National Rural Livelihoods Mission (NRLM)

- Need for a holistic StrategyRajib Mohanty & Jitesh Panda*

National Rural Livelihoods Mission (NRLM) has been conceived as a cornerstone

of National poverty reduction strategy. The central objective of NRLM is to reduce poverty among rural Below Poverty Line (BPL) households through promotion of diversified and gainful self-employment and wage employment opportunities to provide appreciable increase in income on sustainable basis. It mainly focuses on restructuring of SGSY (Self Employment Scheme of Government of India). Outputs of NRLM mainly relate to formation of new BPL Self Help Groups (SHGs); provision of Revolving Fund, Capital Subsidy and Interest Subsidy to SHGs; and provision of skill development training to Rural Youth. There is also thrust on mission mode approach to implementation, with dedicated implementation structure. (Source: Draft Background Material on NRLM; www.rural.nic.in). This document puts forth some of the suggestions to strengthen the design of NRLM. Being Demand led It is proposed to take up NRLM in mission mode. Mission mode approach is likely to be more targets driven. At times, this may lead to promotion of more self employment activities in an area, which may negatively influence the market and there by sustenance of the self employment activities. In some cases, market may be providing more opportunities, but inadequate understanding of opportunities for self employment, may lead to less promotion of self employment activities. Strategy and interventions for promotion of self employment activities may relate to demands expressed by rural households. Being demand led would facilitate long term sustenance of self employment activities. It is in line with household focused demand led approach to wage employment under Mahatma Gandhi National Rural Employment Guarantee Act (MG NREGA). Exclusive focus on Self Employment It is envisaged that NRLM would be promoting both self employment and skill based wage employment. Skill based wage employment would mainly focus on skill training to rural youth. Promotion of both the initiatives requires different skill sets and expertise. It is desirable to separately focus on skill based employment and self employment. Coverage of skill employment may lead to dilution in efforts for promotion of self employment. NRLM could exclusively focus on promotion of self employment. Skill employment can be covered under National Skill Development Mission (NSDM).

Focusing on all Rural Households Self employment opportunities in a village/area relates to all the households, and not just BPL households. In a village economy, all self employment activities intermingle and relate with each other. In a village context, poor and better off households depend on each other. It is extremely difficult to exclusively promote self employment activities involving only poor households. In the interest of poor, there is also need to involve all the households in the village, while focus could be on poor households. However, proposed strategy of NRLM relates to working exclusively with BPL households. Supporting all SHGs While forming SHGs, usually BPL status was not considered as a membership criteria. However, it is proposed that NRLM would be supporting SHGs having members from BPL households. In such a scenario, many of the SHGs would divide and get reconstituted on BPL line. This may seriously affect the on going SHG movement in the country. NRLM may consider supporting all the Self Help Groups, and not only BPL groups. In a village socio economic context, it is also equally difficult to promote new SHGs having members from BPL households. Promoting both Individual and Collective Self Employment Initiatives NRLM would be focusing on providing assistance and support to SHGs. Close interaction with poor households reveal that, SHG members are keen on taking up individual/household based enterprises, than being part of group based enterprises. Past experience also indicate that, in most of the SHG/Group based enterprises, typically the leader, relation of the leader or few members manage the enterprise activity. There are few instances of success of group based enterprises. More over, in most of the places, SHGs were originally formed as Savings and Credit Groups and for taking up group based enterprise activities. Hence, NRLM may consider support all types of enterprises including individual, household, group and other collective enterprises. Thrust on both existing and new micro Enterprises Experience in micro Enterprise development suggests that it is always desirable to strengthen the existing enterprises, before promoting new enterprises. There are already large number of micro Enterprises including relating to agriculture and allied activities that require credit, Business Services and Business Development Services (BDS). However, NRLM is expected to mainly support new enterprises, and more so with thrust on enhancing access to credit services. It is desirable that NRLM could focus on both existing and new enterprises.

Holistic support to micro Enterprises Most of micro Enterprises look for holistic support services and not just credit services. While facilitating holistic services, it is desirable to start with Business Development Services (BDS) and then move on to credit and business services. Current design of NRLM has more thrust on providing credit services. Experience in micro Finance movement also indicates that poor households need both credit and non credit services. It would be desirable that NRLM focus on both credit and non credit services, with emphasis on non credit services. Experience of micro Finance movement also indicates that for poor, access to credit is more important than cost of credit. Over the years, micro Finance including SHG movement has promoted a credit culture amongst poor families. The focus of NRLM on supporting revolving fund, capital subsidy and interest subsidy would affect the micro Finance/SHG movement in India. With regards to credit, NRLM could focus on access to credit, not influence the credit market with subsidized interventions. NGOs as Facilitating Agency In the past, NGOs have demonstrated their expertise relating to social mobilization (promotion of SHGs and other livelihood groups). They have successfully promoted rural livelihoods in different areas. It may be quite relevant to involve NGOs as Block level Facilitating Agencies. Facilitating agencies can take up the role of implementation. They may be supported with a team of professionals at block level and cadre of field functionaries at village level. However, there is inadequate clarity on involvement of NGOs in implementation of NRLM. Promotion of Value Chain and Theme based Resource Centres Promotion of micro Enterprises require capacity building support from theme based and value chain resource centres. The themes relating to micro Enterprise development may relate to institutional development finance for micro-enterprises and BDS; and the value chain may relate to specific commodity. Currently, there are few organizations to be able to take up such roles. NRLM may consider providing long term financial support to existing and new organizations (mainly professional NGOs) to take up such roles. This is similar to specialized institutions like district level Rural Self Employment Training Institutes (R-SETIs) promoted for vocational training. In the long run, this would support micro Enterprise development, rural industrialization and value chain development and overall sustenance of self employment activities to be promoted through NRLM. Initiative like NRLM has potential to promote self employment opportunities in rural India. However, its design may need to be more holistic and inclusive of all actors associated with promotion of micro Enterprises.
*Vrutti A Livelihoods Resource Centre, Catalyst Group, 19, 1st Main, 1st Cross, Ashwath Nagar, RMV 2nd Stage, Bangalore 560 094 India Email: rajib@cms-india.org jitesh@cms-india.org