DATABASE & RESEARCH METHODOLOGY AND REVIEW ...

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Chapter -1

DATABASE & RESEARCH METHODOLOGY AND REVIEW OF LITERATURE

1.1 Introduction

1.2 Primary Sector

1.3 Zilla Parishad (ZP)

1.4 Statement of the Problem

1.5 Objectives of the Study

1.6 Tiffe of the Dissertation

1.7 Hypothesis of the Study

1.8 Database and Research Methodology

1.9 Chapter Scheme

1.10 Review of Literature

References

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Chapter -1

DATABASE & RESEARCH METHODOLOGY AND REVIEW OF LITERATURE

1.1 Introduction

Even in the era of the economic reforms, the importance of the

government in the countries like India has not been declined.

It is because of the important role of the government in socio-economic

development of the economy as well as, ever growing expectations

of the people from the government. This is true in the case of all

categories of government i. e. Union, State, Local. The government

at different layers plays the number of functions, duties and

responsibilities to promote socio-economic development as well as

increase in the state of well being by providing the number of socio­

economic services and amenities. The ever rising number of duties,

responsibilities and functions contribute to socio-economic

development, but at the same time rapidly increase its public

expenditure. It necessitates to mobilize revenue in increased quantum.

It is expected that in the course of time, achieved development should

help in mobilizing additional revenue for the government.

This necessitates to study the relationship between economic

development and resource mobilization of the government in general or

concerning a particular productive sector development and resource

mobilization.

It is a fact that the people are more closely connected with the

local bodies. In the case of country like India, it is true in the case

of rural local bodies. Because of domination of rural economy and need

for rural development. In this background, it is worth to examine

development resource mobilization relationship in the context of rural

local bodies. Zilla Parishad (ZP) is a major and important constituent

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of rural local bodies. As a result, it will be appropriate to study revenue

development linkages with special reference to Zilla Parishad.

Kolhapur is one of the developed districts in the state

of Maharashtra. However, it is also dominated by the rural economy

as like India as well as Maharashtra. Hence, it will be of special

importance to study the nexus between development of primary sector

and resource mobilization by Kolhapur Zilla Parishad (ZP) especially

in the post reform period since 1991.

1.2 Primary Sector

The number of productive/economic activities contribute to

economic development of the economy. For the sake of convenience

and disaggregating of development measured through domestic

product or income is divided into three important productive sectors

namely primary, secondary and tertiary. Primary sector is an important

productive sector as far as development as well as income generation

is concerned. Primary sector is further divided into sub sectors like

agriculture and animal husbandry, forestry and logging, fishing, mining

and quarrying. Agriculture is usually the largest commodity producing

sector of a district economy. Animal husbandry is closely interwoven

with agriculture and plays an important complementary role in the rural

economy. Next to agriculture and animal husbandry, the forestry and

logging sector comprises an important component of primary sector of

the economy. Fishing contributes significantly to generating

employment opportunities or to supplementing the income of small and

marginal farmers as well as landless labours. Mining and quarrying

sector covers the economic activities of production of all major and

minor minerals.

1.3 Zilla Parishad (ZP)

Zilla Parishad is a major component of rural local bodies

in India. Functions of the Zilla Parishad vary from state to state.

In Maharashtra and Gujarat, the Parishad has been specifically

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charged with executive authority in various fields, particularly in those

of planning and development so is designed to be the strongest tier in

the Panchayat Raj system. Zilla Parishad in Maharashtra performs the

number of functions and helps in the rural socio-economic

development. The expenditure on the duties, functions and

responsibilities is met by mobilizing revenue. The revenue sources of

ZP mainly consist of Tax on profession, trade, calling or employment,

tax on water, tax on public entertainments, pilgrimage tax, grants from

the state, land revenue grant, equalization grant, purposive grant,

establishment grant, plan grant, block grant, license fee from butchers,

fee on sale of goods or animals, loans from government etc.

1.4 Statement of the Problem

Government at different levels play a very significant role in

speeding the process of socio-economic development of the economy.

But this requires to spend huge expenditure, which demands additional

resource mobilization. Rural local body in general, and Zilla Parishad in

particular is a bottom level government in India. It is expected to play a

vital role in promoting socio-economic development at rural level by the

Zilla Parishads. But resource constraints is a major problem before them. They have very scanty revenue sources. Besides 73rd

constitutional amendment has increased their duties and

responsibilities. But no assured provision of additional revenue has

been made. Zilla Parishad should attempt to promote socio-economic

development of rural economy, especially primary sector. It is also

expected the higher revenue contribution of primary sector. In this

backdrop, the present study tries examine the finances of Kolhapur

Zilla Parishad in the post reform period.

The budgetary deficit of Kolhapur Zilla Parishad was Rs. 0.95

crore in 1990-91, which rose to Rs. 6.92 crore in 1996-97 and stood at

Rs. 1.07 crore in 2000-01. Its revenue deficit rose from Rs. 3.25 crore

in 1990-91 to Rs. 24.30 crore in 2006-07. Primary sector of Kolhapur

district has contributed by 20% share on an average. But primary

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sector has not contributed much (2% of Revenue expenditure) to the

Revenue of Kolhapur Ziila Parishad. The deficit of Kolhapur Zilla

Parishad relating to primary sector stood at Rs. 29.97 crore in 2000-01

and Rs. 14.65 crore in 2005-06.

1.5 Objectives of the Study

Following are the important objectives of the present study.

1. To study overall fiscal operations of the Kolhapur Zilla

Parishad since 1991.

2. To analyse growth and composition of revenue

of Kolhapur Zilla Parishad.

3. To examine growth and pattern of public expenditure.

4. To review growth of primary sector of the Kolhapur district

in Maharashtra.

5. To study the contribution of primary sector in the resource

mobilization of Kolhapur Zilla Parishad.

6. To assess the impact of primary sector development on

the revenue of Zilla Parishad under study.

7. To find out and suggest new avenues of revenue

mobilization for the Zilla Parishad from the primary sector

as well as rural economy.

8. To study the impact of new economic policy on the fiscal

operation of the Zilla Parishad as well as development of

primary sector.f

1.6 Tile of the DissertationA

The present research study has been completed under the

following title.

"Primary Sector Development and Resource Mobilization

of Rural Local Bodies in Kolhapur District : A Study of Kolhapur Zilla

Parishad since 1991."iU'.X O'tASSKEB WEEK'S UBSASV

c.A—A BlV/Ui kNiVLKU3Y, KCLHAKJR.

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1.7 Hypothesis of the Study

Following is the hypothesis of the present study.

"Government at any layer plays a very important role in socio­

economic development of the area under jurisdiction. Its growing

efforts demands increased resource mobilization due to rapid and

continuous rising public expenditure. This necessitates increased

contribution from achieved development to revenue mobilization of the

government concerned."

1.8 Database and Research Methodology

The present study has collected only the secondary data for its

research. The secondary data was collected from the sources like

budgets, administrative records, reports, surveys, official records and

other publications of Government of India, Government of

Maharashtra, Zilla Parishad and all others. The secondary data was

also collected from Kolhapur Zilla Parishad, Barr. Balasaheb Khardekar

Library, Shivaji University, Kolhapur, Library of Agriculture College,

Kolhapur, District Statistical, Office of Directorate of Economics and

Statistics, Indira Gandhi Institute of Development Research (IGIDR),

Mumbai, Gokhale Institute of Economics and Politics, Pune and so on.

The collected secondary data was classified and tabulated in the

context of hypothesis, objectives and chapter scheme of the study.

The data was processed by employing appropriate statistical tools like

Mean, Simple Growth Rate (SGR), Compound Growth Rate (CGR),

Ratio Analysis, Range, Standard Deviation, Variance, Correlation and

Regression. Likewise, the present study made the use of computer

softwares such as Excel, SPSS. Appropriate charts, graphs, maps are

drawn as per needs and suitability.

The collected secondary data about the fiscal operations of

Kolhapur Zilla Parishad for the latest period of 18 years from 1990-91

to 2007-08 was classified and tabulated in the light of hypothesis and

objectives of the present study into overall fiscal position, growth and

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composition of revenue as well as expenditure of Kolhapur Zilla

Parishad, Revenue receipts and Capital receipts, Tax and Non-tax

revenue and contributions of primary sector to the revenue of Zilla

Parishad. The data concerning Kolhapur district income was classified

and tabulated to study its growth and pattern. The data was processed

by using simple statistical tools like Simple Growth Rate, Compound

Growth Rate, Growth in fold to assess their trends. The Ratio Analysis

was attempted to describe the relative positions of different variables

into Total concerning fiscal operations of Kolhapur Zilla Parishad as

well as Kolhapur district income. To examine the association between

different variables and influence of some variables on the others the

important statistical tools like correlation and regression have been

employed. A tool of standard deviation is used to assess variations in

some variables. For this the use of computer software packages

namely Excel and SPSS has been made. The present study also has

drawn the graphs and figures like bar diagrams, pie diagrams and

trend lines to exhibit trends in some important variables concerning

revenue and expenditure as well as district income.

1.9 Chapter Scheme

Following is the chapter scheme of the present study.

Chapter -1 : Database & Research Methodology and

Review of Literature

Chapter - 2 : Overall Budgetary Position of Kolhapur Zilla

Parishad (ZP) since 1991

Chapter - 3 : Growth and Composition of Revenue of

Kolhapur Zilla Parishad

Chapter - 4 : Growth and Composition of Public

Expenditure of Kolhapur Zilla Parishad

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Chapter - 5 : Development of Primary Sector and

Resource Mobilization by Kolhapur Zilla

Parishad

Chapter-6 : Conclusions and Suggestions

1.10 Review of Literature

The review of major and important research literature on the

research topic is as follows :

Geeta Keripale (2003)1 in her M. Phil, dissertation submitted to

Shivaji University, Kolhapur entitled The Role of Panchayat Raj in the

Process of Rural Development: A Case Study of the Shirol Panchayat

Samittee' studied the role of Panchayat Raj in the process of rural

development.

She observed that Kolhapur Zilla Parishad collects the revenue

from the different sources. However, it is accompanied with the high

degree of fluctuations. Grants-in-aid and miscellaneous sources

occupied a lion's share in the collection of its revenue. Thus, this study

has brought out the fact that Kolhapur Zilla Parishad always heavily

relies upon the mercy of the Maharashtra Government.

Her case study on the Shirol Panchayat Samittee observed that

Shirol Panchayat Samittee depended on the Zilla Parishad for its

revenue mobilisation. It has created a positive impact on the rural

development under its jurisdiction. Five Gram Panchayats were

covered under this study, no doubt, have actively participated in the

process of village economy development through implementing various

development schemes sponsored by the government.

Rupa Shaha (1978)2 in her M. Phil, dissertation submitted to

Shivaji University, Kolhapur entitled 'Finance of Rural Local Bodies with

Special Reference to Kolhapur Zilla Parishad : 1962-63 to 1978-79' has

studied finance of rural local bodies to analyse growth and composition

of revenue and expenditure of Kolhapur Zilla Parishad.

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She observed that revenue of Kolhapur Zilla Parishad always

relied heavily upon the mercy of the state government. Zilla Parishad

has not put in much own efforts to raise funds for the development

welfare purposes. She observed that the Zilla Parishad cannot spend

that amount judiciously for what it is meant for. Therefore, it is

suggested that the state government should release the grants at

proper time by which Zilla Parishad will be in a position to spend them

judiciously and with proper planning and for what it is meant for.

Joshi S. D. & Mitragotri (2002)3 wrote an article titled 'Panchayat

Raj in Maharashtra : Many Achievements'. In this article, they studied

the main constraints on Panchayati Raj institutions in acquiring the

desired status and emergence as agents of development in

Maharashtra. There is lack of political will, the typical attitude of the

bureaucracy, which has always regarded them as subordinate and

inferior institutions. In spite of these constraints on Panchayats in the

state, they have achieved better results as compared to local self-

government institutions in the other states.

They conclude that various controls may give an impression that

these democratic institutions were not allowed to function

independently. However, such controls had become necessary so that

these bodies could act in a responsible manner and help to accelerate

the process of rural development.

Rajaraman Indira & Sinha Darshy (2007)4 in their research

article entitled 'Functional Devolution to Rural Local Bodies in Four

States', said that the Eleventh Schedule added to the constitution by

the 73rd amendment lists 29 functions devolvable by states to rural

local bodies. States were free to set the speed and design of their

approach to decentralisation under the general framework of the

constitutional mandate.

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Based on the data for fourteen-year period, this paper examines

the extent to which functional transfers have been achieved through

the budgetary transfer of funds till fiscal year 2006-07, in four states;

Madhya Pradesh, Chhattisgarh, Rajasthan and Orissa. The approach

taken here is thus radically different from that in official document,

where functional transfers to rural local bodies are dealt with in a purely

qualitative manner, based on administrative notifications without an

associated budgetary provision, which do not carry any operational

significance.

The structure of budget heads and sub-heads is nationally

uniform and therefore any departures found in practice constitute

a violation of that requirement of uniformity. In the absence

of a nationally uniform grant structure an assessment of the functional

devolution across all states calls for an impossibly detailed examination

of the budget of each state.

Oommen M. A. & Datta Abhijit (1995)5 in their book 'Panchayats

and their Finance' published by Institute of Social Sciences and

Concept, New Delhi have given two research papers. In the first paper

'Panchayat Finance and Issues relating to Inter-Governmental

Transfers by Oommen M. A. reviews the existing structure of

Panchayat Finance in a historical context and discusses the important

principles and problems of inter-governmental transfers in the Indian

federal policy in the context of the constitutional amendments and the

10th Finance Commission recommendations. This study concludes

that the goal of building institutions of self-government can be achieved

only if the traditional tasks are pursued with clarity of purpose and

dedication to the cause of democratic decentralization and finance is

made to play the inevitable midwifery role in this task.

In the second paper titled 'Finance Commissions and

Restructuring of Panchayat Finance' by Datta Abhijit focuses attention

on the conceptual and operational problems before the State Finance

Commissions in relation to Panchayat function and finance. The study

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concludes that the Panchayats are to be strengthened as institutions of

self-government and the fiscal strengthening of the Panchayats

involves simultaneous measures for fiscal and organisational

contraction of the state government.

Nandedkar V. G. (1979)6 in his book 'Local Government : Its

Role in Development Administration' published by Concept Publishing

Company, Delhi tries to enlighten the unity in the apparent dichotomy

in the functions of local government and of the development

organisation as these are fused in Panchayati Raj institutions. In this

book, a case study of Nasik Zilla Parishad, District Nasik (Maharashtra)

is incorporated. However, the Panchayati Raj institutions have been

modelled on the proto type supplied by the Balwantrai Mehta

Committee all states differ more than agree on the powers and

functions of these institutions.

Even within a state, there are wide variations in the functional

performance of these bodies on account of the nature of leadership

offered by these organisations, the level of politicization of the people,

the impact of geographic conditions and the extent of economic

development of the district, and similar other variables. This increase

the importance of a case study and its crystallized conclusions would

help towards the better understanding of Panchayati Raj institutions.

He concluded that with all shortcomings on the structural side

and shortcoming in evolving suitable behavioural patterns, the

Panchayati Raj Institutions have proved to be great potential in

modernizing force in the tradition bound rural Indian, (p.188)

Muthayya B. C. (1972)7 in his book ‘Panchayat Taxes : Factors

Influencing Their Mobilization : A Study in Three Panchayats in East

Godavari, Andhra Pradesh’ published by National Institute of

Community Development, Hyderabad, has focused on understanding

the factors facilitating tax paying behaviours is of considerable

importance, when the task of the planners is oriented towards

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mobilizing local resources for local development. This has another

dimension also viz. encouraging people's participation.

He concluded that the Panchayats were functioning properly.

However, it is necessary the cooperation among the members,

between the one body and another. It is necessary to the Sarpanch

and the officials to have knowledge about taxes to be levied by the

Panchayat.

Oommen John (1988)8 in his book, ‘Local Government Finances

in India’ which is an outcome of the National Conference on ‘Emerging

Trends in Indian Local Government Finances’ held at the National

Institute of Rural Development in Hyderabad on 24 and 25 October

1996 organized by Konarad Adenauer Foundation. Oommen John

wrote a research paper entitled’ Panchayati Raj Finances in Kerala :

Tasks Ahead ‘. This paper tries to assess the resource base of each

tier rural local bodies and to analyse as to what more needs to be done

to strengthen their financial grounding.

The present study observed that the financial resources of the

Panchayat Raj Institutes need to be reinforced, as the existing

resources are not enough to carry out their increased responsibilities.

The position of Gram Panchayat is much better than the two tiers since

it only has taxation powers. However, when the per capita income is

taken into consideration, the position of the Gram Panchayat is not

very strong. Efforts must be made to encourage the local bodies to

generate their own resources.

He concluded that the another way to improve the financial

stability is to allow these bodies to borrow and raise loans for their

programmes.

Pal Mahi (2004)9 wrote a article namely ‘Panchayati Raj and

Rural Governance.' In this article he focused on one of the objectives of

the 73rd Amendment was to give certainty, continuity and strength to

the Panchayats. The experiences of the functioning of the Panchayats

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reveal that while elections have been held regularly, barring a few

states, the states have been slow in developing power to the

Panchayat bodies.

He concluded that until the political parties are prepared to

accept the effective decentralisation as one of the issues in their

election manifestos, the Panchayats will remain at the mercy of the

central and state governments even after another amendment. Hence,

both planks of the strategy for empowerment of the Panchayats have

to be applied simultaneously for better results in future.

Consequently, greater autonomy for the Panchayat is not

coming from the grassroots because of the villagers do not consider

Panchayats as their problem solving institutions and elected

representatives of the Panchayats consider themselves helpless in

solving people's problems. It means that the demand side of the

Panchayati Raj in terms of asking for more power by the Panchayats is

badly lacking.

Narayana D. (2005)10 wrote a article titled ‘Local Governance

without Capacity Building : Ten Years of Panchayati Raj’.

This paper analyses the functioning of the elected

representatives at the Gram Panchayat level in Madhya Pradesh,

Tamil Nadu and Kerala. In these three states Panchayat Presidents

understood the legislation letter but planning for development is a far

cry, as little effort seems to be have gone into capacity building and

devolution of powers and resources.

He concluded that unless larger powers and resources are

devolved and elected representatives are trained local government will

be a dream.

There is no substitute to local governance if it felt needs of the

local population have to be met. The Indian constitutional amendments

of 1992 recognize that necessary. The passing of laws however has

not led to local self-governance owing to three distinct sets of factors

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lack of devolution of powers and resources lack of capacity building

and poor involvement of women.

Dr. Kamble, P. S. (2007)11 in his research paper entitled, "Rural

Local Bodies and Rural Development" examines the role of Village

Panchayats as a unit of rural local bodies in the rural development of

rural economy of Kolhapur district for the latest period of 2001 to 2007.

He has selected a few Village Panchayats from Kolhapur district and

has attempted to assess that role. He found that Villa Panchayats

as a unit of rural local bodies can play a very vital role in the rural

development of the areas then represent. But weak financial position is

an important obstacle in it. This demands to provide for necessary

resource base for them.

The foregoing review of literature concerning my research topic

revels that a number of research studies have been conducted relating

to rural local bodies in general and Zilla Parishad in particular.

They have studied various dimensions of their fiscal operations.

They consist of Revenue, Expenditure as well as their various aspects

and heads and subheads. But no studies have been undertaken in the

context of economic reforms programme being implemented since

1991 in India. More importantly, economic development, its sectoral

distribution and their contribution in revenue mobilization of the rural

local bodies is a totally missing aspect, which is thoroughly attempted

by the present study. It is a totally new addition in the research on the

present topic. Likewise, the impact on fiscal operations of rural local

bodies of the economic reforms in general and fiscal reforms in

particular is also an important issue missing in the studies previously

conducted. It is also incorporated in the present study.

Thus, present study is a novel in nature, which takes into

consideration only new and mission aspects concerning rural local

bodies with reference to Kolhapur Zilla Parishad. Hence, it is an

important study with new additions to the research on this topic.

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References

1. Keripale Geeta (2003), The Role of Panchayat Raj in the

Process of Rural Development : A Case Study of the Shirol

Panchayat Samittee, M. Phil, dissertation submitted to Shivaji

University, Kolhapur.

2. Shaha Rupa (1978), Finance of Rural Local Bodies with Special

Reference to Kolhapur Zilla Parishad 1962-63 to 1978-79,

M. Phil, dissertation submitted to Shivaji University, Kolhapur.

3. Joshi, S. D. and Mitragotri, N. P. (2002), Panchayati Raj in

Maharashtra : Many Achievements, Kurukshetra : A Journal on

Rural Development, Vol. 50, No. 9, New Delhi, pp. 43-45

4. Rajaraman Indira and Sinha Darshy (2007), Functional

Devolution to Rural Local Bodies in Four States, Economic and

Political Weekly, pp. 2275-2283

5. Oommen, M. A. and Datta Abhijit (1995), Panchayats and their

Finance, Institute of Social Sciences and Concept Publishing

Company, New Delhi.

6. Nandedkar, V. G. (1979), Local Government : It’s Role in

Development Administration, Concept Publishing Company,

Delhi.

7. Muthayya, B. C. (1972), Panchayat Taxes : Factors Influencing

Their Mobilisation : A Study to Three Panchayats in East

Godavari, Andhra Pradesh, National Institute of Community

Development, Hyderabad.

8. Oommen John (1998), Local Government Finances in India,

Konarad Adenauer Foundation, Manohar Publishers, New Delhi,

pp. 197-206.

Pal Mahi (2004), Panchayati Raj and Rural Governance,

Economic and Political Weekly, Vol. XXXIX, No. 2, pp. 137-142,.

9.

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10. Narayana D. (2005). Local Governance without Capacity

Building Ten Years of Panchayati Raj, Economic and Political

Weekly, Vol. XL, No. 26, pp. 2822-2832.

11. Kamble, P. S. (2007), 'Rural Local Bodies and Rural

Development', a research paper, National Seminar Volume (12,

13th March 2007), Centre of Gandhian Studies, Shivaji

University, Kolhapur.