11138471151 Swarnajayanti Gram Swarozgar Yojana


Published on

  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

11138471151 Swarnajayanti Gram Swarozgar Yojana

  1. 1. 1 The Swarnajayanti Gram Swarojgar Yojana A Policy in Working Nirmala Banerjee and Joyanti Sen Sachetana 31, Mahanirvan Road, Kolkata 700 029
  2. 2. 2 Foreword Under this second sub-theme, Sachetana team has explored an area where researchers seldom venture. Starting from the point where the policy of poverty alleviation was translated into a budgetary measure called Swarnajayanti Gram Swarojgar Yojana, we have traced the consecutive steps through which funds are to reach the ultimate beneficiaries. By examining the hiatus between the guidelines provided by policy makers and their actual interpretation on ground by executing agencies, we bring out why and how this major measure has been slow to take off and poor in impact. The fieldwork for this project was done by Joyanti Sen while the conception and the final reporting was a joint effort. However, the work would not have been possible without the ready cooperation generously offered to us by officers executing the scheme in the State. Beneficiaries under the scheme also provided us with all the information that we needed. Our grateful thanks go to all of them. We are grateful to UNIFEM for providing the funds for the work and to our colleagues in Sachetana for their continuous support. Nirmala Banerjee 12 August, 2003
  3. 3. 3 Contents Items Pages Executive Summary 3-7 Chart I 8 Section I 9-10 Section II 10-16 Section III 16-23 Section IV 23-40 Section V 40-43 Section VI 44-45 Appendix I 46-51 Appendix II 52 Appendix III 53-54 Appendix IV 55 Appendix V 56-57 Appendix VI (A) 58 Appendix VI (B) Map 59 Appendix VII Table(A) 60 Appendix VII Table (B) 61 Appendix VII Table (C) 62
  4. 4. 4 Executive Summary Introduction The Swarnajayanti Gram Swarozgar Yojana (SGSY), a credit-based scheme sponsored by the Government of India for poverty alleviation, is perhaps the largest of its kind in the world. It was first announced in 1997 to commemorate fifty years of India's independence and first allocations for it under the Ministry of Rural development (MORD) were included in the GOI budget of 1999/2000. The MORD was to fix the shares of each district in the country roughly on the basis of relative numbers of poor residing there. 75% of the funds would come from the Union Government and each state government would match it for the remaining 25%. Both parts of the funds are to go directly to the District Rural Development Cells (DRDCs); in each district, the DRDC is in charge of executing the scheme. For this, it is to draw on the help of local governments, line agencies of superior governments and local branches of commercial banks. Chart I shows the scheme of organization. Initially, benefits of the scheme were meant exclusively for those living below the poverty line (BPL families), but recently some non-BPL family members have also been allowed to avail of some of the benefits. At least 50 % of the participants were to be women. The Scheme SGSY is to promote self-employment among the poor; it aims first to bring several of those with similar backgrounds into groups (SHGs) where they are to start building a revolving fund from their own savings as well as some grant and loans from state funds. Initially, members are to borrow from it for any of their various credit needs. Once they learn to manage that fund, they are to take up some productive enterprise, preferably with the group as a whole. In this, they are to be helped by government and semi-government agencies with detailed study of feasibility of the proposed activities as well as modern training in appropriate skills. The banks are to play a major role in ensuring that the groups and their activities are viable; above all, they are to instill
  5. 5. 5 banking habits among the participants and provide adequate credit to ensure that the activities undertaken by the beneficiaries are run at an optimal scale. Objectives of the exercise In our understanding, gender budgeting exercises are not just a critique of past performances of the state; they are also meant to help the policy makers to design schemes for future allocations of budgetary funds that can be more effective in empowering women. So, in undertaking this exercise regarding the SGSY, our aim was two-fold: one, to examine how the long chain of steps involved in taking benefits from the highest level of government to the lowliest, viz, poor women in rural India, was working out in practice. The other was to assess how far participating in this programme would actually be empowering for women. In other words, the review is to highlight the specific aspects of the SGSY design that need to be revised in order to make the project effective. We examined the scheme as it is operating in the State of W. Bengal. Methodology In order to familiarize ourselves with the procedure for the project as planned by the MORD, we studied the guidelines laid down by the Ministry. We then discussed with senior officials of the Department of Panchayets and Rural Development in W. Bengal how they perceived the scheme's design. From them we obtained introductions to the DRDCs in three districts of the State where we were to carry out further fieldwork. The selection of the districts was purposive; the districts had to be near enough to Kolkata to permit repeated visits. And, we had to have local contacts with persons/organizations working on the scheme in order both to examine their performance and to get access to groups of ultimate beneficiaries. This was the way we could expect to form a clear idea about how work on the SGSY was proceeding. At each stage, our discussions on the theme were structured round some preset questions but there was sufficient room for wide-ranging interaction with the people concerned. Findings
  6. 6. 6 1. Room for misinterpretations The guidelines provided by the MORD are highly opaque and use obscure terms like "back-ended subsidy" without clearly defining them. In this case, we found that banks in the districts we visited had chosen to interpret that term in ways that protected themselves from any risks of non-repayment but deprived the beneficiaries of the full extent of resources allotted for them. Executing officers at the State level deeply resented this arbitrary stance of the banks but were apparently unable to question their authority. Similarly, inclusion of a subsidy in the revolving fund was meant only for reducing interest charges on loans from the fund; but some DRDCs in the State had assumed that it was to be distributed as one time gift among members of the SHGs. There was ample scope for such misinterpretations and there was no regular mechanism installed through which agencies at different levels could clarify the position or raise their objections about any aspect. 2. Uneven application The scheme assumes that everywhere, it is possible to bring the poor together to form coherent groups. However, at least in this State, the poor belong to many disparate communities and they do not always live in physical proximity. Also, there is often a deep mistrust between them and they are unable or unwilling to work in a cluster. Interference by political parties at the village level makes the matters worse. It is reported that although designers of the scheme had emphasized the need for the poor to work in groups, so far, over 85 % of the distributed funds have gone to persons working on their own. The scheme is essentially for creating work for the poor; therefore, it leaves out of its scope those poor who are unable to work because of old age, sickness or disability. Also, to form and nurture groups of the poor is a time consuming task for the organizers, whether they are NGOs or government workers. But on ground, the right kind of persons or organizers are not available everywhere. The upshot is that, even
  7. 7. 7 the money released for districts in W. Bengal for earlier schemes like IRDP and DWACRA did not get utilized in the first two years of SGSY and therefore, no funds under the new scheme had been released in those years to any district of the State. Overcoming poverty The SGSY was supposed to be a major improvement on earlier credit-based poverty alleviation scheme in so far as along with credit, it provided for many support services for the participants. These included, agencies to nurture the groups, professionally competent assessment of feasibility of their economic activities, professionally given technical training in the necessary skills, as well as arrangements to build necessary infrastructure. Banks were directed to ensure an adequate credit flow at all stages. All these provisions had been included in the design because the SGSY aimed to permanently raise the income of all its poor participants above the poverty line. But at least with the beneficiaries that we were able to interview, we found little evidence of the beginnings of a process of permanently eradicating poverty. Reasons for this probably lay with the fact that, none of the supporting provisos had been realized. There was no evidence from any area of a proper feasibility study of possible economic activities. Rather, almost everywhere, the poor were carrying on with their traditional work on a slightly enlarged scale. In some cases, participants had actually lost because group organizers had encouraged more workers to take up their activity with the result that wage rates had fallen significantly. Similarly, the occasional training given was brief and informal. Organizers thought the idea of formal training at professional institutions was impractical because participants could not find the time. Most of all, banks in the state appeared to have been very reluctant to join the effort. Not only had they avoided giving the beneficiaries due amounts of funds; they had also been very reluctant to take up any of the multiple tasks that the MORD had envisaged for them.
  8. 8. 8 Empowerment of women Though the scheme was meant only partially for women, in reality, almost all participants in W. Bengal appeared to be women. However, it did not appear to have empowered them to the extent envisaged by the designers. The work and incomes generated through the scheme were mostly of a supplementary kind and not commensurate with the time and effort required in joining group activities. Men could not afford to give up their existing activities for that kind of work. Women were willing to take it up as supplementary work. But this meant that, the workload of the women had gone up substantially with only marginal improvement in incomes. Secondly, we found no instance where gender specific roles of women had been questioned or altered. Rather, the organizers looked for work and training that interfered least with women's roles as reproducers. Except in one district, there had been few efforts to give women the capabilities of handling their own business or management of funds. Above all, the participants had very little awareness of what the scheme had provided and what they were entitled to. In general, that the scheme was not working well in W. Bengal was no doubt partly due to failures on the part of the state level organizers. But it must be emphasized that most of the problems seemed to arise from the elaborate but poorly grounded structure of the scheme. It promoted a single, uniform procedure for all parts of the country without taking note of the diversities in the nature of the poor and of poverty or of the traditions of organizations. Tying up of the programme with the BPL lists added one more reason why those lists have become politically important in all areas. The scheme assumed that there would be ready cooperation from all other government and non-government agencies in the area without providing adequate incentive for them. The small sums set aside for organizational purposes appeared inadequate to compensate for the organizational work involved. Banks were assigned a major role; but no note had been taken of the fact that even with earlier anti-poverty schemes in the
  9. 9. 9 State, they had, in general provided very little sympathy and support for the needs of the poor. We feel that the scheme should be decentralized in a major way; each region should be allowed to plan and execute the kind of support systems that it considers appropriate for its poverty related problems. Equally important, there should be a lot more publicity through the visual media about funds being available with specific agencies and their responsibilities in the process so that potential beneficiaries can seek explanations for any failures.
  10. 10. 10 CHART I Ministry of Rural Development (MORD), Govt. of India In charge, SGSY MORD to inform DEPTs re release MORD to release of funds to 75 % SGSY funds DRDCs. directly to DRDCs On MORD advice, Dept. to District Rural release 25 % Development funds to DRDCs Cells- DRDC under the Zilla Parishads Panchayet and Rural Development Departments of State govt. (Dept.); overall administrative charge Project Director, SGSY to manage SGSY in district Block Development officers NGOs Expected outcome: Stage I incomes of SGSY Forming self-help groups, SHGs, of beneficiaries to rise persons from BPL families: above poverty line 50 % beneficiaries to be women. within three years. Stage II Revolving fund = own Stage III savings + grant (Rs. Bank credit for economic activity 10,000)+ bank loan (Rs. 50% grant on amount upto Rs. 10,000 15,000). Members can per SHG or Rs. 1.25 lakhs per group, borrow for any need. whichever is less.
  11. 11. 11 Section I Introduction For the current phase of the Women's Movement in India, the state has been both an adversary as well as an ally. Many of the Movement's most aggressive campaigns have been against the state, condemning it for its failures to protect women's rights to life with dignity and justice. At the same time, it is to the same state that the Movement has made its appeals from time to time for help in its fight against gender-based deprivations. Since the self-image of the Indian state is that of a populist democracy, the appeals usually get a positive response in the form of some additional gesture- perhaps a law for reinforcing women's rights or a new budgetary scheme for some special service for women. In this process, the Union Government by now has accumulated a large and assorted baggage of legal and fiscal measures that are supposed to be pro-women. A recent study done at the NIPFP1 has shown that in the 2003/04 budget of the Union Government, funds had been allotted to not less than 32 supposedly women-specific schemes. In spite of these gestures, women's groups continue to complain that the state is not doing enough. The main reason of course is the tokenism of those gestures; combined allocation to all those women-specific schemes in the Union budget in 2003/04 is no more than 0.84 % of the total public expenditure (ibid p.14, table 3). Of course, under the Indian constitution, state governments bear the major responsibility of providing welfare services to their residents; in addition, many of the welfare schemes funded out of the central budget are routed through the state machinery. Therefore, it is more likely that women's share in the budgetary resources of state governments matches their share in the state's population more closely. However, a study by Sachetana for W. Bengal has shown that, even with very generous assumptions, women's share in all governmental welfare service projects was no more than 10 % of the total state revenue expenditure in 2000/012. Among these, many schemes were meant to 1 Lekha Chakravarty (2003): Macroscan of Union Budget 2003 in India: A Glimpse through Gender Lense (draft). National Institute of Public Finance and Policy, New Delhi. 2 Nirmala Banerjee and Poulami Roy (2003): Gender in Public Policies: the case of W. Bengal. Sachetana, Kolkata.
  12. 12. 12 assist women solely in their accepted traditional roles of mothers, reproducers and housewives. A few others were to provide relief to distressed women (such as pensions to distressed widows); but the state had not inquired into the reasons why it is women, rather than men, that face such situations; nor had there been any attempt to correct those basic anomalies. Lately however, the state has come to recognize that women have some special difficulties that prevent them from sharing in welfare services on par with men. There are therefore some additional schemes, as for example provision of crèches, which help to remove those gender-based handicaps of women3. Section II Background and objective of the study This study is a part of our work on gender budgeting; in our understanding, exercises under this rubric are not to be limited only to an ex post analysis of budgets; they should also aim to find out and advise policy makers on how best to design and operate public policies that are to empower women. Even if the state allots substantial budgetary resources to a scheme, its success in fulfilling its aims ultimately depends on the various steps involved in its execution and on the understanding and efficiency of the agents who carry out those steps. Therefore in seeking state's help on behalf of women, it is necessary that we ourselves understand how existing policy measures work on ground and what aspects of the design and executing procedures can lead to confusion, delays and leaks in the process of generating the desired effects. The present study therefore aims to analyze the nature and working of a public policy measure that was meant to empower women but appears to have been only partially or poorly successful in doing so. By unraveling its constituent steps and examining the working of each of those steps, we aim to demonstrate that, for making a 3 Elsewhere we have discussed in some details this system of classifying the women-prone policies of the state according to the state's objectives in promoting them. See Nirmala Banerjee, What is Gender Budgeting? Sachetana, Kolkata, on behalf of the UNIFEM South Asia Regional Office.
  13. 13. 13 policy effective, it is important that each step is designed appropriately and executed through transparent, unambiguous steps. Poverty Alleviation For doing so we have focused on policies for poverty alleviation to which the Union government assigns considerable funds; increasingly, many of the schemes are being designed and executed with the expectation that a large section of participants in it would be women. Raising women's purchasing power is considered a more effective way of dealing with poverty related deprivations, because women tend to spend most of their incomes for household requirements; men on the other hand, tend to retain a much larger part of their incomes for personal expenses (Agarwal 19944). Also, there is a lot of evidence from other developing countries, particularly Bangladesh to show that, in credit based poverty alleviation programmes, women's records of loan repayment are infinitely better than men's5. Policy makers tend to promote women's participation in poverty alleviation projects from two angles. On the one hand, now that the nature of poverty as better understood, it is clear that the poor are poor not because they are unemployed but because they work for long hours in activities of low productivity and poor returns. For raising their incomes, they have to send additional members into the workforce. Women form the majority of these additional workers and they usually have to take up activities that yield even lower returns than those earned by men. Raising the returns from economic activities of all workers and especially of these additional workers thus appears to be an efficient way of combating poverty. From another angle, promoting women's empowerment is now an avowed goal of state policies in India and for that purpose too, it becomes important to increase the returns to their work. In both the Ninth and the Tenth five year plans, there is an explicit commitment to work towards women's empowerment; but the only concrete plan 4 Bina Agarwal (1994): A field of her own; Cambridge University Press, New Delhi 5 J. Murdoch (1998) The Gramin Bank: A financial Reckoning; Draft, Hoover Institution, Stanford University
  14. 14. 14 schemes for that objective are those that are meant to provide micro-credit to poor women for use in their gainful activities6. Poverty alleviation schemes are considered to be specially empowering because, a) unlike most other schemes, they treat women as earners and not just as reproducers. b) they provide the same facilities to women as men, and, c) to guard against gender-based biases , there is a provision reserving a fixed share for women. To review the progress of these schemes, the Ministry of Rural Development, which has been responsible for sponsoring them earlier, used to appoint from time to time independent expert groups. Those reviews had three objectives: one, to check whether or not the allotted funds had reached those below the poverty line; secondly, whether women had received their due share, and thirdly how far it had been possible for the beneficiaries to cross the poverty line. This study is a review from a somewhat different angle. It recognizes that these schemes are of a special character where funds that originate at the Central government level have to reach the most distant and voiceless groups at the grassroots, namely the poor and specially the women among them. This means that each scheme must be sufficiently well designed to pass smoothly through multiple stages of decision-making and execution. This study thus aims to follow those detailed steps and locate the various points where there is scope for misconstruction as well as delays and lapses from the professed objectives of the project. Furthermore, because the study is from a feminist perspective, its particular concern is to check how far the designers as well as various operators of the scheme are aware of the various possible bottlenecks that can hinder women's true empowerment. Box 1 The term empowerment is often used rather loosely and can itself be a cause for reinforcing gender roles. For this paper, the term has the following connotations • To enable women to operate in all spheres on par with men. 6 One such scheme promoted exclusively for women is that of "Rashtriya Mahila Kosh" of the Dept. of Women & Child, MORD
  15. 15. 15 • To provide special assistance to women in their functions of biological reproduction. • To challenge the traditional division of labour and gendered allocation of tasks and to ensure that household tasks are shared equally by men and women. • To take full account of women's unpaid work in assessing their contribution to the household and to the economy. In other words, empowerment has to mean not only more jobs and better earnings for women but also establishing a trend towards a better position for them in the society, economy and family. Selection of the scheme Schemes for poverty alleviation and employment generation with reservations for women have been in operation for over two decades by now. Activists in the women's movement have welcomed them for their potential for women's empowerment. However, available data from official sample surveys has shown that during the 1990s, poverty levels in most of rural India including especially rural W. Bengal where we were to conduct our inquiries, had gone down only marginally. Further, the incidence of poverty was consistently higher among women than among men in India as a whole and also in W. Bengal. This was true both among children and among adults of 15 years or more (Banerjee 2000 table 4, Sundaram 2001, tables 10 and 12)7. What is more, the excess in the percentage of women under poverty line as compared to men had remained more or less at the same level. Obviously, on-going poverty alleviation schemes had not been able to correct that situation despite reservations for women. In view of these findings the Union Government has radically revised its anti- poverty programme. The Swarnajayanti Gram Swarozgar Yojana (henceforth referred 7 N.Banerjee (2000): Poverty and social development; Paper presented at the workshop on poverty organized by the Centre for Studies in Social Sciences, Kolkata, July. Also K. Sundaram (2001): “Employment poverty in India in the 1990s: Further Results from NSS 55th Round Employment Unemployment Survey 1999/2000” in Economic & Political Weekly, August 11. These two estimates are not strictly comparable over time since there is some difference in the database for 1993/94 and 1999/2000. However, in both those years there was a positive difference between the percentages of female and male populations living in poverty households.
  16. 16. 16 to as SGSY) came into effect from 1st April 1999. It replaced the following schemes that had been in operation till then: 1. Integrated Rural Development Programme or IRDP 2. Development of Women and Children in Rural Areas or DWACRA 3. Million Wells scheme or MWS 4. Supply of Improved Toolkits to Rural Artisans or SITRA 5. Ganga Kalyan Yojana or GKY. 6. Training of Rural Youth for Self-Employment or TRYSEM For this study we have selected the SGSY for the following reasons: Empowerment of women and working with women's groups for promoting savings and group enterprises is a very important part of the scheme. It is stipulated that at least 50% of the self-help groups participating in the programme has to be of women. The SGSY with a targeted credit programme of Rs. 3,200 crores8 is supposed to be the world's largest credit linked poverty alleviation programme. Because the scheme is still in its formative stage, - at least in W. Bengal- we felt that if necessary, there is scope for reformulating it in the light of the findings of an in-depth field study such as ours. As described in later paragraphs, SGSY is a very elaborate scheme that requires close cooperation between several agencies; these include the Union government, state governments and their administrative network from state head-quarters to block levels, the NGOs or other organizing agents, local branches of the lead banks etc. This provides an ideal case for a study of the problem that we have set for ourselves, namely to study the possibility of bottlenecks or breakdown in communication between diverse agencies and its impact on the working of a scheme. The study is thus to answer the following questions: 8 The figure is for the year 2001-2002 as of 26/4/2002. It is from table 22 of the research report on SGSY prepared by the National Institute of Bank Management, Nov 2002.
  17. 17. 17 1. What are the scheme's professed objectives and procedure? Who were the agents envisaged to participate in it? 2. How far have these proposals been understood and practiced at different stages? 3. What if any are the differences between the original proposal and its practice in the state and why have these arisen? 4. What benefits have accrued to the target population? 5. How do the beneficiaries view the programme? Methodology of the study This study relates to the operation of the SGSY in the state of W. Bengal in the period between 1999 when the scheme was initiated until end of 2002 when the fieldwork took place. As per the original proposal, the Ministry of Rural Development under the Union government has sponsored the scheme and the Ministry determines the allocations for each district in each state according to its estimates of the relative incidence of poverty in that district. Table I shows the central allocations for each of the W. Bengal districts. To start with, we had no information about the operation of the scheme except that the Panchayet and Rural Development Department of the government of W. Bengal was in overall charge of its operation in the State. Therefore, the first stage of the study consisted of interviews with senior officers of the department regarding their understanding and views about the scheme. At this stage, the inquiry was focused on details regarding financial allocations and release of funds during the previous two years as well as their utilization. These interviews were structured around a list of questions that are reproduced in Appendix II. It also provides a list of the names and designations of those interviewed at that stage. (Appendix III) The second stage of the study comprised of visits to district offices that were responsible for implementation of the scheme. The offices visited were of the Zilla Parishads, and The District Rural Development Cells. Since it was not possible to visit all the districts within the time at our disposal, we selected three districts. These were:
  18. 18. 18 1. Haorah is a district, which is partly in the Kolkata Metropolitan District and accommodates a mixture of agriculture and small as well as medium industries. 2. Paschim Medinipur, which is a less advanced but highly politicized region. 3. Hoogli is a progressive district with a healthy mixture of agriculture along with rural and urban industry. At the beginning of this stage, we had little information about the way the work was being conducted and the persons responsible for it. Our method was to contact the officers in charge at the district levels and with authorization from the officer concerned, contact the various persons involved in the operations. Since we did not know the nature of those involvements, we decided to conduct open-ended interviews that could bring out the details of the operations at each level. (Though we did carry a set of questions in Bengali, mainly on the financial aspect of the SGSY in their District. A copy of these questions translated in English is annexed as Appendix IV). We realized that to collect the required information would need repeated visits of the investigators. Therefore the selected the districts had to be easily approachable from Kolkata. A list of persons interviewed at this stage is annexed as Appendix V The third stage consisted of meetings with the beneficiaries in groups as well as singly. We wanted to observe and discuss the programme with as diverse a set of beneficiaries as possible; we knew that this would not be possible unless we had a proper introduction from NGOs or government officials working in the field. Part of the reason why we selected the above-mentioned districts was that we had the necessary contacts with field workers of diverse backgrounds. At this stage, information was collected through group meetings with women in the self-help groups organized for the SGSY. These were supplemented by informal interviews with randomly selected beneficiaries. Basic information about the field sites and their location on a map is given in Appendix VIA & VIB. A detail of the meeting with the beneficiaries at this stage is annexed as Appendix I.
  19. 19. 19 Section III The Scheme Box 2 Short description of the scheme Swarnajayanti Gram Swarojgar Yojana (SGSY) is a self-employment scheme. This scheme was introduced from 1 April, 1999. Six different self-employment and training schemes and sub- schemes were merged to form this scheme. The principal aim of this scheme is to bring BPL families to APL status within three years. The main difference with the previous IRDP DWCRA scheme is to encourage group loans and group enterprise and ultimately to stop giving individual loans to members of the groups. Funding for the project is shared by the Centre and The States on a 75:25 ratio Initially groups are formed with 10 or 15 persons belonging to the BPL families. This group is called a Self Help Group (SHG) and the individual members of the group Swarojgaris. There is provision under the scheme to involve local NGOs to help the DRDC in forming such groups. The funds received by the DRDC are kept in a savings bank accounts The DRDC can open their account with branches of the principal participating banks in the field. The funds deposited in the saving account earn interest at the usual rates till the amount is given as loans to the Swarojgaris. In the first six months the group members are taught to save money i.e. they have to build up a corpus fund by saving a certain amount every week/month. These savings are kept in a local or field bank. After six months, the groups is evaluated by a team where the Project Director, a member of the Block Development Office and a representative of the bank are present. If they pass the evaluation test they are given Grade I status. At this stage they are paid Rs. 10,000. - as a revolving fund. Individual members can borrow from this money either for business purposes or for personal consumption. They do not have to pay any interest. They are also given Rs. 15,000. - as loan by the bank, which is called the cash credit or matching corpus fund. After completion of one year, according to performance and again going through an evaluation process, the group gets Grade II status. After a group gets Grade II status they get credit cum subsidy facilities. This stage is called bank credit linkage. Subsidy under SGSY is uniform at 30% of the project cost, subject to a maximum of . Rs. 10,000. - For groups of Swarojgaris (SHGs) the subsidy is 50% of the project cost subject to per capita subsidy of Rs. 10,000.- or Rs. 1.25 lakhs whichever is less. The SGSY is a credit-cum-subsidy programme. The main purpose behind the SGSY is to help families below the poverty line to earn a higher income that can sustain them at a level above the poverty line. The scheme envisages that an assisted family will come out of poverty within three years of joining the scheme. During this period they will be closely monitored and helped at each stage, not just with credit, but with sound
  20. 20. 20 productive ideas, training and know-how for them, and help to market their products at economic price. Typically in a block, the scheme expects to assist about 300-600 persons in a year. The work is to be done by organizing the rural poor into self-help groups (SHGs) for undertaking economic activities. The new approach ushered in with the scheme incorporates the lessons learnt from the workings of several earlier poverty alleviation schemes and is much more comprehensive. Apart from providing financial support, the promoters are to ensure that members of the SHGs also receive the necessary training for conducting the activities and to manage the project and it’s accounting. In addition, the facilitators of the activities would also ensure that there is adequate infrastructure and marketing opportunities within reach of the groups. Details of its salient features are as follows: The cluster approach Instead of supporting myriad different activities, the scheme in each block would concentrate on promoting a cluster of a few activities. This cluster will comprise not more than ten but preferably four or five key activities for each district. The District level SGSY committee will arrange to get a detailed project report for each activity and get it vetted by the concerned bank. This cluster for each region is selected after carefully considering the viability of each of those activities taking into account locally available resources, skills, markets and infrastructure. The Swarozgaris, i.e. the beneficiaries under the scheme, can either be individuals or groups, but policy makers prefer the group approach because groups can undertake larger activities that can be run at economic scale. In any case, all Swarozgaris are to be members of SHGs and begin the group through pooling their savings, making internal loans to group members out of that pool and monitoring their timely repayment. The groups are the guarantors of all loans to members, whether as individuals or when working in a cluster. This is true also of the bank loans that they get for their economic activities.
  21. 21. 21 The agencies involved The scheme requires active participation of many agencies. The District Rural Development Cell in each place (DRDC) is to do the coordination. Panchayet Raj institutions are to help in selecting the potential beneficiaries; they are also to participate in selection of the activities. Banks are to provide the necessary credit as well as act as monitors at several stages of the formation and development of the SHGs. Both government and non-government organizations (NGOs) are to come forward for socially mobilizing the under-privileged and to help them to organize into SHGs that can work harmoniously and productively. Local officials as well as local elected representatives are to participate in SGSY committees at several levels. In addition, other line agencies, like irrigation department, roads department, electricity boards etc are to be invited to cooperate with the DRDC and modify their own development plans to ensure that the infrastructure necessary for the selected activities is available in that area. Financing The scheme is sponsored by the Ministry of Rural development of the Union government; it determines the amount of funds that each district in each state is to receive every year on the basis of its assessment of the dimensions of poverty there as well as its capacity to utilize the funds. It undertakes to provide 75 % of those funds into a pool of resources earmarked for the scheme. State governments are to contribute the remaining 25% on a matching basis to make up the total allocated amount for each district. Central funds for the scheme are to be released directly to the DRDCs in two installments during each year, one at the beginning of the financial year and the other after 60 % of the initial funds are utilized. As soon as central funds are released, the state government has to send to the DRDCs its 25 %. The funds from this pool are for all expenses for organizing and facilitating the formation and running of the SHGs, to supplement its core revolving fund through a subsidy of Rs. 10,000 per group as well as to provide them with other stipulated subsidies. 30% of the pooled resources are meant for expenses of the organizing department
  22. 22. 22 and of the organizations (GOs as well as NGOs) who act as facilitators of each group. A part of the pool is to be set aside in a fund for training the beneficiaries in all the skills required for organizing, operating and managing the activities of the SHGs. SGSY funds are not meant for infrastructure building for which the DRDCs are to seek help from other line departments; but they can be used for some small but crucial investments of that kind. Box 3 Financing arrangements: • The group starts collecting and banking the savings of its members with the selected bank branch. • Once the group is stable, the bank releases for its use as a revolving fund a cash credit flow of Rs. 25,000, of which Rs.10, 000 is a subsidy from the central fund. • This revolving fund is to be used for any requirements of the group members; the group is to monitor its repayment. • When the group takes up a productive activity, it gets a further loan-cum-subsidy from the bank for use in its requirements of buying assets as well as for meeting its running costs. • This amount is to be Rs. 10,000 per member or Rs. 1.25 lakhs for the group as a whole, whichever amount is less. • 50% of this amount comes as a subsidy. Though the bank also releases that amount, it cannot charge interest on it. • Interest rates for the loans will be notified by the Reserve Bank of India or by NABARD. • Those authorities will also determine the security norms for the loans. Banks' involvement Apart from public funds for the scheme, local branches of public sector banks are to act as main financiers of the economic activities of the groups. They are to provide credit both for acquiring fixed assets as well as for their running expenses. The government subsidy to which groups become entitled on undertaking economic activities is to be a part of the amount released by the banks. But banks are not allowed to charge interest on the subsidy amount and can use that amount to set off against its liabilities
  23. 23. 23 only if repayments by the SHGs are not according to the agreed schedule. Apart from providing credit at the required time, banks are in overall charge of ensuring that the basic objective of the scheme, viz. to remove poverty of households on sustained basis, is fulfilled. They are therefore concerned with the nature of the activities chosen and the capabilities of the Swarozgaris to carry them out successfully. Therefore they are to be closely associated at each stage, from selection of the beneficiaries to smooth functioning of the groups, their choice of projects, the kind of assets they acquire etc. Thus the banks are important members of the committees that do the grading of the SHGs from time to time. Policy makers have repeatedly emphasized the view that no project or activity under the scheme should languish because of under-financing. Rather, if banks feel that a project is viable, they should ensure that whenever required, additional funds are quickly available. Grading of SHGs Although policy makers intend to hasten the programme of poverty alleviation, the scheme SGSY is designed for very careful nurturing of the SHGs and their economic activities. For this, each SHG goes through several stages from its formation, to the point when it undertakes and runs a profitable economic activity that can raise incomes of all the involved families to levels above the poverty line. The stages are as follows: 1. Group formation: when facilitators identify potentially harmonious groups and mobilize them to form groups. This is expected to need considerable interaction between the community of the poor and the facilitators. 2. Group stabilization: when the group starts and develops a saving-cum-internal loan routine. The loans can be utilized for personal requirements, whether productive or otherwise. 3. Micro-credit: when the group corpus is supplemented by the revolving fund through the banks' intervention. At this stage they may start training for their proposed activity. 4. Development of micro-enterprises: when the groups select an economic activity
  24. 24. 24 and starts working on it. The group is reviewed at the end of each stage and the timeframe set for each stage is fairly elastic. The group can proceed to the next stage only when experts are satisfied with its progress. The DRDC is to seek the cooperation of the concerned bank in the grading and review processes of which the local SGSY committee would work out details. Release of funds to the groups is also contingent on their successfully completing each stage. Training As mentioned before, the SGSY envisages training members of the SHGs for upgrading skills required to run and profitably manage their economic activities. The DRDC is to investigate what facilities are locally available with government and non- government institutions. Apart from a basic mandatory orientation programme that informs the Swarozgaris about SGSY, training is to be for the specific skills needed for the productive enterprises. A part of the central pool of funds is to be set aside for the costs of all kinds of training. Marketing The SGSY has rightly emphasized the need to use optimally local resources as well as local marketing opportunities because it notes that selling in distant markets usually leads to the involvement of outside agencies on terms that are exploitative to the producers. The Swarozgaris are of course free to market their products nationally or internationally but should preferably try and do so through government or semi- government agencies. Overall Assessment of the Design In the following sections, we will be describing the problems encountered in operating the scheme in W. Bengal. Part of the difficulties appear to arise because the design of the scheme is complicated and the guidelines circulated by the Ministry of Rural Development are not as clear as they should have been. But there are several aspects of the design itself that need to be noted at the outset.
  25. 25. 25 Although it is the largest single scheme for poverty alleviation in the country, the scheme is to help only a limited section of the rural poor. Since it is meant to assist the poor essentially by generating more gainful work for them, it leaves out of its scope those who are too young, too old, sick or disabled to work. There are admittedly other schemes for those poor who cannot take up work, but it is possible that public resources allotted to those schemes are in no way comparable with those set aside for SGSY and far from commensurate with their numbers among the poor. On the other hand, even in the case of those who are capable of taking up additional gainful work, the work generated under the SGSY is essentially for supplementing rather than replacing their earlier activities. Therefore, it is possible that in many cases, joining the scheme would increase the workload of the poor beyond tolerable limits. The scheme's operation depends on many agencies at many levels committing time and attention to the work. Not only the district administration and line agencies, Panchayet members and office bearers but also local bankers as well as NGOs have to be continuously involved in the work. However, there seems to be no provision for checking whether or not such agencies are available and cooperative in all areas. The sponsors can do little if any of these agencies do not carry out their responsibility and it is not clear what incentives are being offered to them for carrying out the work. The SGSY is essentially a top-down scheme; it embodies a patriarchal outlook where outsiders vet and approve of the poor who are to join the SHGs, grade them from time to time and keep them continuously on a kind of a probation for getting access to the next rung of benefits in the proposed chain. On the other hand, the beneficiaries have no scope for appealing against the performance of the agencies and, as we shall see in the case of W. Bengal, have to accept the decisions of the multiple authorities watching over them. The scheme provides a single design, which is to be applied uniformly in all areas of rural India. It makes little provision for accommodating regional differences in the nature of poverty, or the backgrounds of the poor. In many cases poverty is endemic in a region because of poor terrain and lack of infrastructure and human capital; in such a
  26. 26. 26 case, the SGSY approach of slow and patient building of capacities and infrastructure is appropriate. In other cases, poverty could be a temporary phenomenon caused by a sudden calamity like floods where a quick relief programme is needed. Also, while it seems logical that there would be a basic identity of caste and religious backgrounds among people residing in any one area; but the strength of such bonds is not equally strong in all areas. And it is just as likely that within an area, there are long-standing and deeply entrenched clashes of economic interests between people living in close proximity. Building the programme on a cluster approach is therefore risky. Similarly, even within one state or district, institutions like committed NGOs, training centers or ready market connections are unlikely to be evenly spread. Therefore, per capita investment required to overcome poverty is bound to be different from area to area. This is true to greater or smaller degree of all the necessary institutional inputs. In the fieldwork we started with this understanding of the scheme as conceived in the guidelines. We aim to verify how this was being applied in the operations in W. Bengal. Section IV Findings From the fieldwork We started on the study with very little understanding of the operation of the SGSY scheme. It therefore seemed logical to first approach the Department of Panchayets and Rural Development of the government of W. Bengal that was in overall charge of it. It took several visits to the headquarters of the Department in Kolkata to get to interview concerned officials there; all of them proved to be extremely cooperative and frankly discussed with us their own understanding of and reservations about the scheme. At this stage our method was to elicit responses of the officials to a set of questions prepared beforehand. They first confirmed that in W. Bengal the procedures about agencies and disbursement of the funds are the same as outlined in earlier paragraphs. There is now a
  27. 27. 27 project director in charge of the SGSY in each district. This officer has the full authority to select NGOs and other executing agencies, allot funds to SHGs, and generally take charge of authorizing expenditure. A fact that was not clear from the Guidelines but came out of these discussions was that allocations to each district were to be determined freshly each year in the light of the performance of the scheme there in the previous year. The official list of those below the poverty line was given for five years and rarely changed within that interval. But that did not mean that the amount allocated for the district was fixed for that period. Appendix VII A, B & C brings this out. The scheme was first launched in W. Bengal in April 2000 for the year April 2000 to march 2001. In that year, the Union government did not release any funds to any district in W. Bengal, though the State government had released to each district the amount that was to be its contribution relative to the Centrally announced allocations. This was because all W. Bengal districts had together an opening balance of over Rs. 100 crores from the funds that the districts had received in previous years under the schemes that had been merged into SGSY; these were IRDP, TRYSEM, DWACRA etc. In other words, the actual funds released to each district depended on the performance so far (as assessed by the rate of success of the local machinery in utilizing allocated funds) of this and similar earlier schemes In the next year, i.e. April 2001 to March 2002, both the Central and the State governments announced the amounts that were earmarked to each district in the State, but either till the end of that period released none of these funds. Only the district of Haorah received funds to the tune of Rs. 78.26 lakhs. It appears that if the district machinery cannot give a utilization certificate for the previous balance at the time when the next installment is due, the amount due to it can and is diverted to other districts in that state or in other states. Decisions in this matter rest solely with the Union government. The question automatically came up as to why various districts in W. Bengal had so much of funds left unutilized. We could get no satisfactory answer to the query from officials in Kolkata. Nor could they explain what had happened to the funds of the order
  28. 28. 28 of Rs. 100 crores which had been allotted to districts in W. Bengal but ultimately not released. We could not find out whether it would be possible in the future for those districts to claim it. In their opinion, the following bottlenecks were holding up work in the State: • The basis of allocations made to the districts by the Central government was far from clear. Officials had been informed that the share of each district in the total amount budgeted for that year would be based on Central assessment of the relative numbers of persons below poverty line in that district. However, how much of this budgeted amount was actually released to the district would depend on its performance in using the funds in the previous year. The State government had recently proposed to the Ministry of Rural Development that the allocations should be solely on the number of blocks in the district and no weight should be given to previous performance. • Officers at this level felt that the poor record of performance in W. Bengal was mainly due to the non-cooperative attitude of the banks who refused to fully release the subsidy part of funds to the beneficiaries even when these were due and recommended. • They also mentioned that the State government, which was to release its share within a fortnight of Central release, often delayed the process by some more weeks. The Department nevertheless had been urging the district authorities to improve their performance. Accordingly, in the two-year period from March 2000 to April 2002, approximately 35,635 SHGs had been formed in the State. Of these 90% were women's groups. It was however, rather surprising that in general, at this level of the bureaucracy, nobody seemed to be overly concerned about the fact that this major programme for poverty alleviation was progressing very slowly in the State. As shown by Table I in at least in eight of the 18 districts participating in the scheme, there was an increase in
  29. 29. 29 the opening balance between 1st April 2000 and 1st April 2001. In other words, those eight districts had not improved their performance on this front even with the launching of the SGSY that replaced the earlier schemes. However, even after two years of the launching of the new scheme, officials at State headquarters had only the vaguest of notions about hitches in the working of the old or the new schemes. This was so in spite of the fact that, for a long time it was obvious that something was seriously wrong with the working of all the Centrally sponsored anti-poverty programmes in the State. The large balance left over in all the districts from previous schemes had clearly signaled that fact. Therefore, one would have expected that State officials had thoroughly investigated the problems holding up work on the earlier schemes and checked in detail whether or not those or any other difficulties were there in the new programme. However, apparently there had not been any detailed state level inquiry into the performance of the earlier schemes. Nor had the details of the new scheme been verified or discussed with its Central sponsors to make sure that the same problems were not reintroduced in the new design. Finding out what had ailed the centrally sponsored poverty alleviation programmes in the State should not have been difficult for State headquarters because the laggards included several of the more developed districts of W. Bengal and these were adjacent to the Kolkata metropolis. Monitoring their performance should have been easier for state level authorities; or officers at district levels should have had no difficulty in bringing them to the notice of the former. Instead, State officials resented the fact that a Central ministry had given them a ready blueprint for a scheme that involves a good deal of regular administrative work and would further have the authority to stop their grants if their performance failed to meet its requirements. They had therefore asked the Ministry of Rural Development to allot funds solely according to the number of blocks in a district and not on the basis of performance or utilization. In other words, rather than try to improve ways of reaching help to the poor, the problem had been converted into a question of State-Centre relations.
  30. 30. 30 Findings from the second stage At the second stage, we approached officials at the district level who were actually in charge of operating the scheme. The Joint Secretary in charge of the project in the Department of Panchayet and Rural Development had very kindly written to officers in charge of DRDCs in all districts asking them to cooperate with us and to provide us with all necessary information. This was of great help as it managed to persuade officers everywhere to meet with us and openly discuss their views and experiences. In this section, we first discuss the information gathered from each district and then analyze it together. It was not possible for us to visit all 18 districts where the SGSY was in operations: so we purposely selected three of those. The district of Paschim Medinipur was selected for two reasons: it is one of the least advanced regions of the State with a large concentration of tribal and very poor population. Its economy rests mainly on agriculture and forestry. However it still one of the most politicized districts in the State The second district selected was Hoogli, which on the other hand is one of the more advanced districts in the State; it has a good mixture of prosperous agriculture along with traditional industry in rural areas and modern large and medium industries located in it. It is also near Kolkata and therefore it was easy for us to make multiple visits there The third district selected was Haorah that is also close to Kolkata. It houses many small and large industrial units. It also has some well-diversified agriculture. The social and economic characteristics of the selected districts are given in Appendix VIA Apart from considering these characteristics of the districts for our selection, we were also guided by our need to have some contacts with NGOs in the area. This was essential for us to get access to people who could shed light on their experience of running the programme and dealing with officials. They would also provide us with opportunities to meet the beneficiaries for discussions that were to be part of the third stage of our work. For these interviews, we had a list of questions about the objectives of the SGSY and its financing practices. Medinipur
  31. 31. 31 Our first visit to Paschim Medinipur was in September 2002, when we had an appointment to meet the Project Director in charge of the SGSY in the district. The officer proved to be highly forthcoming and gave us copious information; but preferred not to answer specific questions; he would rather tell us the "story" of SGSY. Initiating the work The district had previously been conducting poverty alleviation work under the IRDP and DWACRA schemes; in fact it had funds of the order of Rs.12 to 13 crores left over from those received under the previous programmes. It had taken the agency all of the previous two years to use up those funds. In the current financial year, the district office had asked for release of new funds. The Department of Panchayet and Rural Development appoints the Project Director for SGSY in each district. In Paschim Medinipur, the Project director had appointed an assistant project director as well as one or more officials from the state administrative cadres in charge of the SGSY at each block level. Method of operation This district was operating on a somewhat different basis because the Project Director did not approve of the way he thought NGOs operated. He had therefore decided to work, not through NGOs, but through employees of government and semi-government bodies like schools, anganwadis, swasthya kendras etc. Employees of such agencies as well as in a few cases, Panchayet members, were asked to undertake the work of organizing and nurturing the SHGs in addition to their normal duties. Moreover, although the scheme provided for separate payment for administering the work for the work of organizing the groups, workers in this district got no additional pay for it. However, the Department knew about this practice and approved strongly of these efforts. Process of organization The Project Director in this district dwelt at some length on the difficulties of organizing SHGs. Forming the groups needed considerable social mobilization. The district BPL list included a high proportion of Scheduled Tribe (ST) and Scheduled Caste
  32. 32. 32 (SC) families. The organizers had to visit each family individually to explain to them the new scheme, highlight its superiority over the previous ones and persuade them to come to join the groups. To do so it was necessary to establish a personal relation with each family, deal sympathetically with their personal problems-whether of domestic violence or of money to feed the children- and persuade them about why the group approach was better for them. The whole process of getting the scheme to start working took over one year and several visits to each family. The Project Director emphasized the fact that between communities and places, the problems and attitudes encountered were different. It was only after establishing a close communication with these various groups, that the scheme could be started. That partly explained the delay in using funds from the new scheme. The SGSY design, according to the Director had not allowed enough time for this part of the work. Nevertheless, in his opinion, the SGSY scored over earlier schemes because it started with bringing people together for building a collective saving habit. The SGSY design allowed the members to use these savings for their consumption needs, or to pay back expensive loans or even for social obligations like marriage ceremony or dowry. This gave the groups some stability and helped the members to develop loyalty to the group. By the time of our visit, there were more than 20,000 groups all of which had reached what the project director called "community convergence action'. By this he meant that in the district already various line agencies of the government were coming forward to help the various groups in their plans. For example, the Keshpur group had taken up silk weaving and they had got a reeling machine from another government body, the Paschimanchal Unnayan Fund. The Sericulture department had given training to the women for running the machine. All in all, there was growing awareness about the beneficiaries under the scheme among other departments and other public agencies operating in the region. The groups by then had stabilized sufficiently for the Project Director to release to each the initial cash credit facility of Rs. 25,000 for building up its revolving fund. Although the original design of SGSY did not perceive it as an exclusively
  33. 33. 33 women's scheme, at least in this district, all the groups formed were of women. The Project Director gave no explanation for this except that he felt that women needed the help more. Funding According to officials in this district, the major problem with the scheme lay with its pattern of funding. It appeared that the original scheme of distribution of the allocated funds was as follows: (1) Revolving fund 10% (2) Matching corpus fund 10% (3) Infrastructure 20% (4) Training 10% (5) Subsidy 50% However, the groups could not claim the subsidy till they reached what was called the second stage, i.e. till the groups had started functioning on a stable basis. On the other hand, most of the members were so poor that they needed some financial help immediately if they were to get out of the clutches of the usual usurers in the locality. Apparently there was some room for renegotiating the programme to incorporate lessons from below; Project Director here had been able to convince higher authorities in this matter and they were then in the process of passing an order that would allow project directors to reallocate 40% of subsidy according to local requirements. The Department of Panchayet and Rural Development saw Paschim Medinipur SGSY as one of the most successful in the State. One reason perhaps was that the officer had been able to form many groups in some of the poorest areas of the State. As we noticed on our later field visits in that district, the Project Director had been closely monitoring the groups and was personally familiar with many of them. However, he ran the programme in a very patriarchal way without leaving any initiative with the persons
  34. 34. 34 organizing the groups. On the other hand, the organizers too were content merely to carry out his orders since for them there was no incentive to put any extra effort in doing something that is an addition to their workload without any extra payment. It was not clear how far this procedure could be replicated in other areas with other communities of the poor, or with other, less energetic officers at the helm of things. Further, the original scheme envisaged that, groups participating in the SGSY would, develop links with banks to get funds for developing their enterprises. Providing some immediate relief, developing a saving habit or even giving some training were no doubt parts of the objectives of SGSY. But for its success, it aimed to ensure that the participants reach a situation where they are permanently out of poverty and have found a sustainable means of livelihood. To finance such activities, it is essential to develop and establish regular credit links with local banks. In spite of the project's apparent success in this district, however, none of SHGs had been able to forge such links with the banks. This could be because of the recalcitrance of local banks; but it could also be because none of the groups or their organizers had developed the capacity to negotiate with the banks. The SGSY scheme had allowed three years for completing this process of raising and sustaining the incomes of the participants to levels above the poverty line. After the lapse of two years, none of SHGs here were as yet anywhere near that stage. Hoogli We had first contacted the Project Director of the Hoogli district with an introduction from the Department; he then invited us to attend a meeting that he had organized on 8th November with various NGOs and other agencies engaged in the project. We also met him on another occasion in January 2003 in order to interview him personally about the work. Organization The Hoogli SGSY has been organized in a way that is dramatically different from what we had seen in Paschim Medinipur. The Project Director for the District had sought to involve several NGOs who had been organizing women for DWACRA programmes.
  35. 35. 35 The Project Director had initially encouraged some Panchayet Samities, local elected governments at the village level, to take up the work; but he was not very happy with their working and had therefore increasingly tended to work through local NGOs. He was very critical of the way the programme was being run in Paschim Medinipur. He felt that District Office there was interested only in forming more and more groups but had not paid sufficient attention to nurturing them to the next stage where they could get bank credit. The NGOs that were participating in the Hoogli SGSY project also felt that the Medinipur model was ultimately unworkable because forming more and more groups without properly nurturing the existing ones was likely to be self-defeating. They also questioned how much time would employees of government and semi-government agencies give to this work of organizing. It was after all, a very laborious task. Compared to the other district, the scale of the Hoogli SGSY programme was still small. There were so far 1925 SHGs formed in the district; of these 781 groups had reached a stage where they could get the allocations for the revolving fund. 17 groups had gone ahead and made links with banks for the next stage of credit cum subsidy for their productive activities. Of the total, 1250 were women's groups, some others were mixed and a few were exclusively of men. In other words, over two thirds of the groups were exclusively of women. Funding The District had started with left over funds of the order of Rs. 7.41 lakhs from the earlier DWACRA scheme. It had received a further grant of Rs. 69.75 lakhs as the State Government's contribution for SGSY in 1999-2000. Of this entire amount, they had till then spent less than 60%; therefore they had not submitted to higher authorities an audited report for the utilization of the grant. The project Director claimed that while they had not received any more money under the scheme, they did receive both from the Ministry and from the department the annual allotments towards their administrative cost The DRDC in the District had no idea about how the Ministry arrived at the
  36. 36. 36 amounts allocated to each district. The Project Director emphasized that they were not consulted in the matter and had no information about what happened to the funds if they were not utilized in time. There seemed to be some misunderstanding about the funds for infrastructure; the original scheme had stipulated that these were for meeting some minor gaps in the required infrastructure facilities; but it was not clear who was to undertake the work, the DRDC, the NGOs or the SHGs. Under the Hoogli project the funds had been given to the groups and wasted by the groups on small items like buying buckets brooms etc. No lasting assets had been generated. Training The Hoogli SGSY project had put considerable emphasis on training the beneficiaries. This had been done through several NGOs, However, though the district had as many as 104 government approved NGOs, only 24 of them had undertaken this kind of training even though the Project Director had set aside funds for that and had asked for sound training schemes. The Project Director was proud to say that theirs was the only district that had arranged to train women in their own homes, since most found it difficult to go out to training institutes for several days. In fact he was critical of the SGSY guideline's suggestions that training should be organized through institutes in the area. He felt that was not practical since it was difficult to organize to get women to go in groups for that. It was also perhaps not necessary because adequate training could be given through local groups, getting the women to go to local clubs etc when necessary. He seemed to be unaware of the fact that by doing so, the project was reinforcing the stereotypes of women as homebound housewives. Also, this ruled out their getting skills at any kind of modern and professional levels. Forming Groups Men in general were not interested in joining groups because earnings from such activities were very meager. Women on the other hand were always interested in supplementing their incomes and always had use for whatever little additions they earned. Therefore, more and more groups have only women members.
  37. 37. 37 The Director agreed with his colleague in Medinipur about the difficulties in getting people together to form groups. A lot of groundwork is involved in persuading them to work as a group. The problem is aggravated by the fact that there are several political parties claiming the loyalty of the poor and members belonging to different political parties are unwilling to work in a single group. Women are also resistant to the idea of pooling savings and revolving funds. They would prefer to deal individually with the organizing agency In spite of this, the Director had pushed for a group approach; he believed that an individual swarozgari would be at a disadvantage because it is difficult to organize training, infrastructure support or marketing opportunities for a single person. In fact, though the Guidelines for SGSY do allow each group to take up more than one activity, the Hoogli Project Director also disapproved of that practice and has tried persuading each SHG to take up a single activity. The main problem, according to the Project Director was the requirement to apply the scheme to families below the poverty line (BPL). The poor, according to him, are too busy trying to earn a minimal living; they are unwilling to take time off from their uncertain activities to come to group meetings. In any case, they do not believe that the government is likely to help them. It is only those who have a regular living who are prepared to spare the time for group activities. Most of the members come from such categories and these women have a clear notion about how to use the additional resources. Another set who join the groups are those who use the opportunities to expand the family business. For example there are many women whose families have traditionally carried on family businesses of chikan work The additional credit was put in the same business to expand its scale. These members who have some regular employment or a running family business are unlikely to be categorized among the BPL. One of the more successful groups of Swarozgaris mentioned to us another problem that appeared to arise from reserving the entire programme for BPL families. Over the last few years, the group had managed to build up a successful business producing jams and other preserves. Through that activity, their incomes had now risen to levels above the poverty line. They were wondering, would this mean that they can no
  38. 38. 38 longer claim any assistance under the SGSY? The Ministry has also realized this problem of reserving the project funds exclusively for BPL households and the new guidelines have laid down that up to 20% of the members of a SHG can be from those above the poverty line. In Hoogli, SHGs tend to include both BPL and APL members; however only 20% can be from the APL families and they cannot claim the subsidy. Views of the Intermediaries While visiting Hoogli DRDC, we met organizers of two of the NGOs involved in the SGSY. They highlighted the difficulties they had encountered in the work. Their biggest complaint was about the BPL lists. These lists formed the basis for selection of the participants but they were riddled with political manipulations and it was very difficult to locate the genuinely needy persons. Box 4 The BPL List Defects in the BPL lists are perhaps the main reason why most projects for poverty alleviation so far have proved ineffective. The SGSY is also likely to suffer the same fate. Over time, almost all projects for helping the poor at the grassroots have become tied with the BPL lists. Whether it is giving ration cards for subsidized food, or providing training and credit for self-employment- every facility is reserved for those on the BPL list. As a result, inclusion in this list has become the most important criterion for being eligible for whatever largesse that are made available for distribution at the grassroots. As such, its politicization was only to be expected. Problem is, whether a household is poor or not is supposedly based on the money value of its monthly per capita consumption expenditure. And it is quite impossible for local workers and busy administrators to ascertain that systematically for each village household. So alternatively, the poor are identified on the basis of an amalgam of several rough criteria such as amount of land owned by a household, whether it’s dwelling is pucca or not, whether members possess a bicycle, a watch, etc. The criteria are sufficiently vague and elastic to leave considerable room for manipulations to bring in all the sympathizers of those in power. It is reported that in many villages nearly 80% of households get to figure on the list. Therefore when it comes to actually selecting the beneficiaries for any scheme, it is easy to focus on one's supporters and give the genuine needy a go-by.
  39. 39. 39 Organizer of one of the NGOs felt that the subsidies given under the project creates problems for women. When men of the households realize that those funds do not have to be returned, they bring pressure on the women to hand these over. This apparently has led to increased domestic violence in many cases. However, others argued that the subsidy was essential for drawing the women into the groups. Both the organizers were very aware of the difficulties of organizing poor women who are mostly illiterate, into any kind of cohesive groups. Also, even when they join in groups, they remain deeply suspicious of each other and strongly resist the idea of group activities. If that hurdle is overcome, the groups have to face the hostility and indifference of the banks who are unwilling to release the funds even when the group is ready and has obtained the necessary clearance. The rate of interest charged also appeared to be too high to the women. Although it was significantly below what they would have paid to the village mahajan, they found it hard to find investment opportunities where the returns would be sufficient to cover those additional charges. For NGOs organizing groups for SGSY, there were problems on many fronts; often the Panchayet leaders created difficulties because they did not fully understand the scheme and felt that they should have direct authority over the money. The DRDC officials did not release funds promptly and held up their work. Along with the banks, they too view the NGOs' activities with some suspicion. Haorah We visited the Haorah DRDC office in November 2002, when we met by appointment the project Director. The lady gave a lot of time and her answers contained particularly useful insights into the working of the SGSY in the State because she had taken the trouble to find out how the scheme was working in other districts. Funding The Haorah project was obviously the most successful among those we had visited since it had used up all the funds left over from the IRDP project and had received funds from the SGSY. In the year 2001/2002, it had received one installment of Rs. 78.26
  40. 40. 40 lakhs from the Centre and Rs. 26.08 lakhs from the State. It was entitled to another installment from the Centre in that year, but could not get it because it had not used up 60% of the funds from the earlier allotment. That was not surprising since the allocations for the year 2001/2002 had been released as late as March 2002. In the next year, that is, in 2002/2003, they had again received Rs. 80.06 lakhs from the Centre and Rs. 26.08 lakhs from the State. These funds were also released as late as October 2002; even then the Project officials had managed to use up 60% of the allotment and had sent the utilization report as required. They were hopeful of utilizing the entire amount by March 2003. In that case they would be entitled to get the third installment of the 2002/2003 grants. The Project Director explained that in each year, the DRDC separately receives the grant towards administrative expenses on a 70:30 basis. The Haorah Project Director too thought that the Ministry should let the DRDCs know the basis of inter-district allocations. Organization In Haorah district, the Project was being executed by NGOs. They were being paid in several installments Rs.10,000 per group . In addition, the DRDC had helped the NGOs to organize a basic orientation programme for the SHGs as well as for individual swarozgaris. For this training the DRDC would mobilize the help of other line departments like health and agriculture. This way the line departments become aware of the programme and at the same time, the SHGs come to appreciate the multi-dimensional nature of the project. In spite of her efforts she had not been able to attract men to join any SHGs. In this district men from poor households very often migrated or commuted to work; (there was very little wage work available for casual labourers). So they were not available to join local activities for earning supplementary income. In any case, earnings from the SHG activities were too small to attract men. The few groups of males that had come up under the scheme were those of betel leaf growers, who lived in the locality and had their land under betel leaves in the same area.
  41. 41. 41 The Project Director was of the opinion that, in other districts like Paschim Medinipur, the district officials and Bloch Development Officers wanted themselves to conduct the progarmme because they wanted control over the funds for the power that the funds give them. This had actually meant that implementation of the project is delayed because the officers could not give it sufficient time from their busy schedules. In any of the past years, W. Bengal has not been able to spend more than 26% of the funds due to it. Kerala, on the other hand, had utilized 126% of the funds. This was possible because, every year, if any state is unable to use its allotments, then the surplus goes to a special fund from which funds are re-allotted to those states that have used up their own grants. In the past, W. Bengal's funds have been diverted to Kerala, Andhra and Bihar. This is a marked departure from the procedure for earlier schemes when states could keep the unused balance and carry it forward to the next year. Funding The Haorah Project Director was very critical of the funding pattern laid down in the guidelines. It gave banks unwarranted powers, especially regarding the subsidies that were built into the project. The guidelines are far from clear about the release of the subsidies but they do say that, when the groups start interacting with the bank for getting access to a flow of credit, nothing should stop them from getting the subsidy due to them. This is not only a gross injustice on the part of the banks but also goes against the intentions of the policy-makers to provide collateral-free loans to the poor. It defeats the very purpose of the scheme of ensuring that economic activities of the groups are not foiled for want of adequate credit. Box 5 Back-ended subsidy Banks in W. Bengal have chosen to interpret the provision of "back-ended subsidy " in the following way: When the SHGs become eligible to the credit facility from the banks, the latter do not release the full amount but keep back the subsidy part as a collateral for the credit. This means that whereas the scheme envisages that each group would have access to a total credit of Rs.10,000 per member or Rs. 1.25 lakhs in total (whichever amount is smaller), it actually gets only 50% of that, because the 50% of the total that is supposed to be a subsidy is not released to the group by the banks. It is worth noting that banks in W. Bengal were doing the same thing with the IRDP funds. This has had been reported repeatedly to the MORD by experts
  42. 42. 42 Building Infrastructure The Project Director was very aware of the need to provide infrastructure that may be necessary to make the economic activities of the SHGs viable. However, in Haorah, very little land is available with the groups to build their own structures, so the Director had initiated action on some commonly useful activities like roads. However, in this, she met fierce opposition from various line agencies. In the end, instead of providing roads for facilitating marketing, she had provide mobile vans to SHGs to market their products from door to door. Views of the Beneficiaries Our ultimate aim was to find out how far beneficiaries had understood the scheme, whether it met their needs and how far participation in it had helped them to deal with their perennial deprivations. In order to examine these aspects we had requested the DRDC offices in the three districts to provide us with contacts with some of the groups that had started working in their areas. The Project Directors everywhere readily agreed to that and arranged to introduce us to a few. In Paschim Medinipur, the Project Director himself offered to take us to meet some groups in one of the remoter areas of the district. In Hoogli, we were introduced to organizers of a few NGOs who took us to meet the groups organized by them. In Haorah, the Project Director requested a woman member of
  43. 43. 43 the local Panchayet to accompany us. In all we met over 200 participants from fifteen groups. Of these, only one group was of males. Because of the presence of the organizers themselves, women of the groups found it difficult to be fully frank with us. It was only in Haorah that we could freely interact with them. Nevertheless, complaints of the women did come out in response to some leading questions from us. Funding So far, only three groups, all from Haorah, had reached the stage when they were able to establish links with the banks and get the cash credit facility. These groups had been formed as far back as 1996 under the DWACRA project. All the other groups had only recently reached the stage where they could claim the state help for starting a revolving fund. We found that very few of the participants knew exactly what the financial provision was under the scheme and accepted whatever was given to them. If the details had ever been explained to them, they had obviously not absorbed them. Even with the little they did get, very few had any idea about what to do with it. Activities Almost all the members are involved in small activities, which are mostly home- based. They are mostly continuation of what they had been doing in the past before joining the group. The additional resources had helped them to expand their scale to some extent. But in spite of the talk about SGSY's training component, we saw no indication of new skills being introduced or old skills being upgraded. The only exception was a single group in Haorah about which some details are given later. As with the previous micro-credit projects9; none of the project organizers could provide the participants with any new ideas for viable new economic activities. Moreover, though the SGSY had aimed at getting the poor to join in groups for building viable activities, almost all the small enterprises we heard of were being run by members in their individual capacities. As Appendix VII (Table B) shows, most of the 9 Nirmala Banerjee and Mukul Mukherjee (1999): Some thoughts on Micro-credit for empowerment; Sachetana, Kolkata
  44. 44. 44 resources released in the first two years had gone to individual Swarozgaris instead of groups in the ratio 10:1. We found individuals cultivating mushrooms, running a small poultry, tailoring, knitting, making muri (puffed rice) or bari ( lentil cakes) or some bamboo work. Joining the project had not altered their techniques but in some cases they had got some facilities for marketing as in the case of mushroom growers in Haorah. But it had not been possible for the organizers to persuade the women to come together to cultivate mushrooms or raise chickens on a larger scale through a group activity. This is in spite of the fact that, there are well-known economies of scale in doing these activities on a larger scale. In one instance, joining a SGSY group had actually harmed the economic interests of some participants. In Medinipur, several women had been doing zari work on piece rates for a middleman. When the group was formed, the organizer, for want of any ideas about alternatives, had persuaded all the women to carry out their work in a common shed. In that way a lot more women got to imitate the skills of the initiating few and look for the same work. This meant that the local labour supply for that work increased and it made it easy for the middleman to beat down the piece rate for all workers. One of the group activities that seemed to work well was of a group in Haorah which had started a unit to make preserves-jams, jellies, pickles etc- and sell them through a marketing unit set up under the project. Another group, that of men, had started a provision store and had acquired a van to give home deliveries. Each of the men was already engaged in another activity and they all took turns to work at the store. Communications with the authorities Most participants are rural women with little or no education or exposure to the world outside. However, before they join the group, they and their households had obviously used all their ingenuity, knowledge and skills for the living they so far had. They had joined SGSY groups obviously in the hope that they would get some additional equipment to improve their livelihoods. The Project was to give them not only some extra
  45. 45. 45 credit, but a holistic package of new ideas, market information, new skills, physical equipment, and infrastructure for running new enterprises. Obviously this had not happened; but the members were neither aware of what they should have got, nor were they in a position to confront the authorities. The latter, on the other hand, in most cases, carried forward the top-down approach built into the project design and had made the beneficiaries feel obliged for the benefits they had received, however partial they were. Section V Conclusion Policy- makers in India would like to promote an image of the country as being both fast developing and humane. The one major stumbling block in their project is the vast and persistent problem of poverty, especially rural poverty. After having tried many different projects for its alleviation, the Union government launched the Swarnajayanti Gram Swarozgar Yojana; the SGSY was not just to give some dole or some one-time grants or loans to the poor; it aimed to nurture their economic activities for as long as three years so as to ensure that the poor do rise above the poverty line. While the aim was admirable, the way devised for doing so has left a lot to be desired. If one examines the design of the scheme in details, several aspects come up. These are briefly summed up below: Funding As we saw before, few people even at the state headquarters or at the district level have really understood the funding pattern. For example, at least in some places, the subsidy part of the money given for the revolving fund is being treated as a non- refundable one-time gift to the participants. However, the guidelines have mentioned that the subsidy is to the group as a whole, the individuals who borrow from the revolving fund, must return the entire borrowed amount to the group. They are merely exempt from paying interest on the part represented by the subsidy. However, in the
  46. 46. 46 districts we visited we came across instances when the beneficiaries were not required to return even the full principle. Similarly, as we have mentioned in box no. 4, the banks have been interpreting the provision for "back-ended subsidy" in ways that make their operations completely risk-free. The other agencies have not understood this fully. Even if they had, they would have no authority to challenge the banks. The funding pattern is not just not transparent; it simultaneously involves several agencies without any chain of authority between them. Thus apart from possible delays in the funds passing from the MORD and State governments to the DRDCs, the banks can, in addition, hold up the project at any stage. The guidelines say that banks have to be involved at all stages starting from choosing the beneficiaries. Who has the authority to question the banks if their decisions obstruct the progress of work? The guidelines had strongly suggested that no enterprise begun with SGSY was to be constrained in reaching its optimal scale for lack of funds. We have seen before how banks in W. Bengal have completely neglected this responsibility. Recently, the Institute of Bank Management had undertaken a field survey of banks participating in the SGSY10. The report brings out the very poor record of achievement of the programme, and gives several reasons fro that. But surprisingly, it makes no mention of the fact that the scheme of financing is hard to understand or that banks are taking decisions, which are not warranted by the original design of the project. Nor does the report anywhere question why banks have been so wary of promoting the SGSY even though there are provisions for groups standing as guarantors for any loans that might be made. In other countries, particularly in Bangladesh, this provision has had a marvelous impact on ensuring repayment of loans especially from women members. Even the Indian micro-credit projects have followed the same approach with good results. So the Report should have looked into the reasons why, for this programme, the banks are allowed to be so cautious. 10 K. Dinkar Rao (2002): Swarnajayanti Gram Swarozgar Yojana: A Research Report: National Institute of Bank Management, Mumbai. The survey was confined only to bank participating in the programme. No attempt was made to contact other agencies.