State of India’s Livelihoods The 4 P Report Edited By: Dr. Sankar Datta and Vipin Sharma Sponsored by India ACCESS Development Services, set up in March 2006, is a not-for-profit company whose overall aim is to incubate new institutions to enable their self-sufficiency and self-sustainability. To this end, it offers specialized technical assistance under two verticals: microfinance and livelihoods. The raison d’être of setting up ACCESS was to build and consolidate the successful experiences of a large microfinance programme funded by DFID and implemented by CARE to contribute to the future growth and evolution of the microfinance sector in India. The initial mission of ACCESS was to incubate and build the capacities of fledgling microfinance institutions in India and meet the demand for financial services from the poor. But it soon became clear that improving the condition of the poor required a more comprehensive approach. As a consequence, besides expanding its programming strategies within the ambit of microfinance, ACCESS has also developed a strong portfolio under its Livelihoods Programme Unit. ACCESS has thus transitioned from a narrow microfinance resource agency to a much more diversified field of programming competences. Under the Livelihoods Program Unit, ACCESS impacts the lives of the poor by developing sustainable solutions for upscaling their income generation activities. To optimize its resources and maximize the results of its interventions, ACCESS believes in partnering with key stakeholders in the sector in order to develop mutually reinforcing strategies, bring convergence of competencies and build consensus on key issues. The Livelihood School has been set up, by the BASIX Group, a premier livelihood promotion institution, to impact livelihoods of millions of poor and other disadvantaged sections of the society, especially of Bharat, in a sustainable, socially and economically equitable manner, by building knowledge about processes, methods and principles of livelihood promotion and disseminating the same to enhance the capacities of practitioners, whose work affects the livelihoods of a large number. Since its inception in 1997, it has offered 251 Livelihood Education Programs, reaching to 9,123 participants, including elected representatives of Panchayati Raj Institutions, BDOs/ CEOs, officers of various Government Programs including Ajeevika and UPASaC Livelihood Project of Uttrakhand Government, Orissa Forest Sector Development Project in Orissa, NABARD, and professionals from NGO and multilateral agencies, engaged in promoting/supporting livelihoods. It has been accepted as the Knowledge Partner for various programs on livelihood promotion, with ACCESS, NIRD and CDAC. The School has been engaged in nation-wide study on “Savings Behaviour of Poor”, supported by NABARD, Ford Foundation, ING Vaysya Bank and international study on “Post disaster livelihood approaches in the context of Tusnami” in Tamilnadu (India) and Srilanka supported by Action-Aid. It has a series 0of other publications including case studies and research papers. The Microfinance India Secretariat ACCESS Development Services 28, Hauz Khas Village, New Delhi - 110016 Aarti Dayal Tel : +91 11 26510915, Fax: +91 11 26850821 Project Coordinator, Livelihoods, www.accessdev.org ACCESS Development Services State of India’s Livelihoods: The 4 P Report Edited by: Dr Sankar Datta Vipin Sharma ACCESS Development Services 28 Hauz Khas Villages, New Delhi 110 016 2009 Disclamer: This report represents the personal views of the chapter authors. It does not represent the view of ACCESS Development Services, The Livelihood School, or of its sponsors, or of the Livelihoods India Advisory Group. 1 State of India’s Livelihoods: The 4 P Report Edition: 2009 Designed & Published by 139, Richmond Road Bangalore – 560 025 Karnataka, INDIA Phone: +91-80-25580346 e-mail: [email protected] website: www.booksforchange.info Copyright © : ACCESS Development Services 28, Hauz Khas Village New Delhi – 110 016 Phone: +91-011-26510915 Fax: +91-011-26850821 www.accessdev.org Bf C Production Team Shoba Ramachandran, Rajeevan and Gokul ii CONTENTS Foreword Preface Abbreviations Chaper 1 Overview of Livelihoods Scenario in India 1. Introduction 1 2. Salient features of the livelihoods scenario today 3 2. 1. New government’s focus on rural livelihoods 3 2. 2. Global economic slowdown 4 2. 3. Current employment scenario 6 2. 4. Stagnant agricultural economy 7 2. 5. Widening gap 9 2. 6. Distribution of workers across gender: feminisation of workspace 12 2.7. India’s response to the current livelihoods situation 12 3. Policy interventions to address the same 13 3. 1. Social Inclusion focus of government 13 3. 2. National Rural Livelihood Mission (NRLM) 13 3.3. National Rural Employment Guarantee Act (NREGA) 13 3. 4. Social security bill 14 3. 5. Skill building efforts 15 4. Innovation initiatives 16 4. 1. Experimentation with institutional forms 16 4. 2. Difficulties in mobilising livelihood finance 16 5. Promotion efforts of civil society 17 5. 1. Diverse multi-lateral programmes focusing onlivelihoods: large investments 17 5. 2. Public-private-people partnership 17 6. Conclusions 18 References 19 Chapter 2 Perspectives on the Impact of the Global Financial Crisis on India’s Poor 1. Introduction 20 2. Financial crises and their impact on the poor 21 3. The canvas 22 3. 1. The global scenario related to the present crisis 22 3. 2. Impact on global trade, growth and remittances 23 3. 3. Global impact on poverty and hunger 25 3. 4. The decoupling debate 25 iii 4. The Indian context 27 4. 1. India and the Global Economy 27 4. 2. The transmission channels 28 4. 3. The moderating factors 28 5. Impact of the slowdown on sectors and industry groups 29 5 .1. Activities not integrated into the global economy 30 5. 2. Activities impacted by domestic deleveraging 31 5. 3. Sectors facing a business cycle acceleration 34 5.4. Sectors entailing boom-time valuations 34 6. Migrant remittances 39 7. Policy response 41 7. 1. Monetary policy response 42 7. 2. Fiscal policy response 43 8. Assessing the impact 44 9. First order impact of the crisis 45 9. 1. Opportunities lost for new job creation 45 9. 2. Job losses 45 9. 3. The poverty impact 47 9. 4. Impact: an intuitive sector-wise overview 48 10. The second order impact of the crisis 48 11. Other collateral issues 51 12. Conclusion 54 Chapter 3 The Promise of Social Inclusion: Will the 11th Five Year Plan Deliver? 1. Introduction 55 2. Social exclusion and inclusion – the theoretical construct 57 3. Socially excluded people and their situation 59 3 .1. Women 60 3 .2. Scheduled Castes (SC) and Scheduled Tribes (ST) 61 3. 3. Muslims 64 4. Livelihoods schemes and their inclusive potential 66 4. 1. Schemes for women 66 4. 2. Schemes for the SCs and STs 67 4. 3. Schemes for the minorities 69 5. The 11th Plan: how inclusive? 70 5. 1. Affirmative schemes 70 5. 2. Basic services 72 5. 3. Social protection 76 5. 4. Market inclusion 77 5. 5. Legal and policy framework 77 5. 6. Social norms and attitudes 77 5. 7. Targets and monitoring 78 5. 8. Discussion 78 iv 6. Conclusions 79 References 81 7. Annexure 1–11th plan outlay & expenditure: selected schemes 84 Chapter 4 NREGS and Livelihoods: A Review of Issues and Outcomes 1. Introduction 88 1. 1. Experience of wage employment schemes in India 89 1. 2. NREGA: vision and salient features 90 1. 3. The rationale of the NREGA and expectations of the NREGS 91 1. 4. Outreach and performance of NREGS 92 1. 5. NREGS outcomes: field evidence of impact on rural livelihoods 100 1. 6. NREGS and rural livelihoods: employment generation 106 or creation of productive assets 1. 7. NREGS and livelihoods: selected implementation issues 109 1. 8. Concluding observations 112 References 115 Appendix 1 118 Appendix 2 120 Chapter 5 Skilling a Young India 1. Investing in youth now 121 1. 1. Problems and challenges 124 2. Legacy of the past 125 3. Snapshot of different market-linked initiatives 128 3. 1. Government of Andhra Pradesh 128 3. 2. Govt. of Tamil Nadu 131 3. 3 The Livelihood Advancement Business School (LABS) by Dr Reddy’s foundation 132 3. 4. Government of Gujarat 133 3. 5. Government of Rajasthan 134 3. 6. Efforts by industry associations: CII skilling initiatives 135 4. S killing mission: a panacea for all ills? 136 4. 1. Challenges 138 5. Way Ahead 142 5. 1. Focus on the unorganised sector 142 5. 2. Focus on women 143 5. 3. Focus on the disabled 144 5. 4. Focus on innovations 146 Chapter 6 Producer Companies – Linking Small Producers to Markets 1. Need for collectivisation 148 2. Functions of collectives 148 v 3. Forms of collectives 150 4. Origin of cooperatives 150 5. Mutually Aided Cooperatives Act (MACS) 153 6. Producer companies 154 7. Comparison of PC and Co-operative laws 157 8. Conclusion 168 References 169 Chapter 7 Challenges in Livelihood Finance 1. Is microfinance the answer to poverty reduction? 171 2. Rationale for livelihood finance 172 3. Working definition of LiFin 172 4. The nature of funds required for LiFin 173 5. The Rangsutra case:4 demand side story 174 6. Organic dilemma5: the supply side story 177 7. The LiFin leveraging bottlenecks 179 8. Good practices in livelihood finance: SEWA experience 181 9. SEWA’s model of livelihood finance – Sajeevikalay 182 10. SEWA’s livelihood initiative for the salt farmers in Surendranagar 182 11. Cost and time aspects of livelihood finance 184 11. 1. Time taken to pull a family out of poverty 184 11. 2. Agarias of Surendranagar 184 11.3. Cost of livelihood finance 185 11.4. Social security 185 11.5. Performance so far 186 11. 6. Lessons from SEWA’s experience in livelihood finance 187 12. Way ahead in LiFin 188 12.1.