- and post-independence growth
rates).
According to most commentators, intellectually the most exciting moment in Indias
planning strategy comes with the second five-year plan (i.e. at the beginning of the
second phase in terms of the classification suggested at the outset). This plan (195661) has also been called the Nehru-Mahalanobis strategy of development, as it
articulated Nehrus vision and P.C. Mahalanobis happened to be its chief architect.
The central idea underlying this strategy is well conveyed by recalling the following
statement from the relevant plan document. If industrialization is to be rapid
enough, the country must aim at developing basic industries and industries
which make machines to make the machines needed for further development.
The Mahalanobis model showed that, given certain assumptions, the higher the allocation
of investment into the investment goods sector, the higher would be the investment
rate at the margin which would lead to a higher rate of growth of output. In other
words, the emphasis was on expanding the productive ability or power of the system,
through forging strong industrial linkages, as rapidly as possible. It is worth repeating
again that such an emphasis enjoyed tremendous theoretical/intellectual legitimacy at
that time, although there were a few dissenting voices. The third five-year plan
(1961-66) was essentially a continuation of the second plan in terms of the broad
thrust and emphasis on industries such as machinery and steel. In terms of the core
objective of stepping up the rate of growth of industrial production, the strategy
started showing quick and impressive results. For instance, the machinery index
increased from 192 in 1955-56 to 503 in 1960-61, and the rate of growth of overall
industrial production during this period was also very impressive. To put it simply, the
strategy during these two plans laid the foundation for a well-diversified industrial
structure within a reasonably short period and this was a major achievement.
As the strategy was unfolding, however, some of its key shortcomings were also
becoming evident. The disproportion between the growth of the heavy industry sector
and other industries, and the shortfalls in achievements compared to the target growth
rates for industrial output, both during the second and the third plan, were among the
most obvious indicators of the problems underlying the strategy in operation.
Consequently, as could be expected, the Nehru-Mahalanobis strategy was subjected

to increasing criticism around this time (and of course thereafter). A variety of

diagnoses relating to the factors that were ailing the Indian economy, and consequently
a plethora of prescriptions were offered. Here one needs to stress the point, however,
that the performance prospects of the development strategy in operation had suffered
during the 1960s not only because of its internal weaknesses, but also because of the
major exogenous shocks that the economy was subjected to. The two military
engagements in quick succession (in 1962 and 1965) had led to severe cut backs in
public investment, contributing to the emergence of significant excess capacities in
the heavy industry sector.
15
Rural Development
Experiences An Asian
Perspective

The other major exogenous shock came in the form of two successive monsoon
failures in 1965 and 1966, leading to drastic reductions in the production food and its
availability, which also had obvious negative consequences for the overall growth
prospects. The widespread distress due to decline in the availability of food led to a
few starvation deaths and food-riots in some states, and were thus rude reminders
of Indias vulnerability in the area of the most basic need. In fact, even before these
droughts, India had already come to depend partly on ship-to-mouth policy, mainly in
the form of wheat imports from the USA under PL-480, and the droughts were
catastrophic jolts that highlighted the failure in this critical area.
The immediate impact of these exogenous shocks was so powerful that the government
temporarily abandoned the five-year plan in favour of annual plans for the next three
years. These annual plans were too limited in their scope, essentially being budgetary
exercises, and this period (from 1966-1969) is also known as that of a plan holiday.
One must note, however, that this period continued to witness sharp cut backs in
public investment with obvious adverse consequences for industrial and overall growth
prospects.
It was mentioned earlier that the Nehru-Mahalanobis strategy came under increasing
criticism during the 1960s and the early 1970s from several quarters. These ranged
from a rejection of the planning process itself to pointing out specific shortcomings,
such as underestimation of the import-intensity of the indigenous industrialization
drive, unnecessary export-pessimism, over-extended regulatory structures, over optimism
as regards the potential performance of the agricultural sector, if not its neglect, etc.
Without going into the merits of the various criticisms here, we may note that the
inadequacy on the agricultural front came to be viewed as one of the most significant
gaps in the past effort. Consequently, formulation of a new strategy of agricultural
development became the overriding objective. The fourth five-year plan, launched in
1969, adopted such a strategy, which in the popular parlance is known as the launching
of the Green Revolution. Thus, with the fourth plan (1969-74), there is a marked
shift in development strategy from an emphasis on heavy industry to pulling up
agriculture.
This, as per the chronological classification suggested at the outset, is the beginning
of the third phase. It may be recalled that the leftist opinion in India had been quite
critical of the earlier strategy for not taking up thoroughgoing land reforms. As it
happened, the agriculture-first strategy, which came into being with the fourth plan
and was also the hall-mark of the fifth plan (1974-79), continued to neglect the issue
of land reforms and focused on technological modernization and betting on the

strong. A variety of support-mechanisms, including credit and price support, were

devised to this effect. Sure enough, in terms of propping up the agricultural growth
rate, the new strategy, in spite of its distributional limitations, delivered good results;
so much so that the dependence on frequent imports of food became a thing of the
past after the mid-1970s, and the government could claim that finally India had
become self-sufficient in this regard.
There are a couple of other important features of our third phase that need to be
taken note of. First, while a degree of export pessimism may have been a feature
of early post-independence thinking, things surely started changing during the 1960s
itself as a number of export subsidies came into being, and this process continued in
our third phase as well. Secondly, at the beginning of this phase itself, the dismal
failure of the earlier development strategy on the unemployment and poverty fronts
had started dawning on the planners and policy-makers. Such a realization had
certainly been sharpened by the growing restiveness among the masses expressing
itself in radical movements of different kinds in various parts of the country and
threatening to go out of control.
16
Rural Development
Concept, Strategies and
Experiences

Consequently, an important response from the policy-makers was to start thinking

about the strategies of direct attack on poverty and unemployment, in particular from
the fifth plan (1974-79) onwards, and gradually a variety of programmes got devised
and put in place to this end. Such programmes gained substantial significance during
the sixth (1980-85) and the seventh (1985-90) five year plans and have continued to
remain an important feature subsequently as well.
Going back to the growth process itself, we have already noted that the strategy of
pulling up agriculture resulted in an improved performance of this sector. This also
had a positive effect on the industrial and overall growth rates, as these picked up
during the second half of the 1970s, (1979-1980) being an exception as it was a
drought year. The turnaround in the industrial and overall economic performance,
however, was certainly not spectacular. There was a widespread feeling that in terms
of the long-term rate of growth, which stood at around 3.5 per cent per annum
between 1951 to 1983, the performance of the economy was far from impressive.
There are a number of explanations for why the economy was unable to move on
to much higher growth levels than it actually achieved. We may only note that there
are at least two basic causes that must be acknowledged in this story. We have
already referred to one of these earlier, namely limited attention to the agricultural
sector, particularly the institutional issues such as land reforms. Second, economic
growth in the post-independence Indian economy has depended to a large extent on
public investment, and thus the states ability to maintain growing productive
expenditures becomes crucial in this regard. As has been pointed out by some
analysts, it is precisely this ability that was getting constrained over time. The attempt
to push up the growth rate in the 1980s, in particular in the second half of the decade,
was based on seeking a way of coming around this problem; in terms of the
classification suggested at the outset, this constitutes the fourth phase.
Essentially the major change in economic policy at this point in time hinged on
substantial increases in government expenditure, in particular revenue expenditure, to
increase the overall level of demand or what is also known as pump-priming the

aggregate demand in the economy. This was done by means of a very irresponsible
borrowing spree by the government, both internally and externally, and much of the
external borrowing was from commercial sources.
Thus the gross fiscal deficit of the government increased dramatically during this
period, as did the external debt and debt-service payments. The increases in government
spending obviously increased the industrial and overall growth rates, and the latter at
well over five per cent per annum for the decade of the 1980s was a distinct
improvement over the continued poor growth rate for the preceding three decades.
The solution, however, was worse than the problem, as the enormous increase in
external debt, a growing portion of it consisting of short-term borrowings, exposed the
economy to the caprice of international lenders and investors, and in particular to the
danger of sudden capital flight due to confidence crisis. This is precisely what hit
the Indian economy in 1991 when its foreign reserves were depleted to abysmally
low levels and the economic managers of the country turned to the Bretton Woods
Institutions, i.e. the International Monetary Fund (IMF) and the World Bank, for help.
These institutions were too happy to bail out the country from the crisis, but on the
terms that it accepted their conditions, which were what the package of liberalization
or reforms is all about. As is well known, India accepted the conditions and thus,
compared to the preceding four decades, embarked on quite a different policy route
in its economic journey since July 1991. The period since then, that of economic
reforms/liberalization, has been designated as the fifth phase in this narration.
The key phrases in the package of reforms disseminated by the Bretton Woods
Institutions happen to be stabilization and structural adjustment programme
17
Rural Development
Experiences An Asian
Perspective

(SAP). To put it simply, the first says that the budget deficits are bad and a government
should minimize them, whereas the second aims at changing the structure of the
economy through major changes in the functioning of different markets as well as
through a drastic overhauling of the role of the state. Essentially, the SAP advocates
the case for a free play of market forces in the different product and factor
markets, including the financial markets, and a reduced role of the state,
particularly as a producer and promoter but also as a regulator, in the economy.
Without going into the details here, we may note that in case of the Indian economy,
the policy changes since July 1991 are enough to view it as a case of transition from
the state-led or dirigiste development paradigm, that characterized the earlier four
decades, to a liberalization paradigm.
Let me hasten to add here that the balance of payments crisis of 1991 was an
important input, but certainly by no means the only one, in effecting a sharp break
with the earlier policy regime. We noted earlier that some of the critics of the NehruMahalanobis strategy, around the late 1960s and the early 1970s, had started questioning
the wisdom of a state-led development paradigm itself. Over time such voices only
grew louder and each one of the basic premises of the said paradigm came under
attack, in particular from the neo-liberal economists.
For instance, it was argued that the idea of autonomous development is a recipe for
backwardness; the public sector, instead of being the flagship of rapid growth, is a
drag on societys resources, and so on. Such criticisms started to find sympathetic
hearing among Indias policy-makers during the 1980s itself, and also elicited some

responses from them.

Leaving aside the specific points of criticisms, whether from the Neo-liberal, Liberal
or Left perspectives, which constitute subjects of intense debate among economists
working on India, there is little doubt that the neo-liberal wholesale condemnation of
the earlier strategy has little merit. The achievements of the earlier strategy, with
respect to any appropriate benchmark, cannot be dismissed lightly, although they
certainly fell short of expectations. Growth rates of major sectors, and that of the
economy as a whole, achieved during 1950-90 may not have been impressive but
were certainly respectable. Moreover, if one takes into account the size of the
unaccounted economy (the black economy), which according to available estimates,
grew from a negligible proportion of national income in the early 1950s to almost half
of it by the late 1980s, then we have a growth rate that is quite impressive! There
are other notable achievements, such as a great deal of diversification of the economy,
in particular within the industrial structure in a reasonably short period, among others.
It is inconceivable that such successes would have been achieved in India soon after
independence without planning. One of the fundamental problems with the neoliberal
account is its ahistoricity, as it almost completely ignores the issue of
linkage between the stage of development that an economy is at and the realistic
choices and constraints it faces.
This is of course not to endorse uncritically the dirigiste development paradigm of the
first four decades, as it was flawed in important ways and missed on several promises,
in particular to the large section of economically vulnerable segments of the population.
The most glaring failure of Indias development strategy is with respect to povertyalleviation;
as per the standard estimates, the absolute number of poor people in the
country towards the end of the 1980s was not very much behind the total size of the
population in 1947!
Apart from the raw deal received by the disadvantaged segments, several other
problems of the dirigiste development paradigm, as it unfolded in India, have been
catalogued and analyzed by researchers in great detail. This has been followed by
a range of suggestions for policy reforms, covering a wide spectrum of analytical and
ideological persuasions. However, as already mentioned in the foregoing, policy
18
Rural Development
Concept, Strategies and
Experiences

prescriptions emanating largely from a neo-liberal perspective have been ascendant

for well over a decade now. Without entering into a discussion of the alternative
policy perspectives, all of which emphasize reforms of one kind or the other, we
may note that the neo-liberal paradigm may be on a weak turf, in particular when
it comes to the provision of adequate and sustainable livelihood options for large
sections of the population. In other words, there is a real danger that those neglected
by the dirigiste development regime may get further marginalized by the ascendant
neo-liberal policy regime, and there is increasing evidence to substantiate such a
view.
The performance of the Indian economy during the liberalization era continues to be
a subject of intense debate. As it happens, the period of economic reforms since 1991
does not seem to be doing better, in terms of standard macroeconomic indicators,
compared to the preceding decade, and in some respects, such as employment
generation, the reform period has been a disaster. Moreover, as stated earlier, in

terms of prospects for the poor and other economically vulnerable groups, the
liberalization era seems to be doing much worse.
Given such a view, you may have the
following as primary objectives of rural development.
a) To improve the living standards by providing food, shelter, clothing, employment
and education;
b) To increase productivity in rural areas and reduce poverty;
c) To involve people in planning and development through their participation in
decision making and through decentralization of administration;
d) To ensure distributive justice and equalization of opportunities in the society

2.3 CONCEPT OF RURAL DEVELOPMENT

The notion of rural development has been conceived in diverse ways by researchers,
ranging from thinking of it as a set of goals and programmes to a well-knit strategy,
approach or even an ideology. If you wade through the relevant literature, you will
realize that its scope and content are nebulous and do not have well-accepted analytical
23
Rural Development
Experiences An Asian
Perspective

boundaries. As has often been noted, however, this may be viewed both as a weakness
as well as a strength. A weakness because, apart from the issue conceptual clarity,
it also means that the very operation of this idea is in a grey zone. A strength because
such a situation allows considerable flexibility for policy makers to take into account
different ground realities.
Whatever be the differences in conceptualizing the notion of rural development, there
is a widely shared view that its essence should be poverty alleviation and distributive
justice oriented economic transformation. Given such a view, you may have the
following as primary objectives of rural development.
a) To improve the living standards by providing food, shelter, clothing, employment
and education;
b) To increase productivity in rural areas and reduce poverty;
c) To involve people in planning and development through their participation in
decision making and through decentralization of administration;
d) To ensure distributive justice and equalization of opportunities in the society.
In the preceding unit on development, we saw that there is no single universally
acceptable approach towards development. We also saw that strategies are necessary
to progress towards development since it is a long-term process. Similarly, there are
various approaches to the problem of rural development. Various schools of thought
perceive the problem of rural development differently and emphasize different sets
of factors in their theories.

2.3.1 Rural Development Projects and Programmes

It is important to distinguish between rural development projects and programmes.
Rural development projects are micro level efforts to bring about change in rural
areas. These changes can take many forms ranging from efforts to increase literacy
to attempts to increase agricultural productivity. The effects of these projects are not
generally widespread in the sense that they concern only a small number of people.
Rural development programmes involve a number of projects each, which are aligned

to one another so that they influence the various facets of rural economic and social
life. Therefore, rural development programmes attempt to bring about changes in a
wider area impacting a greater number of people. Rural development programmes
are more difficult to implement because of the problem of scale. This is particularly
so in the case of a country like India where the rural population is large, widely
dispersed and with varied socio-economic and natural endowments.
Because of these problems, adequate planning in launching and completing rural
development programmes is of great significance. Also, appropriate monitoring and
evaluation agencies and mechanisms are important in order to ensure that these
programmes meet their objectives in cost-effective ways. Indias experience in these
respects is quite instructive as we will discuss in the last unit of this block.

2.3.2 Community Development

The Community Development Programme (CDP) initiated in the 1950s intended to
involve popular participation in rural development. It laid emphasis on the building of
infrastructure in rural areas with the participation of rural communities.
The CDP sought to promote rural development in a phased manner in different parts
of the country. A block of villages was identified as the development unit and an
infrastructure of technical and administrative staff provided to implement development
programmes in different sectors. You will read about the CDP in Unit 4, which gives
24
Rural Development
Concept, Strategies and
Experiences

an assessment of the Indian experiences with this programme. But we may note here
that the CDP, however, did not lead to a noticeable impact on rural poverty because
those who were powerful in these rural communities were able to corner much of
the gains derived from this programme.

2.3.3 Integrated Rural Development

As a concept, the term integrated rural development has gained widespread
acceptance in spite of the fair amount of disagreement among rural development
experts in defining the concept. In spite of the disagreement, however, most schools
of thought emphasize certain basic elements of rural development. The rural economy
and social structure in most developing countries is characterized by widespread
poverty, poor health conditions, illiteracy, exploitation, inequitable distribution of
land and other assets, and lack of rural infrastructure and public utilities
(roads, communications, etc.). Clearly, this means that the problem requires an
approach that will take into account all these factors in devising a comprehensive
strategy to further rural development.
The concept of integrated rural development came into vogue with the need for a
multipurpose thrust to rural planning. It stresses that various facets of rural development,
which have an impact on rural life, are interrelated and cannot be looked at in
isolation. Thus, an integrated approach towards rural development is essential. The
various dimensions of rural life growth of agriculture and allied activities,
rural industrialization, education, health, public works, poverty alleviation and
rural employment programmes all form a part of an integrated approach to
the problem of rural development.

2.3.4 Local Level Participation in Rural Development

Since the late 1980s, local level participation has been given a new thrust in India.
The 73rd and 74th constitutional amendments in the early 1990s were of particular

significance in this regard. Also, many non-governmental organizations (NGOs) in

many parts of the developing world including India, are now working towards
promoting participatory development. The following are the main objectives of these
efforts:
a) Suppression of elitist elements in rural areas so that the process of development
is shaped actively by the poor;
b) Stressing the importance of the felt needs of people at the local level, and
harnessing their energy and vision in designing appropriate programmes;
c) The use of education as a tool in peoples perception towards change in rural
societies. Education is used so that it enables people to organize themselves to
change society.

2.4 RURAL DEVELOPMENT STRATEGIES

In order to foster sustained development in rural areas, different schools of thought
advocate different paths. It must be borne in mind that there is no single universal
means by which this can be universally attained. Different economic and social
systems have to take into account their own specificities in order to further rural
development.

2.4.1 Rural Development Policies

Each rural development strategy also has its own ideological roots upon which the
elements of the strategy have been based. A strategy consists of an ordering of
various policy parameters to attain the desired goals. Different strategies emphasize
different sets of policies in order to achieve their goals. However, there are certain
important policies that are common to most rural development strategies. These
policies are related to: land, technology, agriculture, employment, education, research
and extension, rural institutions and agricultural pricing.
Activities in rural societies, as you are aware, mostly relate to agricultural and other
allied activities. Needless to say, land is a very important question in this matter. As
is well-known distribution of land and other assets is very skewed in India, as the
large majority have small land holdings. This has a direct impact on the ability to earn
incomes in rural areas. Land reforms including the protection of the rights of tenants
is one of the primary means of transforming rural societies. It has also been contended
that productivity levels of small farms are often greater than those of large farms.
This is attributed to the fact that the small peasant puts in more intensive labour on
the small plot that belongs to him. Thus land reforms and a land policy that seeks to
provide distributive justice may also result in greater agricultural productivity. Therefore,
land policy is a crucial element in a rural development strategy.
Improvements in technologies available to rural societies can have a big impact on
them. On the one hand, it is essential that newer technologies are adapted to rural
societies and, on the other, it is necessary that existing technologies are extended to
rural areas. Technological planning, research and development are very vital ingredients
of rural development. In India, the agricultural sector is particularly vulnerable to the
ravage of the weather. Technological improvements can play a vital role in insulating
agriculture from the effects of the weather. Rural societies are also characterized by
large-scale unemployment on the one hand, and low productivity, on the other.
Therefore, care has to be taken when new technologies are introduced in rural areas.
Technologies appropriate to rural societies have to be chosen so that there is no
large-scale displacement of labour. A judicious balance between achieving higher

productivity and increasing employment opportunities to rural communities has to be

struck. Rural development strategies have to take this into account in formulating
their programmes.
26
Rural Development
Concept, Strategies and
Experiences

Given the extent of unemployment problem in rural India, the need for well-formulated
employment programmes can hardly be over stated. Such programmes can insulate
fluctuations in rural incomes on account of poor weather conditions as is the case
when the monsoon fails. As you are aware, agriculture employment is often seasonal.
Under these conditions, rural employment programmes can ensure a better spread of
employment through the year. The growth of non-agricultural activity within the
village economy can also relieve the pressure of population on the land.
Agriculture remains the main avenue for providing incomes and employment in rural
areas. Needless to say, agricultural planning is vital for rural development strategies.
The balanced growth of the agricultural sector can play an important role in creating
better conditions for those depending on this sector.
In India, the problem of illiteracy is particularly acute in rural areas. The lack of
education can act as a constraint in furthering rural development. Rural societies, as
you are aware, are also characterized by widespread inequalities in the distribution
of incomes and assets. The lack of education creates a situation in which this
problem is perpetuated. The spread of education, on the one hand, can enable the
rural poor to ensure distributive justice and, on the other, help them in actively
participating in rural development programmes.
Research and extension is a very important ingredient of rural development strategies.
Research enables furthering knowledge which is appropriate to rural cultures and
extension ensures that the gains are actually delivered to the target groups. Trained
staff are very important for any rural development programme since they actually
interact with the community for whom the programmes are meant.
Rural institutions need to be reformed and utilized for successfully carrying out rural
development. The institutional aspects of rural societies are often ignored when
strategies are formulated. The institutional structures such as panchayats need to be
nurtured so that there is popular participation in rural development. These structures
can act as powerful agents in actually implementing the development strategies.
Since rural settlements are spread out and are often isolated, they cannot be monitored
successfully from outside. Contrarily, local monitoring by institutions such as panchayats
can actually ensure that programmes are successfully implemented and that the
target group actually benefits from such programmes. You may be aware that, during
the last decade several states have taken significant steps in this regard. Rural
institutions such as banks and cooperatives can also play a vital role in rural
development. Unfortunately, during the period of economic reforms since the early
1990, these institutions have suffered significant setbacks.
The use of a price policy is also a crucial element in a rural development policy. First,
agricultural produce has to be priced in such a manner that the farmers enjoy
adequate returns. Secondly, the price policy through the use of subsidies can act as
a means of providing essential items of mass consumption to people residing in rural
areas. This is particularly essential for those below the poverty line. The spread of
the public distribution system through its network of ration shops in rural areas can

be used to solve this problem. This is particularly important during periods of poor
rainfall when rural incomes are adversely affected, which in turn has a negative
effect on consumption. Subsidies may have other formsthe form of input subsidies
to the agricultural sector, for example. This is particularly important in the case of
fertilizers, pesticides and seeds. Thus, the price policy can act as a useful means of
achieving rural development objectives. The recent thinking along the neo-liberal lines
has led to significant changes in the various aspects of the price policy, and it is quite
clear that rural India has been subjected to tremendous stress during the liberalization
era; some of it is on account of changes in some aspects of the price policy.
27
Rural Development
Experiences An Asian
Perspective

2.4.2 Types of Rural Development Strategies

Different strategies emphasize and give importance to different mixes of agrarian
relations, techniques of production and state policies in order to achieve the goals of
rural development. To illustrate some of the relevant issues, we may briefly discuss
the following rural development strategies, giving central importance to agrarian relations
for purpose of classification. These are:
i) A strategy based on collectivization of resources;
ii) A strategy based on regulated capitalist perspective;
iii) A strategy based on peasant agrarian perspective;
iv) A strategy based on Laissez-Faire or unregulated free-market capitalist
perspective.
Of course, these four do not constitute an exhaustive list and are simply illustrative.
Also, one can think of typologies that are different from the one mentioned here. With
these qualifications, let us briefly sketch the contours of these strategies.
Collectivization of rural assets (particularly land) is given utmost importance in the
first strategy. Private ownership of land is abolished so that not only are inequalities
in the ownership of land eliminated but also land use can be made more productive.
The latter is achieved because small plots of land can be consolidated so that largescale
cultivation can bring about economies of scale in agricultural production. Largescale
cultivation also raises productivity by creating possibilities for the use of modern
technology in the shape of tractors, harvesters, etc. This strategy was followed with
fairly good success in the Soviet Union, China and the East-European countries.
These countries were able to make sharp increases in production soon after they
initiated this strategy. However, for a variety of reasons, which are too complex to
be recalled here, the erstwhile socialist regimes have collapsed or changed course
dramatically and this strategy is not in operation anywhere currently.
The second strategy envisions a co-existence of a capitalist sector and a peasant
sector that gets some support and protection from the state. Any large-scale
redistribution of land or reconfiguration of land relations are ruled out. It is hoped that
the objective of rapid growth would be taken care of by the capitalist sector while
the peasant sector would address the problem of unemployment till the time the
nonagricultural sectors start growing at a rapid pace.
This approach to rural development has been criticized for not being able to reckon
with the fundamental contradictions in rural areas. It is pointed out that without
meaningful land reforms, this strategy can only have limited success, as rural inequalities
are ignored in this strategy. Rural elites, on the one hand, exercise control and prevent

changes that will bring about a change in the unequal distribution of assets (particularly
land), and on the other, corner a large part of whatever resources are pumped in from
outside to better the lives of the poor. An example of this is provided by the way
banking cooperatives have operated in India. A great portion of rural credit disbursed
through cooperative institutions has gone into the hands of those who are better off
and have the capacity to mobilize their own resources. Thus, it is pointed out that this
strategy avoids taking hard decisions to make a breakthrough in rural development
that can create conditions for the rapid development of rural areas.
The strategy based on the peasant agrarian perspective argues for thorough-going
redistribution of land and overhaul of land relations. It envisages strong support for
small peasant units, which are supposed to take care of the twin-objectives of growth
and employment. An extensive network of cooperative institutions, marketing facilities
etc is accorded critical importance in this strategy.
28
Rural Development
Concept, Strategies and
Experiences

Both in the second and the third strategies, it is envisaged that the state will play
important roles in promoting and strengthening the non-agricultural economic activities
in the rural areas, so as to ease the pressure of surplus labour on agriculture and to
facilitate the creation of decent livelihood options elsewhere in the long-run. Sure
enough, it is expected that a vibrant agricultural sector will itself generate strong
impulses for the creation of non-agricultural opportunities, but to harness such impulses
the State is expected to perform a whole range of important functions. Furthermore,
it is assumed that the problem of adequate infrastructure in rural areas will be
addressed by the state and also the investments in social sectors such as education,
health, etc.
Finally, we have what can be called a strategy based on unregulated capitalist
perspective. Such a strategy presumes that rich landowners will play the vanguard
role in rapid increase in agricultural output, by taking advantage of the economies of
scale and gradually the small cultivation units will disappear. It is suggested that the
state should not intervene in the expansion of the capitalist sector and there should
be no ceiling on ownership. Unfettered expansion of this sector is supposed to
provide a dynamism that will overall rural economy and the benefits from it, through
employment and increasing incomes, are supposed to percolate even to the lowest
strata. The issues of inequality and distributive justice are considered non-issues in
such a strategy. To the extent the state has a role, it is with respect to infrastructure,
but there too it is not viewed as the major actor necessarily.
This is so, not only because it ignores a number of development concerns, but also
due to its excessive and unwarranted optimism as regards growth and its percolation.
It should be obvious that whichever strategy of rural development one may opt for,
the core of it is an agricultural development strategy. If such a strategy has to
address the concerns of development highlighted earlier, it has to be broad-based. For
this a restructuring of land relations is obviously the key factor. We have already
referred to some of the other important elements earlier, but the core concerns of a
rural development strategy may be listed here as follows:
a) Agricultural research, extension, rural education and training programmes for
farmers form a part of institution building activities;
b) Infrastructure building activity related to the growth of irrigation, transport,

communications and health facilities;

c) Programmes to improve marketing facilities for the distribution of agricultural
inputs and implements;
d) Policies related to land tenure, agricultural output prices and taxation of agricultural
incomes.
Based on the experience of market economies as regards the approach towards
distribution of land, types of strategies for fostering the growth of the agricultural
sector can also be classified as uni-modal and bi-modal strategies. A uni-modal
strategy is one in which land holdings are equitably distributed. This strategy was
followed with tremendous success in the case of Japan, Taiwan and Korea. It seeks
to promote rural development through the use of thorough-going reforms in the
agricultural sector. Thus, because of the land reforms and the consequent even
distribution of rural assets, resources meant for the agricultural sector are also spread
evenly. This type of agricultural strategy creates a situation that enables rapid growth
of agricultural production with equitable distribution of incomes. This in turn not only
results in rapid rural development, but also provides an important basis for overall
economic development.
The bi-modal strategy for the growth of the agricultural sector attempts to increase
agricultural production without making attempts to drastically change the skewed
distribution of incomes and assets in rural areas. Many countries in Latin America
29
Rural Development
Experiences An Asian
Perspective

are examples of this type of strategy. In the case of this type of strategy there is no
attempt to bring about land reforms. A large number of small farms coexist with a
small number of large size holdings. The idea is to concentrate modern technology
and inputs to the latter and thereby achieve agricultural growth. Such a growth
pattern clearly ignores a whole range of developmental concerns and is also unable
to provide strong foundation for overall economic development.

2.4.3 Rural Development Planning

In a vast country like ours where the diversity in socio-economic features is very
great, one of the major problems facing rural development planners is the question
of aligning micro level needs to the overall planning process of the economy. The
needs and problems of various regions have to be taken into account when planning
for rural development. Since the area that is to be covered is vast, there are difficulties
in planning and monitoring rural development from the top. Consequently, the need
for evolving a system of multi-level planning came into being.
Planning came to acquire added significance with the realization that direct measures
to eradicate poverty can result only in limited gains. Subsidies, assistance and special
efforts for the uplift of the poor and under-privileged are obviously important, but they
must not be uncoordinated add-ons. In order to add to the productive base of the
economy over a long period, planning is absolutely essential.
Local area planning through panchayats can be a powerful means of bringing about
rural development. In a monolithic planning structure, those at the top often fail to
understand the specific requirements at the local level. Local planning also makes
accountability more immediate and identifiable. This can act as a means of preventing
leakages from the system.
Unfortunately, keeping in line with the sharp shift to neo-liberal thinking in policy

making since the early 1990s, the idea of planning itself has suffered a serious
setback. Sure enough, there were many problems with the policy regimes prior to this
shift, but the dilution of planning and leaving things to the market can hardly be
thought of as credible solutions.
55
Rural Development
Experiences An Asian
Perspective

UNIT 4 RURAL DEVELOPMENT IN INDIA

Structure
4.0 Objectives
4.1 Introduction
4.2 The Community Development Programme
4.3 Green Revolution Phase
4.4 Special Programmes for Area Development and Poor Farmers
4.5 Direct Attack on Rural Poverty (beneficiary approach)
4.6 Wage Employment Programmes
4.7 Current Status of the Rural Development Programmes and the Emerging
Challenges
4.8 Let Us Sum Up
4.9 Key Words
4.10 References and Suggested Readings
4.11 Check Your Progress Possible Answers

4.0 OBJECTIVES
After studying this unit, you should be able to:
describe the different approaches to rural development as they have evolved
over time;
explain the form, content and important features of the major rural development
schemes introduced during the last 5 decades;
critically comment on the rationale for and the context in which they were
formulated;
identify the strengths and the weaknesses of each programme; and

outline the emerging challenges and draw your own conclusions regarding the
possible appropriate approaches to rural development in the present economic
scenario and in the future

4.1 INTRODUCTION
Rural development has been one of the important objectives of planning in India since
Independence (see Boxes 1 & 2). Intervention of the Government in rural
development is considered necessary in view of the fact that a sizeable population
continues to reside in rural areas despite growing urbanization. It is also required, as
the market forces are not always able to improve the welfare of the rural masses
because of certain structural rigidities and institutional deficiencies existing in these
areas. As a result, there is a danger of large sections of the rural population to remain
outside the ambit of market driven growth processes. To enable the poorer sections
of the rural population to participate more effectively in the economic activities has,

therefore, remained the prime objective of Indian planning and the basic underlying
theme of rural development programmes.
This unit aims to familiarize you with the various approaches to rural development
in the post-Independence phase. We will cover the evolution of various programmes
and schemes from the 1st Five Year Plan to the 10th Five Year Plan (1951-2007), in
order to understand how these have been changed/modified over time to respond to
the emerging needs and situations.
56
Rural Development
Concept, Strategies and
Experiences

Box 1
What is rural development?
Rural development is utilization, protection and enhancement of the natural,
physical and human resources needed to make long-term improvements in
rural living conditions. It involves provision of jobs and income opportunities
while maintaining and protecting the environment of rural areas.
Box 2
Need for Rural Development at the Time of Indias Independence
At the time of Independence, India was predominantly an agrarian economy
with roughly 85 per cent of the population residing in rural areas and deriving
livelihood from agriculture and allied activities. Agriculture growth in the first
half of the 20th Century was merely 0.3 per cent per annum. Illiteracy was
as high as 84 per cent. Public health services were inadequate to face epidemics
such as malaria, cholera and small pox. The mortality rate remained high
at around 27 per 1000 in 1947.
Though agriculture was the mainstay of the people, the colonial government
took little interest in the improvement of cultivation practices except in the
case of export crops such as cotton, jute and tea. Bullock carts were the
common mode of transport, wooden ploughs were the common implements
used in cultivation, spinning wheels the common device in cottage industries,
thatched huts the common type of residence. The railway system was built
only for connecting the ports with production centres and import markets; all
other infrastructural facilities were lacking. There was an adverse impact on
the artisan sector under the British rule. The old crafts were left to languish
and decay - ill prepared to modernize. The extremely narrow base of
industrialization remained confined to a very few cities and states with little
linkages with rural areas. Exports comprised mainly the primary commodities
leading to transfer of cheap raw materials to the metropolitan cities of U.K.
The imports of finished products were out of reach for the common man, as
more than half the population was below the poverty line.
Check Your Progress I
Note: a) Use the space provided for your answers.
b) Check your answers with the possible answers provided at the end of
this unit.
1) Was there a need for Government intervention in rural development after
independence?
.................................................................................................................
.................................................................................................................

.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
57
Rural Development
Experiences An Asian
Perspective

4.2 THE COMMUNITY DEVELOPMENT PROGRAMME

The Community Development Programme (CDP) was the first major rural
development programme launched after Independence in October 1952 with the
following main objectives:
1) To secure total development of the material and the human resources in rural
areas;
2) To develop local leadership and self governing institutions;
3) To raise the living standards of the rural people by means of rapid increase in
food and agricultural produce; and
4) To ensure a change in the mind-set of people instilling in them a mission for
higher standards.
The CDP was conceived as an instrument to transform the social and economic life
of the village community as a whole cutting across cast, religious and economic
differences. Initially, it covered 55 projects with a wide range of programmes for
developing agriculture, animal husbandry, rural industries, education, housing, rural
communication, etc. It was, however, soon realized that covering the entire country
under CDP was not possible due to shortage of funds and personnel. The National
Extension Service (NES) was launched in October 1953 with a reduced number of
personnel and more modest financial provision, so that development work could
proceed on the basis of self-help efforts. The NES was initially launched for a period
of three years with the provision of 4.5 lakhs per block with stress on agriculture,
animal husbandry, rural communication and social education schemes. After three
years, the blocks covered under NES were to be converted into CDP blocks with
the provision of 15 lakhs for three years for more intensive development work in
agriculture and other activities such as cooperation, health and sanitation, rural industries,
housing, etc. It was presumed that the blocks covered in the first two phases would
have attained the desired self-sufficiency and therefore, the quantum of special
Government grants could be reduced. The major contribution in financial and technical
assistance came from the United States of America under a scheme of technical
cooperation. Funds were also drawn from the Central and State Governments to
meet the local expenditure on the implementation of the CDP.
The main achievements of the CDP programmes were as follows:
For the first time an organized administrative setup was established at the national,
state, district, block and village levels. Its developmental functions were totally
different from the revenue collection functions of the existing administrative
machinery.
Development was considered to be people centric.

Due recognition was given to the importance of planning and inter-disciplinary

approach to development.
Recognition was also given to recruitment of trained personnel and the introduction
of technical and technological inputs.
It introduced modern technologies in agriculture with a view to demonstrating
that they could perform better than traditional technology.
It resulted in the establishment of institutions such as agriculture credit societies,
primary schools, hospitals and dispensaries, maternity and child welfare centres,
etc.
Despite the above achievements, the CDP had some limitations:
58
Rural Development
Concept, Strategies and
Experiences

The facilities created under the programme benefited mainly the rich farmers
and could not bring any significant changes in the living standard of marginal
farmers and agricultural labourers.
The objective of self-reliance and peoples participation could not be achieved
given the inadequate attention to the development of responsive leadership.
The programme failed to bring about changes in peoples ideas, attitude and
outlook with the majority of people having no understanding of social education.
Efforts to promote rural industries and cooperatives did not take off.

Administrative weaknesses, bureaucratic red tape, problems of coordination, interdepartmental

rivalries, absence of clear cut functional responsibilities at various
levels were the other weaknesses of this programme.
The plan outlay for this programme was spread very thinly over a wide range
of projects, as a result of which the impact of the programme was quite limited.
Despite the above shortcomings, the CDP was instrumental in laying the foundation
for the development of rural economy and defining rural development strategies and
approaches. It recognized the need for investing in men/women and material as a
means of bringing about social change in rural areas.
Check Your Progress II
Note: a) Use the space provided for your answers.
b) Check your answers with the possible answers provided at the end of
this unit.
1) What were the main objectives of CDP?
.................................................................................................................
.................................................................................................................
.................................................................................................................

4.3 GREEN REVOLUTION PHASE

The end of the Second Five Year Plan (1956-61) was characterized by stagnating
agricultural production and emerging food shortages. The report of the Ford Foundation
Team 1959 (entitled Indias Food Crisis and the Steps to deal with it) outlined
the need for agrarian reorganization. The report also recommended that to increase
agricultural production, improved practices and services should be extended mainly to
the progressive farmers drawn from districts with the largest potential for immediate

and appreciable increase in production. The approach of rural development thus took
a new direction in the Third Five Year Plan (1961-66) with greater emphasis on
agricultural production. This led to a technocratic phase of rural development leading
to the introduction of the Intensive Agricultural Development Programme (IADP)
and the Intensive Agricultural Area Programme (IAAP) and the high yielding
variety programmes. The IADP was introduced in 1961 and the IAAP was launched
in 1964 on a pilot basis. The IADP was launched selectively in three districts and
later extended to 16 districts in 15 states. The programme concentrated mainly on
three components, namely high investments in agricultural production, higher prices
for agricultural produce and modern technological inputs. Additional BDOs and
extension officers per block were provided for specific areas. Once again, a major
draw back of the above programme was that it helped mostly the farmers with large
holdings in selected districts while poor farmers remained virtually uncovered.
59
Rural Development
Experiences An Asian
Perspective

Though IADP and IAAP contributed to good crop yields, the crop variety used in
these two programmes had a low response to fertilizers. At the same time, two
successive droughts in 1965-66 and 1966-67 increased the concern for feeding Indias
growing population. The slowing down of growth in the cropped areas also created
speculation and apprehensions in the minds of Indian planners regarding the possibilities
of increasing food production.
In 1963, adoption of high-grade seeds registered progress with the introduction of
Mexican varieties of wheat and Taichung native variety of paddy seeds. The
Mexican seed was found capable of producing up to 10 tons per hectare of irrigated
land compared with the 1.2 tons of yield from the existing varieties. Another
breakthrough came with the introduction of IR 8 Rice and High Yielding Variety
(HYV) of cereals such as Jowar, Bajra and Maize.
The HYV seeds were designed to be responsive to the use of water and fertilizers.
These seeds, however, necessitated the use of pesticides as they were critically
vulnerable to pests and weeds. The above inputs had to be administered in the
correct proportion to get the best results. The results of using of HYV seeds were
also dependent on the time when the inputs were administered. Any delay in the
application of inputs or inadequate or disproportionate use of inputs affected the yield
adversely.
The HYV package had an overall impact on the cost of cultivation. It significantly
increased the cost per unit of land but not necessarily the cost per unit of output. The
technology also resulted in a shift towards non-labour market with the use of
commercial inputs.
The green revolution by its very nature was a selective and target specific strategy.
It was primarily directed towards regions with favourable initial conditions, such as
irrigation facilities. Furthermore, the technology of wheat conservation was more
successfully adapted to Indian conditions than for rice and other food-grains. The
strategy was also initially directed towards the better off farmers who were able to
invest in the new technologies. Bigger farmers also had better access to credit for
purchase of inputs. The HYV package required more labour inputs as well during the
peak time of sowing and harvesting. This encouraged larger farmers to go in for
mechanization by using tractors and combined harvesters. Hence, the use of new

technology had both labour augmenting and labour displacing impact. In Punjab and
Haryana, the increase in the seasonal demand for labour was met through migration
of labour from the Central and the Eastern parts of the country.
The green revolution was intended to provide a breakthrough in agricultural production
and yield. However, experience shows that the growth rates of the production of all
crops, except wheat, fell during the initial 10 to 15 years of the green revolution.
Furthermore, the limits of expansion in arable land were also reached. The relative
stagnation of the yield of other crops accompanied by slowed down expansion of
areas under cultivation resulted in an aggregated rate of growth in food production
at a level less than 3% per annum. The main achievement of the green revolution
phase, however, was that the overall growth of agricultural output was prevented
from falling.
The uneven spread of the green revolution led to the growth of marketable surplus
in certain pockets of the country such as Punjab, Haryana and Western U.P. Marketable
surplus was made possible also through the output pricing policy which was designed
to make it attractive for farmers to sell part of their output in the market. At the same
time, a number of inputs required for the HYV package such as fertilizers, seeds,
pesticides, diesel (for tube wells and tractors) were subsidized so that farmers could
be encouraged to use these inputs. This led to accumulation of buffer stocks through
which the Government could implement its policy of public distribution system.
60
Rural Development
Concept, Strategies and
Experiences

The green revolution was initially confined to wheat and then it spread to rice. The
high yielding varieties could not be replicated with the same success in pulses and
oilseeds, nor in course cereals such as Maize, Jowar and Bajra. This introduced
certain imbalances in the nutritional intake, especially as the pulses are the main
source of proteins in the Indian diet. The relative increase in the prices of coarse
grains consumed mostly by the rural poor affected them adversely. The low yield of
oilseeds led to dependence on imports for meeting domestic requirements. However,
the spread of HYV technology to rice led to a wider coverage of area under the new
crop in the central and the eastern parts of India, which are known to be the most
poverty ridden. The reduction in rural poverty during the eighties and the nineties is
related, to some extent, to this factor.
Though the green revolution was scale neutral it was not resource neutral. The rich
farmers having better access to inputs such as irrigation and credit for purchasing
fertilizers, pesticides, etc, benefited more through the adoption of HYV packages
than the small and marginal farmers. The growing dependence on purchased inputs
coupled with the need to borrow money for financing the input requirements led to
growing vulnerability of small and marginal farmers to fluctuating yield and output.
The latter in turn were forced to supplement their incomes working as hired labourers,
an activity which eventually became their main source of income. Though real wages
increased in some pockets of the country, there was also a mitigating influence as
a result of the influx of migrant workers both seasonal and permanent from the more
backward areas.
Over the years, the yield of HYV seeds has tapered off as a result of the following
factors:
1) High prices of certain inputs resulting in lower consumption and imbalances in

input usage.
2) Excessive use of certain inputs having low user charges such as water
and electricity (for pumping water) resulting in water logging, problems of
salinity, etc.
3) Resistance of pests to chemical insecticides.
4) Ecological imbalance.
Despite the above shortcomings, however, the Green Revolution phase, especially the
period marked by the extension of the HYV technology to rice cultivation in the
Central and the Eastern parts of the country, has been one of the most important
factors responsible for poverty alleviation in some of the most backward regions of
the country. This, accompanied by growing buffer stocks of food-grains has enabled
the establishment of a food security system unrivalled the world over in its size and
range. The Green Revolution also exposed farmers to scientific agricultural practices
leading to commercialization of agricultural operations.
Check Your Progress III
Note: a) Use the space provided for your answers.
b) Check your answers with the possible answers provided at the end of
this unit.
1) What, according to you, is the long-term impact of the Green Revolution in
India?
.................................................................................................................
.................................................................................................................
.................................................................................................................
61
Rural Development
Experiences An Asian
Perspective

4.4 SPECIAL PROGRAMMES FOR AREA

DEVELOPMENT AND POOR FARMERS
You have seen in the previous section that intensive agricultural practices relying
heavily on water, chemical fertilizers and pesticides resulted in the degradation of land
over a period of time in some parts of the country. The pressure on land was also
aggravated on account of the drastic changes in the proportion of land utilized for
agricultural activities, urbanization and industrial development. At present, India
has only 2.4% of worlds geographical area, but supports 16% of worlds
population. It has 0.5% of worlds grazing area, but over 18% of worlds cattle
population. Given the inter linkages of crop production, live stock economy and
environment, development of waste and degraded lands has emerged as an important
issue in rural development.
The Drought Prone Area Programme (DPAP) introduced in 1973-74 was the first
major programme aimed at soil and moisture conservation in drought prone areas.
The programme was designed to combat the adverse effect of drought on crop
production, livestock and land productivity. The primary objective of the programme
was the promotion of overall economic development and mainstreaming of marginalized
vulnerable sections of the rural population.
The Desert Development Programme (DDP) was introduced in 1977-78 with the
objective to restore the ecological balance, conservation of soil and water to erase
the formation of desert through planning. The Integrated Waste Land Development

Programme (IWDP) was started in 1989-90 to develop Governments Waste Land

and common property resources (CPR), based on village/micro water shed plans. In
1993-94, the Technology Development, Extension and Training (TDET) scheme
was launched for demonstrating the technologies meant for developing wastelands.
The investment promotion scheme (IPS) was launched in 1994-95 to promote
participation of the corporate sector and financial institutions in the development of
non-forest wastelands. The scheme was restructured during the 9 th Plan and the
thrust was on the development of degraded land belonging to small and marginal
farmers including Scheduled Castes and Scheduled Tribes. The National Water
Shed Development Project for Rain Fed Areas (NWDPRA) was initiated in 199091 with the twin objectives of improving agricultural production in rain fed areas and
to restore ecological balance. For channeling greater resources to rain fed areas, the
water shed development fund (WDF) was set up in 2000-2001 at the NABARD with
a corpus of Rs. 200 crores. The fund was to be used for integrated water shed
development in 100 priority districts across 14 states in a phased manner through
participatory approach.
The programmes of land development were formulated for specific areas suffering
from water, soil and ecological problems. The major weaknesses in their implementation
are as follows:
Lack of peoples participation.

Unfamiliarity of field staff with participatory approaches.

Limited time for preparatory activity.
Lack of transparent criteria for selecting areas and villages.
Weak horizontal linkages among various agencies at the district levels.
Plethora of water shed programmes with different (sometimes conflicting)
guidelines and cost norms.
In view of the shortcomings of area development programmes, the Central Ministries
evolved common guidelines for the different schemes in order to bring about
62
Rural Development
Concept, Strategies and
Experiences

convergence of these schemes for greater impact. Efforts were also made to build
human resources and capabilities in local bodies and involve non-governmental
organizations (NGOs), community groups and extension functionaries. Financial
resources were broad based through inter institutional credit linkages. An offer was
made to build suitable institutions for long-term sustainable development.
The Planning Commission set up a committee in 1997 to prepare a 25 year perspective
plan for the development of rain fed areas. The plan made a strong plea for a
participatory approach through water shed development and the use of appropriate
technology in micro water shed. In addition, it emphasized agricultural diversification
in different zones and the need for a coordinated approach. The creation of a
Management Information System (MIS) under the National Management Information
System for the management of national resources is being given top priority under
the current approach to area development.

4.5 DIRECT ATTACK ON RURAL POVERTY

(BENEFICIARY APPROACH)
Alongside the area development schemes another stream of programmes were evolved
to directly benefit the poorer sections of rural population consisting mainly of marginal
farmers, agricultural and non-agricultural labourers. As already mentioned in the
previous sections the CDP as well as the IADP and the IAAP followed by the Green
Revolution failed to generate equitable benefits for the rural population leaving a
growing number of the rural population to subsist in poverty. It was, therefore,
thought fit that if rural poverty was to reduce there should be a more direct, beneficiary
oriented approach for rural development schemes. In 1971, therefore, two new
programmes namely the Small Farmers Development Agency (SFDA) and
Marginal Farmers and Agricultural Labourers Agency MFAL were introduced
on the recommendations of the All India Credit Review Committee (1969). The main
objective of these schemes was to benefit a numerically larger, economically poor
class of rural society. To implement these schemes specialized agencies were
constituted to act as catalysts in the process of rural development.
The role of SFDA was primarily to identify beneficiaries to enroll themselves as
members of cooperative and for them to avail themselves of the credit and inputs
supply facility that were provided at concessionary rates through these cooperatives.
The agencies provided liberal subsidies for buying production assets, like cattle, bullocks,
farm implements, etc. The strategy relied on financial incentives to the beneficiaries
and detailed identification mechanisms to prevent leakages. The main function was
to identify and assess beneficiaries to raise their living standard through improved
agricultural practices, better farming, multiple crops, soil conservation, adoption of dry
farming practices, water harvesting techniques and diversifying into subsidiary activities
like animal husbandry, horticulture, etc. The role of MFAL agencies was focused on
marginal farmers and agricultural labourers through the generation of employment
especially through the promotion of rural industries and subsidiary occupations.
During the 4th Plan (1969-74), SFDA scheme was started in 87 project areas and
MFAL for additional 81 areas. During the 6th Plan (1980-85), however, these two
schemes were merged with the Integrated Rural Development Programme (IRDP)
covering 1818 blocks all over the country.
According to the Project Evaluation Organization (PEO) Report of 1979, the
achievements of SFDA and MFAL were not encouraging. The average number of
days of employment for the participants of programmes were only 10 per year in
MFAL and 18 in SFDA. Only in 14% of the projects, the income of the beneficiaries
of such programmes exceeded Rs. 300. There was also scope for improving the
63
Rural Development
Experiences An Asian
Perspective

identification procedures for beneficiaries, as the better placed farmers were cornering
most of the benefits. The actual impact of assistance was, therefore, of doubtful
significance.
Seeking to improve upon the SFDA and MFAL schemes, while at the same time
retaining their essential flavour of benefiting a target group of poor beneficiaries
through provision of productive assets, the Integrated Rural Development Programme
(IRDP) was introduced in selective blocks in 1978-79. The programme was
universalized on 2nd October 1980. The basic objective of the programme was to
provide assistance in the form of subsidy and bank credit for purchasing assets

leading to the creation of self-employment opportunities among the identified Below

Poverty Line (BPL) families. Subsequently, Training of Rural Youth for Self
Employment (TRYSEM), Development of Women and Children in Rural Areas
(DWCRA), Supply of Improved Tool Kits to Rural Artisans (SITRA) and Ganga
Kalyan Yojna (GKY) were introduced as special programmes of IRDP to take care
of the specific needs of rural populations.
Evaluations of the IRDP show that the projects undertaken under the programme
suffered from numerous defects. These were as follows:
The level of investment required for raising the living standard of the poor family
above the poverty line was inadequate / sub-critical.
The projects were unviable on account of:
i) Lack of technological and institutional capabilities in design and execution;
ii) Illiterate and unskilled beneficiaries with no experience in managing an
enterprise;
iii) Indifferent delivery of credit by banks (high transaction cost, complex
procedure, corruption, one-time credit and poor recovery);
iv) Overcrowding of lending in certain projects such as dairy projects.
Other weaknesses of the programme included:
Poor targeting and selection of non-poor beneficiaries;

Absence of forward and backward linkages (veterinary and marketing facilities

for animal husbandry activities);
Lack of continuing relationship between borrowers and lenders;

Lack of desired linkages between IRDP and its sub-schemes, i.e., TRYSEM,
DWCRA, SITRA, etc.
The marginal impact of self-employment programme led to the constitution of a
Committee in 1997 to review self-employment and wage-employment programmes.
It was found that the various sub-schemes of IRDP were implemented as stand
alone programmes without desired linkages. This detracted from their effective
implementation. Consequently, on the recommendations of this committee, the IRDP
and allied programmes including the Ganga Kalyan Yojna (GKY) were merged into
a single programme known as the Swaran Jyanti Gram Swayamrozgar Yojana
(SGSY) in 1999. The SGSY was conceived as a holistic plan for encouraging micro
enterprise, organization of the rural poor into self-help groups with capacity building,
selection of activity clusters, infrastructure support, technology, credit and marketing
linkages as essential ingredients built into the programme. It also sought to promote
a network of agencies namely the District Rural Development Agencies (DRDAs),
line departments of State Governments, banks, NGOs and Panchayati Raj Institutions
(PRIs).
The SGSY recognizes the need to focus its key activity and the importance of activity
clusters. The programme also has in-built safeguards for the weaker sections, women
64
Rural Development
Concept, Strategies and
Experiences

and SCs/STs. It insists that 50 per cent of the benefits should flow to SCs and STs.
There is also a provision for disabled beneficiaries. The programme is credit driven

and the subsidy is back-ended. The credit and subsidy ratio is pegged at 3:1. The
subsidy is fixed at 30 per cent of the project cost subject to a maximum of Rs.7,500
per individual beneficiary for those in the general category and 50 per cent of the
project cost subject to a maximum of Rs.10,000 in the case of SCs/STs. In the case
of group projects, the subsidy is 50 per cent of the project cost subject to a ceiling
of Rs.1.25 lakhs. The new approach to self-employment has made a significant
contribution to the empowerment of beneficiaries in certain parts of the country as
revealed by evaluation studies.
Check Your Progress IV
Note: a) Use the space provided for your answers.
b) Check your answers with the possible answers provided at the end of
this unit.
1) What do SFDA and MFAL stand for? What were the main objectives of
these two schemes?
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
2) Why were wage employment programmes introduced and with what objective?
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................

4.6 WAGE EMPLOYMENT PROGRAMMES

Wage employment programmes form an important component of the anti-poverty
strategy aimed at providing employment opportunities during lean agricultural season
and also in times of flood and drought and other natural calamities. These programmes
fulfil the twin objectives of creating rural infrastructure to support further economic
activity and to create additional demand for labour market wages in times when there
is maximum unemployment.
The National Rural Employment Programme (NREP) and the Rural Landless
Employment Guarantee Programme (RLEGP) were started in the 6th and the 7th
Plans. These two programmes were merged in April 1989 with the Jawahar Rozgar
Yojana (JRY). The JRY was meant to generate meaningful employment opportunities
for the unemployed and the underemployed in rural areas through the creation of
economic infrastructure and community and social assets. Initially the JRY also
included the Indira Awas Yojna (IAY ) and the Million Wells Scheme (MWS). Both
these schemes were made two independent schemes in 1996.
65
Rural Development
Experiences An Asian
Perspective

The JRY along with its sub schemes resulted in the generation of increased wage
employment in rural areas, an upward pressure on real wages and the creation of
useful community assets. A major proportion of funds was spent on roads and
buildings. Unlike the IRDP, it is a self-targeting programme benefiting the lower
sections of the population. Over 47 per cent of the employment generated benefited

SCs/STs. The share of the landless labourers among the beneficiaries was 36 per
cent. However, its efficacy was limited by lower central allocations during the nineties,
increasing the cost of creating employment, thin spread of funds (given its universal
coverage) with many panchayats getting less than Rs.10,000 per annum.
A major proportion of JRY was renamed on 1st April 1999, as the Jawahar Gram
Samridhi Yojna (JGSY). It now became a programme for the creation of rural
economic infrastructure with employment generation as a secondary objective.
The Employment Assurance Scheme (EAS) was launched on 2nd October 1993 in
drought prone areas and basically tribal and hill area blocks. It was later extended
to all the blocks in 1997-98. The EAS was designed to provide employment in the
form of manual work in the lean agricultural season. The works taken up under the
programme were expected to lead to the creation of durable economic and social
infrastructure and to address the felt needs of the people. The scheme also provided
for the maintenance of assets created in the past under the scheme. Initially, the
scheme was demand driven, but since 1999 resources were allocated to states based
on the incidence of poverty.
The Food for Work programme was started in 2000-01 as a component of the EAS
in 845 drought affected areas of the country. The programme aimed at augmenting
food security through wage employment.
The wage employment programmes described above did benefit the rural areas
through the following activities:
Creation of rural infrastructure;

Creation of demand for labour;

Assurance for paying minimum wages;
Exertion of upward pressure on real wages;
Protection of the consumption patterns of the rural poor during natural calamities
including drought;
Strengthening of the finance of panchayats; and

Promotion of better coordination between the village community and the

government departments.
However, there were some areas of concern, such as:
Inadequate employment and thin spread of resources;

Violation of material-labour norms of 60:40;

Fudging of muster rolls;
Non payment of minimum wages / lower wages to women workers; and
Implementation of schemes through contractors who hired outside labour at lower
wages.
The above mentioned weaknesses led to revamping of the wage employment schemes
towards the end of the 9th Plan and the beginning of the 10th Plan as elaborated in
the next section.
66
Rural Development
Concept, Strategies and
Experiences

4.7 CURRENT STATUS OF THE RURAL

DEVELOPMENT PROGRAMMES AND THE
EMERGING CHALLENGES
Towards the end of the Ninth Five Year Plan (1997-2002) and the beginning of the
Tenth Five Year Plan, it became evident that the Centrally Sponsored Schemes
(CSSs) for rural development had proliferated enormously. In the terminal year of the
Ninth Plan there were as many as 360 CSSs and 2247 Central Schemes. Many of
these had similar objectives and targeted the same population. Certain generic
components, like information, education and communication (IEC) were repeated in
a number of schemes. This also led to multiplicity of the implementing machinery and
lack of synergy and coordination (see Box 3).
Box 3
Fallout of Multiplicity of Schemes
A large number of schemes having common objectives and meant for the same
beneficiary groups invariably get diluted in terms of impact. Excessive
compartmentalization of the executive into Ministries/Departments ensures that
such programmes are not only spread over a host of Ministries that encourages
a narrow sectoral approach to conceiving, formulating and implementing schemes,
but also prevents mutual synergies that are inherent in most social sector
programmes to benefit the plan initiatives. The duplication of delivery structures
and the procedural hurdles invariably curtail the flow of assistance to the targeted
beneficiaries.
In view of the shortcomings mentioned above a large number of rural development
schemes were rationalized and merged. Given the complementarity of the JGSY, the
EAS and the Food for Work programme, they were revamped and merged under the
new Sampoorna Grameen Rozgar Yojana (SGRY) w.e.f. September 2001. The
basic aim of the scheme continued to be the generation of wage employment, creation
of durable economic infrastructure in rural areas and the provision of food and
nutrition security to the poor. The SGRY has three streams, one to address the need
for rural infrastructure in all states, the other to provide special attention to areas
facing endemic poverty and a third stream to respond to natural calamities.
The benefit of amalgamating the wage employment programmes was that it led to
augmentation / consolidation of resources, thus addressing the problem of thin spread
of resources in the earlier programmes. Integration of the schemes is also expected
to result in better planning and monitoring of the projects in accordance with the
needs of the people and the norms laid down by the Government. The three streams
of SGRY would also be able to address the diverse needs of the rural areas at
different points of time with greater flexibility and efficacy.
We have already seen in one of the previous sections that the self-employment
programmes were also rationalized and integrated. After a review and restructuring
of IRDP and its allied schemes (TRYSEM, DWCRA and SITRA) the Swarnajayanti
Gram Swarozgar Yojana (SGSY) was launched in April 1999. This is the only selfemployment
programme currently being implemented in rural areas. The objective of
SGSY remains to bring the poor above the poverty line by providing them income
generating assets through bank credit and Government subsidy.
The success of the rural development programmes and anti-poverty strategy can be
gauged from the decline in rural poverty levels from 37.27 per cent in 1993-94 to
27.09 per cent in 1999-2000. In absolute terms, the number of rural poor fell below

67
Rural Development
Experiences An Asian
Perspective

the 200 million mark for the first time since 1973-74. However, despite the continuing
efforts of the Government to address the challenges of rural development, the incidence
of unemployment and underemployment still persists along with poverty. Land and
forest degradation in the rural areas and over-exploitation of groundwater is seriously
threatening sustainability of food production. Owing to resource constraints at the
Centre, states public investment in agriculture in general, and in irrigation in particular,
has fallen. Development and dissemination of agricultural technologies, diversification
of agriculture into animal husbandry including dairying and poultry, development of
processing and marketing arrangements, rural connectivity, etc. are the other areas
which will demand greater attention in the coming years while formulating new
strategies for rural development. Some of the concerns seen while chalking out future
strategies are highlighted in Box 4.
Box 4
Issues in Rural Development Chalking Future Strategies
Avoiding Multiplicity of Objectives, Programmes and Sub-Programmes:
Multiplicity of objectives and large numbers of programmes and sub-programmes
diffuse focus, cause a strain for managerial resources, render monitoring and
evaluation difficult and lead to sub-optimal utilization of resources. There is,
therefore, need to ensure convergence among the sub-programmes around a
few, clearly identifiable themes and objectives, and also geographically.
Partnerships for Synergy and Long-term Sustainability
Partnerships and alliances need to be built at several levels in order to bring
about synergies in collaborative efforts and long-term sustainability of
programmes. Special attention needs to be given for building closer partnerships
with the State Governments, District Administrations, Panchayati Raj Institutions
(PRIs) and NGOs. The strengths of the voluntary sector, namely their advocacy
skills, organizational skills and being closer to the people should be used to the
advantage of all concerned.
Approaching Development Holistically
A uni-dimensional intervention will not ensure results in the long-term. It is,
therefore, essential to adopt a holistic approach to rural development with suitable
inter-sectoral linkages for maximising impact.
Peoples Participation
People must feel a sense of ownership of such plans/programmes and must
participate and even contribute towards them. The trend of expecting the
government to do everything for them must come to an end. Programmes and
schemes where people participate have been known to be much more successful.
This could be done by involving the people through PRIs, local bodies, self-helpgroups,
user groups, associations, trade unions, etc.
Right to Information
To a great extent, the task of the development administration would become
easier if steps are taken to make information available, as a matter of right, to
the citizens. The right to information is so important, because very often people
do not even know what programmes and schemes are available and what they
are entitled to. Also, policy and procedural reforms can be effective only when

people know that such changes have been made.

68
Rural Development
Concept, Strategies and
Experiences

Social Mobilization
People should not develop over dependence on programmes sponsored by the
government. Instead, they should learn to rely more on self-help-groups. While
designing programmes and working out the time schedule for their implementation,
it should be kept in view that social mobilization is a complex process and
requires time.
Monitoring and Evaluation
In the absence of adequate monitoring and evaluation of rural development
schemes, there could be a considerable amount of wastage and leakages leading
to a less than optimal use of the scarce public resources in the development
process. The existing mechanisms for monitoring and evaluation have to be
adequately used by the agencies responsible for implementing various programmes
and effort has to be made to improve and strengthen these mechanisms over
time.
Check Your Progress V
Note: a) Use the space provided for your answers.
b) Check your answers with the possible answers provided at the end of
this unit.
1) Why were various schemes under the self-employment programme merged
together and what are the objectives of the current self-employment
programme?
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................

4.8 LET US SUM UP

This unit must have given you some idea of the challenges faced by the country in
the field of rural development and the different approaches evolved to meet these
challenges since Independence. As you already know by now, the first major rural
development programme launched by the Government was the Community
Development Programme (CDP). This programme approached the problem of rural
development from a holistic perspective of bringing about overall economic and social
change in the community at large. The programme created the necessary administrative
infrastructure and institutions for the implementation of future rural development
schemes but could not tackle the problem of stagnating agricultural yields and emerging
food shortages.
Responding to the problem of food shortages in the mid-sixties the emphasis of rural
development shifted to area intensive programmes for implementing new technology
in agriculture to enhance crop production. The Green Revolution technology supported
by agricultural price policy and input subsidies, both explicit and implicit, succeeded
in not only overcoming food shortages but in generating food-grain surplus as well.
The benefits of both CDP and the Green Revolution, however, were far from equitable.
69

Rural Development
Experiences An Asian
Perspective

Rural poverty continued to persist and increase in absolute numbers. This led to the
formulation of target/beneficiary oriented schemes in the seventies and the eighties
with the objective of creating self- employment opportunities for those below the
poverty line. Attention was also given to wasteland development, creation of community
assets and rural infrastructure through area based and infrastructure development
programmes which generated wage employment as well.
You know already that the sustainability of some of the rural development strategies
including the price and subsidy policy for agriculture came to be doubted in the early
nineties when the country faced an acute resource crunch and embarked on new
economic reforms. By the turn of the millennium, most of the rural development
schemes were reviewed and modified in order to make them more effective.
There is now growing evidence of significant reduction in rural poverty that took
place during the eighties and the nineties. It can be attributed in no small measure
to rural development interventions of the Government. New challenges, however,
have emerged demanding further attention. This only confirms that rural development
is an on-going process requiring new approaches to be evolved in tune with the
changing requirements. By now you must have a fair idea of the major issues in
implementing rural development strategies and the areas that require further attention.

4.9 KEY WORDS

Resource Neutral : When variation in resources is not an impediment in
achieving particular outcome.
Scale Neutral : When variation in skills is not an impediment in achieving
a particular outcome.

4.10 REFERENCES AND SUGGESTED READINGS

Annual Reports of the Ministry of Rural Development and Poverty Alleviation 19922000 Government of India , New Delhi.
Five Year Plans (1st -10th), Planning Commission, Government of India, New Delhi.
Fifty Years of Rural Development in India, (ed.) NIRD, Hyderabad, 1998.
India Vision 2020: Planning Commission, Government of India, Report of the Committee
on India Vision 2020 (Chairman: S.P.Gupta), Planning Commission, Government of
India
Rural Development - Some Facets, (ed.) NIRD, Hyderabad 1979
Verma, S C ; Direct Attack on Rural Poverty, Ministry of Rural Development, Delhi,
1980.
Working Group on Poverty Alleviation Programmes for the 10 th Five Year Plan,
Planning Commission, Government of India, New Delhi.

4.11 CHECK YOUR PROGRESS POSSIBLE ANSWERS

Check Your Progress I
1) There is need for government interventions in rural development even today,
mainly because a large section of the population continues to reside in these
areas. Furthermore, despite progress in various fields large tracts of rural areas
lack basic infrastructure facilities and employment opportunities necessary to
bring people above the poverty line. Growing pressure of population has resulted
in adverse landman ratio, thereby depleting natural resources and raising doubts
about the sustainability of the development process itself. Weak institutions have

implications for effective governance. Unless a larger segment of the rural

population makes a productive contribution to the growth process, it may retard
the development prospects of the country. Given the large spillover effects of
public sector investment the need for government intervention is strengthened
even further.
Check Your Progress II
1) The main objectives of CDP were:
Secure total development of the material and human resources;

Develop local leadership and self-governing institutions;

Raise the living standards of the rural people;
Bring changes in the mental outlook of the people concerned.
Check Your Progress III
1) The green revolution was intended to provide a breakthrough in agricultural
production and yield. It was primarily directed towards regions with favourable
initial conditions. The main success was achieved in the wheat growing regions
in the North West of the country. However, by its very nature, it was selective
and a target specific strategy. The experience shows that the growth rate of
production of all crops, except wheat, fell during the initial 10 to 15 years of the
green revolution period. Finally, the uneven spread of the green revolution also
led to growth of marketable surplus in certain pockets of the country.
Check Your Progress IV
1) SFDA stands for Small Farmers Development Agency and MFAL stands for
Marginal Farmers and Agricultural Labourers Agency. The main objectives of
these two schemes were to benefit economically poor classes of the rural
society and to act as catalysts in the process of rural development.
2) The wage employment programmes were introduced to provide employment
opportunities to those below the poverty line during the lean agricultural season
and also in times of floods and droughts and other natural calamities. The main
objectives of these programmes were to create rural infrastructure to support
further economic activity and also to create additional demand for labour in
times when unemployment is at its peak.
Check Your Progress V
1) There were a number of self-employment schemes having common objectives
and meant for the same groups of beneficiaries. The impact used to get diluted
in view of excessive compartmentalization in the process of implementation. In
order to avoid this and also the duplication of delivery structures, these schemes
were restructured and merged into one scheme called Swarnajayanti Gram
Swarozgar Yojna. The basic objective of this, the only self-employment
programme, is to bring the rural poor above poverty line by providing them with
income generating assets through bank credit and government subsidies.

2
MRD-101

Rural Development:
Indian Context

Rural Development Concept,

Strategies and Experiences
Indira Gandhi National Open University
School of Continuing Education
29

UNIT 3 COOPERATIVES IN RURAL

DEVELOPMENT
Rural Credit and Banking

Structure
3.0 Objectives
3.1 Introduction
3.2 Meaning and Definition of Cooperation
3.3 Principles of Cooperation
3.4 Evolution of Cooperatives in India
3.4.1 Pre-independence Scenario
3.4.2 Post-independence Scenario
3.4.3 Five-year Plans (Second to Fifth)
3.4.4 Five-year Plans (Sixth to Ninth)
3.4.5 10th Five-year Plan and Cooperatives

3.5 Growth and Development of the Credit Cooperatives

3.5.1 Structure of the Cooperative Credit System
3.5.2 Primary Agricultural Cooperative Society (Production Credit)
3.5.3 District Central Cooperative Banks
3.5.4 State Cooperative Banks
3.5.5 State Cooperative Agriculture and Rural Development Banks

3.6 Growth and Development of the Non-Credit Cooperatives

3.6.1 Cooperative Marketing
3.6.2 Processing Cooperatives
3.6.3 Cooperative Sugar Mills
3.6.4 Dairy Cooperatives
3.6.5 Fertiliser Cooperatives
3.6.6 Industrial Cooperatives

3.7 Regional Imbalances in the Growth and Development of Cooperatives

3.8 Assessment and Evaluation
3.9 Let Us Sum Up
3.10 Suggested Readings and References
3.11 Check Your Progress Possible Answers

3.0 OBJECTIVES
After studying this unit you should be able to:
define cooperation and principles of cooperation;

trace the evolution of cooperatives in India;

compare the characteristic features of cooperative enterprise with other
enterprises;
review the progress and problems of cooperatives in their functioning and their

potential in rural development; and

compare the relevance of cooperative organizations in the mixed economy
scenario.

3.1 INTRODUCTION
India lives in villages where most of the inhabitants are small, marginal, landless
farmers and artisans. After independence, agriculture was identified as one of the
30
Rural Development
Administration

thrust areas for rural development. Even at that time, the policy makers had visualized
the fact that without peoples participation and institutional support, the rural development
programmes could not be pushed through. Considering the situation of the rural
sector, the importance of the panchayati system and cooperatives was recognized
and these institutions were assigned specific roles to play. The main task assigned to
these institutions was to work for community development, to eradicate rural poverty,
to reduce inequalities and to eliminate privileges. Since the 1960s, a number of rural
development programmes, such as the Panchayati Raj and land reforms or the Green
and the White Revolutions through technical and cooperative missions, have been
initiated and implemented. In a village, the cooperative society enjoys a focal position
as an important socio-economic institution. The objective of the cooperative society
is to provide services to its members (i.e. the rural community) and these services,
which you will study in later units, are multifaceted. Although the membership of
cooperatives does not include the entire population of a village, it does include a major
part and a broad spectrum of the rural population. Besides, in implementing any
community development schemes by other agencies (for example, the removal of
illiteracy, making people conscious of their environment, health care, poverty alleviation,
water management, etc.), the involvement of cooperatives is envisaged to seek
consensus of the village community, as the cooperatives comprise a majority and a
cross section of the village community. Moreover, a cooperative is a legal entity. It
has institutional networks and infrastructure facilities at the grass roots level. It is also
involved in social welfare and social protection activities of the rural people, such as
village adoption, insurance, promotion of schools, hospitals, development of social
forestry, etc. It has also generated rural employment for large sections of rural people
through its agro-ancillary activities. In what follows, you will study in detail about the
emergence of cooperatives, cooperative principles and their values, structure, functions,
institutional networks, types of activity and finally you work through a review of the
performance of cooperatives in rural development.
The main aim of this unit is to familiarize you with the concept of cooperatives, their
principles, values, policies and the role they have played in the development of
agriculture and rural employment. Besides, it also aims at acquainting you with the
various types of cooperatives operating in India and their socio-economic goals and
development plans for the welfare of the rural people.

3.2 MEANING AND DEFINITION OF COOPERATION

The word cooperation has many meanings, but in common discourse it means
working, living and thinking together. In our existing socio-economic context,
however, we need to define it somewhat differentlyCooperation is a form of
organization wherein persons voluntarily associate with each other as human beings
on the basis of equality for the promotion of mutual economic interests.

As per the definition given by the International Labour Organization (ILO), a

cooperative society is an association of persons, who assemble for their common
cause and work together voluntarily on democratic lines. According to the definition
given by the International Cooperative Alliance(ICA), a cooperative is an
association of persons united voluntarily to meet their common economic, social and
cultural needs and aspirations through a jointly owned and democratically controlled
enterprise. It means that cooperatives are based on the values of self-help, self
responsibility, democracy, equality, equity and solidarity in the tradition of their founders.
Cooperative members believe in the ethical values of honesty, openness, social
responsibility and caring for others. Therefore, the cooperatives are different from
the private enterprise in their forms of ownership, control, distribution of profits,
values of equality, equity, solidarity and social responsibility.
31
Rural Credit and Banking

Check Your Progress I

Note:i) Write your answer in the space provided.
ii) Check your answer with the possible answer provided at the end of
the unit.
1) What are the common features of Cooperation in view of the definitions
given by ILO and ICA.
..............................................................................................................
..............................................................................................................
..............................................................................................................
..............................................................................................................
..............................................................................................................

3.3 PRINCIPLES OF COOPERATION

The principles and the guidelines by which cooperatives put their values into practice
are:
i) Voluntary and open membership: It means that the membership shall be
voluntary and available without any restrictions/discrimination on the basis of
gender or social, political or religious affiliations. All the members can make use
of the services of their cooperative and willingly accept the responsibilities of
membership.
ii) Democratic member control: Cooperatives are democratic organizations
controlled and managed by their own members. The primary members of
cooperative societies enjoy equal rights of voting (one member one vote) and
participation.
iii) Members economic participation: Economic results arising out of the
operations of the society belong to the members and shall be distributed among
them proportionately according to the size of their transactions with the society,
while a part of the funds will be kept aside for specified purposes as per the
provisions.
iv) Autonomy and independence: Cooperatives are autonomous, self-help
organizations controlled by their members. If they enter into agreements with
others including governments to raise capital from external sources they do so
on terms that ensure democratic control by their members and maintain their
cooperative autonomy.
v) Education, training and information: Cooperative provide education and/or

training for their members, elected representatives, managers and employees so

that they may contribute effectively to the development of their cooperatives.
vi) Cooperation among cooperatives: All cooperative organizations, in order to
best serve the interests of their members and community, shall actively cooperate
in every practical way with other cooperatives at local, national, and international
levels.
vii) Concern for community: Cooperatives work for the sustainable development
of their communities through policies approved by their members.
32
Rural Development
Administration

3.4 EVOLUTION OF COOPERATIVES IN INDIA

After having studied the concept, values, principles and functions of the cooperative
enterprise, it will be appropriate to study the emergence of cooperatives in
contemporary India, in particular the way they have evolved since independence.
Before we do so, however, let us have a brief account of the pre-independence
scenario.

3.4.1 Pre-independence Scenario

In India, the cooperative movement began its work with the objective of making
breakthroughs in the stagnation of the poorer classes who were heavily indebted and
were fully in the grip of Sahukars. With the enactment of the 1904 Act, the first
cooperative credit society was registered on 8 th May, 1905 in the then state of
Bombay in the Gadag Taluka of the Dharwad district under the name of Kanginhal
Agriculture Credit Cooperative. By 1911, the number of registered societies rose to
5321 with a membership of 305,060. Subsequently, the 1904 Act was replaced by
another passed in 1912, with a broader base, opening registration to non-credit
cooperatives also. The Reform Act was passed in 1919, when cooperatives became
a state/provincial subject. The decade from 1919 to 1929 was a period of unplanned
expansion and some re-organization. During the period 1930/31-1937/38, the movement
under went a number of changes. This period is known for the great depression,
which was a major setback for the cooperatives in India, mainly due to our backward
economy and the disturbed political atmosphere. The arrears of the loans of
cooperatives rose from 39% in 1930-31 to 63% by 1937-38. But the Second World
War (1939 to 1946) came as a boon for agriculturists, as the prices of agricultural
commodities rose significantly, and the cooperatives revived. The repaying capacity
of the farmers increased significantly, they were able to clear off their old debts and
the arrears came down from 63% in 1937-38 to 39% in 1945-46. This period is
considered the recovery period.

3.4.2 Post-independence Scenario

After the independence of India in 1947, the country adopted the policy of planned
economic development for establishing an integrated and just society, providing individual
liberty, equality of opportunity and a basic economic minimum for all. Cooperation
was accepted as an effective and important instrument for achieving the objectives
of rural economic development.
The first five-year plan (1950-51 to 1955-56) emphasized that all agricultural families/
households may join as members of primary agriculture cooperatives. In turn, these
societies would take care of their needs and safe guard the interests of farmers and
artisans. During this plan period, the number and membership of cooperatives went
up from 115,462 and 5.2 million in 1950-51 to 159,939 and 7.8 million by 1955-56

respectively.
In the year 1951, the RBI set up a committee known as the All India Rural Credit
Survey Committee and its report was published in 1954. At that time, the main thrust
was on the viability concept. It was observed that only 20% of the cooperatives
were found to be economically viable due to their limited operations and it was
recommended that large size cooperative societies should be organized to procure
more business. It was also recommended that a government, with a share capital to
the extent of 51%, be allowed to become a partner in cooperatives. Beside, it was
recommended that the credit delivery system be three-tier for short and medium
term loans, and long-term credit be arranged through land development banks. Also,
the need for an effective cooperative training system to develop a sound network
33

of institutions from the village to the national level was emphasized in order to guide

Rural Credit and

Banking

and implement the rural programmes effectively. Fortunately, the Government accepted
all the recommendations of the committee.

3.4.3 Five-year Plans (Second to Fifth)

The broad objective of the second five-year plan (1956-57 to 1960-61) was to evolve
a socialistic pattern of society. The plan envisaged building a cooperative sector as
a part of the scheme of planned development. Subsequently, the National Cooperative
Resolution 1958 recommended that credit and marketing should be linked and it was
resolved to organize service societies instead of re-organizing large sized societies at
the village level. This subject was referred to the Vaikunth Mehta Committee, which
having studied both the aspects, recommended the middle path, i.e. the organization
of medium sized societies for them to be viable and manageable. The third five-year
plan concentrated on workers, consumer cooperatives and employment generation.
Accordingly, eight different types of committee were set up. The need for the
development of cooperative activity was emphasized in the fourth plan (1969-70 to
1973-74). During this period, the education and training setup was strengthened. Also
the All India Rural Credit Review Committee was appointed to review the rural
credit supply in the context of the fourth plan. On the basis of its findings, the
committee emphasized (a) re-organization of rural credit, (b) the need for relevant
primary education, (c) setting up of SFDA, MFDA, and IADP agencies and (d)
ensuring adequate flow of credit for agriculture through cooperative and commercial
banks. The fifth five-year plan recognized the cooperative society to be an important
institutional framework for the development of weaker sections, particularly for providing
relevant inputs and the management of the public distribution system. In 1977, the
policy resolution of 1958 was reviewed in the context of the political, social and
economic changes that had taken place during the period. The resolution, now adopted,
recommended that a) a strong and viable cooperative system should be put in place
for rural development, b) the Consumer Cooperative Movement should be developed
to strengthen the public distribution system, c) cooperatives should be built to function
as one of the major instruments of decentralized labour-intensive and rural oriented
economic development, and d) professional management of cooperatives should be
put in place as early as possible.

3.4.4 Five-year Plans (Sixth to Ninth)

The main emphasis during these plans was on a) the strengthening of the primary
agriculture cooperatives (PACS) to act as multi-purpose societies to meet the diverse

needs of their members, b) the development of professional manpower, and c) a reexamination

of the existing cooperative policies and procedures in order to ensure
that the programmes actually improve the economic condition of the rural poor.
During this period, a committee to review the arrangements for the institutional credit
for agriculture and rural development (CRAFICARD) was constituted. The seventh
plan emphasized the need for cooperatives to a) increase food production, b) generate
employment avenues, and c) increase productivity generally. This pointed to the
importance of diversifying activities and also the consolidation of the efforts of the
cooperative movement. During the Ninth plan period, it was emphasized that greater
autonomy should be given to all the cooperatives. As a result, the Multi State
Cooperative Societies Bill was passed and a new Act 2002 came into force to
provide greater autonomy to the cooperatives. The other achievement of this period
was that a new cooperative policy was declared. Among other things, it recognized
the contributions of cooperatives and also pointed to their future role in rural
development.
34
Rural Development
Administration

3.4.5 10th Five-year Plan and Cooperatives

The current, i.e. the 10th Five-year Plan has shouldered greater responsibility in
relation to cooperatives for purposes of:
a) actualizing the vast potential of agriculture,
b) promoting more value additions to safe guard the interests of farmers,
c) transferring technology to cooperatives to bring them at par with other sectors
of economy,
d) identifying new areas for cooperative action, such as insurance, tourism, health,
irrigation, electricity cooperatives, etc., and
e) improving the social and economic health of the rural people.
Check Your Progress II
Note: i) Write your answers in the space provided.
ii) Check your answers with the possible answers provided at the end of
the unit.
Tick mark the appropriate box:
1) a) The first cooperative society in India was registered in
i) 1904 ii) 1882 iii) 1885 iv) 1905
b) Under which Act did the cooperatives become a State/provincial
Subject?
i) 1904 ii) 1919 iii) 1912 iv) 1922
c) Who appointed the All India Rural Credit Survey Committee?
i) GOI ii) NABARD. iii) Planning Commission iv) RBI

3.5 GROWTH AND DEVELOPMENT OF THE CREDIT

COOPERATIVES
Let us now study the mechanism of the credit cooperatives and their delivery system.
Since cooperatives in India constitute a state subject, the primary responsibility for
the development of cooperatives vests in states. Cooperative credit has been classified
into three category: a) Production Credit, i.e. short and medium term credit,
b) Investment credit, i.e. long-term credit and c) Urban credit for urban areas. These
credit systems are managed by different types of institution. The growth of the

cooperative credit disbursement in recent years has been depicted through a graphic
presentation as follows.
35
Rural Credit and Banking
Year 2001-2002 Value in Million Rupees
Names of Cooperatives No. of Total Share
CREDIT COOPERATIVES Societies Membership Capital
Total Capital
Primary Agrl.. Cooperative Societies 100604 109832118 361943.59 4408333.25
Primary Cooperative Agri. Devp. Banks 730 7181650 68019.52 926090.17
Primary Urban Cooperative Banks 2038 17684798 214489.56 9102197.35
Employees Credit Societies 47491 22448844 292267.24 1343646.79
CREDIT TOTAL 150,863 157147,410 936,719.91 15780,267.56

3.5.1 Structure of the Cooperative Credit System

By and large, the structure of production credit is a three-tier system comprising the
State Cooperative Bank at the state level, the District Cooperative Bank at the
district level and the Primary Agriculture Cooperative Society at the village level. The
investment credit structure has two tiers, i.e. the State Cooperative Agricultural and
Rural Development Banks at the state level and Primary Agricultural Cooperative
Rural Development Banks at the grass roots level. But wherever there is no structure
for providing the investment credit, it is rooted through the production credit system
as explained in the diagram below. Beside, there are national level Federations which
take care of policy, planning and promotional works in this case. The refinance to
cooperative banks comes largely from the National Bank for Agricultural and Rural
Development (NABARD).
AGRICULTURAL CREDIT DISBURSEMENT BY
COOPERATIVES
54033
59046.4
80918.1
87589.8
121674.9
142947.8
148390.4
140845.3
217782.4
225939
270750
90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-0k 1-2

0
50000
100000
150000
200000
250000
300000
TL
ST 39318.244029.260186.667292.295173.2107895.2 93280 107400 157897 166803 208151
MT 7470.3 5703.9 9621 7814.812773.919425.6 36160 32270 11924 34176 34237
LT 7244.5 9313.311110.912482.813727.815626.9 18950 16934.223979.524957.128361.8
Cooperatives in Rural
Development

36
Rural Development
Administration

3.5.2 Primary Agricultural Cooperative Society (Production

Credit)
The first Primary Agricultural Credit Cooperative Society was registered in 1905 at
Dharwad in the former state of Bombay. By March 2003, the number had increased
to 106,004 with a total membership of 109 million in the country. In 1960-61, the
number of such societies was 2.12 lakhs, but the process of re-organization brought
this number down considerably. Almost cent percent of the villages and 71% of the
rural households have now been covered by these societies. Initially, the PACS used
to provide only short and medium term credits (i.e. crop loans) to farmers, but after
they were granted the status of multi-purpose societies, the PACS extended the
number of services, which include distribution of inputs like fertilizers, certified seeds,
insecticides, consumer goods, storage facilities and marketing of agricultural produce
to farmers at the village level. By 2001-2002, the total loans advanced by these
societies amounted to Rs. 247.38 billion to 42.69 million borrowers. These societies
are also actively involved in the public distribution system and procurement of wheat,
cotton and jute on behalf of the Government. Nearly 58% of the PACS are involved
in consumer business and the distribution of inputs. During the year 2001-2002, these
societies marketed 132.3 billion rupees worth of agricultural produce and also distributed
consumer goods worth Rs. 9127.4 million. During the mid review period of the fourth
five-year plan, it was emphasized that there were SFDA, MFDA and Tribal areas
where PACS could not meet their requirement of inputs and seeds, nor market the
tribal produce easily. As a result, Farmers Service Societies were organized in the
SFDA/MFDA areas and LAMPS in the tribal areas to meet their needs in their
respective areas. But later on, in 1989, Khusro Committee reviewed the viability
norms of primaries and recommended that to materialize the viability of PACS, these
societies should be transformed into multi-purpose institutions. The recommendations
were accepted. Accordingly, PACS, LAMPS and FSS became multi-purpose institutions
and are now involved, besides the credit services, in the distribution of inputs, consumer
goods and also in the marketing of agricultural produce. They are, however, operating
under differing nomenclature in their respective areas. Even after re-organization,
nearly 36% PACS are not viable. The main problems are low participation of members
in the business, high overdue amounts, lack of professionalism and little transfer of
technology.
INVESTMENT CREDIT
STATE
COOPERATIVE
BANKS- 30
CENTRAL
COOPERATIVE
BANKS-368
PRIMARY AGRL.
COOPS- 100,604
STATE
COOPERATIVE
AGRL. &RURAL
DEVP.BANKS-19
PRIMARY COOP.
AGRL.RURAL
DEVP. BANKS-755

PRODUCTION CREDIT

Production Credit
Disbursed = Rs.
208,151.7 million
Rs. 34,237 million
- STRENGTHENING CAPITAL BASE

BY SAVINGS, SUBSCRIPTION
- KISAN CREDIT CARDS FOR FREE
ACCESS OF MONEY

- BUILDING RESERVES
- LENDING POLICIES ARE BEING
REVIEWED INTEREST LOWERD
FROM 13% TO 9%

Refinance
AGRLCOOPERATIVECREDITSYSTEM

NABARD
37

3.5.3 District Central Cooperative Banks Rural Credit and Banking

The District Central Cooperative Banks are the nodal banks for production credit at
the district level. By 2002-2003, there were 368 DCCBs, which operated through
12,763 branches. These banks provide finances to Primary Agriculture Cooperative
Societies at grass roots level. The borrowings from these banks flow largely from
NABARD, which accounted for 87% of the total borrowings from the DCCBs by
the end of March 2002. The rest of the finances come partly from the respective
state governments (10.8%) and partly from the commercial banks (3.5%). The DCCBs
function as fully-fledged banks at the district level and accept deposits from nonmembers
also, but advance loans only to the members. By 31 st March, 2001-2002,
these banks had advanced loans to the extent of Rs. 506 billion. There are 1,12,692
employees deployed in these banks.

3.5.4 State Cooperative Banks

The State Cooperative Banks (SCBs) are the apex cooperative organizations for
production credit, i.e. short and medium term loans, at the state level. These banks
are classified as scheduled banks and perform all the business that a normal bank
performs. There are 29 State Cooperative Banks, which operate through their 880
branches. The share capital of these banks is Rs. 6752.7 million and the government
participation in the share capital accounts to only 8.5%. Major borrowings (nearly
80.5%) from these banks come from NABARD. The SCBs provide finances to their
respective District Central Cooperative Banks, and also supervise, monitor and control
their operations. The total amount of loans disbursed by these banks during the year
2002-2003 was about Rs. 366.4 billion. The deposits of these banks increased to Rs.
35992.8 million in 2001-2002 from Rs. 7525.1 million in 1990-91, and 80.50% of the
total deposits are from the cooperatives.

3.5.5 State Cooperative Agriculture and Rural Development Banks

There are 19 State Level Cooperative Agriculture and Rural Development Banks
(SCARDB). Of which 11 (those in Assam, Haryana, Himachal Pradesh, West Bengal,
Karnataka, Kerala, Madhya Pradesh, Orissa, Punjab, Rajasthan and Tamil Nadu)
have a Federal Structure, i.e. they function at both the state and the primary levels,
and 8 (those in Bihar, Gujarat, J&K, Tripura, Uttar Pradesh, Maharashtra, Andhra
Pradesh and Pondichery) have a Unitary Structure, i.e. they function only at the state
level. In all there are 1421 branches of SCARDBs spread all over the country. These
banks provide investment or long-term loans to farmers and to 726 Primary Cooperative
Agriculture and Rural Development Banks (PCARDBs). Long-term credit is given
for minor irrigation projects, farm mechanization, plantation and horticulture, diversified

purposes, land development, rural housing and non-farm sectors. The total amount of
loans advanced during the year 2001-2002 by these banks was Rs. 25185.8 Million,
of which 80.04 % was advanced for farm sector development, 14.1% to non-farm
sector and the remaining 5.58% to the rural housing sector. These banks raise their
funds by floating special and ordinary debentures. The institutional membership of
these banks has risen to 5556 members. The participation of the government in the
total share capital of SCARDBs is 13.4%. In addition to their own operations,
SCARDBs operate through the 1214 branches of PCARDBs also. The membership
of the PCARDBs stands at 7.11 million. These banks have disbursed long-term credit
to the extent of Rs. 17844.7 million, of which farm sector constitutes nearly 64.1%
and non-farm sector 16.3%. The remaining 5.8% was disbursed to the housing
sector. These banks are guided, controlled and supervised by their respective
SCARDBs.
38
Rural Development
Administration Check Your

Progress III
Note:i) Write your answers in the space provided.
ii) Check your answers with the possible answers provided at the end of the
unit.
1) What is the structural difference between production credit and investment
credit?
...................................................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
2) Name the cooperative institution that takes care of the tribal people at the
village level.
...................................................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
3) Who provides credit for non-farm sector development?
...................................................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
4) Who is the major refinance provider to Credit Cooperatives?
...................................................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
...................................................................................................................
39

Rural Credit and Banking

3.6 GROWTH AND DEVELOPMENT OF THE

NON-CREDIT COOPERATIVES
In the previous units, you have learnt about the importance and role of credit
cooperatives in the development of agriculture in India. Equally important are the
non-credit cooperatives and their role in rural development. The important segments
of non-credit cooperatives are Marketing, Consumers, Dairy, Fishery, Fertilizers,
Handloom and Handicrafts, Labour, Irrigation, Agroprocessing, Transport, Weavers,
Industry, Farming, Electricity, Poultry, etc. The non-credit cooperatives came into
existence partly out of necessity and partly out of ideological reasons. The non-credit
sector has played a significant role in developing infra-structural facilities, which have
helped in providing value additions to the agricultural produce as well as boosted
employment in the rural sector.
Growth and Development of Non-credit Cooperatives In India
Year 2001-2002 (Value in Million Rupees)
Names of Cooperatives No. of Total Share
NON-CREDIT COOPERATIVES Societies Membership Capital
Total Capital
Marketing Cooperatives. 8869 5096863 49066.16 212459.00
Consumer Cooperatives 23975 7055185 10984.39 33772.05
Student Cooperatives 7688 14782458 1571.16 5214.44
Agro-Processing Coop. 1564 508862 2890.66 25555.32
Dairy Cooperatives 103305 11536704 27953.53 146678.67
Women Cooperatives 11374 999673 2896.23 13572.38
Housing Cooperatives 92000 6600000 36160.70 520000.00
Farming Cooperatives 7149 349589 709.68 4714.90
Irrigation Cooperatives 7315 571756 2648.19 82476.18
Electricity Cooperatives 56 939551 3543.52 30831.99
Industrial Cooperatives 45017 2439291 9089.63 44811.39
(Other than Weavers)
Weavers Cooperatives 20037 2015600 22399.27 87209.24
Fisheries Cooperatives 13649 2130217 4043.54 17477.82
Poultry Cooperatives 4900 441694 2100.27 13008.43
Labour Cooperatives 30428 1671825 2711.43 23178.39
Forest Labour Cooperatives 3408 739530 535.72 17516.68
Transport Cooperatives 10446 156374 2326.69 14617.25
Sugar Cooperative Mills 281 4484000 216218.00 873661.00
Spinning Cooperative Mills 326 783635 94253.75 177561.25
Tree Growers Cooperatives 633 49618 3.36 61.35
Hospital Cooperatives 181 111824 1130.94 3508.35
NON - CREDIT TOTAL 391370 63461007 493236.82 2347886.08

3.6.1 Cooperative Marketing

The need for cooperative marketing was realized in view of the growing malpractices
prevailing in buying and selling of agricultural produce. The producers were not
getting the due share of their agricultural produce. They were forced to sell their
produce on through away prices. So as to protect farmers, marketing cooperatives
emerged after the enactment of Cooperative Societies Act 1912. Accordingly, an
integrated programme of cooperative marketing was planned and a cooperative
40
Rural Development
Administration

marketing structure was set up at various levels. The significance of cooperative

marketing was recognized as early as 1928 by the Royal Commission on Agriculture,
which remarked that group marketing would be more efficient than marketing by
individuals, especially in conditions that prevailed during that period in India. The

objectives of promoting the marketing cooperatives were: a) to strengthen the bargaining

capacity of the member cultivators so as to secure them a better price for their
produce, b) to help in improving the socio-economic conditions of producer members,
c) to help in stabilizing marketing conditions to regulate the supply of commodities,
d) to eliminate the middle men and moneylenders, e) to restrict the intermediaries and
benefit the consumers directly asking them for reasonable prices, f) to systematize
fair trading practices, g) to educate and persuade the farmers to grow better quality
products, h) to arrange and provide the facilities of transportation, grading and storage
of agricultural produce, i) to protect the economic interests of members by educating
them about the latest techniques of farming and j) to inculcate the habits of self-help
and thrift among the members of the cooperative marketing society.
The cooperative marketing structure in the country has two tiers, except in Andhra
Pradesh, Gujarat, Haryana, Himachal Pradesh, Karnataka, Maharashtra, Manipur,
Punjab, Tamil Nadu, Uttar Pradesh and Pondichery, where it has three tiers, i.e.
primary at the block level, district marketing at the district level and state cooperative
marketing federations at the state level. Initially, general purpose cooperative marketing
societies were organized and later attention was shifted to more specialized or
commodity marketing cooperatives, such as those for Fruits and Vegetables, Cotton,
Tobacco, Areca nut, Coconut, Rubber, Sugarcane, Tea, etc. At present, there are 30
general purpose and 22 specialized state level cooperative marketing federations, 394
district marketing and 8869 primary marketing societies in operation. Besides, NAFED
and TRIFED are two national level federations. NAFED has been recognized as the
nodal agency for marketing agricultural commodities, price support and export
channeling of agricultural produce.

3.6.2 Processing Cooperatives

The marketing cooperatives did not seem to help much, as many of the earlier
problems continued. And it was felt that without making any value additions to the
agricultural products, the cooperatives would not be able to help much in ensuring
better prices for the products. In order to reduce the number of middlemen and to
obtain a greater return on the agricultural produce, processing of crops by the marketing
cooperatives was felt to be necessary. This resulted in the emergence of processing
cooperatives, such as those for paddy processing, ginning and cotton baling, rice
mills and those for pulses, and gradually the operation was extended to Fruits and
Vegetables, Cashew, Rubber, Cocoa, Copra, Isabgol and Straw Board. Later on, the
All India Cooperative Planning Committee recommended that in the cases where the
marketing/sales society was unable to put up a processing plant, separate processing
societies be organized. As a result, sugar, spinning, dairy and many other processing
cooperatives came up. The important ones among them are the sugar, spinning and
dairy processing cooperatives, which have not only helped in promoting the economic
well being of the farmers in the rural areas, but also generated rural employment by
deploying a large number of local people and the promotion of ancillary activities.

3.6.3 Cooperative Sugar Mills

The second five-year plan also included a programme for starting cooperative sugar
factories. In the middle of 1958, licenses under the Industries Act 1951 were granted
to 38 cooperative sugar factories. By 2002, the number of cooperative sugar factories
had increased to 281, of which 137 were in Maharashtra. The cooperative sector
contributes nearly 59% of the total sugar produce in the country. By and large, sugar
cooperatives have a two-tier structure, i.e. sugar mills at grass roots level and State

41

Cooperative Sugar Federations at the state level. Most of the sugar cooperative mills

Rural Credit and

Banking

are concentrated in 15 states. These mills have promoted a number of ancillary units
such as distilleries, paperboard units and baggasy. Besides, a number of educational
and social institutions such as medical colleges, engineering colleges, schools,
polytechnics, health centers, etc. are being promoted by these mills at their respective
rural sites. Also, they are helping the rural youth in their efforts for higher education
and are generating rural employments. During the year 2002, these sugar factories
crushed 96,272 million tones of sugar cane and produced 10,499 million tones of
sugar. These factories have not only assured a fair return to the primary producers
but are also providing extension services to farmers for producing high yield varieties.
Obviously, all walks of rural life have benefited directly and indirectly from rural
industrialization.

3.6.4 Dairy Cooperatives

Dairy in India is closely interwoven with agriculture and plays an important role in
the rural economy. Besides having vast employment potential, dairy provides not only
milk, but also stabilizes farm incomes. Small farmers and landless Labourers account
for 53% of the animals and 51% of milk production. Thus small, marginal and
landless farmers play a very important role in milk production in the country. The
need to form the dairy cooperatives emerged due to continued exploitation of these
weaker sections of the rural population by the private local dairy owners and other
traders. With the declaration of the National Policy on Dairying in 1956, the growth
and development of dairy cooperatives received a major boost.
The present structure of dairy cooperatives in India is three-tier. The main objectives
of the dairy cooperatives are: i) to increase the number of milk animals from the
present average holding of 1-2 animals, ii) to collect and sell milk to milk unions,
iii) to ensure regular and remunerative payment to producers, iv) to help members in
increasing milk production, v) to provide veterinary first aid and artificial insemination
services, vi) to sell cattle feed, vii) to increase timely flow of milk (which is a
perishable commodity) to far off markets and viii) to make value additions to dairy
products and the related activities. The present network of cooperatives serves more
than 11.5 million farmers in over one lakh villages. The average milk procured by
these cooperatives per day, is around 165.0 lakh liters and the liquid milk marketed
per day comes to 133.6 lakh liters. The total turnover per annum was Rs. 5957.90
million by 2001-2002. Over the years, the dairy cooperatives have not only changed
the economic situation of the rural people, but also taken care of improving the health
of the animals. The production of milk has gone up from 38.8 million tones in 198384 to 81 million tones in 2002. The other important development related to these
cooperatives is the empowering of the rural women. Now, women play a major role
in dairying, as over 7000 village dairy cooperatives are now run by women. They
have given many a woman some degree of economic independence. Almost two
million women belong to these womens cooperatives. Overall, dairy cooperatives
have played a significant role in the White Revolution. Today almost every district
and state cooperative is engaged in processing activities and is manufacturing quality
milk products, which compete favourably with the products of multinationals. Dairy
cooperatives have also diversified their activities and entered into new commercial
areas, such as oil manufacturing, food processing, water bottling and salt manufacturing
through their subsidiary companies. They are also serving the farmers in providing

nutritious feed for their animals, hygienic containers, veterinary services, artificial
insemination and in organizing camps, study tours and educational programmes for
their benefit.

3.6.5 Fertilizer Cooperatives

With the growing population and the increasing demand for food grains, pressure
continued on farmers to grow more. So as to increase productivity, farmers were
42
Rural Development
Administration

required to ensure adequate and quality inputs at reasonable prices. Faced with this
requirement, farmers were facing immense problems in relation to the timely availability
of quality chemical fertilizers. To solve these problems, a cooperative fertilizer plant
was set up in 1967 at Kalol in Kandla in Gujarat under the aegis of the Indian
Farmers Fertilizer Cooperatives with three major objectives: a) to produce chemical
fertilizers and ensure that they reach the door steps of farmers, b) to educate the
farmers how to use fertilizers effectively, and c) to transfer the required technology
for modern farming to Indian farmers. With the success of the IFFCO fertilizer
production and its network of distribution, the demand for quality and reliable fertilizers
increased significantly. As a result, another plant under the aegis of Krishak Bharati
Cooperatives was set up in 1980 at Hazira. These giant fertilizer cooperatives produce
29% of the total fertilizer needs and distribute 36% of the fertilizer requirement of
the country through rural channels. Besides, these institutions continue to provide
social services, such as developing the village farm forestry, setting up of storagecumcommunity centers, adopting villages for integrated rural development, extending
funds for building rural houses to earth quack affected people of Gujarat and for
promoting educational and cultural activities.

3.6.6 Industrial Cooperatives

Along with agricultural production, it was thought necessary to promote village industries
for rural development. The second five-year plan recognized the need for developing
village and small-scale industries on cooperative basis as far back as the 1950s. With
the acceptance of the recommendations of the first Working Group on Industrial
Cooperatives in 1958, the industrial cooperatives made rapid progress. As against
7101 Industrial Cooperatives with a membership of 7.66 lakh in 1950-51, their number
had gone up to 33266 with a membership of 25.64 lakh in 1960-61 and by 2001-2002,
the number of industrial cooperatives had increased significantly: Weavers cooperatives
(20,037), Non-Weavers (43,786) and Handicrafts (1778), with memberships of 2.01
million, 2.436 million and 1.09 million respectively. The industrial cooperatives have
a three-tier structure, but it is facing difficulties in obtaining finances, availability of
raw materials and marketing due to competition and modernization. Well, this is a
sector that has vast potential to assist the weaker and rural artisans and also to
preserve the traditional arts. This sector has not received the needed support, and is
now being reviewed to see how this sector may be improved.
Check Your Progress IV
Note: i) Write your answers in the space provided.
ii) Check your answers with the possible answers provided at the end of
the unit.
1) In what way do the marketing cooperatives help the farmers?
..................................................................................................................
..................................................................................................................

..................................................................................................................
..................................................................................................................
..................................................................................................................
..................................................................................................................
..................................................................................................................
43
Rural Credit and Banking

2) List the types of processing cooperatives that are run by marketing

cooperatives.
..................................................................................................................
..................................................................................................................
..................................................................................................................
..................................................................................................................
..................................................................................................................
3) Name the major processing cooperatives, which have generated significant
rural employment and have also promoted the various types of socials
institutions.
..................................................................................................................
..................................................................................................................
..................................................................................................................
..................................................................................................................
..................................................................................................................

3.7 REGIONAL IMBALANCES IN THE GROWTH AND

DEVELOPMENT OF COOPERATIVES
The growth and development of the cooperative movement in the country has been
reviewed from time to time by various committees and measures devised to minimize
imbalances in their development. Here we must remind you that with the enactment
of the Cooperative Societies Act 1919, cooperatives became a state subject.
Consequently, all the states enacted their own laws as per their connivance. The
cooperative movement in this country emerged with the blessings of the government,
which also works as an active partner in this enterprise. The laws framed by the
government, however, were restrictive and in certain cases contrary to the principles
of cooperation. The movement did not develop wherever the government equity was
more, but it went well where the government control was minimal. For example, in
the states of Gujarat and Maharashtra, where the governments did not have any
stake in the equity of cooperatives, the movement has shown steady progress and the
government control has been minimized. But in a number of other states, particularly
in the NorthEast, Bihar, Uttar Pradesh, Rajasthan, Orissa and Madhya Pradesh,
development got restricted. The major reasons for imbalances in the development of
cooperatives are: a) excessive government control exercised through restrictive legal
provisions; and b) the absence of definite policy on cooperatives. The Registrar of
a cooperative society is considered to be the supreme authority empowered to supersede
and suspend the elected board, nominate the board of directors and appoint the
managing director. In absence of autonomy, the cooperatives could not develop
professionalism, enlist the services of professional manpower, and manage the affairs
efficiently. Secondly, the cooperatives were used as agents of governments to
implement their schemes which did not help in achieving the viability of cooperatives
due to the lack of profit margins in most of the activities they engaged in.

44
Rural Development
Administration

But with the passing of the Reform Act, i.e. the Multi State Cooperative Societies
Act-2002 and the enactment of parallel Acts in 9 states, namely Andhra Pradesh,
Bihar, Chhattisgarh, Delhi, Jammu & Kashmir, Karnataka, Madhya Pradesh, Orissa,
and, Rajasthan, the powers of the Registrar have been limited only to register, audit
and hold timely Annual General Body Meetings. With these reforms, cooperatives
will have more autonomy to function freely, take their own decisions to plan and
mange their business hopefully effectively. Moreover, with the announcement of the
National Cooperative Policy 2002, for the first, the ideology and principles of
cooperatives have been recognized along with their current role in the rural economic
development and also their future role in the overall developmental process. Once
these reforms are implemented by all the states and cooperative policies endorsed by
all of them, the movement will be able to contribute effectively in the development
of rural economy and actualize vast agricultural potential, which should boost rural
employment significantly.

3.8 ASSESSMENT AND EVALUATION

The size and volume of cooperative business during the post-independence period has
shown rapid growth and multiplied many fold. The coverage of villages by cooperatives,
which was 30% in 1950-51, has reached cent percent and by 2001-2002, 75% of the
rural households were brought into the cooperative fold. Cooperatives have entered
into every sphere of economic activity and emerged as one of the significant segments
of Indian economy. Their contributions in shaping the rural economy also are substantial.
The share of cooperatives in rural credit disbursement amounted to 49.3% during the
year 2001-2002, fertilizer distribution was 36.0%, fertiliser production 29.0%, sugar
production 59.0%, branded oil marketing 50%, ice cream production 45%, animal
feed production 50%, spindling 12%, fabrics production 22.0%, handloom cooperatives
55%, wheat procurement 36.0%, jute procurement 21%, fishermens cooperatives
11%, rural fair price cooperatives 28%, salt manufacture 7% and employment was
created for 15.1 million people. The contribution of milk cooperatives in milk production,
procurement and distribution is significant. Cooperatives were also organized at grass
roots level for fisheries, forest labour, farm forestry, poultry, weavers, handlooms,
handicrafts, and irrigation to organize the rural people and provide them necessary
services for the development of rural community. The education and training networks
of cooperatives have promoted awareness regarding development, advantages and
techniques of living under the umbrella of cooperatives. This has helped in curbing
the migration of the rural people from rural to urban areas. The cooperative venture
and its programmes have also promoted diversification in crop production; effective
use of chemical fertilizers, insecticides and better seeds; new techniques for improving
the fertility of the land and various ancillary activities. The setting up of marketing
and processing cooperatives has not only helped the farmers in ensuring better prices
for their produce but have also generated significant rural employment.
With the present size and network of the cooperatives, their contribution should have
been much more than what it is today. The major problems that have limited the size
of their contribution are, to name the important ones, the increasing amount of nonperforming
assets (NPA), limited resources, lack of infra-structural facilities and
professionalism, absence of modernization and little technology transfer, over
dependence on governments, absence of effective monitoring and poor market

information systems.

3.9 LET US SUM UP

In the introductory part of the unit, we explained the concepts, values and principles
concerning rural cooperatives in order to distinguish them from other cooperative
45

enterprises. Then we moved to the circumstances, which forced us to organize the

Rural Credit and

Banking

cooperatives, i.e. details about the evolution of cooperatives during the pre-independence
and the post-independence periods were presented. The post-independence
developments were presented sequentially with plan-wise responsibilities assigned to
cooperatives along with the details regarding their progressive stages of development.
Besides, details about the important committees, which were constituted to review
the progress and shortcomings of the cooperatives at various stages, were also
presented. Later on, the development of credit and non-credit cooperatives was
presented with details specifically about their structure, functions and operations.
Here, we described every level of working with facts and figures and also detailed
the extent to which the services of cooperatives have helped in shaping the rural
economy. Some of the problems inhibiting speedy development were also highlighted.

3.10 SUGGESTED READINGS AND REFERENCES

Bedi, R.D., 1983, Theory, History and Practice of Cooperation, International
Publishing House, Meerut.
Daman Perkash, August, 1988, Cooperative Democracy vis--vis Members
Education, The Coop. Times, D-64 Saket, New Delhi.
P.K. Jain, 1992, Marketing Management of Cooperative Sector in India, Kanishka
Publishing House, New Delhi.
Nalwaya, K.L., 2002, Indian Cooperative MovementA Profile, National Cooperative
Union of India, New Delhi.

3.11 CHECK YOUR PROGRESS POSSIBLE ANSWERS

Check Your Progress I
1) Both the definitions of cooperatives have certain common elements, such as:
a) association of individuals/persons, b) achieving common goals and c) working
voluntarily on democratic lines. So, we may say that cooperatives are
democratically run institutions managed and controlled by their members.
2) The cooperatives are based on the values of self-help, self-responsibility,
democracy, equality, equity and solidarity.
Check Your Progress II
1) a) iv)
b) ii)
c) iv)
Check Your Progress III
1) Production credit has a three-tier structure, i.e. it operates at the state, the
district and the primary levels, whereas investment credit has a two-tier structure,
i.e. it operates at the state and the primary levels.
2) The name of the cooperative institutions organized for tribals at the village level
is LAMPS, i.e. Large Size Agricultural Multipurpose Cooperative Societies.
3) The non-farm sector is covered by investment credit. Therefore, State Cooperative
Agriculture and Rural Development Banks and Primary Cooperative Agricultural
and Rural Development Banks provide the non-farm credit.

46
Rural Development
Administration

4) The National Bank for Agriculture and Rural Development (NABARD) is the
major refinance provider for Cooperative Credit Institutions.
Check Your Progress IV
1) The marketing cooperatives have been established to fulfil various objectives,
namely: a) to ensure that the producers get remunerative prices for their produce,
b) to increase the retention power of producers by storing their produce in
godowns, c) to stabilize the marketing conditions to regularize the supply of
commodities, d) to eliminate the middlemen and moneylenders, e) to stabilize fair
trading practices, and f) to promote value additions to all the products and
services.
2) The processing societies, mostly promoted by marketing cooperatives, are:
paddy processing, rice mills and those for pulses, rubber, coca, copra, isabgol,
etc.
3) The important processing cooperatives are sugar cooperative mills, spinning mills
and dairy cooperatives, which have not only generated significant employment,
but are actively involved in promoting social activities and institutions for the
welfare of their members.

Planning for
Rural Development

UNIT 1 PLANNING FOR RURAL

DEVELOPMENT
Contents
1.0 Objectives
1.1 Introduction
1.2 Need for Planning
1.3 Theories and Techniques of Planning
1.4 Development Programmes and Projects
1.5 Notion of Resources
1.6 Rural Development Planning in India: A Brief Retrospective
1.7 Let Us Sum Up
1.8 Key Words
1.9 Suggested Readings

1.0 OBJECTIVES
The purpose of this unit is to provide you with an understanding of the concepts
of planning and planning approaches for rural development. It aims at encouraging
you to ask questions about planning. After reading this unit, you should be able to:
lidentify the role of planning;
lelaborate some of the development planning theories;
lexplain the meaning of projects and project cycles;
ldiscuss the concept of resources, and
lgive the evolution and development of planning experience in India.

1.1 INTRODUCTION
You have learnt about the concepts, strategies and performance of rural development
programmes in the preceding two courses. The planning process was not discussed
there, so that your attention remained focused on the practical aspects of various
programmes.
Rural development planning has gained prominence in recent times because of the
growing realization that benefits from development have, by and large, bypassed
large segments of rural society. At the same time, it has been recognized that the
organisation and structure of the process of planning have to be modified, so that
policies and programmes reflect the development needs of rural areas.
In this unit, we give the overview of rural development planning. In the unit, which
follows, we discuss the process of rural development planning in India, while in the
subsequent units, the planning structure at different levels are considered.
Rural Development
Planning

1.2 NEED FOR PLANNING

Planning is the process of preparing a blueprint of actions to attain stated objectives
within a time frame. The determination of objectives, the specification of targets,
the strategy for mobilization of resources, the allocation of resources to different
development sectors, the blueprint of actions (including their operationalisation in the
shape of policies, programmes and their delivery system) are aspects, which have
to be considered in any planning exercise.
Planning is essential because it enables us to formulate, with some precision, what
we intend to achieve within a given time frame. Prioritization among various
objectives enables us to demarcate more important objectives from those, which are
less so. Once this is done, one can decide what is feasible, considering the resources
at hand and how additional resources can be mobilized. Therefore, planning is a
more scientific path towards achieving development objectives, and for bringing
about economic and social transformation in a systematic manner.
Perhaps, the most important reason, which comes to your mind, may be that you
are faced with a severe shortage of certain resources/factors. Given the fact that
each of these resources may also have different uses, you may be unable to decide
how to utilize these resources. It is in such a situation that planning becomes
extremely important. Therefore, you must plan the use of resources in some rational
manner.
A logical question, which you must then reflect upon is: What is a rational manner?
Or, what are the resources available? Let us further illustrate the first question
before answering it. Suppose the objective is to plan the utilization of unskilled
landless labour in a community development block, so that people are able to get
gainful employment. Naturally, you would now start asking for information, such
as how many are employed by landowners for agricultural operations, which
agricultural operations are performed at various point of time? What would be the
prevalent wage rate, which schemes employing rural labour are being run by the
government department, how useful would be the works in which labour are employed
from the point of view of creating durable community assets and so on. From the
point of view of providing solutions, some of these alternatives may be more rational
or more desirable or feasible. Choice of alternatives, thus, may narrow down to

such preferable alternatives. The manner of arriving at this choice is to know the
decision criteria an important component of planning process at any level.
Most of the other justifications for planning can be broadly grouped into two
growth and distributive justice. Growth, here, would mean an increase in output per
unit of time, given the level of resource use. The growth in output is conditioned
by the quality and quantity of resources. Distributive justice means that, as growth
takes places in a society, the gains from increased prosperity are distributed in a
more egalitarian manner across various classes and groups in that society. This
would, for instance, cover policies, which aim at income distribution to reduce
income inequalities among classes and regions, asset distribution to reduce inequality
in terms of ownership of asset, alleviation of poverty, and improvement in quality
of life through better access and utilization of social services.
The Need for Planning in India
An underdeveloped economy like India is characterized by inequalities of incomes
and ownership of assets. The high incidence of rural poverty, coupled with these
inequalities, makes the task of rural development particularly important. There are
Planning for
Rural Development

also regional imbalances and problems connected with the development of areas,
which are disadvantaged due to geographical and ecological factors (as for example,
drought-prone areas, flood-prone areas, etc.). Needless to say, planning in India
has to be geared to meet these challenges.
You will appreciate that it is the people who are the focus of development and
the poor should be given priority because their numbers are large and they are the
most vulnerable. In India, vast numbers of the rural poor have limited access to
social services and these are reflected in low rates of literacy, high incidences of
infant and child morbidity and mortality, poor health and nutrition status, poor
environmental sanitation and hygiene, limited access to potable water and poor
housing. The central approach to any development process has to be one of enabling
the poor and other disadvantaged people to improve their situation, both social and
economic.
Check Your Progress I
Notes: a) Use the space provided below for your answers.
b) Compare your answers with the text.
1) Justify, in your own words, the need for planning.
........................
..........
..............
..................
2) How can planning reduce regional disparities?
........................
..........
..............
..................

1.3 THEORIES AND TECHNIQUES OF PLANNING

There are several theories of development planning that have been put forward
during the last few decades. They are suited to particular situations prevailing in

some countries. They cannot be applied uniformly in all situations. It is important

that you understand this. Many approaches to development are being evolved and
tried and a number of alternative theories have been put forth. Since the main
objective of planning in the initial stages was growth, the main attention was
focused on Modelling the production structure of the economy and identifying the
factors limiting its expansion. These theories are readily applied to most of the
developing countries in which the industrial sector has a predominant share in the
total output.
As the concept of distribution (social justice) came to be recognized as an important
objective, the growth planning models started including a set of disaggregated regions
or spatial areas in their framework. Thus, multi-sectoral models have been proposed
to include factors affecting the income levels of different groups. The development
during the sixties and seventies paved the way for theories of regional development
planning.
Rural Development
Planning

Theories of Regional Development Planning

The earlier approaches to regional development, evolved in the industrially developed
western countries, were mainly growth oriented and presumed that higher growth
rate could be achieved through modern sectors activities. However, the concept of
generating higher growth in regional economy varied in different development theories
or models. The various types of regional development theories with their implications
for rural regional planning are shown in Table 1.1. Some of the relevant development
theories are mentioned in the table. You may refer to Section 1.8 (Key Words) in
order to understand the meaning of some terms, which you may not be acquainted
with. Further, if you would like to read more on some of these theories, there are
several books available. You may, for instance, refer to Michael P. Todaros Economic
Development in the Third World (1985) or to Subrata Ghataks An Introduction to
Development Economics (1986).
Table 1.1
Theory Associated Policy/Planning Models/
approaches
1) Economics Base Multiplier Theory Economic base Models (Multiplier analysis)
2) Macro-economic Growth Theories i) Input-Output Models.
ii) Tinbergen Planning Model/incremental
capital output ratios for sectors/industries.
3) Polarised Development (Diffusion Growth pole centre strategies:
Theory; Central Place Theory; i) Intermediate size cities as countermagnets
Propulsive Firm Concepts) to primate cities.
ii) Lower order population centres as foci for
development from below.
4) Modernisation/Neo-classical and i) Accelerated urban base.
Marxist Stage Theories ii) Two-sector growth models.
iii) Large-scale capital intensive resource
based projects
5) Agriculture/Land use Theories Von Thunen models; Agricultural land use
zoning or regionalisation with locational
advantages.

The basic principle in these theories, as presented in rows 2, 3 and 4, is that growth
does not take place everywhere at the same time. Since factors that affect growth

have varying intensities, it manifests itself at some points of the economy or in

certain regions called poles, and then spreads to other sectors and areas through
different channels. Also, there are variations in the impact of such growth on the
economy as a whole. Growth in a regional economy, thus, can be induced through
modern sector activities or by diffusing the process of development through growth
poles. The economic base theory, while recognizing the role of local resources
in the regional economy, emphasized that higher growth can be achieved by expansion
of either primary or manufacturing activities to produce goods for export.
The regional development approach, adopted in the developing countries, was derived
mainly from the models discussed above. Developing countries are characterized by
Planning for
Rural Development

a high degree of regional imbalances, income inequalities and an agrarian economy

with low rates of growth and high unemployment and under-employment. So, such
countries have reconstructed these growth models in such a way that they would
help in achieving the twin objectives of development, viz., economic growth and
distributive justice.
Rural Development Planning Methodologies
There has been considerable work in evolving methodologies for micro-level planning
in India in recent years, particularly after the Fourth Five Year Plan. The Planning
Commission emphasized the formulation of district plans, provided guidelines for
district planning and suggested:
The first objective of the formulation of district plans is to set forth a long-term
perspective indicating the economic activities to be established in different subregions
of the district and the measures to be taken over the next 15 to 20 years
to develop (and conserve) natural resources, build up infrastructural facilities and
social services and foster the growth of towns and cities in a manner that would
help the district to develop in the predetermined direction. The second objective is
to prepare an integrated programme of action for the next conditions and a realistic
assessment of the immediate problems, short-term priorities and available resources.
From the above statement, it is clear that in the beginning, the approach to development
was regional with emphasis on growth points and location of economic activities.
Over the years, there have been shifts in the national policy for rural development
to achieve growth with distributive justice by minimizing income inequalities between
various sections of society and growth disparities between areas and regions. To
achieve these objectives, area approach and target group approach were added in
the framework. Based on the progressive changes in the approach, the methodologies
evolved for rural development planning can be described under three categories
Growth Centre Approach, Area Development Approach and Integrated Development
Approach.
Growth Centre Approach
The basic logic behind this approach is that development in rural areas can be
fostered by interesting resource mobility towards these areas for the generation of
infrastructural facilities. The constraints, in this regard, arise because of two main
reasons. Firstly, there are financial constraints. Secondly, economic efficiency of
investment has to be ensured. This means that facilities should be located at
appropriate places. Some villages have smaller population that are not sufficient for
proper and full utilization of investment. Location of facilities have to keep in view

the minimum threshold population.

The concept of rural growth centre is to identify ideal locations for investment and
also act as a focus for inducing growth in the area concerned. The main foundation
of this approach was provided by Location Theories and the Central Place Theory.
Location theories emphasize the importance of spatial factors in development. Thus,
the provision of economic and infrastructural facilities in certain locations can generate
growth in the areas adjoining these centres. The central place theories focus attention
on growth centres, which generate growth in areas around them. However, the
concept ignores the potentiality of local economic forces that may induce growth.
Emphasis on dynamic local factors may be more impracticable under rural Indian
conditions. The other problem is that the growth centres do not take into consideration
the future trends of repolarisation of socio-economic activities taking place in an
area.
Rural Development
Planning

10

Area Development Approach

This approach is an extension of the growth centre approach and takes into account
the local factors in achieving economic growth. Then, integrated development of an
area depends not only on the development of an adequate infrastructural network
but also on the way factors of the local economy are activated around the production
infrastructure. In other words, for integrated development of an area, spatial and
functional integration is necessary. Thus, while rural growth centres provide ideal
locations for the provision of infrastructural facilities, their hinterlands are regarded
as basic planning units for integrated multi-sectoral planning to achieve integrated
development of an area. This approach, therefore, was able to provide a wider
framework for rural development. The approach, while taking poverty in the area
into consideration, provides a balance between various sectoral activities as well
as spatial patterns of growth. However, it does not ensure that economic growth
is being shared by all classes and communities of the rural areas. The spread effect
of development may not necessarily affect the whole society in the same way or
with greater equality, particularly in Indian rural situation because of two reasons:
lIn the areas where modern farm technology has not been able to make an advance,
agriculture and its allied activities cannot absorb fully the labour available in villages;
and
lA sizeable number of rural people have little or no access to resources, particularly
land.
Integrated Rural Development Approach
In the context of problems in the area development approach, as discussed above,
and the government policy to tackle the problem of rural poverty, a new strategy
of rural development, i.e. the integrated rural development approach, has been
developed because the area development approach, by and large, failed to address
the question of inequalities in the distribution of employment, incomes and assets.
A mere geographical emphasis, as is the case with the area development approach,
has been found to be inadequate in solving the problems. Target groups have to be
identified for a more direct approach to alleviate the problems faced by specific
sections of the population having specific identifiable problems.
The draft Sixth Plan (1978-83) indicated the concept of integrated rural development
in the following words:

Experience of various rural development programmes in the earlier plans has

shown that a mere project approach or a sectoral approach is not adequate to lead
to an overall development of the area and distribution of benefit to local population,
particularly the weaker section of the society. The distribution of unemployment and
poverty and the potential for development of agriculture and related activities vary
widely from region to region and also within regions. It will, therefore, be necessary
to plan for integration of various programmes and establish appropriate linkages for
optional utilization of local endowments, consistent with the plan objectives, local
needs and environmental balance.
The integrated rural development, now envisaged, will be specially focused on the
target group comprising small marginal farmers, agricultural labourers and rural
artisans, whose economic improvement is an important concern of rural development.
The new approach will aim at integrating field programmes reflecting the economic
activity of the rural family whose employment and development is the basic objective.
Planning for
Rural Development

11

It is proposed to bring this about by developing the primary secondary and the
tertiary sectors. A major effort will be made to formulate area specific plans at the
grass root level.
Check Your Progress II
Notes: a) Use the space provided below for your answer.
b) Compare your answer with the text.
Explain and contrast Growth Centre Approach and the Area Development
Approach.
.....................
.................
.....................
.................
.....................
.................

1.4 DEVELOPMENT PROGRAMMES AND

PROJECTS
Rural development programmes, planned and executed during the last four decades,
can be grouped under two heads:
larea-based programmes, and
ltarget-group oriented programmes.
Intensive Agriculture District Programme (IADP), Drought Prone Area Programme
(DPAP), Command Area Development Programme (CADP), and Desert
Development Programme (DDP) are some of the area-based programmes. Targetgroup
oriented programmes, such as the Integrated Rural Development Programme
(IRDP), are meant for the upliftment of specific sections of the rural society.
Every programme, whether area based or target group oriented, is made up of
a set of development projects. For example, Command Area Development includes
on-farm development project, project for the creation of infrastructural facilities,
canal modernization project, and so on. Sets of projects make up a development
programme; therefore, development projects can be called the building blocks of a
development programme.

Let us examine the meaning of a development project. Every project requires

different types of resources, such as material, manpower, machinery, and finance.
A development project is a time bound task to achieve specifically stated objectives
with investment of resources. It, in contrast to a scheme, is a very specific activity
in a specific area to achieve specific results within a specified time frame.
Advantages and Disadvantages of Development Projects
Let us first discuss the advantages. The Development projects
lconcentrate resources on select priorities.
lfocus on specific geographic areas.
Rural Development
Planning

12

laddress

specific population groups and constraints on development.

lfunction as intensive social laboratories using an innovative approach, a limited
scale to gain experience for larger scale efforts.
Some of the disadvantages are listed below. They
lfunction as segmented units of intervention.
lbypass overall structures.
ldevelop atypically.
lcreate enclaves.
lsiphon resources away from parallel non-project activities.
lcannot always generate sustainable development.
loften overlook socio-structural and institutional variables.
Project Cycles
The project, from conception to operationalisation, passes through various stages in
a cyclical fashion. These stages constitute the project life-cycle.
First, a project idea is floated. Who floats the project idea? It may be the department
concerned, the village assembly, block level bodies, the target groups, voluntary
bodies engaged in development work, scientific and technical research groups, or
the central planning agency.
Subsequently, the floated idea has to be tested for its worthiness before preparing
a blueprint. A sound judgment based upon experience and available knowledge of
the local conditions can be the only guide to this decision. However, once a project
idea has been identified and accepted, work on the preparation of its blueprint has
to begin in the department concerned. A continuous interaction and feedback among
team members is very necessary for successful completion of the task.
With the completion of the blueprint, if the project is found admissible, it goes for
election, along with other projects of the sector. Further, if it is selected, it is
monitored, and finally, the results need to be evaluated.
The following Chart illustrates the project life-cycle:
Chart I: Project Life-cycle
Operation
Pre-Plan Period
Conception
or
Identification
Technical
feasibility
Economic
worthiness

Financial
viability
Selection
Plan Period Post-Plan Period
Construction
Ex-ante Evaluation Concurrent
Evaluation
Ex-post
Evaluation
Project Working life
(1) (2) (3) (4) (5) (6) (7)
Planning for
Rural Development

13

The chart indicates different time phases of a life-cycle, the position of the phases
with reference to the plan period and the kind of decision problems to be solved
at different phases follow the sequence shown in the chart. Although each phase
has its own specific problems of decision, the overall problem of the pre-plan
period is to decide whether the project is worthy of selection for inclusion in the
plan. The problems of construction phase are of different nature, where management
techniques when applied, help to answer questions like how to organise work within
a time schedule, so that a smooth flow of materials and labour to the project is
maintained. This also helps the managerial staff in achieving maximum efficiency
in construction and operation of the project.

1.5 NOTION OF RESOURCES

In any developing country, the major problem is always of resources. Essentially,
these are of three typeswomen, money and materials. Financial resources can be
mobilised within the country through tax efforts and market borrowings, etc., and
from external sources through exports, remittances, borrowings and aid loans.
Planners have to ensure a match between these sources. With these resources, the
planner has to consider completing demands and then accommodate as many of
them as possible, looking at the overall objectives set for the country.
As regards the manpower required, this, again, has to be carefully planned and
necessary arrangements should be made for human resource development right
form the grass roots level upwards to the highest technical levels.
The third aspect of resources is the materials required for enabling the development
process to take place. Planning has to provide for the availability of such resources
for example, oil, steel, cement, power, fertilizer, etc.
Therefore, while seeking to meet the demands of the people through the plan, the
planner has to ensure that the materials required for building up the infrastructure
and support are simultaneously planned for and provided.
Let us briefly view the various dimensions of resources. Generally speaking, stock
and flow, mobility and immobility over space, quality variations or grades of resources,
and renewal ability are the dimensions we will take up for discussion.
i) Stock and Flow: A stock is the quantity of a resource existing at any point of
time. Agricultural and forest land, a herd of cattle, and agricultural implements
refer to a stock of respective resources existing at the time of counting, say, as on
March 31 of a particular year. Human use of resources means that there is a
drawing on the stock itself, as in the case of non-renewable resources like minerals,
or there is drawing of an output from the stock, as in the case of renewable

resources like fisheries, forestry, livestock, agricultural land or underground water

reservoirs.
Any drawing on (i.e., slow release or use) the stock itself or of an output from the
stock is considered a flow. In other words, any drawing or use of a quantity of the
resource of the output from the resources during a period of time is called a flow.
For example, conceptually, whereas agricultural land is a stock , the produce from
the land is a flow. Let us take another example. Consider a sum of money (say
Rs. 10,000) deposited in bank at the beginning of the year. This sum is a stock,
capital fund. If you need some money, say at the end of the year, you have two
Rural Development
Planning

14

options to exercise. Withdraw a part of the capital fund, stock or principal sum;
or withdraw part or whole of a years interest earned on the principal sum. If you
choose the first option, the money withdrawn is a flow out of stock, whereas,
when the second option is chosen, it is a flow out of output (interest earning). An
alternative illustration is your monthly income, which is a flow because it has
been earned over a period of one month. This means that a flow will always have
a time dimension like per day (e.g., wages), per month (salary), per year (interest).
A stock is always defined at a point of time (for example your bank balance
on any given day).
ii) Mobility in Space: Most natural resources have specific location because their
use by human beings has to be in places where they are found. Agricultural land,
fishing grounds, forests, pastures, mines, reservoirs and water streams are all
location specific, immobile resources. A few resources like livestock and human
labour are, however, mobile within the constraints of ecological and social factors.
Most man-made capital resources, especially manufactured means of production,
are more mobile over space. From the angle of development planning, a
classification of resources by their relative mobility is extremely desirable. A
fund of money or capital in value form is the most mobile resource.
iii) Grades of Resources: Since output flow from a stock of resources tends to
decline with degradation in quality, an essential planning task is to preserve,
conserve and improve the quality of resources. Accordingly, a knowledge of
distribution of resources by quality and grade becomes a primary requirement
for any planning agency. Therefore, an essential planning task at the appropriate
level is to prepare an account of stocks of resources existing in the base year
of a planning period. Such an account has to reflect on the characteristic
features of different types of resources discussed above. The account is so
designed as to provide answers to relevant questions of planning such as:
lWhat is the quantity of the stock of a specific resource?
lWhat is the pattern of ownership, utilization or under-utilization?
lWhat is the current flow of output?
lWhat could be the attainable output, given the current status of science and
technology?
lIs there a scope for increasing the quantity of stock?
iv) Renewal: In our everyday life, a continuous flow out of non-renewable stock
(for example mineral mines, oil-well) means depletion of stock and its eventual
exhaustion. The process is irreversible. In the case of renewable stocks (pastures,
forests, cattle or livestock herd), in most cases, the process is reversible in the

sense that a period of depletion can be followed by a period of regeneration and

rebuilding of stock. However, there is always an upper limit to the flow. Therefore,
in some cases, the depletion is faster than the pace of regeneration. Over fishing,
overgrazing and felling of trees, illustrate precisely this phenomenon. Thus, there
is a maximum sustainable output level, determined by the biological and ecological
conditions of regeneration of resources concerned.
Planning for
Rural Development

15

Check Your Progress III

Notes: a) Use the space provided below for your answer.
b) Compare your answer with the text.
Explain and differentiate between the concept of stocks and flows.
.....................
.................
.....................
.................
.....................
.................

1.6 RURAL DEVELOPMENT PLANNING IN INDIA:

A BRIEF RETROSPECTIVE
Even before 1947, the Indian National Congress indicated its commitment to planning
and prepared a set of reports, which generated a lot of interest and discussion.
Apart from this, some prominent industrialists published in 1944 the document, A
Brief Memorandum Outlining a Plan of Economic Development for India.
Much earlier in 1934, M. Visveswaraya had published a Ten Year Plan, aimed at
doubling the national income.
Jawaharlal Nehru, the nations first Prime Minister, is generally regarded as the
architect of planning in India. He viewed planning as a way of developing the
country avoiding the unnecessary rigours of an industrial transition in so far as it
affected the lives of the masses living in Indias villages. Moreover, he recognized
that planning was a positive instrument for resolving imbalances and contradictions
in a large and heterogeneous country, such as India. The first three Five Year Plans
are generally regarded as the most lively phase in Indias planning exercise.
The Early Years of Planning
Though the First Five Year Plan (1950-55) was basically a simple exercise of
putting together programmes, targets and outlays, it provided the first milestone in
rural development through the launching of the Community Development Programme
and National Extension Service.
Indias tryst with planning came with the formulation of the Second Five Year Plan.
P.C. Mahalanobis, an eminent statistician, and a man with a wide range of ideas,
is generally credited with preparing the blueprint of the Second Plan. At that point
of time, this plan was the most self-conscious attempt at planning in any newly
independent country in the Third World. Almost all major contemporary economists,
who took an interest in the study of development economics, interacted with Indian
planners during these years and so did several of todays Nobel Laureates.
The Second Plan (1955-60) laid a strong emphasis on industry. The idea was that
this strategy will relieve the excess population in rural India. The strategy sought

to increase employment in heavy industry and the capital goods sector, so that the
load on the agricultural sector could be lightened. It was primarily a strategy of
industrialization, which hoped to succeed by forging strong industry linkages, both
forward and backward. As a result of this emphasis, the performance of Indias
Rural Development
Planning

16

capital goods sector improved substantially during this period. It also laid a solid
ground for a vibrant and self-reliant industrial base in India.
Though the Second Plan is widely regarded as an industrial plan, there were other
path-finding formulations made by Indian planners during this period, as well. For
example, the Plan document included a very lucid chapter titled Land Reform and
Agrarian Reconstruction. Emphasis and hopes were placed on cooperative farming
practices in Indian agriculture. The formulation also envisaged a vast network of
community development programmes, national extension services and an irrigation
network financed by public budgets. The concept of democratic decentralization for
assigning development responsibilities to Panchayati Raj institutions was also
advocated (by the Balwantrai Mehta Committee). Thus, while it would be inaccurate
and unfair to say that the Second Plan lacked an agricultural strategy, it would not
be unwarranted to maintain that planners were grossly over-optimistic as to what
traditional Indian agriculture, with its conventional input-output basis and deepseated
social stratification, could do within the political constraints.
Role of Planning During the Years of Crises
Among the priorities listed in the Third Plan, it was generally recognized that
agriculture had the first place. Thus, in its initial formulation at least, the Third Plan
differed from the Second Plan. It is generally recognized that there was a general
de-emphasis of agriculture in the Second Plan. The Third Plan attempted to reverse
this.
Indian planning suffered two major shocks caused by exogenous factors in the
1960s. The first came in the shape of the war with China in 1962 and the second
in the form of successive harvest failures in 1965 and 1967. The first shock caused
a sharp increase in Indias defence outlays and a severe curtailment in public
investment of the government. Consequently, the capital goods sector was badly hit.
The crises on the food front was met with wheat import from the USA. This
situation, for the first time, seriously exposed Indias dependence on international
aid. However, Indian planners woke up to the need to build food self-sufficiency
as a result of these crises. The response of the government to the crises came in
the shape of the abandonment of the Five Year Plans. As a result, the period
between 1966 and 1969 the Annual Plans Phase is often labelled as the Plan
Holiday period.
The Annual Plans were notable for the formulation of a clear-cut strategy of
agricultural development. This strategy carried over into the Fourth Plan and was
notable for its shift in perception of the binding constraints on Indian agriculture. It
had hitherto been maintained that a conservative rural social and economic structure,
coupled with inefficient agricultural practices, acted as major constraints on the
agricultural sector. Further, land reform had largely been avoided; in practice, however,
their need was felt as vital. On the other hand, the new strategy made a perceptible
shift from this perception of the problem of the agricultural sector. Instead,
technological modernization was felt to be the main problem. In other words, it

called for a strategy that would make it possible to bet on the strong.
Planning and Agricultural Transformation
The new strategy came to be implemented during the course of the Fourth Plan and
was more popularly known as the Green Revolution in agriculture.
Even as the Green Revolution in agriculture was ushered, it was realized that
distributive justice still remained a distant dream. Thus arrived the popular slogan
of Garibi Hatao (Remove Poverty) and with it came the emphasis on poverty
Planning for
Rural Development

17

alleviation as a distinct planning objective in its own right. In fact, a document

prepared by the Planning Commission, though never officially published, for the first
time put the problem of poverty eradication in the forefront of political and public
discussion.
The Approach Paper to the Fifth Plan followed the recommendation of Working
Group in its definition of poverty in terms of nutritional inadequacy and ventured to
put the explicit redistribution of incomes towards the lowest three deciles as an
objective in itself. Thus, the basic approach of the Fifth Plan was growth with
redistribution. However, on account of the serious harvest failure of 1972-73 and
the oil crises of 1973, inflationary pressure forced Indian planners to seriously
curtail the ambitious programmes they had envisaged. Public investment continued
to be under strain and, as a result, many of the programmes had to be postponed
to the next Five Year Plan. The 1970s are significant because of the Minimum
Needs Programmes, IRDP, Rural Employment Programmes and some area
development programmes about which you have read in the previous courses.
Poverty Alleviation and Indian Planning
The Sixth Plan, (1980-85) again undertook eradication of poverty as its primary
aim. Consequently, the programmes to eradicate poverty NREP, RLEGP (later
merged into Jawahar Rozgar Yojana). TRYSEM, DWCRA Integrated Rural
Development Programme were strongly emphasized. The IRDP, coupled with
rural employment programmes, the Minimum Needs Programme and the area
development programmes, meant that the Sixth Plan had a strong emphasis on the
rural sector.
Poverty alleviation continued to be a central concern in the Seventh Plan. Growth
of employment opportunities, human resource and infrastructure development, removal
of inequalities, an expanded system of food security, increase in productivity in
agriculture and industry, participation of people in development and substantial
improvement in agricultural and rural development administration, were identified as
priority areas. In the course of the Seventh Plan, the emphasis had shifted towards
the concept of modernization again this time in industry. With this came the
relative de-emphasis on the public sector as an engine of growth. Modernization
and diversification of industry, adoption of new technology, a generally satisfactory
level of industrial performance (more so in some sectors), broad based
entrepreneurship development and growth of new industries like petro-chemicals
have also been considered as positive developments.
A number of imbalances cropped up during the Plan Period. First, the massive
inflow of imports under the liberalization regime had meant an adverse movement
in Indias balance of payment position. During the plan period, the continuous strain
on the fiscal resources of the government was so severe that it generated inflationary

pressure despite the record levels of agricultural output. The decline in the ability
of Indias economy (the organised sector) to generate employment out of investments
was manifest during the Seventh Plan. As the Approach to the Eighth Plan 199095 pointed out, The large reduction in the share of the agricultural sector in GDP
has been accompanied by only a marginal reduction in the proportion of people
dependent on this sector. Consequently, the agriculture non-agriculture disparities in
terms of output (and incomes) per head.
The Ninth Plan emphasized priority to agriculture and rural development with a
view to generate adequate productive employment and eradication of poverty.
The Tenth Plan continued the three programme strategies of the Ninth Plan to
(i) increase farm productivity and growth of other activities in rural areas,
(ii) poverty alleviation progremmes, and (iii) public distribution system, especially
to those below the poverty line.
Rural Development
Planning

18

The Tasks Ahead

It is widely recognized that Indias planning process has been one of the most
consistent among such efforts undertaken in the Third World. The Plan efforts have
contributed significantly in many fields, most notably in the increase in food production.
However, a number of problems still remain.
The desire for planning at multiple levels remains largely unrealized despite the
commitment made by successive governments. This contradiction has seriously
undermined the concept of making planning more democratic and responsive to
peoples aspirations. Further, regional inequalities and income inequalities persist in
India despite planned economic development. This is a serious problem, which if
uncorrected, can lead to more strain on the political fabric of the Indian state.
Centre state relations, particularly in regard to planning functions and powers to
mobilize financial resources, have been under stress. These issues mean that
decentralization of the planning process has become an issue of top priority, which
if not seriously implemented, may well jeopardize the concept of planned economic
development itself.
The problem of inequalities in the distribution of incomes and assets and low
productivity continuous to be a major problem facing Indian planners. As you may
recollect, we had focused attention on these aspects in the first Block of course 1.
Tardy progress in land reforms and major institutional rigidities still hamper the
development of Indian society. The problem of the rural poor particularly, the
landless and marginal farmers still remains a major issue on the agenda of Indian
planning. Social services in rural areas continue to be at unsatisfactory levels. The
development of women, Scheduled Caste and Scheduled Tribes and other backward
classes are other areas of concern.
Check Your Progress IV
Notes: a) Use the space provided below for your answer.
b) Compare your answer with the text.
You have read how our planners viewed the binding constraint in agriculture
during different points in time. Explain briefly, in your own words, the
differences in perception.
...................
.............

.................
.............
.................
.............

1.7 LET US SUM UP

In this unit, you have learnt the importance of planning for developing countries.
We saw how the goal of attainment of growth with social justice has to be specifically
incorporated into development planning if the social and economic transformation of
the country is to be brought about.
* state with smaller s refers to its meaning in the macro sense, as Indian state
while State with capital S refers to the federal units as in the state of Maharashtra.
Planning for
Rural Development

19

We also read the different development theories and the various approaches to rural
development planning. You came to know about the growth centre approach, the
area development approach and the integrated rural development approach, You
were also briefly acquainted with the main features of development projects that
were introduced to the concept of project cycle.
Resource is an important factor in planning. We introduced you to the notion of
resource and the concept of stock and flow.
We then went through a brief review of the planning exercise undertaken in India
since Independence. The main areas of emphasis in different decades were indicated.

1.8 KEY WORDS

Concurrent Evaluation : On-going evaluation, while the project is under
implementation.
Decentralized Planning : Planning at several levels and not just at the apex
(i.e. the centre).
Distributive Justice : Justice to ensure that gains from development reach
every section of society.
Economic Base : The term used for a form of regional multiplier,
Multiplier which is able to estimate the impact of changes in
an areas economic base on the economy as a whole.
Ex-ante Evaluation : Evaluation carried out prior to the actual or main
event occurring, i.e. before the actual project is
operational.
Ex-post Evaluation : Evaluation carried out after the event has taken
place, i.e. after the project (some phase or all) has
been implemented.
Flow : Output during a unit period of time.
Growth : Increase in output/number per unit of time.
Growth Pole Centre : Growth generated at nodal centres acting as poles
leading to accelerated growth in the region.
Input-Output Model : An economic model, which is based on the capacity
of inputs of each sector (of the economy) to
generate outputs. The quantity of outputs generated
by the use of inputs is represented by the inputoutput
ratio.

Incremental Capital : The amount of capital that results in output increasing

Output Ratio by one unit.
Multiplier : An economic term, which means that any investment
undertaken in an economy normally causes incomes
to increase by a proportion greater than itself.
Essentially, it means that incomes increase by a
certain multiple of the original investment undertaken.
The value of the multiplier, however, depends on
the quality and nature of the investment made.
Polarised Development : Development of two opposite qualities.
Rural Development
Planning

20

Project : Time-bound package of inter-related activities.

Stock : A quantity of resource existing at a point of time.

1.9 SUGGESTED READINGS

Chakravarty, Sukhamoy (1987), Development Planning: The Indian Experience,
Claredon Press, Oxford.
Ghatak, Subrata (1986), An Introduction to Development Economics, Allen and
Unwin, London.
Misra, S.N. (1984), Rural Development Planning Design and Method, Satvahan
Publications, New Delhi.
Tadaro, Michel, P. (1985), Economic Development in the Third World, Orient
Longman, New Delhi.

47
Rural Poverty

UNIT 3 RURAL SOCIAL STRUCTURE

Structure
3.0 Objectives
3.1 Introduction
3.2 Caste System
3.2.1 The Concept of Caste
3.2.2 Caste in Villages
3.2.3 Caste and Class
3.2.4 The Jajmani System
3.2.5 Social Mobility in Indian Villages

3.3 Families in Rural India

3.4 Nature of the Distribution of Power in Rural India
3.5 Let Us Sum Up
3.6 Key Words
3.7 Suggested Readings and References
3.8 Check Your Progress: Possible Answers

3.0 OBJECTIVES
The aim of this lesson is to introduce you to the different aspects of rural society in
India. After having worked through this unit, you should be able to:
Describe the organization of Indian villages;

Describe the nature of castes and classes, and the cases of upward social
mobility;
Define jajmani system;

Talk/write knowledgeably about the family system in rural India; and

Analyse the nature of power in villages.
3.1 INTRODUCTION
Village community, family and caste are the basic components of the rural social
structure and they bind the economic and social life of people in rural areas.
In order to understand this social structure, it is necessary to understand the nature
of society. Each society consists of different parts, such as individuals, groups,
institutions, associations, and communities. The simplest analogy one can think of at
this point is that of an organism that has different components working together as
a whole. Society is a system like any other system, such as the solar system, the
chemical system, a mechanical system or an organic system. Of these the most
suitable analogy for elaborating the concept of society is that of an organism. This
is usually known as the organic analogy.
You are perhaps aware that the basic unit of an organism is the cell; similarly the
basic unit of a society is the individual. As cells combine, a tissue is formed. In the
same way, an individual exists in relationship with other individuals. A collection of
individuals is called a group, and the smallest group comprises two individuals; it is
known as the dyad. In an organism, the tissues aggregate and the resultant entity is
an organ. In the case of human society, like the individual, no group exists in isolation.
The collectivity of the groups is termed the community. In an organism, the organs
48
Rural Society and
Economy

combine to form the organism, which is the whole. In a similar fashion, the aggregation
of several communities makes the whole called society.
What is social structure? Sociologists use the word social structure to refer to the
inter-relationship, inter-connectedness, and inter-dependence of the different parts of
society. In terms of their form, all societies have the same parts. Thus, there are
groups and communities in all societies, but the nature and substance of these groups
and communities differ from one society to another. For instance, an Indian village
is unthinkable without the caste system, while a Chinese village does not have castes.
Its units are the people of different families and occupational groups. The sense of
identity that the people of different groups have is also seen at the level of the people
of different families and occupational groups in Chinese villages. The inter-relationship
of the different units constitutes the structure of the society.
All the units of a society are supposed to be important, for each one of them makes
a contribution to the functioning of society. In other words, none of them can be
dispensed with. But, in each society, some of its elements are regarded as crucial,
because the society is structured around them. Sociologists think that for defining an
Indian village, its population, physical structure, and modes of production are definitely
important. Usually, a village has less than five thousand individuals. As a physical
entity, it is an aggregation of houses of mixed architecture (some of mud and thatch
and some of cement) in the midst of surrounding agricultural fieldsthe mainstay of
village life is agriculture. Of course, there may be some exceptions to the image of

village that is presented here: for instance, a village may have more than ten thousand
people, as is the case in Kerala. Or, the village may be a conglomeration of beautifully
built cement houses inhabited by people who may predominantly be in service or may
be self-employed non-agriculturalists, as is the case in a number of villages situated
near towns and cities in Himachal Pradesh.
In addition to these indices, sociologists think that the social structure of an Indian
village is understood best in terms of the interrelationship of different castes, as a
common proposition is that the caste system has weakened in urban areas, but not
in the rural areas, where even the members of non-Hindu communities, which have
opposed the caste system, have continued to be treated as castes. In the section
that follows, we shall discuss the caste system in detail.
Check Your Progress I
Note: a) Write your answers in the space provided.
b) Check your answers with the possible answers provided at the end
of the unit.
1) Define the term social structure.
..............................................................................................................
..............................................................................................................
..............................................................................................................
..............................................................................................................
2) Where do you find the most populous villages in India?
..............................................................................................................
..............................................................................................................
..............................................................................................................
..............................................................................................................
49
Rural Poverty

3.2 CASTE SYSTEM

3.2.1 The Concept of Caste
Caste is the main social institution of Indian villages. Referred to as jti, jt, zt or
various other local terms, it is a collectivity of people, related also by the ties of
kinship and marriage, which has a monopoly over an occupation. It provides its
specialized services and the products of its occupation to other caste groups. Harold
Gould characterizes caste as a monopolistic guild. The occupation on which a caste
has monopoly may be very simple. It may not involve any elaborate technology and
skill, and may be learnt easily without much arduous work, such as the occupation
of the caste of messengers, or drumbeaters, or vegetable-peelers. But no caste will
ever venture to usurp the occupation of any other caste howsoever simple and less
specialized it may be.
Under the ideology of caste, ones merit lies in subscribing as conscientiously and
diligently as possible to the duties prescribed for ones caste. The political bodies of
the village strictly deal with any case of usurping the occupation of other castes.
Among other things, the occupation related to it gives identity to a caste. Sometimes,
the castes are also named after the corresponding occupations. For example, those
who supply oil (tl) belong to the tli (oil-man) caste; those who beat drums (dhols)
are dhols; and those who dye (rangn) clothes belong to the rangrez caste. The
occupations are hereditarily transmitted.
Members of a caste marry within their own caste, but usually outside their own

village. In other words, the village is exogamous, while the caste is endogamous.
At one time, in some upper caste communities of Bengal (such as the Rarhi Brahmins)
and Gujarat (such as the Patidars), the men had the privilege of obtaining spouses
from lower castes in addition to spouses from their own caste. Such a system of
marriage, in which the men of upper castes marry women of lower casts allowing
the lower caste women to move up the hierarchy, is known as hypergamy (anuloma).
The contrary system, where women of the upper stratum marry men of the lower
stratum (i.e. where women move down in the hierarchy), is called hypogamy
(pratiloma).
That the classical Hindu tradition permits hypergamy, but not hypogamy, is clear
from Manusmriti, the Hindu law book authored by a sage known as Manu. It allows
a Brahmin man to have spouses from Kshatriya, Vaishya, and Sudra castes in
addition to a spouse from his own caste. Kshatriya men are permitted to have three
wives: one of their own caste and the other two from Vaishya and Sudra castes
respectively. A Vaishya can have two wives: one from his own caste and the other
from Sudra caste. A Sudra can have only one spouse belonging to his/her own caste.
Children born out of hypergamous marriages are legitimate but they do not have the
same rights over the property of their father, as do the children from endogamous
marriages. One of the consequences of hypogamy is the excommunication of the
couples concerned. With the passage of time, such couples established new castes.
A person acquires the membership of his or her caste by birth, i.e. caste is ascriptive
in nature, and theoretically, it cannot be changed, i.e. it is immutable. The chief good
of a person lies in living according to the culture and duties (dharma) of his caste.
According to this ideological system, leading a life according to the dictates and
commands of ones caste not only ensures ones existence in this world, but also the
world hereafter, as one will have an improvement in ones caste status in the following
births. Why one is born in a particular caste is explained in terms of the deeds
(karma) one had done in his or her previous birth. It may be noted that basically
caste system is a system of ideas derived from the classical tradition of Hinduism.
M.N. Srinivas once wrote: The structural basis of Hinduism is the caste system.
50
Rural Society and
Economy

3.2.2 Caste in Villages

A village may be conceptualized as an aggregate of castes, each traditionally associated
with an occupation. Members of a caste are generally clustered together, occupying
a particular physical space in the village, which may come to be known after the
name of the caste like dhobbr (i.e. the settlement of the laundrymen), jton ka
gud (i.e. the habitation of the Jats) or raikon r dhn (i.e. the hamlet of the
Raikas). Each caste has its own style of living, its own types of clothes, its own
distinct pattern of houses, and mutually acceptable common grounds for existance.
It also has its distinct dialect, folk deities, lore, and ceremonies. The members of a
caste are spread over a region in more than one village. The members of a caste
living in nearby villages have matrimonial relations among them. Each caste has its
own council (panchayat), which is a collective body of the members of that caste
living in different villages, but situated close to each other. This body takes up all
disputes between the members of the caste and discusses all instances where the
identity of the caste is abrogated and is in danger. Thus, for political purposes, social
control and matrimony, the members of a caste in a village are dependent upon their

co-caste fellows in other villages. These relations result in the unity of the members
of a caste spread in different villages. M.N. Srinivas has called this type of unity
horizontal solidarity.
In Rajasthan, a common saying is that generally there are thirty-six castes (chatris
quam) in a village. But, in actual fact, no village is found to have all the castes.
Moreover, the total number of castes far exceeds thirty-six. Two points need to be
remembered here.
First, since all the occupational and service castes are not stationed in one and the
village, the members of a caste in a village depend upon the services of castes
situated in other villages. In such a context, the village market (ht) plays a significant
role, because a large number of artisan castes come to it with their specialized
products. For instance, Surajit Sinha studied the weekly market at a village called
Bamni in Singbhum district of Jharkhanda. He found that the average number of
castes in a village of this district is about six. In these weekly markets, however,
goods and services of some sixteen artisan castes are available in addition to the
products handled by specialized traders of some other castes. All this substantiates
the point that the Indian village was never a self-sufficient unit. In a village, different
castes depend on one another for various services. Such dependency relationships
(i.e. those among the various castes living in one and the same village) result in what
M.N. Srinivas has called vertical solidarity.
Secondly, when Indian villagers talk of thirty-six castes or thirty-three crore Hindu
gods and goddesses, what they imply is that there are many and very many
things of which they are speaking. These numbers should not be taken literally. As
for the castes, their number is not stable; it keeps on increasing over time and in some
cases small castes get merged into bigger ones. As noted earlier, often in the past,
sections and sub-sections of tribes moved to multi-caste villages, adopted an occupation
and acquired monopoly over it, and with the passage of time came to be known as
a caste in their own right. Thus, all along there has been a continuum from a tribe
to a caste.

3.2.3 Caste and Class

Caste, as we have seen, is the fundamental principle of social organization in the
Indian village. As Louis Dumont said in his work titled Homo Hierarchicus, castes
are arranged in a hierarchy based on the principles of purity and impurity, which
in fact give distinctiveness to the caste system, because no other system of ranking
in the world makes use of these principles. The caste occupying the highest position
51

is ritually the purest, and as one goes down the hierarchy, purity decreases while Rural Poverty
impurity increases. Those placed at the bottom of the hierarchy, the people who at
one time were called untouchables (now they are called Harijans or Dalits) are
considered to be the permanent carriers of impurity within the idiom of the caste
system. No other social system in the world incorporates the notion of permanent
impurity with such rigidity as the caste system. There may be notions of temporary
impurity (such as, impurity incurred by menstruation, death, or birth), which is overcome
with the performance of rituals, but no ritual can neutralize permanent impurity.
In the caste system, the styles of living are ranked. The way in which, for instance,
the Brahmins are expected to live is regarded the most superior, and those who are
Brahmins by birth have to follow only this lifestyle and no other. Ranking in this
system is not based on economic facts, i.e. the ownership or non-ownership of the

means of production. It is also not based on control over political power. Thus, both
economy and polity are subordinate to the ideology of caste, according to which
ranking is facilitated. The classification based on economic facts is called the class
system. Class is an indicator of the distribution of economic inequality in the society.
The term power stratification, on the other hand, is used for inequality in terms
of the decision-making ability, by which some, as Max Weber says, are able to
impose their will on others and seek compliance from them.
Ideally, class and power, as said previously, are subordinated to caste. A Brahmin,
even if poor, occupies the highest position in the caste hierarchy and commands
unlimited respect from other castes. At one time, the Kshatriya kings wielded power,
but the Brahmin priest officiated in the ritual that accorded them legitimacy to rule.
The producers of economic wealth, the merchant castes (the Vaishyas) pursue different
wealth generating occupations, and are placed just above those whose jobs are
principally menial, i.e. to serve the other three upper castes, as the classical texts
put it. In some parts of India, there was a clear overlapping of the three ranked
orders of caste, class, and power. For instance, both Andr Bteille and Kathleen
Gough, in their respective studies of villages Sripuram and Kumbapettai, found that
the Brahmins, who numbered around four per cent of the total population of South
India, owned around ninety-eight per cent of the land, which they abstained from
tilling because of religious injunctions that did not allow Brahmins to touch ploughs.
The Brahmins, who lived in their separate quarters called agraharam, were also in
control of political power. Therefore, being a Brahmin also meant occupying the
highest position in class and power hierarchies. This was an example of what after
Robert Dahl one would call cumulative inequality. In this case, social status together
with economic and political power are all concentrated in one group, the Brahmins.
The typical Brahmin villages of South India have also been locally called
agraharavadai.
Surely, not all the villages in India followed the pattern charactristic of villages in
South India. In many other parts, the caste that controlled economic resources was
certainly not of Brahmins, nor even of Kshatriyas. In Rampura, the Mysore village
that M.N. Srinivas studied, the landowners were the peasants, the members of the
caste called Vokkaligas. In North India, the principal landowners were and are the
Jats. In such cases, economic stratification is independent of the other principles of
ranking, and can in fact influence them. Thus, those who control political power may
also be the landowners. In this case, different ranked orders do not overlap; they
rather exist independently. For such a system, one can use the term dispersed
inequality, for the group that occupies the highest position in one ranking system is
placed lowly in the other. Keeping this in mind, many sociologists make a distinction
between ritual status and secular status the former emerges from the caste,
which is essentially a ritual hierarchy, while the latter emerges from the ownership
of economic and political power. When these two statuses exist independently, it is
a case of dispersed inequality; and when they overlap, it is cumulative inequality.
52
Rural Society and
Economy

Although myriad varieties of social change have affected social stratification in Indian
villages, perhaps one will not be wrong in saying that at one time, South India
generally had Brahmin-centred villages whereas North India had non-Brahmin
centred villages. For the villages where non-Brahmin castes control economic

resources, the term pandaravadai is used in contrast to agraharavadai, the Brahmincentred

villages.

3.2.4 The Jajmani System

Earlier, it was observed that the various castes living in a village are interdependent
because each one of them has a monopoly over an occupation. If some occupational
caste is not found in the local area, then some other caste may take up its occupation,
and develop specialization in it. For instance, the blacksmiths of Senapur, a village in
Jaunpur district of Uttar Pradesh, also worked on wood because there were no
carpenters in that area, and so they made and repaired agricultural implements for
the landowner-peasants, the Thakurs. The interdependence between castes obtains
in two ways:
i) A caste provides its goods and services to other castes in exchange for payment
in kind or cash, but this payment is done instantly, and if deferred, it is for the
shortest period of time. A lot of haggling also enters this exchange. The relations
here are largely contractual and impersonal. They are quite like the relations one
will expect to find in cities and towns. In villages, such relations may exist
between the merchant caste and the other castes. The latter buy goods and
commodities from the shop of the local merchant, a man of the Vaishya caste,
and pay him instantly. If instant payment is not made, the shopkeeper may
advance credit, but before further merchandise is acquired, the buyer will have
to settle all the previous accounts. In some cases, the merchant may charge
interest for the amount on credit.
ii) By contrast to the first type of interdependence, the second type comprises
relations that are broadly supportive, group-oriented, long-term and continuing,
and they involve multiple bonds between people involved in the exchange. These
relations are durable, unlike the relations between the shopkeepers and the
buyers, where after one has bought the product and paid for it, the relation
comes to an end.
In villages, durable relations obtain mainly between food-producing families and the
families that supply them with goods and services. These relations are called jajmani,
the Hindi word for them as used in William H. Wisers study of a village in Uttar
Pradesh. In other parts of India, they are known by other names. For instance, in
Maharashtra, they are known as balutdari. Notwithstanding the differences in the
terms used, certain features of the system are common throughout India. Although
the jajmani system is regarded as a characteristic of rural India, it has also been
reported from urban areas. Sylvia Vatuk described the jajmani system that was in
operation in Meerut City.
In the jajmani system, at the center is the family of the agriculturist (zamindar). It
receives services from the families of occupational castes. One who receives services
is known as jajman, the patron. The families that provide services are known as
kamin, kam karne waley, or kamgars (workers). In other parts of India, terms such
as parjan, pardhan, balutedar, etc., are also used for the providers of goods and
services. All these words literally refer to the same people, i.e. those who work
for others, and one may call them clients. The implication is that those who do not
work (like zamindars, the big landowners) occupy the highest position in the secular
ranking; those who work for themselves, the self-employed workers, come next;
and at the bottom of the system are placed those families that work for others,
53

carrying out various menial jobs. The castes, which happen to provide services to the Rural Poverty
agriculturalists, vary from one village to another. And, not every caste in the village
happens to be a part of the jajmani system. The simplest definition of the jajmani
system can be: it is a patron-client relationship.
Although the jajmani relationship seems to be between castes, in reality, it is between
particular families belonging to particular castes. It is the relationship between families
that continues to exist over time. Jajmani ties are hereditary, i.e. various families
(belonging to various castes) keep on providing their specialist services to particular
agriculturist families generation after generation. The latter do not have the right to
discontinue the services of the families of serving occupational castes. If they are not
satisfied with the quality of the service, or they notice slackness on the part of the
service-providers, they are expected to bring this matter to the attention of the council
of the caste to which the erring family belongs.
These relations are not like wage-relations, which can be terminated after the transaction
is over. They are durable, in the sense they continue over generations. They are
exclusive, in the sense that one family will carry out its relations with only one
particular family of the particular occupational caste. Because of whatever reasons,
if a family is to move out of an area, it is its moral duty to find an alternative service
provider for its patrons. Many sociologists have found that jajmani rights are also
sold. The point is that no family (whether of the jajman or kamin) will move out of
the relationship unless it has provided an alternative to the other.
Earlier, it was noted that there are multiple bonds between the patron and the client.
The patron looks after all those families that work for him. He advances loans or gifts
to them at the time of festivals and other similar occasions. He safeguards their
interests and saves them from exploitation at the hands of others, i.e. the jajmani
system is based on the ideology of paternalism.
The clients continue to provide services throughout the year to their patrons. At the
time of the harvest, the patrons give their clients a portion of the produce, which in
North Indian villages is known as phaslana. The jajmani system is an example of
deferred payment, which is entirely different from that in the wage labour. Further,
there is no bargaining on the amount of crop/produce given to a client. If the season
is lean, all suffer, be he the patron or the client. And, if there is a bumper crop, then
all are equally benefited. Generally, jajmani payments are made quietly, but there can
always be situations where the patrons publicize the size of payments they are
making, or the clients may show their unhappiness on receiving not-so-satisfactory
payments.
Some sociologists think that the jajmani system is exploitative. The agricultural
castes, which are invariably upper castes, seek the services of occupational castes,
which are generally lower castes, without reciprocating adequately. The exploitation
of lower castes continues under the garb of paternal ties. The opposite argument is
that the jajmani system is functional. It gives security to lower castes that they will
never go hungry. For the upper castes, it ensures a regular and uninterrupted supply
of services. Because of these relations, the village emerges as a unified body, where
the patrons organize rituals and activities that symbolically effect the unity of the
village. For instance, it is believed that some deities (known as Bhumia, Kshetrapal,
etc.) guard the boundaries of the village. The patrons regularly organize collective
worship of these deities. The overall picture is that those who receive the largest
number of services are the ones who are expected to care the most for the welfare

of the village.
In the last fifty years, the jajmani system has undergone many significant changes.
It has already been said that not every caste of the village participated in this system.
In addition to the jajmani relation, there has always been contractual, wage-labour
54
Rural Society and
Economy

type of ties between the providers of goods and services and their buyers. Further,
with the rise of the backward class movements in the recent past, certain castes that
were a part of the jajmani system have withdrawn themselves from it. The introduction
of cash economy has also brought about changes, because payments in the jajmani
system were always in kind rather than in cash. With the ever expanding commercial
frontiers, new opportunities have come up in towns and cities, and many occupational
castes have sought to take advantage of this situation. They move to participate in
these opportunities after seeking withdrawal from the jajmani ties.

3.2.5 Social Mobility in Indian Villages

As discussed earlier, a person born into a caste is expected to live according to its
lifestyle and perform duties that characterize it. Thus, being allocated by birth, ones
caste cannot be changed. A person born into a caste will always belong to it as a
life-long member. In his/her future births, because of good deeds, he/she may be born
into a superior caste. In other words, theoretically, upward mobility is not possible
within the caste system, except for women who may move up by means of
hypergamous marriages. Similarly, downward mobility results from hypogamous
marriages.
Economic opportunities are considerably limited in villages. Agricultural surplus is not
significant either. Virtually nothing is left with the peasants after they have made the
jajmani payments. Barring the big landlords, others in villages live rather precariously,
often hand to mouth. Those, who have been able to move out to towns and cities for
work, have been able to make some money, which they have invested in buying
agricultural land, but the number of such families is not large. The point to be
emphasized here is that class mobility was also non-existent in the village. Power
hierarchy in villages depends on the control over economic resources. Therefore,
those who lagged behind economically would never hope to get any significant place
in political bodies. By considering the factors of caste, class, and power, one may say
that the Indian village was a closed system, i.e. it did not provide any avenues for
anyone to move up in the caste, the class, or the power hierarchy.
Undoubtedly, it is true that in villages the position of an individual is fixed once and
forever. This is in sharp contrast to urban areas where the individual is mobile, and
upward mobility is a cherished value. In spite of the formidable restrictions on ones
mobility in the rural areas, there have been cases of the sections of lower castes
moving up in the hierarchy. There are cases of individuals becoming rich after their
having participated in the newer economic activities emerging in towns and cities.
Mobility from villages to urban locales has always been there. Whether this mobility
was triggered by rural poverty or the concentration of lucrative opportunities in urban
contexts is a different question.
The first person to show that the caste system was not truly immutable and that it
was not as stagnant as it was made out to be, was M.N. Srinivas. In his study of
Coorgs in Karnataka, he showed that originally they were tribals. With the passage
of time, they were able to find a place in the caste system, where they rose to the

position of the Kshatriyas. Srinivas termed this process of upward mobility in the
caste system sanskritization. It can be defined as the process of ritual mobility
whereby a lower caste or a tribe (wholly or partially) emulates the customs and
practices of the upper caste with an explicit intention of improving upon its own
status. It envisages its eventual merger with the caste whose customs and practices
it endeavours to follow.
Srinivas shows that the evidence for the existence of the process of sanskritization
is available in the ancient as well as the medieval literature, but it became an
important process of upward mobility with the advent of the British. A significant
55

change that occurred in the Indian society under the British regime was that land Rural Poverty
became a marketable commodity; it could be sold and acquired in the market. Earlier,
it was inherited through the ties of kinship; it passed down in the family line, but could
not be sold and bought.
The other change that took place was the emergence of towns in the vicinity of
villages. These towns provided several opportunities, offering caste-free and classfree
occupations. The only occupation that happened to be caste-free in villages was
agriculture. Further, the pressure of population in villages, along with the emergence
of opportunities in towns, was sending people out to towns and cities, where they
participated in cash economy. Within a space of few years, they were able to earn
substantial amounts of money with which they could buy agricultural land in their
native villages. And, once they had attained economic power, they claimed a higher
ritual status, which they would certainly achieve, provided originally they were above
the line of pollution. There have been cases of castes below the line of purity,
which claimed upper caste status, but could not succeed in acquiring it mainly because
of their polluting status. Srinivas wrote that Sanskritization does not help the
untouchables.
Thus, changes have occurred in the position of castes by means of sanskritization.
It may be noted, however, that sanskritization was of no consequence to the upper
castes, such as Brahmins, Kshatriyas, and Vaishyas, for they were already
sanskritized, i.e. they already followed what Srinivas has called sanskritic Hinduism.
These castes were the first ones to opt for a Western way of life that came along
with the advent of the British. Srinivas has called the process of adopting the Western
lifestyles Westernization.
The castes below the line of purity tried, from time to time, their level best to move
up in the ritual hierarchy. They also had the pre-requisites for sanskritization, such
as control over the local economic resources. But, being below the line of purity,
they failed to establish marital and commensal (i.e. eating together) relations with the
castes whose lifestyles they were trying to emulate. Once their attempts to move
upwards failed, they had no option but to adopt the political path for bringing about
changes in their status. In other words, their mobility was not along the axis of caste
status, but along the axis of political power. Initially for these castes, but later for
all the castes, the route of politics grew in importance for purposes of upward social
mobility. All the castes realized that in a democratic setup each one of them constituted
a vote-bank, and they could exercise their pressure on the state for a better deal.
Thus, the caste became an interest and a pressure group and politicization, i.e. the
process of adopting various political values, became a functional alternative to
sanskritization.
Thus, sanskritization was meaningful only for castes lying in the middle level of the

hierarchy, but then, these castes constituted the majority of them. In addition to the
cases of upward ritual mobility, sociological literature also acquaints one with the
cases of downward mobility in ritual hierarchy. In the study of a village in Haryana,
S.K. Srivastava found that the Brahmins were gradually assimilating the lifestyles and
occupational aspects of Jats, with the explicit intention of becoming one with them.
This case was the converse of the process of sanskritization, and Srivastava termed
it de-sanskritization. In Udaipur villages, S.L. Kalia found that some castes were
adopting the lifestyle of the Bhils, a tribal group. This was also a case of downward
ritual mobility. Kalia called this process tribalization.
To sum up, the Indian village was never a self-sufficient social or economic unit. It
had relations with the outside world. Benefiting by the changes emerging in it, many
people were able to find respectable places in villages. As a consequence, different
units of the village were able to move up. Upper castes adopted the Western way
of living and institutions. Castes below the line of purity had no option but to follow
56
Rural Society and
Economy

the political path for ameliorating their status and conditions. Middle castes followed
the process of sanskritization. Also, some upper castes tried to seek their identification
with lower castes. In terms of these four processes (viz sanskritization, Westernization,
politicization, and de-sanskritization), one may formulate a composite model of
social mobility in India.
Check Your Progress II
Note: a) Write your answers in the space provided.
b) Check your answers with the possible answers provided at the end
of the unit.
1) Write briefly about the concept of caste.
..............................................................................................................
..............................................................................................................
..............................................................................................................
..............................................................................................................
2) What do you mean by a class in the context of an Indian village?
..............................................................................................................
..............................................................................................................
..............................................................................................................
..............................................................................................................
3) What do you understand by the jajmani system?
..............................................................................................................
..............................................................................................................
..............................................................................................................
..............................................................................................................
4) Do you think that sanskritization is still a relevant process of upward
mobility for lower castes in contemporary rural India?
..............................................................................................................
..............................................................................................................
..............................................................................................................
..............................................................................................................
..............................................................................................................

3.3 FAMILIES IN RURAL INDIA

Family is the cornerstone of human society. It is a universal social institution. Of the

many functions, the most important and non-transferable function it performs is the
socialization of children. Along with the changes occurring in the human society, the
functions of the family have also undergone change. In traditional societies, the family
performs many economic, political, and religious functions; thus, it is not a specialized
entity. With the passage of time, however, these functions are transferred to other
57

specialized institutions. The family, which is the unit of production in simple societies, Rural Poverty
ceases to be so when the market and the other specialized institutions take over the
function of production. In modern societies, the family becomes a unit of consumption.
During the course of its evolution, the family has shed many of its function in favour
of other institutions, and so, it has become a truly specialized institution in modern
societies. Talcott Parsons says that its first function in the contemporary American
society is to carry out the task of providing basic learning to children; this is the
function of primary socialization. Its second function is to help in the process of
stabilizing adult personalities. As the family is a primary group, resting on the sentiments
of affinity, love, and concern, it combats the strains and stresses that are generated
in the modern society, which is pivoted on means to ends relations.
Writing about India during the colonial times, Henry Maine stated that mainly two
cultural traits characterized India: the caste system and the joint family. The latter
was described as being found predominantly in villages. It was also considered an
ideal a supreme value to which every family aspired to approximate. In many
surveys, it was found that people preferred to live in joint families because of several
advantages that it offered. For example, both the old and the young could be looked
after well in joint families.
A joint family is defined as an aggregate of kinspersons who share a common
residence, a common kitchen, a common purse including property, and a common set
of religious objects. Generally, a joint family has a name, which in many cases is
given/taken after the name of its founder. It has a depth of more than two generations.
It is not uncommon to come across joint families that have members of four generations
living together. Joint families in India are patrilineal (i.e., descent is traced in the
male line, from father to son), patrilocal (i.e., all the males of the family live together,
while the females born in the family move out when they get married), and patriarchal
(i.e., men exercise authority).
The chief textbook of Hindu law, written in the twelfth century, the Mitakshara, has
codified the most significant characteristic of the joint family. Under this code, each
male is entitled to an equal share of the household property from the time of his birth.
Thus, all the male members of the family have equal rights in relation to the family
property. The oldest male called karta, however, has the exclusively right to manage
it on behalf of others. One of his main duties is to see that the family property is not
divided. The equal rights that all males have on the property are known as coparcenary
rights, which constitute the prime characteristic that defines the Indian joint family.
When speaking of an extended family, ones emphasis is on the size of the family.
An extended family is a conglomeration of two or more nuclear families. On the
other hand, when one speaks of the joint family, ones emphasis is on the fact that
all brothers/males are coparceners.
Although joint families are found more in the rural than in the urban areas, where
most of the families happen to be nuclear, one should not conclude that all castes in
a village have the tradition of joint families. It has been observed that upper castes,

which are also land owners in many cases, have a higher proportion of joint families
than the lower castes, the less propertied as well as the non-propertied ones, which
tend to have a higher number of nuclear families. Undoubtedly, there is a direct
relationship between the ownership of land and the joint family, because property
remains one of the important unifying forces.
The ideal of a joint family, as an institution in which each individual surrenders his
or her personal interests for the sake of the family and its unhampered continuity, is
hardly ever achieved. Till the time the head of the household is alive, he can succeed
in keeping all his sons together and the family property may continue undivided. After
58
Rural Society and
Economy

his death, his eldest son would succeed him by the right of primogeniture, but it might
become difficult for him to keep all the brothers and their wives together. Sooner or
later, they would all separate, each getting an equal share of the family property, and
each nuclear family, thus formed, would start its process of expansion, becoming a
joint family in course of time, and then breaking up once again and so on.
This process of expansion-depletion-replacement of the family is known as its
developmental cycle. One of the suggestions that emerge from this analysis is that
a family should be studied as a process, as this approach promises a better understanding
of the issues at hand.
As in cities, the forces of modernization have also affected village societies, leading
to both occupational differentiation and geographical mobility. Members from the
same family take up different occupations. Once this occurs, it becomes extremely
difficult for brothers to live together; and being in different occupations, there is
bound to be inequality in their respective earnings. Such a situation does not arise
when they are all working as agriculturists on the same land, as whatever is produced
is for the consumption of the entire family. This system works well in situations that
do not have individualism and individual consciousness is subordinated to collective
consciousness. With occupational differentiation crystallizes individualism and inequality,
making it difficult for the joint family to continue undivided for years and years.
Geographical mobility fits quite well with the nuclear family. When a married son gets
a job abroad or away from the village, he moves to his new locale alone, leaving
behind his wife and children under the care of his joint family. When he gets a place
to live, or is allotted family accommodation, he takes with him his wife and children,
rather reluctantly, because it is the beginning of the disintegration of the joint family
and the establishment of a nuclear family. This explains the preponderance of nuclear
families in urban areas.
Lastly, it should be kept in mind that the nuclear families emerging in India because
of the break up of joint families are very different from the nuclear families in the
Western world, where the expression nuclear family implies a family that is
structurally isolated, i.e. a family that has no dependency relations with any other
family whatsoever. Indian nuclear families are still embedded in strong kin bonds;
they are not isolated as are their counterparts in the West. In India people may live
in nuclear families, but they are dependent on their relatives, living in different types
of families, for varieties of help.
Thus, the Indian nuclear family is not structurally isolated. If structural isolation
is the main characteristic of nuclear families, then the Indian phenomenon needs to
be designated differently. Some sociologists are using the term nuclear households

to differentiate Indian nuclear families from their Western counterparts. They say
that so far structurally isolated nuclear families have not emerged in India; instead
what has emerged here is a variety of nuclear households. Each one of them
comprises a man, his wife and their unmarried children. And each of these units has
long-term, stable, and multiple relations of interdependence with their kinspersons.
Check Your Progress III
Note: a) Write your answers in the space provided.
b) Check your answers with the possible answers provided at the end
of the unit.
1) Give three salient characteristics of an Indian joint family.
..............................................................................................................
..............................................................................................................
..............................................................................................................
59

2) Explain one of the major reasons behind the break up of the joint family in Rural Poverty
rural India.
..............................................................................................................
..............................................................................................................
..............................................................................................................
..............................................................................................................

3.4 NATURE OF THE DISTRIBUTION OF POWER IN

RURAL INDIA
The popular image of an Indian village is that it is free from conflicts and thefts.
During the course of their fieldwork, scholars have noted invariably that villagers
nostalgically remember the days when they did not need to lock their houses, for each
one respected the dignity and the goods of others. Consensus prevailed on almost all
issues, but if disagreements cropped up, they were amicably sorted out with the
intervention of the elderly. The rich parted with their excessive wealth for the welfare
of the poor. In some cases, people praised their villages for having never been visited
by policemen. Women were safe in all respects, and people adhered to religious
values and led a god-fearing existence.
Although it is an idealized version, which of course is far being exact, there undoubtedly
is a grain of truth in much of what has been and is being said about the village. In
comparison with the situation in towns and cities, inter-personal conflicts are fewer
in villages. The rich may not part with their wealth in favour of the poor, but they
certainly display a guardianlike supportive attitude towards them. General consensus
prevails with respect to the norms and values, which in any case are largely uniform
and hardly contradictory, and this is one of the reasons why there are fewer cases
of dissent and conflict in villages. Certainly, the hold of religion on traditional societies
is greater than it is on complex societies.
The conclusion one reaches from a comparison of the idealized view of the village
held by its inhabitants and the reality that exists, is that the village is not a stable,
stagnant, and changeless entity.
Conflicts emerge between the members of a caste and also between different castes,
and the contending parties do not always find it easy to solve them. Villagers in North
India say that conflicts between different people pertain mainly to the matters of land
(zamin), wealth (zar) and women (zanani). For reaching a solution to these conflicts,
each village has a council called panchayat, consisting of knowledgeable and upright

people, who pronounce impartial judgements, supposed to be binding on all.

In addition, as has been noted earlier, each caste has its own panchayat, which takes
up matters it is confronted with. For the sake of distinguishing one from the other,
one may call the village panchayat a gaon panchayat, and the caste panchayat, a
jati panchayat. The functions of each one of them are different, for they serve
different bodies. Besides resolving the conflicts between different families, a gaon
panchayat is also entrusted with undertaking the collective tasks of the village, such
as performing rituals for the welfare of the entire village, or organizing programmes
pertaining to the donation of voluntary labour (shramdana) for building a road or a
granary. A jati panchayat deals exclusively with the issues pertaining to the caste
concerned. For example, it may further the interests of the caste or, in some literate
contexts, it may publish a caste periodical.
60
Rural Society and
Economy

A traditional caste council called panch (i.e. five) comprises a small but always an
odd number of members. It listens to the cases of dispute and takes decisions
democratically. The odd number of its members helps in deciding cases by the rule
of majority when they do not reach a consensus. It is not necessary that a panch
will always have just five members, as is sometimes proverbially said. The idea of
five implies that the council is a small group and that the number of its number is
always odd.
Srinivas says that in villages, it is invariably the members of one particular caste who
exercise their dominance on others. To explain this phenomenon, he introduced the
concept of the dominant caste, which is defined in terms of the following criteria:
numerical predominance;

control over economic resources;

control over political power;
high ritual status; and
the first-ones who have taken advantage of the Western education system.
It is not necessary that all these criteria have to be met for designating a group as
dominant. A dominant caste may not have numerical preponderance or it may not tilt
towards Westernization. The more important criteria, it has been emphasized, are
control over the factors of production and political power. In villages, the dominant
caste is usually associated with agriculture. Let us refer to Jan Bremans data on
peasants and migrants belonging to Surat (Gujarat). He says that in the whole district
of Surat, the Kanbi Patidars occupy the highest status in the field of agriculture. They
own large portions of land, and with the passage of time, they add more and more
land to their already massive land holdings. Consequently, in this area, lower castes
have been reduced to a marginal status. In Rajasthan, even after the land reforms,
the ex-landlords (jagirdar) continue to own vast tracts of land and remain dominant
socially. It has also been seen that the dominant castes resort to violence to keep the
other castes in a state of submission.
Take an example to illustrate this. In Wangala, a village in Mysore that Scarlett
Epstein had studied, in the plays that the Harijans of the village organize, the actor
playing the role of a king does not sit on a prop throne but squats. The idea is that
his head should not appear at a level higher than that of the dominant caste members

among the audience. On one such occasion, their drama company announced that in
their forthcoming production, a stage throne would be used, and the king would sit
on it. There was a strong reaction to this idea. The Vokkaligas, the dominant caste
of Wangala, stopped employing Harijan labourers. Eventually, the Harijans had to
tender an apology and pay a fine for their assertion. Only after this expression of
submission peace came to prevail. Similarly, in Madhopur in Uttar Pradesh, when the
lower caste people (of Noniya caste) started donning the sacred thread, the dominant
caste adopted violent methods to make them stop assimilating the traits of upper
castes. The point being made is that the dominant castes do adopt methods of all
descriptions in order to maintain their status unassailed.
Often, the dominant castes display uniformity in terms of their behaviour and interests.
Although with the emergence of Panchayati Raj and land reforms, the nature of
dominance has changed in rural India, there is no doubt that certain castes still
exercise decisive dominance in villages. In many cases, the studies point out that
people have become disillusioned with their traditional councils. There was a time
when the council members were compared to gods (the idea of panch parmeshwar),
and it was said: Where there is a panchayat, there is god. But now, people prefer
to approach formal institutions (such as the courts, police, and other administrative
bodies) for the settlement of their disputes.
61
Rural Poverty

Check Your Progress IV

Note: a) Write your answers in the space provided.
b) Check your answers with the possible answers provided at the end
of the unit.
1) What are the different types of the traditional council (panchayat) found
in Indian villages?
..............................................................................................................
..............................................................................................................
..............................................................................................................
..............................................................................................................
..............................................................................................................
2) Define the concept of dominant caste.
..............................................................................................................
..............................................................................................................
..............................................................................................................
..............................................................................................................
..............................................................................................................

3.5 LET US SUM UP

An Indian village is composed of endogamous units, each following its own occupation
traditionally associated with its caste, locally known as jati. The number of castes
a village has varies from one context to another. Large villages have more castes
than small villages, but no village has all the castes. Thus, the members of one village
depend upon others in their neighbourhood for various services. The Indian village
was never self-sufficient as some colonial officers believed. Each village has its own
dominant caste, which has very high representation in the political bodies of the
village. Often, the decisions they take serve their own interests. At the local level,
each caste comprises a set of families, and it has been noticed that there is a close

relationship between caste and kinship. Generally the upper, propertied castes usually
have joint families, whilst lower, non-propertied castes have nuclear families. With
changes occurring because of urbanization and modernization, the families are becoming
smaller all over India, but it does not imply that joint families have disappeared.

3.6 KEY WORDS

Ascriptive : This term means by birth. Ascriptive status is that social
position which one acquires by birth.
Caste System : Practised in India, it is the main traditional system of social
stratification, which is ascriptive and based on the notion of
mutually opposing characteristicspure and impure.
Client : While translating the words, jajman and kamin, the terms
used are patron and client. The meaning of the word
client in this context is one who provides the services of
an occupation to the other caste. The term client can be
used interchageably with the term occupational caste.
62
Rural Society and
Economy

Panchayat : It is a small body of elders that takes up the cases of

dispute among people, and pronounces its judgement, which
the contending parties are expected to follow.
Horizontal Solidarity: It is the unity of the people who belong to the same caste
or social stratum, but are spread across a number of
neighbouring villages.
Vertical Solidarity : It is the unity of the people who belong to different castes
or hierarchical social strata, but belong to one and the same
village.

3.7 SUGGESTED READINGS AND REFERENCES

References
Atal, Yogesh. 1968. The Changing Frontiers of Caste. Delhi: National Publishing
House.
Bteille, Andr. 1965. Caste, Class and Power: Changing Patterns of Stratification
in a Tanjore Village. Berkeley: University of California Press.
Bliss, C. and N. Stern. 1982. Palanpur: The Economy of an Indian Village.
Oxford: Oxford University Press.
Breman, J., P. Kloos, and A. Saith. (eds.) 1997. The Village in Asia Revisited. Delhi:
Oxford University Press.
Chauhan, Brij Raj. 2003. Village Community in Veena Das (ed.) The Oxford India
Companion to Sociology and Social Anthropology. Delhi: Oxford University Press.
Mandelbaum, David G. 1970. Society in India. Berkeley: University of California
Press.
Sharma, K.L. (ed.) 2001. Social Inequality in India. Jaipur and New Delhi: Rawat
Publications.
Srinivas, M.N. 1996. Village, Caste, Gender and Method. Delhi: Oxford University
Press.
Suggested Readings
Chakravarti, Anand. 1975. Contradiction and Change: Changing Patterns of
Authority in a Rajasthan Village. Delhi: Oxford University Press.

Dasgupta, B. (ed.) 1977. Village Studies in the Third World. Delhi: Hindustan
Publishing House.
Gough, Kathleen. 1981. Rural Society in South India. Cambridge: Cambridge
University Press.
Gould, Harold A. 1990. Politics and Caste. Delhi: Chanakya Publications.
Jha, Hetukar. 1991. Social Structure of Indian Villages: A Study of Rural Bihar.
New Delhi: Sage Publications.
Leaf, Murray. 1972. Information and Behaviour in a Sikh Village. Berkeley:
University of California Press.
63

Mayer, Adrian C. 1960. Caste and Kinship in Central India: A Village and its Rural Poverty
Region. London: Routledge and Kegan Paul.
Pocock, David F. 1973. Mind, Body and Wealth: A Study of Belief and Practice
in an Indian Village. Oxford: Basil Blackwell.
Srivastava, V.K. 1999. Some Characteristics of a Herding Caste of Rajasthan
in M.K. Bhasin and Veena Bhasin (eds.) Rajasthan: Ecology, Culture and
Society. Delhi: Kamla-Raj Enterprises.

3.8 CHECK YOUR PROGRESS: POSSIBLE ANSWERS

Check Your Progress I
1) The term social structure, originally coined by Herbert Spencer, refers to the
inter-connections of different parts of society, such as individuals, groups,
institutions, associations, organizations, communities, etc.
2) The most populated villages in India are found in Kerala; some of them have
above ten thousand individuals
Check Your Progress II
1) Caste is a system of social hierarchy found in south Asia, especially India, and
all those countries where Hindus have settled down, such as Fiji, Trinidad,
Mauritius, South Africa, United Kingdom, United States of America, etc. In this
system, the society is divided into clearly bounded units called castes, locally
called jatis, each exercising monopoly over a particular occupation. A person
becomes the member of a caste by being born into it. In other words, caste is
ascriptive. The members of a caste share a common lifestyle they live in
houses that look alike, they dress up in a similar manner, they speak the same
dialect, they repose faith in the same set of deities, they have the same set of
rituals, and in a village, they are generally clustered together. Each caste is
endogamous, i.e. each one of its memebers seeks its spouse from the families
of its own caste that are settled in other villages. Each caste has its own
political body called panchayat, which is entrusted with the task of amicably
resolving the conflicts that surface between the members of the caste. In
running the systems of production in a village, each caste is dependent upon
other castes. It is because of the inter-caste dependence that a village develops
bonds of social unity.
2) By comparison with caste, class has an economic referent. Classes pertain to
the system of production and there are basically three classes that make an
Indian village:
i) those who own the means of production (i.e. land, livestock and/or capital);
ii) those who lease the needed resources from the first class and use them
on condition that in return they would pay the relevant rent or a part of

their produce; and

iii) those who do not have any resources at their command, nor do they enter
any economic arrangement to procure resources, but work as labourers
to earn wages for the service they render.
The first class is of the owners (malik ), the second of the tenants (kisan)
and the third of the labourers (mazdur). Theoretically, class relations are
independent of caste, but it has been seen that in Indian villages, there is
often an overlapping between the two. Those who happen to own land also
happen to be from the upper castes, and those who are landless labourers
are from the lower castes.
64
Rural Society and
Economy

3) William Wiser introduced the term jajmani system in his study of a village in
Uttar Pradesh. It is a system of patron-client relations. At the center of the
system are the agriculturist communities, which are served by various occupational
castes, such as the carpenter, the barber, the laundryman, the potter, the blacksmith,
etc. These occupational castes provide their services to the agriculturist caste for
the entire year but are paid in kind at the time of harvest. These relations are
hereditary and happen to be between families belonging to different castes.
Sometimes, a family has jajmani ties with the entire village. For instance, the
family of the village guard (chowkidar), who serves all the different castes of
the village, receives payments in kind from only some of them, as it may not
receive any payments from the castes below the line of purity.
4) The impact of the process of sanskritization as a process of upward mobility
has considerably reduced because backward castes have found the political route
to upward mobility far more effective in the present-day India. Mobility along the
axis of status (i.e., sanskritization) has been replaced by mobility along the axis
of power (i.e., politicization). It is so mainly because sanskritization has not
helped the castes below the line of purity to move up the caste hierarchy.
Check Your Progress III
1) The three salient characteristics of the joint family in India are:
i) Kinspersons belonging to the joint family share common religious beliefs,
common property and a common residence.
ii) All the descendants of the joint family (male and female), recognized by the
principle of descent, have an equal right on the family property. These rights
are called coparcenary.
iii) The head of the household in a patrilineal family is usually the eldest male,
who is called karta. His main job is to work towards the unity and integrity
of the family. He is the manager of the property and is supposed to supervise
it well and keep it together by saving it from all forces that try to break it.
2) Many reasons have been given to explain the break up of the joint family in India.
Occupational differentiation, however, seems to be the strongest of them all.
When members of a joint family follow the same occupation, it is easier for them
to live together than when they branch out into different occupations. When in
different occupations, they are also differentially placed in terms of their respective
incomes. This inequality at the level of economy does not create viable conditions
for different members of the household to live together and pool in their resources.
Occupational differentiation is also closely connected with geographical mobility.

Occupations take individuals away to different places. Obviously, in such migrations,

it is the nuclear family that travels together instead of the entire joint family which
goes on losing its sub-groups by and by.
Check Your Progress IV
1) Indian villages have two types of traditional council. The first to which an individual
is affiliated is the council of ones caste, called the jati panchayat; and the
second is the council of the village, which is known as gram/gaon panchayat.
Caste councils extend beyond the boundary of a village. They comprise members
of the same caste distributed over the region in neighbouring villages. In other
words, a caste council cuts across the villages in the neighbourhood. It is one of
the principal factors contributing to solidarity among members of the same caste,
called horizontal solidarity. A village council, as the name suggests, is of the
village. Its jurisdiction is confined to the village concerned. It takes up matters
pertaining to the village, thus contributing to the solidarity between the members
of different castes living in one and the same village. This type of solidarity is
called vertical solidarity.
65

2) It was M.N. Srinivas who introduced the concept of dominant caste. This term Rural Poverty
is used for the caste that has numerical preponderance in a village. It also
exercises control over economic resources, such as land, livestock, houses,
instruments and implements of production, etc., because of which it has political
power. Its members constitute the best represented group in the village council.
In other words, in the case of the dominant caste, there is a close association
between economic and political factors. Also, it enjoys a high ritual status, and
has often been the first to take advantage of the education system that the British
introduced in India.