World Bank Reprint Series: Number Ninety-six
V. V. Bhatt
Decisionmakilng
in the Public Sector
Reprinted with permission from Ecmomnic and Political Wveekly, Bombay, vol. 13, no. 21
(May 27, 1978), pp. 30-45



Decision Making in the- Public Sector
Case Study of Swaraj Tractor
V V Bhatt
The ch(7racteristic fcature of the dcvelopm/ent process since Wor7ld War II hlas beenz thte deliberate
ass tumption by'the State of the function of reguluating the I'eiee and pL.L'ttrl of socio-econonlic developmIent)
In a large number of LDCs, the? State is also playing an        ive role in p)romnoting and managin" enterprises
in the manufacturing sector, The fun*ctioningzr (atnd growth of these enterprises depen(l on the decision-
making process in the public sector. This proces.LS of riecision7  making, wvthich is ccmiplex    entpoigh in  the
private sector, is inevitahlly mzuch more! conplcx in the putblic sectorA.
This case studq of the Swarai traec 'r h1as beenz undertaken with a view to uindcrs tci,ili, the pro-
blem  of decision-making in putblic manufacturing enterprises in lndia.
The paper is diiiclecl into five sections. Section 1   provides somne informnat'ion about the tractor in-
dusfry in general, Secticin II narrates the storyt of the .SThvarai tractor. In  Sections III and IV  sonme pro-
blems abouzt the decision-making process care raised and some conjfectures mnade abouzt puiblic sector be-
havizour. In the final sectioA,z an attempt is made to formzulate somne explaznatory hyi,pothieses abolut the
public sector decision-making process .-Z hypctheses that mnany have general relevance for the LDCs with
mixed economies.
I                    tractor case,                           the year when the new     agricultural
Introduction                  There is another charlacteristic  of  strategy -  the so-called green revolu-
BEFORE we present the Swarai trac-     the tractor industry that is also rele-  tion - was formulated. The domestic
tor case, it is essential to give some  vant to niote.  In the tractor industry ipmoducrtion  of  tractors  started  in
background with regard to the tractor  there are economies of scale both in    i9fli-fil with a licensed installed capa-
industry. In  North AmeriLc.a tractors  Production as well as dkitribution. It  city on a two shift basis of 8,500 units
began   to  replace  draultht  animals  has been estimated for the US    that  by two firms      Tractor and   Farm
(usually horses) around 1900 and this  approximately the same economies of Equiipment (TAFE) and Bicher Tractors
substitution process was completed be-  scale, around 20 per cent, would attach  Indlia Ltd (Eicber)-the former with
fore World War II.    In Europe, this  to distribution expansion from  20,000  a capicitY of   7,000 units and   the
substitution occurred during the  first  t` 9,)(A(  IlTits as woull(d acilre to a  latter with a capacity of 1,500 units.
decade after the war as small versatile  rdution   cxpanlicri.6  This is part  Both were permitted foreign     colla-
tractors and  government suppor.t for    f the rea,sen why the industry in thle  boration in 1961. TAFE with Massey-
tractor purchase became widely avail-   W`est is dotyiuatdl bv a few rirmiis. re-  Ferguson, UK and Eicher with Eicher
able.3                                 sultine  ini lioliolistie coiiipctition as  of the Federal Republic of Germany.
Most of the technical d&velopment    well as colluion.                         As against this domestic capacity, it
of the  tractor had  taken place   by    In a durable good like a tractor, the  was estimated that the demand    for
World War II and much of it occurred   farmer essentially buys tractor services  traclcrrs would increase substantially as
in the US.   However, the truly revo-  and henice is c-oncerned in his purchase  a result of the adoption of newv agri-
lutionarv deo elopment of the pre-war  dfecision about after- sales service and  cultural strategy in Punjab,  Haryana
period, the "Ferguson System", came    parts ivail.cllty. Farmers' loyalties or  and Western UP. With large increases
not from the US but from the U.1K and  preferenice are  dealer orientel  and   in land prodcictiity, farmers were fac-
was introduced in the US in 1939. By   sales of tractors thus crucially depenid  inig a farm power shortage dlurinig the
this time tractor-technology had moire  °n. the quahlit of disirihutzion and ser-  peak season; further, and even  more
or less stabilised and there has not   vice,  As seems toi have hlappened in  imlplortlnt, cost of animal powe,Cr was
been any    significant change in this  the -S, this deilership network cani   liirln  sh1a1rplv.  Tlle adoption of high-
technology.  There have been minor     redluce culipetition and wvork  against  yielding i arieties oif wheat improved
additions to the  tractor design, like  the interests of the farmers; for  far-  the  Productivity of land,  especially
power-steering and automatic   trans-  mers glntarl% all over thL world have  irrigated land. This in turh raised the
mission; buit there have been few im-  no adequate intorinatioin to jUdge the  opportunity  cost of usilug   draught
portant patents in the tractor industry  quality of a tractor exceptinig throuigh  animals, as fodder competed for  the
since 1939.4  By comparison with an    the nmarketiiig structure. This charac-  highly  productive  irrigated   land.
automobile, a   tractor is a   simple  teristic of the tractor market suggests 'Mechanisat ion -"- task-wise -  thus
machine. ' While a car r1picIllyv has  the need for    public policy in  the   was expected to be an inevitable corn-
15,00V parts, a farm   tractor has a   initerests of the farmers - the group   plement of the green revolution.9
mere 2,000; of these 1,365 are seldomn  in a weak bargaining po-sition 'i.e-a-vis  However, in view of relatively small
or never actually   manufactured   by  the pr,cdiictionl-listributio)ii system.8  holings  68 per cent of holdings in
tractor manufacturers.3 These charac-    Farm nmechanisation in India started  Punjal3 were below 9 hectares, account-
teristics of  tractor etechnology  and  only after the War, In 1944-47 there  ing for about 20 per cent of the stock
manufacture indicate that it should not  were abotut 5,000 tractors; the number  of tractors in 1971 -- the  problem
be difficult for newcomers like LDCs   sharply rose to 20,000 in 1956-57 and  whiclh the Planning Commission faced
to absorb and masteP this technology,. by 1964-65, when our story     begins,  was: wshat type of tractors would suit
This point is relevant for tIle Swaraj  there were about 40,000.   This was' the budget and the needs of      small.
Reprinted from  Economic and Political Weekly, Rcvi'w,. of Alanagement, Vol XIII No 21,   May 27, 1978
M-30                              Pagination as in original, advertisements excluded,



IAIJ . 1: SVkARAJ TRACTOR-- PHR ORMAN( L INI)I(A RORS              ing field c.ndif iowc, lasting over 1,200
hotlrs non-stop runlU1ing with 10 per
Expected        Actual            cent tto 30 per cent over-load during
the ho: est sumtmer months. With the
apal:i Cost(Rs Million) r                   37.002         35.916            experieccce  gained on this prototype,
(iestation Lag                               105 weeks       105 weeks         three more units were    assembled in
(Marchi 1972 to (March 1972 to    Mlarch ]9h') for extensive field  trials
Mlarch 1974)   Marchi 1974)
Outlput Sales of Tractors(Nt,mber)  197q-75    1,600            991            and performance    evaluation at   the
1975-76       3,500          2 42             TTTS, I'icijilh Agricultural Uni irlsitv
1976-77      4,500           3,801)           (I.uJ(dhiana) andi the  UP Agricult inall
1977-78       5,000          5.H00            Uncxersiv rPZant Nagar). As a result oE
Op1r.ating Profih (Rs Million)   1974-75     -3.656           8.824           these te     a  Numbr o    s a ditsultion
1975-76     -0.320           0.635            these tests, a number of modifications
1976-77       1.761         t2. 300*          wvere incorporated iti the  h\xdraulici.
1977-78       2.702         +3.500**          steering gear, front axle, engine and its
cooling, system  and the 1pc'(dlie,d trac-
*For cost-conMpo'ikio0l) see Table II.                                 tor was again tested at TTTS in May-
**Estirnated                                                             June 1971. These tests indicated that
Source: Industrial Dev-elopmnent Bank of lindia.
its performance was better than most
TABLE: 2  SWARAJ TRACTOR: PROJECT     in Mav 1965 to discuss with the So-     of the imported tractors in 20-25 IP
COT                                                            range in rceard to drawbar pull and
T.                     viet   Government   the   nature  and   ratio of the drawbar HP to the power
(Rs MNill' in)  magnitude of assistance for this and the  a\-ailabit2 at the PTO  - which are of
oither projects. M  M  Suri, Director of  primary concerni for cultivation. The
Expe~.ted  Actual    the Ceintral Mechanical   Engineering   tratotr passed the TTTS test.   Thus
(March1   (April    Resear-ch Tinsticuce tCMERI) wais  one   tatrpse          h    TSts,Tu
1972)     1974)                                             w was born the Swaraj tractor, the pro-
of the members of this deltitolol                            ln.
Land                1.162    ()991.9S85it-t tT(fion was rehictant to;dl ct (if local
2. iidccc-. -1-.52           3 435i           OtOts   nition was rilnetauct to  The design for ;Swaraj 20 111'  was
anid::  i Machinerv                    ci l.iiii itself to thle tiactor  project. buil  iiiod the  four-sico,   twin
(a) Imported      3. 191    3. 135    l'icitli' r. Suri felt that the project as  clin   aircole  Kiroske    engin
(h) Indinl-III   15.42(1   1- 4      formuitilatetd  had ex(essivc foreign ex- ctalinder, air-toled Kirlosker  cn-itie
TLcnil lKnow-                                                                  that was being produced in the coun-
w2 073    1 .640    clianiz  conteIlt and required a large  trv. Some (of the other salient features
2.3s tl  isnunila'r of So,viet experts. Since the So-
PAsiet            0.?81               Niet Union wvas reluctant to assist this  engine of X raIeel s de. i ? iith a  riate
Expeinsp 0480                         l roject S i  ui   td to the Deputy
F\.   .nsc,      (0lai40c: . that (CMIII cotld develop an                    speed of 2,000 rpm and a compression
1-'s'le           050t1S()  <.107    Vtli.      trac(toer *l.8 i.. t  . ct   ratio (if 16 :1. It hat .a dlual ranige four
..17 i.h'                                    .tracto .          .i" that   speed   transmissin  s, as to cover
1 5I   " I - rproitc 11d                       i tihout external assistance or   .
i  mp|:t l ptii-tS. Tlle ( xRRw thus  wide  ariet.% of jobs ranging  from
. f C  Work      flee                  mp   L    ers   Ic  '\FItu        heavy dutty to fast  irznaccpmct, and a
in Cp i ta.`                         st:rteid the woirk on the new tractor   provision fo  an independent P
Total              d.' (i       9t      o deilgn u:ider the directiotn of a Commit-  prohiion fobe a gd i olepedienrit PTO
-            u          tee of Technical Experts (CTE ) com-    whieh ctn be    rigsaged n r m ion  n I, ,ca
S.'a. -1,e Llju,atrial D)eve7f,-.^;nll!v B3aii?.rx<lvsit      fte nut         when the tractker is in motiotla an(3 ciin
1-:'. I ri   c                        repi 's-cntitisus of the industry, . tved as a prime mover for  pumps
e  d.agricultural uni%eritics,. farmers  and
I                           ~~anid other s;iMilar egoi fp,11en r. FEnginle
nn,k.ithum  farmerKc.                   thle  Tractor  nT' aIIii n ili and  Testing  coului ng is ciilar itI by an axial blower
Si, ,iOil tTTTS) of 'B itirli           si'id  ' Os provide h  n   the   mine
'                             'ant1                 fnll  pi-ivi(le(i  (!n  the  t:i S'ille
A   team  of   engineers undlLer  the  cvlill(ner block. lydrattulic- with linger
;,iaraj Tractor     i)eciiI-MNa kinig,  ditrec)ion of Suri studiced in (leptO the  til)  cotntrosl forl h) tl1 poitions  andi
Process                   relative merits of the a' alflable desigln  traft (lntrol of li r1e pOinlt lilloda" is
1}    oi,ti1v  wegin11 1 96 i.  A new  of hiO iti'dl'iral  ti actors,  keepling  in  pirc-iiethri for ;i pc ,Itiilm 010 he i iLn jclc
eam of    mnenbu-er  was .cpp '1tilliLI at  view the local ma1inc."falcLurilng faclities,  A  foot  pe.irt,eld 1I .tf1 entLVil  lo09k is
o1 . 1liml a l. Commission and( it vaF  skills, tow materials and  rigro.-climatic  provided to itfprove tmaction in slipz
. oi!!i1.ulti rL  the  Fnollit]i  Fiv(e-  conditionTsi  and dl%ccloped a  tracter,  pery and muddy spots. It is also pro-
Year Pl.n.   As a part of the    Plan,  componetll by component,    Sillce the  vided wvith adjustable front and  rear
^.e       % ne  projects rIqLui red  assi- .c\;ac ability iaf standzard hlyd(raulics wais  ;cslcs, manual  .teering  and1 vertical
stanlc.e  1.5oth financial and technical.  cansidetcd as the key requirement for  g\haust.
i; In    Sioviet Utniln. One of them    a good traictocr, the CM LR[  engincers   Tlhus by 1971, the Swam ci   t Ir.tlor
was at 1ck TIPl  tractor project.  The  4Iicces.f1i1lH  -,t: eloipedl  an  o'riginiil  was ripe for ctmmelccial  t'v di,cctii.
Planuinwi  Co,immission had e timated   singie leNer   automatic   dlep1th-ecim-  But the  question was: whio   would1(
that tLt  *lexnandl f!ir triators  would(  conitrol licalra-Ilit  system, patents ftor  adopt this  innovation?  I ,ic Ic., tlle
be 40,iii0 units per year by 1968-69   which were acceptedi in lncclc.c, the UIK,  ioctots tL' was  ccll'.tJtC'tt', I  i th1  the
and   f this, hallf the demanid wvas ex-  Vapan.  Wet   Germany, the    I SA,   as-istallce (if a pliblic sector  cocrnC01rl1
pected t-l be f(r tractors in the  HIP' France, Poland arid Ywiiai.1.10a ic.  The  the .\linin and Allied   Machinery
iange at "i andl below. The Govern-     first piol -kpo tractor wvas  asseimbled  (Co'riion tin  .ANA,IlC)  and it  wass
meait 4 India's d':cciori headed1 b3    in Novemnber    1967 an1  was ptot to, expectedi that MAMC would be      able
the Deputt, Chairman of the! Planning   extensive endurance tests in  CMF.RT    ti) olndert,ila!e the tractoIr prreict w1ich.
Commission, visited the 4LfS.IeL IJnion  on specially dc"igned test rigs sinicilat-  the addition of nil1Y some  balancing
M-31



equipment. But in the period of indu-  organised by Suri after he left  the  establishied anid new firms- largely
strial recession in the coutrim  (1967-71)  Ci',ERI. to prepare a detailed project  smiall-scale  engintAering  flriis  frot-
the MAMC had      incurred  finanicial  report and undertake the entire  in-  Punjab --- and concentrate on  manu-
losses and was not willing to take any  stallation anid  comnmissioning of the  facture of only 15-20 per cent of key
additional risk involved in the produc-  plant abong, with the company's engi-  components; it was thus that  they
tion of the tractor,                   neers (the CMIE111 group). The detailed  were able to reduce the project cost
Because of industrial recess;ion  and  project report was  completed by the  (sve Table 2).
declinie in its sales of machine tooils,  middle of 1971. The next problem was:  But the PSIDC was able to contril-
the Hindustarn Machine Tools (HMT),   how to finance this project?           bute only less than 10 per   cent of
another Central Government   concern,   The PSIDC and PTL approached the    the cost, while the    IDBI's rule of
wanted to diversify its output by go-  Industrial Development Bank of India  thumb was that the promoters shouild
ing into tractor production.'2  How-  tIDBI), owned by the central bank of   finance the project at least to the tune
ever, it wanted to use its  unutilised  the  country, the Reserve  Bank of   ot 15 per cent of the project cost
capacity  immediately by first  going  India. The IDBI was set up in 1964 as  through  their  own  resources. The
into assemlyZ of Zet'eor tractor  parts  ani apex development bank to promote  PSIDC, hence, was willing to take a
imported from Czechoslovakia. Further,  industrial  dlevelopmient,  particularly  private firm  of civil engineerinig con-
it thought that  Zeteor was a proved  viable projects that could not obtain  tractors as a co-promoter on condition
production model, -while  Swaraj was  financing frf,m the other  institutions,  that it  would provide more  than 5
only a prototype. In this decision, it  Its charter is broad and flexible; it can  per cent of the required resources. The
was supported by the National Indu-   finance any sound project, irrespective  firm was willing to  do so if its re-
strial   Development     Corporation  of its  ownership, organisation  and   presentative was made the  managing
(NIDC), in whose name the     Swaraj  size.                                  director.
tractor was patented.                   At the time the IDBI was approach-     The IDBI was much impressed by
Thus,   at the Central Govenimr'lt  ed by the PSIDC for financial assist-  the quality  of the detailedI  project
level, there was no strong support f or  ance, its top management had chang-  report, the IDBI had not   received
the Swaraj. The Planning  Commission  ed. This new management had giveni     such a high quality project   re'port
members were changed by 1969    and   an   assurance to  industry that  the  from any one of the more than    150
the new ones had no particular interest  IDBI would be prepared to  finance  projects that it had  financed up to
in domestic technological competence.  aniy sound project that met its selec-  thiat' timne. Following discuissions wiJth
Suni had left CMERI by 1969.    The   tion criteria, irrespective of the assis-  PSIDC, PTL and the technical  con-
NIDC and     the Council of Scientific  tance required. Its selection  criteria  soiltants, the  IDBI  was  convinced
and Industrial Research (CSIR)  con-  related to the project's internal rate of  about  the  management  capacity,
sidered Swvaraj a risky venture,      return and exchange rate, the cut-off  technical competence and  motivatiop
It was at this  stage that a  state  rates being 15 per cent and  Rupees   of the three critical groups.
government unit decided to   produce  9_5 to one US dollar. Further, it had      The f )llowing  characteristics, of
the Swaraj tractor, The Punjab State  taken up active   promotional   work    the project were particularly imnpres-
Industrial  Development  Corporation  with regard to the   identification of   sive  ae    n   oetctehooy
(PSIDC) had been set up in 1966 with  project ideas in backward states, had    knowhoow -and consultancy  services,
the object ef promoting medium  and  a, firm  policy of supporting  domestic  the   Swaraj   tractor was  specially
large scale industries in the state.  It  technical consultancY services and re-  designed to mneet local  conditions,
had alreadyv implemented  succesqfully  search and had se ,t up its own techni-  had passed the TTTS test and was
clcsutny srie       Ieaa      approved by the   farmers; of  the
six industrial projects by 1970 : Punjab  ca  oslac      evc          eaa      existing six producers, the  tracto.j.
Prestressed Concrete Works,   PiAnjab  Industrial and Technical, C0ns ulJa-nc\'  design of only two firms had passed,
Chemni-plants. Punjab Footwear, Pun-  Or-ganisation (KITCO)   -in    Kerala   the TTTS test and all of them   had
jabNyl-trnNnk-ion  Pnja  Sat-to prepare  feasibilitv anid  detailed  obsolete models which were of pre-
jab  ylotrdomkson. Punjb  Slt-1965 ulesigni of their for-eign colla-
petre Refinery and Punjab Tanneries,  project reports and provide  tecbnical   borators and   were not    speciall,V9
Th  SD  a  en  aiirwt       sistance to small and medium enter-    a iapted to local conditions.
prissii) 0                          The three groups   assocae
the development of the Swaraj tractor:,  prss                                                               ciate prjc wr  tronly
it had observed its field trials in the  Even1 withi this new IDBI mianagie-   motivated to make it a success
Punjab and the farmers'   favour,ible  ment, the PITL were not   completely      (iii It wouild  support a  large
response to the Swaraj. Three charac-  coilifdent of oibtaining  riniancing. to  number  of  engineering  ancillary
torstis o  th  Swraiattactd  te  te tileof 5-9 pe cet o th pr- i-ndustries in the Punjab -- kno*n
teniric  ofthe  warj atraced  he  he tne  f S~90  er entof te po-  or its entrepreneurial and mechani-
PSIDC   its  indigenous  design,  its  ject cost. The lack of .,ponsorship by  cal talents -  and thus have a large
employment potential in the   Punjab  the  Central  guvernnelnt,  and  the     employ-ment impact,  In   addition,
and its acceptance by t&h Punjilb far-  scpiimaou      tbucssepesd             te engine manufacturer Was suffer-
mers as a sound dependable   tractor,  by both the   CSIR and the   NRDC'      inlg from lack of demand as a result
of industLrial recession and  wouild
The PSIDC hence obtained an    indu-  made the PTL,    somnewhat   diffident   niow be able to increase hip, output.
strial  licence to  manufactuire  the  about getting the IDBI support. They,     (ivl The project  cnVisaged   an
Swaraj tractors in 1970,              therefore, had suggestedi only a mod-    efficient  diStribution and  service
The PSIDC approched the    CM, IF.R1I  Ct project (capacity, output of  5,000  systemn; no other existing firm  had
paid adequate aittenition to distribu.
and requested the latter to release the  tractors in  20-30 HP range) with a   tinadferalsevi.
five engineers who had worked on the  cptlosofesthnR-0miin.                   (v) It had already started wvith the
Swaraj design for its new   firm  _   They were to buy the Ra-2     enpgine   establishmrenrt of its own tool room
The   Punjab   Tractors  Ltd  (PTn).  from  another 'well-establishied  Indian  to manufacture jigs, fixtures and in-
Simnultaneously, it appointed the  con-  firm, purchase  about 80 per cent of  sfpection gauges; this tool room was
sultng irm Sur  aid  Asocites  toal ompnentreqirenens-  rom also to be used for training its% per-
suItng  irm Sunand Assoiats.  ota  coponet  rquiemets  rom sonnel, developmental wvork and re-
WM-.



TBLAi 3:     RATOR CAPACTrrY AND OUTPUT - SOME CHARA( TFRISTICS, 1972
1 irm                     (Collabora-  Model -                ('Capici! (Two Shift Basis)           Production  Retail      Retail      Indigenou;
tion        Make                                                         1971-72     Price       Price       C'"intent   TTTS
HP Range                          (Number)    (1972)      (1972)      (0°)        Test
(Rs)                                    (Rs)
Upto 25     26-35       36 & above    Total
1   Tractor & Farm Equipmient Mva%ey      MF-1033        -          ,000          7P700                 3,412      26,300      45,075       88          Passed
(TAFE, 1961)             Farguson    DT-5 5 5                                                 70042 (MF-1035)
(UK)
2   International TractOrs     International B-275       -           7,000                   7,000       9,005      25,200      45,000       80          Not
(ITI, 1967)              Harvester   B-435                                                                    (B-275)
(UK)
.3   Escorts Ltd (1966)         Motoimport E-37,'3036     -          7,000                    7,000       6,633      -           38,602       60         Not
(Poland)                                                                                                                  Passed
4   Escorts Tractors Ltd        Ford Motor Ford-3000                 6,000                   6,000       1,950      25,200        -           51         Not
(1971)                   Co (USA)                                                                                                                  Passed
5   Hindustan TractOrs Ltd      Motokov     Zeteor-3011  2,000       5,000        -          7,000       * 377      (Super 50)               85          Not
tI 960)                  (Czech)     Super-5O                                                                 32,900                               Passed
(Zateor)
24,100
6   Eicher Tractors Ltd         Eicher      D-BHP         -          2    OO                 2,000         789       25,200      31,600      82          Not
(1961)                    (W Germany)                                                                                                              Passed
7   Kirlosker Tractors         Klockner    D-3006       2,500        4,000       3,500      10,000        -                       -         -            Not
(Assembly started 1972)  Humboldt    D-4006                                                                                                        Passed
((W Ger-    D-50006
many)       D-10006
8   Harsha Tractots            Prommeshe- T-25          10,000        -           -         10,000        -                      33,360      -           Not
(As,embly started 1972)  port(USSR)                                                     'Passed
9  'United Auto Tractors       Industrial  U-5000        -                      5,000       5,000                                 -                      Not
(Assembly started 1972)  Export      U-6500                                                                                                        Passed
(Romania)
10   Hindustan Machine Tools    Motokov     Zeteor       12,000        -           -         12,000       1,301      -           32,221    ' 45           Passed
(Asserrbly started 1972)  (Czech)     201112511
11   Punjab Tractors (Production  None       Swaraj-724  12,000                              12,000                  -            33,354     100          Passed
to start in 1974)
12   Four Units Licensed        W, Germany -                                                 38,000                                                       Not
(Not in Production)      Australia &                                                                                                               Passed
-    UK
13   Six Units-Letter of Intent  France, UK                -           -           -         43,000        -         -             -         -            Not
(Still not given full Licence) & USA                                                                                                               Passed
14   Capacity Expansion of 2 & 3. -                                                          22,000        -         -             -         -            Not
(Licensed but yet to be un-                                                                                                                       Passed
derlaken).
15   Total for 21 Units         -           -             -            -           -        188,000        -         -             -         -            Not
Passed
16   Total for First 11 Units   -           -             -            -                     85,000      23,469      -             -         -           '4t
(Production and Assembly)                                                                                                                          Passed
Source: Indt , al Development Bank of India (IDBI).



TABLE, 4  TRACTOR DE-MAND- FSTIMATFS FOR 1973-74             -     mestic   prod ticei'S  With  foreign
Upt  635lP3 &     Ttl          colliborations, the JFTs required by
Up t  2635  P  36&  Ttal       PTL are not readily a%ailable.  To
25HP          abv                     e-co   a reliable source of quality
HP_________    _____J[ETs in India far in advance of the
cornmnencerrint of trial ~roquction
Planining Commiss'ion                 21,000    38,000    9,000    68,000       iFsd  woliuldb Furtear,ythre o tiof esuc
Ministry of Agriculture                                                         whats would beos  arl th reeT torrimes
'(a)  1968 Estimate:                25,000)   45,000   20,000    90,00(i      whactuld cost. The Ptol toom msnu
(1?) ~1972 Revised Estimate:          --        --               40,006       factur iielthem. r Thetool roomki ino
Leadinig Tractor Manufacturersfatanl sfo13adI)wr;o
Estimate :       1968               10,000    40,000    15,000   65,000       other' domiestic  produItcer- has suct,
Revised Estimate: 1972                -         -        -       36,000       R and D. facilities.
Indian Society of Indus-trial Engineers                                           Q :  The   Swaraj  manlufacturing
Estimate : .     1968                 -         -        -       52,000       procrarmnie en-isages  procurement
Actual Damand 1971-72                                                           of more than 80 per cent of corn-
(~a) Production                      1,301    22,168     -       23,469       ponlents and materials from  domes-
(b) Imports                         10,000     4,000     -       14,000       tic sources; there is no import con-
Total                                 11,301    26,168     -       37,469       tent.  This would reqluire a sound
machinery for materials.   planning
Solurce: Industrial Development Bank of India.                                  and   procuirement,  topgether  with
quality control of bought out com-
search; no existing firm had research  promoters' responses are given below    ponents from ancillaries.  This pur-
addvlpetfaiiisadnone          as Q adArsetvl:                           chase from outside sources may lead
of them  had made any     conscioustohgethn                                                    xpcdcssad
eff~rt to improve the design of their     Q : Farmers   preferred a 30 HP      adversely affect delivery  -schedules
models to suit the local conditionis    engine,  while  the   project  had     as has happened in the case of the
(vi) About 10,000 tractors in the    provided  for  a   20  HPI   engine,    other  manufacturers.   Th e  PTL
HP range. of 20-25 were    currently   A:    20   HP   engine  is   cheaper    should have more than one; source
imported, while there was no    do-    and more suited to the conditions       of supply of components. A: This
mestic   production of tractors  in     of small to medium   holdings. Fur-    is a valid point, We are trying to
this range.   The demand was ex-       ther,  the   Swvaraj-20,  in  actual    develop  alternative sources of sup-
pected to 'grow,                        field trials, had performied  better   ply and    even provide    technical
(vii) It was ex~pected to produce    than the other indigenous 30    HP      assistance  to  new   eiitrepreneurs
and sell Swaraj at a    competitive    tractors and even better than most      seeking to start such ancillaries. Be-
pieadasiscpctexadd            of the impor-ted tractors in  20-25    sides, we    would have    adequate
pric   an,  it  ca afityerpathed  HP range in regard to draw-bar pull    machinery to ensure strict standards
-to 12,000    tractors afe     th     and ratio of the, draw-bar- HP to       of quality control at each  procure-
intalpoitio   evene to exct itsl trac-  the power available at the PTO     -   meat, manufacturing and    assembly
atorsiabroad. n     oepetisrc           which are of primary    concern to     stage.
However, the general    Manager of     the cultivators.doesti
Q : Farmers did not like air-cool-    pro   Byct   973-74 t hetrsi  domesytic
the IDBI did not like the idea -of a      ed engine', anid hence one of   the    praoductio  of00 tractors,i liklel toe
co-promoter; first  because  the  co-     domestic manutfactulrer-s is to chanc_e  bemn abou   4000   oftrates whiler the
promoter did not have particular ex-      over to WatVI'-COOhLd ones. A: W13e    50,000. Thus there would be    ade-
perience with regard to tractor indu-     conducted a field survey in Punijab    quate demand for Swataj.   Fu rther,
str ad ecndy 1 ndcrucially because  on this issue.  The farmers do in-      Swarai with its automatic hydraulic
styadscnl.n                     deed prefer the air-cooled  system,     depth-cum-draft    control    tonily
he did not like the   idea of the co-     Thermodynamically, the   air-cooled      asyF     uo     a  iia     yru
promoter's cepresentative becoming a     s3stem is superior and the CMERI        lics)  and   its  superior  product
managing director. The success of the     hdcmltl         eeindteco-             characteristics should be  preferred
prjctdpedd     on  the   CMERI       ing s~stem of the air-cooled engine    by the farmerq' to other    models,
prjc  eeddfor the Swamai; in actual 'field tests                       However, the industrial licences al.
Assistant  'Director  becoming    the    at the TTTS, it was found that this     ready issued  by   the  government
Managing    Direct'or. He,  thercfoire,  engine was    over-cooled to   some     would raiise the nUmiber of  produh
assured the PTL that the IDBI would       extent.                                cr       rmsx     o15adpmut'r
not insist on 15 per cent contribution      Q : In view  of the low    capital   c'alacify~ fromi 40,000 to 1,23,000 if
investment per tractor of the  PTL      the ne'w  license'd  units do~  start
byte pootrIadarag       o         lwer by about Rs 2,000    'than     mianufaCtUring.  The demand, how-
fhiance 85-90 per cent of the project    that of the other   prtdutcer--- the    c.r    .ulkl      ob     ihrta
cost in collaboration with the  other     PTL can reduce production     costs    5(l,tllt  ee  by    197&-79,  while
finahneial agercies if the project  met   further by manufacturing its   own     licences were issued in 1971 on the
enigine.  A: Since there is under-      basis  of a demand    estimate   of
the IDBI SeleLJIon criteria.             ututlisaition of capacity in the  diesel  90,000 tractors in 1973-74."4  Withi
The IDBI puoject appraisal    team     engine industry, it does not   seem     such relatively small-sized producers
m  advisable to add to capacity in this   (only six of 'them  may   eventually
then prepared its report within  two     branch. Further, this N%-uld require    have a capacit; of more' than 10,000
months. This report was submitted to     additional  investment   and   catise   units) and proliferation of  models
an  Ad   Iloc  Committee of Advisers     delay in project implementation.  If    based on foreign collaboration, the
(ACA) for critical examination   and,    our exPerimpari succeeds, we   pro-     market would become highly    com-
awath  DIspatc,nvtdte          pose to manufacture the engine at       Petitive and uinfortuniately it would
a laer tag  an  theKiroskrs  ave not be poss,ible for any producer' to
ACA   to discuss their comments with     already given ani undertaking to the   lower itS production costs withi the
the project promoters. Such confronta-   Central Government to tralnsfer the    iunit size as fixed b)y the licensing
tion and dialogue gave the IDBI an       couiipl.~tL k-nowbow  for the manni-    au1.thorities. Swaraj then would have to
addtioal  ppotunty   o  tst  he facture of the Ra-2 engine toi the    evolve a   sound   distribution  and
adiinl opruivt    et    te     PTL if the latter decidled to manu-    service machinery in order to comn-
managerial' and technical  competence    facture it,                             pel    effectiv-ely  with the,  other
of the project promoters.                  Q : It is not normal for a tractor    producers. But' even then, its  re-
TLhe  AGA   raised  several critical   mauaturertnrdc          ison      -    trns are not likely to be adequate,
qustots.-  heequestions and the     quir,ements of   jIgs fixstures  and    what With its -small size --  5,000
qusjil.*Teetools (JFTs). A: XJnlike other do-                         units -- and government price con-
M-35



trol. A : We do niot c    i  a:4  ay  a good qualitvy tractor at competitive  For- the IDBf, this performance  was
probtlem  in, niarki'tiiig.  \W2 are to  pr*i*e,. lowever, tliey felt that it may  uniquec. There was hardly any project,
have an   cilwiemr t(de,alor  network
wih,aftandb    h     T   o    take longer than e%pctCECd to umLe111tO  financed by the IDBI, that had  beeni
provide aiter-sales service anid spare  the proiect and in aniy case, in view of  completed in time without any  cost
parts. In .addLition, wve will have our  its, small. size  -as noted above, there  ox erruni. A-,a,n. there was hardly any
own regional centres,.  Fur-ther, thle  are economic~ .of scale in the tractor  project that had r-eached its capacity
fieldi testi carr-iedI ouit on S,,araj in  inusr  -- and governmenit  control  oupu  iti   teplrnedl rimc fiame.
1970 have cr-eated a good impression  idsr                                    uptwti         h   l
on the Prinjab farmers. Because of   on tractor prices, the project will not   Even the way in wvhich    the PTL
its better produict features and its  be~ able to have an internal rate of re-  idlentit'ied it.; problemis and tackled them
superioriry in field performance with  turni of 15 per cenit, one of the two  r-eflected top  man.rilement  efficiency.
miore tillioct Potential at less fuel con-  IDBI selectioni criteria.        During the first 13 months (April 1974
sumption in the 20-30 HP range. we
are nlielv o fce ain.to June 1975), as was expected, it suf-
arem ulkltofca nretgpr-                TeIBthnpeaeameon-                     fered from  irregular supplies from the
bm.dLrm for its Board, recommending more                           ancillaries at rising costs --- this was a
Q : The sale of tractors depend.,  than 85 per cent financial assistance (in  period of acute innlationary pressures in
crucially ont the availability of credit  collaboration with the other financialIni.Te    TLsfrdacshos
fac-ilities Io- the farmers. Under the intttos     foth      prjc      teIda,TePLufrdacshls
rropo5&x--  World Bank scheme, te    istuon)       frhe      pjcthe     hemoof Rs 7.8 million as a result. The top
banks   would be able to    finance  m    orandum argued that the exchange   mngmn          a   wr     hti     ol
tractor-purcbase~ by farmers as  they  rate criteria was met -  the domestic  have to face this problem; the IDBI
would get   reimbursement from the   resource cost of saving otie UJS. dollaran  thAAhddrw             pote    a-
WQrld Bank line of credit. We do     was less than Rs 9.5 -      and   this  tn theAC        hasec  ofrthe poin ject-
not know   whether    Swaraj is in-                                          tention to tis apec      fte    oet
C1hrded in this scheme.   A:-   The  showed that the project was efficient.  But till November 1973, PTL had no
VN'oirld Bank team did not visit us, not  Obviously, ax?  ininovative project of  inventories and its relationship with its
hgs it trie.d to iniquire, intoi the evolu-  this smnall size 'ttot4j  not be able to  ancillaries had still not been formalis-
tion of the Swaraj tractor. With the  h'ave an internal rate of return of 15  e.A    hssAe      h   T     ol    o
prejudice  against ind'a,2nous  re-                                          e.A       hssAe      h   T     ol    o
search and technology -at the Cen-   Per cent or more; but this rate was     afford more than one source of supply
tral Government   level and also in  not very much lower than the cut-off   for each cumponent: the initial produc-
the World Bank, it is unlike]3 that  r-ate -- it was 13 per cent. The Board  to    a    nvtbylmtd          b   h
the Swaraj woulild be included in the  approved the project and sanctioned   avilnabl suppliesbof componentsyand
World Bank scheme.    However, we                                            avialredle          o   opnet        n
would tty to persuade the    Ida      the  require   financial   assistance,  to develop new sources required inten-
banks w ith the assistance Of   the   partly by way of lang-tCrmn loan and   sive technical iniputs from  the PTL.
IDBI to provide the reqluired cred,it  partly as equity,  in  February 1972.   Since November 1973, the PTL con-
bea    pht bemBu  thisb wauldi  -ecil  The technical research for  designing  centrated on developing Multiple sour-
0a pTohem co-toru fceidplne.      this tractor had started  only in late  ces Of suplyPI for each component. It
tion schedIcile appears to be rather  196.5 anid was completedi in May 1970;  promoted itself new ancillaries  near
't  wthot  mch  \l'jitv  it the  ll  as  orre(l  n  170, the the location of the Swarmi by providing
ma  o  b1osblwo     hePLt project b%- teancriole\l                  i    technical assiistance to new  entrepre-
rnpLt  th  roet     fen         September 1971 and was submitted to    nus     hsismtrasppln              m
VilIrch 19 4. that is, within  105   -h     DIfra,itic          nNvme       nus       hsismtrasppln              m
weeks after tho, sanction tif fioan-  teI       o   siric     nNvme          proved and it was able to increase its
cial assis-tance tMarch 1972), as thle  1971.                                output to full capacity level before the
PITL propt.-c-. to) put up its- ox~n tool  The  construction work as well as  end of 1977.
room  to rnr1i.iufLture all the  tool-
ings, requiired. A  In fact this pro-  the in'.tallation of plant and  equip-  But its production costs rose steadi-
ieet has; matured over a period of    ment started -imimediately  after  the lyaipuprcsoe.Uik                  th
earl      ,     sne  1965, when  the  1lDBI sanction of financia'l  assistarnce  ote  -aufcucs   t  upthdn
.dtsignl work  on the, new  tr .ictor  -te                                           auatrr,isotu             a   i
Wd  rlerd't.-ikont  anid we  haxe  in March 1972. The performance (if import content; others imported      their
min._u    twt      retcr.Fr         the PTL since 1972 has been remark-
ry.iwe dr it inith thea 'Preceec Furihreadt-bt              t cs    n    imputs to the extent oif 20-30 per cent
N!k1. txxo trk   iiL  h     Peeec,al         ihrgr        obt     t   otal   of requirements andi the prices of im-
in tkkora, tjcuiirle for t~he Brst time  time --chedules. as, well as the maninerpotdnutwee'itfcrtl          lwr
over the con4entional III I'['(PN                                            i nwihi  ae  n  ake  h  han those of the domestic inputs.- For
aind we are toi review its network on prbesathy         ro.i                 example, the HIMT    bad stairted  the
a  ..:''inputer.  We propose, to) adopt  (i) The project was completed in   prodhuction  of Zeteor-20 by this time
Opc'n-%veb lortal Frame Steel Strue-    105 weeks by the end of March 1974   with an import content of mor-e thani
uires for construction -~-- this con-  as was arnticipatedl: the ACA had ex -45prcn            iityo       iac
cept too is beinig 'ntroeduced in India  pressed scepticismabu    thsim      45prcn.AM           itVofFine
for the first time -and this will                         aboute this              ndcaedtht hectime         npt
result in spLL:'dyI% erection and suibst- sceue                               ud   incadththeotofnps
antial economv in structuetral costs by  cii) The actual project cost  was ~a    oe     yaotR        .0   e   rc
as mtich as 30 per cent. We are con-   more or less the same as expected    tor for the Zeteor as comipared to that
lident that if finiancial arrangements  -  in fact it was somewhat lower - - for the Swaraj. liven this figure dioes
ar(t --onplr:ted by March 1972.  we    with regard to not    only' the total  not accurately reflect the Zeteor ad-
%v.oulni be able toi commence prodluc-  cost but also the cost under  each     ntge      orZer,aliptdin
tion from  \[piii 1 o7.1.              head.,arg.FrZto,alipre                                                  n
(ii) Te PL sartd  mnufc-puits did not require rurthier- processing
After this  L-~chari~ge. te   rocc[    tiir;r  The Pwara stractor  mSanuac-7  as the H-MT was, largely doing assemb-
promoters left andt the IDBI dsked the   .- 'from  April 1, 1974. and reached  lv operations. Yet the S'waraj price was
ACA About its %iews~ on the   project.   its full capacity output (5,000 trac-  comparable to that of the Zeteor-; but
The ACA     approved the project: in     tors) in 1977 --- again as was antiI- its margini was much lower - - the cost
ther  lo, t  astehncalysond    cipatedl,  in spite of raw  mateTial
shortages, inflationary pressure  and  o  nusrs      rm7.       e   eti
and wouul be able to produce and sell     fiaclstngcy                          June 1973 to 93 per cent of e.'.-factorv
M-37



s'elling price by, March 1975.        e%pei irnnt in tlee'.ltpin, a  product  NNh% d.id the Centrail Government niot
1Hence, the PTL  sug4geN,ted to  the  based on indigenious technt.logy  and  .110on"Or another puiblic sector  enter-
Government   of  India  that Swaraj    L-nowhow  won riccofenitiuon fromi thec  prise toi manufacture the Swamia?
should be exempt from excise duty of  Contral Government -. which waZs 71ot    Onie answer couild bie that bureau-
10 per cent (about Rs 3,000 per trac-  p)'ciurc,d to sponsor the Swami prject) crats in D)elhi hatd hot technical kniow-
tor) to offset its higher input prices of  in 1972; ini 1975 the PTL was award-  ledge abkout the tractor industry anid
doniestically bought components. This  edt the National Gold Shield the coun-  probabl y  considered  ani  enterprise
exemption was gr-antedt by the gnd of  try's highest award, for its cOntrhlu-  based on, mtere research resuilt a risky
1975 and since then the PTL's finan-  tion to the development, of indigentsv  venture. They simply did( noit wanit to
cial performance approached the plan-  tc'lnolotuy, knowlbow and constiltaTICy  take this risk. Ho(wever, this explaina-
ned level by the middle of 1977, with  services. The Central Government then  tion dloes not seem to be valid. After
manufacturing efficiency  superior  to  began to emphasise, in actual pr-actice,  all, the Cenitral GovernmenIt had ade-
that of the HMT, producing the Zeteor, ter'l-iological. self-reliance.       quate technoloigicail comipetence;  did
in the Swaraj HP range.                                                     it not have CSIR, NRDC and even the
In addition, the PTL took   several                   I                    CMERI, which had developed Swaraj?
measures to reduce   its costs   and       Prbesan        Cojcus             And the CMERI personnel were quite
diversify its products throughi intensive  Prben       n    ojcue,           confident about the superiority of the
R and D work. It developed a    new    I Such is the  story of the   Swaraj  Swaraj tractor in the Indian context.
design - Swaraj-735 (35 HP) - during  Tractor. It raises sQvera~l problemns for  Could it be that the technical per-
1974i-75 and introduced it by the end  analytic inquiry -  problems  relating  sonnel in the CSIR and the NtgDC anid
of 1975 -  the s6cond year of its ope-  to the behaviour of various units. In  hence the bureaucracy  had no 'Yconfi-
ration. For this 35 HP tractor the addi-  this section  we try  to examine the dncofaihotnyInhecm-
tional costs were only Rs 2;000  per  problems relating to the Swaraj case  tlence of fathe Cnot  eronly el thet alome
tractor, while the price advantage was, proper; in the next section we  deal  wthnc rear te CinEIiersno els btechnlsog
of the order of Rs 4,000 per tractor;  with the problems with regard to the  if(    oslaly     aiiy     gnrly
because of historical 'reasons, it ap-  iiidustrial licensinig piocess.Afe a        ll,coreistncy  hadiit genperallytec
pears that the   farmners regarded  a   Vi'e  following  question.s arise with' wit Atheir dl, esigriis inacta commercialet
higher price product as a :Uperirir pro-  regar  to the Swaraj story :       pritlucthionfr di  long atimeand itmerwal
dUCtl6 (they were used to the Massey-      fi Why did the Central Govern-    much less risky to take their   help
Fergsontrator f 3HP-~ a tractor   ment not sponsor this project?      ta       oudraea          nepie   o
Fergusontractor f 35           lii Why did the Punjab Govern-     ta    oudraea          nepie      o
which had passed the TTTS test and      ment take the. risk of  undertaking  the basis of  comrtiercially  unproved
was the most   popular tractor  since   this project? What were the nature   ini,,envoums knowbow.
1961). By 1977, its output composition  and characteristics, of its  decision-
Sra-    making that accounted for its  suc-    It appeais from the  available evid-
was 4,200 Swaraj-735 and 800            ces?onerhaasch                                        inee   ws    here
274. It has started wvork on develop-     ssenetasuh                                          iddwster-
ing a third model and expects to start     f iii) Why was this exper-iiment in  Svo11m of the  Central  Government
its production by the end of 1977. No  the  creative  .dupataion  of  niodern  scientists,  techniolog,ists  and  the
other tractor manufacturer has  giv'en  ILClmolgv"~ friltfiil?               bureaucrats.  If this  be true,  hoiw
suhatnioIoRad-)wr        o    et us proceed to examine these ques,  could India  ever creati'.elY  adapt
prouct ptt nnting t   adevlopin   new  tions and try to drawv somev inferences  modern technology to its local condi-
-,ne   conjectures --  about the   public  tions? Ag-ain, in that case, what could
designs and models   in response  tobeterioaefstinupcetfc
local coniditions and fa-rmers' preferen-  sector dleckiooi-making process.beterioaefstinupcetfc
ceq.,                Crtra     Gm-l-111wil   Bliarour     anii technolovical research institutions
as parttr(flthe                              CentralntGBvernrent
Swaraf has been, a-s VOla5 expected, a  One Part of the( Goveroniient -  the  spr   f h      etalGvrmn
successful model  itidtg0i,, from  the  Planinfilg Commissionl  took the deli- t0aLh1-)0ine d for elci?inm nri  h
farmers' responise. The PTI. has been  hwriztt decision  to  develop an indi-  ch'diclfed
able to sell its entire output: at a point  genous tractor decsigni.  The CMI-R[  Anottler explanation couldi -,irplv be
in'time orders booked number     500  did   successfuilly evol'%c the  S% 1,1  i1110r-i1istitL1ioiwml rivalry and jealousy '.
tractors. Its  dsrbcinCmsrie           tat' it passed the    M'flS test. Thel  Srin, the recor'd shows, was not much
system has been supeiior to that of any  IIMT, a  Central Gmi.ernlmcnt  enter-  likedI 1vr the CSIRI or N11I X livsonnel;
other manufactuirer.  It Las, however, Prise. which was f.cciaug the impact of  with the Lhango in the politicail -,et-.tp
one handicap. Swvaraj was not included  imiti,uri.il recession oni the demand for  zifter 1968, Suni did reizie.  from  ib"f
as an eligible tractor for the  worlId  machine tools, waincd to undertake a  CM ERI1.  By 1971, thus, withini the
Bank line of credit uinder which fin-  tractor project to use its surplujs capa-  Central Government apparatus,  there
ance is provided to farmers at a con-  city, and thus impr-ove its tinanicifl re, was no  leadership - either at the
cessional rate thriouigh the Agricultural  stilts, At this stage, the NRIDC  con-  political lAevel or at the techntological
Rlefinanice and Development Co)rpora-  sidered Swaraj a risky project  aInd  level   toi spmow.or an active technio-
tion (ARDC); quitie s,urptisiugi'. .  hsad.uedteIIM        otaeu       te    lg   policy  that coutld raise  policy
scheme is meant foir tractors in  the  a,,-emhl'. of Zeteor  which had also  i,.sues above the fieldi of inter.person,iI
range of 26 LIP above and this. 'X"I   passed the TTTS tes"t. This sufited the  anid  inter-institutimnal rivalries  and
does not mentioni Swaraf as a tractor  IIMT as Swvaraj wouldi have inivolved a  jealousies.
worthy of tiniancial support. Anyway', gestationi lat of two) to three  years,  In this connection. at fact ,choitt thfe
the PTL, has devised appropriate financ-  us hde the assembly' of  Zeteosr could  \%oddc Banik muission is %%um di umuu'ntimlu
ing schemes with   the help of   the  stIt I iluumiiirriiatu.lN Doubltless, the~ TIMT  ing.  Inl 1971, thle NvorihI Bank sent a
ARDC.                                  Jecision was a ratitinal one, froml its  mlisskIlx to studs', thte growtih and( st-ic-
It is worth mentioning that this 'new  vwn~ ioint of view, But the (puiestion is: thire, of tho tra'ctor industry in Indiia
M-39



in order t3 makoe policy recomninenda-  fully (lone 'reverse cnginieerilg' wvith  making a stuepss of the project, the
tions to the Central Government andl   regard te an East    European tractor     managing director was to be    paid
fitndl oVtt thei nature atndl :Niagnitudch of  anid had made a similar tractor in his  only a salary fixed on the basis of
ioain     Central Government scale  (he was
fiinancial assistance  that  the  World  owni %wrkshop. tPatent rights oiolation  tun deputation 'from  the  C( MERI)
Bank shoiuld offer.  This wvas the time  pre,vented thlis larmner froml nindertak-  and SUrit fees were muclh belfow the
Nx,eln the Swvaraj model had  already  ing small-scale prodiuction of this trac-  fees charged by the other consultants,
evolved an(d passed the TTTS test and  tor.)  They werc thus able to judge       Indian or foreign; and
the I'TI' wias organised to intoiulto.nt the  Swaraj on its merits and had a certain  (iv)  enlightened  deI eloprment
Swarai project. It is surprising to miid  pride in owning a tractoir based  on I  meot an(i  olfiie;IDBI wthop tanaghe-
that the World Bank mission did not    t(Llinulog\ and( k-nowliow (ldeelpe)vd in  IDBI finanicial assistaince and it', own
contact either the  CMERI personnel    India - and more particularly by the      motivation to miiake it a success, the
or the PTL and, in fact, mnade no re-   Puinjalis. (Suiri happened to be from    project  would not have seen    the
ference to the Swaraj project in its   the Punjab.)                             light of day,
report except to mention in a footnote    T              .                       Creatihe   Adap'tiinr  of   Modern
that it was one of the three tractors    This was    one contideration   The  T7 chnolo J :  This case has i-elevance
that had passed the TTTS test. As a    impact of the    tractor project.  The  for the. decisin-making process   not
result, the World Bank line of credit  Swaraj was to purchase more than 80     only with regard to the Swaraj project
was not available to farmers purchas-  per       was to  cliaseniore,  the     but also with regard to the process of
in     wri    hl    twasaviblfo        per cent of the components fromi the    creative adaption of modern   techno-
ing 5waraj, while it was available for  ancillaries, mostly from  Punjab Nvhich /creathe adanic of modentiechno-
the purciase of all domestic tractors  has   the  most   thriving  small-scale  logy.  The orgiaonic and sequential re-
in the IHP range above 25. It is some-  industrial sector in India.            lationship ang    the  following tasks
what ironical to find this World Bank                                          and functions sesms to bave been te
study recommending improved product      Thus the PSIDC was confideht about    cracial factor in the  success of this
planning to  upgrade designs by   the  the farmers'   re';poinse, the  employ-  experiment.
domestic prodlucers with the   techni-  merit impact and the financial success
cal assistaice of their foreign  colla-  of the project. The PSIDC is an inde-   Idenitification of a project  idea on
borators. "Indigenous capabilities willa  pendett aiene  of the  ninjal) goverm-  the basis oif developmenr strategy was
grathrough    collaboration agreements  ment with the function of  promoting  the critical first stiage.  his was done
grow                                   industrial development of the state. It  by the Planning   Commission.   The
but, in addition, firm  should initiate  is aware  that it can  perform  this  identification of available rtechnologi-
ous universities and   engineering re-  iiinovatiz fuinction effectively only if  cal choices for this 'was the second;
search centres (such as, for  sarnple.  projects succeed in financial terms. For  this was t,he function of a Technical
the Central Mechanical    Engineerin,   th  Iunjal govternmcnt would not -     Consultancy  Service Centre  (TCSC);
Research Institute) aimed at deelp-    could not      provide subsidies on a   in this case, the CMERI    performed
ing  tractor features especially suitable  centinuing basi-s; and  even if it did,  this fuinction.  IdWentification  of  a
ing  tractorefatproblempbyalayTsuCtain
for India.""   Does this require any   such subsiiies would affect its ability  r(searoh   prolem   by   a   TCSC, in
coImment? The question is. Why,did     to functioin with a degree of   inde-   this  case, *the  CMERI,    was   the
the Central Government officials keep  pendincne and thus its ability to take  third stage. The research on the pro-
the   World Bank team   in the   dark  risks and innovate.                     blem   by a   Teclhnological  Research
Centre (TRC), in this case,bthe CMERI,
about the Swaraj, the   CNI~ERI  and(    liow do we account for the remark-    andI the   transmission  of  this  re-
the PTL? Did one party reiiforce the   able performance of the    PTL?   The   search resilt to the TCSC, in this
inferioritv complex of the other with  comprehensive and illuminating detail-, case, Sunri and  Associates, was  the
te,ard to   indigentous  technological  e(i project report, the timely comple-  fe urtb stage.  The detailed project re-
competenice?   Why this emphasis on    tion of the construction phase without  port by the TCSC to the project pro-
foreign  collaborantin in a techilo0loszi-  any cost overrun, the timely realisation  meter T(PTI.) and the financial system
cally simple product like a tractor?   of capacity output, the ways in whlichl  tIDBI) was the fifth stage. The asso-
Devision-making at the State Level:  the top 7n i:nienwnit tackled problems  ciation of the  TCSC with the     top
In spite of the  scepticism  about the  as they  arose aml the new    mod0els  manakriemrnt fo)r project  implementa-
Swarai project on the part of the vari-  d, velop)ed tlmitjli cointiniiog R and I)  tion was the final stage.
ous Central Government agenci:vs, how  work      all thene  characteristics of   In
did it come to pass that another unit  project   performance   were   indeed        this organic scquentia1  zelation-
of the gmoernment -   the Punjab state  unique in the flnancing e\pcrience of  ship, the critical functions were  per-
zLIermtjr: d-tecided to     undertak;e  the IDBI.                              formed by the TCSC and the IDBI
this project in 197'0?                                                         the functions of identifying  relevant
The factors which seem   to account  research problems, embodying the re-
The Poniab    government and    the  for this performance are the following:  search  results  :neaningfnlly  into  a
Puniab   farmers were familiar   with    (i) Seloottim of the project by the   concrete  project, and  facilitating  its
the whole proce'.s of evolttioni of the  PISIDC on the basis of its   visible  implemoentation.  WVithout the TCSC,
Swtaraj. After all, the field trials were  ani direct ptmential-l  impact on its  neither the relevalnt research problem
l.rgely undertaken in the Punj.ih. The   financial res.ources, Punjab  farmers  '    a concrete  project  would  have
farmrs hd i a snse  ecoe a  art and cmplm'mvnt in small industries;
fa(-mers had in a   sense become  a  part    i   selection  of technical  eon-  been idlentifiedi; and without the  link
of this venture, and they had approv-    sultants and top managrncmcnt  per-   betwecri the TCC and the IDBL the
ed this new product which was     ex-     sonnA l-  persons who were    asso-  project would not have    become an
pected( to save on both   capital and     ciated with the design of the Swa-   opertional project. It thus   appears
rperating costs. Further, the Punjabis     (iii) the  powerful  non-econamic   that the critical links in the process of
p        of t    m      tmotivation of            the technical   con-  ceeativ  aiptation of modem      techno-
one of the. armers had in fact success-   suJsants and top   management in    locy are the TCSC and the Financial
M-40



System   I S 1;N i t lit 'tt those two  fun-  inito accounutu liriefly these wee:1(1)  (ii) c, 11pl.i. "'uclt bw IhI, 1m:uj ol v
iii utul agencies the produluti. fl system  Pu -ni-'ioni  f industrial  development;  o)I preduccl of, thle  uilfuki'':
and the technologicluI researchl s%,t eml  r.i Pur. 'motion of ai sclf-reijant  and  pruoductu  *u  iiii- an  plnniing. and(
,are I lbis-t to evolve on parallet lines.2  '-' lII geni Ii dtui IIc_ neC1n11 1 )'%  ci  is du' and at tcr- ,;Iles - 'u' c  nd
iog, voncentration of economic          06s)e:  i  l;ucl, -t rI tOllco tol c qp.i ii  and
IV,                   (4) en-sirhimu balanced reg~ional  dleve-  dliver-sifx tractor outtpuit.
lopImenlt: (5)  setting high   welfare   lBehaviour u'f IL S    'iu-071: Stich
Decision P1rocess : Idtidstrial      stanslardls for lahour; (6) juct-easinuxwt   tesaeo      tetatridsr
LiesigiMPh0's unent opportunitiesi; (7) Stren-             I)v about 1971. '1r1actor ( L.aip V itvwas
In Inidia, thet Nv0lmiaiu and Pattern of  gtheuPInut~ the d101011c ps 'ntial I  f thle  Mnderutilisvd, x0liile imports were suili-
investmient in. the mwnuifacturit`ig sector  conr;()  nagn     tecde        o   tatntial (about 4(0 Per cent of total stip-
are roguilitcod byv thle ItiduIstrial Licetis-  highly trained engineers and  techni-  Ply.). The dermind  for tractors, how-
ing SYsteM  (ILS) in the light 6f the   cians; (9) setting healthy' and  clear  cver, was expectedl to growv to aIbout
development objectives and    strateg~y,  standards of miiiuagetn'iut: (10) keiqiin!,  90,000 by 1973-74. The solution  to
as 'worked out bY the Planining Coifl   dloNvii. prcs aii( (   financial viabil,lty,  t,i~s PrOblemi was to license pine miore
mission. In the case of 'the   tractor  These were the- criteria for thie public  units andL permit six more uinits (this
industry, the actual operation of the   setrpojcs       Io ruatn       pr;szute  was the logic of issuinlg letters  of
LSrieseeaqusin;()Atrsector in'.edrnent, it appears from          the  intent) to obtain licences in future if
the decision toe-a maufacture;1 Atratrs  operation of the ILS that it chose the  theyv  couild  fina-lise  that produictioni
th   eiint   auatr   rcosfirst four and the eleventh from       this  porme.Tepoeta               aaiyo
Was taken (after 1959), wvhy. did the                                       I    riiails      h     oeta      aaiyo
ILS issue licences to five units, each  lito  The inootdusra sectorsn thate inedi  thev licensed eleven  uinits was raised
to produce on relatively small scale a  tbepo       tdWr,inasn,             i-  to) 1,07,00(0 tractors; while productioni
distinctive foreig-n model in the HP    cated by the Planning     Commission,   in 197~-72 was onlyl 33,-16( tractors
range above 26? ('21 Why did the, ILS   Tu    th   oprin     cieiafr       he   with imports of 141,000 tractors,  (See
isse lcenes  nd  ettrs  f iten   to ILS actually wvere :prevention of con-  Ap  ri0i. Stiltmeiunts III and IV.)
raise  capacity   much in excess    of  cL'nthition of econotmic Power,  ensuir-  Thei Ministry of Agriculture had the
poeta  eadfrtatr?        ()   ing balanced(  regional   dc'% elopmcitt  bunefit of othi'r demand estimates: esti-
After the Swaraj model was developed    an    iaca     iblt     fte     rjc.mtso           ninSciety of 1industrial
and hiad passed the  MIS test in 1970,  It is per-tinent to note that thiere is iio FVngineers anid Tractor ManufaCture-rs.
wyddteISise      icnsto       mention of the price.'quality suit:ibilitv  Both these  estimates, of demand foir
manfacuretratormodls  f freitiof the industrial prodiuct to) be  pro-  19713-7-1 were much lowver (32.0(10 and
masinufacuren tractor1 mdloffrin        duced and the impaLt of these charac-   61i,000 respectively) than that of the
dsgsdrn 1707?.                teristics on  the Inidian  Consumers,   Mintikrs of Agicutr.\h          i  h
Bcliait iouir of ILS  Pre-196,5: It is                                                      riutr.W%ddth
tatrin    costs of inmpuitt sujbstitution and-.indu-  ILS dlisre'garI thieseet i-imati-s"
true that the demand fortrcosi            ralept.
lnda wvas growing, particularly aft'er        eprs                                One reas,on, of cotir,e, wvas that the
1955.  However, y~ agenicy seems to       The private firms, it was assuimed,                 grinistrywa ofse        t
have examined the qn-stioin:   WNas it  Would take intoi account the financ'ial  the ILS and, for the 11S, it was Pro-
essential to  mechatnise   agricultural  s iability  ofterpoet.       B    hs   bbyntrlt           rst te ministry's
operations wlien  eniflo'in,1c-nt was a  pr ces of elimination, only two Crt-   estiniate,Frhr     ti   i--vta     h
prbe?A,i ii       It, jjjul,stjItijitI'  ria of choice elfectisely remained for  11,5 miay have taken. the view thiat the
of tractor for animal power was woirth-  the ILS- prevention of conicentration  ruu:ink!1. sx-as jii possession of daita itv-
while : for timnely atid dependable re4  oif economic Power atidt the promotion  latinig' to) regristration  for  tractors -
sults in areas withi mutltiple cropping.  of  balanced  rcei.'ui.il  deIcs lopment.  data wltich wvere noit available toi thu
and becaus;e of rising oipport uuuitX coist  Both these Crt-ieria' indicated mniltipli-  uuitsidu-rs.
of animal Power wvithi sharp inicreae   City and dispersal of fn-ms and limita-   Biht these dat, xs ce infutirde
in land Productivity in inirri.ated areas  ten,I on the size of die  Production  in] a c:ontrolleds si.'I.iu'thr
as a result of the( moviu'  r'-svoblu;i..2"1  cap`acity olf echll ullit,        were mnultiph'o  regi I tcu1touu  ealch
Anyway, it isWtths pertinient to tiote that  Wihths   two ciei    there wa-is a  farimer u e¶'A-1isitu i  for' severall tra~Citor
ani agzenc  ini d ia'rge  of  rug uilativ ti  iisk :uut'ci]vablymy    ot   be   mdl,      i   h    i ~co      h  ni
indurtlu5ial dlevelopmienfcdid not raise- this, enstred.  T'he soluttuon wasl : toi issue  wihvr wu  su u'-a   ,rva
basic qtutestion before i'jh,sui"  licences  Ice' e  o  salsedlrs       whc      osble, Further, farmers' (deniauid is
to fuse units, by 1965.                 Couldi cuiter joit' Collaboration  with  at hI n(timuu  of ti actu'r pru c-s as well ns-.
Several fuirther  questions ar-ise: in ureputable f-c-iru iim-- Such firmis, it  the natuire and terms of credit facili-
spite of the economies of scale in trac-  was  air-ued, would has e   udqtc     tim,-s  Thiuse facts wuvre nuut takvui inIto
tor ir'odttivnin and ilPsttuhuU ion, why  ina-nagemnln  capacii L to) enusure  titiani-  dOu. -
didI thce L5 license five uinits wvith re-  cial success oif their projects.  There  13%s 1 972, the  -olitrolled pt-ices. of
lattively' smallcacies   Wh% did the    was . thus; an obvious; b~as in the 11L5  t Iii(ttiWs  Wet-c raised  andt thle ct-edit
ILS not insist thatt each tractor model  a!tai 1si i ndigoIu(IIL-.  tecnlA1 wu'%  anid  f.ICHIL ". beu.NMe  SCjIu:Ce. '[h'  eMuid(
should pass the TTTS test before ap-    k-nowhcusv. anttI nevw uutfrc'prenvwu s.  for tiractors did gect affoci ed: the niew
plying for a licence? Wh~ didi the ILS    Suich -eems, to have been the logic  tCle5icd dviniautd  estimaites  made in,
not examine the s,uitabilits  of  oeach  mtseui:.the bh-t       -St t~hc  IL1                          "r wetntrw-,iwt~
tatrdsgn to local conditions andi  But this 1-' 'iii' had the following -- r hntoseaeeale-
farmers' iesources?                     suits by 1971: HI unaderutulised cc.      Sw'varm and tlht LS : By 1965) it was
The ILS choices were no' erned by     city because of noor in inagu~nient anu'  knowru that to s~uit  local couiditions
11 criteria which the public    sector  farrmer.,' roje2,-tion of tr-actor  moidels  the farmeors meujutiired ,a tr-actor in the
decision-makin-,  Process had to take   pimzodumi dbli  flurtus' ouit of five firnis:  IiJ) ranuge  of 20 to 30; by 1970 the
M-4ll



Swara; had passed the TTTS test.        ninor technical _hlamngcs that  can  he  the problem  of public sector decision-
In this context    one would have   nma(le, given   the  constraints of the  making in the    developinig countries.
expected the  ILS to issue  a licence  dtgenda. This wvas precisely the role of  These conjectures point towvaros some
only to such a firm which could pro-   the Directorate  General of Technical   hypothe:.es around  which it may be
duce the Swaraj.   Because of e.zono-   Devvlopinent (l)GTD)52 in the ILS.     possible to formulate a theor% of pub-
mics of scale in production as well as   lience the DGTD did not raise the    lic sector behaviour.
distribution, the choice  should have  basic issues relating to economies  of    (1) Socio-economic de% elopnient is
been in favour of a public sector firm-  scale or farmters' preference. In the  not art isolated process; it is an integral
for the private sector the argument of  tractor case, it (iid not occur to the  part of the process of nation building.
concentration  of   economic   power   ILS that farmers' preferences are de-   But this atfori at nation building does
would apply.   Why did the   ILS not   termined by history; in a durable com-  give rise to a variety of tensions  and
suggest such a course of action?       modity like this, they cannot afford to  pressures -- a conflict  among struc-
Probably, the ILS   simply did not   uxperiment. So thev demand such pro-    tural principles of social fabric. These
know  the history of the Swaraj; this  ducts which they have got used to.      conflicts are aggra'.atcd in a country
information was available elsewhere in  They would not know the quality    of  with a fedeial democracv anDc a mixed
the Ltovc-rnnient and there was no com-  the other alternative products;  and  economy. Anyway, the   fact to be re-
munication   channel  developed   for  quite likely, the lower priced product  cognised is that the two processes -
transmission of relevant information to  would be regarded as an inferior pro-  process of nation  building and the
the ILS.21 And this channel did   not  duct.25 In a sense, this is what hap-   process of socio-economic development
develop   because the ILS criteria of  pened. Farmers had become used to       -- are interrelated and one affects the
choice    its agenda   did not require  35 HP Massey-Ferguson and Interna-     other.26
such information. If it is difficult even  tional Harvester tractors; they  were  (2) Such is the context for the deci-
for a private firm to modify its agenda  dependable. A cheaper tractor in HP   sion-making process.  Obviously, gov-
-  taking   account  of new decision   range below  30 came to be regarded     ernment cannot be a monolithic struc-
variables -  how much more difficult   as en infhrior ptloduct. It was thus   ture with a given    consistent set of
would it be   for   the administrative  that price difference between 20 IHP   objectives.  But this  does not ir. Iv,
bureaucracy   where  persons,  before  and 30 HP tractors was much greater     that each participant in the decision.-
they rise to decision-making positions,  than the cost difference.  The change-  making process  takles irrational deci-
are already indoctrinated in the  vir-  over bv the PTL to a 30 HP tractor     sions. Given his context, he is rational,
tues of the pre-existing agenda?21     in l975 wvas largely because of these  If the total outcome of the process ap-
The agenda selected by the ILS were  reasons; its additional cost was only   pears to an outside expert observer as
eminently rational if one viewed them  Rs 2,000 per tractor,  while its addi- irrational, the  reason is not the irra-
in the context of the political process  tional price advantage  was Rs 4,000  tionality of decision-makers  but the
and the bureaucratic politics.  Con-   per tractor.  Neither the ILS nor the   analyt's incapacity to understand  the
c(r(ntration  of economic  power  andi  Ministry of Agriticulture considtered  it  problem.2  Because of the nature of
regional balance  wvere the   political  essential to provide full information to  the political-bureaucratic structure, the
issues raised by the politicians in a  the farmers on the relative merits of   range of choice with regard to objec-
federal democracy. The agenda suited   the different  tractor models.   It is  tives has to be verv wide. This range
both the   ministers as well   as the   p(rtinent to: note that the ILS dids not  can be narrowed in technical terms if
bureaucracy; and the risk inherent in  insist on the TTI'S test before issuing  the trade-offs among  the given objec-
this agenda was reduced by    issuing  a licence   nor did it insist on good  tives can be settled. But this technical
licences  to established firms   with  distribution and after sales service set-  requirement can be in some sense ap-
foreign collaboration. Thus, this ag,enda  uip-key elements for  0cisi-on -alkin  if  proachld only by a profouind change in
also suited the interests of Indian and  the farmers' interests were to be safe-  the sci-politic.l process.
for,ign big business.                  guarded.                                  t3) This choice-range for objectives
There was yet another merit.     If    For some such reasons the ILS did     creates; een a wider range of choice
technical decisions were to be made    not consider the Swvaraj de clopmren[t  cr poli,i en and poliey   ingtrucmcnts
predominantly on technical grouiind1s, it  as a key factor for its licenNiiri policy (,y jeCt )  for  each plicy i'itrn-manine
would be essential to set up an expert  Buit for the CNIERI, the PSID)C  Str!  Ullnit. P'; 'lo'.cLadly, this fact makes it
machinery for the purpose.    Such a   and Associates   and the    IDBI, the   fo slI for ('a(' l ecision-rn.lilIm iuniit
machinery, however, would not be set   Swaraj tractor wotld    not have seen  to make a choice     on the basis of a
up becau.e of the reasons mentionedl the lighit of day: this success, howcer.  limited agenda  and thus d7elimit, his
earlier in connection vith the demand   is likiv to beconiv a 'coervive fact' andi  search for relevant information  even
studies. The agenda had the merit that  has the   pnenti;rl of modifxing  the  from the other   parts of the govern-
it did not require such expert machi-  'ar nada'- the decision criteria of tbe  ment.  The policy decisions or choice
nery. For deali rig with  the minor    Central 0overnnment aqencies.   w       (i- of projects in the same  broiad field
t.chnical issues that 'he adminkirative  ther this potential  would be realised  may aippear tto 1e inconsistert to an
bureaucracy may not understand, it is   depends on1 soi many complex factors;  outsider  but may still 1be bIase(l on
pws.iible to have a technical bureau-  one cannot be certain about the direc-  rational considleratiolnws from  the point
cracv under the    adrministrati%e civil tion of change.                       of view of each decision-making unit.
service. But industry would obviously                                            (4) In a    Nocii)-econormic  process
have rnore vx(urtise than this technical                 v                     with th0ese choice characlerisriv-;, plura-
Wing: so the technical wing too  votl(d     Decision-Making    Process         litY of decisio-n-making units with dif-
have to acc, pt this ag'-nda. Its techni-   Some Central Observations          ferent agendas seems to be essential.'
ca! e.-anvination  and. modlification  of  It seems  possible to make   some   Such plurality  makes creative experi-
projects wvould merely relate to such  conjectures of general relevanc. about  mentation possible  and since the re-
M-43



Suits tof 'such e%periflliibt arc e(ticretc ~,tructures %iih onei mindt and  one1  plvtelh I,iffi. . .      nib %1  i
ani ci-ilh obse.r%able, thle informato  wIl   Th.oliitl          ce       n        iibs              tTeiairt
contenlt oif the deci,si1 M.i IJi:i-, process  oithe" .s e  can make a -crucial eon-  hIto   iiLi tLI  i1.i dIiLi
would improve anid this may tend to    tribtion In Ii t1iLl.  -the   p             eai't.     helck      Ł  dan"
narrow the TJ ii'e of choice xx ith    (i i  f Jlvinge if theŽ. hl~d,- these COUii-             ofiien ir   Ild i  11 t aind
to- both , hjCCti %c,  anid  i,i,rui r  cni  tIries, In cx1 'I1 Il-, a so und .1insi t u ii' -iia   l l  I' IrimiderJ~anc. 'as
tprojtCct-i  Thus at learnii on  proces,s  structtire of the nazturie indicated ear-  )~~l il'It    i~.* i t(ii
based     c' k.prIe'icIL'L and cs11,'in1IIIt;I-  lit'r. kint for tIis fthev nve(I tii under-  flile s 'l'Ii aspobldvI Ix h
titon can lie sei in motion.           st andt the rationalits andlk II1CdIitIIi' olf  siilw  Ile  uimpo: taut  area oit
15) ['ll! stud(y  sugges;ts halit  for  thlis protcess of li  c;Julst to) -'aI that  Advance'. r) ZB.
efTCL uS  and eViccit L'hOiL'0s. it May  it is irrational is -'not to und(erstantd it.  5  hbid, pII :'2- ; 1.
be ad0 sable to) ev-oixe anII~  toi     What it~quires o driauiu.is      the        b ~id I ppt48.
si rtiLi ii:-. where actual Ilc jio,in  with  Problem: withoutt thiis. oni'ioin i  ioffer-  'Ijjte  1.1 iiI  ciiltl lie imade
rega rd toi projects  and pohlcies  a re  edi are Ikely to be solutions to  no-   aai'1       i   Wf    l j  llilil
madle by uniits, whose growth, dlLt,clop-  problemis ori pweido*problenis, however  ot the( poritrntlit and  substaittiad
ment and    i aivcritical1'dv pi   oni  -I'liil' `k'd be the liirgua:1c In which    l~riii,tii      rci'l     aais
arc                          ioni inl the past, it is 1 ht 1Iirea-
the results oif choices made.          they  r, cdoilid.                                          I   tabe  o  ssm   tha  exii
(6) It is pos;sibfle to improve the                                              Ienable ati lasturm soiwa h anuioI 1
deccision making proccss by   institoi-                Notes                       (ibis Canadian counjtierparts certaifl1-
tionalki.au  cltin1e   ucin       n                                                y did!9. and the trusbt which, is
cetifl outo%    ad    [t Would not have been pos-sible  to       Suciel a large, part of the product
thus delimitinIg the  mi anne of  purely  undertake this stud(y but foir the assist-  dliflertejtiatilin  barrier  carl fullk
political deii i-:ku. The institu-     aince of the Industrial   D)evelopment      nurtllreiI by the fi uinp.liiiu'  over
tioi's that seem  to be essential are :  Bank of Inidia (I I)BII I  of which the,  thet  yearS WOidd 1e   41iljniiii'.IIetl
Projct 1roiiiitii~  r ne, Inilitrial  author li,ippcneii to he gteneral ninana-  h .)-A doosi.roita
ger when the dlecisionl io t iiun11CO the  f'ill1v  tit I IparanLM -te  i .lois  have
Development Bank. Technieal Cos'l       Swaraj Tractor prtiiii.'cl was taken. Th'le  beeni 5i1l1 for up tI) tw%o dccadles
taticy  Service  Centre  i,Tt" '(  ., hi 1d I )B) madte .axazl;i11 bl&  everal  docu-  in  'flw r parts (if the wvorld ior
Technolo-ical Resc;irch Ce-ntre T'R('):.  ments: the detailed proicet r'cpoitI pre-  vastly losstor price,s thianiioffered tio
eaaeh o-f the~se inistitutions~ ,hsuld hiaVe  pareld 1~ thie T-chnicaezl  Consulitanits  the ~'Us fariner shiould 11111p conl-
all deltit  anda fncton,dis,tinct  tSuiri dudlk A\"OLj iL ft, tlie IDR PI pIoject  v,ince bii that iL hiarijaiil tractor
anietty adafucin               pprausal repoirts submitted tko the Ad    1olici- is S"iciiitIliTiii to be vao'i I iils"
from  the administnatrx C bill iicr.ic .-` 1Hoc CoUmmittee of Advisers (ACA  as    tLonsidered  and( niot :ni-tt-s'ainl  a
(7) Suchli an inst!' ultioii-i  structure -well as toi its own Boardi of Diroctolrs,  s,ign of interior desiign or mann-
is essenzial also for the proce,s of cera-  tanLl its proiect -supervision reports. In  tactuirr". Ibid. p)22
ti%eof mdernaddition, the                   Puniab   Tractors  Ltd    D  St.~ bbi ctii' Sint!h and  cbieard 11
txca.:atiiiomoeneh-.v:(PTL.)         -the firm ope~ra Ii g thet Swarai  D ay, 'F'actiir I lstiiiailSub-
ht-m -Iii'. point of - iewv, the ro c-~ of  tractor prollec-t  mad(e x, ai lahiL ., to  5titiitaioi inl E'coitioliiI('  I )ex 1'Ii :1
TCSC x .1 the FS tInfdustrial Dcx chop-  us, through thle, Governmniclt of India,  uincit :  A  ( ;~i ei~r lI N4III i, It I I ( 'asi'
menit Banki aret crificlal: they -providle  It' ~,'  replorts and( accounitsi. The  Study'.%  The Iouirnail of hieii Iopi-
the .i.c     inik betwieen the te&,hno.  uhrhsa         a   tebnfto        n       nu-ni .Sfil S111.'..  V hNe111f 11, April
& a  -sac  tse  n  h~-      telnsixe discussions with the nmemhcrs         ; pp lo5- I17t7.
flci o                                  o  te  p   fet  iP1'1, i-  and         10ip  :  i  I I.,-  p11ital  and  ii in t '  t  ii',
,utin  xson-                  u    teamns iif tflbc It) , Suir of Sunri    t ractior is a1 fiunctioul of its Ii- 'Isc
irSt TiPs -i t'I..    si52:-   that  an Aiit z-.-ciates, C'handra Mol IIa ,  the  At'i,teecss ar       vlwr liir
!mplenlcu'tation and(  --p21 Ii t'i  1  iIaii'Iitdieto    t   l, and il ivitO      ti-aetois in the Ill' r-ange lielowv
iril1L  '.Poetolkl        .bers if th,, AC. to`hIB                        5) tan thoke in thel.-11    a .!iil
to'e  fetieni  tieLtI              Fiii the rolei of thei State in 'co-  -i1oi 5. TI IClie   .-'    IlII
%intmlt    is ielv. associated wili     loiihic iIis -wlopuilil t, sc e V V Wlu t.  tili tit lipil iids -  Il.- si7i' of tll('
'le-2c  3adl2i!1'xiiit\iI(i'ti                        orni-      firal .  thle i-'te of animual I '  -I'x
tol-tnulatiiui *i the     it'hIII     Nil lI  Co..lital I Eiuii -Iliu           I and Wi'alain  i-Ji,
phi" iCt xx hichl it had1  tt ii  dnllijit er, thiaii  lics". OrienLt  I' iourians,  11111j.I ilS  '   1  N 1lii  tx ' I  i t  Iini  NI 'rt i!
- t                              OnS.  tit - (lia pLc.it  ofl iv in tia- o0%liL   1, uI-l t  oi  I K1  III I  i
'ii I~ axic  I it-ie Lt'(ti    t it, Ii  pa1tt III  allwI  the  dei-'isii in-  '' Oli  t .s  n     I
nu 1u1.  e te   dc''in vfhI fr    l' i '  ii'di(  'I s ix'  ot, J, AI -IutV!    I it -ii il  tl~   'ie  i
cci'iI  eL' Ia  i  a esn          ;IcI t1ic ts ~I I i iri is t lii'  X  I.n  i '  i,-rIt  pl'  -: '-7 ni It
niil.  neliei ltc  If  it  3i;s  liet  I    In  t I  (. lo '  1-al    1nIli         i     ii)iiij'  il(  'ilj
ow  mierx  fntoi o  h  'i                rldl         I.r    95f it     111 4 11/,1  1, . iiNll!i'  I9
Of'llS'": -.tfruiwvt'ow~ -n a   -'  ~      h    - ' ,)I1r'v  il i)  o  i of0'a sail"i iW ,lrlo hIa cit XI.2 -_ : Boiid'-ax
Thtor                     .-,;jW'orfn                                            * o11VCL  li71     al    lm
nw,   p:.. Ir% ~  ~   Il Ivr -. nlli 0. tal v  Kornai,  ' kiqii               0."'"cioo   ia
LhieAle-tit l2ugn   xx'n           nCni n.''1           i  IXl'         i, I ti( 'Ii' '  CahS li  ofl orl iin'
imp                          1                   o    .  i'ii'Iit i  'n      I 'I   L h i-i       I-it 7olut   alld A l t-11
tIter'ItrŽI  hctxst' x-7 Iti-Cii        ' nI Ii ea:ati.1        li        X  X   Il f   lci li'
rIfM Ath  - ' ni7ni  scen  mlSlLiltl(       () . Tl'l NI' i'1oo  71-01-tov Stfidv,--  I) T ' i~     ili nhdd)



BI): Recent Evolution in its Role       larly the senior financial  execu-       a control system,   designed  anvl
an(d Functions', IPrajnan, Volume        tives, would be very familiur 'with     developed by anuother sub-init of
1, Numiiiber- 8, 1972.                  this iManual. To our great sturprist,    the total system1'. pp 183-184.
wige realised  that many of them
14  lor   dletails regarding  manufac-       ba(t  ot even heard of the exist-   23  Sce Arrow, op cit.
turing finns, capacity output, actual   cence   of -'Cich a Manual.  As a
production, tractor prieos, and the      means (c' c;oss-checking, wu o;tenr  4  lu    P op Cit pp 85-7.
hidlvstri:il licences,see Tadle 3; and  rhferredI to tis Manual while con-   25  Tlfhe US experienice is similar. See
for the varioeis (temand cstimatevs,     vlucting  programmes on manage-         Kud(lrle, op cit, Chapter 1:3.
see Tables 4.                            iient tor st-niof  executives iroiim
15  For the performance indicators of       tfhe publie enterprises. 1'XCeCat for  26  V V Bl3latt. 'Tvr.spcctivcs on Exter-
teIT,seTbe    an2              a few  on the whiole, many of these     nlAssac'            cnmc      cc
e     , see  a                         execultives were not aware of this      PoliticalOi  Ce kly/, A,ntnal Nurmber,
16  The US farnmers seeim to have be-       MNIanual. Responses received to tlle      February 1967.
bave(I in a similar  fashion; see       (qtuestionnaire  nailCdl  to cnter-
Kudrie, op cit, Chapter 13.              prises were most often   categori-  27  Sce Joseph A    Schumnpeter, "Cap-
cal that no Manuial or gui6dlines        italismn, Socialismi anid l)emocracy"
17  In addition, che PTL have initi-        (existed for cap)itll bu1dgetinlg de-     HaLrp(er andl Rowv, New York, Third
at('dl researeh, in. collaboration with  CjibionlS.  Due to this -c)nsistent      ;dintiOuii, 1975.
the Punjal) Agricultural University,     re spon1se, we decidledI to raise this  08  See P) 1) I1enderson, 'Two 13ritislh
Ludhiana, on the development of          issue in the interview we had with      Eirors:   Their Probable Size andl
a tractor-drawn paddy transplanter       the Uoit of the Pl1,inning Comimiis-     Some Possilble  Lessons',  Oxford
capable   of handling six rows of        sion   which was Lresponsible for       Ecollol7ici Pal)ers,  Volume   29,
paddy seeding at a fime-that is,         the preparation and circulation of       Number 2, July 1977.
it couild cover four acres of trans-     the Mlanual.  We were told t4at
planting a day. Field trials of the      niore  thian 1,500 copies of this   29   See  V V    Bhatt,  "Structure of
1)rototype transplanter  are  com-       Manual had been. released for use        FilalucLmal Inistituitions" Vora, Bom-
pleted.                                  b)y the various public enterprises.      bay, 1972.
'We can only conclulde that while
18  NVorld Bank,    Survey of Tractor        it large niuniber of m p)l)ics of this  80  See V V' Bhatt, 'On Tecbnology
Manufacturing    Indv.stry :  India      Manual   have becil, prepared and       l'olic  antd Its Instituitiunial Frame',
(Mfinceograp1hed.) Washington, May       released by the conimittee on Plan       olp cit. See also V V  liatt, 'Deve-
1973, p 23.                              L'rojects of the Planning (Onumis-       lopment   BanlkinLr: Top Manage-
19  On the role of the ICSC and tl,r         sionl  either the (xistence of this     ITnlt Tasks and(I Structure', World1
FS in techn olog  policy, see Vn  V tlManuial nor its contents are knIownI        D)cl'1'p/1jn,u't, Volume 4, Number
Batt, 'iOn Technology  Policy andeV      at this level of exeocttives in the      6, 1976, pp, 519-527.
Its Institutional  Framre',  Wreld       Plublic enterlisus. It is likily' that  ,S1 . Nfartiii Rein aind Sheldon 1E1
Itsnstltionat, Volume 3,   Number        t1e coPies of the Manual sent by        White, O1) cit.
Det-clopiiiiteb   Volume 3p  Number      the conmmittee on Plan    Projects
9, September 1975, pp 651-663.           havie reindil    mnainlv at the level
20  See Inderjit Singh and Richard I-        of the   achniuistrative  miniistrics    To the prolblemn of public sector
Day, op    cit.                          alndl Chia rrieil/Al.\n in,i4 I)irectors  dlecision  mnakillu, some  sinple
Day, op cit.  m1  C n l ie   Directors   panaceas 'are  be 1ving   advocated   by
'21  Government of India, Ministry of l        f theso ent rprises.                   nci mntnnists  of the  neo-classical
Information    and   Broadcasting,         ..... 1 towcver, the initiative am(l  tradlition as wcl1 as the Marxiani
"Toxvard Prosperity Through Pub-         aItive interest of only one of the       tralition. 'lie former reconinein(l
lic Sector: Public Sector for Pub-       nibl,ecrs o[ the Planning ConiniIs-      the   abolition  of   the   p11ublic
lic Good", Delhi, 1971; see also         S1on was Iespo)tml' for the birth        sector andl the latter. the abolition
A Besant C Raj, op cit, pp 109-          ot the Manual.   S'inct this parti-      of the I)rivate sector. These pan-
11.                                     ctilar  meimber   of the Pllanining      aceas,, of course, emperge fronm the
(Cojimission lbad a  strained rela-      Scriptiurs and not from the uniider-
22  See in this connection Raj, op cit,      tioislIii) with other senior Secre-      standing of historical processes of
for an    illum11iniating  case studyV  taries of the administrative inisis-      so( io- ccnounic  chainge.  It does
with   regardl to the  Mlanual of        tries, an(l the Finance  Ministry,       not occtr to these interpreters of
F easibilitv Studies.                   it becarme   necessary to peisuade       the   Sicril)tllres  that  the re is a
.then major     guidkelines  for      the l)eputyI Prime Minister, wlio        (r,Ieu(ci which needs to b e   under-
capital  bildgeting  decisions  of       also fal))aetnd to be the Minister       stood: \Vlcat is thee logic andl dv-
Public  enterprises are  contained       of   Finatnce, to issuie that letter.    nainic of the situation  that has
in a MIaniual of Feasibility Studies     IIere is anl instance of menlolialik t   { creatld  mixed. ecolloinies and, in
Prepared in 19663 by the Conmmit-        COnflict amonigr the top ollicials of    pai tit ilar, are rcpoxlisihle for the
tee on Ilan Projects of the Plan-        the C(iverinmnt, wlhich bNloCI  the(   (e\paucliu'ir rol' of the ,pthl)nic sec-
ning Coniuiiis;ioi) ....                 uffe(live use of a s\steinl conceived   tor in the fieldl of indlistrial dove-
for the    purpose   ot improvinig      loPinent.   Of coiise^, to examiline
"The Manual was issued in 1966        capital  bld lg4ti rug  practices anid   this prob1ci requires much more
anId we con(lucted  our interviewvs     *       rocedumress by the  adumui6istrati rc r  thinking than to churn out solni-
in 19(W and  1971. We expected         ininistries. This also diemonstrates     tions to irrelevant problems on the
that most of the senior executives       the resistanev of the sulb-units of     basis of equally irrelevant econo-
of the public enterprises, particu-      a large organ;uisation even to use      metric or theoretical models.
IM-45



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