Cabinet okays changes to rural livelihoods mission

By Editor_iGovernment |

7th May 2013

Doing away with the BPL criteria for identifying target groups, it allows interest subvention to women SHGs & changes the financial assistance pattern

In a major boost to the rollout of the women’s self-help group (SHG) model across the country, the Union Cabinet has cleared important changes to the National Rural Livelihoods Mission (NRLM or Aajeevika). Welcoming the move, the Minister for Rural Development, Jairam Ramesh noted, "This is an extremely welcome move. The changes will provide additional resources and additional flexibility to implement the NRLM (Aajeevika) in a more effective and accelerated manner across the country, creating new livelihoods and empowering women across rural India".

The key changes approved are as follows:
1. Improved targeting - by doing away with BPL criteria and instead identifying target groups through the Participatory Identification of Poor (PIP) process.
Under the existing framework of implementation of NRLM, only rural households included in the official BPL list could be targeted under the scheme. This list was prepared in 2002 and has not been updated since, with the result that it has many defects. Since the entire NRLM scheme depends on the formation of affinity-based groups of poor women with common bonding and synergistic functioning, which cannot be created by simply drawing persons from an externally prepared and incomplete BPL list, the Cabinet has now approved the that target groups under NRLM will be determined by a well-defined, transparent and equitable process of Participatory Identification of Poor (PIP), at the level of the community. The PIP process has been extensively demonstrated to be very effective in states where women’s self-help-groups have succeeded. The list finalised through the PIP process will be vetted by the Gram Sabha and approved by the Gram Panchayat. The PIP process will also have a set of exclusion criteria, automatic inclusion criteria and a set of deprivation indicators for enabling poverty ranking in a participatory manner. This delinks the NRLM target group from the BPL list.
2. Interest subvention and additional interest subvention in 150 districts - Pursuant to the announcement made by the Finance Minister in his Budget Speech for 2012-13, the Cabinet has approved the provision of interest subvention to Women SHGs, enabling them to avail loans up to Rs. 3 lakh at an interest rate of 7 percent per annum. Women SHGs that repay loans in time will get additional 3 percent subvention, reducing the effective rate to 4 percent. The initiative, in the first phase, would focus on 150 districts, including the 82 Integrated Action Plan (IAP) districts, affected by Left Wing Extremism. 
3. Change in the pattern of financial assistance - replacing capital subsidy with a Community Investment Support fund. Financial assistance to poor households was so far provided in the form of capital subsidy linked to bank credit. It was felt that this did not create a perpetual and viable capital base at the SHG level and was open to misuse. The Cabinet has, thus, approved to withdraw 'capital subsidy' to SHGs and, instead, provide financial support SHG federations and livelihoods organisations of the SHG members in the 'intensive' blocks through a grant called Community Investment Support fund, which will be used by the Federations to advance loans to SHGs and to undertake common socio-economic activities. This will happen in a phased manner, since intensive blocks will be added in a phased manner.  
4. Setting up of a national-Level society under NRLM for more effective implementation - The Cabinet has also approved the setting up of an 'autonomous, adequately-staffed, professionally-managed and empowered agency at the national level to implement the NRLM', called the National Rural Livelihoods Promotion Society (NRLPS) under the Societies Registration Act. The NRLPS will act as the technical support unit of NRLM. It is believed that the setting up of such a society is essential to implement the programme in a mission mode, as the livelihood programmes require a wide range of specialisation and experience. The main objective of the Society would be to continuously build capacities of the state rural livelihoods missions in planning, implementing and monitoring the same. The Society's structure would enable access to high-quality professional support, provide flexibility to create partnerships and facilitate innovations, which would serve as a knowledge center for rural livelihoods for the state missions. Further it will seek to provide an opportunity for formally involving state governments in decision-making, by nominating them to the Executive committee of the Society.


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