RURAL ECONOMIC ZONE(REZ)Economics as if People and Planet Mattered

Dr. T. Karunakaran

Innovation & Industrial Models Series: No. 1

MGIRI PUBLICATIONS

2010

Year of Publication: 2010

Published by

MGIRI

Mahatma Gandhi Institute of Rural Industrialization

Printed by

Vinayak Enterprises, New Delhi

Dedicated to

Dr. J.C. Kumarappa, Founder Secretary of AIVIA whose work in Maganwadi I have inherited.

Dr. Devendra Kumar who always dreamt that one day I will be in Maganwadi to continue the AIVIA dreams

PREFACE

India’s constitution was amended in 1991 ushering in the concept of Local Self Government. But during the last two decades we have not come up with a vision plan for Local Economy. The ides of Public Private Panchayat Partnership (PPPP) floated by the Ministry of Panchayati Raj through its scheme called ‘Rural Business Hub’ (a joint venture with the Indian industry) was inspired by a successful model of OTOP in Thailand. An observation of the ‘impact’ of the above initiative and the meagre allocation made for this mega-movement leaves one with a feeling that many more practical thoughts and experiments will be needed before a workable framework for gramswaraj will emerge.Rural Economic Zone aims at contributing to this effort.

The present book is based on the following four of my books published over the past 33 years:

‘Rural Development and Appropriate Technology’ (1976) published by IIT Delhi and released by Dr. M.S. Swaminathan.

‘Rural Growth Networks’ (1987) published by ‘STEP’ and released by Shri. Ram Niwas Mirdha, Minister for Agriculture.

‘Technology Delivery System’ (1989) published by Gnadhigram Rural University and released by Dr. Sam Pitroda.

‘That Little Democracy’(2006) Published by Gandhigram Rural University and released by Dr. A.P.J. Abdul Kalam

and is also based on efforts of practical implementation of similar ideas by activists like Mr. Elango in Kuthambakkam, near Chennai, BAIF (Pune) in Gujarat besides aspects covered in the cluster development movement of the Government.

My ideas on the subject have grown over the past three decades. My works with Gandhigram Rural University (1988-2007), Pondicherry Govt (1982-86), Tamilnadu Govt. (1982-86), and also in the schemes of Madhya Pradesh, Andra Pradesh, Maharashtra, Sri Lanka, South Africa etc. have nurtured my vision over the last two decades.

The structures presented here have been also experimented partially in certain UNDP sponsored projects of MP, Chhattisgarh, Bihar, and Jharkhand. My role in it as the advisor (while serving as the VC of a Rural Development University in MP during 1997-2004) also indicated to me that bureaucratic approaches can never allow such ‘People’s Economy’ oriented schemes to succeed.

I feel that many among the present day schemes, for example cluster development, Rural Business Hubs, PURA, ..... all have similar vision - except that each is attempting to emphasise certain dimensions. Though the approach of REZ is holistic, it has sufficient pragmatism built into it.

By taking the environment approach - appealing to the concept of minimum disorder or minimizing entropy – it adopts a consistent philosophy. While the approaches so far have been swinging either to the extreme limit ‘as if people alone mattered’ or to the other extreme ‘as if nature alone mattered’, the present work adopts the philosophy of ‘golden middle’, namely ‘people and planet matter’.

A concept such as REZ, with many ramifications, needs a far more elaborate treatment. A detailed book for this purpose: Rural Economic Zone - A Planning Guide authored by T. Karunakaran and Regi Thomas is expected to be released soon.

Acknowledgement

‘REZ’ is a child born out of circumstances. It was during a lecture of mine in the Rajagiri College of Social Work in Ernakulam during 2006 when I first presented the ‘people-planet’ vision of this book in front of a set of students from Kerala and Andhra. My lectures to the international audience in NIRD (2009) and in the John F Welch Technology Centre of General Electric (2009) helped me in sharpening my ideas. I am thankful to the audience mentioned above.

The encouragement and support in vision provided by the officials of the Ministry of MSME, Govt. of India is worth mentioning. I am particularly grateful to Hon’ble Minister Shri. Dinsha Patel and to Shri. Dinesh Rai IAS, Secretary, MSME for this. Similarly the kind encouragement and support for creative thinking received from Mr. Manoj Aggarwal IAS, P.S to the Minister, Mr. Sesh Kumar Pulipaka IA & AS, J.S. (KVI), Mr. Angshuman Dey IAS, Dy. Secretary and Mr. T.S. Lally Former Under Secretary, Min. of MSME are gratefully acknowledged.

The present write-up accomplished roughly within a week, would never have been possible but for the massive assistance provided by my former student Dr. Regi Thomas whose web-surfing capabilities were used to the full. Besides Dr. Regi spent 7 sleepless days in proof reading, analysing and criticising every word of my writing. For this I am most grateful to him.

Many of my colleagues in various departments, in particulars the Khadi, theBio, the Craft and Energy Depts provided examples and details to make the book richer and more useful. I am indeed grateful to them.

The sleepless nights spent by Abhijeet, and the clerical assistance by SaritaKhadse and other friends in MGIRI office helped in typing.

Mr. Vaidiyanathan, Editor of Dinamani (New Indian Express Group), providedan opportunity to have my book released on the important occasion of the 50th

Death Anniversary of Dr. J. C. Kumarappa (30.1.2010) in Delhi, through the hands of Shri. Raj Mohan Gandhi in the presence of Shri. Mohan Dharia. I am indeed grateful to him.

Table of Contents

SN CHAPTER Page No.1 Village Economy 2

1.1 Village as a geographical unit 2

1.2 Self Reliant Village: A Myth or a Reality 3

1.3 The Unfavourable Factors for Rural Enterprise 4

2 From Rio-Vision to a Bio-Vision 52.1 Discovering sustainability 52.2 Entropy as a Dynamic Monitor of Planet’s Health 6

3 Sustainable zones that are viable, bearable and equitable 83.1 Defining sustainability 83.2 Social: Aggregation of villages to constitute a community of 50,000 93.3 Economical: From Resource and Infrastructure Point of View 103.4 Environment: Agro zones with bearing capacity 103.5 Ensuring equity through social connectivity 13

4 APPROACH TO DEVELOPMENT IN THE ‘KNOWLEDGE ECONOMY ERA’ 124.1 We are in a new world with new possibilities 124.2 Challenge to the ‘Urban-Centred Development’ 124.3 Urban is intensive , rural is extensive but the latter doesn’t have to be in

the defensive13

5 Industrialization of rural sector: a structural approach to success. 155.1 Appreciating the Hierarchical Structure of Rural Activity Provides the Clue 15

5.2 Approach to Organising Rural Industries: 155.3 Sustainability of Rural Industries: Niche Area Approach 175.4 Concept of Value Addition, Content and Connectivity5.5 Connectivity aspects5.6 The case of ethnic skills 17

6 RURAL ECONOMIC ZONE (REZ) 176.1 A Broad Definition of REZ 206.2 Visualising an REZ in terms of its constituent subsystems 216.3 Agricultural related apex infrastructure 236.4 REZ as a ‘Multi-Commodity structure’6.5 REZ in the case of a Forest Zone: Illustration 6.6 REZ in the case of craft Zone

7 AGRINDUS: EMERGING EXAMPLE OF FUTURE REZs

8 Technology and its delivery systems 238.1 Defining sustainable technology 238.2 Community scaling of technology 24

8.3 Man machine systems 278.4 Technology delivery structure for REZ 28

9 SELF RELIANCE MARKETING : “GLOBAL SWADESHI” 309.1 Need Hierarchy and Inverse square Law: 9.2 Global Swadeshi:9.3 A tripartite formula: to challenge the foot-loose movement of goods under globalization

10 ORGANISATIONAL ASPECTS OF REZ: NEED FOR INNOVATION 3010.1 Special Purpose Vehicles (SPV)10.2 Organisational structures of a set of REZ in a region 10.3 Constituents of the Nodal Centre of REZ10.4 Innovative Structures of the Mini Industrial Complex

11 Special Case of REZ: Case Studies 3112 Reflection on National Imperatives 34

RURAL ECONOMIC ZONE (REZ)

SUMMARY

To facilitate reading of the book, a chapter-wise summary is given below:

Chapter 1 starts by pointing out that in spite of the constitutional amendment to incorporate Local Self Governance (1994) and in spite of the framework provided through 29 panchayat level activities (11th schedule) no implementation strategy has yet emerged. On the other hand the absence of level playing field between the urban and rural sector the rural entrepreneur is put to great disadvantages.

By drawing a conceptual boundary around a village area and watching the flows across one could understand whether a village is glowing or decaying in economic terms.

Chapter2 (From ‘Rio vision to a Bio vision’) proposes the concept of ‘disorder’ (or entropy) as a conceptual tool to identify activities that could jeopardize the sustainability of the planet.

Chapter 3 continues the discussion in chapter1. It indicates that since a single village is far from self reliant and since the current act of treating the “global village” as a market place for indiscriminate goods-exchange is proved to be injurious the planet it is important to identify an intermittent economic zone so as to ensure viability and equality while at the same time respecting the bearing capacity of the earth.

Chapter 4 discusses ‘development’ in the Knowledge-Economy era and indicates that in the context of information technology supported lifestyle of today the concept of core city has no meaning. The chapter also discovers the ‘niche’ areas of economic activity for which the ‘extensive’ nature of rural sector is favourable.

Chapter 5 continues the search for identifying the factors that would make rural enterprises successful. It discovers that the (normally) 3-tier nature of value addition to rural agricultural produce at house level, at village work centre level and at the zonal centre level could provide an innovative style of

deploying technology so that rural products could be competitive. The concept is profusely illustrated and forms the foundation of the structure of REZ.

Chapter 6 provides the broad definition of REZ as a ‘cycle-commute region’ of about 50000 people. It formalizes the three-tier structure and defines House Level Activity (HLA), Village Work Centre (VWC) activity and value addition needing facilities at the Nodal Centre of the REZ.

It also introduces cluster approach to multi-commodity contexts. Illustration is provided in respect of the Forest Zone, Craft Zone etc.

Chapter 7 (‘Agrindus: Emerging Example of future REZ’) is an important chapter from the point of view of application. It provides case studies using cotton, soya bean, etc. to show that the multi-tier approach assisted by adoption of appropriate technology can usher in a local, employment-rich economic framework which is at the same time least injurious from the point of the view of the health of the planet.

Chapter 8 deals with technology in detail. It explains the importance of ‘community scaling of technology’ for the decentralized management of production. The concept of man-machine system is projected as fundamental if we care for employment along with economic development. Further the concept of ‘injecting appropriate intelligence’ is discussed to enable the less endowed villagers to handle sophisticated process contexts by introducing sensor devices and decision making systems to assist the less trained rural worker. This is viable in view of the very low cost of electronic systems.

Chapter 9 (‘Self-reliance, marketing and Global Swadeshi’) attempts to evolvea framework to help the village community decide the proportion of production for self-consumption, for the consumption of neighbours/other REZs of the country and the proportion that could be for export. In this context it introduces the concept of global swadeshi wherein the codes of conduct conducive for harmonious co-existence of nations emerge in a comprehensive way.

Chapter 10 deals with the organizational aspects of REZ in outline form. It also indicates the need for a Regional Technology Centre common to the many REZs in the sub region of the Agro-climatic Region. It also explains the need for

a Nodal Centre to provide the missing supports like: Advanced Facilities, Connectivities and even platforms for people to meet in committees. It also talks about energy backup system, effluent treatment system and the many other such essential elements. It also provides for mechanism to ensure knowledge connectivity.

Chapter 11 provides case studies. Many of the existing cases are treated as if they are special cases of REZs. It is pointed out that the models evolved by countries like Japan and Thailand provide valuable guidance.

Chapter 12 lists the steps to be taken by the government. It also points out the importance of creating a large team of Societal Entrepreneurs to build structures like REZs. It gives reasons to believe that the universally emerging concept of cluster development will provide a backdrop for the success of the ambitious model namely REZ.

A Picture of Village Swaraj

My idea of Village Swaraj is that it is a complete republic, independent of its neighbours for its wants, and yet interdependent for many others in which dependence is a necessity. Thus every village’s first concern will be to grow its own food crops and cotton for its cloth. It should have a reserve for its cattle, recreation and playground for adults and children. Then if there is more land available, it will grow useful money crops, thus excluding ganja, tobacco, opium and the like. The village will maintain a village theatre, school and public hall. It will have its own waterworks ensuring clean supply. This can be done through controlled wells and tanks. Education will be compulsory up to the final basic course. As far as possible every activity will be conducted on the co-operative basis.

There will be no castes such as we have today with their graded Untouchability. Non-violence with its technique of Satyagraha and non-co-operation will be the sanction of the village community. There will be a compulsory service of village guards who will be selected by rotation from the register maintained by the village. The government of the village will be conducted by the Panchayat of five persons, annually elected by the adult villagers, male and female, possessing minimum prescribed qualifications. These will have all the authority and jurisdiction required. Since there will be no system of punishments in the accepted sense, this Panchayat will be the legislature, judiciary and executive combined to operate for its year of office. Any village can become such a republic today without much interference, even from the present Government whose sole effective connection with the villages is the exaction of the village revenue. I have not examined here the question of relations with the neighbouring villages and the centre if any. My purpose is to present an outline of village government. Here there is perfect democracy based upon individual freedom. The individual is the architect of his own government. The law of non-violence rules him and his government. He and his village are able to defy the might of a world. For the law governing every villager is that he will suffer death in the defence of his and his village’s honour..

1. VILLAGE ECONOMY

1.1 Village as a geographical unitWhen we talk about Gramswaraj it brings to our mind the image of a human habitat, over a geographical unit of land, with its own social economic and governance structure. That the economic dimension is central to the others needs no emphasis.

Since the concept of village itself is linked with primary sector resources from specialised geographical units like agriculture land, forest region, mines, costal land etc. its economy is linked with the geographical region where it is located.

If such a zone could be visualised then we could draw a closed circle as its boundary and ask the following questions:

What is the wealth inside the circle?

How much wealth is coming in from outside?

How much wealth is going out from inside?

When these simple questions are answered and when such answers are compared over a period of time one could monitor whether the village is growing in economic terms or is decaying.

1.2 Self Reliant Village: A Myth or a RealityIf each village could indeed become self reliant in respect of its basic needs namely food, clothing and shelter it would be a highly desirable situation. But in today’s world it is highly improbable and perhaps not worth insisting too –for the endowments of nature itself are not uniformly distributed geographically. The wide variations in the agro-climatic pockets of the world and the consequent variations in the produce from nature hint that interdependence for human needs is built into the design of nature itself.

But instead of a single village (Panchayat) suppose one considers a cluster of, say, twenty villages then these villages together can put out a variety of products and services. In other words the region’s capacity for self reliance is more than that of a single village.

It is also easy to understand that the economic development of a region is dependent on a number of infrastructural aspects besides services.

If one makes a search for a region that includes the maximum number of infrastructural items he will undoubtedly end up with the Global Village namely the entire earth. In a sense it appears to hint at the rationale behind globalisation. In such a case, the search for a self reliant village could be termed as irrational.

There is something intriguing in this whole analysis and we propose to uncover this concept in some detail.

1.2 The Factors Unfavorable in Respect of Rural EnterpriseAn entrepreneur cares for the six Ms: Material (raw materials); manpower; machines; money; methods (techniques) and market. The following table indicates the realities facing a rural entrepreneur as compared with an urban entrepreneur who has no commitment to the rural community.

Aspect Urban Entrepreneur Chooses Rural Entrepreneur has to be contented with

Material the best raw material the market could offer

the local raw materials

Man power the most qualified and capable the local youth with limited qualifications

Machines the best brand the ones that could be maintained / operated by locals

Money the best banks / financialinstitutions

the local ‘rural banks’, ‘co-op banks’ etc.

Methods from the best technology the technology that could be handled by rural manpower

Market the consumer segment that has the greatest purchasing power

the local milieu with limited purchasing power and taste

The above analysis clearly indicates that there is no ‘level playing ground’ between the two types of entrepreneurs and the rural industrialization cannot succeed unless we have an innovative strategy capable of providing a breakthrough in respect of this chasm.

2. FROM RIO-VISION TO A BIO-VISION

2.1 Discovering sustainability The seventies taught to the world that there is a ‘limit to growth’. The cry for ‘Our Common Future’ led to the Rio conference (1992) which initiated broad strategies (Agenda 21) to save planet earth.

Humans however needed to learn the hard truths of sustainable development through the hard way. Over the last two decades the planet instead of getting cleaned up has become a victim of increased anti-environmental activities resulting in crisis management strategies as evidenced in the 1997 Kyoto Protocol and the recent (‘aborted’) Copenhagen Convention.

A cursory look at any of the presentation related to global warming (see Fig 1.2) makes one understand that ‘globalisation and global warming probably go together’ and the former begets the latter. Certain UN reports also hint at such a linkage.

The whole world has realised that the Rio-Vision should indeed lead to a Bio-Vision. But the most fundamental proactive strategies are yet to emerge.

Instead of rolling back or limiting their ‘anti-earth’ activities the so called developed nations are trying to hide their sins through recourse to the Kyoto Protocol taking the poorer nations for a ride by making them compensate fortheir sins by using the dollar-bait.

Unfortunately dollar is no longer a unit to measure either the health or wellbeing of humanity or the health and security of mother earth.

2.2 Entropy as a Dynamic Monitor of Planet’s HealthSince the whole world is now showing concern about global warming a search for strategies for ‘de-warming’ (!) is bound to be considered as a priorityaction. But the progress of such an action could not be ensured unless we have a concept that helps measure the increase or decrease of global warming.

Since warming is a process of thermodynamics it is natural to look for a concept from thermodynamics. Such a concept is indeed available.

That is Entropy!

Entropy, according to physics, is a measure of disorder1.

1 (see Annexure 1: Notes)

Figure 1.2 (a) Presentation showing transport and industries as major causes for global warming

Fig 1.2 (b) The sudden rise CO2 and atmospheric temperature has time

correlation with the period of industrialisation

Source: Hoffert

Fig 1.2 (c) Major factors of energy demand in Japan.

(Source) Ministry of the Environment, Japan

150

200

250

300

350

400

450

500

550

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Manufacturing Industries

Residential +Commercial/Institutional

Transport

476

273

217

452

342

267

The following could be considered as activities with proven potential for adding disorder to a geographical zone

Table 2.2 Examples of Disorder

SN Activity Disorder created1 Production activities emitting

carbon into the atmosphere – in particular industries with effluents.

Solid, liquid & gas pollutants contributing to ozone layer depletion and / or to green house effect.

2 High tech packing. Much energy and material is involved in technologies like tetra pack etc.Since the plastics used in packing etc. is mostly non-biodegradable it can obstruct the percolation of water into the aquifer and thus instead rush back into the ocean creating larger scale top soil erosion, desertification etc. which are very difficult to re-establish.

3 Creation of industries in the urban environ thus causing large scale migration in search of job

The non uniform distribution of industries (- a disorder in itself) creates other disorders like duplication of habitat, creation of slums, pollution, transport etc

4 Urbanization leading to creation of concrete jungles, intensive transportation, space heating / cooling, excessive packing etc.

Concrete itself is carbon intensive; the excessive flyovers necessitate use of powered transport; large scale transport of water / building materials / industrial raw materials into urban areas creates large scale pollution etc .

5 Avoidable imports / exports because of non-availability of production techniques in certain countries

Normally raw materials move from 3rd world countries to industrially dominating countries and the same are transported back resulting in unnecessary transports packing etc. have ecological consequences

3. SUSTAINABLE ZONES THAT ARE VIABLE, BEARABLE AND EQUITABLE

3.1 Defining sustainability Continuing our discussion in section 1.2 now we are in a position to ask the question:

What would be the nature and extent of a region that could be economically self reliant in a practical sense but at the same time optimal from the point of view of minimising Entropy. Obviously in such a region the dissipative activities due to transportation, packing and unwanted industrial process will be minimised.

Fig 3.1 defines the concepts that ultimately constitute sustainability. According to this the zone that we are looking for should be

Viable from the economic and environmental point of view Equitable from economic and social point of view and bearable Bearable from the environmental and social point of view

Fig 3.1: Characterization of sustainability

(Image courtesy Wikimedia Commons)

With the above in mind we go deeper into the social economic and environmental aspects in the following sections

3.2 Social: Aggregation of villages to constitute a community of 50,000

The said zone should be constituted by habitat communities with proven social coherence and capacity for co-existence with mutual tolerance, so that maximum social capital could be expected to be available. Language, culture, occupation etc. would matter. By ensuring that they are already live panchayats these pre-requisites could be ensured. Further politico administrative coherence could also be ensured by choosing them as aggregations of panchayats. These aggregates should preferably have administrative structures like a mandal, block or part of a block where a sub-administrative structure could be created.

How big this community could be in terms of population?

In the Indian context a population of 50,000 appears to be an optimal size for an economic zone to be viable in the sense of sharing infrastructure, and sufficient number of community units. The geographic diameter of the zone also is an important factor as elaborated in the following. But this implies that in the case of tribal zones the population could be less and in the case of plains with high population density it could be more also.

In the year 1952 the Government of India defined the concept of a development block for the purpose of community development. At that time a block was normally considered to be a region of “150 square miles and 70,000 people”.

With the increase of population and as a result of migration some of the blocks, particularly in the plains, have even two lakhs people. In the tribal region the population of a block is of the order of 70,000 people, but the area is normally much larger. Therefore from the point of view of easy access to economic infrastructure and viability a population of 50,000 to 100,000 and a diameter of twenty (plus or minus five) kilometres appears to be reasonable. In such regions a centrally located facility could be accessed within about 10 kilometres. Such accessing will involve less of transportation.

3.3 Economical: From Resource and Infrastructure Point of ViewA village is normally a ‘face to face’ community where everyone identifies everyone else by name. From a social point of view this is a necessity and

augers well for the Gram Sabha of the panchyati raj to be workable. But as discussed in Chapter 1 such a unit of community cannot be viable as an economic force.

Economic enterprise involves raw material, production machines, working sheds, marketing arrangements and other paraphernalia. For this to be viable a minimum scale of production will be necessary and also certain minimum infrastructure. For the community oriented economic vision such enterprises could function as ‘common facilities’ of the community. Such central facilities will have to be accessed with minimum effort without necessarily dependingon professionally run transportation, storage system etc. The idea of ‘bicycle commute region’ captures the spirit of such resource sharing. Of course bicycles could be replaced by a powered two wheelers, local three wheeler transports or even animal driven transports. But what matters is that the process of accessing infrastructure should not completely break down even if the energy system or energy driven transport system fails.

3.4 Environment: Agro-Zones With Bearing Capacity

The terrain features combined with the climatic conditions define the type of flora and fauna that could survive in any particular region. The extent of the region with the same endowment is designed by land resources and water resources manifesting in terms of specific regions along with water bodies.

India according to the latest classification by Planning Commission is divided into 15 broad agro-climatic zones, and under the NARP (National Agricultural Research Project of ICAR) into 131 subzones. A typical state like Tamil Nadu has 7 agro-climatic zones. This is the reason why the agricultural outputs vary drastically from zone to zone. While Kanyakumari district of Tamil Nadu is rich in rubber and coconut, its immediate northern district is a dry region rich in Palmyra and could never be expected to produce rubber. Similarly the Nilgiris with their climatic distinction produce tea and could never be expected to produce Palmyra. Similarly various zones of Tamil Nadu specialize in cashew, mango, tapioca, groundnut, paddy, coconut etc.

In some sense the understanding of the broad agro-climatic zones and subzones helps us to link the intrinsic geo-capacity of each zone so that it could be associated with a set of crops that it could produce without any stress to the soil. The per-hectare yield possible (with the prevailing technology) also defines the bearing capacity. Once the total output in the region is computed the scales at which production operations are viable could be understood.

Even if we have the policy that micro or small scale industries are to be set up and even if the industries are viable (by themselves) the situation might not be favourable from the point of certain infrastructure. For example, a region might have 100 small industries and with these 100 industries in mind a major facility like cargo train might not be viable. The same might be viable if the number of industries were 500.

But at the same time for another type of activity (say aromatic industries) the problem of transport might not be a major necessity.

The above indicates how starting from the knowledge of the set of crops that are possible in an agro-climatic region we identify those crops that will lead to viable industrialization in the region. The decision will also be influenced by what is already in the neighbouring regions. For example if the neighbouring regions are producing enough of a commercially relevant item, say cocoa, then the region under plan might turn to something else.

This leads to the concept of Rural Agricultural Zones, zones identified for specific type of crop from the point of setting up viable industries.

3.5 Ensuring equity through social connectivityA reference to Fig. 3.1 with focus on equity enables us to reflect on ways of ensuring that the benefit of rural industrialization reaches the sectors that are normally deprived: For example woman, weaker sections, marginal / marginalised farmers, landless, exploited artisans etc. When the author was called upon to analyse the employment pattern in the industrial estates of two southern states of India he was shocked to find that in some of the industrial estates both the entrepreneur and the employees were from other states located far away. The same situation is found occasionally in the SEZs of the present day and it leads to much social disquiet. It will be wise to prevent such situations by building up ‘from the bottom of the pyramid’ as shown in Fig. 3.5

Fig. 3.5 Activities are built up on SHGs, Artisan Guilds and Farmer’s Guilds

The question will be: how does one visualise such an integration from the bottom to the top. Chapter 6 will throw more light into the matter.

organised people's industries networks

Federations of organised industriesExport houses etc.

Organised people's industries

Organised industries (micro, small- )

PEOPLE'S INDUSTRIES Self Help Groups(SHG)

Artisan's guilds

Farmer's groups

4. APPROACH TO DEVELOPMENT IN THE ‘KNOWLEDGE ECONOMY ERA’

4.1 We are in a new world with new possibilities:‘Liberation’, in some civilisations, was understood as the process of getting rid of material needs and attaining contentment with things spiritual. The very knowledge about a ‘thing’ was considered equivalent to possessing it. The power of becoming ethereal and conquering space was also part of the spiritual attainment.

Today the concept of software has come as a major technology. It is able to realise things material through things that are of non material nature – for example a set of instructions written on a paper.

Imagine an office in Chennai in 1960 which used to have 4 type- writers (for English, Tamil, Hindi and for scientific typing) for various purpose. Today with a single computer you can handle English, Hindi, Tamil, Malayalam, Chinese and thousands of other languages– each in thousands of fonts.

It is not only type-writer. A click of a button brings your clock; another click your calculator or telephone or hundreds of other devices.

This is a true example of human liberation from a material world through use of software.

4.2 Challenge to the ‘Urban-Centered Development’

The urban centres have been padded up in terms of infrastructure over hundreds of years and the rural areas have been left in tatters. Any feasibility study or exercise always would lead to the urban areas as the only viable locations of anything economically significant. Thus new activities get added in and around the cities and the cycle continues.

‘Development’ has been understood as synonymous to urbanization. And when the western civilization is talking about a ‘solar lifestyle’ we are transforming our metropolises into megalopolises and becoming proud of our having the largest number of flyovers in a city forgetting the fact that a truly developed civilization should now be talking about a ‘city with near zero transport’.

Till recently no idea could challenge the entrenched belief that development is essentially urbanization.

It is only after the arrival of the information era and internet based administration and work style that people are convinced that the concept of ‘core city’ has no central place in the future development plans and that there are alternative approaches to organising activities, finance flows and administration.

With the communication technology of the present day a lot of transportation has been avoided. Entertainment is at home and shopping could be done from home. Mailing has become electronic thus saving millions of tonnes of papers. Libraries have become electronic, so also data storage.

Most importantly those aspects of factory / office work that are information -based could be done from home itself and transferred to office. Global functioning of the industries is no longer a figment of imagination. This style of telecommuting has become the basic structure of many of today’s enterprises. Business Process Outsourcing (BPO) has created millions of jobs across the globe and IT enabled services has become a major segment of global economic activity. Where the industry is located is not important today. One of the largest book sellers of the world Amazon.com has no bookstall at all. The sales have started on web and payments are taking place through payment gateways.

The above is convincing enough in making the point that cities are no longer going to be the central points of business operation. In fact the traffic jams in cities (- it takes hours, during jams in metro cities, just to travel a few kilo-meters -) have convinced the entrepreneurs that cities are the real places of handicap. In the so called developed countries villas- villages in the outskirts of cities - have become favoured places for residing.

4.3 Urban is intensive while rural is extensive

Besides the six Ms (Man, Machine, Material, Method, Money, Market) there is another factor which is very important and serves as a major factor of production. That is land.

The rural area is extensive and has plenty of land. For this reason the industrialists prefer to locate their industries in rural areas. In particular most of the agro based industries need extensive land for stocking the raw materials and for many other purposes. For example some of the processes needaeration or atmospheric exposure (- for example the lagoon in a tapioca

industry or the drying yards in handmade paper or leather processing industry).

When it comes to letting out the effluents the extensive character of the rural area is an advantage.

The extensive nature of the surrounding of rural industries presents an advantage in terms of water supply, raw material supply or even supply of human resources.

But the industry located in the urban area has to have:

- a minimum productivity for each machine installed - a minimum productivity for each man employed - a minimum output for each rupee invested - a certain penalty for each quantum of effluent emitted and - a massive cost for each square meter of plinth area of factory space-

This is because land is very rare in an urban area.

It appears therefore that the rural area will be scoring high if the analysis is for certain industries which are in need of factors of production for which the rural region could be a better provider.

The wisdom lies in limiting rural economic activities to such niche areas.

The issues will become clearer as we proceed deeper in the book.

5 INDUSTRIALIZATION OF RURAL SECTOR: ASTRUCTURAL APPROACH TO SUCCESS.

5.1 Appreciating the Hierarchical Structure of Rural Activity Provides the Clue

Observe rural sector’s endowments:

To start with let us ask some bold questions. Are the raw materials for a textile mill or a fruit processing or a building material cultivated in a city? Does the Mumbai city or Chennai or Delhi grow cotton or mango? Or do they have the clay for making of tiles? The answer is in the negative. Secondly let us ask whether the majority manpower is basically from the village or the city. If we consider the urban slums also as displaced villages the answer is: Village. It is indeed the process of urban regions having been padded up over centuries that have made them as the misplaced venues of industries – thus leading to urban slums, pollution and crimes. At the same time the rural industries have not been given the proper infrastructure and needed connectivity. In particular they are deprived of energy connectivity and knowledge connectivity.

Observing Certain Functional Patterns / Structures in Rural Activities:

Let us take the silk industry for illustration . The basic activity, namely mulberry growing and cocoon rearing is done

at house level. It is basically a House Level Activity (HLA). The process of silk reeling needs a higher level infrastructure. It is not

viable to deploy the technology at house level. But it is perfectly viable for a village or a cluster of villages. It could be considered as an activity in a Village Work Centre (VWC) normally called Common Facility Centre(CFC). Similar considerations apply for dying, printing, garment making etc.

Suppose we consider the process of creating designs, conducting training, providing advanced facilities related to ‘finishing technologies’ advanced embellishments etc. Such things are viable only at a still higher level, say block level or district level.

A cursory analysis of typical rural raw material based industries will reveal a similar structure that could be termed as hierarchical structure. The following table proves the point

Table 5.1 Three-Tier Structure in Rural Activities

SN Activity H.L.A. V.W.C. Nodal Centre.1 Handloom Weaving Bleaching dying etc. Polishing, Printing, Packaging, Marketing

Training, 2 Dairying Milch Animal

Rearing Milk Collection(Quality Testing)

Chilling Processing, Packing, Marketing, Feed mixing.

3 Leather work Stitching the machine-cut

Assembly Centralised Cutting by m/c. Label Printing, Packaging, Marketing, Training

4 Embroidered Clothes

Embroidery work

Stitching Mechanised cutting, screen Printing. Quality checking Packaging, Marketing.

5 Radio Receiver mfg.

Soldering work Assembly & Testing Quality control labelling, Packing , Marketing

6 Preparation of Aromatic Extracts (e.g. Citronella)

Growing Citronella Crops

Local Collection Extraction, Refinement, Bottling, Marketing

7 Sago Growing of Tapioca

Sago Powder Sago and other products, Packing, Marketing

8 Steel Products

Welding shops Central Workshop, Testing, Finishing Advanced facilities

9 Food Products (e.g. Pappad, Pickles)

Preparation Centralised mixing (as per formulae) Packing, Marketing.

The above analysis reveals that by deploying the technology infrastructure in a 2 or 3 or 4 tier structure we ‘bring’ the industry to harmoniously sit on the rural structure rather than ‘dismantling’ the rural population and assembling in urban slums (and thus creating disorder).

5.2 Approach to Organizing Rural Industries:

Once the relevant directions of raw materials (Rural Agricultural Zones) are identified the activities have to be organized into

- House Level Activities or activities at hamlet level taken up by the Self Help Groups or equivalents

- Village Level Works organized in Common Facility Centre or Village Work Centre at cluster level for the next level of value addition.

- Finishing level or assembly level works carried out at Advanced Facility Centres (AFC) normally located as a nodal centre of the zone

Figure 5.3 Value Addition Leads to New Products. This can happen in many stages.

C2+V =C3

C1+V2 = C2

C+V1=C1

Content C

5.3 Sustainability of Rural Industries: Niche Area ApproachSince rural sector has certain intrinsic handicaps it should choose those areas of activities that are compatible with raw materials, human skills, and markets. Choosing the products that are linked to the agro-produceis in factthe starting point of a sustainable approach. The usual handicap is the absence of awareness about the possibilities with the rural produce and the relevant technologies.

5.4 Concept of Value Addition, Content and ConnectivityIn the context of REZ the starting point is the basic rural asset namely : the rural agricultural produce (s) or the ethnic wealth or both.Therefore the first concern is: identification of the “Content” of the REZ.Thereafter one attends to the process of value addition.Fig 5.3 shows multiple Stages of value addition to get to new stages of products. The table 5.4 below shows this concept clarified through a number of illustrations.Table 5.4 Illustration of Value Chain in Rural Industries.

Content Stages A value Addition. Final

Product

Spin of

productsV1 V2 V3 V4 V5

1Cotton (raw) Ginning Sliver Yarn

(+Values)

Fabric

(+Values)

Garment

(+Values)

Readymade

Garment

Cottonseed

(Edible oil etc.)

2. Coconut Copra

Fibre

oil

Ply

Refined oil

Coir

Medicinal & Cosmetic Coir mat

Desiccated coconut, coconut cream, vinegar etc. Shell

3.Rubber Latex Rubberised coir

Rubber sheet

Rubber products

The above table also gives insight into the value addition dynamics of rural products.

(i) As indicated by the first example, value addition leads to higher value products. For example from cotton to ginned cotton 100 % value gets added.In the next stage namely yarn many variations of value additions are possible as indicated in the bracket. The same is true in the next two stage.

(ii) In this example the process of branching is interesting. The coconut value chain route gets divided into the copra route and the fibreroute which are thereafter independent with their own value addition chain.

(iii) Through Example 3, we are able to show yet another interesting phenomenon, namely the merger of the value chains of two different agri products to get a new product. Here the plied coir and rubber latex combine to give interesting products like rubberised coir mat, rubberised coir mattress etc.

These examples could be multiplied. But here the major attempt is to lead the reader to the proposition:

5.5 Connectivity aspects:

The REZ region as we have understood is a region of about 400 to 600 square kilometres with many elements of the REZ like: Advanced agro facilities; Agro products centres (at house level, village work centres etc.)For the above activities to be made possible a number of basic structures and support services will have to be arranged. Some of them are elaborated in the following:

5.5.1 Physical Connectivity:Physical Connectivity could be achieved through

While conceptualising a Rural Economic Zone

It is not an agricultural crop or produce that is important, but a set of

product directions. Thus the effort will be to make the region specialize in

those sets of produces which together could lead to an economic activity

with significant implication to employment

- road- waterways- railways- pipelines- ropeways- tunnels etc. depending on the relative location of activity spots.

5.5.2 Energy ConnectivityWithout energy processing for market is not normally possible. But since supply of electricity in rural areas is erratic in all but one or two states alternative energy systems have to be part of the planning

5.5.3 e –connectivity:As indicated in chapter 4 the e-connectivity has given a chance for the rural sector to conquer space and more or less completely overcome its location related handicaps

The e-connectivity not only enables the rural entrepreneur to access information and to maintain linkages with relevant agencies but also seek consultancies and service inputs from far-away experts at low expenses. Further e-connectivity permits the entrepreneur to put his product in the e-market thus getting international market access instead of depending only on local haats.

5.5.4 Business ConnectivityIt is impossible to build up business in a rural area unless special efforts are made in respect of:

(i) Organisational platforms for the beneficiaries that permit them to take part in economic activities. These organisational structuresshould be acceptable to the schemes like PMEGP, SJSRY etc.

(ii) Cooperatives, Bank, ATMs(iii) Storage facilities (including cold storage)(iv) Transport services, packaging and forwarding services(v) Markets, super-bazaar type facilities or alternative distribution

facilities like home delivery

5.5.5 Knowledge ConnectivityFor rural enterprises to pick up the fore-runner has to be knowledge connectivity. Besides technical schools, training facilities, technical consultancies etc. are needed.

In rural area very innovative knowledge delivery systems need to be designed.

For example a Technology Park (as demonstrated by NIRD in Hyderabad) along with Entrepreneurship Guidance structures will be able to help. In principle such structures are there in the state headquarters (- for example the National Institute of MSME). But the villages in remote areas cannot access these things. District level Structures at the moment are not very strong. Therefore the REZ will have to have a demonstration cum information cum guidance structures at the Nodal centre of every REZ.

Besides the above the Village Knowledge Centre (VKC) at every village (or Panchayat headquarter) can provide the best information link to the world of business effectively.

In conclusion: The importance of connectivity for economic activity to build up in rural sector has been formulated by Dr. APJ Abdual Kalam in the best way. The above presentation has been influenced by his writings. His ideas could be summarised by the following diagram due to him.

5.6 The case of ethnic skills

The rural area has much ethnic wealth. Some of these are products, others are rare services. These need not be necessarily agro-based. Examples are provided in the following table. The table below indicates certain activities made possible by virtue of the rare location of a particular rural zone or village.

Ethnic Products (mainly artisan works) Leather worksPottery (Including art pottery)Sculpture, wood workJewelleryZari work/ embroideryPuppet making

Rural Services based on ethnic skills Bone settingEthnic foodFolk music/ dance

Activities due to special locations / occasions

Eco tourismNature cureKarigar dhamCulture tourism / templesSpecial festivals (eg. Kumbh mela)

6. RURAL ECONOMIC ZONE (REZ)

6.1 A Broad Definition of REZA Rural Economic Zone is a geographic region with

i) About 50,000 people constituted into a cluster of gram panchayats ii) A radius of 15 (plus or minus five) kilometres so that an Advanced

Facility at the centre could be accessed easily. iii) A base of agricultural produce and / or ethnic skills or economic

opportunities arising from special locations / occasions.iv) Possibilities of organising production infrastructure in a

geographically defined hierarchical manner – namely House Level Activity (HLA), Village Level Activity (VLA) and Zonal Level Activity.

v) Possibility of skill resources existing organized at the above levels –Self Help Group at hamlet level, specialized groups/entrepreneurs at village cluster level and advanced skills at the zonal head quarters.

vi) Possibilities of creating a Nodal Centre in the form of a Micro Industrial Cluster (MIC) along with facilities like energy backup unit, raw material supply chain/ godowns, advanced facilities like packaging, quality control, training, design and plan support, marketing support, transportation besides environmentally mandatory structures like effluent treatment plants.

vii) A governance structure involving the stake holders and having committees for planning, environmental monitoring, ensuring social connectivity.

6.2 Visualising an REZ in terms of its constituent subsystems

Fig 6.2 Three REZs in a region

Figure 6.2 indicates the architecture of a typical Rural Economic Zone coexisting with its neighbouring REZs.

The illustration clarifies how the House Level Activities(HLA) are linked to the Village Work Centres and how they are further linked to the facilities of the Nodal Centre. This could be better appreciated when read along with the examples provided in section 5.1.

The picture also indicates how the important constituents of this people’s industry structure are to be located.

The Community Facility Centre is a very important base for value addition next to the level of HLA/ SHG activities.

The Advanced Facility Centre will house technological and service infrastructures at the last level of value addition.

The picture also shows that one more entity namely Regional Technology Centre which will be needed in regions where knowledge connectivity has to

be conceived afresh. Details are developed in the subsequent chapters dealing with technology and marketing.

6.3 Agriculture related apex infrastructure:As indicated earlier the REZ considers the selected agricultural streams, and the production / service activities arising out of them as a continuum.

Most important, in the case of economically sensitive agriculture there is a need to provide knowledge connectivity for the agro-produce to be brought out in a way suitable for the next stages.

Let us peruse the following table:

Example Activities Central Facilities / services without which the activity cannot be practiced

Sericulture Production of spawns scientifically

Mushrooms Production of spawns Ability to identify poisonous mushrooms

Fisheries Fishlings prepared in a scientific way

Dairy Modern practices like embryo transfer

Plants difficult to be propagated or maintained

Tissue culture / Green House structures

6.4 REZ as a ‘Multi-Commodity structure’:The cluster development programmes of the country, to a large extent, have organisational structures closely resembling the one shown in section 6.2. Though the ‘single product cluster concept’ is important from the point of the economic strength of the whole country- often leading to enhanced earning from the industrial / export sector it has certain shortcomings. For example when we look at the population of the zone under consideration that are not covered under the said trade the question of doing justice to their employment comes up. The REZ, which is in effect, Rural Employment Zone, has to answer this.

There are three ways of addressing this question:

(1) If the one theme chosen meets most (say 75 %) of the employment need of the region, then the remaining needs could be fulfilled by those

production and service activities of the region that are considered important for fulfilling basic needs (for example building materials).

We give below an instance of this type.

Example: Pratapgarh region in Uttar Pradesh has been identified as an ‘Amla Cluster’ in the SFURTI programme. Due to its widespread prevalence of Amla in this region it appears to have the potential to meet 75 % of the employment needs of the region.

Fig 6.4 Pratapgarh region with its rare variety of Amla which is processed by the SHGs.

(2) If in the region there are more than one basic directions of employment and together these could cover the employment needs of the regionthere is no concern of any one being left out of employment. For example the region might be rich in Amla and also in turn-wood craft and together these two might fulfil the employment needs of the region.

(3) If the produce from agriculture or activities arising out of ethnic skills do not exist or do not cover the employment needs then attention must be directed towards employment avenues related to inevitable basic needs like building elements, transportation etc. In such instances the said zones could also become a supplier of these items to its neighbourhood also. One could also consider production complexes with raw materials brought from outside. For example FRP (fibre reinforced plastics) are suitable for production in rural areas with very low capital but the raw

materials for the activity are to be brought entirely from the chemical shops of urban trade centres.

6.5 REZ in the case of a Forest Zone: IllustrationLekha Mendha is a Panchayat in the district of Gadchiroli in Maharashtra. This Panchayat with just about 100 families has made its name as the most powerful Panchayat of the country for its ability to assert its right over the forest area associated with the village. It is from this village that the slogan: “In Delhi and Mumbai ‘our’ government; but in our village ‘we’ are the government”. The government has made Lekha Mendha as the first village to be assigned a forest region for deriving its livelihood and for its caretaking. The government indeed has assigned 1500 hectares of forest with a variety of non timber forest produces.

Gram Sabha

Fig 6.5 Lekha-Mendha (Gadchiroli) is associated with 1500 Ha of forest.

If Lekha Mendha succeeds in harnessing the forest given to it as a ‘resource-shed’ then it will become a replicable model and a new approach to the alleviation of tribal poverty will get formulated-along with a new model ofconservation of forest. On the other hand if the Lekha Mendha Project fails similar efforts in allocation of forest to tribal Panchayat will receive a setback. It is reported by the tribal people of the village that the following forest products are readily available:

Mahua (Madhuca longifolia) Chiraunji (Buchanania lanzan) Palma Rosa Grass (Cymbopogon martini)

Nirmali (Strychnus potatorum) Bamboo (Bambusa bambos) Jwarnkush (Cymbopogon flexiosus) Palash (Butea monosperma) Amla (Phyllanthus emblica) Harad (Terminalia chebula) Bahera (Terminalia ballirica) Arjun (Terminalia arjuna) Kachnar (Bauhinia variegata) Meethi neem (Murraya koenigii)

Based on the above the following three clusters of resources could easy be visualized-

Forest produces like Gum, Lac etc. Fruit items like Mahua, Chiraunji, amla and others. Herbal items

A Rural Economic Zone could be considered as consisting of the village along with its associated forest. Since the forest area is large there will be a number of collection and grading centres. There will also be certain manufacturing centres particularly in bamboo which the villagers want to take as a major economic activity.

6.6 REZ in the case of craft Zone:When the ethnic wealth namely craft is dominant in an area the Rural Economic Zone becomes essentially a Rural Craft Zone.

The Organisational structure remains the same:

(i) HLA: Craftsmen work at home(ii) VWC: Village Work Centres supported by community Facility Centres

where the Artisan Guilds could work together or share certain common facilities.

(iii) Nodal Centre: Very Advanced Facilities, Design Support, Marketing, Links, and Training.A number of models of craft support centres exists in the country.

There are residential art centres where the artists / craftsmen reside and work and the marketing is enabled by linking the villages with the tourist’s routes. Typical examples are: - Kanoria Art Centre, Ahmedabad- Cholamandalam, Chennai- Bharat Bhavan, Bhopal- Ghadi Studio, Delhi

Similarly Craft Bazaars over extensive area provide market and work opportunity to hundreds of artisans. Typical examples are:

- Shilparaamam, Hyderabad- Delhi Haat, Delhi- Shilpagram, Udaipur- SurajKund Mela, Faridabad- Karigar Ghat, Raipur and- Jatara, Vishakhapattanam.

A combination of these elements along with a hierarchy of value addition structures could provide a framework for REZ.

7. AGRINDUS: EMERGING EXAMPLE OF FUTURE REZs

7.1 Basic Logic of AgrindusThe rural area and its agriculture has been the major base of rural economy. From the agro-produce value added products are created. The value addition itself might take place in many stages.

Example : If we take tapioca (cassava) we see that

-from tapioca value addition leads to starch

-from starch value addition leads to sago (pearl tapioca)

-from sago value addition leads to different products

At each stage the value of the basic material moves up.

If we take cotton for example

Table 7.1 Value Addition to Cotton in Five Stages

Stage Base item Value addition End product % Value added

Approx. end price(Rs.)

0 Cotton 25-301 Cotton Ginning Ginned cotton 100 602 Ginned cotton Sliver making

processSliver 50 90

3 Sliver Spinning Yarn 10 1004 Yarn Weaving Fabric 50 1505 Fabric Simple tailoring Garment 15 175

Note: The table clearly shows that by keeping technology out of the reach of the farmers we have been depriving him of the benefit of value addition in the most profitable stages.

We see in the above how value addition transforms a kg of cotton costing Rs.25 into garment costing 175. At present the farmer parts with the produce at Rs.25/kg. But suppose we can enable the farmer to go upto stage 1, his produce namely cotton gives him an additional earning of Rs. 35. He will have to invest only Rs.0.70 lakhs for the ginning machine.

Similarly if the farmer or a federation of farmers are organised to go up to stage2 he /they will be able to earn Rs 90 per kg of cotton.

7.2 Technologies to Remove BottlenecksIf the vision is to make the stages of value addition (in Table 7.1) realisable, a few technology breakthroughs are necessary – as presented by the following questions:

a. Could the charka which enables a women spinner to earn Rs. 30 to 40 a day be transformed through technology into one capable of enabling her to earn an income four times more?

b. Could there be a further (at least) marginal increase in the productivity of the loom so that a weaver could earn an income equal to a worker in a power loom?

c. Could the cost of the pre-spinning machinery be brought to a lower level so that the cotton and the farmers as a village level fabrication are enabled to convert their cotton to slivers?

The answer to all the above are in the affirmative. By adopting the solar charka model of MGIRI a women could earn the projected income (see fig 7.2.1).

Figure 7.2.2 clearly indicates that within one year the MGIRI’s initiative has brought in hope that spinning could be ‘saved’ by adopting the new paradigm of decentralized textile. Further MGIRI has demonstrated in the Maganwadi campus the 4 stages of Table 7.1 and proved that the cluster operation to realise the ‘cotton to garment’ concept is possible and could result in highly improvised and embellished garment that could reach the people through the ‘Solar Fab Mart’ at truly affordable prices. The dwindling population of weavers is of great concern. It has to be improvedthrough a multipronged approach including technology upgradation.

7.3 ‘Cotton-to-Garment’ in a Rural Economic ZoneLet us visualise a cotton growing area like the Yavatmal district of Vidharbha region of Maharashtra. At the moment it has earned the position of the ‘capital of farmer’s suicide zone’. But the fate of the sensitive people in the

Fig 7.2.1 Solar Charka

fertile cotton belt could be changed by converting it into a Rural Economic Zone.

Fig 7.3 Glimpses of MGIRI’s Solar Charka Capturing the Attention of the Leaders and Artisans of India.

Sushri Kumud Joshi (Chair Person, KVIC) Examining the Solar Charka in MGIRI (Aug 2008)

Her Excellency The President of India Smt. Pratibhatai Devisingh Patil, during her visit to Amaravati on Jan 07 10 appreciating the Solar Charka.

Solar Charka adorned the dais of the Karigar Sammelan in Meerut(5-6 Dec 2009) and was inagurated by a women-artisan.

Huge crowds at the solar charka pavillion in Allahabad exhibition(25-12-09 to 24-1-2010).

The Cluster Philosophy to Implement ‘Cotton to Garments’

Fig. 7.3.1 dramatically shows the various stages involved. We are more interested in indicating how the process could provide opportunities to the farmers groups women’s SHGs and rural entrepreneurs and depict it in Table 7.3 below.

Table 7.3 REZ Model of Decentralized Textile

Process Participants Proportion and approximate numbers

(Assuming that the farmers groups will convert all the cotton into ‘ginned cotton’ and will convert the needed portion into slivers by technologically organising themselves. This has

spin-offs as well; for example cotton seed products including cattle feed)Spinning Solar Charka Groups (5 SHGs

or 2 SHGs depending on machines per head)

48 women operating say 48 Solar Charkas (12 women if each is provided 4 charkas)

Weaving Semi-automatic looms 36 weavers from say 3 SHG groups of men/women

Garment Centralised cutting Entrepreneur / Common facility centre (employment 2)

Decentralised stitching and embellishments (embroidery etc.)

SHG groups(12 tailors+ helpers/Embroidery workers..)

Marketing (Solar Fab Marts) Traders / women’s groups

7.4 Grains into Food: The Case of Soya in REZMany soya farmers (-as per interaction in the various blocks of Wardha) are not aware that their soya could lead to a soya-milk and a large number of milk products; they are not aware that the products like paint or varnish could come out of their innocent looking soya beans.

Knowledge connectivity should make them aware of these including the affordable machines that have come into the market (see fig 7.4.1)

Without going into the details we indicate in fig 7.4.2 the nature of the value chain and possibilities. A table similar to 7.3 could be worked out by the reader assuming various combinations of role players.

Soya bean

Wash and Soak

Grinding

Drain water

Filtration

Boiling

Soya bean milk Bakery Products Health Drinks

Food Products

7.5 Pre-Fab building Elements in an REZ frameworkWe have discussed elsewhere that from the point of view of avoiding energy-intensive transportation the housing sector is extremely important. An approach to this will be to:

Identify appropriate technologies that will make maximum use of local materials and technologies that are environmentally acceptable (incorporating waste recycling wherever possible)

Making available machines suited to community scale of operation of pre-fabrication by SHG groups etc.

Evolving modular designs for EWS, LIG, MIG etc. that incorporate the building –elements in a big way

The above approach will result in houses that are built fast at much cheaper rates.

With further training to beneficiaries we can usher into an era of ‘self-assembled houses’ using the building elements.

The experience of the author over 12 years as the Secretary / Chairman of the Gandhigram Building Centre (wherein he succeeded in the ‘10-houses in 10-days’ movement) indicates that a non-corrupt approach to housing using these technologies and management could deliver houses at 50 percent cost.

Typical Housing Elements that SHG groups could handle are:

- Pre-fab door frames etc. - ferro-cement shutters- inter locking type building blocks- roofing elements (brick panel, planks, ferro-cement hurdi..)- interior decoration items

The number of items possible is thousands and once we take the local materials (bamboo, fly ash..) in various regions into account. With various state governments announcing housing schemes with targets of millions it is high time this important direction is taken up in the REZ mode.

7.6 Where do the SME-cluster related to machine manufacturing and services fit in?In the above we dealt with technology delivery in an REZ framework : from the stage of agriculture, to the processing stage and associated services. We have also talked about the crafts that derive strength from ethnic / culture-based wealth. But in all these machineries play a crucial role; so also services. The next chapter will deal with the intricacies of technology.But here we want to indicate the interesting way the SME-clusters (Mechanical) under the Ministry of MSME could fit in the Agrindus type of movement. Of course we are here concerned with only a narrow application segment of SME clusters which have global implications.If we observe the nature of machine making activities in Coimbatore or Ludhiana or Rajkot it is clear that the local economic activities have shaped the directions of these machine clusters.Thinking along these line it is clear that the decision on the thrust of similar SME clusters could be easily made by looking at the type of REZ that are to emerge in a region.In the Vidarbha region suppose decentralised garments, and soya (etc) products are going to be in our vision then the SMEs will naturally be linked to the task of manufacturing the relevant machines and providing related services. A reference to the diagram related to the set of REZs in a region indicates a Regional Technology Centre.In reality there could be any other knowledge centre instead of the RTC. But their role will be to come up with the relevant machineries and encourage manufacturers to come up. That eventually relevant SME clusters will emerge need not be emphasised.

8. TECHNOLOGY AND ITS DELIVERY SYSTEMS

8.1 Defining sustainable technologyTechnology is the inventory of knowledge, scientifically organised and applied to help solve problems in specific life situations.

Sustainable technology is the technology package relevant to the contexts of sustainable development.

In the following table we present problem situations and how certain technologies are effective in solving them.

SN Problem situation Technology to solve1 Glut of agro-produces beyond the

absorbing capacity of the market. Example: mango

Cold storage:Conversion into storable / easily transportable form, say as pulp.

2 Rain water occurring over short period, drains fast into sea leaving the area dry

Build check dams, contour bunds, farm bunds etc. to create a watershed management system

3 Ground water to be used as protected drinking water and its wastage to be minimised

Use India Mark II pump.

4 The water harvested in the village is insufficient for the full irrigation of the farms

Use crops that use less water and also ration water (‘Pani-Panchayat System’)

5 Electric power supply erratic and the surgery ward in a rural hospital has to be made safe for patients

Use solar backup. (the use of battery backup is also unreliable since electric supply is erratic)

8.2 Community scaling of technologyThe Micro and Small-scale sector brings in a very new context wherein a set of 10 to 20 people join together in a rural setting to run an enterprise dependent on traditional and modern skills that uses a judicious mix of men and machines. These community units when federated in a hierarchical fashion enable us to visualize higher levels of complexity and sizes in organization.

The above concept which is a crucial building block of the emerging model of sustainable development needs a lot of innovations to become viable, compatible and combatable! (vis-a-vis global forces).

Illustration 1: Normally food processing units could be in huge capacity. The available Machines are also compatible with such medium and large scale

industries. Efforts to scale down the machinery so that it fits in with the low capacity operation by the women of SHG groups will be a good example of community scaling of technologies.

Illustration 2: Design of an aromatic extraction plant for use by a group of about 10 farmers will be a good example of community scaling.

Illustration 3: When pre spinning operations carried out by the machinery in standard mills are down-scaled it will lead to creation of mini textile clusters in the villages. This will help the process of value addition to an agriculture produce like cotton and help agriculture become viable besides making the slogan ‘Cotton to Costumes’ realizable. Thus such a scale reduction will be a good example of community scaling of technology since the beneficiaries will be small federations of farmers, SHGs, artisan guilds and entrepreneurs.

New considerations arising in the process of community scaling of technologies:

The following three considerations are relevant.

1) Energy: Commercial success of rural industries is not possible normally without powered machineries. Unfortunately the rural areas have no electric connectivity. Even if there is one it is so erratic that more harm is done. The solution lies in planning alternate energy systems using resources that are available in the region (-for example solar energy, micro hydel energy, gasifier based power system, biogas run engine based electric dynamo). For low power consumption (up to 5 kilowatt) solar options might be considered since the Ministry of New and Renewable Energy has a massive subsidy scheme. In general the production systems have to be multimodal. For example manual operation should be possible for short periods and even during the other period switch over from one energy system to another should be possible.

2) Intelligence: Most of the rural based products so far have been surviving on the strength of the artisans whose extraordinary skill has come out of the decades of training his nimble fingers and his agile mind underwent with a single minded devotion in a challenging work atmosphere. But most of such hands are now holding either the handle of a spade or the handle of a rickshaw in maddening urban streets or in its stinking slums. The few who are left in the villages are victims of the exploitative traps of greedy middlemen and have taken a solemn resolve never to allow their children to enter into the artisan’s trade. Thus there is no transfer

of technology to the next generation. Even if his hesitant progeny enters into the trade he has to fight for his survival in the formidable market which is backed up by the machine culture or the tricks of the Chinese.

If we have to make an intervention in this situation of a conflict between productivity and creativity we should perhaps bring in forces that will help him be assured of reasonable productivity so that he could concentrate on creativity. Further if modern tools could be brought in to assist him in presenting his innovations as a commercial proposition it will be a boon to the artisans.

It is believed that we can succeed in this effort by injecting appropriate level of intelligence through electronics which is extremely cheap with the current state of technology.

3) Man-machine systems: Between the robotics-based total automation of the west (which has also been often adopted by the eastern manufacturing hub namely China) and the primitive processes of Indian artisans in numerous pockets with manually handled tools there is a ‘golden middle path’. This we call as man-machine system. Through this approach we aspire to get the precision and productivity of the machine along with the individual’s creative input for design variations. The question is: when to adopt this approach and to what extent? The subsequent section will shed sufficient light on these questions.

An example will be appropriate. In the following we display two versions of packaging machines. On the right is a version which is automated in the sense:

(i) The sheet of plastics is manipulated to form into the shape of a bag

(ii) The automatically measured material is poured into the bag that is formed in (i) above. The measuring is done with the help of a timer

(iii) The filled bag is passed through a band sealing system which delivers the pouch.

On the left is a machine the focus of which is on the operation of band sealing and it delivers pouches of the same quality as the machine described earlier. But the system is made extremely simple by human intervention in two stages:

(i) The bags are readymade and a human being inserts the bag at the right spot in the filler machine so that it could be filled.

(ii) The filled bag is inserted into the band sealing machine and at the end of the sealing it is picked up.

In the automated version the filling machine and band sealing machine are integrated but at a heavy price whereas in the simpler design they are linked through the intervention of a human being.

Where the packing capacity needed is of the order of, say, 10,000 pouches per day the simpler version is perfectly adequate. In fact this is the capacity needed by an SHG group which, for example, is making and packing masala.

The price of this simple machine is so small that each SHG can have a few of these and it helps to engage fully the group normally consisting of 10 to 20 women.

The cost of the automated version is about 50 % of the capital of the women’s enterprise whereas the man-machine version is about 10 % of the capital of their business.

Thus the man-machine version gives them the advantage of a machine. At the same time it is affordable and provides opportunity for all to be engaged. It provides the needed productivity without sacrificing quality.

8.3 Man Machine System

8.3.1 A Human Centered Perception of TechnologyTechnology in effect is the process of modifying nature to suit human needs. This process of modification has to be effected by the humans. From the point

of view of the efforts involved and from the point of view of the desirability of the direct involvement of humans in it there are three interesting cases that could be considered:

i) There are activities beyond the capacity of humans- for example connecting millions of communication channels in a second. Many times these are desirable.

ii) There are human level activities that enable humans live and evolve: activities that are possible and desirable

iii) There are activities that can either destroy human beings or degrade them. If a human being has to dive into a sewer for operating certain controls it might be a cheaper way of doing, but it degrades the human. In such circumstances the use of even robots is justified.

From the above analysis we get a clue as to where manual operations are desirable and where they are not. It is perhaps a man machine combination that has to be relied upon.

•activities above human capacity Superhuman

•Activities that make humans grow ; activities that are possible and desirable Human

•Activities that degrade humansSub-human

9. SELF RELIANCE MARKETING: ‘GLOBAL SWADESHI’In chapters 1 to 3 we raised the question about the existence of a vision for village economy which will be viable equitable and will be compatible with the bearing capacity of Nature.

Gandhiji said: “Nature has enough for everyone’s need; but not for even one man’s greed.”

In our dream for an “Economy as if people and planet mattered” it is important to link the plan for natural resource based activities with the structure of “need”.

9.1 Need Hierarchy and Inverse square Law Inspired by Maslow’s theory of need hierarchy we can propose, in the context of the village’s life, the following need hierarchy:

A pragmatic Logic will be as follows:

The items listed under “survival” needs should be satisfied in the closest neighbourhood subject to the constraints of nature. Here again, the “Entropy” minimizing objective will dictate that the items involving energy intensive transportation should be produced in the same REZ. In particular the building materials (brick etc.) should be produced at the nearest sites since it involves much transportation. Technology should help in converting the local materials into ones with the desired properties. The present culture of transporting water (and similar food items) across hundreds of kilometres could be highly injurious to nature (and poor man’s purse). Presently we see one litre of bottled water sold at 12 Rupees. We also see it sold at Rs. 3 in the Railway platforms where the vessel is brought by the consumers. We also hear that drinking water

• Food, Clothing, Shelter Survival Need

• Consumer goods for quality life, transportation, Communication, Education,Health, Social Networking

Quality of Life Need

• Rare Health Needs, Very Advanced equipments, Very Rare Machines, Rare Luxury Needs Rare Needs

could be produced at Rs. 0.25 by using LTTD technology, proposed by NIOT (National Institute of Ocean Technology) Velacherry, Chennai. Water purification at house level and village level can stop this new ‘water borne’ disease! (business)

Majority of the items that are needed for food and clothing should be produced in the region: if not in the district, in the neighbouring district or at least in the state. These could be certain items from the neighbouring state.

At a time when free market reigns who could control such flow patterns? Is it wise to get into such thoughts?

Certainly the market forces are mighty and with the available transports goods will flow as dictated by the price-differences etc.

The importance of the thought is:At the time of land-use plans leading to the plan for industrial corridors, these new considerations help us arrive at plan solutions suitable to a ‘people plus planet’ considerations.

As for as items that fall under the category of “rare needs” are concerned they could be globally produced. The SEZ could be ideal for such purposes.

The Inverse square Law:

In the earlier book: “Rural Growth Network” (1987) consumer goods were classified on the basis of the ‘Universality or otherwise of need’, frequency of consumption and inevitability and the decision derived was that the more fundamental the need is (universal, frequent and inevitable) the nearer it should be to the consumers / habitat. The rarer the need is the farther it could be from the consumer. This philosophy is termed as an “inverse square law” by the great Gandhian thinker Dr. Devendra Kumar. We discuss more on this in the following.

9.2 Global Swadeshi

Between the chauvinistic philosophy of total self sufficiency (which is normally associated with a ‘swadeshi’ mentality) and the ‘foot-loose’ philosophy of

globalization there indeed is a ‘golden middle’, also dictated by the need to abide by the imperative to minimize entropy.The analysis in the previous section (9.1) leads to the concept of ‘global swadeshi’ which demands a style of planning regional self-reliance and ‘goods-sharing’ (import and export) in such a very that the ‘swadeshi’ spirit of all the neighbouring regions are respected. The same thing applies to exchange with other countries too.Indeed it is a good principle to help decide at least conceptually as to who is ‘crossing the limit’ by indulging in a trade-war.

9.3 A tripartite formula: to challenge the foot-loose movement of goods under globalization:Suppose the production in a REZ is 100 units it could be divided into three parts:

a : the percentage for consumption in the REZ itselfb : the percentage exported to other regions in the country andc : the percentage exported outside the country

Obviously a + b + c = 100Suppose a particular REZ plans its production in such a way that

a : b : c = 100 : 0 : 0

What does it indicate? It indicates that it Produces for 100 % internal consumption. Suppose it turns out that the import of this REZ is zero this zone is “self-reliant”

On the other hand if a: b: c = 0 : 0 : 100 it means that the region is producing exclusively for export and in this case there is a chance that the concerned REZ could become a victim of unfavourable global economic fluctuations.

Form the above discussion it is clear that each region should aim at a ratio which maximizes its economic stability. For example a ratio like 50 : 25: 25 indicates a balanced approach to internal consumption verses export within the country and export. This figure is not sacrosanct. But the thinking is important.

Globalization could do good if it permits every country to maintain a state of ‘healthy interdependence’ with respect to its neighbours.

This is not just a ‘good-neighbourhood behaviour’ but is indeed indicated by the law of entropy.

10. ORGANISATIONAL ASPECTS OF REZ: NEED FOR INNOVATION.

10.1 Special Purpose Vehicles (SPV):

The present chapter deals quickly with the organisational structures that will suit the REZ.

Traditionally the cooperative structure could have been proposed as the best structure for situations such as REZ. With the advance of the science of management and the tools of management like IT and with the new patterns of partnership (like public, private partnership) the numbers of variations available are far too many

The concept of SPV: special purpose vehicle is emerging as an important concept.

A Special Purpose Vehicle is a legal entity comprising of the stakeholders participating jointly in a particular enterprise.

In our case it will be wise to have not only the producer groups as members, but the consumers groups as well. Among the produce groups also there are many categories: those at the House Level Activity (HLA), Village Work Centre groups (VWC) and those working at the Nodal Centre. There are also service providers (Entrepreneurs) and higher level company’s providing linkages.

The SPV could provide different type of membership and define the shares and benefits linked to each.

There has to be a governing body comprising of members from among variouspartners and also from among leaders/representatives from the Local Self Government. The details are reserved for a more comprehensive treatise.

10.2 Organizational structures of a set of REZ in a region

Fig 10.2 shows the linkage between the decentralised activity constituents of the REZ.

Fig 10.2 Three REZs in a region sharing a Regional Technology Centre.

It also shows structures that could be above the REZs. For example it shows that the Regional Technology Centre will be needed to provide Knowledge Connectivity to a set of REZs. Similarly there could be Regional Facilities that are common to a set of REZs also.

REZ 1 REZ 2 REZ 3

CFC Common Facility VWC s Entrepreneurs

Centre

S H Gs (HLAs) Farmer’s Federations Artisan’s Guilds.

Fig 10.2.2 Organisational structure of a sets of REZs in a region

10.3 Constituents of the Nodal Centre of REZ

Fig 10.3.1 below is a pictorial representation of the constituents of a Nodal Centre of a typical REZ.

One sees in it

(i) Agro Facilitation Complex :- Seed, food - Demonstration forms- Advanced facilities (tissue culture........)

(ii) Mini Ind. complex & support services- Micro Industrial Complex- Special Advanced Facilities Centre - Higher Level Assembly Industries- Repair Services

Regional Facility Centre

RTC: Regional Technology Centre

- Packaging - Training Centre - Storage Services- Consultation Services- Testing and Quality Guidance- Information Services, e-link- Bank- Transport and Freight Services

(iii) Craft support service Centre (iv) Major Backup Facilities:

- Energy Back up- Effluent Treatment

(v) People’s Committees.

By pooling the above facilities in a concentrated way the industrialization activity, which normally is not possible, is made possible.

Fig 10.3 Nodal Centre of a Rural Economic Zone

In fact, since one of the handicaps of the rural sector is the reluctance of professionals to come to rural areas the proper strategy will be to create professional colonies near these Nodal Centres. Eventually special Institutions like Poly-techniques might also crop up. The ‘mantra’ is provisional of urban facilities in rural areas

10.4 Innovative Structures of the Mini Industrial ComplexIt is very important, for the success of rural enterprises, to devise innovative organizations. We indicate a few examples below. The ideas contained in the examples could be incorporated while designing the Mini Industrial Complexes.

10.4.1 Organizational approach to minimize marketing efforts:The basic idea is to think in terms of a big product which normally is a complex system. This complex system could be broken into many sub-systems. For example if a toy bicycle has to be manufactured this could be considered as made up of many simpler products (wheel, handle, pedal, belt, seat etc.). Now each of the sub-systems will be manufactured by different micro enterprises in the same complex. One entrepreneur, having a higher level investment (say falling within the range of small or medium enterprise) will be assembling the final system. Obviously he will be responsible for marketing the end product.

As for others are concerned

None except one industry needs to worry about marketing None except one industry needs to worry about working capital and

similar organisational matters Coordinating for the purpose of quality and standards could be done by

the lead industry itself. Many of the services, for example accounting, could be shared thus

minimising the overheads.

There could be certain disadvantages of this “tied-up” system too. For example, if one of the critical units in the group becomes lower in quality or productivity then it will affect the net effect of everybody else. This analysis furnishes the remedy to the malady also- namely the need to have a unified coordination unit in respect of quality, standards and the like.

10.4.2 Mini Industrial Cluster with One Dominant Element (MICODE)MICODE could be illustrated through an industrial estate with a single technology or single product or a single raw material in focus. Similar example could be found out for the other elements / factors of industrial production.

For example suppose we consider the single raw material aloe vera. The industrial estate may have a dozen units each coming up with a different product based on aloe vera. It is quite possible that the area in question is dominated by the said raw material and the creation of the industrial estate is a way of adding value to the said raw material. Similar could be Mini Industrial Clusters based on soya or turmeric or herbal products.

Consider now the case of an industrial estate where a particular technology possibly with special investment need is the dominant theme. A typical example is: flavor preserving natural packaging of fruits and flowers without the addition of chemical preservatives. In this industrial estate there could be a variety of units each based on a different raw material.

Consider also a third example: of an industrial estate where the outcome is a complex product needing a number of subsystems and where all the subsystems could be manufactured by micro-level industries or small scale industries. There are two advantages of this arrangement;

Their indeed could be many other such systemic ideas each bringing in significant advantage of some sorts.

Most important thing for us is the possibility of consciously integrating enterprises at many levels of investment category- for example, small with micro (or SHGs), or medium with small or micro etc. This indeed will be an exciting idea by itself.

10.4.3 ‘Decentralized – Centralized’ style of manufacturing

Advanced Facility Decentralised stitching

Centre (AFC)

The above picture illustrates the ‘Decentralized- Centralised’ style of operation which was explained not only as suitable for synergized operation of micro level and small scale industries (and in general MSME) but also the most logical and effective way of cutting costs while maintaining quality, standards and productivity.

The above model could be found to be relevant in hundreds of situations where existing decentralized units like SHGs, artisan guilds etc could be engaged to deliver subsystems using customized tools, jigs and fixtures at a very low cost. The model is important because it avoids urbanization and at the same time engages grassroots level economic units like SHGs in a very effective way.

Stitching

• Cut soles collected from AFC

•Back to AFC for finishing

Stitching

•Cut soles collected from AFC

•Back to AFC for finishing

Stitching

•Cut soles collected from AFC

•Back to AFC for finishing

11. SPECIAL CASE OF REZ: CASE STUDIES

As remarked earlier the Rural Economic Zone is a holistic approach to harnessing the local resources for the purpose of total employment generation through innovative agriculture, industrial production and services

Many schemes of the country have their objectives and operations similar to REZ- though they will be narrower in their scope. We see some examples that in our opinion fall under the broad philosophy of the region

11.1 The case of Ralegaon Siddhi and Hivre BazaarThe story of Anna Hazare and his contribution to Ralegaon Siddhi is well known. Originally the village was economically broken. The people realised the unexploited resource of the village namely water. They came forward to adopt innovative technology for watershed management and went about agriculture in a businesslike manner. As a result the economic development of the village took place. In this process social capital was developed and utilized. The entire village adopted the value based venture approach to prosperity.

As far as Hivre Bazaar is concerned it used the resources of the Adarsh Gaon Yojana (AGY) of Maharashtra Government based on the experience of Ralegaon Siddhi. Its results according to its promoter Mr Popatrao Powar are as follows; “Hiware Bazar is now reaping economic harvests of water conservation. Grass production has gone up from 100 metric tonnes in 2000 to 1000 metric tonnes in 2004. This has resulted in increased milk production from mere 150 litres per day during mid-1990s to 2200 litres per day now. The number of wells has increased from 97 to 217. The land under irrigation has lone up from 120 ha in 1999 to 260 ha in 2006.

Each village resident earns almost double of most of the country’s rural population. In the last 15 years the average income has gone up by 20 times. According to recent press coverage, there are 54 millionaires in this village.”

11.2 REZ Model of a Landless Dalit Village. (Kuthambakkam Panchayat - a model village development nurtured by Mr R Elango)

Kuthambakkam was a very backward village prior to 1996 with communal disharmony, poor basic infrastructure (water, sanitation, roads, street lights, schools, etc). It also had a lot of unemployed youth with unsecured livelihood.

The main money-spinning profession was illicit arrack brewing and hence violence against women and children were common.

Mr R Elango, an ex-CSIR Scientist, who became President of the Panchayat in 1996, was inspired by the study of development models like Anna Hazare's -Watershed Management, Dr Parameswara Rao's - Wasteland Development, Dr T Karunakaran's - Rural Growth Networks Model*, Dr M P Parameswaran's -Swadeshi Movement. His path breaking initiative began with the creation of a vibrant Gramsabha, community mobilization, livelihood based on local resources and local needs besides employment generation through Panchayat activities including housing for all, creation of urban amenities in rural areas etc.

In the opinion of Mr R Elango, 20 villages considered together as a cluster could become self reliant, if they join hands and have a livelihood program involving 350 families using the 28 women's Self Help Groups, 7 men’s Self Help Groups and 7 Marginal Farmers’ Group together having 13 production units. The activities could involve organic farming, food processing, cosmetics / toilet items. There could be habitat-related activities like construction materials, textiles, chemicals, bio-herbal and nutraceutical products, art and crafts besides services (for details see box item).

A number of innovative techniques were adopted to achieve the set goals. Rural industrialization was made possible by making use of unutilized and abandoned land belonging to the panchayats. Kuthambakkam panchayat also succeeded in establishing activities related to stove burner production, first aid kits packaging etc. The secret of rural industrialisation of Kuthambakkam was that its leader could access the above technologies from institutions like CFTRI, CECRI, Regional Laboratories, CSIR, IITs, KVIC, Hudco, technological NGOs like Development Alternatives, ITRCs, etc.

Activities planned for a 20 village clustera) Food related: 1. Rice mills .... 82. Padddy processing units .... 603. Tur Daal (Yelloow pulses) mill .... 84. Other type of Daal mills .... 15. Oil mill .... 86. Bakery items .... 37. Confectionery products .... 18. Flour mill .... 49. Miscellaneous (e.g. pickles, papad,

masalas etc) .... 210. Milk processing .... 6

11. Tea packaging / coffee processing .... 212. Iodized salt .... 113. Vegetables .... 2b) Construction materials:1. Brick manufacturing units (VSBK) .... 12. Painting materials .... 13. Plastic recycling

(road repairing materials) .... 14. Tiles .... 15. Mud blocks .... 36. Precast materials / cement water tanks .... 2c) Cosmetic and other consumables:1. Bathing soaps .... 32. Washing soaps / detergent .... 63. Tooth paste / tooth powder .... 14. Shampoo / shaving cream .... 15. Hair oils .... 16. Tailoring .... 27. Textile products

(pillow covers, bed sheets etc) .... 38. Candles, Incense .... 29. Paper recycling units .... 210. Cattle feed .... 211. Weaving .... 412. Electrical gadgets .... 213. School note books .... 114. School bags / shopping bags .... 115. Compost from waste organic .... 1016. Food processing (jams, squash) .... 217. Furniture, carpentry .... 118. Ornaments (silver & gold) .... 119. Utensils .... 120. Plastic products .... 121. Plastic recycling .... 122. Battery production units .... 1d) Service Industries:1. Transport operators .... 52. Electric repairs .... 23. Auto repairs .... 24. Taxi services .... 35. Internet café / STD shop .... 16. Trading shops (3 per village) .... 45

For more details see www.modelvillageindia.org.in

11.3 Wadi Project in Gujarat by BAIF-DHRUVA

(A Tribal Project Case Study- fully based on Dhruva Annual Reports and Web based information.)Dharampur Utthan Vahini (Dhruva), an Associate Organisation of BAIF, came into existence in the year 1995. The activities are spread over Valsad, Navsari and Dangs districts in South Gujarat area where more than 90% of the population belongs to scheduled tribes, and in the Union Territory of Dadra and Nagar Haveli. Wadi is the flagship programme of BAIF- DHRUVA. The “Wadi” model of tribal development is holistic in approach addressing production, processing and marketing of the agri-horti-produce, while addressing the quality of life issues of participating families.

The tribal rehabilitation project which aimed at reducing migration and ensuring comprehensive development of the tribals was first introduced at Vansda village of South Gujarat. Vansda, a typical block of South Gujarat, was a place with huge tracts of wastelands. Despite good rainfall, water was scarce in non-monsoon months due to undulating nature of land; though the tribal farmers owned land, they migrated to nearby mango orchards for work as nothing grew on their lands. To address these issues, Shri. Arvind Mafatlal, Chairman, BAIF, invited Dr. Manibhai Desai, the Founder of BAIF to Vansda. Having started the programme with only 42 families in 1982 at Vansda, today the tribal development programme covers more than 23,000 families in three blocks of South Gujarat.

Wadi Program: HighlightsAcccording to Druva

Today, over 23,000 families from 400 villages have adapted the model.

Huge tracts of wastelands have been converted into orchards.Wadi has been able to create a blend of livelihood promotion with conservation / regeneration of natural resources.

This has led to the elimination of misery, reduction in migration and a sharp improvement in their standard of living.

A shift in cropping pattern towards commercial crops such as vegetables and pulses has resulted in generating regular income.

The availability of protective irrigation through water resources development has increased cropping intensity.

Seasonal migration has been reduced to a great extent as ‘‘Wadi’’ provides year-round employment opportunities to tribal families. This has also resulted in increased attendance in schools.

The production of large quantity of cashew and mango has opened up avenues for processing activities.

There is a substantial rise in employment opportunities for landless in procuring and marketing of farm produce and processing of cashew and mango as well as other income generating activities in the non-farm sector.

The health programme has reduced the incidences of infectious diseases in the area and has improved health and sanitation in the villages.

The SHG movement has provided a voice to tribal women and brought out their entrepreneurial skills which are demonstrated by micro-enterprises and income generating activities such as nursery management, vermin-composting, etc undertaken by them.

Initiation of informal credit delivery system (credit through VASs and SHGs) has increase the access of tribals to credit for income generation. It has inculcated saving and repayment habits.

Apart from monetary gains, there has been a greater impact on the quality of life by way of drudgery reduction of women, education of their children, and non-consumption of alcohol and development of a hard working culture.

Till date, a large number of non-participant families have started adopting the ‘‘Wadi’’ model in the programme area.

The program had a positive impact on the afforestation of the region. Since its inception Wadi program 4,63,005 mangoes, 5,05,630 cashew and 79,22,300 forest trees has been planted.

Photo Courtesy www.dhruva.org.in

The coverage details of the program in three districts are given below:

Table: Wadi Program Coverage

District Taluka Total Total TotalVillages Families Acreage

Navsari Vansda 38 5,686 5,129

Valsad Dharampur 144 12,958 12,128

Kapa. Dang Ahwa 19 792 679

Total 201 19,436 17,936

Source: Annual Report, 2003-04

The hierarchical social order designed for service delivery

At the village level the program promoted women’s self help groups (SHGs) and other user groups (such as orchard growers). Each of these grassroots bodies were formed with about 10-15 members.

All the user groups and SHGs were federated into a Gram Vikas Mandal (GVM) at the village level. The GVM on an average has 80-100 households as members.

For the management of the program an Ayojan Samiti (AS-Management Committee) was formed with 12- 15 members chosen from among the various user groups.

At each cluster of 25-30 villages a cooperative was registered, with around 1800 primary members, each household commanding two shares, one each for the man and wife.

Ayojan Samiti’s are formed at the level of each GVM as a planning and management committee which is authorized to take decisions on behalf of the GVM. Each Ayojan Samiti member represents a group of 5-10 families with the responsibility of implementation of development activities in the village, providing savings and credit services to members, collection of produce of members for sale& to cooperatives, ensuring technical quality of activities, etc. A cadre of service providers – Field Functionaries is trained to support various activities under implementation at the village level. The capacities of these functionaries are upgraded through a series of trainings organised at periodic intervals by DHRUVA.

11 cooperatives have so far been formed and registered at the cluster level under the Gujarat Cooperative Societies Act, 1961,

with a total shareholding of more than Rs.28 lakhs with a contribution of more than 70% of the wadi owners.

Broad activities of the cooperatives include –

Purchase of wadi produce and other agricultural produce from the members

Value addition of produce from wadi and other produce

Establishing marketing channels for processed / raw products Establishing Agro Service Centres to supply seeds, fertilizers, plastic

sheets, ropes, roof tiles etc to the members at reasonable rates Developing infrastructure – go downs, processing units etc. The co-

operatives are primarily focussing on commercial activities. These co-operatives will continue to function even after the completion of the

Image Courtesy www.dhruva.org

wadi projects. Currently, efforts are being made to make these cooperatives independent in operation.

Production Process : The production process involves the following steps

Wadi Production Collection by Ayojan Samiti Decentralized primary processing centers at the level of cluster. All the

processing activities are supervised by qualified food techniciansat finishing units in the co-operative –Vasundhara at, Kaprada for cashew

Federated marketing team-Vasundhra at Vansada for cashew and mango derivatives

The following table gives an indication of the quantum of produce processed at the respective units.

Vrindavan Products (Annual Processing MT)2005 - 0 6 2006 - 07 2007 - 08

Mango Pickle 237.5 292.0 420.76Mango Pulp 50.0 49.3 46.87Cashew 46.5 51.0 74.06Total 334.0 392.3 541.69l

Marketing and Supply Chain

The arrangement for final marketing of processed products is made with Vasundhara Cooperative, which also take care of the product branding. Vasundhara Cooperative is the oldest cooperative formed through DHRUVA's initiative. It is involved in processing and marketing the products produced by all 11 cooperatives under its umbrella. The professional team of DHRUVA and the cooperative are actively involved in value addition and constant innovation to the produce. The marketing intervention has opened up a huge local market while at the same time promoting tribal livelihoods. In the financial year 2003-04, about 192 tonnes of cashew and 560 tonnes of mango was processed. The sales turnover of Vasundhara co-operative in 2000-01 was Rs. 72.61 lakhs and it increased to Rs. 204.21 lakhs in 2003-04, registering a growth of around 200 percent.

Market mix for the product/Services offered :-

Mango: Pulp-kesar, Pulp-amrapali, Pickle-Mango, Mix, Lemon, Chilly, karvanda and sweet melon.

Cashew: Whole, split and unpeeled

Geographical reach: Products are sold in the local markets with the help of the local youth, SHGs, and through dealers and wholesalers in Vansda, Surat, Baroda, Ahmedabad and Mumbai.

Specific customer segment tapped: The customers for the processed food / pickles are both in the rural and urban areas of Gujarat and Mumbai.Channels used: The products are marketed by individual and institutional buyers. The marketing is done through wholesalers, retailers and commission agents. Sales force / other instruments used are the margins and commissions.

A number of micro industrial activities are taken up by various SHGs coming under the fold of project. A summary of the micro industries are presented below.

Wadi –Micro Industries Run by the SHGs

Type of Enterprises Net Profit

Sale of Vermi compost sale 46,292Nagli (Finger millet) Papad 680Sale of Leaf Plate 750Cashew nut procurement 4,476Sale of Forest Nursery 1,74,400Vegetable cultivation 58,125Mango Grafting 23,560NAHARI Restaurant (TribalIndigenous Cuisine Corner) 14,025Fishery 13,545Worms Sale 90,225Pickle Trading 4,758Sale of Bamboo Toys 3,750Tota

11.4 OTOP Model of ThailandTaking initiative and support from the OVOP in Japan, Thailand intiated the One Tambon One Product Proram with similar objectives. A Tambon is an agglomeration of 10-15 villages with total population ranging anywhere between 5000 and 12,000. The autonomous groups formed for an industrial activity was supported through a multi-tiered technology, management, finance and marketing support system.

“This is a process with several steps, actors, field and extension workers, providers and facilitators, institutions, ministries and implementers. The process begins with the formation and identification of a group with indigenous knowledge, skill, innovations and willingness to work together to produce, market, and share the benefits. The Agricultural Extension Office (AEO) and the Community Development Office work very closely with the people at the village and Tambon levels, recognize the interest to form occupational group, motivate and advise the local people and formalize the group by developing the proposal and registering at the district administration for necessary support and services needed to make the group functional. They provide forward linkages to other government offices for non-monetary support services. Besides helping villagers to form the group, the AEO also provide grants, tools and instruments, various types of trainings either by hiring the trainers or arranging through other related government agencies, and linkage with other government offices. Non-formal Education Office provides various types of trainings, such as, production, marketing promotion, accounting, financial management, organizational development and field visits. The Federation of Thai Industries (FTI) and the Provincial Industrial Office (PIO) provide the training on product and design development. Similarly, District Health Office provides knowledge on sanitary aspect of the product and the production process. Provincial Trade and Commerce Office provides marketing promotion training. The Bank of Agriculture and Agriculture Cooperatives (BAAC) and the Cooperative Auditing Department provide accounting training.” (Routray, 2007)

Each OTOP group commonly elect the management committee such as Chairperson, Vice-Chairperson, Treasurer, Secretary, and members for Public Relations, Production and Marketing. The profit of each group is divided into components such as wage labour, dividend, operational funding (machinery, maintenance, and procurement of instruments, etc.) and village development. A number of ministries and other institutions are involved in providing management and infratructural support from product design to production and marketing.

“There were more than 35,000 products registered under the OTOP. Out of total OTOP enterprises, 70 percent constitutes OTOPs owned by the

community enterprises. There are 569 Five Star products at present out of which food constitutes 263 items (46.23 percent) followed by textiles with 122 items (21.45 per cent), ware and decorations with 85 items (14.94 per cent), herbal supplements with 37 items (6.51 per cent), handicrafts and souvenirs with 33 items (5.80 per cent), and 29 types of beverage (5.1 per cent). The total revenue generated through OTOP activities in 2002 was 16,700 million baht which increased to 38,474 million baht in nine months of 2005.” (Routray, 2007)

Based on quality and a few other parameters such as the skill involved the OTOP products are given a star rating. The best products receive the coveted five stars. Two sets of evaluation criteria are used at the provincial level for this purpose. From the production point of view, provincial identity, local skill and resources, marketability of the product, value addition by the processing, and innovativeness of the design, etc. are used. From the marketing side, the criteria used are production, quality and standard, marketing, product design, social responsibility and cultural preservation.

Products with 3 and above star ratings received proportionately higher support, thereby making the OTOPs competitive within themselves.

Today the OTOPs together market a large number of products ranging from value added agriculture products to chemicals and toiletries

11.5 Rural Business Hub

The RBH Model has been inspired by the OTOP model of Thailand. ‘The objective of the RBH initiative is to promote at least one RBH in each development block of the country by bringing to the attention of the business houses, in both the public and private sectors, the unique product are skill in each development block deriving from local resource endowments, felt needs of the people and relative absorptive capacity of the local community’.

11.6 Comparison of REZ and RBH

The RBH has the main objective of linking the business sector to potential rural markets so that the GDP of the country and export could be strengthened while benefiting the rural sector in the process.

The sectors that are of interest to those commanding the market will alone be touched.

The REZ on the other hand starts from local resource endowment and skills and gives priority to the basic needs (food, shelter, clothing etc.) of the people and depends less on export, national market etc.

The RBH campaign aims to locate one product in a block and then promotes it from the point of view of national economy. The aim of REZ is to build up regional self reliance in the food, shelter, clothing, essential services etc. dimensions to the extent possible with maximum reliance on local resources and further building up wider circles of self reliance. There will be innovative directions like building elements which are important from the point of view of self reliance of the poorer sections of the villages, but this may not be of interest to big businesses or exporters- neither is it desirable that such activities are taken away from the people’s sector.

The REZ builds on the foundation of economic units like SHGs, farmers’ groups, artisans’ guilds etc. The REZ movement would attempt to build higher level of business including export and where such organization is beyond their capacity could seek the help of organised sector units which are normally handled by the RBH.

The RBH is a top down arrangement with an empowered committee chaired by a Central Secretary even to sanction funds for an RBH for a Panchayat. The funds are very limited (Rs. 2 Crores for 2008-09) and thus the possibility of covering lakhs of Panchayats in the country is very unlikely. The funds for creating common facilities centre etc. (gap filling funds) is very small (Rs. 10 lakhs). The entire scheme will create a dependency syndrome with every Panchayat waiting for decades for a pittance. The REZ, on the other hand is encouraged to link up (in an entrepreneurial style) with available cluster schemes, and other schemes including PMEGP.

The RBH is dependent on Block Level Panchayat which at the moment has not much locus standi in most of the states. The REZ, on the other hand, seeks to form a part of a block with a population of 50,000 by federating a set of willing Panchayats forming a contiguous cluster. Public Private Partnership is possible here also but the Panchayats will

have a stronger hold. Even the possibility of a private industries setting up their units in the Panchayats very much exists; but the REZ philosophy encourages the Panchayats to permit such units under the condition that at least 51 % of the share remains with the villagers and shares are considered against the land as well.

12. REFLECTION ON NATIONAL IMPERATIVES

12.1 Providing urban amenities in rural areas

A careful observation of the connectivities indicated by us in chapter 5 along with a look at the schematic (Fig 10.3) that talks about the Mini Industrial Complex indicating even a professional colony in its neighbourhood. In fact all the services (transport, communication, marketing etc.) make a rural life easier and independent of urban centres.

The realisation that REZ and the movement of ‘providing urban amenities in rural areas’ are like two sides of the same coin-could be a good guide to those who would like to venture into a successful planning of REZ.

12.2 Initiatives on behalf of the Government

The mechanics of REZ needs no further experimentation. It is based on component ideas that have been individually tested globally and in India. The convergence between the various ‘cluster development’ type of schemes is indeed the challenge. Such a need for convergence is already deeply felt and for many of the serious region-based schemes such convergence is made imperative.

The following steps will go a long way in our venturing into the REZ type of regional economic development models:

(i) An exercise of delineating potential REZs in typical agro-climatic regions / sub-regions have to be initiated involving competent institutions capable of handling GIS tools. Inherent in this will be the identification of Rural Agricultural Zone and Rural Craft Zones.

(ii) A conscious effort to ensure physical connectivity, energy connectivity, e-connectivity and business connectivity will have to be made

(iii) Efforts to inject innovation into enterprises should be encouraged. For its natural growth the opportunities of interaction of S & T community with artisans and rural entrepreneurs should be encouraged.

Technical / professional institutions should have linkages with the under-developed hinterland. Each major Institute should in fact link up with an REZ ensuring through a group structure that persons with the needed knowledge dimensions are roped in. The NCIC (Nagpur Centre for Industrial Consultancy) initiated by the groups of technical institutions in the Nagpur University regions is an interesting model.

(iv) For each resource region - typology certain HRD efforts are needed so that human resource needed for enterprise development is readily available. The concept of Community Polytechnics / Industrial Training Institutes if intimately linked to the REZ will bear maximum results. Eventually it is hoped that Regional Development Institutes / Regional Development Universities (in the model of Rural Universities) will take over the task of the needed micro-level planning. Till then other Institutes will have to play the role.

(v) The government should tune its development framework. Thus it should put a stop to the development of cities and instead provide urban facilities in rural areas. The unavoidable cities that may come up should be based on the principle of near zero transport.

Similarly the habitat centre policy should be such that distribution could be with least packaging. Tax policies could be such that perishable commodities, like milk, are not transported over long distance / packed with non-degradable materials.

The Gramswaraj should have either middle level structure like Mandal or should have the possibility of sub-regional administrations to permit of REZs. Land control should be with the Panchayats. Rules to encourage the Panchayats to come together into a group for sharing productive resources should be encouraged. Rules should be created in such a way that if the organised house/multinationals wish to start industries in the Panchayat regions they have to negotiate with the Local Administrations and agree for partnership in such a way that the local community will have majority shares.

The government has to bring in other necessary rules in favour of the Panchayati Raj institutions appreciating the fact that agriculture, processing, rural-industries etc. (vide 11th schedule of 73rd amendment) fall within the jurisdiction of the 3-tier Panchayat system.

12.3 Need for the emergence of Social Entrepreneurs

The ultimate aim is enterprise and employment development with the objective of poverty alleviation. As indicated earlier the entrepreneurs should have social commitments and the development should also be posed as a social- business- as advocated by Prof. Muhammad Yunus.

However the need for the nurturing of the new breed of entrepreneurs called Social Entrepreneurs is clear. Educational, training, nurturing schemes are necessary.

12.4 Conclusion

REZ brings in a holistic and structural view of the recently emerging “cluster approach”. Like the watershed approach, SHG based microcredit,decentralisation, participation etc. this is a global phenomena and has a very high chance of success. India’s pre-eminence in IT and the significance being given to knowledge connectivity in India are indicators that it will succeed in India.

But the problem with India is the complexity of numbers and size and an unprepared state of people. Therefore there are to be prime movers in each REZ in the form of Social Entrepreneurs. If efforts are made to evolve successful models for each typology the entire scheme will pick up momentum. India’s sensitivity to a “solar life style” has to be sharpened so that we don’t commit the mistakes of the west at a time when many among the Western countries are vouching for sustainable technologies and a life based on need and not greed.

Annexure 1(Notes supplementary to Section 2.2)

Whether the global warming could be taken as an instance of disorder is debatable because someone might argue that this is moving the planet towards a higher level of order. Even the argument that a very large part of developed world will sink under sea might not sell- for someone might argue that sinking of this geographical regions and destruction of the civilization therein is for the ultimate good of the planet. But there are a number of processes in the modern industrial practices happening under the compulsions of a globalised regime that have self contradicting activity patterns. For example if certain actions are carried out for generating a certain quantity x of energy and for this purpose the energy needed is more than x then there is a contradiction.

In general if there is an activity for which x quantity of investment / input and there is y amount of tangible benefit and x-y (or more) of non-tangible / tangible loss then the activity could be considered as having created a net disorder.

Although the occurrence of tangible and non-tangible entities do create difficulties in the measurement of actual gains or losses these difficulties are of the same order as encountered in day to day economic contexts (- How much compensation should be made for somebody’s services or somebody’s loss due to an accident; or how much compensation should be given for the loss of ‘beauty’ in a tourist spot). However these measurements are in dollars. When we try to measure in terms of Entropy, the amount of disorder created could be measured in terms of dollars (- the amount needed for bringing back the situation equivalent to the original) or in terms of the effort needed to bring it back to the original status. Certainly the measurement of Entropy is as complicated as the question of imputing values in economics. But luckily this sort of decision making activities could be carried out on a ‘lattice structure’ instead of a number system(which in fact is a very special case of a lattice)

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