CHAPTER VI LOCAL FINANCE UNDER PEOPLE'S PLAN

CHAPTER VI

LOCAL FINANCE UNDER PEOPLE'S PLAN CAMPAIGN

6.1 Introduction

This chapter is divided into two parts. The theoretical aspects of the

people's plan campaign are discussed briefly in the first part. In the second part

the finance under People's Plan Campaign is analysed in detail.

Part I

6.2 The People's Plan Campaign

The 73'(' and 74"' constitutional amendments paved the way for involving

people in local level economic planning. 'People's Campaign for the Ninth

Plan' in Kerala was initiated following the decision of the state government to

earmark 35 to 40% of the state's ninth plan for schemes and projects fomulated

by local bodies. There was a felt need for transferring more powers to local

bodies which prompted the government to frame such a policy. Frank and

Chasin have rightly observed "Kerala's Complex geographical and social

diversity means that officials in the capital city might not know what is best for

particular Panchayats. And Kerala's rich history of mass movements and its high

level of education mean that local participation could overcome the bane of

much international participation- oriented development where democratic

structures on paper just become new mechanism for elite dominance and

exploitation of the poor".'

3 14

People's Plan Campaign aims at empowering the local bodies to formulate

the plans and implement them in a scientific and participatory manner. The

Kerala State Planning Board, then headed by I.S. Gulati, in its first meeting on

6th July 1996 announced decentralised planning in Kerala.

It aims at co ordinated village level plans with the individual government

departments giving assistance . It has been generally felt that such an attempt

would boost up the social and economic development of Kerala. Kamalkutty's

opinion is worth noting here. " In recent times it is revealed that Kerala model

has lacked sustainability. In the absence of sustained economic growth, even the

equity side of development cannot be sustained. The latest Kerala model aims

at transforming the local bodies in to genuine institutions of local self

government endowing them with substantive administrative and financial

power".2

Many powers and functions have been additionally assigned to local

bodies. The responsibility for the management of these institutions has been in

the hands of the elected representatives. They have the power to give priorities,

fix the nornls for selecting beneficiaries and the mode of implementing the

projects . The then Chief Minister of Kerala had noted " We in Kerala have

already taken action by allocating between 35-40 percent of the ninth plan outlay

to local bodies who had been convening Gram Sabhas and ward conventions to

list our local priorities in advance of projectization and formulation of local level

315

plans, for incorporation in the state plan".) The people's plan emphasises

encouragement of maximum people's participation at every stage of the planning

process. Thus a multi level planning system was evolved involving people and

taking into account the peculiarities of a specified region .It was institutionalised

and operationalised in Kerala. Rajendrajn Nair opines, "The Gandhian dream

of Gram swaraj is very much reflected in the conceptualisation of the people's

plan campaign. It highlights the need for popular participation in the working of

PRIs especially in plan formulation and implementation and also in maintaining

social justice, commitment, accountability and transparency of plan

implementation^".^ Gandhiji's idea of democratic decentraliasation is based on

planning from bottom where people are independent in framing their policies.

6.3 Earlier Experiments

Decentralised planning on an experimental basis was first implemented

in 25 Panchayats in Kerala in the early Nineties. It was a part of the Panchayat

Resource Mapping Programme (PRMP). Kalliasseri Panchayat was selected as

the first Panchayat to have a Panchayat Development Plan based on Resource

Mapping. The people of the Panchayat themselves collected the data regarding

the resources of their Panchayat area. An integrated village development plan

was drawn up for implementation. It is commonly referred to as 'Kalliasseri

experiment'. It was found to be a great success which led the authorities to

think of decentralised planning in Kerala. The effectiveness of the programme

316

can be understood from the following comment. "Kalliasseri developn~ent

volunteers built an 825 metre long canal in one day, draining a previously

waterlogged area of rice fields. They mapped the resource of their village

reorganised their schools, installed high efficiency cook stoves and solar street

lights, set up a shrimp farm in a swamp area and created dry -season vegetable

co-operatives that generated employment and brought down the cost of food".5

The success of Kalliasseri experiment inspired the government of Kerala to

adopt decentralised planning in Kerala.

6.4 Objectives of People's Plan Campaign

Planning in India had been a centralised function. The central government

decided the objectives and strategies of the plan and allocated funds for the

execution of the plan. People at the grass root level had no direct role in the

planning process. The then Vice Chairman of the State Planning Board, Kerala

and K.M. Shajahan also of the Planning Board said, "Instead of evolving

comprehensive programmes taking into consideration the strengths and

weaknesses of the local land water resources, the main feature of the state

planning being implemented turned out to be primarily departmentalism where

different government departments formulated and implemented schemes

according to their perceptions. Thus the whole planning process became not only

highly centralised but also b~reaucratised".~ Thus people had no direct role in

the planning process. Previously plans were imposed upon the people. The

317

whole picture has been changed due to the initiation of people's plan campaign.

The campaign seeks to ensure maximum participation of the people in the

planning process. Rajendran Nair has aptly noted, "The primary objective of the

campaign has been to motivate and empower the local governments to take up

the new challenge of the development planning. It was sought to be achieved by

mobilising people regardless of their political affiliation, religion, caste or

gender to help local government in all stages of development planning, from

plan formulation and implementation to maintenance of ecology and natural

resources available in the villages".7 The campaign empowers the Panchayati

Raj Institutions to chalk out their own plans taking into account the peculiarities,

resources and needs of the area with people's participation. The main objective

of the campaign is to involve the people in the planning and development

process. The following are the specific objectives of the campaign :

1. Decentralisation of planning process.

2. Making the 9th five year plan an instrument ofmass

conscientisation in respect of developmental issues.

3. Enabling the local bodies to prioritise and prepare schemes l

projects in a scientific manner leading to their selection on a

priority basis.

4. Creating an optimism among the people so that they can directly

participate in the planning process.

5 . Searching for additional resources of various kinds and trapping

318

those resources for the welfare of the people of an area.

6. Enabling the local bodies to perform their functions efficiently and

effectively for the sustainable development of an area.

7. Ensuring maximum voluntary labour and social contribution to the

development activities.

8. Instilling a sense of co-operation among the people for the growth

and development of an area.

9. Doing away with the contractors or other middlemen in the

implementation of the projects prepared by the Panchayats

In the People's Plan Campaign the Gram Sabhas have been assigned 'the

responsibility of identifying local problems and indicating priorities. Maximum

people's participation is sought to be ensured by local bodies at every stage of

the planning process. Bijukumar observes, "people's planning also intended to

create a greater awareness in economic development along with social progress

by way of closer association of scientists, experts, technocrats , administrators

and academicians for the common cause of the development of the state".'

6.5 Phases of People's Plan Campaign

The campaign is intended to bring together government officials in the

various line departments, retired official experts, volunteers and the mass of the

people under the leadership of local representatives for genuine grass root level

planning. The approach paper approved by the government through a formal

order envisaged a five stage planning process.'

6.5.1 Phase 1: Gram Sabha

Identification of the felt needs of the people is the first step in the

decentralised planning process. For that Gram Sabhas have to be convened

ensuring maximum participation of the people to discuss local development

problems.

Section 3 of Chapter I11 of the Kerala Panchayat Raj Act 1994, contains

the provision regarding Gram Sabha. Accordingly, each ward of a village

Panchayat can be considered as a village for the formation of Gram Sabha. It

consists of persons registered in the electoral roll of the ward concerned . Gram

Sabha must be convened minimum twice in a year in a place decided by the

village Panchayat. Gram Sabha has the following functions

a) To help in preparing developmental schemes and monitor and

evaluate their implementation.

b) To cultivate a sense of unity and harmony among people.

c) To mobilise voluntary work and to collect donations for the

developmental programmes.

d) To help in the identification of beneficiaries.

e) To discuss various developmental activities and give suggestions

The law fixed the quorum for the Gram Sabha at 50, which continued to

320

be in force until 1999 when the Kerala Panchayat Raj Act was amended. Since

then the quorum has been revised to 10% of the total membership.

6.5.2 Phase 2 : Development Seminars

The development seminars are organised at the Panchayat and Municipal

levels. These are convened to discuss the problems identified at the lower level,

organise a task force and to prepare schemes under various sectors. Based on the

report of task force, a Panchayat development plan would be drawn by an expert

group. The discussions in the development seminars are centred around the

Panchayat development reports. "Development reports were to be drafted on the

basis of the following exercises:

(i) Consolidation of Gram Sabha reports

(ii) Review of ongoing schemes

(iii) Collection of secondary date

(iv) Geographical study of the area and

(v) A brief survey of local hi~tory". '~

6.5.3 Phase 3: Task Forces

Sector wise task forces constituted at the grass root level convert solutions

into project proposals. The task of project preparation requires more officials

and technically qualified persons than those required at the earlier phases. A

simple and transparent format is proposed for the projects to be prepared by the

task force to ensure uniformity. The task force should make a detailed review of

32 1

the ongoing programmes in their respective sector, analyse the development

problems and solutions suggested at the seminar and prioritise and prepare

projects.

6.5.4 Phase 4 : Annual Plan Finalisation

After the third phase, every village Panchayat prepared a number of

projects. At this time, the grant-in-aid allocated to local body by the state

government was also made known. It was time to prioritise and incorporate the

projects into five year plans of the Panchayats, which was later revised to annual

plan on realistic grounds. The local bodies were also encouraged to take up

addtional schemes of their own. The plan allocation from the state could be

supplemented by voluntary contribution of money, material and labour.

Each Panchayat prepared a plan document comprising of eight chapters,

viz., introduction, the development strategy, resource mobilisation, sectoral

programmes intergrated development, welfare of scheduled caste and scheduled

tribes, women's development programmes and monitoring."

6.5.5 Phase 5 : Annual Plan Of Higher Tiers

The blocks and district Panchayats were to prepare their annual plans

after the preparation of annual plans by village Panchayats. " The sequential

ordering of the process was made in order to ensure that the plans of various tiers

are integrated and the plans of the higher tiers are complimentary to those of the

3 22

lower tiers".I2 The block and district Panchayats also organise seminars to

discuss their draft plans.

6.5.6 Phase 6: Plan Appraisal

It was found that a significant proportion of the projects prepared at the

village level had to be examined for their technical soundness and viability and

corrected before they are implemented. Voluntary Technical Corps (VTC)

consisting of experts were constituted. Retired technical experts and

professionals were encouraged to enrol themselves as volunteers, to appraise the

projects of local bodies and to rectify the weaknesses in technical details and

financial analysis. "Expert Committees were formed at Block (BLEC),

Municipal (MLEC) and District levels' (DLEC) drawing upon the VTC members

along with certain categories of mandatory officers. The District Planning

Committees approved the plan on the recommendations of those expert

committee^".'^

The expert committee cannot change the priorities set by the local bodies.

Their functions are to make technical and financial appraisal of the projects and

to suggest modification to make the projects feasible.

6.6 Guidelines for Sectoral Allocation

In order to ensure the overall thrust of the state plan certain broad

guidelines were given regarding sectoral allocation in the plans of local bodies.

The minimum and maximum percentage share of investments are indicated for

the three broad development sectors viz productive, service and infrastructure

sectors.

- -

Source: Economic Review 2000

The above guidelines are for the rural local bodies, which are different

from that of urban local bodies. The guidelines are applicable only to the

general sector grant- in- aid from the state goverment and not to the investiment

outlay to be financed from other sources. As for Special Component Plan (SCP)

and Tribal Sub Plan (TSP), the minimum share in the productive sector is not

insisted upon. The allocation of 10 % of grant in aid for women component plan

was made mandatory from 1998-99 onwards..

6.7 The "Ayalkkottant l t

The malayalam word 'ayalkkoottam' means neighbourhood forum. The

Table 6.1 Guidelines for Sectoral Allocation

'ayalkkoottams are taking shape and functioning below the Gram sabha in many

village in Kerala. It really marks the begining of a new development culture. An

'ayalkkoottam' consists of 20 to 50 families of a particular area of a ward. It

meets atleast once in a month where the members discuss matters of their

common interest and work on a co-operative basis to solve their probelms.

Sector

Productive Service Infrastructure

Allocation (in %)

40 - 50 30 - 40 10 - 30

3 24

According to Rajendran Nair, "As far as the planning process is concerned,

ayalkkoottams play a decisive role in making participation in Gram Sabhas

effective projectising issues at grass root levels with firm understanding and

selecting beneficiaries in a just manner and as monitoring committees of plan

programmes". l 4

In addition to the Gram Sabhas and ayalkkoottams, there are ward

committee, Panchayat development committe and execution committee in every

village Panchayat. The ward development committee consists of members

elected from the ayalkkoottam and ward member who is the ex-officio

Chairperson of the committee. The Panchayat development committee

comprises of two representatives elected from the various ayalkkoottams, ex-

office Chairperson of the ward development committees and less than ten

nominated members. The executive committee monitors the implementation of

the projects at the Panchayat level. After making a thorough evaluation of the

people's plan campaign, Franke and Chasin comment, " Three million people,

10 percent of the states population, took part in the Gram Sabha that aired

complaints and identified the major problems in their villages and urban

neighbourhoods in September and October 1996. Imagine 1.8 million New York

metropolitian area residents meeting for six hours arguing and electing

problems solving working groups to plan strategies for overcoming local

problems. Imagine thousands of them continuing to meet for weeks to hammer

325

out local plans for which a massive portion of federal and state funds would be

a l lo~ated" . '~ The planning process involves organising Gram Sabhas, seminars,

task forces, projects preparation, approval, implementation and appraisal of

projects. The people's campaign for the gth five year plan is a social movement

which is noteworthy. The wide popular participation of people in various stages

of planning and implementation ignoring the financial status, caste, creed

religion and political affiliation make the movement a model to others. Isaac

and Harilal have rightly pointed out, "First of all .the campaign promised to

break the strait-jacket of biopolar front politics in the state and usher in a new

era of unity for development action cutting across political affiliations."I6

The Panchayats have accepted the campaign as their own. They are

getting a substantial amount of finance from the State government as grant- in-

aid apart from new sources of finance. Oommen John's observation is right,

"The balance sheet would show that the P.R bodies in Kerala are in a better

position now when compared to previous years. Apart from constituional

protection, it has that resource - finance and that too in plenty - which it lacked

before. This time, the onus for its working lies on them and the balme cannot be

laid on the state goverment for lack of political will"." In addition to this, local

bodies are expected to use untapped resources. Most of the Gram Sabhas have

resolved to use beneficiary contributions and voluntary labour along with

goverment grants to implement schemes or projects undertaken by Panchayats.

People's Plan Campaign has created a new development culture among

the rural people. Goplalakrishnan Nair opines "The biggest achievement of the

people's plan campaign is that there has been marked change in .the attitude of

the people towards the planning process. . . . Previously people were found to

be lethargic to the needs of their village, today the people are concerned about

the probelms of their village".18 However, to get maximum from this new

initiative, political parties should have a rational approach to the developmental

issues of the state in general and that of a Panchayat in particular. They should

set aside their partisan interest while having the plan. Rajendran Nair rightly

observed. "In those Gram Panchayats where Gram Sabhas are functioning

effectively, the experience is that people can overcome narrow political

considerations and come together for doing things which are so far left

undone". l 9

The planning process at the grassroot level through local bodies is a

unique experiment . But it is not free from limitations and weaknesses.

However, these should not discourage us. To quote Oommen John, "Though

there has been shortcomings in the work done by local bodies so far as the

implementation process is concerned one need not be pessimistic about its

future. There are bound to be teething problems in any new plan being

introduced for the first time".20 One has to learn lessons from failures. Kerala is

much ahead of other states in terms of social indicators like education, sanitation

327

and health. It can achieve the goals set up for economic development through

decentralised planning. The state government is committed to ensure that the

local bodies take a firm root and play an active role in the decentralised planning

process

Part I1

6.8 Finance Under Peoples Plan Campaign

Before the People's Plan Campaign the share ofplan expenditure by local

bodies was negligible . Their involvement in the plan was confined to the

utilization of the relatively smaller amounts of untied plan grants and amounts

under governlent sponsored schemes. The entire scenario changed drastically

with the initiation of decentralised planning. The plan grant-in-aid is now the

most important receipt of local bodies. Consequently, there is a drastic change

in the pattern of expenditure too.

6.9 Devolution of Plan Funds

In 1996-97 Kerala state Budget, Rs 69 crores was provided for the urban

local bodies and Rs 143 crores for the rural local bodies as untied plan grant. Of

the untied funds to the rural local bodies Village Panchayats were allocated

RslOO crores, Block Panchayats Rs 15 crores and District Panchayats Rs 28

crores.

A higher plan allocation was provided to the local bodies in the following

years. The following table shows it.

328

Table 6.2 Share of Local Governments in State Plan (Rs. In Crores)

I I I I 1

Source : Economic Review. 2000

Year

1997-98 1998-99

1999-2000 2000-200 1

The grant- in- aid to the local bodies has two components- (a) Untied

funds and (b) State sponsered schemes. In addtion to that, funds are given to

local bodies to undertake projects under centrally sponsored schemes.

Grant-in-aid

749 950 1020 1045

A remarkable feature of the grant- in- aid is that it consists of a high

proportion of untied grant. It means that maximum autonomy is given to the

local bodies in the planning process. The budgetary provision for the grant-in-

aid to the local bodies has three components - General Sector Plan, Special

Component Plan (SCP) and Tribal Sub Plan (TSP). Plan funds under each of the

above heads are allocated between urban and rural local bodies on the basis of

population ratio. As for rural local bodies; the total general sector allocation is

distributed to Gram Panchayats block Panchayats and district Panchayats in the

ratio 70: 15: 15. For the special component plan, the share of 20 percent each was

fixed for higher tiers. In the case of Tribal sub plan it was distributed among the

Gram Panchayat, block Panchayat and district Panchayat in the ratio 20:20:60

in 1997-98. During 1998-99, greater weightage was assigned to the Gram

State sponsored scheme

276 166.50 134.40 224.27

Total

1025 11 16.50 1 154.40 1269.27

Panchayats and the ratio is 40:20:40. The allocation of grant- in- aid among

various tiers of local bodies can be noted from the following table.

Table 6.3 Distribution of Plan Grant-in-aid to Local Bodies (Rs. in crores)

1997 - 98 -

Local body

Gram Panchayats Block Panchayats District Panchayats Municipalities Corporations

Total

(Table Continued) 1998 - 99

Local body


Total

Local body


Total

Total

420.49 108.69 123.94 62.34 33.54

749.00

General

307.02 65.79 65.79 49.54 27.86

5 16.00

General

426.02 9 1.29 91.29

' 71.18 36.22

7 16.00

General

464.10 99.45 99.45 77.5 1 39.49

780.00

SCP

105.85 35.28 35.28 12.15 5.44

194.00

TSP

7.62 7.62

22.87 0.65 0.24

39.00

SCP

11 1.03 37.0 1 37.0 1 10.38 4.57

200.00

Total

549.54 135.02 142.67 81.89 40.88

950.00

SCP

108.21 36.07 36.07 10.17 4.48

195.00

TSP

15.31 7.66

15.3 1 0.54 0.18

39.00

TSP

19.88 7.95

1 1.93 0.24

-

40.00

Total

595.01 144.41 148.39 88.13 44.06

1020.00

Source : Economic Review, 2000

2000 - 2001

The total grant -in -aid received by Gram Panchayat in 1997-98 was Rs

420.49 crores It increased gradually and came to Rs 608.91 crores in

2000-2001. The grant- in -aid to other tiers of Panchayats and to Municipalities

and Corporations also showed increase every year. The grant-in-aid under

general sector plan increased every year in the case of the three tiers of

Panchayats, Municipalities and Corporations. In the case of special component

plan, the amount of grant is showing an increase every year for each of the three

tiers of Panchayats. But the grants under special component plan to

municipalities and corporations slightly decline in the year 1998-99.

Local body


Total

Tribal Sub Plan grant shows and increasing trend every year in the case

of Gram Panchayat and block Panchayats. However, there is a decline of this

grant to district Panchayats, municipalities and corporations during 1998-99 and

1999-2000.

General

467.08 100.09 100.09 78.00 39.74

785.00

SCP

120.46 40.16 40.16 11.26 4.96

2 17.00

TSP

2 1.37 8.55

12.82 0.26

-

43 .OO

Total

608.91 148.80 153.07 89.52 44.70

1045.00

33 1

6.10 Investment Pattern of State Plan Assistance

The following table is a comparative statement of the total outlay among

various development sectors for the years 1997-98 to 1999-2000.

Table 6.4 Sectoral Investment Pattern of Plan Funds

Source : Based on data from Economic Review, 2000

In the first year of people's plan campaign 33.93% of the grant-in-aid has

been invested in the productive sector. In 1998-99 the percentage of investment

in productive sector to the grant-in-aid sharply increased to 40.66. However it

declined to 28.3 1 in 1999-2000.

Year

97-98 98-99 99-00

The service sector got due weightage in terms of the number of projects

and allocation of funds. In 1997-98,41.63% of the grant was spent in the service

sector while it was 38.06 in 1998-99. In 1999-2000, a sharp increase of the

percentage of allocation can be noted, i.e., it rose to 48.35.

In the case of infrastructure there is no wide variation in the percentage

of investment in various years. The percentages are 24.44, 21.28 and 23.34

respectively for 1997-98, 1998-99 and 1999-2000.

Productive Sector

110 of projects

24932 32585 44435

Grant in aid %

33.93 40.66 28.3 1

Service Sector Infrastructure

No of projects

256 18 37476 55813

No of projects

17216 29493 59602

Grant in aid %

4 1.63 38.06 48.35

Grant in aid %

24.44 2 1.28 23.34

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6.1 1 Finance Under People's Plan Campaign in Selected Panchayats.

The revenues and expenditure of Panchayat under the campaign are taken

separately here for analysis

The revenues of Panchayat under the campaign consists mainly of plan

funds, amount transferred from own h n d s of Panchayats, beneficiary

contributions and others. The plan fund devolved to the Panchayat constitutes

the main item of revenue. The following table shows the plan funds recieved by

Panchayat from 1997-98 to 2000-2001.

6.11.1 Plan Funds From State Government

Table 6.5 Plan Funds Received

The plan funds devolved to Panchayat do not clearly show a trend if the

data related to each Panchayat is taken individually. In the case of Champakulam

Panchayat it was Rs 264 1000 in 1997-98. A sharp increase is noted in plan funds

in 1998-99 where as, it declined slightly in 1999-2000. However Champakulam

Panchayat received the highest amount of plan h n d in 2000-2001, ie Rs

48,43,166.

333

In the case of Kainakary Panchayat, higher amounts of plan funds have

been received by it year after year except in 2000-2001. In that year there is a

slight decline in the amount of plan fund. In the year 1999-2000 the plan fund

received is Rs 45,82,2650 compared to Rs 22,83,3000 received in 1997-98.

Nedumudy Panchayat also received higher amounts of plan funds year

after year for the first three years. It was Rs 28,32, 60 in 1997-98 which

increased to the maximum of Rs 58,43,013 in 1999-2000. In 2000-0 1, i t declined

to Rs 45,41,250. It is to be noted here that, of the plan funds received by six

Gram Panchayats in each year, Nedumudy received the highest amount, i.e., Rs

58,43, 013 received in 1999-2000.

Edathua Panchayat received Rs 34,30,000 in 1997-98 as plan fund. In

1998-98 and in 1999-2000, the plan funds received increased while in 2000-0 1,

it declined. They are respectively Rs 5 1,94,000, Rs 56,78,000 and Rs 45,12,500

in three years from 1998-99 to 2000-01

Thakazhy Panchayat received Rs. 33,86,000 in 1997-98 by way of plan

fund from the government. It increased to Rs. 52, 37,000 in 1998-99. But in

the following two years, it declined gradually, the amount being Rs. 44,00,634

and Rs. 39,43,8 10 respectively.

Thalavady Panchayat received the maximum plan fund in 1999 - 2000,

the amount being Rs. 53,17,0000. In the first year of the plan, it received Rs

334

34,81,0000 which was the highest amount of plan fund recieved by a Panchayat

among six Panchayats in that year. In 1998-99 it increased to Rs 48,75,000 and

in 1999-00 to Rs. 53,17,000. However, in 2000-01 it declined to Rs 46,39,4 15.

The averages of plan funds recieved by various Panchayats in different

years give an overall picture. The average plan fund is Rs 30,08,927 in 1997-98.

It increased to Rs 47,31,861 in 1998-99 and Rs 49,56,439 in 1999-2000 while

the corresponding figure in 2000-0 1 is Rs 44,90,6 1 1 recording a slight decline

Analysis of Variance

Two way analysis of variance is made to assess whether there in any

significant difference between various years and to assess whether there is

significant difference between Panchayats in respect of plan funds received.

Table 6.6

Between Years (Rows)

The calculated value of F is greater than the table value at 5% level of

significance. Hence there is much difference between the amount of plan funds

received in various years.

335

Between Panchayats. (Columns)

As the calculated value of F is less than the table value at 5% level of

significance there is no significant difference between Panchayats in respect of

plan fund received.

6.1 1.2 Amount Transferred From Own Fund

Panchayats are expected to set apart a portion of their own fund which

may be utilised along with plan finds for undertaking projects under People's

Plan Campaign. Panchayats have to meet their establishment and management

expenditure from own-fund. The balance amount only can be set apart for plan

schemes. Hence there is much variation in the amount transferred from own-fund

in the case of different Panchayats. The table below clarifies the point.

Table 6.7 Amounts Transferred From Own Fund

Champakulam Panchayat did not transfer any amount from its own-fund

for undertaking plan projects in the first three years. But in 2000-0 1 it transferred

Rs 2,17,373 for this purpose.

1997-98

1998-99

1999-00

2000-01

Kainakary Panchayat transferred own funds to the plan fund pool in all

years The amount ranges from Rs 1,43,875 to 2,72,700.

Champakulam

0

0

0

217373

Kainakary

143875

162300

272700

205800

Thalavady

157717

43475

15851

102500

Thakazhy

281872

235603

415130

322600

Nedumudy

124018

120600

65000

70000

Averagc

201395

93663

212894

282007

Edathua

500887

0

508680

773770

Nedumudy Panchayat also made the contribution from its own fund for

undertaking planned projects in all the years under review. It was Rs 1,24,0 18

in 1997-98 which is the maximum in Nedumudy. It declined in 1998-99 to

Rs 1,20,600. It further declined to a mere Rs 65,000 in 1999-2000. In 2000-200 1

the amount transferred was Rs 70,000.

In Edathua Panchayat a substantial amount of Rs 5,00,887 came from

own-fund in 1997-98 for planned investment. However, in 1998-99, no amount

has been transferred from own fund for this purpose. In 1999-2000 and in

2000-2001, Rs.5,08,680 and Rs.7,73,770 respectively were transferred from own

fund. Compared to the amounts spent by other Panchayats under study these

amounts are much larger.

Thakazhy Panchayat transferred a certain portion of own -fund to the total

plan fund in all .the years. The amount here ranges from Rs.2,35,603 to

Rs.4,15,130

There is much variation in the amount of money transferred from own

fund in the case of Thalavady Panchayat. In the first year it was Rs. 1,57,7 17

while it was Rs.43,475 in 1998-99 Rs. 15,85 1 in 1999-2000 and Rs71,02,500 in

2000-0 1.

The variation of transferred amounts in different Panchayats is very well

reflected in the average figures. The average amount of transferred fund of six

Panchayats in 1997-98 is Rs.2,01,395 while it is only Rs.93,663 in 1998-99. In

1999-2000, it is Rs.2,12,894 while in 2000-01 it is Rs.2,82,007.


Table 6.8 Analysis of Variance

The two way analysis of variance made,shows that there is no significant

Source of

Variation Lows Zolumns 7 -nor Total

different between various years in respect of own funds transferred.

Between Panchayats (Columns)

However, there is significant difference between various Panchayats in

respect of own hnds transferred.

F crit

3.2873828 2.9012952

SS

1.09054E+ 1 1 4.80202E+ 1 l 2.82003E+11 8.7 1259E+11

6.11.3 Beneficiary Contribution

Panchayats do not merely rely on the plan grants and own funds to

df

3 5

15 23

implement plan projects . Local people are also expected to contribute towards

it. Individuals or group of people receiving the benefit of the scheme or projects

MS

36351425851 96040364439 18800198841

implemented under the people's plan campaign make the contributions. They

make the contributions in terms of cash or service (Sramadan). A close analysis

F

1.933566031 5.108475993

of the amount of beneficiary contribution reveals that there is much variation

between Panchayats in respect of beneficiary contributions.

P-value

0.167550038 0.0062 14083

The beneficiary contribution in Chamapakulam Panchayat varies from

Rs.2,82,400 in the year 1999-2000 to Rs.7,43,340 in the year 1998-1999.

Table 6.9 Beneficiary Contributions

In Kainakary Panchayat, the variation ofbeneficiary contribution is much

lesser than those of other Panchayats, the minimum and maximum being Rs

3,85,200 and Rs.6,69,450.

In Nedumudy Panchayat there is an increase in beneficiary contribution

year after year except in 2000-01 when it declined to Rs.8,24,149 from Rs.

10,44,06 1 in 1999-2000.

1997-98

1998-99

1999-00

2000-0 1

Edathua Panchayat records a higher variation of beneficiary contribution.

In 1997-98 the amount was only Rs.38,900 while 12,93,8 18 in 2000-0 1. There

is an increase in the amount of contribution each year in Edathua.

Champakulam

638450

743340

282400

3 16500

The beneficiary contribution of Thakazhy Panchayat ranges from

Rs1,72,425 in 1997-98 to Rs. 14,61,817 in 1999-2000. In 2000-01, it declined

sharply to Rs.8,24,149.

Average

334296

985494

897559

867823

Kainakary

543765

669450

385200

663802

Nedumudy

606233

1026903

104406 1

824 149

Edathua

38900

666877

1031173

1293818

Thakazhy

172425

1018235

1461817

824 149

Thalavady

6000

1788 156

1180700

12845 18

In Thalavady Panchayat the beneficiary contribution in 1997-98 was a

meagre Rs.6,000 while it was Rs17,88,156 in 1998-99 followed by Rs. 1 1,80,700

in 1999-2000 and Rs. 12,84,5 18 in 2000-01.

The average beneficiary contribution of six Panchayats for the four years

reveals that the amount is the highest during 1998-99. In the first year, i.e., in

1997-99 i t is that lowest which is Rs3,34,296. The highest average comes to



The two way analysis of variance shows that the calculated value of F

(rows) is greater than the table value (F Crit) at 5% level of significance. Hence

there is significant difference between various years in respect of beneficiary

contribution.


The calculated value of F (columns) is less than the table value (F Crit)

at 5% level of significance. Hence there is no significant difference between

Panchayats in respect of beneficiary contribution.

- -

The proportion of beneficiary contribution to the total plan fund varies

considerably between Panchayats.. In Champakulam Panchayat the proportion

of beneficiary contribution was 0.19 in 1997-98 whereas it declined to 0.15 in

1998-99. In 1999-2000 a sharp decline to 0.07 is noted which showed a further

decline in 2000-0 1. In Kainakary Panchayat the proportion was 0.18 in 1997-98

which declined to 0.13 in 1998-99 and to 0.07 in 1999-2000. But in 2000-0 1 it

has increased to 0.12.

Table 6.11 Proportion of Beneficiary Contribution to the Total Fund

Nedumudy Panchayat showed a comparatively low variation in the

proportion of beneficiary contribution. In the first two year it was 0.17 and in the

third and fourth year it remained at 0.14.

Year

97-98 98-99 99-2000 2000-0 1

The proportion of beneficiary contribution in Edathua Panchayat in

1997-98 is quite negligible, ie 0.009. However, it showed an increase year after

year. It was 0.1 1 in 1998-99 followed by 0.14 in 1999-2000 and 0.19 in 2000-0 1.

In Thakazhy Panchayat the proportion was only 0.04 in 1997-98 . But i t

increased to 0.15 in 1998-99 and to 0.23 in 1999-2000. It declined slightly in

2000-0 1.

Champakulam

0.19 0.15 0.07 0.06

Kainakary

0.18 0.13 0.07 0.12

Nedumudy

0.17 0.17 0.14 0.14

Thalavady

0.002 0.26 0.18 0.2 1

Edathua

0.009 0.1 1 0.14 0.19

Thakazhy

0.04 0.15 0.23 0.16

34 1

Thalavady has the lowest and highest proportion of the beneficiary

contribution among the six Panchayats, ,the lowest being 0.002 in 1997-98 and

the highest being 0.26 in 1998-99.

6.1 1.4 Total Plan Fund

The total plan fund consists mainly of the above discussed items of

revenue. When all these are taken together, the Gram Panchayats have

substantial amounts of money to undertake developmental activities. The table

below shows the total fund at the disposal of Panchayats for planned activities

under People's Plan Campaign during the four years from 1997-98 to 2000-01.

Table 6.12 Total Revenue

The total plan fund for the four years under study does not give a clear

trend. In some years it shows an increase while in other years it declines. Only

in Kainakary Panchayat it is steadily increasing. In Nedumudy and Edathua

Panchayats it shows a gradual increase for the first three years but there after it

declines. In Champakulam, Thakazhy and Thalavady Panchayats, no specific

pattern can be noted. The lowest amount of total plan fund in shown by

Kainakary Panchayat in the year 1997-98 and the highest amount is shown by

342

Edathua in the year 1999-2000 which is Rs.72,17,853. Year wise conlparison

shows that all the Panchayats had the lowest amount in 1997-98.

The average total revenue increases in the first three years while it decline

in the third year. The average ranges from Rs.35,7 1,17 1 to Rs 6 1,17,208.



The analysis of variance makes it clear that there is significant difference

between various years in respect of total plan fund as the calculated value of F

(row) is greater than the table value at 5% level of significance.


There is also significant difference between various Panchayats in respect

of total plan h n d as the calculated value of F (column) is greater than the table

value at 5% level of significance.

6.12 Investment Of Plan Funds

Plan funds have been invested in productive sector, service sector and

infrastructure.

6.12.1 Productive Sector

Agriculture, animal husbandry, fisheries, afforestation, soil and water

conservation, minor irrigation , sericulture, co-operatives in agricultural and

industrial sector, cottage and small scale industries and other industries come

under the productive sector. Gram Panchayats are expected to invest 40 to 50%

of plan funds in the productive sector. The table below shows the amount of

money invested by the six Panchayats in the productive sector in various years.

Table 6.14 Total Investment in Productive Sector

In respect of investment in productive sector in the six Panchayats a clear

trend does not emerge. In some years the amount invested increased while in

some other years it declined.

1997-98

1998-99

1999-00

Champakulam Panchayat invested Rs13,11,780 in productive sector

during 1997-98. It increased to Rs.21,82,396 in 1998-99 while it declined in

1999-2000. However it again increased in 2000-0 1

Kainakary Panchayat shows an increasing trend. In fact i t is the only

Panchayat among the six Panchayats showing a clear trend. In the first year of

the campaign its total investment in the productive sector was Rs. 12, 3 1,7 10.

Champakulam

1311780

2182396

1595898

Kainakary

1231710

1961695

1963900

' ~ e d u m u d ~

1418031

2233297

2827504

Edathua

1475845

2222737

2813642

Thakazhy

1253868

2058066

1892344

Thalavady

683149

2392364

2398812

Average

1229064

2175093

2248683

344

The investment here gradually increased every year and reached Rs. 2 1,67,498

in 2000-01

In Nedumudy, Edathua and Thalavady Panchayats the investment in

productive sector increased for the first three years of the campaign, but it

declined in the fourth year. However Thakazhy Panchayat shows amixed pattern

showing an increase followed by a decline and again an increase.

The average investment in productive sector in various years shows that

for the first three years it increased steadily followed by a slight decline in the

fourth year.



The calculated value of F (rows) is much higher than the table value F

Crit at 5% level of significance. Hence there is significant difference between

various years in respect of investment in productive sector.


The calculated value of F (columns) is less than the table value at 5%

level of significance. Hence there is no significant difference between

Panchayats in respect of investment in productive sector.

6.12.2. Investment in Service Sector

Environment protection, education, health, sports, arts, culture, drinking

water, sanitation, housing, slum development, housing co-operative societies, I

anganvadi employment and labour welfare, other social welfare, tourism, public

distribution burial ground, planning 'surveys and studies and consumer

co-operative societies are the main heads coming under service sector. As per the

general guidelines 30 to 40% of the plan funds can be invested in this sector.

The following table shows the amount invested in this sector by the six

Panchayats b

Table 6.16 Investment in Service Sector

Thalavady Average

On a closer analysis it is seen that only Nedumudy Panchayat shows a

clear trend of increase in investment in service sector in various years. In the

case of Kainakary, Edathua, Thakazhy and Thalavady, the investment in service

sector increased in the first three years while it declined in the fourth year. In the

case of Champakulam Panchayat it does not show a clear trend, recording in

increase in 1998-99 a decline in 1999-2000 and again an increase in 2000-01

346

The average investment in service sector in 1997-98 was Rs. 1 1,80,184.

Thereafter it increased to Rs 17,23,943 in 1998-99 and to Rs.18,00,902 in

1999-2000. But the average investment in the sector declined to Rs. 16,70,829



The calculated value of F (rows) is more than the table value of F Crit at

5% level of significance. Hence there is significant difference between various

years in respect of investment in service sector.

Between Panchayats (Colunzns)

As the calculated value of F (columns) is less than the table value of F

Crit at 5% level of significance, there is no significant difference between

Panchayats in respect of investment in Service sector.

6.12.3 Investment in Infrastructure

Power production, power distribution, development of non-conventional

energy, energy conservation, roads and bridges, inland water transport, other

modes of transport, waiting sheds, bus stand and public buildings are the main

items coming under infrastructure here. Gram Panchayats can invest 10 to 30%

of the plan h n d in infrastructure as per the general guidelines on sectoral

allocation.

Table 6.18 Investment in Infrastructure

In the case of Champakulam and Kainakary Panchayats the investment

in infrastructure shows increasing trends. In the case of Nedumudy, Edathua

and Thakazhy the amounts invested in infrastructure increased for the first three

years and then decreased. In Thalavady Panchayat an increased amount was

invested in 1998-99 in infrastructure. But thereafter the amount of investment in

this sector started declining.

1997-98

The average investment in infrastructure in 1997-98 was Rs.7,58,752. It

started to increase thereafter showing Rs.12,63,072 in 1998-99 and

Rs.15,00,807 in 1999-2000. But in the fourth year it declined to Rs.13,90,842

Champakulam

555645

Average

758752

Kainakary

403848

Nedumudy

601702

Thakazhy

870449

Edathua

941326

Thalavady

1179539

Table 6.19


Analysis of Variance


Source of

Variation Rows 2olurnns 7

'rror

Total


years in respect of investment in Infrastructure

Between Panchayats (Coluntns)

F crit

3.2873828 1 2.901295201

SS

1.93419E+12 2.5728 1E+12 1.03041E+12

5.53741E+12

As the calculated value of F (columns) is more than the table value of F

Crit at 5% level of significance, there is significant difference between

df

3 5

15

23

Panchayats in respect of investment in Infrastructure.

6.12.4 In vestment for Women 's Welfare

MS

6.4473E+11 5.14562E+11 68693884845

The amounts invested in production sector, service sector and

infrastructure include those invested for women's welfare as well. As per the

F

9.3855468 14 7.490658348

general guidelines issued by the state government 10% of the plan fund should

P-value

0.000974835 0.001052322

be invested in women's welfare or development schemes/projects. The following

table shows the amount invested by the six Panchayats for this purpose in the

four years

Table 6.20 Investment for Women's Welfare

For Champakulam Panchayat, Rs. 1,99,906 is the lowest amount invested

for women's welfare, which was made in 1999-2000. It invested the highest

amount in 2000-01 which was Rs. 6,56,715.

Kainakary Panchayat also invested the highest amount in this sector in

2000-0 1, which came to Rs.5,11,114. It made the lowest investment in this

sector in 1997-98, the amount being Rs.3,34,144.

Average Champakulam

In Nedumudy Panchayat there was an increase in ,the amounts invested

for women's welfare up to 1999-2000. In the last year it declined slightly.

1

Edathua Panchayat clearly shows a gradual increase year after year in

respect of the investment in women's welfare schemes, the amount ranges from

Rs 2,23,127 in 1997-98 to Rs.7,22,459 in 2000-01.

In the case of Thakazhy Panchayat an annual increase in the amount of

investment is noted up to 1999-2000. In 2000-01 a slight decline is noted.

Kainakary

Thalavady Panchayat didn't spend any amount in 1997-98 for women's

development programmes. But in 1998-99 it spent Rs.6,30,570 for the same. It

Edathua Nedumudy Thakazhy Thalavady

350

also spent Rs.4,53,069 and Rs.5,24,358 in 1999-2000 and 2000-0 1 respectively.

On analysing the average amount invested for women component plan in

different years, it is clearly noted that, there is an increasing trend. The average

amount of Rs 2,75,695 increased gradually in four years to reach Rs.5,90,610 in

2000-0 1.





years in respect of investment in Women's Welfare Schemes

Between Panchayats (Colcintns)

As the calculated value of F (columns) is less than the table value of F

Crit at 5% level of significance, there is no significant difference between

Panchayats in respect of investment in Women's Welfare Schemes

6.12.5 Investment for the Welfare of Scheduled Castes

Panchayats have been given plan grants under special component plan to

make investment for the welfare of scheduled castes. The amount so given

should be utilised only for that purpose. The following table shows the

investment in this sector by the various Panchayats under study.

Table 6.22 Investment for the Welfare of Scheduled Castes

Champakulam Panchayat invested Rs.4,17,448 in 1997-98 for the welfare

of scheduled castes. It increased in 1998-99 followed by a slight decrease in

1999-2000.But in 2000-0 1 an amount of Rs 1 1,86,568 was invested for the same.

In Kainkary Panchayat, the highest amount invested was in the year

1998-99 the amount being Rs.8,73,578. In 1999-2000 it declined to Rs.6,5 1,497,

but in 2000-01 it again showed a slight increase.

In Nedumudy Panchayat no clear trend is noted. There, the highest

amount invested for the welfare of scheduled castes is welfare of scheduled caste

is Rs.13,000,28 in the year 1998-99, the lowest being Rs 8,41,734 in 2000-91.

In Edathua Panchayat the highest amount invested is Rs.10,72,750 in

1999-2000, the lowest being Rs.6,83,885 in 1998-99

Thakazhy Panchayat invested Rs.10,49,369 for the welfare of scheduled

352

castes in 1997-98 which was the highest in that year when compared to the same in

other Panchayats under study. It increased to Rs.12,22,642 in 1998-99. But it started

declining thereafter.

In the case of Thalavady Panchayat the amount invested for the welfare of

scheduled castes ranged from Rs 7,35,752 to Rs 9,03,239.

On a average the amount invested in special component plan was

Rs.7,24,057 in 1997-98 which increased to Rs 9,33,545 in 1998-99. However the

average declined in 1999-2000 and in 2000-01.


Source of SS df MS F P-value F crir Variation

1.36889E+11 3 45629568886 1.00828 193 0.41638997 1 3.2873828 1 4.83929E+11 5 96785717188 2.138685333 0.1 1665587 2.90129520' 6.78822E+1 I 15 45254772040


The calculated value of F (rows) is less than the table value of F Crit at 5%

level of significance. Hence there is no significant difference between various years

in respect of investment for the welfare of scheduled castes.

Between Panchayats (Colulnlls)

As the calculated value of F (columns) is less than the table value of F Crit

353

at 5% level of significance, there is no significant difference between Panchayats

in respect of investment in for the welfare of scheduled castes.

6.13 Expenditure Before and During the People's Plan Campaign

A comparative picture of expenditures made by the Panchayats before the

peoples plan campaign and during the campaign will throw light on the extent of

decentralisation and effectiveness of the people's plan campaign. For that a

comparative analysis of the average amounts of expenditure under each head in each

Panchayat from 1990-9 1 to 1996-97 and from 1997-98 to 2000-01 is made. The

table below gives the con~parative picture.

Table : 6.24 Averages : Before and During the Plan

6.13.1 Management Expenditure

Management expenditure includes honorarium, sitting fee and T.A of the

members of Panchayat committee, salaries, allowances and other perquisites of

the employees ofpanchayats, office expenses, establishment charges, stationary,

election expenses and expenses of meetings convened by the Panchayat.

Except in Thalavady Panchayat in all the Panchayats under study the

management expenditure during the people's plan campaign is more than double

the corresponding amount before that. In Thalavady Panchayat also there is a

substantial increase in the average management expenditure from Rs.4,8 1,855

to Rs.9,28,064.

Fig. 6.1 Management Expenditure (Before and During People's Plan Campaign)

0

C hampakulam Kainakary Nedumudy Edathua Thakazhy Thalavady

P anchayats

356

6.13.2 Public Works and Infrastructure

There has been substantial increase in the amount spent for public works

and infrastructure during people's plan campaign as compared to that spent

before the campaign. In Champakulam, Kainakary and Thalavady Panchayats

the average amount invested in public works and infrastructure during the

campaign is more than double the amount invested for the same before the

campaign. In Nedunludy Panchayat and Thakazhy Panchayat, the average

amount during -the people's plan campaign is more than the three times the

average amount before the plan period. In Edathua Panchayat an almost five fold

increase in the amount invested in the public works and infrastructure is noted

during the plan period compared to that of the preceding period. The. following

figure gives the idea at a glance.

Fig. 6.2 Public Works and Infrastructure

(Before and During People's Plan Campaign)

Chaqakulam Kainakary Nedumdy Mathua Thakazhy Thalavady

Panchay ats

I ~ e f o r e N during I

6.13.3 Productive Sector

With People's Plan Campaign in operation, funds have been earmarked

for investment in productive sector like agriculture, fishing, animal husbandry

and cottage industries. Before that there was no such provision and most of the

Panchayats did not spend a single paise in most of the years in the productive

sector.

Edathua Panchayat did not have any investment in this sector in seven

years before the people's plan campaign. However the average annual investment

in productive sector during the plan campaign is Rs. 22,61,811 in Edathua

Panchayat.

For Champakulam Panchayat the average annual investment in productive sector

during the plan period is Rs. 17,48,932 while the corresponding figure before the

said period is only Rs. 1,466. In the case of Kainakary Panchayat the average

annual investment in productive sector rose from Rs. 12,432 to Rs. 18,3 1,202.

Nedumudy, Thakazhy and Thalavady Panchayat also show a sharp

increase in the average annual investment in productive sector

Fig. 6.3 Productive Sector (Before and During People's Plan Campaign)

Chanpakulam Kainakary Nedurmdy Mathua Thakazhy Thalavady

Panchay ats

Before &I during 1

6.13.4 Social Service Sector

Investment in service sector is also encouraged under people's plan

campaign. As Panchayats have to invest between 30 to 40 % of the plan funds

in service sector it is quite natural that the total investment in social service

shows a substantial increase during the people's plan campaign

In Champakulam Panchayat, the average investment in this sector during

the plan period is more than eleven times that of the preceding period. In

Kainakary it is more than 12 times while in Nedumudy it is 10.75 times that of

the proceeding period. In Edathua Panchayat the service sector investment

during the plan period is 10 times that of the period before it while they are 9.09

times in Thakazhy Panchayat and 6.67 times in Thalavady Panchayat.

Fig. 6.4 Social Service (Before and During People's Plan Campaign)

2000000

2 1500000 3

E a ioooooo

500000

0 Chan-pakularn Kainakary Nedumdy Mathua Thakazhy Thalavady

Panchayats

1 C] Before During I

Thus a significantly large increase in the service sector investment has

taken place during the people's plan campaign.

For items like education and culture, Panchayat properties, and debt

heads there has been significant increase in expenditure during the plan period

as compared to that of the proceeding period. But such an increase is not so

substantial as in the case of investment in productive sector, public works and

infrastructure and service sector

Many institutions have been transferred to village Panchayats for their

management along with the required h n d s for the same during the plan period.

Hence there has been considerable increase in the money spent for the

management of institutions during the plan period.

360

Many pensions have been distributed through village Panchayat now.

State goverement started allocating funds to village Panchayats for the same in

1996-97. It is not a part of the people's plan campaign

6.14 Opinion Survey Analysis

For having a clear picture of the finances of Gram Panchayats under

people's plan campaign and to supplement the secondary data analysis an

opinion survey analysis related to the same has been made here. Several

questions were put to the respondents to ascertain their views regarding the

finances under people's plan campaign. The different views are analysed and

presented in tables.

6.14.1 Share of Plan Fund Table 6.25

Among the members of Panchayat majority ie 59% opined that their

Panchayat is not getting the due share of plan fund from the state government 32

% of them are of the view that the Panchayat is getting the due share of plan

Share of Plan Fund

Getting Due share Not getting due share Do not know

Total

Members Employees

Frequency

2 2 41 6

69

Frequency

9 3 -

12

Percentag e

32 5 9 9

100

Percentage

7 5 25

100

36 1

funds. However 9% of the members do not know about the due share of plan

funds. It is to be particularily noted that plan funds are substantially large, and

even among the members of Panchayats who are expected to have a clear idea

about the finance of Panchayats, there are people who have no idea about it.

Majority of the employees have a different opinion. 75% of theill think

that the Panchayat is getting the due share of plan funds. Only 25% of them

think otherwise. Thus there is a wide difference of opinion between the members

and employees of Panchayats in this regard.

6.14.2 Formula for the Allocation of Plan Funds

State government allocates funds to various Panchayats on the basis of a

formula. There is difference of opinion among the members of Panchayats as

well as among the employees regarding the existing formula. It is shown in the

following table.

Table 6.26 Existing Formula for Allocation of Funds

Should be changed Should not be changed Don't know

Total

Members

Frequency

3 4 30 5

69

Employees

Percentag e

50 43 7

100

Frequency

2 10 -

12

Percentage

17 8 3 -

100

3 62

50% of the members think that the formula for the allocation of plan

funds among Panchayats must be changed. Most of them express the opinion

that due weightage should be given not only to population but also to economic

backwardness, social backwardness, inadequacy of infrastructure, number of

unemployed people and area under cultivation in allocating the funds. But

43%of the members are of the view that the existing formula should be

continued. 7% of the member do not have any idea with regard to this.

Among the employees 83% think that the existing formula should be

continued only 17% of them are in favour of changing the fornlula. The

members and the employees of Panchayat widely differ in their opinion in this

regard while 50% of the members are in favour of changing the formula, only

17% of the employees favour that.

6.14.3 Sectoral Allocation

Sectoral allocation of funds has been made under people's plan campaign.

For that three sectors have been identified - productive sector, service sector and

infrastructure. Opinions regarding the sector to which highest proportion of

funds should be allocated are collected and analysed. They are given in the

following table

proportion of funds should be allocated to the productive sector. Only looh of

the members and 8% of the employees think that service sector should get the

highest allocation. 33% of the members and 17% of the employee are of the

view that infrastructure should get the highest allocation.

Table 6.27 Highest Proportion of Funds to Be Allocated

6.14.4 Timely Receipt of Government Grants

Only if the government grants which constitute a substantial portion of

.the total fund are received in time, the Panchayats can undertake the projects

successfully. On the question, whether the Panchayats are receiving government

grants in time, the members and employees of Panchayats give their answers

which are presented in the table below.

Productive Sector Service Sector Infrastructure

Total About 57% of the members and 75% of the employees opine that highest

Members

Frequency

39 7

23

69

Employees

Percentag e

57 10 33

100

Frequency

9 1 2

12

Percentage

7 5 8 17

100

Table 6.28 Receipt of Government Grants

I I I

Total 1 69 1 100 1 12 1 100

Members

Received in time Not received in time Do not know

Majority of both categories of respondents think that the Panchayats are

not getting grants -in -aid in time. While 83% of the members hold the view that

the funds are not received in time. 92% of the employees express the same

opinion. Only 17% of the members and 8% of the employees believe that the

grants are received in time.

Employees

Frequency

6.14.5 Broad Guidelines for Sectoral Allocation

Frequency Percentag

12 57 -

The state government has given broad guidelines for sectoral allocation

Percentage

. The following table shows the opinion of the respondents in this regard .

e

17 8 3 -

1 11 -

Table 6.29 Guidelines for Sectoral Allocation

8 92 -

To be continued Should be more flexible Should be more rigid Should be taken away Do not know

Total

Members Employees

Frequency

15 10 3

41 -

69

Frequency

10 1 - 1 -

12

Percentage

22 15 4 59 -

100

Percenta g e

84 8 -

8 -

100

365

While majority of the members of Panchayat (59%) say that the broad

guidelines for sectoral allocation should be taken away, majority of the

employees (84%) state that .the existing broad guidelines must be continued.

Only 22% of the members hold the view that the existing guideline may be

continued 15% of the members and 8% of the employee agree that the guidelines

should be made more flexible 4% of the members only say that it should be

made more rigid.

6.14.6 Reason for Not Taking Loan

Even though there is provision for the Panchayats to take loans for

implementing projects undertaken by them, no Panchayat under study has taken

any loan during the plan period. There is different of opinion between the two

categories viz., members and the employees of Panchayats with regard to the

reasons for not taking loans

366

While majority of the members point out that the available funds with the

Panchayats are sufficient to undertake the projects under people's plan campaign,

majority of the employee say that loan's are not taken mainly because nobody

likes to take the additional responsibility connected with the availing of such

loans. Difficulty in getting loans in the main reason for not taking the loan

according to 7% of the members and 17% of employees,

6.14.7 Adequacy of Beneficiary Contribution

Panchayats can collect contributions from the beneficiaries of the

projects undertaken by them. Different Panchayats follow different practices in

receiving beneficiary contribution. This is because of the absence of any hard

and fast rule prescribed in deciding and receiving beneficiary contribution. There

is difference of opinion among the members as well as employees in respect of

the adequacy of beneficiary contribution.

Table 6.31 Adequacy of Beneficiary Contribution

Seventy Four percent of the members of Panchayat are of the view that

Adequate Inadequate Do not know

Total

Members

Frequency

5 1 15 3

69

Employees

Percentag e

74 22 4

100

Frequency

5 7 -

12

Percentage

42 58 -

100

367

the beneficiary contribution in quite adequate. But majority of Panchayat

employee think otherwise. Fifty eight percent of them say that it is made

inadequate and 42% say that it is adequate. Only 22% of the members hold the

view that beneficiary contribution is inadequate. 4% of them don't known about

the adequacy of beneficiary contribution.

6.14.8 Spending of Funds by Beneficiaries

For the implementation of certain projects, funds are directly handed over

to the beneficiaries. Difference of opinion can be noted among the members of

Panchayat and employees with regard to whether the amounts have been spent

for the purpose for which they are given directly to the beneficiaries.

Table 6.32 Spending of Funds by Beneficiaries

Majority of the members as well as employees agree that the beneficiaries

are spending the money for the purpose for which it is given to them. The

Spend for the purpose for which they are given

Spend not for the purpose for which they are given

Do not know

Employees

Frequency

7

4 .

1

12

Members

Percentage

58

3 4

8

100

Frequenc Y

44

16

9

69

Percentage

64

2 3

13

100

368

percentage of members and employees having this view are 64 and 58

respectively. Twenty three percent and thirty four percent of the members and

employees have a negative opinion in this case 9% of the member and 8% of the

employee have no idea at all as to whether the amounts have been spent

properly.

6.14.9 Mon itoritlg of Projects

The people's plan campaign envisages a monitoring system with the

participation of popular institutions. Panchayat level monitoring samiti,

development sector monitoring samiti and ward level monitoring samiti are

expected to monitor the in~plen~entation of projects at the Gram Panchayat level.

The members and the employee of the Panchayats express their opinion

regarding the efficiency of such monitoring of projects.

Table 6.33 Monitoring of Projects

Majority of both categories of respondents agree that the monitoring

system for the implementation of projects under People's Plan Campaign is

effective. The percentages of members and employees having that opinioil are

Effective Not Effective Do not know

Total

Members Employees

Frequency

44 22 3

69

Frequency

7 5 -

12

Percentag e

64 32 4

100

Percentage

58 42 -

100

369

64 and 58 respectively. However 32% of the members and 42% of the

enlployees have a different view. 4% of the members have no idea about the

effectiveness of the monitoring system.

6.14.10 Collectioiz of Own Fund

The own fund of Gram Panchayat consists of taxes and non-tax revenues

such as license fees registration fees other fees other fees and income from

properties. Direct tax and non-tax own revenue are to be collected directly by

the Panchayats. Many have complained .that the additional work load due to

people's plan campaign has adversely affected the own fund collection. The

following table reveals the opinion of the members and employees of Panchayat

is this regard

Table 6.34 Collection of Own Fund

Majority of both categories of respondents - 81% of nlembers and 92%

of employees - state that the additional work load of people's plan campaign has

adversely affected the own fund collection of Panchayats. Nineteen percent of

the members and 8% of the enlployees think it has not affected the collection of

Adversely affected Not affected Do not know

'Total

Members Employees

Frequency

56 13 -

6 9

Frequency

1 1 1 -

12

Percentag e

8 1 19 -

100

Percentage

9 2 8 -

100

own funds

6.15 Conclusion

Kerala's decentralised planning with people's participation at the grass

root level attracted the attention of economist politicians, sociologist and people

at large. Fernandes and Mukhopadhyay pointed out " The strength of the

Panchayats in Kerala derives not necessarily from the foresight of bureaucrats

sitting in Thiruvanthapuram but is consequent to the dynamics of political

mobilization of grass root organization in pressurising the state elected bodies

to make decision making more participatory, democratic and transparent".22

But the significant question here is whether such an initiative ofgrass root

level democracy helps in achieving economic growth and development. The

people's plan campaign makes use of the strength of mass movement to meet the

current needs for economic growth and development. However it is not without

demerits. In some case it has been noted that even the elected representatives of

Panchayat do not have any idea related to certain aspects of financial matters of

their Panchayats. In the case of certain Panchayats large amount of plan funds

remain unspent. Budgeting which can be made a very effective tool in planning

and controlling the affairs of Panchayats is not at all effective. With people's

participation more productive ventures can be undertaken by the Panchayat. For

that loans can be availed from banks, other financial institution and from

co-operative banks. Collection of own find in adversely affected is many

37 1

Panchayats because of the additional work load in connection with the people's

plan campaign.

Despite these limitations in decentralised planning, Kerala is much

ahead of the rest of India in participatory planning. With more powers assigned

to the local bodies and large amounts of funds devolved they can play a vital role

in the development of the area under their jurisdiction. As George Mathew

comments "when democracy is in the hands of ordinary citizen it can conquer

poverty ensure economic growth with equity sustain healthy environment and

work for human right^".^'

People's plan campaign seeks to realise the dream of Mahatma Gandhi.

Prof. Madhu Dantavate's opinion is worth noting here. "Though Gandhiji's

samadhi is in Rajghat, his soul will be with the people of Kerala as they are in

the process of fulfilling his vision and advice".24

372

Notes and References

1,Richard W Franke and Barbare H Chasin, "Power to the Malayalee

people" Economic and Political Weekly, Nov. 29,1997.) p. 3065.

2.P. Kamalkutty, "People's planning- A new venture", Kerala calling

(Public relations department, TVM. Vol. 19, April 1999.p. 10.

3.E. K.Nayanar. "Govt committed to perpetuation of local bodies",

Kerala Calling, Public Relations Department, TVM vol. 19, April 1999, p. 3.

4. V. Rajendran Nair., Empowerment of community through Panchayati

raj institutions: The Kerala experiment", ISDA Journal., TVM July-Dec., 1999

vo1.9. P.263

5.Richard w Franke and Barbare H Chasin. Op. cit., p. 3067

6. I.S. Gulati and K.M Shajahan, People's Planning: Some Thoughts on

Kerala Exercise" Loyola Journal of Social Science, TVM Vol. xi., NO.l

Jan-July 1997.p. 12.

7. V Rajendrean Nair Op. cit., p. 264.

8. V. BijuKumar, In Response to Development Crisis: Decentralised

Planning and Development in Kerala , Journal of Rural Development .,Vol. 19.,

NIRD Hyderabad. p.345.

9. When the plan campaign was launched only five phases were

visualised. Later on a sixth phase was added for the technical and financial

appraisal of projects.

10. Economic Review 2000, Planning Board Government of Kerala, TVM

1 1. Ibid

12. Ibid

13. Ibid

14. V.Rajendran Nair., Op cit. p.274.

15. Richard W Franke and Barbara Chasin., Op cit., p. 306 1 .

16. T. M. Thomas Isaac and K. N. Harilal., Planning for Empowerment

: People's Campaign for Decentralized planning in Kerala. Economic and

Political Weekly. Vol. XXXII., Jan - 4-1 1, 1997., p. 58.

17. Oommmen John, Panchayat Raj At Work in Kerala: An Analysis

Kurukshetra, Oct 1998. p. 43.

18. R, Gopalakrishnan Nair. Peoples Planning in Kerala, Loyola Journal

of Social Science, TVM vo1:xxi. No 1 Jan- July 1997. p.

19. V Rajendran Nair, Op cit. P. 27 1

20. Oommen John., Op cit. P. 43.

2 1. For details, refer Methodology in Chapter I

22. A Fernandes and P. Mukhopadhyay "Re-designing Panchayat finance

and attitudes: A case study of Goa". Journal of Rural Development vol 1. 18(1)

1999. p. 62.

23. George Mathew, Restructuring the Polity, the Panchayat Raj., Loyola

Journal of Social Science , TVM Vol Xi. No1 Jan-July 1997. P. 33.

24. Madhu Dandavate, quoted in R. Gopalakrishnan Nair (editorial).,

Loyola Journal of Social Sciences., Trivandrum., Vol. xi, no. 1. Jan - July.

1997.

Documents

CHAPTER VI LOCAL FINANCE UNDER PEOPLE'S PLAN