COPYRIGHT 2010, PGD-SRD, NIRD & UOH

Contributors

1.

Dr. K. Suman Chandra, NIRD

2. Dr. Ch. Radhika Rani, NIRD

3.

Dr. R.R.Prasad, NIRD

4.

Dr. B.K. Thapliyal, NIRD

5.

Dr. K.Hanumantha Rao, NIRD

6.

Dr. B.K.Swain, NIRD

7.

Dr. K.P.Kumaran, NIRD

8.

Dr. C.S.Singhal , NIRD

PREFACE
The Father of Nation, Mahatma Gandhi said that India lives in villages and for the national
progress, the development should begin from the villages. It was obvious that after
independence, rural development became one of the important components of the planned
development strategy of the country. Beginning with Community Development Programme
introduced in the First Five Year Plan, rural development in India has passed through many
phases over the past six decades. Over the years, many new programmes were added to rural
development process and the investment in the rural sector increased by many folds. As of now,
the annual investment in rural sector is above eighty thousand crore. However, many rural
problems continue to be challenging. Still about 30 per cent of the rural people are below the
poverty line income.
Rural development is the most complex process because the rural areas and the people
suffer from various deficiencies. There are more than 70 percent people live in rural areas and
more than two thirds of them depend on agriculture as their main source of livelihood. Nearly 80
percent of the farmers have small and marginal holdings and therefore majority of them are
unable to generate minimum required income and thus remain poor. Besides there are
considerable number of landless agriculture labourers who live in abject poverty. In addition to
these, there are still a large number of villages which do not have proper road connectivity,
schools and health care facilities, no electricity and there are considerable number of villages
without safe drinking water.
Despite so many programmes and so much investment , we have yet to achieve the desired
goal of rural development. Though there are many factors responsible for low performance in
rural development, one of the major factors which can be singled out is lack of sustainability.
Sustainability depends on various factors which include cultural and social composition of the
rural community, rural economic structure and access

to the productive resources, rural

institutions and local governance system. Keeping these in view, the first

Course of this

Programme is focussed on understanding various social and economic dimensions of rural

society and the issues related to sustainability. This Course, therefore, is divided into five Blocks
and each block has four Units. The contents of these Blocks are discussed in brief.
The first Block deals with Understanding Rural Communities: Structure, Culture and
Polity. There are four units in it and each deals with some basic aspects of rural social structure,

cultural dimensions which have direct bearing on economic and political aspects of the society. It
is felt necessary that the students should be provided some basic knowledge on these aspects so
that it becomes easy to understand rural social dynamics and its bearing on the development
processes of different communities in rural areas.
The second Block is devoted to Development Theories. There are four units in this block
and they provide some fundamental aspects of economic growth, development, equity and
development with social justice.
Third Block provides the basic concepts and strategies for Sustainable Development.
There are various factor which have bearing on sustainability. It is therefore necessary to make
students understand the basic concepts and various dimensions of sustainability, with specific
reference to rural development.
It is also necessary that students are made aware of rural development concepts, theories
and objectives of rural development. It is also necessary that they are also exposed to the
policies and strategies adopted in India for rural development over the past six decades. Poverty
being one of the most important components of rural development, it is necessary to provide the
students the basic knowledge about poverty, causes and types of poverty and its measurement.
The fourth block therefore has been devoted to Rural Development in India: Policies and
Programmes.
The fifth and last block in this course is devoted to understand the importance of
Decentralised Governance. It includes the role of local self governments, particularly the
Panchayats. Besides there are a number of other institutions like cooperatives, nongovernmental organisations and community based organisations which are playing important
role in rural development.
It is hoped that this Course will be able to provide a sound foundation to the students for
learning and understanding more complex issues relating to sustainable rural development which
will be dealt in the succeeding courses.

B.K. Thapliyal
Course Editor

CONTENTS
Block- 1: Understanding Rural Communities: Structure, Culture and
Polity
Unit- 1: Rural Social Structure: Caste and Class
Unit- 2: Understanding Rural Areas & Society
Unit- 3: Rural Economic Structure: Inequality and Exclusion
Unit 4: Social Conflicts and Social Change
Block - 2: Development Theories
Unit 1: Economic Growth
Unit 2: Growth with Equity
Unit 3: Social and Human Development Structure
Unit-4: Inclusive Growth
Block- 3:

Sustainable Development
Unit 1: Defining Development, Sustainable Development and
Rural Development
Unit 2: Basic Principles of Sustainable Human Development
Unit 3: Dimensions of Sustainability
Unit 4: Measuring Sustainable Development: Theory and
Application

Block- 4: Rural Development and Poverty: Concepts and Strategies

Unit 1: Rural Development and Poverty
Unit 2: Measurement of Poverty
Unit-3: Current Strategies for Rural Development to Attain
Millennium Development Goals
Unit -4: Corporate Social Responsibility (CSR) and Rural

Development

Block-5: Decentralised Governance

Unit-1: Democratic Decentralisation and Panchayati Raj
Unit-2: Cooperative Sector in India
Unit-3: Civil Society Organisations, Community based
Organisations and Self Help Groups.
Unit- 4: Role of NGOs in Rural Development

BLOCK-1: UNDERSTANDING RURAL

COMMUNITIES: STRUCTURE, CULTURE
AND POLITY

Block- 1: Understanding Rural Communities: Structure,

Culture and Polity

Introduction
India, a country of a sub-continent size, is full of diversities. geographical, climatic,
social, cultural, religious, economic, linguistic and even political diversity can be observed all
around the country. Indian civilization is one of the most ancient and over the centuries, a
variety of social systems have evolved by various communities in different parts of the country.
The social systems have direct bearing on the economic and political aspects, particularly, in
rural areas as more than seventy percent of the population is rural.
In the above backdrop, to understand the rural development process and rural economy, it
is necessary to have a glimpse of the rural social systems, communities and their cultural which
has great bearing on the living conditions and economic activities of the rural poor. Keeping
these factors in view, this Block is devoted to understand rural societies and its relationship with
the sustainable development which is covered through following Units :
(i)

Rural social structure: caste and class

(ii)

Understanding rural areas and society

(iii)

Rural economic structure: inequality and exclusion

(iv)

Social conflicts and social change

The first Unit dwells on rural social structure, with emphasis on caste and class. Indian
society is characterised with various castes and classes. There is also regional dimension to the
social structure and therefore the second Unit deals with rural areas and the society. The third
Unit analyses social structure in relation to economic structure. The fourth Unit is devoted to
analyse social conflicts and also the social change. It is expected that the four Units in this Block
will help you to understand the basic aspects of rural social structure and its relationship with
economic structure and implications for sustainable development.

Unit- 1: Rural Social Structure: Caste and Class

Structure
1. Introduction
2. Objectives
3. What is Social Structure?
3.1 Major institutions in rural society
4. What is Caste?
4.1 Features of caste system
4.2 What is class?
5. Summing up
6. Keywords
7. Know your Progress
8. Further Reading/ References
9. Model Answers

1. Introduction
The social structure is very important in Indian society to understand the relations
among the different sections of the society. Indian society is categorized as closed society
because of the existence of caste which has enormous effect on the social mobility. Parallel
there is also the concept of class which has emerged on economic indicators. The social
structure in India, to a great extent has its impact on the economic class and structure. In
this section we will learn some of the important features of rural social structure and its
consequences on the economic and political systems. We will also have some insights into
the major institutions which are playing their due role for the existence of the society.
These aspects will help us to understand various aspects of the rural social-economic and
political life of the rural people.

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2. Objectives
The main objective of this Unit is to help you:

To understand the meaning and scope of the rural social structure;

To distinguish between caste and class; and
To develop an overall comprehension about the rural social structure, caste
and class.

3. What is Social Structure ?

Man learns his behaviour and uses his intelligence whereas animals simply act on
instinct. Like most common-sense notions, this idea has an element of truth but reality is
far more complex.
More than any other species, man relies for his survival on behaviour patterns
which are learned. Man has no instincts, that is genetically programmed directives to
behave in particular ways. An instinct involves not only the impulse to do something, but
also specific instructions on how to do it. Birds have an instinct to build nest. They have
an impulse for nest building and all members of a particular species are programmed to
build nest in the same way. The range and variety of dwellings constructed by man clearly
shows the absence of directives based on instinct.

To all intents and purposes, a new born human baby is helpless. Not only is it
physically dependent on older members of the species but it also lacks the behaviour
patterns necessary for living in human society. It relies primarily on certain biological
drives such as hunger and the charity of its elders to satisfy those drives. The infant has a
lot to learn. In order to survive, it must learn the culture of its society. Ralph Linton states
that, `The culture of a society is the way of life of its members; the collection of ideas and
habits which they learn, share and transmit from generation to generation.
Social structure is a term used in sociology, anthropology and social psychology
to refer to relationships or bonds between groups of individuals (e.g. societies). Whereas
'structure' refers to macro", "agency" refers to micro".

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In general sense, the term can refer to entities or groups in definite relation to each
other, relatively enduring patterns of behaviour and relationship within a society, or social
institutions and norms becoming embedded into social systems in such a way that they
shape the behaviour of actors within those social systems. By the 1930s, the term was in
general use in social science, especially as a variable whose sub-components needed to be
distinguished in relationship to other sociological variables.
The notion of social structure as relationships between different entities or groups
or as enduring and relatively stable patterns of relationship emphasizes the idea that society
is grouped into structurally related groups or sets of roles, with different functions,
meanings or purposes. One example of social structure is the idea of "social stratification",
which refers to the idea that society is separated into different strata (levels), guided (if
only partially) by the underlying structures in the social system. This approach has been
important in the academic literature with the rise of various forms of structuralism. It is
important in the modern study of organizations, because an organization's structure may
determine its flexibility, capacity to change, and many other factors. Therefore, structure is
an important issue for management.

Social structure may be seen to influence important social systems including the
economic system, legal system, political system, cultural system, and others. Family,
religion, law, economy and class are all social structures. The "social system" is the parent
system of those various systems that are embedded in it.

3.1

Major institutions in rural society

The social framework of rural society is not as easily and readily identified or
observable as is the physical structure. In their inter-relationship and interaction with one
another, human beings create forms of association which are entities in themselves and
constitute the major-mechanisms through which society operates. The following are the
major forms of human relationship structure that compose rural society: social institutions,
organisations, ecological entities, groups, and collectivities. Generally recognised are five
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basic institutions in rural society: the family, religion, the economy, government, and
education.

A. Family: The family is the most multifunctional of all institutions in society,

and is a system of organised relationships involving workable and dependable ways of
meeting basic social needs, more specifically the family commonly fulfil the following
tasks in society:

1.

Reproduction and perpetuation of the family and human race,

2.

Socialisation,

3.

Provision of economic maintenance and livelihood in many cultures.

4.

Provision of love, affection and security to the individual, and

5.

Provision of class status to the individual of the family into which he has

been born.

B. Religion: From antiquity, man has sought answers to questions concerning the
mysteries of his own creation, his relationship to the supernatural, a satisfying philosophy
of life, and life after death. In his searching he has built up a category of individuals who
would

devote their specific attention to these matters as possible intermediaries and

religious

guides; he has developed rituals and ceremonies for appeasements and

propitiation of the supernatural; these rituals, based on beliefs, convictions, and the
ceremonies, and symbols accompanying prescribed roles and prescribed patterns of
ceremonies, and patterns of behaviour together constitute religion. Most religions of the
world have the following elements:

1.

A set of beliefs regarding the ultimate power in the universe,

2.

A set of beliefs regarding the ideal and proper pattern of behaviour.

3.

A set of ceremonial ways of expressing these beliefs.

C. Government:

Almost referred to as the political institution, government

administers the regulatory functions of law and order and maintains security in society. It
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provides both

the means for regulating the behaviour of individuals within society in

accordance with required norms, and protection from external aggression. Within this
major institution are secondary institutions such as military systems, police forces, legal
systems, and

diplomatic relations with other countries. In various cultures of the world

government

has tended to assume many functions of other institutions, e.g., the formal

education of

children, physical protection of home, fixation of prices, credit, and the

regulation of marriage conditions.

D. Economics or maintenance:

Such institutions provide basic physical

subsistence for society and meet basic needs for food, shelter, clothing and other
necessities. Included

are the economic institutions of production-agriculture, industry,

and the distribution,

exchange, and consumption of commodities, goods and services

necessary for human

survival. Secondary institutions included with the major economic

institutions are credit

and banking systems, advertising, cooperatives, etc.

livelihood show wide

variety both in themselves and in associated functions and

Means of

relationship not only in various parts of the world but within societies.

E. Education:

Educational institutions are those which seek to socialize

individuals in society or introduce them in formal ways into their social and cultural world.
Every new generation must be prepared and trained to play a role in society. This process,
referred to as the process of socialization, commences informally at home and then
formally in an institution of education. In some societies, part of the function of the
institution of

education is performed by the institutions of the family and of religion.

Educational

institutions have emerged from this background-from the home and the

temple, the

mosque, the church or the ashram to the formal village school, college and

university. In most societies, however, the function of providing education mainly has
been assumed by the Government Education as an institution in various parts of the world
seeks to fulfil its functions of transmission of cultural heritage, social integration of society
by moulding the individual to conform with norms, socialization and personal development
in various forms and in various ways that are socially acceptable and culturally defined.
This major institution is of tremendous influence on the behaviour of rural people, their
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inter-relationships and the moulding of behaviour and personality of individuals and

groups.

4. What is Caste?
An attempt is made in this brief to consider the relation between caste as it is in
fact, and as it is subsumed by the traditional concept of varna. The layman is unaware of
the complexities of varna. To him it means simply the division of Hindu society into four
orders, viz., Brahmana (Brahmin, traditionally, priest and scholar), Kshatriya (ruler and
soldier), Vaishya (merchant) and Shudra (peasant, labourer and servant). The first three
castes are `twice-born as the men are entitled to done the sacred thread at the Vedic rite of
Upanayana, while the Shudras are not. The Untouchables are outside the Varna scheme.
Caste System : The term caste was derived from the Portuguese word Casta
[meaning lineage or race], although in India, the term Varna [meaning colour] is used to
apply to caste. A caste is a social category whose members are assigned a permanent
status within a given social hierarchy and whose contacts are restricted accordingly. It is
the most rigid and clearly graded type of social stratification and has been often referred to
as the extreme form of closed class system. An individual is born into the caste of his
parent and can rise no further. With few exceptions, he cannot fall to a lower caste, but if
he does violate taboos and other mores of his caste, he may be ostracised and expelled
from his caste group. Personal qualities or ability have no role in determining the caste of
an individual, with lineage being the only criterion. The system is supposedly justified and
explained by custom and religion. The following have been identified as the characteristic
features of a rigid caste system:
1.

Deference to higher caste members by those of lower caste is enforced

with implementation of strict punishment and disciplinary measures for
violators.

2.

Lower castes are so repeatedly impressed of their inherent inferiority

that such castes remain subordinate to higher castes.

3.

Lower castes are alleged to have compensatory gains, but such gains are
cited more often by higher castes than by members of lower castes.

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4.

The past is repeatedly and persistently perceived and looked back upon
as golden age a time of inter caste harmony when the entire caste
system worked as an efficiently operating machine that has now been
spoiled by external agitation and interference resulting in resentment and
unrest among lower castes.

5.

Men of higher castes have access to sexual relationships with women of

their own castes as well as lower cases. Lower caste men however do not
have similar access and are confined in this respect to women of their
own caste.

6.

Lower caste members implicitly deny the legitimacy of their inferior

position.

The word jati, which exists in most Indian languages, literally means `kind or
`species and can denote a range of social categories, although one of its primary referents
is `caste. Among Hindus, the vast majority take it for granted that every one of them
belongs to a caste. Caste divisions are also found among Muslims, Christians, Sikhs, and
other religious minorities, although generally not among the tribal people.
The hierarchical caste system is one of the most distinctive institutions of Indian
society. In this system, every person is born into one and only one caste, of which he or
she remains a member until death; in other words, castes are inscriptive status groups with
no individual social mobility between them. Castes are normally endogamous, so that
husband and wife belong to the same caste, which is also their childrens caste.

4.1 Features of Caste System

We shall now describe the features of the caste system implicit in the varna
scheme and then try to see how they differ from, or conflict with, the system as it actually
functions. Firstly, according to the varna scheme there are only four castes excluding the
Untouchables, and the number is the same in every part of India. But even during Vedic
times, there were occupational groups which were not subsumed by varna even though it is
not known whether such groups were castes in the sense sociologist understand the term.

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One of the most striking features of the caste system as it actually exists is the
lack of clarity in the hierarchy, especially in the middle regions. This is responsible for
endless argumentation regarding mutual ritual rank: it is this ambiguity which makes it
possible for a caste to rise in the hierarchy. Each caste tries to prove that it is equal to a
`superior caste and superior to its `equals. The vegetarian castes occupy the highest
position in the hierarchy and approximation to vegetarianism is adduced as evidence of
high status. The drinking of liquor, the eating of the domestic pig which is a scavenger,
and of the sacred cow, all these tend to lower the ritual rank of a caste. Similarly, the
practice of a degrading occupation such as butchery, or a defiling occupation such as
cutting hair, or making leather sandals, ends to lower the ritual rank of a caste. There is a
hierarchy in diet and occupation, though this varies somewhat from region to region. The
castes from which a man accepts cooked food and drinking water are either equal or
superior, while the castes from which he does not, are inferior.
Segmental division of society
Castes were groups with a well developed life of their own, the membership
whereof, unlike that of voluntary associations and of classes, was determined not by
selection but by birth. The status of a person depended not on his wealth as in the classes
of modern Europe, but on the traditional importance of the caste in which he had the luck
of being born.
Hierarchy
One of the principal characteristics of the caste society, viz., the hierarchy of the
groups. Everywhere in India there is a definite scheme of social precedence amongst the
castes, with the Brahmin at the head of hierarchy.

Restrictions on feeding and social intercourse

There are minute rules as to what sort of food or drink can be accepted by a
person and from what castes. But there is very great diversity in this matter. The practices
in the matter of food and social intercourse divide Indian into two broad belts. In India, the
castes can be divided into five groups: first, the twice-born castes; second, those castes at
whose hands the twice-born can take cooked food; third, those castes at whose hands the
twice-born cannot accept any kind of food but may take water; fourth, castes that are not
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untouchable, yet are such that water from them cannot be used by the twice-born; last all
those castes whose touch defiles not only the twice-born but any orthodox Hindu.
Lack of unrestricted choice of occupation
Generally, a caste or a group of allied castes considered some of the callings as its
hereditary occupation, to abandon which in pursuit of another, though it might be more
lucrative, was thought not be right. Thus, a Brahmin thought that it was correct for him to
be a priest while the Chamar(Untouchable) regarded it as his duty to cure hides and
prepare-shoes. This was only generally true, for there were groups of occupations like
trading, agriculture, labouring in the field, and doing military service which were looked
upon as anybodys, and most castes were supposed to be eligible for any of them. Among
the artisans occupations, which were more or less of the same status, were open to the
members of these castes without incidental degradation.

Restrictions on marriage
Each caste forbids its members to marry persons from outside it. Each of sub
groups, popularly known as sub-castes, is thus endogamous.

This principle of strict

endogamy is such a dominant aspect of caste-society that an eminent sociologist is said to

regard endogamy as the essence of the caste system.

4.2 What is social class?

Social class
Social class can be defined as `a portion of a population that is regarded by itself
and others as a differing from other portions of that population in prestige, appropriate
social contacts, activities, possessions and value orientations. Social classes reflect certain
social attitudes. One social class differs from another in certain respects. A social class is
any portion of a community marked off from the rest by social status. A system or
structure of social classes involves, first, a hierarchy of status groups, second, the
recognition of the superior-inferior stratification, and finally some degree of permanency
of the structure. Thus, a social class is a stratum of people of similar position in the social
continuum. The social position of a college gardener is not similar to that of a professor,

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and the gate-keeper of a factory holds an inferior social status to that of the manager.
Among the members of a particular social group there are differences, through they may
consider one another as equals. It is noted that people on the whole are deferential towards
those who are considered socially superior, and under-rate those who are socially interior.
The number of social classes varies from society to society and social status varies along a
continuum, a gradual slope from top to bottom, rather than a series of steps.
Class System
Sharply contrasted with the caste system, the open class system can be placed at
the opposite end of a continuum. A social class has been defined as an abstract category
of persons arranged in levels according to the social status they possess. There are no firm
lines dividing one category from another.

A social class consist of a number of

individuals who share similar status often ascribed at birth but capable of being altered.
Class, therefore, does not consist of organized, closed groups defined by law or religion as
does caste, nor are the various strata in the system as rigid and easily identifiable.
Movement of groups and individuals to other strata is possible. Social class, not a lineal or
familial inheritance, hence can be acquired and changed according to ones achievement
and efforts, although the extent of such mobility varies from one society to another.
Further, the socially defined criteria that ascribe an individual a position in the class system
of a society are not irrevocable. Efforts to bring about change in the value system of
society emphasising certain factors and de-emphasising others may often prove successful
and may facilitate change of status in the class system. Such change is much easier in the
class system than in the caste system.

5. Summing up
The Indian social structure including caste and class is an important element in
the organisation of social behaviour. Social structure is the main frame in which sub
elements have been fitted with congruity. Therefore, one needs to have a fair idea and
understanding about caste and class through which one can penetrate into the other systems
of the society.

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6. Keywords
Caste, Class, Verna, System, Socialisation, Structure, Instinct, Culture,
Untouchables.

7. Know your Progress

1. What is social structure ?
2. What are the major institutions in rural society ?
3. What is caste and what are the main features of the caste system?
4. What is social class?

8.

Further Reading/ References

1. Berger, Guy: Social structure and rural development in the third world.
Cambridge University Press, 1992. vi, 186 p. ISBN : 0-521-39258-6. 309.263(1274)
BERN92S ** RURAL DEVELOPMENT; DEVELOPING COUNTRIES; POWER
STRUCTURE;
2. Chauhan, I.S : Social structure and rural development / by I.S Chauhan and V.S
Bais.-- Jaipur: Rawat Pubs., 1995. 176 p. ISBN : 81-7033-285-5. 309.263 CHA N 95S
** POWER STRUCTURE; RURAL DEVELOPMET ;
3. Krishnamurthy, J : Rural development : challenges and opportunities.-- New
Delhi: Rawat Publications,
2000. 224 p. ISBN : 81 7033 564 9. 309.263(54) KRI
P00R ** RURAL DEVELOPMENT; CASTE; RURAL SOCIAL STRUCTURE;
DEVELOPMENT PROGRAMMES; INDIA ;
4. Longhurst, Richard: Rapid rural appraisal: Social structure and rural economy - Sussen: Institute of Development Studies, 1981. ii,57 (IDS Bulletin vol 12 No.4).
309.2630723 LON N81R ** RURAL DEVELOPMENT

9. Model Answers
1. Social structure is a term used in sociology, anthropology and
social psychology to refer to relationships or bonds between groups of
individuals (e.g. societies). Whereas 'structure' refers to "the macro", "agency"
refers to "the micro".

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In general sense, the term can refer to entities or groups in definite

relation to each other, relatively enduring patterns of behaviour and
relationship within a society, or social institutions and norms becoming
embedded into social systems in such a way that they shape the behaviour of
actors within those social systems.
The notion of social structure as relationships between different
entities or groups or as enduring and relatively stable patterns of relationship
emphasizes the idea that society is grouped into structurally related groups or
sets of roles, with different functions, meanings or purposes. One example of
social structure is the idea of "social stratification", which refers to the idea that
society is separated into different strata (levels), guided (if only partially) by
the underlying structures in the social system.

Social structure may be seen to influence important social systems

including the economic system, legal system, political system, cultural system,
and others. Family, religion, law, economy and class are all social structures.
The "social system" is the parent system of those various systems that are
embedded in it.

2.

The following are the major forms of human relationship

structure that compose rural society: social institutions, organisations,

ecological entities, groups, and collectivities. Generally recognised are five
basic institutions in rural society: the family, religion, the economy,
government, and education.
i)

Family. The family is the most multifunctional of all institutions

in society, and is a system of organised relationships involving workable and

dependable ways of meeting basic social needs, more specifically the family
commonly fulfil the following tasks in society:
1. Reproduction and perpetuation of the family and human race,
2. Socialisation,
3. Provision of economic maintenance and livelihood in many cultures.
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4. Provision of love, affection and security to the individual, and

5. Provision of class status to the individual of the family into which he has been
born.
ii)

Religion : From antiquity man has sought answers to questions

concerning the mysteries of his own creation, his relationship to the

supernatural, a satisfying philosophy of life, and life after death.

In his

searching he has built up a category of individuals who would devote their

specific attention to these matters as possible intermediaries and religious
guides; and prescribed patterns of ceremonies, and patterns of behaviour
together constitute religion. Most religions of the world have the

following

elements:
1.

A set of beliefs regarding the ultimate power in the universe,

2.

A set of beliefs regarding the ideal and proper pattern of behaviour.

3.

A set of ceremonial ways of expressing these beliefs.

iii)

Government: Almost referred to as the political institution,

government administers the regulatory functions of law and order and

maintains security in society. It provides both the means for regulating the
behaviour of individuals within society in accordance with required norms, and
protection from external aggression.

iv)

Economic, or maintenance: Such institutions provide basic

physical subsistence for

society and meet basic needs for food, shelter,

clothing and other necessities. Included

are the economic institutions of

production-agriculture, industry, and the distribution, exchange,

and

consumption of commodities, goods and services necessary for human

survival.

Secondary institutions included with the major economic

institutions are credit

v)

and banking systems, advertising, cooperatives, etc.

Education: Educational institutions are those which seek to

socialize individuals in society or introduce them in formal ways into their

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social and cultural world.

Educational institutions have emerged from this backgroundfrom the home and the temple, the mosque, the church or the ashram to the
formal village school, college and university.
3. The term caste was derived from the Portuguese word Casta
[meaning lineage or race], although in India, the term Varna [meaning colour]
is used to apply to caste. A caste is a social category whose members are
assigned a permanent status within a given social hierarchy and whose contacts
are restricted accordingly. It is the most rigid and clearly graded type of
social stratification and has been often referred to as the extreme form of
closed class system. An individual is born into the caste of his parent and can
rise no further. The system is supposedly justified and explained by custom and
religion. The following have been identified as the characteristic features of a
rigid caste system:
1. Lower castes are so repeatedly impressed of their inherent
inferiority that such castes remain subordinate to higher castes.
2. Lower castes are alleged to have compensatory gains, but such
gains are cited more often by higher castes than by members of
lower castes.
3. The past is repeatedly and persistently perceived and looked back
upon as a golden age a time of inter caste harmony when the
entire caste system worked as an efficiently operating machine
that has now been spoiled by external agitation and interference
resulting in resentment and unrest among lower castes.
4. Lower caste members implicitly deny the legitimacy of their
inferior position.

The word jati, literally means `kind or `species and can denote a
range of social categories, although one of its primary referents is `caste.

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Among Hindus, the vast majority take it for granted that every one of them
belongs to a caste.

Caste divisions are also found among other religious

minorities, although generally not among the tribal people. The hierarchical
caste system is one of the most distinctive institutions of Indian society.

4.

Social class can be defined as `a portion of a population that is

regarded by itself and others as a differing from other portions of that

population in prestige, appropriate social contacts, activities, possessions and
value orientations. Social classes reflect certain social attitudes. One social
class differs from another in certain respects. A social class is any portion of a
community marked off from the rest by social status. A system or structure of
social classes involves, first, a hierarchy of status groups, second, the
recognition of the superior-inferior stratification, and finally some degree of
permanency of the structure. Thus, a social class is a stratum of people of
similar position in the social continuum. Among the members of a particular
social group there are differences, though they may consider one another as
equals. The number of social classes varies from society to society and social
status varies along a continuum, a gradual slope from top to bottom, rather than
a series of steps.

Sharply contrasted with the caste system, the open class system can be
placed at the opposite end of a continuum. A social class has been defined as
an abstract category of persons arranged in levels according to the social
status they possess.

There are no firm lines dividing one category from

another. A social class consist of a number of individuals who share similar

status often ascribed at birth but capable of being altered. Class, therefore,
does not consist of organized, closed groups defined by law or religion as does
caste, nor are the various strata in the system as rigid and easily identifiable.
Movement of groups and individuals to other strata is possible. Social class,
not a lineal or familial inheritance, hence can be acquired and changed

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according to ones achievement and efforts, although the extent of such

mobility varies from one society to another.

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Unit- 2: Understanding Rural Areas & Society

Structure
1. Introduction
2. Objectives
3. Features of the Rural Society
3.1 Major Characteristics of Village Life
3.2 Indian Village
3.3 Village Community
4. Social Customs
5. Summing up
6. Keywords
7. Know your Progress
8. Further Readings / References
9. Model Answers

1. Introduction
Rural areas are simple, agriculture oriented and have more or less similar
economic status. In rural areas people live in communities which will have its own
occupation. People living in rural areas will always have cooperative spirit and come
together where there is a common problem and do help who are in great danger. People
living in rural areas will follow certain social customs and obey common rules and
traditions. Therefore, in this Unit a description of village life has been portrayed.

2. Objectives
The main objectives of this Unit are :
i.

To know and analyse the feature of village life;

ii.

To study the major characteristics of village life; and

iii.

To broaden the understanding of social customs, traditions and culture.

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3. Features of Rural Society

3.1 Major characteristics of village
Primary relations
The relations between the primary groups and families in the village are intimate.
The family fulfils the needs of its members. It is through the family that the new members
are initiated into the customs, conventions and culture of the society. The village people
hold family as an institution. The relations among the people in the village being direct
and intimate, often the entire village is organised like a family.
Traditional life
The villages preserve the ancient culture. They still have faith in the doctrine of
karma, a fundamental principle of Indian culture and generally lead a simple life,
dominated by the spirit of sacrifice and the importance of religion in every aspect of life.
In the ancient time, the villages were an ideal democracy. Life in each village was
self-dependent and, to a certain extent, still now a village can meet a major part of its
requirements in man and material. The sense of neighbourhood in the village is given
considerable importance. There is socio-economic inter-dependence among caste groups
in a village. The villagers generally show a homogeneity due to which they do not
frequently come into conflict with each other and this leads to mutual intimacy and
harmony. The life of the villagers is simple. Their needs are limited. Due to limited
contact with external world, their view point is narrow.

The spirit of ambition and

competition is much less among them as compared to their counter-parts living in cities.
They are generally opposed to a change.
Lack of amenities
From the medieval ages to the present, the conditions of the villages continually
deteriorated. After Independence, however, the work of social reconstruction has been
taken up with right earnest and these are showing some results. The link roads and rural
electrification are having their impact on the life of the rural people.
Occupations
Agriculture (self-farming, tenancy and farm labour) is the major occupation of the
village, but there are other occupations in which people engage themselves to earn their
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livelihood. These include the work of artisans, such as carpentry, blacksmith, pottery, shoe
making, etc. and services such as barbery, washing of clothes, water carrying and other
menial jobs. There is socio economic inter dependence among the various social groups in
the village.

Need for rural development

From economic, social and cultural point of view, the importance of village in
India cannot be over stated. Naturally the countrys achievement in socio economic spheres
will, to a large extent, depend upon raising the level of living of the 80 per cent of the
countrys population living in villages. It is for this reason that the national leaders laid
greater emphasis on rural reconstruction in the Five Year Plans. Several strategies had
been adopted and various rural development programmes launched during the past three
decades.

These have consequently led to a significant improvement in agricultural

productivity, spread of education, improvement in communication and transport, and a

general rise in standard of living.
A foreign visitor to India is struck by the phenomenon known as the caste system.
He may not understand the full working of the system, but he is aware of the fact that
Hindu society is divided into groups, known as caste with varying degrees of respectability
and circles of social intercourse. This is due not only to the fact that caste is the most
general form of social organization in India but also because it presents such a marked
contrast to the social grouping prevalent in Europe or America.
3.2. Indian village
The village: its aspect and life
The aspect of the village varies not only with the general regional setting, with
building materials and house-types, but with social factors. Social fragmentation allied
with spatial separation to the extreme, segregating the untouchables in outlying cherries or
sub-village, sometimes, located several hundred yards from the main villages of which
they are service-components. This is indeed the climax of geographical differentiation;
apartheid. A typical cheri may consist of two rows of huts with a narrow central street in
the middle. The huts have thick mud walls, roofed with Palmyra thatch, and low mud
porches scrupulously swept. To enter one must bend double; the only light comes from the
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door and from under the leaves and the furniture consists of a few pots and pans, a couple
of wooden chests, and the essential paddy bin, 4 to 6 ft. high and 3 to 4 in diameter, raised
from the ground to escape the rats, and built up of hoops of mud. Poor as they are, these
dwelling are yet homes, and obviously loved as such: their cleanliness, the surrounding
mangoes, coconut and Palmyra palms, redeem them from utter squalor.
3.3 Village community
A village community can be defined as a group of persons permanently residing in
a definite geographical area and whose members have developed community
consciousness and cultural, social and economic relations which distinguish them from
other communities. Agriculture and allied activities are the main economic activities of the
people living in a village.

Village settlement pattern in India

Nucleated
Most of the Indian villages are nucleated. In this type, the residential area of the
village is at one place. The fields are around the houses. The houses are built close to one
another and are clustered together. The walls of the houses are continuous and it is
sometimes difficult to distinguish one house from another. There are main roads outside
the village which are meant for inter-village communication. In certain regions this type of
settlement pattern is also strictly on caste basis: houses of each caste are clustered together.
Dispersed
This type of settlement is found in the hilly areas, and in north-eastern and
southern India. This settlement pattern refers to the houses built in the field in a cluster of
2-3 houses-all belonging to a single family group. They are either the houses of father or
brothers or their sons. The next group of houses is at some distance, may be a furlong or
two away. The village settlement has no boundaries. This type of villages has no definite
shape or structure and no village streets; there are foot paths ending from one house to
another.

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Linear village
This type of village is found on the west coast of India. The village is situated
length-wise on the two sides of the roads or rivers. In this area there are some streams and
mountains which serve as natural boundaries between the villages. In such villages, land is
used for agriculture and horticulture. There are no village streets in such settlement
pattern.
Mixed type
This settlement pattern is a mixture of the nucleated and dispersed type. This type
of settlement is sometimes found both in the plains and in hilly areas. In this type, there is
a small compact settlement in the centre of the village and there are a few groups of houses
around this big settlement in the centre. This pattern has the characteristics of both
nucleated and dispersed types of settlement.
The village as a physical view exhibits itself as a conglomeration of houses
huddled together amidst surrounding fields, the residents knowing each others
characteristics and bound together over generations through the common sharing of eventsnormal, disastrous, and hopeful.

Such settlements from nucleated units with a

concentration of population ranging from one to five thousand, as the village proper (gaon
or gram).
Smaller settlements consisting of a hundred or even lesser number of people
living in part villages or hamlets are known as guda and palli in Andhra Pradesh; guda,
majra, kheda and khirki

in Madhya Pradesh.

Difficulties in visual identification of

villages arise when a number of houses along a main highway, especially as in the coastal
region of Kerala, appear as if without a break for a 100 km or more or when only a small
rivulet might provide a formal boundary for a village.

4. Social Customs
The significant among the factors of change in the social order have been the rise
in the age of marriage, the improved status of women, the lesser vogue of caste despotism
and of purdah, the removal of the disabilities of sections of population under caste
hierarchy and in general, the realignment of family relations. But it must however be said
that while glimpses of change in outlook are noticed among the educated in the village
community, in respect of social disabilities, the old order is kept intact in the observances
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of the privileges. Untouchability, access to places of public convenience and wells, etc.,
and public worship were the three crucial barriers and all the three have given way under
legislative compulsion and educative propaganda. The inner change of heart, which is the
result of enlightened education, is yet far from achievement. The tanner and sweeper still
live on the outermost fringe of the village, often on opposite sides. The two tests of free
association in a modern society are food and marriage. In the village, they are still as
strong a barrier as they were and education has done something to weaken them.

5. Summing up
India lives in rural areas. Rural society is distinctively separated from the urban
society in terms of living conditions and services. Indian villages demonstrate unity and
integrity in social aspects. But the beauty of living in rural villages is its patterns and
social moorings.

6. Keywords
Primary Relations, Traditional Life, Occupations, Nucleated, Dispersed, Linear
Village, Customs.

7. Know your Progress

1. What are the main characteristics of Indian villages?

2. Describe the village settlement pattern in India.

8. Further Reading / References

1. Kolb,J.H.
Study of rural society / by J.H.Kolb and E des Brunner.-- 4th ed.-Cambridge:Houghton Mifflin, 1952. x, 532 p. 301.35 KOL N52S
** RURAL SOCIOLOGY
2. Lamba, P.S., ed.
Impact of urbanization and industrialization on rural society / ed. by
P.S.Lamba and S.S.Solanki.-- New Delhi: Wiley Eastern, 1992. viii, 190 p.
ISBN : 81-224-0412-x. 301.35(54) LAM N92I
** RURAL SOCIOLOGY; URBANIZATION; INDUSTRIALIZATION;
INDIA
3. Mishra, Ram Bali

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Caste and caste conflict in rural society.-- New Delhi: Commonwealth

Publishers, 1989. xv, 222 p. 301.44(5425) MIS N89C
** CASTE; RURAL SOCIOLOGY
4. Sharma, K.L
Rural society in India.-- Jaipur: Rawat, 1997. 308 p. ISBN : 81-7033-362-9.
301.35(54) SHA N97R
** RURAL SOCIOLOGY; INDIA
5. Thara Bhai, L. ed.
Social reconstruction : Indian experience.-- Ambala Cantt.: Associated
Publishers, 2006. xii, 316 p. ISBN : 81 8429 018 7. 309.23(54) THA
P06S ** SOCIAL CHANGE; SOCIAL PROBLEMS; SOCIAL
REONSTRUCTION; RURAL SOCIETY
6. Venkatarayappa, K.N.
Rural society and social change.-- Bombay: Popular Prakashan, 1973.
xiii,264 p. 301.24(54) VEN N73R ** SOCIAL CHANGE

9. Model Answers
1. The main characteristics of Indian villages are :
Primary relations : The relations between the primary groups and families in the
village are intimate. The family fulfils the needs of its members. It is through the family
that the new members are initiated into the customs, conventions and culture of the society.
The village people hold family as an institution. The relations among the people in the
village being direct and intimate, often the entire village is organised like a family.
Traditional life : The villages preserve the ancient culture. They still have faith in
the doctrine of karma, a fundamental principle of Indian culture and generally lead a simple
life, dominated by the spirit of sacrifice and the importance of religion in every aspect of life.
Occupations: Agriculture (self-farming, tenancy and farm labour) is the major
occupation of the village, but there are other occupations in which people engage themselves
to earn their livelihood. These include the work of artisans, such as carpentry, blacksmith,
pottery, shoe making, weaving, etc. and services such as barberry, washing of clothes, water
carrying and other menial jobs. There is socio - economic inter - dependence among various
social groups in the village.
Lack of amenities : From the medieval ages to the present, the conditions of the
villages continually deteriorated. After Independence, however, the work of social
reconstruction has been taken up with right earnest and these are showing some results. The
link roads and rural electrification are having their impact on the life of the rural people.
2. The village as a physical view exhibits itself is a conglomeration of houses
huddled together amidst surrounding fields, the residents knowing each others
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characteristics and bound together over generations through the common sharing of eventsnormal, disastrous, and hopeful. Based on the pattern, the villages can be put into four major
types as follows :
Nucleated: Most of the Indian villages are nucleated. In this type, the residential
area of the village is at one place. The fields are around the houses. The houses are built
close to one another and are clustered together. The walls of the houses are continuous and
it is sometimes difficult to distinguish one house from another. There are main roads outside
the village which are meant for inter-village communication. In certain regions this type of
settlement pattern is also strictly on caste basis: houses of each caste are clustered together.
Dispersed : This type of settlement is found in the hilly areas, north-eastern and
southern India. This settlement pattern refers to the houses built in the field in a cluster of 23 houses-all belonging to a single family group. This type of villages has no definite shape
or structure and no village streets; there are foot paths ending from one house to another.

Linear Village : This type of village is found on the west coast of India. The
village is situated in a row along the two sides of the roads, streams, rivers or hills which
serve as natural boundaries between the villages.
Mixed Type: This settlement pattern is a mixture of the nucleated and dispersed type.
This type of settlement is sometimes found both in the plains and in hilly areas. In this type, there is
a small compact settlement in the centre of the village and there are a few groups of houses around
the c settlement in the centre.

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Unit- 3: Rural Economic Structure: Inequality and Exclusion

Structure
1. Introduction
2. Objectives
3. Structure of the Rural Economy
3.1 What is inequality?
3.2 What is exclusion?
3.3 Social inequality and social exclusion
4. Social Stratification in Rural India
5. Summing up
6. Keywords
7. Know your Progress
8. Further Readings / References
9. Model Answers

1. Introduction
The rural economic structure revolves around agriculture. More than 60 percent
of the rural people depend on agriculture. In every society inequality and exclusion are
common features. Therefore, opportunities are not available equally to all sections (castes)
of the people. Inequality and exclusion becomes a stumbling block for the advancement of
individual as well as community advancement.
In India, the inequalities are projected in the form of social stratification.
Therefore, it is desirable to understand the meaning and operational aspects of stratification
so as to understand the Indian rural society in a comprehensive way.

2. Objectives
The main objective of this Unit are :
(i)

To comprehend the structure and patterns of rural economy;

(ii)

To bring out the meanings of inequality and exclusion; and

(iii)

To understand the concepts of social inequality and social exclusion in

the context of social stratification in rural India.

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3. Structure of the Rural Economy

Rural economy in India
The rural economy in India is wholly agriculture based and it is of very high
importance because more than two third of the rural people derive their livelihood from it.
Agriculture is the main stay of the Indian rural population and it constitutes the backbone
of the rural economy. The green revolution has augmented the success of agriculture in
India. Further, rural economy in India has been playing an important role towards the
overall economic growth and social development of India. India has been predominantly an
agriculture-based country and it was the only source of livelihood since ancient time.
During prehistoric time when there was no currency system the Indian economy system
followed barter system for trading i.e. the excess of agricultural produce were exchanged
against other items. The agriculture produce and system in India are varied and thus offers
a wide agricultural product portfolio.
Today, the rural economy in India and its subsequent productivity growth is
predicted to a large extent upon the development of its more than 700 million strong rural
population. The agricultural economy of India is drafted according to the needs of rural
India since majority of the population lives in about 600,000 small villages. Agriculture
accounts for nearly 18 percent of Indian Gross Domestic Product (GDP). The rural section
of Indian population is primarily engaged with agriculture, directly or indirectly. The
Ministry of Agriculture, Ministry of Rural Development, and the Planning Commission of
India are the main governing bodies that formulate and implements the policy related to
rural economy in India and its subsequent development for the overall growth of the Indian
economy.
The main agricultural products that control the fate of the rural economy in India
are as follows

Food Grains - Rice, wheat, pulses, corn, rice bran extractions, sorghum, soya
meal, suji, lentils, jowar, bajra, chick pea

Fruits and nuts - Cashew kernels, cashew nut, almonds, roasted dry fruits,
peanuts, walnut kernels, HPS groundnuts

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Fruits : Bananas, cherry, dried fruits, dried truffles, lemon, mandarins, mango,
mango steens, meslin, shallots, apples, grapes, oranges, oranges, papaya,
pineapple

Vegetables : Potato, beans, cucumbers, gherkins, turnips, asparagus, bitter

gourd, carrots, stripe gourd, pumpkin, cauliflower, cabbage, tomato, onion,
drum sticks, lady's finger, spinach, cucumber, mushroom,

Seeds, buds, plantation and related products - Basil seed, cumin seeds, dill
seed, buds, celery seed, hybrid seeds, sesame seeds, sesbania seed, sunflower
seeds, mustard seeds, oil seeds, plant products, psyllium seed, fennel seed,
fenugreek seed, herb seeds, tamarind seed, vegetable seeds

Spices : Black pepper, chilli and chilli powder, cinnamon, cloves, coriander ,
cumin, curry powders, dried ginger, cardamom, anise, onion powder, pepper,
fenugreek, turmeric and , turmeric powder , garlic

Tea and Coffee : Black and green tea, coffee beans and powder, Darjeeling ,
Assam and Nilgiri teas, instant coffee, cocoa

Tobacco and Tobacco Products : Beedi, betel nut leaves, Tobacco, Cigarettes,
arecanut, zarda, scented tobacco, smoking tobacco, snuff, opium, chatni, pan
masala, gutka zarda, zafrani zarda

Cotton, rubber, jute, wool, silk etc.

3.1 What is inequality?

Economic inequality comprises of all disparities in the distribution of economic
assets and income. The term typically refers to inequality among individuals and groups
within a society, but can also refer to inequality among countries. Economic inequality
generally refers to equality of outcome, and is related to the idea of equality of opportunity.
It is a contested issue whether economic inequality is a positive or negative phenomenon,
both on utilitarian and moral grounds.
Economic inequality has existed in a wide range of societies and historical
periods; its nature, cause and importance are open to broad debate. A country's economic
structure or system (for example, capitalism or socialism), ongoing or past wars, and
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differences in individuals' abilities to create wealth are all involved in the creation of
economic inequality.

3.2What is exclusion?
Exclusion relates to the alienation or disenfranchisement of certain people within
a society. It is often connected to a person's social class, educational status, relationships in
childhood and living standards and how these might affect access to various opportunities.
It also applies to some degree to people with a disability, to minority men and women of
all races, to the elderly, and to youth (Youth Exclusion). Anyone who deviates in any
perceived way from the norm of a population may become subject to coarse or subtle
forms of exclusion. Additionally, communities may self-exclude by removing themselves
physically from the larger community, for example, in the gated community model.

The problem of exclusion is usually tied to that of equal opportunity, as some

people are more subject to such exclusion than others. Marginalisation of certain groups is
a problem even in many economically more developed countries, including the United
Kingdom and the United States, where the majority of the population enjoys considerable
economic and social opportunities.

3.3 Social inequality and social exclusion

Social exclusion
Social exclusion refers to ways in which individuals may become cut off from full
involvement in the wider society. It focuses attention on a broad range of factors that
prevent individuals or groups from having opportunities open to the majority of the
population. In order to live full and active life, individuals must not only be able to feed,
clothe and house themselves but should also have access to essential goods and services
such as education, health, transportation, insurance, social security, banking and even
access to the police or judiciary.
Social exclusion is not accidental but systematic it is result of structural features
of society. The social exclusion is involuntary that is exclusion is practiced regardless of
the wishes of those who are excluded. For example rich people are never found sleeping on
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the pavements or under bridges like thousands of homeless poor people in cities and towns.
This does not mean that the rich are being excluded from access to pavements and park
benches because they could certainly gain access if they wanted to but they choose not to.
Social exclusion is sometimes wrongly justified by the same logic it is said that the
excluded group itself does not wish to participate. The truth of such an argument is not
obvious when exclusion is preventing access to something desirable. Prolonged experience
of discriminatory or insulting behaviour often produces a reaction on the part of the
excluded who then stop trying for inclusion. For example, upper caste Hindu communities
have often denied entry into temples for the lower castes and specially the dalits. After
decades of such treatment the dalits may build their own temple or convert to another
religion like Buddhism, Christianity or Islam.
After they do this they may no longer desire to be included in the Hindu temple or
religious events. But this does not mean that social exclusion is not being practiced. The
point is that the exclusion occurs regardless of the wishes of the excluded. India like most
societies has been marked by acute practices of social discrimination and exclusion. At
different periods of history protest movements arose against caste, gender and religious
discrimination. Yet prejudices remain and often new ones emerge. Thus, legislation alone
is unable to transform society or produce lasting social change. A constant social campaign
to change awareness and sensitivity is required to break them.

Social inequality and exclusion

In every society some people have a greater share of valued resources-money,
property, education, health and power than others. These social resources can be divided
into three forms of capital-economic capital in the form of material assets and income;
cultural capital such as educational qualifications and status; and social capital in the form
of networks of contacts and social associations. Often these three forms of capital overlap
and one can be converted into the other. For example a person from a well-off family can
afford expensive higher education and so can acquire cultural or educational capital.
Patterns of unequal access to social resources are commonly called social inequality. Social
inequality reflects innate differences between individuals for example their varying
abilities and efforts. Someone may be endowed with exceptional intelligence or talent or
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may have worked very hard to achieve their wealth and status. However, by and large
social inequality is not the outcome of innate or natural differences between people but is
produced by the society in which they live.

4. Social Stratification
Social stratification is one of the most constant features of social life. Whenever
two or more persons form a group, they eventually begin to rank each other so that
inequality emerges. Soon some persons are at the top of the hierarchy and others are at the
bottom. At the community and societal levels, this process of ranking leads to the creation
of social classes.
Social stratification refers to the ranking of social positions in terms of the amount
of certain desirable things associated with these positions. In most societies, the most
important desirable things are related to wealth, prestige and power. Wealth, for example
may be defined by occupational category and its accompanying ability to produce income,
or by inherited valuables such as real estate. Prestige refers to honour and style of life; for
example, how elegant ones life style is. Power refers to the ability to control or dominate
the course of events which make up social life. Thus, positions in a society are ranked in
terms of the amount of those desirables that are attached to them. Stratification, then,
involves inequality because the higher the rank of a position, the more desirable one can
get by holding that position.

Stratification in rural India

The social organisation of an Indian village is a complex framework built around
the traditional caste structure of the Hindu social system. Even the non-Hindu groups in a
village are influenced by the caste stratification and thus fit somehow in the framework of
the caste hierarchy. On the whole, it can be said that the non-Hindus have acquired a
quasi-caste in accordance with their general social, economic and political standing in the
village or region. In a central Indian village the Gond (a tribal community) acquired status
in the middle rung of the hierarchy. The Mahar, a scheduled caste, in order to remove the
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stigma of lower status, became Buddhists but still remained at the lowest rung of the
society. In Punjab, while Sikhism is the dominant religion in the villages, the hierarchical
position of the different groups of Hindus and Sikhs, however, follows almost the same
pattern as in other parts of the country.

In villages where the scheduled castes are

converted into Christianity or are Sikhism their position in the hierarchy still remains same,
that is, they occupy the lowest position.

5. Summing up
While rural society portrays a simple and self sufficiency in economy, certain
sections particularly those belonging to scheduled castes and scheduled tribes have not
only been socially excluded but to a great extent majority of them like land less, agriculture
labourers, artisans, etc., have been economically excluded. Therefore, the factors of
caste, religion and land holding are playing an important role in Indian rural society.

6. Keywords
Barter system, Inequality, Exclusion, Social Inequality, Social Exclusion,
Prejudices, Stratification, Social Class, and Dalits.

7. Know your Progress

1.

What is meant by social inequality and social exclusion?

8. Further Readings / References

1.

Baviskar, BS
Inclusion and exclusion in local governance: Field
New Delhi: Sage Publications, 2008. 453 p

studies from rural India.--

2.

Bhattacharya, Nikhilesh
Poverty, inequality, and prices in rural India / by Nikhilesh Bhattacharya and
others.-New Delhi: Sage pub, 1991. 236 p. 338.52(54) BHA N91P
** POVERTY; ECONOMIC ANALYSIS; INDIA

3.

Lal, A.K. ed.

Social exclusion in : essays in honour of Dr. Bindeshwar Pathak.-- New Delhi:
Concept
Publishing Co., 2003. 2v. p Contents: Section-I: Dr. Bindeshwar
Pathak a sociologist and his mission; Section-II: State and society; Section- III:
Exterior and intermediate; Vol
II: Section-IV:
Environment and rural
development; Section-V: Urban development
and
regional
planning;

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Section-VI: Women and child issues; Section-VII: Social sciences for

social
development.
ISBN : 81 8069 052 0. 301.242 LAL P03S
** SOCIAL CHANGE; SOCIAL TRANSFORMATION; ECONOMIC
STRUCTURE;
SOCIAL MOVEMENT; SOCIAL EXCLUSION; CIVIL
SOCIETY; DALITS; RURAL
DEVELOPMENT; SOCIAL
DEVELOPMENT; WOMEN
4.

National Institute of Rural Development :

Development programmes and
inequality
among the peasantry in two villages of Bihar.-- Hyderabad:
National Institute of Rural
Development, 1993. 54p. 338.1 NAT N93D
** SOCIAL DEVELOPMENT; BIHAR; FARMERS

5.

Prasad, R.R. ed.

Rural development and social change / edited by R.R.Prasad and G. Rajanikanth.Hyderabad: Discovery Publishing House, 2006. 2v. p. (Foundation day
series). ISBN : 81 8356 203 5. 309.263 PRA P06R
** RURAL DEVELOPMENT; FOUNDATION DAY; SOCIAL
DEVELOPMENT; POVERTY; RURAL ECONOMY

9. Model Answers
1. Social exclusion refers to ways in which individuals may become cut off
from full involvement in the wider society. It focuses attention on a broad range of
factors that prevent individuals or groups from having opportunities open to the
majority of the population. Social exclusion is not accidental but systematic it is result
of structural features of society. The social exclusion is involuntary that is exclusion is
practiced regardless of the wishes of those who are excluded. For example rich people
are never found sleeping on the pavements or under bridges like thousands of homeless
poor people in cities and towns. This does not mean that the rich are being excluded
from access to pavements and park benches because they could certainly gain access if
they wanted to but they choose not to. Social exclusion is sometimes wrongly justified
by the same logic it is said that the excluded group itself does not wish to participate.
For example upper caste Hindu communities have often denied entry into temples for
the lower castes and specially the dalits.
In every society some people have a greater share of valued resource money,
property, education, health and power than others. These social resources can be
divided into three forms of capital-economic capital in the form of material assets and
income; cultural capital such as educational qualifications and status; and social capital
in the form of networks of contacts and social associations. Often these three forms of
capital overlap and one can be converted into the other. For example a person from a
well-off family can afford expensive higher education and so can acquire cultural or
educational capital. Patterns of unequal access to social resources are commonly called
social inequality. However, by and large, social inequality is not the outcome of innate
or natural differences between people but is produced by the society in which they live.
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Unit 4: Social Conflicts and Social Change

Structure
1. Introduction
2. Objectives
3. What is Social Conflict?
3.1 Reasons for Social Conflicts
3.2 What is Social Change?
3.3 What is Social Mobility?
4. The Impact of Social Change in the Lives of Rural People
5. Summing up
6. Keywords
7. Know your Progress
8. Further Readings / References
9. Model Answers

1. Introduction
Social conflicts and social change are the two most important concepts in the
study of rural society. When conflicts arise due to various reasons, the institutions, the
social structure and social order undergoes to changes. The changes which are impacting
the humans are called social change. Social change also leads to conflicts in the society.
Therefore, these two concepts are interlinked to each other and change in one area leads to
change in another area.

2. Objectives
The main objectives of this Unit are :
(i)

To know the difference between social conflicts and social change;

(ii)

To comprehend the reasons for social conflicts; and

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(iii)

To evaluate the social change on the lives of rural people.

3. What is Social Conflict?

When a social system generates severe problem of adjustment for the occupants of
a particular social status, it is likely that a collective challenge to the legitimacy of the
established rules of conduct will emerge. This is especially likely where democratic
ideology exists, espousing equality of opportunity and universally high aspirations for
success. Therefore, social conflicts arise due to various reasons. Society is impossible
without conflict. But society is worse than impossible without control of conflict.

Conflicts accompany social existence, their domain as vast and varied as life
itself. Correspondingly, studies of conflict cover a vast range of phenomena; resistance,
revolutions, war, certain kinds of movements and legal processes, ethnocentrism, and much
else.

3.1 Reasons for social conflicts

The factors of urbanization, market economy, politicization, education, general
development of some areas have created an awareness of contradiction among the people
living in rural areas. Thus, a consciousness of contradictions at the level of individual or
cumulative and the influence of the stated reasons resulted in an awareness said to have
brought the marginalised close to the conflict situation. While the rule of the socially
superior castes in villages ended after Independence, it is the economically superior castes
that are dominant in the villages in the present days. Wherever the marginalised pose a
challenge to the social and economic dominance of the privileged castes, they are subjected
to various kinds of victimization. Therefore, social conflicts are part of society and they
are to be tackled with care and diligence.

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3.2 What is social change?

Social change
One of the most popular and succinct definitions of social change is supplied by
Charles L. Harper in his Exploring social change, where it is characterised as the
"significant alteration of social structure and cultural patterns through time." He goes on to
explain that this social structure is made up of "a persistent network of social relationships"
in which interaction between people or groups has become repetitive. The resultant
changes can effect everything from population to the economy, which, as it so happens,
alongside such others as industrialisation and shifting cultural norms and values, are also
established agents of social change.
The term social change is used in the study of history, sociology, economics and
politics, and includes such topics as the success or failure of different political systems,
globalisation, democratisation, development and economic growth. The term can
encompass concepts as broad as revolution and paradigm shift, right down to narrow
changes such as a particular cause within small-town government.
The concept of social change implies measurement of characteristics of a group of
individuals. While the term is usually applied to changes that are beneficial to society, it
may also result in negative side-effects and consequences that undermine or eliminate
existing ways of life that are considered positive.

Nature of social change

The main characteristics of the nature of social change are as follows:
(i)

Social change is a universal phenomenon. Social change occurs in all

societies. No society remains completely static. This is true of all societies, primitive as
well as civilized. Society exists in a universe of dynamic influences.
(ii)

Social change is community change. Social change does not refer to the

change in the life of an individual or the life patterns of several individuals. It is a change
which occurs in the life of the entire community. In other words, only that change can be

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called social change whose influence can be felt in a community form. Social change is
social and not individual.
(iii)

Speed of social change is not uniform. While social change occurs in all

societies, its speed is not uniform in every society. In most societies it occurs so slowly
that it is often not noticed by those who live in them.
(iv)

Nature and speed of social change is affected by and related to time factor.

The speed of social change is not uniform in each age or period in the same society. In
modern times the speed of social change is faster today than before 1947. Thus, the speed
of social change differs from age to age. The reason is that the factors which cause social
change do not remain uniform with the change in times.
(v)

Social change occurs as an essential law. Change is the law of nature.

Social change also is natural. It may occur either in the natural course or as a result of
planned efforts.
(vi)

Social change results from the interaction of a number of factors.

Generally, it is thought that a particular factor like changes in technology, economic

development or climatic conditions causes social change. This is called monistic theory
which seeks to interpret social change in terms of one single factor. But the monistic
theory does not provide an adequate explanation of the complex phenomenon of social
change. As a matter of fact, social change is the consequence of a number of factors.

3.3 What is social mobility ?

Social mobility
The movement of a person from one social level to another is a characteristic of
most societies, while in some societies such mobility is not possible. In the caste system,
the individual is born into a particular group where he/she remains until drafts. The rigid
caste system in India which prevailed for centuries brought about social stratification
where the rules and regulations regarding the duties and responsibilities of each caste
group were prescribed.

The apartheid practiced in South Africa and the position of

Negroes in America has many characteristics of the caste system.

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It has been pointed out that social mobility is easier in an industrialized urban
society than in an agrarian rural society. Social mobility refers to the movement of a
person from one status to another. Though social mobility is usually associated with
upward mobility, there can also be downward mobility. There are instances when children
of famous and important people had to choose less important and less famous positions.
Social mobility is much easier in an open society than in a closed society. An ideal open
society is only a theoretical proposition, and in such a society an individual endowed with
ability and eager to work can climb up the ladder of success. There is competition and
what an individual attains is `achieved status. Achieved status is a feature of modern
industrial society and the inequalities that prevail in an open society mainly arise from
differences in abilities. In modern industrial societies there is great stress on success. We
put the successful man on a pinnacle and honour him as one of the great. Such an attitude
prevails in the present Indian society. According to Max Weber there are three orders of
stratification: the economic or class order based upon class position, drawn in a pattern
similar to that of Karl Marx, the social order based upon the distribution of social honour
or status, and the political order based upon the distribution of power.

Horizontal Vs vertical mobility

Mobility can be vertical or horizontal. In vertical mobility, the movement can be
either upward or downward. When a person changes his job without gaining or losing
status it is called horizontal mobility. If a civil servant is transferred from one department
to another without any promotion or change of salary, it is horizontal mobility. The term
`intergenerational vertical mobility is used to denote the status differences which may
arise between generations. If the son of a judge becomes a clerk it is downward mobility
where as when the son of a clerk becomes a judge it is upward mobility. Some of the
studies conducted on the basic determinants of mobility in different parts reveal that two
factors are mainly responsible for upward mobility.

These are a large educational

enrolment and an advanced stage of industrial economy. When industrialization takes

place in a society, much of the manual labour is displaced by machines, with trucks and
trains displacing bullock carts, cattle and head load workers.

Though such a

transformation creates unemployment, new types of jobs involving less physical strain are
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made available. Truck drivers, machine tool workers, and mechanics attain a higher social
status than manual labourers.

The children of one-time manual labourers, through education and special training
get employment which gives them higher social status than that of their parents. Such a
change is called structural mobility. The importance of education and technical training is
given great stress in all the developing countries of the world, and education accelerates the
structural mobility. Those who live in cities have greater chances of upward mobility than
those living in villages, and such mobile persons acquire better education than their
parents, and may have even fewer children.

Two aspects of upward mobility are noticed in such people.

One is

intergenerational mobility when an individual attains a higher social status than his parents,
and the other intra-generational mobility, when the individual goes on improving his social
level all through his career. The disadvantage of a high degree of social mobility is that
many individuals move too fast and too frequently, creating difficulties of assimilation into
their new levels. This results in serious social strain.

4. Impact of Social Mobility

Changes in social status lead to difficulties in adjustment. A middle class person
who has amassed much wealth may not get a place in the society of nobility as he has to
learn `correct behaviour, `correct accent, and the value system of the upper class nobility.
Though wealth is an important factor, it is not true that greater the wealth higher the class
level. Those who have amassed wealth by unfair methods like smuggling and speculation
are not accepted on par with those who have earned wealth through more respectable
means.

In most societies, it takes one or two generations for the new rich to gain

respectability.
However, social mobility is one of the important indicator of development and to
a considerable extent dilution of the caste and class system. It also helps in empowering
people to attain status in society, enhancing economic condition by improved access to
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various economic establishments and equal opportunities in availing of opportunities for

further social and economic advancement.

5.

Summing up
Many times, social change and conflicts bring progress and development in the

society notwithstanding some negative impact. Change is a continuous process which will
have impact on individuals as well as groups / communities. Social change is also one of
the basic parameters for economic change. In a democratic country like India social
change, especially in rural areas is an important factor for to achieve economic growth with
equity.

6. Keywords
Conflict, Social Change, Social Mobility, Horizontal Mobility, Vertical
Mobility.

7. Know your Progress

1.

2.

What is social change?

What is social mobility ?

8. Further Readings / References

1.

2.

Anheier, Helmut K. ed.

Conflilcts and tensions / edited by Helmut K. Anheier and
Yudhishthir Raj Isar.-New Delhi: Sage Publications, 2007. xxiii, 639 p. ISBN : 1 4129
3472 5. 301.23 ANH P07C ** SOCIAL CONFLICTS; SOCIAL
TENSIONS; CULTURAL SITES; POLITICAL SYSTEMS
Augoustinos, Martha ed.
Understanding prejudice, racism, and social conflict / ed by Martha
Augoustinos and
Katherine J. Reynolds.-- New Delhi: Sage
Publications,
2001. xvi, 362 p. ISBN : 0 7619
6208 5. 301.23 AUG P01U
** SOCIOLOGY; SOCIAL CONFLICTS; SOCIAL
PSYCHOLOGY;
SOCIAL COGNITION; RACISM; ATTITUDE

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3.

4.

5.

6.

7.

8.

Jayaram, N.,ed.
Social conflict / ed by N.Jayaram and Satish Saberwal.-- Delhi:
Oxford University Press, 1996. xiii,563 p. ISBN : 019563690-2.
301 JAY N96S ** SOCIOLOGY; SOCIAL CHANGE
Kansal, Jairam
Sociology of social change.- New Delhi: Dominant Publishers &
Distributors, 2004.70 p. ISBN : 817888118 7. 301.24 KAN P04S
** SOCIAL CHANGE; SOCIOLOGY
Khan, Mohammad Abbas
Social change in 21st century.-- New Delhi: Anmole Publications,
2004. vii p. ISBN : 81 261 2103 3. 301.24 KHA P04S
** SOCIAL CHANGE; SOCIAL TRANSFORMATION; SOCIAL
ORGANISATIION
Lewin, Kurt
Resolving social conflicts : selected papers on group dynamics.-- New
York: Harper, 948. xviii, 230 p. 301.152 LEW N48R
** SOCIAL TENSIONS
Mehta, Sushila
Social conflicts in a village community.-- Delhi: S. Chand, 1971. xv,
198 p. 301.35(54) MEH N71S
** SOCIAL TENSIONS; COMMUNITY
Sharma, Rajendra, K.
Indian society : Institutions and change.-- New Delhi: Atlantic Publishers
and
Distributors, 2004. vi, 378 p. ISBN : 81 7156 665 0. 301.2954
SHA P04I
** SOCIOLOGY; SOCIAL INSTITUIONS; SOCIAL CHANGE;
INDIAN SOCIETY; HISTORY; INDIA

9. Model Answers
1. The concept of social change implies measurement of characteristics of a group
of individuals. While the term is usually applied to changes that are beneficial to society, it
may also result in negative side-effects and consequences that undermine or eliminate
existing ways of life that are considered positive. The main characteristics of the nature of
social change are as follows:
Social change is a universal phenomenon. Social change occurs in all societies. No society
remains completely static. Society exists in a universe of dynamic influences.
1. Social change is community change. Social change does not refer to the change
in the life of an individual or the life patterns of several individuals. It is a change
which occurs in the life of the entire community.
2. Nature and speed of social change is affected by and related to time factor. The
speed of social change is not uniform in each age or period in the same society.
In modern times the speed of social change is faster. Thus, the speed of social
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change differs from age to age and community to community.

3. Social change is the law of nature. Social change also is natural. It may occur
either in the natural course or as a result of planned efforts.
4. Social change results from the interaction of a number of factors. Generally, it is
thought that a particular factor like changes in technology, economic development
or climatic conditions causes social change. This is called monistic theory which
seeks to interpret social change in terms of one single factor. But the monistic
theory does not provide an adequate explanation of the complex phenomenon of
social change. As a matter of fact, social change is the consequence of a number
of factors.
2. The movement of an individual or a community from one social level to
another is called social mobility. The rigid caste system in India which prevailed for
centuries brought about social stratification where the rules and regulations regarding the
duties and responsibilities of each caste group were prescribed. Social mobility is easier in
an industrialized urban society than in an agrarian rural society. It refers to the movement
of a person from one status to another. Though social mobility is usually associated with
upward mobility, there can also be downward mobility. There are instances when children
of famous and important people had to choose less important and less famous positions.
Social mobility is much easier in an open society than in a closed society. There is
competition and what an individual attains is `achieved status. Achieved status is a
feature of modern industrial society and the inequalities that prevail in an open society
mainly arise from differences in abilities. According to Max Weber there are three orders
of stratification: the economic or class order based upon class position, drawn in a pattern
similar to that of Karl Marx, the social order based upon the distribution of social honour
or status, and the political order based upon the distribution of power.
Mobility can be vertical or horizontal. In vertical mobility, the movement can be
either upward or downward. When a person changes his job without gaining or losing
status it is called horizontal mobility. If a civil servant is transferred from one department
to another without any promotion or change of salary, it is horizontal mobility. The term
`intergenerational vertical mobility is used to denote the status differences which may
arise between generations. If the son of a judge becomes a clerk it is downward mobility
where as when the son of a clerk becomes a judge it is upward mobility. Some of the
studies conducted on the basic determinants of mobility in different parts reveal that two
factors are mainly responsible for upward mobility. These are a large educational
enrolment and an advanced stage of industrial economy.
The children of one-time manual labourers, through education and special
training get employment which gives them higher social status than that of their parents.
Such a change is called structural mobility. Two aspects of upward mobility are noticed in
such people. One is intergenerational mobility when an individual attains a higher social
status than his parents, and the other intra-generational mobility, when the individual goes
on improving his social level all through his career.

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BLOCK - 2: DEVELOPMENT THEORIES

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Block - 2: DEVELOPMENT THEORIES

Introduction
The economic growth experienced by India in general and other
developing countries is unprecedented. It is often surmised that while the development is
not possible without growth but growth is possible without development. There are issues
of equity, inequality and how these impact on the overall development with some share of
everyone in the growth pie.

This Block has been explained through following four Units:

i) Economic growth;
ii) Growth with equity;
iii) Social and human development;
iv) Inclusive growth.

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Unit- 1: Economic Growth

Structure
1.

Introduction

2.

Objectives

3.

Economic Growth: Definition

3.1

Economic Growth and Economic Development

3.2

Measures of Economic Growth

3.2.1

Real GDP

3.2.2

Compound Growth

3.2.3

The rule of 72

3.2.4

Per capita real GDP

3.3

Determinants of Economic Growth

3.3.1

Human Resources

3.3.2

Natural Resources

3.3.3

Capital Formation

3.3.4

Technological Changes

3.4

Theories of Economic Growth

3.4.1

Classical Theory

3.4.2

Neo -Classical Theory

3.4.3

New Growth Theory

4.

Summing up

5.

Keywords

6.

Know your Progress

7.

Further Readings / References

8.

Model Answers

1. Introduction
This Unit will provide you an understanding about economic growth, its
importance in improving the living standards of the peo1. ple. The primary objective of

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economic policy is growth in per capita income because it is perceived that this leads to
rise in average incomes. The per capita income of our country is less compared to the
developed countries. The per capita income in rural areas is still less compared to urban
areas. This abnormally low per capita income leads to very low living standards of the
people. In order to understand the reasons for backwardness and ways to foster the wheels
of development, it is necessary to have the knowledge of the concept of economic growth,
the difference between growth and development and the factors influencing economic
growth.

2. Objectives
By the end of this Unit, you should be able to have good understanding of :

Definition of Economic Growth

Difference between Economic Growth and Economic Development

Measures of Economic Growth

Determinants of Economic Growth

Theories of Economic Growth

3. Economic Growth : Definition

Economic growth is an increase in the level of national output as measured by the
annual percentage change in real Gross Domestic Product(GDP). It represents the
expansion of a countrys potential GDP or National Output. It determines the rate at which
the countrys living standards or employment is rising. It also refers to sustained increase
in a countrys output of goods and services or more precisely output per capita . The
growth in output per capita is an important objective of government because it is associated
with rising average real incomes and living standards. In terms of period of growth, there
is a distinction between short term economic stabilisation and long term economic growth.
The topic of economic growth is primarily concerned with the long run. An increase in
GDP of a country is generally taken as an increase in the standards of living of its
inhabitants. Over long periods of time , even small rates of annual growth of GDP can have
large effects through compounding. A growth rate of 2.5 % per annum will lead to a
doubling of GDP within 28 years , while a growth rate of 8% per annum will lead to a
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doubling of GDP within 9 years. This exponential characteristic can exacerbate differences
across nations. This is usually brought about by technological innovation and positive
external forces.

3.1 Economic Growth and Economic Development

Economic growth and economic development are often used synonymously.
When progress takes place gradually and reflected in quantitative changes, it should be
considered as economic growth. Growth leads to more output, saving and investment.
Development involves not only quantitative increase in the economy but also qualitative
changes. Economic growth implies a gradual change in the economy. Economic
development may not be steady, and some times it may be abrupt and uneven changes.
From this point of view development is more dynamic than growth. It has a broader
perspective. It not only stands for more output but also changes in the technical and
institutional arrangements by which it is produced. Such changes are not automatic. In
order to initiate economic development,

certain changes have to be brought about

through deliberate policy measures. Viewed in this way, economic development involves
continuous increase in the share of industries, trade, banking, construction and services
and

decline in the proportion of agricultural share in Gross National Product (GNP).

Further, it implies change in technological and institutional organization of production as

well as in distributive pattern of income. Hence, compared to the objective of
development, economic growth is easy to realize by a larger mobilization of resources
and raising their productivity and output levels. The process of development is far more
extensive. Apart from a rise in output, it involves changes in composition of output, shift
in the allocation of productive resources and elimination or reduction of poverty,
inequalities and unemployment. Lastly, economic development is not possible without
growth but growth is possible without development.

3.2 Measures of Economic Growth

It refers to a process by which a nations wealth increases over a time period. The
most widely used measure of economic growth is the real rate of growth in a countrys
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total output of goods and services. Other

measures (national income per capita,

consumption per capita ) are also used. The rate of economic growth is influenced by
natural resources, human resources, capital resources and technological development in the
economy along with institutional structure and stability. Other factors include the level of
world economic activity and the terms of trade.
3.2.1 Real Gross Domestic Product (GDP)

Basically, economic growth is an increase in real GDP. As more goods and

services are produced, the real GDP increases and people are able to consume more. Real
GDP measures the value of goods and services produced within the economy adjusted for
the effects of inflation. If national output falls we are in an economic recession. If real
GDP starts to rise, then the economy is in a recovery phase. An economic slow down
means that the pace of growth is falling but the economy is still expanding (albeit a littler
slower than previously). We expect national income to go up each year because prices
tend to go up. A real increase in spending, income or output is an increase above the rate
of inflation (i.e above the average level of price increase). So, if national income rose by 5
% but prices rose by 7% the real economic growth would be -2%.

To calculate the percentage change in real GDP over a year, we simply divide the
change in GDP by the value of GDP at the beginning of the year, and then multiply the
quotient by 100. For instance, the real GDP of Singapore was approximately 160,853
million Singapore Dollars in 2002 and approximately 157,319 million in 2001. So the
economy grew by 2.2 percent in 2002.
Change over year
Percentage change in real GDP

________________

X 100

Beginning value

160,853 157,319
=

________________ X 100
157,319

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0.022 X 100

2.2 %.

This is also referred as growth rate. Growth rates are usually converted to annual
rates because everyone is used to annual rates. For a change from one year to the next, the
growth rate is already at an annual rate. For the growth rate from one quarter to the next,
the annual rate is approximated by multiplying the quarterly growth rate by 4.

3.2.2 Compound Growth

From 1991 to 2001, the industrial countries of the world showed an average
annual growth rate of real GDP of 2.5 percent. Over the same period, the average annual
growth rate of real GDP

for low income developing countries was 3.4 percent. The

difference between a growth rate of 2.5 percent and one of 3.4 percent may not seem
substantial, but in fact it is. Growth is compounded over time. This means that any given
rate of growth is applied every year to a growing base of real GDP, so any difference is
magnified over time.
Suppose in each case the economy originally is producing a real GDP of $ 1
billion. After five years, there is not much difference: a GDP of $ 1.13 billion at 2.5
percent growth versus $1.19 billion at 3.4 percent growth. The effect of compounding
becomes more visible over long periods of time. After 40 years, the difference between 2.5
and 3.4 percent growth, a seemingly small difference, represents a substantial difference in
output. A 2.5 percent rate of growth yields an output of $2.7 billion; at 3.4 percent, output
is $3.9 billion. After 40 years, the level of output is more than 40 percent larger at the
higher growth rate.
3.2.3 Rule of 72
Compound growth explains why countries are so concerned about maintaining

positive high rates of growth. If growth is maintained at a constant rate, we can estimate
the number of years required for output to double by using the Rule of 72. If we divide 72
by the growth rate, we find the approximate time it takes for any value to double.

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Suppose you deposit $ 100 in a bank account that pays a constant 6 per cent
annual interest. If you allow the interest to accumulate over time, the amount of money in
the account grows at a rate of 6 per cent. At this rate of interest, the rule of 72 tells us that
your account will have a value of approximately $200 (double its initial value) after 12
years:

72
____

= 12

6
The interest rate gives the rate of growth of the amount deposited if earned
interest is allowed to accumulate in the account. If the interest rate is 3 percent, the amount
would double in 24 (72/3) years.

The rule of 72 applies to any value. If real GDP is

growing at a rate of 6 percent a year, then real GDP doubles every 12 years. At a 3 percent
annual rate, real GDP doubles every 24 years.
3.2.4

Per capita real GDP

We have defined economic growth as an increase in real GDP. But, if growth is

supposed to be associated with higher standards of living, our definition may be
misleading. A country could show positive growth in real GDP, but if the population is
growing at an even higher rate, output per person can actually fall. Economists, therefore,
often adjust the growth rate of output for changes in population. Per capita real GDP is
real GDP divided by the population. If we define economic growth as rising per capita real
GDP, then growth requires a nations output of goods and services to increase faster than
its population.
Population growth rates are considerably higher in developing countries than they
are in industrial countries, so real GDP must grow at a faster rate in developing countries
than it does in industrial countries just to maintain a similar growth rate in per capita real
GDP.

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Recap

3.3

Economic Growth is an increase in real GDP.

Economic Growth involves quantitative change
whereas, economic development involves quantitative
as well as qualitative changes.
Economic Growth is compounded over time.
For any constant rate of growth, the time required for
real GDP to double is 72 divided by the annual growth
rate.
Per capita real GDP is real GDP divided by the
population.
Growth requires a nations output of goods and
services to increase faster than its population

Determinants of Economic Growth

The determinants of growth are:

Human resources (labour supply, education, discipline, motivation)

Natural resources (land, minerals, fuels, environmental quality)

Capital formation (machines, factories, roads)

Technology (science, engineering, management, entrepreneurship)

Often, economists write the relationship in terms of an aggregate production

function ( APF), which relates to total national output to inputs and technology.
Algebraically, the APF is
Q = AF (K, L, R)
where Q=output, K = productive services of capital, L=labour inputs, R= naturalresource inputs, A represents the level of technology in the economy, and F is the
production function. As the inputs of capital, labour, or resources rise, we would expect
that output would increase.

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3.3.1 Human Resources

One of the factors of economic growth is the size and quality of the labour force.
Growth in the number of people available for work is one of the important factors of the
growth of GDP. Not everybody in the population is in the labour force. If we subtract the
number of unemployed workers from the number of workers in the labour force, we get the
number of workers employed. Production depends not only on the number of workers
employed but also the quality of labour and the number of hours they work each year.
Hence, when looking at the effects of employment on production and growth, we count
only the hours that workers actually work. The total number of labour hours utilised in the
economy in a given year is what we mean by labour input.

The labour force typically grows more rapidly in developing countries than in
industrial countries because birth-rates are higher in developing countries. Between 1990
and 2001, the population grew at an average annual rate of 2.0 percent in low-income
countries and 0.7 percent in industrial countries.

Based solely on growth in the labour force, it seems that developing countries are
growing faster than industrial countries. But the size of the labour force is not all that
matters; changes in productivity can compensate for lower growth in the labour force.
Many economists believe that the quality of labour inputs the skills, knowledge,
and discipline of the labour force is the single most important element in economic
growth.

A country might buy fast computers, modern telecommunications devices,

sophisticated electricity-generating equipment, and hypersonic fighter aircraft. However,

these capital goods can be effectively used and maintained only by skilled and trained
workers. Improvements in literacy, health, and discipline, and most recently the ability to
use computers, add greatly to the productivity of labour.
3.3.2 Natural Resources

The important natural resources here are: arable land, forests, water, oil and gas,
and mineral resources. Land can be combined with labour and capital to produce goods
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and services. Abundant natural resources can contribute to economic growth , but natural
resources alone do not generate growth. New York City prospers primarily on its highdensity service industries.

Many countries, such as Japan, had virtually no natural

resources but thrived by concentrating on sectors that depend more on labour and capital
than on indigenous resources. Indeed, tiny Hong Kong, with but a minute fraction of the
land area of resource-rich Russia, actually has a larger volume of international trade than
does that giant country. The experience of Japan and Hong Kong makes it clear that
abundant natural resources are not a necessary condition for economic growth.
3.3.3 Capital Formation

Labour is combined with capital to produce goods and services.

growing labour

A rapidly

force by itself is no guarantee of economic growth. Workers need

machines, tools, and factories in order to work. If a country has lots of workers but few
machines, then the typical worker cannot be very productive. Money is needed to buy
machines and technology and therefore, capital is a critical resource in growing economies.

The ability of a country to invest in capital goods is tied to its ability to save. A
lack of current saving can be offset by borrowing, but the availability of borrowing is
limited by the prospects for future saving, Accumulating capital requires a sacrifice of
current consumption over many years. Countries that grow rapidly tend to invest heavily
in new capital goods; in the most rapidly growing countries, 10 to 20 percent of output may
go into net capital formation.
When we think of capital, we must not concentrate only on computers and
factories.

Many investments will be undertaken only by governments and lay the

framework for a thriving private sector. These investments are called social overhead
capital and consist of the large-scale projects that precede trade and commerce. Roads,
irrigation and water projects, and public-health measures are important examples. All
these involve large investments that tend to be indivisible, or lumpy, and sometimes have
increasing returns to scale.

These projects generally involve external economies, or

spillovers that private firms cannot capture, so the government must step in to ensure that

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these social overhead or infrastructure investments are effectively undertaken.

Some

investments, such as transportation and communication systems, involve network

externalities in which productivity depends upon the density
The key determinant of economic growth is technology i.e. ways of combining
resources to produce goods and services. New management techniques, scientific
discoveries, and other innovations improve technology. Technological advances allow the
production of more output from a given amount of resources. This means that
technological progress accelerates economic growth for any given rate of growth in the
labour force and the capital stock.

3.3.4

Technological Changes

Technological change depends on the scientific community. The more educated a

population, the greater its potential for technological advances. Industrial countries have
better educated populations than developing countries do. Education gives industrial
countries a substantial advantage over developing countries in creating and implementing
innovations. In addition, the richest industrial countries traditionally have spent 2 to3
percent of their GDP on research and development , an investment that developing
countries cannot afford. The greater the funding for research and development, the greater
the likelihood of technological advances.
Impeded by low levels of education and limited funds for research and
development, the developing countries lag behind the industrial countries in developing
and implementing new technology.
Four Wheels of Progress
Factors in

Examples

Economic Growth
Human Resources

Size of labour force

Quality of workers
(education,

skills,

discipline)

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Soils and climate

Capital formation

Equipment

and
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factories
Social

overhead

capital
Technology

and

entrepreneurship

Quality of science
and

engineering

knowledge
Managerial knowhow
Rewards

for

innovation

3.4

Theories of Economic Growth

Virtually everyone is in favour of economic growth,

but there are strong

disagreements about the methods used to accomplish this goal. Some economists and
policymakers stress the need to increase capital investment. Others advocate measures to
stimulate research and development and technological change.
emphasizes the role of a better-educated workforce.

Still a third group

Some believe that economic

protectionism is useful.

Economists have long studied the question of the relative importance of different
factors in determining growth.

In the discussion below, we look at the theories of

economic growth, which offer some clues about the driving forces behind growth.
3.4.1 Classical Theory : Classical Dynamics of Smith and Malthus

Early economists like Adam Smith and T.R. Malthus stressed the critical role of
land in economic growth in The Wealth of Nations (1776). This was a time when land was
freely available to all, and before capital accumulation had begun to matter. The entire
national income would go to wages because there is no subtraction for land rent or interest
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on capital. But this golden age cannot continue forever. Eventually, as population growth
continues, all the land will be occupied.

With new labourers added to fixed land,

each worker now has less land to work with, and the law of diminishing returns comes into
operation. The increasing labour-land ratio leads to a declining real wage rates. But how
bad could things get? Malthus thought that population pressures would drive the economy
to a point where workers would be at the minimum level of subsistence. He reasoned that
whenever wages were above the subsistence level, population would expand; belowsubsistence wages would lead to high mortality and population decline.

Only at

subsistence wages could there be a stable equilibrium of population. He believed the

working classes were destined to a life that is brutish, nasty, and short.
3.4.2

Neo -Classical Theory : Economic Growth with Capital

Accumulation
Malthuss forecast was dramatically wide off the mark because he did not
recognize that technological innovation and capital investment could overcome the law of
diminishing returns. Land did not become the limiting factor in production. Instead, the
first Industrial Revolution brought forth power-driven machinery that increased
production, factories that gathered teams of workers into giant firms, railroads and
steamships that linked together the far points of the world, and iron and steel that made
possible stronger machines and faster locomotives. As market economics entered the
twentieth century, a second Industrial Revolution grew up around the telephone,
automobile, and electrical industries. Capital accumulation and new technologies became
the dominant forces affecting economic development.

To understand how capital

accumulation and technological change affect the economy, we must understand the neoclassical model of economic growth. This approach was pioneered by Robert Solow of
MIT, who was awarded the 1987 Nobel Prize for this and other contributions to economicgrowth theory. The neo-classical growth model serves as the basic tool for understanding
the growth process in advanced countries and has been applied in empirical studies of the
sources of economic growth.

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The major new ingredients in the neo-classical growth model are capital and
technological change. This model assumes that countries use their resources efficiently and
that there are diminishing returns to capital and labour increases. From these two premises,
the neoclassical model makes three important predictions. First, increasing capital relative
to labour creates economic growth, since people can be more productive given more
capital. Second, poor countries with less capital per person will grow faster because each
investment in capital will produce a higher return than rich countries with ample capital.
Third, because of diminishing returns to capital, economies will eventually reach a point at
which no new increase in capital, economies will eventually reach a point at which no new
increase in capital will create economic growth. This point is called a Steady State.
The model also notes that countries can overcome this steady state and continue
growing by inventing new technology. In the long run, output per capita depends on the
rate of saving, but the rate of output growth should be equal for any saving rate. In this
model, the process by which countries continue growing despite the diminishing returns is
Exogenous and represents the creation of new technology that allows production with
fewer resources. As the technology improves, the steady state level of capital increases,
and the country invests and grows.

Calculations made by Solow claimed that the

majority of economic growth was due to technological progress rather than inputs of
capital and labour. Recent economic research has, however, found the calculations made to
support this claim to be invalid as they do not take into account changes in both investment
and labour inputs.

3.4.3

New Growth Theory

Unsatisfied with Solows explanation, economists worked to Endogenise

technology in the 1980s.. This model also incorporated a new concept of human capital,
the skills and knowledge that make workers productive. Unlike physical capital, human
capital has increasing rate of return. Therefore, overall there are constant returns to capital,
and economies never reach a steady state. Growth does not slow as capital accumulates,
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but the rate of growth depends on the types of capital a country invests in. Research done
in this area has focused on what increases human capital(e.g. education) or technological
changes(e.g. innovation). The theory seeks to uncover the process which generate
technological change. This approach emphasizes a) That technological change is an output
of the economic system, b) that technology is a public or non-rival good that can be used
simultaneously by many people, c) that new inventions are expensive to produce but
inexpensive to reproduce.
Recap
The growth of the economy is tied to the growth of
productive resources and technological advances.
Because their populations tend to grow more rapidly,
developing countries typically experience faster growth
in the labor force than do industrial countries.
The inability to save limits the growth of capital stock in
developing countries.
Abundant natural resources are not necessary for rapid
economic growth.
Technology defines the ways in which resources can be
combined to produce goods and services.

4. Summing up
The analysis of economic growth examines the factors that lead to the
growth of potential output over the long run. The growth in output per capita is an
important objective of government because it is associated with rising average real
incomes and living standards.
Reviewing the experience of nations over space and time, we see that the
economy rides on the four wheels of economic growth : a) The quantity and quality of its
labour force; b) The abundance of its land and other natural resources; c) The stock of
accumulated capital; and ,perhaps most important, d) The technological change and
innovation that allow greater output to be produced with the same inputs.
The classical models of Smith and Malthus describe economic
development in terms of land and population. In the absence of technological change,
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increasing population ultimately exhausts the supply of free land. The Malthusian
equilibrium is attained when the wage rate has fallen to the subsistence level, below which
population cannot sustain itself. In reality, however, technological change has kept
economic development progressing in industrial countries by continually shifting the
productivity curve of labour upward.
Capital accumulation with complementary labor forms the core of modern
theory in the neo classical growth model. The concern is , in the absence of technological
change and innovation, an increase in capital per worker would not be matched by a
proportional increase in output per worker because of diminishing returns to capital.

5. Keywords
1.

Gross Domestic Product

2.

National Output

3.

Compound Growth

4.

Production Function

5.

Natural Resources

6.

Human Resources

7.

Capital Formation

8.

Technological Innovations

6. Know your Progress

1.Why is the growth of per capita real GDP a better measure of economic growth than
the growth of real GDP?
2. If real GDP FOR China was 10,312 billion Yuan at the end of 2002 and 9593
billion Yuan at the end of 2001, what is the annual rate of growth of the Chinese
economy?
3. Suppose a country has a real GDP equal to $ 1 billion today. If this economy grows at
a rate of 5 percent a year, what will be the value of real GDP after five years.
4. How do developing and industrial countries differ in their use of technological

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change, labour, capital and natural resources to produce economic growth? Why do
these differences exist?

7. Further Readings / References

1. Paul A. Samuelson, and William D. Nordhaus, Economics, Eighteenth Edition,
Tata McGraw-Hill Publishing Company Ltd, New Delhi.
2. K K Sen, Comparative Economic Systems, Fourth Revised Edition, Sultan
Chand & Sons, New Delhi.
3. William Boyes and Michael Melvin, Textbook of Economics, Sixth Edition,
Biztantra.
4. Robert E. Hall and David H. Papell, Macro Economics, Sixth Edition,
W.W.Norton & Compnay.
5. Ruddar Datt and K.P.M. Sundharam, Indian Economy, S. Chand & Company
Ltd, New Delhi.

8. Model Answers

1. Economic growth is an increase in real GDP. Real GDP measures the values of goods
and services produced within the economy adjusted for the effects of inflation. A country
could show positive growth in real GDP, but if the population is growing at an even higher rate,
output per person can actually fall. Economists, therefore, often adjust the growth rate of
output for changes in population. Per capita real GDP is real GDP divided by the population.
If we define economic growth as rising per capita real GDP, then growth requires a nations
output of goods and services to increase faster than its population.

2.Percentage change in real GDP =

Change over Year

________________ X 100
Beginning value

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10312 9593
=

________________ X 100
9593

0.07 X 100 = 7%.

3. Percentage change in real GDP =

Change over Year X 100

Beginning value

GDP after 5 years = x

x-1
5% = ---- X 100
1
or :

(x-1)100 = 5

5
or:

x-1 = ---- = 0.05

100

or :

x = 0.05 + 1 = 1.05

Therefore, the value of real GDP after 5 years is $1.05 billion.

4.

Developing and industrial countries differ in the use of following

resources to produce economic growth -

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Labour:

The labour force typically grows more rapidly in developing

countries

than in industrial countries because birth-rates are higher in developing

countries.

Based solely on growth in the labour force, it seems that developing

countries are growing faster than industrial countries. But the size of the labour force is
not all that matters. Changes in productivity can compensate for lower growth in the
labour force. The skills, knowledge, and discipline of the labour force effects the
productivity. This can be possible only by skilled and trained workers whose number is
more in developed countries.
Natural Resources : Abundant natural resources are not a necessary condition
for economic growth because they can contribute to economic growth , but they alone
do not generate growth. Many developed countries may not be resource rich countries
but thrived by concentrating on sectors that depend more on labour and capital than on
indigenous resources.
Capital Formation : Capital is a critical resource in growing economies.
Countries that grow rapidly tend to invest heavily in new capital goods; in the most
rapidly growing countries, 10 to 20 percent of output may go into net capital formation

Technology: Technological advances allow the production of more output

from a given amount of resources. This means that technological progress accelerates
economic growth for any given rate of growth in the labour force and the capital stock.
These differences exist because the developed countries are developed in terms
of :
Improvements in literacy, health, and discipline, and most recently the
ability to use computers, and greatly the productivity of labour.
High density service industries, sectors that depend more on labour and
capital than on indigenous resources.
Ability to save and invest
Education which gives industrial countries a substantial advantage over
developing countries in creating and implementing innovations. The richest industrial
countries traditionally have spent 2 to3 percent of their GNP on research and
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development, an investment that developing countries cannot afford. The greater the
funding for research and development, the greater the likelihood of technological
advances.

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Unit -2: Growth with Equity

Structure
1.

Introduction

2.

Objectives

3.

Concept of Growth and Equity

3.1

Concept of economic growth

3.2

Various measures of national income

4.

Concept of Equity

4.1

Gender Equity

4.2

Growth versus Equity

4.3

Growth and Equity Trade-Off

4.4

Growth and Equity: The Trade-off Myth

5.

Summing up

6.

Keywords

7.

Know your Progress

8.

Further Reading / References

9.

Model Answers

1. Introduction
In economic policy, the news media and, also in some economic literature, the
increase in production as measured in national income (or Gross National Product, GNP) is
called economic growth, identified with increase in welfare and conceived as the indicator
of economic success. An economy grows because it accumulates factors of production,
like physical and human capital, because its labour effort grows, or because it improves the
efficiency with which it uses the factors of production. The variables that appear most
frequently in economic growth include: savings, investment, technological change,
structure of capital, consumption. The conventional neoclassical theory of growth had
held that economic growth was a result of the accumulation of physical capital and an
expansion of the labour force combined with an exogenous factor, technological
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progress that makes capital and labour more productive. In addition to an expanded view of
the relationship between economic growth and human capital, there now is a deeper
understanding of the relationship between growth and equity. Human capital has more
impact on growth, for example, if it is equitably distributed.

In this Unit, we shall discuss the concept of growth with equity. We shall also
discuss separately the concept of growth and equity. The types of equity including gender
equity and broader perspectives on equity will also be examined. The debate on growth
versus equity, growth and equity trade off and growth with equity trade off myth will be
discussed to have deeper understanding whether development objectives of economic
growth and equity are easier to reconcile in theory than in practice.

2. Objectives
After studying this Unit, you should be able to:

Trace the history of the debate on growth versus equity;

Describe the difference between the concept of growth and equity,
Growth versus equity, types of equity including gender equity and
broader perspectives on equity;
Analyze the debate on growth versus equity, growth and equity trade off
and
o growth with equity myth; and
Develop deeper understanding whether development objectives of
economic growth and equity are easier to reconcile in theory than in
practice.

3. Concept of Growth and Equity

3.1 Concept of economic growth
The study of economic development has become one of the most
fascinating and challenging branches of economics and political economy. Though Adam
Smith is known to be the first development economists with his Wealth of Nations (1776)
being the first treatise on economic development, it was only after the Second World War
that the economists undertook a systematic study of the problems and processes of
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economic development in the context of developing countries. Development economics is

a rapidly growing area evolving its own theory and methodology. It has a wider scope than
either traditional economics or political economy. A part from being concerned with
efficient allocation of scare resources and sustained growth in their availabilities,
development economic, is also concerned with the economic, social and institutional
mechanisms- both private and public requirement to uplift the levels of living of the poor
masses at a rapid and significant rate. Development economics lays due emphasis on the
role of the government and development planning.
It may be pointed out here that economic development is not the same things as
economic growth. Economic development involves something more than economic
growth. While economic growth involves expansion of an economy through a simple
widening process, economic development incorporates growth as well as essential
qualitative dimensions appearing in the form of improved performance of the factors of
production and improved techniques of production. Another qualitative change may appear
in the form of development of institutions and changes in values and attitudes. Thus, while
economic growth refers to sustained increase in per capita product, economic development
refers to growth plus progressive changes in the socio-economic structure of a nation.
The three major factors of economic growth in a country are capital accumulation,
growth in population and thus in labour force and technological progress. Investments that
improve the quality and increase the quantity of existing human and physical resources and
raise their productivity through inventions, innovations and technological progress
represents the major force that stimulates economic growth in any nation.
Economists draw a distinction between short-term economic stabilization and
long-term economic growth. The topic of economic growth is primarily concerned with the
long run.
One of the most significant measurements of economic growth is national income.
It has been widely accepted by economists as the most comprehensive measure of the level
of aggregate (macro- economic) economic activity in an economy. The modern economy is

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enormously complex, involving innumerable transactions of a wide variety of goods and

services. To understand, analyze and regulate the behavior of such an economy, we
obviously need some indicators or measures of its performance in almost the same way as
any business enterprise needs certain types of accounts to measure and evaluate its
performance. National income can be readily looked upon as an important yardstick of the
overall performance of the whole economy.
National income is one of the most commonly used economic phrases and from
that viewpoint it appears to have a fairly simple meaning, viz., it represents the aggregate
income of a nation as against the income of an individual. A number of specific problems
or issues arise when we try to define and measure the national income of any country.
However, to begin with, we may define national income as the aggregate money value of
the annual flow of final goods and services in the national economy.
Some aspects of this definition deserve special mention. For instance, it may be
noted that national income is an aggregative value concept. It makes use of the value
determined by the measuring rod of money as the common denominator for the purpose of
aggregating the diverse outputs resulting from different types of economic activities.
Similarly, national income is a flow concept. It represents a given amount of
aggregate production per unit of time, conventionally represented by one year. Thus
national income usually relates to a particular year and indicates the aggregates money
value of the flow of the output during that year.
Another aspect of this definition that should be noted is that national income
represents the aggregates value of final products rather than the total value of all kinds of
products produced in the economy. The distinction arises because there are a number of
products, which in turn are used in the production of several other products. The output of
the latter will, therefore, include as its components the entire output of the former. For
instance, since flour is used in making bread, the total value of bread includes the value of
flour also. Hence if we add the value of the former to that of the latter while measuring
national income, we will be indulging in what is known as "double counting". Obviously

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the measure of national income should be free form double counting. To emphasize this
aspect, the word final" has been used in the above definition to specify the type of goods
and services, the values of which are to be aggregated to derive national income. It
indicates that national income is an unduplicated total that does not involve any double
counting.
3.2. Various measures of national income
The two broad measurements of representing the national income are GNP and GDP.

Gross National Product (GNP)

The Gross National product (GNP) is defined as the sum of market value of all
final goods and services produced in a country during a specific period of time, generally
one year. The market value of the final national product is virtually the money value of
all goods and services.

Gross Domestic Product (GDP)

GDP is the short form for Gross Domestic Product. This is the most often used
term to measure what are known as National Income accounts, which, as the name
suggests, are a measure of how much product (or income in terms of goods and services) a
country generates.
The GDP includes the incomes locally earned by the non-nationals and excludes
the incomes received by the resident nationals from abroad. A comparative definition of
GNP and GDP is given below.
GNP = Market value of domestically produced goods and services plus incomes
earned by the nationals in foreign countries minus incomes earned in the country by the
foreigners.
GDP = Market value of goods and services produced in the country plus incomes
earned in the country by foreigners minus incomes received by national from abroad.

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Economic growth is an increase in activity in an economy. It is often

measured as the rate of change of gross domestic product. Economic growth can either
be positive or negative. Negative growth can also be referred to by saying that the
economy is shrinking. Negative growth is associated with economic recession and
economic depression.

4. Concept of Equity
Equity is a concept that cannot be formulated precisely. The closest to precision
that one could come, says Higgins would be to define equity as equality. But even
equality" is not a very precise term, and no society in the world is seriously striving for
absolute equality. As the term equity is normally used, it is taken akin to social justice or,
for example, to the unwritten social contract in Australia: everyone should have a fair go,
all Australians should be protected against exploitation by any non-Australians, and every
social group in Australia. Equity means not permitting greater inequalities of income,
wealth, power, privilege, and social status than a good society should.
Economists use two different concepts of equity or fairness: horizontal equity and
vertical equity. Horizontal equity is the identical treatment of identical people while
vertical equity denotes different treatment of different people in order to reduce the
consequences of these innate differences. According to Fernando Henrique Cardoso,
President of Brazil, inherent in the ideal of progress if equity, seen as the convergence of
standards of equality of opportunities - or social justice. This idea of equality has nurtured
all modern utopias from the liberals, centred on political equity, to the socialist,
concerned with the socio-economic equality. Equity is usually thought of in terms of
wealth or income. Human Development Report, 1996, however, takes a much broader
view of equity by seeking equity not only in terms of wealth or income but also in basic
capabilities and opportunities. In this view everyone should have the opportunity to be
educated, for example, and to lead a long and healthy life.
Klugman (1997) argues that at the operational level, the term equity has two
broader perspectives.

Process equity: This can be taken as equal opportunities. In the education

context, this means that a childs chances for success in acquiring cognitive and social
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skills are independent of the school attended (Mc Arty and Brazer, 1990, quoted in
Klugmans paper (1997)), although they may depend on the students own abilities, the
encouragement she/he receives at home and her/his own efforts at school.

Outcome equity: This implies that differential needs should be taken into

account so that, for example, special measures are undertaken for disadvantaged students.
At the extreme, this might require equality of education outcomes, although differential
outcomes of decentralization (with respect to primary school completion, for example)
could be disaggregated by socio-economic group, ethnicity and so on, without adjusting for
special needs.

Klugman further argues that these alternatives concepts of equity correspond to

the distinction between opportunity sets and outcomes that is well established in the
welfare economics literature and, as the above examples imply, are not necessarily
consistent. A particular system education maybe equitable by some pre-determined
standards, but the outcomes may not be, or least may not be to a similar extent.

The concept of distributive equity is based on the notion of need that the
distribution of resources is not mechanically-based on equal quotas parceled out to
individuals or groups, but rather allocated differentially according to the specific
requirements of these groups or individuals.
4 .1 Gender Equity
Gender refers to the roles and responsibilities of men and women that are created
in our families, our societies and our cultures. The concept of gender also includes the
expectations held about the characteristics, aptitudes and likely behaviours of both women
and men (femininity and masculinity). Gender roles and expectations are learned. They can
change over time and they vary within and between cultures. Systems of social
differentiation such as political status, class, ethnicity, physical and mental disability, age
and more, modify gender roles. The concept of gender is vital because, applied to social
analysis, it reveals how womens subordination (or mens domination) is socially

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constructed. As such, the subordination can be changed or ended. It is not biologically

predetermined nor is it fixed forever (UNESCO, 2004).

Gender is a social construction of the female and male identity that goes beyond
the biological differences between woman and man (known as sex). Gender leads to
different social, political and economic opportunities and expectations for men and women.
These opportunities and expectations are not always equal. As gender is culturally
determined, Gender will change over time.

Before discussing the concept of gender equity, we should first distinguish it from
gender equality. Gender equality is defined as the absence of discrimination, on the basis
of a persons sex, in opportunities and the allocation of resources or benefits or in access to
services. The concept of gender equality has evolved over time: initially, gender equality
was concerned with treating everyone the same. Treating everybody the same, however,
perpetuates existing inequalities. By acknowledging and addressing different needs,
interests and values, health services and professionals can work to overcome these
inequalities and arrive at equitable outcomes (NWS, 2004). Gender Equality means that
women and men have equal conditions for realizing their full human rights and for
contributing to, and benefiting from, economic, social, cultural and political development.
Gender equality is therefore the equal valuing by society of the similarities and the
differences of men and women, and the roles they play. It is based on women and men
being full partners in their home, their community and their society.
As discussed earlier, equity is generally regarded as a state of fairness and
justness. It requires that the specific needs of particular groups are considered separately
and acted upon accordingly. For instance, while all Australians are meant to be equal in
regards to their rights and treatment by government and social institutions, their needs,
interests and values will differ. Gender will often determine these differences.
Gender equality refers to equal numbers of men and women in every sphere of
society. Gender equity, refers to a means of justice and fairness in the treatment of both

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males and females. Preferential treatment of men in society and injustice done to women
generates gender inequality. Gender equity, therefore, tries to reduce the inequality
between men and women.
The concept of gender equity recognizes that men and women have different life
experiences, different needs, different levels of power and access to decision-making levels
in our society, differing expectations by others and different ways of expressing illness.
Gender equity strategies recognise that gender leads to different social, economic and
political opportunities for women and men.
The concept recognizes that women and men have different needs and power
structures and that these differences should be identified and addressed in a manner that
rectifies imbalance between the sexes. Gender equity strategies seek to achieve fairness
and justice in the distribution of benefits and responsibilities between women and men, and
recognise that different approaches may be required to produce equitable outcomes.
Gender Equity is the process of being fair to men and women. To ensure fairness, measures
must often be put in place to compensate for the historical and social disadvantages that
prevent women and men from operating on a level playing field. Equity is a means.
Equality is the result (UNESCO, 2004).

Gender equity is not another name for sex differentials. Sex differentials do
provide information on differences in health status between men and women, but they
cloud the issues relating to gender. The impact of gender, for example, on health is
generally not measured while sex differentials are. In this way, sex differentials are often
used to provide an indication (although an imperfect one) of the impact of gender and the
need for gender equity (NWS, 2004).

4.2

Growth versus Equity

For both socialist and capitalist countries the key to development benefiting

people and eradicating poverty was assumed to be faster economic growth. Similarly, for
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many years growth has been a major economic goal of policy-makers - and political
leaders - based on the deeply imagined view that delivering a larger and larger quantity of
goods and services is the best way to improve peoples living.

The faith in growth has been based on the assumption that its benefits would
eventually be widely spread. In the early stages policy-makers in the more liberal
economies accepted that the rich might get richer and the poor might have to tighten their
belts. But they hoped of rewarding the rich in this way would give them incentive to
innovate, to save, and to accumulate capital, and that this would ultimately benefit the
poor.

Philosophically speaking, there are two opposing views of development. One is a

consumerist view, which regards the human being primarily as a consumer of goods and
services. Basically, development is seen in this view as an expansion of the flow of
consumption. For a time, development was identified with aggregate economic growth to
bring about a progressively higher flow of aggregate of consumption irrespective of its
distribution (the reactionaryview). Gradually, the interpersonal distribution question was
raised, in terms of who benefits from such development as consumers (the liberal view)
(Rahman,1992:172).

In 1955 , Lewis defined the purpose of development as widening the range of

human choice. However, Lewis tended to equate wider choice merely with greater income
- and had more faith that economic growth would inevitably lead to human development.
Proponents of economic growth, argue that without such growth, development in the
broader sense of human well-being would be impossible to achieve. They recognize, of
course, that economic growth is a means rather than an end in itself, but tend to agree that
achieving economic growth is the first priority ( Kabeer 1994:74).

Economic development is not concerned only with economic growth but also with
progress in human societies. Development is a process of economic, social, and
technological change by which human welfare is improved. Anything that raises the level
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of human welfare contributes to development; anything that reduces the welfare is antidevelopmental, a subtraction from development ((Higgins,1992:.27). A major goal of
development policy and planning, say Adelman and Morris(1973:192-93), should be to
guarantee social justice to those in need, and that any pattern of economic growth is unjust
that fails to improve the standard of living of major segments of the population. Anything
contributing to extreme inequality in standards of living is morally unacceptable. A
similar point is raised in the HDR, 96, Is economic growth a meaningful goal? Or is
human development the real objective? If it is human development, growth should be
judged not by the abundance of commodities it produces , but by how it enriches peoples
lives(UNDP: 1996:43).

Despite various attempts at dethronement, economic growth remains

fundamental to the most influential models of development thought (Kabeer, 1994:74).
Madison (1971, p. 85) has very correctly observed, whenever there was a conflict between
growth and equity, the latter was usually sacrificed.

4. 3 Growth and Equity Trade-Off

The long-term relationship between income distribution and development has
been one of the most closely investigated issues in development economics. Arthur Lewis
(1976, p. 26), the Nobel Prize-winning West Indian economist has emphasized, the link
between growth and inequality, stating that Development must be in egalitarian because it
does not start in every part of an economy at the same time(quoted by Colman and
Nixson, 1994:80). He argued that growth takes place in enclaves within the LDC and that
this process can generate inequalities both between and within the enclave and traditional
sector and within the enclave itself. Distribution will depend on the pattern of growth, the
main ingredients of which are the original distribution of property, the economic structure
and dependence on foreign resources. Giving theoretical support to this view of the likely
path for capitalist developing countries was the Kuznets curve, named after Nobel
laureate Simon Kuznets. In his path-breaking article Economic Growth and Income
Inequality, Kuznets formulated the hypothesis that early economic growth increases
inequality, while later economic development narrows it. He based this hypothesis on an
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analytical model, on data for developed countries since the 1930s that showed a narrowing
of inequality, and on cross-country comparisons between inequality in developed countries
and inequality in two developing countries, comparisons that showed that considerably
greater inequality in the latter (Adelman, 1992:121).

The orthodox view that inequality was essential for growth was vigorously
challenged by Myrdal (1968, chapter 12:1971), who argued that quite the opposite was the
case and that greater equality was in fact a necessary precondition for more rapid economic
development (1971, pp. 63-4): inequality and the trend towards rising inequality stand as a
complex of inhibitions and obstacles to development and that , consequently, there is an
urgent need for revising the trend and creating greater equality as a condition for speeding
up development.

He argued that the consequences of an unequal distribution of income were

malnutrition, poor housing, poor education, etc., for the vast majority of the population,
which in turn led to low levels of productivity. A redistribution of income to these groups
would lead to an increase in production through increasing the consumption, and hence the
health and productivity, of the poor. Myrdal argued that social inequalities resulted from
economic inequalities and in turn reinforced them, and both were cause, and consequence
of poverty (ibid.).

Although cross-section data appear to indicate an inverted U-shaped relationship

between inequality and per capita income, there is no necessary fixed relationship between
equity and growth. It is not necessarily the case that high growth rates require an unequal
distribution of income, nor that they are responsible for an unequal distribution of income
and growth( Colman and Nixson, 1994: 83). Chinas economic growth record has been
more impressive than that of India and yet it generally agreed that it has been a more
egalitarian society. (Weisskopf, 1975). In Cuba the equity strategy of the 1960s induced
growth in the 1970s (Brundenius, 1981). Other things being equal, say Colman and
Nixson(1994:83), we would expect to find a less unequal distribution of income in a
country effectively pursuing explicitly socialist objectives than in a country following a
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free enterprise development plan. Thus a great deal depends on the economic and social
political structure of the economy in question and its broad development objectives.

Adelman (1992) tested Kuznetss hypothesis that faster growth is negatively

correlated with the share of income accruing to the poor, for the period 1960 and 1970 and
1970 and 1980. The results of such a study indicated that the trade-off between speed of
economic growth and the share of income of the poor was unmitigated and that the
deterioration in the share of income of the poor with growth was quite substantial. For the
1970-80 period, results suggested the existence of even stronger trade-off between the
speed of growth and the equality of the distribution of income. However, results also
showed that in the typical LDC of the 1970s, the decline in the share of the poor with low
growth rates was sufficiently large to ensure that the poor would not recover their 1970
income share unless the LDC could attain quite high rates of growth for the period and
reach at least moderate levels of development. These results hardly gave much hope for
attaining the goal of poverty eradication in LDCs through economic growth in the
foreseeable future. The results further suggested that policies that might mitigate the
growth-equality trade-off somewhat. Foremost among those are rural development policies
designed to close the agriculture/non-agricultural productivity and income gaps and
massive primary education. Adelman based on above findings suggested that the primary
hope of the poor in the current low-growth world lies not in accelerating their countrys
growth rate, but rather in changing the structure of growth and the assets of the poor(ibid.).
Evidence from the past over twenty years shows that economic growth can
exacerbate inequality (Fishlow,1995:25). But evidence also shows that economic policies
can make a visible difference in lessening or averting inequality. What seems to work best
are policies designed to redistribute physical assets, such as land reform, and to promote
the rapid accumulation of human capital. Fishlow (1995) observes that as income equality
improves, poverty falls.

Fishlow further argues that reduced poverty and improved

income equality are compatible. Improving quality of the labour force contributes
significantly to higher worker productivity. Modernizing rural technology has the same
effect. Reduced pressure from rural migration to cities and towns translates into lower
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social outlays and lower unemployment. Empirical estimates of new growth models also
show that, income growth and greater equality are positively related (ibid.). After
reviewing the recent literature on growth and equity, Fishlow apparently still seems to
accept the basic inherent tendency for the infamous inverse U-shaped pattern to hold.
However, Ranis(1995: 50) vehemently criticises Fishlow by saying that, as I read the
evidence, it suggests that it is time to give a decent burial to that famous law, which was
actually advanced not by Kuznets, who was much too cautious, but by Kuznetsians, who
were not. Hollis Chenery, says Ranis (1995, p. 50) was a leader in taking up the challenge
of Kuznetss 1955 call to arms, and Redistribution with Growth (Chenery and others) was
the initial salvo. Redistribution, because it seemed to reinforce the growth first,
distribution later approach of the early postwar years, was perhaps a misleading label. But
as chief economist of the World Bank, he led the profession to focus increasingly on
distribution with growth.

Given the successive writings of Ahluwalia (1976), Anand amd Kanbur (1984),
Fields and Jackbuson (1993), and others, on growth and equity trade-off, it now seems
clear that we need to turn our attention away from the necessity of the inverse U-shaped
phenomenon

and toward the factors that either enhance or reduce the underlying

complementarity between growth and distribution. Bardhan (1995) also argues that too
much attention has been devoted to showing that faster economic growth will take care of
poverty or that the state needs to allocate more resources to welfare programmes. Some of
this attention should be directed towards building institutions and organizations at the local
level that will better serve the poor.

It previously was thought that a trade-off existed between growth and equity that
distributing income too equally would undermine incentives and thus lower everyones
income. The assumption was that the rich needed special encouragement to save and invest
more(HDR,96,p.52). Recent evidence gathered by the UNDP (1996), however, suggests,
that this conventional wisdom is wrong. Many economies in Asia Hong Kong,
Indonesia, Malaysia, the Republic of Korea, Singapore, Taiwan (province of China) and
Thailand have had both rapid growth and relatively low inequality. Between 1960 and
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1993 the East Asian economies, excluding China, had annual per capita growth of 7.6%,
while income inequality remained stable or declined. Japan and Sweden have also
combined growth with low inequality(ibid.).

One lesson, repeatedly relearned, observes Fishlow (1995:25) is that the miracle
of equitable development requires adequate resources. It exists as much for human capital
as for physical - as much for social services as for private needs. Investing adequate
resources to reduce poverty is an investment for the future, and if it not pursued vigorously,
the democratic tendencies emerging in many developing countries will be tenuous and
temporary (ibid.,p. 38). The key to East Asias success, records HDR, 96, was relatively
equal distribution of private and public assets countries there concentrated on
redistributing not income but wealth. What generates income is productive wealth
including human capital. Some new growth theories claim that distributing income more
equitably takes income away from people with capital, lowering their profits and thus
supposedly reducing growth. In fact, a progressive redistribution of assets tends to boost
growth because it has a broad, positive effect on peoples incentives(UNDP,96, p.52). The
HDR, 96 further observes that, some countries in East Asia, such as the Republic of
Korea, initiated growth through large-scale land reforms that broke up feudal class
structures and through the building of rural infrastructure. But all stressed broadly based
investment in education particularly in primary and secondary education.

The World Bank (1993) in its study of eight High Performing Asian Economies
(HPAEs): China, Taiwan, Singapore, the Republic of Korea, Hong Kong, Indonesia,
Malaysia and Thailand, found that despite differences ,the eight economies have much in
common. In a number of ways, their postwar experience distinguishes them as a group.
Their most obvious common characteristic is their high average rate of economic growth.
During the same period, income inequality has declined, sometimes dramatically. These
two outcomes rapid growth and reduced inequality are the defining characteristics of
which has come to be known as East Asian economic miracle.

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The eight economies share, World Bank Report (1993) observes

six other

characteristic that set them apart. Compared with most other developing economies, all
have had:

More rapid output and productivity growth in agriculture

Higher rates of growth of manufactured export

Earlier and steeper declines in fertility

Higher growth rates of physical capital, supported by higher rates of

domestic savings

Higher initial levels of growth rates of human capital

Generally higher rates of productivity growth.

These characteristics are all related to their rapid, more equitable growth. Some
are sources of growth, some are outcomes of growth, and some are unique features of high
performance Asian economies growth, but most fall in more than one of these categories.

Based on their study of the political economy of poverty, equity, and growth of
Sri Lanka and Malaysia, Burton et al very emphatically observe that, the conventional
argument must be modified by the evidence that productivity growth is more crucial to
growth than is capital formation as such. The focus must then shift to the effect of the
growth of productivity of both capital and labour. Conventional wisdom on this issue is
less well established. Similarly, the evidence that inequality of any sort is necessary for an
acceptable saving rate is far from convincing.

4.4

Growth and Equity: The Trade-off Myth

The argument that there is an inevitable conflict between equity and growth, say
Colman and Nixson (1994:83), is not valid on theoretical or empirical grounds. Similarly,
Cline (1975,p.374) stresses the point

that there is no inexorable theoretical basis

justifying a worsening of the distribution (of income) in the course of development, and
Ahluwalia (1976) concludes that there is little firm empirical basis for the view that higher
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rates of growth inevitably generate greater inequality. (in Chenery et al., p. 13), even
though his data seem to support the inverted U-shaped relationship. A conflict may exist in
particular cases, but the explanation must be sought in the specific circumstances of each
individual case and not in terms of a generalized relationship. The presumed trade-off
between rapid economic growth and a more equitable distribution of income is in reality
better expressed as a trade-off between income growth rates among different income
groups(Todaro, 1997:170).

Policies to redistribute assets, and public investment in favour of the poor, are,
says Watkins (1998:42), are obvious strategies for achieving more equitable patterns of
income distribution. However, there is a widely held view that distributive measures are
self-defeating because they slow economic growth, thereby reducing the flow of resources
needed to reduce poverty. There is, so this argument runs, a trade-off between equity on
the one side and growth on the other. Another received wisdom of development economics
is that high rates of growth and the structural changes associated with them (such as rapid
urbanization) inevitably cause increased inequality. Many economists have further argued
that inequality is good for growth, since it concentrates resources in the hands of sections
of the population which are most likely to invest them, and hence contribute to capital
accumulation and more rapid growth. Watkins, therefore asks, do such arguments stand?
Recent evidences, collected from several East Asian and Latin American economies,
suggest not. The message which emerges from the experiences of the East Asian countries
is clear: a high degree of inequality tends to be bad not only for poverty reduction, but also
for growth. Rather than being associated with , high levels of inequality appear to be a
constraint on growth. East Asias experience demolishes the myth that there is a necessary
trade-off between growth and equity (Watkins, 1998,pp. 42-44).

Perhaps a time has come when we should move beyond the debate on whether
economic policies are pro-growth or antigrowth by addressing central issue of the
quality of growth- whether it is genuinely serving human development in a country, in a
region or in the world. Is the character of growth advancing peoples human security,
freedom and empowerment? Is it promoting equity - today and between generations?
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Discussions of policy toward the poor usually focus on the tradeoff between
growth and poverty. But the experiences of East Asian economies suggest that this is not
the critical trade-off. With appropriate policies, the poor can participate in growth and can
contribute to it, and when they do, rapid declines in poverty are consistent with sustained
growth. An impressive body of evidence has been compiled to show that the incomes of
the poor are increased by growth, and that a rising tide of wealth raises all boats (Watkins,
1998: 23). Wolfgang Sachs (1992:165) has correctly observed: The culture of growth can
be erected on the ruins of frugality; and so destitution and commodity dependence are its
price. It is not time after forty years to draw a conclusion? Whoever wishes to banish
poverty must build on sufficiency. A cautious handling of growth is the most important
way of fighting poverty.

The gap between rhetoric and reality, say Colman and Nixson (1994,p.100), is
perhaps greatest in the field of development and equality. As such, I feel that the debate
about the relationship between growth and equity should not continue since the debate is
only of marginal relevance. What East Asias experience underlines that, at the very least,
growth can be successfully built on the foundations of improved equity and poverty
reduction. There is no necessary trade-off between growth on the one side and poverty
reduction on the other. While cause and effect may be arguable, East Asias experience
suggests that there is a positive association between growth and equity. East Asia
demonstrates the potential of a new development paradigm. The policy package associated
with this paradigm can be summarized under the heading growth through redistribution;
turning the old formulation on its head. Growth in the short-term can also be green if it
generates productive wealth including human capital.

5. Summing up
While it is clearly the case that investment in human welfare is not possible
without economic growth, it is also the case that economic growth requires - and is
intended to achieve - the health and well-being of people. If economic growth is slowed
down by greater investments in human welfare, then this should be seen as a trade-off
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between different kinds of development. The terms of this trade-off can only be calculated
if we have, along with the GNP, indices of sustainable human welfare that monitor those
goods which are valued as ends in themselves rather than in terms of the prices they
command. The notion of a trade-off between growth and equity is, therefore, misleading.

As regards the argument that development objectives of economic growth and

equity are easier to reconcile in theory than in practice, I strongly feel is not valid on
theoretical as well as empirical grounds. It appears that the conflict between growth and
equity is inescapable. In that sense, capitalism and democracy are really a most improbable
mixture (Okun, 1975:120). May be that is why they need each other-- to put some
rationality into growth and some humanity into equity.

6. Keywords
Distributive equity: Distributive equity is based on the notion of need that the
distribution of resources is not mechanically-based on equal quotas parcelled out to
individuals or groups, but rather allocated differentially according to the specific
requirements of these groups or individuals.

Economic growth: Economic growth refers to sustained increase in per capita

product.

Economic development: economic development refers to growth plus

progressive changes in the socio-economic structure of a nation.

Equity: Equity means not permitting greater inequalities of income, wealth,

power, privilege, and social status than a good society should.
Gender Equity: Gender equality refers to equal numbers of men and women in
every sphere of society. Gender equity, refers to a means of justice and fairness in the
treatment of both males and females. Preferential treatment of men in society and injustice
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done to women generates gender inequality. Gender equity,therefore, tries to reduce the
inequality between men and women.

Gross National product (GNP)

The Gross National product (GNP) is defined as the sum of market value of all
final goods and services produced in a country during a specific period of time, generally
one year. The market value of the final national product is virtually the money value of
all goods and services.
Gross Domestic Product (GDP)
GDP is the short form for Gross Domestic Product. This is the most often used
term to measure what are known as National Income accounts, which, as the name
suggests, are a measure of how much product (or income in terms of goods and services) a
country generates. The GDP includes the incomes locally earned by the non-nationals and
excludes the incomes received by the resident nationals from abroad.
Horizontal equity:

Horizontal equity is the identical treatment of identical people.

National income
National income is a flow concept. It represents a given amount of aggregate
production per unit of time, conventionally represented by one year. Thus national income
usually relates to a particular year and indicates the aggregates money value of the flow of
the output during that year.
Vertical equity:
Vertical equity denotes different treatment of different people in order to reduce
the consequences of these innate differences.

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7. Know your Progress

1. What do you mean by economic development and economic growth?
2. How do we measure economic growth?
3. What is equity and explain different types of equity?
4. How is the difference between gender equality and gender equity?
5. Is there a conflict between equity and growth? Explain the nature of conflict.
6. What is the nature of trade-off between equity and growth?

8. Further Reading / References

Adelman, I. And Morris, C.T.(1973) Economic Growth and Social Equality
in Developing Countries. (California: Stanford University Press),
pp.192-93 -

- (1992) What is the Evidence on Income Inequality and

Development? ,in Donald J. Savoie and Irving Brecher ed. Book

Equity And Efficiency in Economic Development (London:
Intermediate Technology Publications), p. 121-46..
Ahluwalia,M. (1976) Inequality, Poverty, and Development. Journal of
Development Economics, 6:307-42
Anand, S and Ravi Kanbur. (1984). Inequality and Development: A
Reconsideration. In H.P.Nissen, ed., towards Income Distribution
Policies: from Income Distribution Research to Income Distribution
Policy in LDCs. Padenburg, The Netherlands, D.C.
Bardhan, Pranab. (1995) Research on Poverty and Development twenty
Years after Redistribution with Growth,. in Michael Bruno and Boris
Pleskovic (eds.) Annual World Bnak Conference of Development Economics,
1995, World Bank, Washington D.C.
Begg, D(1991) Economics. (London: McGraw Hill Book company )P, p.
258
Brudenius,C. (1981) growth with equity: the Cuban experience(19591980), World Development , vol. 9. Mos. 11.12.
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Chenery, Hollis, Montek S. Ahluwalia, clive Bell, Hohn H. Duloy, and richard
Jolly. (1974). Redistribution with Growth. (New York: Oxford
University Press)
Cline, W.R. (1975). Distribution and Development :a survey of literature.
Journal of Development Economics, vol. 1.
Colman, D and Nixson, F. (1994). Economics of Change in Less
Developed Countries. (New York: Harvester Wheatsheaf), p. 100
Fields, G.S. and G.H. Jackbuson. (1993). New Evidence on the Kuznets
Curve. Yale Economic Growth Centre, New Haven, Conn.
Fishlow, A. (1995) Inequality, Poverty, and Growth : where Do We Stand?
in Michael Bruno and Boris Pleskovic (eds.) Annual World Bnak
Conference of Development Economics, 1995,( Washington D.C.:
The World Bank
Higgins, B. (1992) Equity and Efficiency in Development: Basic Concepts, in
Donald J. Savoie and Irving Brecher ed. Book Equity And Efficiency
in Economic Development (London: Intermediate Technology
Publications), p. 37-8.
Hueting, R (1991) Growth, environment and national income: theoretical
problems and a practical solution, in Paul Ekins and Manfred MaxNeef (ed).

Real-Life Economics: Understanding wealth Creation (London:

Routledge) p,255
Kabeer, N. (1994) Reversed Realities: Gender Hierarchies in Development
Thought (London:Verso), p. 74
Kuznets, Simon. (1955) Economic Growth and Income Inequality, American
Economic Review, 65, 1-28
Lewis, W.A. (1976) Development and distribution, in A. Cairncross and
M.Puri (eds.) Employment, Income Distributed and Development
Strategy, Macmillan.
Maddison, A. (1971)Class Structure and Economic Growth : India, Pakistan
since the Moghuls,(George Allen aand Unwin)
Myrdal, G(1968) Asian drama, Penguin
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Okun, A.M. (1975) Equality and Efficiency: The Big Tradeoff, (Washington
D.C: The Brooklings Institution), p.120
Rahman,A. (1992) Peoples self-development , in Paul Ekins and
Manfred Max- in Paul Ekins and Manfred Max-Neef (ed). Real-Life
Economics: Understanding wealth Creation (London: Routledge) p,172
Ranis, Gustav. (1995) Comment on Inequality, Poverty, and Growth :
where Do We Stand? in Michael Bruno and Boris Pleskovic (eds.)
Annual World Bnak Conference of Development Economics, 1995,
(Washington D.C.: the World Bank
Sachs, Wolfgang. (1992). Poor not different, in Paul Ekins and Manfred
Max-Neef (ed). Real-Life Economics: Understanding wealth
Creation (London: Routledge) p,165
Todaro, M.P. 1997. Economic Development (London: Longman) p. i70
UNDP (1996) Human Development Report (New York: OUP)
Watkins, Kevin. (1998). Economic Growth with Equity: Lessons from
East Asia,. (Oxford: Oxfam).
Weisskopf, T.E. (1975) China and India: contrasting experiences in
economic development American Economic Review Papers
and Proceedings, vol. 65, No. 2
World Bnak. (1993) The East Asian Miracle: Economic Growth and
Public Policy- A World Bank Policy Resesrch Report.(NewYork:OUP)

9. Model Answers
1)

Economic development is not the same things as economic growth.

Economic development involves something more than economic growth. While economic
growth involves expansion of an economy through a simple widening process, economic
development incorporates growth as well as essential qualitative dimensions appearing in
the form of improved performance of the factors of production and improved techniques of
production.

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2)

One of the most significant measurements of economic growth is national

income. The two broad measurements of representing the national income are GNP and
GDP.

Gross National product (GNP)

The Gross National product (GNP) is defined as the sum of market value of all
final goods and services produced in a country during a specific period of time, generally
one year. The market value of the final national product is virtually the money value of
all goods and services.

Gross Domestic Product (GDP)

GDP is the short form for Gross Domestic Product. This is the most often used
term to measure what are known as National Income accounts, which, as the name
suggests, are a measure of how much product (or income in terms of goods and services) a
country generates.
3)

Equity means not permitting greater inequalities of income, wealth,

power, privilege, and social status than a good society should. Economists use two
different concepts of equity or fairness: horizontal equity and vertical equity. Horizontal
equity is the identical treatment of identical people while vertical equity denotes different
treatment of different people in order to reduce the consequences of these innate
differences. At the operational level, the term equity has two broader perspectives.

Process equity: This can be taken as equal opportunities. In the education

context, this means that a childs chances for success in acquiring cognitive and social
skills are independent of the school attended.

Outcome equity: This implies that differential needs should be taken into

account so that, for example, special measures are undertaken for disadvantaged students.

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The concept of distributive equity is based on the notion of need that the
distribution of resources is not mechanically-based on equal quotas parcelled out to
individuals or groups, but rather allocated differentially according to the specific
requirements of these groups or individuals.
The concept of gender equity recognizes that men and women have different life
experiences, different needs, different levels of power and access to decision-making levels
in our society, differing expectations by others and different ways of expressing illness.
4)

Gender equality is defined as the absence of discrimination, on the basis of

a persons sex, in opportunities and the allocation of resources or benefits or in access to

services. Gender equality refers to equal numbers of men and women in every sphere of
society. Gender equity, refers to a means of justice and fairness in the treatment of both
males and females. Preferential treatment of men in society and injustice done to women
generates gender inequality. Gender equity, therefore, tries to reduce the inequality
between men and women.

5)

Economic development is not concerned only with economic growth but

also with progress in human societies. There are two opposing views of development. One
is a consumerist view, which regards the human being primarily as a consumer of goods
and services. Basically, development is seen in this view as an expansion of the flow of
consumption. For a time, development was identified with aggregate economic growth to
bring about a progressively higher flow of aggregate of consumption irrespective of its
distribution (the reactionary view). Gradually, the interpersonal distribution question was
raised, in terms of who benefits from such development as consumers (the liberal view).

6)

The long-term relationship between income distribution and development

has been one of the most closely investigated issues in development economics. The
orthodox view that inequality was essential for growth was vigorously challenged. It was
argued that greater equality was in fact a necessary precondition for more rapid economic
development. The consequences of an unequal distribution of income were malnutrition,
poor housing, poor education, etc., for the vast majority of the population, which in turn
led to low levels of productivity. A redistribution of income to these groups would lead to
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an increase in production through increasing the consumption, and hence the health and
productivity, of the poor. Social inequalities resulted from economic inequalities and in
turn reinforced them, and both were cause, and consequence of poverty. It is not
necessarily the case that high growth rates require an unequal distribution of income, nor
that they are responsible for an unequal distribution of income and growth. It previously
was thought that a trade-off existed between growth and equity that distributing income
too equally would undermine incentives and thus lower everyones income. The
conventional argument must be modified by the evidence that productivity growth is more
crucial to growth than is capital formation as such. The focus must then shift to the effect
of the growth of productivity of both capital and labour.

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Unit-3: Social and Human Development Structure

Structure
1.

Introduction

2.

Objectives

3.

Social versus Economic Development

3.1.

Meaning of Social Development

4.

Human Development

4.1

What Is Human Development?

4.2

Dimensions of Human Development

5.

Summing up

6.

Keywords

7.

Know your Progress

8.

Further Reading / References

9.

Model Answers

1. Introduction
For several decades development was understood to be essentially an economic
activity. The modernization theories of the 1950s and 1960s believed it to be synonymous
with per capita growth, industrialization and economic indicators. But in 1962 the UN
Economic and Social Council argued that development is growth and change; change in
turn is social and cultural and it is both quantitative and qualitative.
The term social development refers to qualitative changes in the structure and
functioning of society that help society to better realize its aims and objectives.
Development can be broadly defined in a manner applicable to all societies at all historical
periods as an upward ascending movement featuring greater levels of energy, efficiency,
quality, productivity, complexity, comprehension, creativity, mastery, enjoyment and
accomplishment. Development is a process of social change, not merely a set of policies

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and programs instituted for some specific results. This process has been going on since the
dawn of history.
Development is a human process in the sense that it is human beings and not
material factors that are the driving force for development. The energy and aspiration of
people who seek development forms the motive force that drives the development process.
Peoples awareness may decide the direction in which development will take place. Their
efficiency, productivity, creativity and organizational capacities determine the level of
peoples accomplishment and enjoyment. What we call development is only the outer
realization of latent inner potentials. The level of peoples education, the intensity of their
aspiration and energies, the quality of their attitudes and values, skills and information all
decide the extent and pace of development. All these factors come into play whether it is
the development of the individual, family, community or nation or even the whole world.
In this Unit we shall discuss the concept of social development and human
development. In this context we shall also examine the ongoing debate social versus
economic development, principles and common objectives of social development, social
and human development indicators, human development index etc.

2. Objectives
After studying this Unit, you should be able to:

Appreciate the distinction between social and economic development

Understand the concept of social and human development; and
Describe the various principles, objectives and indicators of social and
human development

3. Social versus Economic Development

Once upon a time the well-being of a society was measured by its economic
development. However, policy enlightenment has lead us to realize in recent decades that
economic wealth and social progress are interdependent and should develop hand in hand
to achieve human and social welfare in a globalizing world.

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Development is by its nature social. Its ends embody social values. Its means are
social processes and institutions. Its benefits and costs are distributed across communities,
social groups, and organisations (Francis and Jacobs, 1999). All development is, therefore,
in some sense social because all development necessarily expresses social objectives,
requires social mechanisms in order to achieve those objectives, and has social
consequences. Korten and Alfonso (1981) argue that all development is social
development in the sense that people are the central purpose of development, their skills
and capacities its critical resource. Abel-Smith (1967:16) has pointed out, all ends are
social, and economic growth and development is only one of the means of achieving them:
Why do we want economic growth if it is not to promote social and economic ends
higher levels of living?

The prefix social in social development is used very widely and with very many
different meanings. The definition of the word social, which is more helpful in defining
social development, can again be explained by the use of antonyms. In this case, social is
used as the antonym of economic; for example, social development is contrasted with
economic development and the social benefits of a project are compared with the economic
benefits. Although these terms are often used as if they were clearly definable and mutually
exclusive, they are not if one tries to define exactly what social and economic in this
context mean. The word economic is sometimes used in a relatively narrow sense to
imply an association with money, production, or physical output. In contrast, social
suggests something non-monetary or not contributing directly to production, particularly
something related to the general quality of human life (Conyers, 1986). However, it is very
difficult to define the two terms more precisely and, and in many cases the two are closely
and complexly interrelated. Midgley (1995), therefore, holds the view that social
development explicitly seeks to integrate social and economic processes viewing both
elements on development that characterizes the social development approach.

Within the process of development, social and economic development forms two
sides of the same coin. Social development cannot take place without economic
development and economic development is meaningless unless it is accompanied by
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improvements in social welfare for the population as whole. Social developments most
distinctive feature is its attempt to harmonize social policies with measures designed to
promote economic development. It is the emphasis on development, together with its
universality and macro-focus that differentiates social development from the other
approaches for promoting social welfare. Hence, Midgley defines social development as a
process of planned social change designed to promote the well being of the population as a
whole in conjunction with a dynamic process of economic development. (ibid.,25).

While in the 1950s and 1960s the term social welfare and social development
were used almost interchangeably, by the 1970s there was an increasing concern to
distinguish between the economic and the social aspects of development strategies and
processes (Conyers, 1982). The literature of the 1970s referred to the social aspects or the
social dimensions of development, even if these aspects were largely couched in terms of
the provision of basic services. Initially these social aspects were seen as the noneconomic aspects of development programmes and represented the first recognition that
development was to do with people and not just technology and infrastructure (Singer and
Jolly, 1995). These social aspects were expressed in terms such as basic needs, quality of
life and levels of living and launched the first attempts to measure social development
(Baster, 1972). Arguments also began to emerge that development was to do with both
economic and social change and that this change implied something more than the
provision of some minimum infrastructure of basic services. By the end of the 1970s there
was an increasingly widespread recognition that development could not be seen in purely
economic terms, but equally widespread was a divergence on the meaning of social
development. The progressive replacement of the more conventional economic
development by social development and the linking of it to notions of human needs
and quality of life, however, is not indicative only of a change in fashion; it represents a
paradigm shift (Dube, 1988).
3.1 Meaning of Social Development
People are the central purpose of development and that human will and capacity
are its most central resource (Korten, 1983), and people are the reason and means for
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development, and fair and equitable development contributes to human welfare (World
Bank (1997). Based on these premises the World Bank has outlined a set of principles of
social development [Box 1].

Oakley et al. (1998), based on a number of statements and documents on social

development from a range of development agencies, have constructed the common
objectives of social development which include poverty reduction, human development,
participation, empowerment, womens social and economic development , and peoples
rights (Box 1.1)
Box 1. Principles of Social Development
that people are the reason for development and that how they are affected is the measure by
which development initiatives should be judged;
that people are the means of development; if they do not understand or are not committed
to development initiatives, these initiatives will not succeed, no matter how well they are
planned;
that fair and equitable development contributes to human welfare and to the social cohesion
and social stability that underpins sustainable development;
that in a world of increasing specialisation and interdependence, new kinds of relationships,
organisations and institutions will be needed if people are to benefit and if growth and
development are to be sustained;
that governments have a crucial role in shaping social policy and providing an enabling
environment for poverty reduction and socially sustainable development;
governments cannot act alone; productive partnerships between the state, the market and
society are needed to foster socially sustainable development.

Box 1.1 Common Objectives of Social Development Programmes

1. Poverty reduction: not just in terms of increased production but also in terms of helping
poor people gain access to the resources necessary to sustain their livelihoods.
2. Human development: in the sense of better education, health and family planning.
3. Participation: the means by which poor people can be directly involved in development.
4. Empowerment: in the sense of helping poor people to extend their areas of knowledge
and perhaps to acquire new skills and abilities which could enable them to better defend
and promote their livelihoods.
5. Womens social and economic development: and the promotion of gender equity to
ensure equal access to resources and development benefits.
6. Peoples rights: as enshrined in written constitutions and democratic processes, and the
rights of particularly vulnerable groups such as children, ethnic minorities and refugees.
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The main aim of development must be development of people, enabling them to

lead fuller and more satisfying lives, rather than simply the delivery of material benefits
(Oxfam,1990). This approach, according to Oxfam, is normally referred to as social
development. The term is common currency in the language of development studies, and
most development projects could be presented as having certain social development
objectives.
Even though the term social development is widely used there is no one generally
accepted statement of interpretation. Social development, according to Oxfam (1990),
encompasses a very broad concern for the development of people, for an improvement in
peoples lives and for giving people some control over the forces, and some involvement in
the decisions, which affect their lives. The term social development is also used to refer
to projects which try to develop self-reliance among people, encourage their participation
and generally seek to stimulate in them an awareness of their social reality and of their
ability to influence and direct their own lives. Oxfam identifies two very broad
understandings of social development:

The removal of material barrier to peoples development, such as

un/underemployment,

ill-health

and

lack

of

education.

In

this

understanding, social development is seen as the provision of services

where they are lacking.

Social development as an educational process designed to stimulate a greater

self-determination and a greater awareness among people of the possibilities
for development.

The objectives of social development programmes, according to Oxfam

include:

an increase in participation;

the strengthening of communal organisation/solidarity;

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the reduction of dependence;

the development of initiative. motivation/leadership;

the heightening of critical awareness.

From a social perspective, development can be defined as attainment of a

sustainable improvements in economic growth and the quality of life that increases the
range of choices open to all, achieved by peoples own efforts in the private sector or
through voluntary activity, supported by governments (ODA, 1995). This definition places
value and emphasis on the ability of individuals, households and communities to
participate in their society and its economy, with government playing the role of a
facilitator.
Growth with equity, basic needs, and other related models for dealing with the
problem of poverty have been concerned largely with how best to allocate physical and
financial resources. How much should be invested in rural as contrasted to urban areas?
How much in social services and of what type? How much in employment generation, in
what sectors and in what technologies? How should ownership of productive resources
such as land be allocated? These are important questions, but social development, argue
Marsden et al. (1994), involves more than changing development investment decisions. It
is a way of thinking about development in which people rather than economics and
technology are the central focus. It calls for new methods of development planning and
action, new institutional structures, a balance between analytic and synthetic thought,
leadership, and a continuous learning process at both individual and institutional levels.
Social development is not an alternative to economic development. It is the
incorporation of a more people-oriented focus in to general development efforts (ibid.).
Such a people oriented focus has been discussed and elaborated extensively over the past
decade by Cernea (1985), Chambers (1985) Rahman (1984), Khan (1983) and Oakley
(1991) and has now entered the mainstream of thinking about the purposes and objectives
of interventions in the name of development. According to Dube (1988), the concept of
social development is more comprehensive than economic development; it subsumes the

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latter, but aims at the attainment of certain wider social objectives and ideals. Economic
growth alone is generally socially inadequate. As long as economic and social inequality
persists, and continues to grow, development cannot claim to have achieved one of its
major objectives.
Paiva (1978) has argued that Social development has two inter-related dimensions
the first is the development of the capacity of people to work continuously for their
welfare and that of societys; the second is the alteration or development of a societys
institutions so that human needs are met at all levels especially at the lowest level, through
a process of improving the relationships between people and socio-economic institutions,
recognizing that human and natural forces are constantly intervening between the
expression of needs and the means to attain them. He adds, in this process a balance is
sought between quantitative and qualitative meeting of needs though changes in societal
institutions and in the use of available resources. An essential concern of social
development is therefore with social justice and in the equitable distribution of the fruits of
development. The aim of social development is ultimately to achieve a more humanistic
society with institutions and organizations that will respond more appropriately to human
needs.
The concept of social development, argues Dube (1988), certainly does not imply
the conversion of individuals into cheerless automations and spiritless robots; they must
enjoy the freedom to articulate their ideas and be a part of the decision-making processes in
society. What is being emphasized is that individual fulfillment should be through societal
channels and that social good should have primacy in an individuals thought processes
and lifestyle.
At the heart of social development efforts, argue Marsden et al., is the notion of
increasing peoples abilities to more effectively manage their own resources. The results of
such efforts will be expected to enhance productive capacity and social welfare generally.
If interventions are to be sustainable in the longer term then people themselves must feel a
sense of ownership and worth. Social development projects, therefore, seek to give support
to self-reliant strategies to promote more effective participation, to build local capacity,
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and to develop skills for more sustainable development. A fundamental issue underpinning
this notion of social development is that of empowerment.
At the root of these concepts is the aim of building sustainable assets, both human
and physical, and of transferring resources, responsibility and ownership to those who have
hitherto been excluded from development efforts the poor and the marginalised because
they are seen to have been disadvantaged by social, economic and political changes. a
parallel aim is the building of partnerships with the poor to enrich the networks and
alliances that link North and south. Behind the concepts lie philosophical debates about
justice and equity. They are the battle fronts for competing claims for authority and
legitimacy in a constantly changing world (Marsden et al, 1994).
We may conclude this section with the understanding that the concept of social
development offers a comprehensive macro-perspective that focuses on communities and
societies, emphasizes planned intervention, promotes a dynamic change-oriented approach
which is inclusive and universalistic, and above all seeks to harmonize social interventions
with economic development efforts. The social development approach uniquely integrates
economic and social objectives. It not only recognizes the critical importance of economic
development in raising standards of living, but also actively seeks to harness economic
development for social goals. It is for this reason that social development can be defined as
a process of promoting peoples welfare in conjunction with a process of promoting
peoples welfare in conjunction with a dynamic process of economic development. Social
development is not an abstract ideal but a realistic approach for promoting peoples
welfare.

4. Human Development
The concept of human development emerged as an alternative to the traditional
development concepts which emphasised on economic growth. While the purpose of all
development, economic or social, is human welfare, for a long time, in most of the
literature and in the international debates development has been identified with economic
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growth and measured in terms of aggregate income of a society or per capita income. The
distribution of income in the society, the availability of social choices and opportunities for
maximisation of potential of the people were neglected. Efforts to overcome these
shortcomings resulted in the emergence of an alternative approach to development. This is
the human development paradigm which shifted away from the earlier thrust on
quantitative to the qualitative improvement of human life. Drawing on the ideas of
prominent economist Amartya Sen, the human development school defined development
as a "process of enlarging people's choices'. It regarded increased incomes as a means to
widen human choices and capabilities, the most critical ones being the opportunities to live
a long and healthy life, to be educated atid to have access to resources needed for a decent
standard of living. After the United Nations Development Programme adopted human
development indices to evaluate the progress of nations in 1990, the concept of human
development has gained wider recognition. It has evolved from an idea into an intellectual
movement.
4.1

What is human development?

The issue of development has been central in social sciences since the end of the
Second World War. As nations began efforts to reconstruct their economies damaged by
the war and as the emergent countries of Asia, Africa and Latin America began to remove
distortions in their social and economic systems caused by centuries of colonial rule, a
spate of development theories emerged. By and large these theories conceived of
development in a narrow quantitative sense of material welfare and command over
material resources. Accordingly, the value of the total goods and services produced in a
community, that is, the Gross National Product (GNP) or one of its variants remained in
use an indicator of aggregate welfare of a community.

In the 1970s, equity considerations began to impinge on the idea of development.

For instance, the 'basic needs approach' shifted the focus on to the requirements of the poor
and the disadvantaged in a society. The World Bank also broadened its conception of
development and began to emphasize growth for the poor and resource-weak groups along
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with aggregate growth. While such conceptions of development embodied the desire to
improve the living conditions and welfare of all members of a society, the basic indicators
of development remained income measurements of one kind or the other. Consequently,
growth in real incomes was the main target of development plans of nations and
international agencies concerned with development.
In the early 1980s, this approach to development was disputed by prominent
economists like Amartya Sen, Paul Streeten and Mahbub- ul -Haq. These economists
believed that increased incomes should be a means to improve human welfare, not as an
end in itself. They argued that income should be regarded as a means for enlarging human
choices and strengthening human capabilities (the range of things people are able to do or
be). After all, development is about people, their well-being, their needs, choices and
aspirations. This new thinking on development with people as the focus of concern has
come to be known as the human development approach.

According to this new thinking, human development is the process of building of

capabilities, such as to lead a long and healthy life, to have education, information and
knowledge, to have opportunities for livelihood, to have access to the natural resources for
a decent standard of living, to have sustainable development, to have personal and social
security, to achieve equality and enjoyment of human rights, to have participation in the
life of the community, to have responsible government and good governance and so on.

Traditionally, development theorists have argued that an increase in income would

result in human welfare. Advocates of human development disputed this claim. They argue
that the quality and distribution of economic growth is as important as quantity of
economic growth for enlarging human choices. Income may be unevenly distributed within
a society, in which case people with limited or no access to income will end up with too
few choices. More important, the range of choices available to the people depends on thee
national priorities of a society or rulers; the elitist or egalitarian model development;
political authoritarianism or political democracy, a command economy or participatory
development. By comparing per capita incomes with indicators of education or health
standards, these economists demonstrated that countries with higher levels of per capita
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income did not necessarily have better education or health standards. Amartya Sen, for
instance, observed that the average life expectancy in Sri Lanka was 70 years, whereas it
was not more than 64 years in Brazil, even though per capita income of the latter was four
times greater than that of Sri Lanka.

The human development approach gained ground when the United Nations
Development Programme (UNDP) presented a comprehensive concept of human
development in the first Human Development Report in 1990. This Report, prepared
under the guidance of Mahbub ul- Haq, defined human development as a process of
enlarging the range of people's choices by expanding human capabilities and functioning.
Subsequent annual Human Development Reports have further elaborated the human
development paradigm.

For bringing forward the human development profile of all countries of the world,
the UNDP constructed the concept of Human Development Index (HDI). The HDI is the
cumulative measurement of three essential human choices required at all levels of human
development, longevity, knowledge and decent standard of living. Longevity is a choice to
live a long and healthy life. It is measured in terms of life expectancy (years). Knowledge
is a choice to acquire literacy/information. It is measured by educational attainment
percentage, which is combined gross enrolment ratio at various levels. Decent standard of
living is a choice to enjoy a quality and standard of life. It is measured by national income
or income per capita in purchasing power parity in US dollar (PPP US $).
The UNDP reports ranked a country according to its overall achievement in these
three basic dimensions of human development. HDI ranks countries in relation to each
other to inform how far a country has travelled in the path of human development. In this
way, the HDI is indicative to the levels of human development and not the complete
measurement of development.

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4.2

Dimensions of human development

Human development paradigm has four essential components. First is equity or

equitable access to opportunities. Human development is concerned with widening the
choices of all people. Without equity, development restricts the choices of many
individuals. Second is sustainability. Human development emphasises on sustaining all
form of capital-physical, human, financial and environmental so that future generations can
have the same opportunities for well being that the present generation enjoys. Third is
productivity. Human development believes in investing in people so that they can achieve
their maximum potential. People are not seen merely as human resources, that is, as
means for better economic efficiency. People are seen as the ultimate ends of the
development process. Finally,

human development focuses on development by the

people. People must participate in the activities, events and processes that shape their lives.
Over a period of time, the concept of human development has evolved into a
multidimensional approach. The concept of human development has been gradually
extended into basically all areas of societal development. To the original focus on the
missing link between income and welfare has been added concern for the provision of
social infrastructure and services, that are made available on an equal basis to all citizens;
special emphasis on gender equality; and equal opportunities for participation in political
and economic decision-making. The latter requires both an enabling legal and institutional
framework and empowerment of citizens and civil society organizations so that they
become capable of reaching up to the authorities. Some of the adherents to the concept
have furthermore put special emphasis on sustainability, that is, opportunity to enjoy the
same well-being to the future generations.
Successive annual reports of the UNDP reflect this extension of human
development to areas of social development. In HDR report of 1995, for instance, the focus
is on gender equality. The report included a gender related development index (GDI) to
capture the gender bias in the three central human capabilities. With the passage of time,
the coverage and contents has improved considerably and the current Human Development
Report of UNDP contains many different statistical indicators like Human Development
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Index (HDI), Gender Development Index (GDI), Gender Empowerment Measure (GEM),
Human Poverty Index (HPI), Technology Achievement Index (TAI) etc.
Each year since 1990 the Human Development Report has published the human
development index (HDI) which looks beyond GDP to a broader definition of well-being.
The HDI provides a composite measure of three dimensions of human development: living
a long and healthy life (measured by life expectancy), being educated (measured by adult
literacy and gross enrolment in education) and having a decent standard of living
(measured by purchasing power parity, PPP, income). The index is not in any sense a
comprehensive measure of human development. It does not, for example, include
important indicators such as gender or income inequality nor more difficult to measure
concepts like respect for human rights and political freedoms. What it does provide is a
broadened prism for viewing human progress and the complex relationship between
income and well-being.
Of the components of the HDI, only income and gross enrolment are somewhat
responsive to short term policy changes. For that reason, it is important to examine changes
in the human development index over time. The human development index trends tell an
important story in that respect. Between 1980 and 2007 India's HDI rose by 1.33%
annually from 0.427 to 0.612 today. HDI scores in all regions have increased progressively
over the years although all have experienced periods of slower growth or even reversals.
In the Human Development Report 2009, the HDI, which refers to 2007,
highlights the very large gaps in well-being and life chances that continue to divide our
increasingly interconnected world. The HDI for India is 0.612, which gives the country a
rank of 134th out of 182 countries with data.

5. Summing up
The concept of social development offers a comprehensive
macro-perspective that focuses on communities and societies, emphasizes planned
intervention, promotes a dynamic change-oriented approach which is inclusive and
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universalistic, and above all seeks to harmonize social interventions with economic
development efforts. The social development approach uniquely integrates economic
and social objectives. It not only recognizes the critical importance of economic
development in raising standards of living, but also actively seeks to harness economic
development for social goals. It is for this reason that social development can be
defined as a process of promoting peoples welfare in conjunction with a process of
promoting peoples welfare in conjunction with a dynamic process of economic
development. Social development is not an abstract ideal but a realistic approach for
promoting peoples welfare.
The concept of human development emerged as an alternative to the traditional
development concepts which emphasised on economic growth. While the purpose of all
development, economic or social, is human welfare, for a long time, in most of the
literature and in the international debates development has been identified with economic
growth and measured in terms of aggregate income of a society or per capita income. The
distribution of income in the society, the availability of social choices and opportunities for
maximisation of potential of the people were neglected. Efforts to overcome these
shortcomings resulted in the emergence of an alternative approach to development. This is
the human development paradigm which shifted away from the earlier thrust on
quantitative to the qualitative improvement of human life.

6. Keywords
Poverty reduction: helping poor people gain access to the resources necessary to sustain
their livelihoods

Human development: process of enlarging the range of people's choices by expanding

human capabilities and functioning.

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Social Development: a process of planned social change designed to promote the wellbeing of the population as a whole in conjunction with a dynamic process of economic
development.

Participation: the means by which poor people can be directly involved in development.

Empowerment: helping poor people to extend their areas of knowledge and perhaps to
acquire new skills and abilities which could enable them to better defend and promote their
livelihoods.

7. Know your Progress

1. Social developments most distinctive feature is its attempt to harmonize social
policies with measures designed to promote economic development. Discuss.
2. How are the common objectives of social development programmes?
3. What is human development and what are the dimensions of human
development?
4. Explain the concept of Human Development Index (HDI).

8. Further Reading / References

Baster, N. (1972) Measuring Social Development, Frank Cass
Esteva, A. (1992) development in Sachs W (ed.) Development Dictionary,
London: Zed Books
Jones, J (1981) Social Development : conceptual Methodological and Policy
Issues, New York: St. Martins Press.
Korten, D .(1983) Social Development: Putting people first, in Korten and
Alfonso (ed.) Bureaucracy and the Poor: Closing the Gap, London:
Kumarian
Marsden, D et al., (1994) Measuring The Process: Guidelines For Evaluating
Social Development , Oxford, INTRAC, P.9
Midgley, James. (1995) Social Development: The Development Perspective in
Social Welfare, London: Sage Publications.

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Haq, Mahbub ul, 1995, Reflections on Human Development, New York, Oxford
University Press.
Sen, Amartya, 1988, "The Concept of Development", in: Hollis Chenery and T. N.
Srinivasan (Eds.),
Handbook of Development Economics, Amsterdam, North Holland, 1989.
Streeten,

Paul

P.,

1994,

Strategies

for

Human

Development,

Copenhagen,

Handelshjskolens Forlag/
Munksgaard International Publishers.
UNDP, 1990, Human Development Report 1990, New York, Oxford University
Press.
UNDP, 1991, Human Development Report 1991, New York, Oxford University
Press.
UNDP, 1992, Human Development Report 1992, New York, Oxford University
Press.
UNDP, 1993, Human Development Report 1993, New York, Oxford University
Press.
UNDP, 1994, Human Development Report 1994, New York, Oxford University
Press.
UNDP, 1995, Human Development Report 1995, New York, Oxford University
Press.
World Bank, 1980, World Development Report 1980, Oxford, Oxford University
Press for the World Bank.
World Bank, 1990, World Development Report 1990, Oxford, Oxford University
Press for the World Bank.

9. Model Answers
1. Development is by its nature social. Its ends embody social values. Its means
are social processes and institutions. Its benefits and costs are distributed across
communities, social groups, and organisations (Francis and Jacobs, 1999). All
development is, therefore, in some sense social because all development necessarily
expresses social objectives, requires social mechanisms in order to achieve those
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objectives, and has social consequences. From a social perspective, development can be
defined as attainment of sustainable improvements in economic growth and the quality of
life that increases the range of choices open to all, achieved by peoples own efforts in the
private sector or through voluntary activity, supported by governments.

The social development approach uniquely integrates economic and social

objectives. It not only recognizes the critical importance of economic development in
raising standards of living, but also actively seeks to harness economic development for
social goals. It is for this reason that social development can be defined as a process of
promoting peoples welfare in conjunction with a process of promoting peoples welfare in
conjunction with a dynamic process of economic development.
2. The common objectives of social development which include poverty
reduction, human development, participation, empowerment, womens social and
economic development , and peoples rights

3. The concept of human development emerged as an alternative to the traditional

development concepts which emphasised on economic growth. Human development is
the process of building of human capabilities, such as to lead a long and healthy life, to
have education, information and knowledge, to have opportunities for livelihood, to have
access to the natural resources for a decent standard of living, to have sustainable
development, to have personal and social security, to achieve equality and enjoyment of
human rights, to have participation in the life of the community, to have responsible
government and good governance and so on. Mahbub -ul -Haq, defined human
development as a process of enlarging the range of people's choices by expanding human
capabilities and functionings.
Human development paradigm has four essential components. First is equity or
equitable access to opportunities. Human development is concerned with widening the
choices of all people. Without equity, development restricts the choices of many
individuals. Second is sustainability. Human development emphasises on sustaining all
form of capital-physical, human, financial and environmental so that future generations can
have the same opportunities for well being that the present generation enjoys. Third is
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productivity. Human development believes in investing in people so that they can achieve
their maximum potential. People are not seen merely as human resources, that is, as means
for better economic efficiency. People are seen as the ultimate ends of the development
process. Finally, human development focuses on development by the people. People must
participate in the activities, events and processes that shape their lives.
5. Each year since 1990 the Human Development Report has published the human
development index (HDI) which provides a composite measure of three
dimensions of human development: living a long and healthy life (measured by
life expectancy), being educated (measured by adult literacy and gross enrolment
in education) and having a decent standard of living (measured by purchasing
power parity, PPP, income).

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Unit-4: Inclusive Growth

Structure
1.

Introduction

2.

Objectives

3.

Defining Inclusive Growth

3.1.

Concept of Inclusive Growth

3. 2.

What are Policy Ingredients of Inclusive Growth?

4.

Summing up

5.

Keywords

6.

Know your Progress

7.

Further Readings / References

8.

Model Answers

1. Introduction
In a globalizing world, the challenges and opportunities of development, in
general, and that of sustaining high growth over an extended period of time, in particular,
have become more complex. A country of more than 1 billion persons cannot be led by
growth in a few sectors or a few cities and regions of the country in a sustainable manner.
With nearly two-third of the population still living in the rural areas it is important for the
economy to reach out to these people and provide opportunities to them from the ongoing
economic expansion at their door steps. This is essential not only for strengthening the
inclusive character of the growth process, but also for anticipating and addressing the
demographic issues associated with unplanned urbanization that the absence of a regionally
balanced growth can potentially spark. It is necessary to bring in a paradigm shift for
making the development process more inclusive. It involves creating entitlements backed
by legal guarantee to improve access and provide basic amenities and opportunities for
livelihood to vulnerable sections of our population. Economic growth has to be an
instrument for development and not an end in itself. It has to be not only inclusive but also
equitable so as to sustain it over long period.

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In this Unit, we shall discuss the concept of inclusive growth, and the policy
ingredients of inclusive growth, strategies for high and sustainable growth, social
inclusion, expanding human capacities, evolving good policies and sound institutions, and
social safety nets.

2. Objectives
After studying this Unit, you should be able to:

Analyze the evolution of the concept of inclusive growth;

Explain the key questions of inclusive growth and poverty reduction;

Describe how inclusive growth is the most pragmatic approach for

addressing the multiple development disparities; and

State the issues and strategies for inclusive growth.

3. Defining Inclusive Growth

Rapid and sustained poverty reduction requires inclusive growth that allows
people to contribute to and benefit from economic growth. Rapid pace of growth is
unquestionably necessary for substantial poverty reduction, but for this growth to be
sustainable in the long run, it should be broad-based across sectors, and inclusive of the
large part of the countrys labour force. This definition of inclusive growth implies a direct
link between the macro and micro determinants of growth. The micro dimension captures
the importance of structural transformation for economic diversification and competition,
including creative destruction of jobs and firms.

The term inclusive growth, which emphasizes ensuring that the economic
opportunities created by growth, are available to all - particularly the poor - to the
maximum possible extent? The growth process creates new economic opportunities that
are unevenly distributed. The poor are generally constrained by circumstances or market
failures that constrain them from availing these opportunities. As a result, the poor
generally benefit less from growth than the non-poor. Thus, growth will generally be not
pro-poor if left completely to markets. The government, however, can formulate policies
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and programs that facilitate the full participation of those less well off in the new economic
opportunities. We may thus define inclusive growth as growth that not only creates new
economic opportunities, but also one that ensures equal access to the opportunities created
for all segments of society, particularly for the poor. Consistent with this definition, this
paper provides an approach Inclusive growth means growth with equal opportunities.
Inclusive growth therefore focuses on both creating opportunities and making the
opportunities accessible to all. Growth is inclusive when it allows all members of a society
to participate in and contribute to the growth process on an equal basis regardless of their
individual circumstances.

The importance of equal opportunities for all lies in its intrinsic value as well as
instrumental role. The intrinsic value is based on the belief that equal opportunity is a basic
right of a human being and that it is unethical and immoral to treat individuals differently
in access to opportunities. The instrumental role comes from the recognition that equal
access to opportunities increases growth potential, while inequality in opportunities
diminishes it and makes growth unsustainable, because it leads to inefficient utilization of
human and physical resources, lowers the quality of institutions and policies, erodes social
cohesion, and increases social conflict.

Inclusive growth by its very definition implies an equitable allocation of resources

with benefits accruing to every section of society, which is a utopian concept. But the
allocation of resources must be focused on the indented short and long terms benefits and
economic linkages at large and not just equitable mathematically on some regional and
population criteria.

Inclusive growth refers both to the pace and pattern of growth, which are
considered interlinked, and therefore in need to be addressed together. The idea that both
the pace and pattern of growth are critical for achieving a high, sustainable growth record,
as well as poverty reduction, is consistent with the findings in the Growth Report:
Strategies for Sustained Growth and Inclusive Development (Commission on Growth and
Development, 2008). The commission
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notes that inclusiveness a concept that encompasses equity, equality of

opportunity, and protection in market and employment transitions is an essential
ingredient of any successful growth strategy. The Commission on Growth and
Development (2008) considers systematic inequality of opportunity toxic as it will derail
the growth process through political channels or conflict. Here we emphasize the idea of
equality of opportunity in terms of access to markets, resources, and unbiased regulatory
environment for businesses and individuals.

The inclusive growth approach takes a long term perspective as the focus is on
productive employment rather than on direct income redistribution as a means of
increasing incomes for excluded groups. In the short run, governments could use income
distribution schemes to attenuate negative impacts on the poor of policies intended to jump
start growth, but transfer schemes cannot be an answer in the long run and can be
problematic also in the short run.

The inclusive growth definition is in line with the absolute definition of pro-poor
growth, but not the relative definition. Under the absolute definition, growth is considered
to be pro-poor as long as poor people benefit in absolute terms, as reflected in some agreed
measure of poverty. In contrast, in the relative definition, growth is pro-poor if and only
if the incomes of poor people grow faster than those of the population as a whole, i.e.,
inequality declines. However, while absolute pro-poor growth can be the result of direct
income redistribution schemes, for growth to be inclusive, productivity must be improved
and new employment opportunities created. In short, inclusive growth is about enlarging
the size of the economy, rather than redistributing resources. In other words, inclusive
growth is about raising the pace of growth and enlarging the size of the economy, while
levelling the playing field for investment and increasing productive employment
opportunities.

By focusing on inequality, the relative definition could lead to sub-optimal

outcomes for both poor and non-poor households. For example, a society attempting to
achieve pro-poor growth under the relative definition would favour an outcome
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characterized by average income growth of 2 percent where the income of poor households
grew by 3 percent, over an outcome where average growth was 6 percent, but the incomes
of poor households grew by only 4 percent. While the distributional pattern of growth
favors poor households in the first scenario, both poor and non-poor households are better
off in the second scenario. There is broad recognition that when poverty reduction is the
objective, then the absolute definition of pro-poor growth is the most relevant. Using the
absolute definition, the aim is to increase the rate of growth to achieve the greatest pace of
poverty reduction.

3 .1

Concept of Inclusive Growth

The Indian economy has been growing rapidly. While the size of the economy has
expanded, the gain from economic growth has not been evenly distributed among regions,
groups, households, and individuals. As a result, the gap between the rich and the poor is
widening in the shadow of high economic growth. This is a concern for the Indian
government as it may lead to social unrest and political instability, constraining further
economic development.
While some level of growth is obviously a necessary condition for sustained
poverty reduction, and strong average growth has been accompanied by a sharp reduction
in poverty, the evidence is clear that growth by itself is not a sufficient condition. Growth
does not guarantee that all persons will benefit equally. Growth can bypass the poor or
marginalized groups, resulting in increasing inequality. High and rising levels of income
inequality can lower the impact on poverty reduction of a given rate of growth, and can
also reduce the growth rate itself. High inequality also has implications for political
stability and social cohesion needed for sustainable growth. Hence, reducing inequality
has become a major concern of development policy, a concern that has generated interest
in inclusive growth.
India has vast diversity in the areas of language, religion, culture and social norm.
Since the inception of India as an independent country, population explosion has been
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projected as prime concern of the state. A very important historical characteristic that
severely influenced the development of India was British Colonial Legacy. Soon after
independence Indian leaders were thinking of strategies of economic development the
country should follow. The twin goals of Indian economic planning have been rapid allround economic growth and equitable sharing of the fruits of development. The country
has made significant progress in realizing the first objective. But the second goal has
remained elusive. After six decades of planned economic development, the disparities have
widened and some three-quarters of the population are mired in poverty.
In 1991 India introduced economic reforms. Globalization, industrialization,
liberalization and privatization led to tremendous economic growth. This growth carried
the characteristic feature of urban centric saturation. The prevalent disparities in the form
of social, spatial and regional disparities were aggravated due to this unplanned approach.
The Indian story of growth, especially in post liberalization era, has been
overshadowed by multiple human development issues. Exclusion has been identified as the
primary reason for unequal distribution of the benefits of growth. The emergence of
inclusive growth in the policy paradigm is the outcome.
Inclusive is a very broad concept and covers economic, social and cultural aspects
of development. Generally, Inclusive Growth is synonymous with Equitable
Development although it holds tremendous conceptual clarity about the idea of
inclusiveness. Inclusive growth by its very definition implies an equitable allocation of
resources with benefits accruing to every section of society.
Inclusive growth based on equal opportunity differentiates inequalities due to
individual circumstances from those due to individual efforts. An individuals
circumstances such as religious background, parental education, geographical location, and
caste (in India) are exogenous to and outside the control of the individual, for which he or
she should not be held responsible. Inequalities due to differences in circumstances often
reflect social exclusion arising from weaknesses of the existing systems of property and
civil rights, and thus should be addressed through public policy interventions. On the other

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hand, an individuals efforts represent actions that are under the control of the individual,
for which he or she should be held responsible. Inequalities due to differences in efforts
reflect

and

reinforce

market-based

incentives

needed

to

foster

innovation,

entrepreneurship, and growth.

The differentiation of inequalities arising from efforts from those arising from
circumstances leads to an important distinction between inequalities of outcomes and
inequalities of opportunities. Inequalities of opportunities are mostly due to differences
in individual circumstances, while inequalities of outcomes such as incomes reflect some
combination of differences in efforts and in circumstances. If policy interventions succeed
in ensuring full equality of access to opportunities, inequalities in outcomes would then
only reflect differences in efforts, hence could be viewed as good inequalities, and these
are inherent for any growth process. On the other hand, if all individuals exert the same
level of efforts while policy interventions cannot fully compensate for the disadvantages of
circumstances, the resulting inequalities in outcomes are bad inequalities. While these
two extreme cases are useful for analytical purposes, in reality, inequalities in outcomes
would consist of both good or desirable, and bad or undesirable inequalities. Equalities in
opportunities, which emphasizes eliminating circumstance-related bad inequalities so as to
reduce inequalities in outcomes, is at the core of inclusiveness and at the heart of an
inclusive growth strategy.

Although efforts-related inequalities are good, they can turn to bad if not
properly managed. This could happen if those who are rewarded by the market with
considerable market/political power use some of the rewards to engage in rent-seeking
activities and change the rules of the game. For instance, public investment and
expenditure could be skewed to benefit the elite or even the entire system of property and
civil rights could be skewed in their favour. This suggests that good inequalities also need
to be managed and cannot be completely ignored by policies. At a minimum, the state has
to guard against the possibility of policy capture by these individuals. Bad inequalities can
drive out good ones. In particular, persistence of bad inequalitiesas when certain groups

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get left behind as a result of their residing in a neglected regioncan reduce the tolerance
for even good inequalities. The result can be social unrest.

Inclusive growth not only addresses the inequality issue, but also enhances the
poverty reduction agenda. First, the impact of growth on poverty reduction is higher when
the initial level of inequality is lower and/or inequality declines over time. Second,
inclusive growth makes poverty reduction efforts more effective by focusing on creating
productive employment opportunities and making them equally accessible for all, while
addressing extreme poverty through social safety nets and, therefore, moving away from
the targeting approach to development. There is now a broad agreement that an effective
poverty reduction strategy consists of two prongs, the first being broad-based, pro-poor
economic growth based on private sector incentives to create employment opportunities;
and the second being public investment in basic education, health, and infrastructure.
These two prongs should be supported by social safety nets to protect the very poor and
vulnerable.

The inclusive growth approach takes a longer term perspective. As mentioned,

this is necessary because of the emphasis on improving the productive capacity of
individuals and creating conducive environment for employment, rather than on income
redistribution as a means of increasing incomes for excluded groups. Due to this longer
term perspective, there is an explicit focus on structural transformation and internal
migration in the inclusive growth analytics framework. The goal is to identify a bundle of
binding constraints rather than the binding constraint, and then sequence these constraints
to maximize inclusive growth in a country.

With this longer term perspective, it is important to recognize the time lag
between reforms and outcomes. A good example is the lag between the time when
investments in education are made and the time when returns from improved labour skills
are collected. This implies that the analysis must identify future constraints to growth that
may not be binding today, but that may need to be addressed today in order to ensure

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sustainable and inclusive growth. Inclusive growth analytics is about policies that should
be implemented in the short run, but for sustainable inclusive growth in the future.

The inclusive growth focuses on ex-ante analysis of sources of, and constraints to
sustained, high growth, and not only on one group the poor. The analysis focuses on
ways to raise the pace of growth by utilizing more fully parts of the labour force trapped in
low-productivity activities or completely excluded from the growth process. This is in
contrast to the pro-poor growth literature, which has traditionally focused on measuring the
impact of growth on poverty reduction by tracking various poverty measures.
There are three main steps involved in an inclusive growth analysis:
(1) The first one involves a background analysis, including an understanding of
major factors explaining the countrys past growth and poverty reduction trends and trendbreaks, overall productivity and employment dynamics in the country, major challenges
and opportunities faced, and possibilities for economic transformation and diversification.
(2) The second one consists of putting together the profile of economic actors,
while paying attention to particular excluded groups and includes a description of income
earning activities of self- or wage-employed, distinguished by sector, size of firm, by
geographical area (e.g. rural, urban), by sub-national unit (e.g. provincial, state and others),
by type (e.g. formal or informal), and other relevant characteristics. With the findings from
these two stages it is possible to get a picture of what activities specific groups are engaged
in and to what extent these
activities have the potential for growth or if migration to other sectors are possible
in the short and the long run.

(3) In step three, one attempts to find the constraints to inclusive growth.
In sum, an inclusive growth strategy encompasses the key elements of an
effective poverty reduction strategy and, more importantly, expands the development
agenda. A poverty reduction strategy based on a single and absolute income criterion
ignores the issue of inequalities and the risks associated with them. In contrast, an inclusive
growth strategy addresses circumstance-related inequalities and their attendant risks.
Inclusive growth is not based on a redistributive approach to addressing inequality. Rather,
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it focuses on creating opportunities and ensuring equal access to them. Equality of access
to opportunities will hinge on larger investments in augmenting human capacities including
those of the poor, whose main asset, labour, would then be productively employed.

3.2

What are Policy Ingredients of Inclusive Growth?

Policies for inclusive growth are an important component of most government

strategies for sustainable growth. For instance, a country that has grown rapidly over a
decade, but has not seen substantial reduction in poverty rates may need to focus
specifically on the inclusiveness of its growth strategy, i.e. on the equality of opportunity
for individuals and firms. Other examples can be drawn from resource-rich countries.
Extractive industries usually do not employ much labour and the non-resource sectors
typically suffer contractions associated with Dutch disease effects during boom periods.
These cases may call for analysis of constraints to broad-based growth with a particular
emphasis on the non-resource sectors in the economy. Moreover, in countries starting at a
very low income level and low growth, an inclusive growth approach would be very close
to an approach for speeding up the pace of growth, as the main focus should be on getting
the fundamentals for growth right.
Given that inclusive growth focuses on both creating economic opportunities and
ensuring equal access to them, an effective inclusive growth strategy should have two
anchors: (i) high and sustainable growth to create productive and decent employment
opportunities, and (ii) social inclusion to ensure equal access to opportunities by all.
A.

High and Sustainable Growth

High and sustainable growth is the key to creating productive and decent
employment opportunities. The strategy for igniting growth and sustaining it at a high level
may differ among developing Asian countries, depending on their current levels of
incomes and extreme poverty. A central trait of the Asian growth experience has been that

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economies that successfully sustain growth do so by continuously adapting and changing

their structure. Incrementally, but steadily, they latch on to and master new and more
productive activities, reaping gains along the way. The transformations associated with
sustained fast growth often entail a shift of output from agriculture to both industry and
services. There has been no economy in developing Asia that has sustained fast growth and
economic catch-up that has not also successfully industrialized. One reason for this is that
industry has been where opportunities for productivity growth have been located. While
services have played an important role in mopping up surplus labour from agriculture, this
has often meant employment in low-productivity, informal activity. For low-income
developing Asian countries where the level of extreme poverty is still high, a key challenge
during the next 1015 years will be to eradicate extreme poverty by accelerating the
process of transition toward a low-middle-income country status. In this process, these
countries will transform their rural and agriculture-dominated economies into ones with
higher agriculture productivity, and industry and services sectors playing a much greater
role in terms of both output and employment. For these countries, international experiences
have shown that particular attention is required to create and maintain hardware and
software conditions that would facilitate their economic integration domestically,
regionally, and globally. Integration with their regional counterparts and the global
economy would enable them to participate in international production networks and benefit
fully from their cost advantages. Exploring the potential of market integration as a
powerful source of growth would require continued investment in physical infrastructure
and in human capital and skills; and continued efforts in improving business environment
conducive to private entrepreneurships, foreign trade, and foreign investment. For lowmiddle-income countries where the level of extreme poverty is low and modern sectors
(industry and services) already dominate, a key challenge during the next 1015 years will
be to accelerate the move toward a middle-income or high-middle-income country status.
International experiences suggest that these countries would need to tackle three important
transitions: (i) transition from diversification and producing a broader array of goods, to
specialization and a focus on those goods in which a country has a global comparative
advantage; (ii) transition from accumulation or investment that simply requires more

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savings and more buildings, to innovation that requires the ability to do things differently;
and (iii) transition from basic skills or education to
advanced skills or tertiary education, or one where the educational system delivers
a much broader array of skills required for the labour force.

Economies of most low-middle-income countries are now well integrated with

regional and global economies and have often become an integral part of international
production networks, and this integration has been a major source of their recent growth.
While this needs to be continued and deepened, these countries should pay more attention
to domestic economic integration, including
the integration between urban and rural sectors, not only as an effective means to
reduce spatial inequalities, but also as a significant source of economic growth. Continued
efforts are required in improving domestic and regional connectivity and expanding the
capacities of urban cities and towns to accommodate migrant workers through public
investment, public and private partnerships, and public policies. High and sustainable
growth that creates productive and decent employment opportunities must be driven by a
dynamic private sector through market competition and market-based incentives. But
markets can fail and are sometimes missing. The central role of the government is to
develop and maintain an enabling environment for business investment and private
entrepreneurships by eliminating impediments and distortions created by market failures,
institutional weaknesses, and policy shortcomings. This would require the government to
invest in physical infrastructure and human capital, build institutional capacities, maintain
macroeconomic stability, adopt market friendly policies, protect property rights, and
maintain rules of law. In setting policy and reform priorities, the government should
identify the binding constraints to growth and target its efforts and resources at relaxing the
binding constraints.
B.

Social Inclusion

Promoting social inclusion requires public interventions in three areas: (i)

investing in education, health, and other social services to expand human capacities,
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especially of the disadvantaged; (ii) promoting good policy and sound institutions to
advance social and economic justice and level playing fields; and (iii) forming social safety
nets to prevent extreme deprivation. While (i) and (ii) are essential to equalize
opportunities, (iii) is needed to cater to the special needs of people who cannot participate
in and benefit from the opportunities created by growth for reasons beyond their control
and to alleviate transitory livelihood shocks.
(a)

Expanding Human Capacities

Expanding human capacities to participate in new opportunities means investing

in education, health, and other social services such as water and sanitation. Growth
provides resources to permit sustained improvements in human capacities, while expanded
human capacities enable people to make greater contributions to growth. As education
becomes more broadly based and equally accessible by all, people with low incomes are
better able to seek out economic opportunities, and their children are less likely to be
disadvantaged, leading to improved income distribution over time. Education is one of the
most prominent determinants of movements out of chronic poverty. Improved health and
nutrition have also been shown to have direct effects on labour productivity and
individuals earning capacities, especially among the poor. Health-related shocks are
prominent drivers pushing people into poverty. Access to clean water and sound sanitation
are not only basic means of living for human beings, but also ensure their good health.

Governmentboth central and localhas a critical role to play in investing in

education, health, and other social services, because of their public goods nature and strong
externalities, and in making these services equally accessible by all. The role of
government is to ensure that these social sectors have adequate funding, good physical
infrastructure, strong institutional capacities, sound policy frameworks, and good
governance.

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(b) Good Policies and Sound Institutions

Promoting social inclusion requires good policy and sound institutions. The
expansion of human capacities would not ensure equal opportunity for all if some people
do not have access to employment opportunities because of their circumstances, face unfair
returns on those capacities and unequal protection of their rights, and have unequal access
to complementary factors of production. Such social and economic injustice is often
reflective of bad policies, weak governance mechanisms, faulty legal/institutional
arrangements, or market failures. The central role of the government in promoting social
and economic justice is to address all these market, institutional, and policy failures.
Political, economic, cultural, and social freedoms ensure that members of a society would
not be excluded from participating, contributing, and benefiting from the new economic
opportunities because of their individual circumstances, or because they do not belong to
certain power groups who control political and economic decision making. A key element
of promoting social and economic justice should be to ensure that men and women can
earn a fair level of income from their work and enjoy decent working conditions.

(c) Social Safety Nets

Promoting social inclusion also requires the government to provide social safety
nets to mitigate the effects of external and transitory livelihood shocks as well as to meet
the minimum needs of the chronically poor. Such shocks are often created by ill health,
macroeconomic crises, industrial restructuring, and natural disasters. Developing and
improving social safety nets through public actions is particularly important for developing
Asia as markets for insuring such risks are often rudimentary and, even if they exist, only
cover a small segment of population. Social safety nets serve two main purposes. First, by
providing a floor for consumption, they are a coping mechanism for the very poor and the
unfortunate. Second, they could provide insurance against risk to enable vulnerable people
to invest in potentially high-return activities to lift themselves up by their bootstraps, i.e.,
social safety nets serve as springboards to enable vulnerable people to break out of poverty.
By encouraging efforts, safety nets could contribute toward greater equality in outcomes.
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Social safety nets typically take the following forms: (i) labour market policies and
programs aimed to reduce risks of unemployment, underemployment, or low wages
resulting from inappropriate skills or poorly functioning labour markets; (ii) social
insurance programs designed to cushion risks associated with unemployment, ill health,
disability, work-related injuries, and old age, examples being pensions, health and
disability insurance, and unemployment insurance; (iii) social assistance and welfare
schemes such as welfare and social services, and cash or in-kind transfers intended for the
most vulnerable groups with no other means of adequate support, such as single-parent
households, victims of natural disasters or civil conflicts, handicapped people, or the
destitute poor; and (iv) child protection to ensure the healthy and productive development
of children, examples being early child development programs, school feeding programs,
scholarships, free or subsidized health services for mothers and children, and family
allowances or credit.

4. Summing up
This Unit clarifies that inclusive growth is growth with equal opportunity that
emphasizes both the creation of and equal access to opportunities for all. Inclusive growth
differentiates inequalities due to differences in efforts from those due to differences in
individual circumstances: the former reflects market-based incentives and should not be
disregarded; while the latter is often reflective of social exclusion associated with market,
institutional, and policy failures, and should be eliminated. Inclusive growth is not based
on a redistributive approach. A development strategy anchored on inclusive growth as the
overarching goal encompasses the key elements of an effective poverty reduction strategy
and, more importantly, advances the development agenda significantly.

A development strategy with inclusive growth as the overarching goal should

have two mutually reinforcing strategic anchors: first, high and sustainable growth to
create productive and decent employment opportunities; and second, social inclusion to
ensure equal access to opportunities. High and sustainable growth should be driven by a
dynamic private sector. The central role of the government is to develop and maintain an
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enabling environment for business investment and private entrepreneurships by addressing

market failures, institutional weaknesses, and policy shortcomings through investing in
infrastructure

and

human

capital,

building

institutional

capacities,

maintaining

macroeconomic stability, adopting market-friendly policies, protecting property rights, and

maintaining rules of law. Promoting social inclusion requires public interventions in three
areas: (i) investing in education, health, and other social services to enhance human
capacities; (ii) promoting good policies and sound institutions to advance economic and
social justice and level playing fields; and (iii) providing social safety nets to prevent
extreme deprivation.

5. Keywords
Globalization: Globalization is a process of interaction and integration among the
people, companies, and governments of different nations, a process driven by international
trade and investment and aided by information technology. This process has effects on the
environment, on culture, on political systems, on economic development and prosperity,
and on human physical well-being in societies around the world.
Inclusiveness: a concept that encompasses equity, equality of opportunity, and
protection in market and employment transitions is an essential ingredient of any
successful growth strategy.

Inclusive growth: implies an equitable allocation of resources with benefits

accruing to every section of society

Industrialization: Industrialisation is the process of social and economic change

whereby a human group is transformed from a pre-industrial society into an industrial one.
It is a part of a wider modernisation process, where social change and economic
development are closely related with technological innovation, particularly with the
development of large-scale energy and metallurgy production. It is the extensive
organization of an economy for the purpose of manufacturing.
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Liberalization: In general, liberalization (or liberalisation) refers to a relaxation

of previous government restrictions, usually in areas of social or economic policy.
Liberalization of autocratic regimes may precede democratization

Privatization: Privatization is the incidence or process of transferring ownership

of a business, enterprise, agency or public service from the public sector (government) to
the private sector (business). In a broader sense, privatization refers to transfer of any
government function to the private sector including governmental functions like revenue
collection and law enforcement

Social Inclusion: Social exclusion is a multidimensional process of progressive

social rupture, detaching groups and individuals from social relations and institutions and
preventing them from full participation in the normal, normatively prescribed activities of
the society in which they live.
Social Safety Nets: Social Safety Nets are non-contributory transfer programs
seeking to prevent the poor or those vulnerable to shocks and poverty from falling below a
certain poverty level. Safety net programs can be provided by the public sector (the State
and aid donors) or by the private sector (NGOs, private firms, charities, and informal
household transfers). Safety net transfers include:

Cash transfers

Food-based programs such as supplementary feeding programs and food

stamps, vouchers, and coupons

In-kind transfers such as school supplies and uniforms

Conditional cash transfers

Price subsidies for food, electricity, or public transport

Public works

Fee waivers and exemptions for health care, schooling and utilities

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Sustainable Growth: Sustainable growth is economic growth that can continue

over the long-term without non-renewable resources being used up.
Equitable Development: Equitable development is an approach to creating
healthy, vibrant, communities of opportunity. Equitable outcomes come about when smart,
intentional strategies are put in place to ensure that low-income communities and
communities of colour participate in and benefit from decisions that shape their
neighbourhoods and regions.

6. Know your Progress

1. What do you mean by inclusive growth?
2. How do you define inclusive growth?
3. Explain how inclusive growth not only addresses the inequality issue, but also
enhances the poverty reduction agenda.
4. What are three main steps involved in an inclusive growth analytics?
5. Explain how the policies for inclusive growth are an important component of
most government strategies for sustainable growth.
6. What are the key anchors for effective inclusive growth strategy?

7. Further Reading / References

ADB.

1966. ADB Charter. Asian Development Bank, Manila.

1999. Fighting Poverty in the Asian and Pacific Region: Poverty Reduction
Strategy of the Asian Development Bank. Manila.
- 2001. Long-Term Strategic Framework 20012015. Asian Development
Bank, Manila.
- 2004a. ADF IX Donors Report. Asian Development Bank, Manila.
- 2004b. Enhanced Poverty Reduction Strategy. Asian Development Bank,
Manila.
- 2004c. Key Indicators 2004: Poverty in Asia: Measurement, Estimates,
and Prospects.
Asian Development Bank, Manila.
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2006a. ADB Perceptions Survey: Multinational Survey of Opinion

Leaders 2006. Report prepared by Princeton Survey Research Associates
International for the Asian Development Bank. Manila.
- 2006b. Key Indicators 2006. Asian Development Bank, Manila.
- 2006c. Medium-Term Strategy II 20062008. Asian Development Bank,
Manila.
-

2006d. Pathways out of Rural Poverty and the Effectiveness of Poverty

Targeting. Operations
Evaluation Department, Asian Development Bank, Manila.

- 2007a. Asian Development Outlook 2007. Asian Development Bank,

Manila.
- 2007b. Eminent Persons Group Report. Asian Development Bank, Manila.
- 2007c. Inequality in Asia. Draft. Asian Development Bank, Manila.
Ali, I. 2007. Pro-Poor to Inclusive Growth: Asian Prescriptions. ERD Policy Brief
No. 48, Economics and Research Department, Asian Development Bank, Manila.
Ali, I., and H. Son. 2007. Defining and Measuring Inclusive Growth: Application
to the Philippines. ERD Working Paper Series, Economics and Research Department,
Asian Development Bank, Manila. Forthcoming.
Bourguignon, F., F. H.G. Ferreira, and M. Walton. 2006. Equity, Efficiency and
Inequality Traps: A Research Agenda. The World Bank, Washington, DC.
The Central Committee of the Communist Party of Viet Nam. 2001. Strategy for
Socio-Economic Development 2001-2010. Hanoi.
Chaudhuri, S., and M. Ravallion. 2007. Partially Awakened Giants Uncover
Growth in China and India. In L. Alan Winters and S. Yusuf, eds., Dancing with Giants:
China, India, and the Global Economy. The World Bank, Washington, DC.
ESCAP, UNDP, and ADB. 2006. The Millennium Development Goals: Progress
in Asia and the Pacific 2006. Asian Development Bank, Manila. Available:
http://www.mdgasiapacific.org/files/shared_folder/documents/MDG-Progress2006.pdf.
Felipe, J., and R. Hasan, eds. 2006. Labor Markets in Asia: Issues and
Perspectives. London: Palgrave MacMillan for the Asian Development Bank.

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Kanbur, R. 2000. Income Distribution and Development. In A. B. Atkinson and

F. Bourguignon, eds., Handbook of Income Distribution. Amsterdam: North-Holland.
Murshed, S. H., and S. Gates. 2006. Spatial-Horizontal Inequality and the Maoist
Insurgency in Nepal. Review of Development Economics 9(1):12134.
Planning Commission of India. 2006. Towards Faster and More Inclusive
Growth: An Approach to the 11th Five Year Plan. New Delhi.
Rajan, R., and L. Zingales. 2007. The Persistence of Underdevelopment:
Constituencies and Competitive Rent Preservation. Working Paper 12093, NBER Working
Paper Series, National Bureau of Economic Research, Cambridge.
Roemer, J. E. 2006. Economic Development as Opportunity Equalization. Cowles
Foundation Discussion Paper No. 1583, Yale University, New Haven.
State Council of China. 2006. The 11th Five Year Plan of National Economy and
Social Development of Peoples Republic of China 2006-2010. Beijing.
Tandon, A., and J. Zhuang. 2007. Inclusiveness of Economic Growth in the
Peoples Republic of China: What Do Population Health Outcomes Tell Us? ERD Policy
Brief Series No. 47, Economics and Research
Department, Asian Development Bank, Manila.
UNDP. 2007. Thailand National Human Development Report 2007. United
Nations Development Programme, Bangkok.
World Bank. 2001. From Safety Net to Springboard. Washington, DC. World
Bank. 2006. Equity and Development. In World Development Report 2006. Washington,
DC.
2007. World Development Indicators Online. Available: http://ddpext.worldbank.org/ext/DDPQQ/member.do?method=getMembers&userid=1&queryId=6..
Various years. Household Income and Expenditure Survey. Washington, DC.
World Institute for Development Economic Research. 2007. World Income
Inequality Database. Available: http://www.wider.unu.edu/wiid/wiid.htm.

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8. Model Answers
1. Inclusive growth means ensuring that the economic opportunities created by
growth, are available to all - particularly the poor - to the maximum possible extent.
2. Inclusive growth by its very definition implies an equitable allocation of
resources with benefits accruing to every section of society.
3. Inclusive growth not only addresses the inequality issue, but also enhances the
poverty reduction agenda. First, the impact of growth on poverty reduction is higher when
the initial level of inequality is lower and/or inequality declines over time. Second,
inclusive growth makes poverty reduction efforts more effective by focusing on creating
productive employment opportunities and making them equally accessible for all, while
addressing extreme poverty through social safety nets and, therefore, moving away from
the targeting approach to development.
4. There are three main steps involved in an inclusive growth analytics:
(1) The first one involves a background analysis, including an
understanding of major factors explaining the countrys past growth and poverty
reduction trends and trend-breaks, overall productivity and employment dynamics
in the country, major challenges and opportunities faced, and possibilities for
economic transformation and diversification.
(2) The second one consists of putting together the profile of economic
actors, while paying attention to particular excluded groups and includes a
description of income earning activities of self- or wage-employed, distinguished
by sector, size of firm, by geographical area (e.g. rural, urban), by sub-national
unit (e.g. provincial, state and others), by type (e.g. formal or informal), and other
relevant characteristics. With the findings from these two stages it is possible to
get a picture of what activities specific groups are engaged in and to what extent
these activities have the potential for growth or if migration to other sectors are
possible in the short and the long run.
(3) In step three, one attempts to find the constraints to inclusive growth.
5. Policies for inclusive growth are an important component of most government
strategies for sustainable growth. For instance, a country that has grown rapidly over a
decade, but has not seen substantial reduction in poverty rates may need to focus
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specifically on the inclusiveness of its growth strategy, i.e. on the equality of opportunity
for individuals and firms. Other examples can be drawn from resource-rich countries.
Extractive industries usually do not employ much labour and the non-resource sectors
typically suffer contractions associated with Dutch disease effects during boom periods.
These cases may call for analysis of constraints to broad-based growth with a particular
emphasis on the non-resource sectors in the economy. Moreover, in countries starting at a
very low income level and low growth, an inclusive growth approach would be very close
to an approach for speeding up the pace of growth, as the main focus should be on getting
the fundamentals for growth right.
6. Inclusive growth which focuses on both creating economic opportunities and
ensuring equal access to them, an effective inclusive growth strategy should have two
anchors: (i) high and sustainable growth to create productive and decent employment
opportunities, and (ii) social inclusion to ensure equal access to opportunities by all.

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Block- 3: SUSTAINABLE DEVELOPMENT

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Block- 3: SUSTAINABLE DEVELOPMENT

Introduction
The development, a function and effect of so many factors and situations, is a
fascinating area of study. While economic indicators may give somewhat rosy picture but
the development might not have spread to most of areas or people and after the
intervention of the government or other players is over/ withdrawn, the situation has every
prospect of coming back to square one. Hence we talk of development, we should seriously
consider its sustainability which will ensure development at least at steady rate or even
accelerated rate since it is imperative that development should aim at social change. In
order to understand different aspects of sustainable development, this Block has been
divided into following four Units:

1. Defining development, sustainable development and rural development;

2. Basic principles of sustainable human development;
3. Dimensions of sustainability;
4. Measuring sustainable development: theory and application

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Unit- 1: Defining Development, Sustainable Development

and Rural Development

Structure
1.

Introduction

2.

Objectives

3.

Concept of Development

4.

Sustainable Development: Concept and Meaning

5.

Rural Development

6.

Summing up

7.

Keywords

8.

Know your Progress

9.

Further Reading / References

10.

Model Answers

1. Introduction
Development is an extremely complex phenomenon and an even more complex
process. It is a multifaceted concept having different connotations. Different disciplines
have given different denotations to the expression Development. Development is a term
that embraces a wide range of interpretations stemming from the multiplicity of
disciplinary perspectives, differing ideological premises, and varying usages by
development agencies -- international and national. Development, generally, denotes
progress -- social, economic, educational, cultural, scientific and technological -- brought
about by planned/programmed efforts to inaugurate an era of orderly and peaceful
transformation of a society in a desired direction.

Sustainable development is development which meets the basic needs of all,

particularly the poor majority, for employment, food, energy, water and housing, and
ensures growth of agriculture, manufactures, power and services to meet these needs. In
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that sense sustainable development merges economics and environment both in theory and
decision-making. Several other articulations consider sustainable development as a process
of development by which various environmental, economic and social benefits can be
simultaneously and concurrently maximized. These articulations suggest that sustainable
development, in short, is a blend of economic, social and ecological approaches, each of
these being indispensable and complimentary to each other.
Rural development in general is used to denote the actions and initiatives taken to
improve the standard of living in non-Urban neighbourhoods, countryside, and remote
villages. Rural development implies both the economic betterment of people as well as
greater social transformation. In order to provide the rural people with better prospects for
economic development, increased participation of people in the rural development
programmes, decentralization of planning, better enforcement of land reforms and greater
access to credit are envisaged.

In this Unit, we shall discuss the concept of development, development and

economic growth, new perspectives on development as growth plus social change,
understanding development in terms of freedom from dependency and exploitation. We
shall also understand the concept and meaning of sustainable development, underlying
principles of sustainable development, nature and concerns of sustainable development,
and essential ingredients of a model sustainable development approach. Towards the end of
this Unit, we shall examine the concept of rural development, what is a rural area, rural
development policies, strategies and programmes.

2. Objectives
After studying this Unit, you should be able to:

Understand the concept of development, sustainable development and

rural development; Analyze the evolution of the concept of inclusive
growth;

Explain the key questions and concerns of development, sustainable

development and sustainable rural development;

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Describe various policies, strategies and programmes for sustainable

development and sustainable rural development;

3. Concept of Development
Development is an extremely complex concept and an even more complex
process. Development is also considered to be a very multifaceted concept having different
connotations ascribed to it. People belonging to different disciplines have attached
different denotations to the expression development. Interestingly, the term enjoys
fascinating etymological ambivalence implying that, in the literature, it is used in both
active and medial senses; the former suggests that development is an action in order to
make something develop, and development is something that goes through a
developmental process, according to the latter. The concept of development also implies
reorganization, modification and innovation of the existing institutional structures. The
concept of development is often used in relation to a certain aim. Generally, the
development is supposed or explicitly said to go in a positive direction. The concept of
change, on the other hand, is often devoid of value judgments.
The concept of development is also used in different disciplines: biology and
other natural sciences, as well as philosophy and social sciences. But we are concerned
with human development. Also, the concept of human development has different
applications. One is the physical growth of a child from birth to maturity. But this is not
our concern. Our concern is human development as related to standard of living and
quality of life.
Development is a term that also embraces a wide range of interpretations that

stem from the multiplicity of disciplinary perspectives, differing ideological premises, and
varying usages by international and national development agencies. Differences in
viewpoint naturally exist because the people who express them are really talking about
different things. They express a wide range of optimism and pessimism about the future,
but all are worried about it and feel that something must be done and soon. Let us look
more closely at the reasons for these different interpretations of the nature of development.
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The Oxford Advanced Learners Dictionary defines development as the gradual

growth of something so that it becomes more advanced and stronger (Wehmeir, 2000).
According to Human Development Report, Development is about creating an
environment in which people can develop their full potential and lead productive, creative
lives in accordance with their needs and interests (HDR-2001 of UNDP). To Rist, the
word development can mean a state of affairs or a process; for instance some countries
are developed whereas some other are developing (Rist, 1979,p.2). According to Marshall
Wolfe, quoted by Higgins (1992:26), development consists of systematically inter-related
growth and change process in human societies, delimited by the boundaries of national
state, and highly independent on a world scale. He explains it further by saying that,
development expresses an aspiration towards a better society. However, quite a different
view of development is taken by Wolfgang Sachs (1992) who says that, development has
become a shapeless amoebae-like word. It cannot express anything because its outlines are
blurred. But it remains ineradicable because its diffusion appears benign. He who
pronounces the word denotes nothing, but claims the best of intentions. Development thus
has no content, but it does possess a function: it allows and intervention to be sanctified in
the name of a higher, evolutionary goal. It is clear from the above definitions that
development is perceived differently. However, a very simple definition of development
has been given by Benjamin Higgins (1992:27) who says, development is a process of
economic, social, and technological change by which human welfare is improved.
Anything that raises the level of human welfare contributes to development; anything that
reduces the welfare is anti-developmental, a subtraction from development.
Development theories have been associated with the concept of under-developed
countries, or developing countries. In an early phase development was considered as a
historical process following certain natural and thereby predictable principles. An
evolutionist perceives development as a gradual evolution of life in this world; for a
psychologist, development is the process of mental development of an individual;
development is the movement of population from rural to urban areas for a demographer;
an economist visualizes development in the growth in per capita, Gross National Product
(hereafter GNP).

In sociology, development essentially refers to a process of social

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change, which is planned and desired by a society. Thus, the term development has been
looked at differently and tends to assume shape according to the discipline and perspective
in question (Shukla, 1987). Though they perceive development in different ways, the
principal purpose of these different views remains the same: the incessant improvement of
the human life and knowledge. However, it is important to note here that the notion,
development may not only have functional aspects but it may possess dysfunctional
aspects since development activities have brought happiness to one section of society and
misery to another.
Philosophically speaking, there are two opposing views of development. One is a
consumerist view, and other is the liberal view. The consumerist view regards the human
being primarily as a consumer of goods and services. Basically, development is seen in
this view as an expansion of the flow of consumption. For a time, development was
identified with aggregate economic growth to bring about a progressively higher flow of
aggregate of consumption irrespective of its distribution. Gradually, the interpersonal
distribution question was raised, in terms of who benefits from such development as
consumers (the liberal view). The debate continues to this date; but the basic consumerist
view prevails.

The neo-liberals are primarily concerned with the processes that enable efficient
(i.e. least cost) utilisation of scarce productive resources and with the optimal growth of
these resources over time, so as to produce an ever-expanding range of goods and services.
They hold the view that an economy grows because it accumulates factors of production,
like physical and human capital, because its labour effort grows, or because it improves the
efficiency with which it uses the factors of production. An efficient economy maximizes the
rate of development; that is, it maximizes the rate at which gaps between the norms of
welfare accepted in a particular society and the status quo are reduced. The dominant
development discourses also associate efficiency with the conversion of labour into capital,
with the formalization of economic activities, with the indiscriminate absorption of the
newest technologies and, of course, with the maximisation of growth rates. It is, thus, clear
that the term efficiency has become a buzzword in development discourse.
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Development and economic growth

The different connotations attached to the concept of development have
undergone a drastic change over the years. Initially, the term development was used to
convey the conduit of social evolution. This is reflected in the early works of social
scientists. Implied in this perspective was the metaphor of growth. Development was thus
conceived of as organic, immanent, directional, cumulative, and irreversible. The growth
of industrial revolution and surfacing of capitalism gave rise to novel western development
thinking. The crucial ingredient of this newly floated thinking was the idea of economic
growth, reflected by the growth of GNP. This budge received further impetus in the middle
of the 20th century with the decolonisation of the several countries of the third world and
subsequent problem of their economic reconstruction. As a result, the term 'development'
embraced a strong economic connotation, so strong enough to become tantamount to
economic growth. There was an underlying assumption among the scholars that economic
growth was a sufficient and necessary condition to stimulate development in all sections of
society including those who belong to the lowest strata. It was believed that economic
advancement of one group of people would gradually trickle down to all other groups in a
society. However, the luxury items such as, refrigerators, cars, colour TV which are the
subjects of accelerated growth co-existed with massive poverty; and further that growth led
to inequalities in incomes and asset ownership (Adiseshiah,1990).

The notion then prevailed was that the critical social problems such as poverty,
inequality and unemployment would disappear with the rise in per capita income. Putting it
in different words, many social scientists considered economic growth as an independent
variable and the various other societal problems linked to underdevelopment were
dependent upon it. Enormous number of works produced during this time defined the
aspect of economic growth in terms of an aggregate prosperity, a cumulative better
standard of living, mounting per capita income, productivity of labour, the efficiency of
investment, full employment, quality of life and so on (for details see the works of Rostow,
Myrdal, Timbergem, Prebisch, and Andre Gunder Frank, Mahalnobis, Daniel Bell etc.).
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Development is growth plus social change

The early notion of treating development on par with economic growth could not
withstood the test of times as evident by the serious challenge the GNP conception
received from those who exposed the lack of correspondence between economic growth
and the satisfaction of basic human needs. In this context, Seers writes that the economic
growth (may) not merely fail to solve social problems and political difficulties, certain
types of growth can actually cause them (Seers,1979, as quoted in Shukla,1987).
Many social scientists including developmental economists have argued that
economic growth cannot be achieved unilaterally without corresponding changes in the
social, political and cultural facets of a particular society. They cited the examples of highincome societies, which were socially underdeveloped. In their view, development could
not be a mere economic phenomenon. Because the achievement of high level of economic
development by some countries has not helped to solve some of their serious social and
psychological problems, for e.g., increase of heart or mental diseases, increase rate of
divorce etc. Thus, of late, it has been realized by the social scientists that development is
not merely a measurement of economic growth but it is Social Change plus
Growth(Sharma, 1986,P.35). This resulted in the reinterpretation of development as an
endeavour to provide for the basic needs of people. The principal component in this
perspective is the fulfilment of the basic needs of people, measured in terms of the
provision of necessary services or an increase in the life chances of people. The scope of
economic development, thus, has been redefined in terms of redistribution with growth.

The ultimate purpose of development, as mentioned earlier, is to provide

increasing opportunities to all people for a better life. Development is, therefore, a human
process of transforming men and societies leading to a social order in which every human
being can achieve moral and material well-being. This new conception criticizes those
views, which defines development merely in terms of mechanical or technological
progress.

According to the view, development does not mean the construction of

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impossible physical structure, installation of complicated machines or adoption of latest

sophisticated technology. These structures, machines and technology, indeed, would not
serve their purpose if the human beings are underdeveloped and hence are lacked the
knowledge in utilizing these as a means of development. The purpose here is to reiterate
the point that development is not only economic development but also social and political
development. Development connotes both qualitative and structural changes. Indeed
development has a direct impact on the norms, the values, the psychological well-being
and life-styles of a society (Shukla, 1987:5). Development is, therefore, a complex process
and demands a critical combination of various factors to bring it about. It, therefore, calls
for an equitable distribution of income and other social resources in order to promote
justice and efficient production, to raise the level of employment, to expand and improve
facilities for education, health, nutrition, housing, social and cultural well-being (FAO as
mentioned in Mehta, 1986:36). It also demands substantial decline in racial, ethnic, and
religious inequalities, in addition to reducing regional, sectoral, and social disparities.
Having inspired by this new formulation, several national and international agencies have
reframed their developmental objectives. For instance, the UNICEFs development policy
started giving more emphasis to the provision of daily needs such as safe water, nutritious
food, vaccination, sanitation, basic education and relief of womens drudgery.

There are different views on development. One view visualizes development as

structural changes in the economy reflected in the sectoral shifts from agriculture to
industry or from the primary sector to the secondary sector. It also necessitates a change in
the labour force. Investment in skill formation, energy production, R&D development, and
technological innovation form the backbone of such a view of development.
Environmental protection is an important factor influences development and therefore
cannot be ignored, according to another view of development. It suggests that development
must not be at the cost of nations life supporting system consisting of soil, water, forest
and other natural resources.

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Development is liberation from dependency and exploitation

Of late, increasing attention came to be focused on the dependency of less
developed countries in view of the fact that the resources at the disposal of developing
countries are limited. As a result, the term development is conceived of as liberation from
dependency and exploitation, measured in terms of enhanced opportunities for the deprived
masses to obtain their just share resources. This view, thus, views development as a mean
to liberate the masses from depending on dominant classes for their survival. In their
opinion, the prevailing concepts are asymmetrical/unbalanced, as they have a propensity to
overstate one or the other dimension. Hence they argue that the term 'development' has to
be viewed in holistic terms. Accordingly, development is defined as the enhancement in
the overall quality of life encompassing as well the physical, the psychological, the social,
and cultural aspects of life. The improvement in physical quality of life implies an increase
in life expectancy, literacy, and good health and a decrease in infant mortality and death
rate. This presupposes provisions of safe drinking water, nutritious food, proper housing
and adequate medical facilities for the poorest of the poor. The improvement in the
physical plane is useful only if there is a simultaneous advancement in the psychological
plane too. The improvement in the latter entails the idea of life satisfaction including
positive mental health. An improvement in the moral quality of life means developing a
concern for others and not merely a concern for self (Sharma,1986,p.20).The psychological
quality of life is intimately tied up with the social quality of life. The improvement in the
social quality of life means an increase in the strength of family stability, interpersonal
bonds, and social solidarity.

Human development theories given below, includes the biological, social and
psychological changes that occur as humans grow and develop.

Stage and non-stage theory

Stage theorists assume that growth and development happens in terms of
definable stages generally related to age. Development differs from stage to stage which
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varies across different theories. Thus, Piaget might say that a four-year-old child can
perform certain mental functions. Obviously, there are enough individual differences to
dispute much of the thinking of the stage theorists. Non-Stage theorists view growth and
development as a continuous process. Such theorists do not categorize development into
stages i.e. not broken into definable stages. Generally such theorists stress the environment
as the major influence.
Differential emphasis of developmental theories

1. Physical growth and development can be viewed differently. Growth is because of

maturation and implies an increase in size. Development is a focus on increase in
complexity and diversity rather than just an increase in size.
2. Cognitive development theories emphasize how the intellectual processes
develop. Such theorists are more interested in how individual processes develop
rather than how individuals differ.
3. Moral development is generally an investigation of the bases for moral decision
making
4. Social development is a focus on how people develop and relate to other members
of society.
5. Personality theories are focused on traits, attitudes and behaviours and attempts to
explain those by referring to past and present environmental influences, social
conditions and genetic factors. Theorists tend to be interested in labels.
6. Learning theorists attempt to explain the factors that influence learning. Teaching
theory is largely based on learning theory.
7. Behavioural theory is focused on measurable, observable behaviour. Behaviour is
a product of the environment. Theorists tend not to label behaviour.
8. Psychoanalytic theories are focused on the unconscious influence on human
behaviour and development.

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Summing up
On the whole, development is perceived as an improvement in the overall spheres
of life. It has come to mean a planned, stimulated movement of all sectors of a social
system in the direction of the overall desired goals set by a society. The concept is,
therefore, useful in analyzing the overall progress achieved by the developing societies. It
also facilitates relative comparison among countries and helps to judge where one stands in
relation to the other. In addition, the term 'development' is used to analyze the nature and
consequence of underdevelopment, to suggest measures to develop the developing
societies, and to categorize them into traditional, transitional and modern society in terms
of economic development, including industrialization and all-embracing structural features
that set developed societies apart from traditional or less developed ones. Lastly, each
aspect of development, political, social, economic, intellectual, and emotional should be
given equal importance at the stages of conception, formulation and implementation of
development plans.

4. Sustainable Development: Concept and Meaning

The term sustainable development was widely adopted by mainstream
development agencies following the publication in 1987 of Our Common Future by the
World Commission on Environment and Development (WCED), chaired by the then prime
minister of Norway, Gro Harlem Brundtland. The WCED used the term as a unifying
theme in presenting its environmental and social concerns about worrisome trends toward
accelerated environmental degradation and social polarization in the 1970s and 1980s. It
stated that sustainable development is development that meets the needs of the present
without compromising the ability of future generations to meet their own needs.
Sustainable development is a socio-ecological process characterized by the
fulfilment of human needs while maintaining the quality of the natural environment
indefinitely. The linkage between environment and development was globally recognized
in 1980, when the International Union for the Conservation of Nature published the World
Conservation Strategy and used the term "sustainable development. The concept came into
general usage following publication of the 1987 report of the Brundtland Commission
formally, the World Commission on Environment and Development. Set up by the United
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Nations General Assembly, the Brundtland Commission coined what was to become the
most often-quoted definition of sustainable development as development that "meets the
needs of the present generation without compromising the ability of future generations to
meet their own needs.
Sustainable development does not focus solely on environmental issues. More
broadly, sustainable development policies encompass three general policy areas: economic,
environmental and social. In support of this, several United Nations texts, most recently the
2005 World Summit Outcome Document, refer to the "interdependent and mutually
reinforcing pillars" of sustainable development as economic development, social
development, and environmental protection.
Sustainable development is maintaining a delicate balance between the human
need to improve lifestyles and feeling of well-being on one hand, and preserving natural
resources and ecosystems, on which we and future generations depend.
Sustainable Development: Underlying Principles/Premises
Some of the principles/premises underlying the concept of sustainable
development are:

1. That it is an alternative design for development, which, by definition should be

environmentally benign and eco-friendly.
2. That the present generation should meet its needs without com- promising the
ability of future generations to meet their needs, i.e., to ensure that the productive
assets available to future generations are not unfairly diminished.
3. That those who enjoy the fruits of economic development today must not make
future generations worse off by excessively de- grading the earth's exhaustible
resources and polluting the earth's ecology and environment.
4. That there is a symbiotic relationship between consumerist human race and
producer natural systems.

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5. That environment and development are not mutually exclusive-healthy

environment is essential to sustainable development and healthy economy.
6. That economic development which erodes natural capital is often not successful.
7. That environmental mistakes of the past need not be repeated, as past patterns of
environmental degradation are not inevitable.
8. That development is not growth only, it should stand for broader goals of social
transformation.
9. That sustainable development in the long run has to do with ecology, resources
and people, along with their service agencies, institutions and other aspects of
their social organization.
10. That sustainable development has two major aspects - internally sustainable
development and externally sustainable development - without both, no real
sustainable development would exist.
11. That sustainable development is accountable to the poor, and hence, it should
ensure that the poor have adequate access to sustainable and secure livelihoods.

Nature of our Concern for Sustainable Development

While it is arguable that sustainable development, as we are talking about these
days, is not a new-found revelation, it is, however, true that more recent discussions on it
are the result of the Rio Conference in 1992, which provided a blue-print for moving
towards an alternative vision of development that represents the coming together of
different concerns. After Rio Declaration, known as 'Earth Charter', we have started
becoming more serious in our discussions and debate which seek to establish a basis in
principle for guiding the state in formulating sustainable development policies that balance
environ- mental safeguards with the satisfaction of human needs in contemporary times.
With the coming of the concept of sustainable development, the development debate is not
dominated by economists alone; it has other participants too-the environmentalists, the
sociologists and a host of citizen groups playing their role in the development arena.

The current concern for sustainable development is rooted in the firm realization
that the bounties of nature are drying up and there is going to be an acute scarcity of basic
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resources. The rampage of technology has killed the feeling of continued abundance. The
folly of reckless environmental degradation is finally being realized, and the elitist technoeconomic model of development is being increasingly questioned. The environmentalists
parade the frightening facts and warn us that no issue seems to be more central and vital
today than the protection of the environment. If timely action is not taken the time will run
out, and we will sit on an ash-pile of degraded environment. The critiques of development
also ring the alarming bells, not only for conveniently ignoring the environmental
considerations in the development planning, but also for the distortions of development,
i.e., unjust and iniquitous development.
The facts they present are highly disturbing:

More than 200 million people in the country live below the poverty line.

More than 200 million people have no access to safe drinking water.

More than 500 million people have no access to proper sanitation.

More than 150 million people are without proper shelter.

More than 500 million people are illiterate.

More than a million children die each year before they see their first
birthday.

In the face of such a grim scenario, the question 'development for whom'
needs an honest answer. There is no place here to present a detailed critique of
development. But a one-line statements necessary-that development has failed the poor,
and they need a development which is participatory, equitous and which is infused with
strong considerations of social justice. Labels of such a development, sustainable, or
whatever, do not matter to the poor, what matters is the equitability; call it sustainability, if
you like.
This is the backdrop that constitutes real the concern of the current debates and
discussions on sustainable 'development. The concern is also related to:

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1. global and transnational nature of threats (for example, climate change, ozone
layer depletion);
2. degradation of natural habitats (for example, forests and other eco-systems);
3. depletion of non-renewable natural resources (for example, stock of water,
soil, minerals, wilderness areas);
4. diminution of land for agricultural purposes;
5. pollution of rivers, ponds and other water sources; and
6. environmental pollution in urban industrial areas, especially in large cities.

The current explorations on sustainable development in our midst today exemplify

an approach that will permit continuing improvements in the present quality of life at a
lower intensity of resource use, thereby leaving behind for future generations an
undiminished or even enhanced stock "of natural resources and other assets. The search is
basically on for that process of development by which people develop themselves and their
institutions in ways that enhance their ability to mobilize and manage available resources
to produce sustainable and justly distributed improvements in the quality of life, consistent
with their own aspirations.
Essential Ingredients for our Model of Sustainable Development
For us (in India), sustainable development is both a challenge and an opportunity.
The obstacles are, however, great and making the concept of sustainability precise, is
difficult. It is not possible to argue that there should be zero use of natural resources for
development; successful development will inevitably involve some amount of depletion of
natural resources, resulting in environmental damage. Further, policies and programmes of
accelerating environmentally responsible development will not happen by themselves. It is,
there- fore, important to seize the current opportunity to bring about real, if not radical,
change. The challenge can be converted into opportunity when due consideration is given
to its essential ingredients, some of which are identified here.

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Recognising the Complementarily of Economic Development and Sound

Environmental Management
Economic development and sound environmental management are complimentary
aspects of the same agenda (World Bank, 1992: 25). Without adequate environmental
protection, development will be undermined; and, without development, environmental
protection will fail. Across the globe, there is growing consensus that policies of both
economic growth and environmental management are not much in conflict with each other;
they are more often complimentary. Good economic policies are good environment
policies and vice versa, say World Development Report (1992). Economic growth need not
be an enemy of environment, and the best policies for environmental protection will help,
not hurt, economic development (World Bank, 1992: 178).
Planning and Providing for the Basic Needs of the Poor
For the poor, environment is an integral part of development. In their
impoverished stale, the poor depend on the environment for their livelihood and
sustenance. With few assets on which they can draw upon, the poor have no choice but to
excessively degrade natural re- sources. They have to meet their urgent, short-term needs
by preying upon the natural resources available in their surrounding environment. They
care more about extracting what they can do today from environmental resources, than
about conserving them for tomorrow; the result is often the very opposite of sustainability,
with excessive exploitation of their natural habitat.
In the process of meeting their basic needs through over-exploitation of natural
resources, the poor become both the victims and agents of environmental damage. The
rural poor resort to cultivating erosion prone land-sides and moving into tropical forest
areas where crop yields on cleared fields usually drop sharply after a few years. They
'mine' natural capital through, for example, excessive felling of trees for firewood,
polluting rivers and ponds and over-using some of the exhaustible and non-renewable
natural resources. While the basic needs of the poor are partly met by excessive
exploitation of natural resources within their reach, the poor usually bear the brunt of
environmental degradation. They may also be the ones who suffer most when forests,
which provide them free fuel and cattle feed are logged, or, when factories pollute rivers
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that provide them water, fish, etc. The poor, in this process, become the victim of 'other
people's' dam- age to environment. To make development sustainable, what is therefore
required is strong poverty alleviation strategy that meets the basic needs of the poor (called
'safety net'), and empower them in a manner which reduces their direct dependence on
natural resources. Alleviating poverty is both a moral imperative and a requisite for
environmental sustainability (World Bank, 1992:30), and there exist substantial synergies
between alleviating poverty and protecting environment.
Dovetailing Development Planning with Measures Aimed at Population Control
Like poverty, rapid population growth is a serious constraint on sustainable
development. Population growth offsets development gains. It exacerbates the mutually
reinforcing effects of poverty and environmental damage. Rapid population growth puts
too much pressure on precious natural resources like water, air, energy, forests land and
ecology. Population growth also increases the demand for goods and services and implies
increased environmental damage. More people not only consume more resources, but also
produce more wastes, threatening local health conditions and implying additional stress on
earth's assimilative capacity. In our context, the issue of population control is of
fundamental importance if planning for sustainable development is to make much
headway. Without population control sustainable development is neither possible nor
feasible, however great may be the efforts.
Making Considerations of 'Social Justice' Enter into Strategies of Sustained
Economic Growth
Equity and social justice are avowed objectives of sustainable development. It is
in the backdrop of this objective that sustainable development has been viewed 'as a
development with a 'humane face', a development that humanizes rather than dehumanizes.
It has also been viewed as a development that puts the last first. In short, sustainable
development is equitable development, the development that does not bypass the poor, and
does not deceive the disadvantaged. It is the development that takes due care of the
weakest and the most deprived; a development that is economically more just, more
humane and that which promotes human welfare. Sustainable development, as Gale

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(1991:230) argued is three-pronged construct-economic construct, environmental construct

and social construct. As a social construct, it, among other things, implies the following:

that access to resources and the distribution of costs and benefits must be
fair and equitable to both rich and poor;

that development must be appropriate to the status and concerns of the

local people, especially for those living in conditions of extreme
marginality; and

that the decision-making should be participatory, liberating, collaborative

and consensus-building.

If these three conditions are to be met, the considerations of 'social justice' should
effectively enter into the formulation and implementation of strategies aimed at sustainable
development, which, by all means, is a socially infused development, talking and taking
care of those who presently stand disillusioned at the current pace and processes of
industrial/technical/economic growth, which is capitalistic in character and elitist in its
approach. The only sobering conclusion is that as long as economic development does not
become equitably distributive development, it cannot maintain its sustainability.
Attending to Problems Created by Accelerated Pace of Industrialisation and
Urbanisation
There is a lot of breast-beating on sustainable development in the quarters that
play a major role in the planning and execution of economic growth and industrial
expansion, there is little regard to at- tending to the problems arising out of the pace and
processes of industrial growth. While there is no dispute about the need for
industrialization, the cause of worry is the environmental degradation on a frightening
scale. The industrial units, no matter big or small, are pollutant in nature. Most of these
units flout the regulatory controls with impunity and care little about the problems of
pollution they create in the short and long run. The obsession with growth-oriented strategy
has side-tracked the vital issues of environmental protection and desirable modes of
production. Besides problems of pollution, there is another awesome problem of industrial

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growth, namely, the problem of "project displaced persons" (PDPs). There are many
instances of development projects-factories, mines and dams-that have resulted in bringing
untold misery to poor people whose land has been acquired in the name of 'public interest'
without paying adequate market price. The oustees are always those people for whose
interests nobody cares. The pet argument is that displacement and human sacrifices are
always unavoidable in economic development.
The mad rush to cities, i.e., the menacing pace of urbanization, the booming of
cities and towns, has created mounting problems of sewage disposal, environmental
sanitation, scarcity of space, paucity of safe drinking water, congestion on roads, sprouting
of big slums and squatter colonies, large number of motor vehicles causing deafening noise
and immense air pollution, and conversion of agricultural lands into habitation lands. The
crisis of cities is growing each day, and the pattern of urbanisation seems frightening.
There are no easy answers to the twin problems of industrialization, and
urbanization. These are linked with different models of growth that we have pursued in the
past five decades. The Gandhian strategy of economic development may perhaps provide a
solution. If that be so, robust revival of village-based small and medium cottage industries
and highest priority to rural development, seem to be the promising areas of planning.

5.

Rural Development
India lives in its villages. If villages perish, India too perishes

- Mahatma Gandhi
Rural Development is the key to Indias economic transformation as a majority of
its population live in the rural areas. Mahatma Gandhi said that India lives in its villages
and destruction of these villages will lead to Indias destruction. Hence, the focus is more
on development of rural areas in all planning efforts.

In very broad terms, Indias economic development is inextricably linked to that

of Indias rural economic development. Rural India has around 70% of Indias billion plus
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population. Rural India consists of approximately 638,000 villages inhabited by more than
740 million individuals. The core problems of widespread poverty, growing inequality,
rapid population growth, growing and rising unemployment all find their origins in the
stagnation and often retrogression of economic life in rural areas. Most social and
economic indicators consistently show that rural areas compare unfavourably with urban
areas. It is at the rural level that the problems of hunger, ignorance, ill health and high
mortality are most acute. Therefore, if development is to take place and become selfsustaining, it will have to be rooted and concentrated in the rural areas.
Challenges of Rural Development

Only 2.4 million so-called below the poverty line (BPL) or poor households
have been provided with an electricity connection. By 2009, this number will
rise to six million; the target was 23 million.

About 50 percent of the villages are without roads.

Only 66% per cent of the Indian people are literate (76% of men and 54% of
women).

While close to 90 per cent children in the 6-11 age group are formally enrolled
in primary schools, nearly 40 per cent drop out at the primary stage. The
enrolment ratios of Scheduled Caste (SC), Scheduled Tribe (ST) and Muslim
children (especially girls) still remain far lower than the national average.

1.36 crore (40 per cent) children in the age group of 6-14 years remained out
of school as on March 2005, four years after the launch of the Sarva Shiksha
Abhiyan (Education for All).

Half of Indias schools have a leaking roof or no water supply, 35% have no
blackboard or furniture, and close to 90 per cent have no functioning toilets.

The official teacher-student norm is 1:40, yet in some states classes average is
one teacher per 80 children. The prescribed norm of a school being available
within the radius of one kilometre is still not being fulfilled.

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69.5 percent of children in the age group of six to 59 months are suffering
from anaemia of which 63 percent are in the urban areas and 71.5 percent in
the rural areas.

Malnutrition, hunger and poor health remain core problems, which

comprehensively affect attendance and performance in classes. The added
burden of home chores and child labour influence a large number of children,
especially girls, to drop out of school.

India accounts for more than 20% of global maternal and child deaths, and the
highest maternal death toll in the world estimated at 138,000.

United Nations calculations show that Indias spending on public health

provision, as a share of GDP is the 18th lowest in the world.

Nearly 67% of the population in India do not have access to essential

medicines.

Infant Mortality Rate (IMR) in India was 67.6 in 1998-99 and has come down
to 57 in 2005-06. Kerala heads the progress made so far with an IMR of
15/1000 births. Uttar Pradesh has the worst IMR in the country of 73/1000
births.

Maternal Mortality Rate (MMR) is currently 4 deaths per 1000 births. India
accounts for the largest number of maternal deaths in the world.

79% of the children between the age of 6-35 months, and more than 50% of
women, are anaemic, and 40% of the maternal deaths during pregnancy and
child-birth relate to anaemia and under-nutrition.

There are 585 rural hospitals compared to 985 urban hospitals in the country.
Out of the 6,39,729 doctors registered in India, only 67,576 are in the public
sector.

The ratio of hospital beds to population in rural areas is almost fifteen times
lower than that for urban areas

Only around 6,000 community healthcare centres have specialists - a far cry
against the stated requirement of at least 21,000 professionals.

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Population and Household Profile

Profile

Total

Urban

Population age 6+ that is literate (%)

67.6

81.0

61.3

Households by residence (%)

100.0

32.6

67.4

4.8

4.6

4.9

Have electricity

67.9

93.1

55.7

Use piped drinking water

42.0

71.0

27.9

Have access to a toilet facility

44.5

83.1

25.9

Live in a pucca(brick) house

41.4

74.1

25.5

Have a motorized vehicle

18.6

31.9

12.1

Have a television

44.2

73.2

30.1

Own agricultural land

45.6

19.0

58.5

Mean household size

Rural

Percentage of households that:

Source: The 2005-2006 National Family Health Survey (NFHS-3)

India has been a welfare state ever since her Independence and the primary
objective of all governmental endeavors has been the welfare of its millions. Planning has
been one of the pillars of the Indian policy since independence and the countrys strength is
derived from the achievement of planning. The policies and programmes have been
designed with the aim of alleviation of rural poverty which has been one of the primary
objectives of planned development in India. It was realized that a sustainable strategy of
poverty alleviation has to be based on increasing the productive employment opportunities
in the process of growth itself. Elimination of poverty, ignorance, diseases and inequality
of opportunities and providing a better and higher quality of life were the basic premises
upon which all the plans and blue-prints of development were built.
Rural development aims at improving rural peoples livelihoods in an equitable
and sustainable manner, both socially and environmentally, through better access to assets
(natural, physical, human, technological and social capital), and services, and control over
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productive capital (in its financial or economic and political forms) that enable them to
improve their livelihoods on a sustainable and equitable basis.
The basic objectives of Rural Development Programmes have been alleviation of
poverty and unemployment through creation of basic social and economic infrastructure,
provision of training to rural unemployed youth and providing employment to marginal
Farmers/Labourers to discourage seasonal and permanent migration to urban areas.
Rural development implies both the economic betterment of people as well as
greater social transformation. In order to provide the rural people with better prospects
for economic development, increased participation of people in the rural development
programmes, decentralization of planning, better enforcement of land reforms and greater
access to credit are envisaged.
Initially, main thrust for development was laid on agriculture industry,
communication, education, health and allied sectors but later on it was realized that
accelerated development can be provided only if governmental efforts are adequately
supplemented by direct and indirect involvement of people at the grass root level.
Accordingly, on 31st March 1952, an organization known as Community Projects
Administration was set up under the Planning Commission to administer the programmes
relating to community development.

The community development programme

inaugurated on October 2, 1952, was an important landmark in the history of the rural
development. This programme underwent many changes and was handled by different
Ministries.
In October 1974, the Department of Rural Development came into existence as a
part of Ministry of Food and Agriculture. On 18th August 1979, the Department of Rural
Development was elevated to the status of a new Ministry of Rural Reconstruction. That
Ministry was renamed as Ministry of Rural Development on 23rd January 1982.

In

January 1985, the Ministry of Rural Development was again converted into a Department
under the Ministry of Agriculture and Rural Development which was later rechristened as
Ministry of Agriculture in September 1985. On July 5, 1991 the Department was upgraded

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as Ministry of Rural Development. Another Department viz. Department of Wasteland

Development was created under this Ministry on 2nd July 1992. In March 1995, the
Ministry was renamed as the Ministry of Rural Areas and Employment with three
departments namely Department of Rural Employment and Poverty Alleviation, Rural
Development and Wasteland Development.
Again, in 1999 Ministry of Rural Areas and Employment was renamed as
Ministry of Rural Development. This Ministry has been acting as a catalyst effecting the
change in rural areas through the implementation of wide spectrum of programmes which
are aimed at poverty alleviation, employment generation, infrastructure development and
social security. Over the years, with the experience gained, in the implementation of the
programmes and in response to the felt needs of the poor, several programmes have been
modified and new programmes have been introduced. This Ministrys main objective is to
alleviate rural poverty and ensure improved quality of life for the rural population
especially those below the poverty line.

These objectives are achieved through

formulation, development and implementation of programmes relating to various spheres

of rural life and activities, from income generation to environmental replenishment.
In order to ensure that the fruits of economic reform are shared by all sections of
societies five elements of social and economic infrastructure, critical to the quality of life
in rural areas, were identified. These are health education drinking water, housing and
roads. To impart greater momentum to the efforts in these sectors the Government had
launched the Pradhan Mantri Gramodaya Yojana (PMGY) and the Ministry of Rural
Development was entrusted with the responsibility of implementing drinking water,
housing and rural roads component of PMGY
During the Ninth Plan period, several anti-poverty Programmes have been
restructured to enhance the efficiency of the Programmes for providing increased benefits
to the rural poor. Self Employment Programmes have been revamped by merging the
Integrated Rural Development Programme (IRDP), the Development of Women and
Children in Rural Areas (DWCRA), the Supply of Improved Tool-Kits to Rural Artisans
(SITRA), the Training of Rural Youth for Self Employment (TRYSEM), the Ganga
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Kalyan Yojana (GKY)- Ganga Welfare Scheme and the Million Wells Scheme (MWS)
into a holistic self-employment scheme called Swarnjayanti Gram Swarozgar Yojana
(SGSY)- Golden Jubilee Rural Self Employment Scheme.
Keeping in view the needs and aspirations of the local people, Panchayati Raj
Institutions have been involved in the programme implementation and these institutions
constitute the core of decentralized development of planning and its implementations. The
Ministry is also vigorously pursuing with the State Governments for expeditious
devolution of requisite administrative and financial powers to PRIs as envisaged under
73rd amendment act of the Constitution of India. On 25th December 2002, under Drinking
Water Sector, a new initiative Swajal Dhara empowering the Panchayats to formulate,
implement, operate and maintain Drinking Water Projects has been launched. In order to
further involve PRIs in the development process, a new initiative Hariyali has been
launched by Honble Prime Minister on 27th January, 2003. Hariyali has been launched to
strengthen and involve Panchayati Raj Institutions in the implementation of Watershed
Development Programmes namely IWDP, DPAP and DDP.
The empowerment of rural women is crucial for the development of rural India.
Bringing women into the mainstream of development is a major concern for the
Government of India. Therefore, the programmes for poverty alleviation have a womens
component to ensure flow of adequate funds to this section. The Constitutional (73rd)
Amendment, Act 1992 provides for reservation of selective posts for women.

The

Constitution has placed enormous responsibility on the Panchayats to formulate and

execute various programmes of economic development and social justice, and a number of
Centrally Sponsored Schemes are being implemented through Panchayats. Thus, women
Members and Chairpersons of Panchayats, who are basically new entrants in Panchayats,
have to acquire the required skill and be given appropriate orientation to assume their
rightful roles as leaders and decision makers.
To impart training for elected representatives of PRIs is primarily the
responsibility of the State Governments/Union Territory Administrations. Ministry of
Rural Development also extends some financial assistance to the States/UTs with a view to
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improve the quality of training programmes and to catalyze capacity building initiatives for
the PRI elected members and functionaries.
This Ministry is a nodal department for the two international organizations
viz., the Centre on Integrated Rural Development of Asia and the Pacific (CIRDAP) and
the Afro-Asian Rural Development Organization (AARDO).
The Ministry consists of the following three Departments:
1.

Department of Rural Development

2.

Department of Land Resources

3.

Department of Drinking Water Supply

The Department of Rural Development implements schemes for generation of self

employment and wage employment, provision of housing and minor irrigation assets to
rural poor, social assistance to the destitute and Rural Roads.

Apart from this, the

Department provides the support services and other quality inputs such as assistance for
strengthening of DRDA Administration, Panchayati raj institutions, training & research,
human resource development, development of voluntary action etc. for the proper
implementation of the programmes. The major programmes of the Department of Rural
Development are Pradhan Mantri Gram Sadak Yojana, (PMGSY), Rural Housing (RH)
Sampoorna Gramin Rozgar Yojana (SGRY) and Swaranjayanti Gram Swarozgar Yojana
(SGSY). The Mahatma Gandhi National Rural Employment Guarantee Act aims at
enhancing the livelihood security of people in rural areas by guaranteeing hundred days of
wage-employment in a financial year to a rural household whose adult members volunteer
to do unskilled manual work.
Department of Land Resources implements schemes to increase the bio-mass
production by developing wastelands in the country. Department also provides the support
services and other quality inputs such as land reforms, betterment of revenue system and
land records. It also undertakes development of desert areas and drought prone areas in the
country. The major programmes of the Department of Land Resources are Drought Prone

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Area Programme (DPAP) The Desert Development Programme (DDP) the Integrated
Wasteland Development Programme (IWDP) and Land Reforms (LR). These aim at
increasing the soil and moisture conservation and productivity of the wasteland of the
degraded lands thereby increase the income of the people.
The provision of Drinking Water Supply and extension of Sanitation facilities to
the rural poor are the main components of the activities of the Department of Drinking
Water Supply. The major programmes of the Drinking Water Supply Department are The
Swajaldhara, the Accelerated Rural Water Supply Programme (ARWSP) and the Total
Sanitation Programme (TSP).
However, various ministries in the central government are engaged directly or
indirectly for implementation of many programmes and schemes for the development of
rural areas like Ministries of Agriculture, Health and Family Welfare, New and Renewable
Energy, Science and Technology, Women and Child Development and Tribal affairs etc. In
addition, to strengthen the grass root level democracy, the Government is constantly
endeavoring to empower Panchayat Raj Institutions in terms of functions, powers and
finance. Grama Sabha, NGOs, Self-Help Groups and PRIs have been accorded adequate
roles to make participatory democracy meaningful and effective.
Strategies and programs for rural development
The rural economy is an integral part of the overall Indian economy. As majority
of the poor reside in the rural areas, the prime goal of rural development is to improve the
quality of life of the rural people by alleviating poverty through the instrument of selfemployment and wage employment programmes, by providing community infrastructure
facilities such as drinking water, electricity, road connectivity, health facilities, rural
housing and education and promoting decentralization of powers to strengthen the
Panchayati raj institutions etc. The various strategies and programs of the Government for
rural development are discussed below:
Integrated Rural Development Program (IRDP): First introduced in 1978-79,
IRDP has provided assistance to rural poor in the form of subsidy and bank credit for
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productive employment opportunities through successive plan periods. Subsequently,

Training of Rural Youth for Self Employment (TRYSEM), Development of Women and
Children in Rural Areas (DWCRA), Supply of Improved Tool Kits to Rural Artisans
(SITRA) and Ganga Kalyan Yojana (GKY) were introduced as sub-programs of IRDP to
take care of the specific needs of the rural population.
Wage Employment Programs: Anti-poverty strategies, like assistance to the rural
poor families to bring them above the poverty line by ensuring appreciable sustained level
of income through the process of social mobilization, training and capacity building. Wage
Employment Programs have sought to achieve multiple objectives. They not only provide
employment opportunities during lean agricultural seasons but also in times of floods,
droughts and other natural calamities. They create rural infrastructure which supports
further economic activity. It encompasses Swarnjayanti Gram Swarozgar Yojana (SGSY),
Sampoorna Grameen Rozgar Yojana (SGRY) and Mahatma Gandhi National Rural
Employment Guarantee Act etc. NREGA is an Act of parliament. It is not merely a scheme
or policy. It aims at enhancing the livelihood security of the people in rural areas by
guaranteeing hundred days of wage employment in a financial year, to a rural household
whose members volunteer to do unskilled manual work. The objective of the Act is to
create durable assets and strengthen the livelihood resource base of the rural poor.
Employment Assurance Scheme (EAS): EAS was launched in October 1993
covering 1,778 drought-prone, desert, tribal and hill area blocks. It was later extended to all
the blocks in 1997-98. The EAS was designed to provide employment in the form of
manual work in the lean agricultural season. The works taken up under the program were
expected to lead to the creation of durable economic and social infrastructure and address
the felt-needs of the people.
Food for Work Program: The Food for Work program was started in 2000-01 as
a component of the EAS in eight notified drought-affected states of Chattisgarh, Gujarat,
Himachal Pradesh, Madhya Pradesh, Orissa, Rajasthan, Maharastra and Uttaranchal. The
program aims at food provision through wage employment. Food grains are supplied to

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states free of cost. However, lifting of food grains for the scheme from Food Corporation
of India (FCI) godowns has been slow.
Rural Housing: Initiated in 1985-86, the IAY is the core program for providing
free housing to families in rural areas. It targets scheduled castes (SCs)/scheduled tribes
(STs), households and freed bonded labourers. The rural housing program has certainly
enabled many BPL families to acquire pucca houses. The coverage of the beneficiaries is
limited given the resource constraints. The Samagra Awas Yojana (SAY) was taken up in
25 blocks to ensure convergence of housing, provision of safe drinking water, sanitation
and common drainage facilities. The Housing and Urban Development Corporation
(HUDCO) has extended its activities to the rural areas, providing loans at a concessional
rate of interest to economically weaker sections and low-income group households for
construction of houses.
Social Security Programs: Democratic decentralization and centrally supported
Social Assistance Programs were two major initiatives of the government in the 1990s. The
National Social Assistance Program (NSAP), launched in August 1995 marks a significant
step towards fulfilment of the Directive Principles of State Policy. The NSAP has three
components: a) National Old Age Pension Scheme (NOAPS); b) National Family Benefit
Scheme (NFBS); c) National Maternity Benefit Scheme (NMBS). The NSAP is a centrallysponsored program that aims at ensuring a minimum national standard of social assistance
over and above the assistance that states provide from their own resources. The NOAPS
provides a monthly pension of Rs. 75 to destitute BPL persons above the age of 65. The
NFBS is a scheme for BPL families who are given Rs. 10,000 in the event of the death of
the breadwinner. The NMBS provides Rs. 500 to support nutritional intake for pregnant
women. In addition to NSAP, the Annapurna scheme was launched from 1st April 2000 to
provide food security to senior citizens who were eligible for pension under NOAPS but
could not receive it due to budget constraints.
Land Reforms: In an agro-based economy, the structure of land ownership is
central to the wellbeing of the people. The government has strived to change the ownership
pattern of cultivable land, the abolition of intermediaries, the abolition of zamindari,
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ceiling laws, security of tenure to tenants, consolidation of land holdings and banning of
tenancy are a few measures undertaken. Furthermore, a land record management system is
a pre-condition for an effective land reform program. In 1987-88, a centrally-sponsored
scheme for Strengthening of Revenue Administration and Updating of Land Records (SRA
& ULR) was introduced in Orissa and Bihar.

6. Summing up
The early notion of treating development on par with economic growth could not
withstood the test of times as evident by the serious challenge the GNP conception
received from those who exposed the lack of correspondence between economic growth
and the satisfaction of basic human needs. Many social scientists including developmental
economists have argued that economic growth cannot be achieved unilaterally without
corresponding changes in the social, political and cultural facets of a particular society. The
ultimate purpose of development, as mentioned earlier, is to provide increasing
opportunities to all people for a better life. Development is, therefore, a human process of
transforming men and societies leading to a social order in which every human being can
achieve moral and material well-being. On the whole, development is perceived as an
improvement in the overall spheres of life. It has come to mean a planned, stimulated
movement of all sectors of a social system in the direction of the overall desired goals set
by a society.
Sustainable development is a socio-ecological process characterized by the
fulfilment of human needs while maintaining the quality of the natural environment
indefinitely. The linkage between environment and development was globally recognized
in 1980, when the International Union for the Conservation of Nature published the World
Conservation Strategy and used the term "sustainable development. The concept came into
general usage following publication of the 1987 report of the Brundtland Commission formally, the World Commission on Environment and Development. Set up by the United
Nations General Assembly, the Brundtland Commission coined what was to become the
most often-quoted definition of sustainable development as development that "meets the
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needs of the present generation without compromising the ability of future generations to
meet their own needs.
Rural development aims at improving rural peoples livelihoods in an equitable
and sustainable manner, both socially and environmentally, through better access to assets
(natural, physical, human, technological and social capital), and services, and control over
productive capital (in its financial or economic and political forms) that enable them to
improve their livelihoods on a sustainable and equitable basis.
The basic objectives of Rural Development Programmes have been alleviation of
poverty and unemployment through creation of basic social and economic infrastructure,
provision of training to rural unemployed youth and providing employment to marginal
Farmers/Labourers to discourage seasonal and permanent migration to urban areas.
Rural development implies both the economic betterment of people as well as
greater social transformation. In order to provide the rural people with better prospects for
economic development, increased participation of people in the rural development
programmes, decentralization of planning, better enforcement of land reforms and greater
access to credit are envisaged.

7. Keywords
Equity and social justice: Equity and social justice are avowed objectives of
sustainable development. It is in the backdrop of this objective that sustainable
development has been viewed 'as a development with a 'humane face', a development that
humanizes rather than dehumanizes. It has also been viewed as a development that puts the
last first. In short, sustainable development is equitable development, the development that
does not bypass the poor, and does not deceive the disadvantaged. It is the development
that takes due care of the weakest and the most deprived; a development that is
economically more just, more humane and that which promotes human welfare.

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Neo-liberals: The neo-liberals are primarily concerned with the processes that
enable efficient (i.e. least cost) utilisation of scarce productive resources and with the
optimal growth of these resources over time, so as to produce an ever-expanding range of
goods and services.
Opposing views of development: there are two opposing views of development.
One is a consumerist view, and other is the liberal view. The consumerist view regards the
human being primarily as a consumer of goods and services. For a time, development was
identified with aggregate economic growth to bring about a progressively higher flow of
aggregate of consumption irrespective of its distribution. Gradually, the interpersonal
distribution question was raised, in terms of who benefits from such development as
consumers (the liberal view). The debate continues to this date; but the basic consumerist
view prevails.
Stage and non-stage theory: Stage theorists assume that growth and
development happens in terms of definable stages generally related to age. Non-Stage
theorists view growth and development as a continuous process. Such theorists do not
categorize development into stages i.e. not broken into definable stages.

8. Know your Progress

1)
2)

Define development and explain the concept of development.

Describe the different views on development.

3)

Explain the concept and meaning of sustainable development.

4)

What is the nature of our concerns for sustainable development?

5)

Explain the aims and objectives of rural development?

6)

What are the prime goals of rural development?

9. Further Readings / References

Streeten, Paul , with Shahid Burki, Mahbub Ul Haq, Norman Hicks, and Frances
Stewart (1981).

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First Things First: Meeting Basic Human Needs in the Developing Countries.
Published for the World Bank. New York and Oxford: Oxford University Press.
Norgaard, Richard B. (1994 ). Development Betrayed: The End of Progress and a
Coevolutionary
Revisioning of the Future, p. 2. New York and London: Routledge.

World Commission on Environment and Development (1987). Our Common

Future.
Holmberg ed. (1992), Making Development Sustainable, Chapter 1; Reed ed.
(1997),
Structural Adjustment, the Environment and Sustainable Development, Chapter 2.
Bossell, Hartmut, ed. (1999). Indicators for Sustainable Development: Theory,
Method,
Applications: A Report to the Balaton Group, p.2. Winnipeg, Canada:
International Institute for
Sustainable Development (IISD).
Anand, Sudhir and Amartya K. Sen (1996) Sustainable Human Development:
Concepts and
Priorities. United Nations Development Programme, Office of Development
Studies Discussion Paper Series.
United Nations Development Programme, Human Development Report (19901998).
IFAD (2001), Rural Poverty Report 2001. The Challenge of Ending Rural
Poverty, Oxford
University Press, Oxford.
Ravallion, Martin and Guarav Datt (1996), How Important to India's Poor Is the
Sectoral
Composition of Economic Growth?, World Bank Economic Review 10(1), pp. 125.
Ravallion, Martin and Chen, Shaohua (2003) Measuring Pro-Poor Growth,
Economics
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Letters, 78(1), 93-99.

Ruttan, Vernon W. (1984), Integrated Rural Development Programmes: A
Historical
Perspective World-Development, World Development, 12(4), pp. 393-401.
World Bank (1997), Rural Development: From Vision to Action, ESD Studies and
Monographs Series. Washington DC.
World Bank (2003), Reaching the Rural Poor. A Renewed Strategy for Rural
Development,
Washington DC.

10. Model Answers

1.

Development is a process of economic, social, and technological change

by which human welfare is improved. Anything that raises the level of human welfare
contributes to development; anything that reduces the welfare is anti-developmental, a
subtraction from development.
Development is an extremely complex concept and an even more complex
process. Development is also considered to be a very multifaceted concept having different
connotations ascribed to it. In an early phase development was considered as a historical
process following certain natural and thereby predictable principles. An evolutionist
perceives development as a gradual evolution of life in this world; for a psychologist,
development is the process of mental development of an individual; development is the
movement of population from rural to urban areas for a demographer; an economist
visualizes development in the growth in per capita, Gross National Product (GNP). In
sociology, development essentially refers to a process of social change, which is planned
and desired by a society. Thus, the term development has been looked at differently and
tends to assume shape according to the discipline and perspective in question. Though they
perceive development in different ways, the principal purpose of these different views
remains the same: the incessant improvement of the human life and knowledge.

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2.

Philosophically speaking, there are two opposing views of development.

One is a consumerist view, and other is the liberal view. The consumerist view regards the
human being primarily as a consumer of goods and services. Basically, development is
seen in this view as an expansion of the flow of consumption. Basically, development is
seen in this view as an expansion of the flow of consumption. For a time, development was
identified with aggregate economic growth to bring about a progressively higher flow of
aggregate of consumption irrespective of its distribution. Gradually, the interpersonal
distribution question was raised, in terms of who benefits from such development as
consumers (the liberal view). The debate continues to this date; but the basic consumerist
view prevails.

3.

Sustainable development is development that meets the needs of the

present without compromising the ability of future generations to meet their own needs.
Sustainable development is a socio-ecological process characterized by the fulfilment of
human needs while maintaining the quality of the natural environment indefinitely.
Sustainable development is maintaining a delicate balance between the human need to
improve lifestyles and feeling of well-being on one hand, and preserving natural resources
and ecosystems, on which we and future generations depend.

4.

The current concern for sustainable development is rooted in the firm

realization that the bounties of nature are drying up and there is going to be an acute scarcity
of basic resources. The rampage of technology has killed the feeling of continued abundance.
The folly of reckless environmental degradation is finally being realized, and the elitist
techno-economic

model

of

development

is

being

increasingly

questioned.

The

environmentalists parade the frightening facts and warn us that no issue seems to be more
central and vital today than the protection of the environment. If timely action is not taken the
time will run out, and we will sit on an ash-pile of degraded environment.

5.

Rural development aims at improving rural peoples livelihoods in an

equitable and sustainable manner, both socially and environmentally, through better access
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to assets (natural, physical, human, technological and social capital), and services, and
control over productive capital (in its financial or economic and political forms) that enable
them to improve their livelihoods on a sustainable and equitable basis. The basic objectives
of Rural Development Programmes have been alleviation of poverty and unemployment
through creation of basic social and economic infrastructure, provision of training to rural
unemployed youth and providing employment to marginal Farmers/Labourers to discourage
seasonal and permanent migration to urban areas.
6.

The rural economy is an integral part of the overall Indian economy. As

majority of the poor reside in the rural areas, the prime goal of rural development is to
improve the quality of life of the rural people by alleviating poverty through the instrument
of self-employment and wage employment programmes, by providing community
infrastructure facilities such as drinking water, electricity, road connectivity, health facilities,
rural housing and education and promoting decentralization of powers to strengthen the
Panchayati raj institutions etc.

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Unit -2: Basic Principles of Sustainable Human Development

Structure
1.

Introduction

2.

Objectives

3.

Concept of Human Development and Sustainable Human

Development

3.1

Components of Human Development Paradigm

3.2

Concepts of Sustainable Human Development

3.3

Definitions of Sustainable Human Development (SHD)

3.4

Indicators of Sustainable Human Development

4.1

Sustainable Human Development and Human Security

4.2.

Sustainable Human Development and Human Rights

4.3

Sustainable Human Development and Gender Empowerment

4.4

Sustainable Human Development and Governance

4.5

Impact of New Technologies on Sustainable Human Development

5.

Summing up

6.

Keywords

7.

Know your Progress

8.

Further Readings / References

9.

Model Answers

1. Introduction
Most societies aspire to achieve economic development to secure rising standards
of living, both for themselves and for future generations. They also seek to protect and
enhance their environment, now and for their children. Reconciling these two aspirations is
at the heart of sustainable development.

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Sustainable development is programming for the present day and future life and
development by observing the balance between human beings and the nature, without
exhausting natural resources and thus making it possible for future generations to
materialize their needs and fulfil their development. Sustainable development is a concept
with social, ecologic, economic, spatial and cultural dimensions.

Sustainability is a concept. It is also an ethos. Sustainable development is the

action that follows from the sustainability ethos. Sustainable development is not about
allowing economic growth and material consumption to increase forever. It is about
shifting from economic growth to human development as the first priority. Economic
development remains an important second priority, but on the basis of supporting, and not
interfering with, the first priority. Economic development thus becomes geared to satisfy
the physical needs of humanity in such a way that the human habitat is preserved and, to
the extent possible, enhanced. But economic development must always support the first
priority, which is to develop boys and girls, men and women, to their full potential not only
physically, but also intellectually, psychologically, and spiritually. Thus, the emphasis on
sustainable human development. In this unit, we shall discuss the concept of sustainable
human development and some of the basic principles which need to be applied in order to
secure it.

2. Objectives
After studying this Unit, you should be able to:

Trace the history of the debate on sustainable development and sustainable

human development ;

Describe and define the concept of sustainable human development;

Understand the indicators of sustainable human development ; and

Understand the relationship between sustainable human development and

human security, human rights, gender empowerment, governance and
impact of new technologies.

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3. Concept of Human Development and Sustainable Human

Development

The development theories practised in the 1950's and 1960's overwhelmingly

emphasised economic growth, growth of gross national product (GNP). In 1970's the world
witnessed growing poverty and the approach followed was basic needs. However, the basic
needs approach failed not only because of the selfishness of the privileged few but also due
to helplessness of the deprived many. The 1980's have also witnessed selfishness and
helplessness, both accumulated by the acute problems of environmental degradation in
general and debt, deprivation and growing disparities within the countries in particular.
However, in 1990's some hopes am king surfaced on the horizon: more balanced
management policies, greater awareness of interdisciplinary linkages, sustainable benefits
arising out of technological advances, the role of partnerships, etc. So, the pivot around
which the new paradigm revolves is sustainable human development. Human development
cannot be propelled by pursuing economic growth alone. Quantity of economic growth is
only one dimension of development. Distribution of income, health, education, clean
environment and freedom of expression are the most critical dimensions in the
development process. Sustainable development is primarily concerned with the replicable
models of material consumption, models that recognises the limitations of the environment.
.However, sustainable development is not only a call for environmental protection. It also
implies a new concept of development which provides opportunity for all the people of the
world without depleting the world's finite natural resources. So, sustainable development is
a process in which economic, fiscal, agriculture, industry and all other policies are taken
care of to bring about development that is economically, socially and ecologically
sustainable.

Human development as defined in the UNDP's Human Development Report as the

enlargement of the range of people's choices. It is an extension of the basic needs
approach. The concept of basic needs approach reminds us that the objective of
development effort is to provide all human beings the opportunity for a full life. Since,
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some basic interpretations are in terms of commodity bundles or specific needs, human
development is trying to get away from this. Human development goes beyond basic needs
in a sense that it is concerned with all human beings irrespective of poor and rich within a
nation-state and among nation-states.

3 .1

Components of Human Development Paradigm

There are essentially four components of human development paradigm; equity,

sustainability, productivity and empowerment. Since human development paradigm

distinguishes from the traditional concept of economic development, each of them needs to
be taken care of in its proper prospective. Equity: Since, development is to enlarge people's
choices; people must enjoy equitable access to opportunities. However, equity in
opportunities need not necessarily result in same choices or same results. Even if, equity in
opportunities result in unequal outcomes, equity in access to social, political and economic
opportunities is regarded as a basic human right in a human development paradigm. It is
based on the assumption that all human beings must be enabled to develop their
capabilities to the maximum extent and put those capabilities to the best use in all possible
areas.
Sustainability
Sustainability is another essential component of human development paradigm.
Sustainability does not mean renewal of natural resources alone, which is only one aspect
of sustainable development. It is the sustainability of human development including forms
of capital -physical, financial, human and environmental. Putting it differently, it is the
human life that must be sustained. It also does not necessarily require preserving all kinds
of capital in its current form. Technological progress undoubtedly create substitutes for
some form of capital. And if cost effective substitutes are available, they can be used to
sustain human choices. So, what could be sustained is at least the capacity to produce
similar level of human wellbeing.

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Productivity
Another essential dimension of human development paradigm is productivity. It
requires that adequate investments must be made in human resources so as to achieve their
potentiality. In fact, many East Asian countries have accelerated their growth through
investments in human capital. Japan and Korea could emerge as the efficient exporters of
steel products without possessing iron ore is mainly due to their tremendous human
resources potential.

Empowerment
The human development paradigm focuses on development by the people who
must participate in the process which shape their lives. The strategy of prescription for the
poor is neither consistent with human dignity nor sustainable over time. That is why human
development paradigm envisages full empowerment of the people. Empowerment means
that people must be in a position to exercise choice of their own. It implies a political
democracy where people can influence the decision about their lives. It also implies
Economic liberalisation so that people are free from excessive controls and regulations. In
other words, there must be decentralisation of power so that governance can be brought to
the door step of every individual. Against the above discussions it is obvious that human
development paradigm welcomes all choices whereas the older concept of basic needs
concept is confined to only economic forces.

3 .2

Concepts of Sustainable Human Development

The concept of sustainable development transcends the classical development

paradigm, and consists of the following two components:
1) Sustainable Human Development (SHD), and
2) Environmental Sustainability

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"Economic

development

and

sound

environmental

management

are

complementary aspects of the same agenda. Without adequate environmental protection,

development will be undermined; without development, environmental protection will
fail" (World Development Report, 1992). It has already been discussed that development
is all about well being of people. Improving living standards and levels of health, education
and opportunity are the important dimensions of economic development. However, the
measure of economic development does not adequately reflect environmental degradation
and the consumption of natural resources damaged by economic growth. In fact, it is
neither possible nor desirable to give monetary values on all types of environmental
damages. Nonetheless, it is desirable to know how much environmental quality is being
given up in the name of development as well as how much development is being up in the
name of environmental protection. The World Development Report, 1992 argues that too
much of environmental quality is being given up and too much of economic growth may be
given up in the future to reap the benefits of both economic development and the
environment. In other words, raising economic growth combined with sound
environmental management policies can be used for tackling both environment and
development problems.

Now, the obvious question comes out is that why some economic activity lead to
excessive environmental degradation? One possible answer could be that' many natural
resources are shared and the net value of many environmental goods and services is not
paid for by those who use them. Besides, some natural resources are shared and in most of
the cases there is no mechanism for enforcing property rights. Another possible reason
could be that in some projects government policies subsidize environmental degradation
which can induce more damage that would have been otherwise. One more reason could be
that the poor who does not have adequate resources and hence no choice but to degrade
natural resources in excess of what is currently needed to sustain. The most important
environmental concern in today's world that 'resources that are regenerative but are
undervalued'. For instance, air and water are renewable resources but there is a limit
of assimilate emissions and wastes. If pollution exceeds a particular limit, ecosystem can

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deteriorate rapidly. When fisheries and forests deplete beyond a threshold point, there
would be loss of ecosystem and species.
The concept of sustainable human development is that development which lasts
forever. It may be possible that those who enjoy the fruits of development today may be at
the cost of making future generations worse-off by degrading the earth's finite resources
and the environment. The general principle of sustainable development adopted by the
World Commission on Environment and Development (our common future. 1987) is that
"Current generations should meet their needs without compromising the ability of future
generations to meet their own needs." The sustainable human development i.e., ensuring
that "present needs are met without compromising the ability of future generation to meet
their own needs" require deliberate intervention to prevent depletion or degradation of
environmental assets so that the resource base and ecological base for human activities
may be sustained forever. Different kinds of environmental assets, the renewable and nonrenewable resources and sinks (the kind of actions that can ensure ecological
sustainability) are summarised in the following two boxes.

BOX 1
Meeting the needs of the present....

Economic Needs: Includes access to an adequate livelihood or productive

assets, also economic security when unemployed, ill, disabled or otherwise unable to
secure a livelihood.
Social, cultural and health needs: Includes a shelter which is healthy,
safe, affordable and secure, within a neighbourhood with provision for piped water,
sanitation, drainage, transport, health care, education and child development. Also a
home, workplace and living environment protected from environmental hazards,
including chemical pollution. Also important are needs related to people's choice and
control including homes and neighbourhoods which they value and where their social
and cultural priorities are met. Shelter and services must meet the specific needs of
children and adults responsible for most child rearing (usually women). Achieving this

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implies a more equitable distribution of income between nations and in most within
nations.
Political Needs: Includes freedom to participate in national and local politics
and in decisions regarding management and development of one's home and
neighbourhood within a broader framework which ensures respect for civil and
political rights and the implementation of environmental legislation.
Minimising use or waste of non-renewable resources: Includes minimising
the consumption of fossil fuels in housing, commerce, industry and transport plus
substituting renewable sources where feasible. Also, minimising water of scarce
mineral resources (reduce use, reuse, recycle, reclaim). There are also cultural,
historical and natural assets within cities that are irreplaceable and thus non-renewable
for instance, historic districts and parks and natural landscapes which provide space for
play, recreation and access to nature.
Sustainable use of renewable resources: Cities drawing on fresh water
resources at levels which can be sustained; keeping to a sustainable ecological footprint
in terms of land area on which producers and consumers In any city draw for
agricultural crops, wood products and biomass fuels.
Waste from city keeping within absorptive capacity of local and global
sink: Including renewable sinks (e.g., capacity of river to breakdown biodegradable
wastes) and non-renewable sinks (for persistent chemicals, includes green house wee,
stratospheric ozone depleting chemicals and many pesticides).

Taking into account both the development and environment components in

sustainable human development, the important criteria for judging sustainable human
development could be:

1)

the quality of life of the inhabitants including existing levels of poverty,

social exclusion and integration and socio-political stability;

2)

The scale and nature of renewable resource use, including the extent to
which waste recycling or reuse reduces it;

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3)

The scale and nature of renewable resource use, including provision to

ensure sustainable levels of demand; and

4)

The scale and nature of non-renewable wastes generated by production

and consumption activities and the means by which these are disposed off.
It also includes the extent to which the wastes affect human health, natural
systems and amenities.

Human development can be sustainable if adequate care has to be taken, of

course, through the budgetary policies; in each of these four areas so that it maintains
balance in each generation. Sustainable development, therefore, requires that it must be
different from economic development as well as respectful of the physical environment.
And it must translate into human lives. However, preservation of physical environment is.
only a means towards the end, the end being sustaining human life. Development
opportunities and human choices must be present for future generation so that the next
generation enjoys at least the level of welfare/well-being enjoyed by our own generation.
Against this backdrop, the concept of sustainable human development should thus focus
not only on the future but also on the present. It is ridiculous to worry about unborn
generations if the present generation is living below the poverty line. It is neither necessary
nor desirable to perpetuate today's inequities, which in fact is neither sustainable nor worth
sustaining. So, adequate restructuring of the world's income and consumption patterns is a
necessary precondition for any viable strategy for sustainable human development.

3 .3

Definitions of Sustainable Human Development (SHD)

Sustainable Human Development represents an evolution of the classical concept

of development: its emphasis has moved from the material well-being of states to the wellbeing of individual human beings. While the classical approach was based on three factors
of production, namely land, capital and labour (human beings), the new paradigm of SHD
places people at the centre, as the principal actor and the ultimate goal of development.

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By enhancing human capabilities to expand choices and opportunities for men,

women and children, SHD creates an environment in which human security is guaranteed
and individual human beings can develop their full potential and lead a life of dignity and
freedom.

The term Sustainable Human Development (SHD) has been used since 1991 with
different meanings, or as Cohen (1997) stated, there is no agreement among development
practitioners as to what SHD is or is not

According to Jolly (1991), SHD means protecting our childrens well-being with
an integrated, human approach to environment. Speth wrote in the Foreword to the 1994
Human Development Report that SHD is

development that not only generates economic growth but distributes its
benefits equitably; that regenerates the environment rather than destroying it; that
empowers people rather than marginalizing them. It gives priority to the poor,
enlarging their choices and opportunities, and provides for their participation in
decisions affecting them. It is development that is pro-poor, pro-nature, pro-jobs,
pro-democracy, pro-women and pro-children.

According to Austin, sustainable human development is the process of improving

practical needs and strategic interests to all members of a community with the intent of
providing complete physical, mental and social well-being. Hasegawa (2001) sees
sustainable human development and environmental sustainability as two components of
sustainable development. According to him, SHD creates an environment in which human
security is guaranteed and individual human beings can develop their full potential and
lead a life of dignity and freedom.

Each of these definitions of SHD brings different dimensions of human

development goals to the forefront. Environmental sustainability is not the focal point of
so-called SHD. Most in the Human Development paradigm sees sustainability as just
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another dimension of the human development goals, whereas the Sustainability paradigm
considers that as the core issue for our future existence.
3 .4

Indicators of Sustainable Human Development

Haq best explained the philosophy behind the human development paradigm,
when he said:

The basic purpose of development is to enlarge people's choices People

often value greater access to knowledge, better nutrition and health services,
more secure livelihoods, security against crime and physical violence, satisfying
leisure hours, political and cultural freedoms and sense of participation in
community activities. The objective of development is to create an enabling
environment for people to enjoy long, healthy and creative lives. (Haq, quoted in
the 2006 Human development Report)

For human development to be sustainable, it must be ensured that it is achieved

with sustainable means and the growth path of human development is non-negative.
Climate change, deteriorated quality of environment, depletion of non-renewable natural
resources, etc., are seen as potential threats to future sustainability. Therefore, all of these
are real concerns for SHD. In an effort to find a comprehensive list of sustainability
indicators, the UN Commission on Sustainable Development (UNCSD) has recently
derived a core set of 50 indicators from its initial list of 134 indicators.9 No such unique
list of human development goals exists. The Human Development Report (HDR) focuses
on one critical issue every year and provides data on other relevant indicators.

According to the 2006 Human Development Report, safe water and sanitation
problems are among the most pressing challenges facing humanity. Other pertinent
issues affecting present well-being are resources for and access to health services,
nutrition, inequalities in maternal and child health, public spending on education, literacy
and enrolment, technology, trade-aid-debt, public spending, unemployment, refugees,
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victims of crime, human and labour rights, etc. The concerns for the future generations, as
identified in the report, are energy-use and the environment, which include traditional fuel
and electricity consumption, CO2 emission, bio-safety and diversity, and climate change.

Since there is no agreed definition of SHD, the list of indicators, even the
emphasis on particular indicators, often varies from one study to another depending on the
purpose of the study. According to the UNESCO, the interdependent links between
environment and development are not simply about conservation and economics, but also
include a concern for issues such as human rights, population, housing, food security, and
gender that are important parts of sustainable human development. Hasegawa (2001)
considers human development, poverty, security, human rights, gender empowerment,
governance, etc., as the key issues for SHD; and ecosystem sustainability, biodiversity,
climate change, environmental ethics as major components of environmental sustainability.
From Jamaican experience, Bloom, et al. (2001) point out, over the last 30 years,
Jamaica has enjoyed some degree of human development, but unless growth occurs soon,
that human development is unlikely to be sustainable.
4.1

Sustainable Human Development and Human Security

The concept of human security emphasizes the security of individual human

beings, in contrast to the traditional concept of security focused on the security of States. In
the post-Cold War world, the reduction of the risk for a nuclear conflict has been followed
by the dramatic increase of the threats to human security in the form of gross human rights
violations, intra-states conflicts, poverty, environmental degradation, illicit drugs,
transnational organized crimes, infectious diseases, the outflow of refugees and
antipersonnel landmines. The lack of human security hinders the achievement of SHD and,
vice versa, when there is no SHD the security of human beings is endangered. Conflict
prevention and peace-building are among important means in ensuring human security.
4.2.

Sustainable Human Development and Human Rights

Human rights and SHD share a common purpose to secure the well-being,
freedom and dignity of all people everywhere. Human rights and SHD are interdependent
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and mutually reinforcing: SHD is essential for realizing human rights and human rights are
essential for the achievement of full SHD. By expanding choices and opportunities for
men, women and children, SHD address their economic, social, cultural political and civil
rights.

Freedom from discrimination (by gender, race, ethnicity, national origin

or religion).

Freedom from want (to enjoy a decent standard of living and well being).

Freedom to develop and realize ones human potential.

Freedom from fear (of threats to personal security, torture, arbitrary arrest
and other violent acts).

Freedom from injustice and violations of the rule of law.

Freedom of thought, opinion and to participate in decision making and

form associations.

4.3

Freedom for decent work without exploitation.

Sustainable Human Development and Gender Empowerment

In order to secure SHD, measures must be taken to promote the political,

economic and social empowerment of women and gender equality and to ensure their
participation in all phases of development, from planning to implementation. The Gender
Empowerment Measure (GEM) examines whether women and men are able to actively
participate in economic and political life and take part in decision-making. It is a composite
index using variables constructed to measure the relative empowerment of women and men
in political and economic spheres of activity. The final GEM value is given by three
indices measuring economic participation and decision-making, political participation and
decision-making, and power over economic resources.

4.4

Sustainable Human Development and Governance

A crucial aspect of SHD is governance (accountability, transparency, corruption,

election, participation, democracy, free media, access to information, human rights, and
rule of law).
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4.5

Impact of New Technologies on Sustainable Human Development

With regard to the impact of new technologies on sustainable human

development, the following issues need to be considered:

Participation

Knowledge

New Medicines

New Crop Varieties

New Employment and Export Opportunities

5. Summing up
After going through this Unit, you get an idea of the link between environment
and sustainable human development. Human development cannot be taken care of by
pursuing economic growth alone. Economic growth is only one dimension of development.
Distribution of income, provision of health care, education, safe environment and freedom
of impression are the important dimensions in the development process'. Sustaining human
development therefore is not simply a call for environmental protection but which provides
opportunity for all the people of the world to grow without affecting the world's finite
natural resources. The general principle of sustainable human development is adopted by
the world commission on Environment I and Development is that current generations
should meet their needs without 1 compromising the ability of future generations to meet
their own need. In other words, what we really need to sustain is human life. So, the
environment must be given a I human face to save it from the crises of environmental
degradation. Sometimes economic activities degrade environment primarily due to lack of
interface I between what is provided (resources advanced) and what is used. Environmental
degradation damages human health reduces efficiency and productivity and entails loss of
opportunity to people. In order to counteract the adverse consequences of economic
growth, it is necessary to rationally reallocate investment patterns as well as change the

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behaviour and attitude through proper incentive and disincentive structures. At the
international level, any disruption of the ecological balance would sterilize the life
sustaining opportunities and eventual ecological and economic disaster. If the present
pattern of environmental degradation will continue, the life cannot be safer for organ
without hearty co-operation of everyone in the world. In this critical juncture, what we
really need is to build up partnership to sustain human life. It implies voluntary cooperation among all the stake-holders in the world. The Rio Declaration is precisely
addressing these fundamental issues in a much more scientific way.

6. Keywords
Human Development: Human development is a process of enlarging people's
choices. In principle, these choices can be infinite and change over time. But at all levels of
development, the three essential ones are for people to lead a long and healthy life, to
acquire knowledge and to have access to resources needed for a decent standard of living.
If these essential choices are not available, many other opportunities remain inaccessible.
But human development does not end there. Additional choices, highly valued by many
people, range from political, economic and social freedom to opportunities for being
creative and productive, and enjoying personal self respect and guaranteed human rights.
Sustainable Human Development: Sustainable human development is that
development which lasts forever. It may be possible that those who enjoy the fruits of
development today may be at the cost of making future generations worse-off by degrading
the earth's finite resources and the environment. The sustainable human development i.e.,
ensuring that "present needs are met without compromising the ability of future generation
to meet their own needs" require deliberate intervention to prevent depletion or degradation
of environmental assets so that the resource base and ecological base for human activities
may be sustained forever.

Sustainability: Sustainability is an essential component of human development

paradigm. Sustainability does not mean renewal of natural resources alone, which is only
one aspect of sustainable development. It is the sustainability of human development
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including forms of capital -physical, financial, human and environmental. Putting it

differently, it is the human life that must be sustained.

Productivity: Productivity is one of the essential dimensions of human

development paradigm. It requires that adequate investments must be made in human
resources so as to achieve their potentiality.
Empowerment: Empowerment means that people must be in a position to
exercise choice of their own. It implies a political democracy where people can influence
the decision about their lives. It also implies Economic liberalisation so that people are free
from excessive controls and regulations. In other words, there must be decentralisation of
power so that governance can be brought to the door step of every individual.

Human Rights: Human rights refer to those rights that are inherent to the person
and belong equally to all human beings regardless of their race, colour, sex, language,
religion, political or other opinion, national or social origin, property, birth or other status.
Human Security: The concept of human security emphasizes the security of
individual human beings, in contrast to the traditional concept of security focused on the
security of States.

Gender Empowerment Measure (GEM): The Gender Empowerment Measure

(GEM) examines whether women and men are able to actively participate in economic and
political life and take part in decision-making. It is a composite index using variables
constructed to measure the relative empowerment of women and men in political and
economic spheres of activity. The final GEM value is given by three indices measuring
economic participation and decision-making, political participation and decision-making,
and power over economic resources.

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7. Know your Progress

1. What is the difference between Human Development and
Sustainable Human Development?
2. What are the components of Human Development Paradigm?
3. Define Sustainable Human Development
4. What are the Indicators of Sustainable Human Development?

8.

Further Readings / References

Chambers, Robert, 1983, Rural Development. Putting the Last First, New York,
John Wiley.
Cohen, D. (1997). The HIV Epidemic and Sustainable Human Development.
Issues Paper No. 29,
HIV and Development Programme, UNDP.
Gran, Guy, 1983, Development by People. Citizen Construction of a Just World, New
York, Praeger.
Haq, Mahbub ul, 1995, Reflections on Human Development, New York, Oxford
University Press.
Hasegawa, S. (2001). Development Cooperation. UNU Global Seminar on Global
Issues and the
United Nations, Nov 20, 2001.
Sen, Amartya, 1988, "The Concept of Development", in: Hollis Chenery and T. N.
Srinivasan (Eds.),
Handbook of Development Economics, Amsterdam, North Holland, 1989.
Streeten,

Paul

P.,

1994,

Strategies

for

Human

Development,

Copenhagen,

Handelshjskolens Forlag/
Munksgaard International Publishers.
UNDP, 1990, Human Development Report 1990, New York, Oxford University
Press.
UNDP, 1991, Human Development Report 1991, New York, Oxford University
Press.

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UNDP, 1992, Human Development Report 1992, New York, Oxford University
Press.
UNDP, 1993, Human Development Report 1993, New York, Oxford University
Press.
UNDP, 1994, Human Development Report 1994, New York, Oxford University
Press.
UNDP, 1995, Human Development Report 1995, New York, Oxford University
Press.
World Bank, 1980, World Development Report 1980, Oxford, Oxford University Press for
the World Bank.
World Bank, 1990, World Development Report 1990, Oxford, Oxford University Press
for the World Bank.
Ismail Sirageldin, (2003), SUSTAINABLE HUMAN DEVELOPMENT IN THE
TWENTY-FIRST CENTURY: AN EVOLUTIONARY PERSPECTIVE, in Sustainable Human
Development, [Ed. Ismail Sirageldin], in Encyclopedia of Life Support Systems (EOLSS),
Developed

under

the

Auspices

of

the

UNESCO,

Eolss

Publishers,

Oxford

[http://www.eolss.net

8. Model Answers
1.

Human development cannot be propelled by pursuing economic growth

alone. Quantity of economic growth is only one dimension of development. Distribution of

income, health, education, clean environment and freedom of expression are the most
critical dimensions in the development process. Sustainable development is primarily
concerned with the replicable models of material consumption, models that recognises the
limitations of the environment. .However, sustainable development is not only a call for
environmental protection. It also implies a new concept of development which provides
opportunity for all the people of the world without depleting the world's finite natural
resources. So, sustainable development is a process in which economic, fiscal, agriculture,
industry and all other policies are taken care of to bring about development that is
economically, socially and ecologically sustainable.

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,UK,

Human development as defined in the UNDP's Human Development

Report as the enlargement of the range of people's choices. It is an extension of the basic
needs approach. The concept of basic needs approach reminds us that the objective of
development effort is to provide all human beings the opportunity for a full life. Since,
some basic interpretations are in terms of commodity bundles or specific needs, human
development is trying to get away from this. Human development goes beyond basic needs
in a sense that it is concerned with all human beings irrespective of poor and rich within a
nation-state and among nation-states.

2.

There are essentially four components of human development paradigm;

equity, sustainability, productivity and empowerment. Since human development paradigm

distinguishes from the traditional concept of economic development, each of them needs to
be taken care of in its proper prospective.

3.

Sustainable human development is development that not only generates

economic growth but distributes its benefits equitably; that regenerates the environment
rather than destroying it; that empowers people rather than marginalizing them. It gives
priority to the poor, enlarging their choices and opportunities, and provides for their
participation in decisions affecting them. It is development that is pro-poor, pro-nature,
pro-jobs, pro-democracy, pro-women and pro-children.

4.

For human development to be sustainable, it must be ensured that it is

achieved with sustainable means and the growth path of human development is nonnegative. Climate change, deteriorated quality of environment, depletion of nonrenewable natural resources, etc., are seen as potential threats to future sustainability.
Therefore, all of these are real concerns for SHD. In an effort to find a comprehensive list
of sustainability indicators, the UN Commission on Sustainable Development (UNCSD)
has recently derived a core set of 50 indicators from its initial list of 134 indicators.9 No
such unique list of human development goals exists. The Human Development Report
(HDR) focuses on one critical issue every year and provides data on other relevant
indicators.
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According to the 2006 Human Development Report, safe water and sanitation
problems are among the most pressing challenges facing humanity. Other pertinent
issues affecting present well-being are resources for and access to health services,
nutrition, inequalities in maternal and child health, public spending on education, literacy
and enrolment, technology, trade-aid-debt, public spending, unemployment, refugees,
victims of crime, human and labour rights, etc. The concerns for the future generations, as
identified in the report, are energy-use and the environment, which include traditional fuel
and electricity consumption, CO2 emission, bio-safety and diversity, and climate change.

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Unit-3: Dimensions of Sustainability

Structure
1.

Introduction

2.

Objectives

3.

Concept of Development and Sustainable Development

4.

Sustainable Development: Defining a New Paradigm

5.

Dimensions of Sustainable Development

6.

Summing up

7.

Keywords

Know your Progress

9.

Further Readings / References

10.

Model Answers

1. Introduction
Most societies aspire to achieve economic development to secure rising
standards of living, both for themselves and for future generations. They also seek to
protect and enhance their environment, now and for their children. Reconciling these two
aspirations is at the heart of sustainable development. This section analyses the various
dimensions of sustainable development and sets out some of the basic principles which
need

to

be

applied

in

order

to

secure

2. Objectives
After studying this Unit, you should be able to:

Understand the concept of development and sustainable development;

Explain the various dimensions of sustainable development;

Appreciate the need for integration of the various dimensions of sustainability.

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it.

3. Concept of Development and Sustainable Development

Prior to the second half of the twentieth century, the idea of development as we
know it today barely existed. The structures of imperial and colonial power which
dominated the world in the nineteenth and early twentieth centuries made little provision
for economic and social advance in what we now call the developing world. Colonial
regions functioned primarily to supply imperial powers with raw materials and cheap
labour including slave labour as late as the mid-nineteenth century.

By the end of the Second World War, perceptions and policy had changed
drastically. Economic and social improvement for the majority had become a major
preoccupation of governments, and with the crumbling of colonial power relations this goal
was extended to the poorer nations of the world. Economic development, with its social
and institutional correlates, came to occupy an essential place in theory and policy.

Thus economists, other social scientists, and policymakers adopted a framework

of thought which was much more ambitious in its scope than previous formulations of
political economy. The clear goal of economic development policy was to raise living
standards throughout the world, providing steadily more goods and services to an
expanding population.
The international institutional structures set up after the Second World War,
including the International Monetary Fund, the World Bank, and the United Nations, were
specifically designed with this goal in mind.
As development policy has evolved, different approaches have been emphasized
at different times. The original emphasis was on promoting more productive agriculture
and industrialization. In the late 1970's a focus on basic needs was advocated by Paul
Streeten, Mahbub- Ul- Haq, and others. Education, nutrition, health, sanitation, and
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employment for the poor were the central components of this approach reflecting an
acknowledgment that the benefits of development did not necessarily trickle down to
those who needed them most. This perspective inspired the creation of the United Nations
Development Programmes Human Development Index, which uses health and education
measures together with Gross Domestic Product (GDP) to calculate an overall index of
development success.
In the 1980's the focus shifted to structural adjustment, including liberalization
of trade, eliminating government deficits and overvalued exchange rates, and dismantling
inefficient parastatal organizations. Structural adjustment was seen as correcting the errors
of earlier, government-cantered development policies which had led to bloated
bureaucracies, unbalanced budgets, and excessive debt. But critiques of structural
adjustment policies have found them at odds with the basic needs priorities. Marketoriented reforms have often lead to greater inequality and hardship for the poor even as
economic efficiency improved. A tension thus remains between the basic needs and
market-oriented perspectives on development.
Globally, most countries have made significant advances both in GDP and in
Human Development Index measures. But overall, the record of development on a world
scale is open to two major criticisms:

The benefits of development have been distributed unevenly, with income

inequalities remaining persistent and sometimes increasing over time. The global numbers
of extremely poor and malnourished people have remained high, and in some areas have
increased, even as a global middle class has achieved relative affluence.

There have been major negative impacts of development on the

environment and on existing social structures. Many traditional societies have been
devastated by development of forests, water systems, and intensive fisheries. Urban areas
in developing countries commonly suffer from extreme pollution and inadequate
transportation, water, and sewer infrastructure. Environmental damage, if unchecked, may
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undermine the achievements of development and even lead to collapse of essential

ecosystems.

These problems are not minor blemishes on an overall record of success. Rather,
they appear to be endemic to development as it has taken place over the past half-century,
and to threaten to turn success into failure. The absolute gaps between rich and poor
nations, and between rich and poor groups within individual countries, are widening, not
narrowing.

The growing awareness of these challenges to traditional development thinking

has led to the increasingly wide acceptance of a new concept that of sustainable
development. Development which protects the environment, development which advances
social justice -- phrases such as these have surrounded the introduction of what has been
claimed to be a new paradigm. The new formulation has been eagerly adopted both by
critics of standard development practice and by leaders of existing development
institutions. But what does sustainable development really mean?

4. Sustainable Development: Defining a New Paradigm

Sustainability is the capacity to endure. In ecology the word describes how
biological systems remain diverse and productive over time. For humans it is the potential
for long-term maintenance of wellbeing, which in turn depends on the wellbeing of the
natural world and the responsible use of natural resources.

Sustainability has become a wide-ranging term that can be applied to almost every
facet of life on Earth, from local to a global scale and over various time periods. Longlived and healthy wetlands and forests are examples of sustainable biological systems.
Invisible chemical cycles redistribute water, oxygen, nitrogen and carbon through the
world's living and non-living systems, and have sustained life for millions of years. As the
earths human population has increased, natural ecosystems have declined and changes in

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the balance of natural cycles have had a negative impact on both humans and other living
systems.

The word sustainability is derived from the Latin sustainers (tenere, to hold; sus,
up). Dictionaries provide more than ten meanings for sustain, the main ones being to
maintain", "support", or "endure. However, since the 1980s sustainability has been used
more in the sense of human sustainability on planet Earth and this has resulted in the most
widely quoted definition of sustainability and sustainable development, that of the
Brundtland Commission of the United Nations on March 20, 1987:
sustainable development is development that meets the needs of the present
without compromising the ability of future generations to meet their own needs.
In the 2005 World Summit it was noted that this requires the reconciliation of
environmental, social and economic demands - the "three pillars" of sustainability. This
view has been expressed as an illustration using three overlapping ellipses indicating that
the three pillars of sustainability are not mutually exclusive and can be mutually
reinforcing.
The guiding principle of sustainable development is development that meets the
needs of the present without compromising the ability of future generations to meet their
own needs. Sustainable development recognizes the interdependence of environmental,
social and economic systems and promotes equality and justice through people
empowerment and a sense of global citizenship. Whilst we cannot be sure what the future
may bring, a preferable future is a more sustainable one.

5. Dimensions of Sustainable Development

Sustainable development is a multidimensional concept, involving no less than
four dimensions. Sustainable development is viewed as the mutually beneficial interaction
between the legitimate interests of business and the economy, government and the polity,
and civil society and culture. However, these societal interactions do not exist in a vacuum.
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On the physical and material side, society is bounded by the carrying capacity of the varied
ecosystems, landscape ecology, and ultimately the biosphere of the earth, of Nature. On the
psychological and spiritual side, the threefold functional differentiation of society is
contextualized by the caring capacity of individuals.
Basically, sustainable development has four main pillars (dimensions); social,
economic, environmental and institutional. However, in recognition of the growing
importance of information and communication technologies and the role they play in
development, a fifth dimension on ICT is added. This integration of social, economic,
environmental, institutional, and ICT is an imperative widely recognized by the
community. Following are brief definitions of these dimensions.

A. Social
The imperative of the twenty-first century is sustainability: to raise the living
standards of the world's poor and to achieve and maintain high levels of social health
among the affluent nations while simultaneously reducing and reversing the environmental
damage wrought by human activity.

Sustainability issues are generally expressed in scientific and environmental

terms, but implementing change is a social challenge that entails, among other things,
international and national law, urban planning and transport, local and individual lifestyles
and ethical consumerism. Development is considered to be socially sustainable when it
achieves social justice via equitable resource allocation, eradicates poverty, and provides
social services, such as education, health and others to all members of the society,
especially the most needy ones. The social dimension of sustainable development is, thus,
based on the notion that man constitutes an important means of development and its prime
target who should strive to achieve this notion for both present and future generations.
Social sustainability is one aspect of sustainable development. Social
sustainability encompasses human rights, labour rights, and corporate governance. In
common with environmental sustainability, social sustainability is the idea that future
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generations should have the same or greater access to social resources as the current
generation. Social resources include ideas as broad as other cultures and basic human
rights.

B. Economic
Economically, sustainability means providing economic welfare at present and in
the future, while paying more attention to the "natural capital", which means the natural
resources of economic value, considered as the bases for the economic system, such as
plants, soil, animals, fish, and bio-environmental system such as air and water purification.
Sustainability interfaces with economics through the social and ecological
consequences of economic activity. Sustainability economics represents: "... a broad
interpretation of ecological economics where environmental and ecological variables and
issues are basic but part of a multidimensional perspective. Social, cultural, health-related
and monetary/financial aspects have to be integrated into the analysis." However the
concept of sustainability is much broader than the concepts of sustained yield of welfare,
resources or profit margins At present the average per capita consumption of people in the
developing world is sustainable but population numbers are increasing and individuals are
aspiring to high consumption Western lifestyles. The developed world population is only
increasing slightly but consumption levels are unsustainable. The challenge for
sustainability is to curb and manage Western consumption while raising the standard of
living of the developing world without increasing its resource use and environmental
impact. This must be done by using strategies and technology that break the link between,
on the one hand, economic growth and on the other, environmental damage and resource
depletion.
C. Environmental
An ecologically sustainable system maintains a solid base of natural resources and
avoids excessive use of such resources. This involves the conservation of biodiversity,
attaining atmospheric balance, productivity of soil as well as other systems of natural
environment which are usually classified as non-economic resources. In tackling
sustainable development problems, environmentalists tend to focus on what is known as
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environment borders". As a concept it means that each natural environment system has
certain limits that should not be exceeded by excessive consumption or else deterioration in
irrevocable natural system is inevitable. Therefore, from an environmental point of view,
sustainability means setting limits for consumption, population growth and pollution, as
well as the faulty ways of production; including wasting waters, cutting the forests or the
soil erosion.
Healthy ecosystems provide vital goods and services to humans and other
organisms. There are two major ways of reducing negative human impact and enhancing
ecosystem services:
a) Environmental management :

This direct approach is based largely on

information gained from earth science, environmental science and conservation biology.
However, this is management at the end of a long series of indirect causal factors that are
initiated by human consumption, so a second approach is through demand management of
human resource use.

b) Management of human consumption of resources, an indirect approach

based largely on information gained from economics. Herman Daly has suggested three
broad criteria for ecological sustainability: renewable resources should provide a
sustainable yield (the rate of harvest should not exceed the rate of regeneration); for nonrenewable resources there should be equivalent development of renewable substitutes;
waste generation should not exceed the assimilative capacity of the environment.
D . Institutional
The institutional dimension of sustainable development is concerned with the
participation of all community members in the decision making process and the acquisition
of the information that affect their lives transparently and accurately. It is also concerned
with the organizations, such as councils and committees, charged with the implementation
of various aspects of MDGs.

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E . Digital (ICT)
Information and communication technologies (ICT) are closely related to the
abovementioned

four dimensions of

sustainable development.

The millennium

development goals and the recommendations of the international summit for information
and communication technology held in Geneva in November 2003 provided a suitable
methodological framework on how to make use of ICT in achieving sustainable
development. Therefore, the digital dimension has been added as a fifth dimension of
sustainable development.

6. Summing up
Development is a whole; it is an integral, value-loaded, cultural process; it
encompasses

the

natural

environment,

social

relations,

education,

production,

consumption, and well-being. Let us briefly review some of the main themes developed
thus far:

The original idea of development was based on a straight-line progression from

traditional to modern mass-consumption society. Within this framework, a
tension developed between the promotion of economic growth and the
equitable provision of basic needs. Development as it has proceeded over the
last half-century has remained inequitable, and has had growing negative
environmental impacts.

A concept of sustainable development must remedy social inequities and

environmental damage, while maintaining a sound economic base.

The conservation of natural capital is essential for sustainable economic

production and intergenerational equity. Market mechanisms do not operate
effectively to conserve natural capital, but tend to deplete and degrade it.

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From an ecological perspective, both population and total resource demand

must be limited in scale, and the integrity of ecosystems and diversity of
species must be maintained.

Social equity, the fulfilment of basic health and educational needs, and
participatory democracy are crucial elements of development, and are
interrelated with environmental sustainability.

Taken together, these principles clearly suggest new guidelines for the
development process. They also require a modification of the original goal of economic
growth. Economic growth, especially for those who lack essentials, is clearly needed, but
must be subject to global limits and should not be the prime objective for countries already
at high levels of consumption.

In pursuing these modified development goals, it will be necessary to recognize

the limits of the market mechanism. During the structural adjustment phase of development
policy, the virtues of free markets became an article of faith for policy-makers; this dogma
will have to be revised, as the World Bank now acknowledges. While markets may be
excellent under some conditions at achieving economic efficiency, they are often
counterproductive in terms of sustainability. Guided markets may often be useful tools for
achieving specific environmental goals. But in a broader perspective, it is the social and
institutional processes of setting social and environmental goals and norms which must
guide sustainable development policy.

7. Keywords
Sustainability, sustainable development, dimensions of sustainable development

8. Know your Progress

1)

Explain the guiding principle of sustainable development.

2)

What are the main four pillars (dimensions) of sustainable development?

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9. Further Readings / References

Costanza, R., H. E. Daly. 1992. Natural capital and sustainable development.
Conservation Biology. 6:37-46.
Gale, R.P., Cordray, S.M., 1994. Making sense of sustainability: nine answers to
"What should be sustained?". Rural Sociology, Vol. 59, N2, pp. 311-332.
Bergh, J. C. J. M. and J. van der Straaten (eds.). Toward Sustainable
Development: Concepts, Methods, Policy. Island Press, USA, p.83-111.
Solow, R.M., 1991 Sustainability: an economist's perspective. Marine Policy
Center, WHOI, Woods Hole, Massachusetts, USA.
Wimberly, R.C., 1993. Policy perspectives on social, agricultural and rural
sustainability. Rural Sociology 58: 1- 29.

10. Model Answers

1.

The guiding principle of sustainable development is development that

meets the needs of the present without compromising the ability of future generations to
meet their own needs. Sustainable development recognizes the interdependence of
environmental, social and economic systems and promotes equality and justice through
people empowerment and a sense of global citizenship. Whilst we cannot be sure what the
future may bring, a preferable future is a more sustainable one.

2.

Sustainable development has four main pillars (dimensions); social,

economic, environmental and institutional. However, in recognition of the growing

importance of information and communication technologies and the role they play in
development, a fifth dimension on ICT is added. This integration of social, economic,
environmental, institutional, and ICT is an imperative widely recognized by the
community.

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Unit- 4: Measuring Sustainable Development: Theory

and Application

Structure
1.

Introduction

2.

Objectives

3.

Meaning of sustainability and sustainable community

4.

What is an indicator of sustainability?

5.

Characteristics of effective indicators

6.

A checklist for Evaluating Indicators

7.

Indicators data sources

8.

Indicator spotlight

9.

Summing up

10.

Keywords

11.

Know your Progress

12.

Further Readings / References

13.

Model Answers

1. Introduction

What gets measured gets managed.

What gets reported gets understood.
Sustainable development is a popular and important concept, but one that is open
to a variety of interpretations. Since the 1987 Brundtland Report (World Commission on
Environment and Development, 1987), many researchers in universities, environmental
organizations, think-tanks, national governments and international agencies have offered
proposals for measuring sustainable development. The wide variety of indicators in
existing national and international policy-based sets testifies to the difficulty of the
challenge. This section analyses the various theories and applications related to
measurement of sustainable development.
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2. Objectives
After studying this Unit, you should be able to:

Understand the need for measuring sustainability, and various theories and
applications related to measurement of sustainable development;

Explain the various indicators for measuring sustainable development;

Appreciate the process of organizing the indicators and the possible

indicators data sources

3. Meaning of sustainability and sustainable community

Sustainable

development,

sustainable

community,

sustainable

industry,

sustainable agriculture, etc. You may have heard these words used in many different ways,
but what does "sustainability" really mean and how can you tell if your community is
sustainable? Sustainability is related to the quality of life in a community -- whether the
economic, social and environmental systems that make up the community are providing a
healthy, productive, meaningful life for all community residents, present and future.
How has the quality of life in your community changed over the last 20 or 40 years?
How has your community changed economically?
Are there fewer or more good-paying jobs -- are people working more
and earning less or are most people living well?
Is there more or less poverty and homelessness?
Is it easier or harder for people to find homes that they can afford?

How has your community changed socially?

Is there less or more crime?

Are people less or more willing to volunteer?

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Are fewer or more people running for public office or working on

community boards?
How has your community changed environmentally?
Has air quality in the urban areas gotten better or worse?
Are there more or fewer warnings about eating fish caught in local streams?
Has the water quality gotten better or worse?

These are traditional measures of communities. We use numbers to show

progress: "Unemployment rose 0.4 percent in January," or "The economy grew 2% last
year." However, the traditional numbers only show changes in one part of the community
without showing the many links between the community's economy, society and
environment. It is as if a community were made of three separate parts -- an economic part,
a social part and an environmental part that do not overlap like the picture below:

A view of community as three separate, unrelated parts: an economic part, a social part
and an environmental part.

However, when society, economy and environment are viewed as separate,

unrelated parts of a community, the community's problems are also viewed as isolated
issues. Economic development councils try to create more jobs. Social needs are addressed
by health care services and housing authorities. Environmental agencies try to prevent and
correct pollution problems. This piecemeal approach can have a number of bad sideeffects:
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Solutions to one problem can make another problem worse. Creating

affordable housing is a good thing, but when that housing is built in areas far from
workplaces, the result is increased traffic and the pollution that comes with it.

Piecemeal solutions tend to create opposing groups. How often have you

heard the argument 'If the environmentalists win, the economy will suffer,' and its
opposing view 'If business has its way, the environment will be destroyed.'

Piecemeal solutions tend to focus on short-term benefits without

monitoring long-term results. The pesticide DDT seemed like a good solution to insect
pests at the time, but the long-term results were devastating.
Rather than a piecemeal approach, what we need is a view of the community that
takes into account the links between the economy, the environment and the society. The
figure below is frequently used to show the connections:

A view of community
that shows the links among its three parts: the
economic part, the social part and the environmental
part.

Actions to improve conditions in a sustainable community take these

connections into account. The very questions asked about issues in a 'sustainable'
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community include references to these links. For example, the question 'Do the jobs
available match the skills of the available work force?' looks at the link between economy
and education. Understanding the three parts and their links is key to understanding
sustainability, because sustainability is about more than just quality of life. It is about
understanding the connections between and achieving balance among the social, economic,
and

environmental

pieces

of

community.

Sustainable development is a popular and important concept, but one that is open to
a variety of interpretations. Since the 1987 Brundtland report (World Commission on
Environment and Development, 1987), many researchers in universities, environmental
organizations, think-tanks, national governments and international agencies have offered
proposals for measuring sustainable development.
As what is managed needs to be measured, managing the sustainable development
process requires a much strengthened evidence base and the development and systematic
use of robust sets of indicators and new ways of measuring progress. Measurement not
only gauges but also spurs the implementation of sustainable development and can have a
pervasive effect on decision-making.

4. What is an Indicator of Sustainability?

An indicator is something that helps you understand where you are, which way
you are going and how far you are from where you want to be. A good indicator alerts you
to a problem before it gets too bad and helps you recognize what needs to be done to fix
the problem. Indicators of a sustainable community point to areas where the links between
the economy, environment and society are weak. They allow you to see where the problem
areas are and help show the way to fix those problems.
Indicators of sustainability are different from traditional indicators of economic,
social, and environmental progress. Traditional indicators -- such as stockholder profits,
asthma rates, and water quality -- measure changes in one part of a community as if they

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were entirely independent of the other parts. Sustainability indicators reflect the reality that
the three different segments are very tightly interconnected, as shown in the figure below:

Communities are a web of interactions among

the environment, the economy and society.

As this figure illustrates, the natural resource base provides the materials for
production on which jobs and stockholder profits depend. Jobs affect the poverty rate and
the poverty rate is related to crime. Air quality, water quality and materials used for
production have an effect on health. They may also have an effect on stockholder profits: if
a process requires clean water as an input, cleaning up poor quality water prior to
processing is an extra expense, which reduces profits. Likewise, health problems, whether
due to general air quality problems or exposure to toxic materials, have an effect on worker
productivity and contribute to the rising costs of health insurance.

Sustainability requires this type of integrated view of the world -- it requires

multidimensional indicators that show the links among a community's economy,
environment, and society. For example, the Gross Domestic Product (GDP), a wellpublicized traditional indicator, measures the amount of money being spent in a country. It
is generally reported as a measure of the country's economic well-being: the more money
being spent, the higher the GDP and the better the overall economic well-being is assumed
to be. However, because GDP reflects only the amount of economic activity, regardless of
the effect of that activity on the community's social and environmental health, GDP can go
up when overall community health goes down. For example, when there is a ten-car pileup
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on the highway, the GDP goes up because of the money spent on medical fees and repair
costs. On the other hand, if ten people decide not to buy cars and instead walk to work,
their health and wealth may increase but the GDP goes down.

In contrast, a comparable sustainability indicator is the Index of Sustainable

Economic Welfare. In order to get a more complete picture of what is economic progress,
the ISEW subtracts from the GDP corrections for harmful bases or consequences of
economic activity and adds to the GDP corrections for significant activities such as unpaid
domestic labour. For instance, the ISEW accounts for air pollution by estimating the cost
of damage per ton of five key air pollutants. It accounts for depletion of resources by
estimating the cost to replace a barrel of oil equivalent with the same amount of energy
from a renewable source. It estimates the cost of climate change due to greenhouse gas
emissions per ton of emissions. The cost of ozone depletion is also calculated per ton of
ozone depleting substance produced. Additionally, adjustments are made to reflect concern
about unequal income distribution. The correction for unpaid domestic labour is based on
the average domestic pay rate. Some health expenses are considered as not contributing to
welfare, as well as some education expenses. (See Indicator Spotlight for more on the
ISEW as a sustainability indicator.)

Like the GDP, the ISEW bundles together in one index tremendous amounts of
information, but the key difference is that the information takes into account the links
between environment, economy and society.

Indicators of sustainable community are useful to different communities for different

reasons. For a healthy, vibrant community, indicators help monitor that health so that
negative trends are caught and dealt with before they become a problem. For communities
with economic, social, or environmental problems, indicators can point the way to a better
future. For all communities, indicators can generate discussion among people with
different backgrounds and viewpoints, and, in the process, help create a shared vision of
what the community should be.

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5. Characteristics of Effective Indicators

An indicator is something that points to an issue or condition. Its purpose is to
show you how well a system is working. If there is a problem, an indicator can help you
determine what direction to take to address the issue. Indicators are as varied as the types
of systems they monitor. However, there are certain characteristics that effective indicators
have in common:
Effective indicators are relevant; they show you something about the
system that you need to know.
Effective indicators are easy to understand, even by people who are
not experts.
Effective indicators are reliable; you can trust the information that the
indicator is providing.
Lastly, effective indicators are based on accessible data; the
information is available or can be gathered while there is still time to
act.
An example of an indicator is the gas gauge in your car. The gas gauge shows
you how much gasoline is left in your car. If the gauge shows the tank is almost empty,
you know it's time to fill up. Another example of an indicator is a midterm report card. It
shows you whether a student is doing well enough to go to the next grade or if extra help is
needed. Both of these indicators provide information to help prevent or solve problems,
hopefully before they become too severe.
It can be useful as proxies or substitutes for measuring conditions that are so
complex that there is no direct measurement. For instance, it is hard to measure the 'quality
of life in my town' because there are many different things that make up quality of life and
people may have different opinions on which conditions count most. A very simple
substitute indicator is 'Number of people moving into the town compared to the number
moving out.'

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Examples of familiar measurements used as indicators in everyday life include:

Wave height and wind speed are indicators of storm severity
Barometric pressure and wind direction are indicators of upcoming
weather changes
Won-lost record is an indicator of player skills
Credit-card debt is an indicator of money-management skills
Pulse and blood pressure are indicators of fitness
Note that these are all numeric measurements. Indicators are quantifiable. An
indicator is not the same thing as an indication, which is generally not quantifiable, but just
a vague clue. In addition to being quantifiable, effective indicators have the four basic
characteristics

noted

above.

These

characteristics

are:

Relevant
An indicator must be relevant, that is, it must fit the purpose for measuring. As
indicators, the gas gauge and the report card both measure facts that are relevant. If, instead
of measuring the amount of gas in the tank, the gas gauge showed the octane rating of the
gasoline, it would not help you decide when to refill the tank. Likewise, a report card that
measured the number of pencils used by the student would be a poor indicator of academic
performance.
Understandable
An indicator must be understandable. You need to know what it is telling you. There
are many different types of gas gauges. Some gauges have a lever that moves between 'full'
and 'empty' marks. Other gauges use lights to achieve the same effect. Some gauges show
the number of gallons of gasoline left in the tank. Although different, each gauge is
understandable to the driver. Similarly, with the report card, different schools have
different ways of reporting academic progress. Some schools have letter grades A through
F. Other schools use numbers from 100 to 0. Still other schools use written comments.
Like the gas gauge, these different measures all express the student's progress or lack of
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progress in a way that is understandable to the person reading the report card.
On the other hand, a gas gauge that showed the number of BTU's left in the tank
would probably not be very useful to you in deciding when to fill up the tank. Likewise, a
report card that gave grades in ancient Greek script would be a mystery to most people. In
order for you to know when action is needed, you must be able to understand what an
indicator

is

telling

you.

Reliable
An indicator must be reliable. You must trust what the indicator shows. A good
gas gauge and an accurate report card give information that can be relied on. A gas gauge
that shows the tank is empty when in fact it is half full would make you stop for gasoline
before it is needed. A gas gauge that shows the tank is half full when in fact it is empty
would cause you to run out of gas in an inconvenient place. Similarly, if a student's grade
were reported wrong, an honours student could be sent for remedial work and a student
who needs help would not get it. An indicator is only useful if you know you can believe
what

it

is

showing

you.

Reliability is not the same as precision. When your gas gauge registers empty, you
know there is still a gallon or so of gasoline left as a reserve. The gas gauge reliably underreports the amount of gasoline. An indicator does not necessarily need to be precise; it just
needs

to

give

reliable

picture

of

the

system

it

is

measuring.

Accessible Data
Indicators must provide timely information. They must give you information while
there is time to act. For example, imagine a gas gauge that only gave you the amount of
gasoline in the tank when the engine was started. After you have been driving for several
hours, that reading is no longer useful. You need to know how much gasoline is in the tank

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at each moment. Similarly, a report card distributed a week before graduation arrives too
late to give a student remedial help. In order for an indicator to be useful in preventing or
solving a problem, it must give you the information while there is still time to correct the
problem.

One of the biggest problems with developing indicators of sustainability is that

frequently the best indicators are those for which there is no data, while the indicators for
which there is data are the least able to measure sustainability. This has led many
communities to choose traditional data sources and measures for indicators. There are
several advantages to traditional indicators. First, the data is readily available and can be
used to compare communities. Second, traditional indicators can help to define problem
areas. Third, traditional indicators can be combined to create sustainability indicators.

However, there is a real danger that traditional data sources and traditional
indicators will focus attention on the traditional solutions that created an unsustainable
community in the first place. It may be tempting to keep measuring 'number of jobs,' but
measuring 'number of jobs that pay a livable wage and include benefits' will lead to better
solutions. Discussions that include the phrase 'but you can't get that data' are not going to
lead to indicators of sustainability. In fact, if you define a list of indicators and find that the
data is readily available for every one of them, you probably have not thought hard enough
about sustainability. Try to define the best indicators and only settle for less as an interim
step while developing data sources for better indicators.
Traditional vs. sustainability indicators

The Tables below compare traditional indicators with sustainable community

indicators.
Economic Indicators
Traditional
Indicators

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Emphasis of
Sustainability Indicators

Sustainability Indicators

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Median

income

Per capita income

relative to the U.S.
average
Unemployment

rate

Number of companies
Number of jobs

Number of hours of paid

employment at the average
wage required to support basic
needs

What

Diversity and vitality of local

job
base

Resilience
market

Number and variability in size

of
companies

Ability of the job market

to be flexible in times of
economic change

can

buy

Defines basic needs in

terms
of
sustainable
consumption
of

the

job

Number and variability of

industry
types
Variability of skill
required for jobs

Size of the economy as

measured by GNP and
GDP

wage

levels

Wages paid in the local

economy that are spent in the
local
economy

Local financial resilience

Dollars spent in the local

economy which pay for local
labor and local natural
resources
Percent of local economy
based on renewable local
resources

Environmental Indicators
Emphasis of
Traditional

Sustainability

Indicators

Sustainability Indicators

Indicators

Ambient levels of
pollution in air and
water

Use and generation of toxic materials (both in

production
and
by
end
user)

Measuring
activities causing
pollution

Vehicle miles traveled

Tons of solid waste
generated

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Percent of products produced which are durable,

repairable, or readily recyclable or compostable

Conservative
and cyclical use

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of materials
Cost of fuel

Total

energy

used

from

all

sources

Ratio of renewable energy used at renewable rate

compared to non renewable energy

Use of resources
at
sustainable
rate

Social Indicators
Emphasis of
Traditional

Sustainability

Indicators

Sustainability Indicators

Indicators

SAT and other

standardized test
scores

Number of students trained for jobs that are

available
in
the
local
economy

Matching job skills

and training to needs
of the local economy

Number of students who go to college and come

back to the community
Number
of
registered voters

Number

of

voters

who

vote

in

elections

Participation
in
democratic process

Number of voters who attend town meetings

Ability to participate
in the democratic
process

6. A checklist for Evaluating Indicators

This section describes a checklist that may be helpful for applying the
sustainability criteria to indicators. None of the criteria are absolute, and at times a less
desirable indicator may be selected when there are no reliable data sources for a better
indicator. However, it is important to remember that sustainability is a long-term concept.
Sustainability indicators are not just a statement of what exists, they also show the
community's vision of the future. Before time is spent gathering and reporting data for an
indicator, it should be compared to the community's vision of sustainability to make sure
that it is pointing in the right direction.

Using the checklist can help you determine whether or not an indicator is a good
measure of sustainability. The checklist does not address whether an indicator is a good
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indicator in general. It assumes that the indicator meets the general criteria for
effectiveness. This checklist concentrates on the characteristics that make an indicator a
good indicator of sustainability.

The checklist has 14 questions. Positive answers to the first 13 questions earn one
point each for the indicator being evaluated. This means that the total possible score for an
indicator is 13 points. Few indicators earn more than 8 points, however, because it is
difficult to create an indicator that simultaneously measures all six types of community
capital and links the economy, society and environment. The final question is the showstopper question, because local sustainability is not something that can be achieved at the
expense of global sustainability.
Sustainable Community Indicators checklist
The sustainable community indicator checklist consists of the following 14
questions:

Does the indicator address the carrying capacity of the natural resources -renewable and non-renewable, local and nonlocal -- that the community relies
on?

Does the indicator address the carrying capacity of the ecosystem services upon
which the community relies, whether local, global, or from distant sources?

Does the indicator address the carrying capacity of esthetic qualities -- the
beauty and life-affirming qualities of nature -- that are important to the
community?

Does the indicator address the carrying capacity of the community's human
capital -- the skills, abilities, health and education of people in the community?.

Does the indicator address the carrying capacity of a community's social capital
-- the connections between people in a community: the relationships of friends,
families, neighbourhoods, social groups, businesses, governments and their
ability to cooperate, work together and interact in positive, meaningful ways?

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Does the indicator address the carrying capacity of a community's built capital - the human-made materials (buildings, parks, playgrounds, infrastructure, and
information) that are needed for quality of life and the community's ability to
maintain and enhance those materials with existing resources?

Does the indicator provide a long-term view of the community?

Does the indicator address the issue of economic, social or biological diversity
in the community?

Does the question address the issue of equity or fairness -- either between
current community residents (intra-generational equity) or between current and
future residents (inter-generational equity)?
1. Is the indicator understandable to and useable by its intended
audience?
2. Does the indicator measure a link between economy and
environment?
3. Does the indicator measure a link between environment and
society?
4. Does the indicator measure a link between society and economy?
5. Does the indicator measure sustainability that is at the expense of
another community or at the expense of global sustainability?

Organizing Indicators
Just as sustainability is about finding the balance point between a community's
economy, environment, and society, developing a set of indicators for a sustainable
community requires balancing many different needs within that community. A
brainstorming session might produce hundreds of indicators. Deciding how many to keep
can be difficult. More is not better. Less is not better. The right number depends on many
factors including what type of audience the indicator report will have, how much time is
available to research the data, the number of issues involved, and any specific needs of the
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community. Organizing or sorting the indicators in one of several ways can help a
community evaluate the effectiveness of the entire set of indicators.

There are four common methods for organizing sustainability indicators. These methods,
often called frameworks, are:

Category or issue lists based on the main focus of each indicator show

whether all aspects of the community (environment, society, and economy) are
represented.

A goal-indicator matrix can show how each indicator relates to many

issues or a set of community goals. The matrix shows whether all issues or goals are evenly
addressed.

Driving force-state-response tables balance measures of causes or

driving forces; measures of the results, or state; and measures of programs and other
human activities designed to alter driving forces with the goal of improving the state. This
provides a secondary level of analysis mainly for use by policy-makers or decision-makers.

Endowments, liabilities, current results, and processes sustainable

development indicators to check for balance among measures of what we are leaving for
the future, what we have now, and what is happening to create both situations.
None of these frameworks are the best framework. Different frameworks work
well for different purposes. For organizing indicators in a report, a category list is easily
understood by many people. The Goal-Indicator matrix is useful for showing whether the
indicator set measures all the goals of a community. The Driving Force-State-Response
framework shows the connections between human activities and environmental states. The
Endowments framework can highlight the longer term aspects of sustainability. What is
most important about the framework is that it works well for the intended purpose.

7. Indicators Data Sources

Data for indicators can be found in a wide variety of places, including local
government agencies, state government agencies, academic institutions, large government
databases, and reports at your local library. In most cases, the more local the source of
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data, the more relevant it will be to your community. Finding the data sources is a matter of
talking to different people. If you have succeeded in having a diverse cross section of the
community represented in your project, locating data sources will be easier because of the
expertise of the people working on the project. Everyone will know at least one potential
source of information, some people will know many.
Local sources of data
Local agencies are a valuable source of local information. The town, city or
county clerk generally has information about population and voting. The clerk's office may
also have information about local motor vehicle registration and housing. The department
of public works has information on water use, the generation of solid waste and waste
water, and recycling rates. Public health departments can provide information on illness
and disease. Local school boards or superintendent offices can provide information on
school graduation rates, free lunch programs and other education related issues. The town
finance department will have information on tax revenue, tax rates, and government
expenditures. The local welfare office may be able to provide information related to food
and housing subsidies. These information sources will be the most relevant to local
indicators of sustainable community.
Local organizations or local branches of national organizations are also good sources
of information. In some cases these organizations may have conducted surveys or
researched specific issues within the community. In other cases, local organizations may
have the support of a national parent organization that can provide information. For
example, the local League of Women of Voters may have done a survey on citizen
participation rates. The local Audubon Society chapter may have organized a survey of
local bird species. Local chambers of commerce may have information on shopping habits
or local businesses. The local United Way or another charitable organization may have
done an assessment of the community's need for health care and other services. Each of
these information sources provides community specific data that could be useful for local
indicators.

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Local colleges and universities are a valuable source of information on a wide

variety of issues and in many different forms. Frequently there are professors and
researchers at these institutions who have experience in areas ranging from economics to
environment to health and social services. Often the schools have related institutions which
publish reports and do surveys on community related issues. These can provide
information about the community and a point of comparison to other similar communities.

Your local library is also an important source of information in three ways: First,
many libraries have copies of U.S. Census reports and similar national or regional reports.
Getting federal data may be as easy as asking your reference librarian. Second, in addition
to having copies of reports from national groups, local libraries often have copies of reports
researched and written locally that are specific to your community. Third, local libraries
are helpful in locating additional sources of information. Most reference librarians can
provide suggestions for where to find additional sources of information and frequently may
even be able to get copies for you.

State and National sources of data

Although they probably will not be useful as a primary source of data for local
community indicators, there are also regional and national sources of information. These
will be particularly useful in the beginning stages of a project. These sources of data show
general information and trends over time that can be used to interest people in the process.
The types of information include changes in population, changes in employment and
changes

in

housing.

Regional and state agencies can provide information on a variety of issues. Most
states have a planning board or a planning commission whose job it is to keep track of
information about activities in the state and project how those activities may change over
time. For example, the planning board may have yearly population projections for towns
and cities in the state. The board may also have information about traffic patterns and
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expected changes in those patterns. Environmental agencies at the state and national level
can provide information about air and water quality.

8. Indicator Spotlight
What makes an indicator a good sustainability indicator? What sources of data
exist for a particular indicator? How are indicators actually being used? What do indicators
say about a community's well-being? These are all questions of concern to anyone
involved in community indicator work. The Indicator Spotlight attempts to answer those
questions

and

more

by

discussing

specific

indicators

in

detail.

There are no perfect sustainability indicators, but there are indicators that address
the critical issues of community sustainability. These indicators help us understand and
measure progress better than traditional indicators. In this section we highlight indicators
that are currently in use by a community group or organization actively working on
sustainable community issues. The purpose of highlighting any particular indicator is not to
suggest that every community should be using it. Rather, the purpose is to provide food for
thought and promote discussion of the issues involved in developing indicators that
measure

and

encourage

progress

towards

becoming

sustainable

communities.

Indicators have been selected for Indicator Spotlight based on how well they:
Address the issue of the community's carrying capacity relative to the
four types of community capital: natural, human, social, and built;
Highlight the links between the community's economic, social, and
environmental well-being;
Focus on a long range view;
Are understandable to the community; and
Measure local sustainability that is not at the expense of global
sustainability.

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9. Summing up
Defining and measuring sustainable development are two different things. Given
the difficulty in precisely defining sustainable development, it should come as no surprise
that it has proven just as hard to agree on a single, limited set of indicators for measuring it.
Sustainable development indicators are used by national governments and international
agencies for monitoring progress towards goals set by national governments and
comparing performance among countries. However, it should be clear that the objective is
not to develop international recommendations on a particular set of sustainable
development indicators to be used at the national level. Effort should be devoted to
establishing a common understanding of the object of sustainability (that which is to be
sustained) and to establishing core principles of the measurement of sustainability. the twin
aim of sustainable indicator sets: to show whether or not nations and their associated supraand sub-national entities are managing their own territories in a sustainable manner and
whether or not they contribute to global sustainability.

10. Keywords
Indicator: An indicator is something that helps you understand where you are,
which way you are going and how far you are from where you want to be. A good
indicator alerts you to a problem before it gets too bad and helps you recognize what needs
to be done to fix the problem.

Measuring sustainable development: As what is managed needs to be measured,

managing the sustainable development process requires a much strengthened evidence base
and the development and systematic use of robust sets of indicators and new ways of
measuring progress. Measurement not only gauges but also spurs the implementation of
sustainable development and can have a pervasive effect on decision-making.
Sustainability: Sustainability is related to the quality of life in a community -whether the economic, social and environmental systems that make up the community are
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providing a healthy, productive, meaningful life for all community residents, present and
future.

11. Know your Progress

1. How can you tell if your community is sustainable?
2. How are the indicators of sustainability different from traditional
indicators of economic, social, and environmental progress?
3. What are the common characteristics of the effective indicators?
4. What are the four common methods for organizing sustainability
indicators?
5. What are the Indicators data sources?

12.

Further Readings / References

Arrow, K. J., P. Dasgupta, L. Goulder, G. Daily, P. R. Ehrlich, G. M. Heal, S. A.
Levin, K.-G.
Maler, S. Schneider, D. A. Starrett, and B. Walker. 2004. Are We Consuming
Too
Much? Journal of Economic Perspectives 18(1):14772.
Arrow, K. J., P. Dasgupta, L. H. Goulder, K. Mumford, and K. Oleson. 2007.
China, the US,
and Sustainability: Perspectives Based on Comprehensive Wealth. Discussion
Paper,
Department of Economics, Stanford University, California.
Arrow, K. J., P. Dasgupta, and K.-G Mler. 2003a. Evaluating Projects and
Assessing
Sustainable Development in Imperfect Economies. Environmental and Resource
Economics 26(4):64785.
Arrow, K. J., P. Dasgupta, and K.-G. Mler. 2003b. The Genuine Saving
Criterion and the
Value of Population. Economic Theory 21(2):21725.

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Dasgupta, P. Human Well-Being and the Natural Environment. Oxford: Oxford

University
Press.
Dasgupta, P., and K.-G. Mler. 2000. Net National Product, Wealth, and Social
Well-Being.
Environment and Development Economics 5(1):6993.
Ehrlich, P. R., and L. H. Goulder. 2007. Is Current Consumption Compatible
with
Sustainability? A General Framework and Some Indications for the United
States.
Conservation Biology 21(5):114554.
Esty, D., 2005. 2005 Environmental Sustainability Index. Yale Center for
Environmental Law and Policy, New Haven. http://www.yale.edu/esi.
Hamilton, K., and M. Clemens. Genuine Savings Rates in Developing
Countries. World
Bank Economic Review 13(2):33356.
UNDP. 1994. Human Development Report. New York: Oxford University Press
for the United
Nations Development Programme.
World Bank. 2005. World Development Indicators 2005. Washington, DC.
World Commission on Environment and Development. 1987. Our Common
Future. New York:
Oxford University Press.

12. Model Answers

1.

Sustainability is related to the quality of life in a community -- whether the economic,

social and environmental systems that make up the community are providing a healthy,
productive, meaningful life for all community residents, present and future.
2.

Indicators of sustainability are different from traditional indicators of economic,

social, and environmental progress. Traditional indicators -- such as stockholder profits,

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asthma rates, and water quality -- measure changes in one part of a community as if they
were entirely independent of the other parts.
3.

There are certain characteristics that effective indicators have in common:

o

Effective indicators are relevant; they show you something about the system
that you need to know.

Effective indicators are easy to understand, even by people who are not
experts.

Effective indicators are reliable; you can trust the information that the
indicator is providing.

Lastly, effective indicators are based on accessible data; the information is

available or can be gathered while there is still time to act.

4. There are four common methods for organizing sustainability indicators. These methods, often
called frameworks, are:
o

Category or issue lists based on the main focus of each indicator show
whether all aspects of the community (environment, society, and economy)
are represented.

A goal-indicator matrix can show how each indicator relates to many issues
or a set of community goals. The matrix shows whether all issues or goals are
evenly addressed.

Driving force-state-response tables balance measures of causes or driving

forces; measures of the results, or state; and measures of programs and other
human activities designed to alter driving forces with the goal of improving
the state. This provides a secondary level of analysis mainly for use by policymakers or decision-makers.

Endowments, liabilities, current results, and processes sustainable

development indicators to check for balance among measures of what we are
leaving for the future, what we have now, and what is happening to create
both situations.

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5. Data for indicators can be found in a wide variety of places, including local government

agencies, state government agencies, academic institutions, large government databases,

and reports at your local library. In most cases, the more local the source of data, the more
relevant it will be to your community.

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BLOCK- 4: RURAL DEVELOPMENT AND

POVERTY: CONCEPTS AND STRATEGIES

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Block- 4: Rural Development and Poverty: Concepts and

Strategies
Introduction
The earlier Blocks have dealt with subjects like understanding rural areas and
people, rural social structure, rural economic structure, economic growth and equity
aspects, concepts, definitions and approaches to sustainable development. These subjects
were necessary to make you understand the rural social and economic systems and
processes which have direct bearing on the developmental activities. In this Block, we will
be discussing the following subjects.

1. Rural development and poverty

2. Measurement of poverty
3. Current strategies for rural development and Millennium Development
4. Goals
5. Corporate social responsibility (CRS) and rural development
The main objective of this Block as evident from the above mentioned four Units
is to make you understand the meaning and purpose of rural development, definition of
poverty, types of poverty and approaches to alleviate rural poverty through rural
development programmes.
The first Unit under this Block will deal with the concept and definitions of rural
development, its objectives an various approaches to achieve the objectives of rural
development. The unit also deals with defining poverty and causes of poverty and poverty
line income.
The second Unit will discuss the methodology used for measuring poverty and
also identification of the poor families below the poverty line income so that poverty
alleviation programmes are properly focussed on the BPL (below poverty line) families.
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The third Unit is devoted to discuss the current strategies for rural development
and attempts being made to achieve millennium development goals to be achieved by the
year 2015 as per the United Nations declaration during the year 2000.

Fourth Unit is designed to make you understand the participation of public and
private corporate enterprises in rural development. Public Private Partnership (PPP) under
corporate social responsibility (CRS) is assuming importance in dealing with rural
development and poverty alleviation.

After completing these four units, you will have better understanding of rural
development, poverty and the approaches being adopted to develop rural areas and people
with specific focus on poverty alleviation.

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Unit- 1: Rural Development and Poverty

Structure
1.

Introduction

2.

Objectives

3.1

Definition

3.2

Aims and Objectives of Rural Development

4.

Poverty Definition and Types of Poverty

4.

Causes of Poverty in India

4.

Approaches to Rural Development in India

5.

Summing up

6.

Keywords

7.

Know your Progress

8.

Further Readings / References

9.

Model Answers

1. Introduction
This Unit will provide you with the definitions, philosophy and nature as well as
approaches to rural development. Rural development has attracted considerable attention in
recent years in both the government and among scholars and students of Development
Studies due to the realization that the prospects for a meaningful and sustainable national
development in the country lies in the transformation of the rural economy and social
development. Nearly three fourth of the total population in India is rural and more than 60
percent of them are directly dependent on farm based livelihoods. Majority of the are small
and marginal farmers, land less agriculture labourers, and artisans, most of whom are poor.
This unit , therefore will help you to understand what is rural development, its objectives
and role in poverty alleviation.

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2. Objectives
The main objectives of this Unit are to give you some basic concepts and
approaches of rural development and also poverty and its alleviation . By the end of this
unit, you should be able to have good understanding of:
Defining Rural Development
Aims and Objectives of Rural Development
Poverty Concept and Types of Poverty, and
Approaches for Poverty alleviation
3. 1

Definitions of Development and Rural

Development
Defining development is not easy as in different context its meaning

changes. Development as a concept has been subjected to various theoretical

interpretations and empirical operationalisation. As per various dictionaries, development
means: the act or process of developing; growth; progress; a significant consequence or
event; the act of developing; the state of being developed; a significant occurrence or
change. If we look carefully, all above dictionary meanings directly or indirectly, indicate
change as the meaning of development. Thus, development can be defined as a process
of change from an existing situation to the better and desired position. Development in the
context of people or communities can be defines as betterment or improvement from a
given situation or upliftment of the community from a given situation to a desired position.
Upliftment in this context could be material and quantitative while it could also be
psychological and qualitative in which case it is hardly quantifiable. In essence, therefore,
development is that process, which is concerned with the general improvement of peoples
living conditions. Thus both the physical and psychological elements of development
mutually re-enforce each other in the process of general upliftment, which is tantamount to
and indispensable to development.
Thus development can be defined as a process of change through which the living
conditions of the people are improved and create enabling environment to sustain a
minimum acceptable standard of living.
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Rural Development is a determined and conscious attempt to focus on the general

upliftment of the peoples living conditions in the rural areas. The general thinking about
the rural people is that they are generally traditional, unresponsive to modern economic
motivations and fatalistic and that the rural inhabitants are least willing to transform the
social and political conditions which they inherited. Gandhiji said that India lives in
villages and the development of villages and the people living there can only ensure
national development. Rural areas lack roads and transport, electricity, markets, banking
facilities and other such infrastructure which is necessary for rural economic growth.
Similarly, rural areas have poor school and health facilities, safe drinking water and
sanitation and other such facilities that are essential for improving the living standard of
the rural communities. Majority of the rural people are illiterate, not fully aware of the
government policies and programmes and therefore are not able to fully participate in the
development processes. Thus the rural development is a multidimensional approach to
develop all above mentioned aspects and transform the rural life and economic condition of
the people.

3.2 Aims and Objectives of Rural Development

So far we have discussed the meaning and purpose of rural development. This
helps us in understanding the aims and objectives of the rural development. The ultimate
objective of the rural development is to enhance well being of the rural people. Well being
has many aspects. It means adequate food and clothing, good shelter, safe drinking water
and sanitation;

it also means quality education, health care, road transport

communication, market, banking and credit facilities and other services and facilities
which help in improving the socio-economic status of the people. While the government
has the responsibility to provide most of the infrastructural facilities, the people have to
manage other things such as food clothing and shelter for themselves. They have to spend
on the education and health care for themselves as well as for the family members. For all
these, every household needs a sustainable source of income. The main source of income
and employment for majority of rural people is agriculture and its allied activities
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horticulture, animal husbandry, fisheries, forestry, and other related activities. All these
activities are based on natural resources land, water, forests, and animals. These
resources provide livelihood to those who have access to these resources. There are people
who are landless or have very small land holdings, need other sources of income and
employment or non-farm activities.
Thus the main objectives of rural development can be described as :
1.
services such

Development of socio-economic infrastructure and minimum

basic

as: roads, electricity, drinking water and sanitation, schools, health care

facilities, etc., for improving the living standard of the rural people ;
2.

Development and management of natural resources for optimum economic

use and enhancing livelihood opportunities for the rural people on the one hand and
improving ecology and environment in rural areas;
3.

Transfer of appropriate technologies and develop capacities of the farmers

and other workers in the adoption of modern technologies for increasing productivity and
production of rural farm and non-farm sectors so that the rural workers can enhance their
income and employment status;
4.

Help poor and/or asset less people to develop sources for livelihood and

Undertake such developmental activities that will generate income and employment
opportunities for the rural people in general and the poor in particular; and,
5.

Provide social security for marginalised and vulnerable sections of the

rural people.

4.1

Poverty : Definition and Types of Poverty

Poverty is hunger. Poverty is lack of shelter. Poverty is being sick and not being

able to see a doctor. Poverty is not being able to go to school and not knowing how to read.
Poverty is not having a job, is fear for the future, living one day at a time. Poverty is losing
a child to illness brought about by unclean water. Poverty is powerlessness, lack of
representation and freedom (Word Bank, 1986).

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Some people describe poverty as a lack of essential items such as food, clothing,
water, and shelter needed for proper living. At the UNs World Summit on Social
Development, the Copenhagen Declaration described poverty as a condition
characterised by severe deprivation of basic human needs, including food, safe drinking
water, sanitation facilities, health, shelter, education and information. When people are
unable to eat, go to school, or have any access to health care, then they can be considered
to be in poverty, regardless of their income. To measure poverty in any statistical way,
however,

more

rigid

definitions

must

be

used.

Poverty has many faces, changing from place to place and across time, and has
been described in many ways. Thus there are various types of poverty such as : relative
poverty, absolute poverty, economic poverty, human poverty, etc. These various types of
poverty are briefly discussed below.
Relative poverty
Relative poverty can be understood by a simple example. A person with Rs. 5000
income a month is poorer than the one whose monthly income is Rs. 5500. Relative
poverty can be best used to compare poverty between different communities and regions.
For example the per capita income of agriculture labourers, small farmers and artisans
can give us an idea that which workers group is poorer than others. Similarly comparison
in respect of incidence of poverty between different caste groups like Scheduled Castes,
Scheduled Tribes, Backward Castes and other caste groups can also be made. However
relative poverty doesnt provide clear idea of depth and intensity of poverty.

Absolute poverty
Absolute poverty is a situation where one is below the situation where a person
is not able to meet his/her minimum food, cloth and shelter requirements, vulnerable to
starvation and lives on day to day basis. In economic terms, one whose income is unable
to his /her minimum basic needs is in absolute poverty.

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Human poverty
For a minimum acceptable standard of living, not only food, cloths and shelter but
access to other minimum basic needs such as safe drinking water, sanitation, elementary
education, and primary health is essential. Lack of access to these minimum basic
needs/services causes human poverty. For example inhabitants of a village without safe
drinking water, sanitation, school and primary healthcare suffer from human poverty, even
though they have sufficient food for their consumption.

Poverty in India
In Indian context, absolute poverty can be defined as a situation where a
person or / and his family is unable to have access to minimum required food,
clothes and shelter or inability to earn a minimum livelihood that can meet the
minimum basic needs of a person and his family. However to include human poverty
with absolute poverty, it can be defined as a situation where a person / family is
living below the minimum acceptable standard of life. The earlier definition of
poverty is related to only food, clothes and shelter

while the latter takes into

account other aspects of life, like health, sanitation, education and other basic needs
which are essential for a quality of life.

Poverty Line Income

In India, poverty line is defined as the Monthly Per-capita Consumer
Expenditure (MPCE) corresponding to an intake of 2400 and 2150 K-calories per capita
per day in rural and urban areas respectively. Following this norm, poverty lines are
estimated for the country for different time periods.

The poverty line income for 2004-05

for urban and rural areas of the country were Rs. 538.60 and Rs.356.30 (per capita per
month) respectively .
According to the international poverty line of US $ 1 per day expenditure
per person adjusted by the World Bank, the incidence of poverty in India is put at
34.7 percent in 2001 (UNDP, Human development Report, 2003). However,
according to Planning Commission, Government of India (based on expert group
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methodology), poverty ratio in India during 2004-05 was 28.3 percent for rural, 25.7
percent for urban and combined was 27.5 percent. Table given below shows poverty in
India at different time points.
Table : Poverty in India

Year

Region
Rural

Urban

Combined

1973 74

56.4

49.0

54.9

1999 00

27.1

23.6

26.1

2004-05

28.3

25.7

27.5

Decline

28.1

23.3

31.4

(1973-2005)
The most commonly used definition of global poverty is the absolute poverty line
set by the World Bank. Poverty is set at an income of $2 a day or less, and extreme poverty
is set at $1 a day or less. This line was first created in 1990 when the World Bank
published its World Development Report and found that most developing countries set
their poverty lines at $1 a day.
As of 2001, 1.1 billion people, or 21% of the 2001 world population, had incomes
less than the World Banks $1 a day line for extreme poverty. About 2.7 billion people
had incomes less than the World Banks $2 a day line for poverty. While this is a decline
from past years (in 1981, there were 1.5 billion people in extreme poverty), it still means
that almost one-half of the worlds population lives in poverty, mainly in sub-Saharan
African and South Asia.

4.2

Causes of Poverty in Rural India

Income or expenditure is one of the multiple dimensions of poverty and they

range from the basic economic needs of individuals to their social, political, cultural and
spiritual requirements. According to UNDP (2000), poverty means denial of human rights.
It argues that good health, adequate nutrition, literacy and employment are neither
favours nor acts of charity bestowed upon the poor by Governments and international

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agencies. These are basic human rights which should be ensured for the poor. Poverty,
therefore, needs to be explained and understood with reference to the perspective of
sustainable human development which encompasses ability to lead a long, creative and
healthy life, acquiring knowledge, having freedom, dignity, respect for others and having
access to the resources required for a decent standard of living.
Poverty is influenced by both economic and social factors. Under the former
category, the growth/failure of agriculture affects the absolute poverty levels in the
country. When there is reasonable degree of growth in agriculture a larger workforce
dependent upon agriculture would be able to get employment for longer duration and at the
same time they will have a better bargaining power for higher wages which in turn lead to
reduction in the poverty levels. The present scenario is that nearly two-thirds of the
workforce depends upon agriculture despite the fact that the share of agriculture in GDP
has come below 18 per cent.
Many studies have shown that poverty and social backwardness are interrelated especially in the rural areas where illiteracy is widespread among various social
groups. If the development is to be sustainable, it is not sufficient to focus upon income
poverty alone but the efforts need to be directed towards improving human development
also. This calls for strong commitment on the part of the Government for improvement of
sanitation and drinking water facilities, literacy levels, health standards etc.

Nearly 74 per cent of more than a billion people live in the rural areas and nearly
27 percent of them are below the poverty line income. Agricultural labourers, casual
workers engaged in non-agricultural activities, marginal and small farmers, rural artisans
constitute the bulk of the poor.
The primary cause for poverty among the households dependent upon the landbased activities is the small land holding and their low productivity. Among some sections
within the poor, poverty is further perpetuated on account of poor educational base and
lack of vocational skills. A large proportion of poor people are forced to seek employment
manual works with low wages and productivity levels and the reason for this is attributed

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to poor physical and social capital base. In a nutshell, the basic causes of poverty can
be summarized as under:
(i)

India continues to be an agrarian economy as even today more than

60 percent of the rural work force is depended on agriculture, though the contribution
of the agriculture sector to the GDP is below 18 percent.

(ii)

More than 80 percent of the farmers have small and marginal

holdings (less than two hectares) and most of them practice subsistence agriculture.
Besides a large number of landless people are dependent on agriculture labour.
Majority of them belong to socially weaker sections, who have poor access to the
various factors of production and therefore suffer from poor productivity and thus
most of them are poor.

(iii)

High rate of population growth and low level of literacy are other

important factors which have adversely affected the growth process.

(iv)

Slow pace of development in industrial and service sectors and

inability of the non-farm sectors to create mass employment to absorb excess labour
from the farm sector are also the causes of the poverty.
(v)

Due to lack of diversification of production activities there was no

trickledown effect particularly in rural areas and thus the economy could not
generate employment at the required rate in the non farm and shift surplus labour from
farm to non-farm sector .

4.3

Approaches to Rural Development in India

In the preceding sections we have defined development, rural development,

objectives of rural development, poverty and poverty line income. Now in this section we
will discuss various approaches to rural development. India, immediately after
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independence, has experimented a number of approaches for rural development and

poverty alleviation and introduced various programmes from time to time. In this section
we will discuss major approaches and programmes implemented in India.
Community development approach
The overall focus of rural development is the development of rural communities.
The community development approach therefore focuses on the village community for
their all round development. With the start of planned development in India with the First
Five Year Plan in 1952, the Government of India introduced Community Development
Programme (CDP). The main plank of the programme was the village and its people. The
approach involved the following aspects:
1. Awareness creation among the village people for self and community
development;
2. Provide resources for various village development activities;
3. Encourage people to mobilize local resources by way of contribution of
manpower, material and if possible money also, for village infrastructure
development and social services ;
4. Transfer of modern farm technologies and supply of inputs for improvement
in farm productivity and production; and,
5. Development of village industries and other non-farm activities to diversify
village economic activities.
6. CDP was essentially community based approach but needed considerable
investment in capacity building of the village people to bring them in the
mainstream development. This was a major lacuna in the CDP. Another
problem was the variable size of the villages in terms of population. The size
of the villages vary from less than hundred population to more than twenty
thousand. There are more than sixty percent villages with less than five
hundred population which are not viable for locating various services and
physical infrastructure essential for socio-economic development of the
village people.

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Rural growth centre (RGC) approach

Growth doesnt take place everywhere. It takes place at certain points which have
certain specific characteristics like population size, infrastructure (specially road
connectivity and markets), electricity, schools, hospitals, etc. These points are called as
central villages or growth centres. It has been stated above that a majority of villages are
small in population size that they cannot sustain various socio-economic services and
infrastructure. This doesnt mean that such villages should be deprived of the services and
facilities. The Rural growth centre concept therefore was found useful to locate various
socio-economic services and infrastructure at such locations that inhabitants of a number of
small villages can have access to them at a very short travel distance and cost.

Keeping this in view, it was envisaged to develop a number of central villages as

rural growth centres which will not only provide socio- economic services and
infrastructure but also become a hub of various economic activities and radiate its
influence over all villages within its hinterland. This approach however is more suited to
provide social and economic infrastructure at optimum suitable locations.

Integrated Area Development (IAD) approach

Integrated Area Development (IAD) approach is a modified version of rural
growth centre (RGC) approach as it includes both spatial and functional aspects of
development. The RGC approach basically focuses on developing socio- economic and
physical infrastructure at appropriate locations so that these can be assessed by all people
with the village and also villages surrounding it (hinterland). This is the spatial dimension
of infrastructure and services development. Under IAD approach, economic activities like
agriculture, animal husbandry, horticulture, fisheries, agri-business, agro processing, micro
enterprises, household and various artisan based non-farm activities are planned and
promoted. In addition, activities related to natural resources management such as drought
proofing, wasteland development, afforestation, management of common properties and
watershed development are also included.

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Thus IAD approach takes care of all developmental needs of an area. The size of
an area as a planning unit can vary from Gram Panchayat to a cluster of villages and also a
Mandal /Block) and plan for their development over a given time frame.

The IAD

approach is the best way to integrate various sectoral development projects within a single
plan frame and provides an appropriate platform for convergence of various schemes and
programmes at the ground level.
Integrated Rural Development Approach
The above two approaches are basically growth oriented and main focus is on the
maximisation of productivity and production of both goods and services with in an area.
However it does not take care of poverty alleviation, which is now a prime focus of rural
development.

Hence

IRD

approach

seeks

integration

of

poverty

alleviation

projects/programme within the IAD frame to make it a comprehensive approach for rural
development to provide an enabling environment for achieving stipulated objectives of
rural development. A poor cannot be developed in isolation. Any investment on a poor can
become productive only when other facilitating factors such as productive assets,
technology and extension services, credit, other inputs and marketing support are within
his reach and accessible to him.

Decentralised Participatory Rural Development (DPRD) Approach

Most of the development activities are centralized in the sense that these are
planned and executed by the central and the state governments. In order to make
programme implementation effective it is necessary that the development process
decentralised so that developmental activities are properly monitored. This is essential,
particularly in the case of rural development programme as these are directly focused on
people and the villages. The 73rd Constitutional Amendment made Panchayati Raj System
as empowered Local Self Governments for both governance and development. The PRIs
therefore are the key for decentralised development. The Gram Panchayats are the basic
units for development in decentralised development system and Gram Sabha is empowered
to provide peoples participation in all rural development activities at the village and higher
levels of PRIs.
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Most of the rural development programmes are planned and managed by the
government departments/agencies.

People in general and the target poor are rarely

associated at any stage of planning and implementation except in the case where
beneficiary oriented programmes which are focused on Below Poverty Line (BPL)
families. In other words, almost all programmes are supply oriented and appear as if
thrusted upon the people. The participatory approach, where people are involved at all the
stages of the planning and implementation of the programmes, make them demand oriented
and people claim stake in all those projects and programmes.

5. Summing Up
In this Unit, we have exposed you to the basics of rural development. Starting
with the definition of development, rural development and poverty, and various types of
poverty. Understanding the differentiation as well as relationship between various types of
poverty is necessary as it provides a sound basis to evolve appropriate strategies to deal
with multiple facets of the poverty. We have also discussed the causes of poverty and
present situation of

poverty, specially in rural areas, so that it would help us to identify

the ways and means to alleviate poverty. Finally we discussed various approaches to rural
development adopted from time to time in India. The earlier approaches Community
Development, Rural Growth Center and Integrated Area Development were basically
growth oriented and therefore distributive aspect of rural development was ignored. The
present strategy of Integrated Rural Development takes care of both growth and equity
aspects of rural development. It is expected that after this unit you will have clear idea of
various aspects of rural development and help in understanding various processes in
planning and management of sustainable rural development that will be discussed under
subsequent blocks/units.

6.

Keywords
(i)
(ii)
(iii)
(iv)

Relative Poverty
Absolute Poverty
Human Poverty
Poverty Line Income

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(v)
(vi)
(vii)
(viii)
(ix)
(x)

BPL (Below Poverty Line) Families

Community Development
Rural growth Centres
Integrated Area Development
Integrated Rural Development
Decentralised Participatory Rural Development

7. Know your Progress

1.
2.
3.
4.

What do you understand by rural development and what are its objectives
Define poverty and poverty line income
What are the main causes of poverty in rural India
What are the approaches for rural development adopted in India

8. Further Readings / References

1.

Fifty Years of Rural Development in India : NIRD (1998)

2.

Gilbert, Geoffry. World Poverty. Santa Barbara: ABC-CLIO 2004

3.

Reddy, Sanjay G. How Not to Count the Poor. Columbia University, 2005.

4.

UN World Summit on Social Development

5.

Wikipedia: Poverty

6.

Wikipedia: Poverty Line

7.

World Bank: Poverty Net: Overview

8.

Model Answers
1. Rural Development is a determined and conscious attempt to focus on the

general upliftment of the peoples living conditions in the rural areas. Rural areas lack
roads and transport, electricity, markets, banking facilities and other such infrastructure
which is necessary for rural economic growth. Similarly, rural areas have poor school and
health facilities, lack safe drinking water and sanitation and other such facilities that are
essential for improving the living standard of the rural communities. Majority of the rural
people are illiterate, not fully aware of the government policies and programmes and
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therefore are not able to fully participate in the development processes. Thus the rural
development is a multidimensional approach to develop all above mentioned aspects and
transform the rural life and economic condition of the people.

Thus the main objectives of rural development can be described as :

1.
Development of socio-economic infrastructure and minimum
basic
services such as: roads, electricity, drinking water and sanitation, schools, health care
facilities, etc., for improving the living standard of the rural people ;
2.
Development and management of natural resources for optimum
economic use and enhancing livelihood opportunities for the rural people on the one hand
and improving ecology and environment in rural areas;
3.
Transfer of appropriate technologies and develop capacities of the
farmers and other workers in the adoption of modern technologies for increasing
productivity and production of rural farm and non-farm sectors so that the rural workers
can enhance their income and employment status;
4.
Help poor and/or asset less people to develop sources for livelihood and
Undertake such developmental activities that will generate income and employment
opportunities for the rural people in general and the poor in particular; and,
5.
Provide social security for marginalised and vulnerable sections of the
rural people.

2. At the UNs World Summit on Social Development, the Copenhagen

Declaration described poverty as a condition characterised by severe deprivation of
basic human needs, including food, safe drinking water, sanitation facilities, health,
shelter, education and information. When people are unable to eat, go to school, or have
any access to health care, then they can be considered to be in poverty, regardless of their
income.

Poverty has many faces, changing from place to place and across time, and has
been described in many ways. Thus there are various types of poverty such as : relative
poverty, absolute poverty, economic poverty, human poverty, etc.

In India, poverty line is defined as the Monthly Per-capita Consumer

Expenditure (MPCE) corresponding to an intake of 2400 and 2150 K-calories per capita
per day in rural and urban areas respectively. Following this norm, poverty lines are
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estimated for the country for different time periods.

The poverty line income for 2004-

05 for urban and rural areas of the country were Rs. 538.60 and Rs.356.30 (per capita per
month) respectively .

The most commonly used definition of global poverty is the absolute poverty
line set by the World Bank. Poverty is set at an income of $2 a day or less, and extreme
poverty is set at $1 a day or less. This line was first created in 1990 when the World Bank
published its World Development Report and found that most developing countries set
their poverty lines at $1 a day. As of 2001, 1.1 billion people, or 21% of the 2001 world
population, had incomes less than the World Banks $1 a day line for extreme poverty.

3. The primary cause for poverty among the households dependent upon the
land-based activities is the small land holding and their low productivity. Among some
sections within the poor, poverty is further perpetuated on account of poor educational
base and lack of vocational skills. A large proportion of poor people are forced to seek
employment manual works with low wages and productivity levels and the reason for this
is attributed to poor physical and social capital base. In a nutshell, the basic causes of
poverty can be summarized as under:
(a)

India continues to be an agrarian economy as even today more than

60 percent of the rural work force is depended on agriculture, though the contribution
of the agriculture sector to the GDP is below 18 percent.
(b)

More than 80 percent of the farmers have small and marginal

holdings (less than two hectares) and most of them practice subsistence agriculture.
Besides a large number of landless people are dependent on agriculture labour .
Majority of them belong to socially weaker sections, who have poor access to the
various factors of production and therefore suffer from poor productivity and thus
most of them are poor.
(c)

High rate of population growth and low level of literacy are other

important factors which have adversely affected the growth process.

(d)

Slow pace of development in industrial and service sectors and

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inability of the non-farm sectors to create mass employment to absorb excess labour
from the farm sector are also the causes of the poverty.
(e)

Due to lack of diversification of production activities there was no

trickledown effect particularly in rural areas and thus the economy could not
generate employment at the required rate in the non farm and shift surplus labour
from farm to non-farm sector .

4. In India a number of approached for rural development were adopted from

time to time. Some of the important are briefly discussed below.

Community Development Approach

The overall focus of rural development is the development of rural communities.
The Community Development approach therefore focuses on the village community for
their all round development. With the start of planned development in India with the First
Five Year Plan in 1952, the Government of India introduced Community Development
Programme (CDP). The main plank of the programme was the village and its people. The
approach involved the following aspects :
1. Awareness creation among the village people for self and community
development;
2. Provide resources for various village development activities;
3. Encourage people to mobilize local resources by way of contribution of
manpower, material and if possible money also, for village infrastructure development
and social services ;
4. Transfer of modern farm technologies and supply of inputs for improvement
in farm productivity and production; and,
5. Development of village industries and other non-farm activities to diversify
village economic activities.
CDP was essentially community based approach but needed considerable
investment in capacity building of the village people to bring them in the mainstream
development. This was a major lacuna in the CDP.
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Rural Growth Center (RGC) Approach

Growth doesnt take place everywhere. It takes place at certain points which
have certain specific characteristics like population size, infrastructure (specially road
connectivity and markets), electricity, schools, hospitals, etc. These points are called as
central villages or growth centres. It has been stated above that a majority of villages are
small in population size that they cannot sustain various socio-economic services and
infrastructure. This doesnt mean that such villages should be deprived of the services and
facilities. The Rural growth centre concept therefore was found useful to locate various
socio-economic services and infrastructure at such locations that inhabitants of a number
of small villages can have access to them at a very short travel distance and cost.

Integrated Area Development (IAD) Approach

Integrated Area Development (IAD) approach is a modified version of rural
growth centre (RGC) approach as it includes both spatial and functional aspects of
development. Under IAD approach, economic activities like agriculture, animal
husbandry, horticulture, fisheries, agri-business, agro processing, micro enterprises,
household and various artisan based non-farm activities are planned and promoted. In
addition, activities related to natural resources management such as drought proofing,
wasteland development, afforestation, management of common properties and watershed
development are also included.

Thus

IAD

approach

takes

care

of

all

developmental needs of an area.

Integrated Rural Development Approach

The above two approaches are basically growth oriented and main focus is on
the maximisation of productivity and production of both goods and services with in an
area. However it does not take care of poverty alleviation, which is now a prime focus of
rural development. Hence IRD approach seeks integration of poverty alleviation
projects/programme within the IAD frame to make it a comprehensive approach for rural
development and to provide an enabling environment for achieving stipulated objectives
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of rural development. A poor cannot be developed in isolation. Any investment on a poor

can become productive only when other facilitating factors such as productive assets,
technology and extension services, credit, other inputs and marketing support are within
his reach and accessible to him.

Decentralised Participatory Rural Development (DPRD) Approach

Most of the development activities are centralized in the sense that these are
planned and executed by the central and the state governments. In order to make
programme implementation effective it is necessary that the development process
decentralised so that developmental activities are properly monitored. This is essential,
particularly in the case of rural development programme as these are directly focused on
people and the villages. The 73rd Constitutional Amendment made Panchayati Raj System
as empowered Local Self Governments for both governance and development. The PRIs
therefore are the key for decentralised development. The Gram Panchayats are the basic
units for development in decentralised development system and Gram Sabha is
empowered to provide peoples participation in all rural development activities at the
village and higher levels of PRIs.

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Unit -2: Measurement of Poverty

Structure
1. Introduction
2. Objectives
3. Concepts of Poverty
4. Estimation of Poverty Line: Approaches and Database
5. Income Poverty: Measures and Trends
5.1. Income Poverty: Trends
6. Human Poverty: Concept and Estimation
7. Identification of Poor
8. Summing up
9. Key Words
10. Know your Progress
11. Further Reading / References

1. Introduction
Eradication of poverty and improvement in living standards of the people are the
goals of development planning in India. Besides the sectoral growth, special initiatives in
the name of poverty alleviation programmes (PAPs) have been launched to reduce the
poverty. During the last six decades poverty levels have considerably declined in rural and
urban India.
The purport of this unit is to familiarize the student with the various concepts of
poverty and also measurement issues. More specifically, it deals with concepts of poverty,
estimation of poverty line and database for measurement of poverty, measures and trends
in income poverty in rural India, concept and estimation of human poverty, levels and
trends in human poverty and identification of poor.

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2. Objectives
By going through this Unit, the student will be able to:
i)

explain the concept of poverty and measurement related issues

ii)

use the database and estimate income poverty

iii)

analyse the (official) statistics on poverty; and

iv)

present the approaches followed in identification of poor

3. Concepts of Poverty
Several concepts of poverty have been developed since the seminal works of
Rowntree (1901) and Townsend (1971). Some of the important concepts among them are:
Primary and Secondary poverty and Absolute and Relative poverty.
i) Primary Poverty: It refers to the insufficiency of the income to maintain the
physical well being i.e., the income/expenditure of the household cannot ensure the
consumption of goods and services needed for the minimum standard of living. The
concept of basic needs poverty or primary poverty, therefore, is essentially normative since
there is no objective way of determining the composition and the level of each of the items
in the basket of basic needs. Furthermore, what constitutes minimum standard of living,
is expected to vary with development/time and accordingly the income norm has to be
revised. Failure to adjust the income norm to these changes will lead to either
underestimation or overestimation of poverty. In some of the traditional societies, the
conventional necessities (e.g. death ceremony) are to be included in the basket of basic
needs.
Since measurement of consumption of various goods and services vis--vis certain
standards or norms prescribed is a complex process, poverty is usually assessed in terms of
income or expenditure. The assumption is that consumption levels of the various goods and
services, which determine the living standards, will have strong / less strong association
with income. But keeping the problems of data collection in view, it would be desirable to
consider income or certain equivalent indicators rather than preferring specific
commodities as proxy to income variable.

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The approaches to estimate poverty have paid more attention to food component
than the others. Thus, in the basic needs approach, determination of the magnitude of the
food component yielding certain desired level of (different) nutrients and in particular
calories or energy for maintenance of physical efficiency, has become the critical factor.
So, minimum household income which ensures the recommended calories has to be
identified for estimation of primary poverty.
ii) Secondary Poverty: While primary poverty essentially deals with insufficiency
of incomes, the secondary poverty concerns with allocation problem. A household is
classified as poor, not due to income inadequacy, but due to leakages in the family budget - higher allocation to (relatively) non-basic goods/services. By re-allocation of the
expenditure, the household can be reclassified as non-poor. The secondary poverty, to
good extent, is the resultant of demonstration effect. The tendency to spend more on nonfood items at the cost food items has been noticed even among bottom deciles of income
in almost all the states of India by many scholar
(R. Radhakrishna and C.Ravi 1992, K. Hanumantha Rao 1993).
iii) Absolute Poverty: This concept is more relevant in the context of developing
countries. It emphasises on subsistence and economic deprivation. A family is classified as
poor in the absolute sense if it fails to provide itself with minimum (absolute) levels of
goods and services. It is a state of absolute deprivation in one or several facets of decent
living. Lack or inadequacy of endowments or capabilities could be the plausible cause(s)
for such deprivation.

iv) Relative Poverty: This measure is more appropriate to capture inequality in the
developed societies. It refers to the economic status of a household vis-a-vis the average
level of the society. In general, the per capita income (or a variant of it) of the
region/society will be considered as the yard-stick, to classify individuals into poor and
non-poor. It is to be noted that absolute deprivation of an individual in a society can also be
interpreted as a failure of the system leading to relative deprivation in terms of resources,
incomes and commodities.
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Thus, poverty and Inequality are related and a reduction in the former
will result in the decline of the latter but the converse need not be true. So, containing of
absolute poverty is one of the best means for redressal of inequality in a society.
Income poverty analysis is essentially confined to lower end of income
distribution. The income based approach refers to a certain minimum standard of living
expressed in terms of food (nutrition) and other basic needs like clothing and shelter. The
poverty ascertained using such norm is known as absolute poverty i.e. number of
households or persons who have failed to meet the basic necessities for a decent living in
the society. On the other hand, the relative poverty which is also linked with the income
distribution, is expressed in relation to the prevailing living standards of the people in a
society. For instance, percentage of households/ persons having incomes less than 75 per
cent of the average income of the society can be treated as relatively poor. In such a
definition, relative poverty always exists in every society.
v) Persistent Poverty: It refers to a situation where the household continues to be
economically unviable unit i.e. the household specific factors in the given socio-political
economic environment cannot permit the household to enjoy the above poverty level of
living. The chronic poverty is defined in a similar way. Household is classified as chronic
poor if it remains poor always or most of the time.

vi)Transient Poverty: If refers to a situation where non-poor household becomes

poor due to certain unexpected external factors. This could be a temporary phenomenon.
e.g. due to cyclones or droughts, an economically viable unit becomes unviable and such a
fall in incomes may not be a continuing feature. The economic factors like unfavourable
prices may also cause emergence of such situations. In rainfed areas, most of the small
(agriculture land) holders may get in to poverty trap in a few years of the weather (or
rainfall) cycle.
A definition of poverty encompassing causes as well as consequences of poverty
was provided by Guhan and Harris (1992) poverty has long been recognised as an
interlocking condition of assetlessness, under-employment, low wages and incomes,
proneness to disease, illiteracy, gender, economic vulnerability, social disadvantage and
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political powerlessness. Such an approach which depicts the nature, extent and intensity of
poverty can only help in formulation of poverty alleviation measures.
Thus, the poverty is multi-faceted phenomenon reflecting the deprivation of
individual on several fronts. In a way it can be construed as a sub-normal situation. So,
definition and measurement of poverty in a society should encompass these several
deprivations.

4. Estimation of Poverty Line: Approaches and Database

Defining poverty line has been a subject for debate in India since Indian Labour
Conference, 1957. Several attempts have been made by scholars and agencies to work out
an acceptable norm.
i) Basic Needs Approach: In the measurement of absolute poverty various
approaches for construction of poverty line have been in vogue. For instance, the Working
Group of the Planning Commission (1962) under the chairmanship of D.R.Gadgil defined
the poverty line as the minimum expenditure required for decent life. It had considered the
principal basic needs like food, clothing and shelter but assumed that the health and
educational services for the poor would be met from the state budget or expenditure on
these two sectors. It recommended a minimum of Rs.20 per capita per month (PCPM) at
1960-61 prices for rural areas for leading a minimum standard of living in rural India
though the details of expenditure required for each of the sub-components were not
furnished. As far as urban areas are concerned, a norm of Rs.25/- per capita per month
was suggested to make up the price differences. The perspective plan aimed at achieving
this national minimum expenditure of Rs.20 PCPM at 1960-61 prices for all by 1975-76.

ii) Calorie- Expenditure Approach: Of the other approaches to measurement of

poverty, Food First Approach (FFA) or Calorie-Expenditure Approach (CEA) has been

Normal situation refers to a State which is socially acceptable. e.g. Minimum standard of living
for all, full employment for all those seeking and available for work, etc., are normal situations.

Another estimate of poverty line based on the balanced diet prescribed was worked
out by the Planning Commission and it was Rs.35 per capita per month at 1960-61
prices.

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widely used. Since Food is the prime basic need, the poverty line is defined as that
income or expenditure level at which food needs are met. Since, the total expenditure is
the sum total of food and non-food expenditures, in this approach, the observed or actual
non-food expenditure at this threshold level of income or expenditure has been defined as
the norm (poverty line). So, in many studies, the food needs are estimated first and its
equivalent market value (income) is worked out. This estimated value is inflated by taking
into account the share of non-food expenditure in total expenditure, to arrive at the
minimum expenditure or poverty line.
The average calorie requirements for persons in rural and urban areas were
estimated accordingly. The Planning Commission have used 2400 kcals and 2100 kcals per
day per capita respectively. As norms for determining the rural and urban poverty lines,
Dandekar and Rath (1971) assumed 2250 kcals as the minimum energy need per day per
person. In this approach, the poverty is equated, more or less, with under-nourishment.
Since climatic conditions differ significantly, the use of one calorie norm/poverty line for
the entire country is not tenable.
In the calorie-expenditure approach, poverty line is estimated by fitting functional
relationship between expenditure (E) and calorie intakes (C)
C = f (E)

Using the estimated relation, the minimum expenditure (E*) that is needed for the
specified calorie level (C) will be estimated. The Fig. 1 depicts the functional relationship.
Whether, the non-food expenditure is adequate or not at the estimated total expenditure
level of E* is a moot question since their relationship has been observed to be non- linear.

Calorie
Intake

C
E*

E* : Poverty line
Expenditure (Rs.)

Fig 1 Calorie-expenditure relationship

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Based on this approach, the poverty lines have been worked out for various years
by adjusting this norm/poverty line for price variations/inflation. The principal databases
for several studies are the consumer expenditure surveys of National Sample Survey
Organisation (NSSO) and nutrient contents of different food items of ICMR. The consumer
price index for agricultural labourers and consumer price index for urban manual
(industrial) workers have been employed for arriving at the poverty lines for rural and
urban India respectively for different periods.
This procedure has several limitations, such as:
i) The basic needs basket and the relative importance of each one has been
assumed to be same in rural and urban areas and also over time: and
ii) The variations in climatic conditions and food habits observed across the
country, have not been taken into account in the determination of basic needs basket.
The various committees / expert groups constituted by the Government have
attempted to estimate the percentage and number of poor in India and various states. Some
of them are briefly discussed:
Nutritional Advisory Committee (ICMR, 1958) recommended an intake of 2400
kcal per capita per day in rural areas. Task Force of the Planning Commission (1979) has
adopted the calorie norm and considered a fixed consumption basket while deriving the
poverty line. Using age-sex-activity data, it estimated the poverty line for rural areas as Rs.
49 per capita per month at 1973-74 prices and for urban areas the poverty line was Rs. 56.
These poverty lines were used for all the states.
An Expert Group (1993) was constituted in (1989) by the Planning Commission
under the Chairmanship of Prof. Lakadwala and it used the Task Force poverty lines for
rural and urban India of 1973-74 and worked out poverty lines for each state after adjusting
for spatial variations in prices. Using the cost of living indices, the poverty lines were
estimated for other years.
Tendulkar Committee (2009) has addressed the criticisms levelled against the
Lakadwala Committee such as fixed consumption basket and non-inclusion of goods and
services purchased by households. It anchored the poverty line to nutrition outcomes and
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also to education and health outcomes. The revised calorie norm of FAO is 2000 kcals for
rural persons was taken while estimating the poverty.

iii) Database: For estimation of poverty in India, the main source of data is
National Sample Survey Organisations (NSSO) quinquennial survey on consumer
expenditure. Information is collected in four sub-rounds (quarterly) from randomly
selected households in different villages. The sample will be varying from quarter to
quarter. For instance, during 61st round i.e. for 2004-05, about 79,306 households from
7,999 villages drawn from 4,602 Blocks in various districts of all the states and UTs were
covered. A pre-tested and structured schedule is canvassed to the sample households to
elicit consumption expenditure (and also intake of `quantities for a few items) during the
preceding 30 days in respect of food items and 365 days in the case of durables / less
frequently purchased items (clothing, footwear, education, institutional, medical care and
durables). This approach is called Mixed Reference Period (MRP). If the reference period
is same for all items it is known as Uniform Reference Period (URP). The estimates of
consumption expenditure and thereby the poverty estimates are sensitive to the differences
in the recall / reference period adopted for data collection. The household wise data are
aggregated using weighting mechanism. The estimates of poverty for rural and urban areas
of each state are worked out using the poverty line expressed in terms of consumer
expenditure per capita per month. The estimates are also provided for sub-state level ie
NSS region wise.

5. Income Poverty: Measures and Tends

i) Measures of Poverty
Once the poverty line is worked out, the next step is to estimate the poverty in a
region. Some of most popular measures of poverty are: Head-Count Ratio (HCR), Poverty
Gap Index (PGI) and Sens P measure. However, this unit deals with the first two.

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Head - Count Ratio (HCR)

The most widely used measure is poverty ratio or Head-Count Ratio (HCR) which
is the percentage of persons or population whose incomes/expenditure are less than the
poverty line.

n = Total population
Q= Total number of poor (i.e. persons having income less than poverty line)
Z= Poverty line
m= Y= Average income of the population
mp= Average income of the poor
If y1, y2, yQ , . Yn are the incomes of the population in the
y1 y2 yq

ascending order, then

y1 yq

Q
mp =

n
yi /Q ; m = y =

i=1

Thus, HCR = Q

. Yn

( yi )/n
i=1

100

n
HCR helps in estimating the magnitude of poor or the population at risk. It is a
useful index for deciding the scale of intervention by government or any development
agency to reduce it. The main limitation of this measure is that it does not differentiate the
very poor persons from moderately poor. This measure is also insensitive to
changes/transfers of income among poor and also from poor to non-poor. It is also
unaffected by all those the transfers of income from non-poor to poor without altering the
HCRatio.

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ii) Poverty Gap Index (PGI)

The income required by the poor will not be the same for all and a good poverty
measure should as well capture the inequality among poor. To overcome the above
mentioned drawback, the Poverty Gap Index (PGI) is used. PGI measures the total income
needed to close the income gap of the poor so that all the poor can be brought above the
poverty line (Z). The income-gap or poverty gap(g) of an individual is the difference
between poverty line and his income yi. So
gi = (Z- yi ) and gi

0 for poor and gi < 0 for non-poor.

Thus, Poverty Gap for the poor (PG) is:

Q
PG =

(Z yi) =

gi

i=1
Where yi is the income of the ith person and gi is the income gap of ith person. The
average poverty gap is given by:
Q
PG / Q =

gI / Q = (QZ

y ) / Q= (Z mp )

i=1

Another variant of PG is Poverty Gap Ratio (I)

I=

gi / QZ

Thus, Poverty Gap Ratio, I can also be expressed as:

(Z mp)
I=

i.e. average income gap of the poor as

proportion of poverty line

Z
While the HCR is insensitive to transfers of income from poor to non-poor, PG
indices are not sensitive to the number of people sharing the same income or Poverty Gap.

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5.1. Income Poverty: Trends

The rural poverty trends can be examined in two distinct epochs. The poverty
levels were high and fluctuating during 1954-74 without any clear trend. In the drought
years of 1966-67 and 1967-68, the rural poverty levels were at the peak (56%). The factors
responsible for this pattern are mainly agricultural production, per capita wage rates and
food prices. In the latter period, there has been a steady decline in rural poverty and as per
officials estimates; the rural poverty during 2004-05 was 28 per cent. The growth of
agriculture and the poverty alleviation programmes have played a significant role in this
regard. Tendulkar Committee (2009), however, revised the poverty estimates for 1993-94
and 2004-05. The rural poverty was 50.1 and 41.8 per cent during 1993-94 and 2004-05
respectively. The contribution of economic reforms on rural poverty is more pronounced
since late 90s. The monotonically increasing unemployment rate and low and stagnant
agriculture growth have been responsible for the deceleration in poverty decline in the new
economic reforms era despite impressive overall economic growth of Indian economy. The
poverty incidence and intensity at the aggregate level can be gleaned from Table 1.

Table 1: Trends in Rural Poverty

Period

1973-74
1983
1993-94
1999-2000
2004-05
M: Millions

Head Count Ratio

(%)
56.4
45.7
37.3 (50.1)
27.1
28.3 (41.8)

Number (M)
261.3
252.0
244.0
193.2
220.9 (327)

Poverty
Gap
(%)
16.56
12.32
8.45
-5.80

Note: Figures in parenthesis are estimates given by Tendulkar Committee

The state-wise poverty levels for the year 2004-05 are presented in Table-2
Table 2: Incidence of Poverty in Rural Areas State wise
S.No.

State/UT

Incidence of

Poverty Line (PCPM)

Poverty (%)
States

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2004-

2004

2004-

2004-05

256 | P a g e

1.

Andhra

05

-05 *

05

11.2

32.3

292.25

433.43

22.3

33.6

387.64

547.14

Pradesh
2.

Arunachal
Pradesh

3.

Assam

22.3

36.4

387.64

478.00

4.

Bihar

42.1

55.7

354.36

433.43

5.

Goa

5.4

28.1

362.25

608.76

6.

Chhattisgarh

40.8

55.1

322.41

398.92

7.

Gujarat

19.1

39.1

353.93

501.58

8.

Haryana

13.6

24.8

414.76

529.42

9.

Himachal

10.7

25.0

394.28

520.40

4.6

14.1

391.26

522.30

Pradesh
10.

Jammu

&

Kashmir
11.

Jharkhand

46.3

51.6

366.56

404.79

12.

Karnataka

20.8

37.5

324.17

417.84

13.

Kerala

13.2

20.2

430.12

537.31

14.

Madhya

36.9

53.6

327.78

408.41

Pradesh
15.

Maharashtra

29.6

47.9

362.25

484.89

16.

Manipur

22.3

39.3

387.64

578.11

17.

Meghalaya

22.3

14.0

387.64

503.32

18.

Mizoram

22.3

23.0

387.64

639.27

19.

Nagaland

22.3

10.0

387.64

687.30

20.

Orissa

46.8

60.8

325.79

407.78

21.

Punjab

9.1

22.1

410.38

543.51

22.

Rajasthan

18.7

35.8

374.57

478.00

23.

Sikkim

22.3

31.8

387.64

531.50

24.

Tamil Nadu

22.8

37.5

351.86

441.69

25.

Tripura

22.3

44.5

387.64

450.49

26.

Uttarakhand

40.8

35.1

478.02

486.24

27.

Uttar Pradesh

33.4

42.7

365.84

435.14

PGD-SRD, 2010 - 11

257 | P a g e

28.

West Bengal

28.6

38.2

382.82

445.38

UTs
29.

A & N Islands

22.9

--

--

--

30.

Chandigarh

7.1

--

--

--

31.

D & N Haveli

39.8

--

362.35

--

32.

Daman & Diu

5.4

--

--

--

33.

Delhi

6.9

15.6

--

541.39

34.

Lakshadweep

13.3

--

--

--

35.

Pondicherry

22.9

22.9

--

385.45

All-India

28.3

41.8

356.30

446.68

PCPM: Per capita per month

*: Estimates given by Expert Group

(Source: Planning Commission, Press Release, March 21, 2007.

Tendulkars Group Report, November 2009)

It is evident from Table 2 that poverty is largely concentrated in Central and Eastern
India. The state of Maharashtra, Chhattisgarh, Madhya Pradesh, Bihar, Jharkhand, Orissa
and Uttar Pradesh experience high levels of poverty and together account for nearly 49.9
per cent of the rural poor in 2004-05 (Expert Group).

Further analysis of NSSO data by the scholars revealed that most of the rural poor
belong to SC, ST and OBC groups. Among occupational groups, the shares of landless
labour and small and marginal farmers in the rain fed regions in the rural poverty were
disproportionately higher than their shares in population.
Example
Monthly per capita income (Before NREGS) of the 10 Households for the state of
Kerala are given below. Calculate Head count Ratio and Poverty Gap. Poverty Line (PL)
for Kerala is Rs. 547/- per capita per month.
S.No.
1
2
3
4
5
6

Per capita income

(Rs/ Month)
450
550
400
580
430
420

PGD-SRD, 2010 - 11

Poor /
Poverty Gap
Non-poorer capita income)
Poor
97
Non-poor
-3
Poor
147
Non-poor
-33
Poor
117
Poor
127
258 | P a g e

570

Non-poor

420

Poor

9
10

460
520

Poor
Poor

-23
127
87
27

n= Total number of households (10)

Q= Total number of poor households (7)
HCR= (Q/n) x100
= (7/10) x 100 = 70 %
Poverty Gap= Rs. 729/- (for rural households)
Poverty Gap Index=

Rs. 729
------------ = 1.3
Rs. 547

6. Human Poverty: Concept and Estimation

Poverty measured in terms of income / expenditure insufficiency has several
limitations besides measurement problems. For decent life or living standards, the nonmonetary dimensions such as freedom of expression, dignity of life, access to quality of
health and education services etc., are equally important. Adequacy of income does not
automatically ensure the latter. Morris and Morris (1971) introduced the physical quality
of life index (PQLI) taking into account the health and education parameters. The three
indicators used in the construction of PQLI are infant mortality rate (IMR), expectancy of
life at birth (e0) and literacy rate (L).
Human Development Index (HDI) developed by UNDP (1990) is an improvement
over the PQLI. The HDI deals with the socio-economic well-being parameters which are
necessary even for inclusive and sustainable growth.

It emphasizes on capabilities:

knowledge, longevity (active, healthy and long life) and decent standard of living
(command over resources). A related poverty measure deals with the deprivations / failures
in respect of the three parameters of HDI. This measure is known as Human Poverty Index
(HPI). The Human Development Report (HDR) of UNDP has come out with Human
Poverty Index for developing countries (HPI- I) which is measured based on
-

Percentage of people not expected to survive up to 40 years

PGD-SRD, 2010 - 11

259 | P a g e

Adult illiteracy and school enrolment of children

Low standard of living captured by

-- Percentage of people without access to safe water

-- Percentage of people without access to health services
-- Percentage of underweight children

HPI 1 Measurement
3
HPI -1 =

31/ 3

(P1 + P2 + P3)
3

Where
P1 = Probability at birth of not surviving to age 40 (times 100)
P2 = Adult illiteracy rate
P3 = Unweighted average of population without sustainable access to an improved
water source and children underweight for age.

A sample calculation of HPI -1 for Namibia

P1 = 45.4 %
P2 = 15.0%
P3 = 18.5%
HPI 1 = [1/3 (45.4 3 + 15.0 3 + 18.5 3)] 1/3

= 32.5

Human poverty indices for rural areas of the States and UTs are presented in
Table 3. The HPI values are higher than the income poverty levels implying that tackling
of the former is more difficult task. The ranking of the states in 1981 and 1991 have hardly
changed while almost all the States could reduce the Human Poverty levels; extent of
decline varied, however.

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260 | P a g e

Table 3 : Human Poverty Index (HPI)

1981 & 1991 Rural
(%)
State/UTs

1981
Value
56.16

1991

Rank
Andhra
19
Pradesh
Arunachal
62.03
31
53.71
30
Pradesh
Assam
60.19
28
52.57
25
Bihar
61.07
30
55.85
32
Goa
33.19
5
24.04
4
Gujarat
42.46
9
33.59
12
Haryana
43.36
10
32.29
10
Himachal
36.84
7
28.09
8
Pradesh
Jammu
&
52.37
16
39.34
16
Kashmir
Karnataka
50.11
15
37.54
15
Kerala
34.20
6
21.75
2
Madhya
57.74
25
48.43
24
Pradesh
Maharashtra
47.29
13
36.53
14
Manipur
56.81
24
47.49
20
Meghalaya
60.64
29
56.45
31
Mizoram
54.39
19
45.96
18
Nagaland
53.80
18
46.83
21
Orissa
62.50
32
53.07
29
Punjab
37.33
8
27.95
6
Rajasthan
59.54
27
53.28
28
Sikkim
53.16
17
40.97
17
Tamil Nadu
49.23
14
33.98
13
Tripura
55.19
21
49.54
22
Uttar Pradesh
59.29
26
52.43
27
West Bengal
56.06
22
47.00
23
UTs
A & N Islands
45.57
12
31.53
9
Chandigarh
30.60
3
25.37
5
D & N Haveli
54.65
20
52.25
26
Daman & Diu
32.77
4
28.17
7
Delhi
27.36
1
20.90
3
Lakshadweep
30.38
2
19.04
1
Pondicherry
44.82
11
30.87
11
All- India
53.28
44.81
(Source: Planning Commission, National Human Development Report, 2001)

PGD-SRD, 2010 - 11

Rank
23

Value
45.04

261 | P a g e

Human development and human poverty are inversely related.

Economic development does not automatically ensure low levels of human

poverty (e.g. Haryana and Punjab).

High levels of social development and pro-active social policies can impact
human poverty effectively (e.g. Kerala).

Reduction in human poverty or increase in human development can facilitate

sustainable growth.

7. Identification of Poor
The Planning Commission based on National Sample Survey data on Consumer
Expenditure estimates the incidence of poverty in rural and urban areas of various states
and Union Territories. However, targeting under Poverty Alleviation Programmes (PAPs)
warrant identifying the poor households in each habitation. Initially under Integrated Rural
Development Programme (IRDP), all the households with annual income less than Rs.
4800/- were considered as poor and assisted under IRDP with preference to those with
income less than Rs. 3500/-. The evaluations have pointed out the occurrence of inclusion
(of non-poor / ineligible) and exclusion (of poor) errors in the identification of
beneficiaries / poor. In view of this, the Below Poverty Line (BPL) household census were
conducted in rural India as per the guidelines of Ministry of Rural Development (MoRD)
since 1992.

i) BPL Census 1992: Under the overall supervision of District Rural

Development Agency (DRDA), household census survey was carried out in all the villages
to assess the annual income. All the households with annual income less than Rs. 11,000/were classified as the poor. The number of poor identified was almost twice the estimates
of poverty as per Planning Commission. The non-poors inclusion was also significant.
Use of family income affected the large families with low per capita income and benefited
the small size families with relatively low household incomes. Further, estimation of
income is a cumbersome process resulting in non-sampling errors.
PGD-SRD, 2010 - 11

262 | P a g e

ii) BPL Census 1997: This census has adopted per capita consumption
expenditure and used a questionnaire. It also administered a set of criteria for exclusion of
non-poor. All households satisfying any one of the five criteria were classified as nonBPL.

Operating more than two hectares of land

Having a pucca house

Any member having an annual income of more than Rs. 20,000/-

Possessing consumer durables such as TV, electric fan, motor cycle, three
wheeler

Owns farm implements such as tractor, power tiller, combined thresher /

harvester

These criteria created serious public debate.

iii) BPL Census 2002:

At the suggestion of an Expert Group, all rural

households were rank ordered based on scores assigned to 13 indicators of well-being. The
household score varies from 0-52 and households with low scores (16-25 across states)
were treated as poor keeping the official poverty ratio in view. Those with very low scores
were covered on priority basis. These indicators are 1. Land holding 2. Type of House
3. Number of clothes 4. Food security 5.Sanitation 6.Ownership of consumer durables
(e.g. TV., Fan, Cooker, Radio,) 7. Education level 8. Status of household labour 9.
Means of livelihood 10. Status of children 11. Type of indebtedness 12. Reason for
migration 13. Indicators subjective, etc. In the rank ordering process a few villages / GPs
were not included under BPL population. Verification of the responses in an objective
manner is not possible for a few indicators as GPs are empowered to recommend but have
no say in final decision.
iii) Latest BPL Census: (Yet to be conducted) An Expert Group was constituted
under the Chairmanship of Shri N.C. Saxena to suggest methodology for conducting BPL
census. It submitted its report in August 2009. It recommended a three stage process

PGD-SRD, 2010 - 11

263 | P a g e

criteria for automatic exclusion, inclusion of the most vulnerable and rank ordering the rest
for identification of the (other) poor.

8. Summing up
Poverty is a multidimensional phenomenon and accordingly poverty alleviation
strategies have to be multi-pronged. The various concepts of poverty hover around certain
key issues and choice of a particular concept should be guided by the issue under
consideration. In developing countries, the persistent poverty is more challenging and the
components of human poverty need to be addressed adequately to ensure better
endowment of capabilities. The poverty estimates are sensitive to the various assumptions
underlying the approach adopted. Irrespective of limitations of the measures used, rural
poverty has been decreasing but its incidence is still unacceptably high. Given the resource
crunch, identification of the poor has to be done in a more systematic and simplistic way
with community participation even while laying greater emphasis on exclusion errors. It
will help in better targeting and resource use.

9. Keywords
Poverty Line, Head-Count Ratio, Poverty Gap, Human Poverty, Below Poverty
Line (BPL) Households , Basic Needs.

10. Know your Progress

i) Data on per capita monthly expenditure(PCE) for 20 households in Andhra
Pradesh for the year 2008-09 are given below. Calculate the Head Count Ratio and Poverty
Gap. The Poverty Line (2008-09) is Rs. 388/- per capita per month.

S.No.

PCE (Rs/
Month)

1
2
3
4

325
420
389
358

PGD-SRD, 2010 - 11

Poor /
Nonpoor

Poverty
Gap

264 | P a g e

5
6
7

450
325
375

415

9
10
11
12

400
287
302
350

13

480

14
15
16
17
18
19
20

350
280
305
436
252
364
400

ii) Discuss the various concepts of poverty

iii) What are the approaches followed in India for determination of poverty line?
iv) How rural poor households have been identified through BPL Census?
v) Discuss the trends in income and human poverty in India.

11. Further Reading / References

Ahluwalia, Montek S(1978), Rural Poverty and Agricultural

Performance

in India, Journal of Development Studies, 14 April.

Dandekar V.M. and N. Rath, (1971) Poverty in India, Indian School of

Political Economy, Pune.

Dev, S. Mahendra (1992), Employment, human development and rural

poverty. Indian Journal of Labour Economics, 35(1).

Deaton, Angus (2003), Adjusted poverty estimates for 1999-2000,

Economic and Political Weekly, 38(4).

Dev, Mahendra and Ravi, C (2008), Revising Estimates of Poverty,

Economic and Political Weekly, 43(10).

PGD-SRD, 2010 - 11

265 | P a g e

Hanumantha Rao K (1998), Levels of Living in Rural India (19601993): State-wise Analysis, NIRD Mimeo.
Morris D Morris (1979), Measuring the conditions of the worlds

poor: The PQLI, Pergamon, New York.

Planning Commission, Report of the Expert Group on Estimation of

Proportion and Number of Poor, July, 1993.

Planning Commission, National Human Development Report, 2001.
Planning Commission, Report of the Expert Group to Review the

Methodology for Estimation of Poverty, November, 2009.

Planning Commission, Report of the Expert Group recommended
Methodology for conducting the Below Poverty Line (BPL) Census,
11th Five Year Plan, September 2009. Radhakrishna R and Shovan
Ray (2005) (ed.), Handbook of Poverty,

Oxford University Press, New Delhi.

Reddy, Sambi B (2004), How to identify rural poor? An alternative

approach, Journal of Social and Economic Development, 6(2).

Rowntree, S (1901), Poverty: A Study of Town Life, London:

Macmillan
Sen. A.K. (1973), Poverty, Inequality, Unemployment: Some

Conceptual Issues in Measurement, Economic and Political Weekly,

August.

Srinivasan, T.N. and P.K. Bardhan (ed.) (1974), Poverty and Income

Distribution in India, Statistical Publishing Society, Kolkata.

Townsend (1971), The Concept of Poverty, London, Heinemann.

PGD-SRD, 2010 - 11

266 | P a g e

Unit-3: Current Strategies for Rural Development to Attain

Millennium Development Goals

Structure
1.

Introduction

2.

Objectives

3.

Millennium Development Goals

3.1

Goal 1: Eradicate Extreme Hunger and Poverty

3.2

Goal 2: Achieve Universal Primary Education

3.3

Goal 3: Promote Gender Equality and Empower Women

3.4

Goal 4: Reduce Child Mortality

3.5

Goal 5: Improve Maternal Health

3.6

Goal 6: Combat HIV/AIDS, Malaria and other diseases

3.7

Goal 7: Ensure Environmental Sustainability

3.8

Goal 8: Develop a Global Partnership for Development

4.

Summing up

5.

Keywords

6.

Know your Progress

7.

Further Readings / References

8.

Model Answers

1. Introduction
Poverty continues to be the major concern of many developing countries even
today. India with its growing population and shrinking natural resources faces a great
challenge to alleviate poverty. In 2000,

Heads of States and governments from 189

countries met at the UN Millennium Summit and together signed the Millennium
Declaration. Here, they agreed to "free our fellow men, women and children from the
abject and dehumanising conditions of extreme poverty, to which more than a billion of
them are currently subjected." Keeping this in view, the Government of India took certain

PGD-SRD, 2010 - 11

267 | P a g e

initiatives during 10th and 11th Five Year Plans and new strategies for rural development
were initiated to achieve the millennium development goals by 2015. The main purpose of
this unit is therefore to make you understand the millennium development goals and the
initiatives taken by the government to achieve them by 2015.

2. Objectives
Keeping above in view, the main objectives of this Unit are :
1. To make you aware of the Millennium Development Goals (MDG);
2. Discuss each goal and its importance for poverty alleviation and human
development;
3. Strategies initiated for achieving those goals; and
4. Current status of Indias efforts in achieving MDGs.

3. Millennium Development Goals

The United Nations Millennium Summit in the year 2000 identified eight areas
under the Millennium Development Goals as listed below :
Goal 1 : Eradicate Extreme Hunger and Poverty
Goal 2 : Achieve Universal Primary Education
Goal 3 : Promote Gender Equality and Empower Women
Goal 4 : Reduce Child Mortality
Goal 5 : Improve Maternal Health
Goal 6 : Combat HIV/AIDS, Malaria, TB and other diseases
Goal 7 : Ensure Environmental Sustainability
Goal 8 : Develop a Global Partnership for Development
3.1 Goal 1 : Eradicate Extreme Hunger and Poverty
There are more than a billion poor all over the world and nearly one fourth of
them are in India. As per the Planning Commission, Government of India, during the year
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268 | P a g e

2004-05, there were 27.5 percent people (28.3 % rural and 25.7 % urban) below the
poverty line income in India. Though, in percentage terms, the population below the
poverty line income has declined to half between 1973-74 and 2004-05 the absolute
number of poor remained nearly same as during 1973-74 there were 27.3 Crore people
below the poverty line and now the number is about 26.0 Crore. This has been mainly due
to more than two times increase in the population in the past three decades. More
than a third of the scheduled caste and almost half of the scheduled tribe
population live below the official poverty line (Government of India).
Malnutrition and undernourishment are as critical as hunger. While there have
been no starvation deaths officially reported during the current decade, there are more than
20 Crore people malnourished in India of which two thirds are in rural areas. Nearly half
of children under the age of 5 are underweight, and half suffer from malnutrition (NFHS3). Malnutrition among children belonging to scheduled castes (54 per cent) and scheduled
tribes (56 per cent) is very high. There are more than one third of the adult married women
in the country underweight (NFHS-3). According to the Ministry of Women and Child
Development, the gender discrimination leads to widespread female malnutrition. For
example, nearly half of girls suffer from stunted growth, compared with one fifth of boys.
Nearly three quarters of children under three years of age and half of all adult women are
anaemic.
3.1.1 Current strategies to eradicate extreme hunger and poverty
The target under MDG is to reduce poverty in India below 15 percent by 2015. To
achieve this goal, the Government of India has initiated following programmes:
i) Rural livelihood programmes
There are two important programmes for livelihood promotion of the rural poor.
One is Swarnajayanti Gram Swarojgar Yojana (SGSY) or self employment programme.
Under this programme BPL families are assisted for taking up self employment in farm as
well as non- farm activities, individually or in self - help groups (SHGs). The second
programme is National Rural Employment Guarantee Programme (NREGP) in which any

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269 | P a g e

one in rural areas who seeks for wage employment, is guaranteed a minimum of 100 days
employment by an Act (NREGA). NREGP therefore helps those who are dependent on
wage employment and are unable to get any employment during lean agriculture season.
The employment seekers are registered at the Gram Panchayat and provided with an
Employment Card in which details of the employment and wages paid are recorded.

ii) Agrarian Loan Waiver

The 2008-9 Budget promised to resolve the issue of agrarian debt by waiving
farm loans, giving relief to an estimated Four Crore farmers. However, the waiver will
only cover small and marginal farmers, who own up to 1-2 hectares of land.
iii) Public Distribution System (PDS)
India has largest public distribution network in the world. Under PDS, the BPL
families are provided food grains at subsidised rates which are much less than the market
prices. In order to enable BPL families to get subsidised food grains, they are provided
with different coloured Ration Cards.
iv) Antyodaya Anna Yojana (AAY)
Under Antyodaya Anna Yojana (AAY), the government identified 2.5 Crore of
the poorest families and provides food grains at highly subsidised prices.
3.2 Goal 2 : Achieving Universal Primary Education
India has the highest number of illiterate persons in the world( UNESCO report 2005). Even after more than five decades of planned development in India, literacy rate is
around 64 percent (1991 census), and some of the states have less than 50 percent literate.
Dropout rates at the primary level itself is considerable and it has rather increased to 50
per cent in the last 5 years. Nearly 90 per cent of India's 36 million children with
disabilities are out of school. The Constitution of India guarantees education for every
Indian : primary education.

National Policy on Education emphasises three main

aspects: (i) universal enrolment, (ii) universal retention of children up to 14 years of age,
and (iii) substantial improvement in the quality of education. The Government also passed

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the 86th Constitution Amendment Act, 2002, which makes elementary education a
fundamental right for all children in the age group of 6-14 years.
3.2.1 Current strategy to achieve universal primary education
The current strategy to achieve the target of hundred percent enrolment at the
primary level and hundred percent literacy among 15-24 age group. To achieve these
targets, the Government of India started a new programme called Sarva Shiksha Abhiyan
(SSA). Under the programme, the enrolment drives launched during this period reduced
the number of out-of-school children from 42 million at the beginning of the 10th Plan
period to 13 million in 2005, whilst the number of illiterates declined in absolute terms by
25 million between 1991 and 2001 (Ministry of Statistics and Programme
Implementation). The Eleventh Five Year Plan proposes to address the problem of
physical infrastructure and quality of teaching in schools. In 1993, the Supreme Court
argued that the State has no right to deny its constitutional obligation under article 21A to
provide free and compulsory education to all children until the age of 14 years.
The Central government has passed Right to Education Bill, 2008 (RTE). The
RTE Bill formally transcribes and legitimises the right of the child to free and compulsory
education of an equitable quality. It outlines the responsibilities of the state to both children
in and out of school, the responsibilities of schools, teachers and of local authorities,
prescribed norms and standards for schools and monitoring and recognition procedures. It
implies that informal schools and teachers will have to be qualified as per the standards
defined in the National Council for Teacher Education Act, 1993. Under this legislation,
private schools must guarantee to admit at least 25 per cent of children from poorer
sections without any cost to these families.
Goal-3: Promote Gender Equality and Empower woman
The condition of women in India continues to be a matter of serious concern as
they are still treated unequal to the men. Gender inequality has many dimensions, ranging
from poor access to food and nutrition, healthcare, education, economic resources,
employment, wages, etc. The Constitution guarantees equal rights for men and women, and
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271 | P a g e

makes equal participation, freedom of thought and non-discrimination explicit fundamental

rights. Growing imbalance in the sex ratio occurs because more women die before reaching
adulthood. This takes place because of sex selection and deliberate infanticide, through
violence, neglect of healthcare and simple nutritional needs or risky teenage pregnancies.

There are currently 927 girls under 6 years for every 1000 boys (2001 Census),
declining from 945 in the last decade. There is significant regional variation across states.
Delhi has recorded a decline from 915 girls per 1000 boys in 1991 to 868 girls per 1000
boys in 2001: this means that 24,000 girls go missing in Delhi every year. In 2001 there
were 798 females per 1000 males in the relatively wealthy Punjab. This is not linked to
poverty or lack of education: Chandigarh, the most modern city in India, has the dubious
distinction of having the lowest sex ratio (773) in the whole of the country, despite having
one of the highest literacy rates.
3.3.1 Current strategies for promotion of gender equality and empowerment
of women
1.

The National Programme for Girls at Elementary Level (NPEGEL)

specially tailored to ensure that girls have access to elementary education, is now part of
the Sarya Shiksha Abhiyan (SSA)- Education for All. Under this programme, two Lakh
teachers have been trained in gender sensitisation, and free uniforms have been issued to
two Crore girls. The National Literacy Mission (NLM) initiated in 1988, focuses on
imparting functional literacy to women. Nearly 60 per cent of the beneficiaries are women.
To sustain adult literacy the NLM also provides Post Literacy Campaigns and Continuing
Education Programmes through volunteers. Under this programme about 120 million
people were made literate as a result male - female literacy has decreased from 25 per cent
in 1991 to 22 per cent in 2001.

2.

The Mahila Samakyha aims to address women's perceptions of themselves

though mobilisation of marginalised rural women. The approach is to educate rural women
about the importance of educating girl children. Originally the programme was 100 per

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cent Dutch funded, but since 2003 it has been funded by the Government of India, now
covering almost 16,000 villages in nine states.

3.

Protection of Women against Domestic Violence Bill, 2005; Hindu

Succession Amendment Bill, 2004

and

Pre-Conception and Pre-Natal Diagnostic

Techniques Act (PC & PNDT Act), 1994 are bold initiatives to strengthen the status of
women. The 'Save the Girl Child' campaign has been launched, and under the National
Rural Health Mission. Auxiliary Nursing Midwives (ANM) and Accredited Social Health
Activists (ASHA) are being sensitised on the issue.

4.

According to the 2001 Census, about 1.5 million girls under the age of

15 were already married, with 20 per cent of these already mothers to at least one child. In
Bihar, 40 per cent of girls have been found to be married by age 15, 71 per cent by 18
(Demographic and Health Surveys, 2006). This is particularly worrying, given that the
primary cause of mortality for 15-19 year old Indian girls is early pregnancy. The
Government of India enacted Prohibition of Child Marriage Act, 2006, to prevent child
marriage.
3.4 Goal 4 : Reduce Child Mortality
Malnutrition, poverty, underweight birth and poor health care are the main causes
for infant mortality. In India infant mortality rate (IMR) varies from 35 to 82 from state to
state, with national average of 58. Out of ten children, one doesnt reach the age of 5.
The Tenth Five Year Plan looked to reduce India's IMR to 45 by 2007 and to 28
by 2012. Strategy concentrates on reducing malnutrition among children between 0 and 3
years of age to half of its current level, and on breaking the cycle of ill health and maternal
and infant mortality by tackling the incidence of anaemia and malnutrition amongst
adolescent girls.

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3.4.1 Current Strategy for Reduction in Child Mortality

For achieving the objective to reduce IMR below 28 per thousand births, a
number of programmes have been initiates. Some of the important are:
1.

Reproductive and Child Health Programme (RCH)

In the reorganized phase of the RCH programme the emphasis is on the integrated
management of Neonatal and Childhood Illnesses; home based care of newborns;
education of mothers (i.e. promotion of breastfeeding and complementary feeding); control
of deaths due to Acute Respiratory Infections (ARI); control of deaths due to diarrhoeal
diseases; supplementation with micronutrients Vitamin A and iron, and the Universal
Immunisation Programme.

2. Integrated Child Development Scheme (ICDS)

ICDS is an ongoing programme started in 1975 to tackle the problems of
persistent hunger and malnutrition. The programme is a holistic approach for converging
basic services for improved childcare, early stimulation and learning, health and nutrition,
water and environmental sanitation. The target groups are young children, expectant and
nursing mothers and women groups, to be reached through nearly 300,000 trained
community-based Anganwadi workers and an equal number of helpers and other
community groups. There are nearly 14 Lakh anganwadis all over the country of which
only around 10 Lakh are estimated to be operational. The current strategy is to make this
programme more effective

3.

Integrated Management of Newborn and Childhood Illnesses

(IMNCI) and Expanded Programme on Immunisation (EPI)

Under this programme, village level workers are trained in the holistic
management of measles, malaria, pneumonia, diarrhoea and malnutrition. Started in 75
districts during 2006-07, it will gradually be phased into the whole of the country. In turn,
the EPI aims to reduce prevalence, mortality and disabilities by providing free vaccination

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to all eligible children against six preventable diseases: tuberculosis, diphtheria, pertussis,
tetanus, polio and measles.

3.5 Goal 5: Improve Maternal Health

Maternal Mortality Rates (MMR) in India are high and discouraging. The fact
is that India invests only around 1 per cent of GDP in healthcare. Not only has this, but the
money that is invested gone on purely lateral interventions that do little to improve the
health of Indian women. What is therefore needed is a long term commitment to public
healthcare and nutritional services that are accessible to all women of childbearing age and
especially target these women before the point at which they become sick mothers.

There are various programmes like ICDS, maternity benefit scheme under
National Social Assistance Programme (NSAP) and National Rural Health Mission
(NRHM) under implementation. To tackle the problem of maternal mortality, some
initiatives are being taken under NRHM:

1.

Primary Care Infrastructure: In addition to increased investment on

primary health care facilities, the interventions and expenditure have to be effectively
targeted towards infrastructural improvements and preventative treatment. As per the
estimates of the Ministry of Health and Family Welfare, there is shortages of nearly
25,000 Sub- Centres and Primary Health Centres (PHCs) and 2653 Community Health
Centres (CHCs). Furthermore, almost 50 per cent of the existing health infrastructure is in
rented buildings. Up to one in three doctors' posts remain vacant in rural India; of those
that are filled, around two thirds may be absent at any given time. Hence under NRHM,
these aspects have been given priority so that primary health care is strengthened.
2. Reduce Total Fertility Rate to 2:1 : A large percentage of couples report
an unmet need for contraception, with only 30 per cent of those who want to delay or space
childbearing able to do so. This gap contributes in turn to the high numbers
of unsafe abortions, as a desire to limit family size is the main motivation
cited by women who are obtaining abortion services. Improve facilities for institutional
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deliveries under the Janani Suraksha Yojana (JSY)-Mother Protection Scheme which is
100 per cent centrally-sponsored, giving mothers and Accredited Social Health Activists
ASHAs cash incentives for institutional deliveries. Reports from states indicate significant
increases in institutional deliveries due to demand side financing.
3. Enhance Access to Skilled Service Provision and Emergency Obstetric
Care : Women in rural areas and slums are the target of the Reproductive and Child
Health Programme as part of the NRHM. Under this programme 320,000 Accredited
Social Health Activists (ASHAs) have been recruited and over 200,000 have received
orientation training.
4. The Child Marriage Restraint Act, 1976 : The act should be strictly
enforced to reduce the number of high risk teenage pregnancies and increase the potential
for educated girl citizens.

3.6

Goal 6 : Combat HIV/AIDS, Malaria and Other Diseases

After TB and Malaria, AIDS has become one of the major concern in India.

According to National AIDS Control Organisation (NACO) estimates, there are at least 25
lakh (2.5 million) people infected with HIV in India (2006). However, since many of
those infected are still not aware about their status are simply not getting tested and this
may add to many more . Nearly 70 per cent of India's HIV cases are in Tamil Nadu,
Karnataka, Andhra Pradesh, Maharashtra, Manipur and Nagaland.

There were about 16.7

Lakh malaria cases were reported in India during 2006.

Nearly 18 Lakh tuberculosis cases occur annually. In spite of nationwide polio vaccination
campaign for the past one decade, there was a sharp increase in the number of polio cases
in India in 2007 (873 confirmed cases from 66 cases in 2005) as per the World Health
Organisation (WHO). India is one of four countries along with Pakistan, Nigeria and
Afghanistan where polio is still endemic. The deadline for polio eradication in India has
now been pushed back to 2010.

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3.6.1Current Strategies for Combating AIDs, Malaria and Other Diseases

In the case of HIV/AIDS, the target is to halt and begin to reverse the spread of
the disease by 2015. For malaria and other major diseases, the target is to halt and begin to
reverse the incidence of these diseases. To achieve these targets, the current initiatives are
discussed below.
1.

National AIDS Control Programme (NACP) : Phase III of the National

AIDS Control Programme(NACP) was started in 2007-8 and will run for five years. Its
main objective is to halt and reverse the HIV epidemic in India during eleventh plan
period. The main items under this programme are : (i) Prevention amongst high risk
groups and the general population with targeted interventions, (ii) Provision for enhanced
care, support and treatment to more people living with HIV (PLHIV), (iii) Improving
health infrastructure and resources in prevention, care and treatment at district, state and
national level, and (iv) Strengthening national information management systems .
2.

National Vector Borne Diseases Control Programme: To eliminate the

malaria parasite and effectively manage the disease, diagnosis must be performed at an
early stage and a complete course of treatment strictly adhered to. Referral services must
be strengthened, and communities and districts must be prepared for epidemics to enable
rapid response.
Seven states in the North-East are being provided with 100 per cent central
government assistance to implement disease control mechanisms in remote areas. Over 5
Lakh Drug Distribution Centres, Fever Treatment Depots and malaria clinics have been
established, 54 Lakh bed nets supplied free or highly subsidised

to high risk areas in

endemic states, and the Intensified Malaria Control Project

(IMCP) is currently overseeing 106 districts across 10 states, with an aggregate
population of 100 million.
3.

Revised National Tuberculosis Control Programme (RNTCP) : The

Revised National Tuberculosis Control Programme (RNTCP) has achieved coverage of

632 districts. Since 1997, the programme started expanding and under RNTCP,
than half a million staff

more

were trained, evaluated more than 30 million people with

suspected TB, examined more than 100 million sputum slides, treated more than eight
million patients, and prevented more than 1.4 million TB deaths. The RNTCP has
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established an effective drug logistics management system: quality-assured drugs are

available throughout the country free of cost. A case detection rate (CDR) of 70 per cent
and a treatment success rate of 86 per cent were attained in 2007. This approximates to the
internationally established benchmarks for case detection and treatment success.
3.7

Goal 7 : Ensure Environmental Sustainability

Global warming causing climate change is now visible all over the world.

Temperatures across India have already increased by approximately half a degree

centigrade during the second half of the twentieth century. India is the fourth largest
greenhouse gas emitter in the world, and yet is one of the most vulnerable countries to the
effects of climate change. In the recent decade, the monsoon behaviour has become
unpredictable. While some parts of the country facing drought, during the same period
other parts are affected by floods. These have direct impact on the agriculture and
consequently on the people dependent on farming. It is predicted that crop yields in South
Asia (including India) could decrease by 30 per cent halfway through this century leading
to food shortage and hunger in this part of the world. It is therefore necessary that the
Governments should take steps immediately to mitigate the adverse effects of climate
change. The Intergovernmental Panel on Climate Change (IPCC) has emphasised that it is
ultimately the poor people who will be most affected by environmental degradation.
In the case of drinking water, as of 2004, about 95 percent and 83 percent rural
population had access to safe drinking water and therefore nearing the achievement of the
target for 2015. However in the case of sanitation, the situation is very poor. Less than a
fourth of villages in India have access to drainage systems. While 85 per cent of villages
in Haryana and Punjab have drainage systems, in Chhattisgarh and Orissa less than 10 per
cent villages have drainage facility. Overall 59 percent urban and 22 percent of rural
population have access to sanitation. The target is to increase it to 72 percent for both
urban and rural buy 2015. In order to achieve these targets and also to improve
environment and ecology, the following initiatives are currently underway.

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Peoples Participation and Creating Awareness: Environment related

1.

development activities cannot succeed without the involvement of the people. Keeping this
in view, the Government is emphasizing for more community-driven, participatory
responses

for

rural

water

supply,

sanitation

and

environmental

management.

Decentralisation to local government bodies (Panchayati Raj Institutions) will enable

demand-responsive strategies. The Government proposes to

train and appoint two

community leaders in each gram sabha, male and female, on climate change. These
"climate managers" will raise awareness and initiate changes for sustainable development
at the local level, and will also be trained to handle natural disasters.

2.

Empowerment of Local governments: The 73rd and 74th Amendment

and The Panchayat Extension of Scheduled Areas (PESA) Act, 1996 have vested powers
in the Gram Sabha for : development planning; - management of natural resources;
dispute resolution,

preserving and safeguarding the traditions, identity and resources of

the indigenous people, and hence under the terms of the Act is empowered to approve
development projects, plans and programmes and identify beneficiaries for poverty
alleviation and other programmes. Either the Panchayat or Gram Sabha will be involved
in consultations before land acquisition takes place for development and/or resettlement
projects, or the respective local authority must also make recommendations before granting
licenses or mining leases. Both Gram Sabha and Panchayat prevent alienation of land in
Scheduled areas and take measures to restore such land where necessary, and manage local
plans and resources. Under PESA, it is essential that the Gram Sabha approves all plans
and projects.
3.

The Scheduled Tribes (Recognition of Forest Rights) Bill, 2005: It

seeks to recognise the rights of forest dwelling Scheduled Tribes (FDSTs) who have
occupied forest land on a long-term basis (specified as October 25, 1980.) Pre and post
independence, marginalised forest dwelling communities (and particularly tribals) have
been denied their rights to forest land, use of resources and traditional activities. This will
help both the forest dweller as also the development and conservation of the forests.
4.

The Biological Diversity Act, 2002:

This Act attempts to prevent

unsustainable use of natural resources, specifically the, growing issues of bio- piracy and
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bio-trade as well as the damage being done to the ecosystems and wildlife habitats. It
followed the National Biodiversity Strategy and Action plan (NBSAP), 2000, which also
promoted ecological security, i.e. climate stabilisation, improved rainfall patterns and soil
quality, and developed strategies for the protection of the enormous biodiversity in India
on which millions depend for livelihoods. Under the Act, a National Biodiversity Authority
(NBA) was established in Chennai, and State Biodiversity Boards are being set up across
the country and filter into Biodiversity Management Committees (BMCs) at panchayat,
district council or municipality levels.
5.

National Bio fuel Policy:

clean energies can help feed the world's

growing demand for energy supply and security with minimal risks to the environment. In
Indian context these techniques could provide a self-sufficiency that would reduce India's
dependence on the external markets for fossil fuel. The government plans to bring about
11 million hectares under jatropha plantation by 2012, and state governments have already
started jatropha cultivation.
6.

National Climate Action Plan, 2008: The Prime Minister's Council on

Climate Change announced the establishment of a separate division to act on climate

change, and formulate a climate action plan. The plan activities will include:
(i)

Creating eight missions for multi-pronged, long term and integrated

strategies for tackling climate change - energy conservation, agriculture, water

management, solar energy, protecting Himalayan ecosystems and the Green India
project, which aims at restoring forestry to six million hectares of degraded forest land: one
of the world's most extensive afforestation efforts.
(ii)

Collaborating with the private sector for R&D in terms of providing

carbon efficient power.

(iii)

Making water use more efficient through pricing and regulations.

(iv)

Initiating research and development into crops and agricultural methods

capable of withstanding extreme weather conditions and volatile monsoons.

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3.8

Goal 8 : Develop a Global Partnership for Development

For development, energy is most crucial input and energy production is the single

largest source for green house gases (GHG) emission. While the developed nations have
not committed to the Kyoto protocol, they want the developing countries to reduce GHG
emission which means the developing countries to slow down their development process. It
is therefore a difficult situation where the major GHG emitting countries are non committal
for its reduction. In other worlds there is a challenge for the developing world to act on
GHG reduction without affecting their development process. This calls for development of
green technologies which is not easy for developing countries. It is therefore necessary to
develop global partnership in the development and transfer of green technologies.
India has a sufficient range of products and adequate safeguard mechanisms to
protect the its interest, however, needs further strengthening of domestic policy. India must
represent the position of the poorest countries, including its less privileged neighbours, in
international negotiations. For this purpose India should play a leading role to pursue the
following :
1. Develop further an open trading and financial system that is rule-based,
predictable and non discriminatory, includes a commitment to good governance,
development and poverty reduction nationally and internationally.
2. Address the least developed countries' special needs.
3. Address the special needs of landlocked and small island developing States.
4. Deal comprehensively with developing countries' debt problems through national
and international measures to make debt sustainable in the long term.
5. In cooperation with pharmaceutical companies, provide access to affordable
essential drugs in developing countries.
6. In cooperation with the private sector, make available the benefits of new
technologies especially information and communications technologies.

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4. Summing up
In this unit you have learnt about Millennium Development Goals to be achieved
by 2015. The current situation in India under each item of the MDG has also been
discussed. The current strategies to achieve MDG by 2015 under each of the eight items
have also been discussed. It is hoped this unit will add to your understanding of the
problems of development, specially human development and their relationship with the
MDG and strategies adopted to achieve them.

5. Keywords
Malnutrition, Undernourishment, Livelihood, Sarva Shiksha Abhiyan, Gender
Inequality, Infant Mortality Rate (IMR), Maternal Mortality Rate (MMR), National Rural
Health Mission (NRHM), Biological Diversity, National Biofuel Policy, National Climate
Action Plan, Green House Gases.

6. Know your Progress

1. What is the millennium Development Goals?
2. What are the policies and programme for eradication of extreme poverty
and hunger
3. What are the programmes for reducing gender inequality?
4. What initiatives are being taken to reduce infant mortality ?

7. Further Readings / References

1.

Office of the Commissioners to the Supreme Court, The Right to Food

in India: Review of the NCMP (2007) Programme Evaluation
Organisation, Planning Commission, Government of India,

2.

Performance Evaluation of Targeted Public Distribution System

(TPDS) New Delhi, March 2005)

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3.

Virmani, Arvind, Planning Commission, Poverty and Hunger in

India: What is Needed to Eliminate Them (February 2006)

4.

Ramachandran, Vimala, Status of Basic Education in India: An

Overview , IIPM Thinktank, 29 February 2008

5.

Handbook for Parliamentarians on MDGs: Political Support

&Action

6.

Government of India, Ministry of Health and Family Welfare,

Handbook on Pre-Conception and Pre-Natal Diagnostic
Techniques Act, 1994, and Rules with Amendments (2006)

7.

UNICEF, Early Marriage: A Harmful Traditional Practice: A

Statistical Exploration. (New York: 2005)

8.

The World Bank Gender and Equality Group, Gender Equality and
the Millennium Development Goals (4 April 2003)

9.

WHO, The World Health Report 2005: Make every mother and
child count (2005)

10

Khare, Gargi D., The Millennium Development Goals: A Focus on

HIV/AIDS in Indian Women (2003)

11.

Pauchaun, K.K., Climate Change Implications for India (IPCC, 25

April (2008) Planning Commission, Water Supply and Sanitation
(GOI, 2002)

7. Model Answers
1. There are eight Millennium Development Goals as listed below :
Goal 1 : Eradicate Extreme Hunger and Poverty
Goal 2 : Achieve Universal Primary Education
Goal 3 : Promote Gender Equality and Empower Women
Goal 4 : Reduce Child Mortality
Goal 5 : Improve Maternal Health
Goal 6 : Combat HIV/AIDS, Malaria, TB and other diseases
Goal 7 : Ensure Environmental Sustainability
Goal 8 : Develop a Global Partnership for Development
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2. The main policies and programmes to eradicate poverty and hunger are:

(i)

Rural Livelihood Programmes : There are two important programmes

for livelihood promotion of the rural poor. One is Swarnajayanti Gram Swarojgar Yojana
(SGSY) or self employment programme. Under this programme BPL families are assisted
for taking up self employment in farm as well as non- farm activities, individually or in
self - help groups (SHGs).

The second programme is National Rural Employment

Guarantee Programme (NREGP) in which any one in rural areas who seeks for wage
employment, is guaranteed a minimum of 100 days employment by an Act (NREGA).
(ii)

Agrarian Loan Waiver : The 2008-9 Budget promised to resolve the

issue of agrarian debt by waiving farm loans, giving relief to an estimated Four Crore
farmers. However, the waiver will only cover small and marginal farmers, who own up to
1-2 hectares of land.

(iii)

Public Distribution System (PDS) : India has largest public distribution

network in the world. Under PDS, the BPL families are provided food grains at subsidised
rates which are much less than the market prices. In order to enable BPL families to get
subsidised food grains, they are provided with different coloured Ration Cards.

(iv)

Antyodaya Anna Yojana (AAY) : Under Antyodaya Anna Yojana

(AAY), the government identified 2.5 Crore of the poorest families and provides food
grains at highly subsidised prices.

3. (a) The National Programme for Girls at Elementary Level (NPEGEL)

specially tailored to ensure that girls have access to elementary education, is now part of
the Sarya Shiksha Abhiyan (SSA). Under this programme, two Lakh teachers have been
trained in gender sensitisation, and free uniforms have been issued to two Crore girls. The
National Literacy Mission (NLM) initiated in 1988, focuses on imparting functional
literacy to women. Nearly 60 per cent of the beneficiaries are women. To sustain adult

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literacy the NLM also provides Post Literacy Campaigns and Continuing Education
Programmes through volunteers. Under this programme about 120 million people were
made literate as a result male - female literacy has decreased from 25 per cent in 1991 to
22 per cent in 2001.

(b)

The Mahila Samakyha aims to address women's perceptions of themselves

though mobilisation of marginalised rural women. The approach is to educate rural women
about the importance of educating girl children.

(c)

Protection of Women against Domestic Violence Bill, 2005; Hindu

Succession Amendment Bill, 2004 and Pre-Conception and Pre-Natal Diagnostic

Techniques Act (PC & PNDT Act), 1994 are bold initiatives to strengthen the status of
women.
(d)

The Government of India enacted Prohibition of Child Marriage Act,

2006, to prevent child marriage.

4. For achieving the objective to reduce IMR below 28 per thousand births, a
number of programmes have been initiates. Some of the important are :

(i)

Reproductive and Child Health Programme (RCH): The emphasis is

on the integrated management of Neonatal and Childhood Illnesses; home based care of
newborns; education of mothers (i.e. promotion of breastfeeding and complementary
feeding); control of deaths due to Acute Respiratory Infections (ARI); control of deaths
due to diarrhoeal diseases; supplementation with micronutrients Vitamin A and iron, and
the Universal Immunisation Programme.
(ii)

Integrated Child Development Scheme (ICDS) : ICDS is an ongoing

programme started in 1975 to tackle the problems of persistent hunger and malnutrition.
The target groups are young children, expectant and nursing mothers and women groups,
to be reached through nearly 300,000 trained community-based Anganwadi workers and an
equal number of helpers and other community groups.

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(iii)

Integrated Management of Newborn and

Childhood Illnesses

(IMNCI) and Expanded Programme on Immunisation (EPI) : Under this programme,

village level workers are trained in the holistic management of measles, malaria,
pneumonia, diarrhoea and malnutrition. Started in 75 districts during 2006-07, it will
gradually be phased into the whole of the country. In turn, the EPI aims to reduce
prevalence, mortality and disabilities by providing free vaccination to all eligible children
against six preventable diseases: tuberculosis, diphtheria, pertussis, tetanus, polio and
malaria.

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Unit 4: Corporate Social Responsibility (CSR) and

Rural Development
Structure
1.

Introduction

2.

Objectives

3.

Concept of Corporate Social Responsibility(CSR)

4.

Evolution of CSR

5.

Stakeholders in CSR

6.

Perspectives on corporate social responsibility

6.1

Corporate responsibility the typology

6.2.

CSR in India

6.3

Social commitments of Indian corporate

6.4

CSR in Rural Development

6.5

Role of private sector in poverty alleviation

7.

Summing up

8.

Keywords

9.

Know your Progress

10.

Further Readings / References

11.

Model Answers

1. Introduction
Corporate Social Responsibility (CSR) is defined as operating a business that
meets or exceeds the ethical, legal, commercial and public expectations that society has of
business. CSR is one such effective tool that synergizes the efforts of Corporate and the
social sector agencies towards sustainable growth and development of societal objectives at
large.

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India is a fast growing economy and is booming with national and multinational
firms. At the same time, the Indian land also faces social challenges like poverty,
population growth, corruption, illiteracy just to name a few. Therefore it is all the more
imperative for the Indian companies to be sensitized to CSR in the right perspective in
order to facilitate and create an enabling environment for equitable partnership between the
civil society and business. In this Unit we shall discuss the concept of corporate social
responsibility and the contribution of the corporate social responsibility in rural
development.

2. Objectives
After studying this Unit, you should be able to:

Understand the concept of corporate social responsibility, and trace the

history of the corporate social responsibility in India;

Describe the role which the corporate social responsibility can play in
rural development;

Appreciate how different corporate have incorporated rural development

as a part of their corporate social responsibility interventions

3. Concept of Corporate Social Responsibility (CSR)

CSR, also sometimes referred to as corporate citizenship or corporate social and
environmental responsibility is a concept that states that organizations especially (but not
only) commercial business have a duty of care to all of their stakeholders in all aspects of
their operation.
According to Commission of the European communities (2001), CSR is a concept
whereby companies integrate social and environmental concerns in their business
operations and in their interaction with their stakeholders on a voluntary basis. CSR is one
such effective tool that synergizes the efforts of Corporate and the social sector agencies
towards sustainable growth and development of societal objectives at large.

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A widely quoted definition by the World Business Council for Sustainable

Development(1999) states Corporate Social Responsibility is the continuing commitment
by business to behave ethically and contribute to economic development while improving
the quality of life of the workforce and their families as well as of the local community and
society at large.
Another definition given by IndianNGOs.com (2007) states corporate social
responsibility is a business process wherein the institution and the individual within are
sensitive and careful, about the direct and indirect effect of their work on internal and
external communities, nature and the outside world.
CSR is not a philanthropic activity where a company gives without expecting a
return or a benefit. In CSR, it is about ethical investing. Wood (1991) put that CSR seek to
limit the negative impact of business on society, while optimizing its social performance.
IndianNGOs.com (2007) opined that CSR is good for the community and good for
business companies investing, cultivating and nurturing mutually beneficial relationships
with stakeholders create sustainable communities in which to do business over the long
term.
The concept of CSR can thus be summarized to the following points.

CSR is the engagement of corporate to serving the society.

CSR considers the impact of business on its various stakeholders and

vice-versa.

CSR operates in line with the three pillars of sustainable development i.e.,
economic development, social equity and environment protection.

CSR has an ethical perspective.

CSR serves to neutralize the negative impact of business on society.

CSR emphasizes on accountability and transparency in business operation.

4. Evolution of CSR
The concept of corporate social responsibility originated in the 1950s in USA and
the concept came into prominence in public debate during the 1960s and 1970s. During
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1980s to 2000, corporations generally recognized a responsibility to society and weighed

against the demands of being competitive in a rapidly changing global economy. Corporate
social responsibility is fundamentally a philosophy or a vision about the relationship of
business and society. It is a process of continuous improvement which begins small, grows
and expands over a period of time. It has been referred to as caring capitalism in contrast to
financial capitalism. Corporate Social Responsibility (CSR), also known as corporate
responsibility, corporate citizenship, responsible business and corporate social performance
is a form of corporate self-regulation integrated into a business model. Ideally, CSR policy
would function as a built-in, self-regulating mechanism whereby business would monitor
and ensure their adherence to law, ethical standards, and international norms. Business
would embrace responsibility for the impact of their activities on the environment,
consumers, employees, communities, stakeholders and all other members of the public
sphere. Furthermore, business would proactively promote the public interest by
encouraging community growth and development, and voluntarily eliminating practices
that harm the public sphere, regardless of legality. CSR is the deliberate inclusion of public
interest into corporate decision-making, and the honouring of a triple bottom line: People,
Planet, and Profit.
CSR is a concept that encourages organizations to consider the interests of society
by taking responsibility for the impact of the organization's activities on customers,
employees, shareholders, communities and the environment in all aspects of its operations.
This obligation is seen to extend beyond the statutory obligation to comply with legislation
and sees organizations voluntarily taking further steps to improve the quality of life for
employees and their families as well as for the local community and society at large. The
practice of CSR is subject to much debate and criticism. Proponents argue that there is a
strong business case for CSR, in that corporations benefit in multiple ways by operating
with a perspective broader and longer than their own immediate, short-term profits. Critics
argue that CSR distracts from the fundamental economic role of businesses; others argue
that it is nothing more than superficial window-dressing; others argue that it is an attempt
to pre-empt the role of governments as a watchdog over powerful multinational
corporations.

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Social responsibility is an ethical or ideological theory that an entity whether it is

a government, corporation, organization or individual has a responsibility to society. This
responsibility can be "negative", meaning there is a responsibility to refrain from acting
(resistance stance) or it can be "positive," meaning there is a responsibility to act (proactive
stance).There is a large inequality in the means and roles of different entities to fulfil their
claimed responsibility. This would imply the different entities have different
responsibilities, in so much as states should ensure the civil rights of their citizens, that
corporations should respect and encourage the human rights of their employees and that
citizens should abide with written laws. But social responsibility can mean more than these
examples. Many Non-governmental organizations (NGOs) accept that their role and the
responsibility of their members as citizens are to help improve society by taking a
proactive stance in their societal roles. It can also imply that corporations have an implicit
obligation to give back to society.
Many businesses in emerging markets are realizing benefits from corporate social
responsibility initiatives, with quantified improvements in revenue and market access,
productivity, and risk-management. While emerging-market companies tend to focus more
on short-term cost savings and revenue gains, intangibles, such as brand value and
reputation issues, are more significant for companies in developed countries. The
contemporary corporate social responsibility agenda, however, is relatively immature in all
countries. Despite widespread rhetoric, its impact is still patchy. In practice,
implementation of this agenda by many companies is shallow and fragmented.
Governments are beginning to view corporate social responsibility as cost-effective means
to enhance sustainable development strategies, and as a component of their national
competitiveness strategies to attract foreign direct investment and position their exports in
global markets. There is a significant opportunity for the public sector to harness business
enthusiasm for corporate social responsibility to help achieve its goal of reducing poverty.
The challenge today for the public sector in developing countries is to identify corporate
social responsibility priorities and incentives that are meaningful in their national context,
and to play a role in strengthening appropriate local initiatives.

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A business cannot succeed in a society which fails- goes the clich. This clearly
establishes the stake of a business organization in the wellbeing of a society of which it is a
part.
Traditionally, companies, institutions and individuals were aware of the
responsibility it owes to the society. Business house has always had some ethical
perspective- one of which is the desire to offer help and being conscious of the fragility of
the environment we live in (Sandhya. U, 2006). However, their activities were limited to
philanthropy and charity. The new concept of CSR goes far beyond traditional
philanthropy.
The main driving forces, according to the MRF CSR report (2001, that brought
about the evolution of Corporate Social Responsibility are,

New concerns and expectations from citizens, consumers, public

authorities and investors in the context of globalization and large scale
industrial change;

Social criteria are increasing the investment decisions of individuals and

institutions both as consumers and as investors;

Increased concern about the damage caused by economic activity to the

environment.

Transparency of business activities brought about by the media and

modern ICT.

5. Stakeholders in CSR
Earlier, when profit-making used to be the prime motive of companies, they were
only concerned and accountable to their shareholders However, with the emergence of
social responsibility companies now focuses attention and responsibility towards all which
are sensitive to their business do. IndianNGOs.com (2007) has defined a companys
stakeholders as all those influenced by its decisions and actions, either locally or
internationally business. Their list of stakeholders include, employees, stockholders,
suppliers and contractors, consultants and business associates, neighbourhood community,
customers and consumers and the natural environment. Given below are a list of
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stakeholders and the activities undertaken by the corporate houses for each of them in their
endeavour to discharge their social responsibility.

Stakeholders table for CSR

Stakeholders

CSR activities

Natural

Judicious use of natural resources

environment

Energy conservation
Abatement of polluting emissions
Waste management

Consumers

Production of safe items and using biodegradable

packages
Educating consumers on product use and disposal
Being truthful in advertising

Employees

Providing fair compensation and benefits and safe work

environment
Eliminating discrimination
Providing opportunities for personal and professional
development
Having progressive human resource policies

Government
agencies

Fulfilling obligations under regulations and statues of

(local

these agencies

state and central

Cooperating in planning and investigations

government)

Coordinating administrative activities with these agencies

Community

Providing economic stability

Safe guarding public safety
Protecting the environment
Aiding in development of social and cultural resources of
the community

Media

Being cooperative and truthful about issues that affect

public welfare

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6. Perspectives on Corporate Social Responsibility

According to Samuel and Saari (2007) there are three broad perspectives that
inform CSR.

i) Business perspective:
This recognizes the importance of reputation capital for capturing and sustaining
market. Seen thus, CSR is basically a new business strategy to reduce investment risk and
maximize profit by taking all the key stakeholders into confidence.

ii) Eco-social perspective

This perspective recognizes the need for sustainable development of society and
environment for sustainable business. It gives emphasis on sustained economic social and
environmental growth deigned to meet the needs of the environment as well as the
community.

iii) Rights based perspective

This perspective stresses that all stakeholders have a right to know about
corporations and their business. Accordingly, accountability and transparency in social and
environmental investment are the key aspects of CSR.
6.1 Corporate responsibility the typology
Samuel and Saari (2007) identified three areas in which companies discharge
their social responsibility. These three areas are
i) Traditional corporate philanthropy
In this, company gives without expecting a return or a benefit. They engage in
philanthropy for personal satisfaction or concern for the society of which it is a part of
Citigroup Inc., the financial service company gave $88.8 million to organizations in more
than 80 countries in 2003. Every year, thousands of Citigroup employees give freely of
their time and talent to work with hundreds of NGOs and communities. Irrespective of the
profit they are making, they are instrumental in funding health and educational facilities.

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ii) Corporate social responsibility

CSR acknowledges the debt that the company owes to the community,
within which it operates, as a stakeholder rather than on maximization of profit for
shareholders. HLL (Hindustan Lever Ltd.) believes that it is their obligation to serve and
work for the stakeholders and their all round sustainable development. They have involved
in various activities like educations, women empowerment, disaster relief, environment
protection in states of their operations.
iii) Ethical business:
Here, the essential thrust is on social values and business is conducted in
consonance with broader social values and stakeholders long term interest.

6.2 CSR in India

In India as in the rest of the world there is a growing realization that business
cannot succeed in a society which fails. An ideal CSR has both ethical and philosophical
dimensions, particularly in India where there exists a wide gap between sections of people
in terms of income and standards as well as socio-economic status (Bajpai, 2001).
However, the concept of CSR is not new in India. The idea of social responsibility
in the Indian society, bounded by notion of caste and fate, dates back to the time of British
Rule when Indian reformers launched reform movements which slowly became more
socially responsible. During the independence struggle Indian companies, which began to
proliferate and proper from the mid 19th century, throw in their lot with Mahatma Gandhi
and the resulting concern for the nations caused many of them to be involved in providing
education, health service and even clean water (Guptara).
6.3 Social commitments of Indian corporate
A number of Indian companies discharge their social responsibilities quite
satisfactorily. Following are few illustrations of such socially responsible Indian
companies.

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CSR activities of some Indian companies

Sl. No.
1.

Corporate
ITC

Area of activity

Beneficiary state

Primary education

UP, Bihar, MP, AP,

Livestock development

Karnataka, MP

Social forestry
Integrated

watershed

development
2.

ACC

Revival of traditional arts

Preserving

culture

Rajasthan, HP, MP,

and

heritage

Jharkhand,
Maharastra, AP

Afforestation
Health and medicine
Disaster

management

and

relief
Education
Sports
Water conservation
3.

Citi group

Women empowerment

AP, TN, Karnataka,

Rehabilitation

Kerala,

Education

MP

Maharastra,

Health
4.

HLL

Rehabilitation

Gujarat,

Education

UP, Bihar, Jharkhand,

Health and hygiene education

WB,

Water

Chhattisgarh,

conservation

harvesting

and

Maharastra,

Orissa,

MP,

Maharashtra

Women empowerment
5.

TISCO

Community development

MP,

Bihar,

UP,

Social welfare

Gujarat, Maharashtra,

Tribal area development

Karnataka, Orissa, WB

Agriculture
Rural industrialization
6.

SAIL

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Community development

Maharashtra, AP, MP,

AIDS awareness

Karnataka,

Bihar,

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Education

Jharkhand

Medical facilities and health

Development

of

small

scale/ancillary industries
Agriculture, poultry, fisheries

6.4 CSR in Rural Development

The private sector is the engine of growth which benefits the poor by providing
economic opportunities and increasing access to essential services. The business community
has a pivotal role to play in ensuring private investment flows to those rural areas of the country that have
been left out of the development process so far.

It is axiomatic that high rates of economic growth cannot be sustained without

putting in place an effective growth strategy for rural India. Growth in rural incomes is
both a means and an end of Indias economic development. Various CSR models can
mobilise corporate sector involvement in bringing about prosperity in rural India, given
appropriate policy support and encouragement. Many core development issues are central
to the CSR agenda, including labour standards, human rights, education, health, child
labour, conflict and transparency in relation to government natural resource revenues.
CSR-based multi-stakeholder partnerships can be seen as attractive and costeffective means to enhance rural development strategies. The challenge for the
development professionals is to identify CSR priorities and areas of intervention that are
meaningful in the context of rural development.
Traditionally, the Indian corporate sector has by and large viewed its contribution
to the rural sector as part and parcel of its social responsibility, outside of its commercial
objectives. The cyclone in Orissa, earthquake in Gujarat and the recent Tsunami disaster
saw corporate houses rise to the occasion as never before. This also involved a partnership
approach (Public Private Partnerships) with the governments - both at the Central and State
level. The clear benefits of these initiatives, that is part and parcel of good governance
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within companies, include satisfied shareholders and stakeholders, enhanced reputation,

visibility, strengthening risk management and positive employees and committed
consumers.

However, the challenges in India are enormous. Social responsibility should not
be limited to large successful corporations; there should be greater Participation from most
small; medium, and large business. The goodwill firms can generate from acts of social
responsibility may, in fact, be worth far-more to the businesses than I the amounts they
give. Corporations collectively can make India a better place for every citizen.

The private sector can help alleviate poverty by focusing on the poor as
producers. One way to do this is to make markets more efficient such that the poor capture
more of the value of their outputs. The best way for private firms to help eradicate poverty
is to invest in upgrading the skills and productivity of the poor, and to help create more
employment opportunities for them.

In recent times, a number of foundations set up by leading, Indian firms, including

Infosys, Wipro, Tata, TVS, and Dr. Reddy's Laboratory, have taken a keen interest in
corporate activism to improve health care, education; and living conditions, and reduce
poverty. These foundations support numerous government primary schools and have
developed processes and methodologies for effective change. They support hundreds of
non-governmental organisations and have built orphanages; hospitals, and schools.

Corporate social responsibility has much broader implications for the nation as a
whole. It reduces dependency on the government for social change. Most governmental
programmes quickly become embroiled in political manipulation, corruption, communal
overtones, and bitter infighting. There is a need for public-private partnership with welldefined controls and processes for the best use of resources for social change.
Corporate social responsibility is not a new concept in India. However, what is
new is the shift in focus from making profits to meeting societal challenges. Now-a-days,

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employees are actively participating in the social activities even on holidays. This is
mainly because employees feel a sense of pride when they are involved in such activities.
Moreover, companies are having dedicated departments for CSR. CSR taken up by various
range of companies primarily focuses on poverty alleviation, environmental protection and
sustained development. Companies are taking initiatives for developing infrastructure in
rural areas. TVS Electronics was involved in CSR during the Tsunami to provide relief
measures to the victims. They have also participated with the government to improve
sanitation in a village called Tiruvidenthai. Such initiatives will help in improving the
conditions of rural people. Satyam Foundation of Satyam Computer Services Ltd., Infosys
Foundation of Infosys Technologies Ltd., GE Foundation of the General Electric Company
are exemplary instances of the benevolent commitment of the corporate sector in India.
Irrespective of the profits they make, these foundations are aiming at uplifting of the poor
and enhancing the standard of life in the rural sector.
The companies which implemented CSR in rural India are discussed below:
RURAL ELECTRIFICATION CORPORATION LTD
The approach of REC towards Corporate Social Responsibility is oriented to
identify and formulate projects in response to felt societal needs in diverse areas and to
implement them with full involvement and commitment in a time bound manner. As a
responsible corporate entity, Rural Electrification Corporation is consistently strive for
opportunities to meet the expectation of its stake holders by pursuing the concept of
sustainable development. The major activities in rural area are to facilitate demonstration
of commercially viable rural electricity delivery models with appropriate intervention and
support on a selective basis such that they can be replicated elsewhere. REC provides
promotion of rural enterprise and livelihood including skill development and training,
Provides development support to common facility centres / production centres in rural
areas. REC Promotes development of rural technologies for micro enterprise and also
Promotes sports and games.

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LAFARGE CEMENT
Lafarge worldwide gives prime importance to sustainable development for
sustainable economic performance. Lafarge is committed to the communities where it
operates. In India Lafarge has undertaken a number of initiatives under its corporate social
responsibility programme. The major initiatives are Project Employability, Project Low
Cost Housing, and Project Education. Project Employability focuses on creating
sustainable livelihoods for local communities. The concept of the project is to build
communities that are more skilled and capable of sustaining themselves independently by
capitalizing on the company's expertise, knowledge and competencies, rather than merely
providing continued financial support. It directly provides solutions to the critical
community problem of unemployment, through a method, which is "development"
oriented

and

lays

the

foundation

for

long

term

success

of

the

society.

Project Employability provides professional training in masonry to the illiterate and

unemployed youth in these communities making them employable. The objective of Low
Cost Housing is to promote and enhance the use of cement in houses in order to provide
safe and comfortable habitats. Since a large part of India (70%) lives in rural areas, the
project is largely geared to meet rural housing needs. Project Low Cost housing, which we
initiated during 2004 incorporating modern technology, has become our priority area. The
goal of the project is to design safe houses, which are replete with basic amenities and
provide a platform for its replication across geographies. Lafarge at present is conducting
Computer Education classes, free of cost, for over 1500 girl children in about 10 middle
schools in Jharkhand and Chhattisgarh in the part of its Project Education.
BPCL
BPCL initially started working in Mahul, the village located in the vicinity of its
Mumbai refinery since 1986. The habitants of Mahul, essentially from the fishing
community, were rich because they possessed marine wealth but as far as education,
health, etc was concerned, they needed help. BPCL volunteered and the initial success
brought such gratification that immediately it adopted another village (this time an interior
one) called Karjat, developments with selfless intentions helped introspect about the future
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role BPCL should adopt in its aim to contribute to this effort, then there after there was no
looking back. As a corporate responsibility, today 37 villages across India have been
adopted. This includes making substantial investments for nearly a decade and a half in
them to make them fully self reliant, providing them fresh drinking water, sanitation
facilities, medical facilities, enhancing their income standards by imparting vocational
training and agricultural innovations. However, BPCL also firmly believes that the only
vehicle for raising the villagers from their present state is by educating the young and the
old, a focus on providing grants for opening schools and opening adult literacy camps as
well.
INDIAN OIL
Indian Oil has a concerted social responsibility programme to partner
communities in health, family welfare, education, environment protection, providing
potable water, sanitation, and empowerment of women and other marginalised groups.
Indian Oil has always been in the forefront in times of national emergencies. Indian Oil
People have time and again rallied to help victims of natural calamities, maintaining
uninterrupted supply of petroleum products and contributing to relief and rehabilitation
measures in cash and kind. Indian Oil's community-focussed initiatives include allotment
of petrol/diesel station dealerships and LPG distributorships to beneficiaries from among
Scheduled Castes, Scheduled Tribes, physically handicapped, ex-servicemen, war widows,
etc. The Corporation has also unveiled kisan seva kendras as small-format retail outlets to
reach quality products and services to people in the rural areas. Indian Oil has also set up
the Indian Oil Foundation (IOF) as a non-profit trust to protect, preserve and promote
national heritage monuments. The Corporation also supports a variety of endeavours in
arts, culture, music and dance, apart from organising programmes on its own under the
banners of Indian Oil Art Exhibition, Indian Oil Sangeet Sabha and Indian Oil Kavi
Sammelan.

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ACC
ACC has undertaken social volunteering practices almost from its inception,
long before the term corporate social responsibility was coined. The company's earliest
initiatives in community development date back to the 1940's in a village on the outskirts
of Mumbai while the first formal Village Welfare Scheme was launched in 1952. The
community living around many of our factories comprises the weakest sections of rural and
tribal India with no access to basic amenities. Its community development activities
revolve around the under-privileged community that lives in the immediate vicinity of the
cement plants. The range of activities begins with extending educational and medical
facilities and goes on to cover vocational guidance and supporting employment-oriented
and income-generation projects like agriculture, animal husbandry, cottage industries by
developing local skills, using local raw materials and helping create marketing outlets .At
all our cement factories ACC share amenities and facilities with members of the local
community. This includes sharing education and medical facilities, sports, recreation,
access to Bore Wells, drinking water and the usage of colony roads.
COLGATE'S PROJECT JAGRUTI
In the year 1998 Colgate started project Jagruti , the rural hygiene drive along
with the Indian dental Association. This project covers 60 lakh people in 20,000 villages,
out of which 15,000 villages had no experience to the availability of toothpaste and tooth
powder. The aim of the drive is to promote the brand in rural areas but the overall strategy
is also spreading the vital information of oral hygiene among the lesser aware rural people.
CHAMBAL FERTILISER'S UTTAM BANDHAN
Uttam Bandhan , the community welfare initiative launched by the K.K. Birla
group's flagship company Chambal Fertilisers and chemicals ltd (CFCL) in Rajastan in the
year 2000. Under this programme , CFCL trains unemployed rural youth as extension
workers known as krishi sewaks, who interact with the farmers and advise them .
HUL'S VINDHYA VALLEY PROJECT
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In the year 2000 HUL helped state owned Khadi Board through an advisory
relationship with the government of Madhya Pradesh. It helped the board to brand local
produce from villages and tribal areas such as natural honey collected from forests in the
state under the brand name Vindhya Valley. The product range includes edible products
like papads, pickles, masala and turmeric. HUL provided the corporate expertise,
marketing acumen and quality parameters, while the state government bore the marketing
expenses for the brand building.
ITC'S CSR INITIATIVE
ITC has taken a good number of social initiatives in rural areas around its plants,
which are helping both the population of adjoining areas and the organisation itself. These
developmental efforts are providing meaningful employment opportunities in the village
itself. One of the CSR initiatives is Sunehra Kal ( Better Tomorrow). It is a social forestry
project which was launched around its Bhadrachalam plant in Andhra Pradesh. This
programme targeted at economically backward communities, living below the poverty line
involves forestation, soil and water conversion, community development, health and
sanitation, education and watershed management.
6.5

Role of private sector in poverty alleviation

The poverty alleviating role of private sector may be examined under three
business models, namely, i) Commercial business model, ii) Base of the Pyramid (BOP)
business model, and iii) Social Business Enterprise (SBE) model.

i) Commercial business model

By using the adjective commercial to this business model one can actually
emphasising on the profit maximization behaviour of the business. One can refer to the role
of business as argued by the proponents of capitalist economy. Adam Smith (1937:508;
org.1776), for instance, argued that the individual pursuit of self-interest helps the entire
society to prosper. From narrow self-interest comes, to use Smiths famous phrase,
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greatest good of the greatest number of people. Thus, it may be argued that under ideal
capitalist economy the problem of poverty will eventually get solved through a
commercial business model.

(II) Base of the Pyramid (BOP) business model

It has been argued that with the opening of the closed markets of many counties
The real source of market promise is not the wealthy few in the developing world, or even
the emerging middle-income consumers: It is the billions of aspiring poor who are joining
the market for the first time(Prahalad and Hart 2002). They are at the bottom of the
pyramid (BOP). Prahalad (2005) explains, The distribution of wealth and the capacity to
generate incomes in the world can be captured in the form of an economic pyramid. At the
top of the pyramid are the wealthy, with numerous opportunities for generating high levels
of income. More than 4 billion people live at the BOP on less than $2 per day. It is this
BOP population whose poverty can be eradicated profitably, according to Prahalad

Prahalad and Hammond (2002) made two assumptions: First, prosperity to the
poor regions can come only through the direct and sustained involvement of multinational
companies; and second, multinational companies can enhance their own prosperity in the
process. Prahalad and Hammond (2002) pointed out that it is not true as commonly
assumed that the poor only spend on basic needs, they also spend on luxury items and
they often pay much higher prices for most things than middle-class consumers. Thus, big
corporations can have a huge market among the BOP population by offering higher quality
goods at lower prices while maintaining attractive margins. Secondly, the various
perceived barriers of doing business among the poor in the developing countries are also
not real. Political reform, growing openness to investment, new information technology
and communication s infrastructure especially wireless etc. are reducing the barriers
and providing access to even the poorest city slums and rural areas.

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Prahalad and Hart (2002) elaborated how to create a commercial

infrastructure for the bottom of the pyramid market which will result in alleviating poverty.
They have mentioned about the following four elements:
1. Creating Buying Power by providing access to credit, and increasing the
earning capacity of the poor.
2. Shaping Aspirations through sustainable product innovations initiated in
BOP population and promoted through consumer education.
3. Improving Access through better distribution systems and communication
links for development of the BOP.
4. Tailoring Local Solutions to nurture local market and cultures, leverage
local solutions, and generate wealth at the BOP.
It is important to note that the above mentioned four elements of the commercial
infrastructure for the bottom of the pyramid are intertwined. Prahalad and Hart (2002)
observe that no firm can seek their fortunes and bring prosperity to the aspiring poor alone
Multiple players must be involved, including local governmental authorities,
nongovernmental organizations (NGOs), communities, financial institutions, and other
companies. However, they argue that MNCs are more favourably placed to take the lead
in alleviating poverty through profit. How poverty alleviation through profit happens?
Prahalad and Hammond (2002) explain, When MNCs provide basic goods and services
that reduce cost to the poor and help improve their standard of living while generating an
acceptable return on investment the results benefit everyone.
(iii) Social Business Enterprise
Muhammad Yunus (2005) has developed a concept of Social Business
Enterprise. He talked about two types of people, one profit- maximizing type, the other
not interested in profit-maximization. They are social objective driven. They want to give
a better chance in life to other people. They want to achieve their objective through
creating/supporting sustainable business enterprises. Their business may or may not earn

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profit, but like any other business they must not incur losses. They may be referred as
social entrepreneurs.
Thus, the main objective of BOP model is profit which happens in the
very process of poverty alleviation. On the other hand, the main aim of Social Business
Enterprise is to serve a social cause which may be done with profit. The commercial
business model with its preoccupation with profit differs from the BOP model and SBE in
the sense that it does not make any special effort to make the business model poorinclusive, but argues that majority of the poor will get benefited through its operation under
free play of market forces. Thus, all the three models proposes poverty reduction but
through here different paths.

7. Summing up
Business houses all over the world are increasing in realizing their stake in the
society and engaging in various social and environmental activities. CSR holds a very
important place in the development scenario of the world today and can pose as an
alternative tool for sustainable development. As companies have shown great concerns for
their immediate community and the stakeholders, it can be safely concluded that much of
the fate of society lies in the hands of the corporate.
Nevertheless CSR has certain limitations which restrict its activities. The need of
the hour is to formulate effective strategic policies and adopt various instruments according
to the company history, its content, peculiarity in relationship with its different
stakeholders so that CSR can be best implemented towards its goals sustained
environmental, social and economic growth. Corporate together can make the world as a
better place to live.
Even though companies are taking serious efforts for the sustained development,
some critics still are questioning the concept of CSR. There are people who claim that
Corporate Social Responsibility underlies some hidden motives while others consider it as
a myth. Is CSR really a stalking horse for an anti-corporate agenda? The reality is that CSR
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is not a tactic for brand building. Indulging into activities that help society in one way or
the other only adds to the goodwill of a company. Rural people can become a viable
market for the corporate with a developmental approach of social marketing. Organisations
can launch social responsibility initiatives in order to build brands in the rural areas. The
social responsibility initiatives are far more effective in building brands in rural market
than the commercial advertisements.

8. Keywords
Corporate Social Responsibility, Stakeholders in CSR, Poverty Alleviation

9. Know your Progress

1. Define and explain corporate social responsibility.

2. Trace the evolution of corporate social responsibility.

3. Explain the role of corporate social responsibility in rural development.
4. What are the three business models for poverty alleviation in private sector?

10. Further Readings / References

Guptara. P. Corporate Social Responsibility in India, South Asian Development
Partnership, UK. (http://www.southasian.org.uk/intro_social
Bajpai, G.N. (Nov., 2001). Corporate Social Responsibility in India and Europe:
Cross Cultural Perspective (http://www.ficci.com). http://www.itcportal.com/
Sandya,

(2006)

Corporate

Social

Responsibility,

The

Hindu.

corporate

style

(http://www.thehindujob.com/0608/200608090006100.htm)
Shinde,

(2005).

Social

responsibility

(http://www.expresscomputeronline.com/20050502/technologylike01.shtml).

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Wood, D.J. (1991). Corporate social performance revisited, academy of

management review, 16 : 691 718. http:www.indianngos.com/corporate/about
csr.htm (Sept., 2007).
Samuel, J and Saari, A (2007). Corporate social responsibility.
(http://infochangeindia.org/corporatesrlbP.jsp, Feb., 2007).
Fonteneau, G. (2003): Corporate Social Responsibility: Envisioning its Social
Implications, TJSGA/TLWNSI Essay, 2003, October, pp. 1-11.
UNIDO (2002): Corporate Social Responsibility: Implications for Small and
Medium Enterprises in Developing Countries, Vienna: UNIDO.
Utting, P. (2003): The Global Compact Why All the Fuss?, UN Chronicle,
Volume XL, Number 1, 2003.

11. Model Answers

1.

Corporate Social Responsibility (CSR) is the continuing commitment by

business to behave ethically and contribute to economic development while improving the
quality of life of the workforce and their families as well as of the local community and
society at large.
CSR is not a philanthropic activity where a company gives without expecting a
return or a benefit. In CSR, it is about ethical investing. CSR seeks to limit the negative
impact of business on society, while optimizing its social performance. CSR is good for the
community and good for business companies investing, cultivating and nurturing mutually
beneficial relationships with stakeholders create sustainable communities in which to do
business over the long term.
2.

The concept of corporate social responsibility originated in the 1950s in

USA and the concept came into prominence in public debate during the 1960s and 1970s.
During 1980s to 2000, corporations generally recognized a responsibility to society and
weighed against the demands of being competitive in a rapidly changing global economy.
3.

The private sector is the engine of growth which benefits the poor by

providing economic opportunities and increasing access to essential services. The business
community has a pivotal role to play in ensuring private investment flows to those rural areas of the country
that have been left out of the development process so far. CSR-based

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multi-stakeholder partnerships
308 | P a g e

can be seen as attractive and cost-effective means to enhance rural development strategies.
The challenge for the development professionals is to identify CSR priorities and areas of
intervention that are meaningful in the context of rural development.
4.

The poverty alleviating role of private sector may be examined under three

business models, namely, i) Commercial business model, ii) Base of the Pyramid (BOP)
business model, and iii) Social Business Enterprise (SBE) model.

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BLOCK-5: DECENTRALISED GOVERNANCE

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Block-5: Decentralised Governance

Introduction
The earlier Blocks have dealt with subjects like understanding rural areas and
people, rural social structure, rural economic structure, economic growth and equity
aspects, concepts, definitions and approaches to sustainable development. You were also
exposed to various approaches to rural development, poverty and its many facets,
measurement of poverty, etc. Rural development cannot be planned and implemented from
higher levels. Since rural development is directly related to people or in other words,
people centric, it is necessary that they are made partners in all processes of rural
development. In order to make more effective and result oriented, decentralisation of
development and decentralised governance is essential.
Keeping above in view, we will be studying the following under the four Units
provided in this block :
(i)

Democratic Decentralisation and Panchayati Raj;

(ii)

Cooperatives;

(iii)

Community Based Organisations (CBOs) and their role in Rural

development; and,

(iv)

Non - Governmental Organisations (NGOs) and their role in Rural

Development.

The first unit will deal with Democratic Decentralisation and will focus on the
evolution of rural local self governments or Panchayati Raj System in India and its present
status and role in governance and rural development. The second unit is devoted to
cooperatives. The Cooperative movement and cooperatives have an important role in
economic development particularly, the poor farmers who do not have access to other
formal credit institutions and also procurement of inputs and marketing their produce. In
this unit , we will therefore study the various types of cooperatives and their role in rural
development.

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In the recent past a number of CBOs have emerged which are actively in rural
development activities in various ways. In the third unit we will therefore study various
types of community based organisations and their role in rural development. Similarly,
NGOs are also actively associated in various rural development activities and the fourth
unit is devoted to it.

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Unit-1: Democratic Decentralisation and Panchayati Raj

Structure
1.

Introduction

2.

Objectives

3.

Democratic decentralisation

3.1

Decentralization process and local governance in India

3.2

New phase of governance at the local level: 73rd Constitution

Amendment (1992)

3.3

Devolution of powers, functions and resources

4.

Empowerment and Emerging Leadership

5.

Participatory Governance and Development

6.

Role of Panchayats in Poverty Alleviation

7.

Summing up

8.

Keywords

9.

Know your Progress

10.

Further Readings / References

11.

Model Answers

1. Introduction
India is the largest democratic country in the world. In a democracy, the
common people have the power and therefore, in principal, every citizen should have his
/her say in the governance as well as development processes. However in practice it is
difficult for every individual to participate in these activities. However, through
democratic decentralisation it is possible to involve in the national development process.
In this unit we have tried to help you understand the meaning of democratic
decentralisation, the mechanism to achieve decentralisation by means of local
government systems and their empowerment for governance and local level development
in Indian context and also their current status and effectiveness in governance and
development processes. It also deals with constitutional provisions for peoples
participation, empowerment of weaker sections and specially women, in all processes of
governance and development.

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2. Objectives
The main objectives of this Unit are to:
1. Make you understand democratic decentralisation;
2. Evolution and present status of rural local governments / Panchayati Raj in
India; and
3. Role of Panchayati Raj in Rural Development.

3. Democratic Decentralisation
Democracy, in its true sense, cannot be expected to have a stable and permanent
existence if it is based on democratic institutions which are so remote or far from the
reach of common people. Democratic structure is capable of surviving under stresses
and strains which are implicit in this form of government. Democracy is meaningful if
there are democratic institutions at different levels which are close to the people and offer
opportunity for all to participate in the democratic processes as well as governance.
Though the word decentralization has various usages in different concepts and
every walk of life, in relation to different constitutional systems and socio-political
environment, decentralization may be referred to deconcentration, delegation and
devolution.

Democratic decentralization therefore is directly concerned with

deconcentration of the power from a central institution to local-level institutions through

devolution and delegation of authority, functions, resources and responsibilities.
Decentralization does not mean division of the functions of state between state and local
institutions, each discharging its functions independent of the other. Decentralization
means and includes devolution of state functions on local bodies, the later discharging
them subject to the constitutional responsibility of the state in respect of governance and
development. However, in respect of the functions devolved on local institutions, they
will have full freedom in deciding priorities between various activities and suitability of
areas in which they should be undertaken, provided they confirm to the general policy of
the state. Democratic decentralization is also a means for empowering people to directly
participate in decision making of all such processes which affect various aspects of their
day-to-day life and help them in joining the main stream of socio-economic development
and in the task of nation building.

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Experiences have shown that bigger the administrative unit, the more
impersonal becomes its administrative system which has loose contact with grass-roots,
and the administrative apparatus becomes complicated machinery with elaborate
procedures, time consuming methods leading to impede the disposal of work, thereby
inhibiting initiative and drive. In this situation, local government equipped with adequate
authority, resources, and personnel, are the best alternative to discharge a number of
functions that impinge on daily life of the common people more efficiently.
There are, however, many who consider that local governments are not feasible
as in the discharge of a large number of functions, the local bodies may suffer from one
or the other problems. Firstly, some of is elected representatives may give greater
importance to administrative details than the matters relating to policy planning,
production and public participation. Secondly, there may be difficulties in coordinating
the work of local bodies at different levels and their administrative departments. Lastly,
on account of the very nature of democratic institutions, they cannot provide centres of
initiative and drive.
Democratic decentralization and empowerment of the people will find concrete
expression through the local governments when they are so designed as to take up and
accelerate the cause of socio-economic development and poverty alleviation.

The

strength and usefulness of these bodies consists in their ability to effectively and
efficiently plan and implement programs of economic development and social justice and
ultimately to improve the quality of life of the people in general and the poor in
particular.
3.1 Decentralisation Process and Local Governance in

India

With the launch of First Five Year Plan in 1952, Community Development
Program (CDP) was also introduced to initiate the process of rural development in the
country. In order to make CD program more effective and people oriented, the whole
country was divided into more than 6000 blocks, each block being a decentralized unit of
development. It also helped in bringing the development administration closer to the
people and thus a vast decentralized administrative network was created

to plan and

implement rural development activities.

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Administrative decentralization for the development of rural areas was actually

deconcentration of administrative functions and did not provide adequate mechanism for
peoples participation.

In order to fill this gap and also to initiate the process of

democratic decentralization, the government of India introduced Panchayati Raj system

(PRS) in the country in 1959 and as a result most of the states PRS during sixties.
Panchayati Raj has had a chequered career in a number of states. Even the states where
Panchayats had continuity, these bodies functioned as an additional agency of the
development administration both at the district and the block levels. The growth of PRIs
was hampered by many factors. Some of the important reasons some of them are:
1. Except in a few states, there was no continuity in the functioning of
these bodies.
2. The PRIs functioned like development agencies with a few functions
without adequate powers, functions, and resources;
3. Decentralization of power, functions and resources which are so vital for
the functioning of local governments was partial, adhoc and uncertain;
4. These institutions were used more as political base of the higher level
leadership rather than the institutions for local governance; and
5. There was lack of political will as well as bureaucratic indifference for
PRS. as a result, the basic purpose of their existence, direction and
orientation was almost lost.
While the institutionalization of PRIs remained uneven among different states
and the initial decentralisation package became too thin over the years, the PRIs had
come to stay and were destined to play an important developmental role in rural areas
whether they are energized by periodical elections or not. The three decades of the
working of PRIs had clearly underlined the necessity and utility of local level institutions
of development management whether they were designed or designated as units of
government or `units of self-governments or not. Realizing this fact, the Government
decided to confer constitutional status for PRIs and implement the full package of
decentralization to achieve the ultimate goal of making these bodies self-government
units at the local level.

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3.2 New Phase of Governance at the Local Level : 73rd Constitution Amendment
(1992)
During the decade of nineties, the Development Policy has been affected by two
major events; Economic Liberalization and democratic decentralization. While the New
Economic Policy was aimed at stabilization and restructuring the National economy
`democratic decentralisation was focused on empowerment of the people in rural areas
in terms of both participation in development processes and self-governance. The 73rd
Constitution Amendment was thus, intended to achieve this objective by strengthening
the Panchayati Raj Institutions. As a result of the constitution amendment almost all
states have amended their respective Panchayati Raj Acts and accordingly constituted the
PR bodies at the three levels.
The empowerment of the people could be realized only through delegating the
PRIs adequate authority, financial resources, and personnel to carry out developmental
activities. For this purpose, 29 items, listed in the Eleventh Schedule of the Constitution,
were transferred to the PR bodies. The process of transferring functions to the PR bodies
has already started in different states. While in some states, necessary initiative has
already been taken in this regard; other states have yet to initiate the needed action. One
of the factors for the slow progress is the half-hearted attitude of the political authorities
at the state level, who are generally not enthusiastic about it. The response of the
administration is also lukewarm in this regard. The 29 items transferred to the Panchayati
raj Institution (PRIs) are as listed below Table.
Table 1: Devolution of functions

S.No.

FUNCTIONS

1.

Agriculture, including agricultural extension

2.

Land improvement, implementation of land reforms, land consolidation

and soil conservation

3.

Minor irrigation, water management and watershed development

4.

Animal husbandry, dairying and poultry

5.

Fisheries.

Social Forestry and farm forestry

Minor forest produce

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Small scale industries, including food processing industries

Khadi, village and cottage industries

10

Rural housing

11

Drinking water

12

Fuel and fodder

13

Roads, culverts, bridges, ferries, waterways and other means of

communication

14

Rural electrification, including distribution of electricity

15

Non-conventional energy sources

16

Poverty alleviation program

17

Education, including primary and secondary schools

18

Technical training and vocational education

19

Adult and non-formal education

20

Libraries

21

Cultural activities

22

Markets and fairs

23

Health and sanitation, including hospitals, primary health centres and

dispensaries.

24

Family welfare

25

Women and child development

26

Social welfare, including welfare of the handicapped and mentally retarded

27

Welfare of the weaker section, and in particular, of the scheduled castes

and scheduled tribes

28

Public distribution system

29

Maintenance of community assets

3.3 Devolution of Powers, Functions and Resources

The real test of the PRIs will be in discharging the responsibilities vested in
them on the one hand and satisfying the peoples needs and aspirations on the other. The
most important task before these bodies therefore is to accelerate the pace of economic
development and social justice to alleviate poverty and improve the quality of life of the
people in general and the poor in particular. In order to enable PRIs to discharge their
responsibilities with efficiency and effectiveness, they should be provided with adequate
powers, functions and resources. While some states are making progress, many have yet
to start devolution of powers and functions. For devolution of financial resources, State

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Finance Commission were appointed by the States, to determine the quantum and
financial flow to these bodies. The present status of devolution of powers, functions and
resources in different states of India is presented in Table 2. Despite the constitutional
provision, the States have not achieved desirable progress in respect of the transfer of the
funds, functions and functionaries as per the provisions of 73rd Amendment.

In other

words, as of now the process of decentralization is at a slow pace and it may take couple
of years more to achieve the satisfactory level of devolution of powers, functions and
resources.

4. Empowerment and Emerging Leadership

Addressing the Sammelan (Conference) of Panchayat Adhyakshas
(Heads of local Governments), in which nearly 8000 heads of Zilla Panchayats(District
Councils), Panchayat Samitis(Intermediate Council)

and Gram Panchayats(Village

Council) from all over the country participated in Delhi on 10th and 11th October, 1995,
the Prime Minister of India said that the real democracy in the country will be achieved
when against the present 7000-8000 representatives elected to the Parliament and State
Assemblies, there are 3.5 million more representatives elected to the PRIs and participate
in the development and governance of the nation. Again, through reservations, adequate
number of leaders belonging to socially and economically weaker sections, such as
scheduled castes, scheduled tribes and women are elected to the PRIs both as members as
well as heads of those institutions, and work with other members for economic
development and social justice, the objectives of the democratic decentralization and
self-governance could be achieved.

In other words, through PRIs a large number of leaders belonging to all sections
of the society will be emerging at different levels. Of the nearly 3.5 million leaders, half
of them would be from scheduled castes, scheduled tribes and other backward castes and
one-third of all categories would be the women representatives. Besides, in the same
proportion, the leaders from different categories would be the heads of Gram Panchayats,
Panchayat Samitis and Zilla Panchayats as also heads of various Standing Committees at
all the three levels.
Through PRIs, the process of empowering various socio-economic groups
has begun on a large scale which is an important motivating factor for
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participation. The representatives of the PRIs are expected to mobilize the required forces
for economic advancement. They are supposed to be the creators, designers and
interpreters of policy particularly when economic policy is closely linked with political
ideology.

They may also be needed to promote reorientation of outlook and the

acceptance of the new values necessary if the resources of traditional form of social and
economic organizations are to be effectively mobilized for economic progress. The PRI
leaders are also required to participate in decision making on critical economic issues and
to see that appropriate executive action follows. The important function of a PRI leader
may be, to serve as an evaluator, decision maker, where economic action can be applied
most effectively and expected to be the most efficient combination of resources to
achieve the desired goals. The PRIs leadership for economic growth depends upon the
structure of power in the society, especially the relationship between economic and
political power.

Hence, a PRI representative has to strike a balance between the

following interacting variables emerging from the explosion of self-consciousness in

respect of:
1.

New acquired status;

2.

New Roles they are expected to play;

3.

Responsibilities they have to shoulder;

4.

Promises made to the community;

5.

Loyalty to his/her community and society;

6.

To maintain harmony between members and other social groups;

7.

Managing conflicts and with peoples support;

8.

Consciousness about how to get re-elected;

9.

To improve his / her social and economic position;

10.

Relationship with government functionaries, and the response of the

officials to his / her position.

In the existing situation, the new emerging leadership can be divided into three
categories. Firstly, those who are well aware of their newly acquired position, role and
responsibilities. Second category of the leaders is those who are conscious of the new
acquired position but not aware of their role and responsibilities. The third category
includes all those who are neither fully conscious of their newly acquired status nor
aware of the role and responsibilities.

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The first category leaders who have earlier experience and / or have
understanding of the PRIs and their functioning are very vocal and have already started
raising their voice for transfer of power and resources to them in almost all states where
PRIs are in position. They are influential, articulate and full of enthusiasm.
The second category of leaders, most of them are new comers are conscious of
their new acquired position but are not fully aware of their role and responsibilities as
well as the method through which they can play effective role. The third category of the
leaders which mostly comprises of weaker sections and women and a substantial number
of them are functioning as proxy members of the PRIs. In some cases, where women are
heading Gram Panchayats, Panchayat Samitis and Zilla Panchayats, their husbands or
other male members of the family are assisting as well as influencing them in
performing their tasks.
Under these circumstances, while there is need to harness the potential of the
leaders who are well conscious and aware of their role and responsibilities for proper
governance of PRIs, it is equally important to help the other two categories of the
members to develop consciousness and awareness in the right direction so that they can
play useful role as expected from them. Keeping this in view the Ministry of Rural
Development, the Government of India has taken up a national action plan for
capacity building of 3.5 million elected leaders of PRIs so that these institutions
of local governance could function effectively and meet the aspirations of the
people.

5.

Participatory Governance and Development

The very purpose of development activity, seen in the broadest socio-political
sense is:
To enable people to critically understand their situations and problems;
To identify their needs and to priories them;
To evolve methods of resolving their needs and problems;
To mobilize local resources;
To implement the activity in an organized manner; and

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To monitor, evaluate and learn from the efforts.

Naturally, the participation of the people is necessary for such an effort. But it
is the very lack of involvement and organization amongst people for various political,
social and historical reasons, which is one of the causes of under development. Since
development efforts cannot stipulate peoples participation as an initial condition, such
participation should be actively promoted as an integral part of each programme / project
and should work, within a time-frame, towards an ideal (even if it may not be wholly
achievable) condition. The single biggest constraint to development through `peoples
participation is that it depends much more on attitudinal and belief changes amongst
both development practitioners and intended beneficiaries. Other constraints include:
1.

The fear of change in the power structures As a consequence of

empowering the community and emergence of a large number of new leadership which is
not based on socio-economic status; rising self-consciousness among weaker sections
who were till recently subservient to the socially and economically power sections of the
people; and also challenges thrown by the women leaders, which may affect higher level
leaders and may affect the male dominance in all aspects of social, economic and
political life of the community.
2.

Doubts over Representativeness and Accountability For the intended

beneficiaries to constructively participate, they would require organization.

organization means leaders and representatives to do the actual work.

And

But how

representative are these leaders of the people and how accountable are they to them?
Such doubts could undermine peoples participation. Since everyone in a community
cannot be directly involved in any partnership for planning and implementation of
development programs, the role of leaders, representatives or organizations, as well as
their actual representativeness and accountability, become important in assessing the
quality of peoples participation.
Leaders, representatives and organizations may or may not represent the desires
of the common people. In fact, evidence indicates that all types of leaders, whether
community leaders or elected leaders, frequently use their positions to enhance their own
status rather than to ensure the welfare of the community they represent. The Gram
Sabha is therefore provides a strong forum for community participation in decision
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making process, monitoring the developmental activities, and social audit for
achieving transparency in the governance and resource utilization at the local
level.

The most important role of the PRIs is to accelerate the pace of development in
consonance with the aspirations, expectations and needs of the people. Development
implies a change from one level of existence to a new level which is considered to be
better. The change process affects an individual in three ways: (i) changes his awareness,
the way he sees the physical and social worlds including all his facts, concepts, beliefs
and expectations; (ii) modifies his attractions and values, embraces both his attractions
and aversions to groups and group standards, his feelings in regard to the status
differences and his reactions to sources of approval and disapproval; and, (iii) affects his
behaviour involving the degree of individual control over physical and social
movements.
Most of the changes can be seen in terms of the awareness and knowledge of the
individual in regard to whatever changes that are taking place around him. It is believed
that unless one has the knowledge of whatever kind of programs are implemented, it will
not make him to look for the program or to develop the required attitude in order to adopt
them. Therefore, information giving process to the PRIs leaders must be thorough in
order to make them understand the nature and scope of whatever programs that are
implemented for the benefit of the people. This calls for specific efforts for creating
awareness and improving the knowledge and understanding of the people as well as their
elected representatives about the objectives of the decentralization process and the role
and responsibilities they are suppose to discharge to achieve the stipulated goals of
economic development and social justice.

6. Role of Panchayat in Poverty Alleviation

The 29 functions transferred to the local governments encompass all
sectors Economic, Social and Infrastructure development, which are important for
economic and human development of the rural people. Poverty alleviation has been
in the core of rural development strategy in India. Earlier the PRIs role was
limited to assist in the identification and selection of families below poverty line
(BPL) for government assistance under poverty alleviation programs to help them
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increase their family income through self employment and cross the poverty line.
This approach has not been able to achieve the desired impact. In the new
dispensation, the PRIs can play proactive role in the reduction of the rural
poverty.
Most of the rural poor have

very small

asset base and about 12-15

percent do not have any. In such a situation, it is difficult to expect that any self
employment program will be able to help poor to generate minimum desired
level of income. In order to enhance the asset base or access to the local
resources, the Gram Panchayats have the responsibility to develop and manage
common property resources, like arable, forest and grazing lands, development of
waste and degraded lands, development of water resources, etc. on the one hand
and development of village infrastructure like road, market, common work shed,
etc., so that village people in general and the poor specially are able to find
alternative sources for their livelihoods. In brief, the local governments can support
the poverty alleviation programs and provide

opportunities for sustainable and

gainful sources of livelihoods through following :

Development of common property resources and allowing access of

the asset less poor to make economic use of them;

Management and Development of natural resources like waste and

degraded lands, forests and grazing land, etc. which will help in
increasing resource endowments of the village on the one hand and
help poor to have alternative sources for livelihoods;

Development of village infrastructure, specially work sheds for the

village artisans, women SHGs, road connectivity, market and other
economic facilities; and,

Implementation of poverty alleviation programs with transparency

and accountability.

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7. Summing up

In this Unit, you have learnt the concept of democratic decentralisation,

evolution of Panchayati Raj in India and the constitutional recognition of PRIs through
73rd amendment, which has started a process of decentralization in a true sense.
Simultaneously it has set in a movement among people in general and those deprived of
the fruits of democracy till now, in particular,

leading to the explosion of self-

consciousness and awareness, besides the feeling of empowerment which is an

important motivating factor for participation in all aspects of social, economic and
political processes which affect daily life of every individual. Empowerment of people
through democratic decentralization will bear meaning only when the people are aware
of the opportunities coming on their way and develop the capability to avail of them for
effective local governance, self-development as well as their participation in the
development of village, region and the nation as a whole.

8. Keywords
Democratic decentralisation, 73rd Amendment,
Participatory Governance, Poverty Alleviation

Devolution

of

power,

9. Know your Progress

1. What is democratic decentralisation?
2. What is the 73rd Constitution Amendment ?

3. How the Panchayati Raj Institutions empowering rural people ?

4. What is the role of Panchayats in poverty alleviation

10. Further Reading / References

1.
2.
3.

4.

5.

Arthur, W. McMahon; Delegation and Autonomy, (1982)

Maharashtra, Government of; Report of the Committee on Democratic
Decentralization (1961)
Mathur, P.C; The Constitutional Panchayats of India some Emerging
Jurico Philosophical Issues, C.F. Emerging Trends in Panchayati Raj in
India; ed. S .P. Jain and Thomas W. Hochgesang; NIRD (1994).
Ministry of Rural Development, Government of India; Powers and
Functions of Panchayati Raj Institutions A Frame Work. Occasional
papers (5), NIRD (1994).
National Institute of Rural Development; India, Panchayati Raj Report
2001

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6.
7.
8.
9.

National Institute of Rural Development; Panchayati Raj Institutions in

India An Appraisal; August, 1995.
National Institute of Rural Development; Panchayati Raj Institutions in
Select States An Analytical Study; November, 1995.
Shiviah, M. and others; Panchayati Raj An Analytical Survey, NICD
(1976).
Thapliyal B.K.(1990) ; Decentralized Planning: Concept, Scope and
Methodology, Journal of Rural Development; Vol.9 (6), November .

11. Model Answers

1.

Though the word decentralization has various usages in different

concepts and every walk of life, in relation to different constitutional systems and
socio-political environment, decentralization may be referred to deconcentration,
delegation and devolution.

Democratic decentralization therefore is directly

concerned with deconcentration of the power from a central institution to locallevel institutions through devolution and delegation of authority, functions,
resources and responsibilities.
Decentralization does not mean division of the functions of state
between state and local institutions, each discharging its functions independent
of the other. Decentralization means and includes devolution of state functions
on local bodies, the later discharging them subject to the constitutional
responsibility of the state in respect of governance and development.
However, in respect of the functions devolved on local institutions, they will
have full freedom in deciding priorities between various activities and
suitability of areas in which they should be undertaken, provided they confirm
to the general policy of the state. Democratic decentralization is also a means
for empowering people to directly participate in decision making of all such
processes which affect various aspects of socio-economic development and in
the task of nation building.
2.

Though Panchayati Raj was introduced in 1959, it was only

obligatory on the part of State Governments to implement it. As a result some

states have taken Panchayats seriously, but majority of states did not give them
any importance. Moreover, Panchayats were given very few responsibility,

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most of them being regulatory in nature and thus the role of these institutions
in development was practically nil. In order to make Panchayats as effective
local governments, the 73rd Constitution Amendment was enacted to
strengthening the Panchayati Raj Institutions. As a result of the constitution
amendment almost all states have amended their respective Panchayati Raj
Acts and accordingly constituted the PR bodies at the three levels. In order to
make Panchayati Raj Institutions vibrant and strong local governments, the
73rd Amendment transferred 29 items, listed in the Eleventh Schedule of the
Constitution, along with necessary funds and functionaries to the PR bodies.
The process of devolution of functions, functionaries and funds to the PR
bodies has already started in states though it is a very slow pace.
3.

Through PRIs, the process of empowering various socio-economic

groups has begun in a big way which is an important motivating factor

for participation. There is 33 percent reservation for women both as members
as well as heads of these institutions. The scheduled castes, scheduled tribes
and the backward caste people all together have been provided 50 %
reservation. The representatives of the PRIs are expected to mobilize the
required forces for economic advancement. They are supposed to be the
creators, designers and interpreters of policy particularly when economic
policy is closely linked with political ideology. They may also be needed to
promote reorientation of outlook and the acceptance of the new values
necessary if the resources of traditional form of social and economic
organizations are to be effectively mobilized for economic progress. The PRI
leaders are also required to participate in decision making on critical economic
issues and to see that appropriate executive action follows. The important
function of a PRI leader may be, to serve as an evaluator, decision maker,
where economic action can be applied most effectively and expected to be the
most efficient combination of resources to achieve the desired goals. The PRIs
leadership for economic growth depends upon the structure of power in the
society, especially the relationship between economic and political power.

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4.

The 29 functions transferred to the local governments

encompass all sectors Economic, Social and Infrastructure development,

which are important for economic and human development of the rural
people. Poverty alleviation has been in the core of rural development
strategy in India. The PRIs are expected to play a proactive role in the
implementation of poverty alleviation programmes. In

brief,

the

local

governments have the responsibility for planning and management of the

functions transferred to them with specific focus on

supporting poverty

alleviation programs and provide opportunities for sustainable and gainful

sources of livelihoods through following :
Development of common property resources and allowing access
of the asset less poor to make economic use of them;
Management and development of natural resources like waste
and degraded lands, forests and grazing land, etc. which will
help in increasing resource endowments of the village on the
one hand and help poor to have alternative sources for
livelihoods;
Development of village infrastructure, especially work sheds for
the village artisans, women SHGs, road connectivity, market and
other

economic

facilities;

and, Implementation

of

poverty

alleviation programmes with transparency and accountability.

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Unit-2: Cooperative Sector in India

Structure
1. Introduction
2. Objectives
3

What is Co-operation?

3.1

Cooperative Movement in India:

3.1.1

Cooperative Credit Societies Act, 1904

3.1.2

Cooperative Societies Act, 1912

3.1.3

Maclagen Committee on Cooperation 1914

3.1.4

Government of India Act, 1919:

3.1.5

Multi-Unit Cooperative Societies Act, 1942

3.1.6

Pre-Independence Development

3.1.7

Developments in the Post-Independence Era

3.1.8

All India Rural Credit Survey Committee (1951)

3.1.9

National Institutions which came into existence in the 1960s

3.1.10 NABARD Act, 1981

3.1.11 Multi-State Cooperative Societies Act, 1984
3.1.12 Model Cooperatives Act, 1990
3.1.13 Parallel Cooperative Legislation
3.1.14 Multi-State Cooperative Societies Act, 2002
3.1.15 National Cooperative Policy (2002)
3.2

Cooperative Education

3.3

Cooperative as an Institution

3.4

Cooperation-Activities

3.5

Need for Cooperatives in Rural Development

3.6

Cooperative Programmes

3.7

Function of the Cooperative Department

3.8

Role of Voluntary Organizations in Cooperative Development

3.9

Organization of Women Cooperatives

3.10

National Cooperative Development Corporation

3.11

Problems and Challenges that Cooperatives Face Today

4.

Summing up

5.

Keywords

6.

Know Your Progress

7.

Further Readings / References

8.

Model Answers

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1. Introduction
The concept of cooperation and cooperative activities are very old in India.
Earlier the village communities collectively creating permanent assets like village tanks
or village forests called Vanarai was fairly common. Similarly, instances of pooling of
resources by groups, like food grains after harvest to lend to needy members of the group
before the next harvest, or collecting small contributions in cash at regular intervals to
lend to members of the group viz., Chit Funds, in the erstwhile Madras Presidency,
Kuries in Travancore, Bhishies in Kolhapur etc. were to be found. The Phads of
Kolhapur where farmers impounded water by putting up bunds and agreed to ensure
equitable distribution of water, as well as harvesting and transporting of produce of
members to the market, and the Lanas which were yearly partnerships of peasants to
cultivate jointly, and distribute the harvested produce in proportion to the labour and
bullock power contributed by their partners, were similar instances of cooperation.

2. Objectives
After studying this Unit, you will be able to understand:

definition and meaning of cooperative

evolution of cooperative in India

features, activities and needs of cooperative

problems and challenges face cooperative today

3. What is Co-operation?
Cooperative Management and Administration of International Labour
Organization

defines Cooperation is an association of persons, usually of limited

means, who have voluntarily joined together to achieve a common economic undertaking
through the formation of a democratically controlled business organization, making
equitable contribution to the capital required and accepting a fair share of risks and
benefits.
As per the Cooperative Planning Committee Cooperation is a form of
organization in which persons voluntarily associate together on a basis of equality for the
promotion of their economic interests. Those who come together have a common

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economic aim which they cannot achieve by individual isolated action because of the
weakness of the economic position of a large number of them.
In short, it is a business organization which is democratically managed and
which provides an opportunity to overcome individual weakness by collective efforts.

3.1 Cooperative Movement in India

The agricultural conditions and absence of institutional arrangements to provide
finance to agriculturists during the latter part of the nineteenth century led to mounting
distress and discontent. The Famine Commission of 1880 and 1901 both highlighted the
deep indebtedness of the Indian farmer, resulting in many cases in his land passing into
the possession of the money lending classes. The Deccan Riots and the prevailing
environment of discontent resulted in the government taking various initiatives but the
legislative measures did not substantially improve the situation. The proposal for
agricultural banks was first mooted in 1858 and again in 1881 by the District Judge of
Ahmednagar, but was not accepted. In March 1892, the Governor of Madras Presidency
suggested introducing a system of agricultural land banks and submitted his report. In
1901 the Famine Commission recommended the establishment of Rural Agricultural
Banks through the establishment of Mutual Credit Associations, The underlying idea of a
number of persons combining together was the voluntary creation of a new and valuable
security. A strong association competent to offer guarantees and advantages of lending to
groups instead of individuals were major advantages. The Commission also suggested
the principles underlying agricultural banks.
3.1.1

Cooperative Credit Societies Act, 1904

Taking cognizance of these developments and to provide a legal basis for

cooperative societies, the Edward Law Committee was appointed by the Government to
examine and recommend a course of action. The Cooperative Societies Bill, based on the
recommendations of this Committee, was enacted on 25th March, 1904. As its name
suggests, the Cooperative Credit Societies Act was restricted to credit cooperatives.
3.1.2

Cooperative Societies Act, 1912

With the developments in terms of growth in the number of cooperatives, far

exceeding anticipation, the Cooperative Societies Act of 1912 became a necessity and
cooperatives could be organized under this Act for providing non-credit services to their
members. The Act also provided for Federations of cooperatives. With this enactment, in
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the credit sector, urban cooperative banks converted themselves into Central Cooperative
Banks with primary cooperatives and individuals as their members. Similarly, non-credit
activities were also cooperatively organized such as purchase and sales unions, marketing
societies, and in the non agricultural sector, cooperatives of handloom weavers and other
artisans.
3.1.3

Maclagen Committee on Cooperation 1914

The Banking Crisis and the First World War both affected the growth of

cooperatives. Although member deposits in cooperatives increased sharply, the war

affected the export and prices of cash crops adversely, resulting in increased over-dues of
loans of primary agricultural societies. To take stock of the situation, in October, 1914 a
Committee on Cooperation was appointed by the Government to study the state of, and
make

recommendations

for

the

future,

of

cooperatives.

The

Committees

recommendations are basically related to credit cooperatives. It recommended building

up a strong three-tier structure in every province with primaries at the base, the Central
Cooperative Banks at the middle tier and the Provincial Cooperative Bank at the apex,
basically to provide short-term and medium-term finance. Considerable emphasis was
laid on ensuring the cooperative character of these institutions and training and member
education, including training of the Registrar and his staff.
3.1.4

Government of India Act, 1919

In 1919, with the passing of the Reforms Act, Cooperation as a subject was
transferred to the provinces. The Bombay Cooperative Societies Act of 1925, the first
provincial Act to be passed, among others, introduced the principle of one-man one-vote.
The setting up of the Reserve Bank of India (RBI) in 1934 was a major development in
the thrust for agricultural credit. The Reserve Bank of India Act, 1934 itself required the
RBI to set up an Agricultural Credit Department. As cooperatives were to be channels for
rural development, programmes were drawn up in which rural indebtedness received
priority. The Mehta Committee appointed in 1937 specifically recommended
reorganization of Cooperative Credit Societies as multi-purpose cooperatives.
3.1.5

Multi-Unit Cooperative Societies Act, 1942

With the emergence of cooperatives having a membership from more than one
state such as the Central Government sponsored salary earners credit societies, a need
was felt for an enabling cooperative law for such multi-unit or multi-state cooperatives.
Accordingly, the Multi-Unit Cooperative Societies Act was passed in 1942, which
delegated the power of the Central Registrar of Cooperatives to the State Registrars for
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all practical purposes. In 1944, the Gadgil Committee recommended compulsory

adjustment of debts and setting up of Agricultural Credit Corporations, wherever
cooperative agencies were not strong enough.

3.1.6 Pre-Independence Development

In 1946, inspired by Sardar Vallabh Bhai Patel, the milk producers of Khera
District of Gujarat went on a long day strike forcing the Bombay Government to
withdraw its order granting monopoly procurement rights to Polson, a private dairy.
History was made when two Primary Village Milk Producer Societies were registered in
October 1946 and the Khera District Cooperative Milk Producers Milk Union known as
Amul was registered.
The Registrars Conference in 1947 recommended that the Provincial
Cooperative Banks be re-organized to give greater assistance to primary societies through
Central Banks. For the first time an effective linking of credit with marketing, and
providing assistance by way of liberal loans and subsidies for establishment of a large
number of godowns and processing plants was considered. It would be appropriate to
mention here some developments in Bombay province had an impact on the cooperative
sector. A Committee on Cooperative Education and Training made recommendations for
cooperative education programmes and the setting up of an Education Fund. The
Agricultural Credit Organization Committee recommended State assistance in
agricultural finance and conversion of all credit cooperatives into multi-purpose
cooperatives. It also recommended a three-tier cooperative credit banking system, and
various subsidies etc.

3.1.7

Developments in the Post-Independence Era

After Independence in 1947, cooperative development received a boost and

being given a vital role in the various plans formulated by the Planning Commission of
India.
First Five Year Plan (1951-56) outlined in detail the vision of the cooperative
movement in India and the rationale for emphasizing cooperatives and panchayats as
preferred organizations for economic and political development. The Plan emphasized
the adoption of the cooperative method of organization to cover all aspects of community
development. It provided for setting up of urban cooperative banks, industrial
cooperatives of workers, consumer cooperatives, housing cooperatives, diffusion of

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knowledge through cooperative training and education and recommended that every
government department follow the policy of building up cooperatives.
3.1.8

All India Rural Credit Survey Committee (1951)

A major watershed initiative at this time was the appointment of a Committee,

popularly known as the All India Rural Credit Survey Committee. The Committee was
appointed in 1951 and submitted its report in 1954. It observed that large parts of the
country were not covered by cooperatives and in such areas where it had been covered, a
large segment of the agricultural population remained outside its membership. Even
where membership did exist, the bulk of the credit requirement was met from other
sources. The Committee recommended introducing an integrated system of rural credit,
partnership of the government in the share capital of the cooperatives and also
appointment of government nominees on their boards to participate in their management.
The All India Cooperative Congress in 1956 accepted the principle of state
participation and government representation on the Board of Directors of cooperatives. It
resolved that the number of such nominees should not exceed one-third of the total
number of Directors or three, whichever is less and applicable even to cooperatives
having government share capital in excess of 50% of total share capital.
Second Five-Year Plan (1956-1961), emphasized building up a cooperative
sector as part of a scheme of planned development. It aimed at enabling cooperatives to
increasingly become the principal basis for organization of economic activity. The Plan
drew up programmes of cooperative development based on the recommendations of the
All India Rural Credit Survey Committee. It was envisaged that every family in a village
should be a member of at least one cooperative society. Linking of credit and non-credit
societies to provide better services to the farmers was also targeted. State partnership
with cooperative institutions at various levels, the essential basis of which was to provide
assistance and not interference, was recommended. The Plan also recommended the
establishment of a National Agricultural Credit Long-term Operations Fund. The
National Cooperative Development Fund was also established by the Central
Government, during this period, to enable states to borrow for the purpose of subscribing
share capital of non credit cooperative institutions in the country.
Third Five Year Plan (1961-1969) stressed that Cooperation should become,
progressively, the principal basis of organization in branches of economic life, notably
agriculture, minor irrigation, small industries and processing, marketing, distribution,
rural electrification, housing and construction and provision of essential amenities for
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local communities. Even the medium and large industries and in transport an increasing
range of activities can be undertaken on cooperative lines. With the setting up of
NDDB to replicate the Anand pattern of cooperatives in milk, the Indian dairy
cooperative movement received a spurt. Later on NDDB also ventured into the field of
edible oils and both the Consumer Cooperative Structure and the Public Distribution
System (PDS) was strengthened. The government as a matter of policy decided to give
preference to consumer or other cooperatives in the allotment of fair price shops and
certain States allotted new fair price shops only to cooperatives. With the growth of
public deposits in Urban Cooperative Credit Societies, it was felt necessary to insure
these under the Deposit Insurance Scheme of Reserve Bank of India. Selective provisions
of the RBI Act 1934 and Banking Regulation Act 1949 were made applicable to
Cooperative Banks w.e.f. March 1, 1966 to regulate their banking business and facilitate
insurance coverage of deposits. Thus, they became an integral part of the banking system
of the country.
3.1.9

National Institutions established in the 1960s

The Agricultural Refinance Corporation was set up in 1962 by the Government

of India to provide long-term loans to cooperatives, through Central Land Mortgage
Banks.
In 1963, the National Cooperative Development Corporation (NCDC) was
established as a statutory corporation by an Act of Parliament. The establishment of the
NCDC gave a great boost to the growth of cooperative marketing / processing societies.
Several other significant organizational developments also took place during this
period such as the setting up of various National Cooperative Federations and reorganization of the National Cooperative Union of India (NCUI). In 1967, the Vaikunth
Mehta National Institute of Cooperative Management was set up in Pune. Growth of
consumer cooperatives was also an important development of this period.
Simultaneously, the growth of Land Development Banks also accelerated and
cooperatives for dairy, poultry, fishery etc. were set up.
Fourth Five Year Plan (1969-1974) gave high priority to the re-organization of
cooperatives to make cooperative short-term and medium-term structure viable. It also
made necessary provisions to provide cooperatives with management subsidy and share
capital contribution, as well as for the rehabilitation of Central Cooperative Banks. It also
emphasized the need to orient policies in favour of small cultivators.

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The Mirdha Committee in 1965 laid down standards to determine the

genuineness of cooperative societies and suggest measures to weed out non genuine
societies and to review the existing cooperative laws and practices to eliminate vested
interest. The recommendations of the Committee resulted in amendments in the
cooperative legislation in most states, which destroyed the autonomous character of the
cooperatives.
Fifth Five Year Plan (1974-1979) took note of the high level of over-dues. In
its recommended strategy for cooperative development, the correction of regional
imbalances and reorienting the cooperatives towards the under-privileged was to receive
special attention. Based on the recommendations of an Expert Group appointed by the
Planning Commission in 1972, structural reform of the cooperative set-up was envisaged.
The Plan recommended the formulation of Farmers Services Cooperative Societies as
had been envisaged by the National Commission on Agriculture and stressed the need for
professional management of cooperatives.
Sixth Five Year Plan (1979-1985) also emphasized the importance of
cooperative efforts being more systematically directed towards ameliorating the
economic conditions of the rural poor. The Plan recommended steps for re-organizing
Primary Agricultural Credit Societies into strong and viable multi-purpose units. It also
suggested strengthening the linkages between consumer and marketing cooperatives.
Consolidation of the role of cooperative federal organizations, strengthening
development of dairy, fishery and minor irrigation cooperatives, manpower development
in small and medium cooperatives were some of the planned programmes.
3.1.10 NABARD Act, 1981
The National Bank for Agriculture and Rural Development (NABARD) Act was
passed in 1981 and NABARD was set up to provide re-finance support to Cooperative
Banks and to supplement the resources of Commercial Banks and Regional Rural Banks
to enhance credit flow to the agriculture and rural sector.
3.1.11 Multi-State Cooperative Societies Act, 1984
With the objective of introducing a comprehensive central legislation to
facilitate the organization and functioning of genuine multi-state societies and to bring
uniformity in their administration and management, the MSCS Act of 1984 was enacted.
The earlier Multi-Unit Cooperative Societies Act of 1942 was repealed.
Seventh Five Year Plan (1985-1990) pointed out that while there had been all
round progress in credit, poor recovery of loans and high level of over dues were matters
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of concern. The Plan recommended amongst others development of Primary Agricultural

Credit Societies as multiple viable units; realignment of policies and procedures to
expand flow of credit and ensure inputs and services particularly to weaker sections;
special programmes for the North Eastern Region; strengthening of consumer
cooperative movement in urban as well as rural areas and promoting professional
management.
With increasing demand from proponents of an autonomous cooperative
movement and reforms in the Cooperative laws, the Government constituted a
Committee on Cooperative Law for Democratization and Professionalization of
Management in Cooperatives in 1985. The Committee recommended the deletion of
those legal provisions in State Cooperative Acts, which militate against the democratic
character and autonomy of cooperatives, and also recommended incorporation of several
provisions which could activate democratic processes for infusing professional
management into cooperatives.
Similarly, in 1989 the Agricultural Credit Review Committee examined the
problems of agricultural and rural credit and recommended a major systemic
improvement. The Committee recommended that the Eighth Plan should become the plan
for revival of weak agricultural credit societies.
3.1.12 Model Cooperatives Act, 1990
In 1990, an Expert Committee was appointed by the Planning Commission to
make a rapid review of the broad status of the cooperative movement, suggest future
directions and finalize a Model Cooperatives Act. The Committee submitted its report in
1991. Since cooperation is a State subject and each State has its own cooperative
legislation covering cooperatives whose membership is confined to the State, the report
of the Committee, along with a draft Model Cooperative Law, was circulated to all State
Governments for their consideration and adoption at State level.
The opening up of the economy in 1990, and the liberalized economic policies
followed by the government since then, led to increasing pressures for various
governments, state and central, to bring about changes that would provide cooperatives a
level playing field to compete with the private sector.
Eighth Five Year Plan (1992-1997) laid emphasis on building up the
cooperative movement as a self-managed, self-regulated and self-reliant institutional setup, by giving it more autonomy and democratizing the movement. It also spoke of
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enhancing the capability of cooperatives for improving economic activity and creating
employment opportunities for small farmers, labourers, artisans, scheduled castes,
scheduled tribes and women and emphasized development and training of cooperative
functionaries in professional management.
3.1.13 Parallel Cooperative Legislation
From the Ninth Plan (1997-2002) onwards, there has been no specific mention
about cooperatives as a part of the Plan. Since Cooperation is a State subject and
recognizing the difficulties in having the existing State Cooperative Acts amended on the
lines of the Model Cooperatives Act, a section of co-operators and civil society initiated
action to put in place Parallel Cooperative Legislation for self-reliant cooperatives. Selfreliant cooperatives are generally defined as those which have not received any assistance
from the Government in the form of equity contribution, loans and guarantees.
3.1.14 Multi-State Cooperative Societies Act, 2002
The Multi-State Cooperative Societies (MSCS) Act, enacted in 1984, was
modified in 2002, in keeping with the spirit of the Model Cooperatives Act. Unlike the
State Laws, which remained as a parallel legislation to co-exist with the earlier laws, the
MSCS Act, 2002 replaced the earlier Act of 1984.
3.1.15 National Cooperative Policy (2002)
In 2002, the Government of India enunciated a National Cooperative Policy.
The objective of the Policy is to facilitate an all round development of cooperatives in the
country. The policy promises to provide cooperatives with the necessary support,
encouragement and assistance, to ensure their functioning as autonomous, self-reliant and
democratically managed institutions, accountable to their members, and making a
significant contribution to the national economy.
Based on the recommendations made at a Conference of State Ministers for
Cooperation, the Government of India in 2002 constituted a Ministerial Task Force to
formulate a plan of action for implementation of National Cooperative Policy. The Task
Force suggested that a single law instead of parallel laws should be introduced in the
States. It also recommended, among others, that in order to depoliticize cooperatives,
Members of Parliament or Members of Legislative Assemblies should not be allowed to
hold office of any cooperative society.

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3.2

Cooperative Education

The degree of success in a cooperative organization is determined by the

awareness of the members towards their rights and responsibilities. Each member should
know his right and should also be willing to exercise his right so that the organization
may maintain true democratic character. Similarly each member should be willing to
share his responsibility. To bring such a change, cooperative education is vitally
important. Commission on Cooperative Principles classified four groups which are to be
brought under cooperative education.
According to commission All cooperative societies should make provision for
the education of their members, officers, employees and the general public, in the
principles and techniques of cooperation, both economic and democratic.
Distinguishing Features of Cooperatives
a)

One Man-one Vote unique to cooperatives

As in the case of private and public sectors, the ultimate decision makers in
cooperatives are member-shareholders. But in cooperative organizations voting is not
linked to investment in shares. One-member-one-vote is the principle followed in
decision making. This itself divorces the centre of power from investment to member,
thus putting the person on a high pedestal.
b)

Member participation monitored and managed

To the extent that a cooperative is formed to meet the needs of a group of

people, the organization has to fully understand the implications of meeting the needs.
Even when the content of the need is the same, the qualitative and the quantitative
aspects of members needs may vary. For instance, a credit cooperative is formed by
farmers to meet credit needs. Qualitatively credit needs of a large farmer may be for
investment purposes, whereas those of a small farmer may be for working capital. This
diversity in needs and aspirations can post problems to the cooperative. In a joint stock
company, the shareholders stake is limited to the return on share and nothing beyond,
whereas in cooperative the objective of fulfilling the needs of members is in the focus.
This would impose obligations on the cooperative to reach members and ensure that they
participate in the economic activity.
c)

Owner-user dual role conflicts

Since people are coming together to solve their problems through the
organization, socio-cultural diversity among members can cause problems. In decision
making, subjective elements based on caste loyalties can create serious problems. The
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likely influence of these factors on the organizational culture, decision-making process

and goal setting make cooperatives distinctly different from other forms of organizations.
Yet another dimension arising out of the organizational goal is the problem of
reconciling conflicts that arise between short term objectives of the individuals and the
long-term objective of the organization. When the organization tries to be continuously
sensitive and relevant to its member needs the conflict has to be continuously reconciled.
d)

Employer-employee conflicts

Another distinguishing characteristic of a cooperative is the relationship

between paid employees and shareholders. In a cooperative, the employers, i.e.
shareholders, would have to perform the dual role of leading and be led, control and be
controlled by the employees. This imposes severe stress and strain on both and has
certain implications on the style of management.
e)

Leadership based on entrepreneurial and representational abilities

The role of leadership is yet another aspect that makes a cooperative a special
form of organization. Leadership is any business organization needs entrepreneurial
qualities. In the case of cooperatives the additional qualification required is the
commitment of the leadership to the collective cause of the constituents or in other words
the representational ability to its member needs. Further, the role of leadership changes at
different stages of the organizations life cycle.
f)

Conferring intangible benefits on shareholder members

Unlike other enterprises, cooperatives can provide intangible benefits to its

shareholders through investments in good education, medical and other infrastructural
development. This is quite different from the welfare activities undertaken by other
enterprises for their employees.
g)

Cooperatives responsibility to the community

Another distinguishing feature of a cooperative is the way it discharges its

responsibility to the community or society. Organizations are defined as goal-oriented
collectives consisting of groups of individuals. Through the actions of these
organizations society is provided goods, health care, education, protection and other
social services. The quality of life depends upon the effective performance of these
specialized organizations. This implies that it is not enough if organizations achieve
their limited goals but having used the limited resources of the community efficiently,
they also serve the community effectively.

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While the community is a recipient of products and services of business

organizations, the benefits in the case of cooperatives are confined to community which
has formed the cooperative. In such a situation, the question always arises that how will
cooperative organizations become socially relevant. Indeed, first by keeping the
membership open to one and all, the cooperative could benefit anyone who seeks
membership. It is the open membership that makes a cooperative an organization not of a
selfish few for selfish interests but one ever keen to serve all those who need it.
The second method which a cooperative serves the community is through the
market share mechanism. When a cooperative business reaches a critical level of the
market share, it automatically regulates other business institutions in a way that they also
serve social interests. This implies that the cooperative organizations effectiveness should
not only be viewed from the narrow perspective of what it directly confers on its
members but also by what it contributes to the collective good of the company through its
presence and performance. In other words, the effectiveness of a cooperative affects the
individual :(a) as an individual, (b) as a member of a cooperative, and (c) as a member of
the community.

3.3

Cooperative as an Institution

i) Institutional Values
Prosperity: The first and foremost purpose in forming a cooperative is to
promote the economic well-being of the members. The success is not the profit or loss of
the enterprise and the impressive balance sheet but what the cooperative has done to
increase income of the constituents. The questions of relevance are: How many members
have benefited and to what extent? How many members failed to receive any benefit and
for what reasons? Over the years what has been the impact on the prosperity of the
members?
Growth: For enabling member to get economic benefits, two factors need to be
taken care of: removing the disabilities through the scale of operation; and enabling the
members to overcome the constraints that inhibit growth at the individual level. In other
words, the role of the cooperative does not end with conferring the benefits of collective
action on members but should facilitate the members to use the resources at their
command more efficiently. This implies that the organization should keep on identifying
the reasons and bottlenecks that effect the growth at the member level and devise ways
and means to overcome them.
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Participation: Making the members participate in the economic activity and

decision making is equally important. If the members fail to patronize, the cooperative
would degenerate into a joint stock company. Participation in decision making is the only
means to make them realize that they are the owners of the organization. A large
membership does not excuse the neglect of even a lone voice. On the contrary, it should
be the duty of a cooperative to build a system that would create sensitivity to the reaction
of members, expressed collectively or individually.
Self-regulation: In an association of equal partners, self-regulation should
become a part of the organizational culture. It is neither feasible nor desirable to depend
constantly on external control to regulate member participation for the simple reason that,
over a time, it tends to become counterproductive. More importantly it would affect the
social hygiene of the organization.
Leadership: Another equally important value is leadership development in a
cooperative. The growth and permanency of a cooperative depends on the quality and
continued availability of good leaders. Identifying leaders among members is the task of
the members. They should be in a position to define the leadership qualities required for
the organization at different times and elect the appropriate person. The leaders too
should develop a culture that helps the growth of the organization.
All these institutional values are mutually supportive, interdependent and
reinforcing. To make members prosperity a continuous process, there should be constant
and sustained efforts to impart knowledge, skill and understanding among members. By
encouraging the members to participate in decision making and in the business of the
organizations, they would become an effective demand-system making constant claims
for better services. By helping members to imbibe the culture of self-regulation, they are
made aware of their duties. Conscious efforts to build the quality of leadership ensure
continued success and growth of the organization.
3.4

Cooperation-Activities

Activities of cooperation have two parts, as credit and non-credit sides. They are
further sub-divided into agriculture and non-agricultural cooperatives.
Credit activities form into short term and long term credits. Structure of the
cooperative credit movement is three fold namely primary, central, and apex levels. At
the bottom, village primary cooperative societies with twenty five or more persons joined
together with limited liability managed with elected bodies. They put up their shares,
collect deposits from members and non-members and distribute the funds at low rates of
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interests among members, as required, to be re-paid in convenient instalments. Their

activities are all bound by specific rules and regulations by the set of principles covered
by bye-law and the same is supervised by the Department.
At Central level, these societies are linked as members in the District
Cooperative Banks with which they deposit funds and draw advances and loans for
meeting their monitory needs for distribution to members. At the third stage these district
cooperative credit institutions are linked with the Apex State Cooperative Bank which
controls the monetary functions of the entire credit flow of the district and village
institutions by drawing money from the NABARD and Government for lending
activities.

Land Development
Similarly long-term credit functions are dealt with by the Land Development
Banks at two stages namely primary and State levels. The Land Development Banks
otherwise raise resources by floating debentures in markets but guaranteed by State
Governments. Investments through debentures are mainly from Life Insurance
Corporation of India, State Bank of India and other Commercial Banks such as Reserve
Bank of India and Cooperative Banks and State/ Central Governments.
Cooperatives in Rural Developments
Organized cooperatives consisting of members working for ameliorating the
conditions of the rural poor through integrated rural development approach would
magnificently create social consciousness merely imbibing democratic ideas, sense of
social responsibility and amalgamating poverty stricken groups to mobilize their talent
and leadership for rural reconstruction cutting across the constructional stratifications in
the society.
Cooperative Credit in Rural Areas
Presently activities of cooperative societies are mainly confined to credit
distribution. Multi-pronged functions might help to improve facilities in rural atmosphere
and as well to develop the rearing. The spur of cooperative spirit even to the remotest of
the habitations in the country and the activities should appropriately be continued and
managed in the true spirit of the movement. Good faith and fuller participation of the
members gather the opinion, activate the function and rectify the defects in the situation.
Cooperative societies have made headway in the public distribution system continued
with their own commercial functions. Despite shortcomings in certain areas which are
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otherwise detected and corrected, the system usually works well. Needs of the rural poor
are suitably met by the Agriculture Credit Societies and Land Development Banks as the
twin edges of the blade. Both supply of goods and money are made available through
these organizations. Government programmes are also implemented by way of credit
assistance and categorized as term loans of short term, Medium term and Long term
credits. Short Term Loans are provided for meeting the emergent seasonal agricultural
needs of the members and jewel loans for non-farm necessities. Medium Term Loans are
sanctioned for poverty alleviation programmes and development works. Long term
credits are provided for industrial and agricultural projects and also for purchase of
implements and machinery. Cooperatives keep up the mechanism of forward and
backward linkages through supply of credit for productive purposes, procurement and
supply for marketing purpose and control of finance through recovery and refinance.
3.5

Need for Cooperatives in Rural Development

The preference for cooperative as an institutional infrastructure for rural

development arises from the following considerations:
a)

A cooperative has better intimate knowledge of the local situation.

b)

It is nearer to the people and can appreciate their needs.

c)

It is capable of identifying the small producers who need help on priority

basis.

d)

Cooperative has horizontal/vertical linkages so that it could provide

integrated services to a producer.

e)

Cooperative structure is federal in character so as to enable the individual

member in a village society to avail services of a federation even at the National level.
The approach to rural development through cooperatives have been attempted in
diverse fields such as agricultural credit, marketing and processing of agricultural
produce, promotion of agro-industries, rural artisans and farming systems. The success of
green as well as white revolution could not have been possible in the absence of an
efficient input service system provided by the cooperatives. Successive Five Year Plan
emphasized the importance of cooperation in the field of agricultural development
programmes are to accelerate the growth of agricultural production, increase employment
opportunities and more important, raise productivity and above all to alleviate rural
poverty.

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3.6

Cooperative Programmes

Some of the cooperative programmes for rural development are discussed

below:

Credit
The institutional credit continued to play an important role in increasing
agricultural production and in increasing the standard of living by helping the rural
community. It helps to broaden the income generating base of the producer
encompassing land development, well irrigation, pump sets, fishery equipments, dairy
stock etc.
Cooperative Marketing
The cooperative marketing plays a vital role as it ensures economic utilization
of the available resources in the rural areas by creating potential markets. They offer an
effective countervailing force against speculative tendencies of the market weighed
against the farmers, ensure fair market prices and also promote inter-state and export
trade for providing a better return to the farmers.
Processing Cooperatives
Cooperative processing a major development is the emergence of cooperative
sugar factories of the growers. There are two hundred sugar factories in the co-operative
sector, which account for nearly sixty per cent of the national production of sugar.
During the year 2002 total sugar produced was 15 million tonnes in which sugar
produced by cooperatives are 9.2 million tonnes.
Dairy Cooperatives
As the Diary Cooperatives have made impact on the social and economic life of
the people; the Government have cooperated with the National Dairy Development
Board (NDDB) in the implementation of Operation Flood.
Anand pattern structure has laid the foundation for a dairy Industry owned and
controlled by farmers and offers an effective alternative to the exploitative traditional
marketing system.

Women Cooperatives
The Cooperatives Movement in India has put emphasis on projecting and
promoting the interest of weaker sections. The increase in the number of cooperatives has
led to an increased participation of women in these cooperatives. Majority of rural
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women in India are still illiterate, engaged in unorganized and activities in agricultural
and allied sectors. Exclusive womens cooperatives were organized and wherever, these
cooperatives have been successful, it has helped to improve the economic condition and
social status of women.
In India the role of cooperatives in underpinning the programme of agriculture
and rural development has been significant. A vast network has been created by
cooperative in the rural areas. The share of cooperatives in agricultural finance, despite
the multiagency approach is 46 per cent, in distribution of fertilizers 34 per cent, in sugar
production 60 percent. Similarly in other fields such as diary, fisheries, public
distribution, the cooperatives have made significant contributions. It is crystal clear that
in rural development activities, cooperatives acts as the panacea for the rural poor and
cooperatives have no equals in bringing about socio-economic changes in the rural areas.
3.7

Function of the Cooperative Department

The Registrar of Cooperative Societies is appointed by the State Government to

perform the various duties enjoined on him under the State Cooperative Societies Act.
The Registrar enjoys certain statutory powers to discharge his duties effectively. These
powers relate to registration of societies, enquiry into their working, audit of societies,
arbitration of disputes, execution of awards and decrees, winding up, etc. The
cooperative department has to ensure that the statutory audit of cooperative societies is
conducted in the time and the defects pointed out are promptly rectified.
The powers that the Registrar enjoys under the Cooperative Societies Act and
the functions to be discharged by him are summarized as under:
(i) Power of Registration
The Registrar is empowered to register a cooperative under the Cooperative
Societies Act and the cooperative cannot formally start functioning unless it is registered
by the Registrar or any other officer duly authorized by him in his behalf. The Registrar
issues a registration certificate under his seal and signature which is a conclusive
evidence of the fact that the cooperative is a duly registered organization under the
Cooperative Societies Act.
(ii) Power of Audit
The Registrar in most States is having the powers to get the accounts of a
cooperative audited by the staff appointed for the purpose. In certain States like U.P.
audit is independent of the Registrar of Cooperative Societies. The Mehta Committee on
Cooperative Administration had recommended that the audit should be placed under the
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Registrar whereas the Mirdha Committee had recommended that audit should be
independent of the Registrar.

(iii) Power of Arbitration

The Registrar has powers to decide a dispute referred to him or to an officer
duly authorized by him.
(iv) Power of Winding up
The Registrar has the power to order for winding-up of a cooperative and
appoint to a liquidator subject to the right of the cooperative concerned for making an
appeal to the Same Government.
(v) Powers of Inspection and Enquiry
Registrar or a person duly authorized by him can inspect any cooperative and
can make enquiry into the financial status of a cooperative. The Registrar has also the
powers to supersede the management of a cooperative if on enquiry it is found that the
operations of the cooperative are detrimental to the interests of the members.
(vi) Powers to issue corrective directives
The Registrar has been empowered to take corrective measures under the Act
and rules in cases where he considers necessary and expedient in the interest of a
cooperative in particular and cooperative movement in general. Following are some of
the corrective measures envisaged under the various Cooperative Societies Acts:
a)

The Registrar may pass an order directing the winding up of a

cooperative in case the registration of such a cooperative has been affected by fraud.
b)

The Registrar may pass an order for removal or expulsion of a member

who was been admitted to membership of a cooperative in contravention of the Act or

Bye-laws or who has incurred disqualifications for continuing as a member.
c)

The Registrar may take steps for the removal or disqualification of an

officer of a cooperative from his office if he has contravened or omitted to comply with
the provisions of the Act,
d)

The Registrar may take statutory steps for supersession or suspension of

a managing committee and may appoint an administrator or a new committee of

management if he is satisfied that certain vested interest have created a monopoly over a
certain cooperative and managing committee is functioning against the interest of the
cooperative.

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e)

The Registrar is empowered to hold elections of the members of the

board if the members have failed to hold elections according to Rules/Act.

f)

The Registrar can pass orders of surcharge against any person associated

with the management of a cooperative if it is found that the organization concerned has
incurred losses due to the negligence of such persons.

3.8

Role of Voluntary Organizations in Cooperative Development

Cooperatives are also basically supposed to be the voluntary organizations. It

originated in the struggles of the people to find ways and means to achieve certain
economic and social goals. The conscious attempt of the people results in coming
together, pooling their resources in the competitive environment and achieving thereby
the economics of scale. This creates in them a sense of achievement and elicits
cooperative behaviour,
The voluntary organizations play a dominant role in developing the cooperative
institutions as peoples cooperative movement wherein member participation is seen as a
movement, as members demanding, proposing and pushing, criticizing, supporting and
where necessary consoling, propagating, defending, caring about the progress as well as
setbacks, sufficiently informed to select their leader and to employ the right professional
specialists. In more practical terms members participate in management, decision making
and control in business activity.
3.9

Organization of Women Cooperatives

In order to provide benefits directly to women it is necessary that women

cooperatives should be organized. The main emphasis should be on the weaker sections
of women population who can make use of cooperative services and developmental
services through their own societies. It needs diversification of activities and
liberalization of procedures. Prior to organizing the societies, it will be necessary to take
up a survey for finding our womens involvement in the work force of particular areas
and also their needs and interests. Some potential areas of women involvement are
mentioned below:
Women Farm Labour Cooperatives
Agriculture is the main economic activity for rural women who in majority are
land less. In the absence of institutional base, these women are generally exploited. The
Report of Committee on Status of Women in India mentions that the main disabilities
and source of exploitation of agricultural labour are rooted in their landlessness, lack of
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organization and their inequality of status. Organization of Farm Women Cooperatives

have given them joint bargaining power for better wages and saved them from other
exploitation. Additionally they can also organize some income generating activities that
they can earn income during the slack season. Cooperative extension services and other
social developmental services could be extended to such women groups.
Rural Women Artisan Cooperatives
The female population belonging to the households of small and marginal
farmers can be grouped into artisans cooperative societies. The traditional skill which
they possess e.g. punja durries weaving, basket making, chicken work, zari work,
handloom weaving, brass engraving, etc. have to be identified for the purpose.
Modernization and skill development will be necessary.
Agro-based Industrial Cooperatives
Dairy farming, Poultry, Bee-keeping, Fisheries, Sheep breeding and Goat
rearing are some of the activities fall under this category.
Cereal Processing Cooperatives
Papad making, Puffed rice processing, Roasting of grains, Bakery products and
Spice grinding are some of the activities falls under this category.
Vegetable gardening, fodder and fuel cooperatives:
Rural women can organize cooperatives with vegetable gardening fodder and
fuel growing on the waste land around their houses or on the land owned by village
owned village panchayats.

3.10

National Cooperative Development Corporation

The National Cooperative Development Corporation (NCDC) was established

by an Act of Parliament in 1963 as a statutory Corporation under the Ministry of
Agriculture.
NCDC has the responsibility of planning, promoting and financing
programmes for production, processing, marketing, storage, export and import of
agricultural produce, food stuffs, certain other notified commodities e.g. fertilizers,
insecticides, agricultural machinery, lac, soap, kerosene oil, textile, rubber etc., supply of
consumer goods and collection, processing, marketing, storage and export of minor forest
produce through cooperatives, besides income generating stream of activities such as
poultry, dairy, fishery, sericulture, handloom etc.

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NCDC Act has been further amended which will broad base the area of
operation of the Corporation to assist different types of cooperatives and to expand its
financial base. NCDC is now able to finance projects in the rural industrial cooperative
sectors and for certain notified services in rural areas like water conservation, irrigation
and micro irrigation, agri-insurance, agro-credit, rural sanitation, animal health, etc.
Loans and grants are advanced to State Governments for financing primary and
secondary level cooperative societies and direct to the national level and other societies
having objects extending beyond one State. Now, the Corporation can also go in for
direct funding of projects under its various schemes of assistance on fulfillment of
stipulated conditions
3.11

Problems and challenges that cooperatives face today

a)

Inability to ensure active membership, speedy exit of non-user members,

lack of member communication and awareness building measures;

b)

Serious inadequacies in governance including that related to the Boards

roles and responsibilities;

c)

A general lack of recognition of cooperatives as economic institutions

both amongst the policy makers and public at large;

d)

Inability to attract and retain competent professionals to manage this

large sector;
e)

Lack of efforts for capital formation particularly that concerning

enhancing member equity and member stakes;

f)

Lack of cost competitiveness arising out of issues such as overstaffing, a

general top-down approach in forming cooperatives with tier based structures;

g)

Politicization and excessive role of the government chiefly arising out of

the loop holes and restrictive provisions in the Cooperative Acts..

In addition to the above, there are serious problems in a large number of
cooperatives that are sick or non viable. Recently, the Vaidyanathan Committee Report
dealt with the problems in detail to rectify as far as possible in the cooperative sector.

4. Summing up
In this Unit, the evolution of cooperatives in India, importance of cooperatives,
features of cooperatives, types of cooperatives and various activities of cooperatives are
discussed. The various problems and challenges face by the cooperatives are also

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highlighted. However, to understand the recent dynamic changes witnessed in this sector,
you are required to go through the updates published by the NCDC, NCUI and NCCT in
the last two years.

5. Keywords
Cooperation, Cooperative Societies Acts, National Cooperative Policy, Role of
Voluntary Organisations, Challenges of Cooperatives

6. Know your Progress

1. What is co-operation?
2. Briefly explain the development of cooperative in post-independence era?
3. Narrate five distinguish features of cooperative?
4. Explain the power and function of Registrar under the Cooperative Societies Act?
5. Discuss about the various types of Women cooperatives?
6. What are the problems and challenges cooperative face today?

7. Further Readings / References

Environment for Cooperatives, Reading Materials prepared for Higher
Diploma in Cooperative Management by NCCT of NCUI, New Delhi
Mathur, M.S, Cooperation in India, Sahitya Bhavan, Agra, 1977
Report of the High Powered Committee on Cooperatives, 2009

8. Model Answers
The answers for the questions listed at 6 may be searched from the text.

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Unit-3: Civil Society Organisations, Community based

Organisations and Self Help Groups
Structure
1. Introduction
2. Objectives
3. Civil Society
3.1 Definition of civil society and civil society organization
3.2 Scenario in India
3.3 Emergence of CBOs
3.4 Characteristics of CBOs
3.5 Role of CBOs in Rural Development
3.6 SHG
3.7 Characteristics of SHG
3.8 Promotion of SHG
3.9 Functions of SHG
3.10 Thrift and credit activities
3.11 Linkage with financial institutions
3.12 Social development
3.13 Empowerment of women
4.

Exercise

5.

Summing up

6.

Keywords

7.

Know your Progress

8.

Further Readings/References

9.

Model Answers

1. Introduction
Civil society and civil society organizations (CSO) have a significant role to
play in the national development in general and the development of marginalised sections
of society in particular. They are non profit organisations and closer

to the local

communities capable of raising voice to the needs of these communities. In recent years,
there has been increasing acceptance of the role of CSOs in reaching the benefits of
development to the poorest of the poor. This is evident in the new strategy followed in

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the implementation of rural development programmes by development agencies in

partnership with CBOs. As state runs programme delivered through the bureaucratic
channel has several limitations, the government agencies including international donor
agencies increasingly depend on CSO, for effective implementation of rural development
programmes particularly poverty alleviation programmes. Under CSO, there exists a
wide array of organizations, and like NGOs, Governmental organisations,

CBOs,

professional institutions, peoples organization, social movements, and social networks.

However, in this unit we will discuss only two components CSO viz, CBO and SHG.

2. Objectives
The main objective of the Unit is to understand the role of civil society
organizations in rural development with special reference to Community Based
Organizations (CBOs) and self-help groups. After studying this Unit, you should be able
to :
1. Explain the main factors responsible for the emergence of civil society
and civil society organizations
2. Identify salient features and characteristics of CBOs and SHGs
3. Develop better understanding on the important role played by CBOs and
SHGs in promoting people cantered development at the grass root level.

3. Civil Society
Before we examine civil society organizations let us clarify the concept of civil
society. The concept of civil society has been gaining currency for the last two decades
around the world, although it was in vogue in the 18th & 19th centuries in the works of
great social scientists and social philosophers. Depending upon their background and
country of origin they came out with different definitions of civil society. However, all
these definitions were cantered around intrinsic relationship between state, economy,
political process and people.
While the contemporary debate on civil society to a large extent concerned with
the division between state and civil society, in the classical literature, civil society was
equated with the State.

Among others, it was Hegel (

1942)who introduced the

difference between state and civil society. He used the concept civil society to describe

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the middle point in social structure between the state at the macro level and family unit at
the micro level. But at the same time he rejected the clear distinction between civil
society and state as proposed by some of the radical thinkers. According to him, it was
necessary for the state to supervise and control the civil society. The concept of civil
society and state as two separate spheres was developed further by Alexis de Tocqueville
(1956) in his writing in the American context. His strong emphasis on the importance of
an independent civil society and dangers of encompassing state as an integral part of
most modern liberal and pluralist theories of democracy has huge influence on the civil
society debate that emerged in the 1980s.
3.1 Definition of civil society and civil society organization
Although the definition on civil society varies across the globe, there is a
common understanding that Civil society is composed of totality of voluntary civic and
social organizations and institutions that forms the basis of a functioning society on
opposed to state and market. In this sense civil society is considered as a separate sector
different from the state and market. According to FAO ( 2004 ) civil society refers to all
groups outside the government, such as community groups, NGOs, labour unions,
indigenous peoples organization, charitable organizations, professional associations and
foundations. While in the Indian context, Rajesh Tandon (2005) viewed civil society as
non-party political sphere where individuals came together and forms associations,
movements, groups where citizens organize to pursue shared objectives or common
interest not part of the state which is organized from below, and larger than the
households but not based purely on kinship may be considered a part of civil society.

According to UNDP (2006) CSOs are non state actors whose aim are
neither to generate profit nor to seek governing power. CSO unite people to advance
shared goals and interests. Earlier we have seen that the civil society encompasses a
wide variety of independent union of civil society organizations. They may be generally
classified in to NGO, Governmental organizations, CBOs. Peoples organization, Faith
based organization, Professional institutions and social movements. CSOs have
significant role to play in the national development as they house to important peoples
interest groups which are capable of raising voice in support of many segments of the
society that have been marginalised.

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3.2 Scenario in India

In India, the emergence of civil society was not coterminous with the
contemporary rise of modern states as seen in elsewhere. In India, locally specific
community based groups such as caste panchayat, village panchayats etc. are the proof
of its old heritage of democracy and ancient civilization. Till Independence, these local
institutions had been relatively untouched by the changes in the political spheres and
remained autonomous from State control. The transition to independence and the rise of
welfare State, followed by extending some of the powers to the State in areas that had
been previously held by the civil society resulted in the empowerment of the state.
However, throughout the first two decades of independence the role of civil society
remained relatively unchallenged and worked in tandem with the state.
Nevertheless, by 70 s there appeared several unrest and agitation against the
state as it largely failed to fulfil the aspirations including the legitimate rights and basic
needs of the local communities. The apathy of the state in attending growing problems in
the village resulted in peoples unrest and collective mobilization. The focus of these
mobilizations has been in challenging inequitable distribution of resources and securing
the rights of communities that they had traditionally enjoyed. Some of these movements
initiated by civil society organizations aimed at addressing the grievances and meeting
the urgent needs of the poor and marginalized in areas like primary health, education,
drinking water, sanitation and credit needs. Since the 1990s, particularly after the
globalization and privatization of Indian economy the civil society organization became
very vibrant and has been in the forefront of peoples struggle for protecting their rights
and justice. (Yamini: 2007) Earlier we have seen that though civil society organizations
represent a wide array of association and institutions, in this unit we will restrict our
discussion with respect to only CBOs and SHGs.

3.3 Emergence of CBOs

The role of CBOs in Rural Development is not new in the country.
Traditionally, CBOs played a major role in taking care of the needs of people particularly
those who live in the rural areas.

However, as mentioned earlier, the planned

development initiated by the Government with the advent of independence took care of
the major responsibilities of delivering goods and services to the people there by
marginalizing the importance of CBOs. Although Community development and rural
development programmes initiated by the Government have emphasized participation of
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people, the top down approach that followed and the welfare orientation of the
programme could not enlist adequate peoples participation in the government sponsored
development programmes.
Considering the importance of local level organizations in promoting RD and
social justice among the poor, the Government have taken several measures to promote
such organizations. To facilitate this, in the 7th Five Year Plan itself several strategies
were made to provide conducive atmosphere for the emergence of decentralized structure
like CBOs to take part in the local development with peoples participation. However,
the enactment of 73rd & 74th Constitutional Amendment Act paved the way for shifting
implementation of RD programme from a centralized to a decentralized platform giving
ample scope for the people to participate in the development programmes at the cutting
edge level. This resulted in the proliferation of CBOs at the local level.

Some of the studies dealing with the lack of peoples participation in government
sponsored development programmes attributed to the rigid structure of the delivery
mechanism which is neither pro-poor nor effective in reaching the benefits of
development to the poor. Therefore, as alternative arrangements for the conventional
delivery mechanisms of these programmes CBOs are emerging. For eg. Choudhary
(2000) in a paper argued that the performance of Government bureaucratic organizations
particularly formed for the implementation of rural development programmes at the gross
root level is not satisfactory due to their rigid structure, lack of staff and

linkage with

other agencies.

In the villages, CBOs are emerging in two different ways. They emerge either
spontaneously or through local initiatives or promoted through an external efforts such as
Government, NGOs including donor organizations.

In a study of covering several

developing countries Esman and up off (1984) developed scores for development
performance of CBOs. They found that CBOs were most successful with the highest
score when the organization was initiated by rural people themselves or when initiated by
local leaders (scoring 153 & 138 respectively). They found the scores were lowest when
the initiation was by Government (16) and much higher when jointly initiated by
Government and communities (50)

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3.4 Characteristics of CBOs

CBOs are normally membership organization made up of a group of individuals
in a self defined community who have joined together to further common interests. They
often consists of people living near one another in a given rural or urban neighbourhood.
According to Deepa (2000) people all over the world largely rely on CBOs for meeting
their variant needs. They are formed on the basis of indigenous identity like caste,
ethnicity, clan, gender etc. Such organizations usually command confidence because
people feel a sense of ownership of them.

Pradhan (1999) who studied several

communities based organizations in Nepal, Pakistan & Bangladesh concluded that CBOs
are self governing, self supporting and self-regulating institutions. The dependency on
external fund is relatively small among the CBOs. The mechanism initiated for internal
resource mobilizations from among the members themselves has contributed to make
these CBOs self sustaining and supporting institutions.
After examining the important characteristics of different such groups operating
in the Indian villages, Venugopal et al (2003) came out with a working definition of
CBOs. According to him CBOs are organizations functioning at the hamlet level and
they include self help groups, village education committees, watershed committees, vana
samraksha samithies, water users associations, mothers committees, etc. In this list one
could add some of the co-operative societies, user group, etc. all these organizations are
pro poor and they have ample potential to create an enabling environment that promotes
community driven development.

3.5 Role of CBOs in Rural Development

Of late, CBOs are increasingly recognized as an important partner in the rural
development programmes Considering its democratic structure, participatory nature,
internal resource mobilization and commitments of its members in achieving the stated
goal, the Government of India has been increasingly associating and making them
partners to implement several rural development programmes particularly poverty
alleviation programmes.

This is evident since 1990s in some of the programmes

implemented by the Government in areas like managing natural resources (watershed,

forest, irrigation), primary social services like (health, water, sanitation and education)
and providing basic infrastructure facilities etc.

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As the state run programmes implemented through Government delivery

channels resulted in poor management of natural resources, the Government of India in
the early 90s directed the states to involve the CBOs by forming Vanasamrakshana
Samithi (VSS) for the effective management of forest resources. By 1998, many states
made CBOs as partners while implementing such programmes. The World Bank was an
active partner in supporting the endeavour of six states. In A.P for eg. Within a decade
more than 5000 such CBOs have rejuvenated more than 1.2 million hectares of degraded
forests in the state. As a result of this, degraded forests have sprung back to life, timber
smuggling has almost stopped and cattle grazing are under control, village labour is more
gainfully employed and out migration declined, soil conservation has saved local water
resources (Venkataraman or Falconer: 1999).
Further Studies sponsored by the World Bank in the delivery of services
in areas of, watershed irrigation, infrastructure and education showed provided similar
positive results.

In the country, currently watershed programmes are mainly

implemented in partnership with CBOs by forming grass root organizations like Village
Organization (VO) and water user association for its effective implementation and
sustainable development. Studies have shown that the community based irrigation system
constructed and operated by the farmers themselves without much external support
generated higher level of agricultural productivity than more modern system constructed
by government agencies with substantial external assistance.

In the same way ,

implementation of infrastructure projects often resulted in lower costs and in more

productivity wherever CBOs are responsible for all aspects of the project (design,
management, monitoring). In such cases costs per the beneficiary are less than half than
when the CBOs are not decision makers. Further studies in the educational field also
showed better performance and results whenever the community took over the
management of village school (World Bank; 2000).
With the help of funds from Japanese International co operation (JBIC),
the Govt of Kerala implemented conservation of environment project in the district of
Attapadi mainly in partnership with CBOs. The various activities undertaken for the eco
restoration such as land development, contour building, and construction of check dam,
afforestation and nursery were accomplished by the CBOs like user association (UA),
Oouru Vikasna Samithi (OVS) and Joint Forest management committee (JFMC) with
peoples participation. The study found that the quality of asset created by the CBOs
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were far better than those done by engaging contractors. In addition large no. of man
days created had gone directly to the people in the project area. In this way the no. of
days of employment engaged by the people and the wage earned by them showed
phenomenal increase contributing the livelihood security. ( Chinmaya Basu and et al:
After studying CBOs in the developing countries Pradhan (1995)
contended that CBOs are more effective and efficient channels for the delivery of
development programmes as compared to bureaucratic ones. According to him the asset
created in the villages without peoples participation remained Government property in
the community, but when it was created with peoples participation it became community
properly in the community. The above study showed that when the programme was
implemented with peoples participation the major significant outcome was the
ownership claimed by the community which is very important for its sustainable
development.
As the programme implemented in partnership with CBOs are more
transparent, participatory , with less cost and more efficiency many international funding
organization like World Bank, United Nations Development Programme(UNDP), Food
and Agriculture Organization (FAO),International fund for Agriculture Development.
(IFAD) and JBIC, UNICEF implementing RD programmes particularly poverty
alleviation programmes in partnership with the CBOs. Apart from Govt. of India and
international donor agencies many state govts also came forward to associate CBOs
while implementing poverty alleviation programmes. The experiences of the peoples
campaign in Kerala, Janmabhoomi in A.P., Apna Gaon-Apna Kam in Rajasthan, Gokul
Gram in Gujarat, Namaku Name Thittam and Namadhu Gramam in T.N are indication
of the interest shown by various state Governments to promote peoples participation in
partnership with CBOs. All these schemes are state sponsored scheme intended to
ensure peoples participation in the overall development of villages.

In one of the evaluation of the state sponsored programme mentioned

above namely Namadhu Gramam, the author found that implementing

poverty

alleviation programme with the CBOs had several advantages . The study conducted in
one of the districts of T.N found that when the programme is implemented with peoples
participation by forming local organizations facilitated mobilization of sufficient local
resources to implement social sector and infrastructure programmes in the village with
limited fund from the Government. The remarkable charge that brought about with
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participation was the change in their mindset and realizing their responsibilities in
developing their own village.

In addition participation of the stake holders in

implementing the programme also results in the creation of assets of superior quality,
followed by its ownership by the community. ( Kumaran: 2007)

In the above in brief we have examined emergence, characteristics and

important role played by CBOs in rural development. A silent movement by poor
particularly women belonging to underprivileged section is going on in the country by
forming SHG for their socio economic empowerment. This movement has picked up in
the south and spreading its wing to other parts of the country. Let us examine in detail
the characteristics of SHG and their role in empowering the rural poor particularly
women.

3.6 SHG
SHG is the smallest unit of a CBO. Several factors have been identified for the
emergence of SHGs in both the developed and developing countries. Examination of
some of the studies in the Western context showed that the existing services or systems
are inadequate in meeting the needs of people to be helped, and as a result self-help
groups are emerging in both the developed and developing countries both in rural and
urban areas. Studies showed that SHGs are proliferating in the Indian context as a
strategy for the socio-economic empowerment of the relatively disadvantaged and
marginalized sections of the population (NABARD: 1989; A Fernandes: 1987).
3.7 Characteristics of SHGs
This unit only deals with informal SHG and formal SHGs like co operative
societies are excluded from the preview of the discussion. In the present context SHG is
defined as a special form of voluntary organizations usually formed by a small
homogenous group of people to attain certain goals either social, economic or both. One
of the distinctive features of SHG is that they are formed outside the aegis of bureaucracy
and political parties with limited scope for latter intervention and its risks, costs, and
benefits are shared among its members on an equitable basis. In this sense SHGs are
peoples organizations which are free from politicization and bureaucratization and are
fully participatory and give ample opportunities to their members to take part in all the
activities of the group including decision making. Another important feature of SHGs is

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that they evolve and function on the basis of felt needs of people largely by making use
of local resources. (Singh Kartar and Raji Gain 1995: .Sukhpal Singh 1995). .

Groups are generally formed through the process of social mobilization to

ensure viable groups.

As soon as the group is formed the members will elect the

managing committee members generally consists of President, Vice president, and

treasurer and sometimes required committee members to take care of various activities
undertaken by the SHG. The SHG functions on the basis of a by law, evolved by the
group which is simple and flexible. This enables the group members to manage and
administer the group activities. To facilitate group processes and ensure transparency of
operations group meetings are regularly convened at a pre determined date, place and
time. A saving bank account will be opened in one of the nearby bank branches in the
initial stages of its formation.
After six months of its formation, the group is eligible for bank loan
subject to evaluation its past performance. The promoting institution provides training to
group leaders to maintain official records including financial discipline and management.
The post of group leaders is generally rotated after a specific time period to pave the way
for other members to take up the position. The entry point of activity in SHG is thrift and
credit activities. The quantum of money to be saved including its frequency is determined
by the members themselves depending up on their financial background. The money
saved is used for internal lending after six months of its existence. On priority basis the
pooled amount is given as loan to its members which is used for meeting their either
consumption or production needs.

3.8 Promotion of SHG

The poor seldom organize themselves in to groups to enable them either
to articulate their rights and demands or to fight collectively against common problems
like poverty. Several obstacles within the group and outside resist them from organizing
into such groups. The major hurdles which inhibit them from forming such groups within
include powerlessness, lack of unity, leadership qualities and while those act from
outside include ethnic stratification in to religion caste, sub caste and class. ( Saxena :
1992

). As the poor are not in a position to form their own organization external

agencies are coming forward and promoting SHGs among the poor.
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The SHG promotion institution may be categorized into three. They are (1)
Government agencies (2) Non Governmental Agencies and Financial institutions. In fact
the initiatives taken for the formation of SHG owns its origin primarily to the efforts of
certain NGOs. Majority of the SHGs currently operating in the country is promoted by
NGOs. Although currently many NGOs are forming SHGs the pioneering attempts were
made by MYRADA in Bangalore, SEWA in Gujarath, CARE and Rayala seema Seva
Samithi in Andhra Pradesh etc. Among the banks, several nationalized banks, Co
Operative banks, Regional Rural Banks including some of the private scheduled banks
are also play an important role in promoting SHGs. Of late, several state governments
also actively playing a prominent role in promoting SHGs in their respective states with
the objective of addressing the problem of poverty among the poor. For eg. Indira
Kranthi Pathakam (IKP) in AP, Kudumbasree in Kerala, IFAD assisted poverty
alleviation programmes in Tamil Nadu and Maharashtra, and Mission Shakti in Orissa to
name a few.
.All these programmes aimed at empowering the poor particularly women
through SHG by providing capacity building support and credit linkage from banks for
enabling them to take up income generating activities so as to become economically self
reliant.

Some of the states like MP and Chattisgarh are implementing livelihood

programmes in partnership with SHGs. In the country the SHG programme got a boost
when Govt of India introduced the SGSY in the year 1999, as one of the flagship
programmes aimed at providing self employment programmes for the rural poor. Under
the scheme SHGs members in the category of BPL are eligible for the benefit of bank
loan and subsidy for undertaking income generating programmes. .

3.9 Functions of SHG

In India, SHGs are providing a platform for the poor to come together and
articulate their various needs and demands. They are considered as a viable organization
for the socio- economic empowerment of rural poor particularly women. With the help
of funds available from thrift and bank loans enable the group members to undertake
various income generating activities covering a wide gamut of farm and nonfarm
activities. Using the same platform Centered on Thrift and credit the SHG takes up social
development programmes as well for the benefit of its members. To begin with we will
look in to the thrift and credit activities undertaken by the group.

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3.10 Thrift & Credit activities

Lack of institutional credit has been considered as one of the major
constraints of the poor to come out of the vicious circle of poverty. At the Government
level, attempts like introduction of co-operative societies followed by nationalization of
commercial banks and opening up of RRB were made with a view to reach the
institutional credit to the weaker sections particularly the poor. Failures of cooperative
banks, nationalized banks, Regional Rural Banks in meeting the credit requirements of
the poor stressed the need for special arrangements for the delivery of credit to the poor.
In recent years, SHG are emerging as an alternative to meet the urgent credit needs of
poor through thrift. Studies have shown that savings through thrift has been one of the
important activities of such groups and are becoming very popular among poor
particularly among women in rural areas The money thus saved used for meeting the
emergent consumption needs and also for income generation activities. The major
source of money for undertaking income generation activity pooled from own source
and money received from banks through linkage programmes.

3.11 Linkage with financial institutions

Considering the importance of SHG in alleviating poverty from rural areas,
National Bank for Agriculture and Rural Development (NABARD) has instructed the
nationalized banks to come forward to finance the SHGs with certain conditions and
specifications. Accordingly, several financial institutions are coming forward to finance
these groups by streamlining their procedures to ensure smooth flow of credit to the poor.
Generally, SHGs are linked with financial institutions in two ways, the first method
involves linking the group or individual members directly to the bank and the other
method involves financing SHG though NGOs. Apart from establishing linkages with
banks, some of the SHGs are successful in getting soft loan from non-banking financial
institutions as well. According to NABARD by the end of 2007 there were 2.92 million
SHG in India. In total so far 40.95 million poor households have been provided with
credit form formal financial institutions.

And given that the average size of the

individual family is five, this indicates that over 200 million people have provided credit
by the banking sector through SHG, though not all of them are active borrowers. The
bank linkage programme revealed the savings and employment capacity of the poor,
apart from an important revelation that the repayment rate was very high touching the
levels of 95 percent and above.( NABARD: 2008 ). The bank linkage programme in fact
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helped the poor women to undertake a variety of income generating programme enabling
them to improve their household income. The improvement in economic development
resulted in the betterment of social condition of its members.
3.12 Social development
Apart from economic development other important functions taken up by the
SHG is in the field of social development of its members by creating awareness about
education, health. and hygiene. For e.g. one of the major functions undertaken by the
groups promoted under Kudumbasree in Kerala was to create awareness about education
and health and addresses the problems encountered by the members in these areas. To
address such problems special committees are formed with in the SHG. In a study
conducted in A.P it was found that one of the important functions of SHG is to promote
social development among its members. This is attempted through informal education
and awareness creation about their rights and privileges. With the help of folk media
awareness was created about social evils that prevailed in the society. This helped some
of the SHG members to work for the promotion of social reform activities by eliminating
social evils like untouchability, bonded labour, and alcoholism apart from exploitation of
agricultural labourers by land lords. (Kumaran : 1994).

3.13 Empowerment of women

A good number studies are available supporting the role of SHG in the
socio economic empowerment of rural poor particularly women. ( D.K.Panda: ND; R.B
Savain and F.Y Wallentin :2007, Karmakar:1999; K.P.Kumaran2002) SHGs have been
instrumental in empowering grass root women in several ways. Evidence from such
studies revealed that by becoming a member helped them to develop saving habit which
otherwise unknown to many of them. They also gained managerial skill to administer
SHG and technical skill to operate group funds, and maintain financial records. They also
familiarized with banking transactions and capable of operating micro enterprises. With
the help of fund generated through thrift and credit from banks the members undertake
several types of income generating activities which helped them to improve their house
hold income. Apart from financial benefits, involvement in SHG made them literate and
improved awareness about health and education. This helped them to impart better
education among their children and improving the health of their children and family
members. Awareness building process also took some of them successfully to contest
local panchayat raj elections.
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4. Exercise
1.

Define CSO and explain the factors responsible for their emergence

2.

List down the important features of CBOs and their main role in

community driven development

3.

What are the important features of SHG and in what way it helps to

empower the poor women?

5. Summing up
In this unit we have seen what is civil society and civil society organizations and
examined the role of civil society organization with special reference to CBOs and
SHGs. In India, civil society and civil society organizations are not new. They are as old
as our civilization and rendering various services to the people.

However, the re-

emergence of CBO with new vigour and functions may be traced to the failure of the
state in protecting the interest of the marginalized and the poor. This is more evident
with the introduction of globalization and privatization of Indian economy.

CBOs are pro poor organizations that create an enabling environment that
promotes community driven development. Of late, they are increasingly becoming
partners in the grass root level development programmes implemented by the
government, non-government and international donor agencies. Their participation is
increasingly seen in R.D programmes like managing natural resource management,
providing basic social services and infrastructure facilities. CBOs are membership based
organization which represents the community members, who joined together for meeting
a common interest. . While SHG is a small and informal organization and forms the
smallest unit of a CBO which may not truly represent a community. Nevertheless, SHG
which are informal at the grass root level, get federated at the levels of village and above
to attain the characteristics of a full-fledged CBO. The SHGs are mostly formed among
the poor particularly among women with the objective of attaining their socio-economic
empowerment.

It is a fact that CBOs, and SHGs are proliferating in the rural areas. As per the
conservative estimate, so far in India 36 lakhs SHGs were formed. But they are not

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uniformly formed. In the southern part of the country their prevalence is satisfactory, but
in other parts of the country it is marginal. Although in terms of numbers large number
of SHGs are formed in the country, but we dont have the statistics that to indicate how
many of them are actually vibrant, active and dormant or disabled.

Although CBOs are playing a dominant role in a number of vital rural

development programmes, they have their own limitations. Their weakness starts with
poor leadership qualities, members are largely illiterate, limited resources, lack of
experience of skills in handling situation and above all most of these are informal
organizations. Therefore, to make them effective these is a need for capacity building of
these organizations including its members and leaders. Unless this is attempted the
organization will not become viable and sustainable.

6. Keywords
CSOs, SHGs, Empowerment of Women, Thrift and Credit

7. Know your Progress

1. Define CSO and explain the factors responsible for their emergence
2. List down the important features of CBOs and their role in community driven
development.
3. What are the important features of SHG and in what way it helps to empower the
poor women?

8. Further Reading / References

1. Chinmaya Basu and et al. (2005), A quick study of Attapadi Wasteland
Comprehensive Environmental Conservation Project, NIRD, Hyderabad.
2. Debadutta K Panda: Women empowerment in SHG development in Orissa, ,
MP Associates Pvt Ltd., Bhubaneshwar
.3. Choudhary R.C (2000) Rural Development Organization in India: Realities
and challenges in Pratap Reddy and Katar Singh (ed.) Designing and managing rural
development organizations, New Delhi, Oxford University Press
4. Deepa Narayan (ed) (2000) Voices of the poor can any one hear us, Oxford
Uni. Press., New Delhi,
5. Fernandes A 1987: NGOs in South Asia: Peoples Participation and
partnership, World Development Vol 15, Supplement
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6. Hegel, Fedrich (1942): The philosophy of Right, Oxford University Press.

Tocqueville, Alexis de (1956) Democracy in America, The Colonial Press, New
York
7. Karmakar K.G (1999): Rural Credit and Self Help Groups: Micro finance
Needs and concepts , Sage Publications, New Delhi,
8 Kumaran K P (1994), Self Help Groups and Development of Rural Poor,
NIRD, Hyderabad..
9. Kumaran K.P.(2000): Role of SHG in promoting micro enterprises through
micro credit: An empirical study, Journal of Rural Development, Vol 21 (2).
10. NABARD (1989) Studying in self help groups of the poor Bombay.
11. NABARD (2008) Annual Report, 2008, Bombay.
12, Oommen M A (2007) Kudumbasree of Kerala: An appraisal, , Institute of
Social Sciences, New Delhi
13. Pradhan P (1999) Role of Institutions in Rural Community Development,
Asian Productivity Organization, Tokyo.
14. Rajesh Tandon and Ranjitha Mohanty
Governance, Samskriti, New Delhi

(2005): Civil Society and

15. Ranjula Bati Savain and Fan Yang Wallentin: Does micro finance empower
women? Evidence from SHG in India, Working Paper, Department of Economics,
Updasala University, Sweden
16. Saxena K B 1992, Rural Organisations occasional papers, Govt of India,
Ministry of RD, Krishi Bhavan, New Delhi.
17. Singh Katar & Raji Gain TS (1995) Evolution and survival of SHGs: Some
theoretical propositions and empirical evidences, BIRD, Lucknow.
.18. Sukhpal Singh (1995) : Self help groups in Indian Agri business reflections
from case studies.
19. UNDP (2006) UNDP and civil society organization: A tool kit for
strengthening partnership, New York, USA
20. Venkataraman, A and Falconer J (1997): Rejuvenating Indias Decimated
forests through Joint Action: Lesson from Andhra Pradesh. World Bank, Washington
.D.C.21
21. Venugopal GV, Annamalai V (2003) relationship between panchayat raj
institutions and community based organizations: issues of convergence, Journal of Rural
Development XXII (4)
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22. Yamini Aiyar (2007): Globalization in India: Civil Society Responses,

National Centre for Advocacy Studies, Pune.

9. Model Answers
1. Civil society organizations are non state actors whose aim is neither to
generate profit nor to seek governing power. CSO unite people to advance shared goals
and interests. Civil society organizations include a wide array of peoples interest group in
the form of organization and institutions. They may be classified into NGO, NonGovernment organizations, CBOs, people organizations, faith based organization
professional institutions, social movements and social networks.
Civil society organizations are peoples organization and they can play a
significant role in the national development in general and marginalized communities in
particular. They are emerging due to the following reasons.

1. The existing delivery mechanism used for the implementation of state

run rural development programmes particularly poverty alleviation
programmes has several limitations.
2. The state apparatus is increasingly failed to safe guard the interest of the
poor and the marginalized section of the society.
3. To act as a protective shield from the evils of globalization and
privatization.
4. To act as a watch dog of democracy and Government action.

2. CBOs are membership organizations made up of a group of individuals in a

self defined community who have joined together to further common interest. They
often consist of people living near one another in a given rural or urban neighborhood.
The main distinctive features of CBOs are (1) self governing (2) self supporting (3) self
regulating institution and dependency on external fund is minimal.
Considering its democratic structure , participatory nature internal resource
mobilization and its commitments to the members in achieving the goal, government and
non-government agencies including international donor agencies associating them as
partners in a wide variety of rural development programmes. For eg. Their presence is
increasingly seen in the implementation of programmes like natural resource
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management, promotion of basic services and providing of infrastructure facilities.

CBOs are also supporting peoples struggle to protect their rights and interests in the
contest of globalization and privatization.

3. The smallest unit of CBO is SHG. SHG is defined as a special form of

voluntary organization usually formed by a small homogeneous group of people to attain
certain goal. One of the distinctive features is that they are formed outside the aegis of
bureaucracy and political parties and its costs, risks and benefits are shared among the
members.

SHGs are peoples organization, fully participatory and give ample

opportunities to their members to take part in all activities including decision making.

Important empowering functions:

1. Promotes habit of saving through thrift
2. Undertake income generating activities with the help of own fund as well
as bank loan
3. Help to take up social development and social reforms activities among
its members
4. Enable the poor women to successfully contest Panchayati Raj elections
5. Serving as a best platform for addressing the various issues relating to
poverty
6. The above mentioned socio-economic activities undertaken by the SHG
resulted in the socio-economic empowerment of women.

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Unit- 4: Role of NGOs in Rural Development

Structure
1. Introduction
2. Objectives
3. Definition of NGOs
3.1 Distinction between NGO and Voluntary Organisations
3.2 Characteristics of NGOs
3.3 Advantages of NGOs
3.4 Limitation of NGOs
3.5 Classification of NGOs
3.6 Historical Background of NGOs
3.7 Government of Indias Policy on NGOs
3.8 Role of NGO in Rural Development
4. Case Study of NGOs
5. Summing Up
6. Keywords
7. Know your Progress
8. Further Reading / References
9. Model Answers

1. Introduction
There has been emphasis on mitigation of poverty and unemployment in
developing country over the last three decades. The NGO are playing pivotal role in
mitigation of the drudgery of the poor in the developing countries. Several government
departments has initiated plan and programmes to involve NGO in different ways. This
unit will dwell upon the historical background, advantage and limited, characteristics,
and specific role of NGO in rural development.

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2. Objectives
After studying this Unit, you should be able to understand:
The historical background , characteristics, advantages , limitations and
kind of NGOs/VOs;
Role of NGOs in Rural Development.

3. Definition of NGO
There is no acceptable definition of NGO different experts have given different
definitions. Non Governmental Organisations and Voluntary Organisations (VOs) are
often used synonymously in literature.
Non governmental organization (NGOs) is a term that has become widely
accepted as referring to a legally constituted, non-governmental organisation created by
the natural or legal persons with no participation or representation of any government. In
the case in which NGOs are funded totally or partially by governments, the NGO
maintains its non-governmental status and excludes government representatives from
membership in the organisation. Unlike the term intergovernmental organisation,non
governmental organization is a term in general use but is not a legal definition. In many
jurisdictions these types of organisation are defined as civil society organizations or
referred to by other names. Apart from NGO often alternative terms are used as for
example: independent sector, voluntary sector, civil society, grassroots organisations ,
private voluntary organisations, self- help organizations and non state actors ( NSA)
(Wikipedia encyclopaedia ,2009) .
Lawani (1999) gave several definitions as A voluntary organisation, properly
speaking, is an organization which, whether its workers are paid or unpaid, is initiated
and governed by its own members without external control (Lord Beveridge).

A group of persons organized on the basis of voluntary membership without

state control, for the furtherance of some common interests of its members (Davidskill).
3.1

Distinction between NGO and VO

VOs are non-profit organizations, small in size and run outside the

domain of the state control but NGOs are a later phenomenon. There is a relationship

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between the state and welfare NGOs. It is a fact that NGOs are non-profit organization
but provide welfare services sometime as a part of or on the behest of government and
sometimes outside it.

Voluntary organizations initiate activities without selfless motive and

many times it is done without or with little remuneration. But NGOs emphasizes on
professionalism for rapid social development. NGOs may or may not provide free
services as in case of voluntary organizations.
NGO /VO can be understood more clearly by understanding their
characteristics, types and functions.

3.2

Characteristics of NGOs
Lawani 1999,while referring to Paul Choudhry, mentioned the following

characteristics of a NGO/VO:
1. It is the result of the voluntary effort, which though motivated by different
factors, is spontaneous in nature.
2. It is an organization initiated and governed by its own members on democratic
principles without any external control.
3. It is registered under an appropriate Act to give a corporate status to a group of
individuals so that they get a legal personality, and individual liability may give
place to group liability.
4. It has a general body and a regularly constituted managing committee,
representing all interested men, women, professionals, public men, etc.
5. It has definite aims and objectives and a programme in socio-economic
fulfilment of these objectives.
6. It is known and accepted by the community in which it is formed.
7. It has considerable autonomy, flexible planning and management of its
programmes and services.
8. It has a sense of commitment to human development/welfare.
9. It meets peoples needs and helps to solve their socio-economic problems.
10. It plans and implements its own programmes thorough its own voluntary and
paid workers.
11. It raises its funds from the community.
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12. It maintains its accounts and is accountable to people and the government as far
as it receives grant.
In general, NGOs are non-profitable institutions. But the ethos is not common.
Some may be really commercial; indeed, they may even be commercial companies in
disguise. Several NGOs in India have set themselves up as consultancies working for a
fee with the voluntary sector (UNDP.1993. p.88).
Conflict with government: The conflict exists at the working levels of
government in virtually all countries. Government officials often felt that NGOs come
into a village and establish their programmes, often without discussion and usually
without any attempt to integrate with the governments activities. On the other hand,
many NGOs believe that governments wish to control them and that NGOs will lose their
autonomy if they integrate more closely. ( Bowden,Peter 1990).
Criteria to determine Existence of NGOs/VO
As per the Planning Commission of India the following criteria determine the
existence of NGO/VO :
i. It must be registered Societies Act 1960 or equal enactments of State
ii. Must be based in rural area & worked there for at least 4-5 years.
iii. Must have professional & managerial expertise to produce regular audit
statements & reports.
iv. Must not be linked with any political party and one holding public
office. It is explicitly committed to secularism, socialism and democracy
non- violent means for R.D.
v. It must implement anti -poverty, minimum needs and sociodevelopment programmes which leads to improvement in the quality of
their lives.

3.3 Advantages of NGOs

i. As these organizations are small and informal, they can respond quickly
and directly to development or humanitarian needs and opportunities.
ii. NGOs can provide grass roots services and dynamism in poor
communities in remote areas where the government and other
development organization find it difficult to reach.
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iii. The basic responsiveness of NGOs are associated with social, cultural
and other aspects of development which are generally ignored by the
technical development specialists.
iv. NGOs already have considerable experience in supporting the strategies,
programmes and projects for poor.
v. NGOs can help not only in identifying the community needs but also in
mobilizing broad and active participation and support for local
development activities.
vi. NGOs have willingness to innovate new development approach,
techniques, and experiments which may eventually prove quite
significant in the context of broader development activities.
vii. The operational activities of NGOs are fundamentally related to low
overhead, cost on salaries, volunteers and appropriate technologies
which make the formulated programmes of NGOs at low cost than the
official programmes because they are committed to sustainable
development

approaches

and

to

making

more

use

of

local

resources.(Singh,2003).

3.4 Limitations of NGOs

i.

Due to diverse variety of NGOs and their small scale and disparate aims
and operational activities, many NGOs find it difficult to collaborate
with other developmental organizations.

ii.

The informal and voluntary nature and scarce resources generally create
the problem of weak management of these organizations which can lead
to a lack of control over operations and limited accountability for funds.

iii.

It is generally observed that activities of NGO are often individual

efforts, implemented without a broader strategy, long term focus, or
relationship to work with others institutions.

iv.

Some NGOs operate on the basis of political or religious objectives

which can considerable hamper their work with government and other
development organizations.

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v.

NGOs can drift away from the innovation, flexibility, independence, and
voluntary and participative spirit which actually made them successful in
the first place owing to inappropriate support from governmental and
multilateral agencies.(Singh,. 2003 ).
Evidence on the degree of sustainability of NGOs projects is scanty.
The World Bank (Operational Manual, 1988, p.2) lists it as one of the

weaknesses of NGOs as do Brown and Korten (1988, p.13).

3.5

Classification of NGOs
David Kurten (1990) has classified the pattern of evaluation of NGOs under four

generations viz.,
(i)

Relief and welfare;

(ii)

Community Development;

(iii)

Sustainable Development

(iv)

Peoples Movements

First generation strategies involve the NGO in the direct delivery of services to
meet an immediate deficiency or shortage experienced by the beneficiary population,
such as needs for food, health care or shelter. This generation strategies grow out of a
long history of international voluntary action aimed at assisting the victims of wars and
natural disasters, and providing welfare services to the poor.
Second generation strategies highlight the energies of the NGO developing the
capacities of the People to better meet their own needs through self-reliant local action
which involves an implicit theory of village development in realizing its own potentials
through education, organization, successful participation in activities, usually either a
village or some sub-group within it, such as the women, or the landless agricultural
workers.
Third generation strategies look beyond the individual community and seek
changes in specific policies and institutions at local, national and global levels. This
generation strategies focus attention on creating a policy and institutional setting that
facilities sustainable and inclusive local development in collaboration with major
national agencies in helping and reorienting their policies and broadly-based local control
over resources.
Fourth generation strategy focus attention on an inadequate mobilizing vision as
the casual factor behind the present crisis facing both the developed and developing

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countries. It calls for imbuing the public consciousness with an alternative action Plan
for adequacy mobilizing voluntary action on a national or global scale.
The above four generations relating to the strategies of NGOs can be explained
on the basis of the Table 1 (Annexure-I).
A categorization of Asian NGOs based on their function is as follows
(Bowden, Peter, 1990).
Consulting NGOs, providing consulting services to governments, donor
agencies and major contractors. Although fees are charged, the NGO is
a non-profit organization, usually concentrating on issues relating to the
economic and social aspects of development.
Welfare NGOs, providing assistance to the needy, including relief
services in times of emergency
Development NGOs, working with poorer communities in providing a
range of development services and in building self-help capabilities.
Advocacy NGOs, concentrating principally on environmental issues,
land reforms, tenancy issues, and peoples rights.
Although the principal activity of any NGO would be in one of the above
categories, there is considerable overlap. Most large development NGOs, undertake
consulting work; many will also provide relief in times of national disaster. Many
welfare NGOs provide facilities and services for development (health and family
planning programmes, water supply, agricultural productivity assistance and so on), and
are increasingly attempting to create participative, sustainable system of poverty
alleviation. All most all NGOs, will become involved in popular environmental or land
rights issue.
3.6 Historical Background of NGOs
Before independence voluntary organizations has played an important role to
initiate welfare and developmental activities, which originated outside the state structure
and within society, came into prominence during the colonial period. These voluntary
organizations now a days called as Non Governmental Organisations (NGOs).
Post Independence
As a result of exploitation, by the British imperial policies, alternative
protection and state initiated welfare were necessary soon after Independence in India.
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During the period of the First Five Year Plan, the central government
established the Central Social Welfare Board (CSWB) in 1953 under the Ministry of
Social Welfare with the objective of providing financial assistance, coordination,
training, technical guidance and consultancy to the NGOs engaged in activities for
women and children. In order to reach out to the local NGOs and to release funds in
time, the Central Social Welfare Board established state level Social Welfare Advisory
Boards (Lalitha, 1975). During that time National Institute of Public Co-operation and
Child Development (NIPCCD) was established to promote NGOs in the country.
NIPCCD concentrated in the area of training voluntary workers supporting NGO
activities and promoting liaison between government and NGOs (Garain, 1994). First
Five Year Plan allocated four crore of rupees for the voluntary sector.
During the Third Five Year Plan NGO action was considered as an aspect of
public cooperation.

The National Advisory Committee for Public Cooperation

(NACPC), which came into existence in 1952, had representatives during Third Plan
mostly from National NGOs. As the public cooperation got institutionalized, NACPC
gradually lost its credibility in the eyes of small and comparatively new NGOs (Roy,
1987).
In the Sixth Five Year Plan, NIPCCD, which came into existence during the
First Plan, drastically changed its focus and had become the apex body for training
functionaries and to co-ordinate, monitor, evaluate the Integrated Child Development
Services Scheme of Government of India. Involvement of NIPCCD in the area of Public
Cooperation and NGOs had become minimum at that time (Garian, 1994). From the
middle of the Sixth Plan, there were a number of initiatives at the Government of India
level to establish consultative group of voluntary agencies in each state under the
chairmanship of either the Chief Secretary or the Development Commissioner. But it
could not be success and the move on creating consultative committees of NGOs at the
state level met a natural death (Garain, 1994).
In the Seventh Plan, for the first time, NGOs were given the freedom to plan
their own schemes and follow the methodology they thought best to tackle poverty in
villages they were working in (Roy, 1987). During that period (in 1986) the Council for
the Advancement of Peoples Action and Rural Technology (CAPART) was created to
seek an integrated approach to Rural Development through NGOs.

CAPART was

promoted as an autonomous organization under the Union Ministry of Rural

Development. People and NGOs, who were engaged in rural development activities,
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were members of governing body and general body of CAPART (Garain, 1994). During
that period, a proposal was made and linked with the Seventh Plan document to establish
a council for rural voluntary agencies and code of conduct through an act of parliament.
But this created a lot of debate in the NGO sector and the issue was dissolved gradually
(Garain, 1994). Regarding health, in the Seventh Plan, Union Ministry of Health and
Family Welfare considered following schemes for releasing funds to the Voluntary
Organisations:
i.

Scheme
for
improvement
of
medical
services
for
expansion/improvement
of
hospitals
under
voluntary
Organisations/associations those are operating in rural or urban areas;

ii.

Promotion and development of voluntary blood donation programme;

iii.

Special Health Schemes for setting up of small hospitals/dispensaries in

rural areas only.

In the Eighth Five Year Plan, it was proposed that grants-in-aid would be given
to the voluntary sector for innovative experimental schemes. In the field of health and
family welfare, NGOs were expected to help in raising and promoting the small family
norm by means of motivation and education of women, provision of antenatal and
postnatal care, etc.
During the Ninth Plan, it was realized that NGOs are actually complementary in
nature. Both the sectors (Government and NGO) have their own strategy and strong
points. Both the sectors are to work on a reciprocal basis.
Apart from the Five Year Plans, many government committees pertinent to
development recognized the necessity of NGOs. The Balvantray Mehta Committee
(1957)- the architect of Panchayati Raj administration, emphasized the need for close
cooperation and collaboration between statutory organizations and the NGOs. The Rural
Urban Relationship Committee (1966) focused on the role of NGOs in mobilizing
community support for local level development activities. It identified NGOs as linking
organizations to keep constant and close contact with the people. The CAARD Report
(1985) [Report of the Committee to Review the Existing Administrative Arrangements
for Rural Development and Poverty Alleviation Programmes] had emphasized the need
for the involvement of NGOs in rural development activities (Garain, 1994). The India
alone is estimated to have between 1 to 2 million NGOs (Web -indianngo.com, 2007).
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3.7 Government of Indias Policy on NGOs

A National Policy on VOs has been notified by Govt. of India in July 2007,
which aims to further strengthen, promote and develop such institutions. The Policy has
the following objectives:

To create an enabling environment for VOs that stimulate their enterprise

and effectiveness and safeguard their autonomy.

To enable VOs to legitimate mobilize necessary financial resources from

India and abroad.

To identify systems by which the government may work together with

VOs on the basis of the principles of mutual trust and respect, and with
shared responsibility.

To encourage VOs to adopt transparent and accountable systems of

governance and management.

In a democracy VOs act as public watch dog and a major check on

arbitrary exercise of power by the executive and other organizations.

Many such organisations are also doing remarkable work in implementing

certain projects, some of which are funded by government.
During the course of the 11th Plan, efforts will be made to strengthen such

institutions and integrate their vigilance supervision over many of the programmes which
affect the common citizen.

3.8

Role of NGOs in Rural Development

Rural development aims at the development of rural areas with human and

natural resources. Human development has much deeper connotation than the mere
development of things, economic development or per capita increase of GNP.
Areas identified where NGOs are involved in a study of seven Asian NGOs
(Bowden, Peter 1990) :

Functional literacy training, an entry point- an approach used by BRAC, the

large Bangladeshi NGO and adopted by many Asian NGOs.

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An offer to help small income generating activities is another common entry

point.

Groups, or peoples organizations formed which became the vehicle for the
assisted self-help programme of the NGO.

Some NGOs, would try to work with existing village organizations or with a
locally-elected or appointed village or district council; others will work only
with those villagers who wish to participate.

Particularly for very poor communities, the NGO would spend time gaining
the confidence of the groups, and establishing a degree of group cohesion
and solidarity. Development of the capabilities of the group to make its own
decisions, together with training in leadership and group management is
frequently part of this phase.

Typically, an NGO project would be small, generally covering only a few

urban or rural communities.

Development NGOs would appear to operate in three modes (Bowden, Peter,

1990)
First there is service and assistance provision in development activities these
NGOs will participate with the community in providing water supply, sanitation, minor
irrigation schemes and access roads, etc; they will help generate income producing
projects for women and the landless; manage government (or their own) health
programmes, provide literacy courses, and give extension advise or marketing assistance
to marginal farming and fishing communities.
Secondly, there is the creation of self-help capabilities in poor communities.
The NGO will form groups in the village, perhaps gaining entry and acceptance through
one of the services outlined above, but then concentrating on building the communitys
capability to decide its own development priorities, using its own resources in the
process. The NGO will usually provide assistance, and possibly small amounts of credit.

Thirdly, they engage in advocacy and education.

The NGO usually

concentrates on the potential that is achievable through group action, particularly on the
rights and capabilities of the poor in gaining access to land and to public services.
Training in leadership and group management may be included. Most development

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NGOs will include this type of education and training activity along with direct work
within the community, but some NGOs provide only educational, training, and awareness
raising sessions.
NGOs and Peoples participation
NGO could enlist peoples participation with eases as they are working closely
with rural people. NGO are not governed by rigid set of rules and regulations as found in
the bureaucratic administrative set up and are flexible in their approach towards human
development.

NGOs employ different strategies to enlist peoples participation. Some

of these strategies may be described as follows:

Interpersonal contact and communication
To win over the confidence and conviction and cooperation of the masses,
initially the NGO may have to meet rural people several times, and more often.

Formation of village Association After having established personal contacts

with the people, the next thing the NGO does is to help them organize themselves into a
group. The aim is to involve the rural masses in all the aspects and process of rural
development, especially in the sharing of the benefits in an equitable way.
Division of villages into clusters and areas
If the NGO works in several villages, these villages are divided into clusters and
areas consists of 20-25 villages. A cluster coordinator extends necessary direction and
guidance to the village associations in a cluster, an area coordinate all the activities of the
villages in an area. Besides, there is an animator selected by the village association in
each village. NGOs also make arrangements for participation evaluation of the projects
during the implementation and after the completion of the project.
Infrastructure facilities for further interaction and strengthening of
solidarity
Some NGOs have necessary infrastructure facilities such as training centres for
the village association members to meet regularly for strengthening their solidarity and
share of information.

In a large country of Indias size, the rural masses can not expect the direct
participation as described above. But definitely they can expect it from the NGOs. Any
rural development project should lead the masses to self-reliance.
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participation in rural development may be said to be one of the rights of the poor.
Educating the rural masses on their lawful rights and helping them in taking the lawfully
granted rights could be part of the awareness programme of the NGOs.
People centred and process oriented
NGOs involve people in the entire development process right from planning up
to evaluation. Peoples participation is the major indicator in the NGOs sponsored
programmes.
In a Governmental system many development activities tend to be Product
Oriented or Target Oriented while the NGOs carryout their development activities more a
process oriented.
NGOs impart training to the local youth in the care, maintenance and repair of
the hand-pumps and they are given a tool-kit to carry out the repair work. It is not an
exaggeration that NGOs have given training to the women members too in the villages
who themselves effectively attend the hand-pumps in times they go out of order.

NGOs facilitate the people to carry out the programmes with their
decisive involvement.

NGOs enable the people to gain a sense of ownership and belongingness

in the programmes or the assets created.

NGOs motivate the people not to be dependent on the Government or the

others for little things that could be managed by themselves by
promoting a system of self-management.

NGOs infuse a sense of moral responsibilities to take care of assets and

protect the infrastructures that are created and used by them.

Awareness Generation
Awareness means sensitizing the people about their living situation. People are
enlightened to think what they are, what they ought to be and what they can be.
Awareness is created through social education programmes, dramas, street plays,
exposure, trainings, village meetings, demonstrations, group discussions, PRA
(Participatory Rural Appraisal), information sharing, people to people learning etc.
There are organizations which are out and out specialized only in awareness
creation in villages particularly through indigenous methods like street plays which
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exercise a great influence upon rural minds. Awareness programmes propounded by

NGOs have brought about attitudinal changes among the masses.
Awareness includes functional literacy. In the evening hours, the NGO workers
placed in the villages conduct literacy classes to men and women. This helps the people
write their names and read simple alphabets and do simple arithmetics and more so
critically analyse the village problems.

The Literacy Mission proposed by the

Government of India involves a number of Voluntary Organisations in the country to

make the programme more successful.
Capacity Building
The purpose of community organization/development is to equip the people to
do things of their own. Equipping the people means building capacities in them. Hence
capacity building is the sine-qua-non of NGOs interventions. In fact, all development
programmes revolve around the human potentials. NGOs attempt to build capacities of
the people by organization of participatory training and exposure.
Organising SHGs
Organising Self-Help Groups emerged as a popular activity among the NGOs
during 1990s. Through SHGs, womens movement and a silent revolution among women
folk is taking place. NGOs according to their competence organize SHGs numbering
from 50 even up to 500 groups, in a given region. Big NGOs like MYRADA and also
many other regional NGOs have organized SHGs in large numbers district-wide and also
state-wide.
Empowerment
Empowerment is a concept that goes beyond participation. It implies enabling
people to understand the reality of their environment, reflect on the factors shaping that
environment, and take steps to effect changes to improve the situation. It is a process
that encompasses people deciding where they are now, where they want to go, and
developing and implementing plans to reach their goals, based on self-reliance and
sharing of power. Most importantly, empowerment helps people liberate themselves
from mental and physical dependence. It is, in a sense, the ability to stand independently,
think progressively, plan and implement changes systematically and accept the outcomes
rationally.
NGOs Networking
NGOs network is an evolution which now shows encouraging and progressive
signs at various level. Over the years certain illustrious attempts were made to promote
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and strengthen NGOs network (e.g.) AVARD (Association of Voluntary Agencies in

Rural Development), VANI (Voluntary Actions Network in India) VHAI (Voluntary
Health Association of India) etc., at the National level and TNVHA (Tamil Nadu
Voluntary Health Association) FEVORD K (Federation of Voluntary Organisations for
Rural Development in Karnataka) at the State level and many others in the District level.
Networks are being organized around issues like environment, womens issues, child
labour, health etc.
Role of NGOs in Education
There are large number of NGOs or voluntary organizations working on various
aspects of education in India. Today there is a greater degree of heterogeneity and
variety among NGOs in India working for the improvement of education. There are
many field based organizations implementing education programmes. In contrast, there
are some knowledge-based organizations that provide support to grassroots
organizations (Wazir, 2000).

Many NGOs are found working in the area of rural

development in general that often include literacy and primary education including nonformal as well as adult education; some NGOs focus exclusively on primary education.
While some focus on primary education directly, some others aims at promoting
education indirectly by focusing on elimination of child labour. While many confine
their work to rural areas, some are also operating in urban areas, particularly urban slums.
The role of NGOs in advocacy and thereby in exerting pressure for social action
is also important.

For example, Action aid has initiated a citizens campaign for

improvement in primary education (e.g. ACTION AID, 1997). M.V. Foundation has
been able to mobilize around 40 organisations in the coastal belt of Andhra Pradesh on
the right of education; Pratham in Maharashtra has initiated activities towards
mainstream children in formal schools in slums and villages of the state; the West Bengal
Education network a group of 30 organisations has been actively pursuing the cause of
education in West Bengal; Jeevika in Karnataka has initiated a campaign in 16 taluks of
the Bangalore urban district to ensure every child below 14 years is in school
(Communicator, 1999 Aug).
The role of NGOs in education is important but nevertheless it is somewhat
limited. There are very little coordination among NGOs. Many projects run by NGOs
could be seen as experiments on a small scale, concentrated in small areas. There is large
number of NGOs, but many of them could be located only on papers. There are,
however, quite a few important NGOs doing commendable work.
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It is important to realise that NGOs cannot operate on scale necessary to

universalize education in the country as a whole. Though limited in coverage, NGOs
could produce significant demonstration effects, influence public action and policies of
the government and also of other NGOs. The union and state governments have to
assure full responsibility for organizing, managing providing and financing free and
compulsory elementary education of acceptable quality to all (Tilak J.B.G, 2004).
NGO in Sericulture Development
NGO can contribute to sericulture development through social aspects, often
overlooked by government extensionists, cover promoting the participation of women,
landless and other under privileged groups; bringing people together to form local
organizations like cooperatives, sales outlets, chawki rearing centres and foster selfreliance among the rural people.

Technical aspects, include training local technicians as well as farmers in

knowledge and skills; therefore, creating local teams for trouble shooting and to assist
farmers in course of actual implementation (mulberry plantation and rearing) of the
programme. NGO can also provide feedback to government institutions on relevance of
innovations and utilization of research results in the field.
Organisational aspects in sericulture extension, NGOs are capable of organizing
material input supply such as suitable mulberry varieties, fertilizers, pesticides and
disease free laying through local groups. Initiating and promoting sericulture service
centres for farmers can also be done alongside. Mobilisation of government resources
for the benefit of the community could also form part of the organizational functions of
NGOs.
An evaluation study of the rural water supply programme in eight districts of
eastern UP reveals a low level of coverage and poor maintenance record. If the safe
water programme is to be effectively implemented, greater participation from local
people, especially women, is needed (Pant, S.K. 1996).
Panchayati Raj institutions can effectively attain the larger goal of
comprehensive and integrated rural development for which rural NGOs have been
struggling for decades.

In the wake of the 73rd amendment NGOs should plan a

supportive and complementary role to the panchayats, and thus facilitate community
participation in development programmes. PSU foundation an NGO developed a model
of community based operation and maintenance of the hand pumps to make the IndoPGD-SRD, 2010 - 11

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Dutch cooperation programme in water and sanitation sector in the state of Uttar Pradesh
(Behar, Amitabh, 1998).
Rural development efforts in developing countries have been undertaken mainly
at two levels officials, and the NGO levels. Compared to the total outlay, officials
efforts have yielded little results mainly because of a more dimensional (mainly
economic) conceptualization of poverty and the top-down approach both at the policy
making and the implementation levels.
In contrast, a few NGOs in the sector have tried to conceptualise poverty as a
multidimensional phenomenon and formulated comprehensive and integrated strategies
in a bottom-up participatory framework. Rangabelia is a rare example of NGO initiatives
in rural development where two decade long ardous experiment in economic and human
engineering on a massive scale has sustained without intervention of external changeagents (Bhaumik, Alok. K., 1996).
The Self Employed Womens Association (SEWA), Gujarat, a nongovernmental organization carries out several activities that cater to organizing, building
and developing the strengths and abilities of poverty-stricken, destitute women of the
country through income generation activities and educational programmes (Ela Bhatt,
2001).
In many countries (Nepal, Bangladesh, India, Sri Lanka, for example), NGOs
are being used to train government staff in the skills of community organization.
Advocacy
Many professional NGOs have now taken up the challenge to play the role of
advocacy and to influence policies in favour of the poor.
Advocacy means influencing policy in favour of the poor and powerless this
otherwise, means disfavour of the power holders.
The emerging role of NGOs is nothing other than advocacy. The advocacy role
by NGOs has become a crying need in the current context of market economy. However
much NGOs carry out service delivery and socio-economic development programmes
with commitment, development of the poor and the powerless becomes partial,
incomplete transitory and fleeting unless policies are made in favour of them. This could
be achieved through advocacy.
Traditionally non-government organizations (NGOs) have mostly focused their
attention on grass-root action, ignoring the larger environment in which they operate.
But more recently due to fundamental changes in the countrys economic and political
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environment, NGOs have been forced to realize seriously the role of macro level forces
shaping the micro level realities. Although advocacy is new, the practice has been there
much longer. Advocacy in India has its roots in the work of Raja Ram Mohan Roy,
Mahatma Gandhi etc. Several government policies including the abolition of Bonded
Labour Act (1976) and the primary health care policy were influenced by the work of
NGOs.
NGOs have to critically analyse whether the Government policies are pro-poor
or not. Many NGOs like DISHA, Ahmedabad read between lines the budgets of the
State and the Central Governments since budgets are the manifestations of their policies.
Such NGOs facilitate the Opponent Assembly/Parliament members to raise appropriate
questions to seek remedial action.

4. Case Studies of NGOs

Case Studies of some NGO made remarkable progress in the area of education
are as follows:
The M. Venkatarangayya Foundation (Hyderabad) focuses on elimination of
child labour and putting the child back in school (Sinha, Santa 2001).

The Foundation works in about 400 villages in rural Ranga Reddy district in
Andhra Pradesh and is said to have withdrawn 50,000 children from work who have been
sent to various schools in the last couple of years. On the one hand, campaigns are held
against child labour and on the other, they are held in favour of the need for sending the
children to schools: bridge courses are offered to children belonging to the area group of
11-14 years for 18 months and they are also prepared for formal schooling. By helping
the parents of younger children in the age group of 5-8 years, the Foundation fees that
these children could be easily brought into schools. Viewing local youth as a valuable
resource, they are relied upon to bring the children to schools, to run camps and offer
bridge courses.
Kishore Bharti, a voluntary organization in Madhya Pradesh, started in 1972
was engaged in education and rural development. Its interventions in school system
developed into the famous Hoshangabad science teaching programme. Kishore Bharti

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also launched a Total Education Programme for school drop outs. The Hoshangabad
Science teaching programme was later entrusted to Ekalavya.
Ekalavya, an NGO involved in primary education for more than two decades
aimed at improving the classroom processes. A result of the science teaching programme
in Hoshangabad in Mahdya Pradesh. Ekalavya developed a package of teaching-learning
material for primary school children which are contextualized reflecting the situation in
rural areas where the children reside. The aim is to create a situation in which children
can be more active, intellectually stimulated and creative. In collaboration with DPEP, it
is likely to spread across 75,000 primary schools in the state.
The SWRC, Tilonia (Rajasthan) represents another innovative educational
programme meant for street children and working children. The Tilonia programme
started in 1975, attempts to reach the vulnerable children through night schools. Children
are encouraged to stage street plays on various issues and thus the programme ensures
community participation. The village education committees were constituted to look
after the routine work of the schools. Teachers are recruited from the local community.
The programme spread in as many as eight states.

It receives support from the

government and also in recent years from external sources.

5. Summing up

NGO initiated and function independently outside the government system,

having service as their primary concern. NGO or a voluntary
organization is an organisation which whether its workers are paid or
unpaid, is initiated and governed by its own members without external
control.

The voluntary organization and voluntary agencies are normally used as

synonymous term of NGO.

The characteristics of NGO are as it is a result of voluntary efforts,

organisation initiated and governed by its own members without external
control, have aims and objectives, general body and a managing
committee.

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NGO has considerable autonomy, flexible planning and management of its

programmes and services, accepted by community, meet peoples needs
and help to solve their socio-economic problem, raises fund from
community.

The criteria to determining existence of NGO as per Planning Commission of India

include registration under Societies Act 1960 or other enactments of State, rural
area based and worked there for 4-5 years, regular audit and reports, not linked
with political party and holding public office, secular, socialism and democracy and
non-violent means for RD.

The main advantage of NGO is small, and independent of hierarchical constraints,

procedure, flexible, aware of local environment and are responsive to it, can
mobilize public opinion, can have better rapport with rural people.

Limitation of NGO inadequacy and lack of certainty of the inflow of funds,

leadership, lack of professionalism and trained workers, local NGO lack national
awareness and influence government circle is insignificant, miss-use of fund and
not keeping proper accounts and limited success.

David Kortein (1990) classified NGO under four generations viz., (i) relief and
welfare (ii) community development (iii) sustainable development (iv) peoples
movement.

In a study four kind of NGOs found in Asian country viz., consulting NGO,
welfare, Development and advocacy.

Before independence VOs played an important role to initiate welfare and

development activities which organized outside the state structure and within
society, came into prominence during the colonial period. As per an estimate there
are between 1 to 2 million NGOs available in India.

Government of India has promoted NGO after independence in different five year
plan. Union government of India formulated a policy in July 2007 to strengthen,
promote and develop NGOs.

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Area identified where NGOs are involved in seven Asian countries were functional
literacy, income generating activities and development of self-help group.

The role of NGO could be concretization critical awareness building, organization

of rural people for empowerment, action for effective utilization of available
resources, demanding for the provision of more and better services and creating
better social structure and advocacy.

6. Keywords/Acronyms
1

ACTION AID

An international NGO working in over 50 countries for antipoverty and human development .

AVARD

Association of Voluntary Agencies in Rural Development

BRAC

CAARD:

An international NGO based in Bangladesh and other South

Asian Countries for improvement of quality of life of poor
people .
Committee to Review the existing Administrative
Arrangements for Rural Development and
Poverty
Alleviation programmed

CAPART

CSO

Council for the Advancement of Peoples Action

Technology
Civil Society Organisation

CSWB

Central Social Welfare Board

DONGO

Donor organized

FEVORD-K

Federation of voluntary organizations for Rural Development

in Karnataka

10

ENGO

Environmental NGO, such as Global 2000

11

GONGO

Government operated NGOs

12

GSO

Grassroots Support Organisation

13

GNP

Gross National Product

14

INGO

International NGO

15

MANGO

Market Advocacy

16

M.V. Foundation

M.Venkatarangayya Foundation -a NGO

And Rural

based in

Hyderabad (Andhra Pradesh) focuses on elimination of child

labour and putting the child

17

QUANGO

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back to school

Quasi- autonomous non-governmental organizations

390 | P a g e

18

NIPCCD

19

VO

National Institute of Public Cooperation and

Development
Voluntary Organisation

20

SWRC

NGO based in Rajasthan

21

TNVHA

Tamil Nadu Voluntary Health Association

22

VANI:

Voluntary Actions Network in India

23

VHAI:

Voluntary Health Association of India

Child

7. Know your Progress

1. Explain the role of NGO in rural development
2. Define NGO and give details of the kind of NGOs in rural development
area
3. Give the detailed account of the historical background of NGO/VO in
India
4. What are the advantage and limitation of NGOs ?
5. Distinguish between NGO and VO and explain the main characteristics
of NGOs

8. Further Readings / References

ACTIONAID (1997), Elementary Education in India:
Bangalore.

Citizens Charter,

Behar Amitabh(1998), Revitalising Panchayati Raj Role of NGOs, Economic

and Political Weekly,33(16): 881-882
Bhaumik, Alok. K(1966)., People Centred NGO Initiative in Sustainable
Rural Development: Case of Rangabelia Project in West Bengal( India ), India
Jr of Regional Sciences28(2) , 111-118.
Bhose, Joel S.G.R (2003), NGOs and Rural Development Theory and Practice,
Concept Pub, New Delhi , 87-166.
Bowden, Peter, NGOs in Asia: Issues in development , Public Administration
and Development,
10(2), 1990(April-June), 141-152
Bronen, L.D and Korten, D.C. (1988). The Role of Voluntary Organisations in
Development, An Exploratory concept paper prepared for the World Bank
(Draft).

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Communicator (August 1999), 1 (1), National Alliance for Fundamental Right

to Education.
David C. Korten, (1990), Getting to 21st Centuary: Voluntary
Global Agenda,
Kumarian Press, West Hartford, Connectiout USA, 10

Action

and

Ela Bhatt, Anubhav(2001), The NGO Experience what has Worked in SEWA:
Second Freedom, Aswatha, 3(2) :46-59.
Eleventh Five Year Plan 2007-2012 vol-I Inclusive Growth, Planning
Commission, GOI, p. 224.
Flavier, Juan, Lindsay, Sir James, Hodson, Rip, Babby Eugene, On NGO in
Rural Development, Development , 1, 1983, 91-92.
Francis, C.(1993) Rural Development, Peoples Participation and Role
NGOs, Journal of Rural Development,. 1 (2) : 205-210.

of

Garain, S (1994), Government NGO Interface in India: An overview, The

Indian Journal of
Social Work.55 (3), pp 337-345
Hegde, N.G. and Sahani, G.G.(1995), Role of NGOs in Sericulture
Development, Indian Silk, 33(9) : 4-6
Lalitha, N (1975), Voluntary works in India, NIPCCD; New Delhi
Lawani, B.T. (1999), NGOs in Development, Rawat Publication, Jaipur, p 24-25
Oxfam (1998), Primary Education in India: An Overview, London; Oxfam
UK
Probe (1999), Public Report on Basic Education in India, New Delhi: Oxford
Roy, S (1987), Voluntary Agencies in Development The Role, Policy and
Programmes, The Indian Journal of Public Administration, 34(3): 454-464.
Satyanaryana,G.(2007),Voluntary Efforts and Rural Development , Rawat
Pub.,9-10
Sarkar, Asok Kumar (1971), NGOs: The New Lexicon of Health Care, Concept
Pub, New Delhi, 41-45
Sinha, Shanta (2001), Child Labour and Education Policy in India, Indian
Child 2001. Mumbai: CRY, pp 41-47
Singh, Ravi Shankar Kumar (2003), Role of NGOs in Socio-Economic
Development, Abhijeet
Pub, Delhi , 31-35.
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Singhal, C.S.(1998) , Voluntary Action in Rural Development , Omsons

Publicaiton , New Delhi
Tilak, Jandhyala, B.G(2004) Role of NGOs in Education in India, Man and
Development, 24 (2): 17-24.
UNDP (1993), Human Development Report, New York: Oxford University
Press.p.88
Wazir, Rekha (2000), (ed), The Gender Gap in Basic Education: NGOs as
Change Agents, Sage Pub,New Delhi .
World Bank, (1988), Collaboration with Non -Governmental Organizations,
Operational Manual Statement No. 5-30, Washington D.C. p.2
Website:
http://www.indianngo.com/ngosection/newcomers/whatisanngo/htmwhat is an
NGO?,January 5,2010.

9. Model Answers
1.

Role of NGO in rural development could be as follows :

Catalyse the rural population towards development approach;

Build models, experiment with new programmes and act as
innovators; and
Represent the people of the area by identifying themselves
with the local needs and aspiration
Advocacy

- Critic

Peoples participation in development steps.

a.
b.

Concentisation critical awareness building

Organisation people come together with common objective

c.

Action a. effective utilization of available resource. b.

demanding for the provision of more and better service; c.
Creating better social structure. Area Identified (as per
Planning Commission of India ) for involvement of NGOs are
as follows :

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Formulation of development plans & implementation of some

development programmes.
Providing administrative support & encouragement of VOs in

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the implementation of their programme.

Regulation of flow of funds from national and international
agencies;
Accountability;

Specific role of NGOs in rural development could be as follows:

To supplement government effort

To be eye and ears of the people at the village level.
To set an example. to activate the delivery system.
To disseminate information to make communities as selfreliant as possible
To show how village and indigenous resources could be used.
To train cadre of grass-roots workers.
To mobilise local financial resources, and
To mobilise and organise the poor.

Area suitable for NGO in Rural Development are as follows :

Anti poverty programme Land reforms;

Bonded labour identification & rehabilitation; Drinking water;
Social Forestry; Non - conventional energy;
Health care; Adult education;
Family welfare; Consumer movement;
Legal aid; and Environmental protection.

The further details about role of NOG in rural development could be

seen in item 3.8 of this Unit.
2.

There is no acceptable definition of NGO different experts has

given different definitions. The term NGO and Voluntary organization are
often used interchangeably in literature.
Non governmental organization (NGOs) is a term that has become
widely accepted as referring to a legally constituted, non-governmental
organisation created by the natural or legal persons with no participation or
representation of any government. In the case in which NGOs are funded
totally or partially by governments, the NGO maintains its non-governmental
status and excludes government representatives from membership in the
organisation. (Wikipedia Encyclopaedia, 2009).
A voluntary organisation, properly speaking, is an organization
which, whether its workers are paid or unpaid, is initiated and governed by its
own members without external control (Lord Beveridge).

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A group of persons organized on the basis of voluntary membership

without state control, for the furtherance of some common interests of its
members (David-skill).
David Korten (1990) has classified the pattern of evaluation of NGOs
under four generations viz.,
(i)
(ii)
(iii)
(iv)

Relief and welfare;

Community development;
Sustainable development
Peoples movements
In one of the study (Bowden, Peter, 1990) in seven Asian

countries following categories of NGOs are found as follows:1. Consulting NGOs

2. Welfare NGOs 3.Development NGOs

4. Advocacy NGOs.
The details of each of these categories could be seen at item 3.5 in
this Unit.
3. The detailed account of historical background of NGOs/VOs could
be seen in item 3.6 of this unit .
4. The NGOs/VOs has certain advantage over the government bureaucratic
institutions as follows:

Small & independent of hierarchical constraints, procedure.

Flexible to great degree
Aware of local environment and are responsive to it
Can mobilise public opinion
Can have better rapport with rural people

Further details about advantage could be seen at item 3.3 in this Unit .
The main limitation of NGOs/VOs are as follows :

Inadequacy and lack of certainty of the inflow of funds;

Lack of second line leadership
Lack of professionalism trained workers.
Local VOs lack national awareness & influence Govt. circles
is insignificant.
Misuse of funds & not keeping proper accounts.
Limited success.

The further details about limitation of NGOs/VOs could be seen

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at item 3.4 in this Unit .

5. VOs are non-profit organizations, small in size and run outside the
domain of the state control but NGOs are a later phenomenon. There is a
relationship between the state and welfare NGOs. It is a fact that NGOs are
non-profit organization but provide welfare services sometime as a part of or
on the behest of government and sometimes outside it.
Voluntary organizations initiate activities without selfless motive
and many times it is done without or with little remuneration. But NGOs
emphasizes on professionalism for rapid social development. NGOs may or
may not provide free services as in case of voluntary organizations.
NGO /VO can be understood more clearly by understanding their
characteristics, types

and functions.

The details about characteristics of NGOs could be seen at item 3.2 in

this Unit.

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Annexure-I

Table-1: Strategies of Development-Oriented NGOs: Four Generations

GENERATION
--------------------------------------------------------------------------------------------------------------------FIRST
SECOND
THIRD
FOURTH
Relief
Community
SustainaPeoples
And
Development
ble System
Movement
Welfare
DevelopMent
Problem
Shortage
Local
InstitutiInadequate
Definition
Inertia
onal and
Mobilising
Policy
Vision
Constraints
Time
ImmeProject
Ten to
Indefinite
Frame
diate
Life
Twenty
Future
Years
Scope
IndiviNeighRegion or
National or
dual or
bourhood
Nation
Global Village
Family
Chief
Actors

NGO

NGO
plus
Community

All Relevant
Public and
Private
Institutions

NGO
Role
Management
Orientation

Doer

Mobiliser

Catalyst

Logistics
Management

Project
Management

Strategic
Management

Starving
Children

Community
SelfHelp

Constraining
Policies and
Institution

DeveLopment
Education

Loosely
Defined
Networks of
People &
Organizations
Activist/
Educator
Coalescing
and
Energizing
self-managing
Networks
Spaceship
Earth

st

Source: David C.Korten, Getting to the 21 Century : Voluntary Action and Global Agenda , Kumarian
Press , West Hartford Connecticut, USA, 1990, pp10.

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