Government of India and World Bank Sign Agreement to Diversify and Enhance Household Income in Bihar

July 8, 2016

NEW DELHI, July 8, 2016 –  The Government of India, the Government of Bihar and the World Bank today signed a US$ 290 million credit agreement to help improve livelihood opportunities for poor rural households across 300 blocks and 32 districts of Bihar.

Bihar Transformative Development Project, also known as Jeevika II, will mobilize rural population into self-help groups (SHG) and higher level federations and help them gain access to markets, public services and a range of financial services from formal financial institutions. In line with the emerging priorities and JEEViKA’s already significant experience, the new project will scale up farm and non-farm value chain interventions including setting up of women-owned farmer producer companies.  It will also improve SHG women and SHG households’ nutrition, hygiene, and sanitation practices, and help increase their access to and use of nutrition and sanitation services made available through the Integrated Child Development Services (ICDS) and Swachh Bharat Mission (SBM) programs. The project will work in convergence with the related government programs to achieve this goal.

 The Government of Bihar has been implementing the Bihar Rural Livelihoods Project (JEEViKA), a World Bank supported program for poverty alleviation across six districts and 42 blocks of Bihar since 2007. The project received additional financing in 2012 and was expanded to another 60 blocks. It has so far mobilized nearly 1.8 million rural women from poor households into 150,000 SHGs further federated into 9,500 Village Organizations (VOs) and 161 Cluster Level Federations (CLFs). The project built the capacity of the SHGs and their federations and provided initial capitalization that helped them leverage higher resources from formal financial institutions like banks. So far, the community institutions promoted under BRLP have leveraged nearly Rs 6 billion from commercial banks while mobilizing more than Rs 1.5 billion in their own savings, thus creating a significant base of clients from poor households for the banking system. The new project would cover 300 new blocks in 32 districts (not covered in the earlier phase or through National Rural Livelihood Project), thus covering the entire State.

 “Strong community institutions, like women SHGs and their federations would help the project in creating efficient and effective institutional platforms for rural women from poor households. Enabling them to increase household income through sustainable livelihood activities and improved access to financial services can serve as a critical strategy for poverty reduction,” said Raj Kumar, Joint Secretary, Department of Economic Affairs, Ministry of Finance, Government of India.

The credit agreement for the project was signed by Raj Kumar, Joint Secretary, Department of Economic Affairs on behalf of the Government of India; Arvind Kumar Chaudhary, Secretary, Rural Development Department, on behalf of the Government of Bihar;  and John Blomquist, Program Leader and Acting Country Director, India on behalf of the World Bank.

 “Rural livelihood projects such as JEEViKA has given the rural poor a greater sense of identity, better services and livelihood opportunities. However, Bihar still faces development challenges that require intensive and longer-term support,” said John Blomquist, Program Leader and Acting Country Director, World Bank, India. “By expanding to all the remaining districts of Bihar, this project will help scale up access to financial services for a majority of the rural poor in Bihar and also improve the nutrition and sanitation services available to them.”

Key components of the project include building the capacity of the community institutions for undertaking financial intermediation, developing linkages with financial service providers and commercial banks, undertaking productivity enhancement and value chain activities in agriculture and livestock sector and working closely with the local government and the government line departments to enhance access to various public services, and entitlements for the SHG households.

 “The project builds on lessons from our ten-year experience of working with the government on the Bihar Rural Livelihoods Project (BRLP) and the National Rural Livelihoods Project (NRLP) across 25 districts and 179 blocks of Bihar. These projects confirm that strong, self-managed community-led approach is effective in catalyzing socio-economic changes at the grassroots, providing rural households pathways out of poverty, and stimulating the rural economy,” said Vinay Kumar Vutukuru, Senior Agricultural Specialist and World Bank’s Task Team Leader for this project.

The credit is from the International Development Association (IDA), the World Bank’s concessionary lending arm, with a maturity of 25 years, including a 5 year grace period.

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