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[This seminar was presented before the formation
of Uttaranchal as a state]

Presentation to Uttaranchal Development Seminar
 Indian International Centre

 30 September, 2000
 Presented by Mark Annand,
 Association for Stimulating Know-how,
 C-83, Lajpat Nagar,
 New Delhi 110024


Let me begin by welcoming the new state of Uttarakhand that is about to be  born. I congratulate those who have worked so hard over many years for this  endeavor and for their far sightedness. Uttarakhand represents a highly distinct geographic, cultural, economic and political region and I applaud the creation of this new entity to represent and advance the interests of the hill communities.

What is the Situation?

 After all the celebrations die down what are the ground realities? We have to face a region with entrenched social, economic and environmental problems, on the one hand, and, towering opportunities almost as insurmountable as the Himalayas, on the other. In this context setting directions and priorities will be challenging. Uttarakhand presents a semi feudal landscape often characterized by picturesque poverty.  Life in the hills is not as romantic as it looks. This is the setting that your leaders are expected to transform into a modern economy in which the benefits of development are equitably distributed.
 The Capital Issue

While I have no wish to join the debate about the choice of capital, I would like to make a few observations.  The people's choice Gairsain appears to hold strong symbolic and historical significance as a uniting central point is a long divided region. However, I find the present preoccupation within administrative centre somewhat irrelevant and loaded with potential dangers.   Two forces are working to make the notion of an administrative centre increasingly obsolete. We are now in an era of rapidly expanding telecommunications and computer networks.  These facilities, and the emerging work methods, allow organizations to be arranged in a distributed fashion and there is now much less need to cluster administrative functions around a central core.

We are also on the verge of a drastic and permanent reduction of government with many resources, especially those associated with public service trading activities being transferred to the private sector. Furthermore, the notion of a central site for administration and decision making does not sit comfortably with Uttarakhand's widely scattered populations and formidable geographic barriers to travel and physical communications. I believe that this is the time to question the relevance of 19th Century concepts of state centralism when, at the dawn of the 21st century, we can choose to start afresh with a network of 'wired' organization comprising widely scattered centres connected by telecommunications. I also sense that a distributed approach may be more relevant to the needs of the region and in tune with its more federalist culture.  An administration organized on the network model also provides a mechanism to distribute scarce public service jobs to the various centres throughout the region. So why not use the facilities we already have in towns from Pithoragarh to Srinagar, Pauri to Almora and Ranikhet to Bageshwar?  

It might work out to me more practical and, in all likelihood, much less costly to scatter your departments of state about, and build an electronic network rather than a Government palace in the Himalayas. Apart from reducing costs and protecting scarce capital resources, investment in the telecommunications infrastructure necessary to fully enable this vision can be expected to create the conditions for rapid advances in enterprising the hills.  It is a well-known phenomenon that the availability of modern telecommunications facilities of good quality and capacity acts as a magnet for business.  This is unlikely to be any different in the hills. You might still choose to have a capital but this could be largely symbolic and ceremonial.  Even parliamentary assembly sessions could be rotated between existing centres. Of course you can choose the centralist model and build a grand new capital.  But in following this option, it is important to be aware that you may unwittingly expose the new state to an old enemy. If you put everything in the centre, you may be creating the conditions for the administration virus, the disease of government by officialdom that you have been so desperately trying to escape!  

What is gained if we simply build another Lucknow in the hills?  Why not avoid the problem before it takes root? Assets and Liabilities In assessing the situation in Uttarakhand it could be helpful to draw up a balance sheet of assets and liabilities. On the assets side Uttarakhand has, or had, vast natural resources many of which remain under undeveloped, have been plundered or are being used in ways that fail to deliver the maximum benefit to the local populations.  Uttarakandis also modestly populated by hardy and self reliant people, a great advantage in an already heavily populated nation. On the liabilities side Uttarakhand suffers from a legacy of neglect.  This is evidenced by low social and quality of life indicators, migrant labour, poor infrastructure, especially power and telephone and water reticulation. There is also a virtual absence of any modern industry or business enterprise.

Since the 1960's, with the emergence of border security concerns, roads have been developed extensively in the region.  While many of these roads are rudimentary, physical communication is now possible to most points however travel times are much greater than for equivalent distances on the plains. Overall Uttarakhand retains a semi feudal social and economic character.  Life revolves around subsistence agriculture and commodity trading oriented to, and largely controlled by, plains interests.  The most important resource 'people' and human capacities remain underdeveloped and there is pervasive and massive gender inequality.  This is especially visible in the mainstay agricultural economy where women appear to do practically all the work. In truth the Garhwal and Kumaon have been grossly exploited.

The region has been seen as a convenient place to grab off-season produce for a pittance, a source of timber and migrant labour, and now to grab cheap, if unsustainable, electricity supplies.  All this has occurred without adequate compensation or returns to the region. The biggest casualty has been the environment, which in many areas, particularly in Garhwal is teetering on the edge of disaster. At an economic level I can characterize what I have seen in the hills by a few one liners * Everyone is busy being poor That is to say they are engaged in work of low value, low production and low return * Youth leave the hills on buses for the cities looking for jobs * Jobs leave the region on trucks carrying hill produce to the cities with no added value New Problem Now that the new state is about to become reality we have one extra problem to contend with: "Heightened Expectations"

After years of struggle and delay the people are pinning their hopes and aspirations on a new system of government for their region. Now that this is about to happen we need to produce evidence of real movement "Hill Honeymoons Don't Last Long" People expect greater employment opportunities, modern industry, investment and social advancement.   Big Government is No Answer So, how should the new government respond? Firstly it would be wise to create realistic expectations.  The government cannot do it all!  There can be no room for illusions that government can employ or create jobs for everyone, let alone solve all the other problems by itself. In a region known for a preference for public sector employment, this is going to be an important issue.  

To make matters worse India is on the verge of a massive shake out in the public sector with the inevitable net reduction in public service employment.  Besides, with the nation running a fiscal deficit nudging 10% of GDP and the centre still in the business of subsidizing diesel and cooking gas, a big melt down in public spending is inevitable. Obviously this is bad news for anyone who still thinks that a government job means secure employment for life.  Clearly we need new strategies.  The government cannot look after everyone, but it can create the conditions for sustained private sector expansion. ...How? I believe that if Uttarakhand is to achieve quick growth in employment, incomes and community services, we need to look for ways to make improvements in what we are presently doing.  We need to find ways to boost productivity, add more value and yield better returns for producers and the regional economy.

Of course we can and must embark on well considered development programmes that make good use of local resources. However, such projects often take time and, as we now understand, the benefits of big capital projects seldom trickle down. What is needed urgently are projects that create a trickle up effect, projects that benefit the common man across the region facilitating greater consumption and investment at the grassroots.  One of the ways Uttarakhand can do this is through programmes to reform agricultural marketing practices and enable the producer community to participate, and add maximum value to rural products locally, before they leave the region. Disorganized Agricultural Marketing Agriculture is undoubtedly the cornerstone of the hill economy. The vast majority of the population is engaged directly or indirectly in agriculture production, for food security and to generate cash incomes. Presently agricultural marketing is disorganized, chaotic and employs an unfair system loaded in favour of middlemen. Traders from the plains who, collectively, control the flow of produce out of the region. These traders acquire produce directly from hill producers in an uncontested fashion.  

This one-sided arrangement means that commodities are acquired on the cheap often resulting in pitifully low returns to the producer. Primary producers have practically zero participation in the trade and no access to the marketing process.  In fact there is not a single mundi to be found in the hills beyond the hill margins at Haldwani, Rishikesh, Dehra Dun, Bareilly and Kotdwara. As a result hill producers receive little or no reliable information concerning prices and trends.  Worse still, most produce leaves the hills without even the most elementary forms of value addition. After passing through plains markets, some 200 km away, where sorting grading and packaging operations are undertaken, some of the same produce makes the return journey up the hills to be sold in local shops at prices much higher than that received by the original producer. Apart from the sheer inefficiency, it is quite apparent that most of the benefits of commodity trade are being syphoned off!  In short, the hill communities are simply not participating in the value addition and distribution process.

Benefits of Market Participation

I believe that creating an orderly, open and efficient agricultural marketing industry represents one of the greatest and most easily achievable opportunities for the hill communities, and can be a powerful engine for economic growth. The establishment of an efficient marketing infrastructure and system in the hills will not only facilitate grass roots producer participation.  Volume trading also opens doors to a host of value addition and service industries including:  Sorting and grading , Packaging including consumer ready branded products, Storage and controlled market release especially for the flagship potato production, Manufacturing and processing based on sub-marketable produce, Transport and logistics services, Brokerage and financial services In short, jobs, incomes and growth can be created through a hill produce marketing industry.

Producers can also expect to benefit from the advent of and participation in a produce marketing industry.  They will gain access to the market, exposure to market systems and to market information.  Apart from helping ensure fairness through a contestable sale process, these factors will provide powerful signals and incentives for producers to adjust their production, introduce new crops and manage quality issues for higher returns. Presently these benefits do not exist or are lost to the hill region.  What incentive is there for producers to focus on quality when produce like Nashpati are simply poured into sacks and thrown onto the back of a truck? Obvious opportunities for niche products such as traditional highland pulses and the marketing of organic produce cannot be easily considered owing to the dysfunctional nature of the marketing system.  The same is true for a host of traditional handicrafts nonagricultural products such as furniture and basketry. The Vision The vision is to create Uttarakand's First industry.

The goal is to:  Become leaders in progressive produce trading, Provide equitable market access and enable wide participation by hill producers and village based producer groups, generate and retain maximum added value within the hills economy It is envisaged that:  There could be four or five large trading centres. Each centre would have a network of produce collection and market registration points throughout its natural hinterland  Markets would have modern, well planned and attractive trading facilities. There would be covered buildings with secure storage facilities. Trading would be systematic following auction and tender methods . Computerized information support systems would be employed to ensure transparency, efficiency and quick information flows.

The system would support buyer and seller, and produce registration, transaction recording and immediate bank payments. Up to date and efficient logistics would be supported through the provision of organized truck yards and parking areas, loading and unloading facilities supported by computerized check in and check out procedures. E-commerce be supported through a web site providing catalogue listings, description of sale offerings and electronic trading for institutional buyers in the cities Locations for the mundi need to be considered in the four natural river system hinterlands that run through the region.  These are in : Pithoragarh district, Almora / Nainital district with the mundi possibly located in the Kosi river valley; Pauri / Chamoli district with the mundi on the Alakananda river/Yamuna river valley.