Building prosperous villages

To a common man on the street, the news that millions of youth and women, who should be working, have stopped looking for work in India is disconcerting. The media is abuzz with the study by the Centre for Monitoring Indian Economy (CMIE) which shows that unemployment in India is at 8.1 per cent in February 2022.

In her budget speech this year, Finance Minister Sitharaman said, “Capital investment holds the key to speedy and sustainable revival”. Rs 111 lakh crore are supposed to be invested between 2020-2025 to build infrastructure across the country. The common man wonders why hardly any jobs are being created despite the government investing these huge amounts in ‘infrastructure’ and also saying that GDP, GST collection and exports are all growing. Are all these increasing because the country has invested hugely in expressways, airports, etc., which don’t really provide long-term, productive jobs for the unskilled/semi-skilled millions who need them? Is this the reason that this capitalist growth is increasing both the number of billionaires and inequality in the country? The top 10 people in India are holding 57 per cent of the wealth and the bottom half are holding 13 per cent, says the latest report of Oxfam, “Inequality Kills”.

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Experts point out that by concentrating on capitalist growth, we have neglected local production of low-tech, labour-intensive consumer goods that put millions of people to work. Would the following experiment in this direction by Elango Rangasamy, Ex-President of Kuthambakkam Panchayat, Thiruvallur District, Tamilnadu, be the solution for the problem of unemployment and inequitable growth?

Speaking at a national online lecture on “Governance of Local Resources and Local Economy” organised by the Centre for Rural Management, Kottayam, Kerala, on 24 July 2021, Elango said that selling all raw produce grown in the village to big companies in urban centers who possessed huge technology to process and add value to them would result in the companies making huge profits. The profits would not reach the actual producers in the village leaving them in poverty. This thinking is entirely similar to the thinking of the farmers who protested for a year in Delhi against the farm laws.

Inspired by the thoughts of Gandhi and J C Kumarappa, and by the axiom “Small is Beautiful”, Rangasamy founded the ‘Trust for Village Self-Governance’ in 2001 to take his ideas forward. His aim was to develop a viable local economy by localising both production and consumption. Developing local industries that used local produce and resources would give employment to locals. By this, profits remained within the village enriching the locals, reducing their dependency on the urban, national or global markets. This would also curb the growing migration towards cities in search of employment.

Based on these ideas, the Kuthambakkam panchayat commissioned a door-to-door survey in the 1990s, which found that the village consumed goods and services worth Rs 60 lakh and had the potential to produce goods worth Rs 50 lakh per month. According to Rangasamy, clusters of villages could become local markets for this produce and this approach was named as the ‘Network Growth Economy’. Six villages could form a cluster and be a kind of free-trade zone. A network could contain 15-20 villages and a population of 50,000-60,000. A village typically consumed 40 items including rice, dal, oil, baked foods, vegetables, cereals, soaps, detergents, clothes, etc. The production of these items was not meant to be sold outside the region. The value of these consumables was Rs 55-60 million per month.

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It was found that more than 80 per cent of village consumption could be met through value-addition done to the local produce. The quantity of paddy cultivated in Kuthambakkam, for instance, was 2 million kg annually. If paddy was processed within the village, the total yield of rice from paddy would be 1.4 million kg along with the by-product of husk and bran. 130 persons/families could be given employment through this value-addition. The network villages would share their produce between themselves, supplement each-others’ production and processing. This way, money would rotate within the villages and it would not leave the region because it would be invested back within the cluster. The villages would sell their excess production to other village clusters or towns for money to buy products and services not available in the village.

Traditional skills and knowledge available within the village had to be augmented with appropriate small-scale technology to produce what they needed through small production units. In a 20-village cluster, 60 paddy processing units were set up. In addition, rice, Tur Dal (yellow pulses), ground nut oil, and flour mills, milk processing centres, units making cosmetic and toilet items, construction materials, service industries, etc., were also established.

Under the livelihood programme, 350 families were covered through formation of self-help groups of men, women and marginal farmers. Out of 1,050 households in Kuthumbakkam, around 140 managed to have at least one member in the manufacturing units. On average, the income per family, which was Rs 3,000 to Rs 4,000 in the late 90’s, increased to Rs 20,000 to Rs 25,000 per month.

While the earlier occupation profile of the village had 35 per cent households in farming, and 15 per cent in artisanal and skill-based work, 50 per cent of the families were have-nots. After the Network Economy was created, while the proportion of those in farming remained at 35 per cent, those engaged in artisanal and skilled labour rose to 30 per cent, and the proportion of those in local production rose to 35 per cent.

Rangasamy says, “The Network Growth Economy concentrates on prosperity creation rather than poverty eradication”. He adds, “A new world order will become possible with independent and strong self-sustaining village-based local economies.”

Studies point out that the larger benefits of the ‘Role Model Village’ are the snowball effect on surrounding villages and the curtailment of urban migration.

Rather than merely bemoaning that demonetisation, GST and jobs destroyed by the sudden lockdown, would promoting the above experiment contribute constructively to evolving the much-needed Alternative Agenda for the nation?

(The writer is with the Forum for Democracy and Communal Amity – Karnataka Chapter)