Case Study Status Report on Gram Nidhi - APFED

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APFED Ryutaro Hashimoto Award
<strong>Case</strong> <strong>Study</strong> Working Paper Series
<strong>Status</strong> <strong>Report</strong>
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Gram Nidhi: Eco Enterprises for Sustainable Livelihoods in
Ecologically Semi-Arid Rural Areas, Gujarat State, India
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February 2009
Institute for Global Environmental Strategies (IGES)

Gram Nidhi: Eco Enterprises for Sustainable Livelihoods in
Ecologically Semi-Arid Rural Areas, Gujarat State, India
<strong>Status</strong> <strong>Report</strong>
Kyoko Matsumoto
Project Management Office
This report summarises the findings from APFED Hashimoto Ryutaro Silver Award project in 2007,
entitled “Gram Nidhi: Eco Enterprises for Sustainable Livelihoods in Ecologically Fragile Semi-Arid
Rural Areas, Gujarat State, India”. This project has been implemented by the Centre for
Environment Education (CEE), which has been involved in activities for sustainable development
for over 17 years in ecologically fragile semi-arid rural areas in India. The target villages of this
project are located near Rajikot, Gujarat State in Western India. The mission to the project sites was
conducted from 5 - 7 February 2009 with a local collaborator, Dr. Madhumita Mishra from TERI
University, India. This preliminary report of the case study has been prepared based on summaries
of findings, including some discussions made with stakeholders and the collaborator.
Background
The efforts for pro-poor in rural areas of India have been made by the Indian government,
international organisations, and other donor agencies. Although tremendous efforts were made,
there were still over 220 million people in the rural areas living under the poverty line in 2004-2005
(Government of India, 2007). Recently, the economic growth of India has been prominent but
despite outstanding economic progress, a quarter of nation’s population earns under the poverty
threshold, which is 356.3 INR. per capita/month (= approximately USD7.1 in Feb. 2009)
(Government of India, 2007). According to the CEE staff, when measuring poverty in India, it can be
said that if one household with an average of five family members have two calves, the life of
household would be barely over the poverty line in India. Unfortunately, most villagers still could not
meet this baseline. Hence, the practical measures require assisting the rural development.
The Gram Nidhi project has been implemented in a large area of Gujarat State in Western India,
aiming to establish eco-enterprises for supporting rural development. The initial target villages for
the implementation programme are in semi-arid rural areas with very limited natural resources and
an environmentally vulnerable area, the Hingolgadh sanctuary (15 km 2 ). The surrounding villagers
depend on the natural resource in the area for their livelihood, so that there is concern about further
degradation of the sanctuary. In addition, the area has been traditionally cultivated for cotton, which
is a water intensive cash crop and there has been soil degradation due to the use of chemical
fertilizers and pesticides. Therefore, the protection of natural resources in Hingolgadh sanctuary is
required to ensure sustainable development in neighbouring villages. Five villages surrounding the
sanctuary in Jasdan Block have been selected for this project. The key objectives of the project are
follows;
- to establish eco-enterprise through the village-level institution Paryavaran Vikas
Mandlas(PVM),
- to enhance capacity of target villagers for effective management of natural resources through
the Gram Nidhi model.
1

Institutional Setting
The actors of this programme are a leading implementation organisation, the Centre for
Environment Education (CEE), the institution at village level, Paryavaran Vikas Mandals (PVMs)
and target villages. The Centre for Environment Education was established in 1984, supported by
the Ministry of Environment and Forests of the Indian government. The centre aims to improve
public awareness and understanding of the environment through developing education material and
programmes, as well as to create overall environment and development strategy for India, pursuing
a better environment and a better quality of life. With this background of the establishment of the
CEE, the strong and deep involvements of CEE staff in the target- village contribute to the success
the implementation of the programme.
The institutional setting is a primary factor for the substantial success of the project. Before starting
the Gram Nidhi, CEE has been working since 1988 in the fields for eco-development programmes,
and started assisting in the formation of the Self Help Groups (SHGs) in 1996. Since then, there
have been many programmes implemented in the village and Self Help Group have been set up
already in the villages. The SHGs are formal groups established by the community people, usually
consisting of 15-20 persons. The purpose of the formation of SHGs is that even poor people need
access to social and economic interaction when they face an emergency situation. With this
background for the formation of SHGS and environment, Gram Nidhi project has been
implemented.
The mechanism of the Gram Nidhi project shows in Figure 1. The major stakeholders of this project
are Paryavaran Vikas Mandal (PVMs) and NARMADA Trust and entrepreneurs. First, the CEE
formed the PVMs as an informal group, consisting of mainly youth. The PVM, a legal institution at
the village level under Bombay Trust Act (1950), is translated as Natural Resources Management
Development Group, consisting of women and young people to commit to the programme. The CEE
facilitates these PVMs to foster youths and women to participate in the initiative for environmentally
- friendly activities. The 450 members of PVMS for the Hingolgadh Nature Education Sanctuary in
Rajikot district are currently engaging in institutional activities (CEE, 2008). The willingness for
voluntary works for environment and development at the village is a criterion for becoming the
member of PVMs.
The CEE set up the Eco-Enterprise Investment committee (EIC) which consists of the
representative of PVMs, NARMADA TRUST, CEE, local government officials, financial institutions,
NGOs and experts. Eco Enterprise Investment Committee (EIC) will conduct the screening based
on the criteria.
The Gram Nidhi project supports access to reasonable credit and low interest. The villagers first
have to become a member of SHGs to receive the benefits of the borrowing and credit. The
villagers apply for the credits to SHGs, the application is forwarded the NARMAD Trust, and the EIC
makes a final decision for an approval. Currently, the villagers can borrow money with 7 % interest,
which is a relatively low rate compared to other similar microfinance schemes. For example, the
basic interest at Grameen Bank, Bangladesh is 10 % with flat rate, and the housing loan is 8%.
Although the SHGs repaid to the NARMADA TRUST actually with 5 % interest, the SHGS repaid
7%, and 2% of interest as a safety fund. The guideline was set up for lending funds to villagers by
NARMADA Trust members, NGOs, and CEE.
2

Flows for the implementation of Gram Nidhi
1 Approval by Eo-Enterprise Investment Committee (EIC)
2 NARMADA Trust disburses funds to PVMs
NARMADA Trust
Revolving fund :5% interest
Paryavaran Vikas Mandals (PVMS)
Revolving fund :no interest
Revolving fund :7% interest
Eco Enterprise Fund (EEF)
Eco-entrepreneurs
Members of Eco-Enterprise Investment Committee (EIC)
NARMADA Trust
Paryavaran Vikas Mandals (PVMS)
CEE (Center for Environment Education)
NGOs
Financial Institutions
Local Government Officials
Figure 1: Flow of the Implementation of Gram Nidhi Project
The application should be environmentally sound, therefore there are many criteria
including the points for assisting environmentally sustainable activities as well as for improvement
of their lives. These eligibility criteria were prepared by EIC for enterprise financing;
• Projects should be environmentally sound, economically viable and technically
feasible. Demonstrate an impact on environmental conservation efforts at the project
site and provide financial benefits to the community and local environmental
organizations, contributing to local employment;
• In the proposed enterprises low cost environmentally friendly practices and
options should be adopted contributing to the strengthening of biodiversity and
sustainable development. Compulsorily at least three of the following
practices/technology should be applied: bio-pesticides, vermi-compost/bio-compost,
vermin-wash, bio-control by yellow strip, cow urine, and saplings;
• To ensure viability smaller operational units were considered. The average project
cost for on-farm development activities will be restricted to Rs.20.000/-per enterprise
for individual eco-entrepreneurs; and
• The successful enterprise has possibilities of large scale replicable in the other
nearby rural area.
Up to now, the payback of all loans is 100 percent, and 7 SHGs are currently gaining benefits from
Gram Nidhi funds.
3

Photo 1& 2: Members of NARMADA TRUST
Activities supported by Gram Nidhi
Many activities supported by Gram Nidhi have been funded since 2004. From 2004-2008, organic
agriculture farming and animal husbandry are the main funding activities, and over 250 cases have
been funded (personal contact with CEE). In the target village, PVMs groups are now producing
valuable organic crops, as well as traditional medicine plants for market. Also, the activity for animal
husbandry which provides training and advice to the villagers in order to increase milk production,
such as selection of calves, which resulted in increased income generation. The milk collection
association was formed and a milk collection house in the village was run by the villagers
themselves. Before the introduction of Gram Nidhi project, the villagers hasd only produced milk for
their own consumption, but now many villagers can produce more milk for sale. In addition, the
delivery of milk means that there is now easy and direct access to the market, following the
establishment of a milk collection house in the village. The villagers bring milk twice a day to the
milk collection house, and a member of the milk collection association measures and records its
quality and quantity. Based on the record, the villagers get payment. The products by Gram Nidhi
such as oil butter are now widely recognised for their quality, both inside and outside of India. Some
members directly negotiate with buyers from Australia and send products to them. Also, ecofriendly
activities are supported by Gram Nidi, such as making compost, rainwater-harvesting
structures, the construction of toilet facilities and drainage system inside the village.
Photo 3,4,5,6 From left to right: ;Products by Gram Nidhi Entrepreneurs, the house for milk collection, cactus fruit for juice, rainwater
harvesting structure on the roof top
4

Positive impact to local community
The perception of the villagers both male and female has been dramatically changing after the
implementation of the project. The traditional Indian society, a male dominant society where there
are no women participating in public settings, still strongly prevails in the rural area. In the early
stage of Gram Nidhi project, the men and old women were very sceptical of the project, citing a
negative effect on their wives and the other women. Now, however, they are pleased to send them
to SHGs meetings.
The villagers also have recognised that organic farming generates more income due to low input
costs and good market value in a sustainable manner. The villagers are now able to save some
money for further investment in livestock. The savings also can generate further investment for the
improvement of their lives, such as access to drinking water, toilets, and construction of a drainage
system in the village. The improvement of their lives in terms of sanitation and health can be
physically observed. For example, some houses have been equipped with the rainwater- harvesting
structure on the roof, and water storage underground through the Gram Nidhi loan. Also, the
awareness of sanitation and health has increased. After the implementation of the project, the
villagers are more aware of their sanitation and health, and some toilets have been installed.
Also, increased additional income and saving has been invested in their children’s education, health,
sanitation facility, and safe drinking water. In the target village, many members think that education
is important for developing their capacity as entrepreneurs. One female entrepreneur stated that
they want to give priority to girls for education over boys, since girls have more potential to be good
entrepreneurs, and through the enterprise activities, they can have more opportunity to explore
outside of the village, as well as to improve their lives.
It also notes that after implementing the programme, the rural economy has been diversified, so that
now it is less vulnerable to natural disasters and other inevitable stresses.
Now the villagers have developed confidence to run the self-employment style enterprise to
improve their life.
Key for success
It is important to note that CEE has been involved in the target area for a long time. Without this
long-term involvement of CEE, the project may not have built up such a big success. Before starting
the Gram Nidhi, CEE has been working in the target area since 1988 for Eco-development
programmes and from 1996 onward, the formation of Self Help Group (SHGs) was started. Since
then, many programmes have been implemented in the village and women's SHGs have already
existed in the villages. On this foundation and environment, the Gram Nidhi has started.
Photo 7: Women Entrepreneurs
5

The innovativeness for this micro finance scheme is not only to carry out pro-poor measures, but
also to combine the programme with environmental education for promoting their sustainable living.
The Gram Nidhi model is based on three E’s: Economic Support, Extension service, and
Environmental awareness. The package of measures based on three E’s conferred a benefit on
entrepreneurs. To take an example of many, the Technical Assistance Fund (TAF) is introduced into
the model. The villagers in the rural area have not been able to access micro-credit due to lack of
knowledge, as well as not understanding why it is important to conduct sustainable practices such
as organic farming rather than producing an instant cash crops like cotton. Therefore, the CEE
formed the TAF to provide a necessary training and the technical assistance for improving their
agricultural and livelihood in a sustainable manner. The TAF plays a role as an advisory service for
consulting about financial control, accounting, as well as offering technical assistance for agriculture,
animal husbandry, agro-forestry, horticulture, agro-processing and water conservation. Through
these activities, the TAF significantly contributes to convince villagers of the benefits of practicing
sustainable farming in the long term.
In addition, the Gram Nidhi model applies an eco-package concept providing further positive
impacts on promoting environmental-friendly entrepreneurs. The eco-package provides the utmost
benefits for each entrepreneur with linkage to the market at the village level. The Gram Nidhi
diversifies the activities of entrepreneurs for funds, so that even a landless farmer is able to start an
enterprise such as processing activities for milk production. A chain of suppliers and consumers at
the local level also strengthens community development.
Another essential factor is the presence of a female staff member at the local office of CEE. She
has been heavily engaged in communication with women’s groups at the village level from the initial
stage. The aim is to organise women’s group as SHG to discuss family issues, children education,
health, sanitation, therefore the presence of a woman as part of the staff is essential for villagers to
facilitate the discussion, as well as to give advise on these issues. Now all villagers, even the men,
are building trusting relationships with the woman staff member, and when she visits the village, the
men are willing to send their wives to the women’s group, as well as encouraging their wives to
get involved in various outside activities, such as participation of the agricultural fair outside of the
village. Also, she is a model to which many village girls can aspire.
Figure 2: Gram Nidhi programme linkage to the market
6

Future Plan and Challenge
This micro finance scheme differs from others which primarily focus on pro-poor activities. The
Gram Nidhi model is a combination of micro credit and support in building environmentally
sustainable and economically variable enterprises to improve the target villagers’ lives. The Gram
Nidhi model also proved that the timely access to a small amount of funds can make a change the
rural development. In addition, the long-term involvement of NGOs in the target area is an essential
factor to conduce a successful practice. The Gram Nidhi Project shows that the availability of funds
in the early stage, the presence of NGOs, and long-term involvement in the target area are essential
to implement the project.
The villagers are now thinking of raising more funds to expand their entrepreneurial skills to other
activities. Although the villagers have been saving money to increase the fund money, it is not so
easy for villagers to save extra money regularly. The neighbouring villagers also want to start the
similar micro finance scheme, but they have not currently started the programme yet due to the lack
of basic funds. Conversely, the Gram Nidhi was sponsored by the World Bank, and this condition
actually allows the CEE to start the programme.
Without the intervention of a funding organisation, is it possible for the villagers to replicate a similar
micro finance scheme by themselves? After conducting the case study, it seems that the absence of
a funding organisation is a limiting factor to implement the programme. However, to sustain and
expand the Gram Nidihi Project, the CEE still needs to take an initiative to seek other funding
organisations to expand the project. In addition, CEE itself must bear some of the cost of basic
expenditure such as personnel for the consultation for sustaining the project. In this regards, the
CEE is currently working to expand the Gram Nidhi model in collaboration with Yale School of
Management. Further study of existing mechanisms of Gram Nidhi require the identification of
significant factors for replication, as well as the role of NGOs and government for further
improvement of rural development.
References
Centre for Environment Education (CEE).
http://www.ceeindia.org/cee/index.html
Centre for Environment Education (CEE) 2008. Annual <strong>Report</strong>.
Government of India. 2007. Poverty Estimates for 2004-2005.
http://planningcommission.nic.in/news/prmar07.pdf
Grameen Bank Home page
http://www.grameen-info.org/index.php?option=com_frontpage&Itemid=68
Grameen Bank, Credit Delivery System
http://www.grameen-info.org/index.php?option=com_content&task=view&id=24&Itemid=127
7

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c/o Institute for Global Environmental Strategies (IGES)
2108-11 Kamiyamaguchi, Hayama, Kanagawa, 240-0115, Japan
E-mail: apfed@iges.or.jp
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collaboration with APFED members and policy research institutes for
environmental management and sustainable development in the Asia-Pacific
region.
Institute for Global Environmental Strategies (IGES)
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