Institution Building

The functioning institution (established by people) at the village, form one of the major pillars of a healthy and sustainable democracy.  These are the civic institutions at the base.  Myrada’s experience indicates that “participation”, which like God is interpreted differently by each one depending on his or her needs and biases, is necessary but not enough; it must lead to institution building.  Participation is a means to build an appropriate institution with a vision and mission of its own; it is also an end in itself, since people are empowered in the process.

Our experiences in rural areas provides sufficient evidence that a “People’s institution” which is structurally appropriate to the resource to be managed, (be it credit, agri – commodities, forests or milk) provides an instrument through which people can acquire, increase and sustain ownership of any investment from outside (e.g. the project/programme).  This is why effective participation is so critical; it questions the tendency to standardize and to overload every institution.  Evidence also indicates that the sense of ownership derived from an “appropriate institution” provides the basis for SUSTAINABILITY of the objectives of the intervention which are increase in productivity and in equity.

The equity is also one of the core objectives of the people institution.  It is necessary to foster institutions of the poor over which they have control and which in turn provide space for their growth and a basis to network and link up with other institutions in a sustainable manner.

The words “group”, “institution” and “organization” are often used interchangeably.  A group is a gathering at one end of the spectrum, while an institution is an entity with particular features at the other end.  The “organization” comes in between.  A group, is often a temporary gathering to achieve a particular purpose; it can develop (and does on occasions) into an organization which has rules and regulations and defined functions; in most cases, however, these rules and functions are largely imposed from outside.  An organization develops into an institution when its members have full ownership of the body; where they have interiorized to a large extent the culture and systems that they (or others) have established.  This is more easily achieved when the members have an active and effective say in drawing up the rules and regulations, in setting the agenda and building the culture that enables them to perform the functions that they choose.  When the rules are drawn up by outsiders, the organization can interiorize them adequately provided adequate training is provided to help it to develop its own vision and mission, and above all if the original rules are open to modification, addition and rejection;  in most cases this is not the case.

The Features of an Organization/Institution

An institution, therefore, grows over a period; it requires at least two to three years before a group begins to develop clear signs of an institution.  It is also quite possible for a functioning institution to loose its culture and undermine its systems through external or internal causes.  An institution therefore requires both times to develop as well as constant commitment of all its members to remain healthy.  In short, it must develop its own vision, its own financial and organizational management systems, its own learning mechanisms and the confidence required to link up with others to protect its identity and independence.

Affinity is based on a set of inter-relationships among group members; mutual trust is perhaps the main source of these relationships.  But there are also several other binding inter-relationships of support and inter-dependence as well as the systems that govern their activity and the culture that they develop; this set of relationships could be described as the SHGs “social capital” which provides the basis of its sustainability and the guarantee for any loans given to the SHG.  These institutions give the poor space to grow in confidence and skills.  This is turn helps them to reach out to forge links with other institutions, both formal and informal.  Affinity can be strengthened by group perception of common threats from outside.  It can be weakened if individual aspirations conflict with the groups common good.

Since independence, community based institutions promoted in the development sector have created positive impact on people’s lives.  Difference types of people institutions promoted in the field of development such as;

  1. Institution based on self-help and credit management
  2. Focus on Natural resource management
  3. Producers and commodity based institutions


Development organizations adopted the self-help group as the appropriate people’s institution which provides the poor with the space and support necessary to take effective steps towards greater control of their lives in private and in society.

The self-help group is not a static institution; it grows on the resources and management skills of its members and their increasing confidence to get involved in issues and programmes that require their involvement in the public and private spheres.

The SHGs provide the benefits of economies of scale reducing costs in certain areas of the production process which the members may decide to undertake as a common action.  The group also provides a cost effective credit delivery system, as the transaction costs of lending decrease sharply both to the banks and the borrowers.  The groups provide a forum for collective learning which rural people find more “friendly” and which is consequently more effective than the individual or classroom approach that is commonly adopted.  The groups promote a democratic culture and provide the members with opportunities to imbibe norms of behavior that are based on mutual respect.  The SHGs foster an” intrapreneurial” culture where each member realizes that while she/he needs the support of the group to achieve her/his objectives, the group also in turn requires her/his support in adequate measure.  The groups provide a firm base for dialogue and cooperation in programmes with other institutions like Government departments, cooperatives, financial and Panchayat Raj institutions; if the groups are functioning well; they have the credibility and the power to ensure their participation in identifying, planning, budgeting, and implementation of Panchayat Raj programmes for the empowerment of the poor.


CMRC is a self-run institution which provides essential quality services to its member institutions and the community and thereby supporting them to grow as sustainable institutions, empowering its members.  The CMRCs are the federated structure of local level institutions which includes SHGs, Federations, WDAs etc. and other CBOs in their locality.  The local level institution understands the importance of establishing a Resource Center managed by the community themselves in catering their own needs and requirements.

The objectives are;

  • To provide necessary information on developmental programmes
  • To promote linkages with banks for loans and with government line departments for pro-poor programmes
  • To solve the groups problems
  • To strengthen institutional capacity of sags
  • To promote livelihoods through skill improvement training
  • To promote insurance services
  • To provide legal services



Where a watershed is coterminous with a Village Panchayat or its area is confined within the boundaries of a Village Panchayat, the Gram Sabha of the Panchayat concerned will be designated as the Watershed Development Association. However, where a watershed comprises of areas coming under the jurisdiction of more than one Panchayat, members of the community who are directly or indirectly dependent upon the watershed area, will be organised into a Watershed Development Association. Such a Watershed Association should be registered as a Society under the Registration of Societies Act, 1860. The key objectives of WDA are:

  • Create awareness among the sub-groups on the importance of ecological balance of the watershed as an ecological unit which needs to be properly managed.
  • Co-ordinate and integrate the efforts of all the sub-groups; so that all the sub-groups work towards the same goal, namely the integrated development and management of the resources of the MWSs.
  • Work out systems to ensure that common resources and assets like nala-bunds, gully checks, grazing lands, drinking water resources etc., are managed by the sub-groups in a manner where rights and responsibilities are shared appropriately.
  • Provide the necessary support to the weaker members of each group to develop and participate effectively.
  • Co-ordinate, lobby and bargain with the Government, contractors, financial institutions, Mandal Panchayats, MYRADA (as long as we are there) and other interest groups so as to mobilize, plan and manage programmes offered by these institutions for watershed development and for the development of weaker sections.
  • Network with other WMAs and institutions involved in similar programmes so as to help the sub-groups to develop appropriate skills etc.

Watershed Committees: Subject to the overall supervision and control of the Watershed Association, a Watershed Committee shall carry out the day-to-day activities of the Watershed Development Project.

The Watershed Committee at the 500 ha level is done away as far as its roles in a) managing funds, b) monitoring the programme and c) working on common land is concerned.  The standard watershed for operational purposes in Government Programmes covers an area of 500 ha in which over 100 families cultivate.  There are too many to form a watershed group which promotes effective participation.  As a result, they elect representatives and form a Committee to implement the programme.

Watershed Users Groups: In most watershed projects, the management of an irrigation tank if it exists is not included as a component.  Most watershed management projects focus on the catchment where the poorer farmers cultivate mainly drylands.  However, there are some projects where the management of irrigation tanks is included in watershed programmes.  In such cases, Water Users Groups are formed which focus on the command area of an irrigation tank.  The members comprise all those farmers with lands in the command area.  Each UG shall consist of the persons who are likely to derive direct benefits from a particular watershed work or activity. The UGs should actually take over the operation and maintenance of the completed community works or activities on common property resources.


Village Forest Committee which are widespread and which are expected to participate in regenerating and managing all degraded forest lands and to be involved in managing non timber forest products.  The VFCs include one man and one woman from each family.  The forester is the secretary and signs all cheques.  The meetings are usually called by the forester.  The VFC concept has introduced to manage degraded lands and forest products.

The VFC also shares the strengths of the PRI since it covers the whole village and is able to coordinate activities.  The VFC makes a bow to gender issues by including women as members in equal numbers as men.



Twelfth Plan working groups set up by the Agriculture Division of Planning Commission have strongly recommended that the Twelfth Plan should put special focus on building capacity that encourages group formation and collective effort by small, marginal and women farmers, rather than simply provide additional subsidy to individuals in these categories. Existing group activity takes many forms depending on purpose. From lower tiers of formal cooperative structures in credit, marketing, dairy and fishery, extending to self-help groups, farmer clubs, joint liability groups (JLGs) and, more recently, to producer companies. For simplicity, these can all be termed Farmer Producer Organizations (FPOs).

Small and marginal farmers face problems not only with shrinking land assets and with credit; they have difficulty in accessing critical inputs for agriculture such as quality seeds and timely technical assistance. In this situation, FPOs offer a form of aggregation that leaves land titles with individual producers and uses the strength of collective planning for production, procurement and marketing to add value to members’ produce through pooled resources of land and labour, shared storage space, transportation and marketing facilities. These also improve bargaining power of small farmers and, most importantly, reduce transactions costs of banks and buyers to deal them. Investing in such group efforts has strong externalities.   The Twelfth Plan Working Group on Agricultural Marketing, Infrastructure, Secondary Agriculture and Policy for Internal and External Trade has in fact suggested that an institutional development component, along lines of NABARD’s farmer club scheme, be introduced in all centrally sponsored schemes to specifically target FPO formation among small producers, especially tribal, dalit and women.  It notes that a majority of FPOs that are likely to emerge as a result of such an intervention will remain focused on addressing issues of crop planning, technology infusion, input supply and primary marketing.

The formation and development of FPOs will be actively encouraged and supported by the Central and State Governments and their agencies, using financial resources from various centrally sponsored and State-funded schemes in the agriculture sector agencies. This goal will be achieved by creating a coalition of partners by the concerned promoter body, involving civil society institutions, research organisations, consultants, private sector players and any other entity which can contribute to the development of strong and operations for various crops.

The objectives are;

  • Mobilizing farmers into groups of between 15-20 members at the village level (called Farmer Interest Groups or FIGs) and building up their associations to an appropriate federating point i.e. Farmer Producer Organisations (FPOs) so as to plan and implement product-specific cluster/commercial crop cycles
  • Strengthening farmer capacity through agricultural best practices for enhanced productivity
  • Ensuring access to and usage of quality inputs and services for intensive agriculture production and enhancing cluster competitiveness.
  • Facilitating access to fair and remunerative markets including linking of producer groups to marketing opportunities through market aggregators.