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Chapter
9: Cooperation The volume of cooperative credit (short and medium-term) for agricultural purposes increased from Rs. 203 crores in 1960-61 to Rs. 429 crores in 1967-68 and an estimated Rs. 490 crores in 1968-69. Long-term credit increased from Rs. 12 crores in 1960-61 to about Rs. 120 crores in 1968-69. Appreciable progress took place in the cooperatively organised processing of agricultural produce mainly in the sector of sugar factories, which now account for about a third of the total sugar production. The value of agricultural inputs distributed by cooperatives rose from about Rs. 36 crores in 1960-61 to rbout Rs. 250 crores in 1968-69. Of the inputs, the largest item consists of fertilisers and the value of these distributed by the cooperatives increased from about Rs. 28 crores in 1960-61 to needy Rs. 200 crores in 1968-69, representing about 60 per cent of the total consumption of fertilisers in the country. The total value of agricultural prod 'ce handled by cooperative marketing and processing societies rose from Rs. 174 crores in 1960-61 to an estimated Rs. 583 crores in 1968-69. The value of retail consumer trade undertaken by cooperatives in rural areas recorded an increase from Rs. 17 crores in 1960-61 to Rs. 275 crores in 1968-69. The corresponding figures for turn-over in urban areas were Rs. 40'crores in 1960-61 and Rs. 270 crores in 1968-69. 9.2.
Apart from quantitative progress, there were several organisational developments
of significance during this period. One of them was the emergence of national
cooperative federations. The formation of the national federations and
the reorganisation of the National Cooperative Union of India at the apex,
added a new dimension to the cooperative structure. Another important
development was the reorganisation of the cooperative training programme.
This had two main aspects. A new stress was laid on instruction in business
management. In pursuance of this objective, a Central Institute was started
at Bombay in 1964 to impart training in business management to key personnel
engaged in consumer cooperation. This was merged in 1967 with 9.3. The cooperative movement has been uneven in i's development in different regions as well as in c'ifferent sectors of cooperative activity. So far as cooperative credit is concerned, inadequacy of development is particularly marked, though in different degrees, in the eastern States of Assam, West ficis'r-i], Bihar and Orissa, and in Rajasthan. The eastern region, with about 27 per cent of the rural popu'ation, accounted for only about 9 per cent of cooperative credit. An informal group, constituted by the Reserve Bank of India, examined the institutional arrangements for agricultural credit in 1964, and in view of the serious gaps which existed pan'cularly in the States mentioned, recommended the establishment of agricultural credit corporations as a transitional arrangement. In pursuance of this recommendation, necessary legislation has recently been enacted by Parliament. 9.4. While, for the country as a whole, cooperative short and medium term agricultural credit nearly doubled during 1960—68, the progress towards development of a viable structure at the level of the primary credit societies and central cooperative banks has been much below expectations. Two factors have contributed to this situation. The firsf has been the slow progress in the programme of organising viable primary credit societies by amalgamation of the non-viable societies. The second has been the increase in overdues. At the level of (he primary credit societies, the proportion of over-dues to outstandjngs increased from 20 per cent in 1960-61 to 32 percent in 1967-68. For central co-operative hanks, the increase was from 12.4 per cent to 25 per cent. Of 344 central cooperative banl:s, as many as 67 accumulated overdues exceeding 50 per cent of the outstandicgs. This has brought in its wake a new problem of rehabilitation and reorganisation of weak central cooperative banks. 9.5. One of the notable developments of the period has been the organisation of a network of consumer cooperatives in urban areas. The impetus for this development came from the national emergency in 1962. The programme was accelerated during the period following devaluation. Alongside the organisation of consumer cooperatives, arrangements were also made to facilitate flow of supplies directly from the manufacturers. In order to secure working capital accommodation, the Central Government introduced a guarantee scheme under which central or wholesale consumer cooperatives and. consumer federations are eligible for financial accommodation against a margin not exceeding 10 per cent. As a result of these measures, the volume of retail trade handled by consumer cooperatives in the urban areas has vastly increased. The expansion has not been free from adverse features. Many consumer stores are heavily dependent for their business on distribution of controlled items. Approach to Cooperative Development 9.6. Growth with stability being the key-note of the Fourth Plan, agricultural cooperatives on the one hand and consumer cooperatives on the other will occupy a central position in the strategy of co-operative development. Growth of agriculture is largely dependent-on intensive agriculture and this involves a substantial increase in credit, inputs and services. The aim will be to ensure that the services which the farmer requires are institutionalised to the greatest extent possible. In the process of such instilutionalisation, which will not be to a set pattern, the cooperative form of organisation will have ample opportunities not only to expand but also to establish itself as viable and efficient. It will be part of policy during the Fourth Plan to ensure that the opportunities before cooperatives are as large and varied as they can utilise effectively. While it will be for the cooperatives themselves to make the effort involved and reach those standards of efficiency which will enable them to compete with other forms of organisation serving similar purposes, Government for its part will endeavour to assist the cooperatives +o eouio themselves for the f'-k in important aspects such as finance, organisation and trained personnel. In regard to agro-industries, preference will continue to be given to cooperatives in the matter of licensing and institutional finance. 9.7. The outlays on cooperative development programmes are : Table 1 : Outlay on Cooperative Development Programmes
In addition a provision of Rs. 90 crores Ins been separately made in the Central sector plan for support to the ordinary debentures of lar.d development banks. Furthermore, provisions have been made in the animal husbandry and dairy plan for development of livestock and dairy cooperatives. Cooperative Credit 9.8. One of the basic weaknesses of the cooperative credit system is the non-viability of a large number of primary agricultural credit societies, During recent, years, programmes of rationalisation of the cooperative credit structure, at the primary level, have been under way. As a result, the number of primary agricultural credit societies has gone from 212,000 at the end of 1960-61 to 171,800 at the end of 1967-68. However,, a number of non-viable credit cooperatives still continue to clutter up the credit system. It is estimated that as a result of reorganisation, about 120,000 potentially viable societies are likely to emerge and that th; rest of the societies would have to be absorbed in the process of amalgamation. One of the most important tasks before the cooperative credit movement is to accelerate the pace of such reorganisation, so that the ccoperattive short and medium-term credit structure is placed on a viable footing. It is proposed tu accord high priority in the Plan to this reorganisation. Necessary provision has been included in the State Plans for this programme for grant of management subsidy to and share capital contribution in the reorganised society. 9.9. Among the bottlenecks in the flow of adequate cooperative credit is the existence of weak district central cooperative barks in several areas. It is estimated that over one-third of the cooperative banks fall in this category. It is proposed to undertake suitable programmes directed towards rehabilitation and reorganisation of such banks. In the interim period it is proposed to devise measures whereby the primary credit societies within the jurisdiction of such banks may be financed directly by the concerned apex banks. 9.10. Slackness in recovery of loans, resulting in mounting overdues in cooperative credit institutions is undermining the soundness of cooperative credit structure in many areas and has led to stagnation, if not recession, of cooperative credit. The feature of heavy overdues is prevalent not only in comparatively less developed States but also in relatively advanced States. This points to the deficiencies in loaning policies of cooperatives, inadequate arrangements for supervision and weaknesses of internal management of cooperatives. Recurrence of natural calamities in sucessive years has also accentuated the problem of overdues in many areas. Systematic efforts need to be made both by the State Governments and by the cooperative banks towards substantial reduction of overdues. The responsibility for initiating legal action against wilful defaulters rests with the primary credit societies. To meet situations where the managements of primary Credit Societies do not take prompt action, there is provision in the cooperative societies Acts of some Staies enabling the central cooperative bank concerned to initiate action on its own against the defaulting. members of primary credit societies. Incorporation of similar provisions in other Cooperative Societies Acts as recommended by the All India Rural Credit Review Committee will be helpful in dealing with the problem of overdues. Att.n-tion will also be paid to strengthening the recovery stciff in the Department and the Central Cooperative Banks. The State Plans include the necessary provision. Wher and failure to repay the overdues is not wilful but due to natural calamities, conversion of short-term loans into medium-term loans should be taken rp expeditiously by having recourse to agricultural credit stabilisation funds maintained by cooperative banks which have been augmented by Governmer:; as instance through a Centrally sponsored scheme and to the National Agricultural Credit stabilisation Fund maintained by the Reserve Bank. Along with the collection of past overdues, action should be taken to prevent their recurrerce in future through adoption of more rational loaning policies relating to size of credit to production outlay, effective linking of credit with marketing, strict supervision over utilisation of loans and above '^ll the education of members of cooperatives in the rights and obligations connected with their membership. 9.11 Tt is needless to stress the importance of bringing about a substantial increase in deposits at various levels. The urgency of this task arises from a number of considerations. Increasing the deposit resource would help to absorb overdues and keep up the Hew of credit in an uninterrupted manner. Tt will also facilitate increase in loanable resources for meeting the growing demand for credit in areas of intensive agriculture. Deposit mobilisation is reces-sary to mop up a part of the increased income in. the rural areas for productive investment. The cooperative credit structure, therefore, has to make effective measures to increase its deposits. There would also be need for State Governments to undertake necessary enabling legislation to amend the Cooperative Societies Act, so that the Deposit Insurance Scheme could be extended to the deposits of cooperative banks. Cooperative banks will be encouraged and assisted to open more branches in rural areas for facilitating the flow of credit, for rendering services more efficiently and for tapping larger resources. 9.12. The ability of the cooperative short and medium-term credit structure to expand loan operations is dependent on the viability of the structure, the progress in the rationalisation of primary credit societies, reduction in overdues, mobilisation of deno'ils and liberalisation of loan policies. If the programmes mentioned are effectively implemented, it should be possible for the cooperatives to aim ar drbursing short and medium-term credit of the order of Rs. 750 crores in 1973-74. 9.13. One of the striking developments has been the progress of land development banks which handle long-term credit. These banks new function in all the Slates through, a network of 1250 primary banks and branches. It is proposed to accelerate the pace of expansion of land development banking so that adequate support may be forthcoming for schemes of basic importance to agriculture throughout the country such as land reclamation, soil conservation, land shaping, and construction of surface works, lubewells and other works of minor irrigation. Organisationally and administratively land development banks are equipped to handle loan operations of over Rs. 1000 crores. However, in the light of availabie resources, a loaning target of Rs. 700 crores has been fixed for the Plan. This may subsequently be reviewed in case increased resources become available. For a large number of schemes distributed in different States, constituting in each case a sizeable and integrated project and satisfying the criterion of economic viability, the Agricultural Refinance Corporation will be able to provide refinance of ths order of Rs. 200 crores during the Plan period. Provision has been made for lending support to the ordinary debentures and the special debentures of land development banks. 9.14.
As recommended by ihe Ail India Rural Credit Review Committee, the present
lending policies and procedures of the Land Development Banks have to
be reviewed in a comprehensive manner so a? to bring them in line with
the requirement of so'-ind investment credit and to ensure the optimum
use of scares long-term resources. In the for-mula 9.15. There is need for increasing coordination between the normal lending operations of the Land Development Banks with those pertaining to the Agricultural Refinance Corporation on the one hand and with the operations of the cooperative banks on ihe other. There should be close collaboration between the Land Development Banks and the Cemral Cooperative Banks. Together they should ensure that inputs for production are accessible to the long-term borrower adequately and in time. Coordination should also be ensured in regard to credit for purposes such as the sinking of wells which, depending on the repaying capacity of the borrower, may quality either for a medium-term loan or a long-term one. 9.16. Long-term cooperative credit has hitherto been disbursed to the individual borrowers either by primary land development banks or by branches of central land development banks. In the Fourth Plan, it is proposed to try out on a pilot basis, how far primary credit societies could act as agents of the central land development bank for scrutiny of applications, disbursement of credit, supervision and recovery of instalments. In each State, a limited number of societies satisfying appropriate criteria pertaining to financial strength and operational efficiency wi51 be selected for functioning as agencies of the land development banks in their respective areas. This type of arrangement may be gradually expanded to an increasing number of societies after experience has been gained as a result of this experiment. The bulk of the loans issued by cooperatives is in small amounts of less than Rs. 500 each Even so, farmers with relatively larger holdings are the main beneficiaries of cooperative credit. The traditional emphasis on linking of credit to security offered by a borrower in the form of land and other tangible assets, exclusion of small farmers from the membership of cooperatives, domination of cooperatives by the more affluent and powerful section of the rura! community, absence of tenancy records and prevalence of the system of oral tenancies are among the major factors that have led to denial of adequate credit to small farmers. The crop loan system, recommended for adoption, aims at shifting the emphasis in loaning operations from assets nexus to production potential. The system needs to be implemented in full in all the areas. 9.17. Since 1961, Government has been giving grants to cooperative banks and societies as an inducement to them to give larger loans to small cultivators for production purposes. These amounts are credited to special bad debt reserves of cooperatives. Following a review in 1964, the basis for Government contribution to the bad debt reserve fund has been changed and is now related to additional loans given from year to year to small cultivators. So far, a sum of about Rs. 7 crores has been granted by Government for this purpose and a further sum of Rs. 5 crores is expected to be given in the Fourth Plan. 9.18. Jn the Fourth Plan. one of ihe main endeavours will be to orient the policies and procedures of credit cooperatives and land development barks in favour of small cultivators. The All India Rural Credit Review Committee has made a numb?r of recommendations in this direction. These will be sought fu be implemented, the more important changes being in the following directions :
Cooperative Marketing 19.19 Compared to cooperative credit, 'the development of cooperative marketing of agricultural produce is of recent origin. Following the recommendations of All India Rural Credit Survey Report, an integrated programme of cooperative marketing was taken up in the Second Plan and followed up in the Third. As a result, cooperative marketing structure has been built up at various levels. On the eve of the Fourth Plan, there were nearly 3300 primary marketing societies, of which 500 were special commodity marketing societies. The higher level of cooperative marketing structure consists of 20 apex marketing societies and three commodity marketing federations at the State level and one National "Agricultural Cooperative Marketing Federation at the all India level. There are also 173 central marketing societies including 15 special commodity societies, mainly at the district level. 9.20. Consistently with the programme for increasing agricultural production, steps will be taken to strengthen the existing cooperative marketing structure, "especially at the primary level. Necessary provision for this purpose has been mads in the State Plans. The marketing federations at the State and national level will be strengthened to enable them to reach optimum efficiency and to provide the requisite leadership, financial support aod guidance to their affiliated institutions. 9.21. At present, only marketing cooperatives in Gujarat and a few processing cooperatives in other areas have adopted the system of grading and pooling. Efforts will be made to introduce this and other improved marketing techniques in as many cooperatives as possible. As further measures to improve marketing practices of the cooperatives, the schemes initiated in the previous years for estabiisning grading unics with equipment and suitable trained personnel and for maintenance of price fluctuation funds which enable the societies to make outright purchases of agricultural produce from small growers, will be continued. 9.22. Cooperatives will aim at handling in the last year of the Fourth Plan, 8 million tonnes of foodgrains, 36 million tonnes of sugarcane, 0.6 million tonne of groundnut, 10,000 tonnes of fruit and vegetable and 1.8 million bales of cotton. At current prices, the value of agricultural produce likely to be handled by marketing and processing cooperatives is expected to be of the order of Rs. 900 crores in 1973-74. Cooperatives are also expected to handle agricultural commodities worth Rs. 25 crores in inter-State tsade and Rs. 10 crores in the export trade. Cooperative Processing 9.23. Considerable success has been achieved in the establishment of sugar factories in the cooperative sector. This was facilitated by the licensing policy of Government and the assistance provided by the Industrial Finance Corporation. A concerted programme to develop cooperative processing of other agricultural produce was taken in hand from Second Plan onwards. It has been accelerated in recent years. By the end of 1968-69, 1596 cooperative processing units had been organised. These included 79 cooperative sugar factories, 237 cotton ginning and pressing units, 26 cotton spinning mills, 784 paddy pressing units, 188 oil mills, and 38 fruit and vegetable units. Recently the need and scope for further developing of cooperative processing in the context of increased agricultural production was examined by an expert committee. Keeping in view its recommendations and the available resources, the Fourth Plan envisages the organisation of additional 550 units. A commodity-wise breakup of these units is given in the Annexure II. 9.24. A review made by an expert committee on planning of cooperative agricultural processing units has indicated that the tendency has been to set up processing units on the basis of stereo-typed schemes. In the Fourth Plan, it is proposed that organisation of new processing units should be preceded by proper feasibility studies, advance locational planning with reference to supply of raw material, storage and marketing of finished products and overall economics of each "projects. Facilities to provide technical advice are already being developed in various apex marketing societies. Efforts will be made to strengthen this technical machinery. Attention will also be paid to the need to consolidate and maximise the operational efficiency of existing units and ensure the fuller utilisation of their installed capacity. Cooperative Handling of Agricultural Inputs 9.25. With the development of intensive agriculture, there will be a substantial step-up in the demand for inputs such as chemical fertilisers, seeds, agricultural implements and plant protection material. It is proposed lhai cooperatives intensify their activities and enlarge their distribution system. The expectation is that, by 1973-74, cooperatives will be handling fertilisers worth about Rs. 650 crores, improved seeds Rs. 50 crores, pesticides Rs. 50 crores and implements Rs. 15 crores. To enable the cooperatives 10 handle the distribution of inputs of this order, it v/ill be necessary for them to have access to adequate bank finance. For this purpose, a provision has been made to cover a part of the requisite margin money to be provided by the cooperatives. 9.26. Cooperatives have recently made a beginning in ths production or agricultural inputs. Some marketing cooperatives in the States have organised granular fertiliser mixing units. Production and processing of improved seeds, formulations of pesticides, manufacture of small agricultural implements have also been taken up in the cooperative sphere in increasing measure. A major venture is the establishment of the fertiliser project of the Indian Farmers Fertiliser Cooperative Ltd. with an investment ol about Rs. 85 crores. This project is proposed as a complex of gas-based ammonia and urea plants at Kalol and phosphate plant at Kandia in Gujarat State. This fertiliser factory is expected to produce 318,500 tonnes of ammonia, 382,000 tonnes of urea and 637,000 tonnes of complex fertilisers per annum. Another factory in the cooperative sector in Maha-rashtra State is also proposed to be set up. Storage 9.27. A network of cooperative godowns has been established during recent years. On the eve of the Fourth Plan, there are 15,000 rural godowns and about 4000 mandi level or rail-head godowns. The total capacity is estimated to be of the order of 2.6 million tonnes. So far, the programme of storage has been financed entirely by Plan funds. In the Fourth Plan. it is expected that cooperatives will, for this purpose, have increasing recourse to bank finance and that the provision made in the Plan will be used essentially as margin money.. On this basis, it is visualised that cooperatives will establish in the Fourth Plan an additional storage of about 2.0 million tonnes. Consumer Cooperation 9.28. The broad institutional framework of consumer cooperatives comprises a National Federation to which 14 State federations are affiliated. The State federations, in turn, comprise 371 central or wholesale consumer cooperative societies. Linked to the central cooperatives are about 2800 branch stores (including department stores). There are also about 14,000 primary consumer cooperatives. Apart fiom the consumer cooperatives organised for the general urban population, cooperatives have also been sat up for specific consumer groups such as employees in industrial undertakings and university students. 9.29. With the organisation of various central and wholesale stores, practically all districts with an urban population of 50,000 or above have been brought wi chin the area of operation of such stores. In the Fourth Plan, therefore, stress will'be laid on consolidation and strengthening of existing consumer cooperatives at difi'erent levels rather than the organisation of new institutions. On the institutional side, the weakest link in the consumer cooperative movement lies at the level of primary consumer cooperatives. While over 14,000 primary consumer cooperatives have been registered, about 3.500 cf them are dormant. The rest are mostly engagsd in distributing rationed and controlled foodgrains and ether commodities. One of the major tasks hereafter to ba undertaken is a survey of the existing primary consumer cooperatives with a view to identifying the institutions that are viable or are potentially viable so that, on a selective basis, such primary consumer cooperatives could be further strengthened and developed. 9.30. Attention will also be paid to the reorganisation and strengthening of central wholesale consumer cooperatives with a view to building them up as large-sized multi-retail unit cooperative societies. The superstructure of the consumer cooperative movement comprising the State federations and the National Federation will have to be strengthened with a view to enabling these institu-tions'to play an effective role in procurement of supplies, besides promotional and service functions. At the retail stage, the structure is lopsidcd. It comprises, on the one hand, big retail outlets in the form of department stores with a large assortment of goods and, on the other, very small retail cutlets in the form of single-roomed shops primarily dealing in rationed and controlled items. The latter category accounts for over 96 per cent of the total outlets tluough which the consumer movement is currently operating. These stores have practically no impact on normal consumer trade. To correct this imbalance, efforts will be made to develop retail outlets of the intermediate size, diversify the range of business of consumer cooperatives and improve their operational efficiency and economic viability. 9.31. In the rural areas, retailing of consumer articles is conceived essentially as the responsibility of primary agricultural credit societies supparted by marketing cooperatives. In this fierd, the expansion in business has been significant. The progress, however, has been largely accounted for by distribution of foodgrains and other controlled articles. Moreover the progress has been extremely uneven an .1 has been confined to a few States. In the Fourth PI in, efforts will be made to spread and diversify this activity with a view to enlarging the number of village and marketing cooperative involved in it. The effort will be develop an effective consumer service so that cooperatives become part of a per-niLnent distributive set up for making available a wide range of essential consumer goods in the rural areas. With the expansion and greater diversity of operations of consumer cooperatives and marketing cooperatives there is need for evolving appropriate working relationships between them. Steps will be taken to this end. Rural Electric Cooperatives 9.32. One of the significant developments contemplated in the Fourth Plan relates to the involve-in, nt of the cooperative form of organisation in thg programme of rural electrification. Pilot rural electric cooperatives are in the process of being set up in five States. The licencing of these cooperatives is among the functions allotted to the Rural Electrification Corporation. The objectives of the cooperatives include the supply of electricity for agricultural and agro-industrial purposes and the encouragement of active participation of the people by giving them some degree of control on electricity supply. Urban Cooperative Banks 9.33. In urban areas, the salary earners' societies and the primary urban cooperative banks can make an important contribution to future development. The salary earners' societies have proved highly successful in a large number of governmental departments and organisations and non-official corporations all over the country. They have proved valuable for providing consumption finance and m .ibiiising savings. The primary cooperative banks, in the .selected urban areas in which they have come up, have been financing activities of small producers and traders and are perhaps the most suitable types of organisation for this purpose. It is necessary for cooperative departments and the State Cooperative Banks to take active interest .in ths wider establishment and sound working of these cooperative organisations. It is envisaged that the operations of the urban cooperative banks will be considerably expanded especially in regard to th-. financing of small scale industries and small industrialists. In order to enable urban banks to discharge this responsibility, it will be necessary to strengthen their share capital base. The Reserve Ba.^k has recently approved a scheme for giving loans to the Slate Governments for share capital participation, on a selective basis, in such of these urban banks as are engaged or interested in productive activities related to the financing of small scale industries. It is expected that the State Governments will take advantage, of this scheme. Other Types of Cooperatives 9.34. While the focus of development will be on the cooperatives concer.sed with agricultural credit, marketing, processing and consumer needs, other types of cooperatives will also continue to receive attention. The programme relating to dairy, poultry and fisheries cooperatives and forest labour cooperatives and industrial cooperatives has been dealt with elsewhere. In cooperative farming, priority will be given to the revkalisation of the existing weak rnd dormant societies. New societies will be organised only in compact areas and if they have a potential for growth. Attention will be given to the strengthening of the labour contract societies and o;her types of non-agricultural cooperatives. Management, Training and Education 9.35. Placing of adequate, competent and trained staff in key positions in cooperative institutions— banking, marketing, processing, consumer stores— is crucial for their successful functioning. At present, a majority of these institutions are managed by personnel on deputation from Government, who have no continuing stake in the growth of the institutions and often lack aptitude for business. It is essential for the instiutions to reduce this dependence on borrowed personnel. For attracting the right type of persons, it is necessary to have mangcment pools in different sectors in each State to be operated by the federal organisations like the apex banks, land development bank, apex marketing federation and State federation of consumer cooperatives. In due course, such pools could become the nucleus for establishment of cadres of key management personnel in different sectors. A beginning has been made in recent years in some States. It is proposed to pursue this programme vigorously. 9.36. The programme of cooperative training and education will be increasingly linked with the cooperative activities envisaged. The Vaikunth Mehta National Institute of Cooperative Manage-roens: will be further developed as an apex institute of study and research in cooperation. The cooperative training colleges for intermediate personnel and cooperative training centres for junior personnel will be adequately equipped for training the requisite personnel. 9.37. In a strategy of cooperative development, there is need for continuing to stress the role of a well-informed and enlightened membership in the promotion and working of cooperative societies. A programme essentially directed towards the education of office-bearers and members of primary agricultural credit societies through peripatetic instructors has been in operation for some lime. Of late, there has been a perceptible indication of dissatisfaction with the content and effectiveness of this programme. In some areas and even states, the programme has been curtailed or drastically modified. The programme is proposed to be revised in the light of an evaluation study recenily brought out by the Programme Evaluation Organisation of the Planning Commission. It is necessary to ensure that the peripatetic instructors are liked with the cooperative training centres. Efforts will also' be made to ensure that the member education programme for village cooperatives is supported and supervised by central cooperative banks, marketing societies and other functional federations. II. COMMUNITY DEVELOPMENT AND PANCHAYATI RAJ 9.38. The Community Development programme was started in 1952. It now covers the whole country. Its unit remains the block and its aim that of chieving rural development through people's paricipation and initiative. The assistance from Government, so far as resources would allow, took the shape of a budget grant for the block and a team of extension workers under a Block Development Officer. The latter was to coordinate all schemes of a developmental character within the block. In the integrated programme, divided into stages of five years each, agricultural development occupied the foremost position. 9.39. The next step was that of attempting to weld together Panchayati Raj and Community Development. This objective followed from the acceptance of the recommendations of the Study Team of the Committee on Plan Projects (Balwan-trai Mehta Committee). The three-tier Panchayati Raj system, together with its modifications in different States, thus set the pattern of local development administration. At each level—village or group of villages, block or group of blocks, and district—there was to be a link between the administrative apparatus and elected representatives. 9.40. All villages are now covered by blocks. There are some 5265 blocks, including 4S9 tribal development blocks. Of these 999 are in Stage I and 2585 in Stage II. The rest have completed ten years and passed both the stages. Village Pancha-yats exists in all States and most Union Territories. The other tier—Samitis at the Block level and Zila Parishads at the district level—has been constituted in all States except Madhya Pradesh, Kerala, Jammu and Kashmir, parts of Bihar and Nagaland. There is not much diversity in the functions and powers of ihe village panchayats and panchayat functions and powers of the Zila Parishads from State to State. 9.41. The working of the programme has thrown up a variety of experiences. The operation of the Blocks in five year-stages, with tapering financial provision from stage to stage, was based on the assumption that, by the end of the initial ten-year period, there would be adequate mobilisation of resources by the local institutions and sufficient channelling of other Plan funds to make any separate provision thereafter for the Blocks unnecessary. Community Development, in other words, would then no longer be assisted and schematic but self-reliant and locally rooted. These assumptions have not proved correct. By and large the programme continues to be dependent on Government initiative and even more so on Government funds. Where funds were lacking, activities languished and the staff remained almost supernumerary. Where, however, administrative and financial support has been forthcoming, che combined contribution of Parcha-yati Raj and Community Development has been significant in the formulation and implementation of local development plans. There has also been a large measure of coordination and integration of the field staff. In certain instances, the Panehayati Raj institutions have, for their part, made attempts to raise increasingly large resources through tax measures. In the majority of cases, however, local finance has continued to play very little part in local Development. New Dimensions 9.42. With all their drawbacks, the Community Development Programme and Panehayati Raj institutions have provided a new dimension to rural development and introduced a structural change of- considerable importance in the district administration. Within the limitations of resources the programme has aitemped to do something which in many cases, had never before been attempted. Improvement of agriculture has remained in the forefront throughout. Investment from the available block funds on agricultural development has over thq years almost equalled the provisions for all other sectors of development taken together. In many States, the block organisation has been virtually the only field agency for carrying out development programmes. There has been sizeable contribution from tlie local communities to the deve-. lopmental effort. 9.43. Some States have recently introduced changes in the pattern of organisation. While there has to be considerable flexibility in regard to the typ^ of. organisation, contents of programme and extent of resources, the need for an integrated approach to rural development, including coordination between otncial and non-official agencies, remains basic. Also important is a continued emphasis on priority programmes such as agriculture and family planning. The State Plans accordingly provide Rs. 84.69 crores for programme of community development. It is necessary to ensure that these funds are supplemented to the largest extent possible by resources mobilised by the Panehayati Raj institutions. Simultaneously, there should be progressively larger devolution of programmes and resources by the States. Pilot Study on Growth Centres 9.44. As a part of studies on area planning, a Centrally sponsored scheme of Pilot Research Project in Growth Centres is being launched. The aim of the pilot project will be to evolve a broad research methodology and pattern for identifying emerging growth centres, and to indicate how the growtli potential cf these centres could be promoted through comprehensive and scientific study of the overall development needs, and how these centres could be meaningfully woven into the frame of the district plan and thus help in the process of planning from below. The scheme will thus bring under close study action strategies relevant to the acceleration of infergrated area development around potential growth centres. A number of projects will be set up in different areas in the States and Union Territories. A few projects would be located in institutions working on planning methodology. To facilitate integration with district planning, the growth centres will. to the extent possible, be located in districts for which detailed plans in terms of guidelines and norms provided by the Planning Commission are already being drawn up. Integration 9.45. Panchaya-i Raj having been accepted as the pattern for local development administration, fuiler and more active involvement of the institution is necessary in the process of economic development and social advance. The viability of these institutions would depend on the extent to which they can undertake obligations for mobilising should likewise be assisted to build up their own revenue-yielding assvts. The administrative apparatus at the district, block and village level has to be jnt3grated and, where necessary, strengthened. The integration has to comprise not only the staff of the Community Development and Panehayati Raj institutions but also normal departmental staff deal in;; with all development schemes of a local character. At the same time, the administrative, financial and other procedures relevant to these inititutfons call fcr a careful periodical review to ensure that they remain attuned to the responsibilities devolving on them. Annexure I Physical Programmes- Base Level and Targets
* For the Fourth Plan period as a whole. It excludes loans of the order of Rs. 200 crores on schemes refinanced by Agricultural Refinance Corporation. Annexure II Type-wise break-up of the New Processing Units proposed for the Fourth Five Year Plan
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