Mangala’s Gam Peraliya: Good move but

essential requirement a village level database

Minister Mangala Samaraweera

Gam Peraliya to the rescue

Monday, 21 May 2018

Finance Minister Mangala Samaraweera, announcing the Government’s

decision to move for a flexible fuel price system based on international prices
built into a pricing formula, made a side announcement as well.

That was to give back the entirety of the money saved from the adjustment of
fuel prices to reflect their costs amounting to about Rs. 56 billion in this year to a
new development programme titled ‘Gam Peraliya’ (available at:
http://www.island.lk/index.php?page_cat=article-details&page=article-
details&code_title=184435 ).

This catchy title has been borrowed by him from the classic novel Gam Peraliya
by Sri Lanka’s iconic writer, Martin Wickramasinghe. In this novel,
Wickramasinghe had fictionalised the transition of power in a Southern village
in colonial Sri Lanka from the traditionally rich to the newly rich. Going by the
vision of Mangala’s project, there could not be a more appropriate title to it.

Creation of a rural entrepreneurial class

Critics were quick to point out that Mangala had tried to lessen the feeling of
burden falling on people due to fuel price hike. There is an element of truth in
this criticism because that occasion would not have been the best for him to
make the announcement about the proposed new village development scheme.

However, in his budget as well as his closing speech at the Budget debate, he
had made reference to numerous schemes to develop the rural-based economy
of Sri Lanka, though the tagline Gam Peraliya had not been used at that time.

His philosophy of development of the rural folk, especially the rural youth, was
cogently pronounced in his response in the final budget day as follows: “We
envisage the day when the farmer’s daughter becomes an agribiz-entrepreneur,
when the fisherman’s son becomes a seafood exporter. Sri Lanka needs to go
back to its roots of being a nation of entrepreneurs, a nation of traders. To do
this we must be open to global trade, embrace competition, and take on the
world and win.”

Empowering the rural folk to stand on their own feet

Thus, his objective has been to link villages to the wider global economy as
partners of the global production sharing system that is ruling the global
economy today. Thus, his vision is not to pump money into villages as subsidies
as had been done by Sri Lanka for long. He plans to increase the capacity of
villages as viable production units so that, as he has claimed, they would be able
to decide on their own destiny.

This is in line with the pronouncement by the 6th century BCE Chinese
philosopher Confucius. When he was returning from a fishing expedition, a
beggar sitting by the road had asked him for a fish. Confucius is said to have told
him: “I will not give a fish to you, but teach you how to catch a fish”. A similar
wisdom was pronounced by Chanakya, also known as Kautilya of The
Arthashastra fame, in the Ethics of Chanakya in 4th century BCE. Said Chanakya,
“It is enterprise and not charity that causes poverty to vanish”.

This vision at first sight appears to be a brutal one. But, it helps the poor people
to stand on their own feet and become responsible members of society. If this
can be achieved, it would really be true ‘Gam Peraliya’ repeating itself in a new
cycle of converting villages into entrepreneurial hubs.
Nihal Ranasinghe

Showering the poor with free goodies

Expressing in public their love for developing the rural folk has been the popular
game plan of every politician, past and present. That will be the game which
future politicians too will play. That is because the rural folk as a group are
made up of a very powerful voter base and winning them to his or her side is a
sure way for victory for any politician. Hence, the tendency has been to shower
them with free goodies at the expense of taxpayers.

In Sri Lanka’s case, since the government gets its revenue principally via indirect
taxes levied on mass consumption goods, it is mainly the rural folk that
contribute to fill the government coffers as well. Hence, in effect, it is the rural
folk themselves who pay for such free goodies. Yet, since they are driven to a
temporary myopia, they fall for such promises and help politicians to bind them
to a never ending cycle of poverty, deprivation and destitution.
But, Mangala’s promise has been different. He suggests empowering the rural
folk economically so that they would be able to stand on their feet and manage
their affairs by themselves without depending on outside free goodies.
Economists call this ‘weaning the rural folk away from dependency syndrome’.

Central Bank’s Isuru Project

This writer has the first hand experience in running a dozen odd rural
development projects when he was in the Central Bank.

One such project was the Small Farmers’ and the Landless Credit Project, dubbed
in Sinhala ‘Isuru Project’, first implemented as a pilot project in four selected
districts but later extended to the whole island. The objective of the project was
to help the rural poor to cross the poverty line by empowering them financially
and entrepreneurially. The theme vision of the project was same as the diction
of Confucius and Chanakya in ancient times: the project will help you empower
yourself so that you can stand on your own feet and work hard toward your own
economic liberation.
The modus operandi adopted was the following. The poor were organised into
self-help groups of five to 10 members. Thrift and savings were inculcated in
them right from the very beginning because anyone who does not know how to
save would not be able to handle the money given to him by another. The
requirement was for each member to save just Rs 5 a week and deposit into a
group account with the Regional Development Bank of the district concerned,
the banker to the project.

A six- to 12-month social mobilisation program was carried at the expense of the
project. In that program, they were given ideological wisdom as to why they
were poor and how they could come out of poverty.

In addition, they were trained in the art of conducting group meetings and
working as a team. Then, they were given technical know-how in the fields of
comprehensive farming, livestock development, handicraft, selling, etc. Then,
they were ready to get a bank loan because in the terminology of bankers, they
were now ‘bankable customers’.

Mutual or inter se guarantees

The guarantees for the loans were given by other members of the group in what
is known in microfinance as ‘mutual guarantees’ or ‘inter se guarantees’. Thus,
the loan supervision was made the responsibility of the group which was more
effective than the supervision done by bank managers who relied on the remote
mode rather than onsite sight of the borrowers.

Loans were given to them first in small amounts and later when they repaid the
old loan, new loans of higher amounts were granted. This is known in
microfinance as a graduated scale of lending. The essential feature of the
project was that loans were given at slightly above the market rates rather than
at subsidised rates. That was to keep the well-to-do in the villages away from
the loan scheme.
Poverty alleviation is not a rosy path

This approach to poverty alleviation is not easy and without hiccups. A large
number of governmental and non-governmental organisations teamed up with
the Central Bank to make the project a success. Among the governmental
agencies, a prominent role was played by the Industrial Development Board,
Department of Agriculture and the Department of Livestock Development. The
prominent non-governmental players were Sanasa, Sarvodaya and World
Vision.

It was not an easy path to prosperity. Many members who joined the project got
themselves dropped out in the midstream and special strategies had to be
employed to get them back to the project. According to an impact assessment
survey conducted by the donors of the project, namely the International Fund
for Agricultural Development or IFAD and the Canadian International
Development Agency or CIDA, in 1997 it was revealed that 80% of the original
beneficiaries had succeeded in crossing the poverty line in about five to seven
years.

A subsequent impact assessment survey conducted by the Regional

Development Department of the Central Bank in 2005 has put this number to
63% where the participants have agreed that they were able to cross the
poverty line through the support given by the project. What it means is that
there is no possibility to maintain a hundred percent success rate in poverty
alleviation projects. The success rate is always below that ideal. Even then, that
success rate begins to shrink as time passes due to their inability to cope with
new adverse developments.

Village level statistical base a must

Thus, Mangala’s Gam Peraliya will remain only wishful thinking unless he is able
to establish an effective machinery to convert it to concrete action. One problem
he faces in this respect is the absence of a reliable data base for providing the
support to villages and effectively monitoring their progress.
For this, a comprehensive village level data base has to be assembled, regularly
updated and used at the centre for progress monitoring. Without this, Mangala
will simply pump money to a project where he would not know even where the
moneys have gone.

National Operations Room

The importance of timely availability of data had been felt even in the past
when it came to implementing development projects. To address this issue, in
1989, the Governor of the Central Bank, Dr. H.N.S. Karunatilake, established a
National Operations Room in the Central Bank. All the socio-economic data
relating to Sri Lanka’s regions and the centre were collected, digitised and made
available for the purpose. However, this operations room was transferred to the
Ministry of Plan Implementation later and there, it is reported to have met with
a natural death. If there is a genuine interest in undertaking a development
initiative in the country, it is necessary to resuscitate similar machinery within
the government.

Nihal Ranasinghe’s personal initiative

A senior public servant, Nihal Ranasinghe, presently the Controller General of

Immigration, has developed a comprehensive data base for all the villages in Sri
Lanka titled Extended Rural Development Monitoring System or ERDMS. This
exercise he has completed on his own because of his personal interest in
development administration. He had been an administrative service officer in
the regions for a number of years and during that period, he had experienced
the necessity for reliable socio-economic data at the village level in order to
implement development work there.

This interest was further strengthened when he took courses in development

economics and development administration for his MPA degree at the
Postgraduate Institute of Management.
Nihal: Reliable data are a must

On inquiry, he revealed to me why he used his free time to develop this data
base. “Without data, those of us who plan and implement village level
development schemes have to grope in the dark. The conditions in villages are
different from each other. Hence, it is wrong to work on the assumption that
they are all in a similar situation. Some villages have the problem of water.
Some have the problem of roads. Some other villages are faced with the
problem of marketing their agricultural produce. Some don’t get bank financing
in time. All this information has to be gathered and made available to planners
as well as plan implementation agencies to enable them to address the issues at
hand in each village. I have gathered data for 32,000 villages and they are all
available in a single computer data base. This can be used for developing
appropriate strategies for handling village level issues.”

Mangala should tap this goldmine

This is indeed a goldmine to be tapped by Mangala in his initiative to support

the development of a village level entrepreneurial class. Ranasinghe’s ERDMS
can be used as the basic input when framing any national level development
activity monitoring programme.

The data form has three parts and when information relating to province,
administrative district, division, etc. is inputted, it autogenerates a unique
identification number for each village. These numbers collected into a single
compendium can be used, like a telephone directory, to refer to any particular
village of choice. The other parts consist of demographic data and development
data. Once projects are completed, they can be automatically updated to
provide any centre-level supervision and monitoring. According to Nihal
Ranasinghe, an additional advantage of his ERDMS is that any visiting Minister
or senior public servant can arm himself with the profile facts of the village
before he goes there. He is therefore in a better position to address the specific
issues relating to that village.

These are real innovations done in the public service and Mangala may use
them in order to effectively implement his development programmes.

(W.A. Wijewardena, a former Deputy Governor of the Central Bank of Sri Lanka,
can be reached at waw1949@gmail.com).
Posted by Thavam