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Two pockets of self-reliance chart course for self-governance

Subicsha, Marari success shows state governments need to give more fiscal power to local bodies
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First Published: Sun, Apr 28 2013. 11 45 PM IST
A Marari Marketing umbrella manufacturing unit. Photo: Vivek R. Nair/ Mint
A Marari Marketing umbrella manufacturing unit. Photo: Vivek R. Nair/ Mint
Updated: Mon, Apr 29 2013. 12 51 AM IST
Kozhikode/Thrissur/Alappuzha (Kerala): Soorya’s been deaf from birth so she can’t hear the sound of her sewing machine, a gift from the local Kanjikuzhy panchayat in Kerala’s southern Alappuzha district. That’s ironic, because the device has completely altered the 27-year-old’s life by enabling her to earn enough money to acquire the financial stability she badly needed.
The experience of 29-year-old Sauda in Nochad village of Perambra block panchayat in the state’s northern Kozhikode district is similar. After her husband left her, she joined a self-help group (SHG) that specializes in making products from coconuts that are ubiquitous in the state. That led to things changing for the better in one respect at least—she’s financially independent now. The husband is also back.
In both instances, the SHGs the women were associated with were able to take advantage of the organizational umbrella provided, respectively, by Marari Marketing Ltd and Subicsha—institutions created by the local panchayats to complement SHGs by providing branding, sales and marketing support.
Subicsha is an acronym that stands for a mouthful—Sustainable Business Development of Innovative Coconut based Micro Enterprises for Holistic Growth and Poverty Alleviation. It was conceived as a social and economic development project for the Perambra panchayat by the Indian Institute of Management (IIM) at Kozhikode.
Subicsha started with capital of Rs.5 lakh in 2000, employs around 3,000 women in Perambra and produces around 35 items. Last year’s turnover was Rs.2.5 crore.
Both Subicsha and Marari Marketing, set up by the Kanjikuzhy panchayat, are public limited companies evolved under the central government’s Swarnajayanti Gram Swarozgar Yojana. They have access to local self-government funds, including from bodies such as the Coconut Development Board, the National Bank of Agriculture and Rural Development. The companies are run by the committees of the respective block panchayats.
Marari Marketing’s products, which are branded Maari, include umbrellas, cotton shirts, note books, handmade soaps, bags, jams, pickles, curry powders and mushrooms.
Both the organizations are the outcome of fiscally empowered panchayats taking a proactive approach. This has been facilitated by the tradition of fiscal devolution pursued by Kerala that was initiated by veteran Communist leader E.M.S. Namboodiripad. In 1997, he persuaded the Left Democratic Front (LDF) government to devolve 30% of the state’s revenue to local self government bodies.
Consequently, the gram sabhas and ward committees, at the base of the local self-government pyramid, can not only design the development schemes to tailor local needs but also fund them. The funds are divided in the proportion of 70:15:15 among panchayats, block panchayats and district panchayats. There are 14 district panchayats, 152 block panchayats, 978 gram panchayats, 60 municipalities, five corporations and one township in the state.
These pockets in Kerala are the exception that proves the rule, not just of effective local self government but of how India’s social welfare programmes can be integrated for the best impact. Most states have been reluctant to loosen fiscal controls on panchayats, preferring the top-down approach even after constitutional amendments initiated 20 years ago made it mandatory for the setting up of panchayats.
The idea
Kerala’s panchayats get an assured amount of money every year and can, therefore, draw up their plans accordingly, said P.P. Balan, director of the Thrissur-based Kerala Institute of Local Administration (KILA). “Participatory budgeting” is therefore a natural corollary, he said.
“Panchayats in Kerala are more powerful than their counterparts in other states when it comes to financial devolution,” he said. “Almost all the panchayats have their own resources too in addition to the amount allocated to them.”
This process of fiscal empowerment at the grassroots got a fillip under the aegis of the 13th Finance Commission chaired by Vijay Kelkar, which earmarked 2.5% from the divisible pool of national tax revenue for local government entities.
Maari and Subicsha are local self-government successes in providing social and financial empowerment at the village level, said Thomas Isaac, former finance minister of Kerala and Communist Party of India (Marxist) leader, who supported the initiatives.
“Kerala’s decentralization has been characterized by very substantial devolution of power, giving maximum autonomy to local self governments,” he said. “These two panchayats utilized and conceptualized and implemented microeconomic enterprises integrating centrally sponsored schemes and supporting funds by bodies like Coconut Board, bank loans and thrust of self-help groups,” Isaac said.
The project proposals considered by the two organizations focus on the development of microenterprises that can be effectively managed by SHGs comprising women from poor families. Subicsha and Marari raise resources through bank loans apart from the funds available to them and extend advances to members of the SHGs, besides marketing and selling the products.
M. Kunhammad Master, Perambra block president and chairman of Subicsha Coconuts Producer Co. Ltd, said it was the first producer company of set up by BPL (below poverty line) women in India.
What the company does is “market the 35 products made by the SHGs, negotiate the prices for raw material, sustain the product level, (devise) innovative packages and familiarize the brand (among consumers)”.
In Kanjikuzhy, the cluster centres that dot the panchayat make and package an wide variety of products such as pickle, squash, jam, mushrooms, solar dried fish and vegetables, rice powder, ready made garments, handmade toilet soaps, washing powder and note books. The most popular product however is the Maari umbrella.
“We purchase the basic items from the same place as that of the leading brands in Kerala. However, we pay more money to the workers instead of spending huge money in marketing as they do,” said P.K. Mani, director of Marari Marketing.
According to D. Priyesh, president of the Kanjikuzhy block panchayat, being part of the organization has made the women of the area self reliant, confident and aware of their rights and responsibilities.
Peter M. Raj, associate professor, Kerala institute of local administration (KILA) agreed with this.
“It’s not only improved the living standards of the villagers but also made some other significant changes in the society,” Raj said. “Some in Alappuzha, Calicut (Kozhikode) and Malappuram even export their products. So they create local markets, and supply for the global markets as well.”
An interesting side effect of the empowerment at the grassroots has been the change is has brought about in the relationship between elected representatives and their constituents.
“Increasingly, the MPs (members of Parliament) and MLAs (members of the legislative assembly) are realizing that they should coordinate with the panchayats for the developmental works in their constituencies, because there is an increasing pressure from the ground level,” Raj said. “The situation in some districts in Kerala has come to a stage that no MP or MLA can utilize their local area development funds without the active participation of the panchayats.”
Congress vice president Rahul Gandhi, who visited the KILA office in Thrissur on 16 April, is aware of this. Panchayat representatives sought Gandhi’s intervention in allowing local bodies a larger role in identifying and implementing projects for local area development schemes. Currently, MPs get Rs.5 crore a year and legislators Rs.1-2 crore to spend on development in their constituencies.
MPs from the state differ about the importance of the panchayats.
M.B. Rajesh, Communist Party of India (Marxist) MP from Palakkad said the panchayats are becoming key power centres in the democratic system.
K.C. Venugopal, minister of state for civil aviation and MP from Alappuzha, wasn’t convinced of this.
“Many central projects for the rural poor such as Indira Awas Yojana, backward region development scheme are only implemented through panchayats,” Rajesh said. “Earlier, panchayat presidents used to just mediate in local disputes but now their powers and funds have been increased. They are becoming power centres.”
Venugopal said not all panchayats in Kerala are working towards meeting the full potential of India’s local self-governance system.
Be that as it may, the achievements of Perambra and Kanjikuzhy suggest that there is a correlation between fiscal empowerment at the grassroots and people’s participation. For this to become a nationwide movement, however, state governments will need to accord more fiscal resources if not powers to local level bodies, by curbing their natural instinct to hold on to the reins.
This is the fourth in a series of reports on panchayati raj 20 years after it was given a new constitutional framework.
Read the entire series at www.livemint.com/panchayats
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First Published: Sun, Apr 28 2013. 11 45 PM IST