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G. S. PAPER II GOVERNANCE, SOCIAL JUSTICE

Topic: (9)
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34. 5') '%ve 6p%#"icip%"io!7 %!& 6epo0e#e!"7 -%i!e& 0i&e c(##e!c) i! #ece!" &evelope!" li"e#%"(#e8
Decades of development efforts have provoked a feeling of disenchantment with the conventional growth-oriented
strategy of development not prodcing the desired trickle-down effect
!he failres sensiti"ed the planners and administrators to the need for drawing on the indigenos knowledge system
of the local people
#nless people themselves participate$ the programmes administrated %y e&ternal agencies remain e&ogenos to the
rral commnity there%y affecting reslts
A people-centred vision is %eing advanced %y citi"en's organisations working to create an alternative world order
%ased on economic (stice$ environmental sta%ility and political inclsiveness
As the )man Development *eport +#,D- 1../0 commented1 2-eople's participation is %ecoming the central isse of
or times3
39. So, i$ people p%#"icip%"io! % #ece!" &i$cove#)8
4-eople' as real actors in history have %een %roght forward %y the 4S%altern' school. -easant resistances were s%tle
and effective peoples' actions against oppression. -eople do act$ it is for s to appreciate it and mo%ilise it for
participatory people-centric movements. -eople as development actors emerged long ago in the vision and action of
!agore at Shantiniketan and 5andhi at 6ardha. !agore e&perimented with people centred rral development in the
villages for the re(venation of rral arts and crafts and economy in general. 5andhi relied on the mo%ili"ation of
masses and their economic pliftment throgh the development of cottage and small-scale indstries
3:. O.. I -e" "'%" p%#"icip%"o#) &evelope!" i$ ipo#"%!". 5'%" $'%pe$;+o#$ &oe$ i" "%.e8
Anisr *ahman has identified the following different forms of commnity organisations representing collective action
%y the nderprivileged people to improve their socio-economic conditions1
7irst$ there are grassroots organisations that are %asically economic in natre$ ndertaking income-generating
activities with the help of internal resorce mo%ili"ation spplemented %y resorce and knowledge spport from
otside
Second$ there are other organisations that emerge in 4pressre grop' activities. !hey resist e&ploitation or oppression
%y other grops$ assert economic$ social and hman rights inclding women's rights$ or demand services from the
p%lic agencies
!hird$ some of the organisations ndertake social and cltral activities in sch areas as health$ edcation$ cltre and
so on
7orth$ some aim at the promotion of holistic life %y way of activities that integrate spirital advancement with
economic and social development
7ifthly$ commnity organisations to promote ecologically oriented socio-economic life are also growing in many areas
sch as organic agricltre$ social forestry$ coastal fishing etc
Si&th$ participatory action research is %eing prsed %y some organisations to develop people's own thinking a%ot
their living conditions and environment
3<. T'i$ p#oli+e#%"io! o+ co(!i") 2%$e& o#-%!i$%"io!$ ($" 2e 2%c.e& 2) $oe 2e!e+i"$ #i-'"8
!he vale of participation as a facilitative development process has %een widely recognised and ma(or %enefits have
%een identified as follows1
!he participatory process provides important information in the planning$ programming and implementation stages
there%y ensring congrence %etween o%(ectives and commnity vales and preferences
8y rationali"ing manpower resorces tili"ation$ the process redces pro(ect cost
Any change %roght a%ot throgh development is more accepta%le to the commnity if the local people are
involved$ also$ mistakes are more tolera%le if these are made %y people who have to live with them

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9onitoring is %etter$ and sstaina%ility of the pro(ect is more likely even after the withdrawal of the e&ternal agent$ %e
it government or ,5: agency
!he commnity learns from its own involvement and from this point of view$ participation is a 2 way learning process
in which the administrator and the people %ecome co-learners
Active commnity participation helps re%ild commnity cohesion and installs a sense of dignity into the commnity.
-eople gain in confidence and steadily emerge as real actors in the development process.
3=. I$ co(!i") p%#"icip%"io! "'e!* "'e %!$0e# "o %ll &evelope!" p#o2le$8
;ritics of commnity participation arge1 participation has poplarity withot clarity and is s%(ect to growing
faddishness and a lot of lip service
Serios analysis of local commnity life reveals differentiation in terms of stats$ income and power. ;onflicts and
rivalries are not ncommon even among the poor and nderprivileged. !he romantic vision of frictionless$
harmonios commnity life does not match grond realities
<&ternal intervention %y social workers or political activists has %een fond necessary almost everywhere to organi"e
the local commnity and mo%ili"e the local people
It has also %een o%served that there is an imaginary notion of continos activism %y the local people %ehind all
discssions on commnity participation. !otal and continos commitment to activism is more a revoltionary's
dream than the poor people's actal %ehavior
!here are critics who do%t the efficacy of commnity participation in %ringing a%ot radical change in the life of the
poor and the nderprivileged throgh atonomos local action only. Small changes are not rled ot$ %t commnity
participation to %e really effective needs profond social strctral change at %oth domestic and international levels.
;ommnity mo%ili"ation cannot$ on its own$ correct the %asic social im%alances that have their roots in deeper socio-
economic layers of the society
9ar&ist argment1 participatory development within capitalistic mode is nworka%le$ the prpose of participation is
to diffse revoltionary movements and create an illsion of soltion. !he state seeks to s%vert poplar movements
throgh maniplative co-optation of the poor
3>. O.%). P%#"icip%"o#) &evelope!" '%$ i"$ +%(l"$ %!& $'o#"coi!-$ 2(" i" &oe$ $"%!& +o# %c"io!, e?(i") i! #e$o(#ce
&i$"#i2("io! @ $oci%l c%pi"%l %!& 'e!ce c%!!o" 2e i-!o#e&. 5'%" i$ "'e #ole o+ $"%"e i! %ll "'i$8
!he state plays a fndamental role in helping or hindering participation. Different social science theories evoke
different images of state-society relationships. 6hile 9ar&ian and elite theories are pessimistic a%ot the possi%ility
of commnity participation$ li%eral-democratic and plralist theories are mch more helpfl.
State's actions depend pon-
!he definition and prpose of commnity participation$ state's perception a%ot its role and the political will to
decentrali"e power and resorces to local instittions
Accordingly = different state's responses have emerged +ideal models to characteri"e %etter01
Anti-participatory mode1 !he state in a capitalist system is interested$ not in ameliorating the conditions of the poor$
%t in promoting the interests of capital and the rling class. -ower is$ therefore$ concentrated and not dispersed to
facilitate accmlation of wealth
9aniplative mode1 !he state follows a diplomatic approach and the state spport to commnity participation is
intended to ensre political and social control as well as redce local development costs and facilitate sccessfl
pro(ect implementation. State seeks to netrali"e political opposition %y co-opting atonomos movements with the
lterior motive of gaining control over them. !he rhetoric of participation is invoked to mo%ili"e local la%or in state's
development activities and to give legitimacy to the regime in power
Incremental mode1 It is marked %y an am%ivalent approach to commnity participation. !here is no lack of
government spport to participation %t the policy is nclear and piecemeal > ad-hoc approaches are the norm. !he
state in reality is not willing to part with power and to devolve resorces to local commnity grops. Also$ the
%reacrats and the technocrats have their own ways of %ringing a%ot 2efficient3 local development management.

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Still$ commnity participation is not$ in theory$ re(ected and decentralisation contines in an ad-hoc fashion with a
plrality of actors
-articipatory mode1 ;haracteri"ed %y state's own initiative to create instittions of commnity participation to ensre
effective involvement at the grassroots level. !here are no lterior motives and genine poplar involvement is
ensred %y providing resorces to local %odies and sensiti"ing %reacracy throgh training and directives. 6ithin an
overall development planning framework$ the central$ regional and local development policies and activities are
harmoni"ed throgh positive political will and %reacratic spport
+7ollow-p ?1 6hich of these modes is tre for India@ )ave we evolved from one mode to another or is there one
particlar mode more applica%le or does the state adopt different modes at different timesAplaces0
Enough of participation, lets come to voluntary organisations:
3: 5'%" i$ % NGO8
According to the 6orld 8ank$ 2a ,on-governmental :rgani"ation +,5:0 is a private organi"ation that prses
activities to relieve sffering$ promote the interests of the poor$ protect the environment$ provide %asic social
services$ or ndertake commnity development3. In other words$ ,5:s are legally constitted organi"ations$ operate
independently from the government and are generally considered to %e 2non-state$ non-profit oriented grops who
prse prposes of p%lic interest3. !he primary o%(ective of ,5:s is to provide social (stice$ development and
hman rights. ,5:s are generally fnded totally or partly %y governments and they maintain their non-governmental
stats %y e&clding government representatives from mem%ership in the organi"ation.
In a democratic society$ it is the state that has the ltimate responsi%ility for shering development to its citi"ens. In
India$ throgh the progressive interpretation of the ;onstittion and its laws and policies$ the scope of development
has %een significantly %roadened to inclde not (st economic progress for citi"ens$ %t also promotion of social
(stice$ gender eBity$ inclsion$ citi"en's awareness$ empowerment and improved Bality of life. !o achieve this
holistic vision of development$ the state reBires the constrctive and colla%orative engagement of the civil society in
its varios developmental activities and programs. ,on-governmental organisations +,5:s0 as the operational arm of
the civil society therefore have an important role in the development processes.
3: 5'%" %#e "'e &i++e#e!" ")pe$ o+ civil $ocie") o#-%!i$%"io!$8
1. ;ivil rights advocacy organi"ations1 to promote hman rights of specific social grops e.g. women$ migrants$
disa%led$ )IV$ se& workers$ Dalit people$ tri%al people$ and the likes.
2. ;ivil li%erties advocacy organi"ations1 to promote individal civil li%erties and hman rights of all citi"ens$ rather
than focsing on particlar social grop.
/. ;ommnity %ased organi"ations$ citi"en's grops$ farmers' cooperatives1 to increase citi"en's participation on p%lic
policy isses so as to improve the Bality of life in a particlar commnity.
=. 8siness and indstry cham%ers of commerce1 to promotion policies and practices on %siness.
C. Da%or nions1 to promote the rights of employees and workers.
E. International peace and hman rights organi"ations1 to promote peace and hman rights.
F. 9edia$ commnication organi"ation1 to prodce$ disseminate$ or provide prodction facilities in one or more media
formsG it incldes television$ printing and radio.
H. ,ational resorces conservation and protection organi"ations1 to promote conservation of natral resorces$
inclding land$ water$ energy$ wildlife and plant resorces$ for p%lic se.
.. -rivate and p%lic fondations1 to promote development throgh grant- making and partnership.
1I. Also the ;ivil society incldes - -olitical -artiesG *eligios :rgani"ationsG )osing cooperatives$ slm dwellers and
resident welfare associations.
3: 5'%" '%$ 2ee! "'e i!"e#%c"io! %!& #el%"io!$'ip 2e"0ee! "'e I!&i%! $"%"e %!& NGO$ li.e8
In India the state policies have significantly inflenced the formation of ,5:s and their activities. !he government
sponsored and aided programmes provided financial assistance to ,5:s either as grants or as matching grants to

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spport the implementation of social development pro(ects. !he need for the involvement of volntary organisations
has %een acknowledged %y a nm%er of official committees dealing with development.
8alwant *ai 9ehta ;ommittee$ 1.CF1 !oday in the implementation of the varios schemes of commnity
development$ more and more emphasis is laid on ,5:s and workers and on the principle that ltimately people's
own local organisations shold take over the entire work
*ral-#r%an *elationship ;ommittee$ 1.EE1 Docal volntary organisations can %e very helpfl in mo%ili"ing poplar
spport and assistance of the people in the activities of local %ody. It is possi%le to maintain constant and close
contact with the people throgh these organisations
Ashok 9ehta ;ommittee1 :f the several volntary organisations engaged in rral welfare$ a few have helped the -*Is
in preparation of area development plans$ condct feasi%ility stdies and costA%enefit analysis$ e&plore ways and
means to indce local participation in planning and implementation.
In the Si&th 7ive Jear -lan +1.HI-1.HC0$ the government identified new areas in which ,5:s as new actors cold
participate in development
!he Seventh 7ive Jear -lan +1.HC- 1..I0$ envisioned a more active role for ,5:s as primary actors in the efforts
towards self-reliant commnities. !his was in tne with the participatory and empowerment ideologies$ which was
gaining crrency in the developmental discorse at that time
5overnment spport and encoragement for ,5:s contined in the <ighth 7ive- year plan$ where a nation-wide
network of ,5:s was soght to %e created
!he ,inth 7ive-year plan proposed that ,5:s shold play a role in development on the p%lic-private partnership
model. Also$ the agricltral development policies of the government and its implementation mechanisms provided
scope and space for ,5:s. A case in point is the watershed development program$ which has led to the growth of
,5:s working for rral development
In 9arch 2III$ the 5overnment declared -lanning ;ommission as the nodal agency for 5:-,5: interface. !he
message was clear- government has to and will work with the volntary sector. A 4;ivil Society 6indow' was started in
2II=$ in the hope that it wold ena%le people to engage with the -lanning ;ommission and offer the %enefit of their
field e&periences
Dring the 11th 7ive Jear -lan process a regional consltation was organised to get civil society feed%ack.
-articipation of ;ivil Society +;S0 had ths already %ecome a strong and ro%st element in the preparation of the -lan
;onsltations with citi"ens on the Approach -aper to the 12th -lan %egan on many platforms$ inclding the internet.
9em%ers of -lanning ;ommission travelled across the contry attending -%lic 9eetings called %y ;S arond varios
sectoral isses to gather inpts for the 12 7ive Jear -lan
,ational -olicy on the Volntary Sector$ 2IIF1*ecogni"es the contri%tion of the volntary sector and the need for
5overnment- Volntary Sector partnership and that pro(ect grants are a sefl means for %oth the 5overnment to
promote its activities withot its direct involvement and a vala%le sorce of spport to small and medim Volntary
:rgani"ations. It highlights the need for 5overnment to encorage all ;entral and State 5overnment agencies to
introdce pre-service and in-service training modles on constrctive relations with volntary organi"ations. It
recogni"es the difficlties faced %y the volntary sector in accessing government schemes and sggests ways to tackle
this. !he main o%(ective of the ,ational -olicy on the Volntary Sector is to identify systems %y which the 5overnment
may work together with the Volntary :rgani"ations on the %asis of the principles of mtal trst$ respect and shared
responsi%ility. It also recogni"es the importance of independence of volntary organi"ations$ which allows them to
e&plore alternative models of development. !he ,ational -olicy on the Volntary Sector is (st the %eginning of the
process to evolve a new working relationship %etween the government and the volntary sector withot affecting its
atonomy and identity. !here are many areas in which help of the volntary sector is soght- for social adits$
%ehavior change$ good governance and increasingly even for %etter service delivery.
3: ,o0 '%$ I!&i% 2e!e+i""e& +#o NGO$8
India has a long history of civil society %ased on the concepts of daana means giving and seva means service.
Volntary organi"ations were active in cltral promotion$ edcation$ health$ and natral disaster relief as early as the
medieval period. Dring the second half of the 1.th centry$ nationalist consciosness spread across India and self-
help emerged as the primary focs of socio-political movements. !he early e&amples of sch attempts are 7riend-in-

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,eed Society +1HCH0$ -rathanaSama( +1HE=0$ SatyaShodhanSama( +1HF/0$ Arya Sama( +1HFC0$ the ,ational ;oncil for
6omen in India +1HFC0$ the Indian ,ational ;onference +1HHF0 etc. !he Society's *egistration Act +S*A0 was approved
in 1HEI to confirm the legal stats of the growing %ody of non-governmental organi"ations.
In India$ it was the 1.FIs which saw rapid growth in the formation of formally registered ,5:s and the process
contines to this day. 9ost ,5:s have created their respective thematic$ social grop and geographical priorities sch
as poverty alleviation$ commnity health$ edcation$ hosing$ hman rights$ child rights$ women's rights$ natral
resorce management$ water and sanitationG and to these ends they pt to practice a wide range of strategies and
approaches. -rimarily$ their focs has %een on the search for alternatives to development thinking and practiceG
achieved throgh participatory research$ commnity capacity %ilding and creation of demonstra%le models. 6hen
we review some of the work done %y ,5:s over the past / decades$ we find that they have contri%ted greatly to
nation %ilding. 9any ,5:s have worked hard to inclde children with disa%ility in schools$ end caste- %ased stigma
and discrimination$ prevent child la%or and promote gender eBality reslting in women receiving eBal wages for
the same work compared to men. Dring natral calamities they have played an active role in relief and reha%ilitation
efforts$ in particlar$ providing psycho-social care and spport to the disaster affected children$ women and men.
,5:s have %een instrmental in the formation and capacity %ilding of farmers and prodcers' cooperatives and
women's self- help grops. Several ,5:s have worked hand in hand with the 5overnment to ensre that millions of
ot of school children are enrolled and contine their school edcation$ ths making the right to edcation a reality.
!he leprosy eradication programme was spearheaded %y ,5:s and today only residal leprosy remains in or
contry. ,5:s have implemented the KeevanDhara programme for creation of wells for safe drinking waterG
promoted commnity toilets for total sanitation$ and spported the p%lic health programs on immnisation and for
eliminating t%erclosis and malaria. !he mch cele%rated ,*<5A$ I;DS$ I;-S$ ,irmal gram$ and Swasthya8ima of the
government have their roots in the work of many ,5:s. ,5:s have significantly inflenced the development of laws
and policies on several important social and developmental isses sch as the right to information$ (venile (stice$
ending corporal pnishment in schools$ anti-trafficking$ forests and environment$ wildlife conservation$ women$
elderly people$ people with disa%ility$ reha%ilitation and resettlement of development indced displaced people to
name a few. 7rther$ ,5:s made their modest attempts to ensre the effective implementation of these laws and
policies %y condcting and disseminating findings from participatory research$ %dget analysis$ p%lic hearings$ social
adits$ workshops$ seminars and conferences. Smming p$ it is now well esta%lished that ,5:s have an important
role to play in the development processes and that %oth the state and market need the colla%oration of credi%le$
active$ and acconta%le ,5:s. 5iven their connect with the grassroots realities$ ,5:s can and shold play the 2game
changer3 to pro-poor development throgh leadership on participatory research$ commnity empowerment and
search for development alternatives.
6ith the increasing role of the ,5:s in development activities they are now attracting professionals from varios
other sectors$ and capacities are %eing %ilt in spport areas sch as financial management$ resorce mo%ili"ation$
hman resorces$ leadership development$ governance procedres and practices and instittional development. At
another level ,5:s have %een addressing the social service isses and empowerment related advocacy efforts have
%een increasing. !he stdy condcted %y a ,ew Delhi %ased ,5: conclded that every fifth ,5: in India works on the
isses of commnity and social service. !he favora%le disposition of the governments and the political will to involve
,5:s is more prononced in implementation of the welfare schemes addressing cases of women and children.
7rther$ the indstrial policies have inflenced the formation and relations %etween the %sinesses and ,5:s. !he
;onfederation of Indian Indstries +;II0$ a leading organisation$ has %een raising the isses of corporate social
responsi%ility. !he emphasis of indstrial policies on the promotion and development of small$ cottage and village
indstries has also lead to the formation of agencies sch as the Lhadi and Village Indstries ;ommission$ Small
Indstries Associations and likes.
P#o+ili!- NGO$:
India has possi%ly the largest nm%er of active non-government$ non-profit organi"ations in the world. !here has %een
a sharp increase in the nm%er of new ,5:s in the past decade in India. According to a government stdy$ there were
only 1.== lakh registered societies till 1.FI. !he ma&imm increase in the nm%er of registrations happened after
2III. A recent stdy commissioned %y the government showed that there are a%ot /./ million ,5:s in India %y the
end of 2II. i.e.$ one ,5: for less than an average of =II Indians. <ven this staggering nm%er may %e less than the
actal nm%er of ,5:s active in the contry. !his is %ecase the stdy$ commissioned in 2IIH$ took into
consideration only those entities which were registered nder the Societies *egistration Act$ 1HEI or the 9m%ai
-%lic !rst Act and its variants in other states.

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It can %e noted that a great ma(ority of the ,5:s are small and a%ot three-forths of all ,5:s are rn entirely %y
volnteers. A%ot 1/ percent of the ,5:s have %etween 2 to C employeesG a%ot C percent have %etween E to 1I
employees and only a%ot H.C percent ,5:s employ more than 1I people. According to a srvey condcted %y
society for -articipatory *esearch in Asia +-*IA0$ F/.= percent of ,5:s have one or no paid staff$ althogh across the
contry$ more than 1. million persons work as volnteers or paid staff at an ,5:. 9ore often ,5:s are registered as
trsts$ societies$ or as private limited non-profit companies$ nder Section- 2C of Indian ;ompanies Act$ 1.CE. !hey
also en(oy income ta& e&emption. 7oreign contri%tions to non-profits are governed %y 7oreign ;ontri%tion
*eglation Act +7;*A0$ 1.FE.
3: 5'%" %#e "'e .e) -ove#!%!ce c'%lle!-e$ +%ci!- NGO$8
In view of the emergence of a new paradigm of scaling p$ in which ,5:s are seen as catalysts of policy innovations
and social capitalG as creators of programmatic knowledge that can %e spn off and integrated into government and
market instittionsG and as %ilders of vi%rant and diverse civil societies$ it's imperative to critically analy"e the role of
,5:s in the process of development and nderstanding the challenges facing the Sector. !ransparency and
acconta%ility are key ingredients of 5overnance in the ,5: Sector as these determine operational efficiencies and
risk mitigation. :ver the years$ corporate sector has %een a%le to recogni"e and implement %est governance practices
throgh appropriate instittional framework. )owever$ the ,5: sector is yet to evolve any instittionali"ed
framework$ which cold potentially play an important role in overall development of the nation. ,5:s play an
increasingly active role in today's political and social arenas. ;ivil society organi"ations are increasing in nm%er all
over India. :f late$ some of the local and national ,5:s have %een fond involved in malpractices and acting
irresponsi%ly$ ths ndermining the credi%ility of civil society. It's a hge concern and poses a great challenge to the
development movement spearheaded %y ,5:s in the contry. !here is a hge flow of fnds into the non-
government organi"ation sector and this reBires prdence and good practices to maintain acconta%ility and
transparency to the %enefit of all stakeholders. Althogh$ ,5:s do internal aditing %t for more acconta%ility and
transparency$ it is advisa%le to go throgh e&ternal aditing also$ especially where p%lic fnds are involved. )ence$
isses of internal control mechanisms$ professionalism$ acconta%ility$ transparency and financial management mst
%e given impets. !he challenge is mltidimensional$ and is componded %y the4norganised' natre of the sector$
lack of reglatory frameworks and the fact that India %oasts of more than a million ,5:s of different roles$ strctres
and si"es. In particlar$ the Indian volntary sector rgently needs self-reglatory gidelines and transparency
mechanisms to increase the trst and awareness as to how the philanthropic fnds are %eing tilised. !his is a critical
challenge that creates a %arrier to raising fnds and capital for the sector. !he general lack of transparency in the
fnctioning of a large proportion of ,5:s leads to aversion in donating fnds for charita%le cases since the general
p%lic is largely cynical a%ot the 4genineness' of the non-profit spirit of the sector. !he stringent governance
standards of an ,5: will facilitate the effective management and increase the acconta%ility to its stakeholders
inclding donors$ the government and the commnity. It is in the self-interest of the ,5:s to reali"e the fact that to
implement a strctre of 4corporate governance' principles wold provide the real vale to the stakeholders. Also$ this
wold ena%le to track the potentially d%ios sorces of fnding coming in for the volntary sector M an aspect which
has gained impets in the wake of the increased nm%er of terror attacks and e&tremist activities. *ecently$ this
#nion )ome 9inistry has identified some ,5:s as secrity threat to the contry. Sch secrity considerations have
nderscored the rising need of improving the governance practices in the Indian ,5:s and e&ercising %etter
reglatory mechanisms$ disclosre norms$ and management processes inclding financial management and %dgeting
systems as well. 9oreover$ in the larger interest going %eyond the secrity considerations$ the impets has to %e on
inclcating a cltre of inclding performance goals$ condcting financial and performance adits$ and reforms for
increasing the operational acconta%ility and transparency in the eyes of the p%lic$ volnteers$ donors and other
stakeholders.
S(--e$"io!$:
!he implementation of a strategic framework is essentially important in the management of an ,5:. !he
endorsement of sch a framework %rings in professionalism and internal control mechanisms$ which frther makes
the organi"ation's performance more effective. Developing strategies also inclde esta%lishing a mechanism of
consistent monitoring of whether they are %eing implemented and linking the reslts to the organi"ation's goals.
!here is need to %olster p%lic confidence in the volntary sector %y opening it p to greater p%lic scrtiny. !he
5overnment will encorage ;entral and State level agencies to introdce norms for filing %asic docments in respect
of ,5:s$ which have %een receiving fnding %y 5overnment agencies and placing them in the p%lic domain +with
easy access throgh the internet0 in order to inclcate a spirit of p%lic oversight.

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-%lic donation is an important sorce of fnds for the ,5: sector and one that can and mst increase s%stantially.
!a& incentives play a positive role in this process.!he 5overnment cold simplify and streamline the system for
granting income ta& e&emption stats to charita%le pro(ects nder the Income !a& Act. At the same time$ the
5overnment might consider tightening administrative and penal procedres to ensre that these incentives are not
missed %y paper charities for private financial gain.
!he 5overnment shold encorage all relevant ;entral and State 5overnment agencies to introdce pre-service and
in-service training modles on constrctive relations with the volntary sector. Sch agencies need to introdce time
%ond procedres for dealing with the V:s. !hese cold cover registration$ income ta& clearances$ financial
assistance$ etc. !here mst %e a formal systems for registering complaints and for redressing grievances of ,5:s.
!he 5overnment shold encorage setting p of Koint ;onsltative 5rops A 7orms or Koint 9achineries of
government and volntary sector representatives$ %y relevant ;entral Departments and State 5overnments. It also
needs to encorage district administrations$ district planning %odies$ district rral development agencies$
"illaparishads and local governments to do so. !hese grops cold %e permanent forms with the e&plicit mandate to
share ideas$ views and information and to identify opportnities and mechanisms of working together. !he
5overnment also might introdce sita%le mechanisms for involving a wide cross-section of the volntary sector in
these 5ropsA7orms.
S(i!- Up:
6e are entering into an important phase where the 12th five year plan is %eing worked ot and there are many
targets that the government intends to achieve with the active colla%oration of V:s. !herefore$ it is important to
condct an effective review or report card of the ,ational -olicy with specific recommendations. !hese
recommendations cold %ecome an agenda for all Volntary :rgani"ations$ -lanning ;ommission$ state governments
and national 9inistries. <fforts are also needed to frther disseminate the information a%ot the policy and its
intentions with small V:s as well as government fnctionaries. !here is a need to solicit commitment from state
governments and national ministries. A systematic intervention is also needed to get ,ational -olicy approved and
adopted %y the Indian -arliament. !he most serios challenge faced %y India today is the conflict %etween violent and
non-violent approach of development. ,eedless to say that ma(ority of poplation of India is still deprived of %asic
frits of development$ %t rather than adopting the approach which is more inclsive and look for soltions within the
constittion$ India is faced %y distr%ances in many parts of the contry. !his not only hampers the development
pro(ects %t also shrink the space for people's participation to achieve their goals throgh peacefl means. !he
volntary sector %eing present in sch locations faces the challenge of delivering the services and even mo%ili"ing
people on the development agenda. !he need of the hor is to work closely with each other for the %enefit of the
marginali"ed people$ as even today the dream of 9ahatma 5andhi has not %een achieved.
Having looked at NGOs, now let us take a look at SHGs:
3: 5'%" %#e S,G$8
Self-)elp 5rops are informal associations of people who choose to come together to find ways to improve their living
conditions. !hey help to %ild Social ;apital among the poor$ especially women. !he most important fnctions of a
Self-)elp 5rops are
+a0 to encorage and motivate its mem%ers to save
+%0 to persade them to make a collective plan for generation of additional income
+c0 to act as a condit for formal %anking services to reach them.
Sch grops work as a collective garantee system for mem%ers who propose to %orrow from organised sorces.
;onseBently$ Self-)elp 5rops have emerged as the most effective mechanism for delivery of micro-finance services
to the poor. !he range of financial services may inclde prodcts sch as deposits$ loans$ money transfer and
insrance.
3: Evol("io! o+ "'e S,G ovee!" i! I!&i%:
!he first organised initiative in this direction was taken in 5(arat in 1.C= when the !e&tile Da%or Association +!DA0 of
Ahmeda%ad formed its women's wing to organise the women %elonging to hoseholds of mill workers in order to
train them in primary skills like sewing$ knitting em%roidery$ typesetting and stenography etc. In 1.F2$ it was given a
more systemati"ed strctre when Self <mployed 6omen's Association +S<6A0 was formed as a !rade #nion nder
the leadership of <la 8hatt. She organised women workers sch as hawkers$ vendors$ home %ased operators like
weavers$ potters$ papad A agar%atti makers$ manal la%orers$ service providers and small prodcers like cattle

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rearers$ salt workers$ gm collectors$ cooks and vendors with the primary o%(ective of +a0 increasing their income and
assetsG +%0 enhancing their food and ntritional standardsG and +c0 increasing their organisational and leadership
strength. !he overall intention was to organise women for fll employment. In order to %roaden their access to
market and technical inpts$ these primary associations were encoraged to form federations like the 5(arat State
9ahila S<6A ;ooperative 7ederation$ 8anaskantha D6;*A$ 9ahila S<6A Association etc. ;rrently$ S<6A has a
mem%ership strength of .$C.$III which is predominantly r%an. In the 1.HIs$ 9J*ADA M a Larnataka %ased non-
governmental organisation$ promoted several locally formed grops to ena%le the mem%ers to secre credit
collectively and se it along with their own savings for activities which cold provide them economically gainfl
employment.
9a(or e&periments in small grop formation at the local level were initiated in !amilnad and Lerala a%ot two
decades ago throgh the !amilnad 6omen in Agricltre -rogramme +!A,6A0 1.HE$ -articipatory -overty
*edction -rogramme of Lerala$ +Ldm%ashree0 1..C and !amilnad 6omen's Development -ro(ect +!,6D-0
1.H.. !hese initiatives gave a firm footing to S)5 movement in these States.!oday$ arond ==N of the total 8ank-
linked S)5s of the contry are in the for sothern States of Andhra -radesh$ !amil ,ad$ Larnataka and Lerala.
!he positive e&perience gained from the a%ove programmes has led to the emergence of a very strong consenss that
the twin concepts of +a0 small grop organisation and +%0 self-management are potent tools for economic and social
empowerment of the rral poor. <fforts have %een made almost in all parts of the contry to adopt this model as a
necessary component of the poverty alleviation programmes.
7orming small grops and linking them to %ank %ranches for credit delivery has %een the most important featre of
the growth of the S)5 movement in or contry. !he S)5-8ank linkage programme was started as a test pro(ect in
1.H. when ,A8A*D$ the Ape& *ral Development 8ank in the contry$ sanctioned *s.1I.I lakhs to 9J*ADA as seed
money assistance for forming credit management grops. In the same year$ the 9inistry of *ral Development
provided financial spport to -*ADA, to esta%lish Self-)elp 5rops in some rral pockets of *a(asthan. :n the %asis
of these e&periences$ a fll-fledged pro(ect involving a partnership among S)5s$ 8anks and ,5:s was lanched %y
,A8A*D in 1..2. In 1..C$ acting on the report of a working grop$ the *8I streamlined the credit delivery procedre
%y issing a set of gidelines to ;ommercial 8anks. It ena%led S)5s to open 8ank Acconts %ased on a simple inter-se
agreement. !he scheme was frther strengthened %y a standing commitment given %y ,A8A*D to provide refinance
and promotional spport to 8anks for credit dis%rsement nder the S)5 M 8ank linkage programme. ,A8A*D's
corporate mission was to make availa%le microfinance services to 2I million poor hoseholds$ or one-third of the poor
in the contry$ %y the end of 2IIH. In the initial years$ the progress in the programme was a slowG only //III grops
cold %e credit linked dring the period 1..2-... 8t$ thereafter$ the programme grew rapidly and the nm%er of
S)5s financed increased from H2III in 1...-2III to more than E.2I lakhs in 2IIC-IE and E.HF lakhs in 2IIE-IF.
;mlatively$ // million poor hoseholds in the contry have %een a%le to secre access to micro-finance from the
formal %anking system.
(As a follow-up read up on the success stories particularly the udumbashree programme of erala in A!" # !eport $%
Social "apital &age '$-'()
3: 5'%" o"'e# A-e!cie$ %#e i!volve& i! "'e S,G ovee!"8
Apart from ,A8A*D$ there are for other ma(or organisations in the p%lic sector which too provide loans to financial
intermediaries for onward lending to S)5s. !hey are +a0 Small Indstries Development 8ank of India +SID8I0$ +%0
*ashtriya9ahilaLosh +*9L0$ and +c0 )osing and #r%an Development ;orporation +)#D;:0. !hen$ there are p%lic
sectorAother commercial %anks which are free to take p any lending as per their policy and *8I gidelines.
R%$'"#i)%A%'il%Bo$':
!he *ashtriya9ahilaLosh was set p %y the 5overnment of India in 9arch 1../ as an Atonomos 8ody registered
nder Societies *egistration Act$ 1HEI nder the Department +now 9inistry0 of 6omen and ;hild Development. !he
o%(ective was to facilitate credit spport to poor women for their socio-economic pliftment.It was felt that the credit
needs of poor women$ especially those in the norgani"ed sector$ were not adeBately addressed %y the formal
financial instittions of the contry. !hs *9L was esta%lished to provide loans in a Basi-formal credit delivery
mechanism$ which is client-friendly$ has simple and minimal procedre$ dis%rses Bickly and repeatedly$ has fle&i%le
repayment schedles$ links thrifts and savings with credit and has relatively low transaction costs %oth for the
%orrower and the lender. !he Losh lends with a niBe credit delivery model 2*9L M ,5:-S)5- 8eneficiaries3. !he
spport is e&tended throgh ,5:'s$ 6omen Development ;orporations$ State 5overnment agencies like D*DA's$
Dairy 7ederations$ 9nicipal ;oncils etc.

1I www.visionias.in Vision IAS
SIDCI:
Small Indstries Development 8ank of India +SID8I0 lanched its micro finance programme on a pilot %asis in 1..=
sing the ,5: A 97I model of credit delivery wherein sch instittions were sed as financial intermediaries for
delivering credit to the poor and nreached$ mainly women. Dearning from the e&perience of the pilot phase$ SID8I
reoriented and pscaled its micro finance programme in 1.... A specialised department vi". 4SID8I 7ondation for
9icro ;redit' +S79;0 was set p with the mission to create a national network of strong$ via%le and sstaina%le 9icro
7inance Instittions +97Is0 from the informal and formal financial sectors. S79; serves as an ape& wholesaler for
micro finance in India providing a complete range of financial and non-financial services to the 97Is so as to facilitate
their development into financially sstaina%le entities$ %esides developing a network of service providers and
advocating for appropriate policy framework for the sector. S79; is implementing the ,ational 9icro 7inance
Spport -rogramme +,97S-0. !he overall goal of ,97S- is to %ring a%ot s%stantial poverty elimination and
redced vlnera%ility in India amongst sers of micro-finance services$ particlarly women.
P#iv%"e I!i"i%"ive$:
!hogh$ government efforts have played a ma(or role in advancing the S)5 movement in the contry$ there have
%een a large nm%er of volntary organisations +,5:s0 which too have facilitated and assisted S)5s in organi"ing
savings and credit in different parts of India. S<6A in Ahmeda%ad$ 9J*ADA in Larnataka$ ,av 8harat Kagriti Lendra
and *amakrishna 9ission in Kharkhand$ and ADI!)I in 8ihar are some of the names which took the lead in promoting
Self-)elp 5rops +mostly of women0 arond income generation activities sing local skills. 7rom organi"ing villagers
into grops which cold work on via%le activities$ to making a pro(ect and secring fnds +own contri%tion or
throgh a tie-p with the financial instittion0$ these V:s have worked with involvement and dedication. -*ADA,
+-rofessional Assistance for Development Action0$ D)A, 7ondation$ ASS<7A +Association of SarvaSeva 7arms$ 9ADA*
+9ahalir Association for Diteracy$ Awareness and *ights0$ SLS$ Kanodaya$ ;ohesion 7ondation and Kan
;hetnaSansthan are some of the other ma(or non-governmental instittions which are promoting and nrtring a
large nm%er of S)5s of poor people$ mostly women into effective organisations which cold leverage credit from
formal sorces$ and develop local resorces and skills to increase prodctivity and income. It is ths$ de to the
com%ined efforts of the government and these private volntary agencies that the S)5s have come to occpy a place
of prominence in the socio-economic fa%ric of rral India.
3: 5'%" '%$ 2ee! "'e ip%c" o+ S,G$ o! #(#%l li+e8
A random impact evalation stdy covering CEI mem%ers of 22/ S)5s linked to 8anks located in 11 States was carried
ot %y ,A8A*D. A three year period was selected for this stdy. !he reslts of this srvey released in 2III1H
indicated that +a0 CHN of the hoseholds covered nder S)5s reported an increase in assetsG +%0 the average vale of
assets per hosehold increased %y F2N from *s.E$H=/ to *s.11$F./G +c0 ma(ority of the mem%ers developed savings
ha%it against 2/N earlierG +d0 there was a threefold increase in savings and a do%ling of %orrowings per hoseholdG
+e0 the share of consmption loan in the %orrowing went down from CIN to 2CNG +f0 FIN of the loans taken in post-
S)5 period went towards income generation ventresG +g0 employment e&panded %y 1HNG +h0 the average net
income per hosehold %efore (oining a S)5 was *s.2I$1FF which rose %y //N to 2E$HH.G and +i0 a%ot =1.CN of the
hosehold stdied were %elow their State specific poverty line in the pre-S)5 enrolment stageG it came down to 22N.
-articipation in grop activity significantly contri%ted to improvement of self-confidence among the mem%ers. In
general$ grop mem%ers and particlarly women %ecame more vocal and assertive on social and family isses.
!he strctre of the S)5 is meant to provide mtal spport to the participants in saving money$ preparing a
common plan for additional income generation and opening %ank acconts that wold help them in developing credit
relationship with a lending instittion. It ltimately spports them in setting p micro-enterprises e.g. personalised
%siness ventres like tailoring$ grocery$ and tool repair shops. It promotes the concept of grop acconta%ility
ensring that the loans are paid %ack. It provides a platform to the commnity where the mem%ers can discss and
resolve important isses of mtal concern.
6hile some of the S)5s have %een initiated %y the local commnities themselves$ many of them have come throgh
the help of a mentor 8ody +either government or an ,5:0 which provided initial information and gidance to them.
Sch spport often consists of training people on how to manage 8ank acconts$ how to assess small %siness
potential of the local markets and how to pgrade their skills. In the end$ it creates a local team of resorce persons.
5rop formation %ecomes a convenient vehicle for credit delivery in rral areas. ;ommercial 8anks and other
instittions which are otherwise not receptive to the demands of marginali"ed individals$ start considering sch
grops as their potential cstomers. :verall sch Koint-Dia%ility 5rops e&pand the otreach of the micro-finance

11 www.visionias.in Vision IAS
programme in an effective way$ reaching ot to the e&clded segments e.g. landless$ sharecroppers$ small and
marginal farmers$ women$ S;sAS!s etc.
!he ma(ority of Self-)elp 5rops comprise of women mem%ers. !here is evidence in this contry as well as elsewhere
that formation of Self-)elp 5rops has a mltiplier effect in improving women's stats in society as well as in the
family. !heir active involvement in micro-finance and related entreprenerial activities not only leads to improvement
in their socio-economic condition %t also enhances their self-esteem. 6omen in a grop environment %ecome more
articlate in voicing their concerns and a change occrs in their self-perception. !hey start to see themselves not only
as %eneficiaries %t also as clients A informed citi"ens seeking %etter services. :n the home front$ their new fond
awareness and the confidence generated ot of their entreprenerial skills make them more confident vis-O-vis their
menfolk.
!he S)5 programme has contri%ted to a redced dependency on informal money lenders and other non-
instittional sorces.It has ena%led the participating hoseholds to spend more on edcation than non- client
hoseholds. 7amilies participating in the programme have reported %etter school attendance and lower drop-ot
rates.
!he financial inclsion attained throgh S)5s has led to redced child mortality$ improved maternal health and the
a%ility of the poor to com%at disease throgh %etter ntrition$ hosing and health M especially among women and
children.
8t the S)5 movement has certain weaknesses as well1
1. contrary to the vision for S)5 development$ mem%ers of a grop do not come necessarily from the poorest
familiesG
2. the S)5 model has led to definite social empowerment of the poor %t whether the economic gains are
adeBate to %ring a Balitative change in their life is a matter of de%ateG
/. many of the activities ndertaken %y the S)5s are still %ased on primitive skills related mostly to primary
sector enterprises. 6ith poor vale addition per worker and prevalence of s%sistence level wages$ sch
activities often do not lead to any s%stantial increase in the income of grop mem%ers.
=. !here is lack of Balified resorce personnel in the rral areas who cold help in skill pgradation A
acBisition of new skills %y grop mem%ers.
3: 5'%" "'e! %#e "'e .e) i$$(e$ +%ci!- S,G$ "o&%)8
!hogh$ dring a short span of fifteen years the S)5 movement has recorded remarka%le progress mch still remains
to %e done. !he movement shows steep territorial variations. 9any areas of the contry lack adeBate %anking
strctre. #r%an and semi-r%an areas$ to a large e&tent$ stand e&clded from this mode of credit delivery. 7rther
growth of this movement faces threat from inadeBacy of skills in the rral areas. And finally the pace of the
movement needs to %e accelerated. !he following eight isses of this sector deserve priority attention1
P 9aintaining the participatory character1
6e saw the cooperative sector %ecame a spring%oard for political aspirants. !hogh the S)5 movement is relatively
new$ government interventions and s%sidies have already started showing negative reslts. !he patronage and
s%sidies provided to the S)5s %y government and the -anchayats often lead to their politici"ation. !herefore$ de
care mst %e taken to ensre that government initiatives do not erode the fndamental principles of self-help and
empowerment of the poor.
P ,eed to e&pand the S)5 movement to States sch as 8ihar$ #ttar -radesh$ 9adhya -radesh$ :rissa$ *a(asthan and
in the ,orth-<ast +where the S)5 movement and micro-finance entreprenership is weak01
:verall F/N of the farmer hosehold +in rral areas0 have no access to any formal sorce of credit. In 9arch$ 2II1$
F1N of the total linked S)5s of the contry were in (st for States of the sothern region vi". Andhra -radesh$
Larnataka$ Lerala and !amil ,ad. !he figre went down to CHN in 2IIC$ C=N in 2IIE and to ==N in 2IIF. 8t even
the crrent figre is a case of concern when one talks of financial inclsion for the whole contry.
P ,eed to e&tend small grop organisations +S)5s0 to peri-r%an and r%an areas1
According to the 2II1 censs$ /1=.C= million persons changed their place of residence +vis-O-vis the sitation in the
1..1 censs0 within the contry and ot of this 2...I million or .N changed their place of residence in search of
%etter prospects elsewhere. Since isse of any form of identity card is invaria%ly linked with the possession of an

12 www.visionias.in Vision IAS
immova%le property$ sch migrant workers do not have any formal docment to prove their domicile in the city. 8t
the overall economic and social well-%eing of the city is closely linked with the condition of this section of the city
dwellers. In the a%sence of any docmentary proof$ it appears that this class of people do not have access to
organised financial services. As per the e&isting stattory provisions$ ,A8A*D's mandate is to provide micro-finance
facilities only to rral and semi-r%an areas. 8ranches of the mainstream 8anks too$ thogh$ eBipped with
manpower and technology$ are not keen to service this sector. <ven money lenders are relctant to lend to them. !he
net reslt is that this segment of the r%an poplation e.g. pavement sellers$ street hawkers$ constrction workers
etc. remains financially e&clded.
P 9ode of S)5 development and financial intermediation1
<sta%lishing sta%le linkage %etween a S)5 and a local financial instittion is one of the key elements of the S)5
movement. ;rrently$ for distinct models of financial intermediation are in operation in varios parts of the contry
namelyG 1. S)5-8ank linkage promoted %y a mentor institte 2. S)5-8ank direct linkage /. S)5-9entor Instittion
linkageG and =. S)5-7ederation model
Since the %orrowing S)5s consist mainly of low income mem%ers who cannot afford to miss even a day's wages$ a
hassle-free transaction with a 8ank which is ready to come to their doorsteps with appropriate credit prodcts is of
great vale to them. !he S)5 M 8ank Dinkage 9odel with a mentor S)-I in tow +9odel I a%ove0 wold %e the most
appropriate one for delivery of financial services to the S)5s.
P Self-)elp 5rops and *egional *ral 8anks1
As on 1st April$ 2IIF$ ot of a total of E22 districts in the contry$ C/C have a network of *egional *ral 8anksG the
rest HF districts have no **8 presence. !hese %ranches have %een created %y the *egional *ral 8anks Act$ 1.FE
primarily for providing instittional credit to the marginali"ed sector of the rral economy +small$ marginal farmers$
landless la%or and rral artisans0. !hee&tension of the **8 network to the remaining HF districts wold considera%ly
speed p the process of inclsive %anking and help in e&tending micro- finance to local S)5s.
P Isses of sstaina%ility1
!he instittional sstaina%ility and the Bality of operations of the S)5s are matters of considera%le de%ate. It is
generally held that only a minority of the Self-)elp 5rops are a%le to raise themselves from a level of micro-finance
to that of micro-entreprenership. ,either do sch 8ank linkages lead to sanction of larger individal loans nder the
8ank's normal lending programmes. !he ltimate o%(ective of sch a tie-p is to impart financial strength to the S)5s
so that they can enter into a sta%le relationship with the local financial instittions - withot any e&ternal spport.
<ven after many years of e&istence$ %y and large$ S)5s are heavily dependent on their promoter ,5:s or government
agencies
P 7inancial assistance to S)-Is and other spport instittions1
7orty-five per cent of the total nm%er of women's S)5s of the contry are located in Andhra -radesh. !his envia%le
position of the State is primarily de to the initiative shown %y promoter ,5:s often known as Self-)elp -romoting
Instittions +S)-Is0 A mentor organisations. If the S)5 movement is to spread across the entire contry$ there is need
to provide ma(or incentives to S)-Is A promoter ,5:s. ;rrently$ the financial spport to S)-Is comes from the 9icro
7inance Development and <Bity 7nd +97D<70 of ,A8A*D. It is limited to an amont of *s.1CII per S)5 +formed
and activated0. !o attract more and more S)-Is to the rral areas$ this Bantm of spport needs to %e revised.
P *ole of 9icro-7inance Instittions1
9icro-credit is defined as provision of thrift$ credit$ and other financial services +sch as deposits$ loans$ payment
services$ money transfer$ insrance and related prodcts0 of very small amonts to the poor in rral$ semi-r%an and
r%an areas for ena%ling them to raise their income levels and improve living standards. 9icro-finance instittions are
those which provide sch micro-credit facilities. 9icro-credit is an instrment of %oth social as well as economic
policy. It opens p integral development processes sch as se of financial and technical resorces$ %asic services and
training opportnities to the nprivileged. Access to savings$ credit$ money- transfer$ payment$ and insrance can help
poor people take control of their financial life. It also empowers them to make critical choices a%ot investing in
%siness$ sending children to school$ improving health care of the family$ covering the cost of key social o%ligations
and nforeseen sitations. 8t the most important of all$ an access to finance generates self- esteem among them.


1/ www.visionias.in Vision IAS
A*;-2 has made the following recommendations1
!he 9icro 7inancial Sector +Development and *eglation0 8ill$ 2IIF needs to %e amended to inclde the following
sggestions1-
i. !he scope of 9icro-finance Services shold %e s%stantially widened to cover credit A savings$ insrance$ pension
services$ money transfer$ isse A discont of warehose receipts and ftre A option contracts for agricltral
commodities and forest prodce.
ii. !he activities of Section 2C ;ompanies to the e&tent they concern micro-financial services as descri%ed nder the
proposed 8ill shold also %e %roght nder the prview of this legislation. )owever$ for their management and other
fnctions$ they will contine to %e governed %y the provisions of the ;ompanies Act.
iii. !he isse of interest rate charged %y the 97Is shold %e left to the *eglatory Athority which is %eing created
nder the proposed 8ill.
iv. It shold %e ensred that if 97Is are allowed to handle thrift A savings and money transfer services$ they wold do
so only as %siness correspondents of commercial 8anks.

REDERENCES:
Mohit Bhattacharya- Social Theory and Development Administration
ARC-2 Report 9- Social Capital
Yojana Nov 2!"" iss#e on N$%s
















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