ALLOCATION OF SUBSIDIES AND
THEIR IMPACT ON RURAL DEVELOPMENT A MICRO LEVEL STUDY
A
V* ^ ’
„
R AVINDRA K U M A R
Centre For Rural Development and Appropriate Technology
Submitted
in fulfilment of the requirements of the degree of
D O C TO R OF PHILOSOPHY
to the
INDIAN INSTITUTE OF TECHNOLOGY, DELHI
M A R C H 1990
C E R T I F I C A T E
T h i s is to c e r t i f y that the thesis entitled,
’’A l l o c a ti o n of S u b s i d i e s and their Impact on Rural D ev e l o pm e n t : A M ic r o Level Study", s u b mi t t e d by Mr. R a v i n d r a Kumar, to the Indian I n st itute of T e c hn o lo g y , D e l h i for the a wa rd of the d egree of D o c t o r of P h i l o s o p h y in rural m a n a g e m e nt is a
r ec o rd of b o n a f i d e r e s e a r c h w o r k c ar r ie d out by him. Mr. R a v i n d r a K um ar h as w o r k e d u n d e r my g u i d an c e and s u p e r v i s i o n a n d has f ul f il l ed the r e q u i r e m e n t s for the s u b m is s i o n of the thesis.
T h e r e s u l t s c o n t a i n e d in this thesis have not b e en s u b m i t t e d to any o t h e r U n iv er s it y or In s ti tu te for the a w a r d of any d egree or diploma.
O b s e r v a t i o n s r e c e i v e d from the e x am in e r s have been a c c o u n t e d for in the thesis.
V i n ay s h i i G a u t a m Ph.D.
T h e s i s S u p e r v i s or and P r o f e s s o r of M a n a g e me n t
Indian I ns ti tu te of T e c h n o l o g y N E W DELHI - 110016 (INDIA)
U i )
A C K N O W L E D G E M E N T S
I feel p r o ud and p r i v i l e g e d in e x p r e s s i n g m y deep s e ns e of g r a t i t u d e and i n d e b te d ne s s to Dr. Vinayshil Gautam, Profe s so r, C e n t r e for M a n a g e m e n t Studies* Indian I n s ti t u t e of T e c h n o l o g y (IIT), D e l h i for his s c h o l a r l y guidance,
c o n s t r u c t i v e sugges t i on s, s u s t a i n e d interest, and incessant e n c o u r a g e m e nt d u r i n g the e ntire p e r i o d of i n v es t i g at i on
and p r e p a r a t i o n of m a n u s c r i p t . My g r a t i t u d e is a l s o due to my C o- Su pe r v i so r , L a t e Dr. S.V. P a tw a rd h a n , the f o rmer P r o f e s s o r and Head, C e n t r e for Rural D e v e l o p m e n t and
A p p r o p r i a t e T ec h no lo gy , I.I.T., Delhi, w h o d e s p i t e his busy s c h e d u l e and involv e me nt in a n um b er of a s signments, r e n
d e re d his v a l u a b l e g u i d a n c e and e n c o u r a g e d me to c o m p l e t e this work. Due to his u n t i m e l y sad d em i s e I was b adly d e p r i v e d of his v a l u a b l e s u g g e s t i o n s at the time of c o m p l e tion of this work. I w i s h h e c o u ld h a ve seen the c o m p l e t i o n of this work. As a m a r k of r espect to the d e p a r t e d soul, w h o took rural d e v e l o p m e n t as m i s s i o n of his life, I d e d i ca t e this p i e c e of w o r k in his f on d and l ov in g memory.
I e x press m y h e a r t i e s t t hanks to D r . D . P a u l Chowdhry, the then D ir ector, N a t i o n a l I n st i t ut e of P u bl i c C o o p e r a t i o n and C h i l d D e v e l o p m e n t (NIPCCD), N e w Delhi for g r a n t i n g m e s tudy leave and s h o w i n g his k e en interest t h r o ug h o u t this f e s e a t ch project; 1 h a v e a l wa ys drawn i n s p i r a ti o n and
Ciii)
e n c o u r a g e m e n t from h i m for s u c c es s fu l c o m p l e t i o n of this p r o j e c t .
I w i s h to put on r e c or d my c or d ia l t h anks to D r. ( S mt ) N a n d i n i Azad, C on s ul t a n t; Prof. (Smt) S.-Bajaj, D e p u t y D ir e ct o r; D r . ( Sm t ) A d a r s h Sharma, Joint Director;
Shri V.R. O ru ga nt y, D e p u t y D i re ct or ; Dr. A.M. K h a n , D e p u t y D ir ector; Dr. Salil K. Saxena, A s si s t a n t D ir ector;
S h ri N.K. Sharma, Shri S.C. J os hi and K m . S h a s h i K a l a B o d r a (all from NIPCCD). I also thank to Shri Inderjit Khanna, Joint Secretary, D e p a r t m e n t of R ural D e v e l o p me n t , M i n i s t r y of A g r i c u l t u r e and Rural D e v e lo p m e n t ; Smt. C . P . S u j a y a , t h e then Joint S ecretary, D e p a r t m e n t of Women and C h i l d D e v e lo p m e nt , M i n i s t r y of H u ma n R e s o u r c e D ev e l o pm e nt ; Shri R a j e e v Chowdhry, D e v e l o p m e n t Officer, N a t i o n a l B a n k for A g r i c u l t u r e and Rural D e v e l o p m e n t (NABARD), N e w Delhi; Dr. R.K. Mathur, P ro fe ss or , N a t i o n a l C o u n c i l of E d u c a t i o n a l R e s e a r c h and T r a i n i n g ( N C E R T ) , N e w D elhi; Dr. R.N. Mathur, E d u c a t i o n a l C o n s u l t a n t s India Ltd.; Dr. A.K. Singh, D i r e c t o r (Services), Sai D e v e l o p m e n t C o n s u l t a n c y Services; Dr. A.L. R a m and Shri I.D. G u p t a for their interest a nd e n c o u r a g e m e n t in this work.
I e s p e c i a l l y t h a n k K m M a n j u S h a r m a, m y c o l le a g u e in N I P C C D for a s s i s t i n g m e in i n n u m e ra b le w a y s at the
w r i t i n g s t ag e of the thesis.
My t h an ks are to Shri G.D. C ha kr a va r t y , C h ie f C o n s u l t a n t a nd D ir e ctor, P s y c h o - E d u c a t i o n a l C e n t r e for
( iv)
Testing, Guidance, C o u n s e l l i n g and C o n s u l t a n c y Services, N e w D e l h i for his c o n t i n u o u s and i n s p i ri n g e n c o u r a g e m e n t
in c o m p l e t i o n of this invest i ga ti on .
T h e S c h o l a r is g r a t e f u l to Shri B .N . S a ha y , Joint D i r e c t o r (Rural D e v e l o p m e n t ) , P l a n n i n g C o mm is si on ;
Dr. S u d hi r K. Jain, C e n t r e for M a n a g e m e n t Studies, I.I.T., Delhi; D r .J a g p a l Singh , C e nt r e for Rural D e ve l o p m e n t
a n d A p p r o p r i a t e T e c h n o l o g y (RDAT), I.I.T., Delhi; Dr.B.P.
Sinha, Head, A g r i c u l t u r e Extens io n, IAR1; and Dr. S.B.
V as h is th a, Scien t is t, A g r i c u l t u r e E xt en si on , IARI for t he ir g u i d a n c e / v a l u a b l e c o m m e n t s on the draft, w h i c h h e l p e d the a u t h o r to b r i n g out t he t he si s in its p r e s e n t form.
I am t h a nk f ul to the a u t h or s and r es ea rc h er s, w h o s e w o r k and c o n t r i b u t i o n s h a ve e n r i c h e d my thinking on this s u b j e c t .
My t h anks are d u e to Dr. (Smt) P a d m a V asudevan,
Prof. and H e a d and Dr. R.C. M a h e sh wa ri , A s s i s t a n t Profe s so r, RDAT, I.I.T., D e l h i for t h e i r p a r e n t a l c o n c e r n and
e n c o u r a g e m e n t in c o m p l e t i o n of this work-,
I shall be f a i l i n g in my duty if I do not
e x p r e s s m y s i n c e r e t h a n k s to the O f f i c i a l s of the D i s t r i c t R u r a l D e v e l o p m e n t A g e n c y (DRDA), Gurgaon; B l o c k D e v e l o p m e n t Officer, Gurgaon; B a n k O f f i c i a l s and the v i l l a g e r s of
G u r g a o n Block, w h o s p a r e d time, m a de a v a i l a b l e o f f i c i al
•records a nd e x p o s e d f acets of t heir life w i t h o u t w h ic h this piece of r e s e a r c h c o u l d not have b e en completed.
I a ls o a c k n o w l e d g e the a s s i s t a n c e r e c e i v e d from m y neighb o ur s, namely, Shri V.K.Gu p ta , K m . M i t h e l e s h G up ta and Shri A r u n Kumar. E n c o u r a g e m e n t r e c e i v e d f r om Shri Taj Rawat, U N E S C O writer, is a l s o a c k no w le d g e d. I a m g r a t e f u l to
Km. P . B a n e rj e e for h e r a f f e c t i o n a t e r e b u k e w h i c h e n c o u r a g e d me to c o m p l e te the t hesis in time.
I e xp r es s m y d e e p l y felt thanks to Dr. B.S.Nagi, Incharge, Data P r o c e s s i n g Centre, C o un ci l for Social D e v e l o p m e n t (CSD), N e w D e l h i for his h e l p in d e v e l p i n g the a n a l ys i s plans a n d p r o c e s s i n g of data.
M y thanks are a l s o due to M/s. N E WP RI NT S, N ew Delhi for s e c r e t a r ia l a s s i s t a n c e a n d t y pi n g the t hesis at a
s ho r t notice.
L a s t b u t n ot the least, I w o u l d like to e xp r es s my s in cere and d ee pe s t r e ga r ds to my p a re n ts and f am il y m e m b er s w ho s e blessi n gs , i n c e s s a n t e n c o u r a g e m e n t a nd s u p p or t f a c i li t a te d m e to c o m p l e t e this work. I a m p l e a s e d to a p pr ec i a te the i n v a l u a b l e s u p p or t a n d p a t i e n c e of my b e l o v e d w i fe U rmila d ur i n g the c o u rs e of i n ve st i ga t i o n. K al p an a a nd S amata did
( V )
(RAVINDRA KUMAR) N E W D EL HI
C v i )
A B S T R A C T
O v e r the years, i n sp i te of the i n t e rv e nt i o n of p l a n n e d d e v e l o p m e n t a l efforts, t he re has been a g r o w i ng r e a l i s a t i o n that p l a n n i n g p r o c e s s has f ailed in a c c r u i n g •- the p r o d u c t i v e asset of p e r m a n e n t n at u re w i th the poor. Not a s u f f i c i e n t l y large n u m b e r among t h e m gets r eg u la r income a v a i l a b l e to cross the p o v e r t y line. To i mprove the
situation, s u bs i d y hua b e en c o n c e i v e d as an important c o m p o n e n t of the I n t e g r a t e d Rural D e v e l o p m e n t P r o g r a m m e (IRDP). I n t r od u ct i o n of s u b s i d y u n d e r IRDP has not been new to the Indian e c on o my as they are b e i n g given to the v a r i o u s s e c t o r s of e c on o my on the g r ou n ds of equity and long t e r m needs.
With e ve ry s u c c e s s i v e F i v e Y e ar Plan, subsidies, a n o n - p l an r e v e n u e e xp en di tu re , h a v e grown s u b s t a n t i a l l y in m a g n i t u d e as well as in diversity. D u e to their
p h e n o m e n a l growth, s o m e t i me s ub si d ie s are c o n s i d e r e d a s t r a i n on n a t io n a l r esources, w h i l e on the o t h e r h a n d ,they can also be a u se f u l input in d e v e l o p m e n t a l planning. Yet a d m i n i s t r a t i o n of s u b s i d i e s is c h a r a c t e r i s e d by p o or
m a na g em e n t , l ea ka g es a nd l a c k of c o m p l e m e n t a r y d e v e l o p m e n ta l strate g ie s. It has b ee n felt that s u bs i d i e s also t e nd
to h a ve a s no wb a l l effect a n d to b e c o m e sticky so that
(v i i )
they b e gi n to g e n e ra t e i n e f fi c i e n c y and compla ce nc y.
T h e s e two r e le v an t but d i a m e t r i c a l l y o p p o s i t e views e x p r e s s e d about the subsictf.es n e c e s s i t a t e a t h o r o u gh i n v e s ti g at i o n in o r d e r to s t ri ke out a s u i t a b l e m ix at a m i c r o level.
In the p r e s e n t i n ve st ig at io n, an a t tempt has been made to study the a l l o c a t i o n of s u b s i d i e s and their impact on rural d evelo pm en t. The study c o n d u c t e d at a m i c r o - l e v e l i.e.
b l o ck f o cu s se d on s u b s i d i e s p r o v i d e d u n de r I nt eg ra te d
R ural D e v e l o p m e n t P r o g r a m m e (IRDP) a nd t he ir impact on the ta r ge t g r o u p s in t e rm s of i nc rease in i n c o m e ( i n c r e m e n t a l income), c r e a ti o n of p r o d u c t i v e assets of p er ma n en t n a t u r e an d u t i l i s a t i o n of their idle time. It has also been a t t e m p t e d to find out the s c h e m e s / o c c u p a t i o n s which the b lo c k u n d e r r e f e r e n c e n e e d most and h o w can they be best r es t ru ct ur ed , and the s c h e m e s / o c c u p a t i o n s f i n a n c e d w h i c h are m a r g i n a l l y u s e f u l / c o u n t e r - p r o d u c t i v e for b a s i c d e v e lo p m e nt activ it ie s. T h e impact of a s e t of e x o ge n ou s v a r i a b l e s like caste, l an d o wn e rs hi p, family size,
s u f f i c i e n c y of loan advanced, m o n i t o r i n g by i mp l em e n t in g a ge n cy and a v a i l a b i l i t y of c o m p l e m e n t a r y f ac t or s of
p r o d u c t i o n have also b ee n studied.
The study c o v e r e d 430 IRDP b e n e f i c i a r i e s (67.6 per cent of the u n iv er s e) s p r e a d o v er in 25 v i l l a g e s of G u r g a on b l oc k
(v i i i )
in H a r y a na w h o w er e a d v a n c e d l o a n / s u b s i d y b y the b a nk s/
D i s t r i c t Rural D e v e l o p m e n t A g e n c y (DRDA)during 1981-82 for u n d e r t a k i n g nine d i f f e r e n t s c h e m e s / o c c u p a t i o n s . The b e n e f i c i a r i e s w e r e i d e n t i f i ed on the basis of a t w o - s t a g e s t r a t i f i e d s a m p l i n g technique. The first s t ag e c o n s i s t e d ~ of s e l e c t i o n of v i l la g es and the s e c o n d s ta ge c o mp r i s e d
s e l e c t i o n of s a m p l e units. T h e b e n e f i c i a r i e s w e r e i n t e r
v i e w e d w it h the help of a s e l f - c o n s t r u c t e d i n t e rv i e w schedule.
T h e r e li a b i l i t y and v a l i d i t y of r e sp on s es given by the b e n e f i c i a r i e s d u r in g the i n t e r v i e w p ha se have been cross- e x a m i n e d t h rough case studies. T h i r t e e n case studies,
c o v e r i ng b e n e f i c i a r i e s of b o th - the h i g h e r and lower castes ( w h e r e - e v er a p pl ic a bl e) - u n d e r all the nine schemes/
o c c u pa ti on s, w e r e conduc te d. A d e q u a t e s a m p l i n g p a t t e rn was a do p t e d in s e l e c t i n g the b e n e f i c i a r i e s for the case s tudies and the c o l l e c t i on of i nf o rm a t i on was g u i de d by the r es ea r c h problem. S e c o n d a r y d a t a w e r e c o l l e c t e d f ro m the V i ka s
P a t r i k a s (I d e n t i t y - c u m - m o n i t o r i n g cards) m a i n t a i n e d by
the D i s tr i ct Rural D e v e l o p m e n t A g e n c y (DRDA) for each of the IRDP beneficiaries and the c o n c e r n e d banks' records. C en tr al t e n d e n c i es s t a t i s t i c a l tools like average, f r eq u e n c y d i s t r i bution, p e r c e n t a g e etc. h a v e been u t i l i s e d for a n al y s i n g the c o l l e c t e d data. T h e v a l i d i t y of v a r i o u s i n fe re n ce s drawn w a s t e st e d w i t h Chi Square.
(ix)
T h e study e s t a b l i s h e s the i m po rt a nc e of s u b s i dy in re l at io n to i n cr em en ta l income, c re at i o n oJL' p r o d u c t i v e
asset of p e r ma n e n t n a t u r e and g en e r a ti o n of a d d i t i o n al work.
Th e f i nd in gs of the study s t r o n g l y s u pp or t the s i g n i f i c a n c e of the a v ai l a b i l i t y of c o m p l e m e n t a r y f actors of p r o d u c t i o n o t h er than i n s t i t u t io n al credit, land, and labour; and m o n i t o r i n g by the i m p l em e n t i n g a ge n cy on the a tt empt of e n a b l i n g the b e n e f i c i a r y to cross the p o v e r t y line on a la s t in g basis.
The study recommends, among o th er things, increa s in g i n vo lv em en t of local b o di es in e n s u r i ng p r o p e r s e l e ct io n of b e ne fi ci a ri es . S e t t i n g up of 'Service Centres' or
'Single W i n d o w Services' so as to e ns ur e a v a i l a b i l i t y of c o m p l e m e n t a r y factors of produc ti on ; a ss u re d m a r k e t i n g
f a c i l i t ie s has also been r e commended. It f urther r e c o m m en d s
»
r e s t r u c t u r i n g of s c h e m e s / o c c u p a t i o n s in the light of the benef i ci ar ie s' skills, r e so u rc e s and needs and c l o se r
m o n i t o r i n g to h am m er out the o p ti m al return. T h e s t ud y m a k e s a c o n t r i b u t i o n in d e s i g n i n g m e a n i n g f u l and e f f e c t i v e d e v e lopme n ta l s t r a t e g i e s a im ed at m i t i g a t i n g poverty.
Th e s ubject m a t t e r of the thesis has been p r e s e n t e d u nd e r six Chapters. C h a p t e r one p r e s en t s introduction, o b j e c t i v e s and h y p o t h e s es d e s i g n e d for the study; C h a p te r two p r e s e n ts a l lo c at i o n and a d m i n i s t r a t i o n of subsidies;
( X )
C h a p t e r t h re e p r e s e n t s l i t e r a t u r e s u r v e y e d and gaps in the p re s en t s tatus of i n formation; C h apter four p re s e nt s m e t h o d o l o g y w h i c h includes p ro f il e of the area, d e s c r i p t i o n of the sample, variables, instrument, data c o l l e c t i o n and t h e i r analy si s ; C ha pt er f i v e p r e s e n t s a n a l y s i s of f i n d i n g s ”, these have b e e n p r e s e n t e d w i t h r e f e re n c e to e ac h hypothesis;
and C h a p t e r six p r e s e n t s s u m m a ry a n d c o n c l u s i o n s i n cl u s i v e of r e c o m m e n d a t i o n s and scope for f u rt h er research.
C O N T E N T S
P ag e
C E R T I F I C A T E i
A C K N O W L E D G E M E N T S ii
A B S T R A C T vi
L I S T OF T A B L E S xiii
L I S T O F C H A R T S xvii
C H A P T E R S
I : I N T R O D U CT I O N 1
II : A L L O C A T I O N AND A D M I N I S T R A T I O N
O F . S U B S I D I E S 21
I I I : R E V I E W O F L I T E R A T U R E 63
IV : M E T H O D O L O G Y 110
V : A N A L Y S I S O F F I N D I N G S 121 VI : S U M M AR Y A N D C O N C L U S I O N S 187
R E F E R E N C E S 205
B I B L I O G R A P H Y 215
A P P E N D I C E S 231
