Friday, November 29, 2013

Producer Groups - Theoretical Concept

"Where the poor participate as subjects and not as objects of the development process, it is possible to generate growth, human development, and equity, not as mutually exclusive trade-offs but as complementary elements in the same process." --- Meeting the challenge, Report of the Independent South Asian Commission on Poverty Alleviation, 1992.

The problem with the modern outlook of business education is to view rural/urban citizens as target consumers. Instead, if we enable them as producers, that will surely boost the economy and well-being of our producers. Most of the producers are caught in the vicious circle of poverty and even fully dependent on the monsoon for a good harvest. The government has reworked its strategy of helping marginal and small producers in breaking out of the cycle of poverty by organizing them into producer groups. The concept of Producer Group has been lifted from the cooperative societies. This concept is based on voluntary cooperation as the rural ecosystem has limited resources and infrastructure.

Why Producer Group? The main aim of the producer group is to stop the practice of ‘distress selling’. I will give three reasons for pitching Producer Groups. 1) Creditworthiness is directly related to income, farm size, age of farmers, and level of formal education of farmers. Hence, the marginal farmer is always caught with a lack of credit. 2) Marginal farmers as rural producers always suffer from an imbalance of bargaining power in market transactions. 3) Small farmers always dispose their produce at the nearest mandi at a through-away price. The size of the market for agri-related commodities is always good but highly price volatile in India. I have written more on this topic: Market Failure and Primary Producers.

A producer Group generally consists of 30 to 150 producers [depending upon nature of the Livelihood Activity] involved in a common activity. Producers groups should be formed preferably at the village level or at the GP level for tribal areas where the size of the village is very small. Producers Group may be registered under the Self Help Cooperative Act, 2001 of the Government of Odisha (Depending on the state) or The Companies Act of India in the future. As per new NRLM guidelines, a minimum of 50% of the total members should be from the BPL category. That is a good strategy for poor and vulnerable households.


There will be service charges taken from the members for purchase and maintenance of common assets like mattresses, Chairs, Lock, Box and Weighing machines. There will be the engagement of a professional resource person called LSP (Livelihood Support Person). LSP will help them in procurement, processing, value addition, and market linkages. However, the cost of LSP will be borne by the government for initial two years depending on the honorarium decided by the Producer group. There is a provision of financial (Loan for working capital @7 % & Grant for capacity building through training) for producer group.

Generally, Indian farmers have a highly unorganized and individual approach to cultivation. Organizing the unorganized through mobilizing the whole community is the most time taking part of the formation of the Producer Group. The first step within business planning is to identify the business opportunity. This is decided by members Producer group itself only. Ensuring regular meetings and interaction from a government official is a way to sustain the producer group. With enhanced collective bargaining power, Producer groups are obtaining good prices for their produce in the market. Still, there are many practical difficulties in the whole approach. That will be taken later in a new blog post.

Friday, November 22, 2013

Pointers for Rural Managers

There are 6 lakh villages across the country. It is essential to know about government schemes and local culture while working in rural India. They will always come handy in certain situations. Great debate on caste system has not been touched by me where majority of Indians follow an unwritten rule of not mingling through marriage of one religion or caste.

Hindi Calendar Months:

Important Festivals: I am not elaborating on Festivals in India that consumes a major part of government holidays. Just few minor ones, that may be unheard by most of us.

Akshya Tritiya - Day for worshiping traditional seed-before ploughing and sowing of seed.
Makar Sankranti / Onam- It is a harvest festival.
Vasant Panchami - This dayannounces arrival of spring.
Gudi Padwa/ Ugadi/ Bihu/ Vishu - New Year in Hindu Calendar
Navarathri - Celebrated five times a year but primarily once during spring.
Ramadan - A month of fasting for Muslims.

Important Schemes:

1- Poverty Alleviation Schemes : National Rural Employment Guarantee Scheme (NREGA) and National Rural Livelihood Mission (NRLM)
2- Education Schemes : Sarva Shiksha Abhiyan (SSA), Mid Day Meal Scheme (MDA), Adult Literacy.
3- Water and Sanitation : National Rural Drinking Water Programme , Total Sanitation Campaign.
4- Health : National Rural Health Mission (NRHM)
5- Women and Child Development : Integrated Child Development Services (ICDS)
6- Rural Housing : Indira Awas Yojana (IAY)
7- Rural Roads : Pradhan Mantri Gram Sadak Yojana (PMGSY)
8- Rural Electrification: Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), Remote Village Electrification Programme (Non-conventional energy)
9- Hunger Reduction : Public Distribution Scheme (PDS) and Antyodaya Anna Yojana (AAY) . (Upcoming Food Security Bill,)
10- Entitlements : National Old Age Pension Scheme (NOAPS), National Maternity Benefit Scheme (NMBS) and National Family Benefit Scheme (NFBS).
11- Rural Infrastructure : Bharat Nirman Seva Kendras and Telecommunication Connectivity.

Quote of the Day: “My mother said I must always be intolerant of ignorance but understanding of illiteracy. That some people, unable to go to school, were more educated and more intelligent than college professors.” — Maya Angelou.

Sunday, November 17, 2013

Transfer Order

The official stint at Balangir is over after 175 Days. I have been transferred to Ganjam district that will be effective from 18th November 2013. Life will be turbulent, may be good in coming weeks.

Since, Ganjam district has been badly affected by the PHAILIN and followed by flood due to incessant rain, it was decided to relocate eleven Young Professionals for the rehabilitation and restoration work. Transfer Order is little puzzlinh while looking at overall context of the decision. Currently, there are 36 Young Professionals employed at Odisha Livelihood Mission. There will be thirteen Young Professionals working at Ganjam district now with this official order. There are districts like Mayurbhanj, Kendrapada, Balasore and Bhadrak affected by cyclone and flash floods. No Young Professional is placed there for rehabilitation work. Hence, this skewed decision appears bias to me.

Change is constant but its hard to guess pace of the change. There is an expression that “failing to plan is planning to fail.” While it is partially true that those who fail to plan will eventually fail in achieving their goals, there is strong evidence to suggest that having a plan leads to greater effectiveness and efficiency. I am hoping for better and optimum utilization of time at new place. Dreaming to come up with self-correcting mechanisms against habit of procrastination. Self-image, hopes and dreams matter, not as part of vanity, but for the choices that I will make.

Thought of the Day: The plain fact is that the planet does not need more successful people. But it does desperately need more peacemakers, healers, restorers, storytellers, and lovers of every kind. It needs people who live well in their places. - David Orr.

Thursday, October 31, 2013

Look Beyond GDP !

It is a popular quote by Friedrich Nietzsch : All things are subject to interpretation. Whichever interpretation prevails at a given time is a function of power and not truth. Elite and educated Indians have high obsession with two parameters for judging development in India either GDP growth rate and numbers of stock exchange. I will discuss about GDP and similar indicators. GDP is a good indicator but doesn't show up complete picture. It does not take into account income distribution.

Let us talk about Per Capita Income. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or GNI) and dividing it by the total population. So, its just an average ! Hence, increase in wealth of Tata, Birla and Ambani can show up good figures for India but can't really reflect development of a common citizen. Let us use three global indices of development for comparison:

1. GCI (Global Competitiveness Index): issued by World Economic Forum, and is based on a composite ranking of growth potential, business competitiveness, etc. India ranks 64 among 152 nations in 2013-2014 report.

2. HDI (Human Development Index) : issued by UN which is a composite of education, per capita GDP, longivity, etc. India ranks 136 among 186 nations in 2012.

3. Gini Index: this a part of HDI, which ranks countries according income disparities in the society. A Gini index of 0 represents perfect equality, while an index of 1 implies perfect inequality. Although income inequality in India is relatively small (Gini coefficient:0. 325 in year 1999- 2000), India's nominal Gini index rose to 0.368 in 2005. [Source]

Hence, we are a country with high growth rate and still lacking in basic facilities like health and education. Only figures does not explain this position. I will give data for the reasoning. Let us ask a basic question : Can bad policy decisions block development in a country like India that has many aspects of inclusive institutions ? Yes, that is cent percent true for India. Kothari Commission (1964-66) suggested to allocate 6% of GDP for public expenditure on education. Leave the past, even in the last decade, we haven’t spent more than 4 % of GDP. (Source). Our expenditure on public health hasn't gone up more than 4 % of GDP from may years. Figures of any developing or developed country (Turkey, USA, UK, Brazil and SA) is always more than 6.5% from last 20 years. (Source)

As an approach to development, Ferro et al. (2002) were of the view that pro-poor growth in India can rest on two pillars—by grouping policies for improving the investment climate to accelerate growth and for empowering its poor to contribute and benefit from this growth. Robustness of the economy is a must thing but a significant investment must be made in people's lives. We have today thriving yet highly privatized health and education systems (with very different opportunities for different class). With the exit of middle class using public facilities, the bargaining power of remaining users has declined. Due to less investment by state in increasing its capacity, health and education have became costly affairs in private hands. We must think of households who have to spend a good part of their income to buy good health and primary education facilities in private sector – leaving a much bigger gap in the pocket that can be invested in their own or children’s future.

There are always enough reasons to despair and hope in India. Recently, Raghuram Rajan Committee Report has recommended for evolving a Composite Development Index for States. Kudos for new way of thinking ! Development is about a healthy community of economically active people. Hence, we need to see more than one indicators in popular media as well to get the complete picture. If someone is still not convinced , please march ahead and read : It’s Not The GDP, Stupid!

Thursday, October 24, 2013

Visit for Social Audit of NREGS

NREGA funds are used for natural resource management activities by generating wage employment for the poor as well as strengthening their livelihood resource base. I will ask readers to go through these two articles :[ Rural job scheme: Can we get it right? and NREGA social Audit: Myths and Reality ] on Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) before going forward.

There is social audit of MNREGS going on in Balangir district from 22-10-2013 to 26-10-2013. I attended three such meetings as an observer only. I attended social audit at Kutenpali, Jharmunda and Kandajuri Gram Panchayat of Loisingha Block. Loisingha Block consist of 18 G.Ps with 108 Villages and is 22 km away from district headquarter. The officers, Sarpanch and GRS were present for the meeting on time. Yet, there was lack of people attending the meeting held at Panchayat Bhavan. The registered person data is taken from NREGA website for the financial year 2013-2014. I have given distance from Block Office to show their remote locality.

G.P.Distance from Block OfficeRegistered   In Meeting  
  HouseholdPersonsMaleFemaleTotalMaleFemale
Kutenpali7 Km6741899107682340400
Jharmunda12 Km6611686983703000
Kandajuri15 Km4571075596479770

Key Findings -

1. There were people keeping themselves busy in a game of cards but were unaffected by any meeting. This attitude of local people was fatal to their own development. Hence, all the blame of failure of government scheme can't be solely put on the state. The lack of participation of the local population was making the whole event into a flop show.

2. GP with 40 people was considered as success by block office. It was later told that such low attendance of 5-10 people without any local NGO participation is prevalent in another block of Balangir district. With the support of community based organization, the number of participants can rise upto 80-100 maximum.

3. There was notice attached to the Panchayat office but no meetings were held on the importance of social audit. Adding to this limited communication, effective strategy of rural communication through vocal was also utterly discarded by the government. Neither NGO nor any community organization was used for mobilizing the public.

4. Land development through individual project is equally good option with community project in the remote location. Due to hilly terrain and poor connectivity, there is greater participation in NREGS in backward GPs. Most of the people working as labour in NREGS are tribal and BPL card holders.

5. The Gram Panchayat must own the data it collects; Information is a basic tool for planning. Information relevant to each area like population, Infrastructure and natural resources database is rarely available for use. Even NREGA data is available on the internet yet not available to common man in the village. Virtual transparency may give temporary relief to the government officials, whereas the reality is that villagers have to meander through a cobweb of data to search and find what they are looking for.

6. Surplus labor used in NREGS can generate productive assets that can be eco-friendly in nature. The asset base of the poor both individual (for example, Land leveling, reclamation of soil, bunding, constructing small ponds) as well as collective assets (for example, regeneration of common lands, water harvesting structures, group irrigation facilities etc) can be strengthen through this scheme. Migration of unskilled labors can't be stopped with virtually 30-40 days of the work.


In NREGA, government officials and PRI members had used fraud measures like “creating fake muster rolls, inflated bills, exaggerated measurements, and non-existent works, all through bribes and cuts from wage seekers" to make money. What need of hour is social audit, best tool we have for monitoring using community participation to curb such fraud activities. Development from design is not primarily about selecting right people for the job. It is about setting of right processes, standards and procedures followed with continuous adherence to it. I will end with the words of Omnia Marzouk, President, IofC International - : 'Nothing lasting can be built without a desire by people to live differently and exemplify the changes they want to see in society.'