Report to the President of the International Bank for Reconstruction and Development and the International Development Association on India's economic development effort (Vol. 5 of 14) : Agricultural policy : appendices XI - XV

 - i dNost memberse Appendices a r e and workre- Bote: indiv ual of t h of t h e Nission the are of f e r r e d t o as such i n Volume 11, which i s t h e mzin t e x t on " A g r i c u l t u r a l Policy" . Accord- i n g l y , t h e l i s t i n d i c a t e s t h e a,uthorship. For an explanation of t h e relationship of t h e Appendices t o t h e Report, s e e para.graph 15 of Volume 1 . 1 ! o Page D. XI. Coopera,tives '.Tolf Lade j i n s k y X I - 1 t o XI-43 XII. Administration, Panchayats and A g r i c u l t u r a l Development Kolf Lade jinsky XII-1 XII-52 to XIII. O f f i c i a l Resolution E s t a b l i s h - i n g t h e A g r i c u l t u r a l Pro- duction Board G o d . of I n d i a XIII-1 t o XIII-2 XIV. Da.iry Development ads Basis f o r I n t e n s i f i c a t i o n of Agriculture and Improved Hwnan l l u t r i t i o ~ 3.0. %yte XIV-1 t o XIV-7 XV. Some P o i n t s on P o u l t q r I n d u s t r y Potential i n India A . $jcArdle  cOOPEU~TIVES Xolf Lade jinsky  Iatroduction 1. Agricul-Lure i s accorded an important place i n t h e planned econon5c e f f o r t of I n d i a , and cooperative c r e d i t - liice cooperation I n a v2riet.y of other forins - i s judged t h e b e s t s u i t e d v e h i c l e +yo advance agricul'tural progress and t h e welfare of .the c u l t i v a t o r s . Ths f a c t t h a t t h e cooperatives languished f o r n e a r l y fil@tyyears p r i o r t o t h e advent of t h e *?irs'r; Flan, was t h e more reason Tor t r y i n g t;c make thee, succeed where they formerljr f a i l e d . Throughout t h e t h r e e Plans, a s w e l l a s i.n t h e o u t l i n e of .the coming Fourth Plan, they have been assigned a s t r a t e g i c r o l e i n ac-hieving t h e objectives of economic planning. Th3 cooperatives were t o have been t h e ciain t g ~ e of organization i n s e v e r a l spheres 02 economic a c t i v i t y , and,in t h e words of l , f t h e Second Plan, "'the lrital p r i n c i 7 l e of a l l r u ~ a a c t i ~ i t : r ~ ' $11:~~u l f i l l i n g one of ti12 " c e n t r a l aiins of n a t i o n a l policyI1. It i s understandable, theref ore, why t h e cooperatives have not been s t i n t e d f o r f i n a n c i a l resources and other privileges with which t h e Government endowed than. Nor have they Lacked ts prograins and p o l i c i e s and, uni'ort,unatel,y, very a ~ r ~ b i t i o u a r d e t s beyond t h e i r prowess. Despite and because of a l l .this, and d e q i t e t h e yeoman work performed by t h e Xeservc Bank oi" India on behalf of t h e coo$eratives, a dozen y e a r s l a t e ? i t i s c l e a r t h a t they have f a l l e n far s h o r t of f u l f i l l i n g t h e promise reposited i n them. 2. The cooperative movement i n I c d i z i s an outgrowth of t h e burden of' r u r a l indebtedness. This i s a common pkenomenor. o f e f e r y predofiLnantly ag~icultural has county,~, but possibly n ~ ~ ~ : I i e r e i - L assumed such a fonn of permanency a s i n I n d i a . Tile peasants a r e steeped in it, and have been f o r so long a time t h a t . t o be i n debt i s a normal s t a t e of a f f a i r s . It has been r3i1gIi!_y e s t i n a t e d t h a t about i ; 3~ t h k d s of t h e a ; r i c u l t u r a l pol~~.iati.on - or" I n d i a a r e heavily indebtzd, considerl.ng t h e country1s r u r a l co~ldi Lions; thak indebtedness i s r i s i n g ; and t h a t t h e t o t a l f a r n debt i n 1961-62 was Hs.3,120 crores 1/ or 6.2 b i l l i o n d o l l a r s . ,These a r e l a s t i n g debts. It i s no wonder t h a t sir :l;alcolm Darling i n his c l a s s i c "The Funjab Teasant i n Prosperity and Debtu summed, up t h e problem by s a j i n g t l m t t h e peasant " i s born i n debt, e L v e s i n debt, d i e s i n debt, and beqileaths ciebt". H zade t11i.s reinark i n h i s f i r s t e d i t i o n (1925) and he saw no reason f o r dlanding his opinion f o r t h e f oznth e d i t i o n , i n 1947; judging by h-is c o ~ n e n t s n t h e 1350's, ab0u.t which i more l a t e r , his p o s i t i o n agparently remained unchanged then. H i s dictum a p p l i e s .to -the 20 per cent of t h e upper-crust farulers t o a l i m i t e d degree, but i t i s s t i l l an o v c n e i ~ e l i n gproblaii w i t h t h e r e s t of t h e c u l t i v a t o r s . - 1/ As. I crore = $2.1 rniliion R s . 1 = $0.21 1 U.S. Dollar = Rs.b.762 3. There a r e Illany reasons G J ~ an In&!-an peasant must borrow. One of J them i s p a s t indebtedness, and here i s where i t s h e r e d i t a r y nature cones i n . Under t h e j o i n t family systern, t h e debt i ~ r c u r r e d t h e head of t h e f a r n i b i s by not a personal debt t ~ h i c h becomes e x t i n c t upon t h e death of tile borrower but i s passed on fror?. f a t h e r t o son. iIe, i n t u r n , xust borrow a t high i n t e r e s t r a t e s ( 2 5 per cent and niore) toffmaintain" his s t a t u s a s a debtor. The net e f f e c t of t h e s e high charges i s t h a t once a c u l t i v a t c r g e t s i n t ~ debt i t i s extreme1;r d i f f i c u l t f o r h m t o e x t r i c a t e hinself. These remarks r e l a t e i mainly t o pre-cooperative days, but a s w i l l be shown elsewhere, t h e s e condi.tions s t i l l a;>ply, ever, i f not i n t h e i r most extreme fonii, f o r t h e iila jor2ty of borrowinzs s t i l l come from p r i v a t e sources. 4 3orrowing a t high :interest charges augments t h e debt a1read.y contracted, but t h e :lain cause leading t o indebtedness i s t h e prevailing pover-t:. of v a s t nu9bers of Indian c u l t i v a t o r s . This has co:ne about from t h e sinall h o l d i i l ~ soperated by t h e fariners aird t h e i r subdivisj.on and fragmentation, which :,iakes i t dSf i . c u l t f o r the c u l t i v a t o r t o l i v e within his s r ; ~ a l income; l frequent crop f a i l u r e s ; l o s s of c a t t l e ; t h e ease wi-Lh which a loan m ; be ar secured f run a moneylender; ~ w r c h a s eof land a-t high p r i c e s , e s p e c i a l l y during periocis of boor:^; f a i r l , r high z;<per,&tures f o r inarriage and o t h e r s o c i a l and r e l i z i o u s cereinorAes t o keep up s o c i a l pres";gge i r , t h e eyes of h i s fellow v i l l a g e r s (on such occasions t h e peasant doesnot count t h e money c o s t ) and f i n a l k ~ ,a shortage of subsidiary occupa1;ions i n t h e cff seasons. %at i s - s i g n i f i c a n t t o note es and unto t h e very recefit t ~ i ~ %hen t h e c r e d i t coopera- t i v e s have eased t h e problan i n c e r t a i n a r e a s - i s t h a t the g r e a t e r p a r t of t h e indebtedness i s a mark of d i s t r e s s ; t h e loans a r e mostxy f o r consumption r a t h e r than productive purposes. I n such conditions, a F-gh debt does n o t necessari2,r izpl-; s u ' b s t a n t i a l a s s e t s l e a d i n s t o increased productivitjr. Cooperative History and Policy Changes 4- z o r nearl,>r a century, p r i o r t o Independence, iiiany riisasures were i n i t i a t e d t o ease t h e burden of indebtedness. Among these may be nentioned t h e c o n t r o l of land aliexa-lion, o u t r i g h t l i q u i d a t i o n of some & G t s and c o n t r o l of t h e e x i s t i n 2 (mone2ilenders') c r e d i t syste:,:. Thsy were a l l of l i t t l e a v a i l . 1.t tsas out of. recognition 0 this s t a t e of afi'airs t h a t t h e c r e d i t cooperatives 1 caine i n t o being s i x t y y e a r s ago. They were t o provide not only r u r a l c r e d i t l b u t serve a s t h e p i v o t s of ~ u r a progz3ess. Confidense i n t h e cooperatives ran high even 30 y e a r s l a t e r when t h q d i d not do v . ~ e la.6 a l l . The Royal Commissioi l on Bgricu2ture ( 1928) noted t h a t "cooperative p r i n c i p l e s can be used. i n overcoming most of t h e obs'bacles t o progress i n r u r a l c o r r i ~ m n i t i e s ~ ~ , t h a t and those of I n d i a were no exception. Having subjected Xlanjr a s p c t s of Indian a g r i c u l t u r e t o a thorougl~examination i n search of a remedy, t h e Conmission concluded thak " f i cooperatioii T a i l s , t h w e w i l l f a i l t h e S e s t hope of r u r a l Illdi2'; . 6. The coaperatives case i n t o e;:S.stence x i t h t h e passage of' t h e Cooperative Act of l9Ok. Leaving out t h e more recent tendency t o extol t h e i r r o l e beyond reason,their o5jective i n t h e e a r l y days was ambitious enough t o break t h e c r e d i t system of t h e moneylenders bT providing loans t o c u l t i v a t o r s a t reasonable r a t e s through v i l l a g e cooperatives. Thqy were expected t o mobilize deposPts from me,nbers and non-menbers t o finance t h e borrowings of t h e c u l t i v a t o r s . In p r a c t i c e , t h e g r e a t e r p a r t of t h e financLal r c s p o n s i b i l i t n was shouldered b!r t h e Government. During a period of nearly half a century about 100,OCO cooperativas rilere organi.zed., but t h e i r achievezients rrerz al.to;;eth: liiaited; a s l a t e a s t h e bedinning of this half-century they provided onLv 3 per ceni of a l l r u r a l b o r r o ~ c i n ~ s , and t h e f i r s t fift:,y Tears mz,r be w r i t t e n off as s f a i l u r e . 7. ,The Rural Credit Survey, conducted by t h e ileserve Bar.% i n 1951, evaluated t h e i r perfon:lance and cair?e t o t h e conclusion t h a t , -tliough the? d i d not work w e l l a t a l l , they had t o succeed i n -the f u t u r e . I n t h e words of t h e Survey : "Zven i f ... t h e record 0.2 t h e c o o p e r ~ t i v e si n t h e sphere of agrl.cultura1 c r e d i t emerges a s defective i n ;nore than one w q r , t h e f a c t needs t o be emphasized t h a t t h e cooperative a,;enc:? s t i l l remzins, i n many respects, by f a r Lhe l e a s t unsatisfacbory channel of c r e d i t t o t h e c u l t i v a t o r . A t t'nis stage, we would l a y e ~ O V tJ h~ proposition t h a t t h e reorganization of a g r i c u l t u r a l c r e d i t i n I n d i a inust be hased on some form of cooperative association of c u l t i v a t o r s within t h e v i l l a g e i t s e l f . 8. 'me Surve>r revealed t h e t b3 ijer cent oZ a l l r u r a l f a , n i l i e s were i n debt, and f o r cultivaking and non-cultivating f a n 5 l i e s respec-tively, t h e f i g u r e s stood a t 63 and 52. The averaze debt per c u l t i v a t o r t1a.s 2s.36h and. Rs. 129 p e r nnn-cultivator fanlily, Cf t h e 3orrovings by the c u l t i v a t o r s , h7 per cen-t 5Jere claiined t o be f o r current and non-current a g r i c u l t u r a l purposes and 53 per cant f o r corisumption purposes. The Survey aLso fo-md t h a t t h e burden 02 r u r a l debt and r u r a l c r e d i t as a remedy r e m i n e d , a s i n t h e p a s t (and t h e g e a r s f o l l ~ w i n g ) ,an extraordinary coly~lexof needs, purposes, some fuLnil.lrrent and 1aucl1f r u s t r a t i o n . 9. I n t h e h i s t o r y of th;- cooperst_i_ves, t h e Survey w i l l be ranked very highly f o r a $ r e a t n!ari;r reasons, t k c p r i n c i p a l o m s bej.ng t h a t it drew a l i n e between t h e f i r s t f i f t y years and -those t h a t followed, a% t h e sane t i x e providing a stiriiulus f o r t h e country's modern cooperative ~;lovement. Some or^ t h e Survey s i-eccrunendations a r e p a r t i c u l a r l y germanc t o our thene . They a r e summed up h e r e a s f o l l ~ w s . The b a s i s oZ cooperative loans should be crops grown by t h e c u l t i v a t o r s and not t h e ].and oxned Sy thern. Cooperatives should f i n a n c e tile c u l t i v a t o r s t o t h 2 exten.6 of t h e c o s t i r c u r r e d i n zrowin::: crops i r r e s p e c t i v e or' t h e i r owcership, and loans should be recovered from t h e proceeds of s a l e 92 such crops. 'To iinplernenl; this recom~endation, t h e primary societies wsre t o b e reorganized a s large-sized societies, t h u s movi~lgthem c l o s e r t o eccnoinic viasi!.ity; they were t o be adrilinistered by t r a i n e d , f u l l - t i m e p a i d personnel, and t h e Govern:ient, with t h e a c t i v e a s s i s t a n c e of t h e Reserve Bank, was t o provide the11 with f i n a n c i a l a s s i s t a n c e i n order t o strengthen t h e i r resources. Simultaneously, t h e Second Plan assigned t o t h e cooperatives a very important r o l e i n helpin2 t o achieve i t s objectives, and t h e t o t a l outlay on cooperation raas raised f r m 3s. 7 c r o r e s during the E r s t Plan t o 3s. 49 c r o r e s during t h e Second Flan. 10. I.&le t h e devclopnlent of large-sized c r e d i t s o c i e t l e s was U.r-:?efiJaY, t h e policjr was reviewed i n 195'8> and t h e National Develop~~lent Council 1/ recomnended some r a d i c a l changes I n t h e pa-ttern of t h e organization of-credit cooperatives. *TheC o ~ m c i lresolved t h a t t h e development of t h e cooperative novement shoulcl be d i r e c t e d towards i n t c c s i f y i n g a g r i c u l t u r a l production, mobilizinz l o c a l resources, and shif tin: co.3peratl.ves f ran being merely crec1.i.t- oriented t o being production-oriented. Each vil.la;;e colll~i~unity t o draw U was p i a comprehensive program f o r increasing a ~ rc u l t u r a l produc.tion9 and t h e gro%Jth of c r e d i t was t o be closeqy linked with such a program. T'ne niost outstanding recommendation was t h a t i n order t o promote cooperation a s a peoplest ~nove~~lent, it was e s s e n t i a l t o organize cooperatives on t h e b a s i s of one p r i n a r : ~ r e d i t c socieCy f o r each v i l l a g e or covering two o r more v i l i a g a s not exceeding 1,000 f a r d l i e s , without jeopardizing t h e p r i n c i p l e ~2 nutual contact o r s o c i a l cohesion. The organizatj-on of large-sized societi-es was p r o h i b i t e d thus, an - i a p o r t a n t s h i f t i n policy i n mid-stream, so t o speek. Tiie ccnsequences of t h i s change w i l l be discussed a t length elsewhere, but we may ccliment here t h a t this was one of the 2:21a r e ~ o m ~ e n d a t l o r icsa r r l e d out; between 1958 and 1963 a3out t?,000 new primary c r e d i t socPetles were h a s t i l y c r e a t e d b? cooperative o f f i c i a l s eager t o meet t h e bargets s e t f o r thex by t h e Government. Aside from t h e f a c t t h a t t h e Tarrners demofistrated no flvoluntar.isml~n becolning i ifiembers of t h e s e nag s o c i e t i e s , t h e chanze i n policy toward favoring s n a l l a.s a g a i n s t l a r g e s o c i e t i e s has a f f e c t e d n:ost adversely t h e e n t i r e cooperative novement. T h i s , on tl:ie top of t h e f a i l u r e of the cooperatives t o heed t h e reconmendation of becc.;iils produc3ion-oriented, explains t h e l a t e s t change i n p o l i c y decreed. i n 196kp namaly, a move away f r o n small prii~iarys o c i e t i e s and once again towards tlie more v i a b l e large-sized cooj~esc;t,ives. The --. - Credit S t r u c t u r e 1 1 . A t h e base of t h e agricult1lr-11 c r e d i t s t r u c t u r e i s t h e moneylender. t Though i i bad repute, u n t i l a decade ago o r so he provided n e a r l y 70 per cent ~ of t h e t o t a l r u r a l borrowings (Table I ) ; 1glt11 t h e r i s e of i n s t i t u t i o n a l o r cooperative c r e d i t his share declined, but it i s s t i l l probably close t o 60 per cent of t h e t o t a l . The moneylender i s an indispensable scurce of c r e d i t , and from t h e c u l t i v a t o r ' s point c? view he h a s rl:any advantages over t h e c r e d i t cooperative. He i s e a s i l y accessYole, and IGs methods of business a r e sirnple and e l a s t i c . He inaintains personal contact n i t h t h e borrower. H i s l o c a l knowledge and ex'rjerience and his presence on the. spot enable E r a t o accormodate persons without t a n d i b l e a s s e t s and y e t p r o t e c t himself a g a i n s t l o s s e s . Iie hardly i n q u i r e s i n t o t h e purpose of a loan so long a s he t h i n k s - / 1 The Resolution of t h e National Uevelopment Council on Cooperative Policy, Movenber 8-9, 1958. t h a t he t i i l l c o l l e c t t h e high i n t e r e s t r e t e , which can be a s high a s 25 per cent o r even more. HE i s inore concernec' abou-t t h e i n t e r e s t r a t e than t h e repayment of t h e p r i n c i p a l , f o r I n t h i s manner he can m i l l ; t h e b o r ~ o x ~ ~ e l r fo* a long t i n e t o come. To this day, many c u l t i v a t o r s f e a r t h e consequences 0," displeasing the :iionegrlender by seeking i n s t i t u t i o n a l c r e d i t , and nany 02 - c course borrou fro~iit h e inone;.lencier and t h e p r i ~ a r y r e d i t society, often with an eye 02 m e t i n g t h e i r o b l i g a t i o n s t o t h e former. 'fie cooperatives are expected t o displace t h e none;rlenders, b u t t h i s , c l e a r l y , i s way off i n t h e distant future. 12. Credit cooperatives have a t h r e e - t i e r s t r u c t u r e : p r i s a r y socie.@ a t t h e v i l l a z e l e v e l , Central Cooperative Bani: a t t h e d i s t r i c t l e v e l ; and Apex o r S t a t e Caoperative Bank a t t h e S t a t e l z v e l . The i n t e r n a l resources of a 2rimary s o c i e t y consist of share c a p i t a l , reserves and d e p o s i t s by n e ~ b s r s . Their atajor finance resources a r e e;ctei.nalj th2y cone froiil t h e Central Cooperative Banks, which i n t u r n a r e supplied by Apex or S t a t e Cooperative Banks. These forin t h e t o p of t h e cooperative organization i n each S t a t e . A s w i l l be :-afnted out elset.:here, t h e l a t t e r depend t o a l a r g e degree upon funds borrorred frail t h e Reserve Sank of Ifidia, and, t:, a sma?.ler degree, on other . o f f i c i a l funds 13 - I,?addition, t h e r e a r e Land 7 lor-1;~aze Banks and t h e 4,g.Lcultural - Refinance Corporation. The pwpose or' tile for~,lez s t o providelong-te% i loans t o c u l t i v a t o r s , repayable i n 10 .GO 20 y e a r s , f o r land improvement and l m d purcl~ases. ??here c;& 18 f e d e r a l land :;iortga& banks and 242 primarl o r s:.ialler banis, 1~:3st:y located i n An&ra Pradesh, :.iadras and I:ysore. T!;le;r have a nlcr~bcrshipof about a :.:Lll.ion and they a d ~ a n c e d o r a varie-ty of pllrposes f R s . 19 c r o r e s i~ 1962/63. Piore than 90 p e r cent of t h e loans liere accounted. f o r by f i v e Stakes. The land mortgage banks r a l s e p a r t 0," t h e i r fmcis on t h e open market (LcG:;) by f l o a t i n g debentures, r u ~ n i i l gf o r periods coinciding v i t h t h e period of t h e i r advaricas, usually 15 years, and f o r t h e other 6 p e r cent G depend cn l;he r2eserve B d i , Stabe 3a.nk o:? India, acd t h e State Life Insurance Carporation. i l o r t ~ a g e s0: Lhe borrouersf land a r e guaranteed bv t h e S t a t e 1 Goverment Act a s debenture s e c u r i t y . 'The A g r i c u l t u r a l Rei'inarice Ccrgoration was established ir! 1963 i n c l o s e collaboratioil with t h e Reserve Bank, with an authorized shar? c a p i t a l of R s . 25 crores. The Corporatlon i s b a r e l y under- wa.f; when i n operation, it w i l l concern i t s e l f ~tlainlyt ~ i t l t h e financing of i s p e c i a l a g r i c u l t u r a l p r o j e c t s which car-not be satisfactorily financed e i t h e r by c e n t r a i land mortgage banks o r s t a t e c o o ~ e r a t i v ebanks. a. There i s y e t another source or' c r e d i t wliicil i s becoming p a r t of t h e c r e d i t s t r u c t u r e described here. T h i s i s t h e Taccavi c r e d i t qystem operated by t h e S t a t e Governments. Over the years, most o h u c h c r e d i t was d i s t r i b u t e d d i r e c t l y t o t h e farmers and t h e reiaainder through the cooperatives. It i s believed t h a t a s of 1955, i t i s a11 t o be channelled through t h e cooperatives. T>c sm involved i s not a n i n s i g n i f i c a n t one; i n 1960-61, advances f r o n this source amounted t o R s . bl c r o r e s a s against R s . 26 c r o r e s i n 1957-58. 15 o 'The d.ependenc2 of t h e cooperatives on Government financing i s not a c c i d e n t a l . I n I n d i a , a u n i t of land i s cornbined with t o o aluch l a b o r and t o o l i t t l e c a p i t a l . iiny r e s t o r a t i o n af balance lilust be accompanied by an i n c r e a s e i n i t s c a p i t a l content. Since t n e saving p o t e n t i a l of t h e s e c t o r i s q u i t e p small, c r e d i t nlust n a t ~ r a l l y l a y a s t r a t e g i c p a r t i n a c c e l e r a t i n g t h e srowth of a . z r i c u l t u r a 1 production. And i n I n d i a i t i s not t h e coli~inercialbanks or t h e ~noneylefiderst h a t wish t o provide t h a t k i n d of c r e d i t . Coopera-Lives thus reinain t h e 0111;~ i n s t i t u t i o n a l source f o r c a t e r i n g t o t h e growing c r e d i t needs on of a g r i c u l t u r e . This explains t h e continuous c f f o ~ t t h e p a r t of t h e Government t o f u r n i s h a r i s i n g volume of c r e d i t . 16. n A account of t h e s t r u c t u r e of cooperative c r e d i t or, f o r t h a t matter, of any aspect of cooperative a c t i v i t y , i s not complete without a brief reTerence t o t h e i11:portan-t r o l e played by t h e Reserve Bank i n t h e developr~lent of r u r a l c r e d i t . Although t h e r e i s a Tiinistry of Co~nrriunltyDcvelopn-Lentand Cooperation, f o r a l l p r a c t i c a l p u q o s c s t h e AgricuLtural Credit Degartnent of t h e Reserve Bank i s t h e "brain t r u s t e r i 1 arid an i n p o r t a n t a c t i v i t y of t h e cooperative move:;ient. To be sure, t h e Bank's views on c e r t a i n important i s s u e s , such a s wnall-scale versus large-sized cooperatives o r t h e ii:plexilentation of other p o l i c i e s it has s ~ o n s o r e d ,have not always prevailed. Nevertheless, t h e Ballic has been t a k i n g an i n t e r e s t i n , and influencing, t h e f o r r u l a . t i o n of plans of cooperative development i n t h e country; i t has been revieving t h e o p e r a t i o i ? ~of cooperati.ve i n s t i t u t i o n s in d i f z e r c n t S t a t e s ; it has been taking considereble p a r t i n t h e reorganization and " r a t i o n a l i z a t i o n n of t h e c r e d i t system i n c o o p e r a t i v e i ~underdeveloped S t a t e s ; through a s y s t e r ~of voluntary inspection of cooperative banks, i t has been t r y i n s t o improve t h e i r worlting and adziinistration; i t has set up a standing Advisow Committee on Agricultural Credit i n order .to o b t a i n advice on r , ~ a t t e r s v i t a l i n t e r e s t t o t h e cooperative of c r e d i t sjstern; through t h e research d i v i s i o n of t h e A g r i c u l t u r a l C r e d i t D e p a r t ~ ~ e, t h e Bad: has beccme t h e center of d i ~ s e r ~ l i n a t i oof information or1 n n t h e cooperative movement i n I n d i a ; u n t i l July 1.962, t h e 3ank was a c l o s e p a r t i c i p a n t i n orsanizing t r a i n i n g centers f o r cooperative personnel. But a p a r t f r o n t h e s e a c t i v i t i e s , t h e Bank has a l a r g e f i n a n c i a l stake i n t h e coopera-Lives since 3.t provides them with half of t h e t o t a l furids t o f i n a n c e t h e i r c r e d i t operat zons ' . F a c t s and Fidures on Cooperative Developn~ent 17. I n 1961-62, t o t a l outstanding farm borrowings were estimated a t Rs.3,120 crores 1/. Fresh borrowings during t h a t y e a r amounted t o R s . 1,029 - c r o r e s 2/, of whTch nearly half was f o r payment of outstanding loans. O f t h e - l/ All-India Rural Debt and I n ~ e s t x e n tSurvey. B u l l e t i n , Lleceiaber, 1363. Reserve 3ank of IxiLia -/ 2 Perf orinance of Cooperative C r e d i t . Table 1 .1 Reserve Sank paper, Appendix I X , t o t a l loans advanced i n t h a t year, i n s t i t w b i o n a l (cooperative) c r e d i t accounted f o r R s . 241 crores, o r 23.5 per cent of t h e t o t a l . While t h e l a t t e r i s a nearly eight-fold increase compared with a decade ago, conventional c r e d i t , p r i n c i p a l l y furnished b j ~ moneylenders, s t i l l f urni-shed t h e l i o n t s share of t h e t o t a l . A s t o t h e u t i l i z a t i o n of t h e loans, 58 per cent of t h e t ~ t a were l devoted t o household expenditures and 42 per cent t o a g r i c u l t u r z l e;cperiditures, of wnicii 3C Scr cent went i n t o what xilight be considered a g r i c u l t u r a l invcstinents and 12 per cent i n t o current a g r i c u l t u r a l expenditures 1/. The bo~-ro13ingsdo not i n d i c a t e t h e a c t u a l c r e d i t needs a f t h e farming conGur~-ty. The cost of p r i v a t e c r e d i t i s so exorbitant t h a t ;narS/ needs uhich could be i:let by c r e d i t a r e simply postponed. The cost 3: c r e d i t a l s o i n c r e a s e s s u b s t a n t i a l l y f o r people with snlail holdings, a s w e l l a s f o r those who till t h e land they do not own, and I s c o s t l i e r s t i l l f o r a g r i c u l t u r a l laborers. W must add t o this e t h a t many i n t h e r u r a l cornnlunity a r e not credit-worthy even t o t h e moneylenders. The obvious conclusion i s thab t h e r e i s a l a r g e Zap between borrowings and a c t u a l c r e d i t requirernents. 18. A glance a t Table 111 shows t h a t t h e cooparat-i.ves have iliade sol-ie progress i n India 2/. There were i n 1962-63 a l t o g e t h e r 211,000 a g r i c u l t u r a l primary c r e d i t socTeties, >lit11 a meinbership of 22 ini17aon. O f t h e t o t a l number of s o c i e t i e s about 8,000 a r e large-sized; .these c o n s t i t u t e d only 4 p e r cent of t h e t o t a l rimber aild accounted f o r 24 per cent of t h e snembership, 34 per cent of t h e share c a p i t a l and. 30 per cent of t h e loans advanced during t h e ,year. The nuiilber o.? r r d o n a n t " s o c i e t i e s a t t h e end of 1962-63 was 39,300, o r 18.5 per cent of t h e t o t a l numberofsocieties. Actxallgr, t h e number of dormant s o c i e t i e s i s larger, f o r , of t h e t o t a l number of credi& s o c i e t i e s about SO,C00 extended nu loans a c a l l 3/. Triinari credit s o c i e t i e s covered about 8 1 p e r cent of t h e v i l l a g e s and 31 per c e x ~ t h e r u r a l f a d l i e s , but of t h e ccoperatives a r e not spread eveilly ov9r t h e country. At t h e end of 1562, they covered nearly a l l the v i l l a g e s i n t h e S t a t e s af F'ladras, I i t t a r Pradesh, Gujarat, I.iahainashtra, ;;erela and Punjab. A t t h e other extreme, stood Orissa with only b7 per cent, or" the v i l l a g e s covered. I n i n t e r n s of coverage of t h e r u r a l population, T,Iadras stood first with 80 per cent, vlllile Yest Ben;;al h stood l a s t ~ i t 12.6 p e r cent. liowever, i n a l l Zastern S t a t e s , .they covered & o r served l e s s than I p e r cent o t h e r u r a l population. Clearly, "covering" f a vill.a,ze does notl'cover" -the v i l l a p population. 1/ Cooperatlve Development i n I n d i a . . s Report t o t h e Fourth Cooperative Consress, 1963, paze l ? . -/ 2 The ~ e i e r e n c e - from liere on i s t o a g r i c u l t u r a l c r e d i t s o c i c t l e s otherwise noted. The nmlber of a l l types c j f s o c i e t i e s i s 346,174 (1953/64), unless of t ~ h i c h211,900 a r e a g r i c u l t - u r a l s o c i e t i e s , o r 60 p e r cent of t h e t o t a l . The remainder, i n round f i g u r e s , i s ;lade up of' t h e f olloving non-credit s o c i e t i e s : weaverst and other industrial s c c i e t i e s , 13,000 and 22,OCO respectlvel:; sugar cane supp1.y s o c i e t i e s , 9,OQC; other processing s o c i e t i e s , 8,500; consumerst s t o r e s , 8,500, housing s o c i e t i e s , 9,000; s milk s u p p l ~ o c i e t i e s , 5,300; farming s o c i e t i e s , 4,500; and raarketinc s o c i e t i e s , 3,300. - 3/ S t a t i s t i c a l Statenent Relating t o t h e Cooperative Movement i n I n d i a , T Z F 6 3 , page i i - i . Reserve 3an;( 03 Inciia. 19 SuppAying c r e d i t is t h e main f w c t i o n oZ t h e cooperatives. Durlng 1962-63, they advanced R s . 252 crores, of which R s . 225 c r o r e s were short-tern loans, intended mostly t o finance seasonal ag,ricultural operations, which a r e t o be r e p a i d i n one gear l/. The rest of t h e loans, R s . 27 crores, were advanced a s medim-term cFedit t o be repaid within 3 t o 5 years; t h e s e loans a r e mainly f o r p u r c h a s i n ~c a t t l e and f o r l a n a improvements wlfich do not c a l l f o r l a r g e c a p i t a l Investi~!ents. F!hile t h e t o t a l loans advanced by t h e primary s o c i e t i e s increased fmrn about R s . 59 c r o r e s i n 1956 t o R s . 252 c r o r z s i n 1962-63, t h e averaze loan advanced per j.ne~!iberincreased from 2s .6lr t o ils. 1 1 1 during 1956-63. 'The average amount advanced v a r i e s wide1,y from S t a t e -Lo S t a t e : it was ~ s 515 in Gujarat, Rs.331 i n iiaharashtra, R s .?63 i n I,,adhya Pradesh a i d . E s . 259 i n Andhra Pradesh, while it was only 3s.86 i n Bihar and 3s. 63 i n Jamnu and Kashmir. The working c a p i t a l of a l l p r i n ~ a r ys o c i e t i e s was Rs.375 crores i n l962-63, t h e i r own funds accounting f o r R s . 104 c r o r e s . The S t a t e s had contributed R s . 3 c r o r e s t o t h e i r share c a p i t a l , and t h e r e s t of t h e vorking c ~ . p i t a was based on t h e i r borrowinp. A s alread,,r noted, t h e Reserve l Bank provides roughl;~one-half of t h e uorking c a p i t a l of the S t a t e Cooperative 8arks a t a ;:concess:~onal~~t e of 2 per cent below the normal bank r a t e . Thc ra S t a t e banks i n t u r n channel t h e s e advances t o t h e primary c r e d i t s o c l e - t i e s . A s an i l l u s t r a t i o n of the r i s i n g r o l e of t h e deserve Sank i n providing c r e d i t resources, it had expanded i t s lending from R s . 39 c r o r e s i n 1955-56 t o Rs.136 c r o r e s i n 1962-63. 20. Par-t af t h e borrowings of t h e cooperatives c o n s i s t of xiamber-d2posits, but i n 1962-63 they amoirnted t o only 33-22 c r o r e s . a e p o s i t s per me:?ber a r e very small, a v e r a ~ i n gl e s s than R s . 13. Like !:?uch e l s e i n t h e primar;~c r e d i t s o c i e t i e s , they var<y shzrply, froin a low of R s . 2 i n Assam t o R s . 27 i n i<erala and a ilaximun of R s . 38 i n Punjab. The,/ a r e adnlittec":;. very small, and the exhortations t o r a i s e them have not been very f r ~ t f u l . T h i s i s not s u r p r i s i n g what i s s u r p r i s i n g i s t h a t , small a s t h e d e p o s i t s are, the? a r e made a t a l l . in fhe e ~ ~ l a n a t i o s n o t f a r t o seek. The i n t e r e s t r a t e p a i d b;y t h e S t a t e Cooperative Ea&s on d s p o s i t s of one-;rear duration nay ba a s l ~ a s ? t o 2.5 ? 2 per cent per gear and a r e seldorn higher than 4 per cent; only when d e p o s i t s rermin f o r a period. of over 3 years, can t11e.y be a s high a s 5 Ter cent. The i n t e r e s t r a t e on savings d.ep0sit.s does not exceed 3 p e r cent. The i n t e r e s t r a t e s on d e p o s i t s with primary c r e d i t s o c i e t i e s a r e s t i l l lower a i ~ d h e t d e p o s i t s a f t e n draw no i n t e r e s t . I n 3 r u r a l s o c i e t y where i n t e r e s t r a t e s a r e exorbitant, t h e s e a r e , of course, riot high enough t o induce .the c u l t i v a t o r t c r~~alte deposi.ts. Dne suspects t h a t what f a l l s i n t o t h e category of " d ~ p o s i t s ~ ~ a r e involu?tary contributions t o a c r e d i t cooperative r a t h e r than sources of deriving a d d i t i o n a l incode, and t h e cooj.)eratives are no% a way of erlcoura*ing t h r i f t and s a v i n ~ s . 21. IJot a l l ;.embers of t h e cooperatives a v a i l themselves of coogerative c r e d i t . Actually, onl:y abour; Sc? per cen-L of' theiii do so. According .LO t h e Reserve Bank, t h e following a r e t h e p r i n c i p a l reasons: a b i l i t y of soiae c u l t i v a t o r s t o :;ieet t h e i r expenses from t h e i r own resourc3s; lack of need of o t h e r s t o borrow because of t h e t r a d i t i o l ~ a l l ylow l e v e l of i n p u t s i n t h e a r e a ; f o r s t i l l o t h e r s t h e f a c t t h a t they a r e not s e c u r i t y or credit-worthy; dcfau1.t - I/ Data ir, t h i s paragrap11 supplied by t h e National Caoperative Union of I c d i z . - --- on e a r l i e r loans; grsup factionalism r e s u l t i n g in a e n i a l of loans; f a i l u r e t o present l1farm plans1I where such a r e demanded, a s i n t h e case of t h e i n t e n s i v e developiilent d i s t r i c t s , popular2.l lmown a s t h e "package programs"; untiinely disbursment of loans due t o unwarranted a e i z ~ r s ; "norm~alfl excessive redtape i n g e t t i n g a loan; i n s i s t e n c e on accepting 1oai.m i n itii~d, t h a t is, s o l e l y f o r t h e purc,bse of some kind cf an a g r i c u l t u r a l i n p u t ; Il2~hile n i some Sta.tes, l a r g e numbers of non-rural menbers a r e admitted b u t given no loansf1 1/. It i s s i g n i f i c a n t a l s o t o p o i n t out t h a t t h e percentage o i members-of the? a g r i c u l t u r a l s o c i e t i e s who borrow has declined from 53 p e r cent i n 1959-60 t o 53 per cent i n 1960-61, 51 p e r cent i n 1961-62 and 47 i3er cent i n 1362-63. (Table I V ) . This appears t o be a n a t i o n a l trend, t h e exceptions - where t h e percentage mostly remained constant - a r e Puljab, Andhra Pradesi~, 1;erai.a and Iiaharashtra. I n some S t a t e s , t h e s h i f t over t h e f o u r y e a r s i s p a r t i c u l a r l : pronounced, Iiadras shorsing a decline from 53 t o 36, RajasCuhan fro31 53 t c 33, and Assarn f r a : i 35 (1960-61.) l;o 9 p e r cent. It I s obvious t h a t an i n c r e a s i n g p e r c e ~ t a g eof t h e membershi? do n o t borrow fron; tile cooperatives; what i s l e s s ob%5ous i s t h a t i t i s "more probably . .. unable t o Sorrow from s t h e cooperativesf1, and a t a time when t h e p r i n a ~ j o c i e t i e s cover uore and more v i l l a g e s . A w r i t e r or" t h e Reserve Bani,; ccncludes t h a t : :'These c o ~ i t r a s t i n g t r e n d s would i n d i c a t e t h a t while t h e c o o ~ e r a t i v e s fc r e d i t movement i s t a k i n g i n more v i l l a g e s i n i t s t r a i n , t h e r e l a t i v e e f f e c t i v e n e s s of t h e ~gove~nents i - declining i n a s 3ian.y a s e i c h t S t a t e s ( o u t of 1 5 ) . 112/ 22. I n 1958 t h e National gevelopment Cguncil l a i d down t h e policy t h a t Taccavi loans extended d i r e c t l y t o t h e c u l t i v a t o r s by t h e S t a t e 50verm~ents should be charmeled through t h e cooperatives only. T h i s roas done w i t h an t o c o n c e n t r a t i i ~ aa l l Governrfient financing through t h e cooperatives. The V.L. F a t e l Committee of 1959 on t h e expansj-on of c r e d i t f o r a g r i c u l t u r a l production zade t h e sane r e c a ~ ~ ~ e n d a t i o n . This recor.~?endationwas never applied, a l t h o u ~ h t h e s e loans appear t o been handled i n a manner l e s s s a t i s f a c t o r y than those of t h e coogeratives. To one s-tudent o:C t h e c r e d i t problem, " t h e record of Taccavi f o r t h e l a s t 89 :years i s a record of inadequacies i n respec.t of t h e quantuii, tir;!eliness and u t i l i z a t i o n of t h e loan and of recoveries of dues. Surely, w should l e a r n of t h e experience of t h e l a s t 80 years1!.3/ e - - i larlietin;: Cc~operativesand Cooperative Trad.e 23. I n 1962-63, .there r91ere 3,150 ~nar!ietln.s s o c i e t i e s with a a m b e r s h i p of 1,500,OCO. About 2,620 of tllem were general purpose s o c i e t i e s dealing i n a l l manner of a g r i c u l t u r a l cmmoditiesj among t h e nore ii.i~portan.tones a r e t h e 96 cotton narico-tiag s o c i a t i e s . About one-third of t h e 1i1ar:ieting s o c i e t i e s do - 1/ i1.9. Bhidc. I n t e g r a t e d Sche!r,a of Rural. C r e a i t : KI&MGi&,ODYCG, Cc-tober, 1964. An Assessnent - 2/ Perfornance of Cooperative C r e d i t , Appendix I< page of I n d i a . :, 15. Reserve Bank - 3/ 1:. R. Blxide. Gp. c i t . paze 11 not enga2e i n mnarlcetin;" a t a l l , dealing mostly with d i s t r i b u t i o n of farm requirements. Only 2,057 s o c i e t i e s undertook marketing operations, and t h e i r t o t a l s a l e s mounted t o Rs. 37 crores, chiefly i n f i v e S t a t e s : I'-iaharashtra, ' J t t a r Pradssh, i.,:ysore, Gujzrat and Z,:adras. It should be noLed t h a t marketing s o c i e t i e s functioned xainly a s commission agents i n marlcetin~t h e produce of t h e i r members. Outri,ght purchases by t h e s o c i e t i e s by t h e o f f e r of competitive p r i c e s L t h e i r menbers a r e made only i n exceptional cases. Only i n Gujarat, o do cotton s a l e s and purchase s o c i e t i e s pool t h e produce of kheir nembers and s e l l t h e pooled cotton on t h e i r bahalf .The r e a l xarketing work i n India i s undertaken by processing s o c i e t i e s , especially cooperative sugar s o c i e t i e s . There a r e 57 cooperative sugar f a c t o r i e s with a t o t a l membership of 1*6 million canezrwers. They account f o r 24 per cent of t h e t o t a l capacity of the industry. The share ol: t h e cooperative sector i n t h e t o t a l production of sugar was about 21 per cent. 24. I n 1960/61, cooperatives s o l d , " e r t i l i z e r s valued a t R s . 155 million o r 35 per cent a t h e t o t a l iilput of f e r t i l i z e r s i n t h e country, valued a t f R s . 448 million. This share has gone up very considerabl~rsince then, but t h e r e q u i s i t e data a r e not available. Seeds sold through cooperatives amounted t o only 3s. 72 ,nillion (0.3 per cent) against 3 s . 3,472 :.dllion worth of seeds used. Total a g r i c u l t u r a l requirements so16 through t h e cooperatives were R s . 199 million ( 3 per centj against a R s . 7,274 r,xillion :!laterial input s a l e . It i s estimated t h a t t h e gross value of a l l a g r i c u l t u r a l c o m o d i t i e s i n U60/ 1961 was D.s.71,122 -nillion. Assmling t h a t only 30 per cent of t h e a g r i c u l t u r a l produce i s a c t u a l l y marketed, a g r i c u l t u r a l c o m o d i t i e s valued a t Rs. 21,337 million ixay have been sold. Against this e s t i r a t e , a g r i c u l t u r a l produce sold through cooperative marketing s o c i e t i e s was valued a t R s . 1,738 n i l l i o n (8 per cent) i n 1960/61. Evaluation of t h e Cooperatives 25 The Second Plan overstated t h e case f o r t h e cooperatives when it s a i d t h a t they were t o be "the v i t a l p r i n c i p l e of a l l r u r a l developmentu. This i s very f a r from r e a l i t y years l a t e r , on t h e eve of tlie Fourth Plan. Nevertheless, t h e cooperatives have made some progress, and not only purely s t a t i s t i c a l l y . If t h e c l a i n i s abandoned t h a t they a r e or could soon becoine t h e "one and a l l " i n r u r a l India, then t h e i r a t t a i n q e n t s can be seen i n b e t t e r perspective. There i s t o t h e i r c r e d i t t h e expansion of i n s t i t u t i o n a l c r e d i t , nore widespread d i s t r i b u t i o n of C e r t i l i z e r and t h e spread af cooperation In-to many a remote region of India. Their immediate and more concrete attainment i s t h a t between 1951-52 and 1962-63 cooperative c r e d i t t o farmers increased from 3 t o 23.5 per cent of a l l r u r a l borrowings. This i s a sizable chunl: o i c r e d i t , and a t a r a t e of i n t e r e s t of about 8 per cent compared t l i t h t h r e e tLnes t h a t or more charged bv t h e moneylenders. It i s evidgnt that cooperative c r e d i t i s inportant now t o millions of c u l t i v a t o r s . 26. Des;~ite this progress, t h e Indian cooperative movement a s a whole i s i n a bad way. I t s c r i t i c s , ~ ~ ~ i t aridn outside t h e cooperatives, a r e legion. hi They charge than 1.1i th i n e f f i c i e n t mnagement ; poor q u a l i t y or" cooperative leadership; f a v o r i t i s m of t h e stronger a s a z a i n s t t h e weak; corruption; f a i l u r e t o l e a r n froul p s t experience; unduz dependence on Government f i n a n c i a sxpport; f a i l u r e of t h e main body of t h e cooperatives t o merge a s a s e l f - r e l i a n t orgariization bent on improving t h e l o t of t h e peasants; and 1 5 t h few exceptions, bein2 concerned mainly with q u a n t i t a t i v e r a t h e r than q u a l l - t a t i v e achieveinents. Some of t h e evidence underlying t h e s e charges i s presented i n sone d e t a i l i n Lhe subsequent paragraphs. 27 4 The g r i n a r j s o c i e t i e s , a f t e r a u d i t , a r e c l a s s i f i e d a s "A", "R", "C!', ltD1tg or liEfl. Cooperatives i n t h e "Au and llBll c l a s s e s functioi? s a t i s f a c t o r i l y , and many of them can serve a s rnodels f o r otllers. "C" c l a s s cooperatives a r e mediocre, and a s t o ltD" and llEtl, t h e s e l a t t e r a r e used, i n t h e words of S i r Ilalcoh.i Darling, " t o d i s t i n g u i s h betveen those i n h o s p i t a l and those approaching t h e mortuazy". The t a b l e at the end of this paragraph t e l l s t h e stor,rr, namely, t h a t only 18 per cent 02 t h e a u d i t e d cooperativest work w e l l . The "18 p e r centtt i s an average f i g u r e , and a s such i s a b i t ,iiisleading. Thus, "Au and "Btl s o c i e t i e s c o n s t i t u t e only 1 per cent of t h e t o t a l i n t h e S t a t e s of Vest Sengal, U t t a r Pradcsh and Orissa, 3 p e r cent i n :;adhya Pradesh and 5 p e r cent i n Bihar. Ilore than half of t h e s o c i e t i e s are grouped i n t h e I1At1 an2 ItBt1 c l a s s e s only i n Punjab, PJuJarat, ;-aharashtra and Andhra Pradesii. Audit Class No. - $ i2 No. c? ;.. 28. ilirac.i;ly r e l a t e d t o t h e p o i n t made i n t h e precedinz paragraph i s - a t h e Tamiliar 2enchailt f o r I t t a r ~ e t i s r 5 l u i n c o o p e ~ a t i v e s s i i l much e l s e . Under t h e i i ~ p a c t02 t h e d r i v e f o r "one v i l l a ~ e - o n e cooperativeff, betweeil 1957/58 and 1962/63, t h e nunher of cooperatives increased froin 167,0~Ot o 211,COa. Not rnore than 15 t o 20 per cent oZ t h e new coopera-Lives can be considered I1genuinz" Besides, a s a r e s u l t of t h e h e s t i c e f f o r t t o orsanize new s o c i e t i e s , t h e s t r s n g t h e ~ i n gof the old ones vas neglected. The danger inherent i n this phase of expansioriism d i d not escape t h e atteiltion of S i r ;.,alcoL~~ a r l i n d l w h e n t h e t a r g e t s had j u s t been s e t . Said S i r I;alcolr~i: t l1Owin~ o a 1:atural human tendency f o r those below t o wish t o p l e a s e those above, I i'ound marl:,r disposed t o regard t h e t a r z e l s under t h e (Second) Plan a s a i n s t o be achieved a t a l l c o s t s . It was a l i o s t cis if they thought t h e peasant had been made f o r the tarzet not t h e t a r g c t f o r t h e -peasant. Tlds i s a tendeiqjr very much t o be guarded against a.L a l l l e v e l s , if t h e new s ~ t r u c t u r eis t o be b u i l t on sound l i n e s . " - 1/ - S i r Malcolm Darling, Report on Certain Aspects of Cooperative IJiovement i n Inctia Fage 2. Published by Planning ~omnission, 1957. ---j  s worst e S i r ~ ~ 1 a l c o ~ 1 ~ f~ a r s cane t r u e , f o r . a t h e years following, t h e emphasis i continued t o be on more r a t h e r than b e t t e r coopera-Lives. Targe-t-inindedness r a t h e r than cooperative-nindedness became an end i t s e l f instead of a means t o an end. T h i s I1disease1' has affected cooperative o f f i c i a l s a t a l l levels, f o r , i n e f f e c t , Lhejr earned t h e i r merit, so t o speak, by t h e nwaber gf new cooperatives they were a b l e t o r e g i s t e r . 'The bad e f f e c t s of t h i s drive have besn very serious, and, a s shown i n another section of t h i s paper, it w i l l be a number of years before a sounder cooperative movemcnt comes i n t o bein?. 29. One of t h e shortcofings of t h e cooperative ~iovementi s t h a t while i t t r i e s t o widen and deepen t h e sources of r u r a l c r e d i t , it ncglects savings and t h r i f t . words, according t o Darling, are: Tl~ess iiHardljr z-jsi; ;ne';i;ioned i t,~le RUT.^ C m d i ' ; ~ . U V ~ J ;, .'-I Re,~ort; the erphasis i s e n t i r e l y on c r e d i t . Nor i s it eve11 used i n speaking of t h e credi-t society, and it has been dropped out of t h e society's o f f i c i a l designa-tion. Orlginall;:~,following t h e Raiff eisen nodd on r.lhicli these s o c i e t i e s a r e based., the:.- were called. 'Thrift- Credit Societies ' arid IJere r e z i s t e r e d accordifigly ... "&st 's i n a name1 some nay say r ~ i t h u i l e t , but what s l i p s out of speech J soon s l i p s out of thought. I suggest therefore t h a t the name ,Thrift and Credit Society - should be restored.I1 - 30. SredS.5 Overdues --my. . A c h a r a c t e r i s t i c f ea-ture of cooperative operations, a d v e r s e u r e f l e c t i n s upon t h e i ? efficiency, i s t h e amount of lroverduzsll. This i s a masure o t h e s t r e n s t h of t h e cooperatives a s well a s or' a t t i t u d e of : t h e borrowers vis-a-vis t h e c r e d i t cooperatives. O f t h e t o t a l loans outs tan din^ of R s . 236 crores i n 1962/63, t h e overdue anour~tadt o R s . 77 crores, or 26 per cent. Tlfis percentage has tended t o increase with t h e expansion of c r e d i t resources. According t o t h e Xeserve Banl:, about ha12 of t h e overdues must b e t r e a t e d a s bad debts and w r i t t e n off a s losses. Breairing down t h e average r~f 26 per cent, we f i n d t h a t i n Assam the overdues a r e 76 per cent of t o t a l l e n d i f i ~ s ; i n i;ysore 48 per cen-t; i n Rajasthan 47 per cent; i n Bihar 42 per cent; and m l y i n Uttar Pradesh and iiadras were the,; a s low a s 14 and 10 per cent, respectively. According t o Xr. I.1.L. Bhide, Vice-Governor of t h e Reserve Bank ; ''3verdues a t a l l l e v e l s have gone up considerabky and this i s a matter f o r serious concern. The overdues a t t h e p i m a r y and central bank l e v e l s a r e ver;r nearly equal t o t h e i r t o t a l share capital and t h e r d o r e t h e overdues have i o be passed on t o t h e higher f i n a n c i n ~ .- azfencies "l/ -/ 1 ii. L. 3l13.de, op. c i t . page 6. But even i f the overdues are thus absorbedsit does not minimize the f a c t t h a t the f a i l u r e t o recover loans diminishes t h e t o t a l flow of c r e d i t ; r e s u l t s i n large numbers of c u l t i v a t o r s among those floverdueff losing t h e i r c r e d i t standing altogether a t l e a s t f o r some time t o come; and increases the number of dormant s o c i e t i e s and t h e liquidation of many. And y e t even t h i s picture i s not without a s i l v e r lining. I f i t is any consolation, it may be recall.ed t h a t a decade ago, the overclues were much higher; they had r i s e n from 18 per cent i n 1950-51 t o 38 per cent i n 1954-55 1/. - 31. e I n the preceding paragraph, w noted t h a t "overdues" a r e also a t e s t of the b r r o w e r ' s a t t i t u d e vis-a-vis the cooperatives. This implies a negative a t t i t u d e , but t h i s i s only p a r t l y true. Non-repament i s often a resulh of an "Act of God" r a t h e r than a d e l i b e r a t e f a i l u r e t o meet a loan obligation; nor does improvidence of the c u l t i v a t o r always enter t h e picture. I n a b i l i t y to repay loans is frequently due to widespread f a i l u r e of crops caused by drought, floods, pests and other n a t u r a l calamities. Vhen t h i s happens, as i s often the case i n India, c u l t i v a t o r s w i t h meager resources a r e l e f t high and d r y f o r years to come. Overdues then a r e inevitable, and so i s the demise of many a cooperative suffering from f a i l u r e t o recover many long overdue loans. It was t o nee% t h i s s i t u a t i o n t h a t , a s f a r back a s 1956, the Reserve Bank took the i n i t i a t i v e of creating a National Agricultural Credit ( s t a b i l i z a t i o n ) Fund, t o which it has so f a r contributed R s . 9 crores, o r about Rs. 1 crores p r year. The r e a l creators of the S t a b i l i z a t i o n Fund were t o have been the S t a t e ( ~ p e x ) and c e n t r a l cooperative banks, based on a special scheme of financing t h i s measure. As of 1962, t h a t plan had not met with success, although overdues a r i s i n g froin n a t u r a l calamities have a t t r a c t e d increasing attention. Thus "The building up of t h e funds within the cooperative credit s t r u c t u r e has... proceeded a t a much slower pace than was envisaged and the t o t a l amount accurnulateci i n these funds is only R s . 2.8 crores a t the Apex bank l e v e l and Rs. 3.7 crores a t t h e c e n t r a l bank level.I12/ - 32. The l a t t e r sums are considered t o t a l l y inadequate, and the search i s on f o r ways and means of dealing with one important aspect of overdues. It i s admitted t h a t the cooperatives a r e not i n a f i n a n c i a l position to r a i s e t h e i r contributions t o t h e Fund, and "It i s , therefore, necessary t h a t S t a t e Governmen'cs should come to the assistance of the cooperative banking s t r u c t u r e i n building up these funds t o reasonable l e v e l s i n the immediate future.I13/ The a ~ o u n tof the assistance i s not indicated, but it must be ltsubstantiaT1l; 50 p e r cent of i t i s t o be a grant and the remaining 50 per cent an i n t e r e s t - f r e e loan. Fhatever t h e outcone, what stands out i n t h i s i s he f r a i l financial s t r u c t u r e of cooperatives; t h e f a i l u r e o r i n a b i l i t y t o build up reserves t o meet emergency con2itions; and t h e continuous need f o r f i n a n c i a l nursing from sources ou tside the cooperatives themselves. - 1/ S i r IlIalcolm Darling. Op. c i t . , page 5. - 3/ I b i d , page 8 33 Credit and Crop Loans. A s i g n i f i c a n t t e s t of the service t o agriculture rendered by the cooperatives i s t h e degree to which they advance crop loans t o c u l t i v a t o r s . A s the term implies, such loans a r e intended t o create a more d i r e c t l i n k between c r e d i t and a g r i c u l t u r a l production. The basic f e a t u r e s of t h i s system, which i s production and market-oriented, are the s e t t i n g of c r e d i t scales on the basis of the cash outlay per u n i t area of crop by t y ~ e crop; disbursement of loans in installments and to the of extent possible i n kind; the l i n k i n g of repayments with harvesting; and the recovery of loans through marketing s o c i e t i e s out of the s a l e proceeds of the crop financed. Thus, the basis of crop loans is the requirement of the farmer f o r c r e d i t f o r production of crops and not h i s landed a s s e t s . Under t h e system of crop loans, the members should be offered c r e d i t t o cover t,he cost of c u l t i v a t i o n ( o r a p a r t of it) i r r e s p e c t i v e of whether they are owners a d tenants. 34 The crop loan system embodies c e r t a i n procedural requirements and p r a c t i c e s l a i d down by the Committee of Directions of the All-India R u r a l Credit Survey. Actually, they "were not b u i l t i n t o the structure, organization and working of the s o c i e t i e s . The outmoded and orthodox procedures in vogue since the beginning had been followed without making any e f f o r t t o e f f e c t about the recommended ..." f l e x i b i l i t y a t any stage 1/. The f a i l u r e of t h e c o o ~ e r a c i v e st o bother was symptomatic of their f a i l u r e t o adopt the crop loan system, except i n some d i s t r i c t s i n very few States. The same is t r u e even of the "package" d i s t r i c t s . The following statement r e l a t i n g t o - c r e d i t i n the IADP d i s t r i c t s nakes t h i s clear:2/ "Although i t has been accepted as a policy t h a t the cooperatives should advance loans on t h e basis of t h e production needs as calculated i n the production plans, y e t i n practice i t has not been possible t o do so. The reason i s t h a t i r r e s p e c t i v e of the production needs of a member, the ultimate amount t o be given t o him i s subject t o such conditions a s t h e share amount to be paid by him, h i s repaying capacity, %he absolute limits generally fixed beyond which no member can borrow whatever may be h i s l b i t according t o other c r i t e r i a , the land possessed by him, h i s past repaynent perfornance and the resources of the s ~ c i e t i e s . ~ ~ Sales and Piarke t i n g Societies 35 S h i f t i n g from c r e d i t to marketing s o c i e t i e s , the progress made by the l a t t e r has not been impressive, except i n a few d i s t r i c t s . Of the 27 d i s t r i c t s studied by t h e Reserve Bank i n 1951-52 and i n +he follow-up studies - 2/ Provision of Credit i n the IADP D i s t r i c t s . Typewritten statement prepared by Ford Foundation Package Team i n l a t e 1964 o r e a r l y 1965. of more recent years, only e i g h t d i s t r i c t s reported c u l t i v a t o r s s e l l i n g produce through marketing s o c i e t i e s , and only %NO d i s t r i c t s r e g i s t e r e d s u b s t a n t i a l increases in marketing of a g r i c u l t u r a l produce. Even i n - Maharashtra, perhaps the c o o ~ e r a t i v eS t a t e of India, much of t h e s a l e of t h e predominating crop, cotton, t a k e s place outside the cooperative marketing mechanism. To be sure, t h e system did much b e t t e r i n sugarcane but this was due t o s p e c i a l circumstances. According t o t h e study, t h e success achieved ir! Deoria D i s t r i c t ( U t t a r Pradesh), where s a l e s of sugarcane through marketing s o c i e t i e s went up from 30 t o 75 per cent within a decade, i s a t t r i b u t a b l e l a r g e l y t o t h e d i s p o s a l of sugarcane through sugarcane unions t o p r i v a t e l y owned sugar f a c t o r i e s - a f a c t o r extraneous t o t h e cooperative movement, One of the t e s t s of marketing s o c i e t i e s i s t h e i r a b i l i t y t o handle foodgrains. To d a t e , t h q have not p a s s c d t h e t e s t . The value of foodgrains traded througb t h e cooperatives annually is approximately Rs.30 c r o r e s only, o r n o t q u i t e 3.5 p e r cent of t h e t o t a l estimated marketed surplus of Rs. 800 crores. 1/ - 36 - E'luch has been s a i d in t.he p a s t about the urge& need t o l i n k c r e d i t with marketing s o c i e t i e s . The linkage was t o have sustained t h e growth of both c r e d i t and marketing movemnts, insured e f f e c t i v e recovery of loans, and f r e e d the farmers wherever possible from the p r i v a t e t r a d e r and the moneylender. A l l t h i s was based on the theory of t h e primary s o c i e t i e s advancing loans t o the members t o meet the c u l t i v a t i n g expenses of t h e crops and the marketing s o c i e t i e s recovering the loans from the s a l e proceeds of the members1 produce. khatever t h e theory, t h e p r a c t i c e proved t o be something e l s e altogether, a s indicated i n the preceding paragraph, and as supported by sone p e r t i n e n t evidence presented below. 37 With r e s p e c t t o "interlinkings", t h e Reserve Bank study mentioned above concludes t h a t they "were conspici~ousby t h e i r absence i n p r a c t i c a l l y a l l (27) d i s t r i c t s , including those d i s t r i c t s where cooperative marketing has recorded some progressrt2/. The causes a r e important, f o r t h e y r e f l e c t sorne of the weaknesses of t h e cooperative movement. Xany marketing s o c i e t i e s a r e such i n name only J/; t h e r e i s no binding o b l i g a t i o n on the c u l t i v a t o r t o s e l l h i s produce through a marketing cooperative though he borrows from credi5 s o c i e t i e s ; t h e r e is inadequate representation of c r e d i t s o c i e t i e s on the managing cornnittees of marketing s o c i e t i e s and d e f e c t i v e by-laws which, a s i n the credit. cooperatives, do n o t preclude %he domination of working s o c i e t i e s by c u l t i v a t o r t r a d e r s and c u l t i v a t o r moneylenders, o r j u s t moneylenders. Th5-3 has given r i s e t o a s i t u a t i o n in which many marketing s o c i e t i e s a r e i n t h e the ~ I i n i s t r - yof Community Development &d cooperatic. - 2/ Ibid. - 3/ i.larketing s o c i e t i e s of t e n a r e not, engaged i marketing. I n 19 o u t of 27 n d i s t r i c t s they were engaged i n c r e d i t a c t i v i t i e s l e g i t i m a t e l y entrusted only t o c r e d i t s o c i e t i e s . This was conspicuous even i n such cooperative S t a t e s as Gujarat, Xaharashtra, and Punjab. I n short, %hey neglected tk? purposes f o r which they were created. hands of urban-oriented i n t e r e s t s and traders, and i t i s not t o t h e i r advantage t o promote cooperative marketing, and with it, interlocking cooperative c r e d i t . The most recent study on the subject i n Y ~ h a r a s h t r a1/ points t o such conclusions. Thus, " i n 1962-63, only L3 out of 317 prima$ marketing s o c i e t i e s recovered R s . 67 lakhs 2/ f o r 893 primary s o c i e t i e s . This i s a negligible achievement compared tz tbe t o t a l loans advanced by a l l the primary s o c i e t i e ~ ' ~ .This problem was sunmed up a s follows: f f A s f a r as backing of c r e d i t with marketing i s concerned and recovering through marketing, there has been hardly any prcgress. Out of t h e t o t a l loan operations of t h e order of R s . 250 crores a t the primary l e v e l i n 1962/63, recoveries through marketing have been made only t o the extent of about Rs. 6 crores. This i n the context of the s i z e of the problem i s insignificant.. .Any f u r t h e r s u b s t a n t i a l increase i n credit. operations without a corresponding increase i n marketing and recoveries through i t i s fraught with serious danger. l ' i / 38 Cooperative c r e d i t and marketing should be complementary t o each other, and t h e strength or weakness of one a f f e c t s t h e other. %here the cooperative s t r u c t u r e i s weak and cooperatives loans inadequate, the c u l t i v a t o r s r e l y on p r i v a t e c r e d i t even f o r production purposes, and naturally, s e l l t h e i r produce thmugh p-ivate traders. The c u l t i v a t o r can be induced t o s e l l through the marketing society, but, only i f h i s dependence on the t r a d e r is systematically reduced. This i s the main, ~ e r h a p sthe sole, reason why a l a r g e nwnber of c u l t i v a t o r s reported s a l e s through t r a d e r s even where marketing s o c i e t i e s l i v e up t o t h e i r r e s p o n s i b i l i t i e s . Xiis, however, i s not to imply t h a t where the cooperative c r e d i t s t r u c t u r e is strong, t h e development of cooperative marketing i s assured automa t i c a l l y . The Reserve Bank st,udies show t h a t even i n strong cooperative-credit d i s t r i c t s of 14adras and Andhra Pradesh, there a r e hardly any s a l e s through cooperatives. It appears t h a t although cooperative marketing is accepted on a l l sides a s a desirable goal, it has not attained any s i g n i f i c a n t place in India. There are several reasons f o r the slow development of cooperative marketing: the absence of cooperativel:! owned processing f a c i l i t i e s ; improper location of marketing centers; poor management and lack of business experience; domination by powerful vested i n t e r e s t s i n and outside of the narketing s o c i e t i e s ; red tape, a s against the informalit,y of dealing with the private t r a d e r o r noneylender; delays i n settlement of accounts u n t i l some time a f t e r the produce i s delivered; lack of the s p i r i t of llcooperationn among the members of the marketing cooperatives; strong cornpeti t i o n from the e x i s t i n g private t r a d e r s ; and, f i n a l l y , the f a c t o r t h a t a f f e c t s adversely the e n t i r e cooperative movement - the extreme "bureaucratization1I of the s t a f f with l i t t l e i n i t i a t i v e and the e f f o r t s to builc strong cooperatives not nearly a s g r e a t as might be expected. - 1/ L-hking of Co-operative Credit trith iviarketing i n Maharashtra, page 3, National Co-operative Union of India, February 1965. - 2/ R s . 1 lakh = 100,000 rupees. - 3/ M. R. Bhide. Integrated Scherne of Rural Credit : -4n Assessment, page 9. KHADIGRAI~IODYOG, October, 1964. 39 Securing Credit. Regardless of the s i z e of the loan, getting i t i s nothing so simple a s securing a loan from a moneylender. The procedures a t present followed in the sanction, disbursement and repayment of loans are s o complicated and tiresome t h a t many borrowers can not receive loans as and when they a c t u a l l y require them. Generally each loan must be approved by the Board of Directors, recommended by the supervisor, and ultimately sanctioned by the c e n t r a l cooperative bank - though not on an individual basis. The time t h a t elapses between t h e application f o r and t h e r e c e i p t of a loan may be a s long as three months. When the loan i s i n kind, or p a r t l y in kind, such delays seriously impede a g r i c u l t u r a l production. LO. o H w well o r poorly c r e d i t cooperatives work a f f e c t s short- and medium-term loans. The same may be said of the Land Mortgage Banks with respect t o long-term loans. These a r e the i n s t i t u t i o n s upon which c u l t i v a t o r s depend f o r major investments in land improvement. The r o l e of these banks may be of exceptional importance i n r a i s i n g a g r i c u l t u r a l prcduction on farm- holdings of considerable s i z e , p a r t i c u l a r l y those which provide t h e major share of the marketable surplus. These banks are n o t s t i n t e d f o r financing. Thus, t h e i r t o t a l resoilrces increased from Rs. 13 crores a t the end of the F i r s t Plan t o Rs. 37 crores a t the end of the Second Plan, and Rs. 67 crores a t t h e end of 1962/63; it i s estimated t h e i r resources w i l l amount t o Rs.127 crores o by the end of the Third Plan. H w well they used them f o r the purpose intended i s another matter. The Reserve Sank study concluded t h a t : "Except i n Gujarat, the loan policy and operating of the majority mortgage banks were corn$etely unrelated t o t h e a g r i c u l t u r a l production programs of the s t a t e governments. Duration of loans was a l s o not linked with the purpose of loans in many s t a t e s . I n a l l s t a t e s , loan procedure was long drawnout involving various stages of appraisal and scrutiny with the r e s u l t t h a t the time l a g inm lved between application and disbursement coa tinr~edt o be over a year in many s t a t e s . "l/ - Clearly, though the land mor-tgage banks have nade considerable progress in the s i z e of t h e i r operations, including c a p i t a l available f o r loans, from the point of view of performance they a r e not nearly a s good as might be expected. L1. Cooperative l'Viability". The primary a g r i c u l t u r a l cooperatives a r e small, mostly based on a s i n g l e village, and a r e managed by a personnel repeatedly charged with ignorance, inefficiency, d i s c r i n i k t i o n , and sloth. I n most cases, s o c i e t i e s do not have regular establishments o r offices. They a r e not deeply involved i n promoting c r e d i t a s a means t o increasing a g r i c u l t u r a l production despite t h e i r apparent a c t i v i t i e s . I n 1962-63 about - 1/ Trends in development of cooperatives i n +the context of the Integrated Rural Credit Scheme. A assessment based on t h e Rural Credit ~ o l l o w ~ ~ n Surveys, page 34. Reserve Bank, December 1964. 86,000 s o c i e t i e s engaged i n the d i s tributuion 02 Car:;: requisites : while inany more were d i s t r i b u t i n g a l s o f e r t i l i z e r , a monopoly offered them on a s i l v e r p l a t t e r , about which more l a t e r . There were a l t o g e t h e r only 15,000 godowns e i t h e r owned o r hired by the cooperatives, and the average working c a p i t a l -- of a s o c i e t y was only RS, 17,500, I n t h e same year t h e r e were a l t o g e t h e r only 314 primary s o c i e t i e s o u t of 214,000 with a working c a p i t a l of Inore than --- Rs. 100.000 each. The s o c i e t i e s cannot be expected t o be e f f e c t i v e under these conditions. 42 If cooperatives a r e t o b e developed a s e f f e c t i v e organizations, they must be made economically v i a b l e and p r o f i t a b l e . ::,!hat "viability1! i s o r should be was s u b j e c t t o rnuch discussion a t t h e Conference of S t a t e 1;Iinisters of Cooperation a t Hyderabad, i n June 196b. The v i a b i l i t y c r i t e r i a of a s o c i e t y runs l i k e t h i s : a b i l i t y t o appoint a f u l l - t i m e paid Secretary o r Manager; a b i l i t y t o c o n t r i b u t e t o s t a t u t o r y and other reserves on a s u i t a b l e s c a l e ; a b i l i t y to pay a r e t u r n on share c a p i t a l anti a reasonable i n t e r e s t r a t e on deposits. I n view of the emphasis on small-sized cooperatives, the v a s t majority of them c a n ' t l i v e up t o t h e i r v i a b i l i t y c r i t e r i a . In a statement on lfViability of Primary Credit S o c i e t i e s " prepared by the Reserve Bank, the following f a c t s should be underscored. The t o t a l number of large-sized s o c i e t i e s was j u s t under 8,000; i f 5hese a r e aclded t o t h e t o t a l number of v i a b l e smaller s o c i e t i e s a t the end of i961/62, tne granc2 t o t a l may be estimated a t only 20,000, and t h e i r outstanding loans a t about Rs.120-125 crores, o r Rs. 60,000 t o 60,250 per society. The remainc'ler, assuming t h a t t h e i r number i s reduced t o 130,000, would have an average annual loan business of Rs. 10,000. Since "there i s no prospect of a primary s o c i e t y operating a t even a meager p r o f i t till a turnover of R s . h0,000 is reached1!, t h e i r s t r i n g e n t f i n a n c i a l condition i n d i c a t e s how f a r rertioved they a r e from " v i a b i l i t y b3. To a t t a i n " v i a b i l i t y 1 ' c a l l s f o r ( a ) an o u t r i g h t l i q u i d a t i o n of '!dormant1! s o c i e t i e s ; ( b ) analgarnction of very small s o c i e t i e s i 3 t o l a r g e r u n i t s ; ( c) strengthening of s t i l l othe r cooperatives which a r e jud ge5 po t i ? l t i a l l y viable; and ( d ) an a r r a y of irn~rovemmtst h a t s p e l l out goc i i~anagamnt A t t h e Hyderabad Conference, June 1966 was given a s the l a t e f o r Lhe coslpletion . of t h e reorganization. A s to t h e possible outcome, a t :.east numerically speaking, Uttar Pradesh may provide a clue. I n an e f f o r t t o t r a n s l a t e the IIyderabad recommendations i n t o action, Uxcar Pradesh plans to reduce i t s 50,000 primary c r e d i t cooperatives by one-half. The inference i s t h a t by t h e end of 1966, Incliats 211,000 s o c i e t i e s w i l l be d r a s t i c a l l y reduced i n number. It is i d l e t o speculate a b u t t h e q u a l i t y of performance t o tahich t h i s m i & t give r i s e , b u t t h i s much may be said: t h e elimination of the p r a c t i c e of c r e a t i n e more and g e t more cooperatives within highly constraining conditions i s in i t s e l f a s t e p i n t h e r i g h t d i r e c t i o n . It may eventually l e a d t o soundly based and b e t t e r managed cooperatives, a s w e l l as t o consideration and a c t i o n upon these basic, y e t unresolved, i s s u e s : ( a ) t h a t cooperatives a r e t h e r e t o serve the b e s t i n t e r e s t s of t h e i r membership; ( b ) t h a t the wider p a r t i c i p a t i o n of the membership i n the a f f a i r s of the cooperatives is e s s e n t i a l t o t h e i r performance, and ( c ) and above a l l , t h a t the cooperatives a r e t h e r e a s p a r t of t h e e f f o r t t o i n c r e a s e a g r i c u l t u r a l production. 4b. -- -- Cooperatives and F e r t i l i z e r Distyibution. Distribution of nitrogenou They have been instrumental i n f e r t i l i z e r s i s a monopoly of the ~ ~ o p e r a t i v e s . a much quickened use of f e r t i l i z e r s among the farmers, but their performance i s not satisfactory. "It i s obvious,'' said ik. Subrarnaniam, iCinister of Food and Agriculture, "that even with the best of production of f e r t i l i z e r s in the e country, i f w have the current inefficiencies of our systems of organizati.on of credit, o r of distribution, we w i l l find i t extremely d i f f i c u l t t o increase the off take of f e r t i l i z e r s . I l l / iGinister Subrainaniam indeed touched on a very rleak spot of cooperativ& as d i s t r i b u t o r s of f e r t i l i z e r s , and a t a time arhen the demand i s rapidly mounting. I n the experience of t h i s observer, even the burning of a f e r t i l i z e d crop i n t h e wake of the f a i l u r e of water supply does n o t d e t e r a cultJivator from trying again, because, as a fanner put it, 'We cannot a f f o r d not t o use cheinical f e r t i l i z e r . Obvf ously, d i s t r i b u t i o n of f e r t i l i z e r s is a c r u c i a l element i n agricultural productivity. 45 The tlpackagell d i s t r i c t s a r e by f a r the best supplied, but i n them too, the d i s t r i b u t i o n i s f a r from simple o r satisfactory. What is simple i s the formal description of the process. A c u l t i v a t o r ' s requirement i s de+,ermi.ue: n according to the tfproduction plan". G t h i s basis, the v i l l a g e block and d i s t r i c t requirements f o r each season a r e fomarded t o the Government of India, t~hich, a s denonstrated by experience, has honored them i n most cases. The D i s t r i c t Cooperative Marketing Federation a c t s as a xholesaler and moves the stocks t o r e t a i l depots maintained by l o c a l cooperative societies, on the advice of the Directcr of the "package" d i s t r i c t , about a montn i n advance of the season. 6 4. The supply l i n e i s impeded a t several points. Some of the cooperatlw are not able to l i f t , t h e i r quotas f u l l y and on time f o r l a c k of cash, o r because of the i r i a b i l i t y of Lhe would-be consumers t o Fay f o r the f e r t l i z e r i n advance of the purchase. T t h i s sllould be added a lack of an adequate nmber o of s a l e s points; non-availability of f e r t i l i z e r s a t the peak season; reluctant( o of cooperatives G t i e up money i n newer f e r t i l i z e r s ; lack of lcnotsledge a s t o ~ h o the f e r t i l i z e r s can be best used; and the ineffective suggestions t o "streamline" the d i s t r i b u t i o n of tine product. iiuch e l s e i s involved than nere organizational " ~ t r e a m l i n i n g ' ~ .Primarily, the cooperatives are inefficient; monopolists a s d i s t r i b u t o r s of nitrogenous f e r t i l . i z e r s . Xuch of the trade w i l l not get away from then however they hanrlle i t , and very of ten they do not d i s t r i b u t e i t well, especially from tine ~ o i n of view of timely u t i l i z a t i o n . t Related t o ti12 q u a l i t y of ~erformanceis the a t t i t u d e of many cooperative employees; they are c e r t a i n of being paid f o r t h e job and a r e i n no danger of losing t h e i r jobs no matter hot1 poorly they do them. Par-t of the remedy l i e s i n t h e elhination of the monopoly, a s advocated bjj t h e Directors of the Itpackage:' programs in 1963, a movement .which gathered rnomen turn since then. - 1/ Convocation address of ik. C. Subramaniam, .to the Punjab Agricultural University, Liarch 14, 1965. Some S t a t e s a r e prepared t o experj.malt, with p r i v a t e d i s t r i b u t i o n . I n the l i g h t of t h e massive a g r i c u l t u r a l goals of t h e Fourth Plan, however, it should be the p o l i c y of Government t o eliminate t h e inonopoly by permitting d i s t r i b u t i c : of f e r t i l i z e r s by cooperative and p r i v a t e organizations a l i k e . F a i l i n g the introduct,ion of a competitive element i n t o the picture, t h e f e a r s expressed by Minister Subramaniam remain valid. >lore than t h a t , competence in business techniques and managerial s k i l l s , so g l a r i n g l y lacking in t h e cooperatives, w i l l combine t o plague them f o r years t o come - unless they a r e faced w i t h t h e n e c e s s i t y t o compet,e in an u n r e s t r i c t e d market and held accountable f o r the r e s u l t s of t h e i r performance, 47. !The advocacy of p r i v a t e along with cooperative d i s t r i b u t i o n does not mew, t h a t t h e former would automatically prove s u p e r i o r t o the l a t t e r , A h i g h l y conscious t a s t e f o r p r o f i t a b i l i t y combined with f e r t i l i z e r shortage may r e s u l t i n p r i v a t e d i s t r i b u t i o n being c o s t l i e r t o t h e farmers. The p r i v a t e dealers, too, must be prepared t o extend l o a n s f o r t h e purchase of f e r t i l i z e r s ; this r~ouldbe u s e f u l t o t h e farmers i n one way, b u t probably c o s t l y to them - in o t h e r ways whe-ther they were as s t r a i g h t loans o r a s conditiorls f o r s a l e t o the d e a l e r of some of t h e i r crop. F i n a l l y , it is reasonable t o assume t h a t t h e priva-ie d e a l e r t ~ i l be no improvement on t h e cooperatives i n h i s treatment i of the small farmer. Cespite these probable shortcomings, p r i v a t e p a r t i c i p a t i o r i n f e r t i l i z e r d i s t r i b u . t i o n might very well l e a d t o competition t h a t would curb t h e a p p e t i t e of the d e a l e r s on t h e one hand, while r a i s i n g the e f f i c i e n c y of the cooperatives on t h e other. I n theory a t least, t h e c u l t i v a t o r woulc! stand t o b e n e f i t from these c o n f l i c t i n g i n t e r e s t s . This, then, is the basis f o r throwing the inarket open t o a l l comers f o r the purchase and s a l e of nitrogenous fertilizers. 48. Creditworthiness and Crop Loans, One of t h e vexing problems of I n d i a ' s cooperatives i s t h e matter of creditru.orthiness, o r t h e standard used by a cooperative i n determining who i s e n t i t l e d .to c r e d i t , how much c r e d i t , and who is n o t t o be given any c r e d i t a t a l l . So f a r , and :.~i'th fets exceptions, t h e cooperatives approach creditworthiness from the point cf view of maximura --- s a f e t y which i n p r a c t i c e means i n s i s t e n c e on s e c u r i t y i n the formi of land - 2 and other t a n g i b l e a s s e t s . This system i s as i n v i t i n g a s i t i s i n disregard of t h e 1958 ~ o l i c y decision of t h e F a t i o n a l Economic Council, which c a l l e d f o r loans based on production requirenients, f a m i l i a r l y knohn a s "crop loans". Under t h i s system, a c u l t i v a t o r i s -reditworth;' i f he can repay h i s loan from production. I f such a loan is indeed f o r production, i t might enhance t h e economic welfare of t h e farmer because the crop loan can a c t a s a stimulant t o g r e a t e r a g r i c u l t u r a l production. The e l d s t i n g c r e d i t policy of maximum s a f e t y d o e s n o t adequately meet t h e c r e d i t needs of .the farming community, p a r t i c u l a r l y t h e poorer s e c t i o n s of the v i l l a g e , and notably t h a t of t h e tenants. 47 The crop loan system i s not without i t s shortcomings. One of them stems from t h e acceptance of crops y e t t o be grown a s s e c u r i t y a g a i n s t loans. I n India, t h e s i z e of the crop i s very o f t e n a gamble on t h e monsoon, which i s t o say, t h a t the crop a s a s e c u r i t y i s a l s o a gamble. Second, crops do not lend themselves f o r e f f e c t i v e administrative control by a cooperative i n the same manner t h a t raw materials and products of an i n d u s t r i a l firm do f o r a commercial bank. Third, the recovery of loans through the s a l e s of the crops o r v i a the cooperatives has n o t proved t o be a p r a c t i c a l proposition. The c u l t i v a t o r s of India have other, much larger, loan obligations to meet. The f a c t i s t h a t nearly 60-70 per cent of a l l the farmer-borrowings s t i l l come from noneylenders and other private sources, sscured mostly f o r consumer purposes. These i n t e r e s t s have a p r i o r claim on the c u l t i v a t o r ' s produce and most of it i s sold through those channels. Last, but not l e a s t , there are cooperative members with holdings s o small t h a t they are subsistence farmers with nothing or hardly anything to s e l l . I n sum, though the cooperatives' loan system can be (and is) an incentive t o greater a g r i c u l t u r a l production, i t i s beset by a number of p r a c t i c a l d i f f i c u l t i e s not e a s i l y overcome. 'They explain a t l e a s t i n p a r t the predilection of c r e d i t cooperatives f o r adhering t o the practice of extending loans on the basis of land ownership o r other tangible assets. 50. Ellany cooperative members a r e owner-cultivators who can o f f e r s e c u r i t y whatever the basis of a loan. This i s not a l l ~ a y strue of the Very small holders and surely not irue of tenants; even i n t h e tlpackage" d i s t r i c t s , the tenants could get only nominal loans, n0.c a L a l l up t o t h e i r minimum production requirements, l e t alone t h e i r consumption requirements. %%atthe tenants get i s a subsidy handout rather than c r e d i t . I n Tanjore a i s t r i c t (Madras), the cooperatives were compelled t o r a i s e a t e n a n t ' s borrowing power from R s . 50 to R s . 250, 'out even the l a t t e r sum i s more a response t o c r i t i c i s m than a reasonable c r e d i t . Idhat the tenant needs i s greater income, and c r e d i t commensurat,e with h i s production needs i s the source of greater income, a s well a s the source of r e t i r i n g the c r e d i t obligation. For these reasons, a l i b e r a l i z a t i o n of c r e d i t policies to tenants is long overdue. %go suggestions can be made i n t h i s connection. 'Where tenants have acquired occupancy r i g h t s , though n o t l e g a l t i t l e , t,o land, a f t e r t h e introduction of the land reforms, they should be put on an equal footing with owners, provided t h a t the Government enacts l e g i s l a t i o n making it obligatory upon the cooperatives t o accept lloccupa~cyi g h t t f as s e c u r i t y against a cooperative loan. r A s t o t h e r e s t of the tenants who have no occupancy r i g h t s i n land and no other tangible a s s e t s to provide the usual type of security, the Government must s h d u c e the cooperatives t o give them credit e i t h e r on ~ e r s o n a l e c u r i t y o r against one o r two s u r e t i e s , preferably the f i r s t . S u r e t i e s a s a b a s i s f o r loans t o tenants a r e not a novelty; what would be new and useful is the lllegalizationtl of the niethod and the cooperativets obligation t o extend such loans. A l l of t h i s involves risk-taking, but t h i s is t r u e even of well-secured loans, judging by the 26 per cent of overdues carried by the cooperatives. Besides, with respect t o the type of tenants noted above, t h e r i s k and possible l o s s of non-repayment o r p a r t i a l repayment may well be borne by society a s a s o c i a l cost.. 51. Vhatever -the shortco:nings of the crop loan system, and despite t h e prevalence of loans based on I1safelf security, the chances are t h a t the crop loan idea w i l l ultimately prevail. I n a few States, p a r t i c u l a r l y in t h e "package" d i s t r i c t s , such loans are being granted, even i f in d i f f i c u l t circumstances. The backing of t h e system by such i n f l u e n t i a l i n s t i t u t i o n s a s the Reserve Bank, and the National Economic Council cannot be disregarded i n d e f i n i t e l y . The Reserve Bank can exercise the power of the purse and t h e Council can s e e t o it t h a t i t s 1958 b a s i c p o l i c y decision i s n o t t o be honored i n the breach only. A l l of t h i s would mean serving n o t i c e on the c r e d i t cooperatives t h a t they cannot go on being only moneylenders, though a t a reasonable i n t e r e s t r a t e . To j u s t i f y t h e i r existence they w i l l have t,o t i e t h e i r resources t o the development of t h e a g r i c u l t u r a l economy so as t o increase the flow of income and welfare of t h e i r membership. The only policy- suggestion worth making i s t h e one often repeated i n r e c e n t years: t h e c r e d i t cooperatives must gradually eschew t h e c u r r e n t l y pursued easy way of lending money on t h e basis of manmum s e c u r i t y . Instead, and even i f it soundslike a cliche, they must r e o r i e n t themselves t,o t h e crop l o a n system with a l l t h a t t h e l a t t e r implies. Without minimizing them, with reasonably good management the shortcomings of the crop loan can be overcome i f i t i s indeed linked with g r e a t e r a g r i c u l t u r a l production. 52. I f t h e cooperatives a r e t o s h i f t t o t h i s neu base, they might prof- . t c b l f a d o ~ - t ile:.; set of . I i t e r i a . ? c..-,~-. ' ' h i l c t o tbc :.lone:lenders snd cci.ii:ler",iee!. banks, s e c u r i t y provides t h e basis f o r a loan, f o r t h e cooperatives, t h e loan should provide the b a s i s f o r s e c u r i t y . Unlike p r i v a t e organizations, t h e cooperative should view a loan t r a n s a c t i o n not so much in r e l a t i o n t o t h e s e c u r i t y offered as t o i t s impact on t h e productive capacity of the borrower. I t follows from t h i s t h a t c r e d i t t h a t does n c t h e l p the member t o s t a b i l i z e o r improve h i s economic candition a s a producer should be avoided by the cooperative even if adequate s e c u r i t y i s offered. Cooperatives cannot neglect s e c u r i t y so long a s loans must be repaid but they must adopt a f l e x i b l e view of s e c u r i t y requirements. This means t h a t -the cooperatives ought t o be prepared t o take the kind of a r i s k a commercial lending agency would not tz!ic. More concretely, t h i s implies t h a t the b a s i s f o r a cooperative loan should be the income of t h e nember and n o t the s e c u r i t y he o f f e r s . It i s recognized t h a t the c u l t i v a t o r w i l l continue t o depend on p r i v a t e moneylending agencies f o r the g r e a t e r p a r t of h i s c r e d i t ; Lhat, i n order t o safeguard. so f a r a s possible against repayment of such loans with cooperative c r e d i t , t h e cooperatives must gear t h e i r a c t i v i t i e s t o production c r e d i t in kind,rs.tl~cr thx1 t r y t o compete with moneylenders f o r nonproductive loans. The resources of t h e cooperatives w i l l be doubled during t h e Fourth Plan, but they can meet only a modest share of the t o t a l consumer c r e d i t borrowings of the c u l t i v a t o r s . For t h e foreseeable f u t u r e , and f o r reasons already s t a t e d , tJhe cooperaiives can cio no b e t t e r than concentrate - t h e i r a t t e n t i o n c h i e f l y on production credit,. 53. The one f l y i n t h e ointment i s t h a t 'this would leave the moneylenders without any competition i n t h e f i e l d of consumption o r subs?.stence c r e d i t f o r fainily l i v i n g . And t h i s i s a most important item f o r t h e c u l t i v a t o r . Admitting this, nothing e l s e can be done f o r a long time t o come. Total lending resources being what they are, t h e cooperatives could continue t o extend mixed loans, b u t t h a t would mean a t t a i n i n g n e i t h e r purpose. Vhat i s a t s t a k e i s whether they can make t h e ltcrop loann system a l i v i n g p a r t of g r e a t e r a g r i c u l t u r a l productivity. If they can iiot ,as has been the case so f a r , they have not r e a l l y t r ~ e d hard e;:ough. 3uf, ii G reneved t r i a l saccceds, t h e p o s i t i v e e f f e c t s 1,Lgllt be considerable. if t h o croj-loan sfstein i s a b a s i c and s e n s i b l e polic;r, a s it appears t o be, t h e cooperatives have no choice (and should have none) b u t t o use t h e i r funds f o r t h a t purpose. ?ersonal observations i n the f i e l d suggest t h a t most c u l t i v a t o r s uov.ld r a t h e r liave cash loans t o be used a s they please. This i s u n d e r s t a ~ d a b l c , fcr they gl%la,rs need cash. But t o s a t i s f y t h a t preference f o r t h e sake of t h e imncdiate needs i s t o discount tile f u t u r e and more l a s t i n g b e n e f i t s . :Jeighing one a g a i n s t t h e o t h e r i n terms 3 ' a v a i l a b l e resources ana l a s t i n 2 r e s u l t s , it seems reasonable 1 t o conclude t i a t t h e .%oneylenders mi;;ht w e l l be permitted t o go on playing t h e i r r o l e , w h i k t h e cooperatives used t h c i r resources t o advance a g r i c u l t u r a l production. If t h e cooperaLives performed well, tile r o l e of t h e monejrlenders would be reduced and t h a t of t h e cooperatives would be increased. 54 httit;u-ies and Co~l~!osit;ion Cooperai;ives must serve-he nzeds 0 t h s e n t i r e village conmunit,$, - 1 of . I d e a l l y , t h e cooperative particul-arly i t s weakest - - segments. It h a s been poin1;eti out t h a t t h e conditions f o r securing c r e d i t l i n e s preclude t h e i r serving t h s broad function and t h a t marly s i ~ a l l h o l d e r s t e n a n t s , a g r i c u l t u r a l l a b o r e r s .?nd a r t i s a n s r r e i n l a r g e p a r t kept out of t h e cooperatives. AmtLedljr, t h e wholesale enrolLient af indigent groups has i t s dangers, s i n c e it vlould 5.mpose upon tile cooperatives a l l t h e unresolved problems of t h e poor. 3n t h e other hand, t h e s e a r e t h e v e r ~ ~ people who need t h e a s s i s t a n c e of t h e cooperatives most. 3 u t f o r t h e time being: I1Exper:ience i n d i c a t e s t h a t t h e veaker secti0:is of tile cmi:iunits., e s p e c i a l l y a g r i c u l t u r a l l a b o r e r s and subnar2inal c u l t i v a t o r s , have n o t y e t b e n e f i t t e d t o t h e extent desirable frcri e x i s t i n g cooperative i n s . t i t u t i o n s . I n s p i t e of t h e outrigllt g r a c t s prov5ded f o r s p e c i a l bad debt reserves or" c e n t r a l cooperative banxs and pl5i::ar.j c r e d i t s o c i e t i e s , the i n s t i t l r t i o n s have not prov5ded rciequat:: loans t o t h e weaker sec-tions. A sche:.i!a i s , therefore, under consiiieratior~which e r v ~ i s a z e st h e f o r m a t i ~ i lof sepzrate cooperat; vt: i n s t i ' t u t i o n s exclusively f o r such r:eaker s e c t i o n s . Duri.ilg t h e rler;laining period of t h e i k i r d Plar:, i t Is prfqosed tc ictplernent .the scherne on a 350 nit,~ p i l o t b a s i s i n appr o f i : . ~ a t ? l ~ r c ~ i ; ~ ~ J clcvelol;i_xent Slocks attached t o t h e conr;lunit;r developrr;e~lt, and. c o o ~ e r a t i v et r a i n i n g c e n t r e s . Cutlay on t h e sc'ieiile during t h e 'Third Flari ~111 be rou2hi.y of t h e order of fis. 1 crore. On the bas5 s oT t h e experi- ence gainsd during this Plan, it i s proposed t o extend t h e schen~e i n t h e Fourti1 Five Year ?Ian and i t i s envisageti t h a t one such sociot.? u i l l b s e t up i n each coimunity development lock Qr t h e : end o 'the Fourth Plan. T h e f i n a n c i a l provision required i<il!. be i t o t h e e ~ t e n t 3s. 15 c r o r e s I n this regard.I1l/ of - . - - I/ Reser.~eSank 02 Intiia A g r i c u l t u r a l CredLt 13ei)art;nent. Central Off i c e . Septe.::ber 30, 196L. The quotatf on i s fra. Appendix -n\rLII, Coo3erative . - C r e d i t i n the Fourth Plan, page 3. 55 Thc nembership of a l l pri~naryc r e d i t s o c i e t i e s i n 1962-63 repre- senied about 30 per cent of the t o t a l r u r a l population. The promoters of the cooperatives wish t o see the membership enlarged, and they w i l l undoubtedly succeed. Yet, as w i l l be pointed out l a t e r , a l a r g e section of the r u r a l population "... views them as an o f f i c i a l outside organization; a s sorething a l i e n t o the v i l l a g e and not q u i t e dependableUl/. Cheap c r e d i t furnished by the cooperatives i s a g r e a t inducement, but apFarently i t i s n o t without validity that : ",The average a g r i c u l t u r i s t s do n o t f e e l ericouraged t o join them f o r three main reasons. F i r s t , t h e i r r u l e s a r e i n t r i c a t e and a r e not easy f o r ordinary v i l l a g e r s t o grasp. Second, i n having t o deal with them t h e people a r e required t o sign a l a r g e number of papers and t h i s they do not l i k e t o do f o r the f e a r of get,ting involved l a t e r i n l e g a l and administrative complications Third, mney anl g r a i n obtained from the s o c i e t i e s have t o be returned . on a s p e c i f i c date, and i n t h i s respect the s o c i e t i e s a r e much l e s s accommodating than the v i l l a g e moneylenders. "21 56 It i s d i f f i c u l t t o describe accurately the composition of the menbership by groups; the most t h a t can be s a i d is t h a t it i s both as varied as the s o c i a l and economic s t r u c t u r e of the v i l l a g e and j u s t a s anequally represented. One finds i n it r i c h and middle c l a s s landowners, proportionateiy fewer tenants and s t i l l fewer a g r i c u l t u r a l laborers ana a r t i s a n s ; nor is t h e membership lacking in traders, rice-millers, moneylenders, l o c a l p o l i t i c i a n s and s o on. O i t s face, it i s a llrnixl' of a l l t h e elements of the community; n the r e a l i t y i s d i f f e r e n t . Obtaining any c r e d i t and the volume of c r e d i t obtained i s r e l a t e d to the l i n e s of economic s t r a t i f i c a t i o n . The x e a l t h i e r groups take the f u l l e s t advantage of what the cooperatives have t o offer; they a r e "insiders'l and they control the cooperatives. The power s t r u c t u r e of the Indian v i l l a g e being what it i s , t h i s is a n a t u r a l development; and whatever t h e idealized noLion of "cooperationf7, "village democracyI1, and 'legalitarianisin" t h e f a c t i s t h a t the v i l l a g e im7oses i t s own pattern upon t h e cooperatives. I n general, the cooperatives do not "belong11 t o the rnass of the ~nembership, but t o a r e l a t i v e l y few individuals who USE o r abuse them f o r t h e i r own purposeE 57. Coopera.tives and t h e Governr~ent. This weakness i s conpounded by t g e t another r e a l i t y : the cooperatives a l s o 7rbelona11o the Government i n the sense t h a t they ark not made up of a f r e e associat,ion of persons independently making use of them. The l a t e Fri~nel l i n i s t e r llehru made t h a t point c l e a r when he said: - 1/ S. C. Dube, I n d i a ' s Changin~Villages: Human Factors i n Comm1mity Development, page 66. Lendon, Routledge and Kegan Paul, 19%. - 2/ Daniel lhorner, Prospects f o r Cooperation i n Indian Agriculture, page 8.  "If i t is governmental control, good or bad, i t i s not . cooperation, whatever e l s e i t may be.. 'd'here people, non- governmental people, have taken a lead, have devoted themselves, the movement has flourished and grown... I d i s l i k e the association of government i n cooperation except a s an agency helping i n funds, e t c . l1 Government control and d i r e c t i o n of the cooperative iilovement i s a h i s t o r i c a l legacy. The cooperatives i n India owe t h e i r o r i g i n l a r g e l y t o the i n i t i a t i v e of the S t a t e , and t h e i r development had been nade the s p e c i a l r e s p o n s i b i l i t y of the Registrar. Although many e f f o r t s have been made since Independence t c strengthen the non-official voluntary character of the movement, i t is s t i l l the Department of Cooperation which primarily d.ecides hot] funds a r e used, who a r e t o be i t s members, who a r e t o be given loans and on what basis, in what amounts, e t c . The day-to-day working methods a r e prescribed and supervised by t h e Department. The Board of Directors of rnany c e n t r a l and s t a t e i n s t i t u t i o n s are nominated by the Government. The Cooperative Law makes the Registrar of Cooperative Societies the repository of a l l powers. Though the movement has grown in s i z e i n many directions, t h i s t i g h t governmental control s t u l t i f i e s t h e cooperative movement, and i n the eyes of many of t h e i r members, the cooperatives a r e not t h e i r cooperatives, but primarily instruments of Government. 58. PIuch has been said about the de-officializing of the cooperatives. For example, there is t h e k ~ j ~ n c t i o n offered l a s t year t h a t Ifthe existing laws, r u l e s and proceaures r e l a t i n g t o cooperative s o c i e t i e s should be modified t o enable the cooperatives t o function f r e e l y and organize t h e i r work and a c t i v i t i e s without excessive o f f i c i a l interference and red- tapism" .l/ I n the same context, "The movement, i f it is t o succeed as a popular moveGnt, must increasingly be in the hands of non-officials, who must encourage :L i n every . GOVCI-I.. ;n7t clA,'Lcisls should b- t ~ i t h d r z i'ro,; t l board oT directors of ~.~ ~ moperative organizations. 112/ These well-meant admonitions have brought no change. The s t a t e s c o n t h e t h e i r f i n a n c i a l assistance through contribution: to the share capital, loans f o r the construction of buildings and subsidies towards managerial expenses. A l l these are offered by tb S t a t e Departments - of Cooperation d i r e c t l y t o t h e s o c i e t i e s and t h i s involves direct control and supervision. Hence the o f f i c i a l character of the cooperatives and, in a great measure, t h e i r apartness from the g r e a t majority of t h e i r membership. This i s one more reason why so many of the cooperatives i n India continue to languish s i x t y years a f t e r the inception of the movement. - 1/ Community Development ,in< Cooperation, r 25. ublisl~ed ,In,.j - by Ministry of Community Development and Cooperation, March 1964. The quoted statement i s evidently based on one of the recommendations of the National Development Council of November 1958. - 2/ Ibid, pages 37-38. 59 h.ofitabfli';?i of the CooperatiTi_es, The p r o f i t a b i l i t y of the cooperatives i s not easy to determine, b u t the summary data presented by t h e Reserve Bank sheds considerable l i g h t on the point and on the performance of the cooperative i n s t i t u t i o n s i n general. I t appears, f o r example, t h a t i n 1962-63, t h e S t a t e Cooperative Banks earned l e s s than one per cent on a working c a p i t a l of Rs. 281 crores, and t h e Central Cooperative Bank just over one per cent on a working c a p i t a l of Rs. 400 crores. Incomplete data on primary 47,000 incurred a a g r i c u l t u r a l s o c i e t i e s would seem to indicate t h a t , i ~ h i l e loss, 138,000 operated a t a p r o f i t t h a t nay be estimated a t roughly 2 per cent of t h e i r working c a p i t a l . O the 321 primary land mortgage banks, 224 operated f a t a l o s s . Finally, out of a t o t a l of 201,000 s o c i e t i e s 1/, 89,000 s o c i e t i e s o r 44 per cent operated a% a loss. The data a r e f a r from-precise, but i t is apparent t h a t even i n the case of i n s t i t u t i o n s operating a t a p r o f i t , the p r o f i t i s small; t h a t the l i n e separating p r o f i t a b i l i t y and l o s s i s rather thin, and t h a t but f o r the favorable or a r t i f i c i a l conditions under which cooperative i n s t i t u t i o n s acquire t h e i r working capital, most of them would be operating i n the red. - 1/ These include the following categories : s t a t e and eentral cooperative banks; primary credit a g r i c u l t u r a l s o c i e t i e s ; cen"ura1 and primary 1:lort:age ~ a n k s ; primary non-agricultural s o c i e t i e s ; and non-credit societies. 60. From t h e preceding discussion a number of conclusions nay be drawn. They f a l l i n t o two categories: t h e very few cautiously-positive and t h e very many c l e a r l y negative. A s t o t h e first, t h e volume of cooperative c r e d i t has s t e a d i l y and s i g n i f i c a n t l y i n c r e a s e d during t h e ; ~ a s tdecade even though the number of borrowers has declined i n the p a s t fetr years. The q u a l i t y of t h e increased volume of c r e d i t needsnuch improvement and there i s wides~reaG recognition t h a t t h i s must come about. Targets t o expand t h e number of cooperatives, a s d i s t i n c t from the number of members, a r e no longer pursued; on t h e contrary, t h e aim has been s h i f t e d i n t h e d i r e c t i o n of fewer bur b e t t e r , more viable, cooperatives, Yith t h i s change has ended t h e controversy and confusion created by t h e p o l i c y of one village-one c r e d i t cooperative. Poorly though cooperatives d i s t r i b u t e nitrogenous f e r t i l i z e r s , they have played an important r o l e i n making the farniers aware t h a t f e r t i l i z e r i s a major a i d t o a g r i c u l t u r a l productivity. Crop-loan c r e d i t i s n o t widely available, b u t i t i s a v a i l a b l e i n c e r t a i n d i s t r i c t s of sorne S t a t e s . In addition, i t i s recognized, a t l e a s t in theory, t h a t the l i m i t e d p r a c t i c e of extend- loans on t h e b a s i s of croF production r a t h e r than tangible a s s e t s must u l t i m a t e l y p r e v a i l and the chances a r e t h a t the p r a c t i c e w i l l be gradually extended. Last but not l e a s t , although t h e cooperatives as a whole a r e n o t i n good shape f o r reasons given above and f o r a d d i t i o n a l reasons summarized below, they a r e part-and-parcel of the r u r a l landscape of India. Millions of c u l t i v a t o r s can no longer do without them. Vhatever the l i m i t a t i o n s of the cooperative movement, i t i s t h e r e to stag. It must n o t be f o r g o t t e n t h a t s i n c e 1904, under t h e B r i t i s h but especiall-jr s i n c e Independence, the view has been advanced t h a t the r u r a l economy can be served b e s t through cooperatives. The c o n s i s t e n t r e i t e r a t i o n of t h i s idea has n o t been outrleighed by the existence of p o l i c i e s and p r a c t i c e s which in no way contributed t o t h e strengthening of t h e cooperative movement. For these reasons, the e f f i c a c y of cooperatives a s an a i d t o r u r a l progress i s not questioned by e i t h e r Indian proponents o r Indian c r i t i c s ; t h e only i s s u e i s how t o improve t h e i r operations, 61. A s t o t h e negative aspects of the cooperatives, they a r e many and varied. The cooperatives of I n d i a have not v e t evolved an e f f i c i e n t , system for- t h e d i s t r i b u t i o n of c r e d i t , i n t e r n a l resources more nearly cr~mmensuratewith t h e i r operating needs, a p r a c t i c a l concern f o r t h e a s s i s t a n c e of t h e i r weak members, a marketing system of some magnitude, or a cooperative organization c l o s e l y linked with t h e promotion of a g r i c u l t u r a l production. F e r t i l i z e r d i s t r i b u t i o n and the crop loans they make a r e r e l a t e d t o a g r i c u l t u r a l productio but t h e r e l a t i o n s h i p i s more a c c i d e n t a l than organic. That the cooperatives have been the r e c i p i e n t s of a g r e a t d e a l of governmental f i n a n c i a l support i s understandable, but handini; o u t loans on t h i s b a s i s i s no g r e a t f e a t , p a r t i c u l a r l y when t h i s i s done with l e s s s k i l l than might be expected a f t e r years of p r a c t i c e . The cooperatives have not gone f a r beyond the function of making loans. It is a truism t h a t cooperatives i n Japan and Taiwan, and i n t h e ?Jest have added enormously t o r u r a l welfare i n a v a r i e t y of ways, i n c h d i n e of course, t h e stimulation of a g r i c u l t u r a l production. Coopratives i n India e x h i b i t no such linkage between means and ends. This i s demonstrated even when c r e d i t i s extended f o r production purposes. I n such act,ivities, there needs t o be a functioning i n t e r - r e l a t i o n s h i p between the a g r i c u l t u r a l technicians of the departments of agriculture and t h e credit, s o c i e t i e s . I n f a c t , there i s l i t t l e communication between the two i n India. The farmer may use a production loan to good advantage, but the cooperative i s not s u f f i c i e n t l y concerned in making c e r t a i n t h a t a r i s e i n a g r i c u l t u r a l production i s the ultimate aim of such a loan. 62. Not unrelated to t h e above i s the f a c t t h a t , by and large, t h e cooperatives a r e not the educational i n s t i t u t i o n s which they normally ought t o be. One of the basic r o l e s of a cooperative should be t h a t of guiding the c u l t i v a t o r to b r r m a t the r i g h t time, in the r i g h t amount, f o r the righfv ends and t o repay a t the r i g h t date, a s well a s to teach him t o save so t h a t he may not have t o borrow. These a c t i v i t i e s a r e barely within t h e purview of Indian cooperatives. P a r t l y because of t h e i r actual services to farmers i n general, and p a r t i c u l a r l y because of the type of service they give LO t h e economic needs of t h e low-income c u l t i v a t o r s , they a r e a far cry frola the original purpose of t h e cooperative mcvement i n India. I n sumnlarjr, t h e cooperatives have f a i l e d t o advance t h e progress of what is known as tk~e"Integrated Rural Credit Scheme": ( a ) c r e d i t based on crop production r a t h e r than s e c u r i t y afland o r other tangible a s s e t s ; (b) linking c r e d i t with cooperative marketing of the produce of the c u l t i v a t o r ; and ( c ) application o f the v i a b i l i t y c r i t e r i a and a l l t h a t stems from these pre-conditions of strengthening the cooperatives. Only one of the elements of the integrated scheme, s t a t e p a r t i c i p a t i o n i n cooperative share c a p i t a l , has been realized. This was n o t d i f f i c u l t to a t t a i n , f o r Union and S t a t e subsidies a r e t h e lifeblood of the cooperative movement i n India. According t o the Planning Commission, the key t o the success of the cooperatives in t h e Fourth Plan i s " e f f i c i e n t management of business, the q u a l i t y of the cooperative leadership and administrative arrangements f o r supervision of cooperative a c t i v i t i e s a t each l e v e l " l / . These a r e a l l t a l l orders, and t h e question of questions i s how they are-to be realized. 63. The problem i s the more serious because during the Fourth Plan t h e cooperatives xi11 have much greater funds t o dispose of. By the end of the Fourth Plan (1970-71) t h e i r loan resources are expected to r i s e from R s . 4.40 crores i n 1962/63 t o R s . 050 crores, of which R s . $60 will cover short-term loans and R s . 90 million,medium. A s in t h e past, the p r i n c i p a l contributor w i l l be the Reserve Bank which w i l l r a i s e i t s advances to about Rs. 300 crores, o r 45 per cent of the t o t a l . It i s probably correct to say t h a t the Bank's contribution might be f u r t h e r increased i f the an.ticipated reorganization of the cooperative s t r u c t u r e d e r n d e d greater external financing. I n add.ition, the S t a t e Bank, which i n tvhe past has contributed l i t t l e t o cooperative financing, i s coming into t h e picture; its conczibution to t h e c r e d i t cooperatives under the Fourth Plan i s estimated by the Reserve Bank a t about R s . LO crores. - 1/ i.lemorandum on the Fourth Five Year Plan, page - 35. 6L. External C o o ~ e r a t i v eD i f f i c u l t i e s . Xot a l l the d i f f i c u l t i e s emerienced by the cooperatives can be l a i d a t t h e i r door. The point can be iliustrated two ways. To begin with, they a r e called upon t o serve an a g r i c u l t u r a l economy with serious weaknesses and d i s a b i l i t i e s . Consider t h e case of sma1.lholdings. A well-known Indian economist, D r . A H Khusro, put .. i t t h i s way: "Farm managerent data of recent years lend s u p p o r t i ~the b e l i e f t h a t under average conditions, a farm of l e s s than 7.5 acres - s i z e which i n c i d e n t a l l y is t h e average size of farm i n I n d i a - can n e i t h e r provide adequate family consumption, nor support a p a i r of bullocks, nor adequately employ faroily l a b o r or bullock labor of a s i n g l e p a i r , nor, indeed, d e l i v e r surpluses f o r purposes of i n d u s t r i a l i z a t i o n . Such a farm i s q u i t e s e r i o u s l y disabled aml if f u l l value were imputed t o hunan and bullock labor, i t turns out to be a non-prof it making venture. "l/ - This statement d e a l s with farmers working owned land. Even on farms of t h i s s i z e the c u l t i v a t o r presents a number of problems t o the cooperative before and p a r t i c u l a r l y a f t e r a bad crop year, with non-recovery of loans a s a top consequence. 65 Perhaps even more to t h e p i n t is t h e case of farmers averaging 5 acres, o r what D r . Khusro c a l l s "the l i m i t of economic f e a s i b i l i t y under Indian conditions of todayu. Fhat is bad i n the cases c i t e d above becomes worse i n these instances. The area occupied by t h i s group i s only 12 per cent of t h e t o t a l farm acreage. "ht t o say t h i s , D r . I(husro remarlts, Itis not t o f o r g e t t h e problem of 56 per cent of farm families c l u s t e r i n g on a mere 12 per cent o f acreage and facing d i s a b i l i t i e s of small consumption, small employment and small surplus. 2/ The explosive character of these f a c t s should not keep us here. Tihat zs relevant i s t h a t these f a c t s go f a r toward explaining why millions of c u l t i v a t o r s do n o t meet t h e i r loan obligations; above a l l , it points to an important cause of the s t r a i n imposed on t h e cooperatives f o r reasons o t h e r than t h e i r poor judgment i n making loans. Moneylenders prosper on t h e poverty of t h e c u l t i v a t o r s , cooperatives do not. Any assessment of t h e cooperatives must, therefore, take i n t o consideration t h e s t a t e of the country's a g r i c u l t u r a l economy i n general and the position i n i t of v a s t groups of farmers. I n a r e a l sense, and while not explaining everything, the cooperatives a r e t o a l a r g e extent victims of a s i t u a t i o n n o t of t h e i r making. !hey cannot r e v i s e t h e inequitable land s t r u c t u r e of India, and, a t best, they can, and only occasionally, a l l e v i a t e i t s worst features. 64. There i s another f a c t o r which cooperatives a s cooperatives cannot but have d i f f i c u l t y i n overcoming. Having lavished p r a i s e on r u r a l development i n the Punjab, "where i t s people a r e unmatched f o r vigor, e n t e r p r i s e and - 1/ A . K. Xhusro, Rural Development, ?age 13. Unpublished, mimeographed paper. - 21' Ibid. endurance, S i r I~lalcolmDarling concludes h i s book on t h i s sentence: "But one thing is lacking - communal harmony. Eever were communal r i v a l r i e s so b i t t e r o r so bloodstained. Yet, a s I wrote 22 years ago, if they cannot be replaced by a healthy national patriotism... everything e l s e w i l l be in vain."&/ The point of t h i s lament i s t h a t these d i v i s i v e forces have found t h e i r way i n t o the cooperatives and have tended t o weaken t h e i r effectiveness, often making a ~nockeryof the very term llcooperationll. 67. Darling repeated t h e quoted l i n e s in 1947; i n 1965, ;"Zr. C. Subrammi: Winister of Food and Agriculture, returned to the s a m theme 2/, though not drawing so sharp a conclusion. He affirms t h a t the cooperatiSes a r e the only answer lft o t h e i l l s t h a t a f f l i c t our a g r i c u l t u r e and our society", and wonders a t the same time a t t h e reluctance of farmers t o a v a i l thelnselves of cooperative c r e d i t . 'IIs it," he questions, I1because the cooperative orthodoxy elevated t h e r i t u a l of form f i l l i n g a s more important %ban t h e objective of easy credit?", and then proceeds t o give h i s answer: "one o f t h e main defects of our cooperatives a r i s e s from the s o c i a l background against which they operate. They i n h e r i t e d much of faci;iousness and prejudices t h a t a r e a p a r t of our r u r a l scene." Here again t h e r e s p o n s i b i l i t y f o r contentious v i l l a g e groups cannot be charged t o the cooperatives a s such. After a l l , the inner workings of an Indian v i l l a g e long antedate the Indian cooperatives. 68. I n t e r n a l Cooperative D i f f i c u l t i e s . The views of S i r 14alcol.m Darling r and M. Subramaniam have much v a l i d i t y , but they t e l l only p a r t of the story. The unsatisfactory performance of the- & j o r i t g bf the cooperatives i s n o t only a r e s u l t of the h i s t o r i c a l process of s o c i a l and economic relationships within t h e v i l l a g e community, o r of t h e proprietary r e l a tionship of Indian c u l t i v a t o r s t o t h e land. There i s a great d e a l i n the performance which is man-made by people outsiCe of the village, occupying o f f i c i a l positions of r e s p o n s i b i l i t y a t t h e Center, S t a t e , D i s t r i c t , Block and o f t e n i n the v i l l a g e i t s e l f . This is not t o overlook the doings within t h e v i l l a g e a s they a f f e c t the cooperatives, but i t would be wrong t o overlook these other forces a s important causes of mismanagement and misdirection. !*at emerges i s + h a t the i n d i f f e r e n t work of t h e cooperatives cannot be a t t r i b u t e d t o cooperation p e r se, but i n a l a r g e measure t o cooperative decision-makers and administrators. A l l t h i s s t i l l prevails and the question t o be raised is: tJhat of the immediate future, p a r t i c u l a r l y i n r e l a t i o n t the Fourth Plan, the doubling of the lending o resources during t h a t period, and the r a i s i n g of membership t o about 45 million families? !.Jill the cooperatives be i n a position to demonstrate t h a t with much greater funds a t t h e i r disposal t h e i r performance x1 r e g i s t e r a considerable i1 improvement over t h e past? - S i r lalcolm Darling. 1/ Op. c i t . page 264. - 2/ & r C. Subramaniam. i. Op. c i t . 69 - As the c o o ~ e r a t i v e es r e constituted now, the answer i s llnoll I n . ... o f f e r i n g this conclusian ?Je take note o f the o f f i c i a l statement made i n l a t e 1964 t h a t "It i s obvious t h a t things cannot go on as a t present, and special e f f o r t s have t o be made t o strengthen t h e c r e d i t s t r u c t u r e and improve i t s performance."l/ Nor a r e we unar.tare of the prescriptions of t h e National Economic Council gf 1958, and of those of V. L. Ebhta Committee of 1959; of 70 recommendations made by S i r Nalcolm Darling in 1957; and of t h e 132 recommendations by the 14inist r y of Community Development and Coopera tion, spelled out i n e a r l y 196L, on how t o improve the work of the cooperatives 2/. The l a s t group c o n s t i t u t e s the elements o f a cooperative Action Program in- d i s t r i c t s ~ l e c t e d o r intensive a g r i c u l t u r a l development, but the d i s t i n c t i o n f between t h e cooperatives i n these d i s t r i c t s and those of other d i s t r i c t s i s not great, although the former a r e f i n a n c i a l l y t h e favored ones. The f a c t i s t h a t even i f the number of cooperatives a r e reduced t o 150,000, only 20,000 - 30,000 among them w i l l be t r u l y viable; most of t h e r e s t t ~ i l be l g r e a t l y i n need of propping up f o r years to come. i?rovisions a r e rnade t o t h i s e f f e c t in the form of e i g h t tries of subsidies, ranging from subsidies t o the p o t e n t i a l l y viabl-e primary c r e d i t s o c i e t i e s through primary lana mortgage banks. The t o t a l requirements of t h i s kind a r e estimated at, Rs. 52.5 crores ) (Table v. Since t h i s is the e a s i e s t and common form of assistance, the funds w i l l be made available. DJ~,i n t h e f u t u r e as in the past, additional funds cannot be decisive. 70. - Action Program :;bat i t Mignt Do. Since s o many sound prescriptions hava already been made which are -u., kno1.m t o the a p p r o i ~ r i a l eo f f i c i a l s of the :I! Indian Government, i t i s n o t our in3ention t o o f f e r s t i l l aore prescriptions which rtould be t o pretend t o omisciencc which we do not have. Instead, i t seems more u s e f u l t o suggest t h a t the recomnentia Lions, useful as t h e r may be, cannot possibly be carried out simultaneously even i n a favorable s e t t i n g , Iliot a l l of them are of equal importance, and a h a l f a doaen or s o of the llmore equal1' recommendations should be select,ed f o r prioriCuy treatment, centering on what i s c r u c i a l i n reorganization, v i a b i l i t y , crop loans, and l i m i t i n g t h e t r a i n i n g of personnel f o r areas most e s s e n t i a l t o the work of the cooperatives. For our part, we merely wish t o underscore two recominendations which seem t o u s the most immediately s i g n i f i c a n t , These w i l l be presented shortly, bui i n the ?leantime i t is well t o mention b r i e f l y the substance of the Action Program. Its recormendations cover every f a c e t nf the poblems facing the cooperatives and they make c l e a r t h a t indeed llthings cannot be allowed t o go on a s a t present". They are too voluminous t o be c i t e d a t great length and we limit ourselves t o the following sample: - 1/ Reserve Bank of India. Agricultural Credit Department, Central Office. Septeyaber. 33, 1964. The quotation is fmm Appendix VIII on llCooperative --- - Credit in t h e Fourth PlantT, page 1. - 2/ A Outline of Action Programme f o r Coo?erabive Credit i n the D i s t r i c t n Selected f o r Intensive Agricultural Development. Published by the National Cooperative Development Corporation, June 1964.  '!The pot,en;,ially viable s o c i e t i e s should b e i d e n t i f i e d and e f f o r t s should be concentrated on s h e i r a t t a i n i n g a v i a b l e s t a t u s within a specified period. Societies n o t l i k e l y t o be viable should be taken up f o r reorganization through amalgamation defunct s o c i e t i e s w i l l need to be liquidated.. . ... personriel) should be qualified and should a l s o be oriented t o the Most of the They (key bank new policies... Financial assistance on a s u i t a b l e s c a l e should be offered by Government to enable the banks which do not already have such s t a f f t o make the deficiency ...Training programmes w i l l a l s o have t o he organized f o r t h e supervisory staff... Recovery- mindedness has t o be developed a t a l l l e v e l s so t h a t remissness in timeiy repayment of dues is not only not encouraged but i s regarded a s a dis-service b t h e cornunity ... Every e f f o r t should be made to build up the a g r i c u l t u r a l c r e d i t s t a b i l i z a t i o n fund a t a l l levcls... S t a t e Goverrments r d l l have t o ensure t h a t the proposed measures a r e implemm ted by the rllarke t i n g s o c i e t i e s Present loaning p o l i c i e s and procedure followed by cooperatives ... i n most S t a t e s w i l l need t o be changed so a; t o make them produc tion-oriented. .. Each primary a g r i c u i t u r a l scjciety should be in position to have an o f f i c e and employ a full-time manager if i t i s t o operate t h e loaning p o l i c i e s and deposit schemes recommended above... (and f i n a l l y ) Crganic l i n k s between the v i l l a g e primaries and the inarketing sccietj-cs should be b u i l t up s o t h a t the managements of the v i l l a g e s o c i e t i e s actively help i n providing s u f f i c i e n t Sslsiness f ~r the nlarke Ling s o c i e t i e s . I t & / 71. The jargon of the recomendat.ions aside, i t i s hard t quarrel with o ;o the 132 items on what should be done. But :w poin.4~ n t h i s regard arei - not c l e a r : ( a ) how they a r e going t o be carried out, and (b) who is going - t o carry them out. I n a l a r g e measure the answer to ( a ) is c o n t h g e n t on (b), and it. i s f a i r t o i n f e r t h a t many of the sane inexperienced and/or unwilling hands w i l l be called upon t o change t,heir a t t i t u d e s and h a b i t s of work, which would be quite an undertaking even i f it could be managed. I f we a r e t o judge by the f a t e of most recomenclations generated i n t h s past, the c o o p r a t i v e s o are not e a s i l y given t implementation of sound advice, and especially when given i n such l a r g e dosagos. Iience the soncentratior~on a few meaningful p r i o r i t i e s with the best t a l e n t available. This can no longer be delayed without the most serious consequences t o the c o o ~ e r a t i v e mcvement a s a whole. This is f u l l y unders.tood i n important cooperative c i r c l e s i n India, md one need not be overly. ~ p t i m i s t i ct o assume t h a t what f a i l e d i n the p a s t c a v o t succeed i n t h e f u t u r e i f the application and concentration of e f f o r t a r e made in f u l l measure. - 1/ An Outline of Acticn hogramme f o r Cooperative Credit i n the D i s t r i c t Selected f o r Intensive Agricultural l)evezpment. Published by the National -- Cooperative Developnent Corporation, June 196ir. 72. O f a l l +,he recommendations, by f a r t h e most important; one r e f e r s t o the elimination of t h e tens of thousands of weak or dormant primary c r e d i t s o c i e t i e s . These a r e l a r g e l y l i t t l e more than paper c o o ~ e r a t i v e sard a r e millstones around the neck of the cooperative moverent, created under t h e impact of fttargetismlfand very dubious assumptions. Unless t h i s is d e a l t with a s t h e f i r s t order of business, most other recommendations w i l l probably f a l l by t h e wayside. Their continued existence can be insured only by continuous s c a t t e r a t i o n of scarce resources. Fast experience with t h i s k n id of assistance given t o weak o r dormant primary s o c i e t i e s leads to t h i s conclusion : 73 Attempts t o reorganize such cooperatives are n o t new, nor a r e the p i t f a l l s i n t h e bray of such e f f o r t s . I n the &fast, the majority of s t a t e s have n o t taken t h i s kind of, program r e v i t a l i z a t i o n seriously. A t best, r e v i t a l i z a t i o n of cooperatives meant so the s t a t e s the maintenance of re&ular o f f i c e s and the employment of full-time paid s e c r e t a r i e s by these cooperatives, r a t h e r than t h e volume of t h e i r business turnover, accmnulation of reserves, n p r o f i t a b i l i t y , and, i n sum, good management. O t h i s score we may quote the f o l l o t ~ i n: g ltiuiost of the S i a t e s l a i d clown sone c r i t e r i a f o r s o c i e t i e s to be taken up f o r r e v i t a l i z a t i o n . But i n many cases, r e v i l a l i z a t i o n of s o c i e t i e s was interpreted t o aiaount t o a l i t t l e more than the appointment of a clerk i n each s o c i e t y with the help of the subsidy provided by the Government. Th.ere was no systeniatic program f o r liquidation of hopelessly bad societies... So r e v i t a l i z a t i o n schemes, i n e f f e c t , were l i 5 t l e more than provision of managerial subsidy... Thus, except perhaps in a few d i s t r i c t s , n e i t h e r was the scheme of r e v i t a l i z a t i o n of small s i z e s o c i e t i e s properly formulated nor was the program s a t i s f a c t o r i l y implemented."li - 74. There a r e other reasons why the pruning of the cooperatives of t h e i r deadwood w i l l not be easy through the normal process of an executive order issued fron the top t o be carried out by the l a r e r echelons. I t i s not a simple operation. The membei-s of cooperatives prefer t o have the organiaations located i n t h e i r own villeges. V i a b i l i t y c r i t e r i a a r e of no great moment to them; they would r a t h e r have t h e i r cooperative as it i s i n i t s familiar surroundings, instead of t r a v e l l i n g even a few miles to a stronger, but unfamiliar, cooperative. This i s p a r t i c u l a r l y true of the few who dominate the cooperatives, something they could not do i n a strange environi-ient i4Oreover, among the opponents must be counted many c o o p e ~ a t i v eo f f i c i a l s . They, too, have a vested i n t e r e s t i n the primary s o c i e t i e s and are l o a t h to give up whatever privileges they enjoy in the existing s e t t i n g . 75. P e r h a p conscious of these obstacles, the Reserve Bank 5 s apparently prepared t o apply "strong arm" methods through t h e exercise of the power of the purse. The Bank never l i k e d the principle of "one vi2lage-one cooperativef:. - lj Trends i n developments of cooperatives in the context of t h e Integrated -- - Rural Credit Scheme. An assessment based on the Rural Credit Follow-up Studies, page 16.  o Nw t h a t the Government has f i n a l l y recomised the f u t i l i t y of the 1958 decision t h a t gave r i s e t o the above formula, the Reserve Bank may apply the refusing t o t o e the l i n e : following measures t o c o o ~ e r a t i v e s (a) o N Government share c a p i t a l contribution. ( b) o N managerial subsidies. (c) o N assistance f o r godotms, and, a s a f i n a l and t e l l i n g measure, (d) N extension of c r e d i t to r e c a l c i t r a n t primary s o c i e t i e s . o The impression of t h i s observer carried away from two v i s i t s to the Reserve Bank in Bombay i s t h a t the Bank i s prepared t o apply these measures. Whether i t w i l l a c t u a l l y do so i s f a r from certain. Action w i l l not depend only upon the Bank o r Center's say so; much w i l l depend upon t h e a t t i t u d e of t h e s t a t e s which, i n t h e f i n a l analysis, have a l o t to do with the resolution of t h i s issue, a s with much e l s e f a l l i n g within t h e i r prerogatives. 76. The rrreceding paragraph implies speedy reorganizat,ion and, i f need be, through "strong armtt methods. It i s tempting t o urge t h i s approach, but there i s a weakness i n it t h a t must not be overlooked. Because of the rapid organization of the primary c r e d i t s o c i e t i e s , t h e i r foundations a r e not s o l i d , and without s t m n g prinary u n i t s e f f e c t i v e organization an6 administration a t higher l e v e l s could not be created. A some~~hat similar mistake in reverse might be committed by tearing them dorm too quickly. The reason is simple: i t i s e a s i e r to build new cooperatives with ample Government assistance than rebuild, reorganize o r eliminate e x i s t i n g ones. The h i s t o r y of t h e cooperative novement i n India i s r e p l e t e with instances of how extremely d i f f i c u l t and - costly - i s an e f f o r t of t h i s s o r t . The p a s t prewar reorganizations show t h a t the path of cooperation can be strewn with vrectcage. I t is apparent, therefore, t h a t the r e t r e a t from !lone v i l l a g e -one coopsi-ativefl c a l l s f o r a most sustained and c a r e f u l l y thoughi-out e f f o r t , both in the l i g h t of the overt or covert opposition t o t h e elimination of a l a r g e number of cooperatives, and t h e urgent need of rebuildin_ t h e cooperatives a; saundy a s many of then :!ere unsoundly cllr:ated. 77. I n a l l t h e discussions on t h i s subject it i s indicated t h a t the number of cooperatives i s t o be reduced from 215,000 - 211,000 t o about lf;0,@00. I f t h i s were done, i t woulci be a considerable achieveinent; y e t , even with a doubling of lending resources, the process of creating f i n a n c i a l l y sound cooperatives woulc! have t o gu deeper than t h a t ; t h e i r numbers would have t o be reduced t o no more than about 100,000. O t h a t basis, arid allowing the n 20,OCO o r more well-functioning cooperdtives a lending capacity cf R s . 200 crores, the remaining 80,000 would have an averagc business turnover of ~s.S3,00i per year, o r close t o the estimated rninimum of R s . 60,WO. I f and when t h i s comes about, i t w i l l be demonstrated t h a t an action program in the cooperative f i e l d i s possible, and t h a t a cooperative is not a sacred cow merely because i t i s called cooperative. The most important outcome rnight be t h a t with a concentration r a t h e r than a d i s p e r s a l of h u m and material resources, many of the recommendations of the Action Program might gradually f i n d t h e i r application. But a l l of t h i s , we repeat, is contingent on the e s s e n t i a l priority - the ridding of the cooperative novement of the so-called cooperatives createa i n a rush f o r more of the same, and a t the expense of service and quality . 78. Judging by the order i n tjhich the recommendations f o r t h e Action R-ogram a r e arranged, reduction in t h e number of cooperatives i s given top p r i o r i t y . A year has gone by since the announcement was made and it is too e a r l y t o judge the shape of things t o come, l e t alone i t s f u l f i l l m e n t . There i s evidence t h a t some s t a t e s , notably Uttar Pradesh, a r e considering ways and means of t r a n s l a t i n g t h i s p r i o r i t y i n t o action. The Indian cooperative leadership knows t h a t there i s a wide gap between thought and action. And there is no point i n laboring t h e obvious, namely, t h a t only a determined leadership a t a l l l e v e l s can see t o it t h a t the gap i s eliminated. A l l we can do is express the hope t h a t t h i s time, the Action Program w i l l j u s t i f y i t s name, and t h a t a basis w i l l be createa f o r action on the long list of additional measures bearing on more effective performance by t h e cooperatives. 79. Cooperatives and Competition. Most of t h e advice on improving the work of c o o ~ e r a t i v e centers on the need to rejuvenate them through some form of reorganization. This, a s already observed, &ay assume t h e form-of eliminatin[ the dormant cooperatives, consolidating the remaining ones, improving managemen- increasing f i n a n c i a l resources, applying the crop loan system, serving the need: of the I1underprivileged" membership, improving the training of the s t a f f , etc. Not a l l of t h i s i s new, but the statements mag be useful as guide l i n e s , and the organization i n p a r t i c u l a r may be a basis f o r much more. The immediate problem is implementation, and we believe t h a t the e f f e c t i v e way of approaching it is through emphasis on a second recommendation made n e i t h e r by S i r I~lalcolm Darling n o r ~ b ythe Action Program. Ye have in mind competition a s an a i d t o r a i s i n g t h e q u a l i t y of the work of the cooperatives a "naturalt1 way. 80. I n the evaluation of cooperatives above we discussed the a d v i s a b i l i t y of eliminating the nitrogenous f e r t i l i z e r d i s t r i b u tion monopoly of the cooperatives and the likelihood of its -taking place. If the monopoly position of the cooperatives were eliminated and if they wished to continue in the business they would have t o compete on merit; they o r the private d i s t r i b u t o r s would win o r lose depending upon t h e i r respective performance. It i s not a foregone conclusion t h a t t h e cooperatives ~ o u l d always come o u t second best, j u s t as it is not c e r t a i n t h a t the private dealers would always cone out on t i e top. m e r e i s a strong p o s s i b i l i t y , however, t h a t in the process of competition t h e cooperatives would be compelled t o p u l l up t h e i r socks, f o r g e t the book of r u l e s , and grow up a s they struggle f o r a share of the business. 81. Could not roughly the same idea be applied to the d i s t ~ i b u t i o n of c r e d i t and with r e s u l t s possibly s i m i l a r to those envisioned in the case of the d i s t r i b u t i o n of f e r t i l i z e r ? iqould not such a change obviate a good number of the recommendations with t h e i r f a m i l i a r lldostl o r 'ldontsll which so often escape application? Sometime back a mere suggestion of t h i s kind would have met with t o t a l r e j e c t i o n i n cooperative c i r c l e s of India on the ground t h a t they would undermine the very existence of cooperation. The same reaction i s t be o expected now, \ u i t is a sign ~f t h e t i n e s t h a t the proposal was made ;t publicly t h i s year by t h e Union Minister of Food a d Agriculture. I n the x address already mentioned, Y r . Subramaniam sounded the note of competition a s a means of bolsteririg up the cooperative c r e d i t systern. Said he: "1 believe t h a t t h i s ( t h e factiousness and prejudices in the cooperatives) cannot be corrected unless we bring the winds of I competition i n t o the f i e l d of c r e d i t . '. would, therefore, strongly urge t h a t we should throw open a g r i c u l t u r a l c r e d i t t o competing i n s t i t u t i o n s . What I have i n mind, i n particular, i s t o exainine the f e a s i b i l i t y of s e t t i n g up an a g r i c u l t u r a l bank which w i l l extend r u r a l c r e d i t . The two o r more types of i n s t i t u t i o n s co-existing and contending f o r supremacy on the strength of t h e i r otm efficiency w i l i d e f i n i t e l y improve matters. I h e r e the cooperatives a r e e f f i c i e n t and play an e f f e c t i v e r o l e we would n o t t r y t o intervene. Where, hct~ever, over the years, the cooperative movement i s weak, there seems t o be no other way but t o s e t up p a r a l l e l i n s t i t u t i o n s which are able t o r i s e above t h e plane o f i n t e r n a l contradictions t h a t a f f l i c t our c ~ o p e r a t i v e s . ' ~ 82. ik. Subramaniam had i n mind s e l e c t i v e competition introduced by a new i n s t i t u t i o n o r i n s t i t u t i o n s financed by the Government. That would have t o be the case because no private commercial bank would on i-cs own r i s k providing r u r a l c r e d i t based on croF loans where overdues a r e almost inevitable; where a l a r g e p a r t o f the c l i e n t e l e consists of small farmers, not to speak of tenant-farmers and of a g r i c u l t u r a l workers with v i r t u a l l y no stake in land a t a l l , t h a t i s to say, of r u r a l people with no s e c u r i t y worth mentioning. Under such conditions, t h e bypassing of c e r t a i n credit s o c i e t i e s can be effected only by another governmental banking-credit e n t i t y i n areas where the regular c r e d i t s o c i e t i e s a r e p a r t i c u l a r l y poor performers. 03 The Reserve Bank of India has given the naLter sone thought. I f t r a n s l a t e d into action, t h i s proposal would r e s u l t i n r u r a l c r e d i t banks a t the block level, with trained s t a f f s t o handle c r e d i t operations. The Reserve Bank would finance these r u r a l banks and administer .them, providing c r e d i t or, the basis of crop loans. Such a scheme i s one a l t e r n a t i v e t o crop ~roductj.on c r e d i t i n addition t o and i n competition with established primary c r e d i t s o c i e t i e s . The scheme does not involve the a b o l i t i o n of the existing c r e d i t agencies,but a weeding out of the hopeless ones and an enhancement of t h e q u a l i t y of the work of others through the challenge of competition. The scheme i s f a r from f u l l y developed even on paper, but the germ of an idea is there - another c r e d i t f a c i l i t y t h a t might r a i s e the l e v e l of performance of a l l c r e d i t s o c i e t i e s and eliminate the notorious laggards by giving the farmers a chance t o s h o ~ o r instit,utional c r e d i t . f 81r. This scheme i s not a s u b s t i t u t e f o r the already discussed reorganization of the e x i s t i n g cooperatives o r f o r t h e h o s t of recommendations, which, if implemented, would have s a l u t a r y e f f e c t s on management and the e f f i c i e n c y of organization of the cooperatives. On t h e o t h e r hand, considering the f a i l u r e of somewhat s i m i l a r attempts i n t h e past, i t is important t o introduce t h e competitive element in t h e d i s t r i b u t i o n redi it - even if i t i s based on government financing and management. One can r e a d i l y foresee the great reluctance of o f f i c i a l cooperators t o accent and a c t upon this idea. But if these f e a r s should prove groundless, and i f t h e Reserve Bank is the policy-maker i n addition t o being the f i n a n c i e r and manager o f the r u r a l c r e d i t - banks, the e f f o r t i n this new d i r e c t i o n i s decidedly worth making. The wind of competition even under government auspices i s s u r e l y preferable t o a s i t u a t i o n in which recommendations, however sound, do not seem to be c a r r i e d out. I ~ ~ ~ p l e m e n t a t of nt h e recoinmendations can be b e s t furtnered and speeded io up by a measure designed t o stimulate the cooperatives i n t o doing t h e things they were always sapposed t o d c ~b~ri:. have not alrrays done.  1/ Table I- Source of Credit Per Cent Government 3 -3 Cooperatives 3.1 Private Relatives Landlords Agriculturist Moneylenders Professional Moneylenders Traders and Commission Agents Commercial Banks Others Total -/ 1 This i s taken from llSome Observations on Indian Agricultural PoJicyll, I n t e r n a t i o n a l Bank f o r Reconstruction and Development, September 1, 1964. - Source: Reserve Bank of India, A l l India Rural Credit Survey, Volume 1 , page 167. 1  F Table I1: WORKING CAPITAL O STATE COOPERATIVE BANKS (Crores of rupees) 30 Jurle 1962 30 June 1963 Percentage Percentage t o working t o working Item Amount capital Amount capital 1. Working Capital 256.09 100.0 281. 51 100.0 2. Owned Funds 28.86 11.3 31.95 11.3 3. Deposits 81.U 31.8 97.31 . 34 6 4. Borrowings from: ( a ) Government 7.19 2.8 10.08 3 -6 ( b ) Reserve Bank 131.72 51.4 138.87 49.3 ( c ) Other Sources 6.88 2.7 3 -30 1.2 Source: S t a t i s t i c a l Statements r e l a t i n g t o the Co-operative Movement i n India 1962-63, Reserve Bank of India, p. ii.  1 Table I 1 Loans and Advances by Primary Agricultural Credit Societies Total Borrowings of Cultivator &d Land Mortgage Banks During Households in 1961-62 1961-62 Column 3 a s State For the S t a t e Per c u l t i v a t o r For the S t a t e - Per Ebrrowinp: Percentage of A s a Whole Household Re- as a Whole Member (RS) Column 1- (Rs in crores) porting Borrow- (Rs in crore) i g in the n S t a t e (Rs) Maharashtra Gujarat Hadras Orissa Punjab Madhya Pradesh Uttar Pradesh Andhra Pradesh Mysore Jannmr & Kashmir Kerala West Bengal Assam Rajas than Bihar All-India (Source: Provisional estimates, All-India Rural Debt and Investment Survey 1961-62 f o r Columns 1 and 2 and S t a t i s t i c a l Statements Relating t o the Co-operative Movement I I n d i a 1961-62 n f o r Columns 3 and 4).  Table I V : PROGRESS O AGRICULTURAL CREDIT SOCIETIES F 1962/63 S1. (provi- 1965/66 No. Item 1950/51 1955/56 1960/61 sional) (target) Number (lakhs) 1.05 1.60 2.12 2.a 2.30 Percentage v i l l a g e s covered N.A. N .A. 75 81 100 Membership (lakhs) 4-4 .08 77.91 170.41 226.68 370.00 Percentage a g r i c u l t u r a l population covered 8 15 33 31. 60 Average membership per society (No. ) 45 49 80 106 161 Share c a p i t a l (Rs.mores) 7.61 16.80 57 75 80.15 118.00 Deposits (Rs. crores) 4.28 7.04 4-59 22.02 41.25 Loans advanced (Rs. c r a r e s ) 22.90 49.62 202.75 251.90 530.00 Average share c a p i t a l per society (RS) 727 1,051 2,722 3,753 5,130 Average loan advanced p e r society (Rs) 408 441 688 1,031 1,793 Average loan advanced per society (Rs) 1,983 3,102 9,558 11,953 23,043 Average share c a p i t a l per member ( R s ) 17 22 34 35 32 Average loan advanced p e r member (Rs) 4-4 6k 119 1 11 4 3 Overdues a s p e r cent of outstanding loans 22 25 20 26 --  Table V: F PROPORTION O MEMBERS WHO BORROW TO TOTAL E BR GIUT R L M M E S OF THE A RC L U A CEEDIT SOCIETIES ( Percent) 1962-63 Jammu & Kashmir N.A. Maharashtra 64.0 Madhya Pradesh 61.0 Gujarat 59.0 Punj ab 56.0 Uttar Pradesh 53.0 Andhra Pradesh N. A. Kerala 44.0 West Bengal 42.0 Mysore 40.0 Orissa 37.0 Madras 36.0 Rajas than 33.0 Bihar 33.0 Assam 9.0 All-India 59.14 52.63 50.89 70 b. Source: Performance of Cooperative Credit. Appendix I X , p. 14. Reserve Bank of India. (a) ;;ubsidy t o primary st ,.-.ic:s which are p.' i ko t e n t i a l l y viable x:i; which have a d e f i n i t e nrogramrne of improveaent.. 12.00 -::.;. r b) Hanagerial subsidy t,o Ccn t z a l Cooperative 3anks f o r appointment of k e y personnel. il .40 (c) Subsidy to Central Banks f o r opening 000 branches. RS. 0.80 (d) Subsidy f o r appointment of additional supervisory s t a f f !is. 1.50 i r ) S t a b i l i s a t i o n fund . 5.00 ifj Relief and Guarantee 7?~1d 'ts. 5.00 iF Weaksr Sections (5) Special scheme . I * '-0 (h hssistance t o p r i m a v &rlii ~ o r t g a g e banks (500) . . . 30 .. - , . . .. .-- TOTAL r., -,7 . L<:)n50 : Reserve L y ~ ' : - ~ ~ Bank of Ic-li 7 . 4p-icultural Credit 5 - --'7-zt, 1 -.--- -. Appendix VIII, Co-GnsTat.ive Credit in t h e Fcl7.-'!- .- -;sn.  APPENDIX XI1 ADEIINISTBITION, PAIJCHAUTS AIJD AGRICULTURAL DEVESOPl4ElJT llrolf Lade jinslcy  - APPEiDIX X I 1 F TASi2 O CONTENTS Page No, A. Introduction 1 B. Shortcomings i n Agricultural Administration 3 C. Recent Attempts at 8.eform i n Agricultural Adzinistration 9 D. Indian Administration i n General 12 E. A Basic Criticisax of Indian Administration 16 F. Conclusion 20 A. Ifhy Panchayats? 24 B. Panchayat Organization and Content 26 C. The idlehta Assessment and Prescriptions 28 D. Remedial Suggestions 30 E. Panchayats Since 1957 32 . Conclusion 36 111. COiDITIOKS AFFECTING AGZICULTURAL PRO9C'CTION 38 A. Favorable Conditions 33 Bargain Sect o r 38 Gro~rth 38 Commercialization of Agriculture and Price Incentives 39 flClima-teM 40 Farm Planning - Village and Individual 41  - Page iJo. B. C r i t i c a l Factors I n s t i t u t i o n a l Inputs Agrarian Reform Community Development Cooperatives Administration IV. SUiIirnY 1. One of t h e major problems of any a2encg involved i n a g r i c u l t u r a l development i n I n d i a i s orgailization and arkninistration. The inplementa- t i o n of a ~ r i c u l t u r a l prograils t a k e s p l a c e a t many l e v e l s - Center, S t a t e , District, Block and V i l l a k e - and a g r e a t d e a l depends on an e f f e c t i v e r e l a t i o n s h i p betveen d i f f e r e n t l e v e l s , and, a t t h e saiie l e v e l , amon2 d i f f e r e n t agencies. Securing e f f e c t i v e a d r ~ i n i s t r a t i o nunder t h e s e circunlstances has proved d i l ' f i c u l t i n a l l previous Plans, and t h e a n t i c i p a t e d v a s t expansion of a g r i c u l t u r a l p r o g r a m under t h e Fourth Plan w i l l n o t reduce t h e s i z e of t h e adlilinistrative probleril. To d e a l bsith t h a t problem, it i s necessary t o determine who i s t o do rrhat, \(;hen and hor;, ?:hat p a t t e r n s of p o l i t i c a l and adniinistrative power a r e t o be e s t a b l i s h e d and 1~11erew i t h i n t h e v a r i o u s power c e n t e r s t h e u l t h a t e responsibilrity f o r decision-makirg i s t o l i e . T a i l i n g such d e t e r n i n a - t i o n s , no ~ i l o ~ n t good plannin, nor bivind t h e h i g h e s t f i n a n c i a l of p r i o r i t y t o a g r i c u l t u r e can result in major attainments. A g r i c u l t u r a l p r o d z c t i v i t y i s not only a f u n c t i o n of investment b u t depends a l s o on t h e quaii'cy of t h e human resources applied, t h e l e g i s l a t i v e measures adopked t o c r e a t e a proper i n s t i t u t i o n a l frz!?.eiaork, and, of course, t h e a h u i n i s t r a . t i v e scechaaisin developed t o il~iplemerit a k r i c u l t u r a l p o l i c i e s . Some of t h e necessary eleraents a r e present, but, even i n t h e c a s e of t h e s e , n o t i n a measure r e q u i r e d t o :ileet success full^ I n d i a ' s requirements in a,,riculture nor, f o r tha~l;matter, i n f i e l d s o t h e r than a;;riculture. 2. The e x i s t i n g Indian Administrative System (US) xas l a r g e l y molded by a slnall e l i t e group, Tormerly a p a r t of t h e Indian C i v i l S e r v i c e (IGS) .i:'nich ::as t r a i n e d and o r ~ a n i x e dunder B r i t i s h r u l e . The i n f l u e n c e of t h i s e l i t e which holds t h e conmlanding p o s i t i o n s and p determines a d m i ~ i s t r a t i v e o l i c i e s has not been altc,ether b e n e f i c i a l . To be sure, t h e group served InGia ! : l durin, tile c r i t i c a l e a r l y y e a r s ,el t o f I n d i a ' s Independence. a t h e syster;; i t c r e a t e d proved not t o be so ~ v e l ladapted t o meeting .the c o u n t r y ' s netj developmental needs xhich d i f f e r v a s t l y frol;, t h e problems of t h e pre-Five-Year Plan. I n t h e l a t e r period; "The r e s p o n s i b i l i t i e s assumed by Coverfinent a t various l e v e l s , t h e ranLe and d i v e r s i t y of t h e socLz1, econo;nic arrd p o l i t i c a l ajins t o be r e a l i z e d , t h e e q e c t a t i o n s of t h e people, t h e l i m i t e d time and t h e m e a p e resources a t our d i s p o s a l and t h e added burdens : ~ h i c ht h e s t r u g g l e  f o r development throws upon t h e n a t i o n are all nerr 1/ phenomena, 1.5';hout p a r a l l e l . i n t h e e a r l i e r period5;.- Faced with r a p i d l y changing problems, programs and needs, "to a l a r g e exten i n a d m i n i s t r a t i o n ve have been employing old t o o l s t o do new i . 1 of t h e t o o l s a r e not f i t t e d f o r t h e nev t a s k s ; hence, ~ t h e accumulation of evidence t h a t one of t h e lilost s e r i o u s stumbling blocks i n t h e path of I n d i a ' s economic progress i s an a d m i n i s t r a t i v e system which administers poorly and ~ ~ h i c s l a r g e l y dependent on ih ~ " c ~ o r d i n a t i o n 'i.rithout possessing t h e a u t h o r i t y and r e s p o n s i b i l i t y needed f o r e f f e c t i v e coordination; evidence, too, i s not lacking t h a t t h e numerous attempts a t reform have s o f a r been mainly i n v i b a t i o n s t o f u r t h e r rezorm. The reasons f o r t h i s s t a t e of a f f a i r s a r e many; one of i t s 1-esults :ihich coriies nearest, t o defining t h e problem is, a s !.re s h a l l sh01i belor:, t h e rathei- narrora meaning attached t o t h e term lladministrationli i n Iridia. 3 'lCrood" a c h i r i s t r a t i o n has s o f a r eluded I n d i a i n her a f i o r t s r t o achieve a steady and reasonably h i ~ h a t e of a s r i c u l t u r a l productivity. Indian o f f i c i a l s and a g r i c u l t u r a l s p e c i a l i s t s a r e arTare of this, and reails of informative and a n a l y t i c a l r e p o r t s have been x i t t e n on t h e s u b j e c t l l These s t u d i e s and o t h e r thinIcin2 about t h e question do not sufTer froin a l a c k of sound recornendations a s t o what should be done i n various spheres. A l l of them t o ~ e t h e r have not, I~or~ever, produced s i ~ n i f i c a n timprot-ements, jud,ing Zrorr~t h e continued search f o r t h e ltey t o b e t t e r organization and administration. I n t h e l a t e s t r e p o r t i n t h e s e r i e s , prepared by a p r e ~ t i ~ i o u s group of s i x t e e n Goverx~lento f l i c i a l s , representin:, n i n e S t a t e s and including t h e i . i n i s t e r s of f l ~ r i c u l t u r e and -/ DOctoberche13. l r . ~ari-a s 1963. t o Administrative ref on:^. Yohana, - - AgriculLuraleAdministration Cor~mittee,lofv it n g : N itnhie t r y of r e p c r tand 3/For a r e p r e s n t a t i v e sample see t h e f o l o he s 1958 Food of the ' Agriculture; V. T. l i r i s h n a n a c i ~ a r is Report on India S t a t e Administra- t i v e S e r v i c e s and h o b l e n s of D i s t r i c t ~ d m i n i s t r a t i o n, Planning Conunissiorl, 1962; Report oi" the A g r i c u l t u r a l Administration Committee, Raja S. Singh, Chairman, l,iFi\, 1950; Hish Level Cornnittee i i i n i s t r y of Food and Agriculture. - ' - D r . P. Deshmukh, ~ h a i G n ,1961; Organization of t h e Government of I n d i a , Indian I n s t i t u t e of Public Rdminis'cra-i;ian, 1958; Paul 13. Appleby's Fublic iidministration in I n d i a , 1953; illso, P a u l I I . Applkbyls- Paul I i e - e x a ~ ~ ~ n a t iofn I n d i a ' s .i&ninistrative Sys tern, 1956; A51ninistration and o Administrative Ac':iilinistration ;jcorior;iic Developciefit in India, e d i t e d by 2. B r a i b a n t i a 2corioriiic Led ; - h 3 n Ciovenment 7i.3. datu, Goven%nent of India, :i.3. i\;atu, h b l i c lidministration and Zcononlic P l a n n i n ~ ,Scononlic Plannink, 195'4, ill~inatin~ GoTiale I n s t i t u t e of ~ o l i t G s - and Economics, Poona - . .- Lconomics, Poona. l o r a ~ a o s t For a lacst account of t h e a d m i n i s t r a t i o n of 1ndla under t h e B r i t i s h r u l e s e e P h i l l i p ;.;oodruL'fls The lien I h o iZuled I n d i a , 'Jolumes I and 11, pubiished by Joaakhan Cape, paperback e d i t i o n , 1963. Also, a number of S t a t e s addressed theniselves t o t h e saxe problem, and i n t h i s connection, 1'T.B. Desai, Report on t h e 4 d n i n i s t r a t i ~ eSurvey of t h e S u r a t D i s t r i c t , Bombay, 1958. C olymunitjr j)evelopilent, - :e f i n d t h e Collo.i:irl; c ~ t e b o r i c a land z u t h o r i t a t i v e s Later~en-L: f'The Central Texns oil b;ricvl.tural Ikoduction t h a t v i s i t e d t h e S t a t e s durinr. A-p r i l - J m e 1963, came t o t h e conclusion .- t h a t uasatisfac.torv a Q l i n i s t r a t i v e and organiza-Lion - arran:.er,~ent was, by f a r , t h e ;nos& iinportant s i n z l e f a c t o r responsible f o r inadequate ,pro:,ress i n tile sphere 02 a:,ricu.ltv.ral production". l/ The 11ag;,i11g f e e l i n g t h a t a l l i s n o t ::ell i n t i i i s f i e l d has reached t h e h i ~ i l e s tl e v e l of Government. On t h e eve of Liepublic ilay2/, i n an address t o Indian people, PresLdent Radhakrishnan a l s o r a i s e d t h i s question; "Bas our rural adlninistrative o r ~ a n i z a t i o nbeen e f f e c t i v e enoukli t o t r a n s n i t t o t h e peasants t h e p o s s i b i l i - t i e s and p o t e n t i a l i t i e s of s c i e n t i t i c farm in^?^' I n r a i s i n g t h e question, t h e President provided t a one h i s 0.m c ~ r ~ ~ ~ l e non r y of t h e basic causes of laggin;; agricu.ltura1 production. -. k. ~.;r.Subrar,nnFan:, ;;inisl;er of Food arid Agriculture, r a i s e d t h e i s s u e even nore d i r e c t l y . "The main problem," he s a i d , " t h a t confronts t;be Indian a g r i c u l t u r a l innovator i n I n d i a i s n o t s o ;;luch t h e lack of but, t h e l a c k of an a d m i n i s t r a t i v e and organizational t e c h n i c a l !~rilo-r:leti~e apparatus i n t h e country t o c r s a t e a s u i t a b l e climate for a ~ r i c u l t u r a l chanze. ll I n liis opinion, t h e r e iras e i i o ~ ~!mo;?iedjie I n t h e coun-Lry t o make p o s s i b l e a h i ~ h e r a t e of a;riccii;ural p r o d u c t i v i t y 'thsn t h e r present. I f I n d i a has f a i l e d t o achieve t h a t hi;her r a t e , he r e i t e r a t e s , ii; "is ~naiillybecause it i s i 0 s l ~ 2 i c i e n t o have Imo~rledge, i-t is a l s o 1 t rieces.sargr t o have an o r ~ a n i z a t i o nand a. channel f o r t r a n s n u l t i n g %his . l::lo!rled: e t o t h e c o u n t q ~ s i d e,:2/ 5 The vie::s c i t e d leave 1x0 doubi; t h a t t h e problem of a g r i c u l t u r a l a&ilinistrat,ion i s very s e r i o u s , ancl t l i ~ i ;a y r i c u l t u r a l devel.opnient v i l l be re-i;arc'.eZ v n t i l a s o l u t i o n i s fouild. Since a s o l u t i o n depends on t h e elkina-1;ion of t h e shor-tco..lin,s of t h e administrative system, one 1cus-L begin '02' I d e n t i f j r i n ~them. 6. i;o The shortcomin;s are s e r i o u s e n o u ~ h be d e a l t with i n sone d e t a i l . 1 i s ~ e n e r z l l ylrecognized t h a t a t t h e h e a r t ol" the administrative '; problem i s t h e d i i f u s i o n , d i v i s i o n and sharin,;, or" r ' e s p o n s i b i l l t i e s anon6 2 nunber of a-encies =ci groups of persoils concerned irith i-nter-related aid inter-dependent aspects of t h s sai~lepro;rms o r prob1e~:s. I n t h e - Coordha.Lion f ::orkimrov.p onProd~~c.tion, 1. and 1nstitui;ional l/i{eporl ol the o r X:ricultural Inter-Departmental page i;inis-i;rjr of Food d c s added. 2/January 25, 1965. -. - i 3 / ~ l lt h e q ~ o t a t i o n s n t h i s parazraph a r e from t h e Convocation Address, i.iarch Ili, 1965, by Ik. C . S u b r ~ : i a ~ i i a i Union C i n i s t e r of Food and i, Universi-ty. . . l ~ r i c u l t u r e ,t o t h e &I jab A~ricul-tu.ra3- f i e l d of a ~ , . r i c u l t u r r production, a t the Center, t h e folloving i l i n i s t r i e s l play i;i113artant r o l e s Food aiid A;,ric~;ilu r e ; Coriimity Develop~r~ent t and Coo~eratio'n, Irri,c.:tj.on anc! Poizer; Cornfierce a t Industry xhich c o n t r o l s ni f e r t i l i 7 : e r production, Finance uhich c o n t r o l s f o r e i A n exchanke f o r f e r t i l i z e r L,lpor-ts and has a : : e i ~ h t y s a y i n f ' i n m c i a l a l l o c a t i o n s i n ,;eneral; tile Hm~cIYnistr). :.:hich c o n t r o l s j l i s t r i c t Coilectors and other L 3 o f f i c e r s on d e v e l o p e l i t assi;13i'nents j and, of course, t h e Planning A or Coiiudssion. To t'his l i s t D L ~ ~ , ~ a j separs-Ls ancl 2 i s t i n c t p a r t n e r s should be added t h e i 2 n i s t r i e s oi' Health an2 ;ducation ~[hictihave non- r a , r i c i L t l x a l development concerns i ! t h e countryside. I n addition, t h e r e i s t h e A;ricuiturzl R o d u c t i o n Boarti a t %he enter&/. It takes l i t t l e ii,~a,ination Lo s e e t h a t t h e d i l f i c u l t i e s i n a g r i c u l t w a l developiaeni a r e compounded :;here s e v e r a l d i f i ' e r e ~ t h ~ i n i s t r i e sa r e c o ~ c e r n e d , ;:here ciultiple an6 d i v e r s e t e c l i i i c a l facA60rs coixe i n t o coaion Pocus, and :-?here t h e ultirfi2te "consuners" a r e u n t ~ l d 1tiilli011S of f a r l ~ e r s . 7 O t h e S t a t e i e v e l , r e s p o n s i b i l i i ; ~i s j u s t as fragmented n of because of t h e co~;lpartrnentaliza.tio~? a c t i v i t i e s usually carriec? on by a :'Department of !&;,;rlculturefl. I n e f f e c t , t h e r e a r e s e p a r a t e departments f o r a g r i c u l t u r e , a n i n a l husbandry, cooperatpres, f o r e s t r y , f i s h e r i e s , irrika-tior., extension s e r v i c e and s o f o r t h , i n r,iost cases ackiilinistered by an IAS ene era list, and r ~ i t h tecllnical ar.d a & n i n i s t r a t i v e o f f i c i a l s o f t e n belonging i;o cadres of d i f f erer,-L orzanizations . ,.Li-tht h e coming of Comniunity Development, t h e r e have been added teains 0 d i s t r i c t and block 1 technicians i:ho funct-ion res?ectively under Collectors and Bloc:; Developmen'; Officers and t h e o r e t i c a l l y $a!; administrative and policy zuidance from t h e s e general administrators but r.:ho take t h e i r tcxhnical guidance ( a s ire11 a s r e c e i v i n g c a r e e r advanceinmi;) from t h e i r parelit departmects. The V i l l a ~ e Level ?!or!;ers (VLi!s) a r e under t h e ac':,linistrative c o n t r o l of t h e Block Develop!~zent Officers 1EDOs), but a r e su7posed t o t a k e .technical advice from t h e t e c h n i c a l d e p a r t ~ ~ e n t se,s p e c i a l l y t h e Ilepar-tnient 02 ~2:;riculbw.e. I n s h o r t , t e c h n i c a i s p e c i a l i s t s a r e inlperfec-Lly meshed i n t o t i e system, and t h e r e s u l t ri.s a sysJier,; of multiple conf,ro?-s. The r t e c h n i c a l s e r v i c e s a r e i n a a i r ' ~ l c u l a r l ~disadvan.ta;eous position. Al-thou~h -Lo a g i c u l - L u r a i leadership o u ~ h t sprinr, Proiii t h i s service, crnk a I'eij make t h e ,rade. I n al!;ios.L a tone of c!,espair, t h e Report of t h e A g r i c u l t u r a l Actiiinistration Conmiti;ee sunls u 2t h i s problex tlius ; i ilTlle chances of leadership i n a ~ r i c u l t u r a ls e r v i c e s i n our cauntrg a r e limited, i f not noii-existent. I't i s iluinar, nzture t o a s p i r e t o asslme l e a d e r s h i p and cone t o t h e top. This i s a s it should be i f i.:e a r e t o continue t o progress. I-Ior,~ever,% h i s i s t h e destiny of only a f e i r ; bu.t i n a .;:elfare and democra-tic S t a t e , t h e opportunities of becorin,: l e a d e r s should be equal f o r a l l . I n our arl-(finis-trative setuj:, r ~ h i c hnoir f o m ~ s-;he base a d skein of rrelfare - Z,lational Develop~ientCouncil.Board iras c r eiase chaired by t h e i dby i tsht e r l/The C1:r;riculturaL Production The Board t d kLroyears aLo n e of Food ar.d Ahriculture; t h e o t h e r o~eiibersa r e t h e Planning Coiircission and t h e I ! i a i s t r i e s of Com;luni-iy Developrent and Cooperation and I r r i g a i i o n and Po~ier. The Boar? meets monclily and i t s n~airrpurpose i s t o help eqec?i-Le A g r i c u l t u r a l f i o ~ r a m si n t h e S-tates.  acbunistration i n t h e country, t h e dice a r e loaded abaillst t h e - t e c l h i c a l services. The n!ar,-L2.e of leader- s 1 I r o n bisci:, tehsil&/, d i s t r i c t t o t h e S t a t e l e v e l , i n t h e present context of . t l ~ n , s , :ill invariably be donned by t h e iqembers of a & i n i s t r a t i v e services. There a r e hardly any o ~ ~ o r t u n i t i e o r fs t e c h n i c a l s e n i c e s t o ..or!c and a s p i r e f o r t h i s h a a e r - ship, except rzhen it may please Providence t o choose a s o l i t a r y individual here and there. It b d i l l be a negation of s o c i a l j u s t i c e t o confine leadership in t h e f i e l d of a g r i c u l t u r a l eveloprnent t o any one c l a s s or Lroup of individuais !'-I .9 8. Other d i f f i c u l t i e s a l s o deserve mention. The administrative s t r u c t u r e s of t h e Center and the S t a t e s have undergone numerous chankes since Independence, but the t r a d i t i o n a l sys.bem has remained b a s i c a l l y unchanged, i n s p i t e of I n d i a ' s s t r e s s on economic development i n general and a g r i c u l t u r a l development i n p a r t i c u l a r . According t o D r . Douklas Ensninger : "India has t h e knou-her? f o r food production. The crux of t h e problem now i s one of tiearin& up i-ts administration t o ~ e t h e food produced t ... The tendency appears strong t o keep t o t h e t r a d i t i o n a l eixphasis on regulatory a c t i v i t i e s r a t h e r than a c t i v e f i e l d development, or, t o put it bluntly, t o concentrate on paper r a t h e r than on people ...these a t t i t u d e s r e s u l t l a r g e l y from the f a c t t h a t t h e a d n i n i s t r a t i o ~ l of a g r i c u l t u r a l prosrams, 5n i t s machinery and procedures, i s simply not keyed t o developmen-t. It i s keyed i;o reegul&org functions ... It has l i t t l e or no experience i n mounting an impact prograr.1 involving dl of I n d i a ' s v i l l a g e s i n accomplishing a s p e c i f i e d r e s u l t . T h i s i s i n no sense a condemnation or c r i t i c i s m of individuals - r a t h e r of a system, an administrative point of view i.ahich i n pre- Independence days may have been acceptable but i s rr~11olly inadequate i n t h e urdent, indeed emerLency needs of the nation today. "/ The r a t h e r sharp c r i t i q u e uas accompanied by a nunber of recommendations, but f ollo~.red hardly any modifications and, consequently, 'isith no 5y visible results. - An administrative u n i t covering a number of blocks. 1/ - Report of t h e Apag~eu15. r a l Administration Committee, 2/ D r . Xnsminker, sric ltu 1958. Quotini, - 3/ Ibid., page 5. 9. T!le Center-.Sta+ue a&qinistrat-ive relatiofiship i s i t s e l f a source of dii:'iculty, f o r i t iac!;s organic unity. The d i v i s i o n of parser and r e s p o n s i b i l i t y bet.reen t h e Center and t h e S t a t e s provided f o r by t h e Indian Constitution d o e s n o t & i v e t h e 'Jnion Goverlullent enouth a u t h o r i t y t o i n s u r e adequate performance by t h e S t a t e s . d b r i c u l t u r e i s one of t h e f i e l d s i n ;rhich t h e S t a t e s have complete c o n s t i t u t i o n a l a u t h o r i t y . The Union Government attempts t o m i t i g a t e t h i s t h r o u ~ h"advisory influence". Through t h e resources f o r development -rhich t h e Center maltes available, a measure of d i r e c t i o n can be given t o t h e scheme or' developn~enti n t h e S t a t e s , but, i n t h e main, t h e porJer of t h e purse has not been used t o i t s f u l l e s t advantake, and administration and implementation are firmly i n t h e hands of t h e S t a t e s . According t o t h e same a u t h o r i t a t i v e source, t h e S t a t e s have not done ell i n t h e s e a s i n other respects, i n t h e case of a g r a r i a n reform, mainly f o r s o c i a l and p o l i t i c a l reasons, but, i n ~ e n e r a l , mainly because t h e Center does.nothave t h e potter and h a s n o t u s e d i n d i r e c t means t o g e t t h e S t a t e s t o c a r r y out c e n t r a l l y determined p o l i c i e s a f f e c t i n g t h e > " e l f a r e of a l l of t h e people. The food c r i s i s of 1964 and t h e r o l e s played by t h e Center and t h e S t a t e s respectively, provides a good, if disturbing, example of t h i s point. S c a r c i t y of food, which even i n t h e days of s t r o n g B r i t i s h r u l e brought out t h e l a t e n t bfeaknesses i n t h e C e n t e r ' s authority, nora dangerously s e t s SLate a g a i n s t S t a t e and S t a t e s a g a i n s t t h e Center. 10. Coordination i s t h e core of t h e e f f o r t of f i t t i n g together t h e various elements t h a t c o n s t i t u t e r,rhat is broadly kn0r.m a s administration. It i s supposed t o be e f f e c t e d by Coordination Committees i n t h e Center, S t a t e s and dotin t o t h e Block Development OfTices. I n some S t a t e s , t h e s e committees a r e c a l l e d If'ior!ting 13roups1', but vhatever t h e i r names, they a r e a l l p a r t of tie coordination lnechanism. The Report of t h e A 6 r i c u l t u r a l Administration Cormittee r e f e r r e d t o i n ~;ara,raph 7 f i n d s no f a u l t 1 5 t h t h e mechanism i n p r i n c i p l e , but concedes t h a t i n p r a c t i c e i t i s a ''lmotty problem ... t h a t t h e r e i s l i t t l e evidence of systematic fo1lo-c-up action," and t h a t "i:hat i s more u r ~ e n t l yrequired is a coordination of mind and action." The Report a l s o c a l l s a t t e n t i o n t o t h e burden of t h e i n o r d i n a t e number of papers t h a t have t o be prepared and t a r t l y remarks t h a t "coordination does not mean m u l t i p l i c i t y of reports." After enumeratin, t h e p r i n c i p a l shortcomin,~ from rrhicl~tile coordination mechanism s u f f e r s , t h e 2eport concludes t h z t "These ColivniLtees should concentrate on t h e c o ~ p l i c a t e d proble181s:-hich a r e awaiting solution, and t o make them e f f e c t i v e , suf'ficient poirer and a u t h o r i t y should be vested i n tliem."&/ The underscoring p o i n t s t o t h e heart of t h e d i f f i c u l t y which i s t h e f a c t t h a t most of t h e coordinators do not have t h e a u t h o r i t y and r e s p o n s i b i l i t y r h i c h i s e s s e n t i a l f o r good administration. - l/ . Report of the ~ ~ r i c u l t & a l d i i s t r a t i o n Committee, 1958; a l l A quotations from pages 32-33. I t a l i c s added 1.1 Other f a c t o r s a l s o c o n t r i b u t e t o S t a t e a c h i n i s t r a t i v e problems. To name but a fe:.r; t h e v a s t =id rapid expansion of Con?~~.unity Develop- ment; S t a t e p o l i t i c a l patronake pressures; shortage of funds; t h e something l e s s than high q u a l i t y of personnel i n sofile grades; t h e 101: s t a t u s accorded t o r u r a l xork aid t h e reluctance of o f f i c i a l s of many ranks t o t a k e r e s p o n s i b i l i t y and make d e c i s i o l ~ s ; and final.1:~ t h e e x i s t e n c e of appointed o r h e r e d i t a r y v i l l a g e or d i s t r i c t o f f i c i a l s ~ h o have no p o l i t i c a l I-esponsibility but xho exercise & r e a t power over t h e l o c a l population. These and o t h e r l e s s important f a c t o r s have coinbined t o c r e a t e vide gaps bet::.een administration and implementation, a s ?jell a s an a d m i n i s t r a t i v e s y s t e a xhich i s conlplicated, curfibersome and fragmented. lKth t h e c r e a t i o n of t h e panchayats,L/ rihich w i l l be discussed i n g r e a t e r d e t a i l beloi;, and t h e s p e c i a l r o l e accorded them a s v i l l a h e development agencies, t h e r e i s bound t o be even t r e a t e r administrative confusion f o r a long time t o come. 12. Another source of d i f f i c u l t y 1s ;?hat i s kenerally recognized a s t h e a r c h a i c c h a r a c t e r of t h e administrative systex, r~llichmay be s u i t e d t o a bybone age but i s i l l - s u i t e d Tor anythin; approaching a dynamic r u r a l developxent Fropam. The Center has nore than i t s share of this archaism, but t h e Zekree of arcilaisn~probably i n c r e a s e s a s one moves do..n t h e l i n e 'co t h e S t a t e s , D i s t r i c t s , Blocks and v i l l a g e s . Clearly, procedures tshich were goor! enouhh f o r a Collector administerin;; a d i s t r i c t before Independence r~henh i s job consisted of t h e c o l l e c t i o n of revenue and t h e maintenance of la,: and order a r c q u i t e inadequate today with t h e development of Plans, of a Com~unityDevelopment Frogram, of t h e panchayats and t h e i r many schenes f o r r e ~ r i t a l i z i n ; : r u r a l India. The r e s u l t has been (and s t i l l i s ) t h a t : lf:.Qlereas t h e C o l l e c t o r a t e was c a l c u l a t e d t o operate e f f e c t i v e l y vhen t h e pace of movement and change iu.aS slotr and r e l a t i v e l y haphaza~d, t h e net: developmental e f f o r t rras dynziic, i r r e g u l a r i n motion, o f t e n nervous, and c a l l e d f o r hand-tailored, snappy a t t e n t i o n , and thus was not adapted t o t h e r o u t i n e s of f i l e noting. flz/ 1 . The problems inherent i n t h e system nay be i l l u s t r a t e d by a couple of examples of t o t a l l y d i f f e r e n t dimensions. The f'3-rst, type of problem should be r e l a t i v e l y simple t o resolve, but t h e .f'ollo:>!i.ngaccount i n - d i c a t e s t h a t t h a t i s not t h e case: - 1/ Local s e l f -tovernme~?tmi-Ls, char2,ed sri-th inany functions, t h e p r i n c i p a l bein;; developmental. - 2/ Richard L. Park, Adnlinistrative Coordination and Zconomic Development i n t h e D i s t r i c t s of I n d i a , pake 142, in llAc?ministration and Economic Development i n I n d i a , e d i t e d by R. Braibanti and J. Spengler, 1963.  "A d e t a i l e d survey of an auction s a l e of a p l o t of land m e a s u r i n ~ 50x60 f e e t and valued a t R s . 35 a s p a r t of a governvent s progrme t o consolidate s c a t t e r e d h o l d i n ~ s , sho:rs t h a t t h e necessary correspondence t o and from t h e v i l l a g e o f f i c e r s t o t h e d i s t r i c t c o l l e c t o r had t o pass 50 s t a g e s before f i n a l disposal; it had t o be r e f e r r e d t o t h e d i s t r i c t c o l l e c t o r t h r e e times and it took 2.5 years before t h e a p ~ l i c a n tcould t a k e possession of t h e land applied f o r . lb The second example i s an account of t h e administrative machine of one of t h e very b e s t and successful ''package d i s t r i c t s , " t h a t of i-Jest Godavari of Andhra Yradesh. The period was 1963, but not much has changed s i n c e then. A s described i n a w r i t t e n statement by t h e Director of D i s t r i c t "package progranll, t h e administrative inechanism i s a s f o l l o : ! ~ : "The p r o g r m i s guided from t h e Center. A t t h e Center t h e Extension Cona-nissioner in t h e IXnistry of Food and Agriculture a s s i s t e d by t h e Frogran Direc5or i n t h e D i r e c t o r a t e of &tension, i s i n chc..rge of t h e program and uorks i n c l o s e cooperation l d t h t h e i.,inistry of Co1;ununity Development, Panchayati Raj and Cooperation. A ba-i;cil of t e c h n i c a l e x p e r t s from t h e Ford Founda.tion helps i n t h e formulation of plans and program a c t i v i t y . The Center i s linked ::ith t h e S t a t e Departnient of 8 g r i c u l t u r e rrhich i s responsible f o r t h e implenlentalion of t h e program i n t h e d i s t r i c t s . The D i s t r i c t Collector is made responsible f o r implementing t h e proArarn, a s s i s t e d by a p r o j e c t o f f i c e r of t h e cadre oi" a Deputy D i r e c t o r of Agriculture. The F r o j e c t O f f i c e r has t h e a s s i s t a n c e a t t h e D i s t r i c t l e v e l of Four Subject ;;latter S p e c i a l i s t s on Farm ;;anage- rnent, k g r o n o q , Plant P r o t e c t i o n S o i l Science; a Seed Development O f f i c e r and a Deputy R e ~ i s t r a rof Cooperative S o c i e t i e s . A t t h e block l e v e l , besides t h e normal s t a f f under A ~ r i c u l t u r eand Cooperation, 2 R ~ r i c u l t u r a lE x t e n s i ~ no f f i c e r s , one Cooperative Zxtension O f f i c e r and 10 Village Level ':!'or:cers a r e posted under t h e scheme. I n each block t h e r e are .b cooperative superviscrs appointed by t h e Cooperative Central Bank with t h e subsidy given under t h e program f o r arranging t h e timely disbursement of c r e d i t and recovery of loans t h r o u ~ hc r e d i t s o c i e t i e s . The whole scheme a t d i s t r i c t l e v e l i s under Z i l a Parishad and a t t h e block it i s under t h e Panchayat Samitis. The P r o j e c t O f f i c e r a c t s a s t h e Chief Executive OTficer of t h e Z i l a Parishad f o r implementing t h e program. For t h e purpose of evaluation, t h e r e i s an Evaluation Officer i d t h 2 A s s i s t a n t s and 9 Fieldmen and they work under t h e c o n t r o l of t h e D i r e c t o r of t h e Bureau of Economics and S t a t i s t i c s , Andhra Pradesh. A t t h e S t a t e l e v e l , t h e r e is a S t a t e Coordination Conunittee t o go i n t o t h e program and progress of t h e work besides p u r s u i n ~ac-Lion on items t h a t r e q u i r e a t t e n t i o n - 1/ N.B. Desai, Report on t h e Administrative Survey of t h e S u r a t D i s t r i c t , pages 126-127. Bombay, 195'J.  let.~eli.e. e i t h e r l ~ l t h t n w OY Ceiitral Governments. at h i ~ h e r S The Joint, i)irecJ;or of A=:iculture (extension) i s the S t a t e Level Project Officer "9 . 15. The d e s c r i p t i o n sho:rs t h a t a l l i;he diverse elements a r e supposed t o f a l l i n t h e i r places, but the organization i s obviocsly not simple. Zven t h e c a r e f u l and a b l e supplementary explanatioris pro-cided by t h e Director could n o t q u i t e make i t c l e a r . It takes much poring over a l a r g e o r ~ a n i z a t i o nc h a r t , fo1lo:dng l i n e s goink thj-s i:ay and tliat, t o a r r i v e a t an understanding of how t h e views of S t a t e , D i s t r i c t and Block f i n d t h e i r way t o t h e l e v e l r ~ h i c hcounts niost - tile v i l l a g e l e v e l . I% i s obviously a very coi;iplex nechanism, lrith ::heels rJithin .+:heels, aorkable only r:ith extremely c a r e f u l handlirig and cooperation from a l l concerned. If t h e s e conditions e x i s t , and t h i s i s eviciently r a r e , according t o t h e - 3orking Group Report, then i t i s p o s s i b l e f o r t h e many cooics from t h e d i f f e r e n t schools of train in^ and with t h e d i f f e r e n t a p t i t u d e s apparent i n a l l d i s t r i c t s , t o be kept i n l i n e by t h e chefs, t h e ffpackagett Directors and t h e D i s t r i c t Collectors - provided thz-i; %he27 too a r e exceptional i n c a l i b e r and devote most o f t h e i r t h e t o development ~rork. I n tiest Godavari, it ;:as p o s s i b l e t o overcoxe t h e handicaps of t h e organizational scheme, mainly because of t h e exceptional q u a l i t y of t h e c u l t i v a t o r s , t h e ~ r e a t e rthan riom~ala v a i l a b i l i t y of i n p u t s due t o Ford Foundation a s s i s t a n c e , and t h e unusual competence of t h e 3iu.ector of t h e 'Ipackagefi program. ?3ut ?.Test Godavari i s an exception rathex- than t h e r u l e . C . Adriiinistration Recent Attempts a t Ref om1 i n A ~ r i c u l t u r a l 16. I n vie::. of %he adi:dnistrakive problerns incon~pleteiydescribed above, it iias n a t u r a l f o r Govermient t o see:; Por lie':.; anti b e t t e r cays of deal in^ r.i?;n a r a p i d l y s h i f t i n g developmental scene. One of t h e c o r r e c t i v e measures taiten rlas a gradual change i i l t h e t r a d i t i o n a l r o l e of the Collec.tor. He i s no longer res;consible only f o r c o l l e c t i n g revenue and inaintaining larr and order; he i s not? above a l l responsible f o r t h e econoalic development of a d i s . t r i c t . .This i s a s a l l ~ i o r j rchange because t h e Collector has been Li-aditionally t h e leadin2 o f f i c i a l ir? t h e d i s t r i c t and his neu and a d d i t i o n a l d x e s r e f l e c t t h e importance of r u r a l developmer,'c. But even t h e b e s t of t h e Collectors, l i k e one ~ : eobserved r e c e n t l y i n Tarijore D i s t r i c t (t,adras), i s hardly i n a p o s i t i o n .to s t r u g g l e through t h e morass of a system i n h e r i t e d from t h e p a s t and expanded i n accordance with Farkinson's la:^ of b i i e a u c r a t i c p r o l i f e r a t i o n . Not a l l t h e .technicians from t h e various S t a t e government departments a r e subordinate t o him o r ever1 coordirlale ~ . ; i t h him, and i n r u r a l development, - 1/ ;iolf Ladejinsky. Observations on t h e Packaze Program. -- 1.iimeographed. t h e s e ':uncoordinaLecil' r e p r e s e n t a t i v e s of r: lar,e numbe? of departji1lents on :ihicli they d e p n d l o r t h e i r s t a t u s end advancement have proved t o be l e s s than h e l p f u l i n bringing about t h e e f f e c t i v e implementation of a g r i c u l t u r a l prozrams. The Collector hiinself belongs t o t h e Revenue Service and i s responsible t o t h a t s e r v i c e , but he ?rears many d i f f e r e n t h a t s and i s thus a l s o more or less responsible t o a nwnber of a d d i t i o n a 1 ; n i n i s t r i e s or a~e~cies n .:hich have t a s k s t o p e r f o r r ~i~ h i s d i s t r i c t . 17. For t h e most r e c e ~ tattempt t o revamy: t h e a g r i c u l t u r a l administrative system from t h e Sta-be l e v e l dorm, one must go back t o t h e Vor!cin;i; Group Beport r e f e r r e d t o i n pararraph 3. The Report makes thirty-fo-ar recornmenda- t i o n s ; they a r e too lengthy t o give i n f u l l , but t h e f o l l o r ~ i n gis a l e v e l - by-level sumnary of t h i s e f f o r t t o fashion a more efi'ective system. 18. The p r i n c i p a l recoru~endationsf o r t h e S t a t e l e v e l a r e a s fo1lo;:s: t h e exist in^ S t a t e Coordinating Cornlittee presided over by t h e Chief N i n i s t e r should be ~ i v e n h e r i g h t t o implement decisions 'I~rithoutany t n interdepartiiiental r e f e r e i ~ c e s , ~ iorder t o inake p o s s i b l e quick a c t i o n a n " i n t e j r a t e d " Department; of A=riculture and h r a l Developmen-t should be created. under a senior 01:Cicial 75th t h e t i t l e of Secretary-Comniissioner f o r A g r i c u l t u r a l Produc-tian and Rural Development t o overcome t h e separatism of t h e various branches of a ~ r i c u l t u r e . This o f f i c i a l should be assigned t h e dv-ties formerly c a r r i e d on by the S e c r e t a r y i n charge of Planning, and tlius becofile t h e key man r e s p o i ~ s i b l ef o r a d n i n i s t r a t i o n and planning on t h e %ate l e v e l . It i s not c l e a r , ho~lever, r 1 y the head11 of t h e ne:! p o s t created by t h e r e s h u f f l e should be more e f f e c t i v e than t h e f ornler Development Conr;lissioner . 19. The main reco~;mendationsf o r t h e D i s t r i c t l e v e l a r e t h e followin&. : The D i s t r i c t Collector should a c t a s Chairman o t h e A-Picultural Production Coclmittee rjith r e s p o n s i b i l i t y f o r t h e administration and coordinztion oi a l l departmenzs concerned . -~ i t h g r i c u l t u r a l :>reduction. Thc s e c r e t a r y - a of t h i s Cornnittee, a Class L o f f i c e r , shoula be ~ i v mh e t i t l e of D i s t r i c t t .$gricultural Production Officer and be responsible t o t h e Collector Tor a l l day-to-day a c t i v i t i e s bearin2 on a,riculture. Pet, " S t a t e Heads of Departments u i l l continue t o d e a l d i r e c t l y r:it!l t h e i r d i s t r i c t o f f i c e r s a s a t p r e s e l ~ t , but i n matters r e l a t i p ; t o tile rrorlc of A g r i c u l t u r a l Production Coimittee, they should coimunicate through t h e D i s t r i c t ' C ~ l l e c t o r . ~ Obviously divided r e s p o n s i b i l i t y i s not a l t o g e t h e r t o be elininated. 20. n O tile Block l e v e l , t h e p r i ~ c i p a l innovation recoatmended i s t h e establishment of an A g r i c u l - t u r d Production Committee f o r t h e - Panchzyat . -- Saiilitis (union of t h e v i l l a k e panchayats of a block). This Comj:ittee i s t o be administered by t h e Block Deve1opmen.t Officer, but, on t h e t e c h n i c a l s i d e , he i s t o seek "prior approval of. t h e concerned ~ e c h n i c a l i s t r i c t D O i ' f i ~ e r s . ' ~ Here, too, 6ilalisn: reappeai-s, f o r t h e extension o f f i c e r s remain p a r t of t h e personnel of t h e r e s p e c t i v e t e c h n i c a l departments of t h e d i s t r i c t o r S t a t e , x i t h a l l t h a t t h a t r e l a t i o n s h i p implies. Somer)~hat s i m i l a r i s Lhe recomcended r e l a t i o n s h i p of t h e B3C t o t h e Secretary of t h e D i s t r i c t . Q r i c u l t u r a l h o d u c t i o n Cormittee. A nei- f e a t u r e i s t h e recommendation t h a t t h e 390 should concern himself v i t h a g r i c u l t u r a l a c t i v i t i e s only; other useful sug,estions a r e t h a t 50 per cent of t h e BaO jobs should be f i l l e d froci t h e ranks of extension o f f i c e r s , and t h a t "the development s t a f f ~rorkinga t t h e D i s t r i c t l e v e l an)? Selorr sho-aid not be t r a n s f e r r e d a t l e a s t f o r t h r e e years except i n very s p e c i a l circum- stances li 21. O t h e v i l l a g e l e v e l , t h e p r i n c i p a l old-net! recommendations a r e n thal; t h e VL:s should devote a l l ;;heir t b l e t o a ~ r i c u l t u r a l production and i t s a l l i e d pro;rams; t h a t t h e i r number should be increased, e s p e c i a l l y i n i n t e n s i v e development proLrar~iareas; t h a t t h e i r not: heavy assignment of llamenityll a c t i v i t i e s should be entrusted t o a functionary employed by t h e v i l l a b e panchayats; and t h a t each panchayat sliould orkanize a V i l l a ~ e Agricultural Production Com,~ittee,chaired by t h e President of a Panchayat and mana,ed by t h e VL:Y i n h i s nerj and a d d i t i o n a l capacity a s s e c r e t a r y of t h e Commsittee. 22. Such a r e the :)rinci3ai recommendations of t h e !.Jerking Group %port. Accordin:: t o a v a i l a b l e infonnation most - a l t h o u , h not a l l received-them favorably, and a r e expected t o put then? i n t o sf'fect. It i s - of t h e S t a t e s c l e a r l y t o o e a r l y f o r any jud~ment on the e f f e c t s of t h e proposals. Never- t h e l e s s , a few comments may be v e ~ t u r e t l . The oui;standing f e a t u r e s of t h e Report a r e i t s stress on administrative arrange~ientsa s they impinge on a z r i c u l t u r a l production and i t s recommendation tliai; the Agricultural Production Committee should be made t h e h e a r t of these arrangements a-L a l l l e v e l s . These emphases 1:7a!te c l e a r t h e usefulness of t h e Groilpls approach. ' h a t i s blurred, hovever, i s t h e expected linkage mion& t h e Committees. I n i;heory a t l e a s t , t h e recox~iicndeda r r m ~ e m e n t s would provide f o r more iintezration, p a r t i c u l a r l y on t h e S t a t e l e v e l ; a t t h e lower l e v e l s t h e recomnendations trmld not lead t o a canplcte elimination of fragmentation of r e s p o i l s i b i l i t i e s . The Repost introduces t h e career idea and a l i m i t a t i o n of job t r a n s f e r s , both e s s e n t i a l t o insure t h e much- needed o r ~ a n i z a t i o n a ls t a b i l i k y i n t h e countqrsid3. On t h e other hand, --- it t r e a t s t h e panchayats a s v i a b l e villa,;e development bodies, a~hichi n t h e g r e a t rilajority of cases -L;U:iey Eire not, a t l e a s t a t present. By basing production func Lions uFon tflese bodies, it rnay ;:ell be mistaking shadow f o r substance. Pinall;-, t h e Report acce:,jts t h e o f f i c i a l v i a ? of t h e V;, L! i . e . ::hat he i s expected t o do i n a v i l l a ~ e ,r a t h e r than xhat he a c t u a l l y does or i s capable of doing. I n addition, t h e IZeport takes l e s s account than i t should of t h e need f o r l ~ p g r a d i n h e q u a l i t y of t h e develop~iental t~ s t a f f a t a l l i e v e h . Only time can t e l l rtnether t h e recormendations w i l l brin, about a I1single organizational uni.tI1 i n vhich a l ~ t h o r i t y , decision and r e s p o n s i b i l i t y over basic f a c t o r s of production a r e c l e a r l y defined . and acted unon. IL should be noted. hotrever., .that "-h ?!orkin;: G r o u ~ - e Report i s a r e c o ~ n i t i o nof t h e ur2ent need Tor neL:xays t o achieve rnore .. e f f e c t i v e development and iiliplementation of f arrn programs.  D. Indian Administration i n General 23. It i s ~ e n e r a l l yadreed t h a t organizational shortcomin&s, both those commented on above and others not commented upon, a r e a g r i c u l t u r a l disincentives. Some of t h e correctives discussed i n t h e preceding pages and others outlined i n t h e paper dealink with Community Development and - ! A a r i c u l t u r a l Development may not be without value. Yet :e believe t h a t t h e i r effectiveness would be limited even i f they were s a t i s f a c t o r i l y applied. That i s because t h e s p e c i f i c deficiencies t h a t have been commented upon represent only c e r t a i n - and perhaps not t h e most important - of t h e inadequacies of t h e e n t i r e administrative system which adversely a f f e c t I n d i a ' s e f f o r t s i n most f i e l d s of development. No improvement i n r u r a l administration i s possible without an improvement i n t h e administration of t h e economy i n ~ e n e r a l . It i s desirable, therefore, t o examine t h e probleln a s a whole. 24. Certainly t h e f i r s t t h r e e Plans displayed a keen and compelling i n t e r e s t i n administration, and s o w i l l undoubtedly t h e Fourth Plan. The F i r s t Plan emphasized t h e importance of s c i e n t i f i c , t e c h n i c a l and administrative personnel, and of such matters a s proper selection, r e s p o n s i b i l i t y , decision-making, incentives, human r e l a t i o n s i n t h e s t a f f , etc. The Second Plan spoke frankly about; t h e need f o r facink administrative r e s p o n s i b i l i t i e s more c r i t i c a l l y , s t r e s s e d t h e importance of rapid and e f f i c i e n t methods of work, of t h e delegation of power a s a function of maximizing r e s p o n s i b i l i t y , and zenerally strongly r e s t a t e d t h e position taken i n t h e F i r s t Plan. The Third Plan, drawing on t h e experience of t h e f i r s t two, r e i t e r a t e d i n no uncertain terms t h e e s s e n t i a l s of good administration: clear-cut policies; delegation of authority and no interference with decisions made by those given such authority; q u a l i t a t i v e and q u a n t i t a t i v e improvement i n personnel; an up-grading of middle-grade personnel; i n addition i t made a number of other suggestions f o r b e t t e r i n g t h e administrati7:e system. I n p a r t i c u l a r it inveighed against a broad sharing of r e s p o n s i b i l i t y and eiiphasized t h e need Ifto make t h e administration much more action-orientedf1;/ because i f t h i s approach i s not followed "these measures may not y i e l d enough resultsf!/ 25 The Fourth Plan :.;ill be faced v ~ i t had,ninistrative t a s k s of much k r e a t e r niagnitude and complexi-ty than those of t h e f i r s t three, and t h e i.Jemorandw. on t h e Foiulth Five-Year Plan s t r e s s e s t h e administrative needs a t a l l l e v e l s , p a r t i c u l a r l y a t t h e "Area Leveltt, i . e . i n regions, d i s t r i c t s , blocks "or even v i l l a g e f f . Recognizing t h e ninherently d i f f i c u l t administrative problemsu, the Memoral~dummakes t h e obviously sensible but general recommendation: " A t each l e v e l t h e r e Bas t o be a c l e a r frame f o r administrative action, r e s p o n s i b i l i t i e s and mutual r e l a t i o n s h i p s have t o be defined, s a t i s f a c t o r y communication established and a g r e a t deal of day-to-day coordination achievedn. These recommendations a r e not new and, a s i n t h e past, t h e Plan does not s p e l l l/Third Five-Year Plan, page 278. - T / ~ b i d . , page 278; f o r more d e t a i l e d information see pages 276-290. out how, f o r instance, "a c l e a r f r = e f o aadminZstrative actionf1 i s t o ~ be created, o r how clesr-cut r e s p o n s i b i l i t i e s a r e t o be assi&ned, accepted and l i v e d up t o . This i s not intended a s a c r i t i c i s m of t h e Planning Commission nor, f o r t h a t matter, of other organizations which have gone beyond general recommendations but with not very d i f f e r e n t r e s u l t s . The f a c t i s t h a t , a s t h e following paragraphs make c l e a r , t h e problex i s one of a t t i t u d e s of mind and concepts derived from t r a d i t i o n a l administrative arrangements, v~hicha r e extrernear d i f f i c u l t t o change. 26. Some c r i t i c s c a l l p a r t i c u l a r a t t e n t i o n t o one of t h e baneful manifestations of these a t t i t u d e s , the "oligarchy of rulest1, which, i n agriculture, stands i n t h e r J a y of developriient. IflAnister Subramaniarn r e f e r r e d approvingly t o a statement by one of h i s f r i e n d s t h a t : "It i s t h e t h r e e books t h a t stand between India and proLress - by t h a t he means tlze Fundamental Rules, t h e Financial Rules and Account Codes - vhich a r e quoted by t h e adnunistrator .to t h e innovator; I know very often tile administrator i s himself an innovator. But under t h e present dispensation, even t h e bold amon;;. t h e administrators cannot introduce tile necessary changes r'or, a s has been remarked, one-half of t h e i r mind i s t r a i n e d t o advise i!lly t h e thin;s which t h e other half r~ants, cannot be done1!. 27. th ~ I n searchin, f o r other clues a s t o t ~ h e problez~s of administration a r e so i n t r a c t a b l e , i ~ r . Subrananiam r e f e r r e d t o an Itacute observer of t h e India scene" whose puzzlecient ?;as t h i s : India possesses sone of t h e best administrators extant but c o l l e c t i v e l y "tiley have a great capacity f o r stopping thin,sn. X oifered a s a possible zxplanation, e Itour contemplative inheritance or t h e heritage of years of colonial r u l e i n r?hich people irere rewarded not f o r doink thin@ but f o r riot doing themv. That may or may not account f o r t h e d i f f i c u l t y . There can be no doubt, hotlever, of t h e accuracy of t h e following statement by the i-linist,er which repeats a point already made but seems nevertheless worth quotinz: ffO1~ society, i n recent years, p a r t i c u l a r l y has developed a knack of not, entrusting decisions t o one individual but of d i s s i p a t i n g r e s p o n s i b i l i t y and po::er i n tha f a c e l e s s mass of committees. It i s obvious t h a t this s - t u a t i o n has t o change i f xe want t o r e a l l y nlake progress I , . t 3 28. Hinister Subramaniamts concern i s shared by many i n India, and t h e Plannin;, Commissionts repeated emphasis on t h e need f o r bet-Ler administration has not Seen s.ithout i t s inPluence i n bringing i n t o being an a r r a y of organizations and insCuitutions concerned with t h e problem of administrati-on. An incomplete but formidable enough l i s t dravm frmi a study by our Indian studtntz/ i s a s f0110~:s: t h e G f f i c e of 12anagement a t -/ Aconvocation address. i s l l l quotations i n t h and preceding paragraph a r e from ;k.Subramaniamls 2/Based on A j i t ii. Banerjeets..Fkf-teenYears o f kdministraf;ive.Ref~rin iir, -.. - Over Vies?. "The Indian ~ o m ~ b l h d ~ ic i s t r a t i o nJuly-September i n ~~ r -  XII - 1b t h e Center and i n t h e S t a t e s ; t h e Program G ~ a l u a t i o nOrbanization i n t h e Plannin~. Cornmission; a Special Reorganization Unit i n t h e Ninistry of Finance f t t o make an objective revie1.z of the organizations and personnel s t r e n g t h of t h e various i.;inistriestf; t h e I n s t i t u t e of Public Administration; t h e Administrative Vigilance Division a t t h e Kinistry of Home Affairs; a nei.7 scheme f o r t h e Central S e c r e t a r i a t C l e r i c a l Service; t h e Committee on Plan Projects by the IGational Development Council, t h e Administrative S t a f f College f o r t h e t r a i n i n k of senior members of Government and industry; t h e Sational I n s t i t u t e of Community Developinent and National Productivity Council; t h e National Acaderdy f o r Administration; t h e Central Directorate of Pknpower; t h e Central Cconomic and S t a t i s t i c a l Services. Siention should be made a l s o of t h e Second Central Pay Cornr;ussion 15th i t s s i g k i ? i c a n t findings and recommendations. 29. These and other unnamed organizations :;ere created a s p a r t of t h e many attempts t o reform the c o u n t r y f s administrative arrangements. They a r e concerned ~ i t v i r t u a l l y a l l aspects of t h a t problem. i r . h Banerjee from r;hose study t h e l i s t vas d r a m does not deny the usefulness of some of the reforms but ends on a p e s s i n i s t i c note, because there has not been: "... i generally any basic c h a n ~ e n t h e forms of organization or neFhods OX rqror!c; t h e administrative reforms have mostly been i n t h e nature of ad hoc kiiprovenents of t h e e x i s t i n g s t r u c t u r e and p r a c t i c e s i n response t o the need of them. '.%ile t h e ~overnmenthas t h e o r e t i c a l l y conceded the necessity f o r f l e x i b i l i t y i n organizational p a t t e r n s and methods of work, i n a c t u a l p r a c t i c e nerr or6 i z a t i o n forms and ?ror!r methods have s t i l l t o be evolved. I I ~ "filere t h e attelnpted reforms a r e p a r t i c u l a r l y veak, If... is i n t h e area of hmian motivation and human r e l a t i o n s , ~ihici.1 r e the functions of' several f a c t o r s a such a s monetary and non-ii~onetarjincentives, morale and t h e network of human i n t e r a c t i o n and influence. lf2/ 30 Another student of these problems, Xr. Tarlok Sin&, f o r a number of reasons drawn from h i s orm v a s t experience and close associatioll t ~ r i t h h e Flannin;: Coilmission, :mites t h a t : I1Experience i n t h e past t r ~ o years has tended t o strengthen t h e vier1 t h a t i n i t s s t r u c t u r e , methods of functioning and capacity t o meet requirements of rapid development, the administration has not been able t o catch up, and t h distance may be increasing r a t h e r than 51 - "The :I. 3 i q eJournalYifteen .YeaI;s of Administrative iiefom- - An Overpage 451. 1/~?i-t Indian rjeefs of Public AdministrationIf July-September 1963, Vier:. I t a l i c s added. - 2/Ibid., page 455. - 3/Dr. Tarlok Singh, Administrative Assumptions in the Five-Year Plans. '!The Indian Journal of h b l i c Administrationff, page 336. July-September 1962. H l i s t s t h e numerous riieaswes talcen since Irldependence t o prevent such e a s l i p p a ~ e ,and s i . 2 ~ o r t h t h e b a s i c prenlises l a i d do7.n f o r an e r ' f i c i e n t f adinini~trati~e syste:il. 11( ) O e s s e n t i a l matters, functioniilg within t h e common 1 n frame~iorkof an agreed n a t i o n a l p l a y t h e Centre and t h e S t a t e s , osithin t h e i r r e s p e c t i v e spheres, ~ o u l d each t r y t o maintain and improve t h e standards of e f f i c i e n c y , i n t e g r i t y and s e r v i c e i n day t o day administration; : 2 ) Accordin2 t o t h e p r a c t i c e of parliamentary democracy, t h e p o l i t i c a l executive ; $ r i l l give s p e c i a l a t t e n t i o n t o t h e formulation of p r i n c i p l e s and policy i n each i'ield of activi-Ly, leavinb it t o t h e public s e r v i c e s t o administer an2 knplexent the51 i m p a r t i a l l y an6 t o tender ad~.:ice a1:rays >:.ithout f e a r o r favour; ( 3 ) The higher ranks of tine public s e r v i c e r:csuld h e l p e s t a b l i s h t h e r i ~ h t t r u c t w e oi' administration and s t r a d i t i o n of s e r v i c e and provide a h i ~ h degree of administrative l e a d e r s h i p i n improvin;; t h e administra- tion; (4) Thc r e q u i s i t e t e c h n i c a l and a d m i n i s t r a t i v e cadres :rill be b u i l t up f o r t h e e f f i c i e n t execution of various t a s k s and .the responsible a u t h o r i t i e s nay be l e f t f r e e t o dischar,,e t h e i r funciiions i . i t h the necessary care and t h o r ~ u ~ e s s ; ( 5 ) Both i n planniaz and in implementation, t h e r e t r i l l be e f f e c t i v e i n t e g r a t i o n between d i f f e r e n t a c t i v i t i e s alon;i, wi-th enforcement of s p e c i f i c r e s p o n s i b i l i t y on t h e p a r t of each agency; and ( 6 ) The combination of r e p r e s e n t a t i v e den~ocracyand non- p o l i t i c a l public s e r v i c e s should. be c a r r i e d from t h e n a t i o n a l and. S t a t e l e v e l s t o t h e d i s t r i c t and l o r ~ e r i e v e l s , s o t h a t l o c a l resources and l e a d e r s h i p could be mobilised t o t h e maximu:!. ex-tent possible i n t h e sei1\6ce of econo~iicand s o c i a l development. 31 D r . Sinzh p o i n t s out t h a t .t,ili3se p r i n c i p l e s have not stood t h e t e s t of experience, and questions :;hether t h e character of administrative problems d i f f e r s fro^ t h e assumptiofis underlyin, t h e s e premises, i.rhether t h e a p p l i c a t i o n of t h e p r i n c i p l e s i s f a u l t y , or r ~ h e t h e r"the a & i n i s t r a Live t a s k s t o be c a r r i e d out (:*ere ) being c o r r e c t l y assessed f o r s i z e an:' ranee o r ,:ere they being u n d e r e s t i r l a ' ~ e d ? ~He not only ~ r a i s e s q c e s t ions, but makes a very s i g n i f i c a n t 1:oint i n c onsiclerink t h e ever-present problem of Center-State policy relatfions. In h i s vierr, t h e p t r ~ o o l i i i c a l u n i t s have "a broad n a t i o n a l approach i n most f i e l d s , even i n those vhich may f a l l s t r i c t l y iribhin t h e S t a t e s n , but "this common outlook has not been carried s u f f i c i e n t l y i n t o the area of administrative machinery and implementationn. The form assumed by the Center-State administrative deliberations "has been e s s e n t i a l l y advisoryf1. I n other words, i f w understand c o r r e c t l y the meaning which D r . Singh attaches t o e the term ltadvisoryH, i n the long run, the S t a t e s administer and implement the laws without consideration f o r whether t h e i r procedures represent good administration. I n another analysis of t h e problem by Dr. Singh ( ~ p p r o a c h t o Administrative Fieform) he s t a t e s t h a t "The h e a r t of the matter is, f i r s t l y , t o provide a framm-ork f o r responsible i n i t i a t i v e a t each level, within each agency and on the p a r t of each individual and, secondly, t o ensure t h a t those t o whom r e s p o n s i b i l i t y is assigned s h a l l be accountable f o r the resultsl1. Without trying a t t h i s point t o explain the causes of the 19nisbehaviorf1 of Indian administration, t h i s comment of Dr. Singh i n d i c a t e s c o r r e c t l y the nature of i t s shortcomings. E. A Basic Criticism of Indian Administration - 32 Although much thought and e f f o r t have been given since Independence t o the attainment of a reasonably well-functioning administrative system, the r e s u l t s a r e spotty. The shortcomings are well-known and t h e Indiana themselves have been unsparing in voicing them. The causes of these short- comings a r e l e s s well-known o r appreciated, and they c a l l f o r a d e t a i l e d consideration. One of them, t o repeat, i s the meaning widely attached t o the term lladministrationll. What i s the character of Itadministration" in general and a g r i c u l t u r a l administration in p a r t i c u l a r ? 33 &:ore -than a h i n t i s provided i n contrast often drawn between Itan administration mentally and organizationally conditioned by law and order outlookll and one I1infused with growthmanship in the best sense of the termn. .". 1/ But t h e r i d d l e of t h e wide gap between needs recognized a s urgent and the actions taken t o meet them i s d e a l t with best in the pioneering study of ItPublic Administration i n Indiatt by Paul Appleby, published in 1953, the f i r s t of i t s kind t o be made a f t e r Independence, and h i s succeeding study published i n 1956. Though years 014 these studies have l o s t none of t h e i r timeliness, f o r although no one i n o f f i c i a l India concerned with adininistra- t i o n disagrees with h i s analysis nor the conclusions he draws from it, by and l a r g e they remain mainly blueprints f o r action, 34. I*. Appleby's s t u d i e s deserve d e t a i l e d presentation, f o r they pro- vide, ii seems t o us, t h e answer t o the question raised above. I n h i s opinion the crux of the d i f f i c u l t y l a y in t h i s : "The word tadministration' i t s e l f i s often very narrowly conceived 'If axiythhg a r i s e s i n respect of administration1 usually means - 1/ Pas. Lokanathan. Administration of Economic Regulations i n India, page 10 s I1Administrative ~ e r m Since Independence." Supplement to t h e Indian Journal of Public Administration, July-September 1963.  anything invol.vin5 money or persoAnnelmatters. There i s I,O accepted t e r c ~ ~ o l o o yt ~ cover t h e adnli?istration of pro- gramme which =e t h e i ~ ~ ~ ~ ~ o r - t a n t end-produc3 of a l l public ailministration, no concentration of a t t e n t i o n o r s t r u c t u r e on laction administrationf o r tprograrixneadministration', and t h e c i v i l servants of' highest rank a r e more concerned 1 5 t h lco-ordinationl than 1 5 t h admini.strationl i n a c t i o r ~ terms. A t t h e l e v e l of administrative o f f i c i a l s co- ordination should mean t h e r n a n q ~ e ~ i relatLng of t h e al p a r t s of an administrative rrhole, pointed. emp11al;ically toi;ard a c t i o n decision-making. Here it is a r~atered-dorvn tern c o n n o t h g a diffusion of r e s p o n s i b i l i t y i n an extremely c~~lbersorile process of cross-reference and consultation, and, at t h e Centre, ~ i l t h o u tr e a l powers of enforcing on t h S t a t e s t h e co-ordinative decision, i f t h e r e i s one. ,I&? 35 Ee c a l l e d a t t e n t i o n t o nunierous contributory f a c t o r s , but s t r e s s e d p a r t i c u l a r l y t h e s t i l l p e r s i s t e n t lack of d i s t i n c t i o n i n India l betveen "line" an?. T 1 s t a f f tfunctions. The l a t t e r r e f e r t o planning, l o g i s t i c s , f i n a n c i a l and personnel controls, l e g a l revieu of administrative proposals, e t c . A s a g a i n s t t h e s t a f f organizations, t h e tllineTT organizations a r e supposed t o eilga2;e i n cai-ryin~o a t progrsams, administering them 1 5 t h a vievr t o obtaining t h e objectives of t h e programs. These terms, he noted, Lave limited a p p l i c a b i l i t y i i ~ India, t h e exceptions being defense, e x t e r n a l a f f a i r s , c o l l e c t i o n of taxes and a f e x others. Yith thest! out of t h e picture: 'I.. . there t s 110 tpue and complete administration i n t h e c e n t r a l government. There is, instead, t h e d i l u t e d and incomplete coordination not involving exercise of r e a l , f ornal and c o n t i n u i r , ~ o w r 0 control, an excess of cross p 1 references and conference antecedent t o action, and a delayinti of c t i o n responsibi2i.ties nominally lodged elsei.~here., 1121 35. These viei:s vere not laodified in 1~1r. Appleby1s f 0 1 1 0 ~ - u pstudy Re-Exanination of India s A d r ~ i n i s t r a t i v eSystem, published i n 1956. He noted i n t h a t study t h a t : "... by r e l i a n c c on excessivo procedures of cross-reference t h e r e has been b u i l t ail extraordinary evasion of individual r e s p o n s i b i l i t y and a system r.herehy everybody i s responsible for everytliin; before anytinin& i s done. I n l a r z e and complex a c t i o n s no one and no system can be r r e a l l y responsible f ~ many of t h e actions before they arc actions , even though r.esponsible a f t e r t h e f a c t . 112/ . -- - --- - e l/Paul !I. Appiebjr, Ijublic Administratio?? i11 India, page 17, N w Elelhi, 1953. - 2/Ibid., pa;e 17. - 3/Q. c i t . , pace 6. A s t o the States: "... t h e same p a t t e r n of d i f f u s e d r e s p o n s i b i l i t y i s t h e general r u l e , modified i n some by t h e simple f a c t of Raving a smaller number of m i n i s t r i e s , ... 1/ 1 r, and t h a t : lfIn both t h e Center and t h e S t a t e s , p r e v a i l i n g s t r u c t u r e s ... provide c h i e f 1 Tor co-ordination r a t h e r than adrninistration. ,127 , 37 Although, i n t h e v i e v of t h e author, administration and delegation of poirer a r e inseparable: "An important aspect 0 t h e e x i s t i n & s t r ~ l z t u r e 1 is... an astonishing l a c k of capacity and/or f a c i l i t i e s f o r administrative delegation. This i s a t t r i b u t a b l e i n p a r t t o t n e extraordinary width of t h e kaps in q u a l i t y , p r e s t i g e and pay bet.c:een t h e higher l e v e l s , i n p a r t t o a some1:hat consequectial lack of q u a l i f i e d intermediate personnel, in p a r t t o a lac!; of s u f f i c i e n t a-ttention t o t h e art of delegation, and i n considerable p a r t t o a s t r u c t u r e t h a t discourages and damages delegation. 36 These a r e s e r i o u s s t r i c t u r e s , but iir. Appleby made c l e a r t h a t t h e f a i l u r e of a system i ~ h i c h r.~orkedf a i r l y well before Independence and i does n o t :rork trell vhen lldevelopnler~tlfs t h e b a t t l e c r y of Independent I n d i a cannot be a t t r i b u t e d t o t h e jloor c a i i b e r of t h e t o p l e v e l Indian n officiaidom. O t h e contrary, he paid ilizh t r i b u t e t o t h e a b i l i t y of t h e s e o f f i c i a l s and t o uhat the;- faslzionec! i n t h e e a r l y years of e Independence. H a b t r i b u t e d t h e system's f a u l t s t o t h e l e s s happy i n h e r j - t a m e of mental a t t i t u d e s , rror:: h a b i t s , r e s p o n s i b i l i t y limited a t best, and t h e i n d i s p o s i t i o n of Indian personnel t o grasp l a r g e - s c a l e o p p o r l u i ~ t i e s . He contended t h a t I1Personnel administration here has t o o much i'eudalistic h e r i t a g e u , .;-!hich i n i;urn explains i t s extreme rad: and c l a s s consciousness, i t s jealousies, t h e undue e f f o r t t o perpetuate i t s f'positionll, and t h e high b a r r i e r s separatin;, rank fro111rank. i h i l e t h e r e i s t o o much of a l l of t h e s e eiement.~, t h e r e i s "too l i t t l e consciousness of membership i n ' t h e f public s e r v i c e , and t o o l i t t l e k consciousness t u r n i n & on p a r t i c u l a r job r e ~ p o n s i b i l i t i e s ~ ~ . t , since "Rank has ilo proper s i @ . f i c a n c e except a s it i d e n t i f i e s r e s p o n s i b i l i t i e s , E/ Iiere responsi j l i t y tends t o becoine d i l u t e d and dir"fused, rank exaggerateds1., - l/Paul H. Appleby, Public A&,lir.istra+,ion i n India, page 18, He17 Delhi, 1953 - 2/Ibid., page 10. 3/Ibid., pages 13-19. - / ~ b i d . , a l l quotations i n t h i s paracraph a r e from pazes 10 and 11. G 39. App1eb.J d i s c ~ ~ s s e2d nm.Ser of other f e a t u r e s of t h e countl?~!s p ~ b l i cservice flrnal.:in; the jobs of *ministries and s e c r e t a r i e s (top- ranking c i v i l s e r v i c e men) l e s s and l e s s manageable, "A/ and observed t h a t "the dominance of s e v e r a l r a t h e r h i s t o r i c a l l y conventional notions ~shich,though of p e t t y character and of no v a l i d i t y vhatever i n rlly vie?:, l a r g a l j determine iinportant f e a t u r e s of t h e administrative realitygli)/ The character of t h e i n h i b i t i n 2 h e r i t a z e has already been noted, and t h e d e t a i l e d sumnaq- presented by t h e author need not be given. ';"!hat should be underscored, hor~ever, i s t h a t t h e prevailing type of "administratioli" bears p a r t i c u l a r l y hard on a g r i c u l t u r a l development, because it involves 60 million or so ndecision-makersll and a number of very d i f f i c u l t problems: those 02 securing naxi~wnr e s u l t s from e x i s t i n g a g r i c u l t u r a l technologies and of changing these technologies gradual.1~; t h e problems of i"ura1 education and health; those of providins and d i s t r i b u t i n z seeds, f e r t i l i z e r and other inputs; t h e very complex but v i t a l problem of providing i r r i g a t i o n , necessita-bin" decisions about t h e most u s e f u l types of i r r i z a t i o n f a c i l i t i e s and h o t~ r a i s e P a d s f o r them; and f i n a l l y o t h e problem of t h e incentives t o be provided t o farmers t o achieve an increase i n a g r i c u l t u r a l production. ?Jot surprisinkly, t h e author concluded t h a t "It i s in t h e a g r i c u l t u r a l area, t h e r e i o r e , t a t t h e 9 problem 0." arlministration i s most d i f f i c u l t and most, a c u t e f l l . That conclusfon a p p l i e s rrhatever the character of t h e ag:-icultural policy t h e Government decides t o c a r r y cut. LO. I n h i s f i r s t study, ;Ir. Appleby r-ras more concerned 1 6 t h pointing out t h e changes needed i n t h e basic p r i n c i p l e s and p r a c t i c e s of t h e Indian d administrative sys-ter,; Lhan rrith s u _ ~ e s - t i n g e t a i l e d changes. In t h e seconu, he proposed a number of s p e c i f i c sukgestions t o c o r r e c t t h e most s l a r i n , d e f i c i e n c i e s i n y r a c t i c e . There i s no need t o repeat these suggestions here; they a r e r.reli-known t o top o f f i c i a l adminis-trators i n India. I t seems useful, hoxever, t o summarize t h e i s s u e s raised, because such a discussion, i n i t s e l f , irould i n d i c a t e t h e type of c o r r e c t i v e a c t i o n needed and i s p a r t i c u l a r l y Zerlilaiie t o t h e expaadink and complicated developmental process about t o be ushered in by t h e Fourth Plan. Although 1.k. Applcbyls study vas m i t t e n i n 1956, current p r a c t i c e s v a l i d a t e h i s viem, rrhich a r e liloreover supported by p r a c t i c a l l y a l l students of public administration i n India and have riever been challenged. h1. A in h i s e a r l i e r study, iir. Appleby called a t t e n t i o n t o t h e s f a c t , "tiiat grcat achievements of recent years have been xade beyond t h e capacity of t h e Indian ad;liinis-i;rative systemv. TkLs r e s u l t was achieved by overr~orkin;: key personnel, a p r a c t i c e t h a t cannot be continued i n d e f i n i t e l y . I-Ie sar: i n tinis very success "a monumental f a i l u r e t o develop i n sxbordinates t h e capacity needed t o accept and use dele6ated responsibilities ... t h e r e i s t o o nuck sharing of a c t i o n before t h e f a c t , and too l i t t l e reviet. i n a p p r o p i a t e kerms focusing on accomplishment l/Paul IT. ~:;~;ieby, Public k d n i n i s t r a t i o n i n India, pa&e 19, I:e:r Delhi, 1953. 'Z/~bid., pa2e l ? . - 7/1bid. , page 40. a f t e r the f a c t ... t h e e x i s t i n g p a t t e r n of j o b - t i t l e s and t h e r i g i d i t i e s of c l a s s , service, cadre, and srade pay d i f f e r e n t i a l s a r e a l l confusing and, tkere:fore, h o s t i l e .to rapid gror.ithft. 42. I n a s e c t i o n of t h e Beport c a l l e d I1An Indictment of Present ?rocedurestl, i d kAppleby m o t e t h a t f f s p e c i f i c decisions incident t o . e f f e c t u a t i o n of purpose i n India a r e reviewed by too many persons i n t o o many organs of t h e government i n too detailed, too r e p e t i t i v e and too necative terms ... . n extraordinary and dismajring concern f o r t h e 4 ' r i g h t s 1 of members of t h e S e c r e t a r i a t Service and other services t o advance i n rank enforces e a r l y retirement and puts high b a r r i e r s i n t h e ;.Jay of re-employment of a conipetent r e t i r e d c i v i l servant s e r v i c e s have grown g r e a t l y i n numbers y e t , "there i s too much ... The untril1in;;ness t o r e c r u i t i n s u f f i c i e n t numbers, even f o r present needs, and too 1:~Ltle r e a l i z a t i o n t h a t f u t u r e needs of f a r more s e r i o u s dimensions carnot be met i n Lhe f u t u r e except by a d d i t i o n a l recruitment - ... nov. near t h e h e a r t of 3ile problefi~i s a f a i l u r e t o r e a l i z e and understa.nd t h a t t h e Government of India - Center, S t a t e , 1;iuni.cipal and rural - must grot: g r e a t l y and rapidljr i n s i z e ... ;:'here here t h e t h i n l c i n ~i s big about s o c i a l objectives, t h e thinking i s small about t h e zovernment rlhose g r e a t increase i n s i z e i s e s s e n t i a l t o t h e e f f e c t u a t i o n of t h e great purpose ... Attitude to:iard pay f o r public s e r v i c e a s an aspect cf small savinss i s a serious d e t e r r e n t t o t h e d p a n i c and t r u l y e f f i c i e n t iiovernment i.jhich i s c r u c i a l l y i ~ ~ t p e r a t i v e herelf. And on t h e same subject, tilher.e ai-e too d e f i n i t e and inadequate notions about entrance s a l a r i e s so .Lhi?t many q u a l i f i e d persons a r e not a t t r a c t e d t o t h e pcblic s c r v i c e u . b-3 A s t o t h e rileanin& of ua&flinistrationflhe m o t e ; "The very .;.orti ac311inis-trai;ionlhere i s too narrorrly conceived a s r e l a t i n g t o f i n a n c i a l and personnel adlninlistratioil ... Administratiorl i s b a s i c a l l y t h e conduct of programs important t o c i t i z e n s and t h e nation; f i s c a l administration and personnel administration a r e merely aspects of -khe general managelgent of a v a r i e t y of proL,;rams.tf I n a lengthy disc?lssion of t h e r o l e of Parliament in r e l a t i o n t o administration, he returned t o the delegation of poiTers, and concluded .that lf;'arlianent i s a chiei' c i t a d e l of opposition t o delezation of poiiers, t h e need f o r which i s t h e r,rorst shortconling ol Indian administration. Parliament's reluctance t o delegate i t s povers i n d e t a i l , a s it i s e s s e n t i a l t o do i f Parliamentary pouers a r e t o be important and positive, discoul-ages t ikinisters t o o from d e l e ~ a t i n g h e i r potiers, discourazes S e c r e t a r i e s from delegatin,? t h e i r porsers, and i4anagins Directors from delegating - t h e i r poifers. I f 5 7 F. Conclusion bl~. Despite I.x. Appleby's c r i t i c i s m s of t h e Indian administrative system, he expressed t h e v i e x nevertheless, t h a t I n d i a (along r , i t h - - of I n d i a 1s Administrative System, 1956. from Paul Appleby's Be-Zxanination 1/41-1 quotations i n paragraphs 41-k3 a r e Great ~ r i t a i n )Ifhas t h e b e s t body or^ k e n e r a l i s t c i v i l servants i n t h e ~~orld.l~&/ Other students of t h e problem share t h i s v i e ~ r . One such comment is: "India's p r i n c i p a l inheritance from t h e B r i t i s h period t ~ a s an administrative s e r v i c e of unrivaled i n t e h r i t y and e f f i c i e n c y . 1 1 / Although t h e r e a r e a l s o more tempered reactions,Z/ t h e r e seems t o be general a~reeriientt h a t India has had and continues t o have a Group of administrators of a very hikh c a l i b e r , t h a t has been subjected t o a number of s t e r n t e s t s and has passed them with d i s t i n c t i o n . It i s n o t difficul.1; t o r e c a l l India on t h e eve of Independence f a c i n g t h e t a s k of layin, t h e poundtrork f o r p o l i t i c a l , s o c i a l and economic development. 51 s A ferr examples 1 . 1 u f f i c e t o i n d i c a t e hor~tlie national leadersh2p and t h e administrative s e r v i c e rose t o t h e demands placed upon them: hor~~ they ; r o t e t h e consti-5ution; i n a statesmanlike vay, incorporated -the 500 or more Princely S t a t e s i n t o one country; helped t o absorb t h e severe shock and consequences of P a r t i t i o n , and, of course, produced 1 5 t h no outside a s s i s t a n c e t h e F i r s t Plan i ~ h i c hs e t I n d i a on t h e path of reconstruction. A l l of these achievements must be regarded a s out- standing. And regardless of t h e d e f i c i e n c i e s and shortcomings, I n d i a ' s o v e r a l l attainments i n industry and a g r i c u l t u r e since Independence a l s o j u s t i f y high prai-se. hS = I n t h e years s i n c e then, t h e enlarged administrative Service has n o t starved I n d i a f o r a s t a f f rrhich continues t o shov outstanding q u a l i t i e s . Xoreover, although they, too, have had important acconplish- ments, inany of them have looked c r i t i c a l l y a t t h e i r handiworlc, a s economic developtent brought a succession of new problems. But t h e c r i t i c a l look has not n e c e s s a r i l y meant c o r r e c t i v e action, f o r personnel of t h e e l i t e Service is imbued w i t h cultural t r a d i t i o n a l i s m which s t r e t c h e s back t o t h e dqys before Independence ~d beTore the ' B r i t i s h r u l e , nearly overlaid w i t h i n h i b i t i o n s vhich u i l l be discussed i n paragraph 100. IE a sense t h e i r a t t i k d e , even i f i n a d i f f e r e n t context, resembles t h e t r a d i t i o n a l i s m of t h e v i l l a g e i t s e l f . And j u s t a s t h e v i l l a g e i s under- going a change under t h e impact of nerr ideas, s o a r e some Indian c i v i l servants, including a number i n adiifinistrative p o s1t 'lons. ' h6. The d i f f i c u l t y i s , h o ~ ~ e v e r , i n t h e a d x i n i s t r a t o r s but not r a t h e r i n t h e system a s a ~;liole. The system has not stood ap well t o t h e demands of t h e new e r a of econoriric reconstruction and t h e urgent need f o r economic advance t h a t can be l e f t u n s a t i s f i e d only a t t h e r i s k of n a t i o n a l i n s t a b i l i t y . It i s c l e a r t h a t t h e v a s t and extremely d i f f i c u l t t a s k s facing India c a l l f o r iritense e f f o r t , g r e a t ima;;ina+,ion, and exceptionally e f f e c t i v e administrative arrangements. A administrative system t h a t w i l l n shox t h e first tvo c h a r a c t e r i s t i c s i s y e t t o be created. That i s c e r t a i n l y t r u e i n a g r i c u l t u r e . The Itspirit1l t h a t moves some of t h e members of t h e Service t o function i n a manner t h a t i s in conformity with t h e pace 02 modernization i n India does not dominate t h e administrative system. - page c n 27. a t i o n of India1s Administrative System, 1956, - Development i n India,J.J. S p133,~ lDace University r r e s s , 1963.and Econozlic 2/Ralph Braibanti and page e n e r ,Editors, Administration - 3[1bid., pages 29-30. IJoreover, t h e accornplish~entsof t h e past decade and a h a l f , s i ~ n i f i c a n t a s they have been, f e l l short of t h e needs 01 t h a t period, and i f there i s no iiisprovement i n performailce ii t h e next c r u c i a l decade, the r e s u l t s r ini;.ht well be disastrous. L!7 . I f , a s seems t o be generally agreed, b e t t e r a g r i c u l t u r a l a h i n i s i r a t i o n represents t h e difference between accelerated progress and j u s t chugging along, has not t h e time come f o r less coordinatiorl and more administration i n t h e Center, S t a t e s , D i s t r i c t s , Blocks and v i l l a g e s ? Is it not time f o r fexer conferences and "friendly persuasiontt and more porrer, a u t h o r i t y and dirnl decisions a t t h e Center? And by extension and ?fith appropriate v a r i a t i o n s , may not t h e s m e be s a i d of t h e S t a t e s , with t h e understanding t h a t t h e i r a c t i v i t i e s a r e p a r t of t h e implementation of' n a t i o n a l policy? Has not t h e time come f o r more individual decision-making,- auth'brity and unshared r e s p o n s i b i l i t y ? Is it not time t o de-emphasize t h e g e n e r a l i s t and place emphasis on t h e well-trained s F e c i a l i s t - a t l e a s t t o the extent of redressing t h e balance ? k8. Xany more questions can be raised with respect t o the-a-i-- . s t r a t i o n s i d e and a l l with an cye t o the ever-g~owing and-ever-more exacting requirenents of t h e country a s i t e n t e r s t h e stage of i t s most ambitious Fourth Plan. The dispensable t r a d i t i o n s of India d i e hard i n t h e v i l l a g e a s i n t h e US, and t h e changes a r e not l i k e l y t o come about e a s i l y or quickly. Through t h e Plans, and t h e srieat and t o i l of t h e people, India has proclaimed t h a t shs i s not ready t o nlalce peace with hat hinders progress. Since t h e e x i s t i n g administrative system does not function well i n t h e constant:?y subtly-chanking s e t t i n g i s it not indeed time t o push t h e proble~nit r a i s e s i n t o t h e foreground, e s p e c i a l l y since it i s recognized i n Government c i r c l e s , and :rith a sense of urgency, t h a t -the system must be changed t o meet t h e new naeds? 49 p7any evidences of' deep ccncern of t h i s type can be offered. A exceilent one is t h e assessment of t h e problem by D r . Tarlok Singh in n h i s paper on Administration and Planning of Agricultural Production Pro~rams. He notes, or' course, t h e inpact of t h e a r r a y of measures i n t h e a ~ r i c u l t u r a l i e l d , which cannot be denied i n s p i t e of t h e f a c t t h a t f they have not achieved i n f u l l t h e r e s u i t s expected of them. nHo>jever,u he h ~ o t e n e a r l y 1963, "the stage has nor.1 been reached when 1arr;e i - r e s u l t s w i l l come only with highly e f f i c i e n t , systematic and thorough-i,oing administration and planning i n a g r i c u l t - m e a t a l l l e v e l s ..." It i s on administration a t t h e Center, i n t h e S t a t e s and i n a l l the p r i n c i p a l agencies t h a t serve a g r i c u l t u r e t h a t he l a y s s t r e s s , and he makes t h e very useful suggestion t h a t t o strengthen t h e administration of agriculture: "One approach could be t o have a s l n ~ i e Ministry t o deal 95th a l l aspects 01' a & r l c u i t l l r a l development. This i t i n i s t r y should be capable not only of providing d i r e c t i o n s and technical and f i n a n c i a l resources t o t h e S t a t e s , but a l s o of undertaking some imi~ortanta t ; r i c u l t u r a l p r o j e c t s ... d i r e c t l y under i t s o;m r e s p o n s i b i l i t y The proposal t h a t t h e Central GovernKent should streamline i t s arm  machinery f o r a g r i c u l t u r e i s intended only a s an e s s e n t i a l s t e p tociards i!!iprov.ing a d ~ i i n i s t r a t i o n t a the S t a t e , d i s t r i c t and block levels." 50. D r . Sirigh's suggestions have y e t t o be put i n p r a c t i c e . During t h e i4ission1s s t a y i n India, a number of cabinet meetings discussed t h e p o s s i b i l i t y of broadening t h e administrative a u t h o r i t y and enlarging functions of t h e l.linistry of Food and Akriculture. One can only hope t h a t the s t r o n g l y - f e l t concern about b e t t e r administration a s a key t o b e t t e r a g r i c u l t u r e w i l l be d e a l t with i n a p r a x t i c a l >Jay. Until it i s , it i s tcorth repeating t h e obvious. I n 1956 Xr. Appleby wrote t h a t "India i s i n f a c t i n a s t a t e of emergency q u i t e comparable t o t h e condition t h a t r~ouldobtain i f tile nation was a t war. Its success i n t h i s eniergency depends upon rapid decision-making, rapid a c t i o n ... A s i n a war, t h e emerzency d i c t a t e s t h e establishment of procedures t h a t have 9 maxirflum p o t e n t i a l of a c c e l a r a t i o n consistent with democratic vzlues . What was t r u e in 1956 i s obviously even more t r u e i n 1965. blhether t h e present s i t u a t i o n i s c a l l e d I1war1'o r llemergencyll, it i s unquestionable t h a t India cannot a f f o r d not t o reshape i t s administrative arrangements t o enable t h e country t o meeL i t s g r e a t (and minimum) goals. 51 Agricultural administration cannot of course be fundamentally a l t e r e d t o meet t h e goals of t h e Fourth Plan. The administration i s not a mechanical contrivance nor t h e type of problem t h a t can be solved expeditiously. Long-established h a b i t s of thinking and p r a c t i c e s cannot be eliminated overnight, although they a r e bound t o change under the impact of t h e new science and techno2ogy. Such change does not imply a break with t h e c u l t u r a l t r a d i t i o n s out of s:hich they grew, but modification and, a s i n t h e case of Japan, t h e g r a f t i n g of t h e new upon t h e old t h a t , a s we know, can occur and prove e f f e c t i v e . This process o r change r e q u i r e s t h e understanding, 1411,action and p r a c t i c e of t h e Government and of t h e nation a s a thole. Here and t h e r e organizational and functional efficiency of t h e management of t h e p r i v a t e and public i n d u s t r i a l s e c t o r s i s already being imprcved. Vhile t h e administrative problems i n a g r i c u l t u r e a r e nuch more colriplicated, t h e f e a t u r e s of t h e system cormonly admitted t o be worst need not wait f o r a long thaw f o r correction. A s t h e f i r s t order of Susiness, functions, a u t h o r i t y and r e s p o n s i b i l i t y can be c l e a r l y defined p a r t i c u l a r l y i n the case of o v e r a l l Uriion Government p o l i c i e s t h a t a r e t o be implemented by t h e S t a t e s which have executive r e s p o n s i b i l i t y f o r implementin& a g r i c u l t u r a l policy. I f a beginnicg i s raade on some of t h e necessary cha~?ges, so well-known t o t h e Government of India, l ~ i t h persistence and I1organized w i l l f 1 t o match t h e demonstrated a verbal concern, t h e r e i s reason t o believe t h a t t h e e f f o r t w i l l be crormed ~dth success, d i f f i c u l t and tortuous though t h e process i : i l l be. - page Applebyl s ~ e i ~ x a m i n a t i oof i/Paul 6. n India s Administrative Sgs tern, 1956, 52