Abstract: Since early nineties when ‘East Asian miracle’ aroused heated debate among revisionists and neoclassical economists on economic development and the role of state, two different approaches have emerged in the realm of development cooperation. In one the community participation is seen in commanding position to “create” social capital while the other assign this role to a more “powerful” State. India’s development programme in Nepal exhibits features that are common to both of these positions. In this paper, we evaluate the impact and potential of these development programmes known as Small Development Projects (SDPs), introduced by India as part of its development cooperation portfolio in Nepal. Through a set of case studies and analytical tools, we find that India’s experience of SDPs in Nepal involved wide variety of stakeholders, namely, communities and their groups, local authorities from administration and governments from Nepal and India. We show that the positive externalities enjoyed by Nepal are a result of a complex interaction among these stakeholders as explained by the process through which the projects are delivered. We argue that the outcome of SDPs would be less than optimal if any one of the above mentioned constituents are missing. It would also be affected if the current process of approval is compromised as it brings in due representation of these actors, thus creating an approach that is more nuanced and balanced and one which leads to synergy between state and community for a better development. The paper concludes that the decentralised mode of project delivery led to demand for those projects that were relevant to the community. Further, we have identified gaps in the implementation process and recommend certain policy prescriptions that will improve or enhance the impact of similar development projects for Nepal.
Keywords: Nepal, Community Development, Development Cooperation, India, NGOs, Small Development Project.