Demand Driven Versus Supply Driven Development Models

On 11^th October, 2016, PM Narendra Modi had called for a demand-driven model of development instead of a previous supply-driven model of development.

Understanding Demand Driven Schemes

The government schemes can be supply driven {allocation based} and demand driven. In allocation based schemes, the money from centre to states is based on certain criteria or calculations. These state-wise funds for example, can be based on  poverty criteria. Thus, it’s a top to bottom approach, highly centralized and has disconnect from grassroots organizations.  In demand based schemes, the scheme implementation is driven from below by the grass root institutions such as PRIs, SHGs, district bodies or even state bodies. It’s a bottom-top approach and is highly decentralized and is people centric.

In India, schemes such as MGNREGA, NRLM etc. are demand driven. In such schemes, the provision of government support (such as work in MGNREGA) is triggered by demand for work. Similarly, the NRLM / Aajeevika follows a demand-driven strategy. In both these schemes, the states have the flexibility to develop their own perspective plans and annual action plans for poverty reduction. The most recent example of demand driven scheme is Saansad Adarsh Gram Yojana (SAGY). Under this scheme, every Member of Parliament is required to adopt one village located in his or her constituency by 2016 and then adopting two more villages by 2019. This would result in the development of the adopted village in terms of health, cleanliness, greenery and cordiality within the community. In other words, the scheme imposes a duty upon the MPs to develop the physical and institutional infrastructure of the villages. The development in one village will definitely have an impact on the neighbouring villages, who too will try to be at par with the ‘Adarsh Gram’ or model village.

Development Should be Demand Driven: Inputs for Critical Appraisal

Following are some of the important observations you should note regarding demand driven development model:

• In most government schemes, the approach followed is top-down, i.e. the flow of funds and implementation are pre-determined. Such schemes may not be fully responsive to people’s priorities. We can consider the example of village development schemes here. Under these schemes the funds are directly allocated to the states. The biggest problem here was efficient allocatioon of resources to reach up to every level. Many remote villages did not get enough resources due to their remoteness or insufficient representation.
• Under the demand driven approach, the pre-determined components of the scheme remain absent and focus is on creating a demand for the entitlements under that scheme. This approach is hailed because it accords priority to people’s demand {for example, in recent times, the demonetisation led to rise in demand for work in MGNREGA} and to grass-roots organizations such as Gram Sabha, PRIs, SHGs, NGOs etc.
• The demand driven approach can be called a further progress over allocation driven development, but this is also not free of issues and problems. Many a times, the demand driven schemes have fragmented and scattered activities and may not bring favourable results in all diverse parts of the country.

Issues with SAGY Model

Though PM made this statement at a function related to SAGY scheme, unfortunately, this Scheme has also suffered the same setbacks. Some the areas of criticism include:

• Insufficient attention to efforts– Most of the MPs have made an attempt to first adopt one village in 2016. They complained that they had even identified the problems in the adopted villages and had also written to the Union Ministers and especially to Ministry of Rural Development about the problems. The various issues that were pointed out in the villages were: absence of mobile network, lack of an all-weather access road, lack of sufficient fair price shops and insufficient employment under MGNREGA. But the Central and State Government agencies have not responded profitably to the demands. One of the MPs claimed that only one primary school was built in the village despite pointing out several problems. Thus, there is a genuine lack of commitment to do anything beyond participation or identification of problems of a village.
• Insufficient allocation of funds– Another milestone towards proper implementation of a Scheme is sufficient allocation of funds specifically for the Scheme. But the government has failed to do so. As a result of this, there is still a supply-driven approach where supply depends on the time and financial capacity of the government. Due to this lack of funding the MPs had to tap funds from the existing scanty resources like gram panchayat’s own funds or the CSR funds.
• Reluctance to move forward with the Scheme– Due to the non-responsive nature of the ministry and the agencies, the MPs have also become unwilling to move forward with the project. They are pressurizing the government to first discuss the problems being faced by the MPs in this model, reconsider the performance of the adopted villages and relook the design of the scheme before moving on to the second phase of the project. Only 23 out of 543 Lok Sabha members and six out of 252 Rajya Sabha members have shown interest in the further progress of this program.

Conclusion

The above discussion makes it clear that both top-down and bottom-up approaches have their own pros and cons. For a diverse country like India, the Integration of top-down development with bottom-up approach is needed at various levels, particularly for social and community based projects.