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 - -

UNIT 1 DEVELOPMENT
ADMINISTRATI-ON : CONCEPT
AND MEANING

Structure
1.0 Objectives
1.1 Introduction
1.2 Meaning of Development Administration
1.3 Difference between Traditional Administration and Development
Administration
1.4 Genesis of Development Administration
1.5 Features of Development Administration
1.6 Let Us Sum Up
1.7 Key Words
1.8 References
1.9 ~ n s w e r s ' t oCheck Your Progress Exercises

1.0 OBJECTIVES
After reading this unit, you should be able to :
discuss the meaning of development administration
distinguish between traditional and development administration
trace the evolution o<dcvelopment administration; and
highlight its features.

1.1 INTRODUCTION
The essence of development administration is to bring about change through
integrated, organised and properly directed governmental action. In the recent past
the governments in most of the developing nations have shifted their focus on
development by means of planned change and people's participation. With this shift
of administrative concern towards developmental objectives the researchers and
practitioners of Public Administration have been forced to conceptualise the
developmental situation and to bridge the gaps in administrative theory. The growing
welfare functions of the government have brought into limelight the limitations of the
traditional theory of administration.
The essence of administration in the present conditions lies in its capacity to bring
about change in the structure and behaviour of different administrative institutions, to
develop an acceptance for the change and to create a system which can sustain change
and improve the capacity of institutions to change. All this calls for renewed efforts
on the part of institutions engaged in the tasks of development. Thus development
administration as an area of study and as means to realise developmental goals
assumes importance. This unit will highlight the meaning, features and genesis of
development administration.

1.2 MEANING OF DEVELOPMENT ADMINISTRATION

There is no uniform definition of development administration which is agreeable to
all. But we can atleast arrive at certain basic features and characteristics of
order to understand the concept of development administration, we should try to
understand the meaning of the concept viz., administration of development and
development of administration.
i) Administration of Development
Development is integral to the aims and activities of the government especially in the
developing countries. Because of paucity of resources, human and material in their
counties, the need for making optimum utilisation of available means and
augmenting new means assumes a great importance. Development administration
thus becomes a means through which the governmen€brings quantitative and
qualitative changes in an economy. Government is engaged in not only fixing
priorities but also making efforts to realise them. Though Weidner is said to be the -
first to conceptually explain the definition of development administration, many other
scholars, like Riggs, Ferrel Heady, Montgomary, Gant, Pai Panandikar have
attempted to define the term in their own ways. However, before we analyse the
different definitions and meanings of the term, it should be mentioned that all of them
agree that development administration is an effort towards planned transformation of
the economy involving not only the sphere of administration but also formulation of
policies and indeed the society as a whole. It is an effort at the synchronisation of
changes in all spheres of development-economic, political, social and cultural. Thus
development is not only viewed in terms of growth process, but it includes a process
of social change.
The State plays a leading role in bringing about development through its
administrative system. In order to discharge this role it requires a distinct type of.
support by administration which involves, as'has been observed by Swerdlow, special
understanding of problems in the developing countries. These must be perceptible at
different operative levels i.e., officials must make enough different decisions, adopt
enough differknt policies and engage in enough different activitiest o warrant the
different designations of development administration. Thus devel-opment
administration is simply termed as an action or functioning part of the government
administration. It is action-oriented and places the administration at the centre in
order to facilitate the attainment of development objectives.
For Harry J. Friedman development administration means:
i) the implementation of programmes designed to bring about modernity (i.e.
socioeconomic progress and nation-building), and
ii) the changes within the administrative system which increase its capacity to
implement the programmes. According to Hahn Beenlee, development
administration is involved in managing a government or an agency so that it
acquires an increasing capability to adapt to and act upon new and continuing
social changes with a view to achieve sustained growth. Gant observed that
development administration is "that aspect of Public Administration in which
focus of attention is on o r g ~ i s i n kg n ~ d m i n i s t e r i npublic
~ agencies in such a
way. as to stimulate and facilitate &fined programmes of social and economic
progress. It has the purpose of making change attractive and possible." Thus
development administration involves two elements:
1) the bureaucratic process that initiates and facilitates socio-economic
progress by making the optimum use of talents and expertise available; and
2) mobilisation of administrative skills so as to speed up the development
process.
Development administiation concentrates on the needs and desires of the people, It is
concerned with formulation of plans, programmes, policies and projects and their
implementation. It plays a central role in carrying out planned change i.e. it is
concerned with plinning, co-ordination, control, monitoring and evaluation of plans
and programmes. It is not only concerned with the application of policies as
determined by the political representatives in existing situation but also with
introducing efforts to modify existing situations so as to serve the cause of the masses.
The administration of development implies:
i) the execution of programmes designed to bring about progressive improvement
 ii) the changes within an administrative system which increases its capacity to Development AdmhWstion :
implement such programmes. In brief, administration of development involves Conctpt and Mclaiag
the following objectives:
i) application of innovative strategies for development
ii) emphasis on development at the grassroots level. Development has to be a
need-oriented and self-reliant process
iii) stress on social development and human capital as a major resource
iv) development has to be viewed not merely as a technological problem but
also as an ideological norm
v) profound and rapid change in order to establish a distinct and just social
order
vi) recognising and highlighting the unity, rather than dichotomy between
politics and administration
. vii) effective and efficient use of scarce resources
viii) creation of a politics-administrative environment which is oriented towards
securing basic needs of the population
ix) freedom of administrative machinery to express its values and beliefs
without fear or favour on programmes and projects.

'ii) Development of Administration or Admiitntive Development

Development Administration has to be efficient and effective. For that puQose it has
to aim at enlargement of administrative capabilities and structural and behavioural
change. It is this aspect of administration that is called administrative develspment or
development of administration. In simple terms it means development of
administrative system,'of administrative health by introducing-administrative
rationalisation and institution building. The purpose implicit in this concept is not
merely changing the administrative procedures and channels but also bringing out
fundamental change in administration thar leads to:
1) political development,
2) economic growth, and
3). social change.
T ~ Ladministration should evolve so as to commensurate with societal goals. I
Development of administration further means cultural change in administration. The
cblonial administrative culture is unsuitable to the changed socio-political ethos 9f the
developing world. Our British legacy has adversely affected rhe administration. The
obsolete Acts e.g. Police Act, 1861,'cannot take us towards the path of change.
Development of administration should refer to the creation of ability to adjusi to new
stimuli or changes. The development of administration aims at qualitative and
quantitative transformations in administration with an eye on the performance of
management of affairs. The term also implies technological changesin administration
so as to enable it to adopt new modes or techniques of administration. Thus
administrative development focuses on adaptability, autonomy and coherence in .
administration.
In short, administrative development is concerned with:
1) The capacity of an administrative system to take decisions in order to meet the
ever increasing demands coming from the environment and with the objective of
achieving larger political and socioeconomic goals.
2) Increase in size, in specialisation and division of tasks and in the
ptofessionalisation'of its personnel.
3) A pattern of increasing effectiveness in the optimum utilisation of available
means and further augmentation of the means, if necessary.
4) Increase in administrative capability and capacity.
5) Transformation of existing administrative mechanism into aonew machinery
through modernising the bureaucracy by external inducement, transfer of
technology and training. . --

6 ) Replacement bf initiative, practices etc. with those bas@ on ~eakstic-negd?,-._-

cwccped Appmebcs 7) Reducing the dependence on foreign experts by producing adequate trained
manpower.
8) Promotion of development initiative.
9) Administrative reorganisation and rationalisation.
10) Making modernisation culturally related.
11) Removing or reducing bureaucratic immobility and widespread corruption.
12) Reorientation of established agencies, and the delegation of administrative
powers to them.
13) Creation of administrators who can provide leadership in stimulating and
supporting programmes of social and economic improvement.
The meaning and importance of administrative development as an ingredient of
development administration has been well summed up by Caiden in the following
words, "Administrative reform is an essential ing;edient of development in any
country, irrespective of the speed and direction of change. Administrative capacity
becomes increasingly important in the implementation of new policies, plans and
ideas. The improvements in administrative capacity may involve the removal of
environmental obstacles, structural alternatives in traditional and innovatory
institutions bureaucratically organised or otherwise. This would also necessitate
changing individual and group attitudes and performance." The behaviour pattern of
bureaucrats is as crucial to development administration as the institutions and
structures. The purpose of development of administration is to remove the
administrative lag which seriously handicaps governments in planning and executing
co-ordinated programmes of economic and social reforms.
The predominant concern of development administration is to design and administer
such development programmes which meet the developmental objectives. It is the
administration geared to the task of achieving certain clearcut and sp-ecified
objectives and goals expressed in operational terms. Thus develodment administration
is defined as a process of action motivated by and oriented to the achievement of
certain predetermined goals.
Actually administration of development and development of administration are
interrelated concepts. Both are dependent on each other. Administration of
development is as important as development of adniinistration. To achieve
development goals it is essential that there is proper assessment of resources, proper
plan formulation, evaluation and. implementation, adequate involvement of people,
emphasis on technological change and self-reliance. At the same time we also need
developed bureaucracy, integrity in administration, initiative, innovativeness,
delegation of powers, decentralised decision-making etc. Administrative development
cannot take place without administrative change and reform. Both the concepts
support each other and development of administration is needed for administration of
development. As per F. Riggs 'development administration' and 'administrative
development' have a chicken and egg kind of relationship. Superiority of one concept
over the other cannot be established.

1.3 DIFFERENCE BETWEEN TRADITIONAL

ADMINISTRATION AND DEVELOPMENT
ADMINISTRATION
Many scholars like George Gant, Ferrel Heady and others have sought to
conceptualise development administration as different from traditional
administration. They explain that these two types of administration differ from each
other in terms of purpose, structure and organisatiun, attitudes and behaviour,
cepabilities, techniques and methods. This is the implicit meaning of the observation
of John Gunnel who says, "The increasing shift of development scenario requires
increased diversification and specialisation of. km,wledge and skills and high level of
managerial ability for integrative do-&dination. quicken the pace of development
there is an additional need for a new bre& of administrators of superior calibre and Development A6ministration : '
vision with a passion for achieving results a n i o f those who can take risks and Concept and Mclninq
introduce innovations. There is an increasing rreed to have hightened seniitivity to the
welfare of the poor secticns and greater responsiveness to the political process." It
follows that development administration has to have different features and should be
based on different requisites than the traditional or law and order or general
administration. The distinction between the traditional and development
administration has been presented by S.P. Verma and S.K. ~ h a r m aas follows:
Traditional Developmental
i) ~ e g u l a t o Administration
r~ (routine i) Unpredictable riew tasks or
operations) . problems (rapidly changing
environment)
ii) Oriented towards efficiency and ii) Oriented towards organisational
economy (emphasis on individual growth and effectiveness in
performance) achievement of goals (emphasis on
group performance and inter-group
collab~ration)
iii) Task orientation and conformity to iii) Relationship oriented with
rules and procedures (Concern for emphasis on high programme
security, playing safe, comfort, standards (willingness to take risks,
status and power) encouraging innovation and
change)
iv) Sharp and elaborate hierarchical iv) Structure shaped by requirements
structure (strict and authoritative, ot goals (flexibility and
climate of mistrust) continyously changing roles,
mutual trust and confidence)
v) Centralised decisimrmaking (past v) Wide sharing decision-making.
experience as the main guide to (Empirical approach to problem
problem solving) solving and use of improved aids to
decision-making)
vi) Emphasis on maintaining status vi) Continuing organisational
quo (resistance to organisation development in response'to
change) environmental demands
(development of an organisation .
which is dynamic, adaptive and
futuristic)
Traditional administration has been visualised as one concerned with fulfilling all the
legal requirements of governmental operations and maintenance of social stability. In
the main, this type of administration confines itself to the maintenance of law and
order, collection bf revenues and regulation of national life in accordance with the
statutoty requirements. The assumption behind the differentiation between
development administration and traditional administration is that administration in
newly emergent nations must switch completely from law-and order values to
developmental values. Thus the qualitative goals of development administration i.e.
planning for the people, with people's support and co-operationdistinguishes it from
the quantitative goals of Public Administration i.e. implementing rules. Another point
that distinguishes development administration as a separate identity is that "it is not a
closed system; the linkages with experts, relationships with the grassroots level'and
with the people are more important than Central structures. Though there are
technical and behavioural techniques common to all forms of management, in
development administration, external relations have to be optimised tiefore resources
can be focused on limited incremental goals. Development administration is
concerned with attitudes and processes rather than procedures and structures."
However, there are scholars, like W. Wood, who do not favour separation or division
of administration into such distinct categories. Wood objects to such dichotomisation
on the grounds that:
i) the division of government servants into developers and non-developers might
result in the loss of esteem to one and gain in over-importance t a the others.
This would demoralise administration
Approaches ii) the of innovation and new design is neglected
iii) There is insufficient analysis of the term development in that, on the one hand, it
is treated as an extension of the 'supposed' law and order and revenue collecting
State and on the other, it appears to have a special relationship with
independence and post-colonialisation. The commonness of the two could also
be observed from the following facts as;presented by V.A. Pai Panandikar:
1) The prevailing structure of general administration has a decisive influence
on the strength and weakness of development administration.
2) Both have a common source of authority within the structure of the
government, for instance, a Cabinet responsible to a legislature.
3) A number of key officials, like divisional commissioner, and district
collector, cambine general and developmental functions.
4) Citizen sees and judges as a whole the acts of administration, drawing no
fine distinction between general and development administration.
The differences of views on the question of dichotomy still persist leading to an
inconclusive debate. However, it may be maintained that the administration for
fulfilling the developmental tasks needs to be exclusively studied and explained. The
creation of new and separate development agencies and organisations is a further
pointer to the growing incapability of the law and order function and revenue
collecting administration. That is why in some states in India an attempt has been
made to vest the office of deputy development .commissioner or district development
officer with only the development administration, That development administration is
not synonymous with Public Administration is pointed out by Gant in the following
words:
"Development administration is distinguished from, although not independent of,
other aspects and concerns of Public Administration. Certainly, the maintenance of
law and order is a prime funaion of government and is basicto development,
although it precedes and is not usually encompassed within that definition of
development administration. Similarly, the provision of essential communications and
educational facilities and the maintenance of judicial and diplomatic systems, would
have an impact on but not be an integral part of development administration."

Thus a rigid distinction cannot be made between traditional and development

administration. The traditional functions of maintenance of law and order are also
basic to development. Development administration has assumed the responsibility of
formulating and implementing various development and welfare functions because of
growing complexities of administration and aspirations of people. These functions are
not absolutely separate from traditional functions. In fact maintenance of law and
order, and security is a precondition for an economy to undertake developmental
tasks. But as development administration is wider, broader, participative, innovative
and change-oriented, the traditional administration has to create the conditions for
the effective working of development administration.

Check Your Progress 1

Note: i) Use the space given below for your aliswers.
ii) Check your answers with those given at the end of the unit..
1) What is meant by the term 'Administrative Development' ?

2) Distinguish between traditional administration and development administration.

.. ........................................
r L . . . . . . . . . . . . . . . . . . . . . . . . . .
 Development Administration :
Concept and Meaning

1.4 GENESIS OF DEVELOPMENT ADMINISTRATION

i

When India gained Independence from the British rule, we were confronted with the
problems of unemployment, poverty, squalor, hunger and disease. We were shbrt of
material and human resources and our progress in industrial and agricujtural fields
was also nominal. Moreover, the private entrepreneurs were not ready to take Up the
tasks of development in a ful-fledged manner. Thus the State had to shoulder the
responsibility of bringing about systematic development through a process of
comprehensive and uniform planning. This led to an increase in the functions of
State. Our planners set before them the goals of achieving modernisation,
industrialisation, self-reliance, social justice and economic growth. (These goals of
development will be dealt in detail in Unit 8 of the next Block.) It was realised that
the western concept of development and the ways to achieve development could not
be applied to developing countries like India. The western countries had already
achieved a certain level of development, had a strong bureaucracy, their problems
were different and their resources were abundant. The western models of development
were not conducive to the social, economic, political and cultural milieu of countries
l&e India. Thus a diffkrent kind of administrative system suitable for the needs of
third world countries was thought of. This model saw administrative system as a part
of a larger socioeconomic and political system and established a certain definite
relationship between the environment and administration. Development was s e n as
an overall development, development in industrial, agricultural, technological, social,
r cultural and political fields. Thus a new concept of development administration came
into being with emphasis on people's participation and support and planned change.
The Technical Assistance Programmes under the Marshall Plan and New Deal
L
Programme of Roosevelt failed to make an impact on the administration of third
world nations. The realities of third world called for the adoption and execution of
new approaches of change. This realisation led to the emergence of the concept of
I
development administration.
I The demands of equity and justice called for renewed efforts to understand and define
development as it was relevant to third world countries. Hence, development came to
be defined as a holistic term inclusive of all elements-ecqnomic, social, culturd and
political. Thus it was defined as a process, the aim of which Was not only confined to
economic development'but on over all welfare activities. This changed the meaning of
development and introduced a nck thinking about the methods and techniques to be
applied for bringing about development. For instance, it was emphasised that to
achieve the developmental goals, the poor or developing nations should concentrate
on their own internal resources, administrative mechanism and technology. Thus
dependence on the developed world was sought to be reduced or discarded and
I indigenous system was to be developed in which people would participate in the
I
developmental process. Hence, mere insistence on the lack of infrastructure,
industrialisation, education and modernisation etc. for the prevailing'situation in the
1 developing countries was held only- partially valid. Emphasis came to be laid on
associating people with developmental tasks and provision of basic needs for all. .
Conceptually, therefore, dweropment administration rests upon the discovery that the
administrative practices and structures are not and should not be the same in.all the
countries. And also on the realisation that administration in a given country can be
understood and evaluated only in the light of its cultural and political setting. These
factors can be termed as environment or ecology of Public Administration. Therefore,
to bring about development the State carries on its role of a change agent through its
administrative machinery. In fact, it is the administration which is to be an instrument
of development. It iithe administration that carnies the services to the doorsteps of
the people. The eradication of poverty, unemployment, ignorance and the like is
impossible without an active and determined role performance by the administration.

This leads us to an important question, whether the administrative systems of newly

-
emergent nations of Asia, Africa and Latin America are adequate to meet the
developmental challenges facing these societies or not? Many people believed that the
old administrative system was unable to cope up-with the stupendous task of meeting
the development needs and aspirations of the people who were subjected to
discrimination, deprivation, exploitation and inhumanisation for decades. The
colonial type of administration was suitable neither structurally nor behaviourally to
the changing environment of these polities. Hence, the politicians, the administrators
and the scholars thought alike to approach the problems of Public Administration
from a different aspect. They coided a new concept of Public Administration known
as 'development administration'. The emphasis shifted from the steel-frame to open
structure, from maintenance of law and order to provision of basic amenities for all
and general welfare. The objective was to emphasise on administrative ethos the
purpose of which was to usher in, shape and direct development and change. Thus
development became the central theme for analysing the role of Public
Administration.

The end-objective of a separate focus on development administration; says Edward

Weidner, the architect of the concept, is to "relate different administrative roles,
practices, organisational arrangements and procedures to the maximising of
development objectives." Ramesh K. Arora shares the same view when he says that
the concept is designed to study how Public Administration in different ecological -
settings operates and changes in order to achieve a set of social goals. The
administration is at001 to achieve the object of "change that is desirable and broadly
predicted or planned. It means development administration is concerned with :
increasing ability of human societies to shape their physical, human and cultural
environments." Thus the main thrust of development administration is on directional
change and on Public Administration as a mechanism for promoting and guiding
modernisation w d economic development. The aim of the governmental tasks was
the rationalisation of economic life, expansion of modern centres, stability, security,
democracy, industrialisation and gradual penetration into the traditional institutions
of the rural periphery through the State bureaucracy. The concept of development
administration came in vogue because of the shift of emphasis from mere maintenance
of order in the society to enhanced responsibilities of development not only in terms
of growth but also in terms of human development. This shift presupposes
administration to'be the prime-mover and energiser of this process of achieving the
goals of welfare and well-being of the common masses.

To s w up, in the words of Caiden, "It (Development Administration) is grounded in

normative concepts-that development is desirable; that development can be planned,
directed or controlled in some way by administrative systems, that improvements in
quality and quantity of societal products is desirable; that obstacles to development
c'an be overcome, and that macro p.roblems handicapping societal progress can be
solved. Because the conditions of mankind are so obvious, so real and so compelling,
development administration is also grounded in reality- the practical solution of
human problems, the nitty-gritty of Public Administration, the real world of people,
the practitionersdomain." Thus the manifest objective underlying the notion of
development administration is to introduce modernisation through augmented socio-
economic chan4e qualitatively and quaqthatively.
 Development AdnhhistfPtion :
1.5 FEATURES OF DEVELOPMENT -- Concept and Meaning
ADMINISTRATION
There are certain distinct features of development administration. We would now
discuss them briefly:
Change Orientation
The first and foremost element of development administration is its change
orientation. Change forms part of philosophic values of development administration.
Development administration involves itself in establishing a new social order in which
growth and distributive justice coexist. For Pai Panandikar the central theme of
development administration is socioeconomic and political change.
Development administration cannot be status-quo oriented. No development can take
place unless and until it introduces certain positive changes in a system. Changes such
as structural reorganisation of administration, innovative programme to increase
production, remove unemployment, poverty etc., new schemes to improve employer-
employee relations must form a part, of development administration.
Coal Orientation
Developing countries are facing the problems of poverty, squalor, injustice, unequal
distribution of wealth, lopsided agricultural growth, underdeveloped technology etc.
These colossal issues need to be tackled systematically by fixation of priorities and
goals. Development administration is the means through which the goals of
development viz., social justice, modernisation, industrialisation and economic growth
can be achieved.
Innovative Administration
Development administration focuses on replacing/ improving the existing governing
structures and norms with the ones that suit the changing political and social
environment. In other words deve1opment.administrationis one that is dynamic and
progressive in thought and action. It is interested in identifying and applying new
structures, methods, procedures, techniques, policies, planning projects and
programmes so that the objectives and goals of development are achieved with
minimum possible resources and time. India, for example, has experimented with
many new institutions and procedures which can be termed as the hallmarks of
development administration. We have introduced various development programmes
like IRDP (Integrated Rural Development Programme), TRYSEM (Training Rural
Youth for Self Employment), NREP (National Rural Employment Programme),
DWACRA (Development of Women and Children in Rural Areas), Tribal
Development Programmes etc. These pragrammes broadly aim at removal of
unemployment, creation of job opportunities and reduction of poverty. These
programmes will be discussed in detail in Block 4 of this course. We have also
established some development agencies like the District Rural Development Agency,
District Planning Cells, State Planning Boards, Co-operatives etc. Thus development
administration has to be innovative enough in order to realise the pre-determined
objectives of development. In fact, innovative and creative administration leads to
speedy realisation of goals.
Client-Oriented Administration
Development administration is positively oriented towards meeting the needs of the
specific target groups, like small and marginal farmers of landless agncultura!
labourers and rural artisans in India. The socio-cultural and politicoeconomic
prsgress of these sections forms the essential basis of performance appraisal of
development administrators. Many target group centred or beneficiary-group oriented
organisations have to be created so as to provide these under-privileged sections the
requisite goods and services. It has been suggested that development administration is
'people-oriented' administration which gives priority to the needs of its beneficiaries
by preparing, reviewing and, if necessary, changing the programmes, policies and
activities aimed at the satisfaction of the needs of people in question. The
administration is involved in the betterment of the lot of the deprived and the weak.
Their upliftment becomes a part of the whole administrative ethos. The welfare of the
weaker sections is a part of the administrative value. This feature points 'out the
'
L 3 -L ----
6-- .C -A-:-:-&--*:-- TL- ---%.~h-i -C ... A-..-I-----+.-----:--+:--
Concepts and Approaches are highly motivatdd and committed to a progressive philosophy aiming at cutting the
roots of vested interests in the society. 'This is possible if the people of initiative, extra-
dedication and perseverance are inducted into the development administrative
structures. Training of personnel can be one effective method of creating such a team.
Development administrators should not just formulate plans for the people but even
monitor them in such a way that the beneficiaries are actually benefited.

Participation-Oriented Administration
Development administration accepts for its purposes the principle of associative and
participative system of administration. Here, people are not treated as mere passive
recipierits of benefits or goods and services. They are taken as active participants in
the formulation and execution of development plans, policies and programmes. It is
recognised that centralised administration will not only be unable to take cognisance
of local problems in a realistic frame, but it would also be deprived of the use of local
initiatives, energies and resources. Hence, effective formulation of programmes and
their implementation with the help and association of the local people is now a well
recognised principle of administration. It involves giving people an increasing share in
the governance and management of developmental affairs of the government. That is
why the involvement of Panchayati Raj institutions in planning and administration
has found renewed support in the development strategy of India.
Effective Co-ordination
Since development implies increasing specialisation and professionalisation, the
number of agencies and organisations involved in development tasks has considerably
gone up. In order to have the maximum benefit of this emergent administrative
system, co-ordination between various administrative units and activities is essential.
To achieve maximum results, wastage of resources, time and cost has to be avoided.
Development .administration has to co-ordinate the activities of development agencies
and organisations to integrate their efforts and energies for the realisation of
development goals. This would even save the administration from the problems of
duplication of functions, neglect of important functions and unnecessary focus on
irrelevant or marginally relevant activities. It would thus minimise administrative lag.
Ecological Perspective
Development administration shapes the environment-political, social and economic
and also gets affected by it in turn. It is not a closed system. It receives a feedback
from the social system and responds to the demands put on it by the system. In a way,
development administration is related to the environment and involves close
interaction between the administration and environment. The environment sets forth
the operative parameters of development administration. It requires the qualities of
*
flexibility and responsiveness in administrative actions and methods. The changes in
administration affect its environment and changes in environment also has its bearing
on administration.

Check Your .Progress 2

Note: i) Use the space given below for your answers.
ii) Check your answers with those given at the end of the unit.
1) Highlight the genesis of development administration.
 Discuss any three features of development administration. Development Administration :
2) Concept and Meaning

1.6 LET US SUM UP

In this unit we tried to explain the meaning of development administration, the

concepts of administration of development and development of administration were
discussed. We highlighted the difference between traditional and development
administration. The evolution of developmerlt administration was traced and the
various features of development administration were clearly dealt with.

1.7 KEY WORDS

Administrative Capacity: ability to mobilise resources and convert them into

activities. This process has to be in conformity with the environment taking a
comprehensive view of problems.
Administrative Lag: gap between the development needs and administrative response.
Beneficiary Group: is the target group identified for assistance under a development
programme. The people who are identified as targets and who are to be benefited by
the development schemes are called beneficiaries.
Delegation of Powers: delegation is one of the main ways for dividing and distributing
authority. It is not abdication of responsibility and does not connote the transfer of
final authority. The person delegating authority does not surrender hislher social
responsibility and retains the power of inspection, supervision and control.
Marshal Plan or European Recovery Programme: a co-ordinated effort by the US
and many nations of Europe to foster European economic recovefy after World War
11. First urged (5th June 1947) by US Secretary of State, George C. Marshal, the
programme was administered by the Economic Co-operation Administration (.ECA)
and from 1948 to 195I dispensed more than $ 12 billion in American aid. Sixteen
European countries led by the UK and France, set up the Committee of European
Economic Co-operation to co-ordinate the European participation. It later became
the Organisation for European Economic do-operation (OEEC) (as per the Longman
Encyclopaedia).
New Deal Programme: Term for the domestic reform programme of President
Roosevelt. It had two phases. The first (1933-34) attempted to provide recovew and
relief from the Great Depression (explained in Block 2 of this course) through
programmes of agricultural and business regulation, inflation, price stabilisation and
public works, numerous emergency organisations, e.g. the National Recovery
Administration were established. The second (1935-41) while continuing with relief
and recovery measures, provided for social and economic e.g, social security, to
benefit the mass of working people. Neither phase succeeded completely in restoring
prosperity but remained intact till the end of World War II (the reference : Longman
Encyclopaedia).
Nitty-Gritty: realities or basic facts of a matter.
Responsive Administration: administration that identifies the needs and fequirements
of people and formulates plans in accordance with those needs. It evaluates
development programmes in order to ascertain that people have been benefited and
develops procedures for future improvements.

~. . .-,-~ ;Ann+;GnA me thn t....t..,-.... fmr +ha r-,-.n-nmma -.. ..

Target Group: group identified for assistahce under a development programme. The
,ma,:.., th- -..:A-
uoncepb and -Appraschts benefits of the programme.
- For example, the target group for DWCRA
--
(Development of Women and Children in Rural Areas) is women aiid childrer) from
substantially deprived sections of the community.

1.8 REFERENCES
Bansal, Prem Lata. 1974. Administrative Development in India. Sterling: New Delhi.
Friedman Harry J. 1966. Articles on Development Administration in Pakistan.
Michigan State University, Asian Studies Centre : Michigan.
Gant George F. 1979. Development ~dministration:Concepts, Goals, Methods.
University of Wisconsin, Madison: Wisconsin.
Pai Panandikar V.A. (ed.) 1974. Development ~dministrationin India. Macmillan:
Delhi.
Swerdlow Irwing (ed.) 1963. Development Administration: Concept and Problems.
Syracuse University Press: Syracuse.
Verma S.P. and S.K. Sharma (eds.) 1984. Development Administration. IIPA:
New Delhi.

1.9 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress 1
1) Your answer should include the following points:
development administration has to aim at enlargement of administrative
capabilities
it has to bring about structural and behavioural changes in administration
it brings about political development, economic development and social'
change
it means cultural change in administration
professionalisation of personnel is its important component
reduction of dependence on foreign aid
promotion of development initiative
delegation of powers and
specialisation of administrative tasks
2) Your answer should include the following points:
Traditional administration is concerned with regulatory functions.
it emphasises on individual performance
it adheres to rules and norms
it is hierarchy bound
decision-making is centralised and
emphasis is on maintenance of status-quo.
Development administration is concerned with functions of unique and
unpredictable nature.
emphasis is on group performqnce
goal is to achieve organisational effectiveness
there is a willingness to take risks
it is a flexible system
decentralised decision-making
constant interaction between the organisation and outside environment and
strict dichotomy between the traditional and development administration
must not be made as traditional functions set the conditions and pace for
-
development functions.
Check Your Progress 2 Development Administration :
Concept and Meaning
1) Your answer should include the following points:
the third world countries like India were confronted with many problems at
the time of Independence
the State intervened in order to take up development tasks;
increase in functions of State to shift the focus from maintenance of law and
order to planned change
the western models (Technical Assistance Programmes under the Marshal
Plan and New Deal) could not be applied to third world nations
there was a need for development process suitable to Indian conditions
development came to be viewed as a holistic concept. It implied development
in political, economic, social and cultural spheres
the demands of equity and justice called foi renewed efforts to understand the
concept of development and
dependence on western countries was sought to be reduced and emphasis
came to be laid on people's initiative, uniform planning, self-reliance and
technological advancement.
2) Your answer should include any three of the following points :
Change Orientation
Goal-Orientation
Innovative Administration
Merit-Oriented Administration
Participation-Oriented Administration
Effective Co-ordination and
Ecological Perspective.
UNIT 2 SCOPE AND SIGNIFICANCE

'Structure
2.0 Objectives
2.1 Introduction
2.2 Scope of Development Administration
2.3 The Ideals of Development Administration
2.4 Significance of Development Administration
2.5 Let Us Sum Up
2.6 Key Words
2.7 References
2.8 Answers to Check Your Progress Exercises

2.0 OBJECTIVES
After reading this unit, you should be able to :
highlight the scope of development administration
explain the importance of development administration; and
discuss the ideals of development administration.

INTRODUCTION -

You have read in the last unit that development administration is a process of action
motivated by and oriented to the achievement of progressive goals*of development. It
aims at creating and/or mobilising the will and skills to utilise in an optimum manner
the resources of the country leading to the realisation of development objectives. Thus
development administration is a process of planned change.
The administration is being studied now a days in the contextual perspective.
Comparative analysis of the administrative system in terms of organisation,
administration and development management brings out two distinct elements of
' administration : (1) Administrative reforms are improvements that each nation has

been trying so as to match administration with development needs and

(2) Concentration of efforts at acceleration of rate of growth and change so as to
meet the challenges of socio-political development and nation-building effectively. It
is in this context that the concept of development administration has come to be used.
However, the concept has varied dimensions-social, cultural, economic and political.
The issue regarding the focus or scope of development administration as a discipline
and as a process has assumed importance. Thus in this unit, we shall try to discuss the
ideals, scope and significance of development administration.

2.2 SCOPE OF DEVELOPMENT ADMINISTRATION

The scope of development administration is expanding day by day. Development
administration aims at bringing about political, social, economic and cultural changes
through proper planning and programming, development programmes and people's
participation. T o achieve development goals the administration constantly interacts
with environment. It shapes the environment and is .also shaped by it. In this section
we would briefly highlight the scope of development administration.
Development Administration is Culture-Bound
There is a close link between administration and culture of a country. The culture,
provides an operational framework for administration. The administration, it is said,
-
 is affected by the political leadership t h i guides it Bnd the developmental policies that Scope Md Siylifiuace
it implements. It cannot easily or rapidly break away from the compulsion of
historical legacy or the resources of the economy or the behaviour patterns in society.
However, it does not imply that cultural system of a country is static. Rather, both
the cultural and administrative systems can change each other. The commitment of
administration to the ideology of development and change can definitely usher in
cultural change. For that purpos-e it should also be able to prepare suitable plans,
programmes and projects keeping in view their feasibility, operationality and
desirability. Development administration should serve as a steering wheel that directs
society to pre-determined goals according to the will arid skills of the 1eaders.and
personnel engaged in the development process. It removes the lag between
development requirements and administrative development.
Wide Spectrum of Development Programmes
The spectrum of development programmes, the central theme of development
administration, is very wide ranging from provision of industrial and infrastructural
development programmes to programmes relating to development of agriculture,
health, education, communication, social services and social reconstruction (e.g.
community development, family planning etc.). Thus development administration
covers a whole gamut of the multifaceted tasks of administration and management of
development programmes.
It may also be mentioned here that the principle of politics-administration dichotomy
cannot be accepted for the purpose of development administration as the formullrtion
of policies and programmes about development are intricably related to their,
administration. Otherwise, for unsound and vague policies.and,prograrnmes,tHe
implementing machinary should not be held responsible. The fact, however, is that the
people blame administration for its imperfections in or incompetence of
administration in implementation of a programme. The source of failure can be
policies and plans, administration, management, leaders or people or all taken
together. Development administration is an effort at homogenising all these
institutions/agencies engaged with the tasks of development into a unified system.
Nation-building and Sociakwelding
Development administration further involves the tasks of nation-building and social-
welding. It is concerned,not merely with the function of creation or expansion of
grawth structures, (institution/agencies established to achieve development) but also
to mould social behaviour or reconstruct social structures. Many a countries of the
third world tend to get affected by traditional and parochial set of social relationships
based on kinship, caste, religion and region. These parochial structures need to be
broken and an era of modernisation is to be inducted into the society putting an end
to the patronising approaches of a traditional culture. Hence, the focus of
development administration is on expediting the process of industrialisation,
urbanisation, education and democracy. It is a recognised proposition that
developmental policies should identify and strengthen the strategic growth factors.
The aims of development have to be economic growth, technological advancement,
equity, justice, removal of unemployment and other social and economic problems.
!
I
The social customs or traditions that hamper the development process have to be
modified or done away with. The task of nation-building can only be successful if
development activities bring about social change.
I Planning and Programming
Many countries of the world both developed and developing have opted for
/
I
development planning. This type of planning lays emphasis on the proper assessment
of resources, determination of plan priorities, formulation, implementatign,
t monitoring and evaluation of plan with an aim to achieve maximum results with
minlmum time and cost. Thus development administration comprise wide number of
activities. These are all-round efforts to realise developmental goals, provision of basic
nqcessities, introduction of social change, reorganisation of societal structures and
fuhctions, involvement of people as the ends as well as means of development and
emphasis on planned growth. Scope of development administration is vast and varied
in developing countries like India. In fact, the very survival of the government
programmes depends on the efficiency of the development administration to
implement, monitor and evalute them. Jt also stresses that planning should take note
of the linkage between 'economicdevelo~mentnormatives' and 'neo-social ~ositives'.
In other words, plans and planning process has to relate a country's economic'needs
with its administrative and managerial capacity, if they are not to be reduced to a
level of mere propaganda.
Programming is yet another important component of development administration.
Programming is that process which throws out knowledge about gaps in information
or skills needed and the groups oE people who have the necessary willingness to take
initiative. People's resistance to change, it is believed can be easily overcome through
a proper method or improved communication technology. A few words here about
centralised and decentralised planning are also called for. Centralised planning may
be defined as an act of working out the priorities and the pattern of programmes and
schemes as related to content, staff, finance, institutional arrangements, locations and
beneficiaries at the Central and state levels. This practice is favoured in the name of
administrative efficiency, effective supervision, avoidance of wastage and uniform
assessment of performance. However, developmen! administrators lay emphasis on
decentralised planning or what we call planning from below. They point out many
advantages of such a development strategy. In the first place, it is possible to adapt or
adjust resources to local needs. It can even make best use of locally available natural
and human resources leading to much saving of national resources. Secondly,
centralised planning gives a feeling of an imposed programme and policy planning
and, therefore, does lack in evolving commensurate enthusiasm or involvement of the
local community leading to low performance in terms of plan-implementation.
Moreover, it leads tb bureaucratisation of the whole planning process, beginning from
its formulation to its implementation. Thirdly, decentralised planning helps the local
administrators and communities to grow into self-reliant, self-governing units with
regard to plan formulation and mobilisation of local resources in order to meet the
demands of plan implementation. All matters of local importance may be left t o the
local-self governments and local people. Initially, for this purpose, the local bodies
may be assisted both in terms of provision of adequate funds (in case they lack them)
and also trained manpower in the area of planning. This process will iniroduce an
element of flexibility in administrative technology which is an underlying philosophy
of development administration. Thus through planning and programming
development goals can be realised to an adequate extent.
Development Administration and Ecology
Adminisiration works under the constitutional, political and legal framework. It
points out the fact that not only.the adoption of foreign know-how may be difficult in
a country, but also that even the best technological assistance froln abroad may not
yield the desired results in the recipient country. The sociocultural edonomic and
political milieu may not be ready to assimilatk the'values and innovations applied m
advanced countries. This reality was very well brought out by the students of
comparative administration during the 60s. In other words, development
administration is ecological in nature. It affects the environment around it and in turn
is affected by it.
Development administration, as we read in Unit 1 also, cannot survive in a vacuum, it
has to change in accordance with the changing political, economic, social and
cultural scenario. It affects the environment and is in-turn affected by it. No growth
model, no sophisticated technology, no developed schenies can be planted on a
developing system blindly. A system has to be ready to receive the change. The change
has to be suitable to its conditions.
Development Administration is Organic
Development administration, it is argued, cannot be conceived and operated as a
machine made of nuts and bolts. As development programme envelops and affects
every aspect of life and activity in society, administration for development must be
conceived and approached as sub-culture within a major-culture and with same
responsibility to create a new culture appropriate for the times dominated by science
and technology, ubranisation and material comforts. Technology affects and is
afiected by administration. This approach suggests a systematic study of development
administration. Human element forms an important part of development
administration. Development Administration comprise human beings at all levels.
Planners seek t o achieve development goals with the help of people. People's
participation is required at the time of determination of priorities for plans,
formillation of nlans irnnlernentation of nlans hv various develoament aeencies and
 evaluation of plans and programmes. The idea is to reach as many people as possible.
Thus development administration is organic, it does not work like a machine
following set rules and regulations and working in a pedictable and routine manner.
Though a proper and systematic planning process ii an essential component of
development administration, it does not have to rigidly adhere to the process.
The above discussion stresses the fact that the determination and realisation of
development goals to a large extent depends on a systematic planning process. In
India, through the help of Five Year Plans, we fix up plan priorities in terms of goals
to be achieved and determine the ways and means for realising them. The objective of
i planning has to be fixation of prioritieslgoals, assessment of available resources,
augmenting scarce resources, determination of machinery to carry out plans and

I
I
monitoring and evaluation of plans. In India, we have the Planning Commission,
National Development Council, State Planning and District Planning Cells to
undertake the task of comprehensive planqing. Planning is badly needed at the
grassroots level in order to secure people's support.
b
Check Your Progress 1
Note : i) Use the space given below for your answer$.
C
ii) Check your answers with those &en at the end of the unit.
1) Discuss the scope of development administration.

.......................................................................
2) Bring out the relationship between development administration and ecology.

2.3 THE IDEALS OF DEVELOPMENT

ADMINISTRATION
Development administration, as has been made clehr many times, is not yerely
interested in economic growth. Rather, its objective is economic growth with social
justice. It works for the purposes of a social order based on the principles of equity,
justice, freedom, offering equal opportunities to all. The fact is that all "major
decisions regarding production, distribution, consumption and investment and all
other important socioeconomic relationships must be made by the agencies
committed to social purposes". It works on the premise that wealth and incbme
should be equitably distributed among various people of the society. The philosophy
of development administration is that "the benefits of economic development must
accrue more and more to the relatively less privileged classes of society and there'
C&m!ptg .ad Approaches should be progressive reduction of the concentration of income, wealth and economic
power. However, the methods and approaches to bring about this changed process
must be cqmpatible and effective within the environment in which change must take
place.
Institution-building
The tasks of development administration are not confined only to the formulation of
plans, policies, programmes and projects, but it also includes creation of suitable
institutions to accomplish the objectives of development. The term institution means
planning, organising, implementing and evaluating, through well designed structures.
In the words of Donald C. Stone, "we use this term to identify the process involved in
moving from an objective to be accomplished to the actual creation of the
organisation, service system, new practices or relationships which evidence that
change has actually taken place. This may be a school, a pan~hayat,a water
distribution system, or any kind of organised efforts that requires acceptance and
response." A different set of organisational values and constructs are therefore
necessary to tackle the tasks of development administration, In India our experiments
with development administration have been in the form of Community Development
Programme, Panchayati Raj Institutions, Anti-poverty programmes, district level and
block level planning etc. In the process various institutions such as Zilla Parishads,
Panchayat Samitis, Gram Panchayats, Municipal Corporations, District Rural
Development Agencies, Rural Development Banks, State Planning Cells etc. have
come up. These institutions ate involved in development activities and so are certain
functionaries like the Block Development Officer, Village Level Workers etc.
Administrative Development
The administrative aspect of planning and development in terms of building up
adequate administrative capacity and capability is another integral part of
development administration. In order to make administration a 'perfect instrument' of
development, the changes in structures, attitudes, skills and behaviour of
administrative organisations are taken as essentials. For these purposes, a proper
arrangement for training of administrators engaged in the task of socio-economic and
cultural transformation of the society is called for. In sum., it is concerned with
creating in administration a sense of dynamism, flexibility, democracy,
responsiveness, imagination and innovativeness. It aims at creating a people-centred
administration replacing the colonial attitudes of authoritarianism and rigidity. The
idea is to bring the administration closer to the people, to make the administration
responsive to the people and to make the people an integral part of administration. As
you have read in the previous unit development of administrative capacity and
capability to carry out administrative programmes is a necessity for development of
administration. Another aspect of administrative development is related to
simplifidation of procedures and techniques of work so as to make them
romprehensible and accessible to the people who are mainly ignorant and illiterate.
Administrative development aims at building a new generation of men and women
trained and motivated to operate a modem society.
Communication
Communication has become a watch word for development. It assumed more
importance because new ideas are introduced into a social system committed to bring
about social change. In order to produce higher per capita income and levels of living
through more modern production methods and improved social organisations, the
patterns of corrimunication acquire added significance.. It would be difficult to achieve
developmental goals without an effective communication network: It is through the
process of communication that transinission of information, decisions and directives
among factors takes place and knowledge, opinions and attitudes are formed or
modified. In the words of Pfiffner and Presthus, "administration can be viewed as a
configuration of communication patterns relating individuals and collectivities
(groups) of varying sizes, shapes and degrees of cohesion and stability". However,
communication, for the purposes of development administration, may mean mainly
development communication i.e. communication of messages related to all aspects of
development programmes. Moreaver,~ommunication,an integral component of
development administration, is both vertical and horizontal in addition to being
formal and informal or written and oral one. The process of communication promotes
the elements of personalised relationship which is an important plank of development
administration.
 Participatory Development Scope .adS i g n U f ~ c g
The concept of development administration is based on the premise that people have
an immense capacity to conlribute to development. That is why a renewed stress is
laid on the need to involve people more actively in all stages of development planning,
implementation, controlling and evaluation. Participatory development implies
development of the people by the people. The success of policies, programmes and
projects depends to a larger degree on the success in obtaining more and more
participation of the beneficiaries in development process.
In other words, the focus of development administration is' on seeking people's
involvement at all the stages of development. The voluntary associations, interest
groups, pressure groups and beneficiary organisations are encouraged to participate in
both plan formulation and execution. This is so beciuse the governmental agencies
involved in the task of progressive mobilisation of the society alone may not prove to
be suitable instruments for the job. Though, the concept of popular participation in
development emerged in more developed countries, the societies of the third world
b have also perceived its relevance for achieving fast rate of development. The
implication of all this reference is that participatory development process is the key
factor in development administration because it is the only way qualitative
b
development can take place.
Our centrally sponsored schemes for rural development and poverty eradication
(NREP, TRYSEM, IRDP etc.) have not been much of a success. The lack of success
is not due to faulty premises underlying the schemes but the fact that we have not
been able to involve people in the formulation, implementation and evaluatiop of
these schemes to a needed extent. These programmes have been in a way im-posed on
rural people without taking into due consideration their requirements and needs. The
suitability of a scheme in a particular area has also been overlooked. The emphasis
has been on completing targets rather than actually helping people. To give an
example, TRYSEM (Training Rural Youth for Self Employment) has been
introduced in areas where people are more inclined towards wage employment. No
development programme can achieve its targets if it does not keep in view the needs of
the people, the beneficiaries and all those affected. Development programmes must
also try to satisfy the basic needs of people such as food. sheher, clothing and health.

Development Administration as a Process

Development administration is also a process which involves, as mentioned by
J. Khosla, four crucial elements: (1) Development goals and their feasibility
(2) Development policies and programmes (3) Organisational logistics and personnel
to implement these programmes, and (4) end results. This dimension of development
administration further stresses on (a) 'treating administration as one of the resources
I
in the planning process; (b) working out in operational terms the administrative
requirements of each developmental programme ,or activity; (c) formulating
a clear cut scheme of priorities as between the different developmental
goals and objectives; and (d) designing an effective strategy of implementation'. Thus
I
development follows a proper plan procedure.

Co-ordination
As we read in the previous unit also, co-ordination is a basic component of
development administration. It is taken as a means for planned change. Development
administration has to establish co-operation and co-ordination at various levels of
governmental organisations and functioning. According to V.A. Pai
Panandikar, "the key formula of development administration could be
expressed in the initial letters of co-ordination of resources through organisation of
personnel and procedures i.e. CROPP (Co-ordination, Resources, Organisation,
Personnel and Procedures). In development administration it is the key factot because
scarce resources seldom permit overlapping or wastages without serious damages to
developmental pace and process". ~lternatively,development administration focuses
on 'management of scarcities' or 'optimising opportunities', through better co-
ordination and utilisation of resource inputs. There is no area of development where
co-ordination i.e. structured formal co-operation and cultivated informal co-operation
does not permit and determine the tone and tempo of development. Indeed, success in
development administration could be measured by the degree of-coherenceand co-
ordination achieved in administration.
2.4 SIGNIFICANCE OF DEVELOPMENT
ADMINISTRATION
We have seen in the foregoing discussion how the concept of development
administration his served as a means of comprehensive analysis of the problems of
development and the necessary requisites to meet these challenges. The emphasis on a
multitude of dimensions of development and the administrative inputs in terms of
skills, attitudes, beha&our and structure required have clearly added to the
understyding of the multidisciplinary linkages of change and development. The sub-
discipline of development administration has been able to draw the attention of the
scholars of Public Administration as well as its practitioners to the fact that the
western models and concepts of Public Administration may not be wholly applicable
in the context o f t & countries of the third world. Since the nature of the problems of
these countries are different from the ones in developed countries, it requires a
different set of administrative answers too.
The emphasis of development administration on the ecology of administration has not
only brought to light the need for synchronisation of political, economic and socio-
cultural aspects of development, but also the vivid contextual character of
development administration. It lays stress on developing indigenous administrative
means, procedures, methods and techniques to meet multifaceted challenges thrown
by the pressing demands from the 'new envii..lrment' upon the State. The State also
has to provide leadership to improve standards of societal living.
Development administration, further, calls for new perspectives, insights and
understanding. It promotes democratic spirit in administration and includes people's
participation in the management of developmental affairs and processes of social
change as a technique. Newness in thought, action, organisation and behaviour is the
crux of development administration. It calls for higher standards of group
performance, inter-group collaborations and participative management. A high degree
of achievenlent-motivation and a continuing innovation of organisation to meet
environmental change and internal needs is also called for.
The study of development administration makes it explicitly clear that politics-
adminiatration dichotomy is a myth and in an era of expanding science and
technology, knbwledgt explosion, the clear functional demarcation between politics
and adrhinistration is neither desirable nor possible.
It may be mentioned here that development administration has served as a useful
construct to explore the dynamics of change and administration in the developing
countries of the third world. It is a fact that administration has fallen short of
development aspirations. Development administration seeks to fill the gap between
developmental needs and administrative responses. It also seeks to lay its hand on
certain common themes in the area of administration and environment of different
countries. Hence, it is a move towards contributing to development organisation
theory. It helps us to find answers to the following questions :
1) What is location of the clients?
2) How to identify their needs?
3) What structural and behavioural changes are required to construct a new social
order based on the principles of dignity of human being guided by the principle of
fraternity and equality?
4) How to bring about the desired change in,society and administration?
5) How to raise the level of administrative and political capabilities?

Check Your Progress 2

Note : i) Use the space given below for your answers.
ii) Check your answers with those given at the end of the unit.
1) Discuss any two ideals of development administration as dealt in this unit.

.........................................
. .
L................ ..............
. .
 Scope and Sipfilunce

- ..............................
2) Highlight the significance of d e v e l o v ~ r r qdministration.
t

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

2.5 LET US SUM UP

In this unit, we have studied the scope and significance of development
administration. We have highlighted the'multi-dimensional issaes of development
administration viz. political, economic, social, cultural and administrative. The
importance of development administcation and its relevance to modernisation, nation
building, social change, industrialisation and people's participation has also been
discussed.

2.6 KEY WORDS

Fraternity : the ideal of fraternity ensures the dignity of the individual and unity and
integrity of the nation.
Horizontal Communication :flow of information (regarding the procedures, rules,
policies and programmes of an organisation) from one person to the other at the same
L
hierarchical level.
Informal Communication : flows through friendship circles and other small groups in
the organisation. One positive feature of these channels is that it removes some of the
problems in upward communication. These also facilitate downward and across
communication.
Planning from below : involvement of block and district bodies in planning process in
a full-fledged manner. Preparation of plans at the block and district planning cells.
Per capita Income : is the average income of a country. Jt is derived byP
dividing the
total national income of a country by its population.
Pressure Groups : Pressure Groups are forms of organisations which exe? pressure
on the political or administrative system of a country to extract benefits out of it and
to advance their own interests.
Social Justice : it is the sine qua non of a welfare state. It prohibits discrimination on
any grounds, religion, sex, caste or colour. It also means prohibition of forces creating
artificial social barriers. State must make efforts to i m p r ~ v ethe lot of the deprived.
and weaker sections of the people.
Colmpb and Approrehen Trained Manpower :Trained personnel required or employed by an organisation to
carry the administrative tasks in a skilled and knowledgeable manner.
Vertical Communication :flow of information (regarding the procedures,
programmes and policies of an organisation) from topmost level to the bottom level
of hierarchy and vice versa. It is also classified as "up" and "down" commu~ication.It
can be written as well as verbal.

2.7 REFERENCES
I

Khosla J. 1979. Crisis in India's Development and Administration.

University Press : Bangalore.
Panandikar, V.A. Pai and S.S. Kshirsagar (Eds.) 1978. Bureaucracy and
Development Administration. Centre for Policy Research : New Delhi.
Sharma, S.K. (Ed.) 1978. Dynamics o f Development :An International
Perspective. Concept : Delhi.
Stone, Donald. C. 1964. Administration for Development and Effective
Administrators: Two Lectures. IIPA : New Delhi.
Trivedi, K.D. 1987. Perspective in Development Administration : Mittal : Delhi.
Verma, S.P. & S.K. Sharma, (Eds.) 1984. Development Administration. IIPA :
New Delhi.
Waldo, Dwight. 1964. Comparative Public Administration :Prologue, Problems and
Promise. American Society b r Public Administration : Chicago.

2.8 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress 1
1) Your answer should include the following points :
development administration is culture-bound, the commitment of
administration to the ideology of development and change to usher in cultural
change.
it compiises wide spectrum of development functions and programmes. The
success or failure of a programme depends on formulation of policies, their
execution, management, leadership or all taken together.
it is involved in nation-building and social-welding.
through planning and programming development administration can serve
various objectives.
its relationship with ecology helps to realise the developmental objectives
adequately.
it works for the people and with the help of the people.

2) Your answer should include the following points :

administration works under constitutional, political and legal framework.
only those programmes of development should be implemented which are
conducive to local conditions.
development programmes of western or developed countries should not be
blindly imposed on developing countries.
administration affects environment and is in turn affected by it.
a system has to be ready to receive the change.

Check Your Progress 2

1) Your answer should include any two of the following points :
, Institutisnal building
Communication
Co-ordination
Administrative development
-
 Participatory development Scope md SigniOcance
Process of development administration.
2) Your answer should include the following points :
the concept of development of western countries may not be applicable in the
context of develcping countries.
the problems in developing countries are different and require different
answers or solutions also.
through development administration synchronisation of political, economic
and socio-cultural aspects of development can be achieved.
development administration lays stress on developing indigenous.
administrative procedures, methods and techniques.
it calls for new perspective, insights and understanding. .
it stresses on people's participation and inter-group collaborations.
co-ordinates the tasks relating to policy formulation and implementation.
brings structural and behavioural changes in administration.
UNIT 3 EVOLUTION

Structure
Objectives
Introduction
Genesis of Development Administration : The 1950s
Development Administration in the 1960s
The Thrust in the 1970s
The 'Trends: in the 1980s
Let Us Sum Up
Key Words
References
Answers to Check Your Progress Exercises

3.0 OBJECTIVES
After studying this uriit, you will be able to :
understand the evolution of development administration as a discipline as well as
a process;
explain various approaches to the study of development administration; and
discuss the recent trends in the theory and practice of development
administration.

3.1 INTRODUCTION
The concept of 'development administration' has appeared on scene mainly after the
Second World War. The problems faced by the nations of Asia, Africa and Latin
America which got free from the colonial rule in 1940s were altogether different than
the problems of the developed nations. Consequent upon the positive policies and
programmes made by the developing nations to help the under-developed or
developing ones, the concept of Development Administration caught the fancy of the
scholars to understand and analyse this concept and the role which Public
Administration could play in meeting out the challenges. In this unit, we will discuss
the evolution of development administration as a discipline as well as a process and
also emphasise on various approaches to the study of development administration.
Lastly, we will highlight the recent trends in the theory and practices of development
administration.

3.2 GENESIS OF DEVELOPMENT ADMINISTRATION :

THE 1950s
Ushering development in the developing and under-developed countries, the concept
of development administration emerged. Besides, the success in dealing with the
effects of depression and Second World War, the ~ a r s h a Plan
l for the reconstruction
.
of Western Europe, and the process of decolonisation provided the requisite
background amounting to the coining of the theory of development administration. It
was an Indian scholar, Goswami, who used the concept for the first time in 1955.
Later on good number of scholars all over the world have contributed to its
enrichment.
Classical economists' view on develppment has been the important basis of the
development'theory in the 1950s
+-- with emphasis on increase in the GNP or per capita
income. The economic growth model based on the Keynesian economic approach
(macro-economic approach) which paved the way to development thinking sought to
transform the ascriptive, particularistic and functionally diffused underdeveloped
societies into the one having modernisation-achievement orientation, universalism and
functional specificity. 'Besides Economics, disciplines like Political Science and
Sociology, which viewed the underdeveloped society as a closed traditional society
stagnating in p,rimitive isolation, also contributed towards the concept of development
administration.
It was the Instrumental Theory of Administration and popular Government which
occupied the front rank in the development administration model in 1950s and early
1960s. This theory generated prescription or normative approach viewing
administrative reforms as a precondition to development. The government became a
crucial instrument in designing and administering goals for achieving developmental
objectives. It was argued that the twin objectives of stability and growth could be
achieved if the government designs monetary and fiscal policies. I: amounted to the
concept of planned development having the assumption that the developing countries
could be helped to develop with the aid of western technology of administration. The
important ingredients of the development administration model were :
(i) establishment of planning institutions and agencies; (ii) improvement of the
Central administrative systems; (iii) budgeting and financial control; and
(iv) personnel management and organisation and methods. This model had stress on
(i) reforming the administrative structures; (ii) creation of new agencies improving
the administrative technology in terms of methods; and (iii) procedures and practices
on the lines of western-administrative thought.
The theories propounded by Weber, .GuW,;-Taylor and others were implanted into '

the administrative practices in the developing countries. In order to ensure the validity ,
of Such techniques and methods in the developing nations' environment, the
administrative techniques and methods developed in the West were to be injected.
The administrative values prescribed in this period were efficiency, economy and
rationality. Besides, the principles of professionalism, hierarchy, unity of command,
formalisation and impersonality, span of control, authority commensuralc with
responsibility, staff and line, decentralisation and delegation of authority became the.
basis of organisational structure.
Administrative development was another aspect which drew the attention of
academics and executives during this period. Personnel administration reforms
centred on the problem of setting up merit systems, position classification schemes,
and central personnel agencies. The introduction of the concepts of performance or
programme budgeting in the US were termed as crucial for improving efficiency and
rationality in decision-making. During 1950s and early 1960s, which is considered as
'Technical Assistance Era in Public Administration', the US alone spent $ 180
million on aid for Public Administration, stress was also on training of administrators
to capacitate them to cope with the complex problems of development. In the training
programmes, techniques, like role-play, Case Method, T-groups, etc. were made use
of. The Technical Assistance Programme insisted on creating training institutions in
many a countries of Asia, Africa and Latin America on the one hand and imparting
training to the people from these countries in one donor country on the other.
However, there was an adaptation gap between the training programmes and the
needs of the recipient country. It has been argued by Esman that the rationale behind
the technical assistance was as follows :
1) Economic growth and modernisation occurs through a deterministic sequence of
stages. All societies are destined to participate in this beneficial evolution, but it
can be accelerated by wise policy.
2) Development can be facilitated by transfer of resources and technologies from
advanced to underdeveloped countries. Imparted capital speeds up growth, while
technology increases efficiency and facilitates modernisation.
3) State is a benevolent institution and the principal instrument of development. The
Roosevelt reforms and the Keynesian prescription for economic management all
requried a proactive state.
4) Balanced development requires the mastery of modern science, including the
science of economics and control of the maid levers of public policy.
Concepts h d Apprmchos Development decisioiis should be in the hands of benevolent technocratic
planners, protected by enlightened, modernising political leaders.
5) Bureaucracy is the main vehicle and exemplification of modern administration.
When its membets,are adequately trained and equipped with appropriate
technologies, it can be a reliable and effectlve instrument of modernising elites.
6) The attentive public, specially the leaders of the developing countries eager for
growth and modernisation, will sacrifice other values in order to achieve these
goals, and welcome the material cantributions and intellectual tutelage of
Westerners.
7) The'transformation from backwardness to progress will be rapid and benefits will
be widely shared. Since economic growth produces full employment and increased
labour productivity, there is little need for explicit concern with distributive
issues.
8) Development will yield enhanced well-being as well as the preconditions for
political democracy, but t h c ~ edepend on the maintenance of political stability.
Since premature democrat~cparticipation could overload and destabilise fragile
political institutions, it should not be emphasised during the transition period.

Check Your Progress 1

Note : i) Use the space given below for your answers.
ii) Check your answers with those ~ i v e nat the end of the unit.
1) DISCUSS
the key elements oC development administration model.

2) Briefly mention the proposition of the Technical Assisiance Approach given by

Esman.

3.3 DEVELOPMENT ADMINISTRATION IN THE 1960s

-

Failure of Technical Assistance Programme in Public Administration

It could be said that the Technical Assistance Programme advanced the principle of
emulative development administration for building up of administrative capabilities in
a prescriptive manner. However, it has been criticised by many a scholars. Dwight
Waldo, for example, has termed it as "naive" and "a sad waste of scarce human
resources". The reasons for the failure of technical assistance can be summed up as
follows :
1 ) The applicability of the development model was taken for granted in all countries,
ignoring the relevance of environmental context to administration and
technology;
2) The concepts like efficiency, economy and rationality might be differently
interpreted by the developing or recipient country than the meaning given to them
in the West;
3) It was planning without implementation. Furthermore, since planning has social,
economic, political and cultural dimensions also, many proposals for
administrative reforms, for example, could not be implemented for the lack of
political support and support, from even the bureaucracy.
4) Protagonists of Technical Assistance Prograxime did not have adequate
knowledge and information about administrative problems of specific sectors, like
agriculture, health, education, industry, labour, population control.etc., which
was much needed to be dealt with in more details.
5) The modern administration1 management techniques like CPM, PERT, Linear
Programming, network analysis, long-range planning and forecasting, cost-benefit
analysis etc., were not included for the purposes of transfer to the developing
countries.
6) Administrative reforms attempted during this period concentrated mainly on
structural change and not on attitudinal change.
The technical assistance approach to development administration has been criticised
by Esman when he offers the following views :
1) Neither economic growth nor institutional modernisation are unilinear or
historically inevitable. Economies may stagnate, instit'utions may decline in
effectiveness and societies may fail to deal with their central needs. The benefits of
rapid economic growth, especially, derived from mainline urban-industrial
investment model, have been skewed towards a relatively small minority in the
modern sector, leaving rapidly increasing majorities especially in rural areas as
impoverished, insecure and powerless as they were three decades ago.
2) Confidence in the efficacy of planning, in science and in the benevolent role of the
State have d s o been shaken. Most of the States of the Third World have taken on
vast new functions in econoniic management and the provision of public services.
The size of their bureaucracies has expanded and so have their budgets, but many
have proved to be incompetent or repressive and sometime both.
3) Public Administration is being looked now as a plural rather than a universal
phenomena. In.the words of Esman, "the management,of Central bank, of a
.research station, of a postal service, or of a small irrigation system confront the
analyst with different administrative requirements even within the same political
system. Regular (e.g.'~olice),promotional (e.g. co-operatives), service (e.g. health
clinics), construction (e.g. road building) activities directed at the same rural
public produce distinctive set of problems and require different treatment"
The early dc:elopment theorists ignored the issues of agency-client linkage and the ,
impact of administrative action on the clients. This approach ~esultedin urban bias at
the cost of rural periphery.

The Contributions of the Comparative Administration Group (CAG)

It was Fred W. Riggs, under whose chairmanship the Comparative Administration
Group was formed in 1961 by the American Society for Public Administration. The
CAG was made to carry out research in Comparative Administration with 'special
focus on the problems of development administration. The financial support to the
CAG was given by the Ford Foundation, which was interested in the analysis of the
relations between administrative system and its socio-political, economic, and cultural
contexts.
The Group felt that as the classical concepts of administration in the third world were
rigid, narrow, and parochial and thus unfit in explaining for the cross-cultural
situations as these concepts were unable to answer the irrational, informal, and
.emotional behaviour of administration. Further, &hepostulates of conventiopal
organisational theory were suitable only for "maintenance needs" rather than for
"development needs". The technological-managerial school having emphasis on
planned and managed change, was challenged by'the Ecological School which insisted
on relating the organisational structures to other social structures. It resulted into the
idea that sociological context of administration is more relevant than mere
'organisational change and personnel manipulation'.
The scholars in CAG insisted on a comparative analysis of the administrative systems
of the third world. The Group also advocated concentration on the strategies and
requisites for attaining public policy goals in the developing countries. The Group
which organised its activities through various seminars, symposiums, conferences and
evolving committee system, published more than 100 occasional papers. It is a fact
that the Group initially shared the assumption of technical assistance experts, but it
was not without questioning. The studies carried out by the CAG assumed
- - ' .
concepts ma Approaches developmental thrusts in the context of a "belief in the possibility of (initiating and)
managing change by purposive intervention by administrative institutions". .As a
result of its efforts, the Group was able to innovate many concepts viz : Systems
Analysis; Patterns Variables; Traditional-Modernity Dichotomy; Information Theory
and Pluralism.
The 1960s ushered in a period of evaluation of results, doubts and repetition of old
strategies. It was also a period of a search for new concepts or analytical constructs
which have cross-cultural validity. The Public Administration academics sought
alternative approaches to development administration. They sought to examine the
relationships between Public Administration and social, economic, political and
cultural'environment. In other words, Public Administration was seen in 'ecological
perspective. The most renowned exponent of this approach has been Fred Riggs. We
shall discuss his views in some detail below.
The Contribution of Fred W. Riggs
Riggs has criticised the development administration model by observing that GNP
increase may not necessarily lead to improving the real life conditions of the people.
Thus increase in the per capita income does not serve as an indicator of development.
He has rather preferred the physical quality of life indicators and social and
psychological quality of life index as the success of a development policy.
Riggs has analysed the structural functional features of the social and administrative
systems of the developing countries in his industria-transitia-agraria formulation. He
puts the developing countries in the category of prismatic society which is caught in
between tradition fused and modernity defracted and is undergoing the process of
social change. The ecological approach provided a vision that reflected interest in the
examination of the relationship of non-administrative factors to administrative ones.
Administrative aspects, it is argued, cannot be explained and analysed in their abstract
forms where effective behaviour, despite the establishment of formal political and
administrative institutions, is still guided in modern traditional societies, to a great
extent, by traditional structures and pressures, family, religion, region, caste and
persisting socio-economic practices. Therefore, an attempt is made to understand the
sociocultural and administrative factors as related to the implementation of
Technical Assistance Programmes. The strong primary group affdiations and
conservative mode of thought, where not much importance is given to the factors of
accuracy, promptness and time, have behavioural implications.
The Emp~r~cal
Approach to Uevelopment Administration
The period of the 1960s also saw a shift from normative approach to empirical
approach. This approach was undertaken to make a systematic study of the processes
of institution-building basic to the technical assistance enterprise of the United
Nations and other aid agencies. The fundamental units of analysis were the structures
and their functions in different systems having parallel characteristics. It is in contrast
with the normative approach in which the main aim is to prescribe ideal or atleast
better patterns of administrative structure and action. This approach is implicit in .
most of the so-called principles of Public Administration works of Woodrow Wilson,
L.D. White, Fayol, Gullick, F.W. Taylor and others. It reflected American practice as
a model, especially for the people of the third world countries. This category includes
numerous reports and studies by experts, visiting consultants, technical assistants, and
by sonie western trained Public Administration specialists of the new States. The
basic orientation is the quest for ideal patterns and the identification of difficulties
and obstacles to be overcome and problems to be solved. Such endeavours seek to
identify the universals of the administrative process.

Check Your Progress 2

Note: i) Use the space given below for your answers.
ii) Check your answers with those given at the end of the unit.
1) What are the weaknesses of technical assistance approach?
2) How did CAG contribute to the understanding of development administration?
.......................................................................
........................................................................
......................................................................
....................................................... t..............

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

3.4 THE THRUST IN THE 1970s

Review of Development Strategies of the 1960s
By 1970s not only the meaning of development underwent change in so far as
development goals'were conceived in terms of meeting basic human needs but also the
development administration model, to meet these objectives, saw changes in strategies
and substantive programmatic actions. The shiftsin the approaches to the study of
the theory and practice of development administration were also discernible. Public
Administration shed its love for unidirectional emphasis. This period of the second
U.N. Development Decade, however, began in the background of report of the
Commission on International Development on Technical Assistance Programme in
1969. The report has made it vividly clear that the focus of the 1960s on
administrative modernisation depicted as a technical process involving the expert of
western administrative methods, procedures and practices to the newly Independent
States needs a review and recast. It has been pointed out that the local people were,
though poor, yet not so irrational in decision-making. The development
administration problems were rooted in the political economy of the aid receiving
countries and stressed on inter-theoretic'linkages to social explanation.
The Political-Economy Approach
Many scholars sought to explain the dynamics of societal transformation and
management of change by undertaking political-economy approach which attempted
to seek politics-administration union and economics-administration confluence. It was
asserted that administrative questions are political questions. The political economy
paradigm seeks to relate administration to political and economic environment. This
paradigm which is concerned with both political and economic dimensions of
decision-making and resource allocation deals with "organisational constitution" and
"internal polity". In the words of Mohit Bhattacharya, "Theoretical formulations in
line with the classical study of political economy-explore relationship between
political and economic power in society." The politicaleconomy approach subserves
'goal paradigm' and 'rational model*. These new concepts refer to the concepts of
power and action. The thrust of the paradigm consists in examining development
administration in the context of power-relationships and in terms of the real process
of conflicts and their resolution. The political-economy paradigm provides for the
analysis of the context of administration.
The Ecological Approach
Many a scholars have attempted to understand development administration with an
ecological perspective. The ecological approach has been applied to relate Public
~dminisirationwith social, economic and political-cultural structures of the country.
It has been argued that development is a holistic concept. There is a growing
realisation that political development is necessary for national development and
administration. Thus political environment acquires a special significance in relation
to the 'ability of Pyblic Adniinistration to play its role in the national development*.
The politics-adminl~trationdichotomy principle is not a favoured principle now,
specially in practice. It is a known fact that administration plays a decisive role both
in policy making and its implementation. On the other hand political environment
provides a conditioning effect on administrative environment in so far as effective and
efficient administrative ~erformancereauires the s u ~ ~ oofr t~oliticalexecutive. Even
Coaccpta md Approschea the question of administrative reforms is a political question. Moreover, it is stated
that development is dependent on strong political institutions and practices. If the
bureaucracy is more developed than the political leadership and structures, it might
lead to negative impact on development efforts. It may be said that political context
provides strategic opportunities for accomplishment. This political framework must
be taken into account while studying development activities.

The cultural context also plays an important role in determining administrative

performance. Both goals and methods shall have to be related to these ecological
factors. In the words of M.J. Esman, "At both project and programme levels of action
behaviopr that produces and protects innovation depends on combinations of
sanctions and incentives that meet the tests of political and cultural feasibility.
Available incentives and sanctions are not only individual and economic, but also
collective and non-material, the latter especially are derived from indigenous culture
and experience". The point here is that special characteristics of a country prescribe a
different role for its government and administration. It is equally important to have
the economic and sociological understanding of administration in developing
countries. The economic and social dimensions of development administration are a
part of the process of nation-building and socioeconomic progress. The
administration creates conditions for economic development by mobilisation and
better utilisation of resources on the one hand and by determining the extent and
context of training to be given for modernising labour forces on the other. The
importance of social development has also been recognised in the 70s. Many
organisations have argued for introducing programmes and policies and evolving
relevant strategies to bring about change in the minimum standards of living of the
people and to ensure human dignity. This is the focus, for example, of Declaration on
Human Rights, Declaration on Social Progress and Development and the New
International Economic Order. The emphasis here is on the reduction of poverty,
improved delivery of social benefits like education, health, nutrition, transport etc.
and removal of socioeconomic disparities in the society.

Basic Needs Approach to Development Administration

By the end ot 1960s and early 70s, it was experienced that poverty, hunger, squalor,
unemploqment have been on the rising scale despite achievements in the area of
economic growth. The role of human factor in development process began to attract
the focus ot the students of development and development administration. How to
provide the millions and millions of poor people with the bare minimum of life
became a major concern of the scholars as well as the policy makers. Meeting the
basic needs of food, clothing and shelter, along with education and public health
became the indicator of development. Thus development acquired a social and
economic meaning during the U.N. Second Development Decade (1971-8 1 ) instead of
economic growth. The concern was obvious for qualitative change rather than mere
quant~tativeone. It was realised by the developmentalists of this period that the <;UP
(Gross National Product) model has benefited only a small minority of the rlch and
prhileged persons who were already an entrenched class. The need for new economic
framework and accordingly a new approach to development administration was felt.
The economists like G. Myrdal argued in favour of social and institutional
preconditions for progress. This called for the adoption or creation of new strategies
as well. A group of scholars from Third World Forum also advanced the new
framework of development, more so in the year 1975 when they met at Karachi. The
development ideology as has been mentioned by ~ a r c ' ~ e f r i m
was, characterised by
need orientation, ecological orientation, self-reliance orientation, rural development
orientation based on development and creation of endogenous techniques and
institutional structures. The objectives of development were identified as reduction
and removal of poverty, inequality, hunger, squalor, disease, illiteracy, unemployment
and malnutrition. Thus the impact of economic growth occupied central place instead
of the increase in the production of goods and services per se. In other'words, the
problem of increased production was to be seen along with the problem of distributive
justice. The process of efficient and fair/social choices became a matter of analysis for
the students and practitioners of Public Administration. Anti-poverty planning and
policies aiming at the removal of disparities were treated as key elements of this new
developmental thought. N..Islam and G.M.Henault have presented this shift as
follows :
 Shift
From To
Industrialisation Agriculture
Urbanisation Rural Development
Market Determined Priorities Politically Determined Basic Needs
GNP Per Capita Welfare of Individual
Capital Intensive Labour Intensive
Top Down Planning Participative-Interactive Planning
Parallel Development of Sectors Integrated Development of Sectors
Foreign Dependence Self-reliance
Advanced Technology Appropriate or Intermediate Technology or
Inherent Technology
Economic Orientation Socio-Economic Political Orientation
Service Oriented Rural Production-Welfare Rural
Development Development
De-bureaucratisation and participatory management were regarded as the appropriate
strategy to implement this shift. The development of regional, local and sectoral
structures was focused upon rather than central organisations. M~reover,rural
development became a new management strategy for development. The implication is
the design of a strategy to improve the socio~conomicconditions of the life of the
rural poor. The key elements of this approach are : satisfaction of the basic needs,
increase in production in the agricultural sector, development of labour-,intensive
technology for agriculture, providing the s e ~ i c e sof, credit, technological information,
marketing facilities and assistance, seeds and fei-tilisers t o the peasants and small and
marginal farmers. However, the problem is to find an appropriate
organisational/administrative model to achieve these goals. Some scholars have
suggested the following strategy for development :
1) Decentralisation and Devolution :Decentralisation in administrative language
means delegation of authority from the functional department to the regional and
local to formulate and implement projects, to allocate funds and to raise
resources. Decentralisation is also political when provincial, regional and local
governments work under autonomous regions of authority and functions.
Devolution of powers and authority implies creation of autonomous
administrative instjtutions and agencies at various levels having freedom to plah
and implement development projects and programmes.
2) Strengthening of local self governments and creation of intermediary
organisations.
3) Peoples' participation in plan formulation and implementation.
4) Development of communicational co-ordination and integration channels.
5) Removal of negative socio-political conditions e.g. rural, social and class
structures-persistence of dependency-relationship-factional politics.

3.5 THE TRENDS IN THE 1980s

The 1980s present a third world view of development administration in which
attention has been given to indigenous concepts, methods and theories of
development and administration. Arvind Singhal mentions two contemporary
approaches to development (1) pluralistic, recognising many pathways to development
(2) less western in their cultural assumptions. These approaches stress on the new
socio-economic goals and strategies. The works of Roger, Korten and Klaus, Bijur,
Bryant and White have identified the following as key elements of the modern
approaches to development administration: (1) greater equality in distribution of
development benefits (2) popular participation, knowledge-sharing and empowerment
to facilitate self-development efforts by individuals, groups and communities (3) self-
reliance and independence in development, emphasising the local resources
mobilisation and use (4) the problem of containing the population-increase, and
(5) integration of appropriate technology with big modern technologies in order to
facilitate development. Development administration theory today focuses upon the
involvement of non-government, voluntary and community organisation in the
Con- and Approaebeu development process and emphasises localised, decentralised and participative
approaches to development administration. The shifts in development adpinistration
theory in the 80s have been very well summarised by Arvind Singhal who sees
h a r n i n g Process Approach and People-Centred Approach replacing Blue-Print
Approach and Production-Centred Approach respectively.
Blue-Print Approach to Learning-Process Approach
The conventional development administration theory was concerned with preparing
blue-print for administering a development programme. This approach involves
designing a specific plan of action in advance for implementing a development
project. Lately, this .approach was found inappropriate in so far as it is rigid and
closed and, therefore, unable to respond to the needs of a changing environment.
Hence, many scholars prescribe a learning process approach which is not only a
relatively openended strategy to planned social change, but also involves a cybernetic
process by which development administration can adapt themselves to changing
environment and incorporate mid-course corrections, based on existing local
conditions. Distinguishing the two approache's, A. Singhal states, "The blue-print
approach emphasises advanced planning for the people. The learning process
approach emphasises planning with the people and doing so during the process of
administering a development programme ." The philosophy of action-learning
repudiates the management theory and lays stress on learning by experiences of each
other. The action-learning approach attempts to look at oneself and others around
oneself and seek solutions rather than look beyond the shares for chosen people to
raise them from impoverished conditions in which they live.

The Participatory Approach to Development Administration

This approach is also termed as people-centred approach. The approach stresses upon
peoples' empowerment and promotion of psychological strength so as to enable the
people relate themselves with the officials on a partnership basis. It is based on
developing community action through people. The key elements of participatory
approach include :
1) respecting the ideas of employees and the beneficiaries without evaluation or
criticism;
2) raising of certain diagnostic questions of what the administrators are doing;
3) stimulating ideas from all levels and acceptance of good ideas for implementation;
and
4) attitudinal change by different ways and close observations and discussions
among officials and the people.
The major theme of participatory or people-centred approach is the growth to
capacity via equity. It concentrates on the distribution of development benefits
economic as well as social. Equity became a primary issue in development plans and
programmes. The concern for equity reinforced participation and micro-level
concerns. These concerns focused on direct attack on poverty and rural development.
The set of priorities in the people-centred approach, says Esman, includes :
1) an emphasis on reaching large mass of public often in remote areas;
2) developing programmes that are responsive to their very diverse needs,
capabilities and preferences;
3) organising the public so that they may interact more effectively with the service-
providing agencies of the State;
4) devolution to constituency organisation and the fostering of local action
capabilities;
5) innovation of appropriate Services and practices in support of basic needs
strategies, not'the plantation of established and replicable techniques. However, it
may be mentioned here that some Western administrative methods and practices
like record-keeping, monitoring and reporting methods, public information
procedures etc. may provide useful assistance to programmes oriented to poor
masses.
The participatory approach to development administration provides a link between
beneficiary needs, programme outputs and the efficacy of the assisting agency. The
effective popular involvement in decision-making and decision-implementation
through local skills, knowledge and institutions like local self governmental
institutions or voluntary agencies is given importance. The participatory developme~t
I involves leadership and teamwork, besides sharing of knowledge and-resources
i between the beneficiaries and the programme officials. The people-centred approach
I
I
I also lays emphasis on sustainability of development programmes and creating
opportunities for change. This objective can be achieved by (1) creating a felt need
1
among beneficiaries about the efficacy of the programme (2) developing institutions
which continually adapt (3) providing (or self-generation) of resources and
(4) building support among political elites and community groups.

Check Your Progress 3

Note: i) Use the space given below for your answers.
ii) 'Check your answers with those given at the end of the unit:
1) Discuss the key elements of the modern development administration theory.

2) What are the features of people-centred approach?

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........................................................................
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3.6 LET US SUM UP

The preceding discussion on evolution of development administration shows that it
has emerged only very recently in the last four decades as the study and practice of
induced socio-economic change in the developing countries. Beginning in the 1950s as
a study of foreign aid, it has come to mean the approaches and strategies indigenously
developed by the Third World. The techno-managerial approach showing great faith
in big government and administrative changes to match the expanding functions of
the State, ecological approach, basic needs approach and social justice approach to
the study of development administration have also been discussed in this unit. It may
be concluded, as has been stated by Arvind Singha1 that in the 1950s and 60s,
development was viewed as a process by which traditional Third World society could
be transformed into a modern western society. A general optimism about
development was then widespread among both academic scholars and government
officials. In the 70s it became increasingly apparent that western theoretical models
did not successfully predict development in the Third World countries of Asia, Africa
and Latin America. Optimism about development turned into pessimism and a
questioning instance about development characterised the 1970s. The main viewpoint
about development (and development administration) in the 1980s is pluralism, a
willingness to recognise many pathways to development. Present day development
approaches emphasise greater equality, self-reliance and people's participation.

3.7 KEY WORDS

Basic Needs :Food, shelter, clothing, education and health.
Ecology : The study of the relationship of a system with its environment. The
environment includes the physical, cultural and social aspects of the system.
Normative : Pertaining to value judgements or standards. Originated from the word
"norm", meaning-a rule or value that provides a generally accepted standard of
behaviour within a group.
L

3.8 REFERENCES
Bryant C. and L. White, 1982, Managing Development in the Third World, Boulder,
Westview Press.
Davld C. Korten and R. Klaus (eds.) 1984, People-Centred Development:
Contribution towards Theory and Planning Frameworks, Hartford, CT, Kumarian
Press.
Edan R.S. 1976, Social Change, New York, W.C. Brown.
Everett M,. Rogers, 1983, Diffusion of Innovations, New York, Free Press.
Hansman C.R. 1975, Rich Against Poor :The Reality of Aid, Penguin, London.
Montgomery J.D. and W.J. Siffin (eds.) 1966, Approaches to Development, Politics,
Administration and Change, McGraw-Hill, New York.

3.9 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress 1
1) Your answer should include the following points :
it was the instrumental theory of administration and government which did
occupy the front rank in the Development Administration Model.
it amounts to the concept of planned development having the assumption
that the developing countries could be helped to develop with the aid of
western technology of administration.
9 the important ingredients of the m,odel are (i) establishment of planning
institutions and agencies; (ii) improvement of the Central administrative
system; (iii) budgeting and financial control; and (iv) personnel management
and organisations and methods.
this model stresses on (i) reforming the administraiive structures; (ii) creation
of new agencies improving the administrative technology in terms of
methods; and hii) procedures and practices on the lines of western-
administrative thought.
2) Your answer should include the following points :
economic growth and modernisation occurs through a deterministic sequence
of stages.
development can be facilitated by transfer of resources and technologies from
advanced to underdeveloped countries.
State is principal instrument of development.
development, which is balanced, needs the mastery of modern science which
should include3he science of economics and control of the main levers of
public policy.
training could make the bureaucrats perform better and it is much needed
because modern bureaucracy is the backbone of modern administration.
it is expected that the leaders will welcome the material contributions and
intellectual tutelage of Westerners.
the.transformation from baikwardness to progress will be rapid and benefits
will be widely shared.
depending on the much called maintenance of political stability, the
development will yield enhanced well-being as well as the pre-conditions for
political democracy.

Check Your Progress 2

1) Your answer should include the following points :
the applicability of the development model waS taken for granted in all
countries, ignoring the relevance of environmental context to administration
and technology.
the concepts like efficiency, economy and rationality might be differently
in!erpreted by the developing or recipient country than the meaning given to
them in the West.
 many proposals, for administrative reforms, for example, could not be
implemented for the lack of political support and support from,even the
bureaucracy.
modern management techniques were not included for the purposes of
transfer to the developing countries.
Administrative reforms attempted during this period concentrated mainly on
structural change and not on attitudinal change.
Your answer should include the following points :
the classical concepts were often seen as inadequate in responding to the new
administrative realities of the Third World as they were considerec' to be
rigid, narrow and parochial and therefore were unfit in explaining for the
crosscultural situations.
the American Society for Public Administration formed CAG in 1961 with
Fred W. Riggs as its Chairman to carry out research in comparative
administration with special focus on the problems of development
administration.
the efforts of the CAG were able to innovate many concepts like systems
analysis, patterns variables, tradition-modernity dichotomy, information
theory, pluralism and others.
Riggs has offered criticism of the old model of development administratior,
by observing that an increase in the GNP may not necessarily mean
improvement in the real life conditions of the people.
Riggs prefers the physical quality of the indicators and social find
psychological quality of life index as the success of development policy.
the 1960s ushered in a period evaluation of results, daubts,'and repetition of
old strategies.

Check Your Progress 3

1) Your ansyer should iliclude the following points :
greater equality in distribution of development benefits.
popular participation, knewledge-sharing and empowerment to faciiitate self-
development efforts by individuals, groups and communities.
self-reliance and independence in development ernphasising the local
resources mobilization and use.
the problem sf containing the population increase.
integration of appropriate technology with big modern technologies in order
to facilitate development.
2) Your answer should include the following points :
respecting ideas of employees and beneficiaries without evaluation o r
criticism.
raising of certain diagnostic questions of what the administrators are doing
stimulating ideak from all levels and acceptance of good ideas for
implementation.
attitudinal change by different ways and close observations and discussions
among officials and the people.
. UNIT 4 GROWTH OF DEVELOPMENT
ADMINISTRATION

Objectives
Introduction
The Planned Change
Land Reforms in Independent India
The Community Development Programme
The Democratic Decentralisation in India
The Approaches to Development and Development Administration
Administrative Development in India
Let Us Sum Up
Key Words
References '
Answers to Check Your Progress Exercises

4.0 OBJECTIVES
After studying this unit, you should be able to :
identify the various stages from 1950 till date through which the development
administration h& evolved and grown
explain the role of various techniques, strategies and structure in development
administration and
discuss the various,approaches to development as adopted in India.

4.1 INTRODUCTION
At the time of Independence, India faced numerous challenges and problems, like,
hunger, disease, unemployment, etc. coupled with shortage of skilled manpower to be
made use of for meeting these problems. Besides, the country had more or less a semi-
feudal social structure meaning thereby the concentration df wealth in a fewer hands.
The need of the hour was to put the nation on the rails of development for the benefit
of all. To begin with, the process of planned change was ushered into both for
meeting the challenges as well as the planned change. The strategies and programmes
adopted for the same are analysed in the following pages.

4.2 THE PLANNED CHANGE

India adopted the strategy of planned change which implied among other things that
planning was to be the basic strategy of social reconstruction. Planning was to be used
ix an instrument of socio-economic progress and nation-building. It was recognised as
central to the societies where public sector has to play a role of commanding heights
in the economy so as to fulfil the expectations and aspirations of the peoplh Thus
planning was regarded as a conscious effort to achieve the desired objectives.
In 1936 Dr. M. Visveswarayya underscored the need for planning for industr~afisation
of the country. He suggested a 60 member advisory body from different social
sections and interests for the purposes of plan formulation and execution. He also
recommended the setting up of a Planning Commission, responsible for day-to-day
administration, and a Development Department at the Centre and Economic Councils
in the provinces.
 . Growth of uwelopment
The Congress atter assuming pbwer in.the provinces in 1937, recommenaed the
establishment of an Expert body for eyolving schemes for national reconstruction and Admhishtion
planning. As a result of it, in 1944, a $arming committee under the chairmyship of
Pandit Nehru was formed. It published 3 plans-the Bombay Plan, the Gandhi Plan,
and the Peoples Plan. A Planning and Advisory Board was formed in 1946. The
major aim of these efforts was to bring about rapid improvement in the living
standards of the people.
After Independence, efforts were made to bring forth development and to fulfil basic
needs of all concerned in accordance with the spirit of the Constitution through
planned moves. The brief enumeration of the aims and objectives of the planning is as
follows :
1) Growth of National Income
2) Reduction of inequality'of income and inequality in the ownership of means of
production.
3) Prevention of concentration of wealth in a few hands.
4) Reduction in unemployment and removal of poverty.
5) Provision of basic human needs.
6) Conservation of ecology and environment protection.
7) Self-reliance of the national economy.
A simple analysis of the objectives mentioned above will explain that the objectives of
planning are basically aimed at securing growth with social justice and generating
self-reliance.

The Planning Commission

For the formulation, implementation, and-adniinistration of plans, the central cabinet
adopted a resolution on March 15, 1950 to set up the Planning Commission'with the
following features of its organisational set up.
It is a plural body withmulti-member organisation.
It has two types of members :full time members and part time members.
The size of the Planning Commission in terms of number of its members is not
fixed.
It is a mix of staff and line agency.
It is a mix of political representation and the varied socioeconomic expertise.
The Prime Minister is the chairperson of the Planning Commission.
The full-time members are in charge of various divisions and sections through
which the Planning Commission functions.
There are programme advisors in different divisions.

The other officers of the Planning Commission are known as chief consultant and
joint advisors.
The organisation of Planning Commission as on 15.3.1991 was as follows :
1) Chairperson-Prime Minister.
2) Deputy Chairperson-Minister of Planning and Programme Implemeotation.
However, it appears that it is not necessary for the deputychairperson to hold
this portfolio. For instance, last two governments at the centre appointed full time
Deputy Chairperson.
3) The following Ministers of the Central Government are the part-time members of
the Commission:
A) Finance Minister
B) Agriculture Minister
C) Energy Minister
D) Industry Minister
E) Minister of HRD (Human Resource Development)
F) Minister of Environment and Forest
G) Minister of Law and Justice and Water Resources
H) Minister of State for Planning and Programme Implementation.
Besides, there are 6 full time members of the cchmission drawn from the fields of
economics,,engineering;agriculture etc. They are the experts with long experience in
the respective areas. .
Concepts md Approache Tke Planning Commission, belng a composite organlsation, gives collective advice on
itd important matters.
The ftqctions of Planning Commission are assessment of resources, formulation of
plan; determihation priorities, augmenting of scarce resources, monitoring and
ev,alu&on of plans.
P

The Planning Commission performs variety of functions covering the entire-economy

t of the nation. It is concerned with the issue of financial resources, international
economics, development policies, socio-economic research, labour, employment and
manpower, plan co-ordination, monitoring and evaluation, rural development, village
and small industries, education, rural energy, social welfare and nutrition,
communication and information, health and family welfare.
4
The Committee on Plan Projects
In order to properly gear up the developmental activities through plan projects, a
committee on Plan Projects was created in 1956. It includes the Home Minister (as
chairman), and the Finance Minister, Deputy Chairman of the Planning Commission,
c,? and two Chief Ministers to be nominated by the Prime Minister. The functions of this
committee are :
1) T o organise investigation, including inspection of important projects, both at the
Centre and States through specially selected teams.
2) To initiate studies aiming at evolving appropriate form of organisation, methods,
procedures and techniques for economical and efficient execution of projects.
3) To implement the recommendations made in reports submitted to it.
4) To perform such other functions as may be assigned to it by the National
Development Council for the promotion of efficient implementation of the plan.
The committee, however, is not in existence since 1970 as a separate institution.

The Programme Evaluation Organisation (PEO)

Under the general guidance and direction of the Planning Commission, the
Programme Evaluation organisation was created in 1952 for evaluating the
Community Development Programme and Intensive Area Development scheme.
Later on its sphere of operation was enhanced including therein the evaluation studies
of plans, programmes, and co-operation, health, family welfare, rural industries, rural
development, public distribution etc. The PEO is mainly involved in :
i) the appraisal of performance in the light of objectives and targets.
ii) the assessment of the 'impact of programmes on beneficiaries and the social and
economic structure of the community.
iii) provision of services to the target groups.
iv) rendering technical guidance to the state evaluation organisation and
v) training of state evaluation personnel.
--

Another agency concerned with the formulation of development planning and policies
is the National Development Council, which has the Prime Minister as its chairman,
and the central ministers, the chief ministers, the Lt. Governors, members of the .
Planning Commission and the administrators of the union territories as the members.
Briefly, the role of the'NDC in the planning process is as follows :
a) It acts as a link between the Union Government, the Planning commission and
the governments of the states.
b) It c re scribes the guidelines for the formulation of the Nationai Plan.
c) It considers the plan as formulated by the Planning Commission.
d) It considers all important issues relating to social and economic development
policy. '
e) It reviews the plans and suggests measures, to achieve the set goals of the plan
including the steps to secure peoples active participation and co-operation,
improve the efficiency of the administrative services, ensure the fullest
development of the less advanced regions and sections of the community and -
build up resources for national development.
The importance of the National Development Council lies in the fact that it has been
largely responsible for giving Indian, Plan a national character and for ensuring
national unanimity in approach and unifor~itty
- - in.-working.
-
The Strategy of Planning Growth of Development
The major thrust of the planning was to evolve strategies to atleast minimise the Administration
problems being faced by the people at large. In order to have self-reliant economy,
such thrust areas were picked up where state intervention is required. Keepjng in view
the vital and crucial role to be played by public sector'in industrialization and
modernisation, the state monopolised in the areas of atomic energy, defence,'railways,
airways, iron and steel, minerals, coal, ship building, air craft, electricity, etc. Even the
Industrial Policy Resolutions of 1948, 1956 and 1978 clearly stated that the industries
of basic and strategic significance and also those dealing with public utility services
would be in the public sector. The state also aimed at providing fiscal and supportive
measures to certain other industries to be set up in private sector.
To cope up with the problems of unemployment, under-employment and disguised
employment, the state has taken good number of measures. Some schemes, like
Jawahar Rozgar Yojna, National Rural Employment Programme, Rural Labour
Employment, etc. along with the employment opportunities being provided in the
public sector undertakings are landmarks in this regard. Besides, the financial
incentives are also given to the rural as well as urban educated unemployed youth for
starting self-employment ventures.
In the fieid of a iiculture, the first step was taken in the abolition of Zamindari
systefn, followetby various land reforms Acts like tenancy reforms and Land Ceilings
~ c t s .The
' agricultural production was sought to be increased through intrbducing
\
high technology iti agriculture which is popularly known as green revolution. The
purpose was to achieve self-sufficiency in food grains. However, the scheme was"
implemented ohly in some selected parts of Punjab, U.P., Haryana and Tamif Nadu.
The measures ended in increasing food production to the levelof self-sufficiency, yet
it further widened the gaps between regional development levels.
Check Your Progress 1
Note : i) Use the space given below for your answers.
ii) Check your answers with those given at the end of the unit.
1) Describe the functions of the Planning Commission.
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2) Mention the objectives and str&egies of planning in India.

4.3 LAND REFORMS IN INDEPENDENT INDIA .

The Objectives of Land Reforms
One of the major problems before the country at the time of Independence was
unequal concentration of land ownership in the hands of few and prevailing
conditions df semi-feudalism. As stated earlier,t_he cougtry had a semi-fuedalistic
Concepts and Approaches structure of society having wealth concentration ir. few hands. To do away with this-. .
unequal distribution of wealth, the Poverty Alleviation became the priority item o n -
the national agenda. It was believed to be achieved through Land Reforms on a
quantitative and qualitative scale.

The Land Reforms Measures

The land reforms objectives were sought to be achieved through the following
measures: .
i) Abolition of zamindari system
i) ~enanc~?eforms
iii) Impositi~nof land ceiling and re-distribution of surplus land
iv) Consolidation of land holdings.

There were many intermediaries like Zamindar, Jagirdar, etc. between the state and
the tiller of the land. This resuIted not only in concentration of land in the hands of a
few persons, but also in the neglect of agriculture and consequently decline in
production adding more to the poverty of the peasantry. In other words "Land to the
Tiller" became an accepted policy. Hence, many state governments passed Zamindari
Abolition Actsin the early fifties. This measure gave ownership rights in land to
about 20 million cultivators. Similarly, system of tenancy was also a source of
exploitation of the poor peasantry in the village by the landlords. Hence Tenancy
Reforms also aimed at extending the policy of land to the tiller. The Tenancy
Reforms Acts provided for: regulation of rent; and security rights. However, the
tenancy reforms have been ineffective because of lacunae in the tenancy acts, absence
of proper records of land, lack of effective administrative machinery and interaction
of lease, labour and credit market.
-

The land ceiling was also imposed in many states through legislation. However, there
was no uniformity either in case of the limit or approach. For instance, the ceiling was
4 hectares in Gujarat as against 136 hectares in Rajasthan. It should be stated here
that the objective of fixing the highest limit of the size of holdings was to eliminate
inequalities in the ownership of land. These reforms, however, proved ineffective to
achieve the objective again because of legal flaws, manipulation of law, loose
,
definition of the term and too many exemptions from the application of land ceiling
laws.

The Government of India, during 5th Five Year Plan, started giving financial
assistance to the assignees of surplus land scheme so as to enable them to improve
production and productivity. This grant was made available to the assignees of
surplus land for the purposes of land development, minor irrigatiorretc. Such-grant
or subsidy was not to exceed Rs. 80001- per allottee from all schemes together.

The consolidation ot' landholdings aimed at all rbund improvement in the production
along with diversification of rural economy and provision of common services to
small land-holders like community irrigation wells, scientific planning for irrigation
et.c. However, the progress in these areas also has been slow as only 518 lakhs hectares
area has been consolidated up to 6th Plan period.

Implementation of Land Reforms

. The land reforms programmes were sought to be implemented through the existing
bureaucratic set up. The tall objectives of eliminating poverty, removal of exploitative
socio-economic structures, increase in agricultural output were only partially
obtained. While there were many politico-cultural factors responsible for tardy
implementation, the administrative set-up also presented many problems to effective
implementation of land reforms throughout the country. The administrative system
-- -. - of growth with
was not prepared to respond to the demands of change. The principle
equity remained largely unrealised because the administrative setlup was unresponsive
to the hopes and aspirations of the targeted groups. The old colonial administrative
practices and behaviours kept the beneficiaries away from the processes of
implementation of these laws. The administrative non-performance is responsible
mainly for the continuation of the.practices of conceal or informal tenancy system.
What is required is the establishment of new institutions to be manned by motivated
a A m ; n ; r + r n r r r r o f r r r: m r l a r n i ; i W L . r t ~ n , l ~ ~ t - r ~ tln~ l ;o n
! A
A r~n f n r m o f-nm t ; m n t n ' t ; m n
 -- -

Growth of Development
4.4 THE COMMUNITY DEVELOPMENT Administration

PROGRAMME
The introduction of Community Development Programme could well be termed as
the beginning of development administration in India. The Programme was launched
with the folbwing objectives:
1) to secure total development of the material and human resources of rural areas.
2) to develop local leadership and self-governing institutions,
3) to raise the standard of living of the rural population by means of rapid increase
in food and agricultural predlce, and
4) to bring attitudinal changes towards life in the rural people.
The assumption was ihat the overall development of the rural community needed,
people's participation supported by technical and other services. Moreover, there was
also the realisation that the problems of rural development could be dealt with only in
a holistic perspective rather than being tackled in an isolated manner.

The Institutional Arrangements

The CDP covered to begin with, 53 prbjects with wide ranging programmes for
'
agricultural development along with the development of animal husbandry, rural
industries, health, housing, education and communication in rural areas. The
Programme was administered in phases at 5 levels-National, State, District, Block
and Village. The unit of operation was the village and the block. was taken as the main
.
development unit. The Block Development Office~.fBDO)was the chief executive
officer who was to be assisted by seven extension officers who were experts in each of
the following areas of rural development:
a) agricalture;
b) animal husbandry;
c) rural industry;
d) public works;
e) .social education;
f) co-operative; and
g) panchayats.

There were 10 village level workers (redesignated in many states now as village
development officers) in each block. 10 villages were put under the charge of one
VLW or VDO. The district collector and the development comclissioners were made
the executive heads of the CDP at the District and State levels respectively. At the
national level separate wing known as community projects administration wing under
the chairmanship of the Prime Minister was created. A separate Ministry of
Community Development was formed in 1957.

The Government of the USA made a major contribution under the Technical
Assistance Programme in terms of funds and technical assistance in impiementing the
programme. The rest of funding came froin the.centre and the state governments. For
purpose of implementation the Country was divided into development blocks and 5.5
projects as mentioned earlier, were launched. Each of the project covered about 3500
villages and about 300000~population.Each project was further divided into three
development blocks each of which covered about 100 villages and a populationof
about 70000. About 1060 blocks were covered in the First Five Year Plan which
extended to all the blocks by the end of the third 5 year plan.
Community Development Programme-An Evaluation
The Community Development Programme was viewed, at the time of its introduction,
as a revolutionary step to bring about societal transformation in the rural areas. The
Community Development Programme was innovative in so far as it provided a
different machinery and a delivery system than the revenue administrative system to
bring about socio-economic change. It represented an organised administrative system
l , and local to execute the development programmes .
at all l e v e l ~ ~ n a t i o n astate
throughout the country. The programme was also,the admission of the fact that social
change is not possible unless the --
efforts are peopje-centred aRBinvolvemenfof people
Concepts and Approaches in their development 1s not ensured. It underIined the neccessity of comprehensive
planning and long-term investments from gbvernment for the purposes of rural
reconstruction. Another achievement of thc community development was the
recruitment and trainingoof a large number of personnel and introduction of modern
technology in agriculture, under the programme, many institutions such as farmers
co-operative credit societies, primary schools, family welfare centres, hospitals and
dispensaries were established.
However, despite some positive impacts of the Programme, it became clear by the end
of the Third Plan that it failed to meet the hopes and aspirations of the policy-makers
as well as the people. The rural socio-economic structure and problems continued as
befo*. The elite forces in the rural areas governed the benefits from the Programme.
The administrators either failed to understand the operational implications of socio-
economic and cultural framework existing in the villages or they themselves were not
favourable towards the weIfare of weaker sections. The programme also faiIed in
ensuring people's participation in either the formulation or implementation of the
Programme. The objective of promoting attitudinal and cultural change could not be
achieved. The bureaucratic response to the Programme was unsuitable in the context
of complexities of rural socio-economic structures. The administration was
characterised by redtapism, lack of proper co-ordination, interdepartmenta1 rivalries,
and the absence of well defined functional responsibilities at various levels. Inter-
village and intra-village imbalances in the distribution of benefits was another
outcome of the programme.
Check Your Progress 2
Note : i) Use the space given below for your answers.
ii) Check your answers with those given at the end of the unit.
1) Discuss the objectives of land reforms programmes in India?

......................................................................
2) Discuss the objectives of community development programme.

4.5 THE DEMOCRATIC DECENTRALISATION

IN INDIA
The Panchayati Raj system in India was a product of the assessment of the progress
or failure of the Community Development Programme in the country by Balwant Rai
Mehta Committee report on the programme. Owing to the Gandhian approach to
development and administration, the Panchayati Raj System was set'up in India.
Besides, the assessment of the success or unsuccess of the C D P also added to the
factors responsible for the emergence of P.R. system. Through this, system, it was
sought to achieve a prosperous, genuinely democratic, and dynamic India. P.R.
system introduced in 1959 had the following objectives:
i) decentralisation;
ii) participation in development administration;
iii) replacement of vested interest with the widening mass involvement iq the task of
establishing a gen@ge socio-political and economic democracy;
iv) linking taxes with benefits, ~ r i w t hof Development
Administration
v) planning from below;
vi) increasing the agricultural production and productivity; and
vii) involvement of the weaker, poorer sections in the development process.
Besides, some other objectives of the P.R. system as delineated in the 3rd Five Year
Plan are:
a) development of rural industries;
b) fostering co-operative institutions;
c) encouraging the spirit of self-help within the village community; and
d) progressive dispersal of authority and initiative with emphasis on the role of
voluntary organisation.
The Structure of Panchayati Raj /
The Balwant Rai Mehta Committee had a different idea in view when it suggested a
three-tier system of Panchayati Raj with freedom to the states to structure the system
in line with their socio-political environment. One could see now that the thinking of .
Balwant Rai Mehta did not get the positive response and amounted to lack of
uniformity in the implementation of the scheme. In Jammu and Kashmir, for
example, only VillagePanchayats were established while in Orissa Village Panchayats
and samitis were esiablished. However, there is no variation in case of the highest tier,
i.e. the Zilla Parishad of the Panchayati Raj. Even there, the structure of Panchayati
Raj includes Zilla Parishad at the district level, Panchayat Samiti at the block level
and Gram Panchayat at the level of the village. Balwant Rai Mehta suggested that the
'Block' was to be the unit of planning and development with supervisory and
controlling role left to the Zilla Parishad. Again, there is no uniformity in this regard.
For example in Maharashtra, Zilla Parishad is vested with planning and
developmental functions rather than Panchayat Samiti. The arguments advanced in
favour of assigning these functions to the Zilla Parishad, among others, were as
follow:
A) District is the stable and easily manageable unit;
B) District traditionally has been recognised as the administrative unit; and
C) The technical manpower is already available at that level.
Next to the Zilla Parishad is the Panchayat Samiti at the block level. The village
pradhans or sarpanches,are the members of this important body apart from the co-
optted and ex-officio members. There is reservation of seats for women, scheduled
castes and scheduled tribes. In some states, the MLAs and M.Ps of the area are also
the members. The chairman of the Samiti is elected by the village pradhans
(Presidents of Gram Panchayat).
The basic unit of the Panchayati Raj is the village panchayat. This body is directly
elected by the people of the village and ensures more direct involvement of .
development progTammes. The civic and development functions are entrusted to the
Panchayats in almost all the states. At the village level, there is another body called
the Gram Sabha. It is constituted as an instrument of popular participation. The gram
sabha considers the accounts and approves the proposals for taxation and plans for .
development submitted by the gram panchayat. However, the gram sabha enjoys
these powers only in theory. The Sabha hardly meets and it has proved quite
ineffective.
The number of members of the Panchayat varies between five to thirty seven. The
Fanchayat Act, as passed by the state fixes this number. The members are elected
through the principle of one man one vote and secret ballot. i'he women and
scheduled castes and tribes are also given representation in the Panchayat.
The Ashok Mehta Committee on Panchayati Raj ,
The Panchayati Raj system that was introduced with much fanfare and with multiple
objectives could not be a success. It came to be treated mainly as an instrument of
increasing agricultural production. "The activities of Panchayati Raj institutions were
meagre, their resource base weak and the overall attention given to them viggardly."
It was in this context that the Central Government appointed
-.
a Committee, popularly
Concepts and Approaches known as Ashok Mehta Committee, to suggest steps to strengthen the Panchayati Raj
institutions. The maj6r-i'ecommendations of the committee, among others are:
i) . Replacement of three-tier structure with two-tier structure-one at the level of
the district and the other at the Mandal Level;
ii) The composition of various tiers is specifically given. he Zilla Parishad shall
consist of (a) elected members from suitably demarcated wards, (b) Presidents of
the Panchayat Samitis, (c) nominees of the bigger municipalities and the district
co-operative federatipn, (d) two women, (e) two co-opted members one having
special interest in rural development an4 one from the local teaching profession,
and (f) representation to scheduled castes and scheduled tribes.
The Chairperson of the Zilla Parishad shall be elected indirectly by its members from
amongst themselves:
The Mandal ~ a n c h a ~shall
a t have 15 members to be elected directly, including
representation from farmers' service societies, women and scheduled castes and tribes.
iii) Panchayati Raj institutions should be entrusted with 'compulsory powers of
taxation';
iv) Constitutional status should be awarded to Panchayati Raj system;
v)' Open participation by political parties in the elections to Panchaxati Raj bodies;
vi) Election t o these bodies should be conducted by the Chief Election Officer of the
state in consultation with the Chief Election Commissioner;
vii) Regular social audit and monitoring by a district level agency to safeguard the
. interests of SCs and STs;
viii) Creation of a Social Justice Committee in each Zilla Parishad; and
ix) Ordinarily the Panchayati Raj institutions should not be superseded. In case
supersession is unavoidable, their elections should be held within six months
from the date of supersession.
As discussed under Section 4.5, the Panchayati Raj System was introduced in order to
have development of all concerned by having their involvement and participation in
the total schemes to be launched. For one reason or the other the results of the efforts
made through this system could not be as grand as expected.

4.6 THE APPROACHES TO DEVELOPMENT

AND DEVELOPMENT ADMINISTRAT-ION
Regional ~ i ~ r o a c h e s
The first approach to development, specially rural development, was regional with
emphasis on economic activities to be established in different sub-regions of the
district. This approach is popularly known as Growth Centre Approach. s he
philosophy behind this approach is that the process of development in rural areas can
be fostered by developing 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 a directed way. The assumption is that each village could not
be provided with those facilities simultaneously because of financial limitations and
for reasons of economic emcien~y.This approach is also known as Induced Economic
Growth Approach.
Area Development Approach
Th'e area developsent approach focuses on two points :
i) development of*optimuminfrastructural facilities; and
ii) spatial and functional integration for the development of an area.
The purpose of these approaches was alleviation of rural poverty. In the last four
decades, many area-based development programmes-Intensive Agricultural District
Programme, Drought Prone Area Programme, Command Area Development
Programme, and Desert Development Programme-were prepared and implemented.
Since agriculture plays a very important role in the economy and in social life of the
people, the area development strategy was considered essential. The Drought Prone
Area Development Programme, wgs,.for i n g n c e , envisaged- in the seventh
- -- - five year -
-
 plan to increase productivity from dryland and arid areas. The characteristic of such Growh of Development
Admlnlstrrtion
an area is maximum concentration of the poor and the unemployed. Hence, their
development called for the use of appropriate technology of development. The
Drought Prone Area Development-Programme included six major sectoral areas
including fisheries, irrigation, forestry, horticulture. Similarly, Desert Development
Programme was another area based programme aiming at :
i) afforestation;
ii) maximum exploitation and conservation of water resources;
iii) creation of water harvesting structures;
iv) rural electrification; and
v) development of agriculture, horticulture and animal husbandry.

The Target-Group Approach

The third approach to development is Target-Group Approach or Beneficiary
Oriented Approach. This may also be termed as people-centred approach. It was
realised that economic growth model of development which laid emphasis on trickle
down theory (which believed that fruits of development will automatically reach to
the people in rural areas. That is, the fruits will trickle down by themselves) was
unsuitable to solve the problems of poverty and unemployment. Hence, it was
considered necessary to undertake such programmes and projects which deliberately
and in a determined manner aimed at reduction in poverty and lead to distributive
justice. The main principle came to be economic growth with social justice. With this
objective in view a number of target-group oriented programmes were implemented.
Some of them have been:

i) Rural Manpower Programme: It was initiated towards the end of'1960-61 to

provide employment opportunities for hundred days to ak teast-225 niillion
people. It ended in 1968-69. Again during the 4th Five Year Plan ii special
programme-Crash Scheme for Rural Employmenf was started for providing
employment to 1000 people every year;

ii) Pilot Intensive Rural Employment Programme was launched in 1972 in 15

selected community development blocks for a period of 3 Tears. The programme
aimed at creating additional employment for unskilled labour, creation of assets,
creatibn of new skills and to enter into some kind of manpower budgeting.

iii) Food for Work Programme was initiated in April 1977 with the following
objectives:
a) Improving the nutritional level and strengthening of rural infrastructure.
b) Creation of additional gainful employment in the rural areas to improve the
living of the people in rural regions.
i
i c) Making use of surplus foodgrains for human resource development. This
programme was renamed as National Rural Employment Programme in
October 1980. The implementation of the programme was made the
responsibility of the District Rural Development Agency established at the

I
I
level of the district. The projects were to be prepared keeping in view the felt
local needs.
d) Another beneficiary-oriented programme is Rural Landless Employment
Guarantee Programme (RLEGP). This aims at.to' provide employment to
landless rural farmers. Its objectives include :
1) lmprovement of employment opportunities, specially to provide
employment to at least one member of a family of rural landless labour for
100 days.

I 2) Improving the overall quality of rural life.

3) Creation of productive and durable assets for direct continuing benefits to
the pqorer groups and

I 4) Strengthening rural economic and social infrastructure which would lead to

rnnirl nrnwth nf r n n r - 1 mennnrnrr
Concepts and Approaches Under this programme, the preference was to be given to women, scheduled
castes and scheduled tribes. The execution of the programme could be left to
a voluntary organisation or to DRDA or to any other agency deemkd fit for
the purpose. The voluntary agencies are regulated by either the agency of
People Action for Development or the DRDA where this agency is not in
existence; For the purposes of planning, monitoring and implementation of
the programme, a central committee at the level of the centre was
established. Besides, every state was to have state level co-ordination
committee for. rural development and project approval. The programme is
centrally supported and 10 per cent allocation is earmarked only for the
benefit of SCs/ STs.
In 1989, new scheme called Jawahar Rojgar Yojna was launched. Its basic
objective was to give employment to people in most backward districts with
high incidence of poverty and unemployment. The earlier two programmes
NREP and RLEGP were merged into this new programme along with the
Million Wells Scheme. This is Centrally sponsored scheme where 80 per cent
funds are to be provided by the Centre and that too directly to the DRDAs
who will further forward 80 per cent of the allocation to the village
panchayats.
5) Development of Women and Children in Rural Areas (DWCRA) : Though
development of women as a human resource was made a part of the
Integrated Rural Development Programme, no significant results were
achieved. Therefore, to provide specific alteration to the improvement of
nutritional levels of women and children and also to improve their status,
the scheme of DWCRA was implemented in 1982. The objectives of the
programme included assistance to individual woman to enable her to make
use of facilities provided under IRDP, provision of supportive services at
the work-site and provision of childcare facilities like security, health care
and nursing for the children of women at work.
Training of Rural Youth for Self-Employment (TRYSEM.) was conceived.in order to
make the poor productive and self-reliant, two lakh persons per year were to be given
training. Under the programme, one third of the beneficiaries were to be women. The
main focus of the scheme was to provide the rural youth within the age group of 18-35
years with the necessary skills and technology to enable them to take vocations of self-
employment. The preference was to be accorded to.the scheduled castes, scheduled
tribes and ex-servicemen.,
Minimum Needs Programme Approach
The earlier approaches ignored the social aspect of development. The main thrust of
those approaches was on economic development or income and assets generation for
.the specific areas or target-groups. However, it was realised lately that social
development was equally important. The provision of social selvices and basic
necessities to improve quality of life occupied increasing attention of the planners and
developers, This approach emphasises 'investment in human beings'. The objectives of
this approach are :
i) Establishment of a network of basic services and facilities of social consumption
in all the areas up to nationally accepted norms, within a specified time-frame.
ii) raising of the standards of living and reduction of the regional disparities in
development.
The Minimum Needs Approach concentrates on basic needs of food, shelter,
sanitation, health, education, drinking water and roads. The programme has fixed
'following priority areas. Elementary and adult education, health, rural water supply,
rural road:, rural electrification, housing, environmental improvement of urban slums
and nutrition.
Primary Health Care Approach based on equity, access and social justice is very vital
philosophy of social development. The programme includes (a) provision of curative,
preventive and promotional health services, (b) control and eradication of major
communicable diseases, (c) training of medical and para-medical personnel and
(d) establishment of,network of primary health services. In terms of housing the 7th
Plan sought to (a) provide house-sites and assistance for housing to the landless
 sector housing schemes, (d) augment resources of agencies like HUDCO and State Growth of Development
Housing Boards, (e) providing housing in employment schemes like NREP and Administration
RLEGP, and (0 promotion of research in low-cost rural housing technology and
building materials.
Another important prograinme under MNP is Nutrition Programme which includes
(i) Special Nutrition Programme and (ii) Mid-day Meals Programme. In 1972-73 the
Government of India introduced another special programme for Accelerated Rural
Water Supply. It aimed, among other things, at providing adequate and safe drinking
water to the rural population, prevention of water pollution, educating the public in
conservation of quantity and quality of water etc.
The People-Centred Approach -
The main thrust of this approach is to treat the individual as an active participant in
the development process, rather than viewing him merely as subject of development.
The people-centred approach comprises human growth and well-being, equality, self-
reliance and peoples' participation as its key elements. Similarly, the involvement of
voluntary/ non-government organisations, is also becoming an important part of
development administration in India.

4.7 ADMINISTRATIVE DEVELOPMENT IN INDIA

The development of administration is an integral pm of develdpment administration.
It is now well recognised that development goals cannot be achieved in the absence of
a very capable and competent administrators. They (the administrators) have to cope
with the emerging complex challenges with a different approach. Development
administration does not stop a t merely formulation of plans and programmes for
development, the crux of development is the implementation of development plans
and policies. Hence there is a need to build up administrative capabilities and
capacities to deliver the goods. Administrative development refers to the behaviour
necessary for the formulation and eiecution of schemes and programmes and projects
aiming at change and underlying the understanding in the belief that administration
should be responsive to the needs and aspirations of the people. The civi! services
have to undergo behavioural and attitudinal change, besides the changes in the
structures, procedures and methods or work so as to fit into the need of a developing
country like India. It was with this view that Central government and many state
governments appointed many committees and commissions to suggest measures to
improve administrative capacities and capabilities. The most well-known among them
were : N. Gopal Swamy Ayyangar Committee (1949), A.D. Gorwala (l951), and
reports submitted by Paul H. Appleby in 1953 and 1956. The Appleby Report made
important recommendations regarding work procedures recruitment, training etc. The
I

Estimates Committee of the first Lok Sabha also suggested changes in adminis'trative
machinery of the Central Government through its reports presented in 1950-51 and
1953-54.
The successive Five Year Plans have been indicating the need for improvement of in-
service training, performance evaluation on systematic basis, establishment of 0 and
M (Organisation and Method Division) etc. As the First Five Year Plan saw the
actual advent of development administration in India (1951-56), some new agencies
concerned with the responsibility of administrative evaluation were established :
National Development Council (1952); Programme Evaluation Organisation in the
Planning Commission, and Special Reorganisation Unit. Efforts have been made to
attune the administrative structures, procedures, staffing patterns, techniques of
planning, etc., to the goals and processes of development. Since late 70s it is
increasingly realised that development need not merely mean changes in
administrative technology, but it also entails changes in administrative culture. This
change has been attempted in India through the mechanism of training. Enhancing
the levels of skills and knowledge of the civil service is the other important objective
of administrative development which again is sought through the mechanism of
tr&ning. Experience is transformed into knowledge and knowledge is b e d to build up
.-.L:-L ---- L:l:.:-- -4-.L- -------- ---
1 L- :----..-A .-
~xberiencethrough the methodology of training. Training is an action process by
---a .L- -----
:",..:..--I ---A"
Concepts and A p p r w h a in terms of knowledge, skills, and attitudes required in performing organisational
tasks and functions within relatively short span of time.

Check Your Progress 3

Note: i) Use the space given below for your answers.
ii) Check your answers with those given at the end of the unit.
1) What are the major approaches to development?

2) Discuss the nature of administrative development in India since Independence.

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

4.8 LET US S U M UP
In this unit we have studied the evolution of development administration in India as a
process as well as a discipline, we examined the evolution of development
administration as a concept both in terms of structures as well as programmes and
projects. We have also studied various approaches and themes to development
administration in India.

4.9 K E Y WORDS
Agrarian Structure :Agrarian strueture is understood to mean institutional
framework of agriculture. This institutional network relates to tenure system, forms of
employment credit institutions, trade unions etc.
Tenancy Reforms :It is a part of the land reform programme. It includes the
institutional measures meant for the tenancial security of the cultivators.
Land Ceiling : Imposition of restriction of the size of land-holding.
Tiller :Cultivators of land.

4.10 REFERENCES
Trivedi, K.D. 1987. Perspective in Development Administration :Mittal Publication
Delhi.
Verma, S.P. and S.K. Sfiarma (eds) 1984. Development Admini5tration :Indian
Institute of Public Administration. : New Delhi.
 Growth of.Development
4.11 ANSWERS TO CHECK YOUR PROGRESS Administration

EXERCISES
Check Your Progress 1
1) Your answer should include the following points :
to make an assessment of the material, capital and human resources of the
country.
to formulate a plan for the most effective utillsation of the country's resources.
determination of priorities.
to monitor and evaluate the plan implementation.
2) Your answer should. include the following points:
growth of National Income.
reduction of inequality of income and ownership of means of production.
prevention of concentration of wealth in a few hands.
reduction in unemployment and removal of oowrty.
provision of basic human needs.
conservation of ecology and environment protection.
self-reliance of the national economy.

Cheek Your Progress 2

1) Your answer should include the following points :
- abolition of Zamindari System.
tenancy reforms.
.
impositions of land ceiling and re-distribution of surplus land.
consolidation of land holdings.
2) Your answer should include the following points :
to secure total deveiqment of the material and human resources of rural
areas.
w develop local leadership and self-governing institutions.
to raise the standard of living of the rural population by meam o f rapid
increase in food atrd agricultural produce.
to bring attitudinal change towards lifein rural areas.

Check Your Progress 3

1) Your answer should include the following points :
Regional Approach
The Area Development Approach '
The Target-Group ~ p p r o a c h
Basic Needs Approach
The People-Centred Approach.
2) Your answer should include the following points :
the development of administration is an integral part of development
/administration.
there is seed to build up administrative capabilities and capacities to deliver
the goods.
in other words, administration itself has to be developed in order to meet the
requirements of development.
it was felt that it was only with the change in administration that we can make
it a fit instrument of development.
the Appleby Report made important recommendations regarding work
procedures, recruitment, training etc.
Estimaks Committee of First Lok Sabha suggested changes in administrative
machinery of the Central government.
Successive Five Year Plans have been indicating the need for improvement of
in-service training, performance evaluation on systematic basis, establishment
of 0 and M.
Late 70s it is increasingly realised that development need not merely mean
changes in administrative technology, but it also entails changes in
administrative culture.
UNIT 5 INDIA'S SOCIO-ECONOMIC
PROFILE AT INDEPENDENCE

Structure
5.0 Objectives
5.1 Introduction
5.2 The Social and Economic Conditions of India during the British Period
5.3 A Profile of India's Stagnant Economy
5.4 Colonial Legacy of Urrderdevelopment
5.5 Let Us Sum Up
5.6 Keywords
5.7 Some Useful Books
5.8 Answers to Check Your Progress Exercises

5.0 OBJECTIVES
After reading this unif you should be able to :
discuss the eamomic and social conditions prevailing in India during the British
de,
comment upon tb profile of India's w an t e m a n y at the timo of
Indcpcn&na in terms of population, wak fonx, nrtional income, occupationrrl
structure, agriculture, industry and foreign tnde, and
highlight the nature of our colonial legacy.

5.1 INTRODUCTION
As a studmt of development administration, you must understand the social and
economic umditions prevailing in t k country at tk time of Independence. The pace
and spread of development of an economy over a given period of time depends upon
tk resource base it atarts with. Any schema of devebpmcnt has to be band on the
nature of social and bconomic conditions of a country. Witbout understauding these
conditions one cannot determiqe the seriousness of the problems, their size and
complexity, their mutual relationship and the approach to their solution. In India,
where we come across diverse conditions, such type of understanding assumes greater
importance. The state of the Indian economy and society at Independence also
provides a point of comparison with the changes and development which have taken .
place in the post-Independence period.
Though the state under the British rule played an active role in Indian eamomy, it did
not contribute towards any structural change and development of the country. The
questions like, what was the nature of state intervention in colonial India ? Did such
intervention lead to the welfare of people? What was the socieeconomic p d e of
India at the dawn of Independence ? Why did the state undertake the task of active
participation in the development process etc. ; need praper answers. This unit will try
to give you an idea about the conditions prevailing in India in 1947. The Government
of free India inherited most of the elements of the state structyn (laws, bureaucracy,
policies and schemes) rules and regulations, administrative cuiture etc., from the
British government. An assessment of tk inherited socieeconomic situation would
help you in understanding the necessity for the changes in various parts of the
Development Stmtegy and
Planning 5.2 THE SOCIAL AND ECONOMIC CONDITIONS
OF INDIA DURING THE BRITISH PERIOD
From the mid-eighteenth century to the mid-twentieth century, the British ruled over
India. Globally this was a period of tremendous scientific and technological
advancement. Europe, North America and Japan witnessed a fast and steady social
and economic growth during this period. They also dominated the world politically
and economically. But for India, this was the time of severe economic and social
crisis.
The coming of Britishers in India proved ruinous for her self-sufficient village
economy. As an inevitable result of foreign rule, India lost ground in economic, social
and technological advancement The worst affected were India's village industries,
handicrafts, agrarian economy and trade.
The influx of British and non-British machine-made goods at cheaper prices in Indian
market proved detrimental to the village handloom industry. Import of cheap aniline
dyes adversely affected the village dyers. The condition of village potters also
deteriorated due to the presence of metal ware in the market Village tanners and
carpenters also lost their hold on market. The growth of modern industries in India
was mainly dominated by the British capital. Though accumulation of sufficient
savings in the hands of Indian merchant class did give rise to some Indian-owned
modem industries in India but these were really nominal as compared to the British-
owned modem industries. The industries that flourished during this period were
plantation industries such as indigo, tea and coffee, cotton and jute mills and coal
mines. Engineering and railway workshops, iron and brass foundries grew rapidly
during this period But there was a practical absence of basic heavy industry
(metallurgical and machine producing industry) in the country. There was hardly any
appreciable advance in shipping, aircraft industry, etc. There was a little development
in the fields of banking and insurance but that too largely under the control of the
British. One of the striking features of economic development in India in the sphere of
trade, industry and banking, was the concentration of a big proportion of enterprises
in a few hands, which led to the establishment of monopolies and trusts. The trusts
e.g., Tatas, Andrew Yule and Co. etc., in industry, transport and financial fields
controlled economic enterprises of almost all categories.
Indian handicrafts were almost ruined during the British rule. Our handicrafts became
a prey to British goods and exploitative policies of the colonial regime. Heavy duties
were laid on Indian goods. Artisans were not able to sell their products to Indian and
foreign merchants. British put an end to the internal trade of Indian handicrafts.
Destruction of native states which were the greatest customers of our handicrafts and
also patronised the handicraftsmen came as a severe blow to Indian artisans. Due to
the wide network of railways, Indian markets were flooded with British and other
foreign goods. Iron smelting industries were also undermined. As a result of all this,
many handicraftsmen migrated to cities and took to various kinds of menial jobs.
Some became wage workers, some diverted to agriculture and became farmers and
land labourers.
One of the most alarming and ruinous features of Indian economy under the colonial
rule was the change in agrarian structure and relations. The introduction of private
property in land led to the division of family land which proved to be one of the major
reasons for disintegration of joint family system. The British introduced
commercialisation and specialisation in agriculture. Agricultural produce began to be
sold in market and special crops began to be produced for the purposes of sale. The
new land revenue system eliminated the village as the unit of assessment. The new
land revenue system, excessive land revenue, low productivity, etc., forced the
farmers to take recourse to borrowing of money and seeds from money lenders. This
led to a vicious circle of indebtedness and almost every farmer became a victim of it.
To meet the heavy taxes on land and basic necessities and debt interests, land usually
passed on from the cultivator to the money lender who' further let and sublet i t Thus
a new class of tenants, sub-tenants and absentee landlords emerged which never had
any interest in land. This, combined with extreme subdivision of land and small size
nf lanA hnlrtinnr affantart t h a nndnnnlhnral n d . . n t : . r ; h r sA.ra-al.r
The pressure on agriculture increased to a large extent during this period. Due t o ruin India's Socio-economic profile
of handicrafts and village industries, artisans made farming their livelihood. This led at Independence
to excessive overburdening of land. Even the pasture land providing fodder and
livestock was increasingly encroached upon for agriculture. Thus a highly inequitous
agrarian system enabled its top sections of zamindars and landlords to live off the
labour and toil of the working peasantry. Moreover fluctuating agricultural output
dependent on the vagaries of monsoon made the farmers easy victims of the
exploitative commodity and market operations.
The British rule was thus a sorry story of the systematic exploitition UL India The
benefits of British rule, if any, were only incidental. The main motive of the British
policies and developmental programmes was to serve the interests of their own
country. Thus, in 1947, when the British transferred powcr to India, we inherited a
crippled economy. As Jawaharlal Nehru in his book 'Discovery of India' put it,
"India was under an industrial capitalist regime, but her economy was largely that of
the pre-capitalist period, minus many of the wealth producing elements of that pre-
capitalist economy. She became a passive agent of modem industrial capitalism
suffering all its ills and with hardly any of its advantages."

Check Your Progress 1

Note : 1) Use the space given below for your answers.
2) Check your answers with those given at the end of the unit
1) Discuss the need for mderstanding the resource base .3f an economy.

2) In what way did the British rule affect the agrarizn system in India ?

5.3 A PROFILE OF INDIA'S STAGNANT

ECONOMY

In order to produce increasing quantities and services, a society needs a framework of

government, laws, policies, commcn facilities and institutional. environment which
foster and rewards work, enterprise and innovation. Such a framework makes people
the means and ends of development. The British rule was just the opposite of such a
development conducive system. In this section we will discuss the condition in which
the Indian economy was in 1947 iii terms of national income, work force,
occupational structure, condition of agriculture, land, capital, foreign trade, monetary
and fiscal system, etc. Since 195 1 was the census year, we have a lot of information
for that year. The first two or three years were spent largely in stabilising economy
and administration, the situation of 1951 may well represent the situation on the
morrow of Independence as no concrete changes were introduced between 1947 and
1951.

Populatim and Work Force

According to 195 1 census, o u r p(~yulationwas about 359 million of which 82.7 pct
---A -C.L- ---.-I-*:-- l:-.-A :- ..:I1 . - - " -rL..- ..Ae-
---..I-*:-- ----*:*-.*-A --I-- 1 7 7
'
Development Strategy and 51. During this period, birth rate per thousand was 41 and death rate 27. Thus the
Planning natural rate of growth of population was 1.3 per cent per annum.
The percentage of population which actively participates in economic activities like
production, trade, etc. gives the work participation rate. In 1951, it was 39.18 for the
population as a whole. For males it was 53.9 and for females it was 23.4. The total
number of workers engaged in varied activities was 14.32 crores. The work
participation rate was 46.1 per cent in 1901. It became less as years went by. It
means during the last five decades of English rule, the dependency tatio among the
Indians increased It is an indicator of worsening off of the economic situation.

Occupational Structure
An. economy is an interrelated set of activities or occupations by means of which
people earn their livelihood. Therefore an economic profile of a country must also
describe the distribution of the population, particularly of the work force in various
occupations. Generally, the activities are clubbed into broad categories like
agriculture and allied activities, industry and services. Among these activities, some
are formally organised whereas others are unorganised, given the basic rural and
agricultural nature of the economy which witnessed sizeable de-industrialisation under
the impact of the British rule. As a result of exploitative socieeconomic and foreign
trade policies followed by the British, 72.3 per cent of our work force was dependent
on agriculture for its livelihood. Of these lan&holder cultivators were over 50 per cent
and landless agricultural labourers constituted a little under 20 per cent. In 1901, the
agricultural workforce was a little over 7 1 per cent and in 1921 it was as high as 76
per cent The inter-war years did see a little growth in industrial sphere and trade but
it was not much Thus at the time of Independence, agriculture was supporting
practically the same proportion of workers as at the beginning of the century. As the
population increased, the dependency on agriculture increased further.
Mining, factory establishments and various types of cottage, village and small
enterprises were the next important users of India's workforce. One-an&a half more
workers, that is, a little less than 11 per cent (10.7 per cent) of total workers were
engaged in these establishments and enterprises. Even during 1901, the industry
engaged 12 per cent of our workers. The remaining workforce was engaged in trade,
transport, professions, govement service and other services. In 1951, these activities
engaged over 17 per cent (6.6 were engaged in trade and transport, 9.3 in services 1.0
and 0.1 per cent in railways and banks) of our workforce.
This means that there exjsted a very unbalanced distribution of workforce,
particularly in view of low productivity in agriculture and small size of landholdings.
It means that the hold of traditional activities at the time of Independence was
extensive. Relatively small share of industry, particularly in the manufacturing sector,
shows that we were really deixxlustrialised and whatever industries made their
appearance in our midst failed to provide a steady source of livelihood to a large
number. The number of workers in factory establishments was just about 30 lakhs. It
means high productivity activities could become available to only a very small
number of people.

National Income or Flow of Goods and Services

Total value of current year's production of goods and services, despite its limitations,
is regarded by many economists as the single most important indicator of economic
conditions. In a country Eke India with a large agricultural and unorganised activities,
the national income figures can never give a true picture. However their salience
cannot be doubted.
At the then prevailing prices national income of India in 1950-51 was estimated to be
Rs. 8,853 crore, which in terns of 1970-71 price level would be equivalent to
Rs. 16,798 crom On this basis annual average per capita income at the dawn of
Independence amounted to Rs. 265. It means on the basis of that year's prices,
average daily income was less than Rupee One. Comparable per capita incomes in
U.K, U.S.A, Japan, France and Australia were Rs. 3,598, Rs. 8,840, Rs. 820,
Rs. 3,280 and Rs. 4,340 respectively. It is clear that in terms of international
comparisons, India had a very low level of production per person. It was hardly
sufficient for meeting even the minimum human needs. In view of the large
inequalities existing during that period, it is clear that miliions had an income even India's ~ o c i ~ c c o n o mProfile
!~
below the level indicated by the per capita income figure. at Independence

Given such low and unequal levels of income and an agrarian system incapable of
providing incentives for savings, investment and improvement of productivity, the rate
of savings and capital formation were quite low. According to the First Five Year
Plan, saving available for net investment amounted to Rs. 450 crore only. It mearis
that the rate of savings was a little more than 5 per cent.
According to the estimates of the National Income Committee Report, agriculture,
animal husbandry, forestry and fishing contributed 5 1.3 per cent of our Net
Domestic Product (NDP). As 70 per cent of our population was dependent on these
activities, about half our total product was produced by them. Mining and Industry
produced 16.1 per cent of NDP. Of this, factory establishments produced 5.8 per cent
and small and village industries 9.6 per cent. Trade, commerce, transport (including
railways), communications, banking and insurance contributed 17.7 per cent of our
NDP. The share of housing, construction, public admini~trationand other professions
and services in our national income was 15.7 per cent. Thus it can be seen that the
primary sector was the most prominent sector of the Indian economy in terms of
output. The secondary sector was not so well developed and hence its contribution
towards the national income was rather small.

Aericulture
Since agriculture is the most important sector of economic activities in terms of share
in occupational structure as well as in NDP, it would be insightful to have a closer
look at this group of activities.
In a country with very low level of income, food is the most important item of
consumption A majority of poor people after attending to their food needs are hardly
left with any purchasing power to spare for the other necessities of lie. It means
agriculture has a close bearing on the life of not only the people engaged in
agricultural operations but others as well. At the time of Independence, tea, jute and
raw cotton (all falling under the primary sector) accounted for the major part of
India's export earnings. Even the modem industries like textiles, jute, sugar, edible
oils, etc. which developed during this period, obtained their basic raw material from
agriculture. Agriculture's contribution to public exchequer was also quite substantial.
Thus our economy was basically an agricultural economy.
In 1950-51, the total cultivated area was 324 million acres. Per capita cultivated
area, had started declining since 1901. In 1901 it was 3.2 acres. By 1951, it had
come down to 2.2 acres only. About 35.5 million acres were used for growing more
than one crop, the rest were single crop areas. Food was grown in 78 per cent of the
cropped area Plantation and spices accounted for just 1.1 per cent area but it was
highly lucrative. Over the period 1917-1947 multiple cropped area increased by 20
per cent and irrigated area increased by 10 per cent mainly by means of extension of
canals. Irrigation was available to 18 per cent of the cultivated area in 1951.
By the end of 1949-50, there was a decline in yield per acre from 619 lbs to 565 lbs.
There was a food shortage in the country during this period necessitating imports. ,
During 1948 to 1950, total food imports amounted to 8.6 million tons. Total food
production was nearly 50 million tons, of this over 40 per cent was rice (over 20
million tons) and wheat around 6 million tons. The rest were various coarse grains,
which in their total far outweighed wheat. dmong non-food crops, cotton, jute, tea,
'coffee, oil seeds, sugar cane, rubber, tobacco, potatoes and spices were important.
Per capita food production continually declined after 1900. In 1905-06, it was 200.2
kgms per year, giving 594 grams of food per day. In 1950-51, the annual and daily
availability was as low as 155.2 kgms and 425 grams respectively. It shows that
during the colonial rule, economy was marked with hunger and chronic malnutrition.
According to Agricultural Labour Enquiry Report, 1954, over 22 per cent of rural
families were landowners, over 27 per cent were tenants, over 30 per cent were
agricultural workers (of which about 50 per cent were without land) and 22 per cent
were non-agricultural families. There were many intermediary interests in land and
the actual tillers' rights in land were limited and insecure. In 1950, agricultural
labourers and their dependents were 18 per cent of the total population. About 15 per
Development Strategy and cent of the agricultural workers were attached and the rest were casual workers. The
Planning attached workers were made to work, on an average, 326 days in a year. Wages were
very low. Among agricultural workers 4.6 per cent were children, 77 per cent of child
labour was casual and the rest attached.

Industry
Some modem industrial enterprises were started in India in mid 19th century. These
enterprises were managed generally under the managing agency system. At
Independence the major industries were the textiles, jute, sugar, cement, paper, oil
crushing and light engineering. Total finished steel production was about 89 lakh tons
and steel inputs were 13 lakh tons. Per capita yearly steel production amounted to
just 3 kgs. Other industrial achievements comprised about 4.3 thousand million yards
of cotton piece goods, over 10 lakh tons of jute products, over 9 lakh tons of sugar, 3
crore tons of coal, about 15 lakh tons of cement etc. The production of rice, wheat
and cereals was also very high
In 1947, there were 14.5 thousand factories in India. Around 22.75 lakh persons
worked in these establishments. There was a noticeable degree of concentration of
industries in terms of share capital and fixed assets, indicating the presence of
monopolistic traits. Twenty industrial houses controlled over 34 per cent of total
share capital, nearly 38 per cent of net fmed assets and about one-third of gross
capital stock of the corporate sector. It means that even in the early stage of industrial
growth, monopolistic trends which are a feature of advanced capitalist economies
were visible in India.

Foreign Trade
In 1947-50, exports, valued at Rs. 509 crore were less than 6 per cent of our
national income. Imports amounting to Rs. 590 crore, were less than 7 per cent of
our national income. India had negative trade balance that year, it was Rs. 82 crore.
Principal exports composed of agricultural products, minerals and other raw
materials. Other export items were tea, jute, raw cotton, hides and skins, iron and
other ores, tobacco, spices, lac, gum and oil seeds, etc. Textiles were the major
manufactured goods that we exported. Our imports consisted of manufactured goods
like machinery, metals, chemicals and dyes, foodgrains equipment and machinery, etc.
United Kingdom, the USA, Pakistan, Egypt and Australia were the main sources
from which our imports originated. These countries plus Burma and Canada were the
main buyers of our exports. Overall balance of payments deficit for that year was in
the range of Rs. 150-200 crore.

Other Aspects

Education
The literacy rate in India in 195 1 was very low. The overall literacy rate was 16.7
per cent, 24.9 per cent of the male and 7.9 per cent of the female population was
classed as literate. Among agriculturists, literacy rate was only 12 per cent Females
engaged in agricultural activities had a literacy rate of 4.5 per cent. Total number of
graduates was just 11.74 lakhs. Enrolment facilities were available to only 40 per
cent of those in the age group of 6 to 11, to 10 per cent of those in 11 to 17 years
and to 0.9 per cent of those in the age group of 17 to 23 years. In 1948 49, the total
number of educational institutions from nurseries to universities was 1.82 lakhs only.

Health
There were only 5.56 thousand hospitals with about 8.5 lakh hospital beds. Epidemic
diseases accounted for 5.1 per cent of total mortality. Hundred million people were
estimated to have suffered from malaria and 2.5 million were active cases of
Tuberculosis. Tuberculosis caused half a million deaths annually. Life expectancy
rate was little over 32 years.

Taxes
National income comprised 7 per cent taxes. Of this, 17 per cent came from
import duties, 28 per cent from direct tax= and 8 per cent from land revenue. Total
national debt in 1946-47 was Rs. 2,285 crore. In 1947, the external debt of India
stood at Rs. 36.52 crore.
 India's Socio-economic Profile
Scheduled CastesIScheduled Tribes at Independence
There were nearly 5 crore persons who belonged to 779 scheduled castes and 245
scheduled tribes. In terms of access to productive resources, land, infrastructural
facilities, employment opportunities, social services and modem technolo& these
groups were in a specially disadvantaged position This was in addition to the social
discrimination to which these people were subjected.
Thus in terms of social and economic infrastructure, financial development and
availability of social services, the situation of Iridia was indicative of gross
inadequacy. This shows how some of the basic conditions of decent living
and development were denied to us.

5.4 COLONIAL LEGACY OF

UNDERDEVELOPMENT
Our social and economic profile at Independence paints a rather grim picture of the
country. India, an ancient land of great diversity and potential became subject to a
ruthless and exploitative regime. The British succeeded in extracting manifold support
from India in terms of secured markets, cheap raw materials, savings, employment
opportunities for the Englishmen, men and material for war and cheap labour for
further expansion of British empire. To make things worse, the crucial state support
needed for acceleration of the processes of development was totally denied.
The profile discussed in this unit shows that at Independence, an overwhelmingly
large majority of Indians were living in abject poverty. They did not possess any
productive skills, modem scientific knowledge, instruments and objects of labour and
opportunities for participation in productive activities. The ignorance, disease,
illiteracy and ill-health of millions of Indians living under the shadow of a system of
colonial capitalism imposed on a system of decadent feudalism describes the nature of
our underdeveloped economy. There were groups in India like the princes, kings,
zamindars, big landlords, industrialists, financiers, big merchants, highly qualified
professionals and top echelons of bureaucrats, who being collaborators and underlings
of the colonial rulers, commanded a lot of property, wealth, high incomes and all the
luxuries of life. But the majority of population was denied even the of basic
needs. Education, health, civic amenities for common people were neglected
altogether. Transport, railways, communication system was developed to serve the
British interests. In fact these were half- hearted efforts which had adverse effects on
Indian economy. Lack of a well-balanced and evenly dispersed infrastmctural
facilities of roads, railways, power, technical and skilled man power exercised
negative influence on the growth of industries.
Huge surplus was extracted from the development of railways, plantations, industries,
banking, etc. and this formed a major part of the British capital. India was forced to
contribute to British wars within India and abroad right up to the Second World War.
To the exploitative nature of British rule were added the atrocit;*s of native rulers,
zamindars and feudal lords.
India was actually deindustrialised during the British period as the rate at which pre-
modem indigenous industries were mined was much higher than the rate at which
modem industries were established. Moreover British government did not grant any
great degree of protection to Indian industries till 1924. Insufficient cadre of
technicians available in the country was also one of the reasons for lopsided industrial
growth. The min of India's well-integrated industries which had a high name for
quality and sophistication could not be compensated by some limited progress of
modern light consumer industries based on imported technology and equipment
located in some large cities.
The agrarian system neither provided incentives nor the means to actual cultivators to
go in for methods of improving productivity. The destruction of urban handicrafts
without parallel growth of substitute modem industries led to disequilibrium of
industry and agriculture in India
Greater mobility was introduced within the caste system in India due to various
changes brought about by the British in the economic sphere. The high castes such as
Development Strategy and the Brahmins, Vaishayas and Kayasthas were at an advantage, as these were literate
Plannlng classes and could exploit new opportunities in a more profitable manner. Members of
privileged castes became clerks, school masters, lawyers and doctors, etc. The new
intelligentsia mainly came from these castes. The building of roads, introduction of
railways, postage, telegraph, printing, etc., helped to organise the castes to a
considerable extent The civil and penal codes and the new principle of justice
introduced by the British viz. all men are equal before the law, affected the caste
panchayats adversely. Their power was considerably curtailed but they continued to
exist. The use of law courts did not put an end to the caste panchayats. Both the
systems of justice were made use of. Though the traditional hierarchy of caste system
was upset by the British, it did not become weak. This was due to the fact that the
newly rich castes did not demand the abolition of caste system but only higher status
for themselves.
With new social relations in production, distniution and exchange, appeared new
institutions. The colonial period witnessed the emergence of new social classes viz.
absentee landlords, tenants, peasant proprietors, agricultural labourers, merchants,
money lenders, wage workers, capitalists and petty traders. Professional classes of
teachers, doctors, lawyers, journalists, managers, clerks, etc. also came up during this
period.
India's foreign trade was made subservient to British interests. We were turned into
exporters of raw materials and agricultural produce and importers of manufactured
goods. Indian trade was used to generate export surplus which was used by the British
to finance Britain's own external deficit. Through various devices such as funding of
military and administrative expenses of the British, India's wealth was drained away
to Britain in large quantities.
Thus in addition to the sins of omission, that is, nowintroduction of steps for
development, sins of commission, that is, introduction of steps that hampered and
held back development in the country were also committed by the British. The result
was a stagnant and crippled social and economic state of affairs, where the growth
of domestic production barely kept pace with the growth of population and the per
capita income remained very low.

Check Your Progress 2

Note : 1) Use the space given below for your answers.
2) Check your answers with those given at the end of the unit.

1) What was the occupational structure of India at Independence ?

2) Comment upon the profile of agriculture and indusrq in India in 1947.

........................................................................
........................................................................
........................................................................
........................................................................
........................................................................
3) Discuss the nature of colonial legacy of underdevelopment and its impact on
various sectors of Indian economy.
 ........................................................................ India'a Socio-economic Proflle
......................................................................... at Independence
I

5.5 LET US SUM UP

The profile of Indian economy at the morrow of Independence presents a picture of
ravages caused by colonial exploitation. The post-colonial India was thus
underdeveloped and their structure of socieeconomic relations lacked the dynamism
and capacity to provide growth and social justice. This unit gave us an idea about the
social and economic conditions prevailing in the country at Independence and the
nature of our colonial legacy. With this resource base, our planners initiated the task
of development and adopted various strategies to achieve the developmental pals.
The next units of this block will deal with these aspects.

5.6 KEY WORDS

Absentee Landlords : In those cases where the land legally (as per land records)
stands in the name of a person who does not actually till the land. Usually the
people entrust the farming to some other people who actually till the land but get only
wages. All the profits go to the absentee landlords.
Direct Tax : Tax which is paid by the -person on whom it is levied
Gross Capital Stock : The accumulated stock of past purchases of capital goods
before the deduction of depreciation.
Gross Domestic Product : It is the value of total goods and services produced in the
economy during a particular period of time (normally one year).
Land Revenue Syattm during the British Rule : Till the village ownership of land
existed, the village was the unit of assessment With the introduction of new land
revenue system during the British rule, the village ceased to be a unit of assessment
British introduced a system of individual land assessment and revenue payment
instead of fixation of revenue at a specified portion of the annual produce, a system of
fixed money payment came up. Due to this, the villagers had to pay a fixed sum as
revenue in cash irrespective of the produce.
Managing Agency System : By this system a relatively small number of managing
agency f m s promote, control and finance the various industrial enterprises and
companies, govern their operations and output and market their products. A large
share of the profit passes to these agencies.
Net Domestic Product: The gross domestic product less capital consumption.
Net Fixed Assets : Durable instruments of production such as factories, machinery
etc. by which commodities are produced. This is worked out after deducting the
depreciated value of the fixed assets.
Primary Sector :Agriculture, animal husbandry, forestry, fisheries are collectively
known as the primary sector. These activities are primary because they are the fist
and oldest occupations of people. Further they produce goods which are essential for
human existence. Role of nature is important to these occupations.
Secondary Sector : Manufacture, in small and large workshops factories etc. is called
the secondary sector. Such occupations come after the primary occupations for
example production of raw cotton is a primary activity but conversion of cotton into
cloth is manufacturing and thereby a secondary activity.
Share Capital : The,amount of money subscribed by the shareholders, at par, to a
company. It represents an amount owned by the company.
Balance of Payments : The balance of payments is a kind of income statement that
records all transactions -between individuals, firms
. . and
. . governmental
. . units of one
Development Strategy and Participation Rate : It &notes the proportion of population (usually in percentage)
Planning who belong to the generally accepted working age group (say 16 to 60 years). They
constitute the labour force of the economy. Those members of the labour force who
actually succeed in finding productive work constitute the workforce of the country.
The participation rate denotes that part of workforce that contributes economically to
the country.

5.7 SOME USEFUL BOOKS

Bettelheim, Charles. 1968. India Independent ; Khosla Publication, Delhi.
Chaudhuri, Pramit. 1978. The Indian Economy :Poverty and Development ;Vikas
Publication, New Delhi.
Dutt, RP. 1947. India Today; People's Publishing House, Bombay.
Shelvankar, KS. 1940. The Problem of India ; Penguin Books : Harmondsworth.
Middlesex.
Singh, Tarlok. 1974. India's Development Experience ; Macmillaa, Delhi.
Wadia, P.A. and K.T. Merchant 1954. Our Economic Problem ; Popular, Bombay.

5.8 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress 1
1) Your answer should include the following points :
to base the scheme of development on the nature of social and economic
conditions of the country
to determine the seriousness, size and complexity of the problems
to provide a comparison with the changes that take place in different time
period
to understand the need for a particular strategy, the resources available for its
implementation have to be ascertained
2) Your answer should include the following points :
introduction of private property in land
subdivision of land and small size of landholdings
commercialisation and specialisation of agriculture
excessive land revenue
exploitation of cultivators at the hands of zamindars and money lenders
emergence of class of tenants and absentee landlords.
Check Your Progress 2
1) Your answer should include the following points :
72.3 per cent of workforce was dependent on agriculture
mining, factory establishments and various types of cottage, village and small
enterprises were also important users of workforce
over 17 per cent of workforce was engaged in trade, transport, professions,
government and other services.
ur answer should include the following points :
primary sector was the predominant sector of India at Independence and
accounted for maor part of India's export earnings
modem industries obtained their basic raw material from agriculture
total food production was nearly 50 million tons
per capita food production declined continuously after 1900
there were many intermediary interests in land and the actual tiller's rights in
land were limited and insecure
wages were very low and most of the agricultural workers were casual
industries were managed under the managing agency system
major industries were textiles, jute, sugar, cement, paper, oil crushing and
.. . . .
 there were 14.5 thousand factories in India India's SOCIO-economicProfile
at Independence
there was a noticeable degree of concentration of industries in terms of share
capital and fixed assets.
3) Your answer should include the following points :
huge surplus was extrscted from the development of railways, plantations,
I banking etc. and this formed a major part of British capital.
Indian economy was marked by abject poverty, people did not possess any
productive skills and scientific knowledge
a very large section of population did not enjoy even the basic amenities of
life
transport and communication systems were developed to serve British
interests
there was lopsided growth of industries. British government did not provide
protection to Indian industries till 1924
there was disequilibrium of industry and agriculture in India
I the higher castes were at an advantage, the new intelligentsia mainly came
from these castes
1
4
e the colonial period witnessed the emergence of new social classes
Indian foreign trade was made subservient to British interests.
i
UNIT 6 MIXED ECONOMY MODEL
AND ITS RATIONALE AND
SIGNIFICANCE

Structure
6.0 Objectives
6.1 Introduction
6.2 Concept of Mixed Economy
6.2.1 Mixed Economy : Is not a Pure System ?
6.2.2 The Mixed Economic Nature of Indian Economy
6.3 Rationale Behind Mixed Economy System
6.4 Features of Mixed Economy
6.5 Significance of Mixed Economy
6.5.1 Infrastructure bvelopment and the Public Sector
6.5.2 Role of Private Sector
6.6 Growth'of Mixed Economy in India
6.7 Planning in Mixed Economy
6.8 Conclusion
6.9 LettUs Sum Up
6.10 Key Words
6.11 SorneUsefulBooLs
6.12 Answers to Check Your Progress Exercises

6.0 OBJECTIVES
After reading this unit you should be able to :
discuss the meaning of mixed economy,
explain the various instnunents of mixed economy in India,
state the reasons behind the adoption of mixed economy,
highlight the significance of mixed economy in our country, and
discuss the role of planning in a mixed economy system.

6.1 INTRODUCTION
As we read in the previous unit, during the entire period of British rule, though
certain positive changes were introduced such as growth of road and railway netwgrk,
development of ports and harbours, establishment of some industries, expansion of
trade, spread of fonnal education on British pattern in the urban areas and
development of banking and other services, yet the per capita income of Indians by
and large, remained static. No structural change took place in the economic and .
social spheres. India inherited a stagnant economy from the British which was marked
by abject poverty, empty treasury a d exploitative soci~ecmomicstructure. Thus
after Independence, the Indian planners had before them a colossal task of bringing
about planned economic development in the country. India adopted a 'mixed
economy' model for the attainment of this g o d In this unit we will try to explain the
concept of mixed economy and its significance in the Indian context The unit will
also highlight the various instruments of mixed economy and the role of planning in a
-;--A - n - . r r..s+am
 Mixed Economy Model and ita
6.2 CONCEPT O F MIXED ECONOMY Rationak and Slgnllleance

The term 'mixed economy' is relatively a new term. It hardly appears as a

systematically evolved economic system in the classical writings of economists,
political scientists and social philosophers. In popular discourse, we can come across
this term in many different contexts. The term 'mixed economy' means prevalence of
public, private and joint sectors side by side in a system. In a mixed economy, these
sectors play an important role in bringing about development. In some systems one of
the sectors may predominate, but the fact that these types of sectors coexist is
sufficient to tern an economy a 'mixed economy'. Thus generally, this term is used
for any economy in which one can see the coexistence of more than one mode of
ownership, control and decision-making.
With the change in the functions of state, widening of welfare activities, success of
private sector, increase in people's demands and cut throat competition in
manufacture and sale of goods, mixed economy model has become very essential. In
a mixed economy system, state-owned means of production are so used as to promote
4
social welfare. Privately-owned means of production in such a system serve private
interests within the norms laid down by the state. The underlying theme of a mixed
economy is to attain rapid economic development and ensure that no exploitative and
restrictive tendencies emerge in the economy. In such a system, the state participates
as an active partner with the private enterprise in the process of economic
development.
Thus, we can say that under a mixed economy, the entire economic system in a
country is split up into three parts :
i) Sectors in which both production and distribution are entirely managed and
controlled by the state to complete exclusion of private enterprise,
ii) Sectors in which the state and private enterprise jointly participate in production
as well as in distribution, and
iii) Sectors which are in exclusive and comp4ete control of private enterprise. These
sectors are subject to general control and regulation of the state.

6.2.1 Mixed Economy :Is not a Pure System 1

In actual practice, there cannot exist any pure economic system following one single,
well-defined set of principles of organisation and management. The Soviet economy
of the mid 1920s, when planning was centralised and the major means of production
were under state ownership and control, has been described as a mixed economy. The
C
same term is used for that of Great Britain of the 1950%when private monopolies
predominated the economy despite an extensive system of social security,
nationalisation of many industries and very active state policies for regulating and
promoting economic activities. India of mid 1950s, when the public sector had just
P about made its debut, is described as a mixed economy. India of mid 1980s with the
public sector contributing almost onequarter of her national income is also described
as a mixed economy.
It is clear that there caunot be one definition ofthe term mixed economy. Mixed
economy is an economy where more than one set of principles of economic
organisation and management are used at the same time. It means it does describe a
mixed system but mixtures would be greatly divergent. These Lfferences are not only
quantitative but may even be qualitative. In some cases state structure and processes
are predominant and in others it is the private sector with varying degrees of
concentration of ownership and control that dominates. In some cases it is the market
forces which determine prices, savings, etc., in others these decisions are made by the
existing planning agencies with a view to serve some common ends.

6.2.2 The Mixed Economic Nature of Indian Economy

It is clear from the preceding section that all the economic systems in which different
forms of ownership, control, decisiorrmaking and sharing in production can be found
to be operative in different branches of the economy can be termed mixed economies.
Development S t e e g y and In this sense it is very difficult to fome across an economy to which the term mixed
Plannlng economy may not be applied witll justification.
I

!
Before Independence, the British ad developed a state sector in railways, posts and
telegraph, irrigation, ordnance fac ones and opium industry. The Sindri Fertiliser
Factory, the Visakhapatnam shipkard and Aircraft factory in Bangalore were set up
by the British. Thus what we ado ted from the British was already a mixed economy.

1
To come to a conclusion, this pro lem can be solved by the fact that an economic
system has to be described in te s of its most influential and growing forms of
development of productive forces b d associated social production relations. Thus the
economies where private capitalist ownership of means of production prevails in most
of the dynamic sectors of econom and where production is organi'sed on the basis of
t
hired factors of production with a iew to sell them in market for earning profits
would be called a capitalist economy. Same would be the case for describing a
socialist economy. It means an economy where there is state ownership of means of
production in most dominant sectors of economy, where the goods are sold on the
basis of prices fixed by the state and where social justice prevails in place of profit
motive.
The presence of a fairly large public sector and use of planning do not eliminate the
basic capitalist character of the economies of the countries like Sweden, France,
U.K., U.S.A. etc. In the same way, the use of private and cooperative forms of
organisation along with the use of market mechanism for some specific purposes does
not change the essential socialist character of the Chinese and Soviet economies. It is
the predominant pattern which is decisive in the characterisation of an economic
system.
The Indian economy neither has the basic characteristics of a capitalist economy nor
a socialist economy. In India, the government has consciously, as a part of a well
thought-out plan, decided to increase not only the promotional and regulatory roles of
the government, but also to go for direct participative role by setting up or tAing over
production facilities of a number of different activities. It is further assured that
overall economy operates according to a national plan. This highlights the mixed
economic nature of Indian economy.

6.3 RATIONALE BEHIND MIXED ECONOMY

SYSTEM
As we have discussed before, the socic+economic profile at the time of Independence
was such that assignment of production and developmental tasks solely in the hands
of private sector or public sector would not have solved any problems. The problems
such as low per'capita income, large proportion of population engaged in primary
sector, high birth rate, chronic unemployment and underemployment, low rate of
capital formation, uneven distribution of income and weaith assets, illiteracy, lack of
technical know-how, poor quality of human resources, low per capita consumption,
poor utilisation of resources, etc. made it imperative for the Indian planners to adopt a'
system which would bring about planned economic growth in a satisfactory manner
and also be conducive to the cond~t~ons prevailing in the country. The minority of
feudal lords, land owners, merchants, financiers and industrialists did not have, during
the fifties, the capacity to discharge the large tasks essential for development. The
private sector was not even prepared to undertake developmental works in heavy
capital and essential consumer goods production because of high initial investment
and long gestation period. Moreover even in the British period the key sectors of the
economy were in the hands of the state itself. Thus a mixed economy system for
attaining social and economic development was adopted.
Government's role in economy is regarded as ,crucial because it can perform various
functions by intervening in development process. The government can coordinate the
interrelated development activities and investments in an appropriate manner. State
sector can take risks beeause it can give preference to social gains over financial
profit. It can take a long term view and tolerate low profits and financial losses to
some extent. The state can also prevent the projects which take into view only
financial gains .and overlook sizeable diseconomies.
In a country with limited and lop-sided development, atleast in initial phases, the state Mixed Economy Model and its
has to play a vital role for reaching the conditions in which subsequent development Rstionaie and Si~niflcance
may continue. The Indian planners also realised the limitations of the public sector
and the positive potential of a regulated private sector. Hence neither the public
sector was made all embracing nor the private sector was reduced to non-significance.
A well demarcated role was assigned to the private sector under the Directive
Principles of State Policy, where it has been laid down that the state should strive "to
promote the welfare of the people by securing and protecting as effectively as it may,
the social order in which justice, social, economic and political shall inform all the
institutions of national life."
In the economic sphere, the state has to direct its policy in order to secure a better
distribution of ownership and control of material resources of the cornqunity and to
prevent exploitation of labour and concentration of wealth in the hands of a few. It
would be impossible for the state to attain these goals implied in the Directive
Principles unless the state itself enters the fields of production and distribution. This
explains the ratiotlale behind the deliberate policy of expansion of the public sector to
promote rapid industrialisation and self-reliance.
Thus for protection of the weaker sections of the society, control of distribution of
essential commodities, promotion of infrastructural facilities, prevention of private
monopolies, prevention of opening of the country to foreign capital, creation of
egalitarian and just society, reduction of inequalities of income, India needed'a mixed
econoz~ymodel with state playing a major guiding role and private enterprise acting
= important means for achieving social and economic progress in the country.
Check Your Progress 1
Note: 1) Use the space given below for your answers.
2) Check yaw answers with those given at the end of the unit.
1) Which economy can be termed a mixed economy ?

2) Why did India adopt a mixed economy model for the attainment of social and
economic development ?

6.4 FEATURES OF MIXED ECONOMY

Before dealing with the significance and growth of mixed economy in India, we must
familiarise ourselves with various features of mixed economy :

Large Public Sector

As we read earlier in the unit, presence of a big public sector along with free
enterprises makes the character of the economy 'mixed'. In socialist countries, public
sector plays a major role in almost all the sectors of the economy. Even in the
western capitalist countries, the state has not only intervened in their economies in a
big way but has also engaged itself in various productive and distributive functions.
The developmental role of the state is more pronounced in countries where
industrialisation has been somewhat delayed. In a mixed economy also the public
ector plays a very crucial role.
Prlvrte Ownemhlp of Means of Production and Profit-Indwed Commodity
Production
In many mixed economies as well as in India, at present a large segment of the
industrial sector is in private hands. With the exception of some basic industries, all
other industries, for example, cement, vegetable oil, leather, etc. are with the private
sector. Road Transport is mainly in the hands of private sector. Agriculture is also
with the private sector. It means most of the goods are produced for the market and
majority of economic activities are motivated by profit in a mixed economy.

Declsive Role of the Market Mechanism

Market Mechanism has a crucial role to play in Indian economy. India has markets
not only for various products but also for productive factors. Prices of most of the
commodities and factors of production are determined by interplay of demand and
supply forces. Prices of various commodities and price fluctuations influence the
decisions of the producers and techniques of production. Though all banks have been
nationalised, yet their working as well as business dealings with producers in the
private sector are generally determined according to the laws of the market. The
amount of investment and its form is also influenced by the interest rates that prevail
in the money market Still the market mechanism is not totally out of state control.
Through licensing,'distribution of essential goods at fair price shops and government
purchase of agricultural products at support prices, government tries to regulate
market mechanism in Indian economy.

Joint Sector
A joint sector provides a very important avenue for balanced industrial development.
It complements growth in the public and private sectors. It is an important feature of
a m i x y economy, it is basically an extension of the idea of mixed economy. It is a
tool fdr social control over industry, without resorting to complete nationalisation. It
is needed for an equitable and egalitarian economic growth in the country, it can
widen the scope of the industrial scenario. In India, the joint sector has yet to make
its mark in terms of its contribution to economic growth.

6.5 SIGNIFICANCE OF MIXED ECONOMY

Mixed economy is needed as it provides an institutional balance between the socio-
economic forces under whose control and through whose efforts post-Independence
India has achieved her growth. It mobilises popular support for a state-led, state-
directed process of capitalist, modernising development of the Indian economy in
general and impressive growth of industry and agriculture in particular. Growth and
significance of public and private wctors in a system is an essence of mixed economy.

6.5.1 Infrastructure Development and the Public Sector

That part of the economy which functions on the basis of state owned property, forms
the public sector of the economy. It is an important element in the socio-economic
structure of society in India. The only national basis for modernising the productive
forces in the developing countries like India has always been entrepreneurship. This is
the reason behind the emergence and expansion of public sector in our country.
There has been an increasing recognition and acceptance of the state functioning as a
catalytic agent for economic activities in all the core and basic sectors through the
emerging public sector. For India, government regulation is a direct partner in most
economic activities and a silent partner in all economic activities. The primary sectors
came under the control and ownership of government much earlier than the others,
and covered functions without which the state could not exist and the government
. could not function The sectors like central banking, treasury and state refinance, rail,
roads and ports, posts and telegraph are today normally identified with the basic
functions of the state. These are infrastructural d c t o n and are instrumental to
economic development.
In India, the emergence of the public sector gained momentum with the
~mtionalisationof minerals and metals, industries as well as the oil and petroleum
sectors. The trend continued with the nationalisation of life insurance and a major
 portion of commercial banking. It was in fact in the form of the public sector that the Mix* b o ' o m ~ Model and
state proceeded to undertake the responsibility for enlarging industrial growth and Ratiooak aad Slgolllaace
providing capital cover and entrepreneurship. The public sector has grown not only
under the central government, but also under the ownership of the different state
governments.
Public Sector's contribution towards net domestic product has risen, its contribution
towards capital formation has also gone up. Capacity for labour abcorption in public
sector has been continuously consistent. Rate of investment and cmital stocks of
public sector has shown a steady rise. The growth of public sector has laid the
foundation for rapid industrialisation of the economy by creating necessary basic
industries. Nearly 85% of needed capital goods are being produced at home as
against 15% at the beginning of planning era Public Sector activities now cover a
bulk of important areas of power generation, transport, banking and insurance and
have been extended to domestic and foreign trade in certain important commodities.
The role of the public sector is connected with the building of infrastructural projects
and branches of the economy. It makes for private sector's inadequacy in organising
research and development, in mobilising financial resources and in utilising new
materials and methods in production.
Public Sector is not free from problems. Low or no profits, low morale of its
personnel political interference, trade unionism, inadequate training and recruitment
measures for personnel, inappropriate pricing policy, etc, adversely affect the working
of public sector. Thus, though one cannot deny the importance of private sector, yet
we still find cases in which public sector undertakes to solve the problem of finance,
construction, personnel training and raw material supply as well as to attract private
initiative for the development of backward regions.

6.5.2 Role of Private Sector

In the core and basic sector, control has now been largely handed over to the public
"
sector, and further growth in these areas is also within the public sector. Nevertheless
substantial development in basic industries like cemenf fertilizers and iron factories is
still within the private sector, even though, the commanding heights continue to be
controlled by the public sectors.
The larger proportion of the growth of the Gross Domestic Product (GDP) has been.
contributed by the private sector. In absolute terms, the production of consumer
goods has gone up. By manipulating production and supply in direct contrast with the
forces of demand and supply, the private sector has in a large measure also
manipulated prices and exerted inflationary pressures on national economy. By
widespread diversion of resources to the parallel economy it has also led to the
I
concentration of wealth and inequalities in the distribution of output and income
thereby inhibiting the national and spontaneous growth of per capita income and
GDP.

Still the dominant sector in India that is agriculture is completely managed by the
private sector. Trading, both wholesaie retail, has always been in the private
sector. Small and cottage industries in India are in the private sector and they have an
important role to play in industrial development. They are particularly suited for the
utilisation of local employment opportunities, as they are labour-intensive. The
private sector also helps in the effective mobilisation of human and physical capital.
There is thus tremendous scope for expansion of private sector in India and its
importance in a mixed economy cannot be denied in any way.

Check Your Progress 2

Note : 1) Use the space given below for your answers.
2) Check your answers with those given at the end of the unit.
1) Discuss the various features of mixed economy.
Development Strategy and
Planning

2 I Expla~rlthe role of private sector in a mixed economy system.

6.6 GROWTH OF MIXED ECONOMY IN J?drslZ &

'

The success of mixed economy depends upon the positive growth 01 ;~k:, :fate
and joint sectors of the economy. The state's role in mixed economy is c r u c ~ dto its
growth. The view that the state has to play a key role in rapid industrialisation and
economic development of the country had gained wide support even during the
freedom struggle. The Indian National Congress had passed a resolution to this effect
way back in 1931, which stated that "the state shall own or control key industries and
services, mineral resources, railways, waterways, shipping and other means of
transport". Actual course of action since Independence has, however, been guided
more by pragmatic than by ideological considerations. As we have mentioned earlier
in the unit that the limited economic and administrative capabilities of the state at the
time of independence forced the government to seek the cooperation of the private
sector in the task of economic development, gradcally the public sector was expected
to grow not only absolutely but also relatively to the private sector. The private sector
was expected to play its part within the framework of the comprehensive planning
mechanism.
From the very beginning state policy was based on the view that small scale
industries and a large part of finance and commerce were to be left in the domain of
the private sector. Even in the domain of big industry, private initiative was not
totally ruled out. The relative spheres of activity of the public and the private sectors
were spelt out soon after Independence in the Industrial Policy Resolution (IPR)
adopted by the Government of India in 1948.
The thrust of IPR of 1948 was on mixed economy i.e. coexistence of both public and
private sectors. It emphasised on attainment of social justice through maximisation of
production Industries were divided into four broad categories :
a) industries under the exclusive monopoly of the central government.
b) the industries that could henceforth be undertaken only by the state.
c) the third category was made up of industries of such basic importance that the
central government would feel it necessary to plan and regulate them.
d) a fourth category, comprising the remainder of the industrial field was left open to
private enterprise, individuals as well as cooperatives.
The 1948 resolution not only emphasised the right of the state to acquire industrial
undertakings in public interest but it also reserved an appropriate sphere for the
private sector. The First Five Year Plan (195 1-56) emphasised the rapid expansion
of the economic and social responsibilities of the state. It gave a call for widening
public sector and stressed the fact that private sector must be reoriented to the needs
of planned economy.
The 1956 IPR *edified the 1948 IPR a little. The resolution laid down three
categories of industries, which w e e more sharply defined and were broader in
coverage as to the.role of the state than the-classification of 1948 I P R These
categories were :
s S F ~ P ~ IA.
I I Pthnce whirh WPTP tn ha ~lndpravcl~iaivarprnnnaihilitv nf the atnta
 Mixed Economy and Its
b) Schedule B : those which were to be progressively state owned and in which the Rationale and Significance
state would generally set up new enterprises, but in which private enterprise
would be expected only to supplementthe effort of the stab ; twelve industries
were placed under this category.
c) Schedule C : all the remaining industries and their future development would, in
general be left to the initiative and enterprise of the private sector.
These categories were not water-tight compartments. In appropriate cases private
units could produce an item in category A for meeting the industry's requirements or
as byproducts. Further, heavy industries in the public sector could obtain some of
their requirements of higher components from the private sector while private sector
in turn would rely for many of its needs on the public sector. Moreover, the state
reserved the right to enter category C, when the needs of planning required. The basic
objective of this resolution was to create a mixed economy in India The resolution
aimed at providing non-discriminatory treatment for the private sector, encouragement
to village and small scale enterprises, -removing regional disparities and provision of
amenities for labour.'
The Second Five Year Plan (1958-61) emphasised on the independence of the public
and private sector. The Third Five Year Plan also aimed at curbing the concentration
of wealth through the public sector. The Fourth Five Year Plan envisaged the
emergence of an effective and dominant role of public sector. It called upon the
private enterprise to assume greater responsibilities towards the community as a '
whole. The Fifth Plan stated that the public sector should ensure proper distribution
of resources to the weaker sections.
The IPR of 1970 had various objectives like prevention of concentration of economic
wealth, expansion of production measures and examination of the possibility of
undertaking short gestation gaps for quick yield of profits by the govemment. The
1973 IPR aimed at economic growth, social justice and self-reliance.
The IPR of 1977 emphasised the development of small-scale sector, the basic
industries, capital goods industries and high technology industries. The resolution
aimed at developing the public sector. It assigned an expanding role for the public
sector and recognised the necessity for continued inflow of technology in sophisticated
and high priority areas.
The Industrial Policy of 1980 aimed at optimum utilisation of the installed capacity,
minimising production, correcting regional imbalance, strengthening agricultural base
and promoting export-oriented and import-substitution industries.
The Sixth and the Seventh Five Year Plans have also emphasised promotion of
public and private sectors in a well-defined and properly demarcated spheres.,Thus all
our plans and Industrial Policy Resolutions have aimed at strengthening the mixed
economy system in India.

6.7 PLANNING IN MIXED ECONOMY

Mixed economy is necessarily a planned economy. Since mixed economy operates
under divergent and in many situations conflicting set of motivations, the planning
process in a mixed economy is extremely complex. The conflicting motivations are
those of self-interest on the one hand and social gain on the other. The purpose of
economic planning in a mixed economy is to reconcile the conflicting interests so that
national interest is not neglected. The success of planning in a mixed economy
depends upon the following factors :
i) to what extent is the public sector able to pursue the socially determined goals,
ii) to what extent is the state able to guide the private sector to follow the socially
determined goals,
iii) to what extent is the state able to check the distortions in investment decisions
arising out of private sector interests from going against the public sector.
It was recognised that in a growing economy which gets increasingly diversified, there
is scope for both the public and the private sectors to expand simultaneously. The
Development Strategy and as the key instrument for the economic and social transformation of the country.
Planning
Moreover, the use of resources in the private sector is not left entirely free but is
sought to conform to national priorities through the instrument of economic planning.
In a mixed economy, government uses various instruments to bring about planned
development such as :
i) Industrial Licensing
ii) Land Reforms
iii) Development of Services Sector
iv) Subsidies and Other Measures like Capital Issue Control, Labour Legislation, Price
Regulations and Foreign'collaboration Approval System.

We will now discuss these instruments in brief:

Industrial Licensing
The primary objective of the licensing system is to give effect to the industrial policy
of the government The broad objectives of the system are in consonance with those
laid for the industrial policy. These are fustly, development and regulation of
industrial investment and production according to priorities and targets of various
plans. Secondly, prevention of concentration of economic power in the form of
ownership of industries and thirdly, balanced economic development of different
regions with a view to reduce disparities in the levels of industrial development The
legislative framework for industrial licensing in India is embodied in two different
Acts. These are (a) Industries Development and Regulation Act ( 1981) & (b)
Monopolies and Restrictive Trade Practices Act (1969).

Land Reforms
The objective of land reforms is to bring about institutional changes to make property
relations favourable to the tillers of the soil. It aims to remove all elements of
exploitation and social injustice within the agrarian system. Its goal is to ensure
quality of status and opportunity to the vast sections of rural population and to
increase agricultural pduction. The government has sought to bring such reforms
through measures like abolition of zamindari, tenurial reforms, consolidation of
holdings and cooperative farming.

Development of Services Sector

In the tertiary sector, the mixed economy system has sought to explain the role of the
state in the provision of various services. For this purpose, a number of
nationalisation measures have been initiated, beginning with the nationalisation of
Imperial Bank of India to set up the State Bank of India in 1955. Life Insurance
business was nationalised in the year 1956. The fourteen major commercial banks of
the country were nationalised in July, 1969, followed by the nationalisation of six
more banks in April 1980. Coking and non-coking mines were nationalised in two
instalments in October, 1972 and January, 1973. The General Insurance business
has also been taken over by the government Statutory rationing has also been
introduced in various cities.

Subsidies
Subsidies have become an important part of India's economic system. Subsidies to
exports can be provided indirectly by deliberately running rai!ways etc., at a loss.
Subsidies on foodstuffs ctc., can keep down the cost of living. Farm subsidies can
lead to expansion of the output of farm products. Various subsidies like the subsidy
on land revenue, subsidised industrial housing etc., aim to increase the consumption
levels of the poor, protect and promote traditional and labour intensive industries,
foster entrepreneurship, develop small scale industries, set up industrial estates,
support infant industries, develop backward areas and promote exports and so on.

Other Imtrumenb
Government also tries to regulate the private sector through Capital Issues Control. It
means that corporate sector is required to obtain government's permission for the
issue of any capital, eqbity, debenture ar bond The& we have Foreign Collaboration
 Approval System It means that any project envisaging foreign collaboration has to Mixed Economy Model and its
secure prior permission of the government. Through price regulations also, the Rationale and Significance
government regulates the private sector, for many commodities, pricing of goods and
services is under government control. Government is involved in fixation of maximum
I prices for cammodities etc. The government has also accorded statutory protection to
I
labour through enactment of various laws.
Government, therefore, has been consistently making efforts to develop the mixed
economy system in the country. Private initiative and enterprise have been retained in
all the three sectors viz., agriculture, industry and services. But the state has been
providing direction and regulation to their economic activity through different
measures.

6.8 CONCLUSION
The experience of the various types of operational control used in India has not been
very satisfactory. The tendency to excessively rely on administrative control has led
I, to bureaucratisation, red-tapism and delay. Little progress has been made towards the
attainment of the socialistic objectives of equality of opportunity and .reduction in the
concentration of wealth. The better-off sections of the society have mainly benefited
from the development programmes. Nearly half the population of the country is living
B
below the poverty line. Unemployment has increased. Emergence of black money, tax
evasion, failure to check increase in prices reflects that the corrective measures
adopted by the government have not delivered appropriate results.
Still one need not conclude that mixed economy is not capable of attaining rapid
economic progress and social justice. The success of progressive measures like land
reforms, nationalisation of banks, development of basic and heavy industries and
increase in foodgrains production is indicative of the fact that it is possible to devise
and implement policies within the framework of the mixed economy. We have laid
the foundation of a self-reliant and sustained economic growth. Dependence on
foreign aid has reduced. There has been massive expansion of social and economic
infrastructure. Mixed economy system is a feasible proposition for a developing
country like India. Any redesign which may change the relative proportions, power
and position of the two sectors, cannot possibly change the mixed character of the
system.

Check Your Progre88 3

Note : 1) Use the space given below for your answers.
2) Check your answers with those given at the end of the unit.

I 1) Discuss the philosophy underlying the Industrial Policy Resolution of 1956.

j 1 ................................................... . . . . . . . . . . . . . . . . . . . .

I 2) Explain the various instruments used by the government to bring about planned
development in a mixed economy.
:I .......................................................................
Development Strategy and
Planning 6.9 LET US SUM UP
The mixed economy system can ka powerful instrument for theattainment of
social and economic development of the country. It has to be seen that efforts are
made to ensure that the existing inequalities are considerably reduced, distributive
justice is ma& an integral part of the planning process and suitable institutions are
created for wider and equitable sharing of the fruits of socio-economic growth. This
unit highlighted the concept of mixed economy, its rationale and significance. It
discussed the growth of mixed economy in India and the role of planning in this type
of economy. An attempt was also made to explain the features of mixed economy in
the country.

6.10 KEY WORDS

Bond : A bond is an investment certificate issued by a government or company which

shows that you have lent them an amount of money and that they promise to pay you
a fixed rate of interest. This enables the local holder to redeedencash his bond on
the stipulated date with the principal plus interest.
Cooperative Farming : Due to the non-availability of adequate land, it may not be
possible to increase the size of all small farms. Cooperative fuming thus becomes
relevant. Fanners with land below the desirable limit can pool their lands and operate
more efficiently. They continue to be the owners of their land and will share the
surplus produce as per their contribution of land
Debenture : Debentures are fixed-interest securities issued by the joint-stock
companies in return for longterm loans generally ten to forty years. They may be
redeemed (repayable by the borrower to the holder before the final date) or they may
be irredeemable. They are a debt for the corporation and do not form a part of its
capitat
EQIlitarian Society : Society advocating equality of opportunity for all.
Equity : Equities or equity shares are the ordinary shares in public limited liability
companies. The equity share gives a right to a claim on profits after all prior
claimants have been satisfied. Equity of a company is the value of the net assets as
represented by the ordinary shares.
Gestation Period :Period of time taken from the conception or initiation of the
project till its final completiodproduction stage. While small cottage industries
may need a few months gestation period, an industrial steel or energy plant may
require quite a few years gestation period
Industries (Development and Regulation) Act, 1951 :The chief objective of the
Act is the development and regulation of Indian industries in a manner benefiting the
policy of planning, socialistic society and other social, economic or political
considerations.
Industrial License :An industrial license is a written permission from the government
to an industrial unit to manufacture goods specified in the permission letter.
Inflationary Pressures : Inflation takes place when money incomes rise faster than
the income earning activities. An economy is under inflationary pressures, when the .
total effective demand in monetary terms rises faster than the increase in total supply
of goods and services.
Market Mechanism :The mechanism by which prices adjust themselves to the
pressure of demand and supply and in their turn operate to keep demand and supply
in balance. This is another name for price mechanism.
Subsidies : A payment by the state to help Industry or Agriculture to protect the
producers'/growers' interest and thus keep prices down. The system prevailed during
the British rule.
Sydem of Land Tenure :,Under this system, there were intermediaries between the
government and the cultivator. It had acquired different names in different places such
as zamindars, talukdars, jagirdars, etc. These intermediaries collected rent from
cultivators, a part of which used to be handed over to the government as land Mixed Economy Model and ita
revenue. The abolition of tenures was given topmost priority after Independence. Rationale and Slgniflcance

Tertiary Sector: In these occupations, only sewices are produced as distinct from
the primary and secondary sectors in which goods are produced and therefore, tertiary
occupations are commonly known as services sector. Transport, communication,
banking, finance and personal services such as the services of doctor, lawyers,
government servants, etc. are known as tertiary occupations.

6.1 1 SOME USEFUL BOOKS

Dhingra, LC. and V.K. Garg, 1989. Economic Development and Planning in India ;
Sultan Chand & Sons : New Delhi
Dutt, Ruddar and K.P.M. Sundhararn, t 989. Indian Economy ; S. Chand : New
Delhi
Kabra, Karnal Nayan, 1990. Nationalisation in India :Political Economy of Policy
Options ; VoL 10, Eastern Books :New Delhi.
Mishra, S.K. and V.K. Puri, 1989. Indian Economy: Its Development Experience ;
Himalaya : Bombay.
Ray, S.K. 1989. Indian Economy ; Prentice Hall of India ; New Delhi.
Sinha, RK. (Ed) 1986. Economic Policy and Planning in India ; Deep and Deep:
New Dehi.

6.12 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress 1
1) Your answer should include the following points :
Coexistence of more than one mode of ownership, control aad decisio*
making in aa economy
An economy where state owned means of production are used to promote
social welfare
An economy where state participates as an active partner with the private
enterprise in the process of development
An economy where sometimes the market forces determine the economic
dynamics and sometimes it is the planning agencies which influence the
economic system
All the economic systems in which different forms of ownership and control
can be found operative in different branches of the economy.
Your answer should include the following points :
India inherited a stagnant economy fmm the British
Private sector at the time of Independence was not prepared to perform an
important role in the development of heavy and basic industries
Private sector did not have the resources to undertake large economic
projects which involved high risks and initial investment
Government can coordinate the interrelated economic activities and
investments in an appropriate manner and bring about social and economic
justice
State can take a long-term view of economy and tolerate low profits and
financial losses
Indian planners were also aware of the shortcomings of excessive state
participation on economic development
Private sector was thus provided a significant role within the framework of a
planned economy.
Check Your Progress 2
1) Your answer should include the following points :
Large public sector
Davelopmmt Strategy and Private ownership of means of production and profit-induced commodity
PI.nning production
Decisive role of the market mechanism
Existence of a joint sector.
2) Your answer should include the following points :
Substantial development in basic industries is within the private sector
Larger proportion of the growth of GDP has been contributed by the private
sector
Agriculture is in private sector
Trading, bath wholesale and retail is in private hands
Small and cottage industries in India are with the private, sector
Private sector help in the effective mobilieetim of human and physical
capital.
Check Your Progrc~3
1) Your answer should include the following points :
The resolution of 1956 laid down three categories of industries
It wjdened the role of the state
The industries were categorised under three Schedules i.e. A, B and C
The categories were not water tight compartments, private sectors could
produce an item in category A and public sector in category C
The resolution aimcd at providing non-discriminatory treatment for the
private sector
It aimed at development of small-scale industries and removal of regional
disparities.
2) Your answer should include the following points :
Industrial Licensing
Land reforms
Subsidies
Development of tertiary sector
Other measures like Capital Issue Control, Foreign Collaboration Approval
System, Price Regulations and Labour Legislation.
 UNIT 7 ROLE OF PLANNING

i Structure
7.0 Objectives
7.1 Introduction
7.2 Meaning of Planning
7.3 Need for Planning
7.4 Machinery for Planning in India
7.4.1 Evolution of Planning
7.4.2 Institutions Engaged in Planning
i
7.5 Planning Process in India
i
I
7.6
7.7
Limitations of Planning in the Country
Conclusion
7.8 Let Us Sum Up
7.9 Key Words
7.10 Some Useful Books
7.1 1 Answers to Check Your Progress Exercises

!
I 7.0 OBJECTIVES

After reading this unit, you should be able to :

discuss the meaning of planning,
highlight the need for planning in India,
analyse the n a t m of planning in the country,
discuss the role of the institutions involved in plan farmulation, implementation,
monitoring and evaluation,
explain the process of farmulation of plan, and
state the limitations of India's planning process.

7.1 INTRODUCTION
Planning is generally associated with the development of an economy. Since plans
I
attempt to determine how we develop, they affect each and every sphere of the
society. The need for planning in India arose because of the complex nature of
problems of development. The development tasks of the country had to meet the
challenge of backwardness and poverty. India needed excessive resource mobilisation,
high rate of investment, technological advancement and institutional overhauling. For
all these reasons national economic planning became imperative.
Indian plans have repeatedly stressed their adherence to democratic planning They
have aimed at increase in production, economic growth, balanced regional
development, more employment opportunities, removal of poverty, self-reliance and
social justice. To understand the role of planning in India, we must try to familiarise
ourselves with the concept of planning in India, institutions engaged in planning,
objectives of our plans and the achievements and limitations of Indian planning
system. This unit would highlight these aspects and enable us to understand the
nature of planning in India

7.2 MEANING OF PLANNING

Planning means to determine what is to be done and how it is to be done. In a very
broad
- and
- - general. .way, planning
. .. - as a systematic
may be .treated - -.- - - -
pre-thought
- .
out
Development Strategy and process of determining the objectives of administrative effort and of devising the
PIanning means calculated to achieve them". According to Seckler Hudson, "planning is the
process of devising a basis for a course of future action". Planning, according to
Urwick, is "fundamentally an intellectual process, a mental pre-disposition, to do
things in an orderly way, to think before acting, and to act in the light of facts rather
than guesses. It is the anti-thesis of speculative tendency".
It is often said that planning is a rational method of decision-making and organisation.
It means that planning involves the following steps :
i) a clear perception and definition of the problem
ii) determination of objectives and availability of resources
iii) choice of activities and means for achieving the goals
iv) coordination of these mutually dependent means and activities
v) formulation of programmes
vi) choice of consistent and most effective methods of implementing the coordinated
programmes
vii) systematic review and feed-back in order to continue and sustain the process.
Thus planning is the process of devising a sound basis for a future course of action.
Planning is needed for all types of tasks, whether big or smalL It can be used by
countries at various stages of development and in different social and economic
conditions. Planning has to be flexible, dynamic and adaptable. It involves various
methods for the achievement of defined objectives. These methods are based on
foresight and clarity of goals.

7.3 NEED FOR PLANNING

The role of planning varies according to the social and economic conditions prevailing
in a country. Planning plays a very crucial role in'the developing countries. The need
for planning arises on account of the nature, magnitude and complexity of various
problems persisting in a system. Planning has sewera1 advantages.

Planning Enables Comprehensive and Sciendflc Understanding of Probiems

Planning enables, though does not necessarily ensure the emergence of comprehensive
and scientific understanding of the problems of a system. In the context of
development planning, it is essential that a comprehensive and meaningful
understanding of underdevelopment and the factors, forces and processes which hold
back progress is arrived at. This has to be the first step of development planning and
it stresses upon the need for having a systematic planning mechanism.

Revendon of Wartage and Improvement in Productivity

On the basis of a comprehensive and scientific understanding of the problems,
planning plays a crucial role in assessment, mobilisation and appropriate utilisation of
the resources available. It prevents underutilisation, mimtilisation and inappropriate
allocation of resources.

Highiights the Ron and Conr of Variour Declsionr

On account of extension of the field surveyed, sectorally and spatially, in order to
arrive at decisions, planning plays a useful role. It highlights the external
repercussions of various decisions. It brings out both the positive and negative
dimensions of thedecisions and enables the planners to take steps to make use of
either the positive effects or to lessen the negative effects of decisions.

Increase the Rationaiity of the Syrtem

Planning plays a very impoltmt role in increasing the rationality of the system by
avoiding arbitrariness, duplication, inconsistency, neglect of collective and long-term
interests. As a result, many of the defects of decentralised, uncoordinated decisions
baaed laxgely on the motivation of individual gain can be rectified by planning.

Preventa Incondrteney of Indiddad ~ e d r i o &on Interconnected Matterr

Through planning it is possible to combine in a mutually consistent way collective
social decirricmmakinn on imwrtnnt issues of ncneral social relevance with individual
decision-making in areas where minute details, local conditions and frequently Rolc of Planning
changing situations have to be taken into consideration.

Brings about Structural Change

Planning, rhrcugh collective decision-making and direct or indirect control over social
resources, enables the country to undertake large tasks and bring about changes in the
struzture or me syskzi. Through planning, motivational and informational handicaps,
which are the characteristic features of uncoordinated decisions, can be avoided

Enables Orderly Reconclliatlon of Conflicting Interests

?!YK play an important role in ushering an orderly change and preventing counter-
nrductive conflicts from emerging after the decisions are taken. It invites such
conflicts in advance so that efforts towards their reconciliation may be made at the
earlit-ct. Thus, by ensuring in advance that the various planned activities and changes
are mutually consisten: plans prevent wastage of resources and efforts.
Therefore, planning is a very crucial component of any system oriented towards
bringing about social and economic development. Planning has to play an active
organisational and decisian-making role from the stage of conception to the final
implemectatim and evaluation of the schemes. It facilitates socio-economic change in
accordance with pre-dztermined objectivee in a most effective and rational manner.
As we have read in tlie previous units of this block, India inherited a stagnant
economy marked with abject poqerty and lopsided growth. The nature of the tasks
and changes essential for d e v e l ~ p m eat
~ ' the time of Independen~ewas such, that it
could not have been hanaled =.*ithou, ,]per and concrete recourse to plamhg.
Private enterprises were not in a position to make full use of economic and human
resources. Agrarian relations, small size of land holdings, fragmented holdings, heavy
indebtness of the farmers, persistence of low productivity methods of production had
led to agricultural backwardness. Without a base of productive and prosperous
agriculture, which was the mainstay of more than two-thirds of Indians, there was no
possibility of modem industrial growth. The ruin of Indian handicrafts and absence of
cottage industries aggravated the crises further. This called for a systematic planning
process.
Modem infiastructural facilities for making use of natural resources, human
resources, science and technology, international trade and economic relations and for
directly meeting the need for various social services was not developed in a way and
to an extent conducive to development. The colonial state neglected these vital
investments and drained India of her precious resources. Winning of freedom,
unification of the country after partition, institution of Sovereign, Democratic
Republican Constitution made it clear that there was an urgent need for planning as a
consciously adopted means of economic organisation and decision-making with a
certain inevitable degree of mtralised control. The state had to intervene in order to
augment the resources for development. These tasks were not performed by the
bureaucracy during the colonial d e . Thus without conscious choice, coordination of
activities, large scale mobilisation of resources and centralised efforts, the problems
facing the country at the time of Independence could never have been tackled
properly. Planning, therefore, became a method of responding to the multifaceted,
interrelated and stupendous tasks of development.

Check Your Progress 1

Note : 1) Use the space given below for your anbwers.
2) Check your answers with those given at the end of the unit.
1) What is meant by planning ?
Development Strategy and 2) Discuss the need for planning in a developing country like India.
Plannins
.......................................................................
.......................................................................

MACHINERY FOR PLANNING IN INDIA

In a country like India where the bulk of the means of production are owned by
private individuals, planning should be such that it regulates and controls private
socieeconomic activities that contribute to development and is consistent with the
aims and actions of public policy. Planning in India aims at ensuring social and
economic development for the basic objectives laid down in our Constitution.
As mentioned in unit 6, Indian planning may be tenned as development and
regulatory planning in a mixed economy framework. It means that it is a planning
process for both public and private sectors. To understand the nature of planning
pmass in the country, we must have an idea about the evolution of planning in India
and different institutions involved in plan fonnulation and implementation.

7.4.1 Evolution of Planning

Planning was not an unfamiliar concept for I d a n leaders when freedom dawned in
1947. Awareness and hportana of planning was clearly visible even in the pre
Independence period. In 1936, Dr. M. Visveswarayya had published an essay on the
desirability and feaaibility of p l m h g for industrialisation. In 1938, National
Planning Committee under the chairmanship of Jawahdal Nehru did substantial
work in collecting material lbr pl.nning Later in 1944, the government established a
Planniq and Development Board A Planuing Advisory Board was also constituted
in 1946. These preIn&pendence efforta stress upon the unity of approach that our
leaders possessed for the achievement of common goals. After Independena, a
systematic process of planned development was initiated Since then our plans have
been trying to pramate balanced socieeconomic devebpment and welfare of Indian
people-

7.4.2 Inatitations Earned In Planning

There are various institutions that are involved in plan formulation, implementation,
monitoring and evaluation. The Natiohal Development Council (NDC), Planning
Commission together with its working p u p s and advisory panels, State Planning
Boards, District Planning Cells, Planning Cells in Central and State ministries and
Parliament are involved in this effort. Association with private sector is also secured
through various Development Councils a d representatives of Commerce and
Industry. It is a multi-stage, multi-level and multhagency planning system.
Planning Commission is a multi-member body which was established by the Cabinet
resolution of'March 15, 1950. Its objectives and hctions are to make an assessment
of the resources of the country, investigate possibilities of increasing these resources,
formulate a plan for the moot effective and balanced utilisatioa of the country's
resources. Planning Commission has to define the stages in which the plan should be
carried out, propose the allocation of r m u r a s for due completion of each stage. It
determines the conditions and machinery fa the successful implementation of the
plan by pointing out the factors hindering economic development. Planning
Commission also has to review from time to time the progress achieved in the
execution of each stage of the plan and recommend changes where required.
For evaluation of the plans, we have Programme Evaluation Organisation (PEO). It
was set up in 1952. It works under the general guidance of Planning Commission.
The main functions of PEO are to undettake evaluation studies, to assess the
aranrarnme results a&t the stated obiectives. to measure their h a c t on
beneficiaries and the socieeconornic structure of the society and to give advice to Role of Planning
State Evaluation Organisation that are involved with plan evaluation at the state
level.
Another very important organisation that helps in planning is the National
Development Council (NDC). The NDC acts as a bridge between the union
government, Planning Commission and state governments. It prescribes guidelines for
the formulation of the plan. It considers the plan formulated by the Planning
Commission. It also considers important questions of social and economic policy
affecting national development. It reviews the work of plan from time to time and
recommends measures necessary for the of plan objectives. F e NDC tries
to secure people's participation in planning and pays attention to the improvement of
administrative services and development of less advanced regions. .
Each state has a State Planning Board or State Planning Cell to help in plan
formulation. It prepares a plan for the state with the help of ministries and
departments in the state, representatives of districts and members of District Planning
Cells. The State Planning Board calls for the various projects from the district, which
are then combined on the basis of priorities and fmancial implications and a state plan
is prepared and placed before the Planning Commission.
The districts have District Planning Cells for plan formulation. Soon after state
budget is voted in the assembly, the various departmental heads prepare a district-
wise break up of the outlays provided in the plan. The district authorities together
with District Planning Cells prepare a district plan which is an aggregation of
departmental schemes received from the state government.

The Constitution of India includes the subject of 'social and economic planning' in the
Concurrent List India draws up plans in the form of five year programmes. The
formulation of five year plan is a time-consuming and complex process. This process
can be divided into five stages.
Rnt Stage :This stage begins three years before the commencement of a new plan.
Studies are undertaken by the Planning Commission to examine the state of economy
and scrutinise the problems. Tentative conclusions out of this effort are arrived at and
a framework of the plan is drawn This framework is submitted to the central cabinet
After this it is placed b e f m the NDC. The NDC indicates the rate of growth and
broad priorities to be assumed for the purpose of W e r work on the plan.
Second Stage: Planning Commission works out general dimensions of the plan in the
light of guidelines given by the NDC and a draft memorandum outlining the features
of the plan is prepared.
Third Stage : Drafi memorandum is placed before the NDC and after NDC's
consideration, the work for preparation of draft outline of the plan starts. This draft
plan is open for the comments of state and central ministries. After NDC's approval,
this plan is circulated b r public discussion. It is then considered by Informal
Consultative Committee of Parliament and also by Parliament as a whole.
Fourth Stage :Planning Commission holds detailed discussions with central
ministries and state governments regarding their plans. Discussions are also k l d with
npresentatives of mJor organised industries in the private sector. Planqhg
Commission then prepares a paper in which principal features of the issues needing
more consideration are outlined. This paper is placed before the NDC and central
cabinet for their consideration. Final report on the plan is based on the conclusions
reached on this paper.
Fiicb S w : A draft of the final report on the plan is considered by central ministries
and state governments and then submitted for approval of the NDC and central
cabinet After their approval it is presented before Parliament for discussion and
approval.
After the plan is formulated, it is divided into annual plans for convenient
I--l---.-L- ---I -Ilu-&- S m- -I-- 1- l-l---~-> L-. *L- --A-
Development Strategy and governments. Planning Commission and the NDC are not involved in plan
Planning implementation. Planning Commission only determi~esthe machinery for proper
implementation of plan, it does not by itself carry out the formulated plan. Monitoring
and evaluation of plans is done by the Planning Commission and the NDC through
Programme Evaluation Organisation and other agencies engaged in appraisal of plans.

Check Your Progress 2

Note : 1) Use the space given below for your answers.
2) Check your answers with those given at the end of the unit.
1) What are the functions of Planning Commission ?

2) Discuss the process of planning in Inii;

--
7.6 LIMITATIONS OF PLANNING IN
THE COUNTRY
Our Five Year Plans have broadly aimed at increase irl growth rate, extensive
modernisation, establishment of socialistic pattern of society, attainment of self-
reliance, up!iftment of backward classes, balanced growth, systematic regional
development.,removal of poverty and promotion of heavy and capital goods industries. All
these objectives wil: be discussed in detail in unit 8 of this block But here it is essential to
note that despite four decades of planning, we have not been able to solve the
problems of unemployment, under-employment, rise in prices and poverty. Regional
ineqiialities continue to persist. We have not been able to utilise our manpower
resources to the maximum extent Our growth rate has been inadequate.
Concentration of economic power has increased. Thus there has been a wide gap
between targets md achievcments. These problems can be attributed to several
limitations in our planning process.
Administrative Refo~msCommission (ARC) in its Repdrt on the Machinery for
Planning ( 1968). noted that there was a lack of proper coordination between the
Planning Commission and the private sector. Private sector is only involved at the
time of plan formulation, even here the consultations between the two are held very
rs:,ely. The ARC criticised the functioning of Central Advisory Council on industries
and various Development Councils which have been created by the government for
consultations with the industrial sector. It noted that these councils suffer from lack
of proper leadership and technical support and thus have been generally ineffective.
The Planning agencies also suffer from lack of trained personnel with requisite calibre
and experience. There is lack of coordination between the re!ated sectors of economy
at the time of plan formulation and implementation. Moreover, implementation of the
plans has been rather inadequate. While form'ulating plans, the practicability of the
schemes must be kept in view. Proper attention has to be paid to agencies and people
involved in implementation and evaluation of plans, and a proper feedback
mechanism has also to be established.
Economic development alone will never lead to overall development of the country, it
is, therefore, imperative to bring about structural and institutional changes in the Role of Planning
society. Usually it has been found that there is an absence of realism in planning.
Though agricultural production has increased, process of land reforms has been very
slow, the small and landless labourers continue to live in poverty. Planning in India is
not geared towards undertaking continuous and scientific investigation of social
obstacles such as the kinship and hereditary relations based on caste system which
come in the way of economic reforms and development. Financial incentives to
reduce backwardness are not enough. Certain non-economic, political and social
factors have to be kept in mind.
Our plans have not been able to adhere to time schedules, as a result there have been
cost overruns. The process of execution of plans is so slow that the financial outlays
for plans become insufficient after a certain period of time. Expenditure increases
because with the passage of time the prices go up. There is no emphasis on sense of
urgency in plan implementation and evaluation. Supervision of plans at all the levels
has been ineffective. Plan execution and evaluation is marked with red tape and
wastage of resources.
Regional and Area Planning in the strict sense of the term has never been introduced
in India. Planning in India has been sectoral. Plans at the state, district, block and
village levels have just been mere break-ups of sectoral plans. Planning at the grass-
root level is very weak. The district, block and village bodies merely collect data for
the state and central governments. No full-fledged planning is done at these levels.
Usually the policies are handed over from above and people at the local levels are
required to fill in this framework. Participation of people and voluntary agencies in
planning has also been quite inadequate.

7.7 CONCLUSION

Though our planning process is facing several problems, the situation is not all that
grlm. We have been able to maintain a moderate growth rate. There has been a
growth of infrtstructure and basic industries. We are no longer dependent on food
imports. Education, social services and human capital has developed and expanded to
some extent. Domestic investment has increased. There has been development of
economic infrastructure, energy resources, irrigation works and transport facilities.
Industrialisation nas been quite impressive. There has been a diversification and
expansion of India's industrial capacity with public sector playing a leading role.
Indigenous production of consumer items has also gone up.
Proper emphasis on administrative research and evaluation of plans, simplication of
procedures of work to avoid delay and reduce costs, better coordination between
various sectors of economy on interconnected tasks, better trained personnel and
development of grassroot planning can remove the bottlenecks confronting the
planning system in India.
No effec;ive planning can be possible without people's participation. People have to
be not just the goals but also the means of development strategy. People and voluntary
agencies have to be involved in plan formulation and decision-making, implementation
of planned activities, distribution of benefits of development and monitoring and
evaluation of plans.

Check Your Progress 3

Note : 1) Use the space given below for your answers.
2) Check your answers with those given at the end of the unit.
1) Briefly discuss the objectives of planning in India.
Development Strategy and 2) What are the limitations of our planning process ?
Planning
.......................................................................

7.8 LET US SUM UP

Thus we saw that planning is an indispensable component of any country committed

to the goals of socieeconomic development Plan formulation, implementation and
evaluation calls for the participation of various planning agencies, central and state
ministries, Parliament, private sector and voluntary organisations. Our plans have
always aimed at bringing about social, economic and structural changes in the country
in order to attain systematic and balanced growth. The unit has analysed the system
of planning in India by explaining the importance of planning, evolution of planning
and the nature of planning process in the country. India's plan objectives and various
constraints behind proper fulfilment of these goals have also been discussed in
the unit

7.9 KEY WORDS

Economic Overheads : Building of economic overheads means development of

network of roadways, construction of irrigation and hydreelectric works, development
of railways and other capital intensive projects which are economic assets for the
country.
Fragmented Holdings : These are very small holdings of land that are formed due to
subdivision and fragmentation of land into small parts. This type of fragmentation
leads to wastage of agricultural land, rise in cost of agriculture, and underutilisation
of labour and capitals,
Kinship Relations : Family relations or relations between close and distant relatives
that govern the social behavioural pattern. They are rooted in the caste system of
Indian society.
Regional Planning : It involves coordination of various sectors of the economy in a
specific region, these sectors have to be correlated with certain natural and economic
homogeneities.
Sovereign Socialist Secular Democratic Republic : The preamble (serving the
introduction) to our Constitution declares the ultimate sovereignity of the people of
India and that the Constitution rests on their authority. The Constitution envisages
that the state representatives have to be elected by the people. All the religions in the
country will have the equal status, prestige and respect from the state. The
Constitution also envisages a democratic form of government infused with the spirit of
justice, liberty and equality. The words 'secular' and 'socialist' were inserted in the
preamble of the Constitution by the 42nd Amendment Act, 1976.

7.10 SOME USEFUL BOOKS

Avasthi, A. and S.R Maheshwari. 1988. Public Administration ; Laxmi Narain

Agarwal : Agra.
Jain, RB. 1976. Contemporary Issues in Indian Administration ; Vishal
Publications : Delhi.
Sarup, A and S. Bramhe. 1990. Planning for the Millions ; Wiley Eastern : New
Delhi.
Clppal. J.S. 1984. Indian Economic. Planning ; Macmillan : Delhi.
 Role of Planning
7.1 J ANSWERS TO-CHECK YOUR PROGRESS
EXERCISES

Check Your Progress 1

1) Your answer should include the following points :
Planning is a systematic prathought out action
It involves clear perception of the problem, determination of objectives,
choice of means, formulation of a plan, ascertaining suitable machinery to
carry it out and proper evaluation of the plan
Planning is needed for all kinds of tasks committed towards development.
2) Your answer should include the following points :
India inherited a stagnant economy
.Private sector was not in a position to solve the problems prevailing at that
time
There was a need for development of agriculture and industry, infrastructural
facilities also had to be developed
Planning enables a comprehensive understanding of problems, avoids wastage
and leads to increase in production
Planning increases the rationality of the system, prevents inconsistency of
individual decisions and brings about structural change.
Check Your Progress 2
1) Your answer should include the following points :
Planning Commission assesses the resources available
It formulates plans for effective utilisation of resources
Defines the stages in which plans should be carried out
Allocates resources and determines the machinery for plan implementation
Points out the factors hindering development
2) See Section 7.5
Check Your Progress 3
1) Your answer should include the following points :
Plans aim at strengthening the socialistic pattern of society
They aim at increasing the growth rate
Bringing about balanced regional development
Accelerating balanced gmwth
Provision of employment opportunities
Upliftment of backward classes
Promotion of self-reliance.
2) Your answer should include the following points :
lack of coordination between related sectors of economy at the time of plan
formulation and implementation
Absence of grassroot planning
Lack of people's participation
Absence of regional planning
Increase in expenditure due to non-adherence to time schedules.
UNIT 8 GOALS OF DEVELOPMENT

Structure
Objectives
Introduction
Concept of Development
Development Goals in India
Our Plan Objectives
Conclusion
Let Us Sum Up
Key Words
Some Useful Books
Answers to Check Your Piogress Exercises

8.0 OBJECTIVES
After reading this unit you should be able to :
discuss the meaning of development and highlight its relationship with economic
growth,
state the goals of development in the country,
state the goals of development in the country,
discuss the diffcrent objectives of our Five Year Plans, and
highlight the problems and loopholes hampering the proper achievement of
development goals.

8.1 INTRODUCTION
Development is a complicated and multi-faceted concept. The goals of development
depend on the concept of development which in turn depends on the social, economic
and political conditions prevailing in the country. Development can neither be
identified with economic growth, nor with the level of per capita income. It is a
holistic and integral concept dealing with all the aspects of social existence in their
organic unity.
Development goals or objectives can be short term as well as long term. They can
also be real or stated, depending on whether they are actually or effectively pursued
or nof. India adopted development planning within the framework of a mixed
economy system with a conscious choice of a number of objectives or goals. The
primary objective which overshadowed every other objective is the growth of output.
Social equity is the other objective which assumed a lot of importance because of its
relevance to Indian conditions marked by unemployment, poverty, income inequalities
and regional imbalances. Other goals of development which our country has been
pursuing are attainment of modernisation, industrialisation and self-reliance. This unit
will try to clarify the relationship between development and growth and highlight the
different goals of development which have received a good deal of emphasis in all the
Five Year Plans. An attempt will also be made to bring out the problems that we are
facing in the formulation and implementation of development strategies and
programmes.

8.2 CONCEPT OF DEVELOPMENT

Before analysing the various goals of development, it is essential to know the meaning
of the term 'development'. Though the concept of development has been highlighted
in unit 1 of block 1, it is necessary to bring out the relationship between development
and growth. Development is a difficult concept to define, generally speaking, it means
 moving to the next stage of condition which is better. According to Hahn-BeerrLee Goals of Development
"Development is a process of acquiring a sustained growth of a system's capability to
cope with new, continuous changes toward the achievement of progressive political,
economic and social changes". Development means change plus growth. According to
Gerald M. Meier, the definition that would gain wide approval is one that defines
economic development as the process whereby the real per capita income of a country
increases over a long period of time, subject to the stipulation that the number below
an "absolute povertyline" does not increase, and that the distribution of income does
not become more unequal.
The term development should not be equated with the term growt!!. Though growth is
a precondition to development; mere growth of an economy does not make it a
developed economy. Charles P. Kindleberger rightly asserts that economic growth
I
merely refers to a rise in output whereas economic development implies changes in
technical and institutional organisation of production as well as in distributive pattern
of income. Compared to the objective of development, economic growth is easy to
realise. By mobilising larger resources and raising their productivity, outpllt level can
be raised. The process of development is far more extensive. Apart from a rise in
output, it involves changes in the composition of output as well as shift in the
allocation of productive resources so as to ensure social justice. In some countries,
the process of economic growth has been accompanied by economic development.
This, however, is not necessary. Though development without growth is
inconceivable, growth without development is possible.
In India, the planners realised the fact that the concept of development must
incorporate the following elements :
i) Economic growth cannot be equated with development. In fact, there is no
guarantee that growth of investment, capital formation, industries and national
income would by themselves bring about overall development, which would lead
to better lives for the poor. Hence development must be viewed in its totality as
one single, unified concept incorporating social, political, cultural and economic
dimensions.
ii) Social justice is basic to development
iii) Development has to be a participative exercise and. not one in which a select
minority of the elite controls and directs the process of development
iv) Self-reliance is an integral part of development. It means that the developing
countries should be able to participate in the development process on the basis of
full equality in international relations for the mutual benefit of all concerned.
v) Due to scarcity of natural resources, it is essential that the pursuit of growth
should lead to neither excessive nor imbalanced use of those resources in order to
maintain their natural balance.
These aspects of development have been given due emphasis in our Five Year Plans.
The next section would deal with these aspects.

8.3 DEVELOPMENT. GOALS IN INDIA

Growth and development continue to dominate the public policies of both the
developed and developing countries. Everywhere, the collective efforts of the state are
given a role in development, which varies qualitatively and quantitatively among
different countries. This depends on a number of factors, the most important being the
objective or the goal of development It means that there is a different understanding
of the concept of development in digrent countries. These difTerences relate to the
variety and diversity of goals of development adopted by different countries. The
differences in the objectives of development reflect the differences in the conditions
and approaches of different countries depending on their history, natural conditions,
political and social system, place in the world community and values. The concept of
development in India is also dependent upon the goals of development in the country.
These objectives are self-reliance, industrialisation, modernisation, economic growth
and social justice. We will now discuss these goals in dctail.

Economic ~ r o w t h
Development Strategy and have tried to increase the stock of capital goals, viz., machinery, tools, equipment and
Planning infrastructure facilities This is essential as it helps our labour force to produce a
steady flow of goods and services which ultimately leads to an increase in the rate of
savings and capital formation. Thus development through increase in production has
become the corner stone of Indian planning. It has featured in all our development
policies and strategies. It is clearly evident from the very character of Indian Plans,
that major focus of our planning has been on economic growth. The underlying
objective behind the setting of plan targets and allocating the resources to various
sectors has been economic growth.
The era of economic planning, starting with the First Five Year Plan (1951-56) laid a
target of 2.1 per cent per annum increase in the national income. The Second Five
Year Plan envisaged a target of 4.5 per cent increase in national income by laying
emphasis on the development of the public sector. The Third Plan aimed at securing a
5.6 per cent annual increase in national income. It laid stress on raising agricultural
output The main focus of the Fourth Plan was growth and stability. The Fifth Plan
aimed at 5.5 per cent increase in national income. It treated the objective of economic
growth as a complementary goal to the other goals of eradication of poverty and
achievement of self-reliance. The Sixth Plan aimed at 5.2 per cent increase in the
Gross Domestic Product (GDP). To achieve this target, it laid emphasis on
improving the efficiency level of existing capital stock utilisation, raising the
investment rate, making the investment pattern more rational and keeping the balance
of payments within certain limits. The Sevmenth Plan aimed at 5 per cent per annum
increase in the national income.
Thus the major thrust of our plans has been on economic growh While evaluating
the performance of a plan, its growth rate is always looked into. High rate of
production is considered to be essential to meet the basic needs of the people. Thus
emphasis has always been laid on utilisation of our resources in an appropriate
manner so as to satisfy the needs of our population. It is believed that growth
impulses arising from our production process would gradually spread to the entire
economy. The role and importance of suitable technology in increasing production
has also been stressed upon. Right from the beginning of our planning era, we have.
been giving highest priority to economic growth by introducing ways for increasing
production in the economic sphere. Increase of production is regarded as an
essentiality for removal of poverty, establishment of just and equitable society and
raising the standards of living of the people.
Our plans also seek to achieve a balanced rate of growth, that is, a balance between
industry, agriculture, light industry (industry producing consumer goods) and heavy
industry (industry producing capital goods) has been sought by our plans.

Self-reliance
A country can be regarded as economically independent only if it follows the path
of development according to its own needs, resources and values. The developing
countries such as India cannot become self-reliant unless and until they are able to
detach themselves from the dependency relationship which they have with other
countries in trade, investment and technology.
Our plans stress upon the different dimensions of self-reliance :
i) reduction in the dependence on foreign aid
ii) diversification of domestic production
iii) reduction in imports for certain critical commodities ; and
iv) promotion of exports to enable us to pay for imports from our own resources.
As foreign exchange can become a constraint in promoting development, its
management has been sought by our Five Year Plans through emphasis on self-
reliance and import substitution. We have been trying to achieve import substitution
by development of machinery manufacture within the country. We are also trying to
buildup our capacity in the fields of project consultancy and design engineering.
Through achievement of self-reliance, a country is able to ensure a more equal
relationship with the world economy and reduce its vulnerability to outside pressures
and disturbances. Self-reliance has to be sought along with the objective of economic
nrrr..* h "...A ..A+ "t +ha nrm+ rrF..rrr...+h ns
*arm rslF ra1:nrna ..hrr..lA rrrt ha nrr..&."nA
 Goals of Development
foodgrains, defence etc. It is needed from the point of view of national security. In the
remaining sectors, only self-reliance is sought, it means that in these areas, normally
demand is satisfied from domestic production, but where it is necessary to import
from other countries, purchases are made on the basis of foreign exchange earned
through exports. That is, demand for foreign exchange (equal imports) is set equal to
supply of foreign exchange (equal exports). This is the essence of self-reliance.
In the 1 9 5 0 India
~ ~ was dependent on foreign countries because the output of
foodgrains was not adequate, basic industries were virtually non-existent and rate of
savings was sufficiently low. Due to these reasons, it became imperative for Indian
planners to give due emphasis on the goal of self-reliance in our plans. Self-reliance
did not receive much emphasis in the first two Five Year Plans. In the Third Plan, for
the first time, it was stated that "the country would endeavour to become self-reliant
over a decade or so". It stated that "the balance of payments difficulties that the
country is facing are, not short term or temporary, they will continue for several years
to come. External assistance is essential for this period, but the aim must be to make
the economy more and more self-reliant, so that it is able to support within a period
of ten or twelve years, an adequate scale of investment from its own production and
savings. The normal flow of foreign capital may continue but reliance on special
forms of external capital has to be reduced progressively and eliminated". The Fourth
Plan concretised this goal and determined the time phasing for its realisation. The
subsequent plans have also laid stress on the objective of self-reliance.

Indurtrlalimtion
As we know the central theme of India's planned development has been an
increase in the growth rate of national income. To achieve this, the need for
development of capital goods and basic industries was strongly felt at the be- of
our planning era. Thus the development of capital good industries has been assigned a
key role in the growth profile of the country. Emphasis has been laid on the
production of basic materials and goods like coal, steel, machines, electricity,
chemicals etc. This is essential for setting up of infrastructural facilities end
accumulation of capital. Despite the initial problems of industrialisation such as
production of only heavy and basic goods, non-production of consumer goods and
lack of increase in employment opportunities, it is felt that emphasis on this objective
ultimately leads to expansion of capital and consumer goods, availability of job at
higher levels of income, capital formation a d increase in rate of growth.
Our plans have given a high priority to the objective of industrialisation. They have
laid emphasis on organising an adequate supply of consumer goods. Cottage
industries are being promoted to produce consumer items. Such type of industries do
not require large amount of capital and are also labour intensive. Our stress on
increased rate of savings and investment, import substitution and export expansion
has given a b o a t to our industrial production. In order to ensure the speedy
implementation of this strategy for industrialisation, large amount of funds have been
allocated to the industries in our Five Year Plans. Our Plans have accorded a very
high priority to the development of certain sectors of the economy such as industry
and mining, power and transport and communications.

Moderni~tion
As per the Sixth Five Year Plan document, the term 'modernisation' means a variety
of structural and institutional changes in the framework of economic activity. A shift
in the sectoral composition of production, diversification of activities, advancement of
technology and institutional innovation'have all been a part of the drive for
modernisation. Indian planners have always emphasised the role of science and
technology in bringing about development Application of science and technology in
production raises the output leveland accelerates the pace of economic growth. Our
plans have stressed upon the need for research and development (R & D) in order to
avoid our dependence on foreign technology. Though structural diversification
commenced with the Second Five Year Plan, the concept of modernisation was
clearly spelt out only in the Sixth Five Year Plan.
To bring out modernisation, efforts have been made to promote industrial growth and
diversification. Besides this, the strategy for modernisation, involves a shift in the
industrial sector towards industries producing basic materials and capital goods and
the growth of the public sector in industry. The development of the public sector has
Development Strategy and been the principal element in our drive for industrial diversification. The public sector
Planning as we read in unit 7, plays an important role in industries such as steel, petroleum,
fertilisers, petmchemcials etc. The crucial role of private sector has also been
recognised by our government and it has been accorded due recognition in our plans.
A m t of network in the form of banking institutions has been established to promote
and finance private investment in industry. The government has set up a variety of
institu!ions to assist in the provision of infrastructure, supply of raw materials and the
development of marketing and technology. Small scale industries and artisans are also
being protected through product reservation i.e. by restricting production of specified
commodities by small-scale industries and fiscal concessions. Besides industry, our
plans have also aimed at achieving modernisation in the sphere of agriculture. As we
read in unit 5 of this block, at the beginning of our planning era, our agricultural
growth was not much because of the then existing outmoded land tenure system, the
primitive technology of cultivation and lack of infrastructure for raising productivity.
Thus modernisation in this field was a very difficult task. The elimination of
zamindari and other ~ntermediarytenures, spread of high-yielding varieties and
extension of irrigation has brought about considerable change in the technology of
cultivation. The elaborate network of agricultural research and extension set up,
production of major food grains and horticulture crops, establishment of a system of
support prices, procurement and public distribution of goods are the results of
modernisation

Check Your Progress 1

Note: 1) Use the space given below for your answers.
2) Check your answers with those given at the end of the unit.
1) Bring out the relationship between growth and development.

2) Discuss the need for having a self-relian~economy.

........................................................................
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3) What is the strategy adopted by India towards attainment of industrialisation ?

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

4) Discuss the strategy for bringing about modernisation in India.

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Sociai Justice
One importact cause of underdevelopment and backwardness is widespread and
multi-dimensional inequalities. Social, economic, political and cultural spheres in
India are marked by serious disparities. There is no use of political rights (guaranteed
in the Constitution) if social inequalities continue to persist. For removing poverty,
unemployment, regional imbalances and income inequalities and for making
democracy effective, it is very essential to introduce greater equity. Indian plans have
stressed upon the transformation of her economy into a socialistic pattern of society.
The Second Five Year Plan highlighted the need for a socialistic pattern of society
within the framework of a mixed economy. It stated that the basic criterion for
determining growth should not be private benefit but social gain. It sugge~-:d that the
major decisions regarding planning should be made by agencies committed to social
upliftment and that the less privileged classes should benefit most from our plans. The
concentration of income and wealth must be reduced and the public sector should
play a very crucial role in the economy.
The objective of Social Justice laid down in our plans, aims at
i) increase in the living standards of the poorest groups in society
ii) reduction in inequalities in asset distribution
iii) removal of unemployment
iv) bringing about balanced regional growth ; and
v) upliftment of backward classes.
We will now discuss these objectives briefly.
i) Reduction in Income Inequalities
Another way of achieving social justice in India can be reduction in income in-
equalities and concentration of wealth. The issue of income inequalities in India is
linked with the inequalities in the ownership of agricultural land and concentration of
economic power in the industrial sector. This is a cause of inequalities in rural areas.
In urban areas, also, inequalities due to the rapidly growing assets of big business
houses have been growing. Income disparities between urban and rural areas are also
on the increase. Economic growth and industrialisation, instead of solving the
problems, have aggravated them further.
According to the Planning Commission, the existing economic inequalities in India
have their roots in the remnants of the feudal system and privileges associated with
them, and these semi-feudal relations must be destroyed. In order to achieve this
objective, the Government of India through its plan objectives has made a
commitment to eliminate all intermediaries from the area of agriculture by appropriate
legislation in this regard. Ceiling on agricultul-al holdings could be another measure
towards elimination of inequalities. One more step in this connection could be fixing
up of ceiling on incomes.
Ln developing countries, there are mainly three source5 of high income :
i) capital gains receipts
ii) entrepreneurial profits
iii) salaries and perquisites of business executives.
Thus according to the Planning Commission, removal of inequalities should involve
firstly, restriction of capital gains and speculative profits and secondly, our taxation
system must be geared to the need of detecting the income from the above mentioned
sources and must punish the tax evaders severely. Other measures that can be
undertaken in order to reduce inequalities are rise of agricultural production,
development of agro-based industries and social services, ensuring fair price to the
products of farmers, increasing the rate of growth, improving the productivity of
weaker sections and fair dispersal of ownership of means of production.

ii) Removal of Poverty and Unemployment

Our Five Year Plans have stressed on removal of poverty and unemployment through
creation agd expansion of job opportunities. Our plans do not merely envisage the
establishment of labour intensive industries, small scale industries and promotion of
handicrafts, but also to make employment productive and output per worker
higher. The plans aim at fuller utilisation of available production capacity, provision
of credit and other assistance to people living below the povertyline, small and
marginal cultivators and e l i ~ i h l enersnns seekinn self-emnlnvmcnt
Development Strategy and There is also a provision for special employment programmes in areas, specially
Planning
nual, with high incidence of unemployment and poverty. Eradication of poverty has
featured in all the Five Year Plans. The real thrust on poverty removal came with the
Fourth Plan but it was the Sixth Plan that replaced the term 'poverty removal' with
'poverty alleviation'. The Sixth Plan approached the problem of poverty alleviation hi
three major ways, firstly, by identification and measurement of poverty, secondly, by
developing realistic targets and thirdly, by formulating specific programmes to match
the tagets. In the Fourth Plan, emphasis was laid on removing poverty completely,
since for total eradication, reduction is a major step, the government's approach
towards Sixth Plan changed towards realistic norms and emphasis was rightly placed
on moving step by step towards the goal. The Seventh Plan continued with similar
stress and the Eighth Plan will also lay a good deal of stress on poverty alleviation.
A major step towards poverty alleviation is land reforms. It includes measures such
as abolition of intermediary tenures and tenancy rights, fixation of ceiling on land
holdings, development of institutional credit and marketing, improvement of
agriculture taxation, agriculture extension education, supply of modem inputs etc.
Another step towards this goal is poverty alleviation programmes. Some important
programmes are the Integrated Rural Development Programme (IRDP), Training
Rural Youth for Self-Employment (TRYSEM), National Rural Employment
Programme (NREP). These programmes aim at creation of employment opportunities
for rural poor and landless, provision of training for those seeking self-employment,
creation of self-employment opportunities, establishment of training centres and
assisting rural poor thrwgh credit and inputs.
We have a special programme for helping rural women and children known as
DWCRA, thai is Development of Women and Children in Rural Areas. It seeks to
provide income generating activities to women which will have a positive impact on.
the economic and nutritional status of their families.
In the past also we have had programmes like the Community Development
Programme which was launched in 1952, which aimed at making rural people self-
reliant. Its objective was to inculcate among them a feeling of cooperation through
better utilisation of human resources and science and technology. Then there were
Intensive Agriculture District Programme (IADP), High Yielding Variety Programme
(HYVP) and Multiple Cropping Programme which were started in the 1960s to give a
boost to agricultural production and attain self-sufficiency in foodgrains production.
Rural Works Programme was launched in 1967. It aimed at providing employment
during the lean agricultural season. Small Farmer Development Agency (SFDA) was
started in 1969 which provided assistance to target groups and credit institutions by
ensuring credit and subsidies.
Pilot Intensive Rural Employment Projects (PIREP) and Crash Scheme for Rural
Employment (CSRE) were started as employment generation schemes through
execution of labour intensive projects. Minimum Needs Programme (MNP) aimed at
meeting the basic needs of the poor in order to enable them to improve their standard
of living It provided for elementary education, rural health, water supply, electricity,
rural roads, assistance to landless for rural housing and nutrition and improvement of
urban slums. Food For Work Programme (FFWP) which was started in 1977 aimed
at developing nual economy and generation of employment.
Thus, all these programmes not only aimed at removal of poverty and unemployment
but they also tried to curb the rural-urban migration. They aim at reducing the
problems of unemployment and poverty in urban areas too, as most of the problems
are a result of influx of rural population in urban regions. For urban areas, a new
programme called the Self-Employment Programme for Urban Poor (SEPUP) was
initiated in the Seventh Plan Period.

iii) Removal of Regionel Imbalances

As we read earlier, if development has to be fruitful then it has to be a balanced
development, that is, development of all the regions in the country. Growth of a few
areas or regions at the cost of others will always have negative effects on the
economy of a country. The Finance Commission, thus, pays special attention
to backward regions o f m r country at the time of allocation of funds. The
policy is to locate public sector undertakings in backward regions and encourage the
private sector to invest in those areas.
To attain balanced development, differentlocation centres have been evolved by the Goals of Development
planners for the two set of industries, that is the capital intensive, large scale
industries and labour intensive small scale consumer goods industries. The need for
dispersal of industries as a means of attaining a balanced development of the
economy as a whole has been emphasised in the industrial licensing policy also. The
Planning Commission is of the view that the States can play a major role in the
reduction of regional disparities. The States are asked to prepare their plans in a
manner that would result in the reduction of disparities between different areas and to
give due attention to backward regions, while distributing the plan resources between
differe~tprogrammes.
The Fourth Five Year Plan provided for formulation of a national policy for
development of backward areas in the country. The policy laid down the need for
undertaking the identification of areas, selectioil of special area development schemes
and evaluation of policy and instruments for the implementation of the policy. The
main objective of the area development planning was to provide a concrete
programme for sustained overall development of the area As a result some Area
Development Programmes were started such as the Hill Area Development
Programme (HADP) which aimed at maximising agricultural production in hilly areas
through demonstration campaigns which were organised to teach the farmers about
the need for improved seeds, pesticides, fertilisers, new agricultural technology etc. It
provided for development of forestry, better marketing and credit facilities in hilly
regions. Drought Prone Area' Programme (DPAP) aimed at restoration of ecological
balance, development of agricultural and d i e d sectors jn drought prone areas through
optimum utilisation of land, water and livestock resources. Desert Development
Programme (DDP) was launched in 1977-78 as central sector scheme to specially
cover extremely arid areas. It aimed at curbing the growth of deserts through
afforestation, conservation of surface water and grass land development. There was
also a special area development programme for tribal regions known as Tribal Area
Development Programme (TADP). It was launched in 1972, it aimed at increasing
agricultural production, developing animal husbandry, horticulture, constructing
roads, controlling shifting cultivation, conservation of soil and land and cattle
development. These programmes, thus aim at making the backward areas of the
country economically developed.

iv) Upllftment of Backward Classes

Our plans have always included programmes for social welfare. Special schemes for
the betterment of the disadvantaged groups has been an important feature of the
plans. In the Fifth Plan, the National Programme of Minimum Needs was conceived
as a means of enabling the disadvantaged areas and weaker sections of the society to
achieve parity in the basic social consumption levels.
Special programmes have been started for the welfare of scheduled castes and tribes.
The Fifth Plan has evolved tl new strategy of specific subplans for tribal areas
operating through the Integrated Tribal Development Projects (ITDPs). The long
term objectives of these tribal subplans are to bridge the gap between the level of
development of tribal and other areas and to bring about a qualitative change in the
life of the tribal community. With the Sixth Five Year Plan, three more programmes
were started :
i) the Special Component Plan of the states and central ministries which tries to
provide benefits to scheduled castes and scheduled tribes from general sectors of
plans of states and central ministries. Through income generating schemes and
provision of basic amenities, it aims to benefit the scheduled castes and tribes
financially and physically.
ii) the Special Central Assistance Scheme--aims to provide for development of
scheduled castes and tribes through income generating schemes.
iii) Scheduled Castes Development Corporations (SCDCs) in the States - The
SCDCs are visualised as an interface between poor scheduled castes, and
financial institutions in respect of bankable schemes of economic development

Besides these programmes, there are other ways of safeguarding the rights of SCs and
STs in India Tne Special Officerfor SCs and STs is appointed vide Article 338 to
investigate all matters relating to safeguards provided for SCs and STs under the
Development Strategy and 3 of the Fifth Schedule provides for an annual report on the STs to be sent by the
Planning Governor to the President who can give direction to the Governor regarding any
important matter concerning tribals and harijans. Para 4 of the Fifth Schedule
provides for the establishment of Tribal Advisory Councils in States. Para 5 of the
Schedule calls upon the Governor to make regulations for the peace and good
administration of any area in a State which has been identified as the scheduled area.
Article 275 provides funds from the Consolidated Fund of India for raising the levels
of administration of scheduled areas in the form grants-in-aid to the States.

8.4 OUR PLAN OBJECTIVES

O L Five
~ Year Plans, as we read in unit 7 of this block and as it is clear from the
preceding sections of this unit, have consistently placed emphasis on the attainment
cf the objectives of self-reliance, social justice, industrialisation, modernisation 'and
economic growth. All plans do not place equal emphasis on each objective. Whereas
earlier p!ans laic! more stress on rapid economic growth, the later plans attached more
importance to self-reliance and removal of poverty. The Seventh Plan laid emphasis
on the attahment of modernisation Thus an overview of our Five Year Plans would
give us an idea about the different objectives and priorities under each plan. The First
Five Year Plan (195 1-56) was started after the process of political and administrative
unification of the country was completed The situation at the beginning of the plan
was not very good. We had to tackle the massive problems of backwardness and
underdevelopment Thus the plan aimed at :
i) restoring the economy, resist the inflationary pressures, improve the food and raw
materials position and develop the transport system
ii) formulating and implement such development programmes that could lead to
future progress
iii) initiating measures of social justice
iv) building up such administrative and other organisations that would be conducive
to development. .
This was basically a rehabilitation plan as Indian planners had to correct the
disequilibrium in the economy caused by influx of refugees, severe food shortage and
inflation. It emphasised on increase in agricultural production, improvement in living
standards and growth of national income.
The Second Five Year Plan ( 1956-6 1) laid emphasis on industrial development. The
plan aimed at rapid industrialisation with particular emphasis on the development of
basic and heavy industries. The plan laid special emphasis on increased production of
iron aud steel heavy chemicals and development of heavy engineering and machine
building industries. It also aimed at an advanced increase of five per cent in national
income, provision of additional employment and reduction of inequalities in income
and wealth
The Third Plan (1961-66) set as its goal the establishment of a self-reliant and self-
generating economy. It aimed at :
i) securing five to six per cent annual increase in national income,
ii) achieving self-sufficiency in foodgrains,
iii) expanding basic and key industries,
iv) utilising to the fullest possible extent the man-power resources of the country,
v) increasing employment opportunities,
vi) establishing progressively greater equality of opportunity ; and
vii) bringing about reduction in disparities in income and wealth and a more even
distribution of eoonomic power.
The Fourth Plan (1969-74) laid emphasis on the major objectives of removal of
poverty and achievement of self-reliance. It aimed at achieving a 5.5 per cent annual
growth rate. Its objectives were to :
i) b o a t up industrial productivity
ii) help weaker producers and increase employment opportunities
iii) increase agricultural production, specially production related to the primary
iv) use monopoly legislation and appropriate fiscal policy for reducing concentratibn Goals of Development
of economic power.
v) utilise Panchayati Raj institutions in planning at the local level.
The Fifih Plan (1974-79) proposed to achieve two main objectives : i) removal of
poverty and ii) attainment of self-reliance.
It aimed at achieving these goals through promotion of higher rate of growth, better
distribution of income, increase in the rate of growth of agriculture, production of
level and expansion of production of consumer goods.
The focus of the Sixth Five Year Plan was on enlargement of the employment
potential in agriculture and allied activities, encouragement to household and small
industries producing consumer goods for mass consumption and raising the incomes
of the lower income groups. Its main objectives were :
i) strengthening the strategies adopted for modernisation
ii) achieving economic and technological self-reliance
iii) reducing the incidence of poverty
v) improving the quality of life of the people in general with special reference to the
economically and socially handicapped population
vi) reducing income inequalities
vii) promoting policies for controlling the growth of population ; and
vi) promoting the active involvement of all sections of the people in the process of
development.
The basic objectives of the Seventh Plan (1985-90) are the same as stated in the
earlier plans, but the stress is more on growth, modemisation, self-reliance and social
justice. The major goals of the plan are :
i) to eliminate poverty and illiteracy
ii) to achieve near full employment
iii) to achieve self-sufficiency in the basic needs of clothing and shelter and to
provide health for all
iv) to augment agricultural production ; and
v) to improve technology in the fast growth areas and control inflation.
Thus all our plans have aimed at achieving economic growth, industrialisation, self-
reliance, modernisation, and social justice in some form or the other.

8.5 CONCLUSION

Thus, it is clear that our planners have been trying to bring about development by
pursuing five mdor objectives viz, economic growth, self-reliance, modernisation,
industrialisation and social justice. India's experience shows that a considerable
amount of success has been achieved in certain areas. In agriculture and rural
development, a large number of new programmes have been started. Along with
these, a diversity of organisational arrangements and administrative structures have
been established. There has been a substantial diversification of the industrial base
over the last four decades. Now we are able to produce a broad.range of industrial
products. We have achieved self-reliance in basic and capital goods industries.
Indigenous capacities have been established. The process of industrialisation has
fostered entrepreneurship. A wide variety of technical, managerial and operative skills
have been developed. The major thrust for development of heavy industries has been
provided by the public sector. An elaborate network of specialised development
banking institutes, has been established to help finance industrial investment in the
private sector.
Though the list of achievements is exhaustive, we still cannot conclude that we have
been able to develop in the way we wanted to. The list of failures and the problems
hampering our drive towards development is equally exhaustive. Some economists
doubt 1ndia9sachievements on self-reliance. w e have achieved considerable self-
sufficiency in food but that is not the case in other areas. Import of capital goods,
technology, petroleum products, edible oils, etc. make a huge dent in our external
resources and we have
. ..
a. heavy
.
balance of trade deficit.
- . . -
Though-the .growth rate has
Development Strategy and modernisation in agriculture has just begun. Average yield levels in most regions and
PIaanin6 farming systems are below what can be attained with known technology. India now
has a large and wide scientific and technical workforce in the world, still the capacity
of the system to absorb these skills fully in productive employment has been less than
adequate. Also in pure and applied research, advances have been limited except in a
few areas like agricultural research, atomic energy and space. Average productivity
levels are below h e targets.
Monopolies in industry have grown. Progressive taxation has been quite ineffective.
circulation of black money has increased in the market. Increase in production has
also led to increase in economic inequalities. The objective of income equality in
terms of priority, has always got a very low place in our plans. The publications of
Planning Commission and Plan Documents have never provided estimates of
inequalities of income and wealth distribution. The Fifth and Sixth Plans did not
clearly lay down the measures to be followed for eliminating income inequalities. The
Seventh Plan also did not make any reference to it. We have been under the
misconception that fiscal policy, industrial licensing, monopoly control measures and
additional employment opportunities would be enough to reduce income inequalities.
We have also not been able to make a dent on poverty problem. Anti-poverty
programmes have brought only temporary relief. Improper identification of
beneficiaries, lack of awareness among the poor regarding the benefits of programmes,
wastage of funds, lack of monitoring and evaluation, overemphasis on wage
employment schemes, lack of training of staff involved in implementation of
programmes and less involvement of voluntary agencies and cooperatives in nual
development have proved to be the major problems facing our programmes. Neither
the incidence of poverty has reduced nor the living standards have improved.
'
Land refonns have not been implemented effectively. Shortage of updated land
records, existence of benami transactions, distribution of bad quality of land,
declaration of less land as surplus, lack of participation by benefactors, almost non-
existent cooperatives for land refonns, use of inappropriate technology in agriculture
have impeded their success.
In the early phase of planned development in India, regional factors were not given
enough weightage. Moreover, the major indusvial projects in the public sector located
in industrially backward areas have not produced the desired effects. It has also not
led to diversification of the regional economy. We have achieved some success in the
development of huge irrigation power projects, which have led to agreindustrial
development, but our policy of attracting private sector to invest in industrially
b a c h d regions has not succeeded much.
In education, health care and family welfare, past efforts have been concentrated on
target-oriented expansion in facilities or on enrolment and coverage. The greater
access of the poor to secondary and higher education has not been able to reduce the
illiteracy rate. Our Five Year Plans accepted the objective of equity, however, the
concrete details of this objective such as the extent to which income and wealth would
be distributed, different types of social equity to be introduced, the extent to which
concentration of income and wealth would be reduced etc., have not been spelt out
Various policies and programmes for bringing about equity and steps needed for this
purpose were never specified
Certain measures can be adopted to improve this state of affairs. There is an urgent
need for re-examining our priorities and strategies in pursuit of development. There is
a need for refinement in the process of identification of schemes relevant for
scheduled castes, scheduled tribes and rural poor, both by the state governments and
central ministries. Adequate attention has to be given to these schemes, their
economic base has to be strengrhened. We should try to involve the voluntary
organisations, cooperatives and'people in the formulation, implementation, monitoring
and evaluation of the schemes for the poor and the downtrodden. A strategy is
required whereby we can improve the perfonnance of staff engaged in development
tasks, ensure their accountability to people and increase their accessibility to the
common man. Similarly problems of corruption and red-tapism can be tackled
properly.
To stremthen the countrv's scientific and technoloaical base, its domestic
and research and development efforts in crucial areas of science and technology hsve Goals of Development
to be initiated The evaluation of social welfare schemes in quantitative terms is not
going to solve any problem. We must try to find out the qualitative effect of such
programmes, for example, we must know their ultimate effects on literacy, educational
status. incidence of diseases, mortality rates, nutritional status and living standards.
T o remove regional imbalances, what is needed is a strategy which identifies the
natural, physical and human endowments and potential in different districts and
formulates viable projects which are based on these resources. The plans must also
bring out overall sectoral and spatial requirements of the backward districts which
would help in the inter-district disparities within the States.
Unemployment problem can be solved if our poverty alleviation programmes are able
to produce the desired results. Besides this, the employment potential of an investment
project should be clearly studied. It should also be kept in mind that for each region,
sector and economic class, different employment plans should be initiated, keeping in
view their specific needs. We have to mobilise our resources in an effective manner,
expand our exports, increase our agricultural production, develop proper technology
for ecologically handicapped regions, utilise fully our irrigation potential, develop
effective substitutes for imported products, technology and energy, revitalise our
family planning programmes, strengthen the Panchayat Raj system and introduce a
pboriented education system in order .to solve our goals of development

E:;k Your Progress 2

Note: 1 ) Use the space given below for your answers.
2) Check your answers with those given at the end of the unit.
1) Our plans have always aimed at bringing about social justice through various
strategies and programmes. Comment.

2) Discuss the various methods adopted by the government for removal of poverty
and unemployment.

LET US SUM UP
Our major goals of self-reliance, economic growth, modernisation, industrialisation
and social justice have been ardently pursued by our Five Yea. Plans. The dimculties
impeding the f d achievement of the goals can be removed with the help of people's
participation and right political will. The aim should be to make India a
technologically viable and progressive economy where everyone would enjoy the
basic amenities of life. To attain our goals we need to expand economic and
technological growth, initiate development programmes for the poor and weaker
sections of the society, improve our health and education facilities, bring about sharp
reduction in the rate of population growth, inculcate awareness among the people and
revitalis our panchayats, cooperatives, voluntary agencies and other decaying
administrative institutions.
Developmeat Strategy sad
Planning 8.7 KEY WORDS

Capita1 gains receipts: A fmancial gain resulting from the sale of a capital asset at a
higher price than was paid for it. The gain arises out of an appreciation of capital
value. It creates in the hands of the receiver a clear capacity to pay taxes.
Ceiling on agricultural holdings : Maximum limit fmed under the system of
regulation of holdings. A person cannot possess agricultural holding beyond a certain
fixed limit
Diversification of domestic production : Production of new domestic products while
continuing the production of existing products.
Entrepreneurial p r o w : The difference between the receipts and outlay in business.
It reflects the excess of receipts over the expenditure.
Foreign Exchange : The means of payment in which currencies are converted into
each other and with which international transfers are made.
Labour Intensive production : A form of production requiring a high proportion of
labour in relation to the other factors of production employed.
Marginal cultivators : A cultivator who has minimum means of cultivation and slight
reduction in these means would make him landless or totally non-operative.
Poverty line :The usual method is to fix a poverty level on the basis of minimum
level of per capita expenditure required for normal calorie intake (2250 calories as
average per capita per day requirement). The extent of poverty is measured by
estimating the qumber of people whose overall per capita consumption falls below this
level. This level is called the poverty h e .
System of support prices :The policy of the administration by which a minimum
price is fixed for procurement of certain commodities specially food crops so that the
producprs do not suffer a fmancial loss in case of a glut in production. Such a price
also takes into account the cost of various inputs used by the farmers for production.

8.8 SOME USEFUL BOOKS

Agrawal, A N . 1986. Indian Economy: Problems of Development and Planning ;
Wiley Eastern :New Delhi.
Datt. Ruddar and K.P.M. Sundaram, 1989. Indian Economy ;S. Chand and
Company : New Delhi.
Desai, P.R, 1979. Planning in India (1951-78) ; Vikas Publication : Delhi.
Government of M a . 1990. Towards Social Tmnsfonnation :Approach to the Eight
Five Year Plan ;New Delhi.
Government of India 1981. Sixth Plan Document. Planning Commission : New
Delhi
Government of India. 1989. Seventh Plan Document. Planning Commission :New
Delhi.
Misra, S.K. and V.K. Puri, 1989. Indian Economy :Its Development Experience ;
Himalaya Publishing House': Bombay.
Sarup, Anand and S. Bramhe, 1990. Planning for the Millions ;Wiley Eastern : New
Delhi

8.9 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES

Check Your Progress 1

1) Your answer should include the following points :
Development means progress, it includes growth as well as change
 Growth refers to rise in output Goals of Development
Development implies changes in technical and institutional areas of
production
Process of development is far more extensive than growth
Development includes rise in output as well as changes in the composition of
output
While development without growth is inconceivable, growth without
development is possible.
2) Your answer should include the following points :
Self-reliance is needed for economic independence
Through self-reliance, a country is able to ensure a more equal relationship
with the world economy
It reduces a country's vulnerability to outside pressures and disturbances
To avert foreign exchange crisis
Help a country to support adequate scale of investment from its own
production and savings
Reduces dependence on foreign capital.
3) Your answer should include the following points :
Emphasis on development of capital goods and basic industries
Expansion of consumer goods industries
Cottage industries are being promoted
Labour intensive industries needing less amount of capital are being
developed
Five Year Plans have allocated large amount of funds for promotion of
industries.
4) Your answer should include the following points :
Emphasis on the role of science and technology in bringing about
modernisation by the government
Emphasis on the need for Research and Development
Promotion of industrial diversification
Development of the public sector
, Promotion of a support network of financial institutions
Protection of small-scale industries and artisans
Elimination of zamindari and intermediary tenures to bring about
modernisation in agriculture
Establishment of a system of support prices.
Check Your Prolpzrs 2
1 ) Your answer should include the following points :
Indian plans have stressed upon the transformation of her economy into a
socialistic pattern of society
We aim to achieve social justice through improvement in the living standards
of the poor
Through reduction in income inequalities
Through removal of poverty and unemployment. For this purpose many anti-
poverty programmes have been launched
Through reduction of regional imbalances
Welfare of scheduled castes, tribes and rural poor has been sought by our
plans.
2) Your answer should include the following points :
Our Five Year Plans have stressed on removal of poverty and unemployment
through creation and expansion of job opportunities
We aim to provide credit and other assistance to people living below the
poverty line
Fuller utilisation of available production capacity is sought
Special employment programmes such as the IRDP, TRYSEM, NREP,
etc., have been started
Land reforms is considered to be a major step towards removal of poverty.
UNIT 9 PLANNING COMMISSION AND
NATIONAL DEVELOPMENT
COUNCIL
Structure
9.0 Objectives
9.1 Introduction
9.2 Functions of Planning Commission
9.3 Planning Commission : Structure
9.4 National Develodment Council
9.5 Planning Procedure
9.5.1 Five Year Plans
9.5.2 Annual Plans
9.6 Role of Planning Commission
9.7 Let Us Sum Up
9.8 Key Words
9.9 References
9.10 Answers to Check Your Progress Exercises

9.0 OBJECTIVES
After reading this unit, you should be able to :
explain the structure and functions of the planning Commission
highlight the ctmposition and role of the National Development Council
discuss the process by which Five-Year and Annual Plans are formulated and the
role of agencies involved in the process.

9.1 INTRODUCTION
India is a developing country. It does not yet fall under the category of economically
advanced nations. But this was not the case always. In the seventeenth century we
were economically more advanced than Europe. But it was the colonial rule and the
impact of the industrial revolution which destroyed our economy resulting in
widespread stagnation $nd poverty. Dadabhai Nauroji, writing in 1876, focussed on
the detrimental impact of British rule and the laissez-faire policy on the lndian
economy. Many nationalist leaders stressed the point that for removal of mass
poverty the state must play an active role. And that this was to be done by an
independent and popular government. As the freedom struggle progressed these ideas
got concretised and took the shape of National Planning Committee in 1938 under
the lndian National Congress. However due to the Second World War, when most
of the leaders were imprisoned, not much progress could be made in this sphere.

appointed which recommen t

Again in 1946, before the tra fer of power, a Planning Advisory Board was
the appointment of a Planning Commission to
devote total attention to the task of planned development. This unit will highlight
the structure and functions of the Planning Commission and the National
Development Council. The process of formulation of Five Year Plans which has
been discussed in the previous block will also be dealt with in some'detail. The
planning process at the state, block and village levels will be explained in the
subsequent units of this Block. We will now first look into the task assigned to the
Planning Commission in independent India.

The role of the Planning Commission is directly related to the economic and social
Phaafms Roc- tasks assigned to the government by the Indian Constitution in its Directive
Principles. The Directive principles of State Policy urge upon the state to secure
right to adequate means of livelihood for its citizens and control the inequalities in
the ownership of wealth and means of production. In other words, the state is
required to ensure reduction in mass poverty which implies that it has to ensure
growth in production and its equitable distribution among the various sections of
people.
In March 1950 when the Planning Commission was set up by a resolution of the
Government of India it meant that the state had decided to play a major role in
socioeconomic transformation as required by the Directive Principled of State
Policy. The functions of the Planning Commission with which you must be already
familiar are as follows :
1) Planning Commission makes an assessment of the material, capital and human
resources of the country, including technical personnel, and investigates the
possibilities of augmenting such resources which are found to be deficient in
relation to the nation's requirements;
2) formulates a plan for the most effective and balanced utilisation of country's
resources;
,
3)' on a determination of priorities, defines the stages in which the plan qhould be
carried out and proposes the allocation of resources for the due completion of
each stagc;
4) indicate the factors which tend to retard economic development, and determines
the conditions, which in view of the current social and political situation, should
be established for the successful execution of the plan;
5) determines the nature of the machinery which will be necessary for securing the
successful implementation of each stage of the plan in all its aspects;
6) appraises from time to time the progress achieved in the execution of each stage
of the plan and recommends the adjustments of policy measures that such
appraisal may show to be necessary; and
7) makes such interim or ancillary recommendations as appear to it to be
appropriate either for facilitating the discharge of the duties assigned to it or on
a consideration of prevailing economic conditions, current policies, measures and
development programmes or on an examination of such specific problems as
may be referred to it for advice by the Central or state governments.
In addition to the functions referred to above, the Planning Commission has been
entrusted with responsibility in respect of the following matters as provided for by
the Government of India Allocation of Pusiness Rules :
a) Public Cosperation in National Development;
b) Hill Area Development Programme;
c) Perspective Planning;
d) Institute of Applied Manpower Research; and
e) National Informatics Centre.
The functions appear to be really colossal. But a little explanation will make them
clear. In simple teuns it means that the Planning Commission has been made
responsible for almost all aspect of planning except its execution. To plan we must
have a set of objectives or goals which we try to achieve like the growth of national
income, reduction of the percentage of people below the poverty line and so on. We
' must also decide on the time-frame and the stagesjn which these goals are to be
achieved. Butlo do this we need to estimate our tesources. For example, do we have
enough resource$ to give gainful employment to everyone in say five years? Together
with estimating resources we must also determine a strategy by which we can make
the best use of our limited resources. For example, the decision whether to use our
foreign exchange for importing petrol or food has to be made or not? In shoc, the
formulation of a plan implies the setting up of priorities and stages; estimating %he
resources ,and deciding on a strategy. This is the task of the Planning ~ornmissich.
After the d,lan is formulatw its'execution is the responsibility of the Central
ministries ahd the state governments~whichthrough thqir departmemu execue the
plan by building bridges, setting up factories, importing oil and raising taxes. The
Planning Commission has to keep an eye on the progress of the plan and must
identify impediments and suggest remeQial measures. Further it must also make a
postmortem of the past plan and learn lessons which can then be used to build
subsequent plans. Monitoring and evaluation of plans are therefore essentially the
responsibility of the Planning Commission. The Planning Commission is assisted in
its tasks by the National Informatics Centre which runs a national computer based
information and data system and by the Programme Evaluation Organisation which
periodically undertakes detailed or quick studies of the implementation of selected
development programmes for the Commission. Under the present scheme of things
the National Informatics Centre and the Programme Evaluation Organisation are
attached to the Planning Commission and together the three form the Department of
Planning.

9.3 PLANNING COMMISSION: STRUCTURE

We have seen that the Planning Commission was set up by a resolution of th6
Government of India. It is therefore not a statutory body and the plans formulated
by it have therefore no legal status. Further, we noted that its tasks are primarily the
formulatioq, monitoring and evaluation of plans and not their execution or
implementation. All this makes the Planning Commission appear as an advisory
body though in practice it wields considerable amount of power. 'To understand this
we have to understand the structure of the Planning Commission and its position
relative to other governmental agencies. Let us now explain the internal structure of
the Planning Commission.
Chairman
The Prime Minister of India has since the very inception been the Chairman of the
Planning Commission. This has sometimes been a subject of difference of opinion. It
lends status to the Planning Commission and is a great'aid in coordinating functions
of ministries. However, the Administrative Reforms Commission recommended
against this practice. It must be noted that the Prime Minister attend8 odly the mod
important meetings of the Commission which ensures that'the Commission's
proposals coming up before the cabinet are viewed objectively.,
Deputy Chairman
The day-today work of the Commission is looked after by a full-time Deputy
Chairman who is usually a politician of standing belonging to the ruling party at the
Centre. He has the rank of a Cabinet Minister although he/she may not necessarily
be a member of the ministry. If this be the case, then for answering to the -

Parliament a Minister of State, sometimes assisted by Deputy Minister, is given the

portfolio of planning.
Memkm
There are two types of members of the Planning Commission in addition to the
Minister of State for Planning who is also an ex-oficio member of the Commission.
First, there are a few full-time members who are eminent public persons,
administrators, economists br technical experts. In addition, the Commission has d
its members a few important Cabinet Ministers who attend only the most important
meetings of the Commission. The meetings of the Commission which all membCrs,
full-time and minister-members, attend are called the meetings of the full
Commission. These are few and cover only important decisions. Otherwise the
Commission consisting of full-time members alone meets frequently and acts as a
team.
The day-today work of the Commission is looked after by the Deputy Chairman
and the full-time members. The full-time members are appointed by the Prime
Minister after consulting the Deputy Chairman from among prominent public
persons and experts. They are given ndfenure but normally continue till there is a
change in government. Only in 1990 we had the odd case of three Planning
Commissions in a single year (the full-time members were changed thrice). Each
member looks after a specific set of subjects as indicated in Chart I.. However, the
Commission has collective responsibility and works as a collective body. While each
member individually deals with the technical and other aspects of his/her allotted
subjects, all important cases requiring policy decisions and cases of differences of
opinion hetween members, are considered by the Commission as a whole.
Office of the Commission
The Commission is assisted in its tasks by an office comprising various technical and
subject divisions. Each of the divisions is headed by a senior officer or expert often
designated as the 'advisor'. However, officers with other designations like Chief
Consultant, Joint Secretary, Joint Advisor may also be put in-charge of divisions.
The advisor normally has the rank of an Additional Secretary of the Government of
India. The heads of divisions function under the guidance of the member incharge
of the subject. The tasks of co-ordination and overall supervision and guidance of
the work of the division, specifically relating to non-technical matters, is the
responsibility of the Secretary, Planning 'Commission who is a senior civil servant.
The divisions concerned with plan formulation, monitoring and evaluation are
-classified as (a) subject divisions and (b) general divisions. The subject divisions look
after some specific subject areas like the agriculture division, education division,
rural development division, transport division, etc. The number of subject divisions
have gradually increased and at the end of March 1990 stood at eighteen. The
creation of divisions seem to be based on short-term considerations.
The general divisions arc concerned with broad matters which have either to do with
overall planning or with coordination or with technical matters which are relevant
to all divisions. One example is the project appraisal division which is required to
technically appraise large projects being undertaken by different departments Other
exan~plesare perspective planning division concerned with long-term overall
planning and the plan-coordination division responsible for coordination. In March
1990 there were eight general divisions. The functions of these divisions are (a) the
setting up of steering groups and working groups to help in plan formulation, (b) the
sponsoring of studies and seminars, (c) liaison with ministries for formuiation of
projects and schemes, (d) analyses of proposals received from ministries and
(e) formulation of plans for minhries and states in specified subjects.
Chut I
The chart below will give you a clear picture of the structure of Planning Commission.
PLANNING COMMISSION

+
(PRIME MINISTER)

I DEPUTY CHAIRMAN I

Ir-l
MINISTER
MEMBERS MEMBERS STATE FOR
I
(PART-TIME) PLANNING
(EX-OFFICIO)

I
D SECRETARY

ADVISER/ JT. ADVISERS/

OFFICES OF DIVISIONS

Clearly, thaefore, the cask of formulation of a plan is a massive effort requiring

tecbnicnl inputs of various kinds and specialised knowledge of the subjects. The
precise manna in which national plans art formulated and concretised by the
Planning Commission needs to be discussed in detail. This will also help in
understanding the relation between the Commission and other agencies of the
government. This discussion on the process of plan formulation will be taken up in Pluralng Conmbdon and
National Lkvelopmrnt Coundl
section 9.5. But before that we need to look at the National Development Council,
the other important body associated with national planning.

9.4 NATIONAL DEVELOPMENT COUNCIL

The National Development Council is the product of the Planning Commission's
recommendations. In the draft outline of the First Five-Year Plan, the Commission
recommended the need for a body comprising the central and state governments to
enable the plans to have a national character. It laid down that "In a country of the
size of India where the states have under the Constitution full autonomy within their
own sphere of duties, it is necessary to have a forum such as National Development
Council at which, from time to time, the Prime Minister of India and the Chief
Ministers of States can review the working of the plan and its various aspects".
The National Development Council was set up in August 1952 on the basis of a
resolution of the Government of India. The Council is composed of the Prime
Minister, the Chief Ministers of States and the members of the Planning
Commission. However, other central ministers who are not members of the Planning
Commission also have attended the Council's meetings. Sometimes outside experts
have also been invited to the Council's meetings whenever considered necessary.
The functions of the National Development Council (NDC) as laid down in the
Government of India resolution are as follows:
1) to review the working of the national plan from time to time;
2) to consider important questions of social and economic policy affecting national
development; and
3) to recommend measures for the achievement of the aims and targets set out in
the national plan, including measures t o secure the active participation and
cooperation of the people, improve the efficiency of the administrative services,
ensure the fullest development of the less advanced regions and sections of the
community and, through sacrifice borne equally by all citizens, build up
resources for national development.
As you can see for yourself the functions assigned to the NDC are fairly general. The
NDC can take up almost any issue related to national development. In'the past, the
NDC has deliberated and decided on a number of diverse issues like inter-regional -
disparities, panchayati raj, prohibition, agrarian cooperation and even irrigation
levies. However, given the large size of the NDC and the fact that it comprises of
very important and busy personalities it has not been possible for it to meet
frequently and go into great details on specific matters. The NDC is required t o meet
at least twice a year though it has sometimes met more often. The agenda for thest
meetings generally include the approach paper t o the Five Year Plan, the draft Five
Year Plan and the final Five Year Plan. (These terms are explained in section 9.5).
Other matters form a part of the agenda if raised by the Central or State
governments. The Secretary of the Planning Commission is also the Secretary of the
N DC.
The decisions of the NDC have been in the nature of policy formulation. It would
not be an exaggeration to call it the highest policy making body in the country.
Though the NDC is a non-statutory advisory body which makes recommendations to
the Central and State governments, the very stature of the Council has ensured that
these 'recommendations' have the prestige of directives which are usually followed
and obeyed.

Check Your Progress 1

Note : I) Use the space given below for your answers.
2) Check your answers with those given at the end of the unit.
I) Discuss the functions of the Planning Commission.
.........................................................................................
 .........................................................................................
2) What is the structure of the Planning Commission?
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3) Highlight the role of the National Development Council.

9.5 PLANNING PROCEDURE

brief discussion has already been made on the planning process in Unit 7 of Block
2. In this section we shall try to familiarise ourselves with the planning process in the
country in a little detail. But before that we must know the meaning of the term
national plan. A national plan comprises the plans of the Central government, the
State governments, the Central and State public-sector undertakings and the entire
private sector of the economy especially the private corporate sector. If you take a
look at any Five Year Plan document you will find the size of the plan-i.e. the
amount of money that is proposed to be spent 'under different plan heads during the
five years is broken up into public sector outlay and private sector plan outlay. The
total is the proposed national plan outlay. The public sector plan is the more
important part as the government has only indirect and limited control over what the
private sector would spend during a five-year plan period. The private sector plan, in
practice, is only slightly more than an estimate or a projection. The public sector
plan, with which we shall be concerned here, is further divided into the Central plan
and state plans indicating projects and schemes to be launched by the different levels
of governments. There is also an indication of the amounts t o be spent and the
projects and schemes t o be undertaken by various departments and public sector
undertakings. The preparation of the national plan therefore is a mammoth effort
involving many parties and encompassing almost the entire economy.
The,national plan, if it is to be a meaningful document, must therefore have the
willing involvement and broad aTment of the concerned parties. Thus every plan
involves a large amount of didcussions and meetinprs in addition to a considerable
 amout of t e c h n i d work. Through discussio~is,by an interactive process, a consensus Planning Commhdon and
is built up by the Planning Commission. National Development Coundl

The need for building a consensus arises principally from the facts that India has a
federal and democratic polity. The federal system lays down demarcation of powers
between the central, the state and the concurrent lists. Planning as a subject falls
under the concurrent list and is therefore the responsibility of both the Central and
State governments. However, many areas like agriculture are the primary
responsibility of the states while some others like communication are Central
subjects. The national plan must therefore be able to carry along the Central
ministries and state governments on a generally accepted course of action. Moreover,
the democratic structure requires that the national plan is formulated through
consensus and not by a Central 'Directive'. The people are to be persuaded and not
coerced into accepting the plan. This involves widespread discussions and
participation of non-departmental agencies. Besides involving a large number of
specialised institutions like the Reserve Bank of India, the Central Statistical
Organisation etc., the discussions are aimed at involving non-governmental
institutions also like universities, research institutions and the press. Representatives
of the people are also involved at various stages and the general public opinion is
also sought to be gauged on the more important aspects of the plan.

9.5.1 Five Year Plans

This elaborate consensus-building process-the process of plan formulation-has
three clearly distinguishable stages. The first and the preliminary stage involves the
preparation of an 'approach' to the plan. The approach paper is a brief document
broadly outlining the goals to be achieved during the proposed Five Year Plan
period. The approach paper reflects the basic economic and social objectives of the
political leadership (the government in power) and also has a background of a long-
term ( 1 5 to 20 years) perspective. The ,-\pproach paper is discussed by the full
Planning Commission and then by the Union Cabinet and the NDC.
The broad five year targets of the approach paper finally accepted are then given as
guidelines to a number of Working Groups. These Working Groups are set up by
and work with the assistance of the divisions of the Planning Commission. They are
generally subject or area-specific and function under the concerned divisions. For
example, the education division of the Planning Commission set up in August 1988
thirteen Working Groups on various aspects of educational development for the
eight plan ( 1990-95).
The Working Groups usually consist of economists, concerned technical experts and
administrators in the concerned Central ministries and in the Planning Commission.
The primary task of the Working Groups is to work out the detailed plans for each
sector and sub-sector on the basis of the preliminary guidelines. They are expected to
spell out the details of policies and programmes needed for achieving the targets.
Since there are a large number of research studies on many of the areas, the
Working Groups are expected to benefit from them. In cases of gaps in knowledge,
t
the concerned division often promotes specific research studies or holds seminars,
etc. Thus a large amount of technical and detailed subject-specific work goes into
this second stage of plan formulation. The state governments are encouraged to havr
their own Working Groups and the Central Working Groups are also expected to
interact informally with their state countenparts. On the basis of the exercises done
in the second stage, the Planning Commission prepares a 'draft' Five Year Plan. As
in the case of the approach paper, the draft pl;? that gives tentative details of the
plan is first discussed by the full Planning Commission and then by the Union
Cabinet and is then placed before the National Development Council.
The draft plan is subjected to public scrutiny in the third and final stage of plan
formulation. It is discussed with and commented upon by various central ministries
and state governments. Also the draft plan is publishecf (like the approach paper) for
wide public discussions. The draft plan is discussed by the Parliament first in a
general way and then in greater detail through a series of parliamentary committees
which individual members join according to their preferences. In.this stage the
Planning Commission also holds detailed discussions o? the plans of individual
states. With each state the discussions are held at the experts level as well as the
political level culminating in a meeting with the Chief Minister. These meetings with
state governments lead to an understanding between the Commission and the states
regarding the details of the plan including central finahcial assistance, etc. On the
basis of these various discussions at different levels with diverse parties and on the
basis of reactions from elected representatives, experts and the general public the
Planning Commission prepares the final plan document. This document is again
scrutidised by the full-Commission, the Union Cabinet ind the NDC. Thereafter, it
is presented to the Parliament which after discussions gives its assent. In India the
general approval of the Parliament is considered to be sufficient and no law is
required for taking up the plan for implementation.

9.5.2 Annual Plans

The discussion above broadly highlights the for~nulationof Five Year Plans. In the
course of actual'implementation however the effective instrument is the annual plan.
Due to delays in the formulation of Five Year Plans or due to political or significant
economic changes during a Five Year Plan, a great deal of importance has come to
be assigned to annual plans. Since a considerable part of the Central and State
governments, expenditures are for plan-projects, the annual plan has become an
integral part of the budgeting exercise at both the Central and state levels. It has also
tecome an important feature of our federal financial structure.
You are aware that the financial year in the government starts on 1st of April and
the budget is prepared by February end. The task on the ?nnual plan therefore has
!o start a few months earlier, usually around September, of the preceding year. The
Planriing Commission indicates to the state governments the important objectives of
the annual plan and the likely quantum of central assistance they may expect. The
states then propose draft annual plans detailing, among other things, mobilisation of
resources. These drafts are discussed in meetings, held in November-December every
year, between the Planning Commission and state governments. The state annual
plan outlays are decided in these meetings which also decide the important item of
Central plan assistance. This channel of transfer of resources from the Centre to the
States is outside the purview of the transfers recommended by the Constitutional
body-namely, the Finance Commission. Fiscal transfers through the Planning

/
Commission, a no statutory and supposedly advisory body, has therefore been a
subject of controv rsy. But this is the practice that is being followed. The state
budgets are crucia ly dependent on annual plans, but so are the budgets of Central
ministries. The C ntral ministries' budget allocations are also to a great extent
dependent on the r annual plans which are worked out in consultation with the
Planning Comm' sion. The Planning Commission therefore is in practice not merely
an advisory body as it is supposed to be. It wields considerable power in the
allocation of substantial volume of financial resources between Centre and States

F
and between dif erent departments. By going into details of developmental schemes
and projects it ields considerable influence regarding their acceptance or substantial
modification.

- i

9.6 ROLE OF PLANNING COMMISSION

We have by now got a fair idea about how national plans are formulated. The
functions of the Planning Commission and the NDC in this process must have also
become clear. We have also seen how important these two bodies are despite the fact
that they are non-statutory advisory bodies. This expectedly has been one of the
subjects of controversy. The Planning Commission has been criticised for trying to
assume the role of a super-cabinet and being yet another bureaucratic hurdle in the
initiation of development schemes. However, diammetrically opposite views have also
been expressed. It is sometimes argued that the Commission is practically ineffective
as it has little power in the process of implementation of the plans. And even during
plan formulation, the Commission is guided more by political pressures or
expediency than by its expert judgement. The truth perhaps lies somewhere in
between. As .we have sees, the Planning Commission makes the plan but cannot do
so without the active involvement of Central ministries, State governments, public
sector undertakings and other agencies. Its non-statutory character perhaps helps the
process as it is seen as an agency independent of the Central and State governments
and ministries. It also has some control over plan implementation through the
 mechanisms of annual plans, project appraisal, plan allotments, etc. It is therefore Planning Commbsion and
neither an ineffective ornamental body nor a super-cabinet but merely a co-ordinator Natioryl Development Coundl
in the process of evolving a framlework for governmental schemes and projects for
development. In this process it also has to make compromises and give weightage to
political considerations in addition to its own technical inputs.
This brings us to the actual process of plan formulation which some believe has lost
its meaning and has become merely a ritualistic and cumbersome exercise. We have
seen that the process of plan formulation is a lengthy one and crucially dependent on
the political leadership's development perspective. Therefore either due to political
changes or due to the elaborateness of the process or other reasons, Five Year Plans
are seldom perpared on t i p . The Eighth Plan's approach paper alone is ready after
almost a year of the plan-period has passed. Annual plans however have been
, continuing dejacto as budget time tables have to be met. But annual planning in the
sense of an overall, co-ordinarea and directed multi-instrument governmental
initiative is often absent. Significant changes need to be brought about in the
planning procedure if its relevance is to remain.
' The final, and a related question, is that why should we have a Planning
Commission? With planning going out of fashion in even the centrally planned
economies and with the reemergence of the free-market economy ideology, this
question is being increasingly asked. It is obviously related to the question 'why
plan?'. The Department of Economic Affairs in the Ministry of Finance, it is argued,
is adequate to-decide upon macro-economic priorities and policies. The other
ministries can decide similarly on sectoral matters'. But in India the economic role of
the State involves not only macroeconomic policy formulation, as in fully capitalist
countries, but also substantial public sector involvement in production and
distribution. The public sector is a very substantial part of the Indian economy and
has been developed keeping in view the Directive Principles of State Policy. The
need for a Planning Commission arises from this fact. The role of the government in
our mixed economy involves market regulatiori and public sector initiatives. The
Planning Commission similarly is a product of the mixed economy logic. Its
i. functions lie somewhere in-between those of the Department of ~ c o n o m i cAffairs
and the planning agencies of centrally planned economies. As long as our
commitment to a mixed economy continues the Planning Commission will remain
relevant.
Check Your Progress 2
Note : 1) Use the space given below for your answers.
2) Check your answers,with those given at the end of the unit.
I) Discuss the procedure of formulation of Five Year Plan in India.
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2)- In the course of actual implementation of plan the effective instrument is the
annual plan. Discuss.

1
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9.7 LET U S SUM UP
In this unit we have studied the functions of the Planning Commission which has
also helped us in understanding the meaning of planning. We have examined the
structure of the Commission and its office. The role and composition of the National
Development Council have also been examined. We gained some insight into the
plan formulation process and the manner in which different agencies interact in this
process. Finally, we discussed a few current controversies regarding the role of the
Planning Commission.

9.8 KEY WORDS

Directive Principles of State Policy : Chapter IV of our Constitution contains the
Directive Principles of State Policy (Article 35-51). These are in the nature of general
direcfions or institutions to the State. They embody the objectives and ideals which
the Union and state goyernments must bear in mind, while formulating policy and
making laws. The Directive principles are not legally enforceable by any court and
the State cannot be compelled through the courts to implement them. Nevertheless,
the Constitution declares that they are fundamental in the governance of the country
and that it shall be the duty of the State t o apply these principles in making laws.
Laipsez Faire Policy :It is the policy that is based on the idea that the government
and the law should not interfere with business and other economic activities.
Macro Economic Policy : Policy relating to the national economic system as a
whole. For example, policy relating to total employment, the level of prices and
production in the entire economy.
.-
Monitoring : It means keeping a check on the progress of a plan, project or scheme
during the course of its implementation.
Perspective Planning : Long term overall planning taking into view all aspects of
socio-economic problems.
Poverty Line : It is defined as the income necessary to purchase foodgrains to fulfil a
minimum standard of calorieslfood intake.
Project ~ ~ ~ r a: iEvaluation
sd of a projea in order to estimate its achievements as
against the established goals, estimated cost, time and resources.

9.9 REFERENCES
Paranjape, H .K. 1964. The Planning Commksion :A Descriptive Account,
Indian lnstitute of Public Administration, New Delhi.
Planning Commission. 1975. The Planning Process; Government of India, Delhi.
Prasad, Kamta (Edited). 1 984. Planning and Its Impkmentation, Indian Institute of
Public Administration : New Delhi.

9.10 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress 1
1) Your answer should include the following points :
Planning Commission plays a major role in socioeconomic transformation of
the country
it makes as assessment of the available resources
 investigates the possibilities of augmenting these resources
formulates a plan for the most effective and balanced utilisation of country's
resources
defines the stages in which the plan should be implemented
indicates the factors that retard economic development
i a determines the machinery requiged for successful implementation of the plan
!
/ monitois the progress achieved in the execution of each stage of the plan.
I 2) Your answer should include the following points :
1 Planning Commission consists of a Chairman, who is always the Prime
Minister, a Deputy Chairman, part-time members (ministers), full-time
v
members, Minister of State for Planning as an ex-officio member, advisers,
secretaries and offices of subject, and general divisions.
3) Your answer should include the following points :
National Development Council came into being to enable the Five Year Plans
b
to have a national character
a it is a body comprising representatives of states' and central governments
a it reviews the working of the national plan from time to time
a it considers important questions of social and economic policy affecting
national development',
a it recommends measures for the achievement of the aims and targets set out
in the national plan
a it suggests measures to Secure active participation and cooperation of the
people, improve administrative efficiency, ensure balanced regional
development and the development of the less advanced sectiois of the country
it aims at building up resources for national development.

Check Your Progress 2

1) Your answer should include the following points :
a preparation of an 'approach' to the plan
a discussion on approach paper by Planning Commission and setting up of five
year targets
a the Working Groups of Planning Commission work out the detailed plans for
each sector and sub-sector
T a they spell out the details of policies needed for achieving the plan targets
a the C 6 t r a l and state governments have their own 'Working Groups
a Planning Commission prepares a 'draft' Five Year Plan which is first placed
before the Union Cabinet and then the National Development Council
the draft plan is subjected to public scrutiny
a the draft plan is discussed by the Parliament and by the Parliamentary
Committees
a Planning Commission also holds discussion on plans of individual states
final document is prepared after the meetings of the Planning Commission
with states, diverse parties, experts and general' public
a the final document is then approved by the Union Cabinet and the NDC
a finally it is presented to the Parliament and approved by it.
2) Your answer should include the following points:
a since a considerable part of the central and state governments' expenditures
are for plan-projects the annual plan has become an integral part of the
budgeting exercise
a the work on the annual plan starts usually around September
Planning Commission indicates to the state governments the important
objectives of the Annual Plan
it also indicates the likely quantum of central assistance they may expect
states propose draft annual plans
the drafts are discussed thoroughly and state annual plan outlays are decided
state budgets are dependent on annual plans
Central ministries' budget allocations are dependent on their annual plans.
UNIT 10 STATE PLANNING MACHINERY
Structure
10.0 Objectives
10.1 Introduction
10.2 Role of State Planning Boards
10.3 State Planning Boards : Composition
10.4 State Planning Departments
10.5 State Plan Procedure
10.6 Conclusion
10.7 Let Us Sum Up
10.8 Key Words
10.9 References
10.10 Answers to Check Your Progress Exercises

10.0 OBJECTIVES
After studying this unit, you should be able to
highlight the composition and role of state planning boards
describe the structures and tasks of the state planning departments
explain the process of plan formulation at the state level
discuss the relation between state planning and national planning.

10.1 INTRODUCTION
Economic development with equity is not only the responsibility of the Planning
Commission and the Union Government. The federal democratic nature of our state
calls for national economic development. National development should be a national
endeavour involving a large number of parties. Various levels of government are
therefore necessarily involved in the formulation and implementation of plans. The
Constitution provides for a demarcation of subjects under the central, the state and
the concurrent lists. The state governments have clearly demarcated sources of
revenue, like sales tax and land revenue. In addition to statutory rights in the
transfer of financial resources from the Centre the large area of developmental
activity and resource mobilisation is therefore guaranteed to the states by the
Constitution.
In view of this, national plans cannot be prepared without giving adequate
importance to state plans. State plans in fact account for nearly half of the total -
public sector plan outlay. They cover developmental activities in the state-list
subjects like agriculture, irrigation, power, cooperation, social services and so on.
They also involve mobilisation of financial resources at the state level, in addition to
flows from the centre, to finance a part of the developmental plans. The success of
national planning is therefore crucially dependent on the effectiveness of state
planning. In this unit we will study the machinery of state planning as it exists in a
large number of states. Since there is substantial variation between the planning
machinery, existing in different states, the unit will focus mainly on the basic
structures and functions of the agencies explicitly responsible for the formulation of
plans at the state level.

10.2 ROLE OF STATE PLANNING BOARDS

At the central level a non-statutory advisory body, the Planning Commission, was
set up in 1950. This body, as we have seen, had technically competent personnel and
necessary independent infrastructuie and was separate from the ministries or
Planning Proem8 departments. In the states however no analogous institution existed for a long time.
It was the state planning department which had the sole responsibility of planning in
the first decade. Though the absence of an agency on the lines of the Planning
Commission at the state level had been felt since the early 1950s, it was only in 1962
that the Planning Commission specifically suggested that the states should set up
State Planning Boards (SPBs).
The State Planning Boards, the Planning Commission recommended in 1962, should
be entrusted the tasks of preparation of Five Year Plans and long term persp.ective
plans. In addition, the SPBs should recommend policies and measures for the
mobilisation of financial resources and devise strategies for the achievement of social
objectives. They were also to be entrusted the tasks of project appraisal and were to
evolve policies for selection of project locations.
Administrative Reforms Commission's Recommendations
Following the suggestion of the.Planning Commission, a number of state
governments constituted SPBs. In some states the names were different, like State
Development Board or State Advisory Committee for Planning. However, as the
Administrative Reforms Commission discovered in 1967, the SPBs were not given
clearly defined functions and their progress was not very satisfactory: "The
appointment of the Boards or other similar bodies has thus not helped in the past to
strengthen either the Planning machinery or the process of planning in states."
The problem, according to the Administrative Reforms Commission, was partly due
to the fact that "the functions assigned to the State Planning Boards have been
rather vaguely defined". The Commission therefore in its recommendations explicitly
suggested the following functions for SPBs :
I) To make an assessment of the state's resources and formulate plans for the most
effective and balanced utilisation of those resources;
2) To determine plan priorities of the state within the framework of the priorities of
the National Plan;
3) To assist district authorities in formulating their development plans within the
spheres in which such planning is considered useful and feasible and to co-
ordinate these plans with the State Plan;
4) To identify factors which tend to retard economic and social development of the
State and determine conditions to be established for successful execution of
Plans ; and
5) To review the progress of implementation of the Plan programmes and
recommend such adjustments in policies and measures as the review may
indicate.
Clearly, the proposed functions would give SPBs the pivotal role in state planning.
The SPBs would formulate plans, make assessment of resources, determine priorities,
promote and coordinate district planning, devise development policies and strategies
and be responsible for monitoring and evaluation. The SPB was therefore to be built
in the image of the Planning Commission. It was also to have a secretariat of its own
dealing with subject matters (like agriculture) and other planning tasks (like
evaluation) on lines similar to the divisions of the Planning Commission.
Planning Commission Guidelines
The recommendations of the Administrative Reforms Commission did not find warm
acceptance from both the central and state governments. The need for an expert
advisory body for planning at the state level ccpld not however be ignored. The
Planning Commission therefore in 1972 issued guidelines for strengthening the state
planning machinery. The 1972 Planning Commission proposal suggested that SPBs
should be set up at the apex level and should include a number of technical experts.
The work of the SPB should be effectiveiy supported by the constitution of steering
groups dealing with subjects like agriculture, irrigation and power, social services,
etc. Each steering group was to be under the overall charge of an expert member of
the SPB. This arrangement clearly was similar to the Planning C3ommission system
where full-time members are responsible for specific subject-matters. However, unJike
the Planning Commission, the SPBs were to function only through steering groups.
The actual planning was to be done primarily by the Planning Department as before.
And to strengthen the department's 'planning capabilities more technical units were
 to be added. The Government of 1nSia sirnultanebyi&ame foiiard with a scheme State PImnIng Marbinaj
providing,financial assistance for strengtktnrlig ;he state planning machinery. These
efforts have met with some degree of success. States have set up SPBs, or their
equivalent organisations under different names, to assist in planning. However, as
the Sarkaria Commission discovered in mid-1980s. the functioning of the SPBs has
k e n unsatisfactory in many cask.
Sukuir Commission's Reeornrnendatiom
The Sarkaria Commission, or the Commission on Centre-State relations, noted in its
1988 report that although SPBs had been created in all states except one, they have
not been involved in "real planning work". The state planning departments continued
to discharge this responsibiIity. Only some technical studies were assigned to SPBa
The SPBs in general did not command due status and authority in the state
governments. The Sarkaria Commission therefore recommended that SPBs should
perform functions for the state governments as the Planning Commission does'at the
national level. The state planning department's role should be similar t o that of the
Union Ministry of Planning and limited to legislative assembly work and some
c executive functions.
Therefore even after forty years of national planning the role and functions of the .
SPBs in practice refnain somewhat ambiguous. Studies relating to state planning
machinery have thrown up the disturbing conclusion that only in a few states do
SPBs have a direct and specific involvement in plan formuIation. The SPBs have
generally not k e n involved in the preparation of annual plans and therefore in
discussions with the Planning Commission. The Sarkaria Commission has
recommended the active involvement of SPBs in annual planning exercises. The
effo~tsat setting up SPBs with functions similar to that of the Planning Commission
have therefore had only limited success uptil now.

,10.3 STATE PLANNING BOARDS : COMPOSITION

I

The SPBs, as you must have gathered from the discussion in the previous section,
have had an uneven development, despite the fact that there have been persistent
'efforts for evolving more competent and effective SPBs over the decades. There has
also been considerable variation in their composition, it has varied from state to
state.
, Evolution :Following suggestions from the Planning Commission in 1962 a majority
I
' of states set up SPBs or similar organisations. The Administrative Reforms
Commission noted that there was no uniformity between states regarding the
> functions and the composition of the SPBs. According t o the Administrative
Reforms Commission the composition of the SPBs constituted a major defect in the
I
state planning machinery. First, the SPBs had too large a membership for them t o
function as effective planning agencies. For example, in ~ i j a s t h a nthe SPB had 65
members and in West Bengal and Kerala there were 27 and 26 members respectively.
I
Second, the choice of members was rather whimsical with only "a sprinkling of few
specialists and experts." Generally, members were drawn from state ministers,
members of Parliament, government officials, members of state legislature, vice-
chancellors, representatives of commerce, industry and districts. Clearly, there was
no rational criterion for the selection of members. "Most of the Boards", the
Administrative Reforms Commission observed, "can better be described as
'Consultative Bodies' or 'Public Relations Committees' of the government on the
subject of planning. Because of the large membership, their ineetings cannot be held
frequently nor can there be any pointed and purposive discussion".
T e ARC therefore suggested a scheme for re-organisation of the SPBs. It stated
P
t at each state should have a SPB with the Chief Minister as its Chairman. There.
should be four other full-time members chosen on the basis of their expertise and
experience of different aspects of state development. The members should be people
of eminence and able to command respect of different political and regional interests.
The ARC also suggested that SPBs should have their own secretariat with normally
the following units. -
I
! I) Economic Unit; 2) Agriculture and Rural Development Unit; 3) Power, Transport
and IndustpUnit; 4) Social Services Unit; 5)Coordination Un~t,and 6) Evaluation
Unit. These'units wete to be manned by technically competent staff.
The next phase %I re-organisation of SPBs followed the Planning Commission's
letter to states written in 1972. The Planning Commission suggested the setting up of
an apex planning body at the state level constituting of the Chief Minister, the
Finance Minister, other important ministers and a few respected professional experts.
The SPB was t o have a full-time non-official Deputy Chairman having previous
experience and association with the planning process. The SPB was t o be associated
in its work by a few steering groups constituting of various technical experts drawn
preferably from outside the government. The SPB would have as its secretariat the
State Planning ~ e ~ a r t m e nThis,
t . in btief, has been the evolution of guidelines
regarding the structure of the SPBs. The actual structure of the SPBs presently show
a number of similarities as well as diffetences between states. We will now briefly
outline the actual structures of the SPBs in the states.
Cb.irman md Deputy/Vice Chrinnnn
The Chief Minister of the state is the Chairman of the SPB. However, if the s t a t e 6
under President's rule, the Governor holds the position of the Chairman.
The SPBs h v e the position of Vice Chairman in some states whereas in others the
nomenclature is Deputy Chairman. The position has been held usually by the State
Finance Minister or the Minister for Planning. In some cases even non-official
experts have held the post. During President's rule a n Advisor to the Governor ad
even the Chief Secretary of the state has filled the position. The position is therefore
similar to that in the Planning Commission where the Deputy Chairman's post has
usually been held by a politician of a Cabinet Minister's rank.
Members
There is considerable inter-state difference regarding the composition of SPBs. First.
the SPB has what is called 'official' members, or ex-officio members. They are
government officials. These include t h t Chief Secretary. development commissioner,
finance commissioner, planning secretary, (who is generally the member8ecretary of
the SPB), finance secretary and heads of development departments. 'The second
category is of non-official members which can be further split into either full-time
and part-time categories or into the expert and nonexpert classification. The non-
official members include ministers, Members of Parliament, members of .the State
Legislature, members of district councils or development committees and non-official
experts.
/
The non-official experts are drawn from the fields of economics, technology,
science, industry, law, education, etc. They are usually eminent people in their
respective fields. The non-offrcial experts quite often, though there are exceptions,
serve only as part-time members of the SPB.
The number of members and their distribution between part-time and full-time or
between expert and nonexpert varies considerably between states. The total number
of members has been seen to range from one to nearly forty between states. The
number of part-time members exceed the number of full-time members in perhaps a
majority of the states although the proportion varies considerably between states.
Similarly, there is no uniforvity in the ratio of expert to nonexpert members
between states. In fact there are cases of SPBs having no expert member and, at the
other extreme, all members who are economists. Nevertheless, a common feature
seems to be the presence of a large number of politicians in the SPBs in many states.
Clearly the heterogeneity in the composition of SPBs, both regarding the number
and quality of members. is a source of problem. T
50 is compounded by the fact that
in a large number of states there is no clear division f work.(subjects) between
members. The entire planning is supposed to be done collectively. This has
contributed to the inadequate effectiveness of SPBs in a large number of states. The
SPBs in only a few states have been effective instruments of planning.
Secrdariat/Offke of the State Planning Board
A key administrative post in the SPB is that of Member Secretary. In a majority of
states this post is held by the Secretary of the Planning Department. Officers of
other designations and sometimes of slightly lower ranks have also filled this
position. Only in exce~tionalcases have non-officials served. as the Member-
Secretary. The Member-Secretary plays a pivotal role in state planning and serves as
a link between the SPB and the Planning Department.
As already mentioned,. in a large number of states the SPBs do not have independent
secretariats. In a few states where independent Secretarhtes exist the work of plan
formulation and evaluation is divided into a number of subject divisions and/or
Working Groups as in the case of the Planning Commission. The number of such
divisions and their subject-titles differ between states. However, it has been a
common observation that by and large the SPBs.are inadequately equipped-both in
terms of number and technical competence of the staff to handle the massive task of
state planning, monitoring and evaluation. Some states have only a small ofice
attached to the SPBs and in others the Planning Department looks after all the
detailed work relating t o planning. We will now examine the.role and structure of
the State Planning Department.

.........................................................................................
 state planning-from plan formulation to progress reporting in which it is aided by
the State Bureau of Economics and Statistics. Despite this similarity in functions, the
Planning Departments in different states show considerable variations and
inadequacy for the task of planning: "Thus the organisation, pattern of Planning
Departments vary from state to state. Further, the Planning Departments have not
been organised with any conscious design so as to enable them to undertake the
heavy responsibility of planning. Even though some of the states have established
independent Planning Departments, in practice, the Departments are guided only by
junior officers. Very little consideration seems to have been given to selection and
training of officers for the Planning Departments. The Planning Departments are
thus not very different from the other Secretariat Departments in the States."
Clearly lot needs to be done to strengthen the technical capabilities of the Planning
Departments. In 1972, the Planning Commission suggested to the states that the
Planning Departments should be made technically competent by establishing the
following units wherever they did not exist:
i) Perspective Planning Unit to prepare long-term perspective plans;
ii) Monitoring, Plan Formulation .and Evaluation Unit;
iii) Project Appraisal Unit;
iv) Regional/ District Planning Unit;
v) Plan Coordination Unit, and
vi) Manpower and Employment Unit.
The process of strengthening of the Planning Departments was to be aided by central
. financial assistance for the purpose.
Structure
Though there are some inter-state differences, a few common points regarding the
structure of the Planning Departments in different states can be noticed. States have
fullfledged Planning Departments in their Secretariat which is headed by a Secretary
or an officer with a different designation, like Development Commissioner.
Historically, the Planning Departments in a number of states have evolved into a
separate identity rather than being a part of the state finance departments.
The numerical strength of Planning Departments shows remarkable inter-state
variations. The planning function of the department is performed by civil servants
drawn from the Indian Administrative and State Civil Services and by officers with
technical expertise and their supporting staff. However, it has been found that in a
large number of states the personnel occupying key positions in the Planning 7
Departments are administrators rather than persons with experience and expertise in
planning techniques.
The work of the Planning Department is divided between divisions with usually a 4
Deputy Secretary in-chargemS~he number of divisions, the subjects they deal with and
the strength of the personnel in each division shows a great deal of inter-state
variation. Almost all Planning Departments have a division/unit concerned with
plan formulation. Similarly, divisions dealing with agriculture, plan, finance,
evaluation, monitoring, manpower appraisal and employment exist in a number of
states. Some states also have divisions dealing with regional and district planning in
their Planning Departments. But on :he whole there is little uniformity in the
manner in which planning departments operate. They are also responsible for the
presentation of the state plans to the Cabinet and the Legislature. Outside the state,
their duties include the maintenaqce of liaison with the Planning Commission and
the Centml Working Groups. They hold discussions with the Planning Commission
and are actively involved in the preparation, monitoring and evaluation of the
national plans, both annual and five-yearly.
The Planning Departments therefore do the bulk of planning exercise in the states.
But the states also have the SPBs which are supposed to perform similar functions.
In this context it is often asked as to which of the two agencies should have primary
responsibility for planning? A related issue is the division of functions between SPBs
nnll L n a r t m ~ n t cn n A t h ~ ; rr ~ 1 ~ t ; n n 4c tbh ~ a n ~t h ~h r
 We have seen that specialised committees, like the Administrative Reforms
Commission, have favoured a greater role for the SPBs. The state governments, on
the other hand, appear to by somewhat reluctant to hand over planning to a non-
governmental expert body. The arguments for the primacy of the SPB are as follows.
First, the Department being a part of the normal secretariat would not be able to
operate independently. Second, it would be difficult for the Department to attract
and retain outside expertise. Third;the nature of the work of a planning agency is
different from routine secretariat work but no Department can function in a manner
which is radically different from the other government departments. A separate
planning agency, it is argued, is free from these shortcomings. However, there are
)arguments forwarded against diluting the role of the Planning Departments. it is
feared that if the SPB is to decide on expenditure size, allocation and project
selection, it may become a rival and parallel authority vis-a-vis the State Cabinet. It
is also argued that planning work in states is essentially that of implementation and
therefore there is no need for a policy making and plan formulating expert agency at
the state level. But these are weak arguments. The SPB is an advisory body and its
-expert advice should only help the Cabinet reach rational decisions. Further, one
principal drawback of planning in lndia has been its centralisation. Setting up of
SPBs is perhaps the first, though not the only, important step in the direction of
development through democratic decentralisation.
In general, the relationship between the Planning Department and the SPB has been
somewhat awkward. Although the Planning Secretary is the ex-officio member-
secretary of the SPB, the two agencies have often functioned with little practical
interaction or dialogue. A clear demarcation of functions and meaningful interaction
between the two agencies, on the lines suggested by the Sarkaria Commission, needs
to be taken up as a priority item.

10.5 STATE PLAN PROCEDURE

In this section we shall study the manner in which state plans are formulated and
discuss some of the important issues relating t o centre-state relations with respect t o
planning. Centrq-state issues are important because state plans cannot be prepared in
isolation from national plans which means, in practice, that the Planning
Commission has a large role to play in the formulation of state plans.
Five Year Plans
The preparation of the Five Year Plan is an inter active process with both the Planning
Commission and state planning agencies getting involved in several rounds of dialogue.
Since the planning a i n d a r is well known to states, they start 'advance action' on plan
formulation even before they receive guidelines from the Planning Commission. The
advance action is a preliminary exercise in formulating the broad contours of the
proposed plan and in this process the d i e r e n t departments are invqved. The exercise is
particularly useful when the Planning Commission invites suggestions from states
regarding the approach paper for the national plan. After states give in their suggestions,
the Planning Commission prepares a draft approach which is circulated to the states for
their response.
After the National Development Council- approves the 'approach paper', the states
are requested to formulate a draft Five Year Plan keeping in view the objectives and
strategies as given in the apl~foachpaper. The states too have their own approaches
to the Five Year Plgns. In formulating the state's plan approach the state cabinet.
the planning-secretary and sometimes other persons (like the Chief Secretary) or-
agencies (like the SPB) play a key role. The state's approach deals with problems
specific to the state. Based on the national approach and the state's own resource
position, development experiences and priorities, the planning department embarks
on the task of state draft plan formulation. This process involves discussions with
various state departments and disttict and regional planning agencies on the one
hand and discussions with the Central Working Groups, the Planning Commission
and Central ministries on the other. Many states have set up their own Working
Groups t o formulate sectoral plans, schemes, and projects. The state plan proposals
are then discussed by the central working groups and the Planning Commission and
'serves as an input in the formulation of the draft national pbn, ~ h states
k are asked -
pI.anlng Rocem again to respond to the draft national plan and in the NDC meeting, convened to
discuss the draft national plan, the chief ministers exp-ress their views on the
proposed plan. With the endorsement by the NDC, the national Five Year Plan is
accepted by the states. The entire process of formulation of Five Year Plans usually
takes about two years.

Annual Plans
The process of formulation of the annual plan is simpler than that of the Five Year Plan.
The process begins in August or September when, after a preliminary review of resources
and economic trends, the Planning Commission issues guidelines to the State Planning
Departments. These guidelines include the formats for submitting schemes, resources
forecasts, etc. and highlight the short-term priorities that need to be taken into account
while formulating the annual plan. The state finance department, on request, indicates the
likely resource position to the State Planning Department. The Planning Department
makes tentative plan allocations to development departments and calls for sectoral plans
from them. Once these sectoral plans are received, they are first scrutinised by the State
Planning Department and a tentative plan frame is prepared after discussions with the
concerned departments. The draft plan, after, it is discussed and cleared by the State
Cabinet, forms the basis for negotiations with the Planning Commission.
The outlays proposed by the state government are examined by Central Working
Groups concerned with the specific subjects and this process also involves the
relevant Central ministries. The recommendations of the Working Groups are further
modified and consolidated into a report on the state plan by the Advisers (state
plans) of the Planning Commission. In the meeting between the Deputy Chairman,
Planning Commission and the State Chief Minister the state annual plan is finalised
after considering the Advisers' reports: The State Finance Department, in
consultation with the Planning Department, prepares the 'Budget-Plan link' on the
basis of the final annual plan. The budget is placed before the legislative assembly
and, with its passing, the annual plan implementation process starts with the new
financial year.
Relatiom between the Centre and the States regarding Planning :Clearly, in the
procedure of plan formulation, both annual and five-yearly, the state governments
and the Planning Commission are closely interacting. This relation however has not
been free from difficulties. One of the major complaints of states is that they have
little freedom in the formulation of even state plans due to excessive interference by
the Planning Commission. Some of the points of conflict are discussed below
primarily in the light of the Sarkaria Commission Report.
t h e first irritant relates to the procedure of scrutiny of state plans and schemes by
the Planning Commission. Not only is the total size of the state plan examined in
detail but even the sectoral plans are scrutinised in such detail that the details of
individual schemes are thoroughly discussed. Though the Sarkaria Commission
concluded the "the alleged overbearing approach by the Planning Commission, in the
process of formulation, scrutiny and finalisation of state plans, is more apparent
than real", it nevertheless recommended that the "Planning Commission should not
try to scmtinise in detail all the individual sectoral schemes in the state plans, but
concentrate on the key ones involving large outlays."
The second area of conflict relates to financial resources-the mechanism of Central
assistance and the practice of earmarking of resources. Regarding central assistance
the states objections mainly relate to the facts that (a) too much of it is in the form
of loans and not grants, (b) the formula of central'assistance has a'component of
discretion, and some states hold that (c) the formula itself should be revised to give
greater weightage to the needs of the weaker states. Besides the adequacy and nature
of central plan assistance the system of earmarking of resources by the Planning
omm mission has been a source of complaint. About sixty per cent of the resources
are earmarked reducing the freedom and flexibility of the states in utilising resources
in accordance with their priorities. But the Planning Commission claims that only
the important sectors are earmarked and states have all the freedom to utilise the
earmarked resources of these sectors for schemes and projects of their choice. But
the fact remains that given considerable inter-state diversity in resources and
developmental needs, the inter-sectoral allocation of resources becomes less flexible
by having a large chunk of resources earmarked.
But perhaps the most controversial area has been that of the Centrally Sponsored State W i n g M a d h a y
Schemes. A Centrally Sponsored Scheme refers to a scheme relating to a state
subject which is sponsored and financed, at least partly, by the Central government.
To give an example, the Sarkaria Commission noted that though agriculture and
rural development are state subjects about 43 per cent outlay on this had been in the
Central sector in the Sixth Plan. The states have complained that such schemes are
launched without adequately consulting them and involve detailed scrutiny of the
projects and its implementation by the concerned central ministries and also do not
take into account the inter-state diversities. They also distort the process of transfer
of resources and the state budgets as the states have usually to contribute an amount
matching the scheme-specific central assistance. In 1967, the Administrative Reforms
Commission had suggested that limits be put on Centrally Sponsored Schemes.
Later, a committee set up by the Planning Commission un'der the Chairmanship of
Shri K. Ramamurti suggested a set of criteria to form the basis of a policy for
Centrally Sponsored Schemes. Recently the Sarkaria Commission has stressed once
again the need to accept the Ramamurti Committee criteria and minimise the
number of Centrally Sponsored Schemes. This would, together with measures like
the strengthening of state planning machinery, help in promoting more meaningful
planning at the state level.

CONCLUSION
Planning at the state level; is still not adequately developed and there is a great deal
of difference between states in this matter. The most important aspect of planning
that is the technical competence and machinery for planning has to develop further
-for the states to really take on the task of planned economic development. The State
Planning Boards d o not yet command adequate respect and are not a critical agency ,
for planning. Their composition, including the expertise of members and their
secretariat, is also a hindrance to their effective functioning. Debureaucratisation of
the planning process at the state level should be attempted as a first step towards
purposeful planning. B

Together with the develppment of a competent state planning machinery there

should be efforts to give greater autonomy to states to plan in areas which come
under their purview. This would call for lesser control by the Planning Commission
regarding details ahd also a rationalisation of Centrally Sponsored Schemes. This
would also open up the question of transfer of financial resources from the Centre to
states and the states, ;own efforts at resource mobilisation. Giving greater
responsibility to the states and strengthening their capabilities is perhaps the only
way to effective state planning.

Chcck Your Progress 2

;Note: f ) Use the space given below for your answers.
2) Check your answersB
with those given at the end of the unit.
1) Highlight the structure.and functions of the State Planning Department.

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

.........................................................................................
2) Discuss the. procedure for formulation of Five Year Plan at the state.level.
.........................................................................................
 3) Formulation of plans calls for close interaction between the Planning
Commission and state governments. this relation however has not been free from
I
difficulties. Discuss.

10.7 LET US SUM UP

In this unit we have studied the machinery for state planning in India. The evolution,
role and composition of the State Planning Boards have also been discussed. The
functions and the' structures of the State Planning Departments have been
highlighted. Finally, we studied the process of state plan formulation (annual and
five-yearly) and saw the way in which state and central agencies interact in the
process and discussed some of the problems arising out of this interaction.

10.8 KEY WORDS

Approach Paper : The document outlining the broad objectives and strategies for the
forthcoming Five-Year Plan so that detailed planning exercises develop on the given
lines.
Central Aalbt.nce :Transfer of financial resources from the Centre to states, either
in the form of grants or as loans, to finance expenditures under the plan head.
Centrally Sponsored Sebemes : Plan Schemes sponsored by Central ministries on
subjects falling in the state list with usually fifty per cent financing by the Centre.
Debureaucratifation : Process through which the bureaucratic
characteristics/proceduressuch.as adherence to rules, red-tapism (delay), hierarchy,
rigid division of work etc. are de-emphasised or watered down.
Draft Plan :This is atentative five year or even annual plan formulated by the state
planning agencies or the Planning Commission and is designed to be the basis for
discussion and examination by all concerned parties before it is finally accepted.

10.9 REFERENCES
Khandelwal, R.M . 1985. State Level Plan Administration in India, R.B.S.A
Publishers : Jaipur.
Reddy, K. Venugopal and Kosalram, K. (Edited). 1988. Multi-level Planning in
India : CESS and Booklinks Corporation. Hyderabad.
Somasekhara, N. 1984. State's Planning in India. Himalaya Publishing House:
Bombay.

10.10 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
-Check Your Progress 1

I) Your answer should include the following points :

as per ARC, the functions assigned to the SPBs were vaguely defined
it suggested certain functions for SPBs. SPBs had to make an assessment of
the state's resources, make effective use of the resources, determine plan
priorities and assist the district authorities in plan formulation
SPBs were to identify factors retarding economic and social development and
review the progress of plan implementation.
2) Your answer should include the following points :
according to ARC, the composition of the SPBs constituted a major defect in
the state planning machinery
e. ARC suggested a scheme for reorganisation of SPBs
it suggested that SPBs should have their own Secretariat
the Planning Commission suggested the setting up of an open planning body
at the state level
in accordance with these recommendations, SPBs were constituted, their
actual structure shows a number of similarities as well as differences between
states.
3) Your answer should include the following points :
Chairman.and Deputy/ Vice Chairman
official members or ex-officio members
non-official members
Secretariat/Off~ceof the State Planning Board.

Check Your Progress 2

I) Your answer should include the following points :
states have full-fledged Planning Departments in their secretariat
Department is headed by a secretary
the planning function of the Department is performed by civil servants
the work of the Department is divided between divisions
the Departments are responsible for the formulation of plans
they look after the day-today matters relating to planning
they make an estimate of financial and real resources likely to be available for
plans
they decide upon the plan priorities
they have to present state plans to the cabinet and the legislature
they have to maintain liaison with the Planning Commission and Central
Working Groups.
2) Your answer should include the following points :
for the formulation of plans at the state level the states and Planning
Commission are in constant interaction
 states start 'advance action' on plan formulation even before they receive
guidelines from the Planning Commission
different departments are involved in this exercise
Planning Commission invites suggestions regarding the approach paper from
the states and prepares a draft approach which is circulated to the states
after the NDC approves the approach paper the states are requested to
formulate a draft Five-Year Plan keeping in view the objectives given in the
approach paper
based on the national approach, State's own approach, resource position,
development experiences and priorities, Planning Department prepares state
draft plan
various state departments, district and regional planning agencies, Central
Working Groups. Planning Commission and Central ministries help in plan
formulation
state plan proposals are discussed by the Central Working Groups and
Planning Commission
after the discussion on the draft national plan by the states, it is passed by the
NDC.
3) Your answer should include the following points :
excessive interference by the Planning Commission in formulation of state
plans.
the state plan, sectoral plans and individual schemes are thoroughly
scrutinised by the Planning Commission
the mechanism of Central assistance and the practice of earmarking of
resources to the states is not welcome by the states.
the Centrally Sponsored Schemes according to the states are launched withou
adequately consulting them, these do not take into account inter-state
diversities. .
 UNIT 11 DISTRICT PLANNING
Structure
Objectives
lnt reduction
Rationale Behind District Plannipg
Role of Panchayati Raj Institutions in Local Planning
District Planning Machinery
Problems of District Planning
Let Us Sum Up
Key Words
References
Answers to check Your Progress Exercises

11.0 OBJECTIVES
After studying this unit you should be able to :
discuss the meaning and importance of district planning
explain the steps taken to promote people's participation in planning
8 highlight the evolution of district planning machinery
8 discuss the problems of district planning.

INTRODUCTION
In a vast country like India, with considerable degree of diversity between regions,
planning by a sole Central planning agency can even be counter-productive.
Therefore, ever since Independence there has been a strong trend in the country in
support of democratic decentralisation of the planning process. Broadly, the concept
of democratic decentralisation means the involvement of the p&ple at various stages
of plan formulation and implementation. Under such a scheme of things planning
would have to be done at the Central level, at the state level and at levels below the
state, that is at the block and the village levels. It is only then that planning can
become truly a national endeavour. But this requires that a suitable planning
machinery be established at various levels. It also requires that the tasks of planning
at the various levels are clearly and appropriately specified and links are established
between various levels of planning. Funher, since the ability and the power to decide
on economic matters is an essential part of planning, the process of democratic
decentralisation has as its core the concept of decentralisation of political,
administrative and financial powers.
In this unit we shall study the evolution and functioning of the planning machinery
a$ the district level and in the process discuss the steps taken and the problems
invdlved in attempting to move in the direction of demobratic decentralisation and
planned development.

RATIONALE BEHIND DISTRICT PLANNING

I The Constitution of India provides for the distribution of legislative and financial
powers between the Centre and the states. Further, no politial authority is specified
in the Constitution for the districts. This raises the important issue of the feasibility
of district planning. However, .the Constitution can be amended given the necessary
will. The important question therefore is regarding the desirability of disrict
planning. Should there be planning at an intermediate level that is between the state
and the project .level? If so, then what should be the content of such planning under
altern$tivescenarios of decentralisation of political powe~to the district level?
-.
-
 The case for district planning arises, first, from the fact that a coordinated inter-,
departmental effort is likely to give greater benefit from the same outlay than the
sum total of uncoordinated departmental efforts. Usually, development activities at
the sub-state levels are handled by various departments, each having their own
hierarchies. Also, non-departmental public agencies like commercial banks, input
corporations, marketing agencies, etc. also operate at the district and sub-district
levels. Thus developm~ntfunctions get highly fragmented among numerous
departments and agencies. Immense benefits can be reaped by integrating and co-
ordinating these individual efforts into a consistent regional plan framework. This
requires the setting up of planning agency which can benefit from the fact that most
departments and agencies have their regional offices located at the district level.
District planning is therefore necessary for coordination, consistency and spatial
planning.
Another reason in favour of district planning arises from the need to allow for
diversity and different levels of development between regions. A single plan even,at
the state level, it is argued, cannot account for the great diversity in natural
resources, terrain, soil and water availability, skills and cultural factors. It is
therefore desirable that planning is decentralised at least upto the district level so
that effective use can be made of local resources after identifying local needs and
problems. To plan at a centralised level would mean either the neglect of diversity or
would involve costly collection of data and information from a large area and the
processing of such voluminous amount of information to evolve a consistent and
integrated plan. Decentralised planning would therefore reduce information costs and
allow planning to be of manageable size while at the same time accounting for
regional needs and resources.
However, although these arguments related to spatial planning and decentralised
planning are undoubtedly important, the emphasis on sub-state level planning in
India has primarily been the outcome of political values. The influence of Gandhian
ideals of self-managing small communities has underlined many of the efforts at
decentralisation of planning. In fact the ideas of "planning from below" or "grass
roots planning" have been stated time and again since the inception of planning
process in India. People's participation, from the stage of setting up of priorities to
the stage of plan implementation, has been propagated not only as a means of
effective planning but also as an end in itself. Planning at the district and lower
levels has been seen as an input to the process of strengthening democracy in this
country. The political ideals of democracy and socialism have been the concepts
underlying whatever efforts that have been made to decentralise the planning
prgcess. And it is to the study of these efforts and the problems they have
encountered that we should now devote our attention.

11.3 ROLE OF PANCHAYATI RAJ INSTITUTIONS '

IN LOCAL PLANNING
, Planning requires an agency and a process. At the district level the struggle for
setting up a planning machinery has been a torturous one. The earliest attempts in
this direction was the Community Development Programme and its sequel the
Panchayati Raj System. These were attempts of the 1950s to build structures for
people's participation in planned development. They laid greater stress on people's
participation in planned development rather than on the technical aspects on details
of planning as such.
The Community Development Programme was started in 1952 to promote better
living for the whole community with its active participation and initiative. The role
of the government was to plan and orpnise the programmes on a national basis and
to provide technical services and materials beyond the resources of the communities.
As regards the people, community development was seen as "essentially both an
educatioial and organisational process". It was concerned with changing people's
attitudes and practices and was designed as nurseries of community action.
However; the Community Development Programmes in its first few years failed to
evoke public participation. The Balwant Rai Mehta Study Team was appointed in
. 1957 to study the Community Development Programme, sp~ciallyfrom the point of
F
I
view of assessing the extent of popular participation and to recornmeneeation of District Planning
i institutions through which greater participation could be achieved. The Study Team
concluded that "one of the least successful aspects" of the Community Development
Programme was "its attempt to evoke popular initiative". At the district level this
was due to inappropriate agencies like District Boards being made responsible for
planning. The District Boards were too large, lacked expertise, legitimacy and even
power due to the fact that some states took over some of the Boards' powersand in
I many others there was a dual control both by the states and the Boards.
The Study Team therefore recommended that these bodies be replaced by democratic
institutions to take charge of all aspects of development work. At the district level
such a body was to be the Zila Parishad which was to be an advisory body with the
Collector as the Chairman. The members of the Zila Parishad were to be indirectly
elected mainly through ex-officio members from lower tiers of the Panchayati Raj
institutions. In fact, the Zila Parishad was to be the highest level of the three-tier
,Panchayati Raj institutions viz., Village Panchayats, block-level Panchayat Samitis
and district-level Zila Parishads. The Team's recommendations regarding the
establishment of statutory and elective institutions with definite duties, functions,
powers and resources received considerable amount of support. By 1961 most of the
states established the Panchayati Raj system, sometimes with minor modifications,
on lines proposed by the Balwant Rai Mehta study team.
But planning under the Panchayati Raj institutions was not much of a success.
Perhaps this was not due to any inherent weakness in the decentralisation process.
The main reason seems to be that decentralisation did not go far enough. The
Panchayati Raj institutions were never really given a chance to actively engage in
local planning. Their operations were severely restricted on account of four principal
factors: I) lack of experience, skill and help in planning; 2) domination by the
bureaucracy; 3) inadequate devolution of financial powers, and 4) the subordinate
status of these institutions vis-a-vis the state government. We will now briefly discuss
these factors.
Lack of Experience, Skill and Help in Planning : The lack of experience and ability
I meant that the Zila Parishads could hardly engage in meaningful planning. The

district plan was drawn up by the officials who in turn lacked the requisite sk~lls.In
'fact district plans wherever they existed were no more than a compilation of
departmental schemes and outlays at the district level with the sum total of block
'plan providing a statistical summary. Although the post of the District Plannlng
'Officer or its equivalent existed in many cases, there were no clear procedures
outlined for formulating the district plan. The so-called 'district plan' once prepared
was presented before the Zila Parishad almost as a formality and was then passed.
The legislative process was rushed through giving little time for elected members t o
arti~ulatetheir requirements, make modifications and suggest alternatives. Walter C.
Neale reported a case where the Five-Year Plan was placed before the Zila Parishad
at ten 10 O'clock in the morning and passed by the same evening. All tasks required
in the process i.e. formation of sub-committees, hearing, scrutiny of proposals etc.
were rushed through in a matter of hours. People's participation was therefore
reduced to a token with Zila Parishads taking the role of merq rubber stamps of
official plans.
Domination by the Bureaucracy : The role of the bureaucracy was a factor
contributing to the erosion of the influence of the Zila Parishads. The officials
prepared their departmental plans and pooled these into a 'district plan' and their
primary objective was to get these passed by the Parishad. Since they had more
adequate information and were better educated they succeeded in obtaining the Zila
Parishad's approval for the proposed plan. The fact that the Zila Parishad members
knew little about technical details only helped ip confusing issues. The role of the
Zila Parishads in planning was therefore only peripheral.
Inadequate Devolution of Financial Powers : The Zila Parishads had little financial
powers. Adequate financial powers are really necessary ior planning. The concept of
a district budget which was voted by the Zila Parishad did exist but the Parishad did
not have the right to alter most of the schematic budgets. For example, they Auld
not alter the cost and other specifications of road construction proposals of the
Public Works Departments. Estimates showed that the Parishad had powers to alter
.. I .. ..- .
items acc~untingfor about 10 to 15 per cent of the budget amount. With time, this
Plm.ln~Roc- Subordinate Status of Panchayati Raj Jnstitutions : In addition, in most cases, the
District Magistrate had the power to veto acts of the Zila Parishads. Thus in matters
of planning, the Parishads could not force their views on the administration. The
interference by state level politicians (MLAs, etc.) also increased over Zila Parishads
reducing the role of local participation. With the introduction of Centrally
Sponsored Schemes the powers of the Zila Parishads got further curtailed. The staff
under the Parishads would execute the Schemes though the programmes were kept
outside their purview. The staff spared by the state to the district also gradually
came to consist of officers who were not wanted by the state governments. And
filially there was a tapering off of plan allocations for Panchayati Raj institutions
and a gradual curtailment of powers of the Parishads resulting from various
enactments of the state legislatures. The decline of Zila Parishads was completed
with their supersession and the practice of not holding elections. Barring a few
exceptions, the initial experiments with democratic decentralisation were not
successful.
1
As far as decentralised planned development is concerned we could not achieve,
much. T o rectify this defect and to improve the working of democratic institutions at
the district and lower levels the Government of India appointed a Cbmmittee headed
by Asoka Mehta in December, 1977. The Committee known as the Asoka Mehta
Committee rdcommended a two-tier structure for Panchayati Raj with the district
being the first point of decentralisation below the state. The district level was also to
be the basic unit of planning.
Unlike the Balwant Rai Mehta Committee, the Asoka Mehta Committee
recommended direct elections to the Zila Parishads with reservations for scheduled
castes, tribes and women. For planning purposes, the recommendation was for
setting up a Committee of the whole Zila Parishad with MLAs (Members of
Legislative Assembly), MLCs (Members of Legislative Council) and MPs (Members
of Parliament) from the a r m as ex-officio members. The Zila Parishad was to be the
basic unit of decentralisation with a comprehensive range of developmental
responsibilities. In fact the Committee went even further by recommending that all
developmental functions related to the districts be transferred from the jurisdiction
of state governments to the Zila Parishads. p he Zila Parishads, to be able to perform
the developmental role, were to have all the staff under the supervision of the
Parishad. The Parishad was also t o have financial powers and earmarked devolution
of funds for developmental purposes. In short, the Committee visualised a separate
tier of development administration below the state with comprehensive and 'clearly
defined developmental, administrative, financial and legislative functions.
The recommendations of the Asoka Mehta Committee, although fairly radical, did
not find much favour with the state governments. To discuss the Committee's report
a Conference of Chief Ministers was held in 1979. The discussions led to the
preparation of a model bill to ensure uniformity in the Panchayati Raj system. As
things stand today only a few states, most notably Karnataka, has gone ahead and
implemented the Panchayati Raj system on the lines recommended by the Asoka
Mehta Committee. Perhaps a greater involvements of the Centre in the process,
including possibly an amendment to the Constitution to ensure democratic
decentralisation upto at least the district ltvel may be necessary. In fact, two
Constitutional Amendment Bills (64th and 65th) were prepared one by the Congress
and the other by the National Front Government with this broad objective in view.
Till now no further action has been taken on these lines and the issue of effective
decentralisation on an all-India basis below the state level appears t o have been
shelved for the time being.
C

Check Your Progess 1

Note : I) Use the space given below for your answers.
2) Check your answers with those given at the end of the unit.
I) Discuss the need for district planning.
2) What were the reasons for subdued involvement of Panchayati Raj institutions
5
in local planning?

11.4 DISTRICT PLANNING MACHINERY

In the last section we saw that the ideal of people's participation in plan formulation
has had limited success. The attempts at democratic decentralisation has not been
very effective. Despite this, the attempts to strengthen the machinery of planning at
the district level has continued. Due to the limited success of Panchayati Raj
institutions, the attempts at establishing and strengthening of the technical side of the
'planning machinery has gained momentum. In fact the efforu for strengthening
district planning machinery began in the mid 1960s only, this was the period when
(the weaknesses of district planning had bcome clearly visible.
/As a part of the Community Devel~pmentProgramme the states were asked to
iprepare district and village plans as early as in 1954: However, decentralised
Iplanning got a slightly clearer shape with the recommendations of the Belwant Rai
,Mehta Committee report in 1957. The Committee stated that local plans under the
!Community Development Programme was to be the joint responsibility of people's
representatives assisted by the development staff. The states were expected to lay
down the "broad objectives, the general pattern and the measure of Yinancial,
technical and supervisory assistance available". The concept of block and district
budgets were introduced. While the Zila Parishad was the forum of people's
participation the officials in charge of development departments at the district level
were placed under the overall guidance of the District Collector who was to be
assisted by an Additional Collector and a District Statistical Officer for planning and
evaluation purposes. The District Statistical Officer was to function under the
technical control of the Director of Economics and Statistics and the administrative
control of the Collector.
/

A decade after the Balwant Rai Mehta Committee's recommendations, the

Administrative Reforms Commission noted that the attempts at district planning
have not been effective. According to the Commission this was due to the absence of
a clear idea regarding qeairns and resource availability for district planning. This
was compounded by thz fact that "the district had no planning expertise as suchw.
The Commission therefore recommended that an appropriate planning machinery for
the formulation of plans should be provided at the district level. The planning team
in the district would essentially consist of a Planning Officer who may be either an
administrative or a Vchnical officer capable and trained for coordinating
developmental work': ,This oEficer would work full time on the planning side. The
district level technical officers belonging to sectors such as agriculture, forestry,
minor irrigation etc. should be responsible for plan formulation and implementation
at their levels. Planning at the district level, the Commission felt, should primarily be
in terms of physical planning for the development of local resources. The
Commission also felt that since Zila Parishads normally have no representation from
urban areas they are therefore not the best agencies for balanced district planning as
a whole. The Administrative Reforms Commission therefore recommended that
"there should be a District Planning Committee consisting of the representatiTes of
the Zila Parishad, Municipal Bodies in the district, professional talent in the district
and with appropriate association of the district officersw. It recommended that the
District Planning Committee, unlike the Zila Parishads, should be sprall in size to
ensure effective participation by its members. The District Planning Officer should
be the Secretary of the Committee which should meet at least once in two months.
The Administrative Reforms Commission recommendations'were closely followed by
"guidelines" issued by the Planning Commission in 1969. The guidelines stressed the
need for decentralised planning and 'suggested the involvement of government, local
self-government bodies and progressive farmers and entrepreneurs in the assessment
of available resources and the existing administrative situation ard in the fixing of
priorities. It suggested that officials of different departments are to be responsible for
the preparation of schemes pertaining to their departments for inclusion in the
district plan. The task of the planning agency was to integrate these departmental
plans into a consistent and comprehensive plan for the district. In this process of
plan formulation the planning agency was to consult not only various departments
hut also lower and higher level agencies and other district level public institutions
like banks. Thus the guidelines went into great detail about the process of plan ,
formulation. However, it paid almost no attention to the problem of setting up of an
adequate planning machinery at the district level. A suitable planning machinery at
the district level continued to be absent 'even a decade later as the Working Group
on Block ~ e v dPlanning
~ (the Dantwala Committee) observed : "... there are a
number of departments located in the district, each with its own vertical hierarchy
and separate existence at the state level ... The District Collector performs the role of
a coordinator. Even this role is largely undefined and informal and is limited to
issues pertaining to implementationn.
Thus eve" i" 1978 the Planning machinery at the district level was either non- .
existent or extremely deficient. Regarding the district planning machinery the
Dantwala Committee made the following observations :
'In majority of states, no attempt seems to have been made to improve personnel
resources at this level. Even in the case of states which have set up something like
'District Planning Machinery', the composition of the staff reflects that there has
been no serious attempt to induct technical skills in planning. The staff who have
been appointed in these units perform only routine secretariat functions, assisting
the &strict Developme$ Council under the Collector but do not provide much
technical support in the tasks of plan formulation, monitoring, review and
evaluation. Thus in many states, the District Planning Cell consists of District
Planning Officer assisted by Statistical and Research Assistants and clerical staff
who mainly look after the implementation of the district plan somewhat in a
routine manner."
The Dandwala Committee therefore suggested the strengthening of the District
Planning Cells and recommended that a minimum core staff should consist of,
besides the Chief Planning Officer, six other technical oficers-viz.,
i) economist/statistician, ii) cartographerlgeographer, iii) agronomist, iv) engineer,
V)industry officer, and vi) credit planning officer. In addition to the above core staff,
specialists may be engaged according to the needs of the arealprogramme. The Chief
Planning Officer should be a person who can coordinate the work of the planning
team with that of the departmental officers. He can be from any discipline and
should be the principal aid to the District_Collectorand second to him on the
plannin4si;le.
 I
The recommendations of the Working Group (Dantwala Committee) were followed
by the first serious attempt by the Planning Commission to set up a competent
district planning machinery. In June 1982 the Planning Commission circulated a
document entitled "Scheme for Strengthening of Planning Machinery at the District
Level-Guidelines". The scheme envisaged the induction of technical personnel with
knowledge and skills required for scientific district planning with minimum
supporti'ng staff. Half the cost of the scheme was to be borne by the Centre and the
rest by the states. The proposed planning team was to consist of a Chief Planning
Officer and one economist working with a team of five other specialists chosen from
a suggested list of six specialists-viz, arealprogramme specialist, planning officer
(social development), agronomist, engineer, credit planning officer and a
geographerlcartographer.The guidelines also laid dodn in detail the functions of the
, various specialists and officers of the planning team. It also laid down other details
like the status, qualifications and pay of the personnel, the selection of consultants
I and also gave some suggestions relating to planning procedure. It clarified that only
those states which take concrete steps to make district planning a reality would be
eligible for financial assistance.
To transform the district planning endeavour from a concept to a reality, the
Planning Commission also set up a Working Group on District Planning in 1982
itself. The Working Group which submitted its report in 1984 was headed by Prof.
C.H. Hanumantha Rao. The Working Group was set up with the objectives of
defining the scope, content and procedure of district planning and to establish links
between planning from the block to the state levels. The Working Group noted that
there was some form of District Planning Body in most of the states though they
I were called by various names like District Planning Board/Committee/Council or
Zila Development Board, etc. In some states (Maharashtra, Gujarat, U.P. and Bihar)
the body was headed by a Minister of State. In two states there was a non-official
Chairman and in Sikkim the body was chaired by an MLA. But in most states the
District CollectorlDeputy Commissioner was the Chairman. The Working Group
also found that purely technical personnel in the district planning bodies in the states
ranged from two to six officers, they did not necessarily belong to different
disciplines. They were usually on deputation from other departments and did not
possess any particular.planning qualifications. Thus though by early 1980s district
planning machineries had been set up in states their technical competence was poor.
The Working Group, as per its terms of reference, laid down the functions of district
planning bodies as follows: a) crystallisation of local needs and objectives, b) taking
stock of the natural and human endowments, c) listing and mapping of amenities,
d) formulation of district plans, e) formulation of policies, programmes and priorities,
f) coordinated implementation, and g) monitoring and review of district plans and
programmes. For these tasks the Working Group suggested the setting up of a
broad-based District Planning Body comprising of representatives from the Zila
Parishad, Panchayat Samities, municipalities/corporations, MLAs and MPs from
the district. prominent personalities, workers' and entrepreneurs' representatives,
bank representatives, etc. Thctotal membership of the body could be around fifty. '
In addition t o the District Planning Body there should be a smaller Executive Body
or Steering Committee with the District Collector as the Chairman, the Chief
Planning Officer as the Member-Secretary and other members dl'ahn from important
officers of development departments and agencies. The Working Group therefore
was a de facto group.lt favoured the transfer of the ,planning functkn t o a body
other than the Zila Parishad till the time Zila Parishads become effective and active.
These non-elected bodies, the Group suggested, may be constituted by an executive
order. To aid the District Planning Body in technical matters, the Working Group
further recommended that there should be a District Planning Cell/ Office headed by
a Chief Planning Officer with a status next to that of the District Collector. The
Chief Planning Officer should be specially trained in regionallarea planning and
should be assisted by a team of experts from various disciplines and subject areas.
The Group also suggested the strengthening of the Collector's role and clear
definition of financial and administrative powers for the distict level government and
adequate disaggregation of outlay according to districts. Thus the Working Group
made far reaching recommendations on the technical and administrative aspects of
district planning.
In 1985, just after the Working Group's report, the "Committee to review the
existing Administrative Arrangements'for Rural Development and Poverty
Alleviation Programmes" (in short CAARD) submitted ~ t report s which broadly
supported the recommendation of the Working Group, More specifically, it endorsed
the Working Group's recommendation for setting up District Planning Bodies and
the suggestions for decentralisation of financial and administrative powers. However,
it differed in one important respect in that it called for the separation of
developmental and regulatory activities at the district level and suggested the creation
of a post of District Development Commissioner entrusted with developmental
responsibilities. The regulatory role was to be performed by the District Collector.
The Development Commissioner should be much senior in rank to the District
Collector and should possess wide developmental experience. The CAARD also
recommended the setting up of a State Development Council (on the analogy of the
National Development Council) so that district and state plans can be brought into a
common framework. Thus once again fairly detailed suggestions were made to
restructure the district administrative machinery in order to handle the gigantic task
of developmental planning.

11.5 PROBLEMS OF DISTRICT PLANNING

District planning, despite the fact that its importance has been realised and its need
has been stressed again and again, has yet to become a reality. Large number of
Committees, Working Groups, Commissions, etc. have squarely faced the issue and
made a large number of suggestions. However, very little concrete action has been
taken. It is only when the Planning Commission decided to finance a scheme for
strengthening the technical side of district planning that most districts were able to
have a District Planning Cell. However, these cells have done very little actual
planning in most districts although it appears that their role is likely to increase in
the near future.
Them are various reasons for the relative failure of district planning in India. This
unit has tried to highlight them, though certain major problems need to be
emphasised. First, there is the basic problem that planning and authority must go
hand in hand. Since the district level government is not recognised as a separate tier
of government, like the State and the Centre, it becomes virtually impossible for it to
set targets, decide on priorities, mobilise resources and decide on allocations.
Planning at the district level is therefore reduced to a formality in the absence of
adequate autonomy.
The second, and a related obstacle, is the inadequacy of financial powers at the
district level. If the districts are provided with adequate resources, they can decide on
an o p t i r m pattern of allocation. However, devolution of free resources to districts
is small as most planned schemes are either Ceptrally sponsored or promoted by the
state government. The districts have negligible revenue raising powers and no power
to borrow resources. Therefore, in the absence of financial resources planning loses
its meaning.
Another problem is the absence, in most states, of elected district level bodies to
articulate the needs of the people. The process of decentralisation and Panchayati
Raj has had only limited success. In the absence,of popular initiative planning
reduces to a bureaucratic exercise of formulation, sanction and implementation of
departmental schemes. District planning requires strong and enlightened Zila
Parishads.
Finally, district planning sufferes from the inadequacy of trained and competent
planning personnel at the district level. The officers of the District Planning Cells are
therefore! normally engaged in-routine work and not in technical exercises. For
district planning to be. successful a3and of competent district planners and a popular
and relatively autonomous district administration are being increasingly recognised
as the basic prerequisites.

Cbcck Your Progress 2

Note : I) Use the space given below for your answers.
2) Check your answers with those given at the end of the unit.
--
 r
1) Discuss the r&ommendations of Administrative Reforms Commission regarding
the strengthening of the planning machinery at the district-level.

2) Highlight the attempts made by the Dantwala Committee and Planning

; Commission to improve the district planning machinery.

11.6 LET US SUM UP

In this unit we have discussed the importance and need for district planning. We
have highlighted the efforts that have been made to make the concept of district
planning a reality. These efforts have been on two parallel lines : a) strengthening the
process of people's participation in development at the district level, and b) building
up a competent district planning machinery. Though some progress has been made
in recent years in building up District Planning Cells further steps towards their
development have been retarded due to inadequate decentralisation.

11.7 KEY WORDS

Agronomist : Person specialised in a branch of agriculture dealing with field crop
production and soil management.
Analogy :Comparison or similarity between two things that are alike in some way.
Cartographer : A person whose job is drawing maps.
Dantwala Committee Report :The report of the Working Group on Block Level
Planning (1978).
Defacto :Something that is real.
District Planning Cell : The technical unit responsible for formulation, monitoring
and often evaluation of district plans.
Spatial Planning : Planning of spaces with the objective of optimal location of
services like dispensaries, banks, schools etc.
Vertical Hierarchy : Offices placed in such an order that facilitates issuance of a
command from the level above and the compliance of the same by the level below.
The structure of such authority can be compared with the different rungs of a ladder.
Z i h Parishad : Elected representative body of the district level with legislativeltd
planning functions.

REFERENCES
Department of Rural Development. 1978. Report o j the Committee on Panchayati
Raj Instit~itions.Ministry of Agriculture, Government of India: New Delhi.
Departmentpf Rural Development. 1985. Report o j the Committee to Review the
Existing Administrative Arrangements jor Rural Development and Poverty
Alleviation Programmes (CAARD);Ministry of Agriculture, Government of India:
New Delhi.
Planning Commission. 1984. Report o j the Working Group on District Planning;
Government of India: New Delhi.

11.9 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress 1
I) Your answer should include the following points
district planning is needed for coordination and consistency in planning
a
it is a must for spatial planning
immense benefits can be reaped by integrating and coordinating the individual
efforts into a consistent regional plan
it is needed for regional development
a single plan cannot account for the. diversity in culture, natural resources and
human skills
it reduces information costs and makes planning manageable.
2) Your answer should include the following points :
lack of experience, skill and help in planning, the officials who drew up plans
lacked the requisite skills, the Zila Parishads were not involved in planning
domination by the bureaucracy,, where the primary objective of the officials
was to get the departmental plans approved by Zila Parishad, .the members of
the Parishad did not possess sufficient knowledge
inadequate devolution of financial powers to the Zila Parishads
District Magistrate had the power to veto acts of the Zila Parishads

with the introduction of Centrally Sponsored Schemes the powers of Zila

Paiishads were further curtailed
curtailment of plan allocations for Panchayati Raj institutions
elections to the Panchayati Raj institutions were not held regularly
the two-tier structure recommended by the Asoka Mehta Committee was not
welcom$d by all the state governments
the two Constitutional Amendment Bills (64th & 65th) have not been able to
ensure effective decentralisation.

Check Your Prowess 2

I) Your answei should include the following points:
the ARC recommended that an appropriate planning machinery for the
formulation of plans should be provided at the district-level
it recommended that the planning team would consist of a Planning Officer
for coordinating developmental work
 the technical officers should be responsible for formulation and
implementation of plans at their level
planning at the district level, should be in terms of physical planning for the
development of local resources
there should be a District Planning Committee consisting of the
representatives of the Zila Parishad, professional talent and municipal bodies
in the district
the Committee should be small in size and should meet at least once in two
months.
2) Your answer should include the following points:
.a Dantwala Committee.suggested the strengthening of the District Planning
Cells
it recommended a minimum core staff of six technical officers and one Chief
Planning Officer for the District Planning Cell
in June 1982, the Planning Commission circulated a document entitled
"Scheme for Strengthening of Planning Mechinery at the District Level-
Guidelines"
Lhe scheme envisaged the induction of technical personnel with knowledge and
skills and minimum supporting staff for proper planning at the district level
the planning team proposed by the Planning Commission was to consist of a
Chief Planning Officer, one economist and five specialists
the Guidelines laid down the functions of the specialists
only states which would take concrete steps to make district planning fruitful
were to receive financial assistance
Planning Commission set up a Working Group on District Planning in 1982
itself
the Working Grou noted that the technical competence of personnel
P
involved in district planning was very poor
it laid down the functions of district planning bodies
it suggested the .setting up of a broad-based District Planning Body and a
smaller Executive'Body or Steering Committee
it suggested the transfer of planning function to a body other than the Zila
Parishad till the time Zila Parishad becomes effective and active
it recommended the setting up of a District Planning Cell and Distrbt
Planning Body in technical matters
the Group also suggested the strengthening of the Collector's role and
adequate devolution of financial and administrative powers to the districts.
UNIT 12 GRASS ROOTS PLANNING
Structure
Objectives
1ntreduction
Community Development Programme
Panchayati Raj
Decline of Grass Roots Planning
Attempts at Revival
1-et Us Sum Up
Key Words
References
Answers to Check Your Progress Exercises

12.0 OBJECTIVES
After studying this unit, you should be able to:
discuss the various steps taken to operationalise grass roots planning in India
explain the purpose and features of structures like the block and the samiti
highlight the problems involved in the process of democratic decentralisation
discuss the recent attempts at operationalising grass roots planning.

INTRODUCTION
Although the ideas of 'grass roots planning' and 'planning from below' have their
basis in Gandhian thought, attempts at crystallising these ideals into concrete
administrative and political structures have been rather tentative in the post-
independence period. The ideas of 'decentralised planning', 'planning from below',
'peoples' participation in planning'. 'multi-level planning' etc. have been mentioned
time and again in the Five Year Plan documents. However, only a few steps have
been taken to turn these concepts into reality. In the 1950s the Cbmmunity
Development Programme and the establishment of the Panchayati Raj institutions
were perhaps the first, and uptil now the most comprehensive attempts at putting the
idea of grass roots planning into action. However, these attempts failed and by mid
1960s agricultural growth through improved technology and government support
became the paramount objective.
FA

However, the policy of centralist?. planning with emphasis on growth has thrown up
a number of problems. Foremost of these are increasing inequality especially between
regions and between rural and urban areas. Centralisation in plan formulation has
also alienated large groups.of people from the development process while at the same
time there has been inadequate use of local resources and specialist manpower.
Another major problem area is that of plan implementation, monitoring and project
execution. Decentralisation and peoples' participation, it is now increasingly realised,
are essential for planning to remove the deficiencies of inequitous growth,
unemployment and tardy implementation. Recent years have therefore witnessed a
revival of interest in grass-roots planning.

In this unit we shall study grass-roots planning in its two phases viz., the Community
Development phase and the recent phase. The focus will be on'block level
administration and planning and its chequered evolution.

12.2 COMMUNITY DEVELOPMENT PROGRAMME

The block level administrative structure was t)(e product of the Community
Development Programme (CDP) launched in.the early 1950s. As you read in the
!
previous unit, the basic philosophy underlying the Community Development strategy
was the belief that "all aspects of rural life are interrelated and no lasting results can
be achieved if individual aspects of it are dealt in isolation". It is because of this faith
that the Community Development Programme was made multi-disciplinary in
character though agricultural development remained the primary concern. However,
it was always stressed that the economic aspects of village life cannot be detached
from the broader social aspects and that agricultural development is inextricably
L
linked up with a whole set of social problems. Therefore, social change to enable
1 economic development was central to the Community Development strategy.
The Community Development Programme, in its conceptual basis, was a good
example of grass-roots planning. The very essence of the programme, as the First
, Plan stressed, was 'people's participation". However, sin% small communities like
the villages had limited technical, material and financial'resources, their initiatives
I had to be supported by the state. This needed the establishment of an extension
organisation which would give developmental support to the killagers. Therefore the
two key elements of the CDP were people's initiative and participation encouraged
and aided by an extension organisation. This, it was felt, would enable the
mobilisation of local resources, including manpower, and promote the percolation of
modem technology and resources through the extension agencies. To take an
example from agriculture, what the CDP meant in practice was that extension would
be used to motivate farmers to adopt improved techniques and also to develop the
necessary infrastructure through utilisation of rural manpower.
The extension organisation set up under the CDP created the Community
Development block as the key unit of the structure. It was put under the
administrative control of a Block Development Officer (BDO) who had jurisdiction
over an area of roughly 100 to 120 villages, approximately conforming to a tehsil or
taluk. The BDO was assisted by a multidisciplinary team of extension officers for
different functional areas like agriculture, animal husbandry, irrigation and works.
cooperation, social education, village industries etc. It was stressed that the block
level set up was a "mediumw through which the various developmental departments
would function so as to synchronise their efforts and reach the people.
While there were a number of extension officers at the block level, they all
functioned through the multi-purpose Village Level Worker (VLW) or gram sewak.
The VLW was a crucial link between the villager and the block level administration.
The rationale behind this structure was as follows: "The peasant's life is not cut into
segments, in the way the government's activities are apt to be; the approach to the
villager has, therefore, to be a co-ordinated one, and thus to comprehend his whole
life. Such an approach has to be made, not through a multiplicity of departmental-
officials, but through an agent common at least to the principal departments engaged
in rural work". Although, this may sound alright, in reality this meant that the VLW
was expected to do too much as at the cutting edge the entire 'programme of
decentralised development rested on his/ her shoulders.

12.3 PANCHAYATI RAJ

The Community Development Programme, as we have seen, had two pillars :
people's participation and governmental 'extension'. Whereas the extension
agencies-the Block, the VLWs, etc.-were organised fairly early and planned
budgetary allocations were made for the CDP, the important aspect of people's
participation was tackled only a little later. The most important step in this direction
was the establishment of the Balwant Rai Mehta Committee to study, inter alia, the-
question of popular participation in the CDP.
The recommendations of the Mehta Committee, brought out under the title "Report
of the Team for the Study of Community Projects and National Extension Service",
were far reaching. The Team recommended the establishment of a three tier structure
for Panchayati Raj institutions with elected Panchayats at the village level, an
executive body called the Panchayat Samiti at the b l o ~ klevel and an advisory body
called a Zila Parishad at the district level. These local bodies were to be statutory
and largely elected bodies with necessary resources, power and authority devolved on
them and assisted by a decentralised administrative system working under their
control. The team also recommended that the basic unit of democratic
decentralisation should be located at the block/samiti level.
The Panchayat Samitis, with a jurisdiction co-extensive with a development block,
were entrusted all these development tasks which the block was to undertake under
the CDP. More specifically, these included development of agriculture in all its
aspects, animal husbandry, rural industries, public health, primary education, social
welfare and maintenance of statistics. It was also to be an agent of the state
government in executing special schemes of development entrusted to it.
To enable them to discharge their developmental functions the Samitis were assigned
specified sources of revenue like a percentage of land revenue, cess on land revenue,
profession taxes, proceeds from tolls and leases, etc. In addition, the state
governments were expected to provide conditional and/or unconditional grants-in-
aid. And finally, all Central and state funds spent in the block areas were to be
assigned to the Panchayat Samitis to be spent by it either directly or indirectly. The
Samitis were to have a budget which was to be approved by the Zila Parishad. Thus
the Panchayati Samitis were given resources and assigned developmental functions
and were thus expected to formulate block plans on the basis of people's felt needs
which their (indirectly) elected composition was expected to ensure. To implement
their plans the Samitis were given administrative powers over the technical extension
officers who were to be under the administrative and operational control of their
Chief Administrative Officers, viz., the BDO.
By early 1960s almost the entire country had been covered'by the twin programmes
of Community Development through extension and ~anchayatiRaj institutions. The
atmosphere of confidence it created, reflected in Nehru's characterisation of this as
"the most revolutionary and historical step". It was unfortunately short-lived.
Check Your Progrbs 1
Note : 1) Use the space given below for your answers.
2) Check your answers with those given at the end of the unit.
1) What were the objectives of the Community Development Programme?

2) Highlight the structure and functions of Panchayati Raj institutions.

DECLINE OF GRASS ROOTS PLANNING

The ascendency and decline of grass-roots planning, according to the Asoka Mehta
Committee, had three distinct phases; the phase of ascendency, 1959-64; the phase of
stagnation, 1965-69 and the phase of decline, 1969-77. However, the failure of the
grass-roots planning exercise were visible from its very inception. The causes of this
failure were several and these should be carefully studied so that future attempts at
decentralised planning can be made successful.
I) Among the more important causes ~f failure was the absence of a clear idea and
expertise regarding planning at the block level. Indeed expertise and clarity
regarding the meaning and content of planning was absent even at the district ,

level as we have seen in an earlier unit. In fact there was almost no planning at
the block level as was discovered by scholars like Alice Ilchman: "To talk with
assurance about 'the Block Plan* assumes that a plan exists at every block
headquarters and is available b r examination and use ... In fact, the block plan
turned out to be a singularly elusive document ... When it was demanded,
various pieces of information emerged ... In any event, at none of the blocks ...
was single document which could be copied or photographed as the definite
'Block Plan'." (Quoted in Walter C. Neale's Article on Indian Community
Development ...)
The Block plans, Watter C. Neale reported, "contained a summation of the
information recorded on the scraps of paper that ... VLWs had collected, to which
-were added the programmes administered from block headquarters". Thus block
plans were hardly existent and were no more than some summary statistics and
accounts. Block planning never took off despite the creation of an organisation for
the purpose and the absence of planning capabilities was a major factor for this.
2) The failure is also attributable, in part, to the rigidity in the CDP itself which
was the result of the heavy reliance of the programmes on the bureaucracy. This
causes continual conflict between the Samitis and the officials. "The history of
economic planning and administration at the local level", writes Neale, "has, in
many respects, been the history of tensions between the requirements of
community development and the traditions and responsibilities of the state and
national administrative servicesn. The BDOs role was an unenviable mix of an
"extension officer" and a "programme officern. As a programme officer he was
expected to implement the government's programmes and schemes. As gn
extension off~cerhe was to help the Samiti to articulate their needs and help
prepare a plan. Faced, with the choice of serving one of the two masters more
devotedly, the BDO chose the government and not the Samiti. His choice was
reinforced by the schematic budget of the Community Development Programme.

The 'schematic budget' for a block was the fixed budgetary allocation under the plan
for the Community Development Programme which the BDO was required to spend
on certain specified activities. Though the budget was multidisciplinary, the bulk of
the schematic budget pertained to agricultural development. Not only the heads of
expenditures were specified, the BDOs were also given detailed instructions regarding
the manner of operating the block budget. This gave little freedom to the Panchayat
Samitis and the block officials t o plan according to local felt needs. V.Venkate6an
refers to a case where faced with waterlogging problem certain villagers expressed the
need for a nulla (drain). The BDO was not sure whether his block budget permitted
the construction work and hence referred the matter to the state government which,
in turn, passed the question on t o the Government of India. There have been many
instances of conflict between financial accountability to the authority providing funds
and operational flexibility required for responding to local needs. How could grass-
roots planning operate when for example, the construction of a village drain,
required the clearance of the Government of India?
3) There were other problems also like the problem of co-ordination, the problem
of interference by politicians and officials of the state and central levels and the
problem of existing inequalities and vested interests opposed to egalitarian
development in rural areas. But the decline of the CDP and Panchayati Raj
experiment of the 1950s is directly traceable to the conflict between the urgent
economic needs a t the national level and the local n d s . This was most
strikingly thrown up by the serious food problem the country began to
experience since the late 1950s and which culminated in acute food shortages
during mid 1960s. The food problem manifested itself in outflow of foreign
 exchange to buy food and in rising prices. Though food aid helped temporarily,
the solution, it was realised, lay in rapidly increasing foodgrains production.
Growth in agricultural output through intensive use of inputs like fertilisers,
water, high-yielding varieties of seeds became the accepted government policy.
This was the 'green-revolution' strategy.
This change in strategy of development at the national level changed the content of
the CDP and Panchayati Raj institutions. This major change took the rather silent
form of the community development services being asked to drop "nonessential"
activities and concentrate on raising agricultural production. "ln effect", writes
Neale, "these orders destroyed community development as a joint project of experts
and villagers and turned it into a system of administering specific programmes of
rural credit, loans in kind, subsidies, demonstrations ... and minor social overhead
capital works. The BDO became the man who checked on the conduct of these
programmes. Instead of making the authorities aware of the needs and attitudes of
people at the village level, the BDO started making the villagers aware of the
government's plans and policies and the funds available for them. One might say that
the "spirit had been taken out of community development. Another consequence of
the same cause was to make Panchayati Raj increasingly irrelevarit to economic
planning and administration .... When planning became individualised and
administration became more centralised, the panchayats' economic functions
atrophied".
The decline in the grass-roots planning, it must be emphasised, cannot be dated
strictly as it was a gradual process. The change was visible from around 1960s and
by the end of the decade the Community Development Programme had lost its
spirit. But "at no time was a decision made to replace Community D e v e b p n t and
Panchayati Raj nor have they been abolished". They were simply made ineffective
through neglect.

12.5 ATTEMPTS AT REVIVAL

By mid 1970s the food problem had eased somewhat. However, it was realised that
excessive concern with growth in production has led t o the neglect of the goal of
equity. Studies showed that during the 1960s, while production increased, the
percentage of people below the poverty-line remained virtually constant. Important
segments of the rural population, specially the small and marginal farmers and
labourers, and large parts of rural India, specially the non-irrigated areas, were by-
passed by the green revolution. As disparities grew and discontent mounted, often
manifesting in violent movements as in Naxalbari, policy makers gave greater
prominence to the removal of poverty ('garibi hatao') and attempted to broaden the
base bf development. Several Centrally Sponsored Schemes were launched-for
example, the Drought Prone and Desert Areas Development Programmes; Hill Area
Development Programme; Marginal, Small and Agricultural Labourers'
Programmes; and Employment and Rural Works Programme, reflecting the shift in
emphasis.towards "poverty alleviation". These attempts at broad-basing development
about which you have read in Block 2 of this course logically revived interests in
grass-roots planning. Since mid 1970s a number of attempts have been made to
revive the spirit of decentralised development.
The 'Report of the Working Group on Block Level Planning' (1978) is one of the
important attempts in this direction. This report, known as the report of the
Dantwala Committee, grew out of the concern for a) generating employment,
b) assuring basic minimum needs, c) effective spatial planning for rural socio-
economic infrastructure, and d) promoting equity. In fact, the Committee in its
report enumerated these, inter alia, as the goals of the block-level planning. The
achievement of these objectives through planning required technichl competence to
plan. The Dantwala Committee found that such expertise was absent at the block
level. It stated that the "The present staffing pattern at the block is mainly tuned to
implementation tasks and not so much towards planning functions. 'The set-up
basically consists of a Block Development Officer who is assisted by five Extension
Officers, each in the fields of agriculture, animal husbandry, co-operation,
panchayats and rural industries. The other staff consists of an Overseer, a Social
 ~ducation'organiser;a Progress Assistant and VLWs. In the block, there are also G m Roots Pluming
Veterinary Stockmen, a Medical Officer, a Sanitary.lnspector and a Lady Health
Visitor, some of them with the necessary supporting staff. In some states there is also
an Extension Officer for programmes relating to women and children. Thus it may
be seen that the staffing pattern at the block, level is essentially meant for getting the
development programmes implemented in the field. There is a Progress Assistant
who keeps record of the plan programmes and their progress and assists the BDO in
sending regular progress reports. Beyond this, there is no other person assisting the
BDO in the planning functions*.
However, despite recognising the absence of planning perionnel at the block level,
the Dantwala Committee did not recommend that such personnel should be inducted
at the block level. Realising that planning skills were scarce it recommended the
constitution of a District Planning Cell which would be entrusted with the task of
formulating both district and block plans: "... we are visualising the-planning team
located in the district essentially as a peripatetic team, which will move down to the
selected blocks and prepare the block level plans in association with the BDO, the
Panchayat Samiti, voluntary agencies and other concerned persons at the block
level". Thus the Committee was trying to introduce block-level planning without
changing block-level administration. It laid greater stress on the technical tasks, like
collection of data and assessment of public opinion, to the block administration.
This emphasis on the technical aspect of planning led it to underplay the roles of
both the administration and the Panchayat Samitis. In the absence of popular
involvement, the Dantwala Commitee's recommendations fall far short of what is
understood by 'grass-roots planning' though its strength lay in its attempt at
upgrading planning capabilities at the sub-state levels.
The Asoka Mehta Committee in its report published in the same year as the
Dantwala Committee report (1978) endorsed the latter's proposal of locating the
technical planning team at the district level. The Asoka Mehta Committee gave
primacy to the district as the basic unit of decentralisation which was a fundamental
departure from the system that had developed following the Balwant Rai Mehta
Committee re,commendations of making the block and the Panchayat Samiti as the
key units of decentralisation. The Asoka Mehta Committte assigned practically no
role to the block. It suggested a two-tier Panchayati Raj structure comprising the
Zila 'parishad a t the district level and Mandal Panchayats at the sub-block level with
a jurisdiction over a number of villages and covering a population of 15,000 to
20,000. The existing block level Panchayat Samitis were to be converted into "non-
statutory executive committees of Zila Parishads and when the Mandal Panchayats
become active, most of their functions would be.taken up by the -Mandal
Panchayats".
The Mandal Panchayats, the Asoka Mehta Committee suggested, would comprise
directly elected members and representatives of Farmers' Service Societies with
provisions for representation of women and of members of scheduled castes and
tribes. As regards planning, their roles were seen as implementation and promotion.
They were to be responsible for implementation of the schemes and projects assigned
by the Zila Parishad. They would also "play a promotional role activating
community action, build up organisation and project formulation". To enable them
to function effectively, the Mandal Panchayats should have "purposive work
allocation and transfer of money component alongwith the functions assigned to
them for implementation". Thus the Mandal Panchayat was visualised as essentially
an implementing authority with clear demarcation of functions and financial
resources. Their role in plari formulation was.to be supplementary to the Zila
Parishad role: "... the Mandal Panchayats ... would have a key role in supplying the
! necessary information about the various schemes and suggest the potential areas of
development as well as their requirements to the Zila Parishad ... The Planning unit
1 at the district level should take note of the views articulated by the hiandal
1
1
Panchayats from time to time".
I

Although both the Dantwala and Asoka Mehta Committees favoured planning at
j the district level, the problems of implementation of anti-poverty programmes,
! sponsored by the central government, simultaneously increased the need for
operational planning at the block level. A set of guidelines were issued by the
I
Ministry of Rural Development which sponsored most of these programmes and
these guidelines gradually evolved into the "Operational Guidelines on Block Level
Plans for Integrated Rural Development Programmew(1982). This was definitely an
exercise in planning to be undertaken at the block level but it was planning for the
purpose of implementing a centrally sponsored programme and hence had little of
autonomy and people's participation. But it did highlight the important fact that
even implementation of a programme requires planning at the grass roots level.
The idea of compiehensive decentralised planning was again taken up by the
Hanumantha Rao Committee (Working Group on District Planning, 1984). This
Working Group reiterated the earlier recommendation that "block planning should
also be entrusted to District Planning Teamw. The purpose of block planning should
be, in addition to the goals of district planning of which the blocks are components,
the reduction of intra-district disparities for which the district planners should
develop suitable intradistrict variation indicators: However, unlike the aDantwala
Committee, the Working Group recommended the introduction of planning
personnel at the block level also : "There should also be a Planning Officer of BDO's
rank at the block level assisted by two Research Assistants and a Typist and a
messenger to help the (District) Chief Planning Officer t o coordinate the Block Level
Programmes with regard to intra-block gaps in development and amenities". To put
multi-level planning on a sound footing it also stressed the need for a "single
planning cadre for the state comprising the technical planning staff at block.
district and state levels". Thus the need for making changes in the block level
administration was realised.
This need (of restructuring block administration) was an important recommendation
of CAARD (Report of the Committee to Review the Existing Administrative
Arrangements for Rural Development and Poverty Alleviation Programmes, 1985).
The CAARD noted that the "block-level set up has Iost its original preeminent
position in development administration ... (and) there has been proliferation of
agencies and programmes over the last three decades". The size of the budget
handled by the block has increased several fold and the complexities and technical
content of the various schemes have also increased. The CAARD therefore
recommended that the Block Development Officer should be upgraded and should
be headed by an 'Assistant Development Commissioner of the status of a S u b
Divisional Officer'. Though the committee was of the view that the block should be
"the sheet-anchor of the entire rural development process", it was prepared to accept
smaller units like the Mandals, as recommended by the Asoka Mehta Committee, as
the basic unit of grass-roots planning (in addition to the Village Panchayats). In fact,
it left the choice of the appropriate unit of area planning below the district to the
state government. Some states (for example, Andhra Pradesh hnd Karnataka) have
adopted the Mandal as the basic sub-district unit for decentralised planning. But in
most states there has been little change and grass-roots planning below the district
level remains neglected.

Check Your Progress 2

Note : I) Use the space given below for your answers.
2) Check your answers with those given at the end of the unit.
1) Discuss the reasons for the failure of grass-roots planning.
.........................................................................................
.........................................................................................
.........................................................................................

2) What attempts have been made to revive the institutions at the grass-roots level.
 .........................................................................................
. .
,~ . . .
Craw Roots Phaning

12.6 LET US SUM UP

Grass roots planning in India, we have seen, has not been made operational though
attempts have been made in this direction. The attempts, in their earli - phase,
concentrated on building representative institutions which would reflect the will of
the people and would be the sttuctures of local democratic government. At the same
time the bureaucratic structure was brought to the level below the district and a
significant part of this bureaucracy was entrusted developmental tasks. The aim of
these efforts was to allow people to choose their representatives who, in co-operation
with officials and experts, would draw up and implement development plans. This
attempt had only a limited success due to the paucity of planning skills and th'e
rigidity of the programme.
Recent attempts at reviving grak-roots planning have focused more on the creation
of technical competence and has relatively under-played the importance of people's
participation. What this may lead to is that the lower levels of bureaucracy may be
equipped with planning skills and provide greater autonomy to decide on the
implementation and even the planning of a few projects and schemes. Both these are
welcome developments but are still not enough. Grass-roots planning, in its very
essence, requires people's participation. As more and more of bureaucracy enters the
vilages for developing rural India, the people may lose their dignity and become
mere 'beneficiaries' of development programmes and 'target-groups' for loan-subsidy
schemes. The spirit of self-help', so central t o the community development concept. is
also the key to the process of decentralised planning.
Thus in this unit we have discussed the objectives of the Community Development
Programme and the Panchayati Raj structures which were designed to promote grass
roots planning. We noted that though important structures were created
decentralised planning could not become operational and subsequently declined. The
reasons for this were analysed. Finally, we noted the recommendations of various
recent committees which have attempted to promote grass-roots planning in India.

12.7 KEY WORDS

Cess : A proportionate fee on land revenue levied for building a fund for some
special purpose.
Green Revolution :The strategy, adopted in the 1960s, for rapid growth in
agricultural production through intensive use of high-yielding seeds, water and
fertilisers.
People's Partlclpatlpn :lnvoivement of the populace in plan formulation and
implementation generally achieved through elected local bodies.
Peripatetic : A peripatetic is a person who travels around and stays for short periods
of time in different places, often in order to work in those places.
Poverty Alleviation : Reducing the number of people below the "poverty line"
(defined as the income necessary to purchase foodgrains to fulfil a minimum
standard of food intake).
Schematic Budget :The block budget under the Community Development
Programmefixing the amounts of permissible expenditures under different heads.
Sub-State Level :Level below the state and above the district.
Toll :Money paid for the use of a road, bridge, harbour etc.
47
 REFERENCES
Neale, Walter C. 1985. Indian Community Development, Local Government, Local
Planning, and Rural Policy Since 1950 : Economic Development and
Cultural Change, Vol. 33, No. 4.
P>.nning Commission. 1978. Report of the Working Group on Block Level
Planning : Government of India : New Delhi.
Prasad, Kamta (Edited). 1984. Planning and its Implementation; lndian Institute of
Public Administration : New Delhi.
Venkatesan, V. 1986. Rural Development Administration in Dantwala, M.L.and
others, lndian Agricultural Development Since Independence : Indian
Society of Agricultural Economics. Oxford and IBH : New Delhi.

ANSWERS TO CHECK YOUR PROORESS

EXERCISES
Check Your Progress 1
1) Your answer should include the following points :
the programme aimed a t bringing about economic and social development a t
the grass-roots level
the underlying philosophy of the C D P was that all aspects of rural life are
interrelated
the key elemznts of the CDP were people's initiative and participation
encouraged and aided by an extension organisation
it was stressed that the block level set up was a "medium" through which the
various development departments would function.
2) Your answer should include the following points:
the Balwant Rai Mehta Committee recommended the establishment of a three
tier structure for Panchayati Raj institutions
these institutions were to have elected panchayats at the village level, an
executive body called the Panchayat Samiti at the block level and a n
advisory body called'a Zila Parishad at the district level
the team recommended that the basic unit of democratic decentralisation
should be located at the block/ samiti level, the Panchayat Samitis were
entrusted all the development tasks which the block was to hndertake under
the CDP
the development tasks of the Samitis included development of agriculture,
animal husbandry, industries, health, primary education, social welfare etc.

Check Your Progress 2

1) Your answer should include the following points:
absence of a clear idea and expertise regarding planning at the block level
block plans were mere summary statistics and accounts
heavy reliance of the Community Development Programme on the
bureaucracy, resulting in continued conflict between the Samitis and the
officials
bulk of the schematic budget pertained to agricultural development
conflict between economic imperatives at national level and local needs
community development as a joint project was not successful.
 I /

2) Your answer should include the following points : G n u Rootr h m b g

the attempts at broad-basing development by launching several centrally
sponsored schemes revived interest in grass-roots planning
Dantwala Committee was appointed to develoi ru?al socio-economic
infrastructure to assure basic minimum needs and generate employment
the Committee recommended the constitution. of a District Planning Cell
Asoka Mehta Committee suggested a two-tier Panchayati Raj structure
comprising of Zila Parishad a t the district and Mandal Panchayats at sub-
block level
Hanumantha Rao Committee recommended that block planning should also
be entrusted to District Planning Team
Rao Committee recommended the introduction of planning personnel at the
block level
CAARD recommended that block should be the sheet-anchor of the entire
level development process.
UNIT 13 ROLE OF BUREAUCRACY
Structure
Objectives
Introduction
Expanding Role of the State and Bureaucracy
Role of Bureaucracy in Policy Formulation
Role of Bureaucracy in Policy Implementation
Review of the Rojects and Rogramrnes
Problems of Bureaucratisation
Let Us Sum Up
Key Words
Some Useful Books
Answers to Check Your Progress Exercises

13.0 OBJECTIVES

After reading this unit, you should be able to:

understand the expanding role of stzte and bureaucracy;
explain the role of bureaucracy in policy formulation;
describe the role of bureaucracy in policy implemeritation; and
highlight the problems of bureaucratisation.
,

13.1 INTRODUCTION

The term bureaucracy refers to the body of employees in a large-scale organisation.

More specifically, it refers to a body of employees in authority relationship within an
organisation. Thus every large business organisation has its bureaucracy; in the
government there are civil and military bureaucracies. In the literature of Public
Administration, the term civil bureaucracy has a wider connotation than the term civil
service. Thus, while employees of autonomous corporations are not counted among civil
servants, they are said to belong to the bureaucracy. It is notable that the bureaucracy
does not include elected politicians: it consists only of appointed employees. In
common usage, the term bureaucracy is sometimes also used to refer to routine and
delay in official work. However, in the study of Public Administration, while routine and
delay are taken into account, the term bureaucracy is used to refer only to appointed
officials.
The term development is generally used to refer to economic, political and social
changes such as increase in national income, industrialisation, strengthening of the
nation state, urbanisation, spread of education and wider use of mass media such as
newspapers, radio and television. The bureaucracy, both governmental and business,
participates in bringing about these changes and, so, is said to be an important
instrument of development. However, there is a big debate about this conception of
development, and hence about the role of the bureaucracy. Thus, Mahatma Gandhi
maintains that such development, modelled on Western Civilisation, accentuates
selfishness and violence, leads to concentration of power and wealth, and puts emphasis
on material needs instead of spiritual development. His ideal society would, therefore,
do away with all concentration of power and wealth, and hence also with bureaucracy.
Karl Marx is also opposed to concentration of power and wealth. In his view, this
concentration reaches its maximum in capitalist society; the supercession of capitalism
would in the course of time, do away with the bureaucracy also. Max Weber maintains
that the bureaucracy is an efficient instrument for implementing policies .of state. But it
is also a source of alienation in the society. We thus, note that both, the conception of
development and the role of bureaucracy, are highly controversial matters. In studying
the role of the bureaucracy in development, therefore, we should be careful to note
. . . ..- .. . . ... .
Bureaucrncy and Development
13.2 EXPANDING ROLE OF THE STATE AiND
BUREAUCRACY
The people in developing societies suffer from a number of problems, such as poverty,
unemployment, bad health, illiteracy, corruption and authoritarianism. The state is
considered to be the main agency for dealing with these, or, in other words, for bringing
about development. Hence the state has to shoulder more and more responsibility. Since
the state functions through the government, and the government, in turn depends to a
large extent upon the bureaucracy, the bureaucracy's role also keeps expanding. We
shall briefly examine the contribution of bureaucracy in the various aspects of
development.
i) Role of Bureaucracy in Economic Development
In the eighteenth and nineteenth centuries it was believed that the state should restrict
itself to the country's defence and the maintenance of law and order, and that it should
intervene in the economy as little as possible. This view changed, particularly after the
Great Depression of the 1930s, in which millions of people became unemployed the
world over. Nowadays, all governments are expected to regulate the economy so as to
bring about an inckase in production, a high level of employment, mderate prices of
commodities, and check over monopolies and unhealthy trade practices. The need for
such regulation of the economy is all the more @at in developing cohtries like India
due to widespread poverty and unemployment on the one hand, and the great power of
monopolists on the other. The government regulates the economy through fiscal policies
(by modulating taxes), and monetary policies (by modulating money supply). Planning,
which means resource allocation through a centralised administrative process, is
resorted to for achieving economic growth. The government develops means of transport
and communication. It provides loans and raw materials to industrialists and fanners. All
these governmental activities are performed by government departments, nationalised
banks and other public undertakings through their officials. Hence the bureaucracy has a
very important new role, namely that of functioning as the agent of economic
development. More and more economists, statisticians and trained managers are needed
for the proper performance of this role.
ii) The Role of Bureaucracy in the Welfare State
In recent times there has been a tendency for entrusting the state with more and more
responsibility for social services, such as the provision of education, health care,
employment, labour welfare, the welfare of the blind and other handicapped persons,
and the welfare of widows and orphans. So much importance is attached to these new
functions that the state has been renamed as the welfare state.
The provision of such varied social services requires large numbers of different types of
specialists, such as teachers, doctors, nurses, labour officers and social workers. With
their recruitment as members of the bureaucracy, the nature of the bureaucracy tends to
change: the new role requires a new kind of bureaucracy.
iii) The State and Bureaucracy as Agents of Social Change
In olden days prophets and saints like Gautarn Buddha, Jesus Christ, Guru Nanak ahd
Swami Dayanand called for changing various social practices, norms and rituals.
Nowadays, however, many such changes are sought to be brought .about with the help of
laws. Thus, untouchability, bigamy, child marriage and dowry system have been
declared illegal.
iv) The State and Bureaucracy as Agents of Political Development
The emotional bonds of nationalism are often weak in new nations. However, unless
these bonds are strengthened, the nation is in danger of falling apart, as happened, for
example, in Pakistan from which Bangladesh broke away. The state and its bureaucracy
play an important part in strengthening these emotional bonds. Thus national integration
is sought to be promoted through education, radio and television programmes, .
development of native lilnguages, publication of good quality literature in native
languages, cultural and sports activities in which persons from all parts of the nation
participate, and so on. These programhes are often conducted by members of the
bureaucracy.
In a country where the national bonds ark weak, having a bureaucracy which is Role of Bureaucracy
centrally recruited and whose members serve in different parts of the country, also helps
to hold the nation together.
Political development is also promoted by strengthening interest groups, such as labour
unions. Legislation which sanctions and supports trade union activity thus helps to bring
about political development. Insofar as the bureaucracy participates in the formulation
and implementation of such legislation, it has a role in political development.
Political parties also constitute an important part of the political system. In some
countries nowadays political parties are provided with election funds by the state. This
reduces the dependence of the parties on the rich, helps to curb comption, and
promotes political development.
Elections constitute an important part of the democratic political process. They must be
conducted with honesty and impartiality; otherwise the people will lose faith in the
system and it is likely to collapse sooner or later. Insofar as the bureaucracy conducts
elections honestly and efficiently, it helps to maintain and d e v e l o ~the political system;
for, it is through elections that new parties and leaders come to power and implement
programmes of social change desired by the people.
--

13.3 ROLE OF BUREAUCRACY IN POLICY

FORMULATION

Till about fifty years ago it was believed that in democratic government while
politicians formulated policy, the bureaucracy implemented it. However, research work
has shown that this is not wholly true. The making and implementation of policy are sq
deeply interconnected that it is impossible to separate them. Thus the formulation of
new policy requires an understanding of the reasons for the successes and failures in
regard to earlier policies. This feedback can best be provided by members of the .

bureaucracy due to their wide experience and knowledge. In other words, since
members of the bureaucracy often stay in their jobs longer than politicians, and since
they have more detailed information, their advice on policy matters comes to constitute
a valuable contribution. Their role in policy formulation has tended to gain importance
also due to the expansion of the role of the state, as discussed above. Thus, now it is
well recognised that both in developed and developing countries, the bureaucracy plays
an important role in policy formulation. What is notable is that its role in policy
formulation is much greater in developing counmes than in developed ones. We shall
now discuss the reasons for this.
i) Bureaucracy as a Channel of Communication
The society consists of different sections, such as those of farmers, landlords, workers,
small businessmen, big businessmen, and so on. Their interests conflict to some extent.
It is the function of the state to bring about a balance among their interests, so that the
interests of each section are fulfilled as far as practicable in the given economic
situation. Hence the aspirations, needs, problems and grievances of each section have
to be communicated to the government. This communication between the government
and the various sections of the society takes place, to a large extent, through the
bureaucracy. Thus, if the farmers in an area suffer from some problem, such as lack of
water for imgation, they generally approach officials like the Deputy Commissioner,
who communicates the problem to higher level of the administration: they may make
proposals for imgation facilities in the five year plan and the budget. In this way
communication through the bureaucracy may help in the formulation of policy proposals
for meeting the needs of the people.

In developed countries there is another channel also. This channel, between the people
and the government, runs through interest groups and political parties. An interest group
may be an association for putting forward the interests of a certain section. Thus a trade
union is an interest group for articulating the interests of workers. After the demands of
the various sections have thus been articulated, they are considered and collected
together by political parties in their election manifestos. Such aggregation of interests
t'

BurauCraC~and Development workers, as articulated by trade unions and aggregated by political parties, have led to
labour laws in many countries. These laws contain the labour policies. In this way,
communication through interest groups and political parties leads to the formulation of
policies for fulfilling the demands of the various sections of the people.
In developing countries, however, interest groups and political parties are often either
weak or non-existent. Thus in India, there are hardly any associations of landless labour,
or of artisans such as weavers and carpenters. Most political parties exist in villages
only in name. In towns also their offices seem to crop up only at the time of elections.
Due to such weaknesses of interest groups and political parties, articulation and
aggregation of interests is often not possible through them. Hence the bureaucracy often
remains the only mechanism for the conversion of demands into policies. In this way,
the bureaucracy plays a more important role in policy formulation in developing
countries than in developed ones.
ii) The Bureaucracy as a Repository of Information
The formulation of policy requires a lot of information. Thus one needs to know why
certain policies failed earlier. For example, suppose the policy of expanding secondary
education in villages failed earlier mainly because of poverty, boys and girls had to
earn their own upkeep and so parents could not afford to send them to, school. This
information helps in devising a new policy which combines training in productive work
with literary education, so that the youth earn while they learn. The bureaucracy has the
advantage of long experience, while politicians come and go. The experience of the
bureaucracy makes it a repository of information about the past. Further, the
bureaucracy has access to information which is contained in records, such as files. Such
information can be much older than what any person can remember. Since officials
consult these records often, they know about old cases also. We also need .information
about differences in the various regions, so that the policy may provide for these. Thus,
irrigation facilities in the hills may have to be different from those in the plains. Since
officials are transferred from place to place, they come to know about different areas.
What is even more important, members of the bureaucracy have access to secret
information, it can be information relating to control of smuggling, conduct of foreign
affairs and regulation of the economy. Since such secret information is essential for
policy fommlation, the bureaucracy comes to have an important role. Thus we note that
since the bureaucracy has access to often secret information relating to different time-
frame and areas, its advice is considered by ministers to be weighty, and thus it comes
to have an important role in policy formulation.
iii) Bureaucracy as a Group of Technical Advisers 4:
The bureaucracy comes to have an 'important role in policy formulation also because of
the technical knowledge possessed by it. There are three main reasons for it: (i) growth
of science and technology, (ii) expanding role of the state, and (iii) increasing
complexity of the administration. The growth of science and technology changes the
nature of agricultural and industrial production. Thus agriculture nowadays requires the
use of chemical fertilisers, pesticides, high yielding varieties of seeds, pump-sets and
tractors. The formulation of agricultural policy requires knowledge of these. Such
knowledge is possessed by specialists in agricultural science. Similarly, specialists are
required in areas like health, education, industry, control of crime, and so on. Hence
specialists of almost all kinds are nowadays recruited as members of the bureaucracy
and their advice is depended upon in the formulation of policies. The expansion in the
role of the state makes for dependence upon economists, accountants, lawyers and
others since their advice is needed for regulation of the economy: checking the growth
of monopolies, providing employment, controlling prices, and so on. As the role of the
state expands, the administration tends to become bigger and more complex.
Maintenance of administrative effectiveness and efficiency, then, requires persons
having specialised knowledge and experience of administration and management. Thus
specialists of various kinds in the bureaucracy come to influence policy formulation.

It needs to be emphasised that policies often take the shape of laws. Thus the sale of
high yielding varieties of seeds is controlled through the Seeds Act. Labour policy is
contained in laws like the Industrial Disputes Act. The policy relating to income-tax is
contained in the Income-Tax Act. Hence giving concrete shape to a policy often
only deciding upon its ingredients but also formulating it in thekmdAtws*The Rok of Bureaucracy
drafting of laws and rules necessarily requires specialists in the substantive area (such
as agriculture, health or economics) and also in law. Hence policy formulation, or
giving the shape of laws and rules to policies, is largely done by specialists. It is true
that laws and rules drafted by specialist members of the bureaucracy are later examined
and modified by ministers and legislators. However, ministers and legislators often do
not have understanding of the intricacies of scientific and legal matters. Therefore they
have to depend to a large extent upon specialists in the bureaucracy. In this way the
bureaucracy comes to influence policy formulation.

iv) Bureaucracy as an Impartial Adviser

The society is made up of several sections, whose interests to some extent conflict.
Thus higher wages are in the interest of workers, buf not in the interest of industrialists.
The government is expected to maintain a balance betwetn these conflicting interests.
This is what the government tries to achieve through its policies. Hence the formulation
of policies requires the advice of persons who are impartial, or neutral, between the
different sections. Members of the bureaucracy are expected to function in this impartial
or neutral manner; hence they come to be depended upon for advice relating to policies.

The bureaucracy is neutral in another sense also. Politicians come and go with
elections, 'both as legislators and as ministers. However, civil servants continue to serve
governments of different parties. They are expected to serve and advise every
government for bringing about a balance between different interests. Hence civil
servants are considered to be neutral in a dual sense: between contending interests and
betweep political parties. Their advice on policy is considered to be especially valuable
for being impartial.

Check Your Progress 1

Note: 1 i) Use the space given below for your answers.
ii) Check your answers with those given at the end of the unit.

1 ) What is the contribution of bureaucracy to the various aspects of development ?

2) Explain the statement:

"Bureaucracy acts as a channel of communication".

3) "Bureaucracy acts as a neutral adviser". Discuss.

Bureaucracy and Development
13.4 ROLE OF BUREAUCRACY IN POLICY
IMPLEMENTATION

The main function of the bureaucracy is policy implementation, that is, giving effect to
policies after they have been approved by the executive and legislative branches of the
government. This function also is performed under the overall control and supervision of
politicians in the executive and legislative branches; however, members of the
bureaucracy have to bear much of the responsibility for implementation.

Policy implementation has four stages, as follows:

1) Formulation of projects and programmes
. 2) Project planning
3) Making provision in the five year plan &d the budget, and .

4) Execution of the programmes

We shall now deal with these stages oiie by one.

1) F~rmulationof Projects and Programmes

For implementation, a policy has to be broken up into projects, and each project into
programmes. Thus, for implementing the policy of rural development, there are projects
like that of Community bevelopment. Under the Community Development Project,
there are various programmes. Similarly, under the new education policy, there is the
project of Navodaya Vidyalaya. Each Navodaya Vidyalaya constitutes a programme.
The sizes of projects and programmes can vary: some are very large while others are
small. What is notable, however, is that the implementation of a policy requires
activities of various kinds. Some of these are chosen and given the name of projects.
Again, each project requires action under various heads and at different places. Some of
these are chosen and given the name of programmes. Which of these shol~ldcome first
and which later, is decided mainly by specialist civil servants on technical grounds;
thus irrigation facilities have priority over fertilisers.

2J Project Planning
h j e c t planning must be distinguished from economic planning. While economic
planing refers to allocation of resources among different sectors and areas, project
planning means administrative planning for the implementation of a single programme,
such as that of malaria eradication in a given area, or the setting up of a hospital. The
first step in planning a project is the collection of the necessary information and
statistical data from the field. Thus while setting up a hospital or a school, we have to
decide where exactly it should be located. This requires information about the
concentration of pulation so that the school is built near the residence of most
children; about
%9" roads in the area so that the school may be reached easily; about the
utilisation of lan in the area so that infertile land, rather than good agricultural land, is
used for the purposes of the school; and so on. With the help of such data a study of the
/ feasibility, or practicability, of the programme in the area is made. For example, its
cost-benefit analysis is made: in other words, the costs and benefits of different
locations, sizes, and functions are calculated and compared. Once the functions, size
and locations, sizes, and functions are calculated and compared. Once the functions,
size and location have been decided upon, estimates of the cost of land and buildings,
of the necessary equipment, of the additional personnel required, and of the time it
would take to set up, are prepared. The making of these analysis and estimates requires
expert and specialist civil servants. On the basis of these, a proposal is prepared and
submitted for examination and approval to overhead agencies, like the Ministries of
Planning and Finance.

3) Preparation of Plan and Budget

The economy may be divided into sectors of agriculture, industry and services (such as
health and education). It has to be decided how much money and other resources should
be spent on the development of each sectbr. Broad decisions relating to such allocation
of resources are taken for a five year period since many of the projects and programmes Rok of Bureaucmy
take several years. Thus it may take several years to build a dam. Hence a five year
plan is prepared for allocating resources among different sectors, and also among
different areas, some of which may be less developed than others. More detailed
allocation of resources is made every year for each department, project and programme
through the budget. The activities of every department are important and each one of
them asks for more and more money. However, the total amount at the disposal of the
government is limited. Since all the demands of all the departments cannot be met,
money is provided for the more important projects and programmes, and the less
important o@esare left out. This process of selection involves the comparative
evaluation of projects, and within each project, of programmes. Apart from such
selection, there is the detailed scrutiny of each head of expenditure under a programme.
These functions of planning and budgeting are performed by agencies like the Planning
Commission, the Ministry of Planning and the Ministry of Finance. The activities of
analysis, evaluation, comparison and scrutiny of proposed expenditures relating to
various departments, projects and programmes requires a lot of expertise and
experience. Civil servants, who possess such expertise and experience, are therefore
dependent upon for performing these activities and drawing up the five year plan and
theannual Budget. It must be noted, however, that they are prepared under the over-all
control and supervision of Ministers. Finally, the Plan and the Budget require the
approval of Parliament. Members of Parliament and Ministers are elected
representatives of the people. They control the preparation of the Plan and the.Budget
so that these reflect the needs and aspirations of the people. Such control is a condition
of democracy. At the same time, efficiency of administration is achieved through the
application of specialised knowledge and experience possessed by the bureaucracy.

4) Execution of the Programmes

Execution means canying a programme into effect. It has to be done in stages. Thus if a
school is to be built, the first step is to acquire the land and to construct the building.
Then the teachers and other staff members have to be recruited; they may also be
transferred from other schools. Some of them ,may have to be sent for training. The
equipment for class rooms and laboratories hasalso to be acquired. These activities of
acquiring land and equipment, getting buildings constructed, and arranging for trained
teachers, are all performed by specialised &d experienced civil servants. Thus building
construction may be the responsibility of engineers in the Department of Public Works,
and provision of attendance registers may be the responsibility of officials in the
Department of Printing and Stationery. After such basic requirements have been met,
officials of the Edlication Department would arrange for the teachers. Thus civil servants
in various departments have to function in a coordinated manner for canying out various
programmes. To ensure such coordination and the execution of programmes within the
given time frame, all officials are required to submit reports to their seniors about their
achievements periodically. By examining the reports, officers at high levels are able to
exercise control over the execution of programmes. Thus execution is mainly the
responsibility of the bureaucracy.

i3.5 REVIEW OF THE PROJECTS AND

PROGRAMMES

To ensure that the objectives of a policy have been fulfilled and there has been no
wastage of money and other resources, the implementation of every project and
programme is periodically reviewed. Review is done at several levels. Within every
Ministry, each programme is reviewed after its completion. At the time of the
preparation of the budget, every year, achievements with regard to all programmes are
reviewed, both, by the Ministry concerned and the Finance Ministry, at the time of the
preparation of the budget. The Comptroller and ~ u d i t o ~r & e r a lmakes a review of all
programmes in the course of auditing expenditures. The Planning Commission makes a
review ~f the implementation of all the policies over the past five years while preparing
a new five year plan. It also reviews their implementatibn in the' middle of the five year
period. All these reviews are made, initially, by specialised and experienced civil
servants, who thus help to ensure effedtiveness arid efficiency.
Bura~lrraqa d Development
13.6 PROBLEMS OF BUREAUCRATISATION

While on the one hand the use of the bureaucracy leads to efficiency, on the other, it
gives rise to c e d n problems. Thus bureaucratisation results in an emphasis on routine
and detail, leads to red tape (delay), and gives rise to complaints of unresponsiveness
of the bureaucracy to the people. The bureaucracy has a tendency to expand, so that in
the course of time a large portion of the expendim on a programme goes for paying
the bureaucracy instead of meeting the objectives. Thus in a programme for the
development of fisheries, the help given to fishermen may nun out to be less than the
salaries and allowances duwn by the bureaucracy. Other, more important problems are
related to the power of the bureaucracy. The power of the bureaucracy arises from its
role in policy formulation and implementation. In developing countries, because of the
weakness of interest groups and political parties, the bureaucracy often comes to play
an important role. While politicians may be amateurs, they represent the people and
have to take into account their needs and aspirations. Bureaucrats, however, are under
no such compulsion they often pay more attention to their own interests. Hence it is a
condition of democracy that the bureaucracy should remain firmly under the control of
the elected representatives of the people. In most developing countries, however, the
bureaucracy tends to be too powerful. Indeed, in many of these countries the military
and the civil bureaucracy together assume full power, remove the democratically
elected rulers and themselves become rulers. Such dictatorships are in existince in
many developing countries. The way to deal with these problems is to make the people
aware of their rights and power by educating them, organising them in asdociations and
political parties, and to develop bodies of local self-government through which the
people can rule themselves with less dependence on the bureaucracy.
..
Check Your Progrew 2
NpbC. i ) Use the space given below for your answers.
U) Check your answers with those given at the end of the unit.
1) Discuss the various stages of policy implementation.

_".."....."......... ......""........................................................................................................................................
.............. .......................... ................................................................................................................................. I~
2) Explain the role of bunxucmpy in programme planning.

-!."........ ",.-b.
" ..."- ....."."."................................-..... ..............-...."."..............................

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

...... .......................... ".-.................

.....................".....................................................................................
3) Describe the role of bureaucracy in the execution of programmes.
4) Critically evaluatc the problems of bureaucratisation.

LET US SUM UP

The role of the state and its bureaucracy in bringing about economic, social and
political development is expanding. The bureaucracy participates in policy formulation
by functioning as a channel of communication, a repository of information, as a group of
specialists and as an impartial adviser.
It implements a policy by bkaking it up into projects and programmes, by planning
each programme. by preparing the five year plan and the budget, and by executing the
programmes.

The bureaucracy in each Ministry, and also in overhead agencies like ,the Finance
Ministry and the Planning Commission, periodically reviews the implementation of
each programme.

The problems of bureaucratisation emerge due to the unnecessary emphasis on routine,

red tape, unresponsiveness to the people, increasing cost of administration, the great
power of the bureaucracy and the danger of dictatorship. These problems can be dealt
with by educating the people, by organising them in associations and political parties,
and by developing panchayats and municipal bodies of local self-government.
*

KEY WORDS
Budget: A statement of financial position (e.g. of an organisation) for a definite period
of tiroe (e.g. the following year) based on estimates of expenditure ,and .income during
the period.

Bureaucracy: The term bureaucracy has been derived from the word 'bureau' which
means an office or post. Hence bureaucracy refers to officials holding a post or office
exercising their power to carry on their constitutional duties and obligations.

Navodaya Vidyalaya: Navodaya Vidyalayas (Schools) are spread all over the
country. They are organised by an autonomous organisation i.e. Navodaya Vidyalaya
Samiti under the Department of Education, Ministry of Human Resource Development,
Government of India. Their broad aims are:
to serve the objective of excellence coupled with equity and socld justice

a to promote national integration by providing opportunities to talented children

largely rural, to live and learn together
to develop their full potential and
to become catalysts of a nation-wide programme of school improvement.

Review: The examhation of the implerilentation of each programme, to find out

whether the policy objectives have been fulfilled, and whether the implementation has
been done efficiently.
Bureaucracy and Development
13.9 SOME USEFUL BOOKS

Almond, G.A. and G.B. Powell, Jr., 1966. Comparative Politics: A Developmental
Approach, Arnerind Publishing Co. : New Delhi.
Heady, Ferrel, 1966. Public Administration: A Comparative Perspective, Prentice-Hall:
Englewood Cliffs, N.J. .
Jain, R.B. (ed.), 1983. Public Services in a Democratic Context, Indian Institute of
Public Administration: New Delhi.
Walombara, Joseph (ed.), 1967. Bureaucracy and Political Development, Princeton
University Press: Princeton, N.J.
Riggs, Fred W., 1964. Administration in Developing Countries, Houghton Mifflin:
Boston.

13.10 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES

Check Your Progress 1

1) Your answer should include the following points:
Role of bureaucracy in a welfare state
Role of bureaucracy in economic development
Bureaucracy as an agent of social change
Bureaucracy as an agent of political development
2) Your answer should cover the following points:
Through bureaucracy, communication takes place between the government and
the various sections of the society.
The channel between the people and the government, runs through interest
groups
3) Your answer should include the following points:
Bureaucracy is expected to be neutral between the different sections of the
society.
Bureaucracy is expected to be neutral between the political parties.
Check Your Progress 2
1) Your answer should include the following points:
Formulation of projects and programmes
Roject planning
Reparation of the five year plan and the budget
Execution of the programmes
2) Your answer should include the following points:
Bureaucracy collects data from the fields
Makes a kasibility study
Decides about the functions, size and location
Prepares an estimate of the personnel and the cost involved.
3) Your answer should include the following points:
Bureaucracy acquires the land
Gets the building constructed
 Purchases the equipment Role of Bureaucracy

Arranges the personnel

Functions in a coordinated manner for carrying out various programmes
4) Your answer should include the following points:
Bureaucratisation leads to red tape (delay)
Unresponsiveness to the people
Expansion in bureaucracy leads to increasing costs
Fulfilment of its interests rather than policy objectives
Dangers of dictatorship.
 UNIT 14 COLONIAL HERITAGE OF
INDIAN BUREAUCRACY
Structure
Objectives
Introduction
Political Heritage
Classification of Bureaucracy
Recruitment
Romotion
Conditions of Service
Organisational Heritage
Procedural Heritage
Political Heritage
Cultural Heritage
Let Us Sum Up
Key Words
Some Useful Books
Answers to Check Your Rogress Exercises

14.0 OBJECTIVES

In this unit we will examine the features of Indian bureaucracy. After studying this unit
you should be able to:
understand the political heritage of bureaucracy in the form of its continued power
and prestige;
explain the continuities in certain aspects of personnel administration, namely
classification, recruitment, promotion and conditions of service;
examine how certain aspects of administrative organisation and procedufes during
colonial rule have influenced the formation of the bureaucracy;
describe the inherited restriction on the political rights of the bureaucracy; and
explain the cultural heritage of bureaucracy.

14.1 INTRODUCTION

India was under British rule for about two centuries. During this period, the bureaucracy
was fashioned as a highly efficient inshument of the British power. Its efficiency
consisted mainly in serving well the interests of the foreign power and not those of the
people of India. Also, the bureaucracy tended to acquire powers of its own. Thus the
interests of the bureaucracy were largely different from those of the people of India. Its
role during British rule was narrow and objectives were largely negative, rather than
positive, that is it aimed at maintenance of law and order rather than improvement of
the living conditions of the people. With the coming of Independence, the bureaucracy
is expected to m y a new, much more positive role of bringing about development.
While everyone agrees about the desirability of such a change in its role, the change
does not easily come about. There are several reasons for this. One reason is that social
change is generally a slow process. The development of new values and attitudes takes
time. Secondly, it should be remembered that the transfer of power in 1947 was not
accompanied by a social or economic revolution. Even the political change'was
peaceful. Hence, socially, economically and politically, the society remained, to a
large extent, unchanged. Thus many of the social, economic and political institutions
did not undergo much change. Since the bureaucracy is merely a part of the society, it
could not change much when the society as a whole remained largely unchanged.
- Thirdly, the organisation and procedures of public administration remained largely the
.- .I . *. . . ,.. - A . ~ A. I . .. .-. - .
same. Finally, the system of personnel administration, or control over the bureaucracy,
.. A
 and State governments could make laws to regulate the recruitment and conditions of Colonial Heritage of Indian
Bureaucracy
service of personnel in their public services. Some laws, like the All-India Service-s Act,
195 1, were passed. However, personnel administration, by and large, continues to' be
governed by rules. Some of these rules are new while others are the old rules that are
continuing even after Independence. It is true that no law, rule OK order, whose
provisions are contrary to those of the Constitution can have validity. Still, since many
of the pre-Independence rules continue to have force, personnel administration, to some
extent, bears the mark of colonialism.

14.2 POLITICAL HERITAGE

The political heritage of the bureaucracy refers mainly to its continued power and
prestige. The power and prestige of the bureaucracy in excolonial developing countries
like India are greater than in developed countries like the U.S.A. We shall briefly
examine the reasons for this
a) Power
The power of the bureaucracy refers to its role in policy-making and implementation.
During the British rule, India was governed by the bureaucracy. The British Parliament
and ministers could lay down only some general principles: they could exercise very
little control while sitting in England. Hence the making and implementation of policy
were both largely in the hands of the officials in India. Members of the Indian Civil
Service (I.C.S.) functioned as Lieutenant Governors, members of Governor-General's
and Governors' Councils, members of Central and Provincial legislatures, and also as
judges of High Courts. They thus functioned at the highest level in all the organs of the
government, namely. the executive, the legislature and the judiciary. Naturally, the
bureaucracy had a firm grip over policy formuJation and implementation. In
contemporary India, we have democratic government, where elected representatives of
the people in the legislatures and as members of Governments at Central and State
levels exercise political power. They control the bureaucracy. Hence ht bureaucracy
now has less power than what it had during the British rule. However, it still has a lot of
power. The present power of the bureaucracy is generally due to underdevelopment (as
discussed in Unit 13), and particularly due to the weaknesses of interest groups and
political parties, and the lack of education and awareness among the people. These
factors largely derive from our colonial past. The British rulers on the one hand, did not
allow the people to become educated and politically conscious or to form associations
through which they might assert themselves. On the other hand, the bureaucracy was
able to develop as an efficient instrument of British rule. The result is that even today
the bureaucracy is much more developed than interest groups and political parties.
Hence the present power of the bureaucracy derives to a large extent from the colonial
era.

6 ) Prestige
The high prestige of the bureaucracy in developing countries like India is indicated by
the fact that highly qualified specialists like engineers, doctors and scientists nowadays
compete for entry into the I.A.S. and other services. Prestige is, ultimately, related to
power. In times of distress, such as those of drought or floods, the people often rush to
I civil servants such as the Deputy Commissioner for the solution of their problems. In the
United States, by contrast, they more often go to their political representatives, such as
Senator. Even the Government, in India, has to depend to a large extent upon the civil
I and military bureaucracy for dealing with recurrent grave problems rike those of riots
and terrorism.

Ministers often depend upon civil servants to ensure that their constituencies are
properly nursed. Decisions made by civil servants, for example, those relating to the
grant of licences and permits for raw materials, greatly ect businessmen. Generally
"%
speaking, governmental control of the economy giv&s a 1 t of power into the hands of
bureaucracy. In short, the government tends to acquire a lot of power in a situation of
economic, social and political underdevelopment. Also, because of underdevelopment,
t much of the governmental power tends to be exercised by the bureau&cy, leading to
I
1 high prestige for it. Thus even after independence, the bureaucracy continues to retain
I
Bureaucracy and Development some cf the power and prestige of the colonial era. It is notable here that
underdevelopment has basically been the result of colonial exploitation. The power and
prestige of the bureaucracy, resulting in turn from underdevelopment, may thus be truly
said to be a part of the colonial heritage.

CLASSIFICATION OF BUREAUCRACY
a) The Rank System: The bureaucracy may be classified mainly in two ways. One
way is to classify it according to jobs, posts or positions. It has been adopted, for
example, in the U.S.A. The other way is to classify the bureaucracy into services and
groups or classes as is done in India. The first one is known as the system of position
classification and the second one as that of rank classification. The rank system was
introduced in India by the British and has continued since then. In this system every
member of the bureaucracy has a rank which is attached to that person. Whatever post a
bureaucrat holds, hisher rank remains the same. AaState administrative service has a
rank lower than that of the I.A.S. In effect, all the members of a State service have a
lower rank than that of members of the I.A.S.
During British rule, at the beginning of the present century, the services were divided
mainly into two classes: imperial and provincial. Members of the imperial services were
recruited in England, mostly from among Englishmen. Members of the provincial
services were recruited in India, mostly from among Indians. The rank of members of
the imperial services was higher than those of provincial services: this implied that
Englishmen were superior to Indians. The continuation of the rank system would seem to
imply that we still consider the members of some services to be superior to those of
others. In a democratic system of personnel administration, however, we would prefer to
impute superiority or inferiority to jobs rather than to persons. Thus while a pkrson joins
a subordinate post at the beginning of his career, he often becomes fit fctr a superior one
after gaining experience.
In India, while the rank system continues, the position system has also been
superimposed upon it to some extent. Thus while ordinarily a civil servant draws hidher
salary according to hisfher seniority in the time-scale whatever histher post is certain
posts (like that of Chief Secretary) carry a fixed salary or special pay. Hence we have,
in our system to some extent, a mixture of the rank and position systems of
classification. Still, insofar as our system .continues to be rank based, it has a feature
that was more suited to colonial administration than to democratic administration in a
free society with higher social mobility.
b) All India Services : In federations, such as the U.S.A., the Federal and State
Governments have their separate services. The Indian Constitution also has some
federal features. Thus powers of the Union and State Governments have been divided by
the Constitution. They have their separate services also, known as Central and State
services. In addition to these, there are other all-India services, which are common to
the Union and the States, as in other words whose members serve both the Union and
State Governments by turns. The Constitution declared the Indian Administrative
Service and the Indian Police Service to bk all-India services. These had been created
to take the place of the Indian Civil Service and the Indian Police which existed during
the British rule. Later, through the All-India Service (Amendment) Act, 1963, three
more all-India services were to be created, namely the Indian Engineering Service, the
Indian Forest Service and the Indian Medical Service. However, only the F o m Service
actually came into being.
The all-India services constitute the continuation of a colonial institution. However,
they are considered to have both advantages and disadvantages at our p e n t stage of
development. Their members serve at all levels of the administration throughout the
country. Thus they serve as Secretaries to Government at the Union and State levels;
they serve as Divisional Commissioners at the regional level; and they also serve at the
local level as Deputy Commissioners, District Collectors and Commissioners of
Municipal Corporations. In a situation when the bonds of nationalism are not yet very
suchg, the all-India services are said to help in maintaining the unity and integrity of
the country. On the other hand some State Governments have complained that members
of the all-India services have a dual loyalty to the Union and State Governments-and
have expressed dissatisfaction with their manner of functioning. The Sarkaria Co~oai.lnvitagt or In&
Commission on Centre-State Relations Constituted by the Government of India in 1983 Buruucracy

has, however, expressed a view favourable to the all-India services; it has supported the
belief that they help in maintaining the unity of the country.

14.4 RECRUITMENT

Recruitment is the process whereby people are attracted to, tested and inducted into the
bureaucracy. Patterns of recruitment is of great importance for the nature and role of
bureaucracy; for it is through recruitment that it is decided to who will be selected
and who will be left out, what hisher age and qualifications will be, and so on. In the
following sections, we shall consider the aspects of recruitment that originated during
British rule but are still with us, and interfere with the fulfilment of our national
objectives.
a) Emphasis upon Liberal Education
During British rule members of the Indian Civil Service were chosen by competitive
examination from among those who had received a liberal education at a university. By
liberal education we mean education which is not professional or technical but is
directed to general broadening of the mind. Liberal education has continued to be the
base for recruitment to our higher services. Thus for entry into the Indian Administrative
Service, Indian Police Service, various Central services including the Indian Foreign
Service, and also State Administrative Services, mostly candidates with a liberal
education, that is with education in literature, or social or natural sciences, appear at,

competitive examinations. Even for some services whose work may be said to be
technical in character, such as the Indian Audit and Accounts Service, no technical
knowledge is required at the time of recruitment. After selection, many of them function
as Heads of Departments such as those of agricultuk or education with responsibilities
for the supervision of the work of persons with high technical qualifications. Members of
the I.A.S. often function as Secretaries to Government, and as such advise ministers.
They participate in the formulation of policy.
With the growth of science and technology, policy making in most areas has become a
highly technical matter. Hence it would be better if technically qualified persons
function as administrators in the areas of their specialisation. This was the view of the
Fulton Committee in England. In India also, the Administrative Reforms Commission in
1966 recommended that persons with technical knowledge and experience of
administration in a certain area should hold high administrative positions in that area.
Thus those who have studied the science of agriculture in a university and have served
in the agriculture service alone should be appointed to higher administrative positions in
the secretariat department of agriculture, where they have to participate in the
f p u l a t i o n and implementation of agricultural policy at the highest level. This is
necessary because of developments in agriculture. The green revolution has taken place
in some parts of India because of the use of high-yielding varieties of seeds, chemical
fertilisers, pesticides, weedicides, pump sets and other mechanised implements. An
administrator must have an understanding of this new technology. The continuation of
generalists, with a liberal education, in high administrative positions, interferes with
efficient use of new technology. This applies to practically all fields. Even the
maintenance of law and order nowadays requires knowledge of criminology and forensic
science. The management of relations with a foreign country requires an understanding
of its history, society, economy, policy, culture and language.
It is true that an effort is made to provide the elements of the necessary information
during the training after recruitment. However, since generalists move from department
to department, they need knowledge in a new field every time they are transferred. The
acquisition of new knowledge in a strange field becomes mbre and more difficult due to
the fast expansion of knowledge. Hence while the system of administration by
generalists might have served the purpose a century ago, it no longer does so. Instead of
recruiting high administrators from among those with a liberal education, as was done
during British rule, we should now recruit them from among technically qualified
persons. The continuation of colonial practice makes for a bureaucracy which is not
Bureaucracy and fully suited to its expected role of bringing about socio-economic development thro6gh
Development
the most fruitful use of science and technology.
b) Restrictions on Lateral Entry
In India, recruitment to bureaucracy is made only from among the young, usually fresh
grdduates from universities. The low age limits constitute a continuation of the practice
during British rule. However, in advanced countries like the U.S.A. there is no age limit
fpr entering into q e Services. Thus persons with greater knowledge and experience than
those in their twenties can also come in. This is a great advantage, since nowadays
persons with diverse knowledge and experience are needed in Public Administration.
Due to expansion in the role of the State, civil'servants are now required to have an
understanding of matters with which they would have not been concerned half a century
ago. The government is now doing business, mainly through public corporations and
companies, in addition to regulating its business activities much more than before.
Hence we need persons in the bureaucracy, who have a good understanding and
experience of business. Experienced businessmen or managers who join the public
sector might serve the purpose better than those without experience of business.

Lateral entry, or entry from the side, would make for greater flexibility in employment
in all fields; flexibility, in turn, would make for richness of talent all over. Thus if the
entry of experienced managers, researchers and teachers would enrich Public
Administration, experienced administrators might make good teachers of administration
in universities. Provision for lateral entry would also allow people to change their
profession, thus making for greater job satisfaction for those who find themselves to be
misfits in a certain profession .and would like a change. There is greater likelihood of
success of the policy of lateral entry if a beginning is made with the government, since
the government is one of the largest employers nowadays, and also has the
responsibility for making innovations which function as the seeds of development, but it
is our colonial heritage that stands in the way of allowing, or at least experimenting
with, lateral entry.

PROMOTION

Promotion means undertaking higher responsibilities in service usually resulting in

higher emoluments. Promotion is of great importance, it benefits both, the employee
and the organisation. It is of benefit to the employee because it makes for higher status
and emoluments for him. It is of benefit for the organisation because (i) the hope of
promotion motivates employees to do better work; (ii) officials for higher and more
responsible jobs are made available through bromotion; and (iii) promoted employees
are more inclined to accept the organisation as their own. However, in the Indian
bureaucracy, promotion suffers from certain drawbacks, some of which are a result of
our colonial legacy. We shall now examine these shortcomings.

e) Promotion from One-Class or Service to Another

We have mentioned above that the rank system of classification of the bureaucracy,
which was adopted during British rule, continues to be used in India. The bureaucracy is
divided into a number of services and classes having different ranks. Since new entrants
are recruited into particular services, and not for particular jobs, their promotion also is
from one class or service to another. This has the disadvantage that the qualifications of
candidates for particular jobs are rarely taken into account. However, with the growing
diversity of tasks in Public Administration, and the increasing need for specialisation
among functionaries, it is becoming more and more important to fit persons to jobs
according to their qualific'ations and experience. The present system of promotion, from
one class of service to another, does not permit this. Further, Since rank is associated
with status and emoluments, employees come to demand promotion as a matter of right
without giving importance to qualifications.

b) Rigidity
.There would be a lot of flexibility in promoting persons to jobs according to
qualifications. A person could improve hisher qualifications, for example by taking a
correspondence course and request for promotion to a high level job, involving jumping
of levels, on the basis of his new qualifications. The possibility of faster promotion Colonial H~ritageof Indian
would also provide a lot of incentive for improving one's qualifications and doing better Bureaucracy
work. Such flexibility and incentives are absent in the present system. Promotion is
largely from one class or service to another, and it is governed by rigid rules. Thus only
33% of the members of a State Administrative Service who have completed eight years
of service can be promoted at a time to the Indian Administrative Service. It was
pointed out by Paul Afipleby about forty years ago that such rules make for unnecessary
rigidity. Such rigidity is harmful for both the organisation and the employees. It is
harmful for the organisation because if promotion is governed by rigid rules the
employees come to take it for granted; it ceases to function as an incentive, leading to
a fall in the efficiency. Rigidity is harmful for the employee because it comes in the
way of faster promotion even for those who are willing to work harder and give better
results. Rigidity of the promotion system, like several other aspects of personnel
administration, is a part of our colonial heritage.
Check Your Progress 1
Note : i) Use the space given below for your answers. :
ii) Check your answers with those given at the end of the unit.
1) What are the reasons for the continuance of the colonial features of Indian
bureaucracy ?

2) Why has the bureaucracy continued to be powerful after independence ?

.................................................................................................................................................................................
3) What is the main advantage and disadvantage of all-India services ?

4) What are the disadvantages of the system of recruitment?

5) Discuss the disadvantages of the system of promotion ?

.................................................................................................................................................................................
 ..-
Bo=wi.cy and Dcvdopment . 1 ................................................................................................................................................................................

CONDITIONS OF SERVICE

During the British rule, the bureaucracy was an instrument that was used in the interests
of the foreign rulers. The interests of the rulers and the people were basically in conflict.
Hence the bureaucracy did not identify with the people, it remained aloof from them.
Aloofness of the bureaucracy from the people was necessary because of the great power
exercised by it. If bureaucrats had been close to the people, they would have been
inclined to grant favours to them. Hence social distance between the people and the
bureaucracy was created. At the same time, service under the British had to be made
attractive too, this resulted in a ruthless bureaucratic system which was distant from the
people. There arose a conflict between the interests of the people and the bureaucracy.
This was highlighted by the revolt of 1857, and the freedom movement. In this situation,
attraction for the service and social distance from the people were both ensured by
giving high emoluments and excessive security to the bureaucracy.
High Emoluments
Attraction for the service and social distance from the people could both be ensured by
giving members of the service a high social status. High social status was conferred
upon them by giving them higher emoluments in comparison with the incomes of the
people at large. The emoluments included, in addition to salary, special pays,
allowances, housing, conveyance, medical attendance, and retirement benefits. During
British rule the emoluments of the bureaucracy were generally much higher than those
in comparable jobs in the Indian private sector. After independence, the growth of big
business had led to higher emoluments for business executives. Hence in the higher
echelons, civil service jobs are not necessarily more remunerative than those in
business; some business jobs are better. However, compared to the average, or per
capita income in India, the emoluments of the public bureaucracy are certainly high.
These high emoluments also constitute the continuation of a colonial practice. Since
the higher civil servants are paid much more than the common people, they are often
unable to understand their difficulties and indentify with them. Most of the problems of
developing countries like India are related to unemployment and poverty. Since the
civil servants are far removed from the experience of poverty, they are often not in a
position to satisfactorily formulate and implement policies for dealing with problems,
such as widespread ill health, lack of education, increasing population. and increasing
crime, which are deeply related to poverty. Thus the high emoluments and great power
of the bureaucracy lead to social distance between it and the mass of the people; this
social distance, in turn, comes in the way of the fulfilment of developmental objectives.
Hence the high emoluments and great power of the bureaucracy, which once served
colonial objectives, now hamper development.

Excessive Security
During the British rule, excessive security was given to the civil service to make it
attractire and to permit unhampered exercise of power by it. In a democracy, however,
the civil service has to be responsible and accountable to the people through their
elected representatives. Hence excessive security, which comes into conflict with
responsibility and accountability, is antithetical to democracy. However tradition dies
hard; and traditionally civil servants have been prosecuted against for criminal offences
like embezzlement, but rarely for lack of efficiency or non-fulfilment of their duties. As
political underdevelopment makes ministers too dependent upon the bureaucracy, undue
security is given to the civil service. Disciplinary action against civil servants, is often
delayed because of various rules and procedures. Disciplinary action is also often
challenged before tribunals and courts. The recent institution of tribunals has certainly
helped to reduce the delay involved in litigation before courts. However, for all the
reasons mentioned above, higher authorities are still cautious of taking disciplinary
action even where it is due. The excessive security of civil servants tends to make them
forgetful of their duties. They tend to function in a highly routine and often lethargic
manner without being motivated by the hope of rewards and curbed by the fear of
 *
punishments. It is interesting to note that the absence of both reward9 aid punishments, Colonial Heritage of Indlrn
to some extent, results'from excessive security. Thus one of the most ipportant rewards Burerucrrcy
would be quicker promotion. However, giving somebody quicker promotion is likely to
be challenged by those who are superseded. Sirnilarly, not giving promotion to an
inefficient official is also likely to be challenged, often on the ground of mala fide
action by the superior. Hence one of the main causes of inefficiency in Indian
administration today is the excessive security which the bureaucracy has had since
colonial times.
In advanced countrics such as the United Slates, many jobs in the public bureaucracy
are given for thrce to five years at a time on a contract basis. This makes the employees
strive for better performance s:, that their contracts may be renewed. Such a system
lacking almost completely in security, however. is unworkable in developing countries
such as India due to lack of employment opportunities. Few competent people are likely
to take up jobs on a contract basis for fear of becoming unemployed soon afterwards.
This shows that administration of a country is deeply influenced by its socio-economic
conditions.

ORGANISATIONAL HERITAGE

Now we shall deal with certain .attitudes and modes of functioning of bureaucracy that
developed due to the organisational setting during the colonial rule.
0

a) Centralisation
One of the most important features of administration during the British rule was
centralisation. India was a vast unitary state. with all power concentrated in the hands
of the Governor-General. While in England the term Secretary was used for a minister,
in India it came to be applied to the civil servant heading each Department. The
Secretaries and their assistants were collectively called the secretariat, which became
the hub of the administration as a whole. The Governor-General functioned through the
Secretariat and controlled the administration in every nook and comer of India. All
administrative action throughout India required the sanction of higher authorities, and
ultimately of the Governor-General which was conveyed through the Secretariat. There
was very litt!e delegation of authority; even if authority was delegated to a subordinate,
it was withdrawn if a mistake was made. Civil servants thus developed an attitude of
dependence upon superiors; qey were afraid to make innovations. Thcse attitudes to
some extent, hay, 6 continued after independence. However, they do not suit democratic
administration in which power resides in the people. The spirit of administratiou now
should be that of serving the people rather than of blindly carrying out the command of
the superior.
System of Transfer
The bureaucracy exercised a lot of power during the British rule. Therefore there was a
fear of misuse of power, it was thought that a civil servant might unduly help or harm
someone. The possibility of such misuse was rcduced by not allowing a civil servant to
stay in one post for a long time, in order to avoid friendly or h~stilerelations between
the bureaucrats and some persons. within the bureaucracy or outside. Hence the system
of routine transfer of civil servants after the duration of about three years came into
force. Such a system is not needed in a democracy where the bureaucracy exeicises
less power. and is properly controlled by the elected representatives of the people. The
system of routine transfer has some disadvantages also. Every functionary takes some
time to understand the problems of a new place. and to establish rapport with citizens
whose participation is required in progranlmes of development. Helshe has to make a
new beginning every time helshe is shifted; this interferes with hisher efficiency. A
transfer also usually upsets things in the domestic front too like the education of hisher
children, tile job of hislher spouse etc. The system of transfer in Indian administration
has beeti inherited from British rule. Its continuatice is associated wilh that of
bureaucratic power. The reason why the system of routine transfer does not exist in
developed countries is that their bureaucracies are better controlled and hence less
powerful. As our democracy develops and the bureaucracy becomes less powerful, the
enretnm nf rnnat;na t r s n r f a r ;r 1;bmI.n t n h m rmm-rrmrl~A hw thnt nf fittin- fmww-t;nnmriaa rn
I

Burenucracy and Development,

PROCEDURAL HERITAGE

During colonial rule theie was a basic conflict of interest between the rulers and the
ruled. Indian civil servants could not always be trusted to function in imperial interests
as against those of the people of India. Hence they were bound by detailed rules and
procedures. Even the rules needed interpretation, which was also often handed down
from the top. If a case was once decided in a certain manner, it became a precedent
which had to be followed in other similar cases. Thus in the course of time a complex
set of procedures, rules and precedents developed. Strict observance of these required
examination of each case at several levels involving delay. With delay came
comption, since the affected persons tried to get their cases speeded up by bribing
officials. Thus paying more attention to rutm than to people's interest, delay and
corruption came to be prominent features of colonial administration. The continuance%f
these features to some extent constitutes our colonial heritage. It is to be expected that
political development will, in the course of time, do away with them.

POLITICAL HERITAGE

In a democracy, the public bureaucracy has to fulfil t w somewhat

~ conflicting
requirements. On the one hand, it is expected not to side with any of the political
parties; on the other hand, it should not be the servile tool of the rulers as in a
dictatorship. While it is essential that the bureaucracy should not becom'e politicised as
happens in a spoils system, it is also necessary that its members should able to
exercise the political rights of citizens after duty hours so far as such exercises does not
conflict with their official responsibilities. There has been a tendency in developed
democracies for liberalisation in regard to the political activity of civil servants. In
England, on the recommendations of the Masterman Committee of 1948, more than half
of the civil servants (including all industrial civil servants and most of the minor grades
of the non-industrial staff) were freed from restriction on political activity; about one-
fifth were permitted to engage in political activities, except Parliamentary candidature,
at the discretion of their Departments, only the executive and higher staff remained
barred from participation in national political activities. In California, in the United
States, the ban on political activity of state servants was lifted about twenty years ago.
In India, however, civil servants remain barred from all kinds of political activity, they
cannot even go on leave without pay for participation in a political campaign as
happens in many democracies nowadays. It is true that in our present state of political
underdevelopment, when in addition political parties tend to put all kinds of pressures
on civil servants, participation in political activity by civil servants is more likely to
hurt the democratic process than to help it. Still, insofar as our political
underdevelopment has resulted mainly from colonial rule, the continued denial to civil
servants of political rights which are commonly granted in developed democracies, may
be said to be part of our colonial heritage.

14.10 CULTURAL HERITAGE

We have discussed above several aspects of the colonial heritage of the Indian
bureaucracy. In regard to cultural heritage, which we are going to discuss now, it is
'
notable that this aspect belongs not only to the bureaucracy but to the upper classes in
general. Still, it remains true that the individual in the bureaucratic setting is more
'subject to cultural influences that seep down from the top. Thus it is more difficult for a
member of the bureaucracy to avoid adopting Western dress, language and manners
than for one outside it.
Western Liberal Education
During colonial rule the bureaucracy was an instrument for the fulfilment of the interests
of the foreign rulers. Hence they tried to mould the bureaucracy so that it would identify
with them. In other words, it was sought that Indians in the employ of the rulers should
come to think. feel and behave like Englishmen. so that they might more easily .
participate in the exploitation of the masses. Western liberal education was useful for Colonial Heritage d Indian
this purpose: Through this education, Indians tended to develop the same attitudes as Bureaucracy
those of the English; the study of Western literature, day after day and year after year,
tended to infuse into them blind admiration for Western civilisation. Civil servants were
recruited from among those who had received Western liberal education; those who had
studied only in a Pathshala or a maktab through the medium of an Indian language were
ineligible for government service, although it would be difficult to maintain that such
persons who might have studied Sanskrit or Persian literature were uneducated.
After the achievement of independence also, the recruitment of administrators through
competitive examinations has been mainly on the basis of Western liberal education,
whose influence has thus continued. It is true that Western liberal education has a
beneficial modernising influence also. However, the modernisation of our upper and
middle classes, including the bureaucracy, has often been only skin deep. Their
members have often continued to have pre-modern attitudes of communalism and
casteism. They still have belief in superstitions, and also indulge in nepotism. Their
Westernisation has not led so much to a broad mental horizon, as to emulation of
Western fashions and has thus created a social distance from the lower classes.

Dependence upon the West

Westernisation, in our case, has also resulted in making us excessively dependent upon
the West. Many of our best brains find the West more attractive than their own country.
As a result of the phenomenon of brain drain, the scientists, engineers, doctors and other
intellectuals who have been educated in this country make their contribution in another
country. Our administration and industry, have to often depend upon foreign scientists,
engineers, consultants and advisers. This dependence upon the West leads to purchase
of technology at a high cost from abroad, forced collaboration agreements with foreign
firms, and a tendency for the domination of our economy by developed countries
through multinational corporations. Thus while the yoke of colonialism .was thrown away
more than four decades ago, our country now tends to become subject to neo-colonial
exploitation. The culture of the upper and middle classes, including the bureaucracy, is
deeply related to the growth of neo-colonialism.
Our westernisation also makes us develop more interest in problems of the developed
Western countries than in those of developing ones, including our own. This applies to
social sciences also like Sociology, Economics, Political Science and Public
Administration. Indian scholars often aim at getting their research work published
abroad. Hence they have to choose problems which are of interest in the West. Our own
problems, which should be of greater interest to us, tend to be ignored. These, then.
come to be studied by foreign scholars. Some of the best studies on Indian society,
Economy. Polity and Public Administration are by foreign scholars. Creative thinking
and innovative theory-building related to our society is done more by foreign scholars
than us. Hence we tend to remain dependent upon the West for knowledge concerning
our society as well as that of other countries. It should be remembered that most of the
universities in India are part of the system of Public Administration, since they are
funded by the government. Also, the civil servants are the products of the universiti:-
Hence continued dependency in the field of knowledge affects the whole of the public
bureaucracy in government departments, public undertakings, government colleges, and
research institutes and universities funded by the governments.
Mix of Capitalist and Feudal Attitudes
During the British rule, Western culture was sought to be superimposed upon our
existing, largely feudal culture. Those who received Western education, and particularly
government employees, thus developed a mix of capitalist and feudal attitudes. The
continuation of these attitudes often comes into conflict with the democratic and
socialist ideals enshrined in the Constitution of independent India. Thus one of the
values of Western society is giganticism or the attraction for bigness for its.own sake. A
poor country like India can ill afford big buildings; big organisatiops that involve undue
centralisation. Another trait of Western capitalist culture is consumerism or unlimited
attraction for consumer goods. Consumerism interferes with capital formation and
therefore with economic growth. The tragedy of our bureaucracy is that while it has
inculcated some of the harmful Western attitudes like giganticism and consumerism, it
has failed to adopt some of the Western attitudes that would be helpful for'development.
Bureaucracy and Development Thus dignity of labour and habit of hard work, which are deeply ingrained in Western
culture, are not yet part of the bureaucratic culture in India. Here we find a continuation
of feudal attitudes. Our colonial cultural heritage, which is thus seen to be a mix of
capitalist and feudal attitudes, now comes in the way of development.

Lack of Communication between the Bureaucracy and the Common

People
The bureaucratic culture in India is not conducive to communication with the common
man. The use of a Western language, namely English, and Western dress and manners
obviously come in the way of communication. The gulf between the values of
administrators and common people also makes for difficulty. Thus while small farmers
might feel satisfied with kuchcha wells for irrigation, a high level administrator might
feel successful only if he were able to plan and execute a big, time consuming,
irrigation project. While the farmers and the administrator might both be right,
successful planning would require a meeting point between their differing frames of
reference. Ultimately, development is brought about by the work of farmers and workers
in fields, factories, mines and other workplaces; administrators help to plan and
coordinate these activities. Hence lack of communication between workers and
administrators, coming as it does partly from their different cultures, interferes with
development. The culture of the bureaucracy, insofar as it is colonial and removed from
that of !he common people, is thus a hindrance to the national objective of development
or growth with justice.
Check Your Progress 2
Note : i) Use the space given beiow for your answers.
ii) Check your answers with those given at the end of the unit.
1 ) Why was the bureaugacy highly paid during British rule?

2) What are the disadvantages of giving high emoluments and excessive security to
the bureaucracy?

.............
.a....................e.a....8....................

3) What attitudes were engendered by centralisation during British rule?

4) What are the concomitants of the procedural heritage of the bureaucracy?

.................................................................................................................................................................................
......................................... "......................................................................................................................................

.................................................................................................................................................................................
5 ) What are the various aspects of the cultural heritage of bureaucracy?
 Colonial Heritage of l o d i i
Bureaucracy

14.11 LET US SUM UP

Thus we read in the Unit that the bureaucracy continues to have certain colonial
features due to lack of development of the society, and also due to insufficient change
in personnel administration, administrative organisation, rules and procedures. The
power, prestige, emoluments and security of the bureaucracy continue to be high, and
interfere with its identification with the people, understanding of their problems most of
which are related to poverty, and the motivation to sblve these. The rank system of
classification, all-India services, recruitment of administrators on the basis of liberal
education, restriction of lateral entry, rigidity in the promotion system, routine transfers,
and restrictions on political activity by civil servants even if they go on leave without
pay, are some other features of colonial administration inherited by us.
Certain aspects of administrative organisation and procedures inherited from colonial
rule tend to engender in the bureaucracy attitudes of much dependence upon superiors.
lack of urge for making innovations, greater attention to rules than to people's interests,
acceptance of delay and corruption. The cultural heritage of the bureaucracy consists of
admiration for Western civilisation and dependence upon the West deriving from
Western liberal education, a mix of capitalist and feudal attitudes which interfere with
development and leads to lack of communication with the people.

KEY WORDS

Colonial : Pertaining to or of the nature of a colony.

Culture : The sum total of way of living built up by a group of human beings, which is
transmittkd from one generation to another
Forensic Science : Science dealing with scientific aids necessary to examine,
compare & evaluate physical evidence in cases of crime which helps in discovery of
information about the crime.
Heritage : What is inherited, or received from predecessors
Liberal Education : Education (in arts, humanities, social sciences, and natural
sciences) which is not professional or technical but is directed to general broadening of
the mind,
Position Classification :It is the process of Classification of positions in the
'
organisation into groups or classes on the basis of their duties, responsibilities,
qualifications, skills required to perform them. Here duties and responsibilities of
positions determine pay and qualification requirement of persons.
Rank Classification : Classification of employees according to services, groups and
classes.

Multinational Corporation : A firm with headquarters in one nation and significant

operations in one or more other nations/

14.13 SOME USEFUL BOOKS

Bhambhri, C.P., .1972. Public Administration and Practice, Jai Prakash Nath : Meerut.
Maheshwari, S.R., 1989. Indian Administration, Orient Longman: New Delhi.
Misra, B.B., 1977. The Bureaucracy in India -An Historical Analysis of Development
.
upto 1947 Oxford University Press : Delhi.
Varma, R.S., 1973. Bureaucracy in India, Progress Publishers : ~ h o d a i .
Bureaucracy and Development
14.14 ANSWERS TO CHECK YOUR PROGRESS
EXERCISES

Check Your Progress 1

1) Your answer should include the following points :
Social change is generally a slow process.
Many of the social, economic and political institutions have remained
unchanged.
The organisation and procedures of Public Administration have not undergone
much change.
Personnel administration continues to be governed mostly by old rules and
practices instead of new laws.
2) Your answer should include the following points :
The bureaucracy has continued t i b e powerful because of underdevelopment in
general.
Weakness of interest groups and political parties.
Lack of education and awareness among the people.
3) Your answer should include the following points :
All-India services help to maintain the unity and integrity of India.
If the Governments of the Union and a State have been formed by different ?.
political parties, the State Government tends to complain about the dual*'
loyalty of members of All-India services.
4) Your answer should include the following points :
Administrators with liberal education may not be able to fully utilise modem
science and technology for policy formulation and implementation.
Restrictions on lateral entry come% the way of exchange of personnel between
the administration and other fields.
5) Your answer should include the following points :
Promotion from one class or service to another does not fully permit fitting the
individual to the job.
Rigidity in the system of promotion is harmful for both the organisation and the
employees.
Check Your Progress 2
1) Your answer should include the following points :
The bureaucracy was highly paid for maintaining social distance between it
and the Indian people.
For making it attractive in the face of the people's opposition to British rule.
2) Your answer should include the following points :
A prosperous bureaucracy is unable to closely associate with the people.
Excessive security interfers with rewards and punishments and leads to
inefficiency.
3) Your answer should include the following points :
Centralisation led to attitude of dependence upon superiors.
Lack of motivatitn for making innovations.
28
4) Your answer should include the following points : Colonial Heritage of Indian
Bureaucracy
Greater attention to rules than to the fulfilment of people's interests.
Delay.
Corruption.
5 ) Your answer should include the following points :
Admiration for and dependence upon the West, flowing from Western liberal
education.
A mix of capitalist and feudal attitudes which impede development.
Great differences between the culture of the bureaucracy and the common
people.
Lack of communication between the bureaucracy and the people.
UNIT 15 SOCIAL BACKGROUND OF
INDIAN BUREAUCRACY
Structure
Objectives
Introduction
Social Background of the Bureaucracy
Influence of Bureaucracy's Social Background on Administration
Ways of making Bureaucwcy mae Representative
Let Us Sum Up
Key Words
Some Useful Books
Answers to Check Your Progress Exercises

15.0 OBJECTIVES

After reading this unit you should be able to:

a describe the various aspects of the social background of bureaucracy;
a discuss the influence of the social background of bureaucracy; and
a suggest ways for bringing about a more representative bureaucracy.

15.1 INTRODUCTION

Studies of the social background of bureaucracy have been made in various countries in
recent times. A study of higher civil servants in France by Bottomore was published in
1954, of those in Britain by Kelsall in 1955, and of those in America by Warner and
others in 1963, in India V. Subramaniam's Social Background of lndia's Administrators
was published in 1971. Research work on the social background of the Indian
Administrative Service (IAS) was done by L.P. Singh and S.N. Singh. David C. Potter's
lndia's Political Administrators 1919-1983 was published in 1986. In this book, he dealt
with the Indian Civil Service and the Indian Administrative Service and the social
background of each of these Services.
One of the objectives of making studies such as those mentioned above may be merely
to find out which social economic group do the senior civil servants come from."The
researcher ties to answer questions about the section of the society from which most
civil servants of a certain category are drawn, their education, whether they lived in
villages or cities, their caste, their religion, the extent to which women are able to get
in to the services and so on.
A second objective may be to relate the social background to attitudes, or in other
words to study the influence of social class, education and such other factors on the
nature of bureaucracy, and hence the administration.
A third objective may be to study how far the bureaucracy may be said to be
representative of the society in general, that is to examine whether it is drawn from all
sections or whether members of a certain class predominate. Representativeness is often
considered to be related to responsiveness: it may not be fully responsive to the other
classes in the society. Considerations such as these make the subject interesting.
The bureaucracy may be conceived of as having a higher section, consisting of
administrators who play a greater role in advising ministers on policy, and in guiding,
supervising and controlling the lower section. The members of the lower section are
responsible mainly for implementation. In India most of the top administrative posts at
all levels are held by the IAS. Thus most of the officers in the secretariats, both Central
and State, are drawn from the IAS. Many of the Heads of Departments of State
Governments, and Divisional Commissioners also belong to the IAS. At the local level,
 most Deputy Commissioners and Commissioners of city corporations also come from '&ma1 Background of Indian
Bureaucrac~
this Service. Hence the IAS may be said to constitute the hard core of the higher
bureaucracy. That is why most studies of social background have been those of the IAS.
In this unit, we will study the varicus aspects of social background of bureaucracy and
the influence of this social background on administration. It will also give you an idea
of various ways of making the bureaucracy representative.

15.2 SOCIAL BACKGROUND OF THE

BUREAUCRACY

i) Occupation -of the Father or Guardian

The main finding of research studies is that most members of the higher bureaucracy
have been drawn from the professional middle class of India, consisting of higher civil
and military officers, lawyers, doctors, university teachers and business executives.
Thus the father or guardian of about 94 per cent of the direct recruits to the IAS up to
1956 belonged to this class. Very few of the IAS officers recruited between 1947 and
1956 come from families of Zamindars or farmers: they constituted only 4 per cent of
the total. The situation with regard to other higher services was basically similar, but
the difference between the numbers of those drawn from the professional middle class
and from landowning families was less. Thus, of the recruits to the Indian Police
Service, about 81 per cent came from the professional middle class and about 16 per
cent from the landowning class. Of the recruits to the Indian Foreign Service, 82 per
cent came from the professional middle class and 12 per cent from the landowning
class. In short, in the first decade after independence, most of the entrants to the higher
bureaucracy belonged to the English educated, salaried or profegsional, upper middle
class; there were very few entrants from other sections of the society. Recruitment to
the higher bureaucracy was highly biased in favour of the professional. middle class,
since it constituted less than 10 per'cent of the population but more than 80 per cent of
the recruits were drawn from it.
During the period 1957-63, the proportion of recruits from landowning families improved
somewhat, although it remained low. Of the recruits to the IAS in this period 81 per cent
came from the professional middle class and '12 per cent from the landowning class. In
the case of the IPS also the direction of change was the same, the percentages of
recruitment from the two classes being 77 and 19 respectively. In the case of certain
other Central Services also the proportion of recruits from landowning families improved
a little, although it went down in respect of the Indian Foreign Service.
In the years 1980 and 1981,71 per cent of the IAS recruits came from ;he professional
middle class and 19 per cent from the landowning class.
The above data indicates that while the proportion of persons from farming families has
been increasing gradually, the vast majority (about 70 per cent) of those joining the
higher bureaucracy still come from the professional middle class.
ii) Education
I

II Research studies shew that most of the entrants into the higher bureaucracy are drawn
from among those educated at exclusive schools and colleges. The phrase "exclusive
i schodls and colleges" refers to educational institutions which charge high fees and
hence are generally joined only by children from the upper and richer sections of the
society. The medium of instruction in these institutions is usually English only.
What is even more interesting, there has been an increasing role of education at
exclusive schools for entry into the higher echelons of the civil service. Of those
recruited to the IAS in the period 1947-56, about 15 per cent had been educated at
convent and public schools; in the period 1957-63, about 16 per cent had been so
educated. There was a big jump by the seventies. Of those who entered the IAS between
1974 and 1979, more than 60 per cent had been educated in such schools. Thus since
Independence, the proportion of recruits educated at exclusive schools had gone up by
four times.
The significance of education in exclusive colleges has also been unmisiakable. More
than half of the IAS recruits, 56 per cent in the period 1947-56, and 59 per cent in the
BurenuanC~and Development period 1957-63, had been cducated in only a dozen well-known colleges in India; all the
other colleges put together had contributed less than half. A similar picture emerges
when we consider the role of education at the better known universities. Abol;t 79 per
cent of the IAS recruits in the period 1947-56, and about 70 per cent of those in 1957-
63, had been educated at the six universities of Madras, Bombay. Calcutta, Delhi,
Punjab and Allahabad. These six universities also contributed 79 per cent of the recruits
to the Indian Foreign Service in the whole of the period 1947-63. The trend has
undergone a change in the recent years. The students of universities in the North feature
more in the services.

While the requirement for entry into the higher bureaucracy is mostly only graduation,
fibkt of the entrahts have a master's degree. There are some medical doctors, engineers,
and research degree holders also. Thus among the 129 recruits to the IAS in 1981 there
were 13 with a bachelor's degree and 106 with a master's degree. They included 5
doctors and 17 engineers. There were 10 research degree holders also.

iii) Rural-Urban Residence

The higher bureaucracy in India has been recruited predominantiy from the urban areas.
There has not been much change in this scenario over the years. Thus of the 1981
recruits to the IAS, 72 per cent had an urban background and 28 per cent a rural one. If
we compare these figures with those for 1957, we find a change of only 2 per cent. 74
per cent then had an urban background and 26 per cent a rural one. Thus there may at
best be a slight tendency for more rural residents to get into the higher bureaucracy.
iv) Caste
The higher bureaucracy is recruited predominantly from the so called higher castes.
People of low caste are also generally poor and cannot afford higher education for their
children. To compensate for the age old discrimination against those having a low
social status, the Constitution of India provided for "reverse discrimination" in the
shape of reservation of jobs for scheduled castes and mbes in Public Administration. For
long, however, these quotas were nor filled, since candidates of scheduled castes and
tribes could often not get qualifying marks in the competitive examination. Government
coaching centres were therefore started to help such candidates in preparing for the
examination. By the end of 1970s quotas were being filled. Thus while in 1967 only 11
per cent of the recruits to the IAS belonged to scheduled castes, in 1981, 15 per cent
belonged to the scheduled castes. Similarly, the percentage of scheduled tribes recruits
had risen from 4 to 7. By 1982, 10 per cent of the total number of IAS officers were from
scheduled castes and 5 per cent from scheduled tribes. These percentages were,
however, still lower than their proportion in the population. In other words, persons of
low social status were still under-represented in the higher bureaucracy.

v) Religion
While all the important religions of India are represented in the higher bureaucracy,
some of them have fewer members than their proportion in the population. Thus among
the IAS recruits in 1981, about 88 per cent were Hindus. only one per cent were
Muslims, 4 per cent were Christians and 5 per cent were Sikhs. The representation of
muslim has varied between 1 and 6 per cent since 1957 and has been much lower of
than their proportion in the population.

vi) Gender'
The representation of women in the higher bureaucracy has increased consistently.
Among IAS recruits for the year 1957, 1967, 1977, 1980 and 1981, their percentage was
about 3, 8, 9 and 12 respectively. While there has been an increase in the number of
women getting into the IAS, they constituted only 7 per cent of the IAS officers in 1983.
Since women constitute about half of the population, they may be said to be still
grossly under-represented.

So far we have studied the social background of the higher bureaucracy in India on the
basis of research studies made from time to time. Comparable studies for the lower
bureaucracy have not been made, presumably because it is not considered to play as
important a role in the political system. However, some comparison of the social
background of the two sections of the bureaucracy can be attempted on the basis of
available data. M.V.Subbiah Chaudhary made a study of the Andhra Pradesh
bureaucracy and presented it at a seminar in 1989. While the study suffered from certain , Social Background of Indian
limitations. it does prcvide some data for purposes of comparison, as discussed below. Bureaucracy

We find that in the Andhra Pradesh bureaucracy, while about 69 per cent of officers in
the secretariat came from the professional middle class, 62 per cent of the assistants
and 17 per cent of the clerks belonged to this class. Also, while 21 per cent of the
officers belonged to farming families, 20 per cent of thc assistants a ~ i d65 per cent of
the clerks belonged to such families. Thus there i \ .I clear contrast in the social
extraction of officers and clerks: while a majority of the officers have an urban
profcqsio~almiddle clahs background, a majority of the clerks have a rural, farming,
background. It has also bee11 found that while about 76 per cent of the officers came
from upper and upper middle classes, 75 per. cent of the ilerks came from the lower and
lower lrliddle classcs.
In this study, castes were divided into three categories: forward, backward and
scheduled. It was found that 69 per cent of the officers, 53 per cent of the assistants and
41 per cent of the clerks belonged to forward castes. Also, while 3 per cent of the
officers belonged to scheduled castes and tribes, 6 per cent of the assistants and 17 per
cent of the clerks also belonged to these categories. Thus while the highest proportion of
forward castes was among officers, the highest proportion of scheduled castes and tribes
was to be found among clerks. This indicates a clear relationship between caste status
and bureaucratic status. The distribution of backward castes was also on the same
pattern. About 14 per cent of the clerks belonged to backward castes. These data
indicate that the higher the status of a person in the bureaucracy, the more likely helshe
is to belong to a high caste.
Check Your Progress 1
Note : i ) Use the space given below for your answers.
ii) Check your answers with those given at the end of the unit
1 ) Discllss the social background of the higher bureaucracy ?
................................................................................................................................................................................

2) "The higher bureaucracy is recruited pre-dominantly from the so-called lower

castes". Comment.

15.3 INFLUENCE OF THE SOCIAL BACKGROUND

OF BUREAUCRACY ON ADMINISTRATION
p~
-. .

We have noted earlier that our higher bureaucracy is drawn largely from the urban
professional middle class. It can at best be said to be drawn from 10 per cent of the
rociety. Hence the higher bureaucracy cannot be said to be representative of the society
.I\ a whole. This influences the administration in several ways. We shall deal with these
~nfluencesone by one.
i Lack of Communication
There are great differences between the values, norms, feelings, beliefs and information
of the higher bureaucracy, the lower bureaucracy and the people. This makes for lack of
Bureowracy and kvelopment We have noted above that the majority of members of the higher bureaucracy, or
administrators, have been educated in exclusive schools. One view is that suCh schools
develop qualities of leadership and inculcate discipline and good manners among the
administrators. The other view, represented by Bertrand Russell, is that the education at
these schools is "as destructive to life and thought as the medievel church. According
to him its evils arise from two sources: "its perfect assurance of its own rightness, and
its belief that correct manners are more to be desired than intellect, or artistic creation,
or vital energy". With whichever of these views we agree, the fact remains that the
early education of those who join exclusive schools is in many ways different from that
of the vast majority of children, resulting in very important and substantial differences
in attitudes.

The combined influence of upper middle class homes and exclusive schools tend to
inculcate among their children, values such as those of consumerism, giganticism and
the hoarding of material goods, and attitudes such as those of lack of empathy for the
poor, considering oneself to be superior to others, seeking success at any cost and aping
the West. Their very joys and sufferings tend to be different from those of the vast
majority. Their upbringing and education at exclusive colleges and schools tend to keep
them aloof from those belonging to the lower strata. They rarely ever get an opportunity
to live in villages where the vast majority of the people live. Hence their information
and underskding of the conditions of living problems and needs of vast sections of the
people are little. These differences of values, beliefs and information make for lack of
communication between the higher bureaucracy, lower bureaucracy and the people.

ii) Lack of effectiveness

One of the important functions of the bureaucracy inideveloping countries is to deal
with poverty, its causes and consequences. If the upper section of the bureaucracy,
which plays an important role in policy formulation as well as implementation, has
little understanding of the nature of poverty in the country, ineffectiveness is bound to
result. If the common people are afraid of administrators and can hardly speak a
language understood by them, administrators understanding of people's problems
remai'ns wanting, and hence policies for dealing with these remain unsatisfactory. Thus
lack of comrllunication leads to lack of effectiveness. Lack of effectiveness also results
from lack of participation by the people. Due to social distance between the
administrators and the people, and differences in their values and beliefs, administrators
are unable to enthuse the people and seek their cooperation and participation.
Ineffectiveness also results from lack of feedback to the administrators. Due to lack of
communication with the people, and their lack of cooperation, administrators are unable
to assess the success of programmes, and the problems in the way of their fulfilment
properly.

Lack of effectiveness also results from lack of adjustment between members of the
higher and lower bureaucracy. B. Mook made a study of the bureaucracy in Tamil Nadu
in 1982. He found that the subordinate officials suffered from feelings of insecurity,
hostility and isolation. They felt that they had no influence, had to only obey
instructions, and stick to rules.

Thus differences in the status and culture of the higher and lower bureaucracy made for
frustration, hostility and lack of initiative on the part of the large, lower, section of the
bureaucracy whose function was to give effect to policies.

iii) Perception of Injustice

One of the principles of democracy is equality of opportunity. It implies that everyone
should have the same opportunity to achieve desired goals, in keeping with his abilities
and effort. Since high level administrative positions in our society have a high prestige,
large numbers of youth wish to obtain them. However because of their socio-economic
background, a large number cannot avail of this opportunity. The vast majority of our
people live in villages where they have little opportunity to pursue the kind of education
which would make for success at the competitive examination. Many among those who
live in cities also cannot afford good quality higher education. Hence the poor, and
those.living in villages, have the feeling that they are unjustly being denied entry into
--..---A ---I-:--- :- .L- -J-:-I-L-r:--
 Social Background of Indian
15.4 WAYS OF MAKING BUREAUCRACY MORE Bureaucracy

REPRESENTATIVE

We have seen earlier that our bureaucracy cannot at present be said to be

representative of the society as a whole. This results in ineffectiveness of administration
and a feeling of injustice among those who are left out. Hence we have to seek ways of
having a fnore representative bureaucracy without compromising with the principle of
selection on the basis of merit. We shall consider these below.

i) Spread of Education
At present only a small proportion of the people in India receive education. Only about
36 per cent of the people are literate. However literacy constitutes just the beginning of
education. For getting a job one needs education appropriate to it. The proportion of
those who get secondary and higher education is small. Many. of course, never go to
school. Even among those who join a school, the majority drop out. Of 100 children who
enrol in class I, only 23 reach class VIII. Higher education is limited to only 4.8 per cent
of those in the relevant age group. Wider spread of education is,required to provide for
social justice and also to help in social, economic and political development. Having a
more presentative bureaucracy is an aspect of development. Spread of education can
be improved by having more schools, reducing the cost of education, vocationalising
education, providing mid-day meals, books and uniforms to children of the poor,
providing for more teachers, improving the method of teaching, and so on. If those who
get left out today also get educated, they can compete for the public bureaucracy. This
will benefit the administration since the bureaucracy will be drawn from a larger pool,
thus tapping the potential of more people; it will also make for a more representative
bureaucracy.

ii) Emphasis ow6pecialisation and Position Classification

In developing countries like India the system of personnel administration also remains
underdeveloped. The system of recruiting people for a service, instead of a job, is one
aspect of such underdevelopment. This has three consequences: (i) lack of emphasis on
specialisation, (ii) rank-in-man instead of rank-in-job, and (iii) recruitment from a
limited section of the society. Thus when we recruit people for the IPS, the method of
recruitment results in the selection of persons mainly from a small section of the
society:This is because the test is for abilities which mainly candidates from the upper
middle class have developed. These abilities, however, may not be relevant for all the
jobs which IPS officers may have to perform. The result is that while we exclude
candidates from classes other than the upper middle class, we still do not select those
who are really suited for the work which they have to do. Thus at present, the athletic
ability of candidates is not tested. While an advisor to the government on security might
not need it, a dismct police officer might be in great need of it. If position classification
were there, and we were recruiting district police officers, we might test their atheletic
ability also. Many boys from the poorer section might have it in greater measure than
those from richer ones. Similarly, we might require other specialised qualifications
appropriate for particular jobs. In this way we would be able to recruit persons with
specialised qualifications and abilities suited to particular jobs, and also with diverse
social backgrounds. Hence introduction of position classification and recruitment for
specialised jobs would lead to both, personnel who are better suited to their jobs and a
more representative bureaucracy.

iii) Improvement in Methods of Recruitment

At present recruitment to services like the IAS, IPS, IFS and IA&AS (Indian Audit and
Accounts Service) is made on the basis of a written examination followed by an
interview. The examination and the interview, however, do not test all the abilities of a
person. According to David C. Potter, cramming also helps some people to succeed in a
written examination. An objective type examination has recently been introduced to
reduce the emphasis on cramming. However, there is a need for further improvement.
According to the Harvard psychologist, Howard Gardner, intelligence is of seven kinds:
(i) Linguistic, (ii) Logical-Mathematical, (iii) Spatial, (ivJ Bodily-Kinaesthetic,
Burcllncmcy and Development persb , for various jobs we should test these different kinds of intelligence according to
job requirements. The interview is called the personality test. However, no scientific
personality tests, such as those used in the armed forces, are employed. By testing
candidates more scientifically, we would not only be able to select persons more suited
to their jobs, we would also be able to spread our net wide. Various abilities may be
said to be distributed widely over different sections of the society. Hence if we test for
various abilities, instead of mainly that of essay writing, we would be able to get people
who are more suited to their jobs from diverse social backgrounds.
Check Your Progress 2
Note : i) Use the space glven below for your answers.
ii) Check your answers with those given at the end of the'unit.
1) How does the social background of bureaucracy effect administration ?

2) How can we have a more rzpresentative bureaucracy without compromising with

the merit principle ?

LET US SUM UP

The higher bureaucracy in India is drawn mainly from the urban, salaried or
professional, middle class consisting of higher civil and military officer\, lawyers,
doctors, university teachers and business executives. Most administrators have received
education at exclusive schools, colleges and universities. Three-fourths of them have
lived in cities. About one-tenth of them belong to scheduled castes and about one-
twentieth to scheduled tribes. Muslims and women are also under-represented. Such a
. narrow field of extraction of the higher bureaucracy makes for differences in values.
norms, beliefs and orientations between the higher and lower bureaucracy and the
people at large. This results in lack of communication, ineffectiveness of administration
and the perception of injustice. A more representative bureaucracy, selected by merit,
can be had through greater spread of education, more emphasis on position
classification and specialisation, and the adoptioi~of more scientific methods of
recruitment for testing various abilities and personality traits.

KEY WORDS

Bodily-Klnaesthetic Intelligence: Process of learning through bodily movements

and sensation.
Communication: The imparting or interchange of thoughts, opinions or information
or knowledge, partaking of ideas and a sense of participating and sharing.
Consumerism: The tendency in the modem age to promote production, consumption
 amongst producers to promote their sales with the help of electronic redia, attractive Social ~ a c k ~ r o u nofd :*I
B I I ~ ~ ; I I JJCLY ~
package etc.
E a c a t i o n system in the medieval church period: Many of the teachings and
preachings of the medieval church laid emphasis on righteousness. this way of 'hinking
does not allow a feeling of tolerance and looking at other people's views and attitudes.
resulting in narrow thoughts and values, proving self-destructive in the ultimate analysis.
Norms: An accepted standard of behaviour within a society.
I'rofessional middle class: The group of persons engaged irr profession such as
Ihose of civil and military officers, doctors, lawyers and busine5s executives etc.
Kank-in-man instead of rank-in-job: Traditionally, organisations like thc
military and bureaucracy have classified persons as per hierarchy ranks. But in modeni
times, in some countries like the U.S..4.,the jobs are classified and are based on
hierarchical ordering of the difficulty and complexity of jobs and not merely the rank of
I the person.
t Representative bureaucracy: A civil service representlnp proportionately every
I
caste, class and religious groups of population. This type of bureaucracy is expected to
be responsive and responsible in relation to the people of the country.

15.7 SOME USEFUL BOOKS

Potter, David C., 1986. India's Political Administrators: 1919-1983; Clarendcm Press:
I Oxford.
1 Subrarnaniam. V., 1971. Social Background dftndia's Adrninistrutors; PuSlications
Division. Government of India: New Del

15.8 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES

Check Your Progress 1

1 ) Your answer should include the following points:
Occupation of the father/guardian.
Educational background.
Area they come from .
Caste, religion, and gender they belong to.
2) Your answer should include the following points:
Whether the statement is true or false.
The caste from which the bureaucracy predominently come.
Check Your Progress 2
1) Your answer should include the following points:
Due to difference of values, beliefs and informa:ion, there is lack ot
communication between the higher. lower bureaucracy and people.
\

Lack of communication leads to lack of effectiveness.

Perception of injustice.
2) Your answer should include the following poin~s:
Education facilities to everyone.
More emphasis on specialisation and position classification.
1 r-.--- A A,
. J" .. .
UNIT 16 NEUTRAL VERSUS
COMMITTED BUREAUCRACY
Structure
16.0 Objectives
16.1 Introduction
16.2 Neutrality
16.3 Commitment
16.4 Assessing Neutrality and Commitment
16.5 Let Us Sum Up
16.6 Key Words
16.7 Some Useful Books
16.8 Answers to Check Your Progress Exercises

16.0 OBJECTIVES

After reading this unit you should be able to:

discuss the meaning and significance of neutrality and commitment;
describe the problems in the way of achieving neutrality and commitment ; and
suggest measures for having both neutrality and commitment.

16.1 INTRODUCTION
In this unit we shall consider how far the bureaucracy is, or should be, neutral and
committed.
First we shall take up the question of neutrality. Neutrality means impartiality. The
significance of neutrality of the bureaucracy in the modem democratic state is great. As
has been discussed in earlier units, the bureaucracy plays an important role in policy--
making as well as in its implementation. The permanence of members of the
bureaucracy helps to provide them with a long-term perspective, while ministers tend to
have a short-term perspective related to the elections. The bureaucracy has access to lot
of confidential information, which ministers often do not possess since they lack the
time to read all the official documents. Bureaucrats come to have long experience of
administration, while ministers come and go. Many of the members of the bureaucracy
are technically qualified, while ministers usually are amateurs. For these reasons there
is considerable dependence upon the bureaucracy in all countries. In developing
countries, like India, there are some additional factors making for such dependence.
Thus in developing countries, interest groups and political parties are either weak or
non-existent, electoral systems are often defective and the traditions and conventions of
democracy have often not been well-established. Hence dependence upon the
bureaucracy is greater in developing coqntries, making it more important that the
bureaucracy should be neutral.
We shall discuss the neutrality of bureaucracy under three heads: (i) neutrality between
classes, (ii) neutrality between cultural groups, and (iii).neutrality between political
parties. We will discuss the significance and problems of these three aspects of
neutrality and try to find out the ways of achieving neutrality.
Commitment means moral dedication to a cause. The bureaucracy should be committed
to (i) human and national values, (ii) service of the people, and (iii) professional
norms. Commitment on the part of the bureaucracy is important because while on one
hand it is bound by rules, on the other hand it is always trying to find new ways of
dealing with difficult problems. This is true in all countries. There are some additional
factors in developing countries. The responsibility of bringing about development falls
. P . . .. .. . * .. ..
upon the bureaucracy to a large extent. There is widespread apathy, engendered by
participation can be obtained only through committed, and energetic action on the part Neutral Versus Committed
Bureaucracy
of the bureaucracy. Serious problems tend to crop up in the process. Thus, the
bureaucracy tends to become very powerful so that in most developing countries
dictatorship by the civil and military bureaucracy is a common -phenomenon. It requires
a lot of commitment to exercise power in the interest of others. We shall try to find
ways of inculcating such commitment.
While neutrality and commitment can go together, and indeed reinforce each othei if
properly oriented, they can also become antithetical if not so oriented. Thus, if
bureaucrats become committed to one political party, they cannot remain neutral. We
will examine such areas of conflict between neutrality and-commitment.
Finally, we shall also examine methods already being adopted for having a highly
committed and at the same time neutral bureaucracy in certain special areas, and
consider the possibility of using these methods for a few'more areas.

16.2 NEUTRALITY

The society consists of various sections, groups and classes. Each one of these tries to
protect its interests, The various interests often come into clash with each other. It is the
function of the government to maintain peace by keeping this conflict within limits. The
government achieves this objective by trying to fulfil the just demands of each section.
This involves a changing allocation of resources. Thus in most democratic countries
there is progressive taxation through which the rich are taxed more than the poor; the
resources so obtained are then utilised more for the welfare of the poor. In this way,
resources are transferred from the rich to the poor. Thus governmental policy determines
the allocation of resources among the various sections of the people. The bureaucracy
participates in drawing up the policies for such allocation by negotiating with
representatives of the various interests, advising ministers on the pros and cons of
alternative policy proposals, and drafting reports, proposals, resolution and legislative
measures. In view of such participation by the bureaucracy in policy-making, and also
in putting it into effect, it is important that the bureaucracy should be non-partisan or
neutral between the various sections. In our society, neutrality of three kinds is
important: neutrality between classes, neutrality between cultural groups, and neutrality
between political parties. We shall consider the significance and problems of each kind
of neutrality; we shall also consider how neutrality of each kind can be increasingly
achieved.

i) Neutrality between Classes

The society is made up of various classes such as those of landlords, capitalists, traders
and workers. The government is expected to take care of the interests of each one of
them, and to allocate resources to them justly. The bureaucracy is the government's
main instrument and must be neutral between classes if justice is to be done.
Justice between classes is difficult to achieve because their interests often conflict.
Thus if a manufacturer pays higher wages to his workers, his profits get reduced to that
extent. Similarly, if a landlord gives a higher share of the crop to his tenant farmers, he
suffers a loss. It is precisely because of such conflict that neutrality between the classes
is difficult to achieve. It is only if the government and the bureaucracy are seen to be
neutral that the conflict can be kept within limits and peace maintained. If, however, a
class has the feeling that injustice is being done to it, it may take to the war path. Thus
disputes between capitalists and workers result in lockouts or strikes, sometimes there is
even violence and bloodshed. Hence the neutrality of the bureaucracy, which is the
main instrument of the government, is essential for the maintenance of social order.
The conflict between classes is greater in developing countries like India, than in
developed ones. This is because there are greater disparities in developing countries.
Thus while a few are very rich, millions continue to starve. What is more, those who are
poor also lack of education, social status and political power. In other words. the poor
often do not even know how to improve their condition, and even if they try, the richer
and more powerful sections often thwart their efforts, because of the conflict between
Rureaucracy and Development of the poor and their protection from exploitation. Thus in India, workers are by and
large poor, uneducated and urorganised, only about one-tenth of them are organised in
trade unions. Due to the prcvailing poverty, unemployment and lack of education, thc
trade unions also remain weak. Hence in the case of an industrial dispute the
government often intervenes requiring adjudication by a Labour Tribunal or Court.
Now, a Labour Tribunal or Court performs t e function of administrative adjudication: i t
$1
is a bureaucratic mechanism for ensuring justice to both, the employers and the workers.
It is important that this bl~reaucraticmechanism should be seen as being neutral
between the contending parties, if peace is to be maintained. This example indicates
the great significance of rleutrality of the bureaucracy in developing countries.
The neutrality of the bureaucracy is important also because of its role in helping to
bring about development. The government provides loans, subsidies, tax concessions,
raw materials (such as steel and cement), and inputs (such as coal, electricity, lertiliser
and seeds) to industrialists and farmers. The classes of big industrialists and big fanners
have a lot of political and economic power and, therefore, tend to monopolise these
gains. However, development requires that small industries and small farms should also
prosper: they are large in number and make substantial contribution to the national
product. Justice also requires that they should not be ignored. Hence it i5 important that
the bureaucracy, which distributes these facilities, should do so impart~allyand justly.
In other words, just support to small industrialists and farmers requires that the
bureaucracy should not be influenced by the power of rhe big industrialists, big farmers
and landlords.
For reason!, discussed above, there is general agreement about the need for r~eutralityof
the bureaucracy. However, there are some problems in attaining this ideal..One of these
is reiated lo its social background. As discussed in Unit 15, most of the higher
bureaucrrtcy comes from a single class. Thus about 70 per cent of the IAS officers come
from the urban. salaried or professional, middle class. This indicates that farmers and
workers, who constitute the majority of the population, remain grossly under-
rvpresenteil. If the bureaucracy were more representative, it would likely be more
n ~ - ~ ~ Mctnbeis
~ r a l . of every class tend to be partial to the interests of their own class. I f a
lurgc majority of members of the bureaucracy come from a single class, the
bureaucracy 1 4 likely to be partial to this class. This problem can be solved to some
eire111by making the examination for recruitment more broad based. The present
examinarion givea preference to those who can write andspeak English well. and are
able to commit facts and formulas to memory. If the examination is diversified, so as to
include tests of the various psychological and physical abilities, more persons are likely
to be recruited from the families of farmers and workers, thus making it more
representative and more neutral.

Another problem relates to the influence of interest groups. A department that serves a
certain interest is, in the course of time, likely to become identified with it. It has to
come into close and continuous touch with persons having this interest, and it often has
to function as the advocate of this interest. Thus the department of agriculture has to
serve farmers by providing various facilities, and has to obtain funds for this purpose. In
this process, the farmers' lobby and the department of agriculture are likely to become
mutually supportive. If the interests of farmers and industrialists clash, as they often do,
the department of agriculture is likely to take the side of farmers. Hence such
specialised agencies are in danger of losing their neutrality. This problem has arisen in
an acute form in the United States in regard to variaus 'constituency agencies'. In
developing countries like India, it tends to arise mainly in regard to agencies dealing
with powerful interests, like those of big' industrialists and big farmers. The solution to it
lies in the development of organisa~~ons of hitherto weaker sections of the society.
Efforts are now being made in India to help landless labour to organise itself. Similarly,
if various interests organise themselves, and demand better political control over tbe
bureaucracy, so as to ensure its responsibility and accountabiliLy, it is likely to remain
morc ~leutralalso.

ii) Neutrality between Cultural Groups

Our society consists of groups based on religion, caste, language and region. While all
these groups have many common interests, they also come into conflict to some extent.
-. . . . - . . . . -- . -. . . -- . . -
 Neutral Versus Committed
the blacks have remained poor and exploited. In the USSR also there have been ethnic
Bureaucracy
conflicts, for example between Armenians and Azeris. The bureaucracy is required to
hold the balance between the various groups. Hence it is important that it should be
neutral between them. Since the conflict between cultural groups is generally greater in
developing countries, the significance of the bureaucracy's neutrality is also greater in
these countries. The way to the achievement of such neutrality, and also to the general
reduction of conflict between cultural groups, lies through better education. If the
attitudes of the people can be changed through education, so that they come to regard
themselves more as belonging to the Indian nation than to a particular group based upon
religion, caste, language or region, the conflict between groups can be reduced.
Members of the higher bureaucracy are recruited mostly from among those who have
received higher liberal education. If higher liberal education really broadens the mental
horizon, members of the higher bureaucracy should be among the most broad-minded
people in the society, and hence neutral between cultural groups. To some extent this is
t already so. Conscious effort at improving the quality of education can further help to
modernise the attitudes of the bureaucracy leading to even greater neutrality.
The conflict between cultural groups is often accentuated by socio-economic factors.
I
Thus Muslims in India have generally been poorer than Hindus. Most Sikhs in Punjab
have a rural background, while most Hindus have an urban one. Members of the
scheduled castes all over India are generally poorer and have a lower social status than
others. Many of them are landless labourers. Conflict between cultural groups can be
reduced by narrowing the disparities between them. One of the effects of such
disparities is that a cultural group having a lower social and economic status has a
lower representation in the bureaucracy also. Such a bureaucracy, with higher
representation of certain groups than others, is often not perceived as being neutral.
Hence the reduction of socio-economic disparities between cultural groups will not only
reduce conflict between them, but also make for a more representative and neutral
bureaucracy. Programmes aiming at poverty removal (such as the Integrated Rural
Development Programme), better health and education services, and loans to small
farmers and industrialists, constitute part of the governmental effort to reduce
disparities. Further, if a cultural group suffers from poverty and exploitation and is
unable to find adequate representation in the bureaucracy, special measures are taken
to help it in getting such representation. Thus, some universities and state institutes run
special courses for preparing those belonging to weaker sections for competitive
examinations for entry into the bureaucracy. The Constitution of India permits
reservation of posts in the bureaucracy for any backward class of citizens under Article
16(4). Under this provision, 15 per cent for scheduled tribes, that is in proportion to their
population in the country. For other backward classes the quantum of reservation varies
from State to State. Many of the reserved seats, however, remain unfilled due to the
non-availability of candidates with requisite qualifications belonging to the weaker
sections. Still, these measures are able to help in having a more representative and
more neutral bureaucracy.
iii) Neutrality between Political Parties
Competition between political parties is an essential characteristic of a democracy. If
there is only one party, the voter can hardly exercise hisher choice. Democracy
becomes meaningful only if the voter can choose between candidates of different
parties. The exercise of choice by voters at general elections results in the formation of
the government by one of the contending parties. Every party that fights an election puts
forward its manifesto before the people. If it wins, it is rightly inferred that the people
have approved of its manifesto, indeed, it is said that the manifesto now becomes the
mandate, or command, of the people to the new government. This mandate consists of
policies which the people have approved. Fulfilment ol the wishes of the people
requires the implementation of these policies. The marn instrument of the government
for the implementation of its policies is the bureaucracy. Hence it is important that the
bureaucracy should be neutral between parties : such neutrality alone can ensure the
fulfilment of the wishes of the people.
While the neutrality of the bureaucracy is accepted as an ideal, many problems arise in
practice and come in the way of the fulfilment of this ideal. One such problem has been
the spoils system, under which the winning party appoints its followers or supporters at
different positions in the bureaucracy. Such a burea~crac'~, naturally, lacks in merit and
Bureaucracy and Development efficiency. Since a new government, formed by another party, throws out the supporters
of the party earlier in power, the bureaucracy also tends to lack permanence, knowledge
gained from experience in the service and the motivation which the career system
might have provided. The spoils system brought home the advantages of neutrality of
the bureaucracy. The spoils system tends to arise with democracy but has to be curbed
later on. It prevailed in the United States during most of the nineteenth century. The
effort to replace it by the merit system, through selection of permanent officials by a
Civil Service Commission, began with the passage of the Pendleton Act in 1883. In
developing countries, where democracy arose around the middle of the twentieth
century, the spoils system has often tended to exist despite a Civil Service Commission.
Thus if members of the Civil Service Commission themselves are chosen from among
the supporters of a political party, the neutrality of those whom they select can hardly
be ensured.
In India, the Constitution contains several provisions for the maintenance of the
independence of Public Service Commissions. These are as follows:
i) The Chairman or a member of a Commission can only be removed from his office
by the President on the ground of misbehaviour according to the report given by
the Supreme Court after holding an enquiry.
ii) The conditions of service of a member of a Public Service Commission cannot be
to his disadvantage after his appointment.
iii) The expenses of a Commission are charged on the consolidated Fund of India or
of the concerned State.
iv) A Chairman or a member of a Commission, on ceasing to hold office, cannot get
employment under the government except at a higher post in a Public Service
Commission.

Another problem which tends to interfere with the neutrality of the bureaucracy between
political parties is the development of loyalty towards the politicians in power.
Members of the bureaucracy who have been selected impartially by a Civil Service
Commission, can later, in the course of their career, shed their neutrality and become
aligned with the party, or the individuals, in power. According to the Shah Commission
this problem existed during the Emergency (1975-77) in India. Some writers maintain
that nowdays also, there is a tendency for the development of such relationships of
alliance between ministers belonging to different political parties and senior civil
servants in nowadays also in governments of different political parties in India. Thus it
is suggested that the problem is not related to any particular party, but rather to the
underdevelopment of our political system. The solution, then, lies in political
development. Political development requires strengthening and improving the working
of the various parts of the political system: interest groups, political parties, the
electoral system, mass media, legislatures, the judiciary, and the political and
bureaucratic parts of the executive. Thus if interest groups representing the various
interests in the society put constant pressure upon the government, it will become
difficult for a minister and a bureaucrat to collide for making unjust and partisan gains.
If there is internal democracy in the ruling political party, its leaders also will remain
accountable to the rank and file of the party and not try to make selfish gains with the
compljcity of members of the bureaucracy. If the electoral system helps to elect those
who can truly represent the people, elected politicians will tend to be more responsive
to the people and are likely to refrain from misusing the bureaucracy. If the mass,media
(the press, television and radio) are healthy and powerful, they will provide for effective
communication between the rulers and the ruled and help to make the will of the people
prevail. Properly functioning legislatures will keep both the politicians and the
bureaucracy under check and make them behave with realisation of their responsibility
and accountability. In short, the growth of democratic consciousness and institutions is
likely to deal with the problem of alliance between ministers and civil sekvants for
making selfish gains.

Check Your Progress 1

Note : i) Use the space below for your answers.
ii) Check your answers with those given at the end of the unit.
 1) Why is bureaucracy needed to be neutral between the classes?

2) What are the provisions for the maintenance of the independence of Public Service
Commission ?

COMMITMENT

The bureaucratic form of organisation has both, advantages and disadvantages. Its main
advantage, as pointed out by Weber, is efficiency. Its main disadvantage, as pointed out
by Marx, is alienation. Hence we aim at reducing alienation while maintaining
efficiency. This can be done, to some extent, by improving the bureaucracy's
commitment, or moral dedication.
Let us examine the need for commitment in some detail. According to Weber, the main
characteristics of a bureaucracy are hierarchy, division of labour, specialisation, rules
and impersonality. All these factors make for efficiency. At the same time, however, a
bureaucracy suffers from alienation. According to Marx, the members of bureaucracy
suffer from loss of freedom, creativity, humanity, and morality. Weber agrees that
members of a bureaucracy tend to function like "little cogs, little men clinging to little
jobs". Other writers have also pointed out the disadvantages, or dysfunctions, of
bureaucracy. Thus Merton says that bureaucratic control over officials, requiring that
they should strictly follow rules, induces in them "timidity, conservatism and
I technicism". Hence the problem is how to maintain efficiency while reducing alienation
or the dysfunctions of bureaucracy. The solution to this problem lies mainly in
improving the commitment of its members. In other words, the bad effects of
bureaucratic controls can to some extent be reduced if the employees are imbued with
dedication.

Dedication, or commitment is required also because the employees have constantly to

deal with complex problems, many of which are new. It is a mistake to think that all
bureaucratic activity is routine and monotonous. Developmental activity in particular
requires forecasting, planning, risk bearing, breaking new ground and experimentation.
Hence, innovations have to be made all the time. The making of innovations, or
creativity, requires emotional commitment.
We have noted so far that commitment on the part of the members of a bureaucracy
leads to effectiveness and efficiency. Effectiveness means fulfilment of the
organisational objectives, and efficiency means doing so with as little expenditure of
resources as possible. Thus effectiveness and efficiency are aspects of the successful
working of the organisation. However, the organisation consists of human beings and it
is also important that they should be happy. To some extent, monetary rewards can
make them happy. Equally important, however, is their need for job satisfaction: Job
satisfaction is the intrinsic satisfaction which one gets from doing a job. Thus the
satisfaction which a painter gets from painting itself, is his job satisfaction: it is quite
apart from the money that he gets from the sale of his paintings. It is obvious that job
Bureaucrat) and Development satisfaction is related to commitment. If one paints only for money, he has little job
satisfaction. The more devoted, or committed, he is to painting, the greater is his
satisfaction. Thus commitment leads not only to organisational effectiveness and
efficiency but also to the satisfaction and happiness of the employees. Hence
comniitlncnt is significant from both, the organisational and individual points of view.

i) Commitment to Values and Objectives

Of our various commitments, the most important is the commitment to values. In the
ethical sense, values are ends in themselves: they are sought for their own sake. The
most important of our values are what are called human values, that is those values
which are sought in all places and times. Examples of human values are truth.
compassion, honesty and courage. While human values are universally sought, there are
some values to which importance is attached in only some countries. The latter may be
called national values. Important human and natipnal values may be mentioned in a
nation's Constitution also. Thus the following four human values are mentioned in the
preamble to India's Constitution: justice, liberty, equality and fraternity. These may be
called human values since in no age or place has their desirability been questioned.
Then there are the values of nationalism, democracy, socialism and secularism which
may be called India's national or Constitutional values, since they find explicit or
implicit support in the Constitution. While it is expected that everyone everywhere will
attach great importance to human values, citizens of India are, in addition, expected to
seek to fulfil the national or Constitutional values. The bureaucracy is expected to
attach even greater importance to both these sets of values than ordinary citizens. The
bureaucracy acts on behalf of the state or government. If the state and government are
to have a human face, that is if they are to be seen as being just and humane, the
bureaucracy must show respect to human values. Again, since the constitution lays
down the fundamental principles according to which the state is governed, the
bureaucracy, as the agent of the state and the government, must accord the highest
importance to all the values enshrined in the Constitution.
Apart from human and constitutional values, the bureaucracy must also be committed to
national objectives. Some of these may be so important as to be mentioned in the
Constitution, while others are stated in laws. Thus Part IV of the Indian Constitution,
entitled "Directive Principles of State Policy" mentions objectives such as the
following: securing just and humane conditions of work, securing a living wage,
provision of free and compulsory education for all children, and the protection of
Scheduled Castes and Tribes from social injustice and exploitation. However, the
Constitution mentions only a few, paramount, objectives, most other national objectives
are stated in laws. Their seed may be found in the demands of interest groups, they are
presented to the people for their approval through the manifestos of political parties at
election time. and they are adopted as national objectives after their inclusion in laws.
The legislature consists of elected representatives of the people, and hence is entitled
to declare the national will. Every act of the legislature contains such a declaration: the
objectives which the act seeks to fulfil are mentioned at its very beginning. Thus the
objectives of ~ h cIndustrial Disputes Act, 1947, are to secure industrial peace and to
ameliorate the condition of workmen in industry. Once objectives are enshrined in the
Constitution or the laws, it becomes the duty of the bureaucracy to faithfully fulfil them
by implementing the law. Commitment of the bureaucracy to the objectives stated in
Iaws is thus essential for the performance of its duties.

A problem presents itself. however, if we consider the actual' role of the bureaucracy. A
law contains not only the objectives which are sought to be fulfilled, but also the
chosen way in which this is to be done. This way can be called the policy. In other
words, for fulfilling a certain objective there may be several alternative ways, or
policies. Thus the objective of free and compulsory education may be achieved in either
of two ways: (i) punishing parents of children who are not sent to school, and (ii) giving
incentives, such as free mid-day meals, to attract children. Either of these ways may be
adopted and enforced through a law: this, then, becomes the policy of the government.
Now, while the objectives are, more or less, decided through the interaction of political
parties with interest groups and, directly, with the people, policies are chosen on the
basis of the advice of technically trained and experienced members of the bureaucracy.
The role of the bureaucracy in the formulation of the policy is very important, since
often only the bureaucracy knows what will work on the ground. The bureaucracy
informs the minister about the advantages and disadvantages of each of the alternative Neutral Versus Committed
Bureaucracy
policies, and advises on the adoption of the most suitable alternative. It is then for the
minister to choose the policy: he may accept or reject the advice of the permanent
official. In case the civil servant's advice is rejected, he faces the problem of faithfully
implementing a policy which he considers to be bad, or wrong. Thus, during the
Emergency (1975-77) the~ewere', perhaps, some officials who considered the policy of
using compulsion for family planning as being a bad one, since it would have achieved
the 'desired objective. Still, they were expected to faithfully enforce the measures for
compulsion.
We note, then, that.there may'be differences of opinion between ministers and civil
servants in regard to the policy to be adopted. In such a situation, civil servants are
expected to faithfully implement the policy chosen by ministers. In other words, the
bureaucracy is expected to be committed to a policy even if it considers it to be faulty.
Further, it is expected to become committed to a new set of policies on a change in
government. It comes in for criticism if the expected change in its commitment does not
come about. Paul Appleby has pointed out that the civil service in Britain is criticised
for not being as responsive to policy shifts as it should be.

The justification for expecting the bureaucracy to be ,committed to the policies of the
government of the day is inherent in democracy. It is the elected representatives of the
people, and not civil servants, who are thrown out of power, and office, if the policies of
the government are not liked by the people. The ministers are responsible to the people,
hence they are justified in choosing policies which they think the people want. The
function of the civil servant is to advise the minister freely and frankly in the
formulation of the policy, however, if the policy is finally chosen by the minister, the
civil servant must implement it faithfully. If the policy is proved to be wrong, the
minister is likely to be punished by the people at the time of election.

ii) Commitment to Service of the People

The bureaucracy's important role in policy formulation and implementation gives it a
lot of power, it participates in deciding who should get what, when and how, and then
goes ahead to enforce these decisions. In developing countries, particularly, the power
of the bureaucracy is considerable since the other parts of the political system are weak.
Hence while the civil servant is, ideally, expected to function as a "servant" of the
people, in reality he may turn out to be a master. In countries like India, this problem
becomes worse due to be heritage of the colonial past, when the civil servant used to be
the symbol and agent of the foreign power. After independence also, a cultural and
social chasm has continued to exist between the mostly non-literate and poor people
' and the higher bureaucrat who often dresses, speaks, and even thinks, like a foreigner.
In a democracy, however, the people are expected to exercise real power, and the
bureaucracy is expected to remain under the control of the elected politicians, and
serve the people. Hence commitment for providing service to the people is essential for
the proper performance of the bureaucracy's role.

The bureaucracy's power, derived from its role in policy formulation and
implementation, is used also for fulfilling its own interests. In developing countries, the
bureaucracy is very powerful, the result often is that the bureaucracy tends to fulfil its
own interest even at the cost of the interests of the people. Thus the extra profit
(benefits apart from salary) remains high in most public undertakings in India even if
they lack effectiveness and run at a loss. High officials play an important role in the
determination of their own emoluments, and try to protect their interests by maintaining
the emoluments at a high level. Service of the people requires that where there is a
conflict between their own interests and those of the people, they should give priority to
the people's interests.

iii) Commitment to Profession

A profession is a vocation or calling, especially one that involves some branch of
science or advanced learning. Nowadays Public Administration requires persons
belonging to almost all the profe~ions,such as doctors, engineers, lawyers, teachers,
scientists, managers and accountants. Obtaining professional qualifications requires long
and arduous preparation on their part. They are considered to have specialised
knowledge and excellence and hence have high prestige. Since their contribution to the
Bureaucracy and Development society comes from their specialised knowledge, it becomes their duty to keep abreast
of the developments in their field of specialisation. They must also maintain the
expected standard of performance. Thus university teachers must continue to read the
latest publications. These are the requirements of their commitment to teaching as a
profession. Similarly, other professionals must also continually update their knowledge
and skill, and maintain the expected standard of performance through practice.
The duties associated with every profession required, not only knowledge and skill, but
also moral dedication. Hence commitment to a profession involves adherence to its
ethics and etiquette. Thus the ethics of the medical profession require that a doctor
should attend to a patient even at the risk of infection to himself; its etiquette requires
that he should not disclose information confided to him by his patients. Similarly, every
profession has its ethics and etiquette. When a professional joins the bureaucracy,
he/she must continue to remain committed to the ethics and the etiquette of hisher
profession, in addition to hisher commitment to the objectives of hisher organisation.
Thus even if hisher position in the organisation confers a high status upon himiher.
he/she must not allow it to interfere with hisher professional duties. For example, if a
specialist in clinical medicine becomes the director of a medical institute. he/she
should not allow the new status to interfere with hisher duty towards the patients.
Hisher position may also provide himiher with opportunities for selfish gain at the cost
of hisher clients. Thus, a specialist in a medical institute may be pressurised for
recommending some costly and inferior equipment for purchase. Hisher commitment to
hisher profession would require refusal to recommend inferior equipment. whatever the
pressure.
Check Your Progress 2
Note : i ) Use the space below for your answers.
ii) Check Your answers with those given at the end of the unit.
1) What are the implications of the commitment to values and .objectives?

2) Discuss the implications of the commitment to service of the people.

...............................................................................................................................................................................
"

3) What are the implications of professional commitment?

In this section we shali consider (i) whether neutrality and con~mitrncntarc ncccssarily
antithetical, (ii) ways of achieving neutrality and commitment. and ( i i i ) spcckil
devices for important areas.
 i) Compatibility of Neutrality and Commitment Neutral Versus Committed
Bureaucracy
In recent years there has been a lot of discussion in India about the nature of neutrality
and commitment, and particularly, whether the bureaucracy can have the two qualities
at the same time. Obviously, if commitment is taken to mean commitment to a
particular political party or to its leaders, it becomes antithetical to neutrality. However,
commitment to human and constitutional values and national objectives, to service of
the people, and to professional ethics and etiquette, is not antithetical to neutrality
between classes, cultural groups and political parties. Indeed, commitment and
neutrality reinforce each other if they are of the right type. Thus commitment to the
human value of compassion and to the constitutional value of fraternity are likely to
induce neutrality between classes and cultural groups respectively. Similarly,
commitment to national objectives is likely to induce neutrality between political
parties. Hence the effort should be to induce commitment and neutrality of the right
kind.
I
1 ii) Inculcation of Neutrality and Commitment
I

Inculcation of desirable attitudes in the bureaucracy requires attention to all aspects of

personnel administration. At the time of recruitment and selection of candidates it
should be ensured that they have received the right kind of socialisation and education
in the family and school. The competitive examination for selection can include tests of
attitudes towards human and constitutional values and national objectives on the one
hand, and towards classes, cultural groups and parties on the other. Such tests can
indicate whether the candidate has properly benefited from liberal education and has a
broad mental outlook, or has merely committed materials to memory for passing
examinations. After entry, desired attitudes of neutrality and commitment can be
inculcated in the members of the bureaucracy through training. Various incentives, such
as desired posting, visits abroad and quicker promotion, can be provided for motivating
employees to develop the right attitudes. Finally, control by the political executive and
the legislature can ensure that they do not deviate from the norms. Institutions like the
Public Service Commission, Courts and Administrative Tribunals should ensure that the
exercise of control by political aut~loritiesis done fairly and justly. Further, in a
democracy, the people have the right and the duty to see that all institutions function
properly.
iii) Special Agencies and Recruitment Methods
Special agencies and methods of recruitment can be used for important areas requiring
a high degree of both neutrality and commitment. One such special agency already in
use is the autonomous university. Higher education and research constitute an area in
which commitment and neutrality are both of great importance. If commitment is not
there, pursuit of knowledge lacks excellence; if neutrality is not there education
becomes merely indoctrination. The autonomous university aims at achieving both; it
also retains the main advantage of bureaucratisation, namely efficiency, while avoiding
the dysfunctions flowing from bureaucratisation due to its autonomy. Max Weber has
noted that staff members of a university constitute a bureaucracy. The characteristics of
hierarchy, division of labour, specialisation, rules and impersonality are to be found in a
university also, and hence it has the efficiency flowing from these factors. At the same
time, its autonomy permits its staff members to remain committed as well as neutral,
since the rules of conduct applicable to government servants do not apply to the
employees of a university.
There may be other areas requiring a high degree of both neutrality and commitment.
Perhaps one such area is that of rural development. Much success was achieved by
leaders like Mahatma Gandhi in this area by employing a cadre of volunteers who were
marked by both commitment and neutrality. The governmental programme of
Community Development, which has similar objectives, has, by contrast failed to fulfil
our expectations. Some of the deficiencies of the Community Development Programme
may be traced to the lack of a committed cadre. Paul Appleby has noted the need for a
committed cadre for such new programmes, as follows: "usually it is not possible by the
Civil Service process to quickly identify the rare individuals who would be particular!^
competent at many of the key jobs required for these new programmes. This is
especially,true in view of the further fact that it is of mportance that these new
agencies be staffed by.people who are genuinely zealous with respect to the new
Bureaucracy and Development programme". Appleby has suggested the recruitment of committed cadres on a flexible
and political basis for such new programmes, and their conversion later into career
bodies. Perhaps this, and similar suggestions, can be experimented with, after -
introducing modifications appropriate to the country concerned. Developing countries,
where the government must play a leading role in bringing about development, can
postpone such experimentation only at great peril; for, underdevelopment increasingly
tends to be associated with phenomena like widespread disturbances and violence.
-
Check Your Progress 3
Note : i ) Use the space below for your answer.
ii) Check your answer with that given at the end of the unit.
1) How can neutrality and commitment be assessed ?

16.5 LET US SUM UP

The bureaucracy comes to have great power due to its role in policy formulation and
implementation. Hence it is important that it should be neutral between classes, cultural
groups and political parties. The achievement of neutrality is beset with problems; most
of these, however, are likely to be solved with development. Also, the bureaucracy has
to play an important role in bringing about development. Its role requires commitment to
human and constitutional values and national objectives, to service of the people and to
professional ethics and etiquette. Neutrality and commitment can both be inculcated
through proper education before entry into the service and training after entry, the proper
use of incentives, and controls by political and independent institutions of democracy.
Experimentation can be made, for example by having a highly committed, flexibly
recruited, cadre for a new programme of importance, requiring commitment.

16.6 KEY WORDS

Antithetical: direct opposite or contrast

Commitment: moral dedication to a cause
Dysfunctions: consequences that interfere kith adjustment and create problems in
the structure.
Ethics: moral principles
Etiquette: conventional rules of social behaviour or professional conduct which
restrict professional people from indulging in activities that are detrimental to the
interests of people and their colleagues and adversely effect the dignity of their
profession.
Fraternity: ideal fraternity is enshrined in the preamble of the Constitution of India. It
ensures the dignity of the individual and the unity and integrity of the nation.
Pendleton Act: the reform of Civil Services in U.S. began with the Pendleton Act
(1883). Its aim was to promote appointment on the basis of merit through open
competitive examination and assure the appointees security of tenure. It recommended
the establishment of a United States Civil Service Commission. The Act was concerned
with classified positions only. Labourers, workmen and persons nominated for
confirmation by the Senate were excluded from the purview of the Act.
Values: one's principles or standards, one's judgement of what is valuable or
. . . ...-
 Neutral Versus Cornmitt
16.7 SOME USEFUL BOOKS. Bureaucra

Kothari, Shanti and Roy Ramashray, 1969. Relations between Politicians and Administrators
at the District Level; IIF'A: N. Delhi.
Lapalombara, Joseph (ed), 1967. Bureaucracy and Poll'rical Development; Princeton
University Press: Princeton, N.J.
Verma, R.S. 1973. Bureaucracy in India; Progress Publishers: Bhopal.
Journals
Arora, K. Satish, "Political Policy and the future of Bureaucracy" in Indian Journal of Public
Administration, Vol. 18 (July-Sept 1971) pp. 355-367.
Gupta, V.P., "A Study of Conflict between Political Elite and Bureaucracy", in the Indian
Journal of Political Science, Vol. 48, No. 1. January-March, 1987.

16.8 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress 1
1) Your answer should include the following points:
Neutrality of bureaucracy between various classes in the society. is required to
ensure that
Feeling of injustice is done away with.
Social order is maintained.
Development is achieved.
2) Your answer should include the following points:
Method of removal.
Condition of service.
Expense of a Commission.
Other provisions.
Check Your Progress 2
1) Your answer should include the following points:
Commitment to the constitutional values.
Commitment to the national objectives.
Commitment to the policies of the government of the day.
2) Your answer should include the following points:
Conflict between interests of the bureaucracy and interests of the people.
Commitment to the interests of the people.
3) Your answer should include the following points:
Update one's knowledge and skill.
Maintaining the standard of performance through practice.
Commitment to the ethics of the profession.
Commitment to the objectives of the organisation.
Check Your Progress 3
1) Your answer should include the following points:
Compatibility of neutrality and commitment.
Inculcation of neutrality and commitment.
Special devices for important areas.
 17 BUREAUCRATS AND
POLITICIANS AND THEIR
RELATIONSHIP
Structure
Objectives
Introduction
Relationship in the Course of Policy Formulation
Relationship in the Course of Implementation
Problems in the Relationship
Let Us Sum Up
Key Words
Some Useful Books
Answers to Check Your Progress Exercises

17.0 OBJECTIVES

After reading this unit you should be able to:

describe the relationship of politicians and permanent officials;
discuss the problems of their relationship; and
suggest measures for improving the relationship.

17.1 INTRODUCTION

In this unit we shall study the relationship between politicians and permanent officials.
Their relationship is important because they together constitute the executive branch of
the government. If there are problems in their relationship; the administration does not
run smoothly. Problems are likely to be there mainly because of their different roles.
Politicians represent the people and take care of their interests; permanent officials, on
the other hand, provide expertise and experience. Hence their modes of recruitment are
different: politicians are elected while members of the bureaucracy are appointed. his'
makes for differences in their social background. While most members of the
bureaucracy in underdeveloped countries like India are drawn from the salaried or
professional, urban, middle class, many of the politicans have a rural, agricultural
background. mese, and similar, differences in their roles and social background lead to
differences in their attitudes also. Hence they sometimes find it difficult to cooperate
with each other.

We propose to examine the relationship of politicians and permanent officials under

three heads: Relationship in the Course of Policy Formulation, Relationship in the
Course of Policy Implementation, and Problems in the Relationship.
Relationship in the Course of Policy Formulation is, further, proposed to be studied
under five heads: (i) Communication with the People, (ii) Provision of Information, (iii)
Technical Consideration, (iv) Coordination, and (v) Authorisation. Relationship in the
Course of Implementation is proposed to be studied under three heads: (i) Rule-making,
(ii) Supervision, Monitoring and Evaluation, and (iii) Administrative Management.
Finally, Problems in the Relationship are proposed to be discussed under four heads: (i)
Interference Complex, (ii) Bureaucratic Power, (iii) Loyalty, and (iv) Collusion.

17.2 RELATIONSHIP IN THE COURSE OF POLICY

FORMULATION

It was earlier believed that while policy was formulated by politicians, it was
 there is no such separation of functions. This is so in all countries: politicians and the Bureaucrats and Politicians and
their Relationship
bureaucracy cooperate in the course of both policy formulation and implementation. In
developing countries, particularly, it has been found that the bureaucracy plays an
important role in policy formulation also. In the following we shall consider the
relationship of politicians and permanent officials in the course of policy formulation in
some detail.
I) Communiqation with the People
Public policy results from the interaction between the people, functioning individually
and'in groups, on the one hand. and the politicians and the bureaucracy on the other. In
the course of their interaction, all the three seek to influence each other and
communicate for this purpose. Thus the various sections of the people try to articulate
their particular interests through interest groups, such as trade unions and associations of
farmers, lawyers, doctors. engineers and others. Political parties take note of these
various interests and try to satisfy all of them as far as justifiably possible. This is
known as interest aggregation. For this purpose politicians remain in close touch with
the people. Thus Jawaharlal Nehru worked among the farmers of the Allahabad district.
He not only listened to their problems but also helped them to organise for the freedom
movement. Similarly, V.V. Giri was a leader of industrial labour. It is notable that in
developing countries, where associations of the poor often do not exist, politicians
generally have to take the initiative in organising them. Generally political parties
depute their important members to organise particular sections of the people. Thus every
important political party in 1ndia.tries to set up its own trade union, farmers'
association, women's wing, youth wing, and so bn. Hence in developing countries, the
role of politicians consists of both interest articulation and aggregation: they become
both spokesmen and arbiters. Their leadership function requires that they rouse the
consciousness of the people, set collective goals for them. and unite them in the pursuit
of these goals. In practice, there are many hindrances, such as lack of education among
the people, factionalism within @tical parties, lack of internal democracy within
parties, division of the people, and factionalism within parties, on the basis of caste,
religion, language, and so on. Still, the fact remains that play an important
role in organising the people and ventilating their demands and grievances. Hence
politicians come to be seen as being aligned with particular sections and, therefore,
partisan, to some extent. The bureaucracy, on the other hand, is generally seen as being
neutral. Also, due to the weakness of interest groups and municipal and Panchayati Raj
bodies, the bureaucracy has been the main channel of communicating the felt needs of
the people to the government. Hence, while both. politicians and civil servants
functions as links in the chains of communication between the people and the
government, civil servants sometimes tend to look upon politicans as mere rabble-
rousers. On the other hand, politicians tend to believe that bureaucrat are unresponsive

I and insensitive to the problems and needs of the people. This perception is heightened
by the cultural and status differences between the higher bureaucracy and the common
people. At the same time the political and bureaucratic channels of communication
have to meet at various points. Hence politicians and civil servants have to cooperate at
all levels, despite their somewhat different roles and view points.

ii) Provision of Information

Politicians and civil servants are repositories of different types of information, and both
these are needed in the course of policy formulation. Civil servants generally have the
advantage of longer experience; they also keep their command on organisational
memory in the shape of files and other records. Hence they can provide valuable
feedback-information about the results of earlier efforts as well as ongoing programmes.
Now policy can, then, be formulated in the light of these results: modifications can be
introduced to avoid past mistakes or problems faced earlier. Politicians. on the other
hand, are more likely to successfully assess the mood of the people;. particularly, they
are expected to be able to tell what the people will not stand. Thus more, or better,
social services such as education and health, would cost money which must come from
the people in the shape of taxes. The politician is expected to provide information as to
whether the people would prefer better service or less taxes. Once the ruling politicians
have given their assessment, civil servants can proceed to give concrete shape to policy
proposals in the shape of new programmes or budget proposals. If the assessment of
politicians is faulty, they may be punished by the people at the next election.
Buraucracy and Development Politicians are also answerable for mistakes committed by civil servants workirig under
them. Hence it is also their duty to exercise proper control over the bureaucracy.
iii) Technical Consideration
Technical examination of policies and programmes i s a f utmost importance for ensuring
that they fulfil the desired goals at the minimum cost. There are several aspects of
technical consideration. The first is the substantive aspect. Thus health policy must be
examined by doctors, educational policy by educationists, and so on. That is why
specialists of all kinds are nowadays employed by governments. They function in the
various departments at almost all levels. Thus in the Health Department not only is the
Director a doctor, but doctors are to be found in the primary health centres in the
remotest villages. Problems and suggestions of specialists at various levels are
considered and lead to new policies and programmes.
Another type of technical examination may be related to feasibility. Thus there may be
a question whether a certain policy or programme is feasible or practicable. For
example, if the proposal is to teach sewing to destitute women for providing them with
employment in a city, it is first necessary to find out whether there is a market for
clothes produced by them. If a feasibility study shows that such clothes are not likely to
sell, the policy must be modified. Hence administrators must ensure the practicability of
policies and programmes through feasibility studies.
'Techno-economic analysis constitutes another type of technical examination. Here the
attempt basically is to find out whether the technology proposed to be used is
economically viable. Technology is related to the requirements of raw materials,
personnel, the size of the undertaking, the nature and quantity of the output, and the
financial outlay. All these factors have to be taken into account while taking decisions
relating to policy and programmes.
Finally, it is important to make a social cost-benefit analysis of every policy,
programme and project. This analysis has to include consideration of hidden costs and
benefits also. Thus the building of a dam may involve hidden costs in terms of
destruction of the environment and the uprooting of people. Similarly, there may be
hidden benefits. For example, a road connecting a village with a city may help in
changing the attitudes of the village people, apart from leading to economic gain.
The various types of technical examination mentioned above indicate the great
contribution of specialists in policy formulation. It is important, therefore, that
specialists should be allowed to influence decision-making in the interests of
effectiveness and efficiency. In practice, however, political considerations are
sometimes allowed to outweigh technical ones. Thus decisions about where industries,
roads, hospitals and schools should be located are often taken, not on technical bases,
but in the interest of powerful politicians. For example, it may be technically more
feasible to locate an industry close to its source of raw materials. However, a powerful
chief minister may insist upon its location in his state. Similarly. a powerful legislator
may insist upon having a road in his constituency rather than where it is more needed
for economic reasons. Powerful politicians often over-rule members of the bureaucracy
in their narrow interests. Sometimes members of the bureaucracy also give
recommendations which are not justified technically, but which please ministers or
powerful legislators. Such deviations from norms hurt the public interest.
iv) Coordination
All policies and programmes are to a varying extent interrelated. Thus agriculture
development also requires industrial development for the provision of fertiliser,
pesticides, and mechanical implements; it requires educational development so that
farmers may be able to read and benefit from new scientific knowledge; it also requires
development of farmers' health so that they may be able to work properly. Hence
policies of agricultural development have to be drawn up so that they harmonise with
other policies. Hence coordination of a high order is necessary. Coordination is needed
at all levels and all stages, as Mary Parker Follett has stressed. At the top level it is
sought to be brought about through the cabinet. All important policies are reviewed by
the cabinet. Here the ministers have an opportunity to examine the implications of other
pdlicies for those of their own department. Any inconsistency, gap or duplication is
ironed out.
 Below the cabinet, there are certain agencies which function on behalf of the Bureaucrats and Politicians and
tbeir Relationship
-government and help in achieving- coordination. Staff agencies,
- such as those for
planning, financial administration, personnel administration, administrative reforms, law
and public works help in coordinating both policy-making and implementation. Thus the
Planning Commission examines the policies and plans of all Ministries and all State
Governments. Here specialist and generalist members of the bureaucracy make
important contributions to policies and programmes. While detailed examination of a
certain policy is made in the concerned Ministry, the Planning Commission takes a
government-wide view and suggests modifications. Similarly other staff agencies
participate in policy-making. The contribution of the higher bureaucracy is here of
paramout importance. However, the bureaucracy necessarily functions under the over-all
control of politicians. Final decisions necessarily rest with politicians; civil servants
help them to reach these by providing a comprehensive view based upon a mass of
data, analytical studies, and expert advice.
Politicians and civil servants have to cooperate at the field level also. Thus a Deputy
Commissioner and M.L.A. are both concerned with the various policies related to the
development of a certain area. Although district planning has yet to become a reality,
district politicians and civil servants do make suggestions which are taken into account
by authorities at higher levels. Joint efforts of politicians and civil servants bear more
fruit.
Cooperation between politicians and civil servants is essential for the proper functioning
of bodies of local self-government like municipalities, and Panchayati Raj bodies. In
developing countries like India, however, these bodies are often so weak that they have
to depend upon civil servants who are employees of the state government. Hence local
politicians often have little control over the permanent officials serving the local bodies.
If different parties happen to be in power at the state and local levels, state politicians
tend to use the bureaucracy in the field in their party interest. Solution to such problems
lies, ultimately, in the strengthening of local-government. This is an important aspect of
the required political development.
V) Authorisation
The final stage of policy-making is its authorisation. The legislature authorises or
approves policies and programmes usually in the shape of laws. Laws are necessary
because without their sanction the government cannot allocate social resources. Thus
taxation is the prime method for making resources available to the government.
Imposition of taxes requires laws. Thus a law for the imposition of a certain tax may
imply a policy for the redistribution of wealth. Approval by the legislature is taken to
mean approval by the people, since the legislature consists of representatives of the
people. Hence the passage of a law puts the stamp of approval by the people's
representatives on the policy contained in it and also empowers the executive to
enforce it.
I
The function of giving legal shape to a policy is mainly performed by the bureaucracy.
After a certain policy has been approved by the cabinet a draft of the bill is prepared by
the Law Ministry. It is then examined by the civil servants and the minister from whom
the proposal emanated. Thus while cooperation between politicians and civil servants is
a must, it is important to appreciate the contribution of those who draft the bill. The
details of the policy as it is enforced are determined by the legal terminology of the bill.
The minister is generally unaware of legal niceties. The result is that the burea'ucracy
determines the details, some of which can be highly significant.
The significance of the bureaucracy's contribution can be gauged from the fact that
sometimes the very success or failure of the policy may depend upon the legal
terminology used in the law. Thus the widespread failure of land reforms in India was to
some extent due to the loopholes in the laws which sought to enforce the policy. The
National Commission on Agriculture noted that, "These legislative measures were full
of loopholes which were taken advantage of by the bigger landed interests to
circumvent the laws".
Thus while a policy needs the approval of the minister and the cabinet, and it is
enforced througb a law passed by the legislature, the bureaucracy plays an important
part by giving it the shape of laws. Cooperation between politicians and civil servants
is, therefore, again a must.
Bureaucracy and Development Check Your Progress 1
Note : i) Use the space below for your answers. .
ii) Check your answers with those given at the end of the unit.
1) "It is the bureaucracy alone which function as channel of communication between
the people and the government". Explain.

2) What role does the bureaucracy play in technical examination of a policy?

3) What part does the bureaucracy have in the authorisation of a policy?

RELATIONSHIP IN THE COURSE OF

IMPLEMENTATION

While in policy-making politicians have the dominant role, in implementation the

bureaucracy has a greater role. While a politician only heads a department as a
minister, civil servants function at all levels. Members of the bureaucracy at the top
level advise ministers and manager the departments, those at the middle level supervise
field officials and keep the top informed of the progress, and field officials like
policemen, taxcollectors and factory inspectors enforce the law. It would, however. be
a mistake to think that politicians have no role in implementation. The minister is the
political head of the department and bears responsibility for both, its policies and their
implementation. He is questioned in the legislature even on the details of
implementation if anything goes wrong. It is the duty of the minister to ensure that civil
servants in their department function according to the law and that no injustice is done
either to a member of the clientele or the bureaucracy. The minister has to ensure that
implementation of policies is done lawfully, effectively and efficiently. The minister
deserves criticism if he/she tries to impose hisher will on officials in the performance
of quasi-judicial functions, for example as members of a tribunal; if she withdraws
delegated powers from officials in particular cases; and if he/she acts in a partisan or
selfish manner. Hence responsibility for proper implementation of policies is borne by
politicians as weil as members of the bureaucracy, the role of the politicians as
ministers being to exercise control over the bureaucracy on behalf of the people.
i) Rule-Making
A law as passed by the legislature is in general terms. It does not go into details. Thus a
law may prohibit trade in harmful drugs. However, it would not list the drugs, leaving
this to be done by the executive. There are several reasons why laws are stated in such
general, rather than specific, terms. One reason is that the legislature is busy with a
 large amount of business having to do with control over the administration, discussion of BureaUCratS and Politicians and
their Relationship
policies, and legislation. It does not have the time to go into the details. Another reason
is that the legislature consists of representatives of the people rather than experts: their
proper role is to protect the interests of the various sections of the society and not to get
involved in the intricacies of particular pieces of legislation. Members of the
bureaucracy are employed as experts to deal with the details falling within their area of
specialisation. Finally, situations keep changing but the law cannot be changed so
frequently. Thus new harmful drugs may make their appearance in the market. If the law
were to give their names, it would have to be .mended every time a new drug appeared.
For these reasons the law is stated in general terms.
The function of filling-in details is left to the executive. The executive performs it
through the making of rules and regulations. The making of rules and regulations under
authority given by the legislature is called delegated legislation. The term legislation is
t
used for the making of rules because they come to have the force of law. After all, rules
give effect to the will of the legislature by filling in the details.
L

I
1
While the legislature gives the authority to make rules and regulations to the
government, this authority is mainly exercised by civil servants. The reason is that civil
servants possess the specialised knowledge, the experience and the detailed information
necessary for drawing up the rules. The minister is generally not likely to have either
the specialised knowledge or the time for doing this himself; he is busy with his
political duties of meeting delegations of the people, looking into complaints, and so
on.
i

I
The function of drawing up rules and regulations under delegated authority tends to
confer a'lot of power on the bureaucracy. This is specially so in developing countries
where the bureaucracy is very powerful otherwise also. The role of delegated legislation
in confemng power on the bureaucracy has been discussed for more than half a century.
In England the Committee on Ministers' Powers considered this issue in 1932. The
consensus now is that while there is the risk of giving too much power to the
bureaucracy, there is no alternative to giving this function to it. Hence it is considered
to be important that the rules be laid on the table of the house of the legislature, and
that they be scrutinised by members of the legislature. The minister's role in exercising
check over the bureaucracy in the drawing up of the rules goes without saying. In short,
in this respect as in others, democratic theory emphasises the need for effective
political control over the bureaucracy.
ii) Supervision, Monitoring and Evaluation
After the notification of rules, implementation becomes mainly the responsibility of
, field officials like tax-collectors, factory inspectors, doctors in government hospitals,

1
i
and policemen. Supervision over them is exercised by superiors of the department. This
supervision generally remains lax in Indian administration. The main reason is that
superior officials have very little real authority for rewarding or punishing their
subordinates. Promotion, particularly at lower levels, is based mostly on seniority; nor
can a superior give any other rewards. So far as punishment is concerned, the procedure
for taking disciplinary action is very cumbersome and it takes a lot of time, sorhetimes
years, before the final decision in regard to punishment is taken. However, another, and
more important reason for laxity of supervision nowadays is the protection often given
by boliticians to civil servants over the heads of their superior. The politicians generally
extend such support to civil servants in fhe hope of getting their help at election time.
The patronage of politicians which civil servants thus enjoy results in widespread loss of
efficiency, effectiveness, and probity in administration. We shall consider the solution
to this problem later. Here we only note that instead of exercising control over the
bureaucracy, politicians often are instrumental in eroding even the authority of
bureaucratic superiors in our developing society.
The progress achieved in the fulfilment of targets is regularly monitored at higher levels.
Various forms are prescribed for submitting periodic reports. Such reports can be of great
value if they are properly used. However, they can also come in the way of
achievement. Research work has shown that officials who are responsible for
achievement have to fill too many returns; this takes away much of the time which
should have been spent on the work itself. What is more, the returns and reports are
often not even read by superior officials but merely tied up in files to gather dust and
Bureaucracy and Development OCCUPY valuable space. The responsibility for this state of affairs belongs to both senior
bureaucrats and politicians. There is a need, in every organisation, for constant w-
examination of structures and procedures. Thus returns which were prescribed long ago
may no longer be needed. Some, perhaps, can be cut down in their length. The initiative
for such changes must come from the top through cooperation between high level
politicians and civil servants.
Every programme should be evaluated after its completion for ensuring that the
objectives have been fulfilled, that the work has been done at minimum cost, and that
there has been no dishonesty. Evaluation is made, first and foremost, by superjor
officials in the department. The evaluation is likely to be more effective if the minister
takes interest in it, finds time for seeing evaluation reports, and demands explanation
for non-performance.

Overhead (or staff) agencies, like the Planning Commission, also make evaluation of
policies and programmes. Thus the Planning Commission prepares a "mid-term
appraisal" in the middle of every plan period; it also makes an evaluation of past
policies at the beginning of every plan period in the document containing the new plan.
The Planning Commission consists of politicians and experts and is assisted by high
level members of the bureaucracy. It sometimes uses a special agency, such as the
Programme Evaluation Organisation, for making in-depth studies. Evaluation by the
Planning Commission carries great weight because of its pre-eminent position. This also
provides an idea of the achievement possible through cooperation between politicians,
civil servants, and experts who belong fully to neither of these two categories.

Evaluation is also made by the Comptroller and Auditor General who is an independent
authority under the Constitution. He examines not only whether funds have been spent
only for purposes for which they were provided by the legislature, but also whether the
work has been done efficiently and wisely. His organisation provides a good example of
how the bureaucracy itself can be an effective instrument of exercising check over
administration as a whole--civil servants and also ministers.

However, the Comptroller and Auditor General also functions conjointly with the
legislature, which is a political body. His Eport is presented to Parliament and State
Legislatures where it is considered in detail by the Public Accounts Committee. The
members of the bureaucracy working with the Comptroller and Auditor General, and the
politicians in the Public Accounts Committee provide support to each other for
evaluation at the highest level. Cooperation between politicians and bureaucrats can
take many forms and for diverse purposes.

The Estimates Committee, of Parliament and of State Legislatures, makes an in-depth

evaluation of the performance of a few departrnentssekc.tep every pear. The
Committee on Public Enterprises, of Parliament and State Ikgislatures, evaluates the
performance of public enterprises. These committees of legislatures, 'consisting of
elected politicians, provide an opportunity to politicians who are not members of the
executive to exercise check over the bureaucracy.

The above discussion of supervision, monitoring and evaluation shows that while
politicians and members of the bureaucracy must cooperate, politicians are also duty-
bound to keep the bureaucracy under control. If the bureaucracy were not kept under
control, the government would cease to be democratic. It is true that there may be more
knowledgeable people in the bureaucracy than among politicians; however, that does
not entitle the bureaucracy to rule over the people, for in a democracy the people wish
to rule over themselves through their elected representatives. If politicians allow the
bureaucracy to become too powerful they fail in their duty towards the people.

iii) Administrative Management .I

Administrative management refers to the management of the organisation as a whole. In

India the principal agencies for this purpose are the ministries or departments (in the
Union and State Governments respectively) of finance, planning, personnel and
administrative reform or reorganisation. The Planning Commission, and planning boards
in the States, and Public Service Commissions also participate in the function of
managing the governmental organisation as a whole. While the management of
p r o m m e s or projects for fulfilling the substantive purposes of the government are the
 responsibility of line agencies like the Ministries of Defence, Industries and Health, Bureaucrats and Politicians and
their Relationship
administrative management relates to organising, financing, planning and staffing in all
the ministries or departments. Effective implementation of policies and programme
requires effective administrative management.

The importance of administrative management has not yet been sufficiently recognised,
particularly in developing countries. Substantive concerns, such as those for defence,
provision of employment and the maintenance of law and order, are so pressing that
administrative management tends to be ignored. Administrative management does not
receive the amtention at the political level which it deserves. Thus many of the
recommendations of the Administrative Reforms Commission have yet to be attended
to. It is a mistake to think that substantive programmes can be successfully
implemented without providing proper groundwork of administrative management. Thus
maintenance of law and order and dealing with terrorism require a well-managed police
force. Unless more attention to personnel administration in regard to the police is paid,
it is idle to expect that terrorism can be wiped out. There is obviously need for more
attention at the highest political level to administrative management. Ministers must
become more conscio,us of their managerial role. They must provide for more support to
administrative reform; there is need for a new relationship between politicians and the
. bureaucracy in which politicians accept more responsibility for management of
organisation and procedures.

17.4 PROBLEMS IN THE RELATIONSHIP

So far we have described the relationship that develops between politicians A d the
bureaucracy in the course of policy-making and implementation. Now we shall try to
examine somewhat more closely the problems of this relationship. It is important to
realise h a t most of the problems that arise in countries like India are basically related
to underdevelopment. The various aspects of underdevelopment are interrelated.
Economic, social, political and administrative underdevelopment- influence, and
sometimes cause, each other. Hence the solution of administrative problems ultimately
lies in development: they can rarely be solved in isolation.
i) Interference Complex
The term "interference complex" has been coined by Fred Riggs to refer to complaints
by politicians against what they call "bureaucratic interference" and countercharges by
administrators against what they call "political interference". These politicians often
complain that the bureaucracy sabotages policies and programmes of progressive social
change. The National Commission on Agriculture expressed agreement with this view
while dealing with the failure of land reforms. It said, "The question is, who has failed?
Is it the legislator or the admiqistrator? In a measure both have failed. However, the
major responsibility lies on the shoulders of the enforcement agencies, that is to say,
the administrative set up entrusted with the task of implementation." The.Commission
went on to give the reason that the bureaucracy had been "trained and conditioned to
function as the guardian of status quo and the defender of existing property relation." On
the other hand. civil servants often say that legislators and ministers exercise patronage
through interference with recruitment, selection, transfer and promotion of government
employees for obtaining support at election time.
There may be some truth in both these complaints. Most of our higher bureaucracy. is
drawn from the urban professional middle class. Hence the majority of the population
consisting of farmers and workers finds very little representation on it. The attitudes of
the bureaucracy may, therefore, not be in consonance with the aspirations of the
majority of the people. The solution to this problem, to sonie extent, lies in the
introd~r:tionof tests for testing various physical and psychological attributes of the
persaviality of the candidates at the time of initial selection. Hopefully, this will help to
recruit a more representative and also more capable, bureaucracy. Changes in education
and training can also help to better inculcate in the bureaucracy human and
constitutional values such as justice, liberty. equality, fraternity, nationalism,
democracy, socialism and secularism. Such a bureaucracy is likely to cooperate better
in bringing about desirable economic, social and political change, or development. --
Bureaucracy and The problem of political patronage can, to some extent, be solved by strengthening
interest groups and political parties. At present some of our best parties also have a
substantial non-genuine membership, elections within the parties are sometimes not
held for decades, there is a high degree of centralisation in the functioning of parties,
they are overly dependent upon a few rich capitalists or big farmers for election funds,
there are.within them factions owing allegiance to different leaders, there are divisions
based on caste, religion and language, and sometimes criminals manage to get
important positions in them. Removal of these deficiencies is likely to reduce their
dependence upon patronage, as happened in the West.
Improvements in both, political parties and the bureaucracy, are likely to help in
bringing about a better relationship between them and in doing away with the
"interference complex".
ii) Bureaucratic Power
Writers like Riggs, Weidner and Heady pointed out long ago that the bureaucracy
tended to be more powerful in developing countries than in developed ones. The greater
the power of the bureaucracy, the more difficult it is for politicians to control it. Hence
there is a tendency for dictatorship by the civil and military bureaucracy in developing
countries. Democratic administration requires that the bureaucracy should be properly
controlled by the elected representatives of the people.

The great power of the bureaucracy is part of our colonial heritage. Indian bureaucracy
appears to have the attitudes and behaviour of the colonial bureaucracy but do not seek
to have identified themselves with democratic norms of a political system.
S.N. Eisenstadt has pointed out that colonial powers strengthened central institutions of
the society but left local ones unchanged. Thus they developed central services but not
local self-government. Fred Riggs has pointed out in his book entitled The Ecology of
Public Administration that the bureaucracy in India has become very powerful also
because members of All-India Services hold the highest posts at Central, State and
local levels. Thus the highest official in a district has been a member of an All-India
Service like the ICS or the IAS and not an elected politician. In developed countries
like the U.K. and the u.S.~:local self-government is very powerful. Thus a country is .
ruled by an elected government headed by a representative of the people as a mayor.
The bureaucracy at h e local level is employed and controlled by the local authority. In
India, by contrast, the Deputy Commissioner is not employed and controlled by the Zila
Parishad; the Deputy Commissioner functions mainly as the agent of the State
Government and regulates and controls the Zila Parishad and the municipalities in the
district on behalf of the State Government. The bureaucracy at the district and block
levels is mostly employed by the State Government, and hence is not under the control
of local politicians. This relationship between politicians and the bureaucracy at the
local level constitutes a continuation of the coloqial practice.
Development involves.doing away with colonial practices and introducing in their place
democratic ones. This requires strengthening local self-government. People in the
villages need to be educated and organised, political parties at the grass-root levels
activated, and more resources provided to local governments. Once local governments
become powerful they can employ their own bureaucracy instead of depending upon the
State bureaucracy. Only after local representatives of the people begin to exercise
power on their behalf can the felt needs and aspirations of the people be fulfilled
through local (village, block and district) planning. Implementation of policies and
programmes can also be much more effective if the bureaucracy strictly controlled by
local politicians who are on the spot, instead of by those who are far away at the State
headquarters. In other words, democratic decentralisation constitutes an important
aspect of development.
Democratic decentralisation, however, can succeed only if other types of development
also takes place. For example, the spread of corruption at the local level can be
prevented by strengthening associations of the people (or interest groups) and political
parties. Experience has shown that corruption has been curbed in villages where the
.people organised themselves. Local political leaders can take the initiative in
organising the people. The functioning of political leaders is related to that of political
parties generally. The functioning of political parties can be improved by removing their
-- ~-r:-:---:-- /--A- A :- -..L ---.:--
4 -I A I \ VL- --I...:---L:- L -....--- --I:.:-:..-- ..-A 6 ~ -
 bureaucracy .is merely an aspect of the political system: improvement in it requires Bureaucrats and Politicians and
their Relationship
development in all aspects of the society, since they are all interrelated.
iii) Loyalty

Members of the bureaucracy are expected to be committed to human and constitutional

values and nationals objectives. They are expected to be neutral between political
parties. In the recent past, however, there have been complaints that some politicians in
power have demanded from the bureaucracy loyalty for their party and themselves. For
example, members of the bureaucracy have stated that they could not express their
disagreements with ruling politicians freely during the Emergency. Some civil servants
were perceived to have lost their neutrality. The Shah Commission noted, "In some
cases the administration and administrators ceased to be insulated from politics with
disastrous consequences".

The Shah Commission recommended institutional safeguards to protect civil servants

from politicians who make unjustified demands, as follows: "It is necessary to point out
the need to provide certain institutional safeguards to look after the interests of the
entire run of officials, and particularly those who are involved at the decision-making
levels in the various departments of the Government in the States and at the Centre.
When unscrupulous and unprincipled politicians and their associates are in a position to
harm the public servants refusing to fall in line with wrong and illegal orders, it
becomes necessary in the interest of the basic unity and integrity of the country, as also
of the fundamentals of the Constitution and the rule of law, to protect the officials who
are called upon to function at different administrative levels." Since the Shah
Commission reported, administrative tribunals have been established to which members
of the bureaucracy can take their complaints.

There have been complaints that some ministers obtain the help of civil servants at
election time. While solution to this problem in the short-run lies in strengthening the
election law, in the long-run it can be solved by strengthening political parties so that
they become capable of providing all the help and support which their candidates need
at election time.

iv) Collusion
Sometimes politicians and civil servants cooperate in wrong doing. The Shah
Commission noted that, "It is necessary to face the situation squarely that not all the
excesses and improprieties committed during the emergency originated at the political
level. In a large number of cases it appears that unscrupulous and over-ambitious
officers were prepared to curry favour with the seats of power and position by doing
what they thought the people in authority desired". After the Emergency also, cases

i have come before courts showing wrong doing jointly by politicians and civil servants. It
is an accepted fact today that the Indian bureaucracy has a vested interest in the
industrialisation of India. This explains the easy adjustment between bureaucracy and
business and industrial pressure groups in the country. There has for long been
widespread public concern with corruption in administration arising mainly from such
collusion.

Apart from ordinary courts of law, there is now the institution of the Lok Ayukta in some
states. This is the most appropriate institution for looking into complaints of this kind. If
wrong doing is found by the Lok Ayukta, prosecution can be launched in courts of law.
With the institution of the Lok Pal at the Centre, as now proposed, complaints against
Central ministers will also be similarly attended to.

The ultimate check upon both politicians and civil servants lies in a vigilant public
opinion. The public is aided by a free press. The proposed legislation for ensuring
freedom of information and amending the Official Secrets Act is likely to go a long way
in giving even more scope to the press for exposing wrong doing in public interest.

11 Check Your Progress 2

Note : i) Use the space below for your answers.
! ii) Check your answer with those given at the end of the unit.
Bureaucracy and Development 1) what is the relationship between the politicians and the bureaucrats in the course
of implementation of policies ?

2) What are the problems of the relationship between politicians and bureaucrats ?
........................................................................................................ ......................................................................

17.5 LET US SUM UP

Cooperation between politicians and the bureaucracy is essential for effective and
efficient administration. Both of them function as channels of communication between
the government and the people. While politicians assess the mood of the people, civil
servants obtain valuable feedback. Civil servants make several kinds of technical
examination of proposed programmes. Coordination of policies and programmes is made
by politicians mainly in the cabinet, and by civil servants through staff agencies. Laws
are drafted mainly by civil servants, but passed by politicians in the legislature.
Implementation is done mainly by civil servants, but under the control of ministers.
Problems in their relationship can be solved, ultimately by strengthening local self-
government, interest groups and political parties, or in other words through development.

17.6 KEY WORDS

Interest articulation: presentation of demands of particular sections of the society

by their associations before political decision-makers
-
Interest aggregation: conversion of demands into general policy alternatives
(mainly by political parties)

Feedback: information about results (of programmes)

Feasibility: suitability, practicability
Delegated legislation: rule-making by the executive under authority granted by the
legi- lature
Monitoring: keeping check over achievement
'1
Administrative management: management of the organisation as a whole (for
example management of planning, finances, personnel and reorganisation in all the
departments of a government)

SOME USEFUL BOOKS

Eisenstadt, S. N., 1969. Modernization: Protest and Change; hentice-Hall of India

Private Ltd.: New Delhi.
Heady, Fenel, 1966. Public Administration: A Comparative Perspective; Prentice-Hall
Bureaucrata and and
their Relationship
Inc. ; Englewood Cliffs: New Jersey.
Kothari, Shanti and Roy Ramashray, 1969. Relations between Politician and
Administrators at the District Level; IIPA: New Delhi.
Riggs, Fred W., 1961. The Ecology of Public Administration; Asia Publishing Co.:
Bombay.
Riggs, Fred W., 1964. Administration in Developing CountriesThe Theon of Prismatic
Society; Houghton MiffQn Co.: Boston.
Journal
Arora K. Satish, "Political Policy and the Future of Bureaucracy", in Indian Journal of
Public Administration, Vol. 18 (July-Sept. 1971). pp. 355-367.
Gupta, V.P., "A Study of Conflict between Political Elite and Bureaucracy", in the
Indian Journal of Political Science, Vol. 48, No. 1 January-March, 1983.
Subramanian, V. "Role of Civil Service in the Indian Political System", in Indian
Journal of Public Administration, Vol. VVII, No. 2, April-June, 1971, p. 238.

17.8 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES

Check Your Progress 1

1) Your answer should include the following points :
Political parties to constitute the channel of communication.
Through interest articulation.
Through interest aggregation.
2) Your answer should include the following points :
Bureaucracy's role in the following :
- the substantive aspect of the policy.
*
- feasibility of the policy.
- economic viability.
- social cost-benefit analysis of the policy.
3) Your answer should include the following points :
Examination of the draft of a bill.
Determining the details of a bill.
Giving to it the shape of law.
Check Your Progress 2
1) Your answer should include the following points :
Rule making.
Supervision, monitoring and evaluation.
Administrative management.
2) Your answer should include the following points :
Interference complex.
Bureaucratic power.
Loyalty.
Collusion.
UNIT 18 ENHANCING BUREAUCRATIC
CAPABILITY
Structure
Objectives
Introduction
Personnel Development
Organisational Development
Procedural Development
Development of the Society
Let Us Sum Up
Key Words
Some Useful Books
Answers to Check Your Progress Exercises

18.0 OBJECTIVES
After reading this unit you should be able to :
Identify the factors related to bureaucratic capability;
Discuss how the various factors influence the bureaucratic capability; and
Suggest measures .for enhancing its capability.

18.1 INTRODUCTION

Capability means ability to perform. In this unit we propose to discuss how bureaucratic
performance can be improved. Our discussion will be in four sections. In section 18.2,
entitled Personnel Development, we shall examine how the quality of the employees
can be improved. Here we shall see how personnel administration, in its various aspects
such as classification, selection, placement, promotion. training and disciplinary action,
can be modified to lead to a better quality of personnel. In section 18.3, entitled
Organisational Development, we shall examine how changes in the organisational
structure can improve administrative p&formance. Section 18.4, on Procedural
Development, deals with the methods of working, or procedures, and how changes in
these can lead to better results. Section 18.5, entitled Development of the Society,
deals with the relationship of the bureaucracy and the society in general. Here we
examine how changes in the society can make the bureaucracy more capable.

18.2 PERSONNEL DEVELOPMENT

A bureaucracy is an instrument which is devised for the fulfilment of certain purposes.

As these purposes change, the nature of the bureaucracy should also undergo changes.
In most developing countries like India the bureaucracy was originally devised by the
imperial power for serving its own ends. Many of the colonial features of the
bureaucracy have continued to exist even after the attainment of independence, as
discussed in Unit 14. Hence changes in personnel administration are needed for having
a bureaucracy. suited to democratic administration. Further, the role of the stab5 has
expanded; in developing countries particularly, the state has the responsibility of
bringing about development. Since the bureaucracy is the prime instrument of the State,
it has to be modified and attuned to the new purposes. Hence it is necessary to bring
changes in the nature of bureaucracy. The argument that what has served well in the
past is likely to do so in the future also, does not hold good. In the following, we shall
deal with the various aspects of personnel administration one by one. --
 i) Classification, Recruitment and Placement Enhancing Bureaucratic
Capability
In India, Government employment have been classified on the rank system into
services, classes and grades since colonial times. A person may move from one job (or
position) to another, and yet his rank can remain unchanged. Obviously, this system of
classification is not suited to a bureaucracy with a diversity of positions having varying
functions and responsibilities required by the large number of developmental activities.
The system of position classification, in which jobs rather than persons are classified, is
more suited for our present needs.

In the system of position classification, each job has its functions; the qualifications for
recruitment are fitted to these functions. Hence recruitment is for particular jobs. In this
way, persons, who are most suited to the jobs (which they have to perform) can be
recruited. Naturally, such a bureaucracy is likely to be much more efficient than one
recruited in bulk without much thought about the functions which the individuals have
to perform.

If recruitment were for particular jobs, we would be more careful about the special
/ qualifications of each candidate. Specialised knowledge tends to become more and
more important in the modem world. Members of the bureaucracy have to perform
various jobs requiring highly specialised knowledge. It is true that at present also there
are various kinds of specialists in the bureaucracy. However, they are often recruited as
members of service rather than for particular jobs. Hence many members of the
bureaucracy do not possess the knowledge required for the jobs which they hold. Thus
many managers of public undertakings do not possess knowledge of managerial
sciences; private business, by contrast, nowadays generally appoint persons trained in
management.

In recruitment for public services, generally there continues to be too much emphasis on
the "cultivated person" with a liberal education, rather than on the specialist. Even .for
services requiring specialised knowledge and particular abilities, we often tend to
recruit those with a general, liberal education, and do not test for the necessary
abilities. Thus accounting and auditing. require specialised knowledge; it takes several
years for one to become a chartered accountant. However, recruitment to the prestigious
Indian Audit and Accounts Service continues to be made from q o n g graduates with a
liberal education who may have no knowledge of accounting. Much of the expenditure
incurred by the Government on training those recruited to this Service can be saved by
recruiting from among those having some knowledge of accounting. Similarly, for the
police we need persons with special knowledge and abilities. Criminology and forensic
science nowadays tend to be developed disciplines. Police officers also need certain
psychological and physical abilities, such as those of courage and endurance. High
officers who have to deal with gangs of dacoits or terrorists need such knowledge and
abilities. However, recruitment to the Indian Police Service does not take these into
account. Recruitment to the armed forces, by contrast, is based on tests of various
psychological and physical abilities. It is obvious from these examples that the
capability of our bureaucracy can be greatly increased by basing the selection on tests
of psychological and physical abilities and of specialiSed knowledge required for the
jobs for which the recruitment is being made.

The capability of the bureaucracy can also be enhanced by paying attention to the
aptitude and interest of an officer while making the placement (or posting him to a
particular place). This is specially important so long as we recruit people to services
and not to jobs. Thus members of the Indian Administrative Service have different kinds
of knowledge, interest and aptitude. Al1,graduatesare eligible for entry into the Service;
still, they have different educational backgrounds. While some of them have studied
arts, others have studied sciences; while some have studied engineering, others have
studied management. Their interests also vary. While some of them may be interested
in managing governmental business undertakings, others may be more interested in
programmes for the welfare pf women and children. Similarly, the aptitude also varies
from member to member. Aptitude means the natural ability to acquire a particular type
of knowledge or skill. Thus one may have an aptitude for policing, while another may
have more of an aptitude for helping farmers to increase production. Obviously, the
performance of the bureaucracy would improve if the knowledge, interest and aptitude
of officers were taken into account while posting them
.~.,.
in different
.
places. At present
\ ' '
Bur-ucrac~ and Development this is done only in a few, special cases. By and large, members of generalist sehices
are treated like standardised parts of machines which can be fitted without reference to
;heir differences. However, the science of psychology lays great stress on individual
differences, that is variations or deviations from the average of the group, with respect
to mental or physical characters. Whi!e parts of machines are sought to be made more
and more similar to each other through quality control, the development of human
beings requires the unfolding and growth of their particular talents. Hence a policy of
personnel development must be associated with recognition of their special interest,
aptitude, knowledge and skill. This would lead to greater motivation and job satisfaction
on the part of employees and also better fulfilment of programme objectives.

ii) Promotion and other Incentives

Everybody's performance is dependent upon hisher motivation, that is the extent to
which he/she has been stimulated to achieve certain goals. Motivation results from
rewards and punishments. Modem psychological theory puts greater emphasis upon
rewards than upon punishments. Rewards are positive in character and can lead to an
unlimited improvement in performance. Punishments, on the other hand, are negative
and tend to lead to the minimum acceptable performance. Hence rewards are of greater
significance than punishments for improving performance.
In Indian personnel administration there is very little scope for giving either rewards or
punishments. Thus one of the most important incentives is promotion. Promotion can be
attractive for two reasons, fust it can imply recognition of an employee's contribution,
and secondly it means a higher salary and status. At present, however, promotion is
mostly based on seniority. It is true that according to the declared policy, merit at
higher levels is more important than merit at lower levels. In practice, however, it is
only rarely that anyone is promoted out of turn. This is mainly so because if any such
out of turn promotion is made, there is a lot of heart burning among those who are
superseded. As a result, while the performance of the promoted employee may go up,
that of all those who are superseded goes down, leading to a net fall in &rformance.
Hence in Indian Administration at present promotion is based mainly upon seniority.
However, if promotion is based upon seniority, it ceases to function as a reward; instead
it comes to be treated as a "right". We thus find that while promotion could function as
the most important reward, in our present situation it no longer plays that role.
In order to make promotion function .as a reward, greater mobility in the public
bureaucracy is required. In other words, there should be more opportunities for all for
moving up, sideways to other departments and in and out of the bureaucracy. This
requires economic development in the first place, so that there are more employment
opportunities. Within the administration, however, it requires greater flexibility, or less
rigidity. Flexibility can be increased by Coing away with the colonial classification into
services, classes or groups, and grades, and introducing in its place position
classification coupled with open competition for all jobs. Age restrictions would also
have to be reduced so that qualified and experienced persons in all walks of life could
take up jobs at all levels in the public bureaucracy. In the colonial period, the civil
service functioned as if within a shell, with little possibility of entry or exit in the
course of one's career, since l n d i b s at that time were not trusted enough to hold high
office unless they had been tested for a lifetime. Such distrust has no justification now.
Introduction of greater flexibility and mobility will lead to an improvement in
performance all over.

If promotion is to function as a reward, it must be based upon objective criteria. The

present system of annual confidential reports leaves much to be desired. Employees
often perceive that their evaluation is subjective, that is based upon the whims af the
~uperiorofficer, and that factors of sycophancy and relationship, caste and creed have a
significant role in it. A satisfactory system of performance evaluation would be one
which the employees themselves perceive as being based upon objective criteria. The
criteria would preferably be evolved in advance jointly by persons whose performance is
to be evaluated and those who do the evaluation. They would also be quantifiable as far
as possible. Thus targets could be agreed upon and performance could then be judged
against them.
While promotion can be given only once in a while, other incentives can function more
often. The most important of incentives is job satisfaction or the satisfaction which the
 Enhancing Bureaucratic
employee gets from'the work itself. Such satisfaction can be increased through job Capability
enrichment, that is providing greater opportunities for achievement, responsibility,
recognition, growth and learning. Each one of these factors can take various forms.
Material incentives can become more effective if they function in combination with
non-material ones. Thus monetary rewards, such as increments in salary, can be better
motivators if they are seen as constituting recognition of good work done.
iii) Training
Training of personnel is of increasing importance due to the continuous and great
expansion of knowledge. The use of science and technology makes it possible to
immeasurably increase productivity. Thus the green revolution, or great increase in
agricultural productivity, has come about in Punjab, Haryana, and Western U.P.,
through the .use of high yielding varieties of seeds, fertilisers, pesticides and mechanical
implements such as pump-sets and tractors. Hence it is important to impart this new
knowledge to functionaries of agriculture departments of all State Governments in the
country. Similarly, other employees must also update their knowledge like the doctors,
engineers, architects and managers.

Training is necessary also because the adoption of new technology tends to render those
trained in the earlier technology useless. Hence re-training of those trained earlier is
constantly needed.

To make training attractive for employees it should be associated with advancement, or

promotion. Thus selection for training should be made from among those who show
promise; those who 10well at training should be rewarded. Promotion should be made
as a reward for those who give the best performance as a result of their training.

At present, officials who have made a nuisance of themselves are often sent away for
training so as to get rid of them at least for a short while. Trainees also often tend to
regard the training period as one of holiday. This situation can be remedied by
evaluating what each employee has learnt in the course of training, and making the
evaluation report a part of the record of his performance.

Training, at present, is not sufficiently related to the work which the employee has to
perform. Often the posting of officers after training does not take into account the new
expertise they may have acquired. Hence much of the expenditure on training tends to
be a waste.

Training methods also need change and improvement. The lecture method, which is
commonly adopted, is not the most suitable one for teaching techniques and skills and
for inculcating judgment and understanding. Other methods, such as those which make
use of cases, business games and workshops, need to be adopted keeping in view the
content (such as knowledge, skills, and attitudes), and the level and maturity of the
employees.
iv) Disciplinary Action
We have noted earlier that Indian Administration suffers from a lack of use of reward
and punishment. We have also noted that reward is more effective than punishment for
influencing performance. What we need, therefore, is a system which combines rewards
and punishments. The possibility of punishment must be there, for it is required by
accountability.
Punishment of Civil Servants is governed by Civil Services (classification, control and
appeal) Rules, which were originally made under the Government of India Act, 1919.
They provide for punishment in case of breach of conduct prescribed under rules of
conduct relating to the Service to which the employee belongs. These Rules provide for
the following punishments in the ascending order: censure, withholding of increments,
reduction to a lower level, recovery of Government's loss from pay, suspension, removal
(which does not disqualify from future employment), and dismissal. However, Article
3 11 of the Constitution provides that a civil servant cannot be removed or dismissed by
an authority subordinate to that which appointed him; it also provides that no dismissal,
removal or reduction in rank can be ordered unless the civil servant has been given a
reasonable opportunity of being heard in respect of the charges brought against him.
Tharp n r n r r i c i n n c rpnnira t h m f r ~ r n i n mnf r - ~ i f ; ~~ h n r n n r
and Dcvelo~ment considering the civil servant's answers to thew charges, and following the rules of
natural justice.
In practice it has been found that the process of disciplinary action takes a long time,
and often involves the Government and the superior officer in litigation. Hence
disciplinary action is taken rarely; it is taken where breach of the law can be easily
established but not for poor performance. In effect, the Gove~mentof India does not
function like most other governments, and employers in general, 'who would not tolerate
poor performance. Civil servants in India tend generally to feel that no action is likely
to be taken against them (except perhaps transfer) even if their performance is poor.
The situation can be remedied through various measures, such as expediting the process
of disciplinary action, amending the rules of conduct, and making short-term contracts
with employees. The protection, so often given to erring employees by politicians,
would also have to be curbed.
Check Your Progress 1
Note : 11 Use the space given below for your answers,
ii) Check your answers with those given at the end.of this unit.
1 ) What changes can be brought in the classification, recruitment and placement of
personnel for enhancing their capability ?

2) How can promotion and other incentives be used for enhancing bureaucratic
capability ?

' 3) What is the role of training in enhancing bureaucratic capability ?

18.3 ORGANISATIONAL DEVELOPMENT

So far we have discussed how the personnel can be developed fdr enhancing their
capability. Now we propose to examine how the organisational structure can be
developed. The distinction between the system and the individuals who constitute the
system, is important. Thus in a dictatorship, large numbers of individuals may be
prevented from doing, or even saying, that which they consider to be right. Hence a
political system which provides freedom to the individual is better than one that does
not. Similarly, the quality of an administrative structure is dependent upon the extent to
which it allows the utilisation of the potentialities of its members. A structure is a set of
relationships. Most contemporary organisational structures are too restrictive in nature.
- _ A .L -. -_
According to Douglas Mcgregor, many more members of organisations are able to
---. -L. -.I .x? ---_-.---._
=-1 ---L I - - - .L-- 2- -- ------ &.
 , .
the potentialities of the average person are not being fully used. This is specially so in Enhancing Bureaucratic
Capability
ex-colonial developing countries like India. In the following sections we shall examine
ways in which the structure needs to be reformed.

i) Decentralisation

J. Ramsay MacDonald, who later became the Prime Minister.of England, described
Indian Administration under British rule as follows :
The tendency has been to centralise the working.....The machine of Government has
become a thing apart, and by separating itself from the organic life of India it has over-
emphasised the fact that India is ruled by foreigners. The evolution of such a system is
inevitable.... Secretariats become all-powerful; not a sparrow falls but is recorded,
reported and re-recorded, docketed, initialled and minuted; not a suggestion emanates
from below but is regarded with suspicion or hostility as something of a foreign origin;
not a thing is done without involving the whole machine in the doing of it.
Centralisation continues to be one of the prime features of the Indian Administration. It
has various aspects and ramifications; however, its most important indicator is the
secretariat - a citadel of bureaucratic pawer such as does not exist in any developed
country. The interposition of the colonial institution of the secretariat between the
minister and the executive head of the department interferes with both, proper political
control over the bureaucracy and adequate participation of specialists in decision-
making.
It is important to bring the minister into closer touch with the executive agency
consisting of specialists. At present control over specialists is exercised by bureaucrats
in the secretariat in the name of the "Government". This makes for great power for the
generalist officers in the secretariat. Executive agencies function under the restrictive
control of these generalist officers who often have little understanding of the
technicalities involved. Since the so-called heads of departments (such as the Director
of Agriculture, the Director of Public Instruction, and so on) themselves function under
the sqingent control over officials in the field. What is more, field officers function
. under dual control, they are answerable .to the office of the head of the department for
performance, but in matters like transfer, promotion and disciplinary action they are not
dealt with by the secretariat. As a result, functionaries in the field often feel that they
do not have the autonomy necessary for effective functioning.
The Administrative Reforms Commission in its Report on the machinery of the
Government of India and its procedure of work in 1968 recommended doing away with
the distinction between the secretariat and the executive departments at least in some
cases. Enough action has not yet been taken to implement this recommendation. Indeed,
the passage of about a quarter of a century is likely to have made the recommendation
more widely applicable than conceived by the Commission.
ii) Enhanced Role of Specialists
The role of modem science and technology cannot be over-emphasised when dealing
with development administration. While many specialists are employed by the
Governments in India, they often do not have a role which would make a sufficient
impact upon the policy and its implementation. An impact on policy would require
keeping close contact with the minister. However, the main advisers of ministers are the
generalist officers in the secretariat. It is true that heads of departments are asked to
comment in writing on policy proposals; however, they do not have a sufficient role in
initiating policies. This would require more authority and personal interaction with the
minister. It is notable that the minister and the secretary are both generally amateurs in
the sense of not having specialised knowledge, and hence may not be able to think of
new measures for dealing with difficult problems. Nor can a Planning Commission dd
all the policy-making, since situations differ so much from place to place and time to
time. Hence close association between specialists and the minister is essential. The
Administrative Reforms Commission, in its Report on Personnel Administration,
recommended that officers in the secretariat should come from among specialists. This
recommendation has not been implemented by the Government.. The least that should
be done is to induct more specialists into the secretariat, so that the minister can hear
them as well as the generalists. -
preaucrac~and Development An interesting new experiment is nowadays being made of appointing junior ministers
from among scientists. This does indicate the desire to bring influence of scientists to
bear on the administration. However, with the explosion of knowledge there tend to be
so many different disciplines that the inclusion of a few scientists as ministers is not
likely to provide the full benefits of science and technology.
iii) Reorientation of Staff Agencies
Agencies which deal' with planning, financial administration, personnel administration,
administrative reform, law making, and central purchasing and building activities, are
known as staff agencies. Examples of staff agencies are the Planning Commission, the
Finance Ministry, and so on. Staff agencies are said to be advisory in nature, but as
Simon pointed out, in reality they exercise control on behalf of the cabinet. The controls
which staff agencies exercise are, to some extent, necessary. Thus having a single
coordinated plan for the goveinment as a whole requires a planaing agency: its advice
to the government relating to the size of the plan for a certain ministry, implies some
controlling power over that ministry. However, if the staff agencies in large
organisations like a State Government go beyond laying down broad policy guidelines,
and tend to deal with details they can hamper the fulfilment of governmental objectives
by the executive ministries. In India, staff agencies were used during British rule for
exercising checks over the executive or line agencies (such as departments of
education, health and so on) in the interests of the foreign power. Thus ministers of,
provincial governments under the Montague Chelmsford Reforms of 1919 complained
that the finance department did not provide them with money for developmental
programmes like those of roads and education. This restrictive nature of the staff
agencies became enshrined in rules and precedents. Hence staff agencies have
remained restrictive partly due to their colonial heritage.
Paul Appleby, in his reports on Indian Administration submitted about forty years ago,
pointed out another important reason why the staff agencies tend to become restrictive
unless preventive action is taken. As the functions, number of personnel, expenditure,
and general size of an organisation increases, the staff agencies must restrict
themselves more and more to giving general policy g~iidelines.If they continue to make
as detailed an examination as before, they tend to be over-burdened with routine work
while the functioning of the line agency being regulated tends to become more and
more constrained due to the closeness of control. This, says Appleby, has happened in
India. The size of the administration has grown many times in India. However, the rules
contained for example in the budget manual remain much the same; the exercise of as
minute a control over a large organisation as was exercised over it when it was much
smaller, greatly hinders its functioning and retards performance.
A third factor making for too restrictive a control by staff agencies is their large number.
Appleby puts it pithily in the statement that there are several brakes but no accelerator
in Indian Administration. Thus for a programme for the control of an epidemic, the
health department of a State Government would need the approval of the Union
Planning Commission and the State Planning department for its inclusion in the five
year and annual plans, that of the State finance department for its inclusion in the
budget, that of the law department for the necessary legislation, that of the public works
department for the necessary buildings, that of the State Personnel agencies in regard to
the personnel, and so on. Thus the line agency has to deal with too many'staff agencies.
What is more, the functioning of these coordinating agencies is itself uncoordinated.
Differences between them cannot be resolved by the line agency, but it is the work of
the line agency which is hampered by such differences.
Various steps need to be taken to deal with the above mentioned problems. The staff
agencies should be reoriented to function at their level; they should restrict themselves
to giving policy guidelines. The line agencies should develop their own staff offices for
looking into the details of their plans, budgets, and so on. Once such staff offices have
been developed in the line agencies, the staff agencies should delegate more authority
to them. The cobrdination of coordinating agencies (or staff agencies) can be improved
by combining the various staff functions in one or two of them, as is done in advanced
countries.
iv) Delegation of Authority
Delegation means conferring authority from one administrator or organisational unit to
snnth~w
in n r A - r t n s r m m n l i c h n a r t i r i ~ l s ra c c i n n m ~ n t c T h i ~ c9 C t a t ~C . n v ~ r n m ~ n rt a n
 Enbancia8 Bureruerrtic
delegate authority in a certain matter to the Deputy Commissioner. The administrator
Crpabilii
who delegates authority continues to have his original authority and responsibility even
after delegating it.
Delegation is essential in every large scale organisation. Officers at lower levels mainly
exercise delegated authority. If there were no delegation in a corporation, its chairman
would have to manage it alone.
One of the important faults of Indian Administration is a general lack of delegation.
During British rule, Indian officials were not trusted. Hence ICS officers directly
exercised authority as far as possible. If authority was delegated to Indian officers and
any mistake was made by the officer to whom it had been delegated, it was withdrawn.
Rules thus came to provide a low delegation; subordinates were required to take prior
sanction for every little thing.
Low delegation could continue during British rule since the functions of the
administration were limited. Maintenance of law and order and tax collection did not
require the exercise of much initiative or innovations. However, in developmental
activities field officials must exercise initiative and make innovations; they need to be
given more authority for fulfilling the objectives of development. Hence there is a need
to review the rules and regulations for enhancing delegation.
Financial matters call for special attention in this regard. As prices rise, there is a need
to innease the financial powers of officials at various levels. Otherwise their authority
gets reduced in real terms.
V) Reductioa ia Number of Levels
Hierarchy is considered to be an essential element in an organisation. However, if the
number of levels in the hierarchy is lwge, the chain of communication between the
field and decision-making levels tends to become so long that communication ceases to
be effective. Lack of effective communication means that those at lower levels are
unable to understand the changing objectives of administration, and those at higher
levels are unable to comprehend the needs and problems in the field.
In Indian Administration there are too many levels. For example, even within the
Secretariat. where all the civil servants sit in the same office, there are the following
levels in the ascending order: clerk, assistant, superintendent, assistant secretary. under
secretary, deputy secretq, joint secretary, additional secretary and secretary. In other
words, a certain matter may have to be considered by nine civil servants before the
minister gives his decision. The larger the number of levels, the longer is the time
taken. Hence both effectiveness and efficiency tend to suffer due to the multiplicity of
levels. There is a need to review the structure so as to bring the number of levels down.

18.4 PROCEDURAL DEVELOPMENT

The colonial heritage of brdian Adminisbation also results in procCdures which are
underdeveloped. hrring tbe British ruk, the administration was carried on according to
rules made under laws made by the British Parliament. After Independence, laws made
by Indian legislatures, and rufes made under them, should have taken the place of the
old provisions. However, in most cases the old rules have been allowed to continue.
This interfere with the fulfilment of values and objectives of the present/administration
and hence leads to ineffectiveness; it also leads to delay and frustration and hence to
inefficiency.
Let us take the case, for instance, of procedures relating to personnel administration.
The Constitution provides that "Acts of the q m p i a t e kgislature may regulate the
recnritmemt, end conditions of m i c e of persans appohebd, to pubiic service and posts
in connection with the affairs of the Union or of my State" (Article 309). In pactia.
however, inruead of passing laws under this constitutional provision. old rules have been
allowed to continue. Some of the old rules were originally made about a century ago
and have only been tinkered with from time to time. Thus the Civil Services
(Classif~ation,Control and Appeal) Rules were made under the Government of India
hreaucracy an* h v e l o ~ m a t Act of 1919, but continue to govern classification and punishment. The spirit behind
such rules can hardly be in consonance with that of the Constitution. .
The conflict between the spirit of the old rules .and the new Constitution is apparent in
every field of administration. Thus the oldgolice manual provided for the handcuffing of
every person who was arrested. However, the Supreme Court has now laid down that
handcuffing should be done only in certain special cases. There is, thus, a clear d i c t
between the old rules and the new law as laid down by the Supreme Court. ?he adinmy
policeman reads the police manual, but hardly ever judgements of the Supreme CaaL
His behaviour is, therefore. guided mostly by the manual and often goes against botb
the spirit and the &r of the law.
The above discussion has brought out the need to make new laws and new rules. In
Europe, most countries have a single law for regulating personnel administration. If
such a law were made by the Indian Parliament also, the present dependence upon a
large number of scattered rules would be done away with.
Apart from the old rules, ~ndianAdministration is, to a large extent, governed by
precedents also. This is related to the general lack of delegation and decentralisation.
Officials at lower levels have remained bound by rules. However. there can be several
interpretations of a certain rule. To avoid making a mistake in interpreting a rule, they
tend to depend upon earlier interpretations, or precedents. Hence t h y are hindered fnmr
finding new solutions to difficult problems, making innovations and generally exercising
their initiative.
Micials at lower levels have to send various reports and r e m s to higher authorities.
The expansion of governmental functions requires changes in the forms and periodicity
of many of these. Hence there is a need for frequent reexamination of the quized
reports and returns.
Record-keeping needs to be improved in most government offices in India. The mcords
are often tied up in files and put one on top of another. Hence it is often difficult to find
tkm, thus making much of the effort involved in record keeping almost usckss.
The above diecussion Bae shown mat defective poctdur4s can gnatly interfiesle with
effectiveness a d efficiency. Hence it is important to improve and 'devek~thrm far
enhancing bPnaucratic capability.

18.5 DEVELOPMENT OF THE SOCIETY

Fublic Administration constitutes merely an aspect of the society. Other aspects of the
society -economic, social, political, cultural and educational, constantly interact with
the administration. Hence enhancement of bureaucratic capability requires changes in
the social environment.
So l o q as the majority of the people remain poor, uneducated and unaware of their
rights and duties, they cannot properly participate in prognunmes of development.
Import of high technofogy cannot deliver the goods in a sitmtkm of general economic
backwardness. ?Wq if b e data received fnnn the f ~ l an d defective (my bcause of
lack of means of misport and communication), the processing of the data on a
compter by highly trained specialists is of no use. In shorr, economic development is a
pre-requisite of &lministrmtive development.
hlitical development is also required for administrative development. For
administration to become democratic and participatofy, as against coloairl. the
development of interest gnwps, political parties, the electcwal system, and mrse media
is ewential. '

Social snd cukural d e v m e n t is also an important ropect of modernisation.

Sqmtitim ad the emitation of ~sopkof ao called low caste, women and children,
intafiacwishIbe~ofhtalcb,educlaiancmdpoductivity.
h rbaS tbc vriovs aspects of the society pn, -, inamlati&. Dev-tin
cme rsquinS dtv- of all others. Edhmcement of bureaucrrrtic capability,
tberrfm, requites developeat of the society genetally. even as administrative
developnent helps all-round development.
 Enhancing Buraucratk
Check Your Piogress 2
Capability
Note : . i) Use the space given below for your answers.
ii) Check your answers with those given at the end of the unit.
1) "The organisational structures need to be reformed" explain.

2) How can improvement in procedures help to enhance bureaucratic capabilities ?

3) How is administrative development related to development of the society in

general ?

LET US SUM UP
Enhancement of bureaucratic capability requires development of personnel
administration, organisational structure, procedures and the society as a whole.
In personnel administration there is a need to move towards position classification,
recruitment for jobs rather than ranks, placement in accordance with interest and
aptitude, the use of promotion and other incentives for rewarding performance, training
for enhancing capability and disciplinary action for punishing for poor performance.
The organisational structure can be improved through decentralisation, enhancing the
role of the specialists in decision-making, restricting the staff agencies to giving policy
guidelines, delegation of authority, and reduction in the number of levels.
Improvement in procedures requires making new laws and rules in place of old ones,
reducing dependence upon precedents, reexamination of forms for reports and returns
and adoption of new methods of record-keeping.
Effective enhancement in bureaucratic capability can be achieved only with economic,
political, social and cultural development.

18.7 KEY WORDS

Aptitude: natural ability to acquire general or special types of knowledge or skill.

Censure: expression of disapproval, reprimand'.
BUMU-Y kvebp-1 Delegation: Grant or conferment or giving of authority, or a part of work or
responsibility to some one else so that they can act on your behalf.
Incentive: motive for acting in a certain way.
Staff egency: Staff agency refers to any individual, officer or unit which provides
help. assurance; advice and information to the chief executive.

18.8 SOME USEFUL BOOKS

Bhattacharya, Mohit, 1987. Public Administration: Structure, Process and Behaviour,

Tbe World Ress Ltd.: Calcutta.
Maheswari, S.R.. 1986. Indian Administration. Orient Longman Ltd.: New Delhi.

18.9 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES

Check Your PI-ogress1

1) Your answer should include the following points :
The system of position classification.
Recruitment on the basis of specialisation.
Placement of personnel, according to the interest and aptitude.
2) Your answer should include the following points :
Promotion, on the basis of merit.
Promotion, on the basis of objective criteria.
Greater opportunities for achievement, responsibilities.
Greater opportunities for recognition. growth and learning.
Increments in salary in recognition of good work.
3) Your answer should include the following points :
Helps to keep pace with the expression of knowledge.
Orients the officials to work.
An incentive to further promotion.
Check Your Progress 2
1) Your answer should include the following points .:
Decentralisation.
Enhanced role of the specialists.
Reorientation of staff agencies.
Delegation of Authority.
Reduction in number of levels.
2) Your answer should include the following points :
Formation of new rules.
Formation cf new laws.
Finding new solutions to problems rather than depending on precedents.
Improvement in record-keeping.
3) Your answer should include the following points :
Interrelation of the various aspects of the society.
Development in one requires development of all others.
UNIT 19 CONCEPT OF DEMOC.RAT1C
DECENTRALISATION
Structure
19.0 Objectives
19.1 Introduction
19.2 Concept of Decentralisation
19.3 Need for Decentralisation
19.4 Aspects of Decentralisation
19.5 Democratic Decentralisation
19.6 Hindrances to Democratic Decentralisation
19.7 Lht Us Sum Up
19.8 Key Words
19.9 Some Useful Books
19.10 Answers to Check Your Progress Exercises

19.0 OBJECTIVES
After reading this unit, you will be able to :
explain the meaning of decentralisation;
discuss why it is needed;
explain the meaning of democratic decentralisation; and
discuss its hindrances.

19.1 INTRODUCTION
We are aware that almost all the developing societies of Asia, Africa and Latin America
achieved independence from the colonial rulers during the present century. These societies
have undergone the trauma of exploitation and neglect by the colonial rulers. At the time
of their independence, they have had the experience of inheriting poverty in all aspects of
the society. More than two-third of the people live and die under a state of misery.
Centralised planning systems have failed to provide for fair distribution of the benefits of
economic growth among regions and groups within developing countries. Decentralisation
has often been put forward as a remedy against the concentration of power and as a means
of ensuring that the needs and expectations of the common citizen are respected.
It is necessary to remember that all the developing d e t i e s are mostly agrarian in nature
and they depend heavily on agriculture for any marked increase in national income. There
is a great potential in agriculture which can be utilised to assist tbe overall development.
Moreover, increased industrial production is possiile by the promotion of nvrl and village
industries. And this is possible in an atmosphere of decentralised planning proass.
Several of the developing countries are rich with natural mources like fertile soil, plenty of
water, minerals. In many of these countries, the government is the only agency to meet the
challenges. It was r e a w that an active involvement of the communities in the
developmental process would certainly have positive results. A sense of participation would
make people aware of their rights. And voluntary organisations, which are beiag formed
with a particular purpose, would be able to achieve their goals. India is a country with great
diversity in culture, language, caste groups and economicstratification. There is a great need for
many programmes which would lead to eradication of poverty, diseases, ignorance,
prejudices. All these require massive effort. Therefore the tasks demand greater participation
of people at different levels.

19.2 CONCEPT OF DECENTRALISATION

The term of decentralisation is being usedintedmg6ably with terms like daonoentration,

devolution and delegatioo. But these concepts are different dcgms or fonns of
and ~ e v r l o p w n t i) Deconcentration
Deconcentration implies the transfer of authority in geographical term, from headquarter
administration to field administration. For instance, the district collector in Andhra Pradesh
has been made head of every development department at the district level. Deconcentration
involves the redistribution of administrative responsibilities. And in deconcentration,
accountability is upward. That is, the district collector is accountable to the headquarter
administration.
ii) Delegation
Another form of decentralisation is the delegation of decision-making and management
authority for specific functions to organisations that are not under the direct control af
Central Government ministries. Often the organisations, to which development functions are
delegated, have semi-independent authority to perform their responsibilities and may not
even be located within the regular government structure. Public corporation and regional
development authorities have been used extensively in developing countries to execute
development schemes.
iii) Devolution
Devolution has political and legal connotation. It implies transfer of authority from
CentralIState government to local governments (for instance the Panchayati Raj
institutions). In devolution, the accountability is both upward and downward-upward to
the CentraVState governments and downward to the local people who elect them.
If deconcentration and delegation have administrative connotations, devolution has political
and legal, then decentralisation covers all aspects-political, legal/administrative. It is the
decentralised mode of policy and programme implementation which can involve people in
the development process. It is this process whereby centralisation is reversed, so that power
of decision-making is shifted from central. political and administrative bodies to a multitude
of quasi-autonomous bodies, concerned with the formulation and application of policy in
particular regions and in answer to local requirements.

19.3 NEED FOR DECENTRALISATION

It has been proved in the past that the centrally controlled national planning has severe
1
limitations. The central planning systems have been unable to provide for equitable
distribution of the benefits of economic growth among regions and groups within
developicg countries. It was realised that development, being a complex and uncertain
process, cannot be planned and controlled from the centre. The decision-makers at the
centre would not be able to understand the needs of heterogeneous regions and groups.

When functions and authority are being transferred to the local levels, or to the persons
concerned with the problems and needs, they take more interest in the work. It is the sense
of participation in development planning and management that encourages them.
The central government official's knowledge of local problems and needs also can be
increased. They become more sensitive to various problems at the local level when they are
being reassigned to local levels. When there is closer contact between government officials
and the local population, better information can be obtained. And with better information,
more realistic and effective plans for projects and programmes can be formulated.

In central planning and management, there is over-concentration of power, authority and

resources at the Centre. Thus, red-tape and highly structured procedures are its inevitable
characteristics. The developing countries have to achieve developmental goals within a
target period. It is decentralisation which can cut through red-tape and highly structured
procedures.
Decentralisation can lead to the development of greater administrative capability among
local governments, thus expanding their capacities to take over functbns that are not
usually pehormed well by central ministries.

Decentralisation can also provide a structure through which activities at various central
government ministries and agencies involved in development could be coordinated more
effectively with each other and with those of local leaders and non-governmental
organisations within various regions.
Decentralisation would lead to creation of alternative means of decision-making. Thereby,
the local elites, who are unsympathetic to national development policies and insensitive to
the needs of the poorer groups in rural communities, would not be able to have control over
development adivities.

Check Your P r o m 1
Note : i) Use the space below for your answers.
ii) Check your answers with those given at tbe end of the unit.
1) What is meant by Decentralisation?

...........................................................................
2) Why is decentralisation necessary?

19.4 ASPECTS OF DECENTRALISATION

In this section, we will discuss about various aspects of decentralisation.
i) Political Decentralisation
Political decentralisation leads to the creation of local government organisatiom, with
public representatives as members of tbese bodies. They are assigned the responsibility of
developmental tasks, at that level. Thus here, decentralisation takes the shape of devolution.
Devolution to local self-governing bodies is an attempt to set up autonomous governments
at the local level. These local self-governing bodies, which are elected locally to determine
local policies and implement them are, in a fundamental way. detached from the
central/state government. If these local self-govcrnments cannot exercise autonomy.
devolution will remain more in theory.
ii) Administrative Decentralisation
Administrative decentralisation is motivated by eficiency criterion. Through a process of
deconcentration, field administrative units are being set up. Thereby, field level decision-
. making is made possible which leads to prompt problem-solving. Here, field units of
government (for example district administration) are connected organisationally to
central/state government. In this process. administrative units might come up at many
levels between the locality and the central (state) headquarters.
iii) Non-governmental Orranisations
lnvolvement of non-governmental organisations such as farmers' association, cooperative
societies, women's organisations, organisation of various other interest groups is the third
aspect of decentralisation for rapid development. It is the will of the people which bring
them together and motivate them to form an organisation.Through these organisations they
try to improve the standard of living of the people. And this is done by action oriented
participatory programmes. These programmes have significant influence on a varieiy of
people. encompassing diverse areas, like health. education. agriculture. small industries.
women. children, fisheries etc. Thus. the government shares responsib~litieswith these
organisations that represent varibus interests in society and that are initiated and operated
by members of those organisations. We would discuss the role of voluntary organisations'in
detail in Unit 23.
Decdntfdbdon dDcvelapant
19.5 DEMOCRATIC DECENTRALISATION

It was J:S. Mill who had stated about Qtmocracy that it is "the ody government which can
fully satisfy all the exigencies of the social state, where the whole people participate."
~ e o ~ l e&cipation
's fonns the basis of democracy. When people's participation in the
operation of their own government in a country is larger, continuous, more active and
constructive, it is said to be nearer to democracy as a political ideal. The idea of
ckccntdhabioo is inberent in dewnracy. It is democratic daxntralisation which aims at
people with the govumcot to the maximum possible extent. The word
"-ticn in of decentnlisatian emphrsises the purpo~eof deccotdisation. The
purpose is to provih a larger, greater and closer association of the'pcople with the work of
their own government, at all levels, national regional and more particulul local. In a
democratically decmtnlised system, people have got the right to initiate eir own projects
for local well-being and they have the power to execute and operate them in ao
ti
' autonomous manner.
Democratic deceotralisation is a centrifugal movement. Power moves from the central to
the regional and local areas. It aims to entrust local organs created in local areas with
powers, local in chankcter. Thus there is devolution of authority lrom the higher levels of
the government to tbe lower levels. The proccss of democratic decxntnlisation is vertical
nther than horizontal.
This devolution of authority assumes the form of autonomy to the pcople at lower levels to
take political decisions, to formulate ways to execute it, to mcmage~a~~control
the finances
q u i d for it and ultimately to g ~ i d aotl
e control its administration.
Tbe authority thus decentralised should be managed by the people directly or indirectly
through their representatives.
The iasiitutional machinery of democratic decentralisation is necessarily elective.
Democratic d e c e o ~ o isn thus a political ideal. And local self-government is its
institutional form. Ip India, it is the panchayati raj institutions which are the institutional
fonn of democratic decxntralisation. In subsequent units, we will know panchayati raj
institutions.
I
CbecLYoprRogrem2 4
I

Note : i) Use the splce below tor yohr answers.

ii) Check pur rnswerswitb thosc given at the end of the unit. I
I) Whrt is d t by(politica1decenttalisation?
1

.......................................................................................
2) What is meant by administrative decentralisation?
........................................................................................
........................................................ " e.............................

..........................................................................................
.........................................................................................
3) "People's participation is the hallmark of democratic decentralisation." Explain.
................ ........................................................................
..
r #

.........................................................................................
19.6 HINDRANCES TO DEMOCRATIC
DECENTRALISATION
There are many problems which are being faced in the developing countries, problems
which pose obstiuctioas in the way of democratic decentralisation.
i) Problem of Coordination
The purpose of democratic decentralisation is to provide more discretion at the local level
to meet unique local needs, and to generate innovative solutions to development problems.
For this, proper coordination between and amdng different units is essential. This way, the
effort and material resources invested would not go waste, lead~ngto an integrated
development without any friction, overlapping and duplication.
ii) Problem of Perception
If democratic decentralisation is to be effective, the central administrator's perception of
their roles has to undergo a change. They should understand that their task is to provide
support and facilitate the work process. But'tnany a times, they feel that their task is to
control. And thus, friction arises.
iii) Unit of Administration
The basic problem of democratic decmtralisation is with regard to the unit of
administration. A number of factors suchas -phial area, population,~esources,level
of development etc. have to be taken into atqount wbilc deciding about the unit of planning
and development. It should not be too big leading to unwiefdy~ituation,nor too small
which would result in defeating the very purpose for which it was set up.
iv) Communication
An analyslj of the patterns of communication shows that in most of countries, the
communication system happens to be top down. One way communication network appears
to be the most dominating practice. Absence of the htolvement of grass'root organisation
in the upward communication is weak in most of the developing societies. And this leads to
unrealistic policies and unattainable targets. The problem of red-tape, overlapping.
duplication are generally there in most of the developing countries.
v) Leadership
Leadership is another important variable which can make significant difference to the
developmental process. An examination of the type of leadenhip in most of the developing
countries indicates that this has been one of the major limitations on their effort for
development and decentralisation.
Further it reveals the following characteristics : 1) The bureaucratic leadenhip is
strengthened and perpetuated. 2) Wherever political leadership is involved, they
strengthened either the traditional leadership or the traditional leaders stepped into the new
roles emerging from the developmental effort. 3) The leadership at the higher levels of
organisation is strengthened while the leadership at the lower levels did not receive much
attention. An assumption that those who occupy key positions at higher levhls are more
coqpetent than those working at lower levels appear to be dominating the elite thinking.
4) 4dequate opportunities have not ban provided for the emegence of new leadenhip. Since
the local organisations are not strong, there do not appear to be many opportunities for the
emergence of new and committed political leadership.
Clndr Your Prognss 3
Note : i) Use the space below for your answers. ,

ii) Check your answers with those given at the end of the unit.
1) How does the problem of coordination hamper democratic decentmiisation?
a d mvdopacllt 2) HOWdoes topdown communication result in formulation of unrealistic policies?
i

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

19.7 LET US SUM UP

Adiiussionoo different organisational patterns under democratic decentralisation leads us to
a few broad conclusions. These conclusions can be used ds guidelines in devising or
I'
improvising the organisational structures for development. The following parameters are I
suggested to judge the effectiveness and suitability of an administrative structure for rural
development. 1
One of the most important parameters in institutional arrangement in the modern times is
to build the system on the foundations of decentralkd power. A report by one of U.N.
agencies stated that "It is generally recognised that too great a concentration of problems
upon the central guidance cluster causes delay, increases costs, reduces efficiency, limits
initiative, discourages innovation and c a w s the cluster itself to become a bottle-neck in the
process of development." Further, overqntralisation leaves the various government units,
without the authority that is nece+aryf y efficiency and innovation. Eventually, a I
antralised form of administration,must move more and more towards decenttalisation and I
delegation of authority. I
1
The discussion on various aspects to decentralisation suggests that the decentralisation of
power should be more political than administrative. The transfer of authority to the lower
levels of administrative units cannot be considered as real decentralisation of power. Such a
decentralisation might facilitate flexibility and quick decision-making but cannot
qualitatively alter the nature of a system nor can ensure public participation. This should
inevitably ensure iupremacy of political institutions over administrative institutions. This
leads us to another vital question namely what attitude the national elite in power adopts
towards decentralisation. The political elite who are committed to decentralisation alone
would part with their power and create a participative system in which the energies and
talents of the people can be harnessed for the dkvelopmental purposes. However, the
experience of the developing countries indicates'that decentralisation of power is possible in 1
8 system which is stable and led by an ideologically committed leadership.
1
la addition, tbc decision-making centres should be very close to the people. This can be
achieved only throqh well-organisedlocal institutions l w t e d close to the people. It can be
propcsedbere that tbc nearer the organisation is to the people, the more is the effectiveness
of the organisation to tackle the problems. All the developmental efforts should be
coacentrated on a unit which is accessible to all the people. This type of arrangement would
not only avoid multiple contact points but help them in understanding the development
pro-. This would also add to their political awareness which is an important variable for
development.
Tbe local organisations should enjoy sufficient autonomy io order to be ableto respond to
the varied local needs and demands. Further, they should be endowed with adequate
powers, authority, f i n e s and competent staff.Such a local organisation should be
considered as an indicator of a sound structure for development.
The unification of administrative institutions at various levels has to be achieved, for
!
developmental effort has to be economised. This can be achieved by establishing
harmonious and effective linkages both horizontally and vertically. Further, the purpose d
this should be to reduce conflict in the organisation to the minimum. Thus, unification of
administrative institutions with minimum conflict is another indicator of a sound
organisation.
The administrative and political structures devised for the new tasks should be innovative.
The traditional and obsolete structures, instead of delivering the goods, tend to be
dysfunctional. The structures should be dynamic enough to adopt themselves to the
constantly changing demands. Therefore, innevativeness of the structure is another indicator
of development.
Tbe entire development aims at enlisting people's cooperation and stimulating their
participation in decision-making. It is being increasingly realised that no development is
possible without massive involvement of the people. It is observed that maximum progress ,
depends on maximum participation, a situation in which all members of the society have a
stake in that progress and contribute to it. This participation has to be achieved by devising
suitable structures, encouraging new leadership and politicisation of the mask.

19.8 KEY WORDS

Equitable distribution :Just distribution. When benefits of economic growth are didbutcd
among region and various groups in an impartial manner.
Heterogeneous :Composed of diverse elements. For e.g. in India, existence of groups brsed
on caste, language, religion etc.
Top down communication :When there is communication from tbe top level to the down
level.
Traditional leadership :Leadership which is obtained by tmditioa. For itstance, tbe evil
practice of caste leadership.

19.9 SOME USEFUL BOOKS

Chauhan, D.S., 1977. Democratic Decentralisation and h a 1 Government Administratiow
(In S.K. Sharnia (ed.) Dynamics of Development :An lnternorional Perspective);
Concept : N . Delhi.
Cheema. Shabbir G., Rondinett A Dennis, 1983. Decentmlisation and Developmenr; S a p
Publication : N. Delhi.
Dandekar, V.M., 1968. Democratic Decentmlirariow Hudd Laski : Institute of Political
Science : Ahmedabad.

Jounub
Atthreya, N.H. 1978. "A Note on Decentralisntion in Administration : A *citizen's point of '

view", Indian Journal of Atblic Administmhorr. Pages 859-61 : Volume 24.

, P
~ a t t a~bhijit, 985, "kntralisation and Local Government Reforms", Indian l o u d of
A t b l i c ' ~ d m i n i s t ~ Pages
w 56 1-577 : Volume XXXI.
Dutta, Vijay Ranjm, 1982, "kntralisation and Political Development in India-A
Gandhian Perspective", lndion Journal of AtBlic Administmiow Pues 1-9, Vdume
XXVIII.
Joshi, B.M.,1989, "Evolution and Practice of Decentralised Pla_n_ningin
India", Indiun
Journal of Atblic Administration; Volume XXXV.

19.10 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progreu I Cbeck Yoar Proems32
I ) See Section 19.2 I) See Section 19.4
2 ) See Section 19.3 2) See Section 19.4
3) See Section 19.5
ChcckYourRgrm3
I ) See Section 19.6
2 ) See Section 19.6
 UNIT 20 EVOLUTION AND ROLE OF
PANCHAYATI RAJ
Structure
20.0 Objectives
20.1 Introduction
20.2 Ancient Period
20.3 Rural Local Government between 600 BC to 600 AD
, 20.4 Kautilya's Arthashastra',
20.5 Moghul Period
20.6 British Rule
20.7 Development after Independence
20.8 Role of Panchayati Raj
20.9 Let Us Sum Up
20.10 Key Words
20.1 1 Some Useful Books
20.12 Answers to Check Your Progress Exercises

20.0 OBJECTIVES
After reading this it, you will be able to :
f
trace the evol tion of Panchayati Raj in India,
explain the meaning of the concept,
undentan the importance of its practice; and
?
explain its, role in the rural development.

~ancha~ati Raj in'lndia is a system of local self-government by which the people in rural
areas have taken on themselves the responsibilities for their socioeconomic and cultural
development. Basically, it is thus an arrangement of participation of people in the
administration of local affairs.
Information on the evolution of Panchayati Raj is not easily available. Historians have been
able t o m some of the details from a close study of the inscriptions of the past and a few
stray references to Panchayatl Raj, tound in literature. From these studies, we infer that
ancient India did possess local self-governing institutions. And the local bodies enjoyed a
large measure of f d o m from the state control. In this context, we recollect the statement
mrde by Metalfe. He had written that "the village communities are little republics, having
natly everytbiq thy cm want within themselves and (are) almost independent of any
foreign relations. They seem to last where nothing else lasts, dynasty after dynasty tumbles
down; revolution succeeds to revolutions....The union of village communities continue each
forming a sepaiate little state in itself. It has contributed more than any other cause to the
preservation of the peoples of India through all the revolutions and changes which they
have suffer&. And is in a high degree conducive to the happiness, and to the enjoyment of
a great portion of f d o m and independence." It is also understood that the village
communities exhibited vigour and vitality in their functioning. Although, the picture
portrayed by Metcalfe may have been an idealistic one, but all accounts of village
panchayats in ancient India do point to the fact that there existed village panchayats which
attended to the neab of the people living in the villages. Later, they fell into disuse. The
early.British rule led to their disintegration. Therefore, it is argued that it is possible to
restore its health and prosperity if these institutions are revived and revitalised with suitable
encouragement and mistance to meet the challenges of modern times.

Vedic literature has provided some references to an organised system of rural local self-
government institutions. However, it is difficult to connect different references into a
coherent account of how rural local bodies funnioned.in vedic times..It is mentioned that
the vedic state was essentially a country state, with the villageas the basic unit of
administration. An important functionary of the village was called "Gramini*. He was a
respectable official who played a crucial role in the coronation ceremony of the king.There
were references to Samiti (Asstmbly) and Sabha where discussions took place &nly
concerning with agricultural problems in which the king also participated.
Organisation of Sreni (Guilds), religious organisations, caste organisations ptc., was another
sphere of activity of the local self-government institutions. Some of these had direct
representation in all the popular bodies of the state..
When we look into the great epics such as Ramayana and Mahabharata, we find some
explicit references to village institutions. There are references to the assembly of elders of a
hamlet (Ghosh) village (Gram) and headman of the village (Gramini) The headman
(Gramini) was responsible for collecting the state dues, keeping village records, settling
disputes, controlling crime etc. The council of elders used to exercise control over the
headman. We are not certain, whether the office was elective or by appointment. But in the
post Mahabharata period, he was nominated by the king and was accountable to his next
highest authority, "Gopa" of the village. Five to twenty-five villages were under the charge
of "Gopa"

20.3 RURAL LOCAL GOVERNMENT BETWEEN 600 BC

TO 600 AD
S.C. Jain in his book "Community Development and Panchayati Raj in India" has given a
detailed account of the Vinage Panchayats in the ancient period. ~ c c o r d i hto~Jain, the
period between 600 BC to 600 AD witnessed the rise and fall of religious orders like those
of Mahavira and Buddha and the rise and fall of the empires of the Mauryas and the
Guptas.
According to Jatakas, villages were classified according t,o the size and mode of habitation.
The Jain and Buddha literature explain several aspects of village life. Jataka tales contain
instances of villages, joining together to build reservoirs, roads etc. The villagers put in
collective labour to meet their common services. The religious orders, founded by Buddha
and Mahavira, observed highly democratic procedures in arriving at decisions. It appears
that there were rules and regulations regarding the working of these institutions. They
enjoyed freedom in the conduct of their own affairs. There is no known instance of
interference by the state in the internal affairs of the religious orders. Similarly, the guilds
and castes enjoyed high status and autonomy in their internal affairs.

20.4 .KAUTILYA'S ARTHASHASTRA

Arthashastra provides an exhaustive account of the system of village administration
prevailing at that time. Kautilya prepared an exhaustive account of the statecraft and it is
said that the another narrated his experiences in the Arthashastra. As we are mostly
concerned with village panchayats, we shall try to confine ourselves to this subject matter.
Kautilya outlined the ideal size of the village, its demarcation, distance between one village
and another, and grouping of villages for purposes of posting police force and other state
officials.
The villages had a number of officials, such as headman (Adhyaksha) Accountant
(Sankhyaha) etc. All of them enjoyed property rights over certain areas of land, without
right of alienation, in lieu of their services to the state. The village headman exercised
several duties and performed innumerable functions in the village.

rhe next higher official was the "Gopa" who had between five and twenty-five villages
under his charge. He was also entrustep with several responsibilities such as registration of
land, census, maintenance of records of temples, irrigation works etc. Several other
functions were entrusted to the "Gopa". At the district level, the Rqukas were entrusted
with several functions mostly in relation to survey of land and settlement of land revenue.
They also performed certain judicial functions.
Decentmlimtion hvelo~mcnt All the above mentioned authorities were nominated by the king. However S.C. Jain
comments that the political links, through which village interests were represented at the
highest level, seemed to have broken down as a result of the ascendancy of towns andcities,
growth of imperial ideas and bureaucratic practices. All these gradually restricted the areas
of rural self-government. The system which had evolved during the ancient-period, did not
change under the Guptas. However, there were certain minor changes mostly in the
nomenclature. During this period, the rulers in South India introduced sev&
,administrativeunits such as provincial (Mandals), districts (Nadu), sub-districts (Kottams)
group of villages (Kurram) and village (Gram) These bodies were mostly responsible for
management of land, temples, educational institutions, irrigation works, etc.
Another interesting aspect of the evolution of Panchayati Raj in India relates to the
description of rural local government by Hindu Law Givers of the smriti period. Manu has
given a detailed account of the organisation of the country-state and the role of local self-
government institutions. All the writers of smriti period had a broad agreement on the basic
structure. The system ultimately led to a centralised bureaucratic control with the king as
the final authority.
The anarchic conditions created during the period of struggle for political ascendancy (AD
600 to AD 1200) after the collapse of Gupta Empire led to a climate of uncertainty. This
has led to several phases of disturbed conditions in the working of local self-government
institutions. However, the village system remained intact and if we look into the epigraphic
records, particularly of South India, we find evidence of the Constitution and functioning of
- village government. It js argued that during this period the state was paternalistic in
h

character.
There are three aspects of the village administration of the ancient period which deserve
mention. One is the community spirit which prevailed among the people. Another is the
kind of public functionaries who were concernad,with its administration and the third is thc
nature of public p i e s through which the inhabitants participated in.the management of its
affairs.
There were two factors which fostered and strengthened unity among the people. One was
the self sufficiency of the village and the interdependence of different groups within the
village which resulted from it. The other factor was the isolation in which each villagc was
located. This strengt6ened the spirit of collective effort among its people.
There were a number of administrative functionaries such as Ayagars, Karnam, Talari,
Brahmin etc., who performed respective administrative duties as per the custom. Thus the
village was not only a compact economic unit but also an administrative unit with its full
compliment of public functionaries. All of them were servants of the village community and
not of the state government.
Thus, we find village self-governmentwas more real in the past than what we have today.
One reason for this is that the present day Panchayati Raj owes its existence to legislation
enacted by the State Government. It is created by the state and can be abolished by the
state. This was not the case with village self-governmentin the ancient period. It owed its
existence to the customs and traditions. And no ruler, however, despotic he might be, had
the courage to interfere with what the custom laid down. This gave to the village institution
an unique stability and permanence. In this connection, it is necessary to mention that it
was an accepted theory in ancient India that all institutions derived their authority from
Dharma. Even the state and its rulers were subject to it. Their duty was to uphold it and not
to interfere with it. Dharma, of which custom was a part, ordained that every village should
have its own self-governinginstitutions and that it was not right for the rulers to interfere
with them. This resulted in the decentralisation of decision-making power to the village
communities.
Further, due to the isolation of villages, it was not possible for state ofiicials to visit villages
and interfere with the administrative matters by exercising control wer the village
-
authorities.
Check Your Progress 1
Note : i) Use the space below for your answers.
ii) Check your answers with those given at the end of thc unit.
I ) Write a short note on rural local government between 600 BC to 600 AD.
 Evolution and Role of
Panchayati Raj

................................................................
2) Briefly discuss Kautilya's description of rural local government.

20.5 MOGHUL PERIOD

From about the twelfth century onwards, we find that village administration, its
functioning, its autonomy, entered a period of decline and it might be said that it even ,
disappeared from most of the villages. The establishment of Muslim power in India
signalled a political change which had a much deeper significance than the political changes
caused by the struggle among the medieval Hindu kingdoms. Although, the disorder and
political instability, prevailing during the long period of decay hampered growth, yet the
fundamental principles of central local relationships did not change much with the change
of kingdoms. Muslim rule in India, brought in several ideas which were new to the soil. The
new rulers had different ideas and customs. There were marked differences in regard to the
management of land, taxation. India, a land of variety, has enriched by this experience.
However, it is necessary to mention that the local institutions still continued to function.
The hands of the administration reached only the district level. The village communities
continued to exist.

20.6 BRITISH RULE

Dilring the British rule. the isolation of the village communities was completely broken and
with that, the age old economic self-sufficiency. The community spirit received a severe
blow. Tbere was development in the means of communication such as roads, railways.
motor trafic, telegraphic and telephone. Therefore, there was no need for the villager to
remain self-sufficientin the supply of his economic needs. Commercial goods were
developed at a rapid pace. There were contacts with outside world. Production for the
market took the place of production for consumption in the village itself. Village craftsmen
and artisans lost their importance. They had to go out of their villages in search of gainful
employment. The other villagers no longer depended on them for the supply of the various
articles they needed. They could purchase them at a cheaper ratc from the nearest town or
market centre. The village ceased to be an economic unit for production purposes. The only
tie that kept the villagers together was their residence in the same locality. Thus economic
. interdependence within the village gradually lessened in the villages.

The Britishen. being outsiders. adopted certain administrative policies which further
strengthened the forces of disintegration of the village communities. One prominent feature
of British Rule was the establishment of a direct conneetion between the central and
provincial governments on one side and central government and the individual inhabitants
of the village on the other. For instance, Ryotwari System of land tenure was one such
feature. Under this system, the government dealt directly with the individual cultivator and
not through the village panchayat. In addition, the government took the responsibility of
construction and maintenance of irrigation works, roads, schools. payment of grants to
them. Other activities such as regulation of agricultural credit and relief to the pkople during
natural calamities were also undemken by the central government. All this meant hat
much of the work, which for ages had been associated with village authorities. was taken
over a d carried out by ollicial agencies from outside. A psychological change took place as
a coaseqwncc of this extreme end unprecedented centralisation. It made the villagers look
for mom and more help from the district, provincial or central government. The village
Deeontralisation and Development elders became dysfunctional. The villagers ceased to feel their need to the extent they had
in former times.

The judicial system, introduced by the British, also led to the same result. Disputes, which
for ages, were settled by elders in the village in accordance with custom and usage were
now referred to the courts outside the village and decided in accordance with statutes
enacted by the alien rulers. Naturally; this system cultivated the habit among the people to
look to institutions away from their villages for the redressal of their grievances.

Another landmark of the British administratiod which dealt a blow to the rural areas was
the change which the British introduced in the position of village officials such as the
headman, karnam etc. These public functionaries, who had been regarded throughout the
ages as the representatives and spokesmen of the village community, were now made the
salaried officials of the government. The villagers naturally began to look at them as the
agents of an outside authority who could not be expected to serve them or be trusted. It
deprived them of their natural leaders and cracks in the community spirit began to appear.

The educational system, introduced by the British, was another feature which also produced
a similar effect. Under the new English education, the educated people began to migrate to
towns in search of employment. Rural areas were thus deprived of enlightened leadership.
The effects of Western civilisation, the Christian missions, weakening hold of custom and
tradition without any other bond also contributed to a great extent to gradual erosion in the
village community. Greater attachment to material values of life and growth of a spirit of
individualism was a contributing factor that brought change in the outlook of the villager
and by the end of British rule, the situation in the village was not what it had been in earlier
times.

It is necessary to mention that the different steps taken by the British government to
introduce a few measures to strengthen rural local bodies did not result in any success. The
colonial rulers selected the district as the chief administrative unit in preference to the
village. It was only after the submission of the report by the Royal Commission on
Decentralisation that the importance of the village came to be recognised. And it was only
about the year 1920 that a serious attempt was made to establish village panchayats and
revive the old community through them. The process adopted for the purpose was very slow
and it was subject to numerous limitations. By then, the village community was practically
broken up and conditions became hostile for the successful working of the new panchayats.

It is also necessary to note that all the reports on the working of panchayats after 1920
make reference to several factors which were responsible for decay in the system. They
mention the influence of village factions, caste and communal divide, apathy of the
villagers, and reluctance of the people to contribute to the organisation. In fact all these are
the characteristics of the villages in a state of decadence brought about by the changes
introduced into the system of administration by the British. Centralisation was the key
factor to all these changes. Centralisation and local self-government cannot exist side by
side. They are antithetical. It is centralisation that is responsible for the decline and
disappearance of Panchayati Raj as it existed for years in the villages of India.

20.7 DEVELOPMENT AFTER INDEPENDENCE

The development of Panchayati Raj in India, after the country became independent in
1947, took a crucial turn and did not occur in isolation. It was part of a wider movement
which affected the entire nation. In fact, the real meaning and implications of Panchayati
Raj can be understood only in relation to the wider movement. There have been several
factors which were responsible for the birth and growth of Panchayati Raj in India which
led in course of time to a new structure, much different from what it was in the days of the
British rule. Four major factors deserve mention. They are the teachings of Gandhiji, the
Directive Principles of State Policy, the Five Year Plans with their emphasis on popular
cooperation and the Community Development Programmes. It can be safely mentioned that
to a large extent, the present day Panchayati Raj in the country is the outcome of the
influences of these factors. The factors are discussed below :
i) Influence of Mahatma Gandhi
The influence of Mahatma Gandhi, on the people of India, was profound. His approach to
the'problems of India, particularly of the rural areas, is well-known. He advocated a
 philosophy of ruralism, as distinguished from urbanism. The keynote of Gandhiji's Evdutian .ad Rdc 01
P.ach.yrti Raj
philosophy was the revival of the village community, with all its self sufficiency and
mlnimum dependence on the outside world. Back to the villages, was his main message. He
I called upon the people to focus their attention on the reconstruction of village life which
i u as neglected during the British regime. It was his conviction that the cities were.
responsible for immense damage to village economy and that the only way of saving them
was by making them self-sufficient in as many essential needs of life as possible. He pleaded
that agriculture, supplemented by cottage industries, would provide enough employment
and help in achieving self-sufficiency. A self-sufficient economy would also be highly
decentralised. It would be completely free from all control exercised by outside agencies.
Mahatma Gandhi felt that the village should be self-sufficient not only economically but
also in political and administrative affairs. He was not in favour of people always looking to
the government for anything and everything. He suggested that all the affairs in a village

I should be administered by a panchayat elected on the basis of adult suffrage. As far as

possible the state and central control should be brought down to the barest minimum. The
impact of Gandhi's ideals influenced to a large measure, the political executives after
independence. There is no doubt that the impetus came from Gandhi. Hence, the State
Governments entrusted several development functions to the Panchayati Raj bodies and if
democratic decentralisation has become their watchword, much of it has to be attributed to
the influence of Gandhi's thoughts.
f ii) The Directive Principles of State Policy
i The second major factor, which deserves mention, is the provisions of Article 40 in the
Constitution. Thcre was considerable debate in the Constituent Assembly when the draft
bill was discussed. The draft bill did not provide any reference at all to villages as a unit of
self-governmcnt. In fact, Dr. Ambedkar spoke disparaging1y about the situation in the Indian
Villages. rhere were several others who supported Ambedkar. They said correctly that
greater decentralisation does not imply greater democracy in the villages, it is the people.
belonging to so called higher castes, who would gain more power and would apply that
! power more ruthlessly against the poor.
1

However, there was a very strong section who pleaded forcefully in favour of village
panchayats. They argued that villages could not be ignored and that democracy should not
be restricted only to governments at higher levels but should be extended to living units at
the bottom. As a result of support from numerous members, Article 40 came to be
incorporated in the Constitution in the provision entitled the Directive Principles of State
t
Policies. This Article calls upon the state "to take steps to organise village panchayats and
endow them with such power and authority, as may be necessary, to enable them to
function as units of self-government." This principle has been broadly interpreted by !he
Union as well as state government so as to provide not only self-governing institutions but
I
also democratic institutions at different levels in the rural areas.

~ i i )The Five Year Plans

The third factor which deserves mention for the growth of Panchayati Raj institutions is the
planned economic and social development undertaken by the government. In the
implementation of the Five Year Plans it became necessary to secure the active cooperation
and involvement of people in the rural areas. Active involvement became necessary
particularly in respect of schemes of agricultural development. It was recognised that the
transformation of the traditional methods into modern techniques, involving the use of latest
improvements, could not be brought about without the willing cooperation of the farmers.
The official machinery was not suitable for this work. Further, experts could not approach
each individual farmer in this task. The First Five Year Plan recognised this difficulty and
suggested that "as the agencies of the state government cannot easily approach each
individual villager separately, progress depends largely on the existence of an active
organisation in the village which can bring the people into common programmes to be
carried out with the assistance of the administration." One result of this view led to the
creation of Panchayats thpugh which Five Year Plans have sought to enlist the cooperation
of people in their execution. In fact the First Five Year Plan observed that "many in the
administration realise that official machinery by itself cannot carry out these developmental
programmes, which call for a great deal of initiative and participation on the part of people
themselves."

The Second Five Year Plan had identified two broad groups of functions-administrative and
judicial. A long list of administrative functions had been prepared. The list is formidable. It
~ ~ ~ t b n Devdopcnent
a n d clearly shows the attitude of governmeht towards the role of Panchayati Raj bodies in the
reconstruction of national life.

iv) Community Development Movement

The fourth factor which has been to a large extent, instrumental in the 6rigin and growth of
Panchayati Raj is the Comllrunity Development movement which was inaugurated on
October 2, 1952. It had a direct impact on Panchayati Raj, which, ia essence, implies a nev
approach to the nation building activities. The emphasis of the Community Development
movement is on theall-round development of local community - a village, a group of
villages, a district. The philosophy of community development is to create an opportunity
for the people to take initiative and identify their needs and find out the methods to meel
them. It is not an outside agency that defines the needs of the community and how thosc
needs have to be satisfied. Further, it is observed that in the Community Development
Movement, the community is prepared to find resources of its own to carry out the projects
which it has decided to undertake.
The community development programme was first started under official guidance. Although
tnere were a number of voluntary bodies of non-official nominated members associated, it
was found out that such bodies were not of much use in creating enthusiasm among the
people in securing their participation. The problem was thoroughly examined by the
Balvantray Mehta Committee. It was on its recommendations that the advisory bodies have
been abolished and statutory bodies were created to undertake the work of Community
Development. Thus Panchayati Raj has been ushered in the country as a people's
programme with officials participating in it on account of their technical knowledge and
guidance.
, -
Check Your Progress 2
Note : i) Use the space below for your answers.
ii) Check your answers with those given at the end of the unit.
1) What were the changes which took place during the British rule?

........................................................................
2) What was Gandhiji's view on decentralisation?

20.8 ROLE OF PANCHAYATI RAJ

After tracing the evolution of Panchayati Raj in India, it is necessary to analyse the role of
the Panchayati Raj institutions. There is no doubt that Panchayati Raj has become a
powerful movement. All the states in India have adopted it. It is no more an experiment. It
is being accepted to be important in the democratic process. It is more than a political
slogan, more than an administrative device. Panchayati Raj in India has come to stay. There
is no alternative to it :
i) Political Consciousness
The first and foremost aspect in the study of role of Panchayati Raj relates to its role in
awakening the political consciousness of the rural population. It has enabled a large number
Gf pe.ople to acquire leadership at loci1 levels. The quality of this leadership will ultimately
determine the success or failure of Pancheyati Raj. It is no exaggeration to state that the
Panchayati Raj bodies have provided political'education, preparing the citizens for E v o l u h md Role of
Prnrhayati Raj
responsible living. In fact the Panchayati Raj bodies have developed leaders who could take
control of democratic institutions at state and national level. The prediction of Ripon that
"it is not primarily with a view to improvement in administration that this measure is put
forward and supported. It is chiefly designed as an instrument of political and popular
education" has been realised to a large extent. Panchayati Raj has become a powerful tool
where caste and local interests interact, clash, compromise and arrive at common
understanding on various issues. The experience gained by the new generation of leadership
in democratic management has raised the quality of legislative debates and working of other
higher level institutions. It has provided opportunity for the circulation of political elite
which is very essential for maintaining democratic forms in their true spirit.

ii) Planning and Development

The Panchayati Raj institutions have been designed to play a crucial role in planning and
development. A number of studies indicate that as units of planning and development, be it
at the district or lower level, the Panchayati Raj institutions have contributed substantially.
In Maharashtra, Karnataka, West Bengal and several other states, local level planning has
been succtssfully formulated and implemented by these institutions. Ultimately to what
extent the local bodies have the necessary autonomy and financial resources to take up
developmental activities, depends largely on the state government.

There is yet another point of view according to which the Panchayati Raj Institutions have
become the connecting link between the Parliament and State Legislature on the one hand
and local bodies on the other so that the respective members can exchange views on the
objectives of a plan and its priorities. The local members talk about the local needs,
urgencies and difficulties in the implementation whereas the members of Parliament and
State Legislature can explain the possible solution since they decide national priorities and
at the same time they are financially in a better position to help the rural bodies. This two
way link has served the dual purpose of modifying the state policies at poinb of
maladjustment as well as communicated the message from centre and/or state to the remote
corner of the rural society. Thus, the Panchayati Raj bodies have come to play an important
role in the sphere of planning and development.

iii) Executive Institution

To what extent the Panchayati Raj bodies act as units of self-governmentrequires a closer
look into the functions performed by these bodies. Certain civic functions such as rural
sanitation, public health, street lighting, dfinking water supply, maintenance of village
roads, culverts, management of primary and secondary education, etc., have been carried
out by the Panchayati Raj bodies.

In several states all the developmcntal functions have been divided into three categories :
the central sector, the state sector and local sector. The Local Sector Schemes have been
devolved to Panchayati Raj bodies for planning and execution, they include subjects such as
agriculture, minor irrigation, rural health animal husbandry, rural roads, social welfare,
cooperation, cottage industries, rural housing etc. In all these fields the Panchayati Raj
bodies have played an important role.
Finally, we should remember that the Panchayati Raj bodies are the creations of the State
Government. They have no inherent powen and functions of their own. They do only what
they are authorised by the state. Now the time has come to think aloud about preparing a
local list and incorporate the same in the Constitution. It depends on our political maturity
and perhaps we need some more time to bring in such revolutionary change in this country.

Check Your Progress 3

Note : i) Use the space below for your answers.
ii) Check your answers with those given at the end of the unit.
1 ) What role does Panchayati Raj play in planning and development?
 7

Decentralissition and Development . 2) How does Panchayati Raj institutions bring about political consciousness of the people?

20.9 LET US SUM UP

The evolution of the system has shown that village communities have always existed in
India. Several changes they have undergone - but the basic structure is there. During the
British rule, the village communities no longer remained isolated, due to the development in
the means of communication. Centralisation was the key factor of the British rule. After
independence, an attempt has been made to revive the local self-government. In the
following units. we would be discussing the emerglng patterns of Panchayati Kaj institution
in India and the problem and prospects of Panchayati Raj.

-- - - - - --

20.10 KEY WORDS

Epigraphic record : Record by inscription.
Guilds :A guild is an organisation of people who do the same job or who have the same
interest.
Smriti period :The period in which knowledge was transferred orally.

20.11 SOME USEFUL BOOKS

Dayal, Rajeshwar, 1970. Panchayati Raj in India; Metropolitan : New Delhi.

Desai, K.S.,1962. Panchayari Raj; Asia Publishing House : Bombay.
Jain, R.B., 1981. Panchayari Raj; IlPA : New Delhi.
Jathar,R.V., 1964. Evolurion of Panchayati Raj in lndik Institute of Economic Growth :
Dharwar.

Journals
Hooja. B., 1978. "Panchayati Raj versus Decentralisation of Administration", Indian
Journal of Public Administration; Pages 652-67; Volume XXlV : IIPA.
Maddic Henry, 1978. "Can Panchayati Raj become the agency for integrated rural
development?, Indian Journul of Public Adminislration; Pages 577-91; Volume XXlV :
IIPA.
Mathur, P.C. 1978. "Remodelling Panchayati Raj Institution in India", Indian Journalof
Public Administration: Pages 592-6 16. Volume XXlV : IIPA.

20.12 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress I Check Your Progress 2
I ) See Section 20.3 I ) Scc Section 20.6
2) See Section 20.4 2) Sce Section 20.7
Check Your Progress 3
I ) See Section 20.8
2) Sec Section 20.8
 UNIT 21 EMERGING PATTERNS OF
PANCHAYATI RAJ
Structure
2 1.0 Objectives
2 1.1 Introduction
21.2 Structure of Panchayati Raj
21.3 Andhra Pradesh Pattern
21.4 Maharashtra Pattern
21.5 Karnataka Pattern
21.6 Let Us Sum Up
21.7 Key Words
21.8 Some Useful Books
21.9 Answers to Check Your Progress Exercises

21.0 OBJECTIVES

After reading this unit, you will be able to :

'analyse the different patterns o
! Panchayati Raj;
understand the necessity to have different patterns; and
compare the Panchayati Raj Institutions, existing in different states.

21.1 INTRODUCTION

Panchayati Raj Institutions have been set up in our country as a result of the
recommendations of the Balvantray Mehta Study Team. The Team made a number of
recommendations regarding the constitution of the new bodies, their internal organiiations,
thc staff to be employed by them, their functions, finance and the arrangements for
cxcrcising control over them. Besides, the Team also made several others on various points
rcfcrred to it for consideration. Consequent to the repon of the Team, almost all the States
and Union Territories introduced the Panchayati Raj Institutions over a period of time. We
now have more than three decades of Panchayati Raj experience. While the need for setting
up democratic institujions was accepted by the Government of India, it was realised that in
a country of India's size, complexity and diversity, a uniform pattern all over the country
should not be introduced rigidly. It was recognised that each state should have the
discretion to devise a system,.best suited to the local conditions. In fact, it is necessary to
recall the resolution of the Central Council of Local Self Government at its fifth meeting at
Hyderabad in 1959. The meeting recommended that "while the broad pattern and the
fundamentals may be uniform, there should not be any rigidity in the pattern. In fact, the
country is so large and Panchayati Raj (democratic decentratisation) is so complex a subject
with far reaching consequences that there is the fullest scope of trying out various patterns
and alternatives. What is most important is the genuine transfer of power to the people. If
this is ensured, form and patcrn may necessarily vary according to conditions prevailing in
I
different states." On the basis of this approach, the Panchayati Raj Institutions have been
introduced in diflerent slates at different points of time. The structures, that have come into
I existence, do not yet seem to have settled down into some kind of format, for in most of the
states, attempts are being made to bring about changes in them. Changes are introduced, at
1 frequent intervals, on the basis of experience of the existing system. However, we have tried
/ to analyse the different patterns as they have evolved and are working at this juncture. A l t a
all, there cannot be any finalityin any society, particularly in the developing societies where
1 reforms have to be introduced at regular intervals to keep pace with the c h a n ~ i nt i~m a
I
-

1 21.2 STRUCTURE OF PANCHAYATI RAJ

I The Balvantray Mehu Study Team proposed a three tier (Zilla Paushad. Panchayati SImiti
n n r l Yillmma Dmnnhmwmtil euet*m nf Pmn~hmurtU
i ri Thara'ir nn n s n i f n - i l u ra.-arAinm 1h-
 and Development
Decenb~tisation number of tiers in all the states. It is true that there is Panchayati Raj of some kind or the
other in all the States and Union Territories, but there is variation in respect of the number
of~units.There is difference of opinion regarding the unit of planning and development.
Election procedure, financial resources, personnel policies etc., are a few other aspects on
which there is no unanimity. However, we have tried to identify a few patterns which are
distinct in their character for analysis. We will study Panchayati Raj as it has evolved in
Andhra Pradesh, Maharashtra and Karnataka. It is also necessary to point out that in this
short essay, it is not possible to analyse the patterns of Panchayati Raj Institutions in all the
States and Union Territories.

Check Your Progress 1

Note : i) Use the space given below for your answers.
ii) Check your answers with those givemat the end of the unit.
1) What was the proposal of.the Balvantray Mehta Study Team?

........................................................................
2) What was the resolution of the Central Council of Local Self Government?
........................................................................ 1
I

21.3 ANDHRA PRADESH PATTERN

Andhra Pradesh and Rajasthan adopted Panchayati Raj soon after the submission I '-hta
Report in 1959. In fact, they take pride in the fact that they acted fast in accepting the
recommendations of the Mehta Study Team. The legislation, in both the States, was mainly
based on the model suggested by the Mehta Team. From 1959 to 1983, the three tier
structure was in vogue in Andhra Pradesh. In 1983, a four-tier structure was set up. Thus,
there are two phases in the Andhra Pradesh pattern of Panchayati Raj. We would discuss
each phase in the following.
A) ~ i r d Phase from 1959 to 1983
Under this scheme, the Gram Panchayat was the lowest unit. It was constituted either for a
single village or a group of villages. There was also provision for a Gram Sabha, the
members of which were all the voters of the Gram Panchayat.
The Panchayat Samiti, which is the middle tier, was the most important uqit from the point
of view of planning and development. Originally, there were 448 blocks in the State which
were later reorganised into 321. The Panchayat Samiti was composed of Ex-officio and
co-opted members.
The Zilla Parishad for each district was the apex body of the Panchayati Raj in Andhra
Pradesh. It also consisted of Ex-officioand Co-opted members. The Panchayat Samiti
and the Zilla Parishad had seven standihg committees, each of which transacted important
business. Till 1983, no major structural change was contemplated in the three tier structure.
It is, however, necessary to point out that now and then, a few modifications which were
mostly peripheral in nature were introduced in the system consequent to the
recommendations of several committees constituted by the State Government.
The functions of these bodies have been enumerated in the Act, They may be broadly
divided into two categories; i) Civic and Wdfare functions; ii) The developmental functions.
It wac maint'v t h Gram
~ Panrhavatc and Pnnrhavat Snmitirc which had hem ~ n t r u c t ~with
d
civic and welfare functions. The functions of Zilla Parishads in this area were restricted to Emerging Panem of
the establishment, maintenance and expansion of secondary, vocational and industrial Pmchayatl Raj
schools. In fact, the Zilla Parishads served more as a coordinating agency and as the agency
for distribution of funds among the Samitis in the district.

The Panchayat Samiti was the principal agency for performing all developmental functions.
They include agriculture, cooperatives, animal husbandry, community development, cottage
industries etc. The Zilla Parishads had no executive functions so far as developmental work
is concerned. However, at times they had also undertaken activities under certain
circumstances. Otherwise the Zilla Parishads were mostly coordinating and supervisory
agencies.
Thc three tier structure continued to be in operation till 1983. The emergence of a new
regional political party namely the Telugu Desam Party at the state level has brought in
certain changes in the Panchayati Raj set up in Andhra Pradesh.

It would be useful to recall the prevailing situation in the'late seventies. It has been
observed that during this period, the Panchayati Raj Institutions were in a bad shape. We
were witness to a total decadence in the working of these Institutions all over the country.
The situation was viewed with serious concern by the Janata governmeht at the centre.
Consequently, it had appointed a Committee headed by Ashok Mehta, to review the
working of Panchayati Raj Institutions and to suggest suitable remedialheasures. Though
the committee submitted its report in 1978, it did not evoke any interest in the state
governments. In addition, the collapse of the Janata government put the Ashok Mehta
report in cold storage.

B) Second Phase : 1983onwards

The emergence of nonCongress-l government in Andhra Pradesh in 1983 revived the
interest in the Ashok Mehta Committee Report. On the basis of the report, a number of
changes were introduced in the Panchayati Raj structures in Andhra Pradesh.
The present set up is based on the Andhra Pradesh Mandala Prajlo Parishad, Zilla Praja
Parishad and Zilla Pranalika Abhivrudhi Mandals Act 1986. The Act provided for a four
tier structure : Cram Panchayal for a village. Mandala Praja Parishad for a group of
villages, Zilla Praja Parishad for every district and Zilla Abhivrudhi Sameeksha Mandali
for every district. Let us examine each one of these bodies in detail.

i) Cram Panchayat
Gram Panchayat is the lowest unit of the'four-tier system. There are about 19.500 village
panchayats in the State. Gram Panchayats are constituted either for the entire village or for
groups of them. Members of Gram Panchayat are elected by the villagers on the basis of
wards. The Sarpanch is directly elected by all the voters of the village. There is a provision
for reservations to the extent of 15 per cent for SCs, 6 per cent for STs, 20 per cent for BCs
and 9 per cent for women, in all the elective posts at the village Panchayat level.

ii) Mandala Praja Parishads

Thc most significant reform made in the structure is the abolition of former 330 Panchayat
Samitis and creation of 1.104 Mandala Praja Parishada in their place. The size of the middle
unit is reduced by one-third with a population of 35 to 50 thousand with a view to taking
administration to the 'doorstep' of the rural population. The new Mandala Praja Parishads
arc coterminous geographically with the Revenue Mandals. This was designed mainly to
mcrgc both the Revenue Mandals and the Mandala Praja Parishads, over a period of time
facilitaiing an integrated unit to emergeat the grassroots level. The revenue bureaucracy
had howcvcr opposed this proposal. For the time being, the entire issue of merger is kept
pcnding.
Andhra Pradesh adopted the system of direct election to the position of President of
Mandala Praja Parishad. Sarpanchs of village panchayats are the ex-officio members of the
Mandala Praja Parishad. Members of Legislature and Parliament are also ex-officio
members. In the new system, the registered political parties are permitted to field their
candidates for elections. Along with this provision, a ban is imposed on the Mandala Praja
Parishad presidents from defecting from the parties on whose tickets they were elected. The
spirit of Anti-defection law is very much felt at the grassroots level.
No substantial changes and improvements are made in the powers and functions of Mandala
Praja Parishads. Almost all the functions of erstwhile Samiti are handed over to the new bodies.
Dmnb.liPtba ud Dcvclopcant iii) Zilla Praja Parishads (Z.P.Ps)
A few changes have been introduced in the composition. of the Z.P.Ps literally meaning
district people's councils. The Zill Praja Parishad a headed by a chairman, directly dcctcd
for a term of five years by the entire district electorate. The urban voters are exclude& It
may be recalled that under the old Act. the chairman was elected indirectly by the pcncral
body of the Zilla Parishad. In the present situation, the Zilla Praja Parishad chairman a
elected by the largest electorate in the country; roughly having an electorate twice that of a
Lok Sabha Member or ten to fourteen times that of an M.L.A. The government has
accorded the status of the Minister of State to the Zilla Praja Parishad chairman. Provision
for reservations is also made: one for STs, three for SCs, four for BCs and two for womcn
out of a total 22 Zilla Praja Parishads. The general body consists of the chairman, all thc
Presidents of the Mandala Praja Parishads, legislators as Ex-oflicio members and a co-opted
member belonging to the linguistic minorities. The district collector is also a member of the
Zilla Praja Parishad. The antidefection law is made applicable to this organisation also.
There are six standing committees, all headed by the Chairman, through which the busincss *
is carried on. The district collector's power has been diluted by divesting him of the
e x ~ f i c i ostatus as in the old act. No radical changes have been introduced in respect of
functions and sources of finance.
iv) Zilla Abhivrudhi Sameeksha M d a l
Another significant feature introduced in the new set up is the creation of a fourth tier. a
nDminated body over and above the Zilla Praja Parishad. Each of the districts in thc statc.
excluding the state capital, is provided with a Zilla Abbivrudhi SIlmeeksha Mandai
(District Development Review Board). It is headed by a Minister nominated by thc Chief
Minister. The Chairman of the Zilla Praja Parishad, all the legislators of thc district, the
district collector and five expen members nominated by the government constitute thc hody
of ZiUa Abhivrudbi fhmceksha Mandal.
This fourth unit has become a subject of criticism. The purpose of these bodics is stated to
be review of developmental works within the district. However, the real purpose, thc critics
point out, is to subordinate the Panchayati Raj Institutions to the state and through it to thc
party in power.
Finally, it is said that the present experiment does not 'make any significant changc in thc
position of the Panchayati Raj Institutions. However, there are two aspects which dcscrvc
appreciation. First, creation of smaller units of administration has led to better acccss to t hc
rural people. Secondly, the provision of reservatiorts at all levels facilitated the sharing of
power and status by a larger number of people from the deprived sections of population.
\

Check Your Progress 2 -.

Note : i) Use the space given below for your answers.

ii) Check your answers with those given at the end of the unit.
1) In what way, Mandala Praja Parishad is difierent from that of Panchayat Samiti of the
past?

2) Write a short note on Z i a Abhivrudhi Sameeksha Mandal.

 21.4 MAHARASHTRA PATTERN

After having explained the emerging pattern of Panchayati Raj in Andhra Pradesh, it is
necessary to examine one of the unique systems of Panchayati Raj Institutions in India i.e.,
Maharashtra pattern. It is unique because the State government did not accept the
recommendations of Mehta Team in toto. And therefore it set up a committee in 1960 to go
into the question of introducing democratic decentralisation in the light of its own
experience in the field of local government under the Chairmanship of V.P. Naik.
Consequent to the Naik Committee Report, the state government passed an Act in 1961
which came into force in 1967. We find quite a few differences between the Mehta Rep&
and the Naik Report which deserve mention in our lesson.
I
The idea of introduction of grassroot democracy as envisaged by Naik Committee is
different from that of the Mehta Team. The Mehta Report laid emphasis on developmental
mechanism, whereas the Naik Committee integrated the developmental functions and made
it clear that the Panchayari Raj Institutions, proposed in Maharashtra state, would be in the
form of local governments and not a mere extension agency of the Central Gouernment or
State Government.

After a careful examination of the causes for thefailure of the existing system, the Naik
Committee suggested that all developmental schemes should be divided into three categoriqs
namely a) the state sector schemes, b) the local sector schemes and c) community
development programmes. The I'ocal sector schemes and the community development
programmes should be entrusted to the Panchayati Raj bodies for planning and execution.
For proper implementation of all the schemes of local sector, the district should be the ideal
unit since it has necessary administrative organisation already existing. Thus, the Naik
Committee suggested district as a unit of planning and development and the ~ a n c h a ~ a t
Samiti could be a statutory committee of the Zilla Parishad.
Before we proceed to the description of the units, it is necessary to mention that the Naik
Committee was not in favour of associating the district collector and the Members of
Legislative Assemhly and Parliament with the Panchayati Raj lnstitutions. The Committee
felt that by keeping the collector outside the body, the Government would have in himlher
an independent officer who could evaluate impartially the functioning of the local.body and
report the same to the government. The Members of Legislature and Parliament would be
too busy with their respective roles and may not find enough time to devote to the local
bodies. Hence, the.committee did not find their membership useful in the local bodies.
The Committee suggested that all the local sector officers should be p l a d under the
unified administrative control of the Chief Executive (of the rank of district collector) of the
Zilla Parishad, working under the supervision and the control of the Zilla Parishad. Similarly
the block level staff should be kept at the disposal of the Panchayat Samiti.
At present, the Panchayati Raj system in Maharashtra is organised on the basis of
Maharashtra, Zilla Parishads and Panchayat Samitis Act 1961. Let us analyse the main
features of the system.
i) The Zilla Parishads (Z.Ps)
The Zilla Parishads have been constituted for every district. The Bombay city and suburban
district does not have a Zilla Parishad. Zilla Parishad is the main unit of decentralisation. It
has a minimum of forty and a maximum of sixty councillors directly elected from a
constituency of roughly 35,000 adults. There is also a provision for co-opting
representatives of cooperative societies. Reservation for Scheduled Castes and Scheduled
Tribes is also provided. In addition, two women would be co-opted if the directly elected
members do not include women. The chairmen of the Panchayat Samitis in the district are
ex-oficio members of the district council ensuring linkage between the samiti and district
body. The direct election of the Zilla Parishad Councillbrs ensures responsibility to the rural
population. Besides it was designed to lend a political status to these bodies
The Zilla Parishad from amongst its councillors elects a President, a Vice-President'and twe
Chairmen of subject committees. The Zilla Parishad for its day to day working, is divided
into eight committees. The President of the Zilla Parishad, apart from functioningas head of
the Panchayati Raj bodies, also presides over the meetings of the Standing Committee. The
remaining subject committees are presided over by the Vice-President and Chairmen of the
Subject Committees. President of the Zilla Parishad, Vice-President and two chairmen of
Dmn'r*htioaudDc~t subject committees receive honoraria and housing facilities. In addition they are also
provided with a vehicle. Thus a kind of portfolio system has been introduced. '
The 1961 Act lays down a variety of functions for the Zilla Parishad. Thesc include
agriculture. animal husbandry, forests, cooperation, education. health. irrigation, cottage
industries etc. Planning and execution of development works. thus. is the basic function of
the Zilla Parishad. The sources of funds mainly consist of various grants that are paid by the
government. The whole of the land revenue. and a cess on it is given over to the Panchayati
Raj Institutions. The Zilla Parishads have also inherited most of the revenue sources from
the local bodies which include professional tax. building tax, registration fee etc.
So far as the administrative serviCts ate concerned, the Zilla Parishad is headed by an
officer of district collectot's rank called Chief Executive 0.fIicer. He is assisted by a Deputy
Chief Executive Officer who is also the Secretary of the Zilla Parishad. Besides them, the
government has transferred its various othir departments in the district including the staff to
the Zilla Parishad. Thus, the entire contingent of administrative organisations arc placed
under the Zilla Parishad.
ii) The Panchayat Samitl
The Panchayat Samiti in Maharashtra is a statutory committee of the Zilla Parishad. The
membership of the Samiti consists of Zilla Parishad Councillors elected from the block.
co-opted councillors and two members who are the Panchas/Sarpanchs elected by
~anchayatmembers from each electoral division in the block. Thus, there is a downward
ex-oflicio membership for the elected representatives of the Parishad from the constituencies
in the block. The system also ensures a working link between the Panchayat Samiti and the
Village Panchayats in its area. There is a provision for co-option of Scheduled Castes.
Scheduled Tribes and women on the lines similar to that of the Zilla Parishad.
The Chairman and Deputy Chairman of Panchayat Samiti are elected from amongst its
members. They are full time functionaries. They are paid honoraria and'accommodatior,
facilities. The law does not allow them to be a member of any subject comniittec of the
Zilla Parishad. In Maharashtra, the Panchayat Samiti is not a corporate body. In fact it is a
statutory committee of the parishad and therefore, works as a whole. The Block
Development Officer is the ex-oflicio secretary of the Panchayat Samiti.
The 1961 Act has allotted a list of functions to the Panchayat Samiti. Thesc functions
overlap the list of functions of Zilla Parishads. However, in practice, different development
schemes are executed through the Panchayat Samiti.
iii) Village Pamhayats
The basic unit of Panchayati Raj in Maharashtra is the village panchayat constituted
independently of the Zilla Parishads. Panchas are elected ward-wise. A few seats are
reserved for Scheduled Castes, Scheduled Tribes and women. There is provision for
co-option. The Sarpanch is elected by the panchas. For every village there is a Gram Sabha
which has to meet twice in a year to review and approve the annual budget and plan of the
village.
The functions of the Village Panchayat are mostly civic and developmental in nature. The
subjects include agriculture, social education, health, cooperation, social welfare etc. The
entire land revenue is given to the village panchayat. Grants for development are received
from the Zilla Parishads.
The essence of Panchayati Raj System in Mabarashtra is that its Institutions have become
institutions of power mechanism. It means that the Panchayati Raj Institutions are not only
units of planning and development but also enjoy power to decide which development
&heme bas to be taken up, where it should be taken up etc. There is a clear identification of
functions, finances and devoltition of authority to these units. It is also stated that a large
measure of success of the Zilla Parishad in Maharashtra is attributed mainly to the
.integration of administrative services.
Check Your Progress,3
Note : i) Use the space given below for your answers.
ii) Check your answers with those given at the end of the unit.
I ) Write a short note on Zilla Parishad, existing in Maharashtra.
 Emerging Patterns of
Prnehayrti R l j

2) Write a short noteon!Village Panchayats of the Maharashtra Pattern.

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

1.

21.5 KARNATAKA PATTERN

-
Panchayati Raj was introduced in Karnataka in 1959 with the passage of Mysore Village
Panchayats and Local Boards Act 1959. Prior to this Act there was no uniform pattern of
rural government in the slate. The five different areas which constituted Mysore State,
redesigned as Karnataka state, were governed by different Acts. In 1959 these Acts were
superseded by the Act of 1959. Based on different experiences of the state the 1959 Act
which was strikingly different from other states was adopted. The recommendations of
Mehta Team in addition to different recommendations of various committees were, thus
synthesised in the Legislation of 1959.
It is appropriate now to talk about the salient features of the system which was introduced
in 1959 and to,explain the new trends emerging in the recent times. There are two phases in
thc emerging patterns of Panchayati Raj in Karnataka. The first one is from 1959 to 1985
and the second phase began in 1985.
A) First Phase : 1959 to 1985
The Act provided a three-tier structure with the Village Panchayats/Town Panchayats at
the base, the Taluka Development Boafds in the middle and the District Development
Council for each district at the top.
i) Village Panchayats/Town Panchayats
The Village Panchayats/Town Panchayats elected their members directly. Seats were
reserved for Scheduled Castes, Scheduled Tribes and women. The Chairman and Vice-
Chairman of the Village Panchayat/Town Panchayat were elected from amongst its
members. The Panchayats were entrusted mainly with civic functions such as sanitation, i
control of epidemics, street lighting etc. They were supposed to perfonn that are called
agency functions assigned by the Taluka Board and the State Government. Their major
sources of income were from Grants given by the State Government and proceeds of the
taxes which were very marginal. There was no organic linkage between Village
Panchayat/Town Panchayat with the higher body, Taluka Development Board. As in many
other states. there was a provision for a Gram Sabha.
ii) Taluka Development Board
The middle level unit was known as Taluka Development Board constituted for each
Taluka in the state. The members of the Board were directly elected by the voters.
Reservation of seats for the Scheduled Castes, Scheduled Tribes and women was provided.
The members of Legislature, and the Council were ex-officio members of the Taluka
Development Board. The Chairman and Vice-Chairman were elected from amongst the
members of the Taluka Development Board. The formation of the Taluka Development
Board is contrary to the suggestion made by Mehta Team. The Taluka replaced the block at
the middle tier.
The Taluka Boards were entrusted with certain obligatory functionssuch as looking after public
roads, public wells, primary school buildings, public health etc. They had a highly restricted and
narrow tax base. They had to depend heavily on financial assistance by the state
onvernment. This had nlaced them cnrnnlctelv at the rnerrv nf the hipher authoritiff.
-tim ud D c v c k p w n t iii) District Development Council
There were district development councils for each district. The District Development
Council consisted of the Presidents of all the Taluka ~ e v e l o ~ m e Boards.
nt Members of
Parliament, Assembly and the Legislative Council from the district. In addition, not more
than 15 oflicials of the government in the district, were nominated by the government. The
Government also nominated members from the weaker sections of the society. The Deputy
Commissioner of the district was the ex-officio chairperson of the council. It was purely a
coordinating and supervisory body, conforming to the recommendations of the Mehta
Study Team.
The decline of Panchayati Raj system in all the states, including Karnataka, was a subject
matter of discussion during the Janata rule at the centre. The Ashok Mehta Committee's
recommendations revived some interest in the system. One of the election plans of the
Janata Party in Karnataka was to reinvigorate and revitalise Panchayati Raj to enable it to
play a more effective role in the process of rural development. In order to fulfil the election
promise, the Janata government introduced a Bill to this effect and after going through
different stages. the Act came into existence in July 1985.
B) Second Phase : 1985 onwards
The Act of 1985 conlains a number of innovations and makes a radical departure from the
earlier system. The new system has rejected the existing structure. Rama Krishna Hegde, the
then Chief Minister of the State called it the "second transfer of power", the first being 1947
from the British to the people of the state.
The Karnataka Panchayati Raj system is based on the Zilla Parishads, Taluk Panchayat
Samitis, Mandal Panchayats and Nyaya Panchayats Act 1985. A brief description of the
new Panchayati Raj structure would be highly useful. The structure which comprises four
layers - Zilla Parishad, Taluk Panchayat Samiti, Mandal Panchayat, and Gram Sabha -
replaces the pre-existing three tier system consisting of District Development douncil, Taluk
Development Board and Village Panchayat. Let us analyse each one of them.
i) The Zilla Parishad
A Zilla Parishad is constituted for each district. It is a corporate body, composed of elected
members. It has a small segment of nominated members of the local MLAs, MLCs and MPs
with voting rights. There is one Associate member without voting right i.e., the Chairperson
of District Central Cooperative Bank. Persons above 18 years of age are eligible for voting,
but no person below 25 years of age can contest the elections. Reservation to the extent of
25 per cent is made for women. Similarly not less than 18 per cent members is reserved for
Scheduled Castes/Scheduled Tribes.

The Adhyaksha and the Upadhylsha, elected from amongst the members, will receive a
monthly salary of a Minister of State and that of Deputy Minister respectively. This and
other related provisions would certainly enhance the prestige, status and independence of
these oflices. There is no reservation to elective key positions of offices for Scheduled Caste,
Scheduled Tribe and women. There are 9 standing committees to monitor and implement
the activities of the Zilla Parishad. Members of these committees are elected by the
members;of the Zilla Parishad from amongst 'themselves in accordance with the system of
single transferable vote.
The Zilla Parishad will have an administrative organisation consisting of several officers
mostly on deputation, who work under the control of a Chief Executive Officer of the rank
of a Deputy Commissioner called the Chief Secretary. A number of functions are allotted to
the Zilla Parishad. They include all developmental programmes such as agriculture, animal
husbandry, horticulture, industries, welfare of SCs, STs, BCs, supervision, coordination and
integration of developmenhl schemes etc. The most important function of the Zilla
Parishad is formulation and execution of district plans. As Nazir Sab, the architect of new
Karnataka scheme of democratic decentralisation says, "We will have two planning
processes hereafter, one at the district and the other at state level." He further states that the
Legislative Assembly will pass two appropriation Bills: one for the state sector and the other
for the Zilla Parishad. The most radical structural change was that of dissolut@nof the
existing District Rural Development Society and transfer of its assets, liabilit~esand
functions to the Zilla Parishads.
A number of sources of income such as allocation from consolidated fund of the state,
grants, loans, contributions etc. have been provided. Each Zilla Parishad is likely to get
 more than 40 crores annually. There is a provision for a Finance Commission to be set up
by the State to determine allocation of resources. This would certainly improve the resource
base of the Zilla Parishads.
ii) Taluka Panchayat Samiti
The most interesting structural innovation of the Karnataka model is Taluka Panchayat
Samiti at Taluka level. It consists of Members of State Legislature representing a part or
whole of the taluk, members of the Zilla Parishad representing a part or a whole of taluka,
the Pradhans of Mandala Parishads in the Taluka, President of the co-operative Institutions,
five members belonging to SCs, STs, BCs and women co-opted by the Taluk$Panchayat
Samiti and approved by the Zilla Parishad. The Member of the Legislative Assembly
representing the major part of the taluka shall be the Chairperson. If the MLA is not
P
available or if the member becomes a Minister, the Taluka Panchayat Samiti shall elect a
Chairperson from amongst its members.
The Taluka Panchayat Samiti is not a corporate body. The powers and functions have not
been assigned to it the way it has been done in the case of Zilla Parishad. However, the
Block Development Officer has been designated as secretary of the Taluka Panchayat
Samiti. The Samiti has powers to supervise, review and coordinate the acts of officers and
servants of Zilla Parishad working in the Taluka. The Samiti also has the power to review
the work of Mandal Panchayat and coordinate the work when it relates to more than one
Mandal.
iii) The Mandal Panchayat
The concept of Mandal Panchayat has been taken from Ashok Mehta Committee Report. It
is a corporate body constituted for a revenue village or a group of villages having a
population of not less than 8,000 and not more than 12,000. Reservation of seats is made
for women, SCs and STs. All the members are elected on a ward basis. There is no
provision for co-option or nomination. However, where no person belonging to backward
classes is elected to a Mandal Panchayat, the Zilla Parishad shall nominate two persons
belonging to backward classes. The Mandal Panchayat shall elect two members to be
Pradhan and Upapradhan. They are paid honoraria. It has an impressive list of functions
which could be broadly divided into three groups; obligatory, discretionaiy and transferred.
Thc Mandal Panchayat has to formulate the agricultural production plan and undertake
promotion of educational, economic, social, cultural and other developmental aspects of
SCs, STs and backward classes.
The Mandal Panchayat has a full time secretary appointed by the Zilla Parishad. Its
activities are financed by the Government or the Zilla Parishad. Mandal Panchayat fund is
constituted. Proceeds from tax on buildings, entertainment, market etc., are some of the
other sources of revenue of the Mandal Panchayat. On an average, it appears, each Mandal
Panchayat receives not more than rupees 5 to 6 lakhs in a year.
iv) Gram Sabha
In the new Act the Gram Sabha occupies a statutory base. Every meeting of the Gram
Sabha will be presided over by the Pradhan of the concerned Mandal Panchayat. It meets
twice a year to review developmental programmes of the villages.
The Act also provides the Institution of Nyaya Panchayats at the Mandal level. However,
the government did not introduce the same for a period of five years so that the government
could work out the details of the scheme.
In conclusion, it is observed that the new Panchayati Raj system in Karnataka has been a
unique model. Elected bodies have been given primacy, political parties are allowed to
contest the elections, anti-defectionlaw has been enforced, financial support base is
strengthened. It is said that the quantum of resources transferred to the Panchayati Raj
1nstitut;ons has gone up from Rs. 3 crores to 800 crores. Finally, the experiment in
institution building has taken a concrete shape and the display of political will has been
witnessed in Karnataka.

Check Your Progress 4

--
Note : i) Use the space given befow for your answers.
ji) Cheek your anSWem with those given a
end Of fh ,,,,it.
Write a llMc a h h r k h a d as existing 1985 in Kanuuh
.............................
 .........................................................................
2) Write'a short note on Taluka Panchayat Samiti as existing 1985 onwards in Karnataka.

- - -pp -
21.6 LET US SUM UP

Thus it was decided appropriately h a t States would devise the Panchayati Raj Institution\
suited to their local conditions. The most importan1 issue being transfer of power to thc
people, we have to consider whether a particular pattern could achieve that. And we havc
noted that in States like Karnaiaka and Andhra Pradesh, a particular pattern was discarded
and a new system was evolved. This is what is needed in the process of growth. Flexibility
and not rigidity. In Maharashtra, we have noticed that the State had set up a Committee to
go into the question of introducing democratic decentralisation. All thcsc mcasurcs arc very
important in the growth of grassroot democracy.

21.7 KEY WORDS

Co-opted member :elected into body by votes of existing memhers.
Ex-officio : by virtue of one's office.
Standing Committee :A committee which is established to deal with a particular ni;lttcr.
Statutory Committee :A committee which derives its authority from the staturc cnactcd.

21.8 SOME USEFUL BOOKS

Inamdar, N.R.. 1970.Functioning of Village Panchayats; Popular Prakashan : Bombay.

Jain, R.B. (ed.) I98 1. Panchayati Raj; Indian Institute of Public Administration
New Delhi.
Mishra. S.N., 1 977.Pattern of Emerging Leadership in Rural India; Associated Book
Agency : Patna.

21.9 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress 1
1) See Section 21.2
2) See Section 2I. 1
Check Your Progress 2
1) See Section 21.3
2) See Stction 21.3
Check Your Progress 3
1 ) See Section 21.4 (i)
2) See Section 21.4(iii)
Cheek Your Progress 4
1 ) See Section 21.5 (i)
2) See Section 21.5 (ii)
I
i
UNIT 22 PROBLEMS AND PROSPECTS OF
PANCHAYATI RAJ
Structure
22.0 Objectives'
i
22.1 Introduction
22.2 Problems faced by Panchayati Raj
22.3 Prospects of Panchayati Raj Institutions
22.4 Let Us Sum Up
22.5 Key Words
t 22.6 Some Useful Books
22.7 Answers to Check Your Progress Exercises

F 22.0 OBJECTIVES
After reading this unit, you will be able to :
discuss the various problems faced by the Panchayati Raj;
analyse the problems; and
discuss the prospects of Panchayati Raj and suggest condition for its success.

22.1 INTRODUCTION
The working of Panchayati Raj Institutions since 1959 has been viewed as a succes? in a
few states and a failure in most of the states. It means that the system has been experiencing
ups and downs. The history of Panchayati Raj Institutions since 1959 could biconveniently
divided into four phases : the phase of ascendancy (1959-64), the phase of stagnation
(1965-69), the phase of decline (1969-83) and the phase of revival (1983-onwards). The
overall attempts to revive the Panchayati Raj Institutions could be witnessed to the last
phase when the Ashok Mehta Committee Report (1978) has evoked interest among the
politicians and people alike in the year 1983.
Panchayati Raj is a state subject. Hence, each state is free to evolve its own system
depending on local conditions, administrative convenience etc. As a result, we have a
variety of Panchayati Raj Institutions throughout the country with all kinds of permutations
and combinations. Their success or failure mostly depends on their structures, powers,
functions, leadership, finances, control etc. A general review of the working of Panchayati
Raj Institutions would provide valuable insight into the different aspects of these
institutions. It may not be out of place to mention that in a country like India with its size
and diversity, certain unevenr~essin performance is inevitable. Changes in different aspects of
these bodies have been taking place as per the changing circumstances. But by and large, it
would indicate that the activities of Panchayati Raj Institutions were meagre, their resource
base weak, and overall attention given to them was halting. Thus, the functioning of these
bodies presents a discouraging picture.
However, it would be wrong to conclude from the existing situation that Panchayati Raj
Institutions have failed and their future is bleak. These institutions have certain
achievements to their credit. Let us try to idcntify the problem areas and find out the
remedial measures so that' the institutions at the grassroot level would be able to fulfil the
promises for which they have been created.

22.2 PROBLEMS FACED BY PANCHAYATI RAJ

There are a number of problems faced by the Pdnchayati Raj Institutions. We will discuss
the causes in the following :
i) Conceptual Confusion
It is said, that basically, there is lack of clarity regarding the concept of Panchayati Raj and
about the objectives for which the Institutions have been established. Over the years, the
Doeentrrllsation a d Development concept has undergone some changes. Let us analyse the problem in detail. In the first
instance, the concept of Panchayati Raj is very narrow as it was not viewed as an
institutional framework which could play an important role in the overall development of
-rural masses. The present concept does not envisage even a single unit of Panchayati Raj
Institutions as an instrument of planning as well as implementation agency ef different rural
development programmes. There is also lack of clarity about Panchayati Raj Institutions as
agencies that can manage routine administration, infrastructure and bring about socio-
economic welfare of the rural population. There are a multiplicity of agencies in the rural
scene charged with the responsibility of undertaking a plethora of developmental activities.

Secondly, there is no clarity about the relationship between Panchayati Raj Institutions and
the administrative organisation of the government. It is also clear that the administration has
a dual responsibility i.e., towards state departments and towards Panchayati Raj Institutions.
This has resulted in a lot of confusion and complications. Thirdly, there are a few who call
the Panchayati Raj Institutions the "tools of democratic seed drilling in the Indlan soil." In
the process, the Panchayati Raj Institutions are dominated by socially and economically
privilegedpections in rural India who continue to dominate the poor people. For instance,
people belonging to so-called higher castes, continue to dominate the people belonging to so.
called lower castes. And benefits do not reach the people who are in real need. As a result,
the Government has to intervene to provide the benefits to the poor through some other
means. But many a times, government officials pay attention to increase their own bank
balance only. Further, the state control of Panchayati Raj Institutions in the rural
developlnent activities is increasing continuously. There is thus widespread confusion about
the role of Panchayati Raj Institutions in rural development programmes.

Finally, there isno clear trend emerging in regard to the concept of power. There is a strong
feeling that decentralisation of power and authority exists at the district level and down the
lines. But at the same time, a number of central schemes and agencies, both in number and
size have been emerging, Independent of these bodies. It is paradoxical that all these
concepts co-exist side by side leading to increasing confusion and conflicts in-their working.
We are not able to make out what kind of decentralisation we intend to introduce, develop
and follow. This has led to a crisis of expectations all along the line.
ii) Structures
While establishing Panchayati Raj bodies, no uniform pattern is adopted for creating units
and identifying the units of planning and development. This may not be a cause for failure
but the structures that have been adopted by various state governments are just not capable
of performing the role that is expected of them. The distribution of functions and powers
a) among the Panchayati Raj Institutions, b) between the Panchayati Raj Institutions and
State government and c) between the Panchayati Raj Institutions and the Central
.Government have not been made on the basis of any sound principle. There is a great deal
of confusion, overlapping and some times duplication in the function. To some extent,
Maharashtra, Karnataka and Gujarat have made some effort to demarcate the functions
between Panchayati Raj Institutions and the state government. Rest of the states did not
make any serious attempt in this direction.
Further, the expertise available to the Panchayati Raj Institutions is very limited particularly
in the field of planning, implementation or monitoring of various developmental schemes.
Thus the pla~ilingprocess suffered to a large extent. In fact planning at the grassroot level
remains in paper while there is a strong tendency towards centralisation in the country. This
is not a healthy sign. We can cite a number of programmes and agencies initiated by the
state governments and the central government for rapid development. In these programmes,
the Panchayati Raj Institutions have very limited role to play.

iii) Financial Resources'

The most important problem faced by the Panchayati Raj Institutions is regarding finances.
It is needless to mention that the quality and variety of activities which the Panchayati Raj
Institutions are expected to perform will depend mostly on the resources at their command:
The resource base would depend on the local economy and partly upon the allocations
made by the state and central governments. As things stand today, the local economy is
very weak. It means, the Panchayati Raj Institutions have a very limited scope to impose
taxes in their jurisdiction. In India, there is centralisation of revenue resources which is a
bone of contention between the centre and the states. Similarly, the financial system in the
state is also of the same nature. The Panchayati Raj Institutions have to look towards the higher
authorities for necessary grant. There is thus a real danger of imbalahce between resources
 and responsibilities since in the name of decentralisation, more and more functions are Problems and Prospects of
Panchayati Raj
transferred to the Panchayati Raj Institutions. The centre or the states are not coming
forward with the same vigour to transferring resources proportionately. Thus most of these
bodies have to function in an atmosphere of lack of resources.
The states have an agency through which they get their statutory share in tax revenues
which they get as a matter of right. The Panchayati Raj Institutions, on the other hand, do
not get any share from the state shares. Whatever amounts they receive from the state are
largely discretionary in nature. It is in this context that the demand for some statutory
arrangements should be viewed to strenghten the resource base of these bodies.
iv) Socio-Economic and Political Conditions
The existing socio-economic structure of the Indian society is a major factor which is
responsible for the limited success of Panchayati Raj Institutions. It is proved beyond doubt
that the elected members at all the levels of Panchayati Raj Institutions-and the Office
bearers are normally from the rich and dominant sections of the rural society. They have
vested interests in preserving the existing system and would not do anything that would
strengthen the position of the downtrodden in their areas. In fact, it is said that the
leadership of the Panchayati Raj Institutions acts as a "gate-keeper" to prevent the flow of
benefits to the weaker sections of the rural community.

Although, reservation of seats at the different levels have been made in some states but the
reservation concept has not been effectively adopted. For example, in our earlier lesson on
patterns of Panchayati Raj, we have seen that in Karnataka, there is no provision of
reservation to the key elective posts such as Chairperson, Vice-Chairperson or Adhyaksha
and Upadhyaksha etc. It means, there is no possibility of mass participation of the poor in
the developmental process in our hierarchically stratified society where the weaker sections
are almost completely unorganised. The concept of participation of people in the process of
democratic decentralisation is highly difficult under such conditions. It is necessary to point
out that there may be stray instances of poor and downtrodden taking part in the
developmental activities. Thanks to reservation of certain elective posts in states like
Andhra Pradesh. But they are so very few. And so much has to be achieved in that
direction.
V ) Position of Civil Service
An efficient, adequate, responsive and committed administration is the essential condition of
success of Panchayati Raj. The functions of these bodies are too many and too complex.
There is a need for technical personnel, proper orientation and above all commitment in the
civil service. The aspirations of the citizens in the rural areas are getting stirred. There is a
demand for improvement in the services. We find a different and a difficult situation as far
as civil services in India is concerned. The bureaucracy is getting alienated and has begun to
by-pass these institutions. Several programmes have been introduced without involving
Panchayati Raj Institutions in them. These programmes have become close preserves of
bureaucracy, under-mining and frustrating the Panchayati Raj Institutions as units of
representative bodies and local self-government.

We have pointed out earlier that,the head of the district council is an officer from the All
India Service i.e., IAS, who is assisted by other officers belonging to the states cadre. A
number of studies have pointed out the strained relationship between the bureaucracy and
the elected members of the Panchayati Raj 'institutions. It is seen that there is mutual
suspicion instead of mutual faith. The bureaucracy feels that the grassroot political
executives try to strengthen their vested intkrests by flouting rules and regulations, while the
members of the Panchayati Raj Institutions dislike the superior status of the civil servants. It
is also pointed out that the officials are always loyal to their respective state departments
and do not cooperate with elected members. There is some truth in both these arguments.
I In the first instance, the ambiguity about the place of administration makes the officials and
staff f ~ e that
l they are primarily responsible (for results) to the state government and not to
the local elected members. Secondly, the plans and programmes implemented by the
administration come from above, state or central, or by the civil servants at the district level.

1 The intervention of Panchayati Raj Institutions is not taken very kindly by the civil servants.
This has led to dualism of civil service and lack of clear demarcation of the mles of civil
servants has led to confusion and misunderstanding.
1
In this context it is necessary to point out that in Maharashtra and Karnataka,, attempts are
being made to demarcate the responsibilities of the administration between the state and the
l k = m ~ r i o a.nd Develop-r Panchayati Raj Institutions. However, the hold of the state on the civil service is still intact
sice all the important positions are held by bureaucrats, belonging to All India Services of
the state service.

vi) Lack of Political Support from 'the Top

The elite and the so-called higher levels generally do not provide political support to
strengthen the democratic process at the grassroot levels. The Members of Parliament, State
Legislatures always felt that the Panchayati Raj leadership would emerge as a threat to their
position intheir respective constituencies. The man on the spot with some power, however
limited it might be, is always treatid as a rival power centre. Therefore, every effort is made
by the state and central leadership to weaken the powers and functions of the grassroot
functionaries. And they always exhibit a negative attitude. The best example is the way in
which the 64th Constitutional Amendment Bill on Panchayati Raj was introduced and
defeated and finally shelved for the reasons extraneous to the development of local self-
government institutions in the country. The 64th Constitutional Amendment Bill on
Panchayati Raj is discussed in Section 22.3 (vi).
Thus, the potential of Panchayati Raj lnstitutions as centres pf peoples' power aroused
doubts among a few and jealousy among many. Elected representatives in the Parliament
and State Legislatures saw with dismay their inevitable dependence on the Panchayati Raj
functionaries with whom they are not willing to share power.
vii) State Control and Supervision
Since the Panchayati Raj Institutions fall under the state subject and are created by the .
slate, there exists a superior-inferior relationship between the state and the Panchayati Raj
Institutions. The state governments always tend to exhibit a high degree of paternalism.
There is on the one hand a commitment for decentralisation of power and,hon tpe other, its
suspicion and fear that such power would be misused by the local bodies. As a result, a
number of checks have been envisaged by the states in the statutes themselves.
The control exercised by the state over Panchayati Raj Institutions is of a comprehensive
character. There is practically no subject relating to the Panchayati Raj Institutions, over
which the state cannot exercise powers of control. With the result, in several states the -,
rulers at the state level discovered a number of problems, real or imaginary, like structural
weaknesses, organisational short-comings, functional deficiencies, inept performances, lack
of adequate resources etc. As an ad hoc measure, the Panchayati Raj Institutions have been
either suspended or superseded and quite often elections were deferred aher the expiry of :i
the term. On a number of occasions, an inconvenient office bearer is either suspended or .
dismissed by the state government under some pretext or the other. Thus, several
short-comings have been highlighted and listed out by the states. It has become a regular
feature in all the slates and it needs corrective measures.
viii) Absence of Statutory Provision
The success or failure of an institution depends mostly on the status, on the basis of which
an organisation is established. According to Article 40 of the Constitution, "The state shall
take steps to organise village panchayats..." Since it is included in.the Directive Principles of
State Policy, (Chapter-IV) it is not mandatory. It means that the states may or may not
constitute the Panchayati Raj Institutions. Similarly, in a number of states, elections have
not been held regularly. The superseded bodies have not been revived and they were kept
underathecharge of special officers drawn from the civil service. Thus, the Panchayati Raj
Institutions have been undermined with several constraints, particularly, the constitutional
constraint which is a very serious matter.

Check Your Progress 1

Note : i) Use the space given below for your answers.
ii) Check your answers with thost given at the end of the unit.
I),Why do the Panchayati Raj Institutions face problems regarding finances?
2). How does the socioeconomic structures of India hamper the growth of Panchayati Raj
Institutions?

3) What type of relationship exists between the state government and the Panchayati Raj
Institutions?
........................................................................................
.......................................................................................
.......................................................................................
.......................................................................................

22.3 PROSPECTS OF PANCHAYATI RAJ

INSTITUTIONS
It would, in fact, be wrong to conclude from the above discussion that the Panchayati Raj
Institutions have failed completely and that they have no future. Such a pessimistic view is
not shared by many. As stated repeatedly, there is no substitute fordemocratic
decentralisation in a developing country such as India. Panchayati Raj has come to stay as a '

part of democratisation of Indian polity in the wake of independence. The fact of the matter
is that the Panchayati Raj Institutions have not been given a chance to serve as a vanguard
of development in thk rural areas of India. With necessary correctives, the basic objectives
could be achieved without much of a difficulty. Let us try to list out some of the
preconditions which appear to be necessary for the success of Panchayati Raj Institutions.
i) Conceptual Clarity
The first and foremost important aspect that needs immediate attention is that of evolving a
comprehensive concept of Panchayati Raj. Its goal, role etC., have to be clearly defined and
there should not be any ambiguity, so that the people would have a clear perception of
Panchayati Raj Institutions. The following important roles may be taken a serious note of,
for this purpose. Firstly, the Panchayati Raj Institutions should be treated as the basic units
of self-government. It implies that there is a need for decentralisation of administrative and
political power. This would encourage self-governance and mass participation in its
working. Secondly, the Panchayati Raj Institutions have to contribute towards
strengthening of the planning process at the micro-level as well as overall development.
Finally, the Panchayati Raj Institutions have to improve the condition so that the down
trodden can reach the highest level of decision-making bodies.
ii) Protection of the Poor
In addition to conceptual clarity, it is necessary to strengthen the condition of the poor to
protect them from the rural rich and their dominance. It is clear that the existing power
structure in the rural areas is mostly in favour of rich who would exploit the poor. After all,
the efforts made by all in the rural areas were directed mainly to improve the conditions of
the weaker sections. If the benefits of the Panchayati Raj Institutions have to reach the pooc
and if the poor are to be associated with the Panchayati Raj Institutions, it is necessary to
strengthen their position by adopting certain measures. It is necessary to identify the areas of
dependence of the poor and find measures to stop exploitation. Streamlining the public
distribution system, social security measures, employment guarantee schemes, organisation
of the ruralpoor are some of the measures which wuld be mentioned in this context. In
addition, redistribution of assets in favour of the poor by implementing land reform laws ,
and creation of assets to the poor could be another set of measures which would go a long
wav in meventinn dependency of the poor on the rural rich.
k m t d h t i o n and Developnrmt iii) Awareness among Panchayati Raj Functionaries
It it generally realised that the Panchayati Raj.functionaries do not have sufficient
knopledge about their new role. They are ignorant of several aspects of Panchayati Raj
systeh. It is, therefore, necessary to provide an opportunity to them to know about the
Panchayati Raj Acts, the objectives and role of Panchayati Raj Institutions, the rural
situation, possible areas of growth and minimum skills of planning.for overall development
of their respectiveareas. It is necessary to train them so that they could perform their
functions effectively. This would also help them to minimise the citizen's apathy towards
the Pan~hayatiRaj activities.

iv) Financial Support

There is a need for sound financial base for the Panchayati Haj Institutions. The
establishment of a Panchayati Raj Finance Corporation could be the first step. This would
enable the Panchayati Raj Institutions to establish remunerati ve enterprises. Enlarged tax
jurisdiction, sharing of revenue from selected state taxes and grants are the other possible
alternatives to achieve the long-term objective.

However, there is a growing demand for an institutional arrangement through which the
distribution of the finances among the Panchayati Raj Institutions have to be made without
further delay. A rational redistribution is necessary. It is in this context that we have to
draw lessons from Karnataka model. As per the 1985 Act, the State Governments in
Karnataka has to organise a State Finance Commission to workout the distribution of
finances between the state and the Panchayati Raj Institutions. This step would go a long
way in solving the financial problems of the Panchayati Raj Institutions.
It does not, however, mean that the Panchayati Raj lnstitutions need not bother about their
own resource base. The thesis that "no taxation, only representation"'is not a wise policy.
The Panchayati Raj Institutions have to make serious attempts to tap the local resources.
' v) Integrated Administrative Structures
There is a need for remodelling the administrative organisation of Panchayati Raj
Institutions. It is necessary that all the officials whose functions have been shifted to
Panchayati Raj Institutions have to be placed under the respective institutions. It calls for a
separate service called Panchayati Raj service. It is also necessary to see to it that the
bureaucracy is committed to Panchayati Raj. In fact the Panchayati Raj Institutions should
be provided with necessary administrative help which has a primary loyalty towards them.
The dual responsibility of the present day system should end. The concept of specialisation
should be introduced so that the technical needs of the Panchayati Raj lnstitutions could be
met without any problem.
It will not be out of place to mention that appropriate measures should be taken to protect
the civil servants from undesirable political pulls and pressures. The power to transfer,
promote, etc., are the vulnerable areas in the rural scene. Therefore, adequate safeguards
have to be provided in this direction.

An integrated administrative structure, thus, becomes very essential. The Karnataka.

Maharashtra and to some extent Gujarat have made provision for such an arrangement.
Almost all the committees which studied the problem have unanimously recommended that
an administrative structure for planning and development and the same should be integrated
with the Institutions of local self-government.

vi) Provision for Constitutional Status

Finally, let us look at the attempts made in recent times to provide Constitutional status to
the Panchayati Raj Institutions. It is observed that the states are not'very keen to organise
Panchayati Raj Institutions as they are not prepared to share power with so-called lower
local bodies. In fact, some critics pointed out that some state governments have grabbed the
power back from the Panchayati Raj Institutions gradually. Several committees and
commissions, appointed by the state governments from time to time highlighted the
deficiencies in the functioning of Panchayati Raj Institutions. It is also felt that the
Panchayati Raj Institutions in the coming years should be well-quipped to manage
democratic development under the changing conditions in all spheres of rural life. Realising
the need to restructure and revitalise these bodies, the Government of India came forward
with a proposal to amend the Constitution.
I
-
I a ~lf-stateswill have three tier Panchayati Raj system; ProMcrns and Prospects of
Panchayati Raj
I b) Elections will be held regularly, every five years, under the control and supervision of the
I
C h i e f M e ~ i o nCommissioner. Elections to the dissolved or superseded bodies will have
to be held within six months.
c) All the seats will be filled through direct election and office bearers will be members
directly elected.
d) Reservation of seats to the extent of 30 per cent to women and seats for scheduled castes
I
I and scheduled tribes in proportion to their population will be made.
e) The State governments will provide adequate finances. State Finance Commissions will
I review the finances of the Panchayati Raj bodies every five years.
f) Panchayati Raj bodies will prepare plans for economic developmellt, social justice and
social welfare of their population as per the guidelines. These plans will be incorporated
I
later on in the state plans.
g) Strict accounting procedures would be laid down to control corruption and misuse of
funds by the Panchayati Raj Institutions. Comptroller and Auditor General will
I
supervise the accounts.

The Bill generated a lot of heat and light. There were arguments in its favour and counter
arguments against it. However, after getting the approval in the Lok Sabha, the bill failed to
become an act as it failed to get the required support in the Rajya Sabha. *
Nevertheless, the amendment is a welcome measure since there are several provisions which
are desirable and contain positive pints. However, critics have identified a few hidden
provisions which would ultimately result in more centralisation rather than promote.
decentralisation. Let us examine them briefly.
It seems the proposzd amendment would increase the powers of the centre at the cost of
state governments. First of all, the amendment proposed to take away the Panchayati Raj
out of the state list and put it in the concurrent list so as to allow the centre to pass
legislation in this area. Secondly, holding election under the supervision and guidance of the
Chief Election Commissioner would give more powers to the Central Government. Giving
funds for centrally sponsored schemes directly to the Panchayati Raj Institutions is another
aspect which would not only ignore the states but also provide a link between the centre
and the Panchayati Raj Institutions. Finally, the governor will be the authority to exercise
the power to dissolve. supersede or suspend Panchayati Raj Institutions. This will also
increase central control over local bodies.
It is seen that the 4mendment goes much more beyond the required level of central
intervention. The amendment touches upon a few aspects of the preconditions necessary for
the success of Panchayati Raj Institutions. However, in the bargain the centre tried to
I I reduce the power of the states and enhance the powers of the centre. It 1s not a healthy sig?.
I It not only strengthens the present trend of over-centralisation of power but also endangers
the federal character of the nation. Finally, there is no guarantee that centralisation leads
I towards more decentralisation at the grassroots level.
I Nevertheless the need for appropriate steps to strengthen the Panchayati Raj Institutions has
been well appreciated by one and all. It needs to be seen as to how the centre and states
would take up the matter in future and revitalise the Panchayati Raj Institutions as real
centres of decentralised democratic institutions.

Check Your Progress 2

Note : i) Use the space given below for your answers.
ii) Check your answers with those given at the end of the unit.
1 ) What measures are lo be taken to protect the poor?

2) What steps are to be taken to create awareness among the Panchayati Raj functionaries
about their new role?
Pcantnbtion and Development ..........................................................................................
...........................................................................................

3) How can the financjal problem of the Panchayati Raj Institutions be resolved?

22.4 LET US SUM UP

We have discussed various problems faced by the Panchayati Raj Institutions. The basic
purpose of Panchayati Raj Institutions has not yet been achieved. The problem would not
end by making the Panchayati Raj Institution economically self-sufficient and structurally
sound. The most important aspect is change at the attitudinal pattern. Otherwise,
decentralisation would remain only in paper. And in actual practice, there would be
concentration of power in the hands of those people who have money and who want to use
.the institution for making more money. It would take many more decades to reach a stage
when people are at least aware of their own rights. And when they would not let others to
exploit them. There would be a healthy atmosphere where each would grow but not at the
cost of others. Panchayati Raj Institutions have come to stay in India but to achieve success,
we have a long way to go.

22.5 KEY WORDS

Alienated : Here, it is used in the sense of being uninvolved.
Hierarchically stratified society : Society classified into various gradations on the basis of
caste, economic power.
Mandatory :Compulsory.

22.6 SOME USEFUL BOOKS

I

Abraham M. Francis, 1974. ~ ~ n a m iofc sLeadership in Village India; India International

Publications : Allahabad.
Cheema, Shabir, G & Rondinelli A. Dennis (ed.), 1983. Decentralisation and Developmenr;
Sage Publications : New Delhi.
Chaudhuri Ranji, 1972. Problem of Village Leadership; Institute of Political & Social
Studies : Calcutta.
Reddy, Ram G. (ed.), 1977. Patterns of Panchayari Raj in India; Macmillan : Delhi.
Samiuddin, Abida, 1976. A Critique of Panchayati Raj (with special reference to Uttar
Pradesh); Sahitya Bhavan : Agra.

22.7 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress 1 Check Your Progress 2
1 ) See Section 22.2 (iii) 1) See Section 22.3 (ii)
31 Can Cor-t;nn 33 3 /;v\ ?\ Can Cnnt;nn 3 3 2 [ ; ; A
 UNIT 23 ROLE OF VOLUNTARY AGENCIES

23.0 Objectives
23.1 Introduction
23.2 The Concept
23.3 Evolution
23.4 Methods of Voluntary Action
23.5 Role of Voluntary Agencies
23.6 State and Voluntary Agencies
I 23.7 Identification of Voluntary Agencies
23.8 Identification of Programmes
23.9 Profile of Voluntary Agencies
23.10 Let Us Sum Up
23.1 1 Key Words
23.12 Some Useful Books
23.13 (Answersto Check Your Progress Exercises

23.0 OBJECTIVES

i ~ f t e reading
r this unit, you will be able to :
a

discuss the meaning and evolution of voluntary agencies;

explain their role and methods, and
identify voluntary agencies and their programmes.

23.1 INTRODUCTION
I
Voluntary agencies have been playing an important and significant role in the rural areas of
India. The voluntary action covers a wide range of activities such as charity, welfare, relief
' and rehabilitation, provision of services, socio-economic development of rural poor, human
, resource development etc.

Rural societies, such as in India, need a steady and continuous help and support from
differentsources in order to transform the rural communities from a state of abject poverty
I to a reasonable level of development. Panchayati Raj Institution is an institutional
: expression of participation through formal involvement of people in.the developmental
1 process. There would be many who would be outside this formal structures and yet would

/ participate in or activate a developmental project. Thus the efforts of the formal agencies
and voluntary organisations, which are outside the formal structure, should be judiciously
merged so that the ultimate goal of rapid rural development would become a reality. The
1 intensity, motivation, and direction of the efforts of the voluntary agencies, however, need
further analysis. We have already explained the role of Panchayati Raj Institutions in
I transforming the rural areas. In this lesson, the concept of voluntary organisations, the
motivation, methods adopted, the role, relations with government etc. will be discussed. .

23.2 THE' CONCEPT

The term "voluntarism" is derived from the Latin word 'Voluntas' which means will. The
will assumes various forms of impulses, passions, appetites or desires. It is the will that may
produce some of the social evils, of which the unfortunate sections of the society are the
victims. That has to be eradicated.
Inequality among individuals is a perennial source of motivation for voluntary action in
every society. Social services are initiated to help eradicate the inequality and to uplift the
under privileged. The term volunteer is normally used to denote some one who offers
~ r n n n ; Ac a r . r i ~in
~ 9 OMA FVP~
P D ~ ~ C P x rV
n l n n n t n r ~~ f F n r ti c t h o n r d n n ~ nf
t tho h l d c k ~ n 9t n A
Dean-Okn .,,,,
Dev-t
of focus in all types of such associations. Philanthropy appears to be an essential motivating
factor in the voluntary action. When a sense of social responsibility is being inculcated in
the individuals, they take up various steps to improve the condition of the people all
around. Life and Writings of persons like Marx and Gandhi have always been the
motivating factors.

The.term voluntary association is variously defined. Michael Banton defined it as a group

organised for the pursuit of one interest or of several interests in common. David L. Sills
identified it as a group of persons, organised on the basis of voluntary membership without
state control, for the furtherance of some common interest of its members. Lord Bevridge
has defined a voluntary organisation as "one which, whether its workers are paid or unpaid,
is initiated and governed by its own members without external control."*

There are four essential elements in any voluntary association: a) method of formation,
which is voluntary on the part of a group of people, b) method of government, with self-
governing organisation to decide on its constitution, its servicing, its policy and its clients,
c) method of financing, with at least some of its revenues drawn from voluntary sources and
d) motives of profitexcluded. Organisations having all the four elements are rare and
perhaps are only the ideal forms.
It is necessary to point out that voluntary organisations and non-official organisations are
not one and the same. There are several differences between the two Voluntary agencies
are spontanecus in their origin and sometimes oriented towards a specific situation. This is
their strength. They bring in high motivation, better management skills, and greater
sensitivity to field problems. On the other hand, the non-official agencies may be state
sponsored and last as long they receive suppbrt, finances etc., from the state. This is initiated
by the state. Therefore, all non-official organisations need not necessarily be included in the
category of voluntary organisations. But in both these organisations, there is a scope for
involvement of enlightened individuals who are involved to serve the cause.

Further, voluntary agencies are supposed to be potentially superior to official agencies in the
following respects;
i) their workers can be more'sincerely devoted to the task of reducing the suffering of the
poor than government staff;
ii) they can have a better rapport with the rural poor;
iii) since they are not bound by rigid bureaucratic rules and procedures, they can operate
with greater flexibility;
iv) their efforts are more economical; and
v) they can motivate more public participation in developmental efforts than the
government departments.

23.3 EVOLUTION

The evolution of voluntary organisations in India could be traced to the last decades of 19th
century whcn a deliberate, systematic and an organised atfempt was made in the field of
rural transformation. Initially, it was the religious missionaries who took the lead to spread
their religious preachings in the inaccessible parts of the country. However, a series of
experiments in the field of rural development were initiated only during the earljl decades of
the present century : the prominent among them being Sriniketan by the poet Rabindranath
Tagore. Rabindranath Tagore had get up SRINIKETAN, an extension of his university
Shantiniketan. SRINIKETAN was specially meant for the purpose of rural reconstruction.
where rural women were trained in the craft of making quilts. The father of the nation,
Mahatma Gandhi, initiated the process of transformation of socio-economic life at
Sevagram around 1931. Thus, several voluntary organisations, small and large, have
contributed significantly to the principles of rural development through voluntary action
prior to independence. The Constitution of voluntary agencies has been well appreciated by
policy makers and administrators after Independence. The plan documents made a reference
to the positive aspects of the functioning of these organisations. According to the First Five
Year Plan "A major responsibility for organising activities in different fields of social
welfare like the welfare of women and children, social education, community organisation
 working in their own humble way and without adequate aid for the achievement of their
objectives with their own leadership, organisation and resources." Since, then, the successive
Five Year Plans have noted the roie of the voluntary agencies. In fact, there has been an
increase in grant-in-aid from a mere Rs. 4 crores during the First Plan to Rs. 150 crores
during the Seventh Plan. The Seventh Plan envisaged a crucial role for the voluntary
agency, as an alternative monitoring machinery of the bureaucracy in reaching the poor as
early as possible. Thus, the plan documents recognised a much wider role of the Non-
governmental organisations (NGOs), particularly pbverty amelioration 20 point
programme which is the major thrust of the Government of India.

23.4 METHODS OF VOLUNTARY ACTION

Voluntary organisations in India have adopted diversified methods for development. The
method largely depends on the mode of approach and also on the aim of the organisation. It
-includes community organisations, social action, extension education, training. In fact, in all
these activities, some of the voluntary agencies have adopted appropriate latest techniques
of preparing projects of their programmes with definite goals, based on the needs of the
target group. Some of them even serve as consultancy bodies.
Community organisation is one of the methods of working with the people and is based on
the principle of scientific social work. It concentrates on development of certain aspects,
such as development of local leadership from among the community, development of
institutions in the rural areas, capable of handling their affairs, and development of internal
resources. In this way, through social action, people are not merely made aware of the
problem but are enabled to organise themselves for collective action to change the situation.
A few voluntary agencies have taken up the responsibility of educating the rural poor so
that they would refuse to accept a system that perpetuates injustice and would struggle
together for the establishment of a just society.
In recent times, a new set of voluntary agencies have come into existence the main objective
of which has been to organise the peasants and workers. Some of these organisations have
taken an aggressive confrontational stand, seeking to bring about radical changes in social
relations of production. Some of the voluntary organisations have been adopting the
technique of conscientisation, as part of the non-formal education process in working with
the rural poor. The concept of conscientisation is advocated by Paulo Freire. It is a human
and non-manipulative process of consciousness-raising education that will enable the poor
to become aware of their socio-economic and political environment. This would help the
poor to become aware of causes of their exploitation and poverty. It will also provide them
an opportunity to know their strength and weaknesses of their own inherited culture and
traditions and of their own capacity and inherent power to change this environment and
their position in it.
There are other methods like extension approach in which results of science and technology
are disseminated to the rural population for its appropriate application. The method is
identified mostly with agriculture. In recent years, it has been adopted in other areas like
health, sanitation, nutrition, rural industries etc. Some voluntary bodies have utilised
education as a method of improving the capacity of rural people for self-reliance and
developing their motivations, opportunities and capacities to learn.
Training, as an essential input in rural development, has been made use of by some
voluntary organisations. It is adouted mainly to develop the technical skills, and knowledge
of the client groups for self-employment.Some voluntary agencies have technical
infrastructurefacilities toprovide necessary scientific training particularly in the field of self-
employment schemes. The analysis is not exhaustive since there are a variety of methods
adopted by different groups depending on their aims and objectives. What we have
explained so far relates to certain socio-economic activities of tlie voluntary agencies in the
context of rural development.
In the light of the above description, it is possible to classify the work of the voluntary
agencies in the following broad categories :
i) "The Techno-Managerial Agencies" the main concern of which is rural development
and Dcvelopmen' ii) "Reformist Voluntary Agencies" which try to bring about changes in the social and
economic relationship within the existing political framework
iii) "The Radical Voluntary Agencies" which seek to challenge the existing production
relations. Their attempt is to.organise the exploited against the exploiters.

Check Your Progress 1

Note : i) Use the space given below for your answers.
ii) 'Check your answers with those given at the end of the unit.
1) Write a short note on the evolution of voluntary agencies in India.

........................................................................
2) What are the various methods of voluntary action?

23.5 ROLE OF VOLUNTARY AGENCIES

. '
There is no doubt that voluntary agencies have been playing a pioneering role in rural
development activities. They have also exhibited the qualities of flexibility of service,
personal touch and proximity to the clientele. In addition, they have demonstrated the
capacity to initiate and experiment with new programmes and showed sensitivity to meet
difficult problems in ways that cannot be adopted by the state. However, it is necessary to
envisage the following role for these bodies in the context of village base organisations.
a) The voluntary agencies have to supplement and not to compete with government efforts.
The government should not consider their activities as duplication.
b) They act as eyes and ears of the people at the rural level and act as a source of reliable
feedback to government so that it can design the policies and programmes accordingly.
c) It is possible for the voluntary agencies to reach a large number of people and set an
example for others.
d) Voluntary bodies, quite often, take initiative in the implementation of certain acts such as
Minimum Wages Act, Abolition of Bonded Labour Act etc., in letter and in spirit.
Through public interest litigation and administrative measures, these bodies could
activise the system and make it respond.
e) Dissemination of information is another potential area in which the voluntary agencies
is of immense use. It is quite often seen that information regarding various schemes,
programmes projects etc., do not reach the rural poor. Information is power and the role
of the voluntary body is to distribute such power and make it accessible to the rural
poor.
f) Voluntary sector has been in the forefront in utilising rural skills and talent. Further, it is
possible to minimis? the dependency syndrome through various methods and a sense of
self-reliance has to be instilled among the villagers.

23.6 STATES AND VOLUNTARY AGENCIES

The relationship between the state and voluntary agencies is an essential aspect which . .
Annnr.rmc n a a r nttentinn fnr n Aet&leA a n a l ~ c i crlhp tack nf rllrsll 11nliftrnm-d ic cn oioslntir thgt
 Role of Vduntary A g e d
it has generally been accepted that government alone cannot tackle the problem of poverty,
unemployment and provisions of basic minimum needs to people living below poverty line.
The strategies adopted by the voluntary agencies necessarily have to be different from those
followed by the government. The goals of both are identical but the approaches are
different. Thus, we find a basic difference in the approaches and models. The development
of infrastructure is a pre-requisite as per government is concerned. It is secondary to the
voluntary agencies. Voluntary agencies believe in the development of human beings, make
them aware of their rights and duties, of schemes and programmes, of rules and regulations.
In any case, the mode of relationship between the voluntary agencies and government may
be categorised under the following heads :
1) there is considerable scope to associate voluntary agencies with the formulation of
development plans and entrusting them with the implementation of some of the
developmental programmes;
I
2) providing administrative support and encouragement to voluntary agencies in the
implementation of their programmes;
3) regulation of flow of funds from the international, national and state level agencies and
their proper accountability is another factor of considerable importance.

Check Your Progress 2

Note : i) Use the space given below for your answers.
I
ii) Check your answers with those given at the end of the unit.
I

I 1) Cite two instances where voluntary agencies can play an effective role in the context of
rural development.
........................................................................
I

.........................................................................
.........................................................................
.. ,

.........................................................................
........................................................................
2) What is the relationship between voluntary agencies and the state?
I

23.7 IDENTIFICATION OF VOLUNTARY AGENCIES

It is very difficult to gather data of voluntary agencies. Their number, location, nature of
activities and functioning, strategies adopted are difficult to locate. In addition, a few other
factors such as their limitedBpan, inadequate communications and sometimes
un-ostentatious disposition of some organisations could be cited as impediments in the
collection of data. More than the above mentioned difficulty the apathy of the government,
both central and the states, till Sixth Plan period have also come in the way of maintaining
sufficient information base of the voluntary organisations.,However, during the Sixth Five
Year Plan period, the government of India made serious attempts for the first time to draw
up a set of terms of reference on how to identify rural voluntary agencies. It is estimated
that at present there are more than 10,000 voluntary agencies, engaged in various welfare
and developmental work compared to 1,739 in 1953, showing a phenomenal five-fold
increase in the number.
In view of their increased participation in the rural development programmes, the Seventh
Five Yeas Plan has feconnised the imwrtant role daved bv the voluntarv agencies and
h n t r a l i m t i o n a n d Development However, the plan document laid down the following criteria for identifying voluntary
agencies for enlisting their help.
1 ) The organisation should have a legal entity.
2) It should be based in a rural area, and should be working there for a minimum period of
three years.
3) It should have broad based objectives serving the social and economic needs of the
community as a whole, and mainly the weaker sections. It must not work for profits but
on a no-profit-no-less basis;
4) Its activities should be open to all citizens of India irrespective of religion caste, creed,
gender or race.
5) It should have the necessary flexibility, professional competence and organisational skills
to implement programmes;
6) Its office bearers should not be members of any political party;
7) It must declare that it will adopt constitutional and non-violent means for rural
development process;
8) It must be committed to secular and democratic concepts and methods of functioning.
The above mentioned criteria has been prescribed since some of the voluntary bodies have
not been able to divorce it from party considerations, profit motive, for office of power and
other sectarian considerations. Where the voluntary agencies have not been able to keep
their identity, the spirit of volunteerism suffered.

23.8 IDENTIFICATION OF PROGRAMMES

The Seventh Plan document provided a separate section on involvement of voluntary

agencies and included it in the chapter on Rural Development. It was done deliberately for
the first time because the government wanted to shift the focus of the traditional image of
these bodies to the non-traditional, professional managerial and technological image of rural
development where voluntary agencies also have a substantial contribution to make.
Identification of programmes becomes essential since a substantial amount has been
earmarked to be allotted to these bodies. This way, the government recognised the need to
mobilise small village groups. The programmes, in which these voluntary village groups
were involved in the Seventh Five Year Plan period, were :
1) Integrated Rural Development/Rural Landless Employment Guarantee Programmks:
2) Implementation of land ceilings and distribution of surplus land;
3) Enforcement of minimum wages to agricultural labourers:
4) Identification and rehabilitation of bonded labourers;
5) Supply of safe drinking water; repair and maintenance of water supply system with
community support;
6) Afforestation, social forestry, development of bio-gas and alternative energy sources
(Solar, Wind, Energy, Smokeless Chulas, etc.);
7) Promotion of family planning;
8) Primary health care; control of leprosy, T.B., Blindness; and preventive health
programme using village resources;
9) Programmes for women and children in rural area;
10) Innovative methods and low cost alternatives in elementary primary and middle school
education for children, adult education and non-formal and informal education;
11) Consumer protection, promotion of cooperatives;
12) Promotion of handicrafts and village and cottage industries;
13) Promotion of science and technology;
14) Leeal education;
 Role of Voluntary Agencies
15) Rural Housing-improvement of rural slums;
16) Environmental ecological improvement; and
17) Promotion and encouragement of traditional media for dissemination of information.
The Seventh Plan document also envisaged that there is a need for voluntary agencies to
decide on a code of conduct to be applicable to those agencies seeking government funds.
The plan document, thus, for the first time made a serious attempt to regulate the role,
areas, financial assistance to thke agencies.

23.9 PROFILE OF VOLUNTARY AGENCIES

As functions of the state increase; voluntary agencies also come up in large numbers
according to the exigencies of the situation. The number of people living in poverty has
increased and landlessness has become more widespread, while popular participation in the
process of development remains minimal. It is hoped that voluntary agencies would be able
to phieve certain objectives like greater social equity, eradicating various kinds of
exploitation. It is rather difficult to prepare an exhaustive profile of voluntary agencies in
India. Their number being around 10,000 the problem becomes enormoug. Yet a brief
description of a few would not be out of place by way of illustration.
Voluntary agencies, with or without government support, such as Bharat Krishak Samaj,
Young Farmer's Association of India, Action for Food Production, Appropriate
Technology Development Association, Social Work and Research Centre etc., have been
mostly engaged in the area of agriculture and allied fields. The Arya Samaj, Rama Krishna
Mission, Sai Service Society, the Servants of India Society have been undertaking several
educational and social service activities. Baba Amte, Manibhai Desai, Sunder La1 Bahuguna
fall under the category of idealistic organisations whose main objective is to protect the
environment from the reckless deforestation and denudation. There are many women's
organisations all over India which are creating awareness among peoplk regarding various
oppressions which are being faced by women. For instance, inequal treatment of women,
dowry, dowry deaths. These evils are being paid attention due to the effort of these
women's organisations. They not only create awareness but also attempt to get the culprits
punished. Several Christian Missions, Andhra Mahila Sabha, concentrate their activities in
educational and medical work. Voluntary agencies such as Pandu Mevas Development
Agency, Society for Education Welfare and Action Rural, Bharat Sevak Samaj, Association
1
of Voluntary agencies for Rural Development, Gandhi Peace Foundation, Bhagavatula
Charitable Trust mainly concentrate on integrated rural development programmes. There
are a few agencies specially focusing on Tribal and Harijan Welfare. They are Harijan
Sevak Sangh, the Comprehensive Rural Operations Service Societies (CROSS), Bharatiya
Adimajati Seva Sangh, Banavasi Seva Mandal etc.
It is pointed out by many that the real awakening for the present large-scale voluntary
action has come from the world wide relief efforts which have been initiated in India in
1965-66. There are, today, many voluntary organisations at the international level working
for the rural cause. The prominent among them are OXFAM, Christian Aid, Catholic
Relief Services, War on Want, Save the Children Fund, Bread for the World etc. The
foreign donations have come to occupy an important place in the working of volllntary
agencies. It is pointed out that in 1986 about Rs. 350 crores have been received from
foreign donors. The four southern states, Tamil Nadu, Kerala, Andhra Pradesh and
Karnataka, receive the largest amount as there are a large number of Christian Missions
doing charitable work in these states.

Check Your Progress 3

Note : i) Use the space given below for your answers.
I
ii) Check your answers with those given at the end of the unit.
t
1) What are the various criteria, laid down by the Seventh Five Year Plan, for identifying
voluntary agencies?
t k a m h k a t k n a d Development

2) Write a short note on the type of work the voluntary agencies do in the task of rural
development.

23.10 LET US SUM UP

In this lesson, various issues have been analysed. A number of issues and problems indicate
the wide ranging scope of the subject. Voluntary action is looked upon by many as an
instrument of mass mobilisation or involvement of large number of people and, thus, help
to reduce the chasm between the 'governed' and the 'governors'. Voluntary action in
patnership with the government is an important issue. The presence of healthy atmosphere
and goodwill between government and voluntary agencies is a basic prerequisite to
strengthen good relations between the two. At present, there appears to be mutual suspicion
and lack of trust in each other. On several occasions, voluntary agencies have been valued
so long as they function within the existing "order" and follow directives of government.
Any agency that questions the existing order is normally treated as a subject of law and
order problem, demanding repressive action. A proper measuring norm has to be developed
to assess the working of voluntary organisations in this country.
Apart from this, distribution of funds remain a controversial and sensitive subject. It became
acute when funds came from international bodies. Some critics point out that the foreign
donors use these voluntary bodies, to whom they donate money, as clever ploy to weaken
the power of the state as a part of the large game of global power politics. Further,
selflessness and selfishness cannot always be distinguished easily. Organisations, functioning
at different levels in different areas, suffer from lack of coordination.In spite of these and other
problems, with their uniqueness of the operational abilities, the voluntary agencies have a
crucial role to play in rural transformation.

23.11 KEY WORDS

Just Society : A society where there is no exploitation, where people are all being treated
equally.
Land Ceiling : Limit is put to one's possession of land.'
Surplus Land :Land which is in excess of what is needed or used.

23.12 SOME USEFUL BOOKS

Franda, Marcus, 1983. Voluntary Association and Local Development in India; Young Asia
Publication; New Delhi.
Kulkarni, V.M, 1969, Voluntary Action in a Developing Society; Indian Institute of Public
Administration; New Delhi.
Kramer, Ralph M, 1989. Voluntary Agencies in rhe Welfare State; University of California
Press; London.
Shah Kalpana, 1984. Women's Liberation and Volunrary Action: Ajanta; New Delhi.

Journals
Bhattacharya, Mohit., 1987. "Voluntary Associations Development and the Statem--Indian
Journal of Public Administration; Vo1.'33, July-Dec., pane 383-94 : IlPA
Zhaturvedi, H.R, "Role of Voluntary Organisations in Rural Development", Indiun
Journal of Public Administration; Vol-33, July-Dec., page 53346 : IlPA
Maheshwari Shriram,1987. "Voluntary Action in Rural Cevelopment", Indian Journal of
Public Administration; Vol33, July-Dec., page 559-68 : IIPA
Muttalib, M.A. 1987. "Voluntarism and Developrnent-Theoretical Perspective", Indian
Journal of Public Administration; Vol-33 July-Dec., page 399419 : IIPA

23.13 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress 1
1) See Section 23.3
2) See Section 23.4
Check Your Progress 2
1) See Secti~n23.5
2) See Section 23.6

check YO& ~rogress3

1) See Section 23.7
2) See Section 23.9
UNIT 24 CO-OPERATIVES AND
DEVELOPMENT
Structure
24.0 Objectives
24.1 Introduction
24.2 Concept of Co-operation
24.3 Deriition
24.4 Objectives of Co-operative Movement
24.5 Models of Co-operatives
24.6 Kinds of Co-operatives
24.7 Co-operatives and Panchayati Raj Institutions
24.8 Let Us Sum Up
24.9 Key Words
24. I0 Some Useful Books
24.1 1 Answers to Check Your Progress Exercises

24.0 OBJECTIVES
After reading this Unit, you will be able to :
understand the objectives of co-operative movement;
discuss the models and kinds of co-operatives societies; and
explain the importance of co-operatives in the context of development.

24.1 INTRODUCTION
In all the countries of the wo~ld,several methods have been initiated, organised and
directed towards realising socio-economic and political development. The co-operative
movement has been recognised as one of the important means for development not only in
the developing societies but in the socialist and also in the western industrial societies.
Through co-operative movement, the different requirements of the individual and the
society are sought to be met. Therefore, co-operative movement has emerged as a very
powerful system throughout the world. The history of co-operative movement in India
began in 1904 with the enactment of Co-operative Credit Societies Act. The main purpose
was to make provision for granting credit to the farmers for agricultural activities. Though
the main emphasis of the co-operatives is still on rural credit, there has been a massive
diversifications of credit to different sectors of the society. Today, there are co-operatives in
the field of housing, dairy, labour, fisheries, industries, transport, consumer, etc. In fact, we
have co-operatives almost in every walk of life.
With the launching of the Five Year Plans after Independence, co-operatives came to
occupy an important place in the national economic policy and a major form of
organisation in almost all sectors of economic activity, specially in the rural areas. In all the
Five Year Plans, the co-operatives have been assigned a key role in development. It is in
this context that we would like to recall the statement on the co-operatives in the Third
Five Year Plan document. It says "In a planned economy pledged to the values of socialism
and democracy, co-operation should become progressively the principal basis of
organisation in many branches of economic life, notably in agriculture and minor irrigation
small industries and processing, marketing, distribution, supplies, rural electrification,
housing and construction and provision of essential amenities for local communities... Thus,
a rapidly growing co-operative sector with special emphasis on the needs of the peasant,
worker and the consumer become a vital factor for social stability, for expansion of
employment opportunities and for rapid economic development."

The Indian co-operative movement, thus, has emerged today as the largest in the world with
more than three lakh societies of different kinds and a membership of 12.5 crores. The total
credit disbursed through co-operatives stand approximately at 4,500 crores. It has become
nnssihle fnr the cn-nnerativc sectnr to cnver. in l n d i a 97 ner cent of v i l l a ~ and
s 88 n e r cent
 &opehives d DevclOpmcllt
24.2 CONCEPT OF CO-OPERATION
The concept of co-operation existed ever since the existence of human life. However, in the
primitive societies, its necessity was limited since the life of an individual was simple with
few wants. In those days, co-operation was mostly related to cultural, religious and social
aspects. It was a way of life and was more of an informal nature. Thus in primitive society,
co-operation had become an integral part of the society.
The concept underwent an enormous change from ancient times till today. The needs of
the individual and the society increased. Modem person is dependent on nature and fellow-
beings. In addition, interdependence has become a way of life. It is the co-operation through
which it is possible to achieve peace and prosperity.
The modern concept of co-operation is the result of Industrial Revolution which brought in
a series of changes in the method of production in Europe, especially in Great Britain. The
Industrial Revolution paved the way for the division of society into two classes, namely, the
capitalist class and the working class. In its greed for more profits, the owners of the
industries started exploiting the labourer. They were paid lower wages. They were used for
producing money and more money. They were being treated inhumanly. It was during this
time that social reformists like Robert Owen gave thought to the formulation of a new
philosophy which ultimately led to the birth of co-operative movement. Robert Owen
(1771-1859) was a British Industrialist and Philanthropist and he was the pioneer of the
co-operative movement.
The Co-operative movement is an economic concept and is of a formal nature. It is a distinct
form of business activity in which people have primacy whereas a secondary role is assigned
to the capital. Thus, the Co-operative movement provides an opportunity to the
economically deprived sections to live in better conditions.

1 24.3 DEFINITION
Co-operative movement is a broader phenomenon which means different things to different
people. Hence, .it is very difficult to provide here a precise definition. There is no unanimity
i about the definition of co-o~erationsince conditions and circumstances differ from place to
place. Since it is a dynamicmconcept which has evolved with time and experience, there is
no single definition which provides all the necessary ingredients of the Co-operative
movement. However, we will attempt a few which all provide us with some broad idea of
Co-operative movement.
According to Lambert "a co-operative society is an enterprise, formed and directed by an
association of users, applying within itself the rules of democracy and directly intended to
serve both its own members and community as a whole." It is a broad definition of
Co-operative society which seeks to achieve member's welfare and which also works for tht
betterment of the community, as a whole.
The International Labour Organisation states that a "Co-operative society is an association
of persons, varying in number, who are grappling with the same economic difficulties and
who, voluntarily, associate on a basis of equal rights and obligations, endeavour to solve
those difficulties mainly by conducting at their own risk an undertaking to which they have
transferred one or more of such of their economic functions as correspond to their common
needs, and by utilizing this undertaking in joint co-operation for their common material and
moial benefits." This definition is considered to be the most comprehensive definition on
co-operative society since it consists of most of the principles of co-operation. Now-let us,
explain briefly, the objectives of co-operative movement.

244 OBJECTIVES OF CO-OPERATIVE MOVEMENT

A co-operative society comes into existence when a group of people join together and form
an association. It is a union of individuals, who usually have meagre resources and who are
.. - -. . - . .. . . - .
h n t d i g ( l o n and Development principles to ensure economic benefits to its members. People are free to loin the
co-operative society and they can resign at their own discretion. There is no coercion nor
compulsion of any kind. The main objective of the co-operalive society is to serve its
members. Here, profit making becomes secondary. It is run on democratic principles. All
the members enjoy equality and no discrimination is shown on the grounds of religion,
gender, political ideology etc. Basically, co-operative movement gainzd importance as a
consequence of evils of capitalism. Therefore, its major objective is to ach~evesocial justice.
Finally, co-operative movement is characterised as a constituent part of the overall socio-
economic movement of the society. It is described as being capable of reforming and
restructuring society by peaceful means.
Every co-operative society comes into existence with certain specific goals and objectives.
However, the long-tetm objectives of all the societies are the same. Let us identify the basic
objectives of the co-operative movement.

The most important objective of a co-operative society is to raise the standard of living of
the poor who have been subject to exploitation by the capitalists. The deprived sections form
an association to undertake some gainful activity and get the rewards of their work without
being at the mercy of the capitalists. The other objective of co-operative rllovement is to
eliminate the middlemen who take away the benefits that should have gone to the real
beneficiaries. As a sequel to this, the co-operative society has to remove capitalist tendencies
and as stated earlier it has to bring in socio-economic changes in the society at large instead
of focusing on the individual and on hidher personal advancement. The other objective of
a co-operative society is to conduct its activities with honesty, truthfulness and thereby raise
moral standard of its members.

As stated earlier, a co-operative society should aim at bringing about the welfare of not a
particular individual but of the entire community. This will foster fellow feeling and the
bond of co-operation. Abolition of social inequality such as high and low should be the goal
of the co-operative movement. The other important objective of co-operative movement
relates to its neutral stand as far as religion and politics are concerned. This will ensure real
concern for one and all without being partial to a particular religious group or a political
group. Finally, it aims at providing a corporate life to the weaker sections, ensuring the
world-wide concept of "each for all and all for each" replacing the natural law of "the
I
survival of the fittest".

Check Your Progress 1

Note : i) Use the space given below for your answers.
ii) Check your answers with those given at the end of the unit.
1) Write a short note on the concept of co-operation.

2) What was the necessity of the co-operative movement?

24.5 MODELS OF CO-OPERATIVES

After having described the concept and objectives of the co-operatives, now let us
understand different models which are followed in India to achieve socio-economic
development. These models have been evolved over a period of time and have distinct
since the government has entered the co-operative institutions in a big way as a partner at Co-operatives and Developwnt
different levels. The following are the different models of co-operatives I
i) Cooperative Credit Structure
In India, co-operative movement started with the establishment of credit societies way back
in 1904. Credit is provided by the mperative banking, without which many activities,
particularly in the rural economy, cannot be initiated. This again is a western concept.
However, Indizn government adopted it in 1904. Subsequently, a large number of credit
societies have come into being. Of the different types of cooperative societies, cooperative
credit societies in India are very important for rural upliftment and national development.
The cooperative credit structure in India is federal in character, offering short and medium
term ~raiit.At the base, there are primary a-operative credit societies; in the middle that is
at the district level, there are mperative central banks and at the apex, there is state
co-operative bank. These institutions supply credit, supervise its use and recover dug frow
members. They function as the balancing centres at each level and supplement their
financial resources through deposits, by borrowing from the public money market and the
Reserve Bank of India. The Reserve Bank of India takes active interest in the agricultural
credit and is closely associated with cooperative movement in the country. An important
feature of this system is that though these institutions, at different levels, are connected with
each other through affiliation, they are for all practical purposes distinct entities. Each will
serve a set of specific purposes. Thus, there is justification for their existence as independent
units. We will now discuss each of them in the following as separate units.
ii) Primary Cooperative Agricultural Credit Society
In the Co-operative credit structure, the primary cooperative agricultural credit society at
the village level constitutes the basic institutions, the foundation. The following objectives
are to be achieved by the primary co-operative agricultural credit society :
a) Mobilise deposits and provide short-term and medium-term loans on reasonable
conditions.
b) Develop the habit of savings among rural masses.
c) Assist in the better implementation of Five Year Plans relating to agriculture, and
d) Take up educative, advisory and welfare functions for the benefit of farmer members.
Individual farmers are the members of the primary credit societies. Each society secures
its funds by way of share capital, deposits, loans and the Reserve Fund. The share
capital is directly contributed by the members and indirectly by the state government.
Though the primary societies are expected to be multipurpose in character but in
practice credit facilities remain their most important function. Thus, loans constitute an
important source of working capital. Loans are procured from the state government
and central co-operative banks.
The primary credit societies provide loans which they get from the state government and
central co-operative banks to their members for short periods, (between six months and one
year). With the money, the member can purchase seeds, fertilizers, pesticides and other
minor items. Medium term loans are provided for the purchase of cattle, pump sets,
agricultural inputs etc., for periods varying between one to five years. The loan amount
sanctioned varies among members depending upon the purpose, repayment capacity, the
type of security pledges etc.
Primary co-operative agricultural credit societies in India suffer from the following defects :
Most of the societies are not viable since their membership is small. Therefore, the capital is
inadequate. Secondly, the credit facilities, provided by the societies, are insufficient when
compared to the requirements of the farmer members. Thirdly, it is seen that there is
inordinate delay in the sanctioning of loans. Fourthly, a large number of weaker sections in
rural areas are not in a position to receive the much needed asistance from these societies,
since these societies are mostly held by the rich farmers. Finally, credit societies have failed
to develop, to any significant extent, the savings habit among rural masses. All these have
resulted in the growth of private money-lending and usuary in the rural areas. The money-
lenders continue to exploit in the rural masses.
All these defects have to be removed to achieve success.
iii) District Co-operative Central Banks
District Co-owrative Central Banks have been established at the intermediarv level in the
~mnt&tion Pnd Devhpment co-operative credit structure to provide a useful link between the primary societies and the
apex bank at the top. The organisation of the district co-operative central banks is not based
on any systematic or uniform pattern. A large number of central banks in India are of
mixed type. Primary co-operative agricultural credit societies form the bulk of its
membership. However, other societies, such as farming societies, urban co-operative banks,
weaver's societies, industrial societies etc., are also afiliated to the central banks. Thus, we
find both individuals and primary co-operative societies as its members. The government is
also a shareholder. Normally, there is one co-operative central bank for a district but in
certain districts, we have more than one central bank.
The share capital of co-operative central banks is provided by the individual members,
primary societies and the state government through purchase of shares. Deposits of different
types are received from individuals and institutions. The bank gets loans from the state
co-operative bank and Reserve Bank of India.
The Central Bank acts as a link between primary societies and the state co-operative bank.
It provides the necessary financial resources to the primary societies and is responsible for
their recovery. It also lays down common policies and provide administrative guidance for
the proper and efficient functioning of primary societies. They develop and extend the
banking facilities in rural areas and make the people aware of the facilities and make use of
the same. Finally, the central banks are responsible for the development of co-operative
movement in the district and act as a friend, philosopher and guide to the primary societies.
We find a few defects in the working of co-operative central banks. Due to large number of
district central banks, the affiliated member societies are small. Therefore, some of them
have become weak and non-viable. They are always short of funds. Reserve fund is
compulsory. However, it is not sufficient to overcome their financial difficulties during the
peak season. The deposit mobilisation, savings etc., is not satisfactory. To overcome these
problems, the banks have to improve their financial position. The government has a major
role to play in this respect. Ultimately success or failure of a system depends on the political
decision-makers.
iv) State Co-operative Banks
The State Co-operative Bank is the apex Co-operative institution in the state. It is at the top
in the three tiered co-operative credit structure. The jurisdiction of the bank is over the
entire state. The district co-operative banks in the state are members of the state
co-operative banks. In some states, individuals and primary societies are also admitted as
members.
The major functions of the bank are listed below :
a) It acts as a intermediary between the district co-operative bank and the money market.
It borrows money from the money market and make available loans to the district
central banks.
b) It functions as the balancing centre between district banks with surplus funds and deficit
co-operative banks.
c) It supervises and guides the activities of the district co-operative central banks in the
state. It also conducts regular banking business as any other commercial bank.
d) It operates as an agency of the Reserve Bank of India to hnance agriculture. The
Reserve Bank of India provide loans to state co-operative banks which in turn are
disbursed to farmers with the help of the three tier structure.
e) It helps the state government in the formulation, execution and coordination of credit
policies in the state.
As stated earlier, loans constitute the major source of funds for state co-operative banks.
Money is borrowed from Reserve Bank of India, State Bank of India, State government and
other nationalised banks. But for state co-operative banks, borrowings from Reserve Bank
of India constitute the major source of loans.
It is found out that some of the state co-operative banks have been careful while investing
funds in other co-operative institutions. A few societies have made huge advances to
primary credit societies with the result that recovery has become a serious problem. The
over dues have been mounting due to various reasons. Credit limits for central co-operative
banks have not been carefully fixed. There are several other problems faced by the state
co-operative banks. However, the defects could be eliminated if the state governments and
the Reserve Bank of India come forward with certain effective measures such as adequate
. .. 1 - - > ....._- .-~.,.
1 ._
~ . ,--- ..-.c--- *L- >-C.-*lL. -
 Co-opmHves md Development
v) Primary Land Deveiopment Banks
It is not enough if the agriculturists are provided only with short and medium term credit.
There is a need for long-term credit since it would help the farmer to make improvements
in the agricultural sector. Long-term credit facility would bring lasting benefits. Long-term
credit is provided by the land development banks.
The first land mortgage bank of India was established in the Punjab province in 1920.
Subsequently, other provinces also established similar institutions. Today, all the states have
co-operative central agricultural development banks. It is a two tier structure: primary land
development banks at the district or taluk level and central agricultural development banks
at the state level.
The main function of the primary land development banks is to supply long-term credit to
its members for a period varying between 15 to 30 years for bringing about permanent
improvements to their lands. Thus its major function is to assist the farmers to raise their
standard of living. Farmers and corporate bodies subscribe to the share capital of primary
land development banks. Loans are sanctioned against immovable assets of the borrower.
Loans are generally sanctioned at a lower rate of interest.

The membership of central land development banks is.composed of members of primary

land development banks. In some states, individual members are also permitted to acquire
shares. It distributes funds to the farmers through primary land devleopment banks. It also
arranges for proper supervision and guidance and acts as a intermediary'between Reserve
Bank of India and primary societies and prevent farmers from mortgaging their lands with
the greedy money-lenders. The prime motive in doing all this is to protect the farmers from
falling victims tothe middlemen and provide them with c~editfacilities through
co-operatives.
A number of defects have been identified in the working of these land development banks.
To begin with, there is no unifrom organisational structure in all the states. Consequently,
there is no uniform development of these banks. Many banks, it seems, are not viable. There
is a lack of proper coordination between the different credit agencies operating in the rural
areas leadinq to several complications.
The co-operative credit movement in India, having a history of nearly a century, has now
developed to a substantial extent. Its coverage is substantial, nearly 95 per cent of the
villages have been covered. However, a large segment of poor remain outside the
co-operative fold. Yet, the credit movement made a substantial impact on the rural
development. To make it more effective, various official committees have suggested certain
structural changes. The essence of the recommendations of these committees is to integrate
all the co-operatives whose basic objective is to extend credit to the farmers. Ultimately
there should be a single source of institutional credit for meeting all requirements of the
farmers. The government of Andhra Pradesh has taken steps in this direction by introducing
Single Window Co-operative Credit Delivery System in 1987. Today all the credit needs of
the farmers such as short-term, medium-term and long-term credit needs are met through an
integrated "single window" system in Andhra Pradesh. By "single window" is-meant that
there is a single source of institutional credit for meeting all requirements of the farmers.

Check Your Progress 2 ---.

Note : i) Use the space given below for your answers.
ii) Check your answers with those given at the end of the unit.
1) What are the objectives of the primary co-operative agricultural credit society?

2) What are the functions of the State Co-operative Bank?

 ........................................................................
3) Write a short note on Primary Land Development Bank.
i

24.6 KINDS OF CO-OPERATIVES

The Indian Co-operative movement has emerged as the largest in the world. It is being said
that there are more than three lakh societies of different kind. In the following, we would
discuss some of the co-operative societies, operative in India :
i) Co-operative Farping
The importance of co-operative farming has been recognised by the Government of India as
one of the potential strategies in rural development. Co-operative farming refers to a type
of farming where the farmers of the village voluntarily pool their land, labour, equipment
and cultivate the land collectively. The land, implements, bullocks etc., so pooled are
divided into suitable units by the farming society and the land is cultivated collectively. The
work of the members is calculated after careful examination and wages are paid. The total
produce is sold in the market and the income received from the sale is distributed among
the members in accordance with their share of land and labour.
The Co-operative farming societies were first started in India in the forties for the seklement
of ex-army personnel. The ex-army personnel could earn their living through co-operative
farming societies. After partition, it has become a useful tool for the rehabilitation of
displaced persons. Co-operative farming societies were first established in Bombay, Uttar
Pradesh, Madras and Mysore states, Later on, other states followed. These co-operatives
came into existence due to the following reasons.

a) Due to fragmentation of holdings as per custom and other reasons, we have small
holdings which are notviable. For instance, when landholdings are distributed among
sons. As a result, we have a large number of small and marginal farmers.
b) Since there are small and marginal landholders, the farmers are poor and depend
heavily on external agencies for finance. The situation also led to poor yield per acre
which is reflected in utter poverty of a majority of the farmers.
c) For a long time, the Indian farmer has been using traditional tools in agriculture. It is
mainly due to their poverty and their traditional philosophy of life. Therefore, even
today, the method of cultivation in India is, still to a great extent. traditional.
d) Further, there is exploitation of ignorant farmers by middlemen.
In view of the circumstances explained above, co-operative farming was suggested for the
Indian farmers. This system would help those whose landholdings were less than the
holdings of basic size.
Co-operative farming would help in adoption of scientific cultivation of land. Farmers are
in a position to get better seeds and modern tools. There is a possibility of getting the services
of technical personnel. Collectively, the farmers would be in a position to prevent damage
to the crops by pests and insects. There would be rational use of human and animal
resources, rendting in the increase of yield per acre. Increased production would help the
farmer in meeting his family demands without depending on others. Co-operative farming
would provide gainful employment to the rural youth. And finally, it would usher in
socialist pattern of society in which the wealth is not held by a few but distributed among a
large number of people. Thus, it ensures rapid rural development.

However, co-operative farming in this country did not show any promise and is faced with
many a practical problems. It is observed that in Indian context. it is very dificult to gather
 Coopm(ivad Dcvehpment
a large number of people with different castes, tastes to work together. In the absence of
revolutionary ideology, which would have brought changes in the attitudes of the people, it
15 not possible to maintain discipline among the farmers. This has become a major problem
In the socialist countries today. There is a move to disband co-operative farms and allow
farmers to cultivate the land as individual owners. Co-operative farming presupposes
wrrender of land to the community. Indian farmer is sentimental. It is not possible for
h ~ mto surrender the piece of land, however, small it might be to form a co-operative.
Co-operative farming is yet to take roots in India. There may be a few stray examples of success
but by and large, it did not succeed in any appreciable manner.
ii) Co-operative Marketing
Marketing is an important problem of rural development. Sound marketing helps the
farmers to sell their produce at the most profitable prices and in less time. In such a
situation, the producers are bound to gain substantially, leading to improvement in their
financial viability. Co-operative marketing societies are not the innovations of third world
societies alone, but are found even in industrially developed countries of the west. A
co-operative marketing society is defined as "an activity, taken up by a group of producers,
who basically are farmers, to sell their marketable surplus at most remunerative prices for
their own benefit."
a) Objectives
The marketing societies have to secure best possible market price for the products of the
members. The society, sometimes, does the job of processing, grading, packing etc., so that
the product could fetch remunerative price. Another objective is to reduce the cost of
marketing such as transportation, storage etc. The co-operative marketing societies have
been established with the purpose of acting as a powerful check upon the monopolistic
power, generally enjoyed by the private traders. It will also eliminate middlemen who
exploit the farmers. The system also ensures protection of consumer's interest since the
society adopts fair methods in its marketing activity.
b) Business Methods of the Marketing Co-operatives
The co-operative marketing societies adopt any one of the following forms :
a) The society only acts as the agent between the members and ihe traders. It is like
working as a commission agent. The farmers sell their produce through the society.
b) The marketing society purchases the produce of the members and pays the price directly
and immediately. This is adopted by those societies which have technical know-how,
sound financial position and proper processing and storage facilities.
c) In some cases, the marketing societies help the farmers by allowing them to store their
produce with it for which they receive payment up to 70 per cent of the value of the
product. This would help the members to store the material until they get remunerative
price at a subsequent date.
d) The marketing societies also undertake pooling of the produce of the members, grade the
material as per standardisation, process the raw material into a form, fit for consumption
like paddy, cotton, groundnut etc.
e) In certain areas, the marketing society may undertake procurement of agricultural
products on behalf of the government to ensure payment of minimum support price to
the farmers. This would eliminate the tendency of distress sales by the farmers.
f) The marketing societies, also undertake supply of essential goods like sugar, kerosene,
fertilizers, seeds etc., at reasonable prices to the farmers.
g) Marketing co-operatives extend their activities by exporting goods which are in demand
in the foreign countries. The National Agricultural Co-operative Marketing Federation
and the State marketing co-operatives undertaEe export of a number of commodities to
foreign countries.
c) Institutional Structure
The first co-operative marketing society in India was started at Hubli in the year 1915.
Since then, a number of marketing societies have been set up in various parts of the
country. The co-operative marketing structure comprises a network of about 3700 primary
marketing societies at the Mandi level, about 170 district central marketing societies and
about 29 state co-operative marketing federations and at the apex there is the National
and Development main branches all over the country. Separate tribal co-operative development corporations
have been established in those states where there is a sizeable tribal population. Similarly,
commodity marketing federations have been set up at the state level.
Individual farmers and primary agricultural credit and other service societies are members
of the primary marketing society. The members of the State co-operative marketing
fderations are the primary marketing and processing societies. In a few cases credit
societies are also allowed to become members of state co-operative marketing federation.
The membership of the apex organisation, NAFED, are state level marketing federations,
commodity federations and a few primary and central marketing societies. Its primary
objective is to assist its members to carry on business. The marketing societies raise their
finance through shares, deposits and loans. Loans are raised from central co-operative
banks, State Bank of India and other sister co-operative organisations.
The marketing societies have an ample opportunity for development but this development is
not taking place at the expected levels. The business methods followed are not satisfactory.
In our country most of the co-operative societies have been organised by the government.
Therefore, the farmers do not evince any interest in the working of these institutions. There
seems to be lack of coordination between primary credit societies and marketing societies.
There is greater emphasis on distribution of essential commodiiies and the marketing of
other items such as processing etc., have been neglected Financial viability is another
drawback in the working of some of these societies. Finally, the success or failure of these
bodies depends mostly on the Management Board at the helm of affairs.
iii) Producers' Co-operatives
In India, as all of us are aware, co-operatives have been initiated, organised and supported
by the state. Due to abject poverty and ignorance, co-operatives could not survive on their
own. Hence it was thought that government participation would help it. Having begun
primarily in the field of credit, co-operatives, in the last four decades, have come to embrace
a number of activities to serve the interests of producers and consumers. in this connection,
co-operative movement in the field of dairy management, could be mentioned.
Co-operation, in the field of dairy management, is fast spreading all over the country.
However, it is necessary to point out that dairy co-operatives have a long history in India
but its spread has been very limited. The first 'dairy co-operative was organised in 1913 at
Allahabad. But the growth of the dairy co-operatives has not been even and steady. It was
only after Independence that the dairy co-operatives have been organised on a large-scale in
several states.
The development of dairy co-operatives has the twin objectives: support the producers of
milk and ensure regular supply to the evergrowing urban centres. Milk, as an essential
commodity for human subsistence, needs special efforts for procurement, preservation and
transportation. The Government of India did not pay much attention to this subject matter
during the First and Second Five Year Plans. It was only during the Third Plan that some
efforts were directed when National Dairy Development Board (NDDB) was established
with a view to developing dairy technology on modern lines. This plan period is also
significant because of Anand Co-operative Union of Milk Producers which proved
su&ssful in organising dairy on co-operative lines. The NDDB is the nodal organisation in
establishing this type of co-operative federations in ten states in the country. About 30
thousand village level co-operatives covering about 40 lakh farming families, are
functioning in India. The members of the village co-operatives are mostly small and
marginal farmers. We also find a large number of landless agricultural labourers in the
village societies.
A brief description of Anand pattern of co-operative is useful to appreciate the working of
dairy co-operatives in the country. The Anand pattern is a successful formula developed by
Tribuvandas Patel which was adopted by the farmers of the Kaira district in Gujarat to
procure, process and market their surplus milk. The Anand pattern is a system that is
collectively owned, operated and controlled by farmers. It ensures a fair price to the farmer
and high quality of milk and dairy products to the consumer and it eliminated middlemen.
Thus it aims at the utilisation of resources in the most profitable manner at the grassroot
level.
 collectively. At the district level, there is District Milk Producers Union which receives -clva .bd m v h p d
surplus milk from the village co-operatives. The District Unions organise their state level
co-operative milk marketing federetion. The federation performs all the activities regarding
processing, marketing and providing funds for co-operative dairy development in the state.
I
I It is said that outstanding leadership, modern technology, better marketing methods, plough
I back earnings and dedicated personnel were identified as the main reasons for the success of
Anand pattern of milk producers co-operative movement in Gujarat. The Anand pattern is
yet to be introduced in many states of India. It requires imaginative planning and sufficient
financial support to the dairy co-operative societies. Proper education and necessary
k
orientation to the farmers will go a long way in the successful management of dairy

i operative societies.

I
While explaining the producers' co-operative, it is pertinent to point out that there are
co-operatives in other fields such as sugar, spinning etc. Sugar co-operative societies of
Maharashtra made a mark in the co-operative sector. The above analysis of the Anand
I pattern is an illustrative and not an exhaustive one.
iv) Industrial Co-operatives
t An industrial co-operative means a co-operative formed by artisans, craftsmen, industrial
,I labourers etc., either for undertaking production and marketing or for providing facilities
I and services to them. Industrial co-operatives have been organised with two major
I

I
objectives in view: Safeguard the interests of the poorer artisans/workers against the
exploitation of the better placed entrepreneurs, and provide employment opportunities
during the agricultural slack season so that there will be increase in production in the rural
sector which would improve the living conditions of the rural artisans. It will also prevent
migration of artisans to another place in search of employment.
Industrial co-operatives were organised in 1930s but their impact and contribution to the
economy of the country were rather limited. Notwithstanding the limited success, during
1945-46, co-operative societies for tanners, wood workers, oil pressers, potters, toy-makers
and bee-keepers were started in Madras and Bombay. Their satisfactory performance gave
fillip to further growth in this sector after India became Independent.
Today there are quite a large number of industrial umperatives in India. These societies
take up the work of purchase and supply raw materials, tools and equipment, needed by the
members. They also undertake sales of finished goods at a competitive price. There are a
number of industrial co-operatives, functioning successfully. However, the sick units in this
sector are growing at an alarming rate due to managerial defects. There is a need for
corrective measures at the management level since more than one half of these societies are
dormant and non-viable due to poor membership, meagre sales and inadequate working
capital. Over some of the units, there is monopoly of the middlemen and traders. Again,
many centres do not produce commodities but are like purchase and sale organisations.
Therefore, there is an urgent need for restructuring of these societies with proper planning
and feasibility study. Then only, they will succeed in their co-operative endeavour.
v) Consumer's Cooperatives
It is said that the co-operative movement originated as the consumer's co-operative
movement in response to the challenges posed by industrial revolution. Later, it spread to
other countries. The movement had taken shape in India in 1904, but it did not succeed to
any appreciable measure. After Independence, the consumer co-operatives have expanded
in almost all the states in India.
The structure of the consumer's co-operative societies in India consists of primary stores,
wholesale stores, state federations and the National Co-operative Consumer's Federation at
the apex level. The primary consumer co-operative store is the basic unit in this structure. A
wholesale store is the second tier and the state federation, which has wholesale stores as its
members, is a coordinating agency. The National Co'-operative Consumer's Federation was
formed in 1966. Its membership consists of state federations and some wholesale stores.
The most important objective of the consumer's co-operative is to supply goods of good
quality to consumers at reasonable prices. It will also eliminate dishonest intermediaries.
In India, consumer co-operatives did not make any tangible progress since the societies have
been initiated by the government. Therefore, the consumers do not evince interest with the
hooe that the government would look into their Droblems. Consumer co-o~erativesare
-tkn .nd~ e v e b p m m t people are not covered in this movement. By and large, the consumer co-operatives in India
did not succeed in their activities because of several structural and functional deficiencies.

24.7 CO-OPERATIVES AND PANCHAYATI RAJ

INSTITUTIONS
The Central Government in India and all the state governments have promoted co-operative
movement in its various forms. At one time, the major concern of rural co-operatives was
the provision of cheap credit to the farmers to save the latter from the money-lenders. After
Independence, however, there has been a definite shift. Along with the provision of cheap
credit, the emphasis upon co-operative marketing, producers co-operatives and several other
new areas have increased. In line with these major changes in the co-operative policy, the
Five Year Plans also made sufficient provisions in the plan allocations. In fact, the
allocations have been steadily increasing from first plan onwards.
In view of the important role assigned to the co-operatives, particularly in the rural
development, there is a need for close liaison between Panchayati Raj Institutions and
co-operatives. In fact, Panchayati Raj Institutions and co-operatives are envisaged as two
pillars of rural reconstruction. There is a close affinity between co-operative movement and
Panchayati Raj Institutions since both are envisaged as instruments of socioeconomic
transformation of rural areas. Both follow the principles of self-help, mutual aid, equality,
democracy and decentralisation. Besides ideological afinity, there is a distinct pattern of
interdependence from the operational point of view. The co-operatives supply credit and
other major inputs while Panchayati Raj Institutions provide politico and administrative
leadership in the preparation of agricultural plans and their implementation. Thus, there are
several areas of common interest which would require coordination and joint approach as
both the movements have one thing in common which is rapid rural development.
Since we have different patterns of Panchayati Raj Institutions in India, the association
between Panchayati Raj Institutions and the co-operatives also have different patterns. In
some states, the presidents of the district co-operative institutions (Banking, Marketing etc.,)
are associated with the Zilla Parishads with an Ex-oficio membership in the council. In
some states, they enjoy voting rights while in others they are associated members without
the voting rights. Similarly, at the level of middle tier, (Taluka, Mandal etc.) almost the
same pattern, as it exists at the district level, is followed.
In Maharashtra and Karnataka at the district level, the subject "co-operatives" has been
placed under ZiIla Parishads. This would mean that the parishad is kept informed of the
progress of co-operatives in the area and that it can discuss and give suitable instructions
and guidelines to the co-operatives regarding various aspects like credit, marketing and
other activities in the district.
There are thus several areas of common interest and association, between Panchayati Raj
Institutions and co-operatives. A proper coordination and joint approach would help in
their smooth functioning and ultimately lead to realisation of objectives for which they have
been organised. -.
Check Your Progress 3
Note : i) Use the space given below for your answers.
ii) Check your answers with those given at the end of the unit.
I) What is the importance of co-operative farming in rural development?

........................................................................
........................................................................
........................................................................
........................................................................
2) What are the objectives of the co-operative marketing?
 Co-oprntivea and Devebpmm(

I ........................................................................
3) Write a short note on Industrial Co-operatives.

24.8 LET US SUM UP

. India is predominantly an agrarian economy. Therefore the credit for agricultural and other
allied activities is very important. It has been noted that in spite of the existence af several
financial institutions, co-operatives have a major role to play. As such, rural development is
very much dependent on co-operatives. Co-operative movement has one major advantage
which no other financial institution has and, that is the involvement of masses in both their
decision-making and implementation process at all the stages.
Even though the cooperatives have been playing an important role in the economic
development of India, we cannot simply ignore some serious problems that the movement is
facing today in the country. The recovery position of the loans for agriculture is distressing.
There are many reasons. There are some genuine reasons for default but in quite a few
instances, there is some amount of resistance among the sections of rich farmers and in
some plaes there is political resistance.
Though the co-operative movement is for the common people, certain groups control this
movement in different areas in one way or the other. These vested interests have developed
deep roots and unless it is broken, there is no prospect of democratic functioning. It is
observed that the poor such as marginal farmers, sharecroppers, landless labourers, slum
dwellers and other deprived sections are still outside the orbit of co-operatives. Further,
there is too much interference by the government in the working of co-operatives. Some
times, it is essential to check mismanagement, corruption etc., but government control
should not become a regular phenomenon and the government shov~ld not treat
cooperatives as a departmental affair.
Finally, though there are about 12.5 crores of people in the co-operative movement, most of
them are there because of the economic benefits. Further, we have a feeling that the
initiative for co-operation is always from the government and not from the people
themselves. Therefore, the co-operators should be made to realise the importance of ideals
and principles of co-operation.
There may be several complaints against co-operative movement in the country, a few
imaginary and some real, but still it is to be recognised that the co-operative is the.most
democratic agency for development and for benefit of the common people.

Capitalist tendency :The tendency to hoard money only for personal advancement,
without paying attention to the community's advancement. Rather by exploiting others.
Defaulter :Persons who fail to pay debt.
Distress sales :In acute need, the farmers are compelled to sell off the agricultural products
at prices less than the minimum support price.
Non-viable unit :Unit which is not capable of surviving from economic stand point.
M t r a l & t i o n and Development
24.10 SOME USEFUL BOOKS -

Chinchankar P.Y.and Narnjoshi, M.V. (ed.), 1977. Co-opemtion and the Dy.?amics of
Change, Somaiya : Bombay.
Goel, S.L. and Goel, B.B., 1979. Principles, Problems and Prospects of Co-operarive
Adminislrarion; Sterling Publishers Pvt. Ltd. : New Delhi.
Hough, E.M., 1960. Co-operarive Movement in India, Oxford University Press : London.
Krishnaswami, O.R., 1978. Fundamentah of Co-operation; S. Chand & Company Ltd.
New Delhi.
Prasad, Ravindra, 1978. Co-operarives and Rural Development, Bookline : Hyderabad.
Saxena, K.K., 1974. Evolution of Co-operafiveThought; Somaiya : Bombay.

24.11 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress 1
1) See Section 24.2
2) See Section 24.4
Check Your Progress 2
1 ) See Section 24.5 (ii)
2) See Section 24.5 (iv)
3) See Section 24.5 (v)
Check Your Progress 3
1 ) See Section 24.6 (i)
2) See Section 24.6 (ii)
3) See Section 24.6 (iv)
UNIT 25 SPECIALISED AGENCIES FOR
DEVELOPMENT
Structure
25.0 Objectives
25.1 Introduction
25.2 The Concept
25.3 The Approach
25.4 Drought Prone Area Programme (DPAP)
25.5 Desert Development Programme (DDP)
25.6 Command Area Development Authority (CADA)
25.7 Hill Area Development Programme
25.8 Integrated Tribal Development Agency (ITDA)
25.9 Asset Oriented Approach
25.10 Let Us Sum Up
25.1 1 Key Words
25.12 Some Useful Books
25.13 Answers to Check Your Progress Exercises

25.0 OBJECTIVES

After reading this unit, you will be able to

understand [he organisation, functions and role of the specialised agencies for
development;
discuss the short-comings of these specialised agencies; and
critically analyse the specialised agencies.

25.1 INTRODUCTION

Elimination of poverty has become one of the greatest challenges of the modern societies. In
recent years, many Third World countries have come to realise that the development
strategies, they had followed in the past, were inappropriate and even irrelevant to their real
needs. They have also come to realise that a development strategy linked to economic
growth will not, by itself, solve the problems of poverty or improve the conditions of the
poorest segments of the population.
The search of alternative strategies has now become intense in India. It is also noted that
the majority of the poor live in rural areas. Therefore, attempts are being made to identify
the target groups and provide assistance to them. The Government of India launched
Community Development Programme during the First Five Year Plan period with a
promise to improve the living conditions of the people. It was hoped that it would bring
overall development of rural India. Subsequently, during the Second Five Year Plan, an
effort was made to decentralise power to the representatives of the people at the district,
block and village levels with an objective to mobilise people's support to the rural
development programmes. The Third Five Year Plan laid emphasis on the overall growth in
the country to reduce inequalities in the income and wealth. As a result of these policy
formulations, a number of programmes such as Intensive Agricultural Development
Programme which subsequently became Intensive Agricultural Area Programme were
designed to accelerate agricultural production in selected regions that were endowed with
good soil and irrigation facilities. However, it was soon realised that the above programmes
did not make any dent on the poverty of the rural poor. Unemployment and inequalities in
wealth and income have continuously increased, in spite of phenomenal increase in
agricultural production. It is also pointed out that most of the benefits from these
programmes were taken away by affluent sections and better endowed areas.
It was soon realised that unless a direct attack on poverty is launched, the developmental
efforts would not help the poor. On the other hand, it may aggravate the situation. Some
~ n n r r rnParnrs
~ t ~ t h p r ~ f n rhave
~ hppn n l a n n d and n e w inctit~~tinnq
w e r e dpcianpd tn
Decentdisation and Development provide higher standard of living to the poor, to achieve equality of income and wealth to
prevent economic concentration.

25.2 THE CONCEPT

Keeping the above factors in view and on the recommendations of Rural Credit Review
Committee, several special agencies were established. The following considerations were also
identified in favour of specialised agencies. It is pointed out that the existing bureaucratic
machinery is not capable of tackling the problem of poverty. Again, the existing
developmental strategies would be helpful to those who are already rich and it would not
help the poor. It is also suggested that there is a need for clear identification of target groups
and financial assistance in the shape of subsidy or margin money which would act as a
catalyst in the development of the poor. Finally, it is possible to prepare viable schemes to
enable the poor to cross the poverty line. The specialised agencies, are thus intended to
tackle the poverty directly and help the poor.
At present, these are the following specialised agencies for development :
1) Drought Prone Area Programme
2) Desert Development Programme
3) Command Area Development Authority
4) Hill Development Authority
5) Integrated Tribal Development Agency
6) Asset Oriented Approach

25.3 THE APPROACH

The following imprtant characteristics are identified in the working of the specialised
agencies :
a) Autonomy
The special agencies have been established under co-operative societies Act. It is a departure
from the earlier approaches. Under the new dispensation, the agencies enjoy certain amount
of autonomy and flexibility in the decision-making process and in its implementation. The
agencies are expected to draw up plans and programmes for investment and production
activities to be undertaken by the target groups.
b) Catalyst
The agencies have to act as a catalyst to the target group mainly through generation of
gainful employment. In this direction, the agencies are expected to bring the benefits of
modern technology to the small and marginal farmers, rural artisans, and other members of
the target group and help raise their standard of living.

c) Limited Administrative Staff

The agencies have only a limited staff since they do not undertake implementation of the
programmes. The programmes of these agencies are to be implemented through the existing
departments and organisations. The main job, therefore, is restricted to sectlre the
co-operative and co-ordinate the programmes among different departments and
organisations.
d) Involvement of District Collector
In most of the states, the District Collector is the chairperson of these agencies. The
Collector is expected to ensure coordination among the departments. A Project Officer and
an Assistant Project Officer have been provided to each agency to assist the District
Collector.
e) Governing Body
Each agency has a governing body of its own. It formulates the policies and programmes to
carry out the objectives of its agency and approve the annual budget. The governing body is
a~mthnricmrltn arnnnA nr renaal anv hvn-Iswc relstinu tn the ~Aminictrntinnand mnnasement
 SpeciPlised Agencies for
of the agency. There is provision for appointment of committees, sub-committees on any
Development
matter relating to the work of the agency.
f) Financial Assistance
One of the most important aspect of this new approach is the provision of subsidy to the
target groups. It is also called seed money and/or margin money. Different agencies have
different rates of subsidy. The balance amount is financed by the different financial agencies
as commercial banks, rural regional banks, co-operative banks. The subsidy and/or margin
money is intended to provide relief to the target group and at the same time stimulate the
financing agencies for investment.
Having explained the need, characteristics and approach of the specialised agencies, let us
describe the organisation, the functions, the role and short-comings of these agencies in detail
for a better understanding.

25.4 DROUGHT PRONE AREA PROGRAMME (DPAP)

Till recently, famine, drought and scarcity were being tackled more or less on ad hoc basis.
It was only in 1970-71 that the Government of India sponsored a rural works programme
for organising labour intensive and production oriented work in the drought prone districts
of the counny. It was conceived as an addition to the normal developmental effort. In 1972,
the scope of the programme was enlarged to that of an integrated area developed scheme
for a permanent solution of the problems of drought in these districts. Accordingly, the
emphasis shifted from labour-oriented to problem-oriented schemes. This area development
was designated the Drought Prone Area Programme (DPAP) and classified as a
plan scheme from 1972-73.

The DPAP is a centrally sponsored programme. The expenditure on this scheme is being
shared equally by the centre and the states. The DPAP extended to 73 district (401 blocks)
in the country, spreading over thirteen states.

i) Approach and Present Strategy

The main thrust of the DPAP is to maintain the production in good rainfall years and to
minimise the losses when the rain fails. This is sought to be achieved by a number of
schemes such as soil and moisture conservation methods on a scientific basis. Construction
of water sheds is one method adopted for such a plan. Suitable drought resistant varieties of
crops are suggested to meet the challenge of inadequate rainfall or long dry spells.
Experiments have been conducted to develop a package of practices suitable under different
sets of conditions so that appropriate crops could be developed to meet the requirements of
the local population. It is pointed out that the development of agriculture in these regions
has certain limitations. Therefore, the farmers are encouraged to take up subsidiary
occupations like animal husbandry, poultry, sheep rearing, sericulture and horticulture.
Development of a comprehensive package of processing and marketing has been another
area of its activity so that the farmers would be able to derive remunerative prices for
product under subsidiary activities.

Other activities which fall under DPAP include infrastructure for daily, sheep breeding
which have been taken up to support cattle rearing and sheep rearing avocations. Social
forestry schemes have been undertaken to meet the needs of local population, both cattle
and human. This would help meet the needs of the community for fuel-wood, timber and
fodder for cattle. Rural electrification has been taken up to exploit ground water resources.

There has been considerable emphasis on the development of subsidiary occupations of the
families below poverty line, rural artisans, agricultural labourers etc.

ii) Assessment - -_,

While implementing various schemes under DPAP, it would be seen that there are a
number of problems which deserve immediate attention. Development of basic
infrastructure, supporting various economic activities, like roads, rural electrification,
drinking water, processing and marketing facilities would have to be taken up. However,
under DPAP scheme. a ceilinn of 30 ner cent of the total annual olan has been earmarked
Dcecanlbdbn.ndbvd-t Water conservation and water harvesting are of utmost importance in the DPAP ?heme.
However, experience in the last few years have indicated that the techniques of survey,
watershed planning and designing have not attained even the minimum satisfactory levels in
most states. Not only this, the survey techniques are very slow and outdated. Men and
material resources have to be adequately provided with the latest techniques on a scale
several times more than deployed at present in case the watershed scheme is to have any.
impact.

Under the DPAP, the forestry programmes largely followed the ways of the old forest
departments. The schemes taken up consisted mostly of regeneration of degraded forests,
shelter belt plantations, road side plantations etc. It is a lopsided approach. What is required
at present is that every village should have fuel-wood and fodder plantation to meet their
needs. It is needed to involve the poor in the social forestry on government waste land
which is plenty in the DPAP areas.

Regeneration of the village pastures and development of pastures on government land

should be taken up as an important aspect of DPAP so that in a bad year, the cattle and
men would be prevented from migration to alternative places. However, the DPAP did not
make any appreciable progress in this direction.

In the drought prone areas, there is a great need for diversification of the occupations to
divert the population from land and cattle. Individual beneficiary programmes have been
drawn up and there is considerable progress in this sector. Dairying, sheep husbandry etc.,
are a few other activities which would bring considerable incomes in the drought prone
areas. It requires up-to-date knowledge and technology. The DPAP should pay more
attention on these activities so that the beneficiaries would sustain their interest
continuously in the above mentioned sectors of rural economy.

iii) Conclusion
The concept of has started taking shape as an area approach. A good beginning has
been made in conserving soil and water through watershed scheme: Ground water
exploitation has received considerable fillip. Dairying, sheep breeding benefited the rural
people to a large extent. However, the efforts so far did not yield much results. There is a
need for sharp focus on several activities, including infrastructures, ia the drought prone
areas of the country. Finally, there is a need for review of focus, content and coverage of the
programmes so that corrective measures could be introduced to set right the maladies, if any.

25.5 DESERT DEVELOPMENT PROGRAMME (DDP)

In 1977-78, the Govenunedt of India launched another programme which is very akin to
DPAP, designated Desert Development Programme (DDP).

i) Objective
Its main objective has been for an "integrated development of the desert areas for increasing
productivity, income level and employment opportunities for the inhabitants through
optimal utilisaiion of physical, human, livestock and other biological 1 resources." The
programme also aimed at "Protection of and prevention from further deterioration of desert
areas and of the spread of desert conditions." Pasture development, cattle development,
dairy development, sheep development, canal development and forestry have been the main
thrust of the scheme. Subsequently, certain schemes of individual beneficiary were also
undertaken. This scheme was extended to 19 districts (I 26 blocks) in five states of India i.e.,
~ajasthan;Haryana, Jammu and Kashmir, Himachal Pradesh and Gujarat. In actual
practice, in certain states DPAP and DDP have since been running parallel to each other in
a number of districts.

ii) Assessment
There is a need to review this scheme. It is also suggested that for easy and effective
administration, there is need for ammllgamating DPAP and DDP in areas where both the
programmes are running parallel. It would help achieve greater coordination among these
agencies whose major objective is identification of target areas and groups for special
 Specidid Agmeks for
25.6 COMMAND AREA DEVELOPMENT AUTHORITY Devcbpmmi
(CADA)
There is a growing interest in the performance of irrigation schemes in India on account of
huge investment made in these schemes. It is pointed out that there has been unsatisfactory
performance on agricultural front. The poor performance has been attributed in terms of
technical deficiencies in planning, design and operation. It is also being widely recognised
that the basic issues in the field of water management are institutional and administrative. It
calls for a new approach than hitherto followed in the developing societies.
The importance of utilisation of irrigation potential created under various schemes was well
recognised during the third plan period. The Fourth Plan did provide finance for proper
utilisation of irrigation facilities. The progress was however not satisfactory. During the
Fifth Year Plan oeriod, an inteerated command area develooment was suaested. The
proposals of Irrigation Commission and National Commission on Agriculture were also in
favour of such an organisation. Thus, the Command Area Development Authority came
into existence in the last year of Fourth plan and has taken concrete shape in the Fifth Five
Year Plan. The Command Area Development Authorities have been created in about
sixteen states, covering about eighty major and medium projects.
i) Objectives
The objectives of the CADA are as follows :
i) Modernisation, maintenance and efficient operation of the irrigation system.
ii) Development and maintenance of the main and intermediate drainage system.
iii) Development of field channels and field drains within command of each outlet.
iv) Land levelling and land shapping on an outlet command basis for the type of
irrigated crop that is to be grown.
v) Consolidation of farm holdings and redrawing of field boundaries.
vi) Fair distribution of water to individual fields.
vii) Development of ground water to supplement surface irrigation.
viii) Supply of all inputs and services including credit.
ix) Development of marketing and processing facilities.
x) Preparing individual schemes of action for small and marginal farmers and agricultural
labour as part of the master plan of development for these categories of beneficiaries.
xi) Soil conservation and afforestation wherever necessary, and
xii) Town planning.
The above list of items entrusted to the CADA is quite comprehensive which includes all
aspects of irrigation development as well as utilisation of water from the medium and major
projects.
ii) Assessment
The CADA is not a banking or a financial institution. It receives finance from kree sources :
Central assistance to the states for certain selected items, the state governments own
resources are institutional credit for certaM specific programmes. All the budget grants for
the CADA are controlled by different secrefariat departments and released by the same at
the appropriate time.
Thus, the centre, the states and the financial institutions are the major partners in the
CADA. It is pointed out by several studies that there has been shortfall in the Institutional
finance. The reasons are (a) Poor recovery of loans; (b) Increase in the number of ineligible
farmers and delay in updating of land records. In addition, there was a short fall in
achievement in respect of land levelling. Since land levelling is very costly, it is reported
that many farmers did not show interest in this programme. With a view to reduce the gap
between the potential and actual achievements, the'seventh Five Year Plan envisaged the
following :
a) Updating of land records
b) Effecting suitable modification in the cropping pattern
C) Drainage improvements in the irrigated areas
d) Modernisation of entire irrigation system
e) Development of marketing and processing facilities
n f ' n n r t r ~ r - t i n n nf -c~IAnt;nl rnsrlc in tha n n m m n - A nran
D#arb.Pldk.ad Dev- Check Your Progress 1 \

Note : i) Use the space given below for your answers.

ii) Check your answers with those given at the end of the unit.
1) What are the characteristics identified in the working of the specialised agencies?

........................................................................
........................................................................
2) What are the objectives of the Desert Development Programme (DDP)?
........................................................................
........................................................................

........................................................................
........................................................................
........................................................................
3) What are the objectives of Command Area Development Authority (CADA)?

25.7 HILL AREA DEVELOPMENT PROGRAMME

Since the socio-economic conditions in the hill areas are of a special nature, there has been
a demand for special attention of the Government of India. Consequently, the Fifth Five
Year Plan made some provision for development of hill areas. Subsequently the government
of India introduced a number of pilot projects for the integrated development of agriculture
and quite a few subsidiary occupations were taken up. The Hill Area Development
Programme was one such programme provided only in those areas designated as hill areas
in Assam, U.P., West Bengal, Tamil Nadu, Maharashtra, Karnataka, Kerala, and Goa. It is
a centrally sponsored programme. This programme is taken up in addition to the funds
provided by the state plans. The Fifth Five Year Plan provided Rs. 170 crores which
includes Rs. 20 crores for Western Ghats Development Programme (WGDP). In the Sixth
Plan, it was raised to Rs. 560 crores including Rs. 75 crores for WGDP. The Seventh Plan
provided Rs. 860 crores induding Rs. 116 crores for WGDP. Thus there has been a
substantial increase in the financial provision in the plan allocation.
It is pointed out that during the Fifth and Sixth plan period, enough attention was not paid
towards provision of ecological balance but mostly concentrated on sectoral approach.
Pressure on the hill areas and denudation of forests for commercial use, soil erosion and
consequent fall in the productivity of land has been recognised and therefore, there was a
shift in the Seventh Five Year Plan in which allocations have been made for socio-
economic growth, develdpment of infrastructure and promotion of ecology in the hill
areas. Its focus was gn identification of basic needs of hill people and appropriate measures
were initiated. Important basic needs of the hill areas such as energy, fodder, water supply,
heslth n n A m i ~ ~ r n t i nwere
n aivpn nrinritv The nrnnncnl enviraoerl altprnative pnprov rnnroef
forests and the drudgery on women. In order to ensure sustained supplies of fodder and fuel,
the barren forest lands were identified and used for afforestationby growing tree species
which can provide both fuel and fodder. Protected water supply, health and sanitation and
mass immunisation has been another aspect of the Hill Area Development logr ram me. In
all these programmes active involvement of people and their local organisations, including
voluntary agencies, is essential.

25.8 INTEGRATED TRIBAL DEVELOPMENT AGENCY

The Tribal communities in India constitute about 7 per a n t of the total population. T h m
communities generally live in the.hills and forest regions which are mostly inaccessible.
Their economy is largely self-sufficient, unstructured and non-specialised. Their social
system is simple. But of late, this situation is undergoing rapid changes. Industrial and
mining complexes and major imgation dams have disturbed their habitat. In certain cases,
the policies and programmes of the government have also affected their living conditions.
There have been a few cases of tribal unrest since the tribals have hardly had any benefit
from the ongoing developmental programmes. However, state treated the situation in a
routine manner. It is necessary to point out that the tribal areas and tribal people have a
distinct culture of their own and these communities differ from other races in their socio-
economic conditions, educational and beneficiaries are provided witbsubsidies/margin
money/seed money ranging from 25 per cent to 50 per cent.
Assessment
The ITDA is expected to improve the living conditions of the tribals and protect them from
exploitation. Therefore, the success or failure has wider implications. However, a number
of studies pointed out that the performance of these agencies is far from satisfactory. Quite a
large number of tribals were not aware of the existence of ITDA, therefore, unable to avail
of the benefits. The procedures are cumbersome and some of the programmes were not
viable, There has been a lack of coordination among the various developmental
departments and lukewarm attitude of the financial institutions rlso contributed largely to
the unimpressive performance of these institutions. That is the reason why during the
Seventh Plan period it was proposed to undertake an evaluation study on the impact of
different development project meant for the socioeconomic uplift of tribals.
-
Check Your Progress 2
Note : i) Use the space given below for your answers..
ii) Check your answers with those given at the end of the unit.
1) Write a short note on Hill Area Development Programme.

--.
2) What are the areas which have been given prbrity in the tribal Sub-plan of the
Integrated Tribal Development Agency?
Decentrnlimttion and Development
25.9 ASSET ORIENTED APPROACH

Lack of adequate employment and chronic under-employment are the most difficult
problems of rural India. This has led to a large-scale poverty in the midst of surplus
manpower and abundant natural resources. Poverty is the rtsult of poor income, inadequate
supply of goods and services and defective distribution and inequitable spread of wealth.
Removal of poverty and provision of suitable employment opportunities has been the major
thrust of all the Five Year Plans. Several measures have been initiated in this direction.
However, the measures did not achieve success as desired and performance was very
disappointing. It is said time and again that the rural poor have been by-passed both in
terms of growth and distribution of gains of growth. It was with this in view that the
Government of India has evolved certain programmes specially to tackle the poverty lin
rural India and those programmes were launched over a period of time. Let us describe
them briefly and study the organisational set up of the specialised agency to which the
programmes have been entrusted.
i) Small Farmer's Development Agency (SFDA) and Marginal Farmer's and
Agricultural Labour Development Agency (MFAL) :
It has been pointed out that some of the earlier programmes did not help the poor.
Therefore, on the recommendations of the Rural Credit Review Committee, two new
agencies have been initiated by the Government of India in order to help the small and
marginal farmers and agricultural labourers. Small Farmer's Development Agency (SFDA)
and Marginal Farmer's and Agricultural Labour Development Agency (MFAL) were
established in 1971-72 for the benefit of small farmers and marginal farmers and
agricultural labourers respectively.
The main thrust of these agencies is to assist persons specially identified in improving their income
level. To achieve this objective, the agencies have to identify the target group according to
the norms laid down, draw up suitable programmes for improved agricultural and allied
occupations, arrange credit through institutional sources and get the programmes executed
through the existing organisational arrangement. The main focus is on agricultural
production. The programme includes improved agricultural methods, land development.
soil conservation, minor irrigation, horticulture, field demonstrations etc. The agencies are
also expected to take up subsidiary occupations such as dairying, poultry, piggery, sheep
and goat rearing, fisheries etc.
The SFDA and MFAL have been established under Societies Registration Act 1860.
Therefore, they enjoy certain amount of autonomy in their functioning. The District Collector
is the chairperson and the Project Officer is the Vice-Chairperson. The other members of
Committee consists of the heads of the developmental departments and a few non-officials
' at the district level.
\

The identified beneficiaries.underSFDA and MFAL get the benefit of 25 per cent and
1
33 -% of subsidy on the total investment for various programmes such as land
3
development, soil conservation, animal husbandry etc.'~owever,there is a ceiling on such a
subsidy. In case of community irrigation works. a liberal subsidy of 50 per cent is allowed.
Scheduled Tribes farmers get 50 per cent of the subsidy in view of their general economic
backwardness. Thus, different schemes have been visualised under the SFDA and MFAL
agencies.
i) An Analysis
An evaluation of SFDq and MFAL is necessary since expe~ienceof these
schemes will have impact on the subsequent developments in the anti-poverty
ptogrammes. It IS po~nttldout by several studies that the coverage of beneficiaries has been
much below than that of the expected levels. But the amount, spent on the targeted group, is '
quite impressive. This however, does not indicate how many beneficiary families were
really helped to become economically viable and could cross the poverty line.
Some more short-comings in the working of these agencies deserve attention. It appears that
no proper care seems to have been exercised in the selection of some of the projects. Critics
also pointed out that while selecting beneficiaries, proper care was not exercised, with the
result a number of affluent farmers got the benefits through manipulation and foul methoc'
Very little attention had been paid to identify the agricultural 'labourers and scheduled castes
and tribes. No reliable data is available, till today, about different categories of people who
It was found that the procedures, prescribed by the financial institutions, were cumbersome. Sped.lired Agmdes for
This resulted in delay and corruption was rampant, It has also led to the growth of middlemen Dev-
called pyravikars who did considerable damage to the schemes.
The above mentioned problems are illustrative and not exhaustive. The problems are
general in nature and these new agencies are no exception to it. Since the problems of the
rural poor are many and complex in nature, they need a thorough analysis in the selection of
beneficiaries with sdlicient care to the factors of eligibility and needs.
It should be noted that with effect from October 2, 1980 the SFDA and MFAL have been
merged with Integrated Rural Development Programme which is ultimately handed over to
the District Rural Development Agency for planning and implementation.
ii) Minimum Needs Programme
In 1974, the Government of India introduced the "Minimum Needs Programme" to
improve the quality of life of the rural poor and provide infrastructure facilities required for
supporting.and supplementing various programmes which have been started to help the
rural poor. This programme is essentially meant for human resource development. It seeks
to improve the consumption levels of those living below the poverty line and thereby
improve their productive capacity. The main components of minimum needs programmes
are 1) elementary education; 2) rural health; 3) rural water supply; 4) rural roads: 5) rural
electrification; 6) house sites for landless labourers; 7J nutrition and 8) environmental
improvements of urban slums.
Nearly six thousand crores were provided during the sixth plan while a total provision of
about ten thousand crores were made under central and state sector during the seventh plan.
It is quite a substantial amqunt and gives indication of the commitment of the Government
towards rural development. All the programmes mentioned above have been handled by
different agencies such as DRDA, DPAP etc., at the implementation stage.
iii) Special Livestock Production Programme
The Special Livestock Production Programme was launched in 1975 mainly to provide
employment opportunities to the rural poor through improvements in the livestock products
such as milk, wool, eggs etc., and to set up sheep, poultry, piggery production units. This
programme is in operation in about 183 districts in thirteen states and four union territories.
One third of the beneficiaries will have to be from SCs and STs only. This programme is
also managed by DRDA.
iv) Antyodaya
The Antyodaya scheme is based on Gandhian philosophy. Its main objective is to uplift the
poorest of the poor in the rural areas. The sole criteria in the selection of people is the
extent of poverty and no discrimination is shown on the basis of caste, class, religion etc. .
Under this scheme, an attempt is made to identify the requirements of the poorest families
amongst the poor living below the poverty line and take appropriate steps for their
betterment. It was first launched in Rajasthan in 1977. The cost of the scheme is to be
shared by the state government, financial institutions and Khadi and Village Industries
Commission. Certain guidelines have been prescribed to identify the target group.
Several schemes have been formulated under this programme. Allotment of agricultural
land and credit facilities for securing inputs for the development of agriculture, old age
pension to the old, infirm and disabled would be provided to the Antyodaya families. Loans
from the financial institutions have been arranged under differentialrate of interest to the
families for the purchase of bullock cart, camel cart, donkey cart, pair of cows, sheep, goat
units etc. Self-employmentschemes to the rural artisans have been provided through Khadi
Board. School going children of Antyodaya families are provided with school dress, books,
medical facilities etc., at free of cost.
The policy, strategy and guidelines of this scheme are prepared by a state policy committee
headed by the Chief Minister. With the help of a full-fledgedCommissionerfor Antyodaya
scheme, the Chief Secretary is responsible for implementing the various programmes. There
is a District Antyodaya Committee headed by District Collector with officials and non-
officials as members of the committee. This committee is responsible for the implementation
of the programme at the district level. The Panchayati Raj Institutions, the Co-operative and
other financial institutions have an important role to play in this programme.
Government of India had decided to extend its assistance for the programme if implemented
under the Integrated Rural Development Scheme, cultural attainments. Their literacy rate is
low and government service is the most disappointing factor.

With a view to bring the tribal population in the country within the mainstream of socio-
economic development, an integrated sub-plan approach for tribal development was
adopted.duringthe Fifth Five Year Plan. This new strategy is adopted in almost all the
states where there is tribal population and the Integrated Tribal Development Agencies
were establisha for each tribal area. Now, we will discuss the tribal sub-plan objectives and
the programme of ITDA.
a) Tribal Sub-plan Objectives
The basic objectives of the subplan and ITDA are to narrow down the gap between the
backwardness of the tribal areas and the economically developed areas. It is intended to
improve the quality of life of these long depressed and neglected sections of the society. It is
also pointed out that the tribal areas, which have become easy prey of non-tribals, have to
be liberated from the all forms of exploitation by non-tribals. Further, it is proposed to
provide suitable locations to rehabilitate those tribal families, displaced due to location of
projects like power, irrigation, industry, mining etc. It is a gigantic task.
The Integrated Tribal Development Agency is registered under Society's Registration Act
with the District Collector as the Chairperson and the Project Officer as the Chief Executive.
There is a Managing Committee consisting of official and non-official members of the
district concerned.
Under the special assistance for tribal development, the Fifth Plan provided Rs. 526 crores,
while the same has come down to Rs. 485 crores in the Sixth Plan. However, during the
Seventh Plan, there was an increase in the allocation to Rs. 756 crores.

b) The Programmes of the ITDA

The main thrust of the ITDA is to-encourage the programmes of the local nature. However,
the tribal sub-plan was to identify the thrust areas of the different areas for the different
regions. After a review of the state efforts, some major areas were identified for action. The
following areas have been given priority in the tribal sub-plan of the ITDA.
a) The major area in the ITDA scheme is on agriculture and allied activities such as animal
husbandry, horticulture etc. By horticulture is meant intensive cultivation of vegetables,
fruits and flower crops on relatively small plots. Under this programme, the ITDA
undertakes the supply of high yielding variety seeds, plough bullocks, oil engines, electric
niotor pumpsets, soil conservation, horticulture and orchard development.
b) Supply of milch animals, sheep, goat, piggery duck and establishment of fodder plots are
undertaken by the ITDA.
c) Minor irrigation works, irrigation wells, tube-borewells community irrigation wells and
filter points are undertaken by the ITDA.
d) The ITDA provides assistance to form cooperative societies for the benefit of tribals.
A number of other activities have been taken up by the ITDA for the welfare of the tribals.
In all these activities, today, the oDRDAis responsible for the execution of Antyodaya
scheme in all the states.
In view of its working and experience so far gained, it is pointed out that the loans given to
the beneficiaries should be utilised for the purpose for which they were granted. Further,
there is a need for involving voluntary agencies in these programmes. Finally, the success of
the schemes depends mostly on the fair selection of the target group, integrity and sense of
devotion of the offi~ialsand non-officials and the w-operation of different segments of the
society.
v) Food for Work Programme
fn 1977, Food for Work Programme was launched to provide opportunities of work to the
rural poor. It was also intended to provide employment opportunities during slack season
and.create durable assets in the form of roads, canals, minor irrigation projects. The basic
aim was to provide additional employment in rural areas and at the same time create
durable community assets which would strengthen the rural infrastructure. The workers
were mid mrtlv in cash and mrtlv in food erains. Initiallv. the results were encouraeine but
after sometime, there was steep decline in employment opportunities. Therefore, the food
for work programme was reshaped into National Rural Employment Programme in
October, 1980.
vi) National Rural Employment Programme (NREP)
With a view to provide employment opportunities to nual workers, particularly during the
lean seasonlor severe drought conditions, an integrated scheme has been introduced in
1980. It is expected to prepare a district level employment plan keeping in view the
availability of skilled and unskilled workers. Projects are to be prepared for each district on
the basis of the felt needs of the rural community. The NREP has to give priority to works
relating to social forestry and pasture development, soil and water conservation, imgation,
flood control and drainage and improvements to village tanks. further, 10 per cent of the
resources under this scheme are allotted to people belonging to Scheduled Castes and
Scheduled Tribes. Similarly, 10 per cent of the resources are earmarked to social forestry
programmes. It is a centrally sponsored scheme which will be executed through Panchayati
Raj Institution (PRIs) and its implementation is entrusted to DRDA. There is a provision
for involving voluntary organisations in this venture. Substantial allocations have been
made in the VI and VII Five Year Plans. In 1989, the Government of India launched yet
another employment generation programme called Jawahar Rozgai Yojana. It is intended
to combine National Rural Employment Programme (NREP) and Rural Landless
Employment Guarantee Programme (RLEGP). \.

vii) Rural Landless Employment Guarantee Programme (RLEGP)

In August 1983, yet another programme called the Rural Landless Employment Guarantee
Programme (RLEGP) was launched with an aim to alleviate poverty, unemployment,
underemployment among the rural landless workers. The main objectives of the programme
are t0.a) improve and expand employment opportunities for the rural landless and provision
for guarantee of employment to at least one member of every landless family up to 80 to 100
days in a year and b) creation of durable assets for strengthening of the rural infrastructure,
capable of increasing production. Rural link roads, field irrigation channels, land
development, reclamation of waste lands, social forestry have been identified as priority
items under the RLEGP. It is entirely financed by the Government of India. In the Sixth
Plan,.an amount of Rs. 500 crores were provided. About one thousand crore. have been
earmarked during the Seventh Plan period.

The RLEGP has created substantial infrastructure facilities and community assets.
However, the amount of employment opportunities provided to the landless has been
meagre because of the concentration of asset creation rather than creation of required
quantum of employment.
viii) Integrated Rural Development Programme (IRDP)
The concept of Integrated Rural Development Programme (IRDP) was introduced in 1978-79.
This has been started mainly with a view to achieve better r ~ u l t with
s proper coordination
and integration of different programmes. The attempts =.far made have been piecemeal,
fragmented rather than integrated and comprehensive. This resulted in lopsided approach
in the area of rural development. The different programmes such as SFDA, MFAL, DPAP,
NREP, RLEGP, MNP, Antyodaya etc., did not bring desired results and on the other hand
a majority of the rural population continue to remain extremely poo; without
income generating assets and without access to institutional credit and other inputs.
Keeping these aspects in view, a new strategy has been evolved to improve the economic
and social life of the poorest of the poor living in the rural areas. The scheme is designed as
the Integrated Rural Development Programme. Most of the earlier schemes are now
merged into IRDP. It is extended to all the districts in the country.
The IRDP aims at generating additional employment opportunities to raise the income
levels of all the poor fimilies who live below the poverty line. The thrust of the scheme is
on the poorest of the poor, consisting of small and marginal farmers, agricultural and non-
agricultural labourers, rural artisans and craftsmen, scheduled castes and scheduled tribes.
The main effort is to prepare area specific plans for full employment, seek people's
particioation, involve voluntary agencies, motivate target groups and evaluate the
programme through research and concurrent evaluation.
The major focus of the IRDP is to undertake agricultural development, animal husbandry,
ficheriec mil and villnoe fnrmtru nnd hnrtiri~lti~re
The develnnment nf villaa~and rnttnoe
h k r l i o p t i o n and Development entrusted to the IRDP. Thus the integrated approach is expected to yield significant results
in evolving a new strategy to face the problem of poverty. . /

The implementation of the programme is done by the District Rural Development Agncy,
a registered body under Society's Registration Act 1860. All the schemes in the district have
been entrusted to DRDA. It is an autonomous body with district collector as the
Chairperson and Project Officer as the executive authority. Recently, the Karnataka
Government has placed the DRDA under the control of Zilla Parishad.
4a

It is pointed out that for the proper implementation of all the schemes so far described, the
financial institutions have an important role to play. The presence of the bankers is all
pervading, starting right from identification of target group, selection of asset, adjustment of
subsidy and follow up on the use of credit. Thus, they have a very crucial role in the
implementation of various schemes in the rural development.
A number of evaluation studies have indicated that the IRDP did not succeed in identifying
the beneficiaries to the extent it was expected. The wrong identification is said to be
between 15 and 20 per cent. Further, there have been complaints of corrupt practices due to
the role of pyravikars i.e. middlemen because of lack of awareness among the beneficiaries.
In certain places, the banking services were inadequate which invariably resulted in
inordinate delay in disposing of loan applications. Absence of appropriate technology,
inadequcy of infrastructure, hostile political conditions in the rural area accounted for poor
implementation.

Check Your Progress 3

Note : i) Use 'the space given below for your answers.
ii) Check your answers with those given at the end of the unit.
1) Why was the Minimum Needs Programme introduced?

2) Write a short note on Antyodaya.

........................................................................
3) What are the objectives of the Integrated Rural Development Programme?

25.10 LET US SUM UP

Beginning with the Fifth Five Year Plan, a number of specialised agencies for rural
development have been organised by the Central Government and by all the states with a
hope to eliminate poverty by lifting people from below the poverty line through various
schemes. There have been massive investment in these programmes. But sadly enough, they
The following analysis is based on studies conducted by academics, government and Specidised Agencies fo.
voluntary bodies : Development

It is pointed out that the agencies did not leave any significant and positive impact on the
conditions of the rural poor. On the other hand, the rural rich got the benefits through
manipulation and tightened their grip over the poor. In case of a few who got the benefit
did not use the assistance for the purpose for which it was given but diverted the same for
other pressing need. The unimpressive performance of the specialised agencies may be
traced to the following factors.
A critical analysis of the working of these agencies reveals that the special agencies have
been run by those who belong to the regular administrative machinery. In fact several
officers are deputed from regulatory departments. Almost all the schemes have to be
implemented through the usual machinery available at the grassroot level. This raises the
question that how can an agency which is manned by the same bureaucrats and dependent
on the same administrative machinery be different from the rest of the machinery in actual
practice.
In fact the specialised agencies have created new problems. The regular staff treated the
work of the agencies as additional burden. The specialised agencies do not have a
machinery to monitor the schemes. The district bureaucracy do not feel happy with this
,new agencies. In certain cases, officers who have been inconvenient in the department were
sent to the new agencies. It means they do not have any stake nor commitment. We find an
actue problem of coordination. This is only an illustration but not an exhaustive analysis of
the problems faced by the specialised agencies.
In the existing socio-economicculture, it is very difficult to insulate the vested interests from
these agencies. The agencies are guided by the rural elite at various levels. The rural poor
are helplessly dependents on these elite. Mere establishment of a special agency would not
help in breaking the stronghold of the rural elite on the administrative culture of the state.
While identifying the target groups, the personnel of the agencies depend on the rural elite.
There are a number of cases where the qualified and deserving were ignored. It means that
the special agencies could not be of much help in an anti-poor culture inside and outside the
agency. The financial help, extended to the target group in the shape of subsidy/seed money
is treated as a 'dole'. At least that is the impression one gets from the existing political
culture. Therefore, the middlemen, who are corrupt knock away a large cake of subsidy
component of the loan. Special agencies should have evolved their own special or
convenient procedures to transmit the benefits to the target members.
Finally, the very idea of creating several special agencies, indicate that there has been failure
in the working of Governmental institutions. Therefore, modifications are carried out. It
means that the instruments are not sharp enough to attack the rural poverty. It calls for a
deeper analysis to understand the root cause of the existing socio-economic structure which
needs to be transformed drastically.

25.11 KEY WORDS

Afforestation : Planting of land, not formerly so covered.
Ground water exploitation : Making use of water lying under the surface of the ground.
Infrastructure facilities : Facilities regarding the basic structure which supports the whole
system. For e.g., it would be water supply, means of communication etc.
Livestock : domestic animals.
Margin money :The least amount of money at which a transaction is economically sound.
Marginal farmer :The farmers who makes just the profit at which a transaction is possible.
Waste land : Uncultivated, uninhabited land.
Water shed :A water parting, the elevated line which may or may not be sharply defined,
separating two contiguous drainage areas from which the headstreams flow in different
.. . . ...- . .
Decentralisation and Development
25.12 SOME USEFUL BOOKS

Arora, R.C., 1986. Inregrafed Rural Developmenf; S. Chand : New Delhi.

Paul,S., 1978. Rural Poverty :The Cancer and fhe Cure; Sugar : New Delhi.
Prasad, Kamta, 1985. Planning for Poverly Alleviation; Agricole Publisher : New Delhi.
Punit, A.C., 1981. Profiles of Poverty in India; B.R. Publication : New Delhi.
Sundaram, I.S., 1984. Anti Poverty Rural Development in India; D.K. Publisher : New Delh,i.

25.13 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress 1
1) See Section 25.3
2) See Section 25.5 (i)
3) See Section 25.6
Check Your Progress 2
1 ) See Section 25.7
2) See Section 25.8 (ii)
Check Your Progress 3
I ) See Section 25.9 (ii)
2) See Section 25.9 (iv)
3) See Section 25.9 (viii)
UNIT 26 EVOLUTION AND EXPANSION
OF PUBLIC SECTOR
structure
26.0 Objectives
26.1 lntroduction
26.2 Public Sector and Public Enterprise - Meaning
26.3 Evolution of Public Sector in India
26.4 Objectives of Public Sector
26.5 Expansion of Public Sector and its Impact on .the Economy
26.6 Let Us Sum Up
26.7 Key Words
26.8 References
26.9 Answers to Check Your Progress Exercises

26.0 OBJECTIVES
After studying this unit, you should be able to :
explain the meaning of public sector and public enterprise
.discuss the evolution' of public sector in India
highlight the objectives of public sector; and
analyse the expansion of public sector and its effect on the economy.

26.1 INTRODUCTION -
~ t d f intervention
i of a positive kind in the regulation, ownership, and operation
of industries and services has become an essential activity of public
adfninistration in almost all the countries. For example, the manufacturing of
arms and ammunition and other related activities for the defence of the country
had been an indispensable part of the state function. During ancient times also,
as mentioned in Kautilaya's Arthasastra, there are references about
departmental heads dealing with coinage and other economic activities.
Over the years, the role of the state in undertaking commercial activities has
gained importance due to changes in the economic system. The most important
reason has been the advent of industrial revolution and its expansion which has
necessitated state intervention in various forms: During the period of Great
Depression in the early thirties, the view which was held that if the government
is kept out of the, business it will automatically provide the community with
necessary economic development had been amply disproved. In USA during
this period the federal government entered into the field of economic and
industrial management in a bigger way than before.
The extent of the state regulation or control of industries varies from country t o
country. The government's ownership of industry in the socialist societies is
based on the plea that public sector plays an important role in bringing economic
development. In the case of capitalist countries, it is felt that there should be
conscious effort to keep the government out of economic operations as far as
possible. In a developing country like India, public sector is largely a necessity
and not a matter of choice.
In this unit, we will explain h e meaning of public sector, public enterprise and
discuss the evolution of public sector in India. The unit will also.dea1 with the
objectives of public sector and highlight the expanskn of public sector and its
impact on the economy in terms of investment, turnover, employment, bringing
about balanced regional development etc.
=*.dlkr-nt
26.2 PUBLIC SECTOR AND PUBLIC ENTERPRISE-
MEANING
Despite a large volume of literature on the subject which has considered the
importance of public sector in the econcmic development, the meaning of public
sector, public enterprise, public sector undertaking continues to be vague and
varying. Now let us know the meaning of these terms.
As we have read in Block 2 of this course, the present Indian economic structure
is characterised as 'mixed economy' with the presence of public, private and
joint sectors. Public sector in a wider sense covers all the governmental activities
which are social, industrial, and commercial in nature. Public sector is said to
cover all publicly controlled activities, the developmental activities in the fields
of education, public health, transport and communications, infrastructure etc.
Public Sector includes not only government departments but also government
companies whether in the central or the state sector, irrigation and power
projects, railways, posts and telegraphs, ordnance factories, other departmental
undertakings. The banking, insurance, financial and other services also come
under the purview of public sector.
The Bureau of Public Enterprises, Government of India in its annual Report
1973-74 states, "Public Sector in its widest sense covers all activities of the
Government. It is in this sense that the overall expenditure mentioned in the
Five Year Plans are described. In a more specific sense, however, public sector
would cover industrial and commercial undertakings of the Government which
are in the form of state corporations or companies registered under the Indian
Companies Act ..........".
Public enterprises, on the other hand, can be defined as those specific forms of
institutions set up either at the central, state or local levels involving
manufacturing or production of goods including agriculture or making available
a service for the price. Such institutions can be maintained either'directly in the
form of a departmental organisation or through any autonomous body. The
main focus is that in public enterprise, the price is charged for goods and services
provided by it. Such price may cover the entire cost or not but the aim is that the
enterprise as a whole, should at least have a breakeven. Therefore, the.socia1
services, the administrative functions of the government are not covered under
the term public enterprises, while public utility services like railways, postal
services and telecommunications, though managed by the respective
departments are called public enterprises because the objective is to breakeven
over a period of time.
According to the United Nations Document, a public enterprise is that
organisation in which the government has a majority of interest of ownership
andlor management. In one of the studies of the Standing Conference of Public
Enterprises (SCOPE), a public enterprise is defined as an entitylorganisation
which is owned andlor controlled by public authorities and whose output is
marketed. In U K, public enterprises are known as nationalised industry
because most of them came into existence as a result of nationalisation of
existing industries. In India, on the other hand, majority of the public
enterprises have been set up as a result of governmental entrepreneurial efforts
after Independence.
Thus, while public sector refers in a widest sense to all the economic activities
undertaken by the government, public enterprises are those specific forms of
institutions or establishments in the public sector, responsible for production of
certain goods and services. Public enterprises are also referred as public sector
undertakingslunits, government controlled enterprises, state economic
enterprises. Public enterprises are set up in various forms like corporation,
company etc., about which we will discuss in Unit 27.

.26.3 EVOLUTION OF PUBLIC SECTOR IN INDIA

The earliest'reference to the state ownership and operation of industry in India is
development of industries as a remedy for frequent famines. The Commission
stressed the need for governmental help for the creation of new industries. It also
suggested that the government should start manufacturing of sugar, cotton, wool,
silk, paper, pottery, glass.etc. However, no action was taken by the then government
as India's role was confined to that of an exporter of rawmaterials for manufacturers
in England. Even in the Report of the Indian Industrial Commission (1904) the
government's policy of industrial development was confined to a few provisions of
technical and industrial education, collection and dissemination of commercial
information and publication of monographs on Indian industries. In 1905, the
government established a Department of Commerce and Industry. It was hoped that
public sector would be initiated. Though some steps were taken in this regard, it
aroused opposition by the European Communities who interpreted the action of the
government as a serious menace t o private enterprise and considered it as an
intervention on the part of the state in matters beyond their sphere.
The First World War brought to the fore, the vulnerability of the Indian
economy. After the commencement of the war, the government resolved to
examine the industrial policy. It was felt that a definite and self-conscious policy
of improving the industrial capabilities of India should be pursued after the war.
This led to the appointment of Industrial Finance Commission in 1916. It
recommended that the government must play an active part in industrial
development. It also felt there was a need for establishing certain kty industries.
Later, under the Government of India Act 1935, the developrtlent of ipdustry
became a provincial subject and the Centre had only the powers to give
directions and provide technical education. Since the provincial.gsvernment
lacked adequate experience, organisational funds, ipitiative- and creativity,
nothing much was done except the creation of departments of industries in
provinces. In 1937, when the Congress came to power in many provinces, the
Conference of Industry Ministries of the provinces under the Chairmanship of
Subhash Chandra Bose emphasised the need for industrialisation and
recommended a comprehensive national plan for the purpose. It was also felt
that the public utility services could be owned by the qentral, provincial and local
governments. Even the key indust* like machine tools, manufactute of
machinery, heavy engineering, automobiles, chemicals and fertilisers were
recommended to be under the direct operation of the state.

In April 1945, the government issued a statement on industnal policy ander

which continuation of ordnance factories, railways and public utility services
already under the state ownership and operation was confirmed. It declared that
some of the'basic industries should also be under the ownership of the slate.
Such state intervention was required as adequate capital was not forthcoming
.and also it was essential in the national interest to promote such industries. The
Advisory Planning Board set up in December, 1946, suggested that the state
should take into its own hands the ownership and management of large
industries. However, the interim government which came into power in 1946
was more concerned with the transfer of power, and therefore nothing could be
done on this recommendation.
After Independence, the government had to tackle the urgent and difficult
problem of securing growth at a faster rate. Basic requirements of economic
development were lacking and foundation for economic growth had to be laid.
For this purpose it was considered that building up of infrastructure was
essential. It was also felt that owing to long gestation period, low yield and high
capital intensive nature of the investments, which could not be taken up by the
private enterprises, state intervention in economic activities, was necessary.
Keeping in view the varied problems faced by India on its economic, social
fronts, it became imperative to introduce public sector which was to help in
building a sound agricultural and industrial base, overcoming the economic and
social backwardness.
The growth of public sector in India over the years, since Independence can be
traced to the Industrial Policy Resolutions made by the government. The
Industrial Policy Resolution of 1948 emphasised on the growth of industry and
expanding production capacity of both the public and pri~ate~sectors. It made it
clear that the State must play a progressively active role in the development of
 industries. It was also felt that due to the inadequacy of resources, the State may
not be able to enter into all industries as widely as it may desire. Therefore, the
decision was to set up upits of production in the newer fields rather than
acquiring or running existing units. It was also felt that the private enterprises if
properly directed and regulated must also play an important role. According to
the Resolution, the industries 'were divided into four categories. The first
category included the manufacturing of arms and ammunition, production and
control of atomic energy, ownership and management of railways and transport.
T h ~ s ewere to be under the exclusive monopoly of the Central Government.
The second category which covered setting up of new undertakings like coal,
'iron and steel, aircraft manufacturing, ship building, telephones etc., were to be
the responqbility of Central, State governments and municipal corporations.
The third category of industries which included automobiles, heavy machinery
etc., was to be increasingly subject to Central control and regulation in
co-operation with state governments. Rest of the industries were left to the
private enterprises subject to the provision that' the State will also progressively
participate in this field and will not hesitate to intervene where the progress of
industry, under private enterprise is unsatisfactory.
The Constitution of India which was adopted later, emphasised the role of the 1
State for ensuring better utilisation of resources, and also in preventing
concentration of wealth in few hands. Article 39 of the Constitution provides
that "the State shall, in particular, direct its policy towards securing that the
ownership and control of the material resources of the community are so
distributed as best to subserve the common good" and that "the operation of
economic system does not result in the concentration of wealth and means of
production to the common detriment" The introduction of planned economy
and setting the goal of achieving socialistic pattern of society also emphasised
the need for public sector and for its rapid expansion. It was felt that the public
sector should not only initiate developments in the activities in which the private
sector was either unwilling or unable to undertake, but also play a dominant role
in shaping the entire economy of the country. Thus, the extensive role of the
public sector in the country had been well established after Independence.
The 'Industrial Policy Resolution of 1956 emphasised on the need for planned
and economic development and declared that all industries of public utility
services should be in the public sector. Other industries which are essential for
the development of the country and required investment on a large scale should
also be in the public sector. Thus, the government was to assume direct
responsibility for future development cf industries over a wide area. The
industries under the Resolution of 1956 were classified into three categories.
Category one consisted of industries like arms, ammunition, defence equipment
etc., the development of which would be the exclusive monopoly of the State. In
the second category, industries were to be progressive!^ State-owned and the
State was to take initiative to establish new undertakings. Th,e private sector was
expected to supplement the efforts of the state. The third'category comprised
the consumer industries, the development of which was generally left to the
initiative of private sector though the State could set up any industry in this
category. From the Industrial Policy Resolution, it is amply clear that India has
consciously adopted the policy of mixed economy where the co-existence of
public and private sectois have been emphasised. We have already discussed in
detail the concept of mixed economy in Unit 5 of Block 2 of this Course.

It is clear from the Industrial Policy Resolutions that the compulsions of securing
the desired socio-economic objectives for improving the standard of living of
people, and also the then prevailing inability of the private enterprises to meet
this challenge were primarily responsible for assigning a dominant role to public
sector in India. The Industrial Policy of 1977 also envisaged a greater role for
public sector in various fields. The Industrial Policy Statement made in 1980,
also expressed that public )ector will continue to play an increasingly important
role. During the last two decades, there has been an unprecedented expansion
of public sector, to the extent that there is no sphere of economic activity left
where the direct participation of the public sector is not to be seen. This has led
to various positive benefits in the economy about which we will be discussing in
,. . -- -
 An important aspect which needs to be discussed is the objectives for the Evololkm .adExpudoll d
fulfilment of which the public sector has evolved in India. The Five Year Plans as Rtbk Sector
well as the Directive Principles of State Policy have enumerated a number of
objectives which are to be fulfilled by the public sector. Let us discuss these in
the next section.
Check Your .Progress 1
Note : i) Use the space given below for your answers.
ii) Check your answers with those given at the end of this unit.
1) Distinguish between public sector and public enterprise.
..............................................................................................

'
2) What steps were taken during the pre-Independence period towards
promoting State intervention in economic activities?

);. I lichlicht the rnkiin p~-o\i\ic>n.o f Indu\tri:~l Policv Resolution of 1948.

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

26.4 OBJECTIVES OF PUBLIC SECTOR

Though the reasons for the expansion of public sector in different countries, may
differ, the United Nations has clearly given a comprehensive understanding of
the reasons why the governments have set up the public sector. Following are
some of the objectives as indicated by the United Nations :
1) Government must supply the developmental initiative. The purpose of'the
future development will require the stimulus of the government on the
demand side and its determined direct participation in the economic and
social works. Such an initiative may come in the form of initiative fbr
investment and promotion' of industrial activity, initiative for developing
infrastructure and basic activities or tbe government may supply the
required managerial and technical capabilitiesoto the entetprise.
2) Government has specific priorities and compulsions which are unlikely to
be realised if they are left erltirely to the private enterprise.
3) Government may be able to ~upplementthe efforts of the private sector in
import substitution and export promotional activities.
3) The government may wish to promote savings faster by generating
resources through prices charged by public sector enterprises. This is
Pllbaescecorud~enbpmeat being considered as more convenient method of resource mobilisation
rather than exclusive resort to measpre of borrowings from public.
5) The government may introduce public sector enterprises as an agency of
development in an under-developed region because the private sector has
a tendency to entrust their units in already developed region.
6) In many cases, the governments of the developing countries have certain
ideological objectives such as promotion of economic and social justice,
which also necessitates a greater role for public sector.
The state of Indian emnomy, at the time of Independence which is basically
agrari~n,with a weak industrial base, low level of savings and investment, near
absence of infrastructural facilities, made it imperative for the government to
step in to all sectors of the economy. Moreover there still exists considerable -
inequalities of income, low level of employment opportunities, serious regional
imbalances in economic development and inadequate trained manpower. Given
the types and ranges of problems faced by the economy in the economic, social
and strategic fronts, it became a pragmatic compulsion to expand the role of
public sector as an instrument of self-reliant economic growth so as to develop a
sound agriculture and industrial base, diversify public economy and overcome
the socio-economic backwardness.
The need for public sector arises to meet the following objectives :
i) to help in the rapid economic growth and industrialisation of the country
and create the necessary infrastructure for economic developinent;
ii) to earn return on investment and thus generate resources for development,
iii) to promote redistribution of income and wealth;
iv) to create employment opportunities;
v) to promote balanced regional development;
vi) to assist in the development of small-scale and ancillary industries;
vii) to promote import substitution, save and earn foreign exchange for the
economy.
These objectives are the macro-goals or broad objectives of the public sector.
Till now no effort has been made to lay down micro-objectives for public
enterprises on an individual basis. Andhra Pradesh was the first state to have
brought out a white paper on state level public sector enterprises, in 1989 which
was the first of its kind in India. There has been persistent demand on the
Central Government to present a white paper on public enterprises. Earlier too,
the Administrative Reforms Commission and the Parliamentary Committees
have repeatedly recommended to the government to specify the objectives of
every public enterprise. This will facilitate the evaluation of the performance of
public enterprise, in terms of the fulfilment of the laid down objectives. A recent
development in this direction is the practice adopted by the government in
signing a Memorandum of Understanding (MOU) between the government and
the enterprise. It is a simple and effective technique of establishing clear
objectives and targets, unambiguous criteria for evaluation and a system of
rewards for achievement. Nearly 26 public sector enterprises have been covered
by this system and one hundred more are likely to be covered during 1991-92.

26.5 EXPANSION OF PUBLIC SECTOR AND ITS

IMPACT ON THE. ECONOMY
In India, before Independence, State intervention in economic and commercial
activities was confined to a few areas like railways, ports, posts and telegraphs
ordnance factories etc. Since Independence, the range of activities and products
of public sector have expanded tremendously. It includes making of steel,
mining of coal, ferrous and nonferrous minerals, extraction and refining of
crude oil,, manufacturing of tools, machines, electrical, building equipment,
telecommunications, cement, textiles, newsprint, and many other consumer,
trading and service activities. These activities dominate the national economy in
several sectors especially in the production of basic metal industries, fertilisers,
and fuel. The public sector's contribution to the total industrial production
constitutes more than 50% in many metals, steel and coal, while it is 100% in the Evolution and Erprnsba of
Fuwc sector
area of petroleum, copper, lead and electromechanical teleprinters.
In the last two decades there has been continued large investments in public
sector. This was done with a view to accelerating the growth of core sectors of
the economy, to serve the equipment needs of the strategically important sectors
like railways, telecommunications, defence etc., and alsd to achieve a certain
degree of self-sufficiency in critical sectors. There has been growth of consumer
oriented industries in public sector like drugs, hotels, food industries etc. This
was done to ensure easier availability of vital articles of mass consumption and to
check prices of important products.
There are a large number. of public enterprises operating in national and
international trade, consultancy, contract and construction activities,
communications etc. The public sector coverage has of late enlarged and a
sizeable proportion of its outlay has been directed towards the various public
enterprises. At the commencement of the First Five Year Plan, there were only
five Central Government enterprises and the number rose to 244 by March 1990.
The growth of public sector enterprises has been phenomenal not only in terms
of investment, but also in terms of production, profitability and range of
activities. The imperatives of bringing about accelerated economic growth of the
country as well as achieving socio-economic goals under planned development
has given fillip to the expansion of public sector.
The expansion of public sector in terms of the number as well as investment has
led to many positive effects on the economy in terms of output, employment,
generation of resources, balanced regional development in the country etc. Let
us discuss these briefly.
Investment
The investment in central public sector undertakings alone has-grown
appreciably over.al1 these years. From Rs. 29 crore as on April 1st 1951 in five
enterprises, the moesknent has gradually increased to Rs. 99,315 crore in 244
operational public enterprises as on March 31, 1990. The plan-wise growth of
investment in central public sector enterprises from 1st April 1957 to 31 March,
1990, is given in the table belob :
Tabk 1

Plan-wise Growth of Investment in Central Public Enterprlscs

Total Investment No. of

(Rs. in Crores) Enterprises
At the commencement of 29 ,5
1st Five Year Plan (1.4.51)
At the commencement of 81 21
2nd Five Year Plan (1.4.56)
At the commencement of 948 47
3rd Five Year Plan (1.4.61)
At the end of 2410 73
3rd Five Year Plan (31.3.66)
At the commencement of 3897 84
4th Five Year Plan (1.4.69)
At the fommencement of 6237 122
5th Five Year Plan (1.4.74)
At the end of 15534 169
5th Five Year Plan (31.3.79)
At the commencement of 18150 179
6th Five Year Plan (1.4.80)
At the commencement of 42673 215
7th Five Year Plan.(1.4.85)
As on 31.3.1989 85628 238
As on 31.3.1990 (i.e. at the end of 993 15 244
7th Fivc' Ycar Plan)
I Scaa and Dc*e4opment Besides the number of units given in the table above, there are many enterpri.ses
which are under the various departments of the government. If those are
in'cluded, the amount of investment would become tremendous.
Turnover
The expansion of public sector can also be analysed from the turnover of the
public enterprises. The turnover which during 1979-80, was only 23,290 crore
rose to Rs. 93,122.13 crore in 1988-89. During the last ten years, the turnover
has increased by nearly four times. The ratio of net turnover to capital employed
brings out the efficiency of utilisation of funds of any enterprise. During
1988-89, this ratio was about 127%. Bulk of this turnover is from enterprises like
Indian Oil Corporation, Oil and Natural Gas Commission, Steel Authority of
India and Food Corporation of India. In fact, the major tuinover is in the Oil and
Petroleum Industry. The public sector's role in the total economy of India has
been rapidly expanding since the beginning of planning. In terms of its
contribution to net domestic product which was only 3% at one time has already
increased to over 20%. Apart from 'the share in the Net Domestic Product, the
rapid rise of public sector is manifested in the growth of income. Over the last
few-decades the income of public enterprises has increased by 374 crore, a't an
annual rate of 20% as compared to 11% for the private sector in the organised
segment of the economy.
Infrastructure Development
Public Sector has contributed significantly to the development of strong
infrastructure which is essential for economic development. There has been
tremendous improvement in the road, rail, air and sea transport system. There
has been sufficient expansion of irrigation facilities, power, energy which has
contributed to agricultural and industrial development. Such improvemznts
brought about in the infrastructure by the public sector after Independence have
benefited the private sector too.
Balanced Regional Development
Public Sector had made significant contribution in bringing about balanced
regional development and accelerating economic growth. The position of
economic development in some states and regions in the country has not been
uniform over the years owing to some historic reasons and other factors. During
the pre-Independence days, there was concentration of industries in Bombay,
Calcutta and Madras while other parts of the country lagged behind. It was only
after 1951, that attention was paid towards these problems and' steps were
initiated to set up industries in other areas which had been neglected. The
Industrial Policy Resolution of 1956, and subsequently the Resolutions of 1977
and 1980 also emphasised the need for accelerated rate of growth in the
economy, speedy industrialisation and removal of imbalances in development
between different states/regions/areas. Hence, a substantial portion of
investment of public sector has been diverted to setting up large units in
backward regions and also in remote areas. It was with this objective of
developing the backward areas that all the four major steel plants have been set
up in Madhya Pradesh, Orissa, Bihar and West Bengal; fertiliser factories have
been located in Andhra Pradesh, Bihar, Assam and so on.
The dispersal of public sector units to a i the states and union territories has been
appreciable as it has led to the expansion of employment opportunities, growth
of small scale and ancillary industries along with the development of
infrastructural facilities: It is with this view of bringing about balanced regional
development that the government has been following the policy of giving
preferential treatment to backward states in the field of public sector investment.
Employment
The real strategic position of public sector can be seen by looking at its shares in
employment. The expansion of public sector has witnessed considerable
increase in employment. As on March 31, 1989, 232 Central Public Sector
enterprises employed 22.93 lakh people which constitutes more than one third
of the total employment in the organised sector. During 1978-79, the number of
employees in public sector was only 17.03 lakhs. State-wise distribution of
employees reveals that Bihar accounted for the largest number of 4.33 lakh .
employees as on March 31, 1990 followed by West Bengal,-Madhya Pradesh, Evdublonand Expmuh of
PGblicSeaor
Maharashtra, Utiar Pradesh. The industries,. which have a sizeablk number of
employees in the public sector include coal and lignite followed by steel, textiles,
heavy engineering, petroleum etc. The coal and ignite sector alone accounted
for more than 30 per cent of the total employees.
The public sector is becoming a model employer and most of the enterprises
have recognised their social responsibility in providing housing, educational,
medical, recreational facilities to the employees, especially in cases where the
projects are located in towns and villages which are inaccessible. The actual
gross investment incurred on township of public sector enterprises (including
work in progress) as on March 31, 1990 amounted to Rs. 2,965 crore. Housing is
a major contributory factor in bringing about an attachment of employees with
their enterprises and in promoting better and balanced industrial development
including higher productivity. Keeping in view the need for overall
improvement in the productivity of personnel working in various public
enterprises attention is being paid towards training and re-training programmes.
Public sector has been one of the instruments in bringing about development of
human resources.
Internal Resource Generation
Over all these years, public sector has been paying great attention towards
generating resources internally for financing their own expansion and for other
development activities. In the context of resource crunch'being faeed by the
country, the generation in internal resources by the public sector has assumed
greater importance. The gross internal resources generated by the public sector
enterprises during the third plan period was of the order of Rs. 287 crore which
in the seventh plan period went up to 37,678 crore. The public sector contributes
to the government exchequer by way of
i) dividends
ii) interest payment on loans
iii) income tax
iv) excise and other duties.
During the year 1989-90, such contribution amounted to Rs. 18,252 crore as
against Rs. 16,352 crore in the previous year, recording an increase of 11.6 per
cent.
Import-Substitution and Export Promotion
In a developing economy like India, the problem of foreign exchange becomes a
serious constraint on the process of industrialisation. The expansion of activities
of public sector in areas like steel, aluminium, heavy engineering has to a certain
extent lessened this problem. The contribution of some of the public enterprises
like Indian Oil Corporation, Oil and Natural Gas Commission, Bharat Heavy
E~ectricalshas been significant in reducing imports substantially thereby
reducing foreign exchange piessure and creating a base for industrial and
kconomic self-reliance of the country.
Public Sector has also contributed towards expanding exports of the country
especially in products as metal ores, engineering goods etc. Apart from foreign
exchange earned through exports by manufacturing concerns, other enterprises
like Air Corporations, Shipping Companies etc., are also contributing towards
the external trade of the country. During all these years there has been steady
growth of export earnings by the public sector enterprises which in the year
1988-89 stood at Rs. 4,898.07 crores.
Public Sector in any country, more so in the develaping countries, certafnly
plays an important role in its economic development. In fact in the developing
countries it is the most important agent of development. It has been able to
translate into reality the policy of technical managerial and economic
development. It is also true that the financial position of a large number of public
enterprises the world over, has not been appreciable. For example, in India, the
net profit works o,ut to be 4.4% of the capital. Some of the public enterprises are
having consistent losses. There is a need to improve the peiformance of public
enterprises but at the same time there are no easy solutions for improving the
performance. Profitability, though extremely important, cannot be the sole
criterion for judging the performance of public enterprises in a developing
country. However, there is a need to efficiently manage all the available
resources at the disposal of public sector enterprises. In the foreseeable future,
industrial and economic development in the country is expected to take place to
a considerable extent through. the public sector. Public sector has t o provide the
lead with the private sector enterprises continuing and supplementing the effort
of economic development.
Check Your Progress 2
Note : i) Use the space given below for your answers.
ii) Check your answers with those given at the end of the unit.
1) State 'the objectives for the fulfilment of which the public sector has evolved
in India.

2) Discuss the expansion of public sector in terms of investment and increasing

employment opportunities.

3) How far has the public sector contributed towards internal resources
generation?

26.6 LET
, US SUM UP -

Intervention of a positive kind m the ownership and operation of economic

activities has become an essential role.of all the States but more so in the
developing countries. Though public enterprises existed in one form or the other
in the earlier societies, generally it is regarded as a development of post-World
War I period. Most of the developing countries have generally adopted the
mixed economy model and the expanded role of public sector is being
considered as a pragmatic approach for the socio-economic development rather
than a dogmatic approach.
Such activities where the organisation charges price for goods and services are
generally regarded as public enterprises. Though in a limited form, public
enterprises existed in India during pre-Independence period but the dominant
role of the public sector in shaping the economy of the country is considered as a Evdutlon Ipd Erpusba of
post-Independence activity. Under the Industrial Policy Resolutions of 1948 and Public Soetor
1956, the public enterprises are helping in the rapid economic growth and
industrialisation of the country and have been called upon to create necessary
infrastructure for economic' development, promote balanced regional
development, create employment opportunities, earn forei n exchange and
generate internal resources. 6
Since Independence, there has been a tremendous expansion of public
enterprises in terms of its activities and products, number of units, investment
and the turnover. Over all these years it has played an important role in bringing
about socio-economic development and helping in assisting the small scale and
ancillary industries. It has also been generating resources for the public
exchequer. In the near future, public enterprises will be required to take up
additional responsibility in bringing about economic development.

26.7 KEY WORDS

Ancillary Industries : The industries which are dependent upon the main
industries and provide some help in the form of gdo'ds and services to the main
industries. i

Break-even : It refers to that stage or point when the economic activities start
giving some profit.
Dividend : It is share of profits earned from a company, either by the
government or any individual as holder of shares in that company'.
Equity : A form of financing the organisation under which the capital stock is
held in the form of shares.
Infrastructure : The organisations whose activities indirectly help in providing
base for further eeonamic development.
Memorandum of Understanding : In simple words it means an agreement
between two or more parties. I? case of public enterprises, it means an
agreement between the administrative ministry and its enterprises which is
expected to set out mutual obligations and expectations. The memorandum
clearly establishes the objectives, targets of the enterprises concerned, criteria
for evaluation of achievements and a system of rewards.
Re-training : It is instruction in a new field of specialisation or extensive training
in the old field of specialisation.
Turnover : The turnover relating to public sector refers to the total value of
goods which are sold by the organisation.
White Paper : An official document which gives the policy of the government on
a particular subject.

Bureau of Public Enterprises, 1991. Public Enterprises Survey 1989-90,

Department of Public Enterprises : Government of India.
Dhingra, I.C. 1990. A Text Book of Indian Economy - Resources, Trade and
Development, Sultan Chand and Sons : New Delhi.
Kumar Indra & Biji James, 1990. Public Sector Enterprbes in India, Common
Wealth Publishers : New Delhi.
Mishra, R.K. and S. Ravishankar, 1986 Public Enterprises in India in Public
Enterprises in the World, Himalaya Publishing House : Bombay.
Misra, S.K. and V.K. Puri, 1989. Indian Economy - Its Development Experience,
Himalaya Publishing House : Bombay.
Singh, Bishwanath , 1991.Public Enterprises in Theory and Practice, Deep and
Deep Publications : New Delhi.
26.9 ANSWERS TO CHECK YOUR PROGRESS
EXERCISES
Check Your Progress 1
1) Your answer should include the following points :
Public Sector covers all the governmental activities which are social,
industrial and commercial in nature. It is said to include industrial,
commercial undertakings of the government which are in the form of
corporations or companies.
Public enterprises are those s p e c s c form of institutions set up either
at the central, state or local levels which are involved in the
manufacture or production of goods. These goods and services are
made available by the enterprises for a price.
2) Your answer should include the following points :
The Indian Finance Commission set up in 1888 stressed on the need
for governmental help for the creation of new industries.
A Department of Commerce and Industry was set up in 1905.
With the commencement of First World War, the vulnerability of the
Indian Economy came to fore and the government felt the need to
improve the industrial capabilities of the country, through a definite
self-conscious industrial policy.
The Industrial Finance Commission in 1916 recommended that the
government must play an active part in industrial development and
stressed the need for establishing certain key industries.
In 1945, a statement on industrial policy was issued under which '
continuation of ordance factories, railways, public utility services
already under the State ownership and operation was confirmed.
.The Advisory Planning Board in 1946, also suggested State ownership
and management of large industries.
3) Your answer should include the following points :
The Industrial Policy Resolution of 1948 made it clear that the State
must play an active role in the development of industries.
m e State was to set up units of production in the newer fields rather
than acquiring or running the existing units.
It proposed fourfold classification of industries. The first category
consisting of manufacturing of arms and ammunition, atomic energy,
railways etc., were to be under the exclusive monopoly of the central
government. The second category covering iron and steel, coal etc.,
were to be the responsibility of the central, state and local
governments. The third category of industries which included
automobiles, heavy engineering was to be subject to central control
and regulation in co-operation with state governments. Rest were left
to the private enterprises with the provision for State intervention in
cases where the progress of industry under private enterprises is
unsatisfactory.

Check Your Progress 2

1) Your answer should include the following points :
The objectives for the fulfilment of which the public sector has been set
up in India are to :
help in the rapid economic growth and industrialisation of the country
and create infrastructure for economic development;
earn return on investment and generate resources for development:
promote redistribution of income and wealth.
create employment opportunities;
assist in the development of small-scale and ancillary industries;
promqte import substitution, save and earn foreign exchange for the
economy.

2) !See Section 26.5

3) see' Section 26.5
 UNIT 27 FORMS OF PUBLIC
ENTERPRISE
Structure
I

Objectives
Introduction
Departmental Undertaking
Statutory Corporation
Government Company
Choice of a Form of Organisation for Public.Enterprises
Other Forms of Organisation
Joint Enterprise
Need for an Apex Organisation for Public Enterprises
Let Us Sum Up
Key Words
References
Answers to Check Your Progress Exercises

After reading this unit, you should be able to :

state the main features of Departmental Undertaking, Statutory
Corporation and Company form of Organisation
discuss the issue of choice of form of organisation for public enterprises
describe the features of other forms of organisation
explain the concept of joint enterprises; and
indicate the need for having an apex organisation for public enterprises.

As discussed in the previous unit, as a direct consequence of Industrial Policy

Resolutions of 1948 and 1956 and avowed declaratipn of 'Socialistic Pattern of
Society', 'Directive Principles of State Policy' and under the impact of planning,
the public sector in India has assumed a very significant role in the economic
development bf the country. Public sector units have been established in .
industries like steel, coal, fertilisers, heavy electricals etc. Some important
financial institutions like the Reserve Bank of India, insurance companies etc.,
have been taken over by the government, while a number of financial
institutions for providing finance to different sectors of the economy have been
set up. In all these endeavours, when a government determines to acquire or
create a pabec sector unit, it is faced with a dilemma as to how to devise an
administrative structure which is subject to government's direction in important
policy matters like other public organisations, while at the sametime having the
freedom of actiofi necessary for it to operatelefficiently like a private
organisation. Accountability towards public, flexibility in operations are
' important amongst the other characteristic features of public sector
organisations. Basically,, therefore, the choice of a form of organisation means
nothi'ng but the ability to strike a right balance between 'public accountability'
and 'operating autonomy'.

Three pnnciple forms of organisation for the administration of the public

enterprises, each achieving a different balance between the 'autonomy' and
''governmental control' are being experimented by the ~overnmentof India.
These forms of organisation are Departmental Undertakings, Statutory
Corporations and Government Companies. But, so far well-defined principles
have not crystallised either in theory or h practice regardingithe choice of the
form of organisation for the public sector undertakings in India. The
Administkative Reforms Commission in its Report on Public Sector
Undertakings has recommended that a "Statutory Corporation" should in
, ~ s a i ~ r . i b ~ r r d 0 f f . t general be adopted for public sector projects in the industrial and manufacturing
field. A similar suggestion was also made earlier by the Estimates Committee.
But the government has been favouring the company form of organisation for
industrial and manufacturing, undertakings.
In this unit, we will initially describe the features of the above mentioned three
.principal forms of organisation i.e. the Departmental Undertaking, Statutory
Corporation and Government Company. Then the issue of choice of a form of
organisation for public enterprises will be discussed. Other forms of public
enterprise organisations like control board, operating contract, sector
corporations will be described. The concept of joint enterprise and the need for
having an apex organisation for public enterprises will be highlighted.

Among the different forms of organisation, the 'Departmental' form is the

oldest and is at par with normal government departments in matters of
appropriation, parliamentary control and accountability. This form has
.commonly been used for the hdministration of national services like posts and
telegraphs and railways besides defence production units.
The main features of the ' ~ e ~ a r t m e n t aform
l ' of organisation are :
a) A department is headed by a minister who is responsible for policy making
and day to day administration.
b) Departments do not enjoy any financial autonomy, as the governmerit
exercises strict financial and budgetary control over them.
c) Department follows routine procedures of administration and this leaves '
no scope for any flexibility in taking decisions and other matters too.
d) The .depaqmedts do not enjoy any autonomy in personnel matters. m e
personnel working in the departments are recruited by the public service
commission and are governed by strict rules, regulations of the
government.
According to the Report of the Seminar on Organisation and Administration of
Public Enterprises in the Industrial ~ield'conductedby the United Nations
Economic Commission for Asia and the Far East in 1956, the main features of
departmental form of organisation in most of the countries are :
a) the departmental enterprise is financed entirely by appropriations from
the Treasury and all or a major share of its revenues are paid into the
Treasury;
b) the edterprise is subject 'to budget; accounting and audit controls
applicable to other government activities;
c) the permanent staff of the enterprise are civil servantsand the methods by
which they are recruited and the conditions of service under which they
are employed are ordinarily the same as for other civil servants;
d) the enterpriseis generally organised as major subdivision of one of the
control departments of government and is subject to the direct control of
the Head of the Department; and
e) where this applies in the legal system of the country concerned, the
enterprise possesses the sovereign immunity of the State and cannot be
used without the consent of the government.
Although this form of organisation ensures full control by the government, there
are obvious limitations in this form of organisation. It may not have adequate
freedom of action-in matters such as technological improvements, capital
expansion, finance and accounting, purchase and personnel administration. The
Krishna Menon Committee Report on State Undertakings has also pointed out
some limitations in having a purely departmental form of organisation. These
include :
i) Permanent staff is subject to rules and regulations applicable to civil
servants, there by preventing both promotion on merit and prompt
disciplinary action where necessary;
ii) tardy procedms for atranging funds; for instance, the necessity for
getting sanction# for expenditure and other matters inqvery single case;
 iii) cash receipts have to be put into government account and cannot be taken
out without special sanction;
iv) the system of accounting; and
v) the departmental methods of purchase of raw material and sale of
products and so on.
The Departmental form of undertakings due to their being subject to such
limitations are not very popular. Inadequacy of this form has been recognised
and two alternative forms viz., a 'statutory corporation' and 'government
company' were developed to allow flexibility and initiative in the management
of the public sector undertakings. Let us now discuss these two forms of
organisation.

27.3 STATUTORY CORPORATION

After Independence with the government assuming new economic, commercial,
industrial functions for the welfare of the people, it was felt that departments are
not suitable for carrying out all these functions. As.we have discussed in the
earlier section, departmental undertakings lack flexibility, autonomy, quick
decision making powers. Hence statutory corporations are better suited for
these functions, as they have altogether a different type of structure. Since they
have more freedom in decision making and flexibility in their day to day working
than departments there was acceptance of statutory corporation as the
appropriate form of organisation for public sector units This is one of the
reasons, for adopting this form of orjgnka-tion while setting up the Damodar
Valley Corporation, the Industrial ~ i n a n c eCorporation etc., after
Indepegdence.
Statutory Corporations are set up under specific statutes of the Parliament and
the extent of their accbtmtability and the nature of the parliamentary control is
indicated in the statutes.
The principal characteristics of a corporation are :
a) It is owned by the government and it is established for some specific
purpose.
b) It is estab1ished.b~law or statute passed by the Parliament or Legislature.
The statute clearly lays down the objectives, powers, and privileges, the
form of management and its relationship with the established departments
and ministries.
c) The statutes creating the corporations also vest in a body, usually known
as the 'Board of Directors' the powers to act in the name of the
'Corporation' subject to government's right to issue directions from time
to time.
d) The corporation has a 'corporate status' It implies that in the eyes of law a
corporation has a status of that of an individual. For legal purposes it is a
separate entity, can enter into contracts, acquire property, can sue
anybody and be sued. A statutory corporation is an administrative agency
of the government, but in the eyes of law it has an independent.status like
a citizen. This is known as 'corporate status' of the corporation.
e) The statutory corporation has financial autonomy. It is usdally
independently financed. It obtains its funds from borrowings and is
authorised to use and re-use its revenues.
f) The employees of the corporation normally are not civil servants. They
are recruited and remunerated under the' terms and conditipns determined
by the corporation, except that in certain matters certain broad guidelines
issued by the government have to be adhered to.

A corporation therefore is in an advantageous position because it has initiative,

flexibility and operational freedom and relieves the ministers of direct
administrative responsibilitj.. However, the creation of this device has given rise
to new and equally difficult problems. There is a danger that their okrations
may become unco-ordinated and they may become too much independent.
1 According to Hanson, "the freedom conferred on an enterprise by this form of
organisation can be so large that the proolem ot public accountability becomes
very difficult". The resultant problem is as to how far should the governmeit
keep control over a corpbration or how far should it go to grant it autonomy.
Exercise of control by the government and Parliament is likely to take away its
primary advantages of autonomy and freedom.

27.4 GOVERNMENT COMPANY

Government company is the new form of organisation. which is being widely
used in India and many European countries for the industrial and commercial
undertakings. The company form has become popular due to the merits of easy
formation, flexibility in administration, freedom from governmental
interference etc. The government company, according to Sec. 617 of the
Companies Act is that in which not less than 51 per cent of the paid-up share
capital is held by the Central government or State government or jointly. by the
Central and state governments. This form of organisation can associate private
enterprise-national or foreign. A goternment company is established by issue of
an executive order. It does not need the approval of the Parliament or State
Legislature.
Some of the characteristics of a government company are :
a) It is a body corporate created under the Companies Act. Like statutory
corporation, it can own property, sue, be sued in its own name and enter
into contracts.
b) It is governed by Memorandum of Association and Articles of Association
which lay down the objectives of the company, and other rules governing
its internal management.
c) A company is managed by a board and depending upon the extent to
which private capital is participating in the enterprise, all the directors or
majority of them are appointed by the government.
d) The personnel of a government company are not, civil servants and they
are appointed by the company on terms and conditions different from that
of government departments.
e) It enjoys financial autonomy. If it is fully owned by the government, it
obtains funds from the government and otherwise from some private
shareholders, revenues secured through sale of its goodi and services. It is
also not governed by accounting and audit procedures applicable to
government departments.
A government company is far easier to form than a public corporati-on. The
latter generally calls for specific legislation for which the Parliament may not
have time or which the government ma not wish to introduce at a given point.
?
With the adoption of company form o set up for any public enterprise, the
government is not bound by any limitations as imposed by any specific act
because of the regulations governing and guiding the Board of Directors iin the
form of Articles of Association which unlike an Act, can be modified
periodically in an easier way.
The company form is also convenient WIIC~,

i)c the government has to take over an existing enterprise in an emergency;

ii) the government'wishes to manage an enterprise in association with private
enterprise;
iii) there is competition with the private sector requiring operational
autonomy; and
iv) there are certain compulsions by the donor countries to have specific form
of organisation.
The use of company form of organisation has at times been criticised on certa~n
grounds like it does not assume accountability to the Parliament which is implicit
in the case of departmental form of organisation and explicit through legislation
in the case of public corporation. Also it serves a limited purpose in the case of
organisations e:.q.blished for developmental or promotional purposes.
 Form dPuMi E n t r r p r ~ x
27.5 CHOICE OF A FORM OF ORGANISATION FOR
PUBLIC ENTERPRISES
The problem of evolving a suitable form of organisation for public enterprises
has been since long a matter of controversy. Regaiding the suitability of
departmental type of organisation, consensus exists that it be used for
undertakings relating to defence, having a strategic or security base and for
enterprises designed for commercial activities or public utility services. The
Estimates Committee also in its 16th Report (1954-55) discussed this problem
and expressed its disapproval of adopting a form of departmental undertaking
and recommended company type of organisation.
Regarding the relative utility of the 'corporation' or 'government company' as
the form of organisation, there has been an absence of.raison de'tre. The
corporation form has been adopted for most of the industries in England and
other Commonwealth countries. The company form is extremely popular in
Europe, France, Germany and Italy. In India too, the company form has been
favoured for industrial and manufacturing industries.
A company form of organisation gives the government a free hand and there is
less dependence on Parliament's approval for policies relating to day to day
administration of such an organisation. Hence the parliament naturally, is not in
favour of such an organisation, which reduces its 'Parliamentary control'. This
controversy between the choice.of either a statutory cordoration or a
government company form of organisation is pretty old.
The Estimates Committee again in April 1960 in its r e p q t observed that no
well-defined principles had been followed in determining the form of
organisation. It recommended that state owned public undertakings be
organised in the form of statutory corporations and the company form be
organised only under special circumstances like for instance if an enterprise is to
be launched in association with private capital. The government in reply
defended its choice and pointed out that the company form has the necessary
flexibility and autonomy needed for the succeqful operation of commercial
gnterprises. The government, however agreed that corporation form of
organisation will be deemed favourable whenever the undertaking is to handle
enormous finances or where the normal functions of an industrial or commercial
enterprise are lacking.
The Administrative Reforms Commission in 1967 examined the issue, and felt
that the adoption of a statutory form of organisation for a public enterprise is
advantageous as compared to the company form. Since the corporations are set
up by the Parliament, it has the opportunity of discussing the details of the
constitution of enterprise in public sector, its objectives, operations and other
obligations the enterprise has to fulfil. The specific act creating a corporation
can define the extent of autonomy and decentralisation necessary for the
enterprise Hence the Commission favoured the adoption of statutory
cbrporation f m in general and also suggested for the establishment of the
Sector Corporation about which we will discuss in the next section. It
recommended :
a) Adoption of statutory corporation form in general for public sector
projects in the industrial and manufacturing field.
b) Company form of organisation for projects where there is an element of
private participation, undertakings which are primarily trading concerns
or which are set up to improve particular areas of business. This form is
suited for an undertaking which is small in size and is to be given an
independent legal status.
c) Promotional and developmental agencies should as far as possible, be ,
formed as statutory corporations or departmental concerns.
The Government of India did not fully accept Ihe .recommendations of the
ARC, but later, keeping them in view clearly demarcated areas where the
corporation and company form of organisations are preferred. The statutory
corporation is preferred for certain enterprises which provide utilities, which are
- $I+
primarily' intended to develop the basic infrastructure facijitjgs, where the
Ppbk War and Denlopmeot commercial aspect is predominant the company to^,,^ of organisation may be
adopted.
It is the experience.of most of the countries including India that both statutory
corporations and government companies do not enjoy the extent of autonomy
which was originally expected from them. The idea which was once widely
expressed that the requisite autonomy for a public undertaking can be secured
by the appropriate legal status has now proved rather illusory. Whether the
undertaking is organised as a statutory corporation or a government company,
the autonomy which it enjoys and the kind of control under which it has to work
depends mainly on the conventions and the working precedents which develop
along with its legal status. With the obstructive presence of our bureaucracy and
political interference, directly or indirectly in the appointment of personnel, it
turns more into an apology of autonomy, being what politicians permit and civil
servants allow.
Hence, every form of organisation has its relative advantages and
disadvantages. Determining a particular type of organisation for a public
enterprise is a difficult task which has t o take into account various factors like the
nature of activity of that particular enterprise, its contribution to the national
economy, its personnel, financial requirements, etc.
Check Your Progress 1
Note : i) Use the space given below for your answers.
ii) Check your answers with those given at the end of the unit.
1) Distinguish between a departmental form of undertaking and a statutory
corporation.

.................................................................................................
2) State the characteristic features of a government company.

.................................................................................................
-

3) Discuss the recommendations of the Administrative Reforms Comrmssion

regarding the choice of organisation for public enterprises. Were these
recommendations accepted by the government?

27.6 OTHER FORMS OF ORGANISATION

Apart from the three principal forms of organisation we have mentioned above,
there are other forms of ~rganisationunder which some public enterprises are
I
functioning. Let us discuss these.
Control Board
The Control Board comes into existence based on the resolution of Central or
state governments as the case may be. These Boards are set up generally for the
management of river valley projects. Control Board is not a statutory body but is
created by the executive authority and hence does not enjoy operational
autonomy like the public corporation. Except the Damodar Valley Cqrporation
which was set up as a statutory corporation, other projects'like Bhakra
Management Board, Tungabhadra Project are set up under the form of Control
Board. The Board is given the charge of the project including technical and
financial matters.
Operating Contract
It is another form of organisation where the government entrusts management
functions to a private party on an agreed remuneration with a view to getting the
benefit of private control and management. Till now no central public enterprise
has been set up in India in this form of operating contract as this device
establishes the supremacy of private management.
Co-operative Society
At times a public enterprise may also be established as a co-operative society. A
public enterprise is treated as a co-operative society only if the government has a
majority investment. Many of the development or promotional activities can
also be taken up by registered societies under the Societies Registration Act.
Such organisations are basically non-profitable in nature. Some of the central
enterprises like the Indian Diary Corporation, Trade Fair Authority of India,
National Research Development Corporation are set up in the form of
co-operative societies.
Sector Corporation
In most of the countries including India there are large number of organisations
which are performing particular activity or area of operation. They function
directly under the c m e r n e d ministry. It was the Administrative Reforms
Commission which- recommended the setting up of sector corporation in areas
like oil, coal and lignite, petroleum, petrochemicals, iron and steel, electricals,
fertiliskrs ktc..The objectives ofsector corporation which will be a single
integrated corporation for each major sector of industry are to :
a) achieve. brbader co-ordination and uniibrmity of policies among
constituent units;
b) provide better professional development to its employees through
exchange of experience and training;
c) avoid duplication of services and unnecessary competition;
d) pool together the activities relating to research and development.
According to the ARC, setting up of sector corporation by amalgamation of
similar activities and converting the organisation into corporation would make
the government control more effective by confining it to strategic and vital
points. Even the span of ,control for the purpose of ministerial supervision would
be reduced. The major functions of the sector corporation were to (i) advise the
government on general matters affecting the particular industry, (3) receive and
secure the implementation of government.directives and .(iii) promote, .provide,
co-ordinate activities relating to. research and consultancy, recruitment and
training of personnel, marketing and purchase, pricing policy etc.
The Government of India did not agree with the suggestion made by the
Administrative Reforms Comwission, as it felt that a large orgarusation like
sector corporation would become unmanageable. Moreover healthy
competition among the public enterprises 1s needed to improve,their
performance. However, the government agreed on an experimental basis to
integrate some of the units having some common functions. For this purpose in
1973, a holding company in the form of Steel Authority of India (SAIL) was
created. A holding company is that wbich by virtue of its share ownership in
other companies is able to exercise control over the management of those other
companies known as subsidiaries. It was meant to integrate all the. comeanies
into one conipany so that there is averall control of the management of its
subsidiary companies. Such a 'system would bring better co-ordination in the
R b l e ~ u d ~ n b p w n t development of an "overall strategy to plan, promote and organise its.
management functions. The Steel Authority of India was assigned functions of
planning, organising an integrated and efficient development of iron and steel
industries, formulating a national policy for the development of iron and steel
industries and also rendering advice on all policy and technical mafters.
The formation of sector corporation was extended to coal industries too by
creating Coal India Lim~tedand to the Hotel Industries by creating Ashoka
Group of Hotels. However, this had not been extended to other industries. The
argument regarding grouping of public edterprises having somewhat similar
functions still remains valid. In a developing country like ours, this grouping will
help to reduce unnecessary expenditure and will bring about better
management. The establishment of Holding Companies in core sectors was
emphasised again in 1986 by the Arjun Sengupta Committee especially in areas
like energy, fertilisers etc., as it would provide a link between the government
and public enterprises under them.

27.7 JOINT ENTERPRISE

A new trend in the field of public undertakings in some of the developing
countries is government participation in economic activities jointly with the
private sector. It was the Industrial Licensing Policy Enquiry Committee
popularly known as Dutt Committee, which in its report in 1969 advocated the
joint sector as an effective antidote to the concentration of economic power,
curb the uncontrolled growth of large business houses. According to the
Committee the joint sector could fulfil two important objectives of (a) ensuring a
positive say in the management and control of assisted private sector industries
(b) preventing large industrial houses from expanding their industrial empire
with the resources of public financial institutions.
The reasons for creating joint enterprises can be as follows :
a) While the government desires to set up an enterprise but lacks requisite
initiative, skill, by using this device of joint sector, private sector
managerial resources can be drawn.
b) Through joint sector the government may acquire some equity interest in
some enterprise that is sick or is mismanaged by the private sector and is
causing concern to the government.
c) The government participation through joint sector' would accelerate
industrial growth as it helps in activating any untapped segment of
industrial sector.
d) The government may acquire shares in the private enterprises for the sake
of profits that are likely to follow.

Although the concept as well as the practice of joint sector has been gaining
popularity, it seems that there is no clarity regarding the exact roles of public or
private sectors. .Also some operational problems like autonomy, pricing policy,
representation of government and private sector in the board of management
are faced by the joint sector undertakings. Joint enterprise can be powerful
instrument of development in the developing countries if mutual trust and
confidence is created between the private and public sectors.

27.8 NEED FOR AN APEX ORGANISATION FOR

PUBLIC ENTERPRISES
As we have discussed in Unit 26 there has been a significant increase in the
number of enterprises. This poses a question whether there is any need to have
one overall organisation or single apex body for all the public undertakings.
A.D. Gorwala in his Report on the "Efficient Conduct of State Enterprises"
(1951) recommended that there should be one Board of Management for all
public undertakings. Based on this recommendation, a Ministry of Production
was created in the mid fifties and was given the responsibility of co-ordinating
the activities of all production units in public sector. But this ministry was wound
 up later due to resistance put up by other ministries affected by th'is move. The ' F- or public ~atcrprise
proposal of the Select Committee on Nationalised Industries of the UK to have a
Ministry of Nationalised Industries and also the presence of Ministry of State
Holdings in Italy since 1956,.brings the issue of having a separate Ministry of
Public Enterprises to the fore.
It is felt that there should be a separate ministry which is well equipped with the I

managerial personnel having technical ability to deal with all the problems
relating to public enterprises. Such a ministry would help in having consistent
policies and integrating the efforts of public enterprises towards the process of
national development. It will be able to develop and promote common
techniques and bring about harmonious relationship among the public
1
enterprises. Even the ministerial control and parliamentary accountability will
I
i become effective. On the other hand, since the public enterprises are large in
number and constitute a substantial part of the economy, creation of a ministry
might lead to organisational problems. The main problem of such a ministry
would be its organisational size which may become unwieldy and gigantic.
Moreover public enterprises are functioning in different areas which are either
commercial or non-commercial in nature with divergent objectives of the
individual enterprises and each functioning with a different technology. Hence

I
co-ordination may become ineffective.
The Department of Public Enterprises was created in 1985. The Bureau of
Public Enterprises (BPE) which was created in 1965 acts as a nodal staff agency
to provide managerial, advisory, performance monitoring services in various
facets of management of public enterprises. The Bureau which was functioning
earlier under the Ministry of Finance is now under the Department of Public
Enterprises. The Bureau is required not only to bring unity and co-ordination in
the internal functioning of enterprises but to give expert advice and guidance to
various public enterprises. It acts as a vital link with the public enterprises on the
one hand and the government and Parliament on the other. It also consolidates
the entire activities of public enterprises and their financial results into one
consolidated report. Similarly, the Standing Conference of Public Enterprises
(SCOPE) also brings similq type of co-ordination within the public enterprises.
Besides this there are various committees which are being set up to bring
co-ordination among various public enterprises.

Check Your Progress 2

Note : i) Use the space given below for your answers. .
ii) Check your apswers with those given at the end of the unit.
i
1) Explain the meaning of Control Board.

2) What is a sector corporation? Discuss its functions.

.3) What role does the Bureau of Public Enterprises play in the management of .
public enterprises?
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27.9 LET US SUM UP

Right from the beginning, the government is confrohted with a problem to set an
appropriate organisation for the .management of public enterprises whereby a
likely balance between public accountability and operatiopal autonomy may be
achieved. For this purpose three principal forms of organisations namely;
departmental undertakings, statutory corporations and government companies
have been set up. Every form of organisation has its advantages and
disadvantages. However, for the purpose of strategic and defence oriented
industries, it has been argued that we should have a departmental form of
organisation. In the case of financial institutions and public utility services, it is
advisable to have a statutory corporation. In the case of manufacturing,
processing and trgding activities as well as those activities where there is likely to
be some competition with the private sector it should be under the government
companies. At the operative Level, there is indeed no discoverable correlation
between the legal status of the undertakings and its autonomy and quality of
performance.
As discussed in the unit the suggestion of the Administrative Reforms
Commission to have a sector corporation has not found the favour of the
government though on an experimental basis Holding Companies have been
created for some of the activities in India. The joint sector which has its obvious
advantages has also not been successful in this country. Some of the countries
have unified department or a ministry at the apex to deal with all the public
enterprises. Efforts are being made to create such an organisation in India.

27.10 KEY WORDS

Appropriation : The authorisation of finances drawn by the legislature through
the instrument of budget.
Articles of Association : These are regulations for the management, internal

1
arrangement of a company and the terms and conditions on which the
shareholders agree, amongst themselves, as to how the business of the company
shall be carried.
Arjun Sengupta Committee : The Committee set up in September 1984 headed
by Dr. Arjun Sengupta with the objectives of analysing the performance of
public enterprises, identifying their constraints and suggesting measures to
improve their functioning.
Equity Capital : The total stock/money capital held in the form of shares
required for the financing of organisation. '

Holding Company : The wain company which holds the shares of other
companies for the purpose df financing and co-ordination. The other companies
are subsidiaries to these companies.
Memorandum of Association : It is considered to be a charter of company which
defines or lays down the objects, operations of the company. It sets out the
powers the company is entitled to exercise to carry out its objectives. It is a
document which consists of details as to the name of the company, state in which
the registered office of the company will be situated, objectives etc.
 Operational Autonsmy : Freedom to take decisions and managing the activities
relatihg to the internal functioning of the organisation.
Public Accountability : T o render an account of the performance either directly
or indirectly to the public or to the Parliament.
Standing Conference of Public Enterprises (SCOPE) : This was set up in 1970 under
the Indian Societies Registration Act. The objectives behind its establishment
was to collect, analyse information regarding public enterprises, promote better
understanding of the role and performance of the public sector.
Sovereign Immunity : The power enjoyed by an organisationlauthority, which
being a part of the State is not subjected to legal control by any private authority
or organisation.
Span of Control : The number of persons/organisations that can be effectively
supervised by the supervisorylcontrolling authority.

27.11 REFERENCES
Hanson A.H., 1962. h4anagerial Problems in Public Enterprises,Asia
1 Publishing House : Bombay.

I Laxminarain, 1989. Principles and Practice of Public Enterprise Management,

Sultan Chand and Co : New Delhi.
Prakish, lagdish et a1 1987. Administration of Public Enterprises in India,
I Himalaya Publishing House : Bombay.
Sapru R.K. (Ltd), 1987, Management of Public Sector Enterprises in India.
Vol.1, Ashish Publishing House : New Delhi.
Singh Bishwanath, 1991, Public Enterprise in Theory and Practice, Deep and
Deep Publications : New Delhi.
Tandon B.C., 1987. Public Enterprises in India, Chaitanya Publishing House :
Allahabad.

27.12 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress 1
1) Your answer should include the following points :
Departmental undertaking is the oldest form of organisation and is at
par with normal government departments in various matters while
statutory corporation is created for specific purpose by law or statute.
Department is generally headed by a minister who is responsible for
policy making, day to day administration while these functions.-in case
of corporation are discharged by the Board of Directors.
Deparments do not enjoy autonomy in financial, personnel matters
while corporations are not bound by any strict rules and regulations of
the government regarding these matters.
2) Your answer should include the following points : .
A company is a body corporate created under the Companies Act.
The objectives of the Company, rules governing its internal
management are laid down in its memorandum and articles of
association.
It is managed by a Board.
The personnel of company are not civil servants and are appointed on
certain terms and conditions laid by the company.
It enjoys financial autonomy.
3) Your answer should include the following points :
The Administrative Reforms Commission examined the issue of choice of
organisation for public enterprises and recommended :
 adoption of statutory corporation form in general for public sector
projects in the industrial and manufachring fields;
company form of organisation is suitable for projects where there is
an element of private participation, trading concerns or those which
are set up to improve particular areas of business;
promotional and developmental agencies be formed as statutory
corporation or departmental concern.
.The Government of India did not fully accept the recommendations of ARC,
but keeping them in view demarcated areas where the corporation and company
form of organisations are preferred. The natutory corporation is suitable for
certain enterprises which provide utilities, which are primarily intended to
develop the basic infrastructure facilities, while the company form may be
adopted for commercial enterprises.
Check Your Progress 2
1) Your answer should include the fol!owing points :
control Board is a body created by the executive authority and is not
created by a statute.
It is set up generally for the management of river valley projects like
for example Bhakra Management Board, Tunga Bhadra Project etc.
Control Board is responsible .far the management of the project
including the technical and financial matters.
2) Your answer should include the following points :
Sector corporation is single integrated corporation for each major
sector of industry.
The Administrative Reforms Commission recommended the setting
up of sector corporations in areas like oil, and lignite, Petroleum and
petrochemicals etc.
The functions of the sector corporation are to
advise.the government on general matters affecting the particular industry;
receive and secure the implementation of government directives;
promote, provide, ,co-ordinate activities relating to research, consultancy,
recruitment and training of personnel, marketing and purchase, pricing
policy etc.
3) Your answer should include the following points :
The Bureau of Public Enterprises plays an important role in
bringing about unity and co-ordination in the internal functioning of
the public enterprises;
giving expert advice and guidance to the enterprises;
acting as a vital link between public enterprises, government and the
Parliament.
 UNIT ROLE DEVELOPMENT
CORPORATIONS
Structure a

28.0 Objectives
28.1 Introduction
28.2 Concept of Development Corporation
28.3 Functions of Development Corporations
28.4 Development Banks
28.5 Role of Development Corporations and a Critical Evaluation
28.6 Let Us Sum Up
28.7 Key Words
28.8 References
28.9 Answers to Check Your Progress Exercises

1 28.0 OBJECTIVES
L
After studying this unit, you should be able to :
explain the concept of development corporation and developmeqt bank
describe their functions
evaluate the overall role of development corporations i~ promotional and
developmental activities; and
highlight some of the administrative problems being faced by the
development corporations.

28.1 INTRODUCTION
In India, industrial development for a long time has been hampered due to lack
of adequate capital. As we have discussed in Unit 26 about the evolution of
public sector and its gradual expansion after Independence, in the initial years it
had become a stupendous task for the government, to set up and develop
industries in the large and medium scale sectors. The, problem was not only of
financing them, but also providing technical help. Hence, a need arose to set up
specialised institutions known as development corporations in different areas, to
initiate, promote and operate financial and other promotional activities in the
economy. These institutions serve as development agencies, in not only carrying
on lending operations, but also developmental activities including promotion of
projects, guiding and advising the entrepreneur.
in this unit, we will discuss the concept and functions of development
corporations,,,and the role of development banks. A critical evaluation of the
development corporations will also be dealt with in the unit.

28.2 CONCEPT OF DEVELOPMENT CORPORATION

It is difficult to define a development corporation in exact terms. In most of the
developing countries the term is used to signify an autonomous agency
established in the public sector mainly to promote, rather than operate
economic activities through some system of assistance; An important feature of
such a corporation is that it aims at achieving some external returns and benefits
against its own profit. As far as fostering promotional activities is concerned, the
development corporations are useful as they (1) promote an activity which ,:
otherwise may not be supported by the private sector or where the private
initiative is lacking, (2) accelerate those activities which may materialise but at a
slow pace, in a small size and that too, in a sectorally unbalanced manner,
(3) promote a desired economic activity as envisaged by the government.
 The development corporation connotes the expansion of desired sector of
activity, promotion of nnits, effecting reforms in the structure of ownership and
management of some economic activities, attaining the desired balance of
payments and development of economic activities in certain backward regions
or areas. Thus, the central focus of the development corporation is a planned
and deliberate promotional initiative in the public sector which 'is desirable but
'may not take place through the initiative of the private sector. The initiative of
the, government through the development corporation provides initial boost to
the economic activities. At timks these corporations may promote an activity
jointly witb the private sector so as to provide necessary confidence to the
private sector. Desired development activities are promoted by the
development corporations and its promotional benefits do not go to the
undeserving beneficiaries. .
These development corporations are established in the public sector, firstly
because the private sector is not interested in such activities as the projects
involve huge amounts of investment, long gestation period or the return on
I
investment is negligible. Secondly, most of the developing countries have the
chronic shortage of finances due to reduced amount of savings, low rate of
capital formation and these corporations are designed to fill the gap between
savings and investment. Thirdly, it may act as an instrument of government
policy in bringing about planned economic growth and industrialisation.
Development corporations are provided sufficipt autonomy as is normally
given to a statutory corporation. We have already discussed the characteristic
features'and advantages of statutory corporation in Unit 27. These development
corporations owing to internal autonomy are able to perform such promotional,
developmental and commercial activities which otherwise may not be possible
under a departmental form of organisation. It is due to this autonomy, that they
are able to offer financial, technical and managerial assistance to the
beneficiaries. And they can take decisions suited to the circumstances of each
case, like for instance whether to participate in the form of equity or loans or to
operate activities by itself or to give some subsidies or to sell the entire enterprise
to the private sector.

28.3 FUNCTIONS OF DEVELOPMENT

CORPORATIONS
In most of the developing countries, development corporations perform a
number of functions. These functions can be broadly classified under four
different categories : (1) ina an cia!, (2) Promotional, (3) Technical and
(4) Operative functions.
1) Financial Functions
Development Corporations provide loans to industry, trade or agriculture. They
may also participate in the equity of an enterprise whereby they are able to
promote an enterprise. They may also engage in the activities that have the
effect of promoting an active capital market by underwriting the capital issues of
the company. In India, the development corporations or development banks
like the Industrial. Finance Corporation of India, National Industrial
Development Corporation, Industrial Credit and Investment Corporation of
India, the Industrial Development Bank of India discharge these financial
functions. Similarly, various financial and development corporations have been
created by the respective state governments since 1952 to provide financial
asshtance to small and medium-scale industries. We will be discussing in detail
about these in Section 28.4.

2) Promotional Functions
The promotional functions take different forms. In some cases, the development
corporations may undertake pre-investment studies of the viability of the project
and help the entrepreneurs and investors to pick up a feasible project. In most of
the developing countries where- the skills of the project appraisal and market
snalysis is not adequately available this promotional aspect of the development
corporations helps the entrepreneurs. In some of the cases, these corporations Rde olDevelopnnnt Cormtiom
set up industrial estates in which the promoters are given incentives to locate
their establishment. In these industrial estates, land is provided at a concessional
rate. Inputs required by the industrial units like power, water etc., are given at
subsidised rates. Marketing, warehousing, communication fgcilities are also
provided in these industrial estates. Various state governments in India have set
up a large number of such industrial estates.
In many development corporations, actual pfomotion may take place by
initiating steps including procurement of capital arrangements for foreign
collaboration and equipment. The State Trading Corporation of India Limited
(STC) is a classical example of such promotional activities. The principal
business of the STC includes organising and undertaking trade with other
trading countries and promotion of export of both traditional and new
commodities with a view to diversifying trade and maximising foreign exchange
earnings.
Some development corporations are set up, either exclusively or partly, to
develop a backward region. For example, the IDBI and other financial
institutions have started consultancy organisations like the North Eastern
Industrial and Technical Consultancy Organisation (NEITCO), Kerala
Industrial and Technical Consultancy Organisation (KITCO) etc, for providing
technical advice to entrepreneurs who are desirous of setting up industries in
backward regions.
The Industrial Policy Resolutions of 1956 and 1977 entrusted the public sector
with the responsibility of encouraging and developing a- wide range of ancillary
industries and contributing to the growth of decentralised production by making
available its expertise in technology and management through small scale and
cottage industries. Balanced regional development, extension of the benefits of
economic progress to the backward regions and a widespread expansion of
industries have been -themajor objectives of the. development corporations in
India.

3) Technical Functions
Research and development of new technology is one of the major objectives of
the development corporations. For example, the National Research
Development Corporation of India was established with a view to promote
technical research. The development corporations discharge the function of
arranging technical knowhow for the enterprises which may be available either
indigenously or from other countries. This to a large extent helps small scale
industries in modemising their technology. In India, the National Industrial
Development Corporation, is one such development corporation whose major
and a continuous function consists of providing consultancy in project
engineering, preparation of detailed project reports, drawings as well as
assistance and site supervision. The Engineering India Limited is another
example whose development function consists of processing, deslwing and
supervising the engineering work of the proposed units. Some of the
development corporations provide managerial advice and expertise to the
entrepreneurs. They also provide training facilities to their technical and
managerial personnel. A development corporation may also offer assistance in
the marketing of producls of certain categories of industrial enterprises. For this
purpose, a large number of marketing units for the sale of agricultural as wkll as
industrial products have been set up by the state governments in our country.

4) Operative functions
A development corporation may promote and operate the activities, of any
enterprise under its own control o r before transferring it into private sector.
Hence, a number of joint sector uni!s have been promoted by the state
governments. In the devebping countries, owing to the non-availability of
desired co-operation either'by the govermnent or private sector, the role of the
development corporations has not been fully realised. However, there is great
pptenfial in co-operative ventures for operating diverse activities. Throughout
the world, there has arisen a tendencv to priv'atise the existing units set up in the
public sector. Thisds being regarded as a better alternative fdr fast
industrialisations, in a developing country.
A development corporation, therefore, is set up not exclusively for one
particular function, but may have divergent functions as discussed above. Many
of the financial corporations like the Industrial Finance Corporation of India,
Industrial Credit and Investment Corporation of India, Industrial Bank o f India
are also assigned non-financial functions.
Check Your Prqress 1
Note : i) Use the space given below for your answers
ii) Check your answers with those given at the end of the unit.
1) Explain the meaning of development corporation. What purpose do they
serve in developing countries like India?
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2) Point out the reasons fo
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3) Describe any two functions of development corporations.
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28.4 DEVELOPMENT BANKS

We have discussed in Section 28.3 that one of the functions of development
corporations is to provide financial assistance to industries. Those development
corporations entrusted with financial functions are also known as development
banks. The evolution of these specialised financial institutions has been a post
World War-I1 phenomenon. In most of the developing countries one of the'
major reasons for la'ck of development has been the inadequacy of finance.
Consequently, in the post-war period many of the developing countries have
established special institutions to supply finance for the purpose of
industrialisation. These financial institutions are known as development banks.
These banks were first set up in Europe and Japan. The important function of a
development bank is to mobilise resources and then utilise them for industrial
growth.
In -India, the Industrial Finance Corporation of India (IFCI) was the first
all-India lending institution set up in 1948, entrusted with the function of
 had also set up state level institutions known as State Financial Corporations. In Rde of~ e v e l o p ncormwm
~t

1964, the Industrial Development Bank of India (IDBI) was set up as an apex
organisation in the field of development banking. It was assigned the functions
of co-ordinating the activities. of other financial institutions, supplement their
resources, plan and promote industries of major importance and adopt
priorities, promote industrial growth.
Like other development corporations, these development banks are playing a
very important role in filling the gap in the capital market and providing finances
to those industrial enterprises which may not be able to raise funds from the
normal channels existing in the country. One of the greatest barriers to
development, namely finances, has been removed to a large extent. Their
I/ renclering of financial assistance is confined not only to new enterprises, but
small and medium firms. enterprises in the backward region and non-traditional
enterprises. Such. assistance is provided for expansion, diversification and
modernisation of the enterprise.
Most of these development banks along with providing finances, discharge
promotional activities also. Some of these activities are :
1) Identification of projects from an overall economic study of the country
through area and sector surveys.
2) Identifying entrepreneurs to manage the projects.
3) Undertaking full feasible studies of the project either through their own
efforts or through appointed consultants.
4) Appraising the feasible studies and assisting in the implementation and
execution of these projects.
I These development banks are now occupying a position of dominance in the
field of finance. The technical help coupled with the financial help have helped
in reducing regional imbalances, developing backward regions, encouraging
structural changes and bringing about diversification in the industrialisation of
the country. Through the efforts of these financial institutions, infrastructure for
development has been created. Small and medium scale industries have been
encouraged which in turn has accelerated the industrial development in our
country.

i 28.5 ROLE OF DEVELOPMENT CORPORATIONS

i AND A CRITICAL EVALUATION

!
In India, we have a large number of development corporations both at the
Central as well as the State level. As we have discussed earlier, some of these
apart from the development banks, include the National Research
Development Corporation, National Small Scale Industries Corporation,
Central Warehousing Corporation, State Trading Corporation, Rehabilitation
Industries Corporation, National Seeds Corporation, Indian Tourism
Development Corporation, Film Finance Corporation etc. Similarly a large
number of state governments have also set up development corporations for the
purpose of meeting the needs of agro-bast4 industries, small-scale industries,
for the export, marketing and tourism sectors. There has been a gradual
tendency in India to establish development corporations with specific purposes
rather than in an omnibus manner. The dominant area in our country has been in
the field of finances. But some of these corporations in fields of tourism, expqrt,
research and development have been very effective.
The National Industrial Development Corporation has been functioning
effectively as an instrument of government for securing a balanced and
integrated development of industries both in public and private sectors. It has
been setting up new industries and developing new lines of production. It has
also taken up the study and investigation of industrial schemes, ensuring the
maximum possible use of industrial equipment, and also rhe available skill and
experience in the country. The industries which have been set up in turn
encourage the growth of ancillary industries.
h b l i e Sector md Devekpment
The promotional activities undertaken by development corporations in the area
of agro-based industries, fisheries, textiles, jute and similar other activities have
boosted the overall production and the marketing of these products. On a wider
scale the development corporations have also been effective in bringing about
sdcial transformation especially for the scheduled castes and tribes and in the
tribal areas. They have inculcated the spirit of self help and provided sources of
employment to the large number of vulnerable sections of the society. The
warehousing facilities provided by these corporations has provided adequate
protection to our small scale manufacturers and growers. Tourism in most of the
states has become an important industry and in this context the contribution by
the Tourist Development Corporations has been quite significant. Substantial
foreign exchange is also being earned through this sector.
The development corporation has no doubt contributed to the cause of overall
development, strengthening the economy by .providing economic and social
infrastructure, removal of regional imbalances and encouraged
entrepreneurship among different sections of our society. But a serious problem
-
facing most of these corporations have been one relating to its autonomy.
Though it is in the form of statutory corporation which enjoys more operational
autonomy, being an instrument of government policy and promotional
intentions, these corporations have not been able to come out of the government
influence in any major way. Unless sufficient autonomy to these institutions is
granted it will not be possible for them to operate as commercial enterprises.
Since. most of these development corporations are undertaking developmental
and promotional activities, the influence by the government cannot be
undermined especially when they have some social implications. It is expected
that a clear understanding especially with the help of memorandum of
understanding needs to be built up to have an effective working relationship
with the government and the corporations. Once the objectives are clarified and
the targets fixed, these corporations should be provided sufficient autonomy so
that they are able to discharge their functions. 1
The priorities laid down for the development corporations many a time are
broad in nature. This hinders the effective functioning of the corporations. For
1I
example, the Industrial Financial Corporation of India has been making i
frequent changes in the priorities of its financial operations consistent with the
directives received from the Government of India. Unless the directives are
clear, positive and issued timely, the development corporations cannot
i
discharge their functions effectively.
' To enable the development corporations make a significant impact, their
organisation should be so constituted that they are ensured of autonomy in their
I
day to day matters consistent with their overall objectives. There is need for
proper delegation of administrative and financial powers to. the Board of
Directors and lower authorities in the organisation. Professionalism needs to be
developed in these corporations through imparting training to the managerial
and technical personnel.
Modern techniques of financial management, electronic data processing and
better office management techniques should be introduced to improve the
overall effectiveness and efficiency of the corporations. This may bring in 'better
system of planning, decision-making monitoring and evaluation.

Check Your Progress 2

Note : i) Use the space given below for your answers
ii) Check your answers with those given at the end of the unit.
1) Point out the important functions of development banks.
 Role of Development Corpomfions
2) Highlight the contribution made by development corporations in our
country.

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

3) Discuss the administrative problems faced by development corporations in

India.
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I
4) What steps can be taken to impove the effectiveness of the corporations?

I
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28.6 LET US SUM UP

In most of the developing countries there exists a large number of development
corporations to promote and initiate such activities which mav indirectlv help in
the-process of sbcio-economic development of the respective-countries: ~ h k s e
corporations are created to help the private entrepreneurs in financial and
technical matters. In this unit, we have discussed the concept of development
corporations and their functions. Generally, those development corporations
which provide financial assistance to industries are known as development
banks. We have highlighted the functions of these banks like the Industrial
Development Bank of India, Industrial Finance Corporation. The development
corporations have made a remarkable impact on the'economy in various sectors
like tourism, marketing, warehousing facilities etc. But a critical analysis of their
role brings out that most of these corporations have overlapping
.- -
functiogs, they
do not enjoy sufficient autonomy and i r e not able to bring about
among their, technical and managerial personnel. To make the corporations
effective, there is a need to modernise and improve their adminjstrative set up.

28.7 KEY WORDS

Capital Market : It refers to various institutiqns, arrangements concerned with
the purchase, sale and transfer of stock;. bonds etc.
Electronic Data Processing : Use of Computers for the purpose of storage and
processing of information for managing an. organisation.-
h b k Scetor and Development
External Returns : The advantages and benefits of investment reaching other
organisations which. secure assistance from the promoters.
Feasibility : Practicability; activitiesltasks capable of being executed or
managed.
Joint Sector : Those forms of organisation which are managed and operated by
public and private sectors together.
Mprket Analysis : Measurement of market potential .and its characteristics.
Operative Functions : Functions and activities related to the direct running of an
organisation.
Underwriting of capital issues : It means contracting with or without condition,
to subscribe for the stocks, shares, bonds or debentures of any company'or
industrial concern with a view to the resale of the whole or any part thereof.

28.8 REFERENCES
Administrative Reforms Commission, 1967. Report on Public Sector
Undertakings. The Manager of Publications : Delhi.
Das Gupta, A & N.K. Sengupta, 1987. Government & Business. Vikas
Publishing House : New Delhi.
Government of India, 1990. Public Enterprises Survey 1989-90, Vol. I,Bureau
of Public Enterprises : New Delhi.
Khanna, K.K., 1988. Management of Public Sector Enterprises in India.
Himalaya Publishing House : Bombay.
Nayar, Baldev Raj, 1989. India's Mixed Economy - the Role of Ideology and
Interest in its Development.Popular Prakashan : Bombay.
United Nations, 1974. Organization, Management and Supervision of Public
Enterprises in Developing Countries, United Nations : New York.

28.9 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress 1
1) Your answer should include the following points :
Development Corporation refers to an autonomous agency
established in the public sector with the purpose of mainly promoting,
rather than operating economic activities through some system of
assistance.
In developing countries like India, they are useful as they
promote such type of activities which may not be supported by the
private sector or where the private initiative is lacking.
accelerate those activities which take place at a slow pace, in a small
size and in a sectorally unbalanced manner.
promotes a desired economic activity as envisaged by the government.
2) Your answer should include the following points :
The reasons for setting up of development corporations in the public sector
are to
take up those projects which the private sector is unwilling to take as
they involve huge amounts of investment, long gestation period or the
return on investmept is negligible.
meet the financial requirements of industries in developing countries.
act as an instrument of government policy in bringing about planned
economic growth, industrialisation.

3) Your answer should include the following points :

The development corporations discharge financial functions through
provision of loans to industry, trade or agriculture. They may also
 engage in activities which promote an effective capital market by Role of Development Corpomtiom

underwriting the capital issues of the company.

The development corporations take up promotional functions in
undertaking pre-investment studies of the viability of the project,
helping the entrepreneurs in taking up feasible projects. Industrial
estates are set up in which the promoters are given incentives to locate
their establishment, other facilities like power, wslter, marketing,
warehousing are given. Promotional functions can take the form of
procurement of capital arrangements for foreign collaboration and
equipment.
Some of the development corporations are entrusted technical
functions which take the form of arranging technical know-how for
the enterprises which may be available either indigenous13 or from
! other countries. It includes providing consultancy in project
engineering, preparation of detailed project reports, drawings, site
supervision etc. Provision of managerial advice and expertise to
entrepreneurs, training facilities, assistance in marketing of products,
etc., are some of the technical functions discharged by the
corporations.

I
Operative functions take the form of joint sector units promoted by
many state governments. A development corporation may promote
and operate activities of any enterprise under its own control or
before transferring it into private sector.
Check Your Progress 2
1) Your answer should include the following points :
The functions of development banks include :
providing medium arid long-term credit to industry;
co-ordinating the activities of other financial institutions; supplement
their resources, plan and promote industries of major importance and
adopt priorities to promote industrial growth;
identification of projects;
identifying entrepreneurs to manage the projects;
undertaking full feasible studies of the project either through their
own efforts or through appointed consultants;
appraising the feasible studies and assisting in the implementation and
execution of these projects.
2) Your answer should include the following points :
The contribution made by various development corporations in
bringing about a balanced and integrated development of industries
both in public and private sectors;
setting up new industries, study and investigation of industrial
schemes, ensuring maximum possible use of industrial equipment;
undertaking promotional activities in the fields of agro-based
industries, fisheries, textiles, jute, small-scale industries, export,
marketing, tourism sectors;
inculcating the spirit of self-help and providing sources d
employment to'a large number of vulnerable sections of the society.
3) Your answer should include the following points :
The administrative problems of development corporations relate t o :
inadequate operational autonomy;
the priorities fixed for the corporations are broad in nature and are
not specific;
lack of clear, positive. timely directives by the government;
4) Your answer should include the foilowing points :
Proper constitution of the organisation of the development
corporations with sufficient autonomy in their day to day matters
consistent with their overall objectives.
Proper delegation of administrative and financial powers to the Board
of Directors and lower authurities in the organisation.
Development of professionalism in the corporations through
imparting training to the managerial and technical personnel.
UNIT ADMINISTRATIVE PROBLEMS
PUBLIC SECTOR
Structure
Objectives
Introduction
Ma'jor Problems of Public Sector in India
The Policy Aspect
Organisational Problems
Operational Problems
Let Us Sum Up
Key Words
References
Answers to Check Your Progress Exercises

29.0 OBJECTIVES
After reading this unit, you should he able to :
identify the major problems relating to the performance of public sector in
India
discuss the organisational problems faced by public sector
analyse the various problem areas relating t o the operation of public sector,
\
and
poirit out the institutional and procedural changes required in.the
administrative set up of public sector in India.

29.1 INTRODUCTION
In'the previous units we have discussed the evolution and expansion of public
sector and the role of development corporations. We have also hinted at some of
the administrative problems which are being faced by the public sector in India
as well as in some of the other developing countries. In th'is unit an attempt is
being made to examine those administrative problems in a greater detail.

29.2 MAJOR PROBLEMS OF PUBLIC SECTOR IN

INDIA
As discussed earlier in Unit 26, as a direct consequence of the Directive
Principles of State Policy, Industrial Policy Resolutions of 1948 and 1956 and the
government's declaration of establishing a socialistic pattern of society, the
public sector in India has come to occupy a commanding position. It has been
called to play a significant role in accelerating the rate of economic growth,
speeding up the pro,cess of industrialisation, increasing employment
opportunities and improving the living standards of our people. The
performance of public sector, therefore, largely determines the speed and the
effectiveness with which we can achieve our social and economic goals.
All these years we have been facing various administrative problems relating to
planning, construction and the commissioning of the projects. It has been
argued that many of our projects have not been properly planned. They have not
been set up at the appropriate locations. Moreover, there has been delay in the
construction and commissioning of the projects. There has been considerable
increase in the cost of completion of these projects which in turn has not only
deprived the nation of the much needed goods and services but has also put extra
burden on the public exchequer. With the operation of these public sector
undertakings. the operational problems have now assumed greater importance.
 Jn this context the public sector enterprise surveys have clearly brought out that Administrative.RoMemsof
PubUc Sector
many of the public sector enterprises have not been functioning as expected.
The profitability profile of the public enterprises indicates that during the year
1988-89, in 222 operating public enterprises having a capital investment of
Rs. 67,535 crore, the net profit has been only Rs. 2,981 crore which works out
t o be 4.41 per cent of the capital employed. Even in terms of capacity utilisation,
labour productivity, .operational cost of the products and the rate of industrial
unrest the performance of public sector in India has not been much encouraging.
The record should be a matter of concern and has been indeed an issue of public
discussion at various levels. In an endeavour to improve the performance of
public undertakings various reports of the Parliamentary Committees,
Administrative, Reforms Commission and many other studies have highlighted
various administrative problems. While emphasising on improving the
functioning of public enterprises a number of issues pertaining to the conceptual
and operational aspects, especially related to its economic and social objectives
have been raised. It had clearly pointed out that the public enterprises are
neither functioning according to its declared objectives nor it has been able to
achieve effective utilisation of resources especially personnel, money' and
material. It is in this context that we are trying to highlight some of the
administrative problems being faced by the public sector in India towards the

I
fulfilment of its declared policies and objectives.
For the purpose of discussion these problems can be classified as those related- t o
policy, organisation and operations of the enterprises. The operational
problems may in turn cover some major issues relating to financial management,
human resource management, materials management, marketing, pricing etc.

29.3 THE POLICY ASPECT

As per the Industrial Policy Resolutions, the public enterprises were required to
play a dominant and an exclusive role in the strategic as well as core industries.
The consumer activities were left to the private sector. It is a matter of concern
that the public enterprises have entered into non-priority areas including
manufacturing of beverages and marketing of consumer goods, which
legitimately could have been given to the private sector. Since the public sector
has started operating in those areas which were assigned to private sector, the
private sector is demanding a share in the core as well as strategic industries.
There is a need to have a fresh look at our industrial policy. The public sector
should hand over these non-priority areas of operation to the private sector.
This would thereby reduce the size of the public sector. There is a need to
encourage small and medium scale industries in the private sector. The
government should adhere to only those areas of operation which are strategic,
t core and basic in nature.

29.4 ORGANISATIONAL PROBLEMS

In our previous unit we indicated that there has been no consistency rather there
has been confusion about the organisational policy of state enterprises. There
ha.s been a demand for creating statutory corporation rather than a joint stock
company. The recommendation of the Administrative Reforms Commissiod to
have " S ~ c t o rCorporation" which was referred to earlier in Unit 27 of this Block
has not been accepted by the government. On the contrary we are creating a
large number of companies out of the existing departmental forms of
organisation. But most of these enterprises are functioning as bureaucratic
organisations. Moreover there are a large number of public sect0.r units
performing nearly the same functions and there is no co-ordination between
these units in matters relating to marketing, research and personnel
management. There is a lack of effective and proper linkages between the
different units within the public sector on one hand and the government on the
other.
Most of the public enterprises do not have adequate delegation of powers. There
are frequent instructions and directions which are given by the government.
Also there is no clarity of objectives for these organisations. Most of the public
enterprises d o not have adequate power to take timely decisions. There is
frequent interference both by the politicians as well as the adminiqtrators of the
concerned departnients. Both ministerial control and the parliarncril,c~\
accountability have been found to be ineffective. Norms and technique\ o f
accountability have not been adequately established. The control and
accountability has been ad hoc in nature and has restricted the managerial
autonomy. This has neither been in the best interest of the public enterprises nor
has assured their accountability in substantial terms.
There is a need for new scientific techniques of accountability, monitoring and
evaluation as opposed to routine rule of thumb and strict bureaucratic system.
The main concern should not be more accountability but good accountability. It
is only through the "management by objectives" and accountability by results
and operational output that the operational autonomy and accountability can be
reconciled. In this process both operational autonomy and accountability can be
simultaneously enhanced. More accountability can be secured if it is not for
individual actions and decisions but for .results. T o achieve this, instead of
hierarchical, authoritative and unidirectional control, there should be more
managerial accountability which lays stress on harmonious relationship, unity of
action based on common purpose amongst controlling agency and public sector
undertakings in the formulation of policies and their implementation. It is hoped
that with the memorandum of understanding which has been introduced in our
country, the control and accountability in public 'sector would become more
meaningful.
Another problem relating to the organisational structure has been the
composition of the board of directors. Most of the public enterprises have a
mixed type of board consisting of a few full-time members and a few
part-time members. The studies have indicated that many of the part-time
members do not take adequate interest in the functioning bf public enterprises.
Many of them do not attend meetings regularly. Therefore, the advantage of
having external experts on the board of directors to give adequate
representation to different interests like consumers, suppliers, financial
institutions and others, is not being served. There has also been a talk of bringing
employees/workers representatives on the board of directors. Once this policy is
accepted and implemented in toto, it may bring about a cordial relationship
between the management. and the workers of the public enterprises. One hopes
that the industrial unrest may also reduce and we may witness a harmonious
relationship between the management and the workers: unless adequate
powers of decision making are given to its board of directors, a structural change
may not bring about a desired improvement.
Planning and Construction of the Projects
Studies have indicated that there have been defects in the planning, preparation
of the detailed project reports. In some cases the feasibility reports have not
been prepared or have been prepared on the basis of wrong assumptions. There
has been lack of proper assessment of the location of the projects and incomplete
analysis of commercial profitability as well a s socio-economic benefits. For
example, 6th Report (Third Lok Sabha) of the Committee on Public
Undertakings revealed that setting up of two plants of Fertiliser Corporation at
Namrup and Gorakhpur suffered from locational disadvantages. No
techno-economic ebaluation of the project was undertaken before setting up
these two plants and the decision to this effect was taken by the government
based on consideration that every state needs to have a fertiliser plant. At times
when the reports have been prepared it takes a long time to get it cleared from
the appropriate authority which results id considerable delay. Even at the time
of construction, the site of the projects has been changed due to political
interference. It has not been completed as. per the time schedule. Modern
techniques like PERT and CPM which help in project planning and monitoring
have neither been prepared nor adhered to. Whenever contracts were given, the
details were not adequately laid down. All this has resulted in delay in the
construction and increase in the cost of the project.
Check Your Progress 1 Adm6&rativePmbIerns of
Note : i) Use the space given below for your answers. Pubk Sector

ii) Check your answers with those given at the end of the unit.
1) Explain the nature of the major problems being faced by the public
sector in India.

2) Discuss some of the organisational problems of the public sector in India.

a
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29.5 OPERATIONAL PROBLEMS

The operational problems 'faced by the public sectorein India relate mainly to
financial management, human resource management, materials management,
industrial relations, pricing, marketing etc. Let us briefly discuss these problems.
Financial Management
If the public enterprises have to function on commercial principles it is essential
that their financial management is consistent with this requirement. Many of
them adhere to the bureaucratic procedures existing in the government
departments and have not applied the modem techniques of financial
management.
A sound budgeting system is very essential for building up an effective
mechanism of financial management and control. The budget which apart from
providing accountability and internal control, is also a plan of action and a tool
of management. The financial performance of an enterprise depends
significantly on proper planning and control of its resources. But most o f the
public enterprises in India do not give much importance to this tool of budget
while planning their physical and financial targets. The Estimates Committee in
its 20th Report of the Second Lok Sabha also stressed upon the need for toning
up the efficiency of public sector undertakings through prepiration of a
,performance-cum-programme statement for the budget year together with the
previous year's statement. The Study Team of the Administrative Reforms
Commission in 1967 which investigated into this aspect pointed out towards this
adoption of the traditional pattern of budgetary forms and procedures in public
sector and emphasised the need for introduction of performance budgeting as
the expenditure needs to be linked to the activities and end results. But not much
headway was made in the adoption of performance budgeting in public sector as
stili most of the enterprises follow the preparation of traditional budgets.
There is a need to introduce 'performance budgeting' and 'zero-base' budgeting
in the public sector enterprises. The improvement in the budgetary system
should also be accompanied by greater delegation of authority as well as
reduction in the number of cases requiring prior financial approval.

Internal audit is also an important tool of financial management. There is a need

to strengthen the interna! audit system so that it is able to review the soundness
adequacy and application of sound financial principles and operational control.
It should play a pcsitive role in suggesting improvements in the financial'
management rather than acting in an obstructive way. They should also conduct
h b ~ sector
c s ad Development
a test check of a certain percentage of transactions with a view to verify
iqventories and ensure prevention and reduction of fraud, misappropriation and
pilferage.
One of the greatest problems.of financial management is resource mobilisation.
Most of the public enterprises have their initial supply of capital out of the
budgetary allocation. During the last few years some of the public enterprises
are getting loans directly from the public to augment their resources. Recently a
decision has been taken by the government that 20% of the finances can also be
obtained from the public in the form of equity. This equity participation would
increase the financial resources of the public enterprises and 'would reduce their
dependence on the budgetary allocation. Moreover, if the public enterprises are
able to improve their overall performance, it would be able to generate
sufficient internal resources and keep those financial results for their
modernisation and future develoment.
Human Resource Development
It has been well established that the success of any undertaking ultimately
depends on the ability, training, experience and morale of the personnel
engaged by the public enterprises. Perhaps the most important failure of the
public sector has been its inability to develop, to a requisite extent, its own
resources of managerial and .technical personnel. For staffing most of the
managerial positions, the government and the public enterprises right from the
beginning have been depending upon private sector, foreign personnel and civil
services. But their continuous dependence on any of these resources has been
found to be neither practical nor desirable. Private sector as a source of staffing
is professional and qualitatively weak because the nature of public sector is
different from the private sector. Moreover some of public sector units are in
competition with the private sector. Therefore, dependence on this source is not
desirable. Most of the existing public sector departments like railways, posts and
telegraphs and the then existing ordnance factories did provide a limited number
of persons for filling up those positions. With the expansion of the public sector
it may not be possible to spare their experienced personnel to the new public
sector enterprises. Even the services of foreign personnel which were acquired
by the public undertakings for staffing their positioiis have been found to be very
costly and their dependence may not result in the development of people from
within organisation as it limits the opportunity for development of its own
employees. Most of the public undertakings, therefore, during the initial stages
have been depending upon the civil servants to staff various positions. This
dependence on the civil service, especially in the central public enterprises has
reduced to some extent but it still continues at the state level. The dependence
on the civil servants has brought a large number of problems relating to the
bureaucratic culture, short tenure and lack of commitment to the public
enterprises. Ultimately, :he public enterprises are required to have its own cadre
of 'management. In this regard the Public Enterprises Selection Board (PESB) in
tHe Bureau of Public Enterprises has been of some help. Even then most of the
top positions are vacant for a long period. There had been a suggestion to create
separate management service for the public enterprises and to have separate
public service commissions for the public sector undertakings. Neither of the
suggestions has found favour with the government.
Public enterprises have not been able to attract trained and competent
managerial personnel because the salary structure is not comparable with the
private sector. Pay-scale is considered as one of the important factors which
affect motivation and mobility of personnel. It is therefore desirable that the
remuneration policies of the public sector should be rationalised and
considerablk changes in the pay structure should be brought about. It should be
uniform throughout the public sector and should be somewhat comparable with
the private sector.
Many of the public enterprises have excess manpower that too, at the clerical
and unskilled level. Partially it has been because the public enterprises were
required to retain the employees working in the construction of the projects and
there have been tendencies to provide helpers, peons and other staff to the
skilled and senior personnel. Partly, it has been due to the fact that manpower
 planning has not been done on scientific basis during the initial stages of the Adminiabative Roblem of
project. This fias resulted in reduction of ' l ~ b o u rproductivity' and increase in Public Sector
the cast of operation. Defects in manpower planning in public sector in India 'la:
been pointed out by many studies and committees. Excess of staff strength,
employment of large-scale casual labour, ad hoc additions from time to time and
employment of helpers etc., have been said to be the problems'facing some
public enterprises.
Training anrl development of the employees is another area which can help in
providing the undertaking competent employees on a continuous basis. With the
increase in the number of public enterprises, the present supply of technical and
managerial personnel to inan various positions is not sufficient. Also our
educational system is not directly related to the professional requirement of the
public undertakings. Moreover, rnost the public undertakings are modernising
and diversifying their activities. All this necessitates augmenting of the training
facilities and co-ordinating all the training activities which are currently carried
on by the public sector. There are two institutions which impart management
training in public enteiprises i.e. Institute of Public Enterprises in Hyderabad,
and Continuicg Education for Public Enterprises in New Delhi. Also many
public enterprises have in-house training facilities for.workers, supervisory
I managerial staff.
Many of the public enterprises have been sending their employees to foreign
countries for training. It has been observed that at times, this training is not
effectively utilised as it does not suit the requirements of the job to be
performed. This is because right type of identification of training needs has not
been done.
Industrial relations
Unfortunately the public enterprises are suffering from poor industrial
relations: Being not owned by any individual or a group of capitalists the public
sector was expected to have not only cordial but harmonious industrial relations.
Owing to the political interference and political patronage, greater concept of
job Security and encouragement from senior managers, many of the trade unions
in the public sector are resorting to'frequent strikes and thereby creating
industrial unrest. The present system of works committees and limited
employees participation in management has not improved the industrial
relations to a great extent. It is hoped that if the government introduces the
modified form of workers participation, whereby the employees can participate
at the shop floor level, plant level and the board level it would help in bringing
about better industrial relations. Though public enterprises are spending
substantially on 9bour welfare, housing, employees education, transportations
and other such f ~ i l i t i e s ,the employees have not been adequately mativated to
give their best to the organisation.
Materials Management
The efficient and economic use of materials is essential for the profitable
operation of any undertaking. It forms the most important part of managerial
effort in controlling cost. Moreover the value of inventory also imposes a heavy
financial burden. The study team of the Administrative Reforms Commission,
based on its own study and the reports of the parliamentary committees and
Planning Commission pointed out some of the deficiencies in the area of
materials management. These include unjustifiably high amount of inventories,
lack of adoption of scientific methods of inventory control, delay in the delivery
of materials which has resulted in under-utilisation of the capacity of the
undertakings. Also, some of the undertakings do not ha-re proper storage and
handling facilities. Even the procedure for purchases' is lengthy and involves a
large number of references to the finance branch.
Studies relating to inventory management in public sector reveals that the time
taken to place an order for purchasing materials from the time of placing
requisition for those materials is very long. Also there are procedural delaysin
the organisation for processing the orders for purchase of materials. With this,
especially those public enterprises which import materials for their operations
tend to import huge stocks, to avoid any possible stoppage of production in
between due to non-availability of material.
mbllrSslor.dDcrrkpwat
There is a need to simplify the procedures and introduce modern tecnniques of
materials management, adequate delegation of powers for the purchase of .
materials. Inventory preparation should be done in a scientific way and should
be kept to the minimum. Better storage facilities would help maintain the
material in good shape and quality.
Marketing
One of the very important functions, namely marketing is generally not effective
in the public sector. This is basically because it enjoys the patronage of the
government. Much importance is not given to market planning. Public sector
faces other problems like lack of well-developed and integrated marketing
information system, formulatioii of marketing objectives in generalised terms,
lack of professionally qualified and trained marketing executives etc. The
marketing function has not assumed importance in. the public enterprises, owing
to monopolistic nature of the enterprises in the market and the absence of
private competition. This has retarded the growth and development of public
enterprises especially when they have to compete in the international market.
It is, therefore, essential that the public enterprises should make special efforts
to attract and develop marketing strategies for the overall growth and prosperity
of public sector in India. The Committee on public undei-takings has
recommended that the government should evolve a centralised marketing set up
for each type of industry as well as for specialised products manufactured by
more than one public enterprise. The marketing strategy should be to develop
long range plans by assessing the environmental factors, production capability
and the capacity of the market to absorb the products and services of the public
sector.
Pricing
The most controversial and frequently debated issue relating to public
enterprises has been its pricing policy. Since there are a number of enterprises in
public sector operating in different 'fields like developmental and promotional,
industrial and trading, basic o r essential service sectors, there has been no
uniform policy and hence they vary from one enterprise to the other.
Broadly, the pricing policies can be classified under three major areas namely;
(a) promotion oriented pricing (b) surplus-generation-oriented pricing and
(c) regulation oriented pricing. For the enterprises adopting promotion -oriented
pricing, the prices are fixed low and the external benefits are greater as
compared to the surplus created for the organisations. This jndirectly implies
subsidies to the beneficiaries. For example in case of a public sector unit like the
Food Corporation of India, the costs incurred by the unit at the point of saie are
higher than the issue price fixed by the government.
Some of the public enterprises follow the surplus-generation oriented price
policy to generate surpluses for their own development or to contribute to the
public exchequer. In fixing such prices they take into account the cost of
operation and the desired profit.
The regulation oriented price policy is adopted by certain enterprises wHere
there is a need to stabilise or regulate the prices and the enterprises are required
to provide adequate goods and services at lower prices so that the prices in the
private sector are brought to some reasonable levels. Such prices are fixed for
commodities which are of mass consumption.

The Bureau of Public Enterprises from time to time has been laying down
guidelines regarding pricing policies to be followed by public enterprises. It has
been emphasised that the public sector has economically viable units and all
efforts should be made t o increase their efficiency and establish their
profitability. In respect of those units producing goods and services which are in
competition withethe private sector the normal market forces of demand and
supply should operate and such organisations should have competitive prices. A
public sector unit like Hindustan Machine Tools (HMT) comes in this category.
For instance, the price policy of enterprises operating in the international
market like the Bharat Heavy Electricals (BHEL), Hindustan Steel Ltd., etc. is
determined by the forces in the-international market.
 Since the pricing policy in public sector has to satisfy varied interests of the Administratlve Pmblem ol
enterprise, consumer, and supplier it becomes difficult to fully meet everyone's Public Sector
requirements and hence some clash of interests is inevitable. But the prices need
to be determined keeping in view the overall guidelines issued by the
government, individual circumstances of each enterprise, and larger national
interests.

' Check Your Progress 2

Note : i) Use the space given below for your answers.
ii) Check your answers with those given at the end of the unit.
1) Indicate the major problems relating to human resource management in
public sector.

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

2) Highlight the problems relating to materials management in public sector.

3) Explain the three types of pricing policies of public sector in India.

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

29.6 LET US SUM UP

In an endeavour to improve the performance of public enterprises various
reports- official and non-official- have stressed upon the importance of efficient
fui.lctioning of public enterprises. It has been particularly pointed out that the
performance and the success of any public sector unit depends, ultimately, on
the administrativelmanagerial capabilities of the organisation. The public sector
even with the government patronage is likely to fail unless it is able. to streamline
its administrative system and build up professionalism amongst its
managerialladministrative and other employees of the undertaking.
The administration of public enterprises are confronted with a large number of
organisational and operational problems. The most important of these relate to
finance, management and human resource management. Some of the
recommendations to improve the functioning of the public enterprises have
either not found the favour with the government and the public enterprises or
there has been considerable delay in accepting such suggestions. Unless the
suggested institutional and procedural changes are brought ih the administrative
set-up of the public sector, it will not be possible to fulfil the declared objectives
and improve the performance of public sector in India.
h b k Seth and Development
29.7 KEY WORDS
Committee on Public Undertakings : This is a parliamentary committee set up in
1964, consisting of members from the LoK Sabha and the Rajya Sabha. It is
entrusted with the function of examining the reports and accounts of public
undertakings to see whether in the context of the autonomy and efficiency, the
affairs of undertakings are conducted hccording to sound business principles and
prudent commercial practices. The committee is essentially a fact-finding body
and helps Parliament in ensuring accountability of public undertakings.
Critical Patb Method (CPM) : This is a planning technique which by means of
diagrams indicates the order in which jobs relating'to an activity or project are to
be accomplished or completed. It defines a project in terms of its component
events: By ordering the events or activities' and showing their interdependency
in the'form of a diagram, this technique enables one to identify the critical or
important events or activities, whose delay might lead to delay in the overall
completion of projects. This technique is used for planning, estimating,
scheduling and controlling of engineering, construction or related projects.
Inventory : It refers to part of the assets of an organisation consisting of raw
materials to be used in the manufacture of a product, goods in the process of
manufacture, finished goods which are ready for delivery to the customers.
Internal audit :'It is an integral part of any organisation which includes
examination of the accounts t o ensure that they are maintained properly,
expenditure incurred is within the prescribed limits and the financial rules and
regulations are adhered. The scope of internal audit is determined by the
.management of the organisation.
Manpower Planning : It is the process of developing and determining objectives,
policies and programmes in an organisation that will develop, utilise and
distribute manpower so as to achieve economic and other goals.
Management by Objectives : It is a management technique which helps in
achieving performance goals of an organisation. It is based on mutual
understanding between the management and employees under which specific
targets are agreed upon, actual performance towards the objectives is monitored
and if necessary, corrective action can be taken.
Materials Management : It consists of all tbe activities concerned with
movement of materials, production, control, inventory control, storage,
materials handling, purchasing etc.
Performance budgeting : A method of preparing budget in which items
appearing in the budget represent functions to be'performed or activities to be
undertaken. It is system of presentation of public experiditure in terms of
functions, programmes and activities/projects.
Programme Evaluation Review Technique (PERT) : It is a relatively new
planning and control technique which is designed to help the management wit1
planning, problem solving, control of organisational processes. It is generally
suitable for projects where there are uncertainities and with the help of this
technique, statements about the probability of completing a project within a
certain stipulated time can be obtained.
Public Enterprises Selection Board (PESB) : The board was set up by the
Government of India in 1974, entrusted with the responsibility of selection and
recruitment of top managerial posts in public sector undertakings.
Works Committees :.These are committees consisting of representatives of
employers and workers in equal number, .which are set up for industrial
establishments with one hundred or more workers. Its functions include matters
which affect the working conditions in the establishments like safety, provision
of amenities, educational and recreational activities etc.
Zero-base budgeting : It is an approach to budget formulation in which all the
activities have to be jdstified as though those activities were being started for the
first time. It aims at analysis and justification of existing activities and a
systematic consideration of how the objectives should be accomplished.
 A~thePnlblumol
29.8 REFERENCES Public Sefter

Hanson A.H., 1962. Managerial Problenzs in Public Enterprises, Asia

Publishing House : Bombay.
Joshi Navin Chandra and S. Banerjee (Ed.), 1986. Readings in Public Sectors ( A
Book of writings in Indian context), UDH Publishing Company : Delhi.
Sanker, T.L., R.K. Mishra and S. Ravishankar (Eds.), 1985. Leading Issues in
Public Enterprise Management,Hirnalaya Publishing House Bombay.
Singh Prabhu Nath. 1982. Some Aspects of the Managerial and Economic
Problems of Public Enterprises in India,Janaki Prakashan : Patna.

29.9 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress 1
1) Your answer should include the following points :
Organisational problems d a t i n g to planning, construction and
commissioning of public sector units
Operational problems relating to financial management, human
resource management, materials -management, marketing pricing.
2) Your answer should include the following points :
Bureaucratic functioning of most of the public sectorqorganisationr
Lack of effective and proper linkages between the different units
within the'.pblic sector and the government
Inadequate delegation of power
Frequent interference by the politicians as well as the administrators
of the concerned de'partments
Ineffective ministerial control and parliamentary accountability
Composition of the Board of Directors consisting of both part-time
and full-time members. The part-time members' do not rake adequate
interest in thz functioning of the enterprise.

Check Your Progress 2

1) Your answer should include the following points :
4 Inability to develop, managerial and technical personnel
Dependence on the civil service to staff various positions in public
sector which has led to problems relating to the bureaucratic culture,
short tenure and lack of commitment to the public enterprises
Improper remuneration policies due to which the public enterprises
,are not able to attract trained and competent managerial personnel
Defective manpower planning .leading to excess of staff strength at the
clerical and unskilled levels, employment of large-scale casual labour
etc.
2) Your answer should include the following points :
High amount of inventories leading to heavy financial burden
Lack of adoption ef scientific methods of inventory control
Delay in the delivery of materjals
Lack of proper storage and handling facilities
Procedural delays in !he organisation for processing the orders for
purchase of materials.
3) Your answer should include the following points :
There has been no uniform pricing policy in public sector and it varies
from one enterprise to the.other
Broadly, the pricing palicies can be classified into three types i.e.
(a) promotion oriented, (b) surplus generation oriented and (c)
regulation oriented pricing policy
Public Secta~and Development
In case of enterprises adopting promotion oriented pricing policy, the
prices are fixed low and external benefits generated are greater
compared to the surplus for the organisation's
In surplus generation oriented pricing, surpluses are generated by the
enterprises for ,their own development o r to contribute to the public
exchequer
The regulation oriented prices policy is adopted by enterprises
involved in production of goods for mass consumption with a view to
. '
stabilise and regulate the prices of goods and services and offer them
at a lower price.
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