National Rural Livelihoods Mission (NRLM)

www.swaniti.in National Rural Livelihoods Mission (NRLM) A critical element in India s 12th Five Year Plan (2012-2017) is the generation of productive and gainful employment at scale. The aim of such planning is to absorb the working population in the unorganized sector of an expanding economy. This sector contributes about sixty percent of the country s GDP and includes workers from micro enterprises, unpaid family work, casual labor and home based work. In addition, it also absorbs migrant laborers, farmers, artisans and out of school rural youth. To this effect the existing Swarnajayanti Gram Swarozgar Yojana (SGSY) has been restructured as the newaajeevika - National Rural Livelihoods Mission (NRLM) and was launched by the Ministry of Rural Development (MoRD) in 2011. The restructuring was mainly done to address ley shortcoming of SGSY, specificallyvast regional variationsin mobilization of rural poor, insufficient capacity building of beneficiaries, insufficientinvestments for building community institutions, weak linkages with the banks leading tolow credit mobilization, lack of repeat financing and lack of dedicated manpower to implement the program. Extent of the Problem Labor force participation rate in India is 84% amongst males, and 29% amongst females.(world Bank-2012) Long term unemployment in India is 1.4% of total unemployment which is comparable with international Objectives Standards (World Bank) The agricultural work force participation in India is 43% (males), which often comprises of the un-skilled workers and also hides the problem of disguised employment (World Bank) Aided in part through investment support by the World Bank, the NRLM aims at creating efficient and effective institutional platforms for the rural poor enabling them to increase household income through sustainable livelihood enhancements and improved access to financial services. Such institutional platforms will create an ecosystem where the poor can work together and with external agents to identify problems and design solutions. NRLM targets to cover 7 Crore rural poor households, across 600 districts, 6000 blocks, 2.5 lakh Gram Panchayats and 6 lakh villages in the country through self-managed Self Help Groups (SHGs), federated institutions and support them for livelihoods collectives in a period of 8-10 years. Key Features The key features of NRLM are captured in the following diagram: 1. Social Mobilization 2. Institution Building 3. Financial Inclusion 4. Livelihood s Promotion 5. Convergen ce 6. NRLP 6. Support 7. Ajeevika to Urban Skills Street Vendors

2 1. Social Inclusion and Universal Social Mobilization: Via NRLM the states will ensure that at least one member from each identified rural poor household, preferably a woman, is brought under the Self Help Group (SHG) network in a time bound manner. Using participatory vulnerability assessment and ranking methodology it will identify the poorest and the most vulnerable amongst the BPL households. The Mission will adopt differential strategies for social inclusion and mobilization of all identified BPL households into functionally effective and self-managed institutions, with particular focus on inclusion of vulnerable sections (like scheduled castes, scheduled tribes, disabled, landless, migrant labor, isolated communities and communities living in disturbed areas). 2. Institution Building: Investment by NRLM for institution building is mainly of two types: a) creating large scale quality 'social capital' that will ensure strong and sustainable community institutions and b) capacity building of community cadre and Community Resource Persons (CPRs) who would support the Mission in terms of bringing in more people and strengthening the institition. Strong and quality institutions of and for the poor (starting from SHGs at village level) would be the primary building block of the NRLM institutional design. NRLM is mandated to promote SHGs with exclusive women membership. The process of SHG formation is as follows: organizing women into affinity based groups, developing group norms, practicing Panchasutra (regular meetings, regular savings, regular inter-loaning, timely repayment and up-to-date books of accounts), and leadership development. Within six to twenty four months of SHG formation, the focus would be on capacity building, preparing micro investment plan (MIP), strengthening existing livelihoods of members, creating linkages with banks and setting up primary federation. Beyond the twenty-four months, the focus would be on visioning/planning, promoting new livelihoods, new products and creating social capital. The secondary level of the institution will be the aggregation of SHG. TheFederations provide a platform to the members of SHGs to voice their social and financial concerns. The Federations aim to help in knowledge and technology dissemination and also act as hubs of production and commerce. NRLM would provide support to the states to strengthen these Federations by building strong systems of good governance, planning, accounting, procurement, audit etc. so that they can become sustainable. Specialized institutions like livelihood collectives, producer's cooperatives/ companies for livelihoods promotion (which work on scale, ensure backward and forward linkages with the market, and enable access to information, credit and technology) are enablers that are across the horizontals mentioned above. Theyare key components of institution building in NRLM. 3. Financial Inclusion: Experience from large-scale projects shows that access to repeat finance, at affordable price and customizable repayment terms are crucial for poor and vulnerable group of the society to explore entrepreneurial opportunities, exit debt trap and invest in livelihood assets. The current status of banks extending loans (in Rupees Lakhs) to SHGs in each state is shown in the accompanying table (Source: ajeevika.gov.in). The poorest and the most vulnerable groups would be given priority for capital subsidy. Largely this fund is expected to be used for on lending to the SHGs for providing financial assistance to meet their livelihoods Projectwise Achievement 3/4/2014 S.No States & UTs Total SHGs Total Loan Amount 2 ANDHRA PRADESH 234592 665,330.23 15 KARNATAKA 49372 76,302.08 29 TAMIL NADU 38364 92,978.87 33 WEST BENGAL 25374 19,792.94 16 KERALA 14556 33,393.92 19 MAHARASHTRA 10626 16,396.17 24 ORISSA 8207 10,166.83 31 UTTAR PRADESH 7517 6,939.24 18 MADHYA PRADESH 5573 5,549.88 5 BIHAR 4226 2,934.98 4 ASSAM 2907 2,715.19 10 GUJARAT 2557 2,296.07 6 CHATTISGARH 2004 2,726.56 14 JHARKHAND 1152 1,371.07 34 Unmatched SHGs 1132 1,887.37 27 RAJASTHAN 943 1,287.65 32 UTTARAKHAND 883 565.26 11 HARYANA 600 806.75 12 HIMACHAL PRADESH 419 558.45 26 PUNJAB 311 327.11 3 ARUNACHAL PRADESH 237 83.37 25 PUDUCHERRY 229 719.42 23 NAGALAND 227 308.64 9 GOA 201 371.69 13 JAMMU & KASHMIR 184 135.10 30 TRIPURA 140 61.62 20 MANIPUR 105 75.50 28 SIKKIM 93 83.77 21 MEGHALAYA 89 60.31 22 MIZORAM 5 16.90 7 DADRA & NAGAR HAVELI 2 1.29 17 LAKSHADWEEP 1 0.30 1 ANDAMAN & NICOBAR ISLANDS 0 0.00 8 DAMAN & DIU 0 0.00

3 and other essential needs. Each state will strategize the routing of the financial assistance to the institutions of the poor.nrlm will provide interest subsidy to the rural poor in order to access credit at 7% rate of interest to make their investment more viable. Interest subsidy would be performance linked on a long-term engagement with banks over the entire credit cycle. Banks have a critical role in providing services (including opening savings accounts for community groups, SHGs and their federations; deposit savings; provide credit and remittances). NRLM would develop strategic partnerships with major banks and insurance companies at various levels, to create enabling conditions for banks/insurance companies and the poor for a mutually rewarding relationship (both supply and demand side of rural finance value chain). On the demand side NRLM will ensure that financial literacy, counselling services on savings, credit and insurance and trainings on micro-investment Planning are embedded in capacity building of all SHGs. The Reserve Bank of India has declared lending to the poor through NRLM as priority sector lending thus ensuring it to be in banks interest to lend to the poor and vulnerable section. The eligibility criteria for SHGs to avail loan from banks are: SHG should be in active existence at least since the last 6 months as per the books of account of SHGs and not from the date of opening of S/B account SHG should be practicing Panchasutras i.e. Regular meetings; Regular savings; Regular inter-loaning; Timely repayment; and Up-to-date books of accounts; Qualified as per grading norms fixed by NABARD. As and when the Federations of the SHGs come to existence, the grading exercise can be done by the Federations to support the Banks. The existing defunct SHGs are also eligible for credit if they are revived and continue to be active for a minimum period of 3 months. No collateral and no margin will be charged uptors. 10.00 lakhs limit to the SHGs. Loan amount: Emphasis is laid on the multiple tranches of assistance under NRLM. This would mean assisting an SHG over a period of time, through repeat tranches of credit, to enable them to access higher amounts of credit for taking up sustainable livelihoods and improve on the quality of life. The amount of various tranches of credit should be as follows: First tranche: 4-8 times to the proposed corpus during the year or Rs. 50, 000 whichever is higher. Second tranche: 5-10 times of existing corpus and proposed saving during the next twelve months or Rs. 1 lakhs, whichever is higher. Third tranche: Minimum of Rs. 2 lakhs, based on the Micro credit plan prepared by the SHGs and appraised by the Federations/Support agency and the previous credit history Fourth tranche onwards: Loan amount can be between Rs. 5-10 lakhs for fourth tranche and/or higher in subsequent tranches. The loan amount will be based on the Micro Credit Plans of the SHGs and their members. The loans may be used for meeting social needs, high cost debt swapping and taking up sustainable livelihoods by the individual members within the SHGs or to finance any viable common activity started by the SHGs.

4 4. Livelihoods Promotion: Major focus of NRLM is to stabilize and promote existing livelihoods portfolio of the poor, in farm and in non-farm sectors.nrlm would look at the entire portfolio of livelihoods of each household and facilitate support for the activities at the individual/household level, or in a collective, or at both levels. As agriculture is the mainstay livelihoods activity for a large proportion of the rural poor, NRLM will lay special focus on sustainable agriculture and allied activities like animal husbandry, non-timber forest produce and fisheries. The main institutional components for livelihoods promotion are: Mahila Kisan Sashaktikaran Pariyojana (MKSP) - The program envisages empowering women in agriculture by making systematic investments to increase productivity and participation and create sustainable agricultural livelihood options for rural women. This segment will be implemented by NRLM in partnership with State Departments/CSOs. The central to state share in funding for MKSP stands at 75:25 ratio. Infrastructure and Marketing Support Fund for Livelihoods - For deriving optimum returns from an economic activity, NRLM provides for utilization of up to 20% of the total fund outlay in the annual NRLM plan of the state (25% in the case of North Eastern States) for the infrastructure and marketing support. This fund is meant to provide end-to-end livelihoods solutions for the poor, their SHGs, federations and livelihoods collectives but not to meet recurring expenditures of maintaining infrastructure. Skill Development and Placements: With a view to ensure inclusion of the rural poor in the formal labor force and contribute in the country s growth process, the NRLM would scale up the existing skill and placement projects through partnership mode. For strengthening this, various models of partnerships with public, private, non-government and community organizations would be developed. Promote Self Employment: Micro enterprise development through Entrepreneur Development Program (EDP) training, skilling and short term apprenticeship and hand holding will be provided through Rural Self Employment Training Institutes (RSETIs), which are being set up in all the districts in the country in partnership with the Public Sector Banks. 5. Convergence and Partnerships: NRLM will ensure that states agencies (SRLM) develop partnerships with major government programs and build synergies to address different dimensions of poverty and deprivation. Focus would be on: Entitlements Public Distribution Systems, MGNREGS, social security, Right to Education. Improving quality of life health and nutrition, clean drinking water, sanitation, permanent housing, electricity etc. Enhancing capabilities elementary education, vocational, technical education, skills enhancement etc. Creating livelihoods opportunities institutional finance, agriculture, animal husbandry, watersheds, MSME development, food processing etc. Physical infrastructure schemes roads, electricity, telecommunications etc. NRLM /SRLM would make efforts towards convergence with programs of Ministries of Panchayati Raj, Human Resource Development, Agriculture, Animal Husbandry, Food Processing, Health & Family Welfare, Textiles, MSMEs, Women and Child Development, Financial Services, Tourism etc. 6. National Rural Livelihood Project (NRLP):GOI has availed a credit from the International Development Association (IDA) for implementing the, National Rural Livelihood Project (NRLP), under NRLM. The NRLP will broadly support the following components: Institution and human capacity development State livelihood support towards establishment of institutional platforms of the rural poor Innovation and partnership to address livelihood needs of the rural poor and help pilot or scale them Project management and monitoring and learning systems.

5 NRLP would be implemented in 13 high poverty states accounting for about 90 percent of the rural poor in the country. Intensive livelihood investments would be made by the NRLP in 107 districts and 422 blocks of 13 states (Assam, Bihar, Chhattisgarh, Jharkhand, Gujarat, Maharashtra, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh, West Bengal, Karnataka and Tamil Nadu). Distribution of project funds among the states would be based on the relative share of rural BPL population in the total states. 7. Ajeevika Skills: Ajeevika Skills is the skill and placement initiative of the Ministry of Rural Development, Government of India (MoRD). It evolved out of the need to diversify incomes of the rural poor and to cater to the occupational aspirations of their youth. The program s focus is on skilling and placement in the formal sector for rural youth who are poor. Aajeevika Skills has its origins in the Special Projects component of the Swarnajayanti Gram Swarozgar Yojana (SGSY). Fund Flows Financial Management The following will be the eligible items of expenditure under the State Action Plan: 1. Institution Building - formation of new SHGs, federations and other collectives 2. Training & capacity building of institutions of the poor, community resource persons, staff and other stakeholders 3. Revolving fund and capital subsidy 4. Interest Subsidy 5. Infrastructure creation & marketing 6. Skills and Placements projects 7. Administrative cost The appraisal of the states action plans will take into account-balanced allocations among various components. The allocations among the components will take into account the initial conditions in the states (degree of social mobilization, extent of financial inclusion, etc.) and priorities of the annual action plan. The flow of funds from the center to the states that have transited into NRLM will be routed through SRLM. For this the SRLM will be required to open a separate bank account and notify the same to NRLM. The devolution of funds to the districts will be made by the SRLM in accordance with district-wise allotments indicated in the Annual Action Plan. The release of central share to the SRLMs will be made in two installments. The first installment of central share will be released in the month of April subject to the terms and conditions stipulated from time to time as is being done now. The second installment will be released in the month of October on the request of SRLM in prescribed proforma and on fulfillment of the following conditions: Utilization of at least 60 percent of the available funds including the opening balance State Government should have released its contribution during the previous year. In case of deficiency in release of state contribution, the central share will be reduced proportionately. The opening balance of the SRLM should not exceed 15 percent of the allocation for the same year. In case the opening balance exceeds this limit, the central share would be appropriately reduced. Audit reports, utilization certificates for the previous year should have been furnished. Any other terms and conditions stipulated at the time of the previous release should have been met. SRLMs are needed to develop a comprehensive financial management system to ensure efficiency, transparency and accountability. MoRD will develop an electronic fund tracking system in that regard.

6 Knowledge Management, Learning and Advocacy NRLM aims to create a digital library/repository at central and state levels. This is aimed at increasing efficiency of program delivery, overall program quality and improving access to knowledge hub on demand. NRLM will create a state of art e-governance platform for hosting and delivering variety of project services like Management Information System (MIS), Financial Management System (FMS) and Decision Support Systems (DSS). This system aims at connecting villages to the national level and will be Aadhar (UID)/National Population Registry (NPR) complaint and will be leveraged to deliver ICT based services to rural poor households in the last mile. Community Resource Persons (CRP) for social mobilization and supportproject staff in scaling up The World Bank supported Society for Elimination of Rural Poverty (SERP) project in Andhra Pradesh has developed and practiced the Community Resource Person (CRP) strategy, involving the experienced community members for social mobilization, capacity building and scaling up of various processes within the project. There are two types of CRPs developed Internal and external. Internal CRPs are the community persons from within the block and external are from outside the block/district or state. A systematic process of identification and orientation is given for the CRPs before their services are utilized. CRPs are paid a fee for the services and time provided for the project in addition to meeting the travel and food costs by the project. CRPs are expected to deliver defined set of outputs in a given time frame and CRPs are used primarily as an interim strategy to trigger the process and support the project staff and work on a campaign mode to address specific tasks especially on a scale in a given period of time. CRPs are community members selected based on the following characteristics: Active members of mature SHGs/Village Organization /Mandal Samakhya, who have come out of poverty as a result of the intervention and recognized as role models Have good communications skills and relevant experience as members in their groups, accessed and successfully repaid multiple doses of loans and improved their standard of living Gained knowledge and experience in management of groups, clarity on the need of Bookkeeping and role of Bookkeeper, various processes of VO management, clarity on the role and function of Community Activists. Have the ability and skills to organize training programs for the community by drawing lessons from their personal experiences and the best practices of their SHGs and VOs. They have the ability to use their folklore in the trainings and facilitation for motivating the poor women. Ability to document the SHG / VO profile, case studies and best practices of members and use them as training material in the trainings and facilitation In case of the Bihar Rural Livelihoods Program external CRPs from Andhra Pradesh were involved for social mobilization andlater Internal CRPs from older locations were involved. CRPs were successfully able to form manygroups at very shorter span of time due to campaign approach and motivate the poor and vulnerable throughsharing of own experiences. DISCLAIMER: The opinions expressed herein are entirely those of the author(s). Swaniti makes every effort to use reliable and comprehensive information, but Swaniti does not represent that the contents of the report are accurate or complete. Swaniti is a non-profit, non-partisan group. This document has been prepared without regard to the objectives or opinions of those who may receive it.