Prime Minister of India - Dr. Manmohan Singh

PM's inaugural address at the Chief Ministers' Conference on Poverty Alleviation and Rural Prosperity through Panchayati Raj

"I welcome you all to this Conference which will take stock of our efforts at rural development and for transforming rural governance through panchayati raj. I would like to use this opportunity to urge you to do an honest appraisal of our efforts in this area. The challenge before all of us is to collectively rise to the task ahead of us in terms of increasing rural incomes, getting rid of chronic mass poverty and giving control to the local levels to plan for themselves thereby strengthening the democratic process that has placed us all here.

I have a few questions and I would greatly appreciate a sincere debate on some of these issues: Do we have a holistic view of rural development in which all the activities currently being undertaken are integrated? Do we share a vision for a prosperous rural India, a vision which sees agriculture and allied activities as the growth engine for rural development complemented by promotion of non-farm activities for value addition and sustainable in a healthy competitive environment? Are our strategies effective in increasing the productive potential of our agriculture, developing viable non-farm occupations and provision of basic human needs in a holistic manner? Do we have in our plans an integrated approach, based on the resource endowment of the area, felt needs of the people and relative absorptive capacity that needs differentiated responses?

It is for us to honestly ask the question of whether we are making the best use of the nearly Rs 17,000 crore that we spend annually on the schemes being currently implemented. Does the compartmentalization of our effort in multiple schemes in a Ministry or ministries - both at the Centre and in the States without a core vision make this investment sub-optimal? Before we set this right at the Centre we cannot be asking the states to do so. Do we have too many schemes, which are fragmented in concept, are rigidly designed and impose national parameters on highly differentiated local realities in terms of resource endowments or felt needs? These schemes in turn fragment plans of state governments, which have to find counterpart funds for these several centrally sponsored programmes. We perhaps need to architect a uniform vision for rural development that can respond differentially and purposefully to development situations in different states and different regions. The situation in Assam is different from Bihar, or that of Kerala from Uttar Pradesh. If one message comes very clearly from a survey of development indicators of Indian States, or from the last round of the Census, it is that many development challenges are not uniform national problems any more, but problems of selected states, in fact in some cases even selected districts in states.

Once we are able to fashion an agreed vision, we will have several opportunities in policy to address many of our pressing challenges. The challenge of rural employment is the most obvious one. We will be able to combine the short-term need of people for employment with a medium term objective of improving their land and water resources to make our agriculture more productive. Targeted employment programmes that address the geography of poverty of environmentally degraded land can quickly restore their productive capacity, even as immediate livelihood security through wage employment happens. They provide food security in the short-term and by improving land, embed that food security in a larger food and environment security. Social safety nets should not be seen as mere transfer payments and instead be seen as productive job creation.

Our strategy for rural development must be fashioned to unleash the productive potential of our agriculture and its allied activities. The experience of the past half a century of development in our own country tells us that a vibrant and productive agrarian economy is the foundation of high and sustained economic growth. Those regions of our country that have experienced an agrarian transformation, economically, socially and politically have fared better than the ones that have yet to experience the agrarian change. Technological possibilities to break new grounds in increasing productive capacity of small farms and small businesses need to be fully harnessed. Decentralized power in terms of local electricity generation and use can make the Gandhian vision of decentralized production not only an ethical idea, but also a viable economic option. We need to learn from the Chinese model of rural business hubs that add value to agricultural produce within the rural areas. There is a new big opportunity in terms of the herbal wealth of people in tribal areas, which can greatly benefit from the attention now given by business to Non Timber Wood Products. States that have low-input agriculture have now an advantage in taking to organic farming as organically grown products are likely to increase in value. Strategy for rural development must promote these and other options. This can happen only if planning from below becomes truly a reality and local communities are enabled and empowered to work out a profile of development activities based on their own assessment of locally available resource endowment, resource potential and the felt needs of the local people.

For differential strategies to emerge in rural development and to make rural India our big opportunity we need to implement the provisions of Panchayati Raj in letter and spirit. It is the antidote to some of the problems we discussed. Panchayati Raj is the medium to transform rural India into 700 million opportunities. The key instrument for integrating economic reforms with institutional reforms in the countryside is Gandhiji's farsighted goal of Purna Swaraj through Gram Swaraj. This was given Constitutional shape and sanction by Late Shri Rajiv Gandhi's vision of empowering Panchayati Raj Institutions to function as "institutions of self-government", to plan and implement programmes of economic development and social justice.

Our challenge today is to institutionalize this system of local self-governance to make India not only the world's largest democracy, but also to make it the world's most representative and participatory democracy. Much remains to be done however, before we can actually claim to have empowered the elected bodies to function as institutions of local self-government. 37th Report of the Parliament's Standing Committee on Urban and Rural Development tabled in the Parliament in December 2002 gives us an indication of the possibilities that we can explore.

The key issue in this Report is action on transfer of functions, functionaries and funds. Transfer of functions has to be based on the principle of subsidiarity and any task that can be done by a lower level should not move to a higher level. Effective Panchayati Raj requires that functionaries of government work under elected leadership. As far as funds are concerned, the awards of the State Finance Commissions should be fully honoured. There are reports that State Finance Commissions are not constituted, of them not giving awards in time, and of these awards not honoured when given, all of which erode panchayati raj. It is in this context that we have called for non diversion of funds for panchayats and for their timely transfers. In the best traditions of fiscal federalism, the Centre and the State Governments need to cooperate in strengthening local government finances.

The major issue here is capacity building of elected panchayat leadership, especially women and scheduled castes and tribes. These representatives, whom panchayat raj has empowered, can become truly change agents in their local contexts as their struggle for leadership in itself signals a break from traditional dominance structures of caste, class and patriarchy. The nature of capacity building must be sensitive, therefore, to ensure that panchayats are not seen as the lowest unit of government functioning but an autonomous domain of self-government. Capacity building has to focus on strengthening the gram sabha for direct democracy to function as a watchdog of representative democracy. Many studies of effective decentralization reveal an interesting paradox�that it needs a visionary leadership above to ensure decentralization. I appeal to the Chief Ministers to play this visionary role to become champions of decentralization in their respective states. You represent the pinnacle of democratic leadership in your state and elected panchayat leaders are your fellow travelers. They need your support and handholding.

The agenda for rural development includes in addition to releasing productive capacities of agriculture and rural employment, ensuring access to basic services like education, health, nutrition, safe drinking water supply and sanitation and social security. Some of these basic services today involve panchayats and some do not. We should review the areas where today panchayats are bypassed and make corrections. Female-headed households, aged and the infirm, destitutes and all such vulnerable categories depend on the social security framework in policy that the state is able to craft on their behalf. This is a task that can best be done by local governments supported with funds from the central and State governments. Panchayat supervision through gram sabhas also offers opportunities to make governance transparent and accountable to the citizen. We now have the potential to combine grassroots power of panchayats with advances in information technology to radically alter governance and service delivery, an opportunity we must expand and exploit.

The late Mahbub-ul-Haq writing in the early nineties observed that societies everywhere had begun challenging governments. This holds true in India and panchayat raj was our response, seeking to mobilize social energies for development. Similarly creative partnerships with civil society, ex-servicemen and non-governmental organizations need to be forged to energise the entire process of rural reconstruction and development.

Specific rural development programmes are under review in this Conference. The challenge before Sampoorna Grameen Rozgar Yojana implemented by Panchayats is to orient it towards an agenda that optimizes local resource use and potential. The Indira Awas Yojana focus on specially vulnerable groups could be amplified. The Swarnajayanti Gram Swarozgar Yojana for micro finance needs to be part of a larger framework for non- farm employment and value addition. Some state governments have wanted norms of the Pradhan Mantri Gram Sadak Yojana which is undertaking the task of last mile connectivity to be amended to permit improvement of other district roads without which the connectivity objective is getting diluted, or defeated. The rural water supply programme of ARWSP (Accelerated Rural Water Supply Programme) with the new stream of Swajaldhara seems to be creating a complex incentive structure for states with varying levels of state contribution. Area development programmes like the Desert Development Programme and Drought Prone Areas Programme and the Integrated Wasteland Development Programme may need to explore how a national effort in the nature of a Watershed Management Mission can come about to catalyse community action, like the one demonstrated by Shri Anna Saheb Hazare in his Khet ka Paani Khet Mein aur Gaon Ka Pani Gaon Mein model.

Together, all of these point to one major conclusion, that we must examine our rural development programmes afresh. I request this forum to consider if we should adopt a system of providing block grants to districts based on their incidence of poverty to plan and implement strategies that optimize their resource potential. These funds need not be tied to specific schemes but linked to a holistic vision of rural development encapsulated in a district plan. This would ensure that district level planning as envisaged in the Constitution Amendment on Panchayat Raj becomes a reality. I am aware that state governments have been asking for a dispensation of untied funds in several earlier meetings and also in the National Development Council. The concerns that we have of not being able to unlock varying resource potential of different regions, sub optimal use of funds and inability of panchayat raj institutions to become effective can all perhaps be addressed by such a policy shift.

We should be conscious that this would create a new set of complexities in terms of capacities at the district level to plan and implement which we may need to address and bridge. This will therefore call upon state and central governments to play a much more active role in facilitating local planning and building more effective systems for monitoring outcomes. The real question to ask would be whether it would make the situation better than at present. If so, what are the conditions, which need to be satisfied before we can operationalise this vision.

Together we have an opportunity to make a radical departure from current ways of doing things. Incrementalism will not take us very far as sometimes the fault may be in the very design of the programmes imposed from above. I look forward to a very creative and constructive debate on this at this forum and I will look forward to your final views. I am aware that this to some extent moves to some extent away from the structured discussions planned on the ongoing schemes that were scheduled. Let us move ahead with an open mind guided by what best suits the people in our rural areas and what best realizes our country's vast, latent productive potential".