SOIL Report 2008 - ACCESS Development Services

Public Systems: Major central government anddonor-supported programmes for Livelihood Promotionthe poorest quintile, whereas as many as 14 per cent are from the richest and 26 per cent are from thetwo richest quintiles. Further, the total benefits are even more inequitably distributed with the richestquintile receiving as much as 50 per cent as compared to 8 per cent for the poorest. Only 10 per cent ofthe poorest households were aware of the programme. In terms of leakages to intended non-beneficiaryhouseholds, SGSY ranks next to the PDS grain distribution system and the Indira Awas Yojana. Indeed,SGSY was found to be a poor performer on most indicators.SGSY and SHG Bank-Linkage and Microenterprise Development: TowardsConvergenceThe potential of microfinance, whether under SGSY iv or SHG-bank linkage, has been posited on theability, especially of women borrowers organised into groups, to carry out profitable microbusinesses.With agriculture unable to absorb the growing rural labour force, the spillover factor adding to the numbersengaged in microenterprise, especially in the services and business segments, is strong. Yet, not allhouseholds have the capability to undertake microenterprise. Several constraints may be in operation,which may limit the income-yielding potential of any investment. This could include the risk-aversebehaviour of households. Poorer households are more likely to be disadvantaged in this respect on accountof their lack of education, entrepreneurial skills, etc. Finally, demand constraints may be operativefor the limited range of feasible microenterprise options (Tankha, 2001).For years it has been accepted that there is scope for the integration of the SHG bank-linkage andSGSY programmes as their objectives are complementary, and to some extent, sequential. Apart fromthe range of “microfinance plus” elements the main area of difference appears to be the existence ofthe subsidy element, larger loans and the absence of a strong savings link to credit and sustained socialintermediation in the case of SGSY. The two programmes deliver thousands of crores of rupees ofloans to the same target group. Nevertheless, funds available under SGSY lie grossly underutilised evenas a fresh round of restructuring of rural employment schemes is being proposed.microenterprisedevelopmentfor povertyalleviationrequires aconvergence ofapproaches notonly betweenthe currentmicrofinanceprogrammesbut also a rangeof players atthe district andhigher levels.The physical and human infrastructure requirement for microenterprise development, particularly fornon-traditional activities, can be substantial. Despite the existence of government extension departments,support even for traditional activities was deficient and the district industrial centres ineffectivein the design of projects for this target group. Sporadic development of activities at the district leveldoes not suggest itself as an easy way forward. Identifying viable new activities with local and widerdemand, creating skills and backward and forward linkages is a task presently outside the capacity ofdistrict level officials.Thus, microenterprise development for poverty alleviation requires a convergence of approaches notonly between the current microfinance programmes but also a range of players at the district and higherlevels. The expected synergies at local levels can be realised only if there is consistency and convergencebetween programmes and objectives of different stakeholders such as different ministries and departmentsand banks as well as NGOs. Above all, these would best be based upon consultations with, andpriorities of the poor people themselves. Ideally, participatory micro-level planning with communitiesshould result in mapping of the skills and capacities of the people and the demand for different productsand services.Challenges and Future Directions 11SGSY has reached a stage where it requires revitalisation. An exercise for the restructuring of the programmein consultation with all stakeholders is under way. Given below are some of the challenges andfuture directions for the programme:11As highlighted in NIRD (2006), MoRD (2008b) and other MoRD documents.A separate deliverystructurefor SGSY atthe state, districtand blocklevel, mannedby developmentprofessionals,needs to becreated.115