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Growth Centred Approach Under PURA: The Way Forward for the World Bank India Country Partnership Strategy 2013-2017

Abhilaksh Likhi's picture

The broad objective of the World Bank’s India Country Partnership Strategy Report (CPS) for the period 2013-2017 is to support poverty reduction and shared prosperity in India. The Report states that between 2005 and 2010, India’s share of global GDP increased from 1.8 to 2.7% and 53 million people were lifted out of poverty. But it also states that with population growth, it has proved difficult to reduce the absolute number of poor at a rapid pace and 400 million Indians still live in poverty. Each of the seven low income states (Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha, Rajasthan; Uttar Pradesh)  and seven special category states (Assam, Himachal Pradesh, Manipur, Meghalaya, Mizoram, Sikkim, Uttrakhand) have poverty rates that are higher than that of the more advanced states. The low income states, where a large majority of the poorest 200 million Indians reside, are a priority for the World Bank Country Strategy funding during 2013-2017 (estimated to be $ 5 billion annually with 60 percent lending through direct financing of state projects of which half will go to low income and special category states).

India, both in the above mentioned and its advanced states (e.g. Punjab, Haryana, Kerala) is undergoing a massive rural- urban transformation- one of the largest in the 21st century. For the first time since independence, India has seen a greater absolute growth in urban population. The number of towns has increased from about 5000 in 2001 to 8,000 in 2011 and some 53 cities have a population exceeding one million. Today 30.1 percent of the population lives in urban areas and the share is expected to rise to 50% in the next 20 years (with urban India expected to generate 70% of its GDP by 2030). Though villages vastly outnumber towns in India (660,000 villages as per Census 2011), the construct of these villages is changing as the economy grows.

As per the Indian Institute of Human Settlement’s  (IIHS 2011) analysis of Census data, though proportion of rural India living in small villages and hamlets (of fewer than 2000 people) has decreased from 63% to an estimated 28%, at the same time the percentage of people living in large villages (more than 5000 people) has jumped from 5% to 17%. The latter may not qualify as towns, the analysis adds, but they do mimic urban living. In this context, IIHS Report  notices the striking importance of what it describes as a ‘grey zone’ of between 80-140 million people living  between the smallest town and the largest village of more than 5000 people with more than 75 percent of its male population working off the farm. It is herein, the Report observes, that the success of India’s labour intensive manufacturing, rural livelihood and skill building policies (in both the informal and formal sectors) will be sorely tested.

Therefore, according to the World Bank’s India CPS Report, accelerating urbanization is central to India’s growth, development and poverty reduction but it cannot be done without an equally pronounced focus on rural development. Rural areas with deficient basic services (housing, social security, energy, food, education, drinking water & sanitation, health care) are often poorly connected to expanding villages, small towns and cities, resulting in weak value chains for agricultural products and slow rates of off farm job creation (e.g. services, construction and  light manufacturing).

The IIHS Report emphasises that India’s urbanization will interact with the country’s ongoing demographic evolution to shape the extent of the ‘demographic dividend’. A young labour force (8 million entering the labour force every year with 16 percent deriving income from wage employment and more than half engaged in agriculture) is, therefore, in the process of  migrating and making a transition into more or less productive employment avenues.

In the backdrop of 2011 Census, the IIHS Report identifies twenty streams of youth migrations that make up half of the total migrants over the 2001-10 decade. The most significant total migration flows (urban & rural) are from Uttar Pradesh, Bihar, Kerala, Madhya Pradesh and Karnataka. Key destination states are Delhi, Tamil Naidu, Kerala, Haryana, UP and Bihar. Urban migration is much more diverse but the lead source states still continue to be UP, Bihar, Tamil Naidu, Karnataka and Haryana. Herein, key destination states include Delhi, Kerala, West Bengal, Maharashtra, Tamil Naidu and Andhra Pradesh.

In wake of the above migration patterns detailed in the IIHS Report,  there is a dire need to strengthen rural-urban linkages that enable growth centres/clusters in  or across 640 districts within states to become catalysts for rural employment and to reduce rural poverty through local self government led public-private partnerships. Such growth centres/clusters ought to have economic potential based on comparative advantage (natural endowments, traditional skills and basic entrepreneurial spirit) and ought to be located in areas that are witnessing higher migration of rural youth.   

In the above context, Provision of Urban Amenities in Rural Areas (PURA) is a national central sector program that was initiated as a pilot project in 2005. It aims at narrowing the gap in the availability of physical and social infrastructure between rural and urban areas through provision of urban amenities and livelihood opportunities. It also aims at catalyzing the convergence between different infrastructure schemes and create a new model of management of urban services in rural areas. Its salient features include i) simultaneous delivery of key infrastructure in villages leading to optimal use of resources ii) provision of funds for O&M of assets for 10 years post construction along with capital investment iii) transformation of several schemes into a single project to be implemented as per set standards on a defined time frame and with the requirements of each scheme being kept intact iv) combining livelihood creation with infrastructural development v) enforcement of standard of service delivery in rural areas almost at par with those obtaining in urban areas and vi) enforcement of service standards through a legally binding arrangement. 

Holistic and accelerated development of compact areas around a potential growth centre/cluster in the Gram Panchayat area (or a cluster of five contiguous Gram Panchayats- the lowest of the three tier village government structure in India) is to be executed through a public private partnership. The core funding is to be sourced from the convergence of central government schemes and complemented by additional support through the PURA scheme. The private sector is envisaged to bring on board its share of investments besides operational expertise. Other features entail a) competitive selection of a lead agency/anchor partner with clear articulation of roles, rights and responsibilities, b) commitment of the state government, c) selection of growth centres /clusters on basis of economic growth potential, d) creation of sustainable revenue model to encourage commercial banks and private sector to participate.

There are two main relationships in the project based design of the program, viz., one between the Gram Panchayat, the District Rural Development Agency (DRDA) in the district and the Special Purpose Vehicle (SPV) for the development of the PURA project and two between the Union Ministry of Rural Development, the State government and Project SPV. These relationships are governed by a concession agreement and the state support agreement for an operational period of thirteen years (of which three years are allocated for development of project facilities and ten years for operating and maintaining the same).  
The scope of the program targets to cover approximately 3000 Census Towns (emerging towns identified by the Census of India with a minimum population of 5000 with more than 70 percent of population in nonfarm jobs and governed by Gram Panchayats) and non-municipal block headquarters in rural areas of various states. It is proposed to undertake 600 PURA projects during the 12th Plan Period (2012 -2017) that would entail an expenditure of over $ 9 billion annually. The latter is the annual expenditure being currently incurred on the centrally sponsored flagship program Mahatma Gandhi National Rural Employment Program (MGNREGA) that aims at creating a public safety net for livelihood security in rural areas and also provides for an unemployment allowance.  

The states in which PURA pilot projects have been initiated include Uttarakhand, Rajasthan, Andhra Pradesh, Puducherry, and Kerala. The major livelihood services to be provided include rural tourism, food/meat processing, Apparel Park, agricultural park/support, micro/small industries and rural business hubs. The World Bank India CPS could be very instrumental in taking up an analytical study that examines the implications of convergences needed between basket of basic service schemes being managed by the Union Ministry of Rural Development (water, sewerage, drainage, solid waste, skill development etc) and other union line ministries (street lighting, telecom, electricity generation, etc) to take up PURA projects through growth centres/clusters in the low income and special category states.

It goes without saying that the key to a robust and sustainable public private partnership in this last mile program are empowered Gram Panchayats (there are over 260,000 for villages and groups of villages). The first key institutional challenge, therefore, is to make program implementation effective by enforcing PRI ‘activity mapping’ (unbundling subjects into smaller units of work and assigning these units to different levels of local government). Once the activities are unbundled, they are to be assigned to each of the local government tiers where they can be most efficiently performed. Empowering Gram Panchayats with funds, functions and functionaries (3F’s), especially in Schedule Five Areas, is a critical incentive to build their institutional capacity for service delivery in PURA growth centres/clusters.

The World Bank India CPS must specifically support the Union Ministry of Panchayati Raj’s programs such as the Accountability Incentive Scheme (PEAIS) that measures the “Devolution Index” in various states for macro parameters such as setting up of State Election Commissions and District Planning Committees. Infact, this Index should be expanded to incentivize and monitor implementation of micro parameters (e.g. activity mapping) at the level of Gram Panchayats.  In this context, Kerala is an example of a province that has mapped and assigned activities and sub activities by legislation to Gram Panchayats. For instance, responsibilities in areas of agricultural extension, watershed management, soil conservation and management of assets have been detailed for the Gram Panchayat, Block Panchayat, District Panchayat, Municipal Corporation and the State Headquarters separately.

In the above context, it is also pertinent to highlight two other areas of critical importance. First, India’s 12th Five Year Plan (2012-2017) emphasizes capacity and training enhancement of approximately three million elected representatives and related official functionaries at the grassroots every year. Second, all Gram Panchayats are to be connected with fibre based broadband along with associated infrastructure to enable them to electronically track national flagship program funds, improve internal management processes and infact supervise converged flow of funds efficiently. The World Bank India CPS, therefore, should also support scaling of the Union Ministry of Panchayati Raj’s schemes- The Rastriya Gram Swaraj Yojana (RGSY) and the Backward Regions Grant Fund (BRGF) that focus on training needs of the above mentioned target groups while plugging crucial gaps in  infrastructure (of connectivity, both digital and physical) at the Gram Panchayat level.

The second key issue is the need for multi sectoral convergence within PURA growth centres/clusters for the latter to be job creation engines during the next five years. This would include programs and schemes for the rural youth that impinge upon small farms, agri-business, micro-enterprises, self employment, self help group (SHG) activity, labour intensive manufacturing, skill development etc. The four critical elements herein would be accelerating job creation (with construction as the biggest contributor), raising farm productivity (agricultural infrastructure and extension) , increasing public spending on basic services (health care and elementary/vocational education)  and well as making them more effective (bio-metric technology, conditional cash transfers and social audits).

A World Bank study points towards three manufacturing activities amongst micro enterprises as most important across all developing countries- textiles and apparel, food & beverages and wood & forest products. These account for 90% of the manufacturing enterprises in rural areas. Besides, India’s 12th Five Year Plan outlines five trades that have the potential to create large employment for the youth in rural areas- textiles & garments, leather & footwear, gems & jewellery, food processing industries, handloom & handicrafts. In addition, labour intensive services such as tourism circuits, hospitality, retail trade and transportation would also be critical in absorbing low skilled youth moving out of farm jobs in PURA growth centres/clusters. 

In this context, there are four key national programs/schemes where synergies need to be identified for effective livelihood generation in PURA growth centres/clusters in collaboration with civil society. These being MGNREGA, National Industrial Manufacturing Zones (NIMZ), The National Rural Livelihood Mission (NRLM) and National Skill Development Mission (MSDM). In addition, critical operational issues of priority e.g. reliable & low cost power, road/rail/air/port connections, transparent tax administration, access to land & finance need to be dovetailed with service provision in PURA growth centres/clusters. In this context, The World Bank India CPS could support nongovernmental organization backed skill orientation projects to train rural youth in addition to connecting young people to jobs through skill inventories in low income and special category states.   

In conclusion, the way forward is to remedy the institutional failures and market imperfections that prevent the state in partnership with the private sector from creating more avenues for youth livelihoods.

Photograph courtesy of Simone D. McCourtie via The World Bank Photo Collection, available here.
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