Change in the Countryside

Financial Times

April 19, 2007

Far from the dynamic bustle of India’s cities, change is also afoot in rural India. Two villages in the southern state of Andhra Pradesh illustrate how rural India is making small but significant steps to break poverty’s grip.

Some broad measures have ignited remarkable progress in the two villages including access to banking services; better agricultural techniques and water management; empowerment of women; and new agribusinesses such as the growing of trees used for biofuel.


The village of Kishtapur, home to about 800 people, is nearly six hours’ drive from the southern city of Hyderabad. Located in a historically poor district of the state, it is hardly the typical picture of ’rising India’.

Packed dirt paths weave through clusters of small houses with tin roofs and outdoor latrines. Cows, goats and chickens wander calmly through yards near thatch sheds. In fields at the foot of the village, barefoot men, women and children dig drainage ditches by prying soil from the earth with a pole and moving the black clods with their hands.

By developed country standards, Kishtapur looks poor. Yet while the village is by no means rich, the standard of living of its inhabitants has risen steadily.

Average family incomes have increased more than 50 per cent, from Rs32,959 ($716) in 2002-03 to Rs50,172 ($1,090) in March 2007.

Life in Kishtapur is a world away from India’s cities, home to billion-dollar companies and robust consumerism. But what unfolds in Kishtapur and thousands of other Indian villages is just as much the fabric of India’s future.

Manmohan Singh, prime minister, has repeatedly warned that the uneven development of urban and rural economies could harm political and social stability. He has urged greater investment in agriculture to remedy a brewing farming crisis that stands in sharp contrast to the country’s booming industrial growth.

”There is a very strong correlation between agrarian prosperity and demand for manufactured goods and modern services across the country,” said Mr Singh at an agriculture summit in New Delhi last year. ”The route to sustaining high economy-wide growth rates has to be accelerated through agricultural development.”

India’s annual economic growth exceeds 8 per cent but agricultural growth rates have stagnated from 4.7 per cent in the years between 1992-97 to just 1.5 per cent from 2002 to 2006.

Just a few years ago, Kishtapur was an example of stagnation and disarray. The village was plagued by unemployment, alcoholism and infighting. Tired of drunken fights sparked by their men, village women formed self-help groups under the guidance of government poverty alleviation programmes.

Under this model, groups of about a dozen women collectively make monthly deposits into a local co-operative bank. When they have established a record of regular deposits, they are eligible for bank loans with annual interest rates far lower than the 60 per cent charged by local loan sharks. Together they decide how to spend loans, whether investing in seeds, farm tools, cows or a tin roof and rely on one another to repay loans lest the group’s record be marred.

In the past three years, loans have grown from a few thousand rupees per group to Rs30,000 last year. Just last month, the bank approved a large loan of Rs3m for all seven self-help groups that villagers say will be used to repay all old debts to loan sharks. Keeping in mind that 80 per cent of India’s population of 1.1bn lacks access to financial services, Kishtapur’s banking activities represent a quiet revolution.

As an elected village leader, 30-year-old Chandra Kala makes regular visits to the bank a few kilometres away although she is illiterate. This is a dramatic change for a woman so shy she used to hide when government workers visited the village.

Over the past few years other big changes have happened. With government aid, the villagers built a paved road leading toward the village, as well as a bridge over a gully that floods during monsoon season. They have cultivated new sources of income such as worm compost that is sold as rich fertilizer to other farmers for Rs3.50 per kilogram.

Most of Kishtapur’s residents are illiterate. But now 100 of the 120 children in the village attend local schools where just a few years ago school was considered an activity for ”rich people”.

The women’s self-help groups have worked so well that the chastened men have formed three ”gents” self-help groups.

Kishtapur is not the poorest of India’s villages. It has had sporadic electricity since the 1980s and water pumps are scattered throughout the village. But telltale signs of greater prosperity have emerged. The village counts 80 televisions (no wonder India’s media industry is booming), three satellite dishes, a few three-wheeled auto rickshaws and even a ”two-wheeler” or motorcycle.

Happily, Kishtapur is a village that has risen above the poverty line.

There are no satellite dishes yet in the village of Powerguda, about two hours drive from Kishtapur. But this village of about 300 tribal people of the Gond minority has also undergone dramatic change. Powerguda’s crop yields from the dry soil were so low that most of the villagers had taken to migrant work on other farms. Alcoholism too plagued the village.

But under two programmes launched in 2000, agricultural scientists introduced new water conservation techniques. The International Fund for Agricultural Development and the Inter-Tribal Development Authority provided funding. The International Crops Research Institute for the Semi-Arid Tropics (ICRISAT) gave technical guidance.

With this support, villagers dug long trenches to channel rain into shallow reservoirs that replenish groundwater supply. They built small dams made of stones to stem rain run-off and to prevent precious topsoil from being washed away.

These seemingly simple watershed measures helped boost crop yields dramatically. Cotton yields increased 45 per cent from 1999 to 2002, for instance. Focus was given to crops such as soybeans, which were more productive than sorghum and cotton. As a result of better water supply, vegetables were grown for the first time in Powerguda.

Powerguda has also availed of self-help groups and bank loans. New businesses are also sprouting. Notably, villagers are growing pongamia tree seedlings that the government is buying to plant in forests and other villages.

Seed money for the pongamia nursery came from the World Bank in 2003, which gave about $650 to Powerguda to offset carbon emissions for participants flying to a conference in Washington.

Pongamia, an unassuming medium-sized tree, is gaining prominence because its large brown seeds produce oil that can be used to run generators and farm equipment.

Better earnings from crops and income from building watershed structures have helped boost average family income to nearly Rs27,821 in 2002-03 from Rs15,677 in 1999-2000.

That doesn’t include potential future income from Powerguda’s 10,000 pongamia trees that are still three to four years from maturity.

As a result, thatch huts have been replaced by homes with solid walls, water pumps have been installed and villagers have practically halted seasonal work in other locales.

Both Kishtapur and Powerguda have shown remarkable progress within just a few years. But these villages are just a drop in the bucket. Tens of thousands of villages in India lack government support and access to banks.

Andhra Pradesh, like many southern states, also benefits from a more progressive outlook in contrast to conservative northern states. Half of India’s 1m self-help groups are in Andhra Pradesh.

These two villages are admittedly stand-outs, but their lessons should not be ignored. Can these early successes be replicated in other villages across India?

Suhas Wani, principal scientist at ICRISAT, is ”very confident” that they can. But the biggest limitation is lack of resources to enable farmers and development agencies to get the ”right information at the right time.” For example, farmers often are unaware that their soil may lack critical micronutrients and therefore invest in the wrong fertiliser.

”Farmers have no access to get their soil samples analysed and get suitable recommendations to correct these deficiencies,” said Dr Wani. ”There are no mechanisms pumping in new knowledge from research institutions to non-governmental organizations, government departments and farmers.”

To scale up, Dr Wani highlights the need for a ”national support group” to provide information and guidance. While technical knowledge and financial support are important, Dr Wani stresses the importance of science-led development rather than just additional funding for more structures.

”For sustainability, knowledge and process are important,” said Dr Wani.



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