The Hindu Business Line : Empowering the rural poor

Poverty reduction — and its eventual elimination — has been one of the major goals of development policy in India since Independence. Several poverty alleviation programmes have been in place for a long time now. There are numerous centrally-sponsored schemes (CSS), designed by the Centre, administered by the Ministry of Rural Development, but implemented by the States, with the States generally contributing 25 per cent to the cost.

Though there has been some reduction in the percentage of people below the poverty line since the 1970s, the problem still remains formidable with over 260 million people living below the poverty line. In fact, going by the World Bank’s new yardstick to measure global poverty adopted last year, the number of people living on $1.25 per day (instead of the earlier $1 per day yardstick), India had 455 million people living below the poverty line in 2005.

An overwhelming majority of the poor are in rural areas and continue to depend on agriculture for want of any other livelihood opportunities outside the sector. About 52 per cent of the country’s workforce and over 60 per cent of the population depends of agriculture which now accounts for just 17 per cent of the country’s GDP, thus perpetuating rural poverty and widening the rural-urban divide.

MAJOR WEAKNESSES

The major weaknesses of the plethora of poverty alleviation programmes launched over the years have been the overlapping of schemes, thin spread of resources over a wide area, inadequate preparatory work before their launch, lack of proper co-ordination between the Central and State governments, inadequate funding by banks, paucity of trained staff at the ground level and poor governance and delivery resulting in widespread leakages and corruption.

Apart from wage employment and nutrition programmes, and public distribution system, the accent over the past two decades has been on self-employment programmes to reduce rural poverty. The idea was to provide alternative livelihood opportunities to the surplus labour force that is forced to depend on agriculture. Self-employment programmes launched over the years have not been able to empower beneficiaries in the true sense of the term by enabling them to earn an income sufficient to lift them out of poverty.

Useful CASE STUDY

In this connection, the findings and recommendations of the report of the Committee on Credit Related Issues under SGSY released recently by the Ministry of Rural Development, the Government would be of help for the new UPA Government in formulating the future strategy relating to self-employment programmes.

The Committee under the chairmanship of Dr R. Radhakrishna, Honorary Professor, Centre for Economic and Social Studies, Hyderabad, has focused attention on the working of the Swarnajayanti Gram Swarojgar Yojana (SGSY). However, the recommendations of the committee are relevant in dealing with the prevailing shortcomings of the self-employment programmes launched over the years.

After experimenting with numerous self-employment programmes, they were modified, consolidated and integrated into Swarna Jayanti Gram Swarojgar Yojana (SGSY) in April 1999.

However, even after a decade, the achievements of the scheme are far from satisfactory proving that mere consolidation of schemes is no panacea for the prevailing shortcomings. While it covered over 31 lakh self-help groups (SHGs) over the past decade, only 22 per cent of them were provided with bank finance for undertaking income generating activities, including micro enterprises. What is worse, the bank assistance was abysmally low leading to low level of investment activity and poor income generation for the participants. The cumulative investment (credit plus subsidy) in SGSY over ten years was just Rs 24,375 crore for the entire country.

This is insignificant compared to Rs 45,000 crore spent on NREGS between 2006 and 2009 so far. The credit mobilised rose from Rs 1,065 crore in 1999-2000 to Rs 2,760 crore in 2007-08. Only six per cent of the funds were utilised for training and capacity building.

Not surprisingly, the results have been disappointing with the average monthly earnings per swarojgar even in relatively better-performing States of Andhra Pradesh and Kerala not exceeding Rs 2,000 per month. The performance has been particularly unsatisfactory in the States with high incidence of poverty.

Among the important recommendations of the Committee are:

creation of National Rural Livelihood Mission with an initial corpus of Rs 1,000 crore for rapid increase in the coverage of rural households under self-employment;

extension of pro-poor financial services in a time-bound manner;

creation of an agency or an umbrella organisation at the state level for helping to create SHGs and nurturing them; and

restructuring the programme to include training for skill development and help providing skill-based employment along with self-employment.

The panel also emphasises the need to ensure credit outreach by a bigger role to lead banks, use of mobile banking, allowing banks to use the services of NGOs, microfinance institutions and civil society organisations as intermediaries.

NEED FOR INNOVATION

Clearly, there is a need for fresh thinking and innovation to make the self-employment programmes more meaningful in empowering the rural poor with better skills and training. There is also a need to avoid overlapping of various schemes aimed at achieving the same or similar objectives through merger or better co-ordination.

In this connection, the suggestion of Dr Radhakrishna Committee to examine the potential areas of convergence between SGSY and the National Rural Employment Guarantee Scheme (NREGS) that could benefit both the programmes from synergies deserves serious consideration. Together with NREGS, SGSY can take the poor several more steps towards employment and income security. As of now, the works under NREGS are limited to unskilled manual work.

Moreover, NREGS is only a short-term solution to protect the rural poor by providing guaranteed work for 100 days in a year to one person in every rural family in difficult times. In the longer term, there is no alternative to a comprehensive rural development policy to generate more jobs outside agriculture.

In this context, the government could also examine if microfinance institutions could extend a helping hand to SHGs associated with SGSY since an overwhelming proportion of micro-credit is also disbursed through SHGs as in the case of the beneficiaries under the SGSY. In both cases, the loans are too small to make an impact.

The government has already announced that it wants to consolidate flagship programmes for employment, education, rural infrastructure, with emphasis on skill development.

It has also promised that the restructuring of various schemes would be accompanied by governance reforms for effective delivery of services. The task is truly formidable but not impossible.

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