FEATURE STORY

The National Rural Livelihoods Project

July 5, 2011

WORLD BANK SUPPORT

India's National Rural Livelihoods Mission (NRLM) aims to benefit some 350 million people in 12 states which account for almost 85% of the rural poor. The World Bank will support the NRLM with a credit of $1 billion, in continuation of its decade-long engagement in the sector.

July 05, 2011 - The Government of India’s $5.1 billion National Rural Livelihoods Mission (NRLM) is one of the world’s largest initiatives to improve the livelihoods of poor rural people and boost the rural economy.

It aims to make a multidimensional impact on the lives of India’s rural poor by mobilizing them, particularly the women, into robust grassroots institutions of their own where, with the strength of the group behind them, they will be able to exert voice and accountability over providers of educational, health, nutritional and financial services. This, based on past experience, is expected to have a transformational social and economic impact, supporting India’s efforts to achieve the Millennium Development Goals on Nutrition, Gender, and Poverty.

These village-level institutions will help the poor to promote savings and build productive assets of their own. They will also empower farmers, milk producers, weavers and artisans to link up with markets and negotiate better terms of trade for their products and services. Importantly, the program will equip poor rural youth with the skills and opportunities to secure jobs in India’s mainstream economy.

The NRLM aims to directly benefit some 350 million people - or almost a quarter of India’s population - in 12 states which account for almost 85 percent of India’s rural poor (Bihar, Chhattisgarh, Gujarat, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Orissa, Rajasthan, Tamil Nadu, Uttar Pradesh, and West Bengal). Most of the rural poor in these states belong to traditionally marginalized social and occupational groups.

The World Bank will support the NRLM with a credit of $1 billion, in continuation of its long-term engagement in the sector. Since 2000, World Bank-supported rural livelihoods initiatives have mobilized some 30 million poor people in select districts of Andhra Pradesh, Bihar, Madhya Pradesh, Rajasthan and Tamil Nadu.   

The NRLM aims to ensure that at least one member from each identified poor rural household, preferably a woman, is brought under the Self Help Group (SHG) network in a time-bound manner, benefiting the poor in a number of ways: 
        
VOICE AND SOCIAL INCLUSION

Access to public services: The NRLM will enable SHG members to build their skills in interacting with service providers, whether government or private, enabling them to negotiate for improved access to better quality services such as educational and health services, and gain voice in local governance institutions. Under current state livelihoods programmes, for example:

  • More than 90% of SHG households sent their children to school
  • The poor received better health care after community members were positioned at help desks set up at primary health centers and other medical facilities
  • Some 4000 women were elected to Panchayats and other local governance institutions

Access to entitlements: Mobilization will also empower the poor, vulnerable and differently-abled to improve their access to public programs to which they are entitled such as old age and widows’ pensions, livelihoods programs such as those under the National Rural Employment Guarantee Act (NREGA), and food security programs such as the Public Distribution System (PDS). For example, current livelihoods programmes in Andhra Pradesh have:

  • Mobilized more than 400,000 differently-abled persons into SHGs and facilitated their access to entitlements, credit and livelihood opportunities
  • Helped more than 400,000 poor women, old and disabled members to receive pensions
  • Helped the poor to increase their access to edible oil, pulses, and sugar from the PDS in AP by 78%

Food security and gender issues: State livelihood programs have shown that SHGs provide poor members with a vital safety net that they can access in times of need - a vital first step if the disadvantaged are to lift themselves out of the vicious cycle of poverty. For example, current state livelihoods programmes have:

  • Covered 2.5 million poor households with dedicated food security interventions
  • Impacted gender issues with women’s groups having successfully taken on issues such as dowry, child marriage, discrimination against the girl child etc.
  • Helped women landowners and leaseholders to access 470,000 acres of land to grow food

Improved health and nutrition: Experience from livelihoods projects in India has shown that community actions, such as community-run nutrition centers, can lead to dramatic improvements in the nutritional status of women and children and reduce maternal and infant mortality. These improvements are critical for India to reach the Millennium Development Goals (MDG) on gender, nutrition and poverty. Current state livelihoods programmes have:

  • Helped 2,358 villages achieve MDG indicators for peri-natal and neo-natal mortality
  • Immunized all children and provided full antenatal check-ups for women in nearly 6,000 villages
  • Enabled community institutions to run some 4000 nutrition-cum-day-care centers

FINANCIAL INCLUSION

Promoting savings and aggregating demand for financial services: In many rural areas the poor do not have access to any kind of credit, apart from the local money lender, or coverage against loss of life, health or assets - a crucial ingredient for reducing poverty and helping families tide over emergencies. Current state livelihood programs have, for example:

  • Mobilized household savings exceeding $1 billion
  • Provided 13 million households with access to credit on a sustainable basis
  • Enabled SHGs to leverage nearly $7.5 billion in credit from commercial banks
  • Enrolled 11 million SHG members and their spouses for health, life & disability insurance

Creating space for financial service providers: By encouraging thrift and prudent financial behavior, and instituting mechanisms for imparting financial literacy and credit counseling, the SHGs will create the space for financial services providers, both commercial banks and MFIs, to bring in a range of affordable financial services for the poor, widening the options for the rural poor to access credit to set up micro or nano enterprises and build their assets. Current programs have:

  • Helped open 1.5 million SHGs accounts and 4.5 million savings accounts for the poor in commercial banks
  • Set up 3000 help desks in commercial banks to facilitate banking services for poor clients
  • Enabled 21,200 community institutions to function as village level ‘banking correspondents’

ECONOMIC INCLUSION

Developing skills for self employment: Importantly, the NRLM will support the rural poor in building their skills and capabilities for self-employment, enabling them to graduate from dependence on safety nets to building productive assets of their own. Producer groups in agriculture, dairying, and the non-farm sector will be better able to upgrade technologies to improve the productivity and quality of their products, access market information, develop value chains, attract the private and cooperative sector to do business with them, and negotiate fairer terms of trade for their products and services. For example, current programs have:

  • Doubled productivity on 100,000 small/leased farms through System of Crop Intensification
  • Brought 2.7 million acres of land under sustainable agriculture practices
  • Tied up with large private firms like Unilever, ITC, Himalaya Drugs, etc. and large cooperatives like Sudha, Vijaya, NDDB, as well as social enterprises like Asian Heritage Foundation to buy from these producer collectives. The estimated turnover of these procurement operations is around $ 500 million
  • Enabled large multinationals like Hindustan Unilever to leverage SHG networks to increase their rural footprint to 100,000 villages in India.

Building job skills: A critical element of the NRLM covers rural youth who will be empowered with the skills needed in India’s rapidly changing labor market. This will enable them to access new job opportunities in the services sector, connecting the hitherto lagging rural regions to the mainstream economy, and helping India to capitalize on its demographic dividend. It will also assist India’s growing private sector enterprises to tap into a ready pool of trained labor, assisting them in hiring and placement, especially given the shortage of appropriate skills in India’s labor market. For example, current projects have:

  • Trained and placed 500,000 poor rural youth in jobs through partnerships with large private sector firms and multinationals in high growth sectors such as fast food - McDonalds, Café Coffee Day, and Unilever; manufacturing - Ford Motors, Hyundai, and Nokia; construction and infrastructure - L&T; garment making - Adidas, Apache, Triumph etc.