UNIT 3 SOCIAL AND CULTURAL

DYNAMICS OF DEVELOPMENT
Structure
3.1 Introduction
3.2 Social Development: Emerging Concepts
3.3 Social Development Theory: A Perspective
3.4 Social Development Index
3.5 Social Processes of Development
3.6 Social Dynamics of Development
3.7 Culture and Cultural Dynamics
3.8 Cultural Obstacles to Development
3.9 Let Us Sum Up
3.10 References and Selected Readings
3.1 1 Check Your Progress - Possible Answers

3.1 INTRODUCTION
The aim of this unit is to provide a general introduction to the dynamics of social
and cultural development. It is now well understood that historical, institutional,
social, cultural, demographic, political, and ecological factors are all of great
importance for the analysis of economic development. It is also well known that
the concept of development is much broader than that of economic development
alone. Development involves a wide range of changes in a variety of social
indicators, such as health, education, technology, or life expectancy, which are
directly, or, indirectly linked to economic changes, but, which need to be studied
in their own right. Although, demographic and human factors play an important
role in the primary production process, other social factors such as health, disease,
mortality, life expectancy, and education are important as independent aspects
of development.

The social and cultural dynamics of development are processes that result in the
change of social structure in a manner that improves the capacity of a society to
fulfil its aspirations. The aspirations range from a variety of issues including
personal security, safety, happiness, nutritional satisfaction, education, and include
health issues, hygiene, emotional, and intellectual satisfaction. It can also be
summarized as the process of organizing human energies and activities at higher
levels to achieve greater results. Development increases the opportunities for
greater utilization of human potential, and society develops by consciousness.
The process that is subconscious in the society emerges as conscious knowledge
in pioneering individuals. Therefore, one can say that development is a process,
and not a programme. While, not all social change constitutes development, the
term is usually applied to changes that are beneficial to society, it may result in
negative side-effects, or, consequences that undermine, or, eliminate existing
ways of life that are considered positive. Therefore, the social and cultural
dynamics of development are continuous processes of change which are
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influenced by development quite substantially, and, they determine the direction Social and Cultural
Dynamics of Development
of further and future development.
After studying this unit you should be able to:
Establish relationship between society, change and development
Explain the basic issues of social transformation
Analyse various indicators of social and cultural change
Identify the functional dimensions of society and development, and various
problems of social change

3.2 SOCIAL DEVELOPMENT: EMERGING

CONCEPTS
I

Social development is a cross-cutting approach to development that promotes

policies and institutions in support of
greater inclusiveness and equity in access to services, resources, and
opportunities
greater empowerment of poor and marginalized groups to participate in social,
economic, and political life
greater security to cope with the chronic or sudden risks, especially for the
poor and marginalized groups and segments
Social development is the capacity of individuals and communities to take upon
themselves the direction of their own development. The notion of human resource
development becomes central in social development, as individuals collectively
form a society. The old formulation that literacy leads to development is quite
different from the new notion that literacy is embedded in social practice and
has social meanings. Approaching the question of literacy from this perspective
is not to consider education as an independent commodity, but to analyse carefully
the literate competencies needed in a specific society, and to link education and
literacy to the social practices people are involved in. Only by approaching literacy
in this manner can adult literacy be seen as integral to the development process.

Social development can be summarized as the process of organizing human

energies and activities at higher levels to achieve greater results. The development
process increases the stances and opportunities for the utilization of human
potential. In the absence of a valid theory in the sphere of social development,
the concept of social development remains largely a process of trial and error
experimentation. The dismal consequences of transition strategies in most Eastern
1I Europe countries, the very halting progress of many African and Asian countries,
the increasing income gap between the most and least developed societies, and
I
the distressing linkage between rising incomes, environmental depletion, crime
and violence, reflect the fact that humanity is vigorously pursuing a process
without the full knowledge needed to guide and govern it effectively. Social
development consists of two interrelated aspects - learning and application.
Society discovers better ways to fulfil its aspirations, and it develops
organizational mechanisms to express that knowledge to achieve its social and
economic goals. The process of discovery expands human consciousness, and
37
 I
Dynamicsof Development the process of application enhances social organization. Society develops in
response to the contact and interaction between human beings and their material,
social and intellectual environment.

Historically, society has developed by a trial and error process of physical

experimentation, not unlike the way children learn through a constant process of
physical exploration, testing and even tasting. Physically, this process leads to
the acquisition of new physical skills that enable individuals to utilize their
energies more efficiently and effectively. Socially, it leads to the learning and
mastery of organizational skills, vital attitudes, systems and institutions that enable
people to manage their interactions with other people and other societies more
effectively. Mentally, it leads to the organization of facts as information and the
interpretation of information as thought. The conceptual mind is the highest,
most conscious human faculty. Conceptual knowledge is the organization of
ideas by the power of the mind. That conceptual knowledge becomes most
powerful when it is organized into a system. Theory is a systematic organization
of knowledge.

I
A comprehensive theory of social development would provide a conceptual
framework for discovering the underlying principles common to the development
process in different fields of activity, countries, and periods. It would also provide
a framework for understanding the relationships between the accumulated

theory of knowledge-which does not yet exist in any field of science or art.
Historically, advances in our understanding of material and biological process
have far outstripped advances in our understanding of social processes. As a
result, vast social potential has been created, but society has not yet acquired the
capacity to fully utilize it for its own development. A theory of development
should aim at a knowledge that will enable society more consciously and
effectively to utilize its development potentials.

In most discussions, development has been conceived in terms of a set of desirable

results - higher incomes, longer life expectancy, lower infant mortality, and
more education. Recently, the emphasis has shifted from results to the enabling
conditions, strategies and public policies for achieving those results - peace,
democracy, social freedoms, equal access, laws, institutions, markets,
infrastructure, education, and technology. But, still little attention has been placed
on the underlying social process of development that determines how society
formulates, adopts, initiates, and organizes, and few attempts have been made to
formulate such a framework.

processes involve the interaction of political, social, economic cultural,

technological and environmental factors as well. The basic principles of
development theory must be as applicable to the development of early tribal
societies as they are to the emergence of the post modem global village.
Dynamics of Development groups, and, measuring gender disparity in social development. The SDI also
captures social deprivation by developing separate SDIs for SCs, STs and others,
on one hand, and for gender differences on the other. A brief description of the
indicators and sources of the data used in the computation of the SDI are given
below in tabular form.

Economic Deprivation Indicators

Unemployment Rate NSSO and National Sample Survey
(NSS) 61" Round, Report No. 515
Gini Ratio for Per Capita Sachar Committee Report, 2006
Consumption Expenditure

40
 Social Deprivation Related Dynamics of Development
Indicators
Ratio between Literacy of the NSS 61" Round, Report No.516,
Scheduled Caste Population and Sachar Committee Report 2006 and
AverageLiterac~ofthePo~ulation Office of Registrar General and
Census Commissioner of India, 2006
Ratio between Literacy of the NSS 61" Round, Report No.516,
Scheduled Tribe Population and Sachar Committee Report 2006 and
Average Literacy of the Population Office of Registrar General and
Census Commissioner of India, 2006
Ratio between Monthly Per Capita NSS 61" Round, Report No.5 16,
Consumption Expenditure of Sachar Committee Report 2006 and
Muslims to the Total Population Office of Registrar General and
Census Commissioner of India, 2006
Ratio between Literacy of Female NSS 61" Round, Report No.516,
Population and Average Literacy of Sachar Committee Report 2006 and
Total Population Office of Registrar General and
Census Commissioner of India, 2006
Ratio between Female NSS 61" Round, Report No.516,
Unemployment Rates to Total Sachar Committee Report 2006 and
Unemployment Rates Office of Registrar General and
Census Commissioner of India, 2006
Child Sex Ratio NSS 61" Round, Report No.516,
Sachar Committee Report 2006 and
Office of Registrar General and
Census Commissioner of India, 2006
Source: [Link]

3.5 SOCIAL PROCESSES OF DEVELOPMENT

We have described social development as the release and channelling of social
energies through more complex social organization to enhance productive
capacity and achieve greater results. This process depends upon mechanisms to
direct and channel the collective energies of the society into new and more
productive forms of activity. We can identify four distinctly different levels, or,
types of mechanisms that serve this function: social aspirations, government
authority, socio-cultural structure, and social know-how, in the form of science,
technology, and productive skills.

i) Social Aspiration
Economically, development occurs when productivity rises, enabling people to
produce more, earn more, and consume more. To do so, they have to be motivated
to learn new skills, adapt to new work processes, and, to adopt new technology,
changes which, in past ages, have met with considerable resistance. The driving
force behind the whole movement is psychological. At the deepest level, the
energies of society are directed by the collective's subconscious aspirations.
Society's self-conception of what it wants to become releases an aspiration of
D~namicsofDevelopment the collective for accomplishment. That aspiration exerts a powerful influence
on the activities of the society. India's twin revolutions were spurred by a growing
aspiration of Indian society for security, prosperity, and enjoyment. A similar
aspiration spurs middle class Americans, today, to invest their savings in the
stock market.

We have traced the evolution of social aspirations in India from pre-Independence

to the present day. The earliest expression was an aspiration for political freedom
and self-determination. After Independence this aspiration evolved into an urge
for self-sufficiency, a willingness to try new things and take risks. More recently
it has matured into a movement of rising expectations permeating all levels of
Indian society.

ii) Role of Government authority

Like social aspirations, the authority of the government has the capacity to direct
the flow of social energies through the instruments of law, public policies,
administrative procedures, controls, incentives, and fear of punishment. Here,
too, there is a graded hierarchy of stages through which government influences
the development process. Monarchy is a highly centralized form of government
organization with a significant capacity to restrict freedom and prevent unwanted
activities, but with very limited power to promote social development because
of its limited power to positively motivate and direct human initiative. Modern
authoritarian states have augmented the power of government to compel and
control by evolving complex organizational mechanisms to reach out into every
field of social activity. Its members submit, by necessity, to the power of the
state, but continuously seek ways around the strictures and demands it places
upon them. As the 20thcentury experiments in Eastern Europe amply demonstrate,
its power as an instrument for development is severely limited. Countries with
authoritarian governments that have succeeded in releasing social initiative for
economic development, such as China, Taiwan and South Korea, have done so
by loosening social control over economic activities, while retaining it over
political activities.

Modern forms of democracy greatly enhance the development capabilities of

society. They are not only capable of enforcing a rule of law which, to a large
extent, the population willingly accepts as being in its own interest. They also
promote far greater development of individual aspirations; thought, capacity,
skill, and initiative. The accountability of a democratically elected government
necessitates that it continuously institute measures perceived as beneficial to the
electorate. Working through decentralized self governing structures, it empowers
more and more centres of activity in society, leading to greater creativity and
innovation. The basic human rights it endorses elevate aspirations and release
human energies for higher accomplishment.

The impact of democracy on development was illustrated by the Nobel laureate

economist, Xmartya Sen (1999), when he observed that no democratic country
with a free press and independent judiciary has suffered a famine in this century.
India's Green Revolution is a powerful testament to the power of governmental
authority, though, in this, and every other instance, government's role cannot
substitute for social readiness and social initiative, it can only aid in preparing
that readiness, releasing that initiative, and organizing the new activities.
 iii) Socio-cultural authority Social and Cultural
Dynamics of Development
Government exercises authority over its citizens through law, administration,
and enforcement. Society exercises a far more persuasive authority over its
members through its ideas, attitudes, customs, and values. Different societies
may develop at very different rates and in different directions under very similar
forms of government, due to differences in social and cultural authority. Modem
societies are far more free and tolerant than those of previous centuries, yet, they
continue to exert a very powerful force on their members; only, the character of
that force has changed. From being predominantly negative in the form of
prohibitions and strictures, now the force of social authority acts far more as a
spur to initiative, than a bar. The pressure felt by middle and working class
' families to 'keep up with the Joneses' has become pervasive throughout the
world. The bold initiative of a poor farmer in rural India to dig a bore well and
become prosperous could act as stimulus for the rapid development of ten
surrounding villages because the competitive pressure of social authority would
compel his neighbours to keep up with his level of accomplishment.
The spread of education tends to enhance this tendency. Apart from the practical
knowledge and skills it imparts, modem education also instils a greater sense of
individual self respect and social rights that impel an individual to seek and
maintain his, or, her status in society. Here, we include the complete range of
capacities that determine the ability of the people to physically direct their energies
to achieve productive results. The most important of these are scientific
knowledge, technology, and productive skills. These may appear very different
in nature and action from social aspirations, government, and social authority,
but the character of their influence on development is quite similar. They provide
the direction for the efficient organization of mental, social, and material energies.
Each of them carries with it an inherent authority, and, imposes a certain discipline
on the expression of social energies. This authority usually takes the form of an
impersonal authority of standards, rules, and systems, such as the rules for
maintaining an orderly flow of air traffic.
Adopting a higher level of technology, whether it involves the cultivation of
hybrid wheat, space travel, or electronic commerce requires adherence to more
stringent procedures and greater organization, without which, it does not work.
The Internet is a recent example of a technology that promotes freer and easier
commercial and personal transactions, but accomplishes it by imposing rigorous
standards of discipline on users in the form of a common computer language for
communication.
Up till now, you have read about the social development index, social
development theory, and the determinants of development. Now, answer the
questions given in Check Your Progress 1.
Check Your Progress 1
Note: a) Write your answer in about 50 words.
b) Check your answer with possible answers given at the end of the unit
1) Describe the role of the individual in the process of value creation.
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 development.
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3) Explain, in brief, the conceptual framework of social development theory.

After reading the meaning and indicators of social development, let us now
discuss various social dynamics of development. The various social dynamics
of development are as follows:
We define social development, in its broadest social terms, as an upward
directional movement of society from lesser to greater levels of energy,

choice, mastery, enjoyment, and accomplishment. The development of

individuals and societies results in increasing freedom of choice, and an
increasing capacity to fulfil its choices by its own capacity and initiative.
Growth and development usually go together, but they are different
phenomena subject to different laws. Growth involves a horizontal or
quantitative expansion and multjplication of existing types and forms of

Social development is driven by the subconscious aspirations and will of

society for advancement. The social will seeks progressive fulfilment of a

expression of excess energy in entertainment, leisure and enjoyment,

knowledge, and artistic creativity.
The development of society occurs only in fields where that collective will
is sufficiently strong and seeking expression. Development strategies are
most effective when they focus on identifying areas where the social will is
mature, and when they provide better means for the awakened social energy

I subconscious urge will gain momentum and multiply. The development of

 the collective is subconscious. It starts with physical experience which Social and Cultural
Dynamics of Development
eventually leads to conscious comprehension of the process. Conscious
development that is based on conceptual knowledge of the social process
accelerates development, and minimizes errors and imbalances.
. Society is the field of organized relationships and interactions between
individuals. Only a small portion of human activity is organized for utilization
by society, so only a small portion of development potential (of technology,
knowledge, information, skills, systems) is tapped.
Every society possesses a huge reservoir of potential human energy that is
absorbed and held static in its organized foundations-its cultural values,
physical security, social beliefs, and political structures. At times of transition,
crises, and opportunities, those energies are released and expressed in action.
Policies, strategies, and programs that tap this latent energy and channel it
into constructive activities can stir an entire nation to action and rapid
advancement.
The act is the basic unit of social organization. The evolution of more complex
and productive activities woven together by people to form systems,
organizations, institutions, and cultural values constitute the fabric or web
of social organization.
The essential nature of the development process is the progressive
development of social organizations and institutions that harness and direct
the society's energies for higher levels of accomplishment. Society develops
by organizing all the knowledge, human energies, and material resources at
its disposal to fulfil its aspirations.
The process of forming organizations takes place simultaneously at several
levels: the organization of peace and physical security in society; the
organization of physical activities and infrastructure; the organization of
productive processes through the application of skills and technology in
agriculture, industry and services; the organization of social processes we
call systems, laws, institutions and administrative agencies; the organization
of data as useful information; the organization of knowledge through
education and science; and, the organization of higher social and cultural
values that channel human energy into higher forms of expression. Each of
these levels of organization admits of unlimited development. Each of these
levels of organization depends upon, and, interacts with the others. Elevating
the organization at any of these levels increases the utilization of resources
and opportunities and accelerates development.
Development requires an enormous investment of energy to break existing
patterns of social behaviour and form new ones. Development takes place
when surplus social energies accumulate beyond the level required for
functioning at the present level. The social energy may be released in response
to the opening up of a new opportunity, or, confrontation by a severe
challenge. Where different cultures meet and blend, explosive energies for
social evolution are released. The expression of surplus energy through
existing forms of activity may result in growth - a quantitative expansion
of society at the existing level of organization. Channelling the surplus energy
into more complex and effective forms of organized activity leads to
development - a qualitative enhancement in the capabilities of the society.%
45
Dynamics of Development The fresh initiatives that lead to this qualitative enhancement usually occur
first in the unorganized activities of society that are not constrained and
encumbered by the inertia of the status quo.
The rate and extent of development is determined by prevalent social attitudes
which control the flow of social energies. Where attitudes are not conducive,
development strategies will not yield results. In this case the emphasis should
be placed on strategies to bring about a change in social attitudes -such as
public education, demonstration, and encouragement of successful pioneers.
Development proceeds rapidly in those areas where the society becomes
aware of opportunities and challenges and has the will to respond to them.
Increasing awareness accelerates the process.
Social progress is stimulated by pioneering individuals who first become
conscious of new opportunities and initiate new behaviours and activities to
take advantage of them. Pioneers are the lever, or, spearhead for collective
advancement. Pioneers give conscious expression to the subconscious urges
and readiness of the collective. Development occurs when pioneering
individual initiatives are imitated by others, multiplied and actively supported
by the society. Society, then, actively organizes the new activity by
establishing supportive laws, systems and institutions. At the next stage, it
integrates the new activity with other fields of activity and assimilates it
into its educational system. The activity has become fully assimilated as
part of the culture when it is passed on to the next generation as values
through the family.
Development is a process, not a program. Development is an activity of a
society as a whole. It can be stimulated, directed, or assisted by government
policies, laws, and special programs, but it cannot be compelled. or, carried
out by administrative or, external agencies on behalf of the population.
Development strategy should aim to release people's initiative, not to
substitute for it.
All resources are the creation of the human mind. Something becomes a
resource when human beings recognize a productive or, a more productive
use for it. Since there are no inherent limits to human inventiveness and
resourcefulness, the potential productivity of any resource is unlimited.
Human beings are the ultimate resource and the ultimate determinant of the
development process. It is a process of people becoming more aware of
their own creative potentials and taking initiatives to realize those potentials.
Human awareness, aspiration, and attitudes determine society's response to
circumstances. Development occurs only at the points where humanity
recognizes its power to determine results.
The development of social organizations takes place within a larger
evolutionary context in which the consciousness of humanity is evolving
along a sontinuum from physical to vital to mental. This evolution is
expressed as a progressive shift in emphasis from material resources to
technological and information resources; from the social importance of land
to the importance of money and knowledge; from the hereditary rights of
the elite to fundamentalrights for all human beings; from reliance on physical
forms of authority to laws and shared values. As society advances along this
continuum, development becomes more conscious and more rapid.
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 Culture is a bond that ties the people of a region or community together. It is that
one common bond which brings the people of a community together. The customs
and traditions that the people of a community follow, the festivals they celebrate,
the kind of clothing they wear, the food they eat, and most importantly, the cultural
values they adhere to, bind them together. Culture is seen as a system of social
control, wherein people shape their standards and behaviour behaviour. The
cultural values form the founding principles of one's life. They influence one's
principles and philosophies of life. They influence one's way of living and, thus,
impact social life. The importance of culture lies in the fact that it is a link
between people and their value systems.

Culture refers to the pattern of human activity and the symbols which give
significance to this activity. Culture is erepresented through the art, literature,
costumes, customs, and traditions of a community. Different cultures exist in
different parts of the world. The natural environment greatly affects the lifestyle
of the people of that region, thus, shaping their culture. The diversity in the
cultures around the world is also a result of the mindsets of people inhabiting
different regions of the world. The cultural values of a community give it an
identity of its own. A community gains a character and a personality of its own,
because of the culture of its people. Culture is shared by the members of a
community. It is learned and passed from the older generations to the newer
ones. For an effective transfer of culture from one generation to another, it has to
. be translated into symbols. Language, art and religion serve as the symbolic
means of transfer of cultural values between generations. In this sense, culture
primarily refers to characteristic mental maps and values shared by members of
a group or society. It excludes the material objects and artefacts that are produced
by members of a culture. On the other hand, it also excludes institutions which
structure human behaviour. There is a tendency to think of cultures as homogenous
, patterns.

It should also be kept in mind that there are contradictions and conflicts within 1
specialties, elements that are specific to certain subgroups in a community. In
every society, there are a variety of groups with their own subcultures. Some of
these are dominant insider groups, others are outsiders. Elements of cultural
pattern may even be in conflict with each other. Cultures, as well as countries,
are formed by the emergence of value systems (social stages) in response to life
conditions. Such complex adaptive intelligences form the clue that bonds a group
together, defines who they are as a people, and reflects the place on the planet
they inhabit. These cultural waves, much like the Russian dolls (a doll embedded
within a doll, which is again embedded within a doll) have formed, over time,
into unique mixtures and blends of instructional and survival codes, myths of
origin, artistic forms, life styles, and senses of community. While they are all
legitimate expressions of the human experience, they are not equal in their
capacities to deal with complex problems in society. Cultures should not be seen
as rigid types, having permanent traits. Instead, they are core adaptive intelligences
that ebb and flow, progress and regress, with the capacity to lay on new levels of
complexity, or, value systems, when conditions warrant. Much like an onion,
and no utopian paradise. Each stage is but a prelude to the next, then the next,
then the next.

The debate about cultural obstacles to development is done after a universal

assumption that people across the world agree on the content and goals of
development. It is well accepted that development is inevitably a highly value-
laden concept, but that one can indeed identify the contours of a development
concept, including increased welfare, productivity, health, education, and, an
extension of political and social freedoms. If one looks at the dynamics of
socioeconomic development from a macro perspective, the differences in
dynamics in different parts of the world would be obvious. Some of the selected
examples of the possible impacts of culture on development follow.

i) The caste system

In traditional Hindu societies in India, the caste system acts as an obstacle to the
most efficient use of human capabilities and talents in the economic process.
The caste system defines a religiously legitimized hierarchy of social estates,
which are restricted in their interactions with each other. The groups also differ
in political influence, landholding, and so forth. In the caste system, physical

deeply embedded in social life. According to La1 (1988), the caste system itself
is the prime cause of slow economic growth in post independence India. In his
view, the slow rate of growth between 1950 and 1990 is primarily due to
inappropriate policies.

ii) The low status of physical work and efforts

In many cultures there are negative attitudes towards physical labour and effort. *
In African societies, the heaviest physical work in food production is usually left
to the women, while men engage in activitie's that are associated with higher
status. Another example of differences in work ethic is provided by Malaysia.
The indigenous Malay population tends to look down on physical labour as
something suitable for Chinese coolie labourers who were imported in the
nineteenth century to work in mines and plantations.

iii) Gender discrimination

Inequality between the sexes and discrimination against women is embedded, in
different degrees, in most world religions and cultures. Like the caste system,
occupational discrimination by sex is a potential obstacle to the optimal use and
allocation of human talents. In a great many societies, women have less access
to paid jobs, hcalth services, and, in particular, education. In some of the most
orthodox Islamic societies, women are prohibited from engaging in education
and paid work outside the house.

iv) The mysterious role of ethnic minorities in economic development

The economic role of the ethnic minorities is a dilemma and a puzzle of
development. The Chinese have been extremely successful as entrepreneurs all
across East and Southeast Asia where they are minorities, likewise, the
Dynam
Palestinians in the Arab world, and Indians and Pakistanis, who dominate business
activities in East Africa. In Europe, Jews have played a prominent role in finance,
business, culture, and in intellectual pursuits. The interesting thing about these
successful minorities is that they often originated from rather traditional cultures,
and from societies that had long been economically stagnant. In spite of their
economic success, or, perhaps because of it, these groups have usually been
discriminated against.

v) Tkaditional versus modern cultures

Modernization theorists posited a dichotomy between traditional and modem
[Link] economic core of modernization is industrialization,which requires
a measure of congruence between economic development and the social and
cultural environment. The dichotomy between modern and traditional
societies involves changes in a number of cultural and institutional dimensions.
Some of the most frequently mentioned dichotomies are given below.

a) Modernisation theory: dichotomies between modern and traditional

societies
Achievement versus ascription. In modern societies, social positions are
assigned to individuals on the basis of achievement - meritocratic criteria.
In traditional societies, social positions are assigned on the basis of birth,
social origin, and other ascription, or arrangement into classes or categories.
Mobility versus hierarchy. Modern societies are characterized by increased
upward and downward social mobility in comparison with traditional static
hierarchical societies.
Rational versus traditional behaviour behaviour. Modern societies are
characterized by rational thinking about ends and means. In pre-modern
societies traditionally defined patterns of behaviour behaviour predominate.
Future orientation versus fatalism. In modern societies, people believe that
their actions influence their future. They are willing to make long term
investments in a better future for themselves and their children. Traditional
societies are characterized by fatalism and a short term horizon.
Nuclearfamilies versus extendedfamilies. It is argued that extended families
and kinship relationships act as a break on economic development, because
of the strong pressure towards redistribution amongst the extended family
impedes capital accumulation. Modernization involves the breakdown of
extended families and the emergence of nuclear families. %

Increased role for civil society. Modernisation implies an increased role for
unions, parties, political pressure groups, and other associations of civil
society.
Single- stranded versus multi-stranded social relationships. Many
transactions in modern markets and modem bureaucracies are anonymous
and specialized (single-stranded). In traditional societies, relationships are
more personal and involve many dimensions. There are a variety of economic
and financial exchanges, relationships of kin and tribe, friendship,
relationships of authority and dependence in traditional societies.
Dynamics of Development Individual orientation versus collectivist, or, communal orientation. In
traditional societies, social obligations are more important than in modern
societies, where people feel free to pursue their individual interests.

b) Reaction to Western penetration and cultural disruption

Reactions to Western cultural dominance and to modernization and economic
change in general have taken a variety of forms, including traditional opposition
movements; modern nationalist movements; Marxist and social movements.
Some of the changes that have affected traditional communities' world over are
given below.
The accelerated rate of change implicit in the development process.
Demographic growth, urbanization, education, and marginalization of
traditional economic activities.
The break up of traditional units of community, such as village and extended
family.
The overwhelming impact of Western culture, which is frequently transferred
only in the rudimentary form of consumption oriented-behaviour behaviour
and technology.
The impact of mass communications, especially through radio and television.
Homogenizing efforts at building national identity through mass media,
political organizations and the school system, which conflict with geographic,
tribal and kinship lines of affiliation.
Inadequate adaptation of education and training to the opportunities of
employment and the needs of self employment.
Rapid loss of authentic traditional cultural legacies, which are primarily orally
transmitted, due to increased mobility and perceived lack of short tern1
relevance for the young.

vi) The role of the individual and the process of value creation
Society has no direct means to give conscious expression to its subconscious
collective aspirations and urges. That essential role is played by pioneering
conscious individuals-visionary intellectuals, political leaders, entrepreneurs,
artists and spiritual seekers who are inspired to express and achieve what the
collective subconsciously aspires to, and is prepared for. Where the aspirations
and actions of leaders do not reflect the will of the collective, it is ignored or
rejected. Where it gives expression to a deeply felt collective urge, it is endorsed,
imitated, supported, and systematically propagated. This is most evident in times
of war, social revolution, or communal conflict.

India's early freedom fighters consciously advocated the goal of freedom from
British rule long before that goal had become a conscious aspiration of the masses.
The leaders spent decades urging a reluctant population to conceive of itself as a
free nation, and to aspire to achieve that dream. When, finally, the collective
endorsed this conception, no foreign nation had the power to impose its will on
the Indian people.
 During the World Academy of Art & Science's meeting on development theory Social and Cultural
Dynamics of Development
in Washington DC in May 1999, there was a broad consensus of participants
that the formation of values was a critical aspect of the development process.
Here, we propose to re-examine the process of development as a process of
value formation. If gross physical actions are the most visible and tangible form
of human initiative, the creation of values is the most subtle and intangible. Yet
human existence is powerfully determined by the nature of its values. Physical
skills, vital attitudes, mental opinions, and values represent a gradation of internal
organizing principles that direct human energies, and determine the course of
individual and social development.
All human creative processes release and harness human energy and convert it
into results. The process of skill formation involves acquiring mastery over our
physical-nervous energies so that we can direct our physical movements in a
precisely controlled manner. In the absence of skill. physical movements are
clumsy, inefficient, and unproductive, like the stumbling efforts of a child learning
I
to walk. Human beings acquire social behaviour behaviours in a similar manner.
Here, apart from the physical skills required for communication and interaction
with other people, vital attitudes are centrally important. Each, social behavibur
expresses not just a movement, but an attitude and intention of the person.
Acquiring social behaviours requires gaining control over our psychological
energies and channelling them into acceptable forms of behaviour. The
developmental achievements of modern society are founded upon such intangible
social attitudes as confidence in the government, trust in other people, tolerance,
and cooperation. Without such attitudes, our money would become valueless
paper and our institutions would cease to function.
The same process takes place at the mental level. The mind's energy naturally
flows as thought in many different directions without any structure to contain,
or, organize it. The acquisition of knowledge involves construction of a mental
structure of understanding that is analogous to the structure of skills and attitudes
I - that govern the expression of our physical and vital energy. It forms an
organizational framework for learning, and application of what is learned. Human
values are formed by a similar process and act in a similar manner. Although the
word is commonly used with reference to ethical and cultural principles, values
t
are of many types. They may be physical (cleanliness, punctuality), organizational
(communication, coordination), psychological (courage, generosity), mental
(objectivity, sincerity),or spiritual (harmony, love, self-giving).Values are central
organizing principles or ideas that govern and determine human behaviour.

1 Unlike the skill or attitude that may be specific to a particular physical activity,
or, social context, values tend to be more universal in their application. They are
expressed in everything we do. Values can be described as the essence of the
knowledge gained by humanity from past experiences, distilled from its local
circumstances and specific contexts to extract the fundamental wisdom of life
derived from these experiences. Values give direction to our thought processes,
sentiments, emotional energies, preferences, and actions. Centuries of experience
have been distilled by society into essential principles. Values such as hard work,
responsibility, integrity in human relations, tolerance, and respect for others, are
not just noble ideas or ideals. They are pragmatic principles for accomplishment
which society has learned and transmitted to successive generations as a
psychological foundation for its further advancement. The values of a society
Dynamics of Development Because values are intangible to our senses, and their formation is the result of a
very long process, we tend to overlook their central role in development. Social
values constitute the cultural infrastructure on which all further social
development is based. In this sense, values are the ultimate product of past
development and the ultimate determinant of its future course.

By now you are familiar with the emerging concepts of culture and development.
Now, answer the questions in Check Your Progress 2.

Check Your Progress 2

Note: a) Write your answer in about 50 words.
b) Check your answer with possible answers given at the end of the unit
1) Explain, in brief, the emergence of culture.
.......................................................................................................................
.......................................................................................................................
......................................................................................................................
.......................................................................................................................
.......................................................................................................................
2) How is gender discrimination a cultural obstacle to economic development?
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................

3.9 LET US SUM UP

There are enormous issues linked with the social and cultural dynamics of
development, and in this section we have discussed the concepts, dynamics,
meanings, and broad issues involved in social development. We have seen that
the social and cultural dynamics of development are a continuous process of
changes which are substantially influenced by development, and that the process
also determines the direction of further and future development. We have covered
the emerging concepts of social and cultural development, social development
theory, social development index, cultural obstacles to economic development,
and determinants of development: social aspiration, and, lastly, a summary of
social development principles.

3.10 REFERENCES AND SELECTED READINGS

Adam Szirmai, (20050, The Dynamics of Socio-Economic Development: An
Introduction. Cambridge University Press.
Kristol (eds.), Capitalism Today, New York: Basic ~ o o k s . Dynamics of Development

Huntington, S. P. (2000), Cultures Count in L.E. Harrison and S.P. Huntington

(eds.), Culture Matters: How Values Shape Human Progress. New York: Basic
Books, pp: 13-16.
Kottak, C. P. (1986), Dimensions of Culture in Development in UNESCO, The
Cultural Dimension of Development, The Hague: UNESCO.
Lal, D. (1988), The Hindu Equilibrium, Vol. 1: Cultural Stability and Economic
Stagnation: India, 1500 BC - AD, 1980, Oxford University Press.
Pye, L. (2000), Asian Values: From Dynamos to Dominoes, in L.E. Harrison
and S.P. Huntington (eds), Culture Matters: How Values Shape Human Progress.
New York: Basic Books, pp: 244-54.
Schumpeter, J.A. (1976), Capitalism, Socialism and Democracy, Allen and
Unwin. London.
Sen, Amartya, (1999), Development as Freedom. New York: Anchor Books.
Sen, Amartya, (2005), The Argumentative Indian: Writings on Indian Culture,
History and Identity. Penguin Books, New Delhi.

Check Your Progress 1

1) Describe the role of individual in the process of value creation.

Answer: That essential role is played by pioneering, conscious individuals -
visionary intellectuals, political leaders, entrepreneurs, artists, and spiritual
seekers who are inspired to express and achieve what the collective
subconsciously aspires to, and is prepared for. Where the aspirations and actions
of leaders do not reflect the will of the collective, it is ignored or rejected. Where
it gives expression to a deeply felt collective urge, it is endorsed, imitated,
supported, and systematically propagated. This is most evident at times of war,
social revolution, or communal conflict.
2) Describe the role of a democratic government as a determinant of
development.

Answer: Modern forms of democracy greatly enhance the development

capabilities of society. They are not only capable of enforcing a rule of law,
which, to a large extent, the population willingly accepts as in its own interest,
they also promote far greater development of individual aspirations, thought,
capacity, skill, and initiative. The accountability of a democratically elected
government necessitates that it continuously institute measures perceived as
beneficial to the electorate. Working through decentralized self governing
structures, it empowers more and more centres of activity in the society, leading
to greater creativity and innovation. The basic human rights it endorses elevates
aspirations and releases human energies for higher accomplishment.
Dynamics of Development 3) Explain, in brief, the conceptual framework of social development theory.
Answer: The following observations suggest a starting point for the formulation
of a comprehensive conceptual framework.
Social development theory should focus on underlying processes rather than
on surface activities and results, since development activities, policies,
strategies, programs, and results will always be limited to a specific context
and circumstance, whereas social development itself encompasses a
potentially infinite field in space and time.
The theory should recognize the inherent creativity of individuals and of
societies, by which they fashion instruments and direct their energies to
achieve greater results.
The implication of this view is that even though it may be influenced, aided,
or opposed by e x t e ~ ~factors,
al society develops by its own motive power,
and in pursuit of its own goals. No external force and agency can develop a
society.

Check Your Progress 2

1) Explain, in brief, the emergence of culture.

Answer: Cultures, as well as countries, are formed by the emergence of value
systems (social stages) in response to life conditions. Such complex adaptive
intelligences form the glue that bonds a group together, defines who they are as
a people, and reflects the place on the planet they inhabit. These cultural waves,
much like the Russian dolls (a doll embedded within a doll, which is again
embedded within a doll) have formed, over time, into unique mixtures and blends
of instructional and survival codes, myths of origin, artistic forms, life styles,
and senses of community.
2) How is gender discrimination a cultural obstacle to economic
development?

Answer: Inequality between the sexes and discrimination against women is

embedded, to different degrees, in most world religions and cultures. Like'the
caste svstem. occu~ationaldiscrimination bv sex is a ~otentialobstacle to the

have less access to paid jobs, health services, and in particular education. In
some of the most orthodox religious societies, women are prohibited from
engaging in education and paid work outside the house.
 UNIT 4 DEVELOPMENT AGENCIES
Structure
4.1 Introduction
4.2 The Role of Government Agencies and Institutions in Development
4.3 The Role of Financial and Non Financial Institutions in Development
4.4 The Role of Multilateral and Bilateral International Agencies in
Development
4.5 The Role of the United Nations Agencies in Development
4.6 LetUsSumUp
4.7 References and Selected Readings
4.8 Check your Progress- Possible Answers

4.1 INTRODUCTION
In the earlier units, you learned about the dynamics and the process of
development. In this unit, you will study the role of development agencies in the
dynamics and the process of development. Development agencies are agencies
whose goal is to accelerate development within a specified geographical location
- a city, region, or state - by providing the necessary resources and assistance in
a specified span of time. A development agency engages in directing development,
or facilitating development, through by providing inputs, guidance, finance,
markets, technology, etc. Some development agencies are privately owned and
others are run by government. Both kinds of development agencies play an
important role in assisting the various development efforts in an area. Besides
various international agencies, such as the World Bank, the Asian Development
Bank, also extend financial and technical support in different areas of
development. In this unit, you will read in detail about their role, responsibilities,
and functions.
>
After studying this unit, you should be able to:

i) Discuss the role of governmental development agencies in development

ii) Explain the role of financial and non financial institutions of development
iii) Narrate the type. nature, and extent of multilateral and bilateral assistance
provided by the international agencies for development.

4.2 THE ROLE OF GOVERNMENT AGENCIES

AND INSTITUTIONS IN DEVELOPMENT
In this section, you will read about the role of government agencies in
development. Various government agencies play important roles in directing the
development activities to be pursued in both the short and the long run. The role
of a few important government agencies that play an important part in
development in India is discussed. These agencies are:
i) The National Planning Commission -
55
Dynamics of Development ii) The Finance Commission of India
iii) The State Planning Board
iv) The District Planning Boards Committees

The National Planning Commission

Rudimentary economic planning by government agencies first began in India in
the 1930s under colonial British rule. The colonial government of India formally
established a planning board that functioned from 1944 to 1946. Private
industrialists and economists formulated at least three development plans in
[Link] India gained independence, a formal model of planning was adopted,
and the Planning Commission, reporting directly to the Prime Minister of India,
was established. Accordingly, the National Planning Commission was set up on
15 March 1950, with Prime Minister Jawaharlal Nehru as the chairman. The
First Five-year Plan was launched in 1951. Now, the Eleventh Five Year Plan is
underway in the country.
A few important functions of National Planning Commission are:
a) To make an assessment of the material, capital and human resources of the
country, including technical personnel, and to investigate the possibilities
of augmenting those resources that are found to be deficient in relation to
the nation's requirement
b) To formulate a Plan for the most effective and balanced utilization of country's
resources

C) To determine the priorities define the stages of the implementation of the

Plan, and to propose the allocation of resources for due completion of each

d) To indicate the factors tend to retard economic development, and determine

the conditions which, in view of the existing social and political situation,
need to be established for the successful execution of the Plan
e) To determine the nature of the machinery, which will be necessary for the
successful implementation of each stage of the Plan, in all its aspects

f) To appraise, from time to time, the progress achieved at each stage of the
Plan, and to recommend the adjustments of policy and measures that such
appraisal may show to be necessary

g) To make interim recommendations based after considering the prevailing

economic conditions, current policies, measures, and development
programmes.

From a highly centralized planning system, the Indian economy is gradually

moving towards indicative planning, where the Planning Commission concerns
itself with building a long term strategic vision of the future, and decides on the
priorities of the nation. It works out sectoral targets and provides promotional
stimuli for the economy to grow in the desired direction. The Planning
Commission plays an integrative role in the development of a holistic approach
to the policy formulation in critical areas of human and economic development.
The emphasis of the Commission is on maximizing the output by using the
 7

limited resources optimally. Instead of looking for mere increase in the plan DevelopmentAgencies
outlays, the effort is to look for increase in the efficiency of utilization of the
allocations.

ii) Finance Commission of India

The Constitution of India provides for the establishment of a Finance Commission
for the purpose of allocation of certain resources of revenue between the Union
and the State Governments. The President of India established the Finance
Commission under Article 280 of the Constitution.

The qualifications, powers and procedures of the Commission itself are regulated
by the Finance Commission (Miscellaneous Provisions) Act, 1951. The Finance
Commission is constituted to define financial relations between the Centre and
'
the States. Under the provision of Article 280 of the Constitution, the President
appoints a Finance Commission for the specific purpose of devolution of non-
plan revenue resources.
C

Under Article 280 of the Constitution, the Finance Commission is required to

make recommendations to the President about
The distribution of net proceeds of taxes to be shared between the centre
and the states, and the allocation between the states of the respective share
of such proceeds.
The principles which should govern the grants-in-aid by the center to states
out of the Consolidated Fund of India.
The measures needed to augment the consolidated fund of a state to
supplement the resources of the Panchayats and the Municipalities in the
State on the basis of the recommendations made by the State Finance
Commission.
Any other matter referred to it by the President of India, in the interests of
sound finance.
.,
The Finance Commission has the following powers
The Commission shall have all the powers of the Civil Court, as per the
Code of Civil Procedure, 1908.
It can call any witness, or, can ask for the production of any public record, or
document, from any court or office.
It can ask any person to give information or documents on matters as it may
feel to be useful, or relevant.
It can function as a civil court in discharging its duties.
iii) State Finance Commission
The 731~ constitutional amendment envisages that in every five year, the state
government shall appoint a Finance Commission to review the financial aspects
of the Panchayati Raj Institutions (PRI), and Urban Local Bodies (LILBs). The
State Finance Commission (SFC) will give recommendations with regard to

i) The distribution between the state and the Panchayats of the net proceeds of
taxes, duties, tolls and fees leviable by the state which may be divided between
them, and how allocation would be made among the various levels of
panchayats 57
D~namicsofDevelopment ii) What taxes, duties, tolls and fees may be assigned to the panchayats
iii) Grant -in-aids to the panchayats.

The report of the commission together with the action taken report shall be laid
before the state legislature. Many states have appointed their third State Finance
Commission. The State Finance Commission reports are referred to in the matter
of the allocation of resources to different sectors in the states.

iv) State Planning Boards

The State Planning Boards were formed, primarily, to assist the Planning
Commission in allocating resources to states, to enable the state governments to
formulate development plans based on a scientific assessment of the resources
of the state, and the growth priorities. The boards were assigned the task of
preparing an Annual Economic Review to be presented, along with the Budget
Document to the state legislatures.
The main functions of the State Planning Boards are:
To assess the resources of the state, and to prepare schemes for their effective
utilisation
To assist the District Planning Officers in preparing district plan proposals,
so that they may be incorporated in the overall Plan
To ascertain the obstacles to growth of the state economy, and to suggest
measures for removing [Link].
To monitor the progress of Plan schemes, and to suggest changes in
developmental policies
To decide Plan priorities.

v) District Planning Boards and Committees

The decentralized planning process started long ago in India, and, in 1969, the .
Union Planning Commission issued guidelines for preparing district plans.
Realizing that the planning machinery and competency were not yet developed
at the district level at the time, efforts were redirected, in later years, to strengthen
the state level planning process. In the early 1980s, a Working Group, under the
Chairmanship of Professor C.H. Hanumantha Rao, was constituted to develop
guidelines for district plans. Based on the recommendations of this Committee,
the Seventh Five Year Plan adopted decentralized planning at the district level
as one of the major strategies to achieve plan targets.

Local self-government is the prime instrument of decentralization at the grass

root level. The intention of local self-government is to shift from bureaucratic
administration to democratic administration, and to formulate, and execute
development programmes through people's participation, and to instill political
consciousness among the people. They act as vehicles in carrying back to the
people the power that really belongs to them. They ensure self-governancethrough
directly elected representatives.

According to Dr. D.R. Gadgil, the primary requirements of district planning are
the knowledge of local conditions. and the association of local ~ e o n l ewith thr
 formulation, and the implementation of development plans. The well known Development Agencies
Economist, Gunnar Myrdal pointed out, way back in 1968, "The ideal has always
been that the plan should come from the people and meet their wishes and needs,
and have their support in thought, as well, as deed". The points put forth in
favour of decentralized planning are
it facilitates the formulation of locally relevant programmes, with reference
to natural endowments, and felt needs of the people
it makes bureaucrats more accountable to the people
it also facilitates the participation of ordinary people in the planning and
development process

At the state level, the District Planning Board, and, more recently, after the 73rd
Constitutional Amendment, the District Planning Committees have begun to
function. The important functions of District Planning Board are

i) To formulate a long term district perspective plan, and to evolve a strategy

of planned development for the district, on the basis of felt needs of the
people, and local priorities
ii) To prepare a priority-wise list of schemes and programmes, taking into
account the resources available from the plan fund and community
contribution, well before the beginning of each year
iii) To take appropriate measures for the proper implementation of schemes and
programmes and projects
iv) To monitor the progress of projects, and for this purpose the District Planning
and Development Board may meet as frequently as necessary. The Board
will send performance reports to the State Planning Board at regular intervals.
V) To encourage the panchayats and other local bodies to implementat
development projects themselves. They are responsible for the maximum
involvement of people, and for developing confidence in their leadership,
and in their ability to implement development work. The involvement should
be both in terms of ilnancial and physical parameters
vi) To make efforts to generate additional resources for developmental work
with the cooperation of people. NGOs, NRIs, and other agencies and;
vii) Any other related function that might be assigned by the State Planning
Board.

In the 73rdConstitution Amendment, Article 243 ZD envisages that there shall

be a District Planning Committee in every district to consolidate the plans
prepared by the panchayats and municipalities in the district. Now, in most states,
the District Planning Committees (DPC) have been constituted. The Act envisaged
that the chairman of the Zilla Parishad (the District Panchayat) be the chairman

I
1
i
of DPC. However, in many states, DPCs are headed by District Commissioners.
The function of the DPCs is more, or less, equivalent to the District Planning
Board. Recently, the DPC has been instrumental in the preparation of District
Agriculture Plan, District BRGF (Backward Region Grant Fund) plan and District
NREGS (National Rural Employment Guarantee Scheme) now called MREGA
(Mahatma Gandhi Rural Employment Guarantee Scheme) Plan in mo4t o f I hc
states. 59
D~namicsofDevelopment In this section, you have read about the function and role of various agencies
and institutions in development. Now, you should be able to answer the questions
given in Check Your Progress I .

Check Your Progress 1

Note: a) Write your answer in about 50 words
b) Check your answers with possible answers given at the end of the unit
1) Describe the brief history of the Planning Commission of India. What are
the key functions of the Commission?

.......................................................................................................................
2) Discuss the roles, functions, and powers of the Finance Commission of India.

4.3 THE ROLE OF FINANCIAL AND NON-

FINANCIAL INSTITUTIONS IN
DEVELOPMENT
Besides the apex planning bodies mentioned in the preceding section, various
banking and non-banking institutions also play important role in the development
of the nation.

A) The Role of Financial Institutions

A few important financial institutions providing finance for developmental
activities in India are described, below.

i) The Industrial Development Bank of India (IDBI)

The Industrial Development Bank of India (IDBI) is the tenth largest bank in the
world in terms of financing development. The National Stock Exchange (NSE),
The National Securities Depository Services Ltd. (NSDL), Stock Holding
Corporation of India (SHCIL) are some of the institutions which have been built
by the IDBI. The IDBI is a strategic investor in a large number of institutions,
which have revolutionized the Indian financial [Link] IDBI's role as a
catalyst to industrial development encompasses a wide spectrum of activities.
The IDBI can finance all types of industrial concerns covered under the provisions
of the IDBI Act. With over three decades of service to the Indian industry, &c
IDBI has grown substantially in terms of size of operations, and its portfolio. Development Agenc
The IDBI also undertakes and supports wide-ranging promotional activities that
include entrepreneurshipdevelopment programmes, the provision of consultancy
services for small and medium enterprises, assistance in upgrading technology,
and programmes for the economic uplift of the underprivileged.

ii) The National Bank for Agriculture and Rural Development (NABARD)
NABARD was set up by the Government of India as a development bank with a
capital base of Rs 2,000 crore provided by the Government of India and the
Reserve Bank of India. It is an apex institution handling matters concerning
policy, planning and operations in the field of credit for agriculture and for other
economic and developmental activities in rural areas. It has mandate to facilitate
the flow of credit flow for the promotion and development of agriculture, and
for integrated rural development. The mandate also covers supporting all other
allied economic activities in rural areas, promoting sustainable rural development,
and taking measures that usher in prosperity in the rural areas. Essentially, it is a
refinancing agency for financial institutions offering production credit and
investment credit for promoting agriculture and developmental activities in rural
areas.

NABARD performs the following functions

Initiate measures towards institution-building for improving the absorptive
capacity of the credit delivery system, including monitoring, formulation of
rehabilitation schemes, restructuring of credit institutions, training of
personnel, etc
Coordinate the rural financing activities of all the institutions engaged in
developmental work at the field level, and maintain liaison with the
government of India, state governments, the Reserve Bank of India, and
other national level institutions concerned with policy formulation
Prepare, on an annual basis, rural credit plans for all the districts in the
country. These plans form the base for annual credit plans of all rural financial
institutions.
Monitor and evaluate projects that are refinanced by it
Promote research in the fields of rural banking, agriculture, and rural
development
Function as a regulatory authority - supervise, monitor, and guide cooperative
banks and regional rural banks.
One of the milestones in the field of micro-financing achieved by NABARD is
helping the government and nongovernmental organizationsin opening of SHGs.
iii) Commercial Banks
In post-independence India, in order to facilitate improvements in agricultural
production and attain food self-sufficiency,the thrust of the policy was to ensure
sufficient and timely credit at reasonable rates of interest to as large a segment
of the rural population as possible through the commercial banks. The strategy
was threefold: (i) Expansion of the institutional base (ii) Directed lending to
disadvantaged borrowers (iii) Credit provision at concessional rates of interest,
and (iii) The nationalization of commercial banks was done to promote financing
facilities in rural areas.
L

D~namicsofDevelopment During the post-independence period, commercial banks came a long way in
providing rural credit to the rural community, with a substantial spread of branches
in rural and semi-urban areas comprising 68% of their total outlets as on 31
March 1991. The period since 1991-92 has seen rapid expansion of credit to
agriculture. This includes credit extended by the Regional Rural Banks. During
this period, the Government also took some major initiatives to boost agricultural
production and productivity through enhanced credit flow, and by way of building
agricultural infrastructure, particularly, imgation and connectivity in rural areas. .

iv) Co-operative Societies

The cooperative movement in India owes its origin to agriculture, and allied
sectors. Towards the end of the 19th century, the problems of rural indebtedness
and the consequent conditions of the farmers created an environment for chit
funds and cooperative societies. Farmers generally found the cooperative
movement an attractive mechanism for pooling their limited resources to solve
shared problems relating to credit, supplies of inputs, and the marketing of
agricultural produce.

The experience gained from working with cooperatives led to the enactment of
the Cooperative Credit Societies Act, 1904. Subsequently, this was
comprehensively revised to the Cooperative Societies Act. This Act provided
for the creation of the post of Registrar of Cooperative Societies and to the
registration of cooperative societies for audit, and other purposes.

In 1958, the National Development Council (NDC) recommended a national

policy on cooperatives. Prime Minister Jawaharlal Nehru had strong faith in the
cooperative movement. While opening an international seminar on cooperative
leadership in South East Asia he had said, "But, my outlook at present is not the
outlook of spreading the cooperative movement gradually, progressively, as it
has done. My outlook is to convulse India with the Cooperative Movement, or
rather with cooperation to make it, broadly speaking, the basic activity of India,
in every village as well as elsewhere; and finally, indeed, to make the cooperative
approach the common thinking of India...Therefore, the whole future of India
really depends on the success of this approach of ours to these vast numbers,
hundreds of millions of people".

The cooperative sector plays a distinct and significant role in the country's socio-
economic development. There has been a substantial growth in this sector in
diverse areas of the economy over the past few decades. The number of all types
of cooperatives increased from 1.81 lakh in 1950-51, to 4.53 lakh in 1996-97.
Cooperatives have operated in various areas of the economy such as credit,
production, processing, marketing, input distribution, housing, dairying, and
textiles. In some of their areas of activity, such as dairying, urban banking,
housing, sugar and handlooms, the cooperatives have achieved some success,
but, there are 13rger areas where they have not been so successful.

B) Role of Non-Financial Institutions

i) Non -Governmental Organisations
Socioeconomic development is a process of mutual endeavor which calls for
participation from all segments of the society. But, due to the limited capability
of the national government in most third world countries, it has become
62
 increasingly difficult to respond effectively to the growing and diversified needs Development Agenc
of the vast majority at the grassroots level. It is here that the role of the non
governmental organisations (NGOs) becomes important.

NGOs are voluntary organisations other than cooperatives, Self-Help Groups

(SHGs), etc. Voluntary organisations are known for their human touch, dedication,
great initiatives, self-reliance, contextual innovations, flexibility, togetherness
with community, and ability to reach the masses in the most effective manner.
These organisations are now considered partners of government in all their
endeavours concerning the needy, the poor, children and women and their
environment.

NGOs are an important link between people at the grassroots, civil society, and
the state. They are instrumental in creating awareness and implementing
development programmes in agriculture, watershed development, women's
empowerment, education, de-addiction, removal of superstitions, health and
family welfare, human rights, disaster management, etc.. They are, thus,
representative of alternative modes of development thinking in India. NGOs
have been doing commendable work by reaching out to people in all spheres of
socioeconomic life. They have a long history in India, and have been associated
with developing easy and quick rapport with people at the grass root level.

ii) Self Help Groups (SHG)

The Self Help Group (SHG), Bank Linkage Programme, was started as a pilot
project by NABARD, in 1992. It led to the evolution of a set of RBI approved
guidelines to banks to enable SHGs to transact with banks. Initially, there was
slow progress in the programme up to 1999, as only 32,995 groups were credit
linked during the period, 1992 to 1999. Since then, the programme has grown
I
rapidly, and the cumulative number of SHGs financed increased from 4.6 1 lakhs
I
t on 31 March 2002 to 10.73 lakhs on 31 March 2004, and has grown further, to
, 29.25 lakh groups, as on 31, March 2007.

The credit provided by NABARD to SHGs has supplement their incomes by

initiating entrepreneurial activities at the grassroots level. This has been a very
successful development initiative, undertaken by NABARD. Commercial banks

I also play a major role in the promotion of SHGs. Under the bank linkage
movement, more than 11.88 lakh SHGs have linked to banks for the provision
of credit. Reforms in the commercial banking system include the removal of
procedural and transactional bottlenecks, including the elimination of the Service
Area Approach, reducing margins, redefining over dues to coincide with crop
cycles, new debt restructuring policies, one time settlement, and relief measures
for farmers indebted to non institutional sources.
I
4.4 THE ROLE OF MULTILATERAL AND
BILATERAL INTERNATIONAL AGENCIES
I IN DEVELOPMENT
1 In this section, you will read about key international agencies that provide
assistance to the development sector. You may have heard of some of them, such
as the World Bank, Asian Development Bank.
Dynamics Of 4.4.1 Multilateral International Agencies
A few important multilateral international agencies that provide assistance in
the development field are discussed:

i) World Bank
The World Bank is a vital source of financial and technical assistance to
developing countries around the world. It is not a bank in the ordinary sense. It
is made up of two unique development institutions-the International Bank for
Reconstruction and Development (IBRD), and the International Development
Association (IDA), both owned by 186 member countries. The World Bank is
like a cooperative, where its 186 member countries are shareholders. The
shareholders are represented by a Board of Governors. They are the ultimate
policy makers at the World Bank. Generally, the governors are ministers of
finance, or some equivalent from member countries.. They meet once a year, at
the Annual Meetings of the Boards of Governors of the World Bank Group, and
the International Monetary Fund.

Both institutions, the International Bank for Reconstruction and Development

(IBRD), and the International Development Association (IDA), play different,
but collaborative roles to advance the vision of inclusive and sustainable
globalization. The IBRD focuses on middle income and creditworthy poor
countries, while the IDA focuses on the poorest countries in the world. Together
they provide low interest loans, interest free credits, and grants to developing
countries for a wide range of activities that include investments in education,
health, public administration, infrastructure, financial and private sector
development, agriculture, and environmental and natural resource management.

a) International Bank for Reconstruction and Development (IBRD)

The International Bank for Reconstruction and Development aims to reduce
poverty in middle income and creditworthy poorer countries by promoting
sustainable development through loans, guarantees, risk management products,
and analytical and advisory [Link] in 1944as the original institution
of the World Bank Group, the IBRD is structured like a cooperative that is owned
and operated for the benefit of its 186 member countries.

The IBRD raises most of its funds from the world's financial markets, and it has 1
become one of the most established borrowers since issuing its first bond in j
1947. The income that IBRD has generated over the years has allowed it to fund
development activities, and to ensure its financial strength, which enables it to
borrow at low cost and offer its clents favourable borrowing terms. To fulfill its
I
goals, it I
1
supports long term human and social development needs that private creditors
do not fin;:nce
i
preserves borrowers' financial strength by providing support in crisis periods,
which is when poor people are most adversely affected
uses the leverage of financing to promote key policy and institutional reforms
(such as a safety net, or anticorruption reforms)
creates a favorable investment climate in order to catalyze the provision of
64 private capital 1
 -
provides financial support (in the form of grants made available from the Development Agencies
IBRD's net income) in areas that are critical to the wellbeing of poor people
in all countries.

Middle income countries, where 70 per cent of the world's poor live, have made
profound improvements in economic management and governance over the past
two decades, and are rapidly increasing their demand for the strategic, intellectual,
and financial resources that the World Bank has to offer. The challenge facing
the IBRD is to better manage and deliver its resources to meet the needs of these
countries.

b) International Development Association (IDA)

The International Development Association is a part of the World Bank that
helps the world's poorest countries. It complements the World Bank's other
lending arm - the International Bank for Reconstruction and Development-
which serves middle income countries with capital investment and advisory
services.

Loans from the IDA are designed to address issues in primary education, basic
health services, clean water supply and sanitation, environmental safeguards,
business climate improvements, infrastructure, and institutional reforms. These
projects are intended to pave the way towards economic growth, job creation,
higher incomes, and better living conditions.

The International Development Association helps to reduce poverty by providing

no-interest loans and grants for programs that are aimed at boosting economic
growth, and improving living conditions. The IDA funds help the poorest
countries deal with the complex challenges they face in striving to meet the
Millennium Development Goals. They must, for example, respond to competitive
pressures, as well as the opportunities of globalization; arrest the spread of HIVI
AIDS; and prevent conflict, or deal with its aftermath. The IDA'S goal is to
reduce inequalities both across, and within, countries by allowing more people
to participate in the mainstream economy, reducing poverty, and promoting equal
access to the opportunities created by economic growth. The IDA also provides
grants to countries at risk of debt distress.

ii) Asian Development Bank (ADB)

The Asian Development Bank is a multilateral development finance institution
whose mission is to reduce poverty in the Asia Pacific Region. Although the
ADB claims to operate in the interest of Asia's poorest citizens, civil society
groups have long been concerned about the ADB's role in promoting sustainable
and equitable growth in the region. The ADB was founded in 1966 with the goal
of eradicating poverty in the region.

The Asian Development Bank is a many-sided development bank that is owned

by around 67 member nations. The Asian Development Bank has provided India
with loans of huge amounts over the years. The Asian Development Bank has
helped India to reduce its level of poverty, improve infrastructure, and has given
a boost to its economy.

The main objective of the Asian Development Bank is to help its members, who
are developing countries, by providing them with technical assistance, grants,
65
 loans, and guarantees. With over 1.9 billion people living on less than $2 a day
in Asia, the institution has a formidable challenge. It undertakes the following,
in the Asia Pacific Region
Provide loans and equity investments to its developing member countries
(DMCs)
Provide technical assistance for the planning and execution of development
projects and programs, and, for advisory services
Promote and facilitate investment of public and private capital for
development
Assist in coordinating development policies and plans of its DMCs.

India and the Asian Development Bank have had a relationship since 1966, when
India became a member of the ADB. India holds around 224,010 shares in the
ADB, and the percentage of votes that the country holds is 5.374%. The Asian
Development Bank has provided India with large amounts of loans for various
sectors, such as infrastructure, energy, financial, health, agriculture, and industry.

4.4.2 Bilateral International Agencies

Apart from the external multilateral assistance from the World Bank, Asian
Development Bank, and the International Monetary Fund, there is provision for
bilateral assistance as well. Many countries, such as Canada, Germany, Japan,
UK, and USA, assist India and other developing countries on a regular basis. An
outline of some of the organizations, and their role in developmental activities is
given below.

i) Canadian International Development Agency (CIDA)

Canadian bilateral economic assistance to India began in 1951. Until March
2005, the total Canadian bilateral economic assistance to India amounted to $
2.743 billion (Canadian). The bilateral economic assistance mainly comprised
development assistance, food, and technical assistance. Canadian assistance has
been channelised through the Canadian International Development Agency
(CIDA). The assistance extended by CIDA since 1, April, 1986, has been in the .
form of grants.

The Canadian bilateral assistance is provided in the form of grants to implement

projects. The main objectives of CIDA's country policy programme for India
had been
i) to promote economic and social policy reforms
ii) to contribute to India's capacity to promote environmentally sound
development
iii) to assist in building a stronger economic relationship between the private
sectors of both the countries.

ii) The Indo-German Bilateral Development Cooperation Programme

Since 1958, Germany has provided both financial and technical assistance to
India, under the Indo-German Bilateral Development Cooperation Programme.
Financial assistance is now being provided as soft loans, develnpm~rtiq???s
66
(long term, and with reduced interest), Special Facility for Renewable Energy & Development Agencies
Energy Efficiency, and as grants. During the Indo-German Annual Consultations,
held in May, 2006, in New Delhi, a decision was taken to focus on the following
sectors
Energy
Environmental policy
Economic reforms.
Even though the health sector will not form a priority area for IndeGerman
Development Cooperation, activities in the field of health care financing, social
health insurance, the prevention of pandemic contagious diseases (HIVIAIDS,
Polio), and support to related health sector reforms have a place in the programme.

The existing Indo-German Bilateral Cooperation Programme is largely focused

in the states of Madhya Pradesh, Himachal Pradesh, Karnataka, Maharashtra,
Rajasthan, West Bengal, and Orissa, though Germany is willing to offer
development programmes to other parts of the country as well, particularly in
the States of the North East ,and Uttarakhand.
iii) The Japan Bank for International Cooperation (JBIC), and the Japan
International Cooperation Agency (JICA)
Japan has extended financial assistance for India's development programme since
1958. Initially Japanese aid to India was canalized through the Government owned
Export-Import Bank of Japan (J-EXIM). During 1975-76, aid was canalized
through the Overseas Economic Cooperation Fund (OECF) of Japan. From 1976-
77 onwards, both project, and commodity aid was canalized through the OECF.
With effect from 1 October, 1999, J-EXIM and OECF have merged, and a new
agency, Japan Bank for International Cooperation, is the channel for both the
Overseas Development Agency (ODA) programme, as well as for the
international economic programmes of the Government of Japan. The Japanese
ODA loan assistance to India is received through JBIC, and grants in aid, and
technical cooperation are received through JICA.

The Japan International Cooperation Agency (JICA) facilitates the grant in aid
programme of the Government of Japan, and implements the technical
cooperation programme. By way of technical cooperation, JICA provides
approximately Rs 35-40 crores to India in a financial year. The main components
of Technical Cooperation are
Technical Cooperation Projects
Development Study
Dispatch of Experts
Follow-up Cooperation Programme
Training of Indian Government personnel.
iv) The Department for International Development (DFID)
The United Kingdom has provided bilateral assistance to India since 1958. At
present, the UK is the largest external bilateral development partner, in terms of
grants. The UK's assistanceis channeled through the Department for International
67
D ~ n a m i a o Development
f Development (DFID). This bilateral assistance from UK is provided in the form
of grants routed through the Government of India's budget, which includes direct
payment by D F D for consultancy services, experts, training, etc.

The priority areas of the UK's assistance are mainly in the social sectors, such as
health and family welfare, rural development, environment, slum development,
education, and programmes that relate to the Millennium Development Goals.
DFID has chosen Andhra Pradesh, Madhya Pradesh, Orissa, and West Bengal as
its priority states. DFID also supports local NGOs and civil society projects
through the Poorest Areas Civil Society project (PACS), and the Orissa Civil
Society Poverty Programme (OCSPP). The funds for NGO projects are disbursed
by DFID to the concerned NGOs. DFID also provides assistance through various
multilateral agencies through trust funds with the World Bank, ADB, UNICEF,
UNDP, and others in the social sector.

v) The US Agency for International Development (USAID)

Bilateral development assistance from the US to India started in 1951, and until
March, 2006, the total assistance extended to India is, approximately, US$ 14.7
billion. The assistance, mainly administered through USAID, comprises
development assistance, agricultural commodities, and technical assistance. The
assistance extended by USAID at present is entirely in the form of grants in
areas such as family planning services, AIDS prevention and control, disaster
management, environment, and energy.

vi) European Commission (EC)

The EC extends development cooperation assistance to India since 1976. This
assistance to India is entirely in the form of grants, and currently focuses on the
areas of environment, public health, and education.

In the initial stages, the EC's development assistance was in the form of project
financing. However, with the support of the Health & Family Welfare Sector
Programme, the EC shifted their strategy to a sector based approach. The EC, in
their Country Strategy Paper for India for 2002-2006, again changed in their
strategy by adopting a partnership approach with one or two Indian states in
order to deploy the bulk of their resources in these States for health, education
and the Health and Family Welfare Sector Development Programme is
implemented by the European Commission with the aim of reforming the health
care system in India by focusing on primary health care services.

In these two sections you have read about the role of financial and non financial
institutions in the development sector, and role of multilateral and bilateral
international agencies. Now, you should be able to answer the questions given
in Check Your Progress 2.

Check Your Progress 2

Note: a) Write your answer in about 50 words.
b) Check your answers with possible answers given at the end of the unit
1) Financial institutions play a key role in the [Link]~;~'S
path to development.
Discuss this in the light of the role played by tk2: IDBI and NABARD.
.................................................................................................
68
 ....................................................................................................................... Development Agencies

.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
2) The World Bank is a vital source of financial and technical assistance to
developing countries around the world. Discuss this statement in the context
of India.
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
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~
4.5 THE ROLE OF THE UNITED NATIONS
AGENCIES IN DEVELOPMENT
Besides these multilateral and bilateral agencies, the United Nations agencies
also provide assistance to promote the development of various sectors in
developing countries. Some of the important agencies are discussed, below

i) The International Fund for Agricultural Development (IFAD)

The InternationalFund for Agricultural Development (IFAD) was set up in 1977,
on the recommendation of the World Food Conference, which supported the
setting up of an institution that would finance agricultural development projects,
primarily for the expansion of food production in developing countries. The
recommendation was endorsed by the United Nation's General Assembly, and
this fund was set up as the 13th specialised agency of the United Nations.

Up to 31 March, 2006, 12 projects with assistance from IFAD amounting to

US$ 322.07 million had been implemented in India. Presently seven projects
with a total assistance of US$ 157.72 million are under implementation. These
are on community resource management, tribal development, micro finance and
livelihood security.

ii) The United Nations Development Programme (UNDP)

The United Nations Development Programme is the largest source of
development cooperation in the UN system. The overall mission of the UNDP is
sustainable human development through high priority to poverty alleviation,
gender equity and women's empowerment, and environmental protection. The
UNDP derives its funds from voluntary contributions from various donor
countries. India's annual contribution to the UNDP has been to the extent of
US$4.5 million (Rs. 20.25 crores), which is the largest among the developing
countries.

The resources of the UNDP are distributed across countries, taking into account
population and per capita Gross National Product. The country-specific allocation 69
DynamicsofDevelopment of UNDP resources is made every five years under the Country Cooperative
Framework (CCF) .
The CCF focuses on the following thematic areas
Promoting human development and gender equality
Capacity building for decentralization
Poverty eradication and sustainable livelihoods
Vulnerability reduction and environment sustainability
iii) The United Nations International Children's Fund (UNICEF)
UNICEF was created by the United Nations General Assembly in 1946to provide
energy food and health care to children in countries devastated by World War 11.
UNICEF relies on contributions from government and private donors. UNICEF
supports activities in the following areas
Early child development through a focus on children under three years of
age, and with special attention to early learning and care, low birth weight
and malnutrition, sanitation and hygiene, routine immunization, and safe
motherhood
The promotion of universal elementary education, particularly for girls, by
concentrating on: (a) girls from difficult backgrounds including Scheduled
Castes and Scheduled Tribes; (b) enhancing learning achievements; (c) and,
mobilizing community involvement in schools
The protection of children who are vulnerable to labour, trafficking, and
sexual exploitation, as well as promoting an enabling environment for
addressing protection issues
The prevention of HIVIAIDS among children through: (a) imparting life
skills to young people; (b) scaling up national efforts in the prevention of
mother-to-child transmission; (c) and, advocating policy development and
community-based actions to respond to those affected by HIVIAIDS
Emergency preparedness and response to reduce vulnerabilities, and support
the continuity of sector interventions.

The results of the UNICEF Reproductive and Child Health (RCH) programme
have contributed to reduced infant and maternal mortality in the following manner
An increased percentage of children have been fully immunized
There is improved quality and access to the health system
There are improved home practices, including management of childhood
illness in selected districts
The pron~otionof care practices for pregnant and lactating women and
newborr~s.
iv) World Food Programme (WFP)
The The World Food Programme was first established in 1960. Governed by an
Executive Board, it has representatives from 36 countries. It is the food aid
branch of the United Nations, and is one of the world's largest humanitarian
organizations. The main aim of the WFP is to eradicate hunger and malnutrition.
The main goals of the WFP are to Development Agencies

Save lives in refugee, and other emergency situations

Improve the nutrition and quality of life of the most vulnerable people at a
critical times in their lives
Help build assets to promote the self reliance of poor people and communities,
particularly through labour intensive work programmes.

The WFP has undertaken development projects support to supplementary feeding

through ICDS; forestry, through food for work; livestock and dairy development;
irrigation and rural development activities; and, assistance during natural
calamities, such as floods in Assam, Madhya Pradesh, the super cyclone in Orissa,
the earthquake in Gujarat, and tsunami assistance in Tamil Nadu and Andaman
and Nicobar Islands.

In India, the WFP implements its projects through five-year Country Programme
(CP) cycles, keeping in step with the Five Year Plan of the Government of India.
The Country Programme (2003-2007) focuses on assisting the Government of
India to improve their food based programme by creating replicable models to
overcome the issue of food insecurity within the country. The priority for WFP
operations in India is to address the specific problems of hunger and
malnourishment amongst children and women. Consistent with the 10th Five
Year Plan of the Government of India, the current CP focuses on nutrition, I

education for girls, and asset creation in regions with high levels of food insecurity,
and low levels of human development. The most recent CP has two major goals
To play a catalytic role in the country's efforts to reduce vulnerability, and
eliminate hunger and food insecurity among the hungry and poor
To promote and demonstrate models that provide immediate and long term
food security in the most food insecure districts, in the least developed states
of the country.
The activities under the current CP include
Improving the nutritional status of children and women by providing support
to the Integrated Child Development Services (ICDS).
Investing in human development, with a special emphasis on girls through a
food for education programme. The aims of this activity are to contribute to
the achievement of the government's goal of universal elementary education,
and to assist the Ministry of Tribal Affairs in establishing a successful model
for school feeding.
lmproving food security through disaster mitigation and the preservation
and creation of assets through a food for work programme. The primary
goal of the activity will be to improve the long term household food security
of the most disadvantaged people through preservation, and creation of assets
such as dug wells, ponds, field bunds, and forests.

v) The World Health Organization (WHO)

The World Health Organization is the international agency within the United
Nations' system that is responsible for health programmes. The WHO objectives,
71
Dy-csdDevelopment as set out in its constitution, is the attainment,by all people, of the highest possible
level of health. Health is defined in the WHO constitution as a state of complete
physical, mental and social wellbeing, and not merely the absence of disease, or
infirmity. Its major goal is to combat disease, especially infectious diseases, and
to promote the general health of people.

The WHO's Country Office (WCO), India collaborates with the Government of
India. The primary partnership of the WCO is with the Union Ministry of Health
and Family Welfare, with which it has day-to-day liaison with the ministry's .
International Health Division. WCO is guided by its Country Cooperation Strategy
(CCS). The most recent CCS, 2006-2011, is the basis for undertaking technical
assistance in collaboration with the Government of India, the states, development
partners, and civil society. The CCS is the WHO's tool for alignment with national
health strategies and priorities, as well as for harmony with other UN agencies,
and development partners.

The WCO is organised around core programme clusters. Each of the core clusters
has programmes on diseases such as communicable and non-communicable
diseases or focuses on a specific area in the health sector such as child and
adolescent health, and the health system. The WCO also has special programmes
that focus on specific initiatives, such as the National Polio Surveillance (NPSP),
Routine Immunization, Disease Surveillance, Revised National Tuberculosis
Control (RNTCP), Emergency and Humanitarian Action,

vi) The United Nations Population Fund (UNPF)

The U'nited Nations Population Fund (UNPF) was formed in 1969 by the name
United Nations Fund for Population Activities. The UNPA supports programmes
in Arab states in Europe, Asia and the Pacific, Latin America and the Caribbean,
and sub Saharan Africa. The main trust of the UNFPA is to "reduce poverty, and
to ensure that every pregnancy is wanted, every birth is safe, every young person
is free of HIV/AIDS, and every girl and woman is treated with dignity, and
respect." The main thrust of UNFPA is
Universal access to reproductive health
Universal primary education, and closing the gender gap
reduce maternal and infant mortality
enhance life expectancy
and to reduce HIV infection rates.
In this section you read about the role played by UN agencies in development.
Now you should be able to answer the questions given in Check Your Progress 3.

Check Your Progress 3

Note: a) Write your answer in about 50 words.
b) Check your answer with possible answers given at the end of the unit
1) What is the main thrust of the UNFPA?
.......................................................................................................................
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72 .......................................................................................................................
 2) What are the objectives of UNICEF's RCH Program? Development Agencies

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4.6 LET US SUM UP

Development agencies play an important role in the development of a nation. In
India, the National Planning Commission, the Finance Commission, the State
Finance Commission, and State [Link] play vital roles in the formulation
of national and state plans. At the district level, under the umbrella of decentralized
planning, the District Planning Committees are being involved in preparation of
district development plans. This unit also discusses the role and the functions of
various bilateral and UN agencies, such as the World Bank, the ADB, UNICEF,
USAID, CIDA, along with others and their work in the development of various
sectors. The development agencies, including NGO's and banks, also play an
important role in the socioeconomic development of a nation.

4.7 REFERENCES AND SELECTED READINGS

1) Multilateral and Bilateral Economic Assistance;

I [Link]
2) The Planning Commission of India; [Link]
3) The Finance Commission of India; [Link]
I

4) The Industrial Bank of India; [Link]

d
5) The National bank for Agriculture and Rural Development; http://
[Link]/
6) The World Bank; [Link]
I
I
7) The International Monetary Fund; [Link]
8) The Asian Development Bank;
[Link] = CJuWs8aouZOCFcItp
AodXTPXigv
9) Multilateral and Bilateral Economic Assistance to India;
[Link]
I
Brochure%[Link]
t

73
-

CHECK YOUR PROGRESS - POSSIBLE

Dynamics ~f Development
4.8
ANSWERS
Check Your Progress 1
1) Describe the brief history of the Planning Commission of India. What
are the key functions of the Commission?
e
Answer. After gaining independence, India adopted a formal model of planning,
and the Planning Commission, reporting directly to the Prime Minister of India,
was established. The Planning Commission was set up on 15 March 1950, with
Prime Minister Jawaharlal Nehru as the chairman. Some important functions of
National Planning Commission are
To make an assessment of the material, capital, and human resources of the
country, including technical personnel, and investigate the possibilities of
augmenting such of these resources as are found to be deficient in relation
to the nation's requirement
To formulate a Plan for the most effective and balanced utilisation of country's
resources
After determining priorities, define the stages in which the plan should be
carried out and propose the allocation of resources for completion of each
stage.
2) Discuss the roles, functions and powers of the Finance Commission of
India.

Answer. Under Article 280 of the Indian Constitution, the Finance Commission
is required to make recommendations to President regarding

1) The distribution of net proceeds of taxes to be shared between the Centre

and the States, and the allocation between the states of the respective share '
of such proceeds

2) The principles which should govern the grants-in-aid by the Center to the 6

states out of the Consolidated Fund of India

3) The measures needed to augment the consolidated fund of a State to
supplement the resources of the panchayats and the municipalities in the
state, on the basis of the recommendations made by the State Finance
Commission.

Check Your Progress 2

1) Financial institutions play a key role in the country's path to development.
Discuss this in the light of the role played by the IDBI and by NABARD.

Answer. The IDBI is vested with the responsibility of coordinating the working I

of institutions that are engaged in financing, promoting, and developing industries.

It has evolved an appropriate mechanism for this purpose. NABARD initiates
measures toward institution-building for improving the absorptive capacity of
the credit delivery system. This includes monitoring, formulation of rehabilitation
schemes, restructuring of credit institutions, training of personnel, etc. NABAR TI i
74
coordinates the rural financing activities of all the institutions engaged in Development Agencies
developmental work at the field level, and maintains liaison with the government
of India, state governments, with the Reserve Bank of India, as well as with
other national level institutions that are concerned with policy formulation.
2) The World Bank is a vital source of financial and technical assistance
to developing countries around the world. Discuss this statement in the
context of India.

Answer. The World Bank is a vital source of financial and technical assistance
to developing countries around the world. It is made up of two unique
development institutions-the International Bank for Reconstruction and
Development (IBRD), and the International Development Association (IDA).
The IBRD focuses on middle income and creditworthy poor countries, while
IDA focuses on the poorest countries in the world. Together they provide low
interest loans, interest free credits, and grants to developing countries for a wide
range of activities that include investments in education, health, public
administration, infrastructure, financial and private sector development,
agriculture, and environmental and natural resource management.

Check Your Progress 3

1) What is the main thrust of the UNFPA?
Answer. The main thrust of the UNFPA are: (i) Universal access to reproductive
health (ii) Universal primary education, and closing the gender gap(%) To reduce
maternal and infant mortality; (iv) Enhance life expectancy; (v) To reduce HIV
infection rates.

2) What are the objectives of the UNICEF's RCH Program?

Answer. The UNICEF Reproductive and Child Health (RCH) programme
contributes to the reduction of infant and maternal mortality by realizing the
following
a) An increased percentage of children, fully immunized
b) Improved quality and access to the health system
c) Improved home practices, including the management of childhood illness
in selected districts
d) Promoting care practices for pregnant and lactating women and newborns. I

75