Abstract:
The rainfed areas of rural India often lack the services of able water management institutions. Thus, management of water in such areas is not a stand-alone activity but is significant for the overall development of the area, which also takes into account natural resource management, productivity enhancement and livelihood supporting activities. This is commonly referred to as watershed development (WSD). These WSD programmes are run on a massive scale and have been dovetailed with the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). But, even after massive investment, these programmes or the institutions did not generate effective performance. There is an urgent need of good institutional arrangement that reduces transaction costs and favours co-operative solutions. In this context, the literature on new institutional economics identifies good interaction as one of the most important features of effective institutions. This article uses new institutional economics, theories of governance, management and organizational design to develop a conceptual framework for understanding the role of institutional interaction and participative decisionmaking in generating enhanced performance and sustainable outcome. Conceptually, the demand for interaction depends upon generic and specific drivers, and the supply of good interaction would come through structures, processes and
governance features of institutions and also through consideration of different rationalities (e.g., technical and social). This article involved an exploratory research followed by an in-depth survey of 30 local watershed institutions in three districts of Andhra Pradesh. The findings indicate that the quantity of interaction alone is not sufficient in generating effective institutional performance. Quality of institutional interaction based on various rationalities is equally important. The study may help in designing the institutions involved in WSD in a better way for inclusive and sustainable outcomes.
