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Backward Regions Grant Fund

Any development intervention should attain a certain level of critical investment in order to have a perceptible as well as sustainable impact. This basic principle has never been observed in the states of the north-east region. This article criticises the funding criterion of the recently launched Backward Regions Grant Fund, arguing that we need to redefine geography for developmental interventions if investment is to yield results in states like Manipur.

Backward RegionsGrant Fund

History Repeats Itself

Any development intervention should attain a certain level of critical investment in order to have a perceptible as well as sustainable impact. This basic principle has never been observed in the states of the north-east region. This article criticises the funding criterion of the recently launched Backward Regions Grant Fund, arguing that we need to redefine geography for developmental interventions if investment is to yield results in states like Manipur.

AMAR YUMNAM

A
fter delivering an election campaign speech for his party at Tamenglong in Manipur, the prime minister in January 2007 launched the Backward Regions Grant Fund (BRGF). Let me quote the objectives of the scheme from the guidelines “The Backward Regions Grant Fund is designed to redress regional imbalances in development. The fund will provide financial resources for supplementing and converging existing developmental inflows into identified districts, so as to: (a) Bridge critical gaps in local infrastructure and other development requirements that are not being adequately met through existing inflows; (b) Strengthen, to this end panchayat and municipality level governance with more appropriate capacity building, to facilitate participatory planning, decision-making, implementation and monitoring, to reflect local felt needs; (c) Provide professional support to local bodies for planning, implementation and monitoring their plans; (d) Improve the performance and delivery of critical functions assigned to panchayats, and counter possible efficiency and equity losses on account of inadequate local capacity” [GoI 2007].

The scheme is consequent upon the Report of the Expert Group on Planning at the Grassroots Level: An Action Programme for the Eleventh Five-Year Plan submitted to the government of India in March 2006. Chandel, Churachandpur and Tamenglong are the districts from Manipur covered by the scheme. As per the report, there are many activities to be completed by July 2006 at the state levels.

We are not sure if Manipur ever undertook any of the activities by our all-knowing ministers and super-knowledgeable bureaucrats. Anyway, that is beside the point. What I want to comment on is the criteria for distribution of funds.

Funding Criteria

For the untied portion of the funds, the sharing pattern is as follows (ibid, pp 4-5):

(i) Every district receiving a fixed minimum amount of Rs 10 crore per year; and (ii) The remaining portion would be distributed on the basis of 50/50 as per the population and the geographical share of the district in the total population/geography of all the backward districts.

It is this funding criterion which goes against the interests of the states like Manipur, and it is something which we need to demand as calling for correction. Any development intervention should attain a certain level of critical investment in order to have a perceptible as well as sustainable impact for the intervention. It is this basic principle which has never been observed in any development intervention in the region.

Here I would like to emphasise that the development heart-burn in India needs to be addressed in a two-pronged way – one, at the level of the states and another, at the level of the districts. The first approach can address the issues of the smaller and demographically as well as geographically heterogeneous states like Manipur, while the latter approach would be appropriate for the larger and more developed states in the country. But it is always the latter approach

Economic and Political Weekly May 12, 2007 which has carried the day for in the Indian democracy the voices of the larger states are always more vocal at the decisionmaking level.

Here I am reminded of two reports of 1969. Towards the end of the Third Five-Year Plan, the necessity of addressing the regional imbalances in development was accepted in a much more involved way than ever. The necessity of specific policy instruments designed exclusively to promote industrial development in backward areas was recognised during this period. The committee of the National Development Council (NDC) decided in its meeting on September 13, 1968 to set up two working groups, one dealing with the identification of backward areas and another with the incentives for starting new industries in backward areas. The first one dealing with the identification of backward areas is commonly known as the Pande Working Group and the second dealing with the incentives as the Wanchoo Working Group. These two working groups were set up by the Planning Commission in pursuance of the NDC resolution. The Pande Working Group submitted its report on Identification of Backward Areas in February 1969 and the Wanchoo Working Group on Fiscal and Financial Incentives for Starting Industries in Backward Areas in April 1969. Whereas, the criteria suggested by these two working groups for identification of backwardness and provision of financial and fiscal incentives might be of little relevance here, I must hasten to add that both the groups put an emphasis on the identification of backwardness at the state or union territory levels. Well, this is exactly what has been reversed by the NDC in its meeting in September 1969 by adopting the districts as the level at which backwardness is to be defined.

What is much more interesting is the conspicuous non-reference to these two reports by the recent report of the expert group on the basis of which the BRGF has been launched.

Threshold

Before I talk of the threshold level of investment for development, let me make a clarification on the reference to the classification of special category states as if these states have been done a great favour. This classification is only about the pattern of funding, and no way addresses the issue of scale and scope of investment. But, it is only scale and scope which can take care of effectiveness and sustainability of the developmental impact.

The funding criteria of BRGF are biased against the states like Manipur in three critical ways. First, it is known that even an activity delivered in a linear way, like power, involves a higher cost in the north-eastern region than the rest of India. One unit of power can be transmitted with 11 paise in the rest of the country; it involves 35-75 paise in this region. One unit of investment in Amravati in Maharashtra would not achieve the same level of impact in Tamenglong in Manipur, though both belong to the same category of backward regions. Secondly, the 50 per cent on population and another 50 per cent on the geographic size goes again against the interests of the states like Manipur. Despite the higher level of investment needed in Tamenglong for the same level of developmental impact as in Amaravati, the existing pattern of funding would favour the latter much more than the former. The official definition of geography in India for development interventions is just the plain area. It needs to be replaced by a definition which takes into account the ruggedness of geography in order to allow for the differences in the geographically heterogeneous country while deciding the size of developmental investments. Thirdly, the above two effects get further aggravated, in the sense of widening the distance between, say, Tamenglong and Amaravati, when the number of districts covered are large in the larger states as per current geographic definition. To wit, the total aggregate impact of the investments in the 36 districts of Bihar, six of Gujarat, 24 of Madhya Pradesh, 12 of Maharshatra, etc, would be huge and meaningful. But that of the three in Manipur would, given the existing funding pattern, be hard to feel.

In fine, we need to redefine geography for developmental interventions, if we are to invest to yield results in states like Manipur.

EPW

Email: yumnam@usc.edu

Reference

GoI (2007): Backward Regions Grant Fund:

Programme Guidelines, Ministry of Panchayati

Raj, Government of India, p 3.

Economic and Political Weekly May 12, 2007

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