Bibek Debroy:India's Haats

OFF THE RECORD

In India, 72.22 per cent still live in rural areas, even if only 57 per cent earn a living from agriculture. If one understands what the UPA is attempting, and if one understands what the NCMP (National Common Minimum Programme) promised, the India Shining effect must be extended to rural areas.

This is a simple enough proposition. And diverse initiatives are being talked about. First, there is the National Rural Employment Guarantee Act, which will subsume the National Food for Work programme and be used to create rural assets.

Second, there is the idea that centrally sponsored schemes (CSSs) will be rationalised and devolved downwards to panchayats. Indeed, some money has already been earmarked for devolution to panchayats. Third, there is a cluster idea, emanating from the National Commission for the Promotion of Enterprises and this includes rural clusters.

Fourth, there is PURA (Provision of Urban Amenities in Rural Areas), with physical connectivity (roads, power), electronic connectivity and knowledge connectivity, leading to economic or market connectivity.

Fifth, there is the Rashtriya Sama Vikas Yojana (RSVY), targeted at backward districts, and whatever yardstick one uses for identifying backward districts, rural development will fit in. Sixth, there is the Bharat Nirman, even if one doesn't know where to find money for it.

Although there is talk of irrigation and credit, with the former more of an agricultural problem, it is perhaps fair to say that policy-wise, there has been a shift from an agricultural policy towards a rural development policy.

This is as it should be, although one doubts that such coherent thinking necessarily characterises government policy. The 58th round of the NSS (National Sample Survey) for July-December 2002 resulted in a report on village facilities that covered five heads of proximity to administrative centres, access to the rest of the economy, physical and social infrastructure, coverage of government support programmes and presence of private initiatives.

Out of India's 600,000 villages, this report tells you how bad physical and social infrastructure is in around 350,000 of them. And perhaps inevitably, where government initiatives have led to no results, private initiatives are also non-existent.

Having said this, we have had rural development programmes for years and years. If these didn't work, what is the guarantee that these wonderful new programmes will work now? Simply stating that we will now link outlays to outcomes and that there will be an outcome budget isn't enough.

True, the PMGSY (Pradhan Mantri Gram Sadak Yojana) seems to have performed better. But why on earth was the PMGY (Pradhan Mantri Gramodaya Yojana), for rural electrification and drinking water, given up?

Presumably because it didn't work. If government programmes were horses, rural India would have been riding away to glory by now. Even if we can find Rs 50,000 crore out of that promised Rs 174,000 crore, I think the Bharat Nirman idea will work better if we focus on one item alone. Like India's haats.

At the top of the market hierarchy are mandis, which owe their development partly to government policies on agricultural marketing. These 7,161 regulated markets, or mandis, are mostly primary wholesale markets, and are usually governed by APMC (Agricultural Produce Marketing Committee) Acts.

But the point for the moment is not to discuss mandis or the relevance of the APMC Acts, which have created monopolies and entry barriers and prevented dis-intermediation. The point is that these mandis are primarily wholesale markets, located near important towns or centres of production.

The mandis that are secondary wholesale markets are also located in district headquarters or major trade centres. It is true that every district has a mandi and it is also true that mandis are spread throughout the length and breadth of the country.

However, the more important point is that small farmers have limited access to these mandis. Transactions take place between commission agents and wholesalers. Market intermediaries (adhaatis or dalals or with other names) purchase the farm produce from farmers, often in advance, and bring it to mandis for sale to wholesalers. Farmers have little access to mandis.

Unlike the regulated markets, there are also unregulated markets known as haats, peta, angadi, hatwari, shandies, chindies or painths. These are sometimes periodic (once a week) and sometimes permanent. Figures on haats are difficult to obtain.

But there are believed to be around 47,000 permanent haats, mostly concentrated in Bihar (including Jharkhand), Kerala, Madhya Pradesh (including Chhattisgarh), Maharashtra, Orissa, Uttar Pradesh (including Uttaranchal) and West Bengal, all relatively backward parts of the country.

In haats, dis-intermediation is greater and there is an opportunity for producers to directly sell to consumers or small rural retailers, although APMC Acts sometimes prohibit such sales that bypass mandis. Unlike mandis, small farmers have access to haats. Local bodies usually control auctions of space and issue licences and permits to vendors to use these haats.

Market fees or taxes are collected from the participants, but these are rarely ploughed back to develop infrastructure. Haats are not equipped with basic facilities like platforms for sale or auction, electricity, drinking water, facilities for grading, sorting and so on. It will cost less than Rs 1 crore to upgrade a haat. And that will be true Bharat Nirman.