A People-Oriented Proposal

They may be illiterate and poor in capital, but rural Nepalis possess common sense and a heritage of traditional technology. Their abilities must be used innovatively to turn the agrarian economy around.

If it is true that development efforts of the past four decades have bypassed Nepal's poor and disadvantaged — the marginal fanner, poor households headed by women, and artisans — then the issue is how to redress the imbalance. What strategy can we adopt for people-oriented, participatory development?

The single most important lesson that emerges from past experience in Nepal and elsewhere is that the people themselves will have to get involved in their own development. This is hardly a dramatic discovery, but the lesson has yet to penetrate or form the bedrock of development programmes of the government and donors. They have yet to find ways to involve the people in projects aimed at self-sustaining indigenous development.

For development to be genuinely self-sustaining, impulses and initiatives must come from within the community. Those impulses and initiatives are there, normally dormant, in every community, howsoever "underdeveloped". What is required is to identify them and nurture them with appropriate institutional and material support. This is where public sector bodies, voluntary institutions and international agencies can play their most significant role, provided they can find the right mechanisms.

A WASTING RESOURCE

Nepal's rural folks may be illiterate and poor in capital, but they do possess common sense and have a heritage of traditional technology which is normally environmentally sound. These two elements can provide the foundation for modern innovations.

Obviously, any strategy for Nepal's agrarian economy must take into account its resource endowments and constraints. The constraints are natural, technological, financial and managerial, but the one resource in which Nepal is rich is underemployed and unemployed rural woman and manpower. This surplus labour might be "unskilled", but it does possess traditional skills for digging canals, constructing bunds, reforestating, or building rural roads and schools.

Unemployed labour, like time, is a wasting resource. If unused, it is not only unproductive but acts as a drain on limited consumption goods and services, and hence a burden on households and the community at large. It is necessary to capitalise on this vast reservoir of seasonally unemployed and underemployed rural labour for productive investment.

This is, again, by no means a new concept. After all, the Pyramids and the Taj Mahal were built with shramdan, so-called "voluntary labour". Voluntarism in rural areas usually turns out to have been coerced in one form or another and exploitative of the poor and underprivileged. There is generally no contribution in labour or in kind by the wealthier and more powerful members of the community, although it is they who largely benefit from the community projects.

Justice and equity would demand that those who are called upon to contribute their labour, which usually is the only capital or resource they possess, should be compensated for their contribution towards the community project. Such compensation should be, at the very least, in part in cash wages to the extent that will pay for the daily needs of their families, and the balance in some form of entitlement to essential goods or services, or a share in earnings to be generated by the community project.

This would imply that the community project constructed with voluntary labour should have access to some form of credit or working capital in order to be able to pay for part of the daily wages in cash (besides the purchase of required materials). They should also be able, upon completion, to generate revenues in order to pay for the initial credit of capital and labour (with interest and premium, in the latter case, for deferment of consumption) as well as for regular operation and maintenance over the life of the assets created.

THE RIGHT MECHANISM

One way to provide working capital or credit to locally-initiated rural development projects would be to set up a "Local Development Corporation" for the purpose, or entrust the responsibility to an existing institution such as an agricultural development bank. The financial institution would provide credit to communities for approved projects, properly prepared and appraised, on the basis of collective liability of the community as a whole to pay the long-term loans (5 to 10 years) in the form of toll-fees or user charges to be levied on committed projects.

These fees and charges would be collected by the lending institution through its own staff or representative until payment of the loan plus interest and administrative costs have been fully realised. During project execution, the LDC representative would also handle all finances, such as part-payment of wages in cash to the local voluntary workers, with the balance to be deposited in a local bank account to earn interest from the first day of payment at the highest rate applicable to long-term deposits.

The labour certificates will be negotiable only for community services or public goods and services, for example irrigation, public transport, schools and health services, all of which also would be subject to user fees. Those public services which collect their fees in labour certificates will be able to cash them at the central bank or the authorised local bank. The cash in lieu of labour certificates will be derived out of savings of the public exchequer made possible by withdrawal of all forms of subsidies to public services, such as schools and health clinics.

The LDC will provide long-term soft loans to local communities for projects initiated and designed by them, if required with the assistance of its core group of well-qualified and experienced technical experts. However, the project will be operated by the LDC to meet its own standards and conditions for loans. It will stipulate priority areas, in conformity with the national development plan, and also make due allowances for regional variations for purposes of overall balance.

The LDC's local agent, initially appointed to handle project execution and disbursement of loan funds and to administer the project after completion on behalf of the local Board of Directors or Executive Committee set up for the project, will he expected as a development agent to identify areas for new local initiatives or help generate innovative ideas for local development. The most important ingredient for such development, namely local initiative, community leadership and cohesion for development would have already been identified and tested with the completion of the first project.

GOING IT ALONE

The concept of labour certificates may be implemented even by small communities on an ad hoc basis without the intervention of an LDC or another financial intermediary institution. For example, local residents who volunteer to work in community projects may be compensated in terms of school fees for their children in the local community schools.

An account will have to be kept for the number of woman- man-hours contributed by a family at the prevailing or mutually agreed rate of daily/hourly wages, and the amount credited towards the school fees (or health service fees, or any other community service that may be preferred available).

Since the school will not be able to cash the labour certificates received in payment of school fees, it may be necessary to raise the school fees for all children in proportion to the value of the labour certificates, This would in effect mean that the labour certificates will be paid for by the community at large. This would meet the norms of equity and social justice, for the reason that those who contribute voluntarily their labour for community projects for payment in kind are likely to be poor families. It is only fair that they should be compensated by the rest of the community for their contribution to the community's welfare.

R.C.Malhotra was till recently Director of Evaluation for the Rome-based International Fund for Agricultural Development. His proposal is treated in detail in Local Level Planning and Rural Development: Alternative Strategies, Concept Publishing, New Delhi.