Chapter 2

Self-Employment and Entrepreneurship Development Programmes

Integrated Rural development Programme
Poverty eradication has been one of the major objectives of planned development. The strategy and policy of direct attack on poverty by way of target approach for rural poor came into being in the Fourth Five Year Plan. With the main objective of improving the asset base of the poor and to involve the poor in the production/income generation processes of the economy, Integrated Rural Development Programme (IRDP) was initiated. IRDP was taken up initially in 2300 blocks and has been extended to all the blocks of the country since 2nd October, 1980. of the Planning Commission. These official estimates of poverty are arrived at by the Planning Commission based on the National Sample Survey Organisation Consumer Expenditure Surveys conducted every five years. Devolution of funds to districts is based on a formula evolved by the respective State Government. Further devolution to the Blocks is done by the Governing Body of the DRDA based on the criteria approved by it. Target Group The target group consists of families of small and marginal farmers, agricultural labourers and rural artisans etc. Whose per capita monthly expenditure does not exceed the poverty line (ranging between Rs.216.65 and Rs.327.48 for different States/UTs) as estimated by the Planning Commission. Currently, the Below Poverty Line census is being carried out in all the States and the revised poverty line will be used to categorise BPL families. Within the target group, special safeguards have been provided by reservation of
q q q

Programme Implementation
Programme IRDP aims at providing income generating assets and self-employment opportunities for the rural poor. Assistance under IRDP is given to target group of rural poor belonging to families Below Poverty Line (BPL), in the form of subsidy by the Government and term credit by financial institutions. Criteria for Allocation of Funds to the States Allocation of funds to States is being made by the Central Government in proportion to the poverty levels in each State on the basis of official estimates

50% benefits for SCs/STs, 40% for women and 3% for physically handicapped persons.

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Priority is also to be given to women headed households, assignees of surplus land, freed bonded labourers and acceptors of small family norm. However, this should not in any way adversely affect the safeguards provided for SCs/ STs, women and physically handicapped persons. The flow of financial assistance (subsidy + credit) to the categories described above should be commensurate with the percentage of the physical coverage.

Pattern of Subsidy The pattern of subsidy is

q q

25% for small farmers; 331/3% for marginal farmers, agricultural labourers, and rural artisans; and 50% for SCs/STs beneficiaries and physically handicapped persons.

An IRDP beneficiary with his cow

Implementing Agency District Rural Development Agency/Zilla Parishad is the implementing agency for this programme. The Governing Body at the district level provides guidance and directions to DRDAs. It includes local MPs, MLAs, and Chairman of Zilla Parishad, Heads of District Development Departments and representatives of SCs/STs, women and NGOs. At the grassroots level, the programme is carried out by Block Development Officer, and the other block staff with the help of the village level functionaries. Funding Pattern and Release of Funds IRDP is financed on a 50:50 cost-sharing basis by the Centre as well as by the States. The funds are released directly to the DRDAs. BPL Census and Selection of Beneficiaries In order to target assistance to poor families, a BPL census is conducted at the beginning of each Plan period by the States, at the behest of Ministry of Rural Areas and Employment. The Gram Sabha is involved in the identification and selection of beneficiaries under IRDP from the initial stage itself. After the survey/census is completed, the same is verified in the Gram Sabha and once it is approved, such a list is drawn up. The same is sent to the Panchayat Samitis/Blocks and DRDAs fro record. Identification of Thrust Areas and Selection of Projects for Beneficiaries

The ceiling on subsidy in respect of individuals is

q q q

Rs.4000 in normal areas; Rs.5000 in DPAP/DDP areas; Rs.6000 for SC/ST families and physically handicapped persons; Rs.7,500 or 50% of the project cost, whichever is less for unemployed educated youth; and For activities involving at lease 5 persons, the ceiling has been fixed at Rs.1.25 lakhs or 50% of the project cost, whichever is less.

Power Tiller provided to a group under IRDP

The project profiles to be taken up for beneficiaries, take into account the beneficiarys needs and

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Weaving a bright future : Self-employment through bank credit and Government subsidy under IRDP.

aptitudes the local resource endowment. The investment target for the year, the choice of the BPL family of the activity, forward and backward linkages and infrastructural support, etc. are also taken into account while making a project profile. The activities can be taken up in Primary sectors, Secondary sectors and Tertiary sectors. District Credit Plans The District Credit Plan and the Annual Action Plan are formulated by the Lead banks according to the guidelines issued by Reserve Bank of India (RBI) from time to time. The District Credit Plans are prepared normally for a period of three to five years. Action plans are prepared for each year. While preparing the District Credit Plans, the targets laid down by Government of India and RBI with regard to the share of lending to the priority sectors, weaker sections, small scale industries etc. are to be kept in view. It is also ensured by the DRDAs that the Annual Plans prepared by them for IRDP are integrated into the District Credit Plans and Annual Action Plan prepared by the Lead banks so that necessary credit support for IRDP is made available.

Credit Target At the beginning of the year target for credit for IRDP at the all-India level as well as at the State level are fixed. This is done in consultation with the RBI, NABARD and the participating banks. Credit should normally flow in the ratio 2:1 to subsidy. However, the effort is to see that credit-subsidy ratio exceed 2:1. The ceiling limit for collateral free loans is Rs.50,000. Acquisition of Assets and Cash Disbursement Scheme The assets procured should be of standard quality, at economic prices and to the satisfaction of the beneficiary. Beneficiaries under IRDP are generally given assets and not the cash. However, sometimes the quality or the price is not to the satisfaction of beneficiaries. It provides greater freedom to the beneficiaries for the purchase of quality assets and to minimize the leakage in its disbursement if the assistance is given to the beneficiaries cash. Experience has shown that reliance can be placed on the good sense of the beneficiaries

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in purchasing of assets subject to some safeguards. Disbursement of money in cash to a beneficiary improves his/her bargaining power and has the added advantage of reducing delays and other malpractices prevalent in disbursement in kind. Hence, with effect from the year 1991-92 it was decided to permit disbursement of assistance in cash under the Cash Disbursement Scheme with a view to giving greater choice to beneficiaries in purchasing assets. Initially it was implemented in 50% of the blocks. With effect from the year 1996-97, it is extended to all the blocks of the country. Release of Subsidy (Back-end Subsidy) Earlier, simultaneously with the disbursement of loan by the bank, the subsidy amount was debited from the DRDA account and credited to the account of the beneficiaries. Thus in effect, the beneficiary was burdened only with the bank credit portion. This

before the stipulated lock-in period. The loan document would be taken by the bank for the full project cost and it would be inter-alia stipulated that in case of misutilisation of the loan, the entire amount of subsidy would be forfeited. Such forfeited amount of subsidy will be available to the bank for adjustment against the borrowers dues. Family Credit Plan A new project of Family Credit Plan (FCP) has been launched in the year 1994-95. It is in operation in 316 selected districts. Under this scheme, more than a single member of the family can be given assistance, subject to the normal subsidy limits for the family. The banks mobilize higher credit for families selected under this scheme. The current levels of investment under FCP have crossed Rs.26,110 at the all-India level. Monitoring and Supervision IRDP is being monitored from the Central level down to grassroots level. At the State level, a State Level Coordination Committee (SLCC) monitors the programme. At the Central level, the Central Level Coordination Committee (CLCC) monitors and reviews the implementation of the scheme and lays down policy guidelines. A High Level Coordination Committee on credit support to IRDP also functions at the Central level to monitor and review all aspects relating to credit linkage for IRDP. The progress under IRDP is being monitored on a monthly, quarterly, half yearly and annual basis through reports and returns submitted by DRDAs/States. The shortfall, if any, in the performance under IRDP has been brought from time to time to the notice of all concerned States/UTs for corrective measures. Over and above, the implementation of the Programme is monitored through the annual Project Directors Workshop and periodic meetings with the State Secretaries. At the Block/DRDA level monitoring is done through field visits and physical verification of assets for which an inspection schedule for the district and block functionaries has been laid down.

A beneficiary of IRDP, operating a machine

adjustment of subsidy at the beginning itself was termed as Front-End subsidy. It was, however, found that the beneficiaries were repaying the loan immediately, thereby availing of amount of the subsidy. This in effect meant misuse of subsidy. To make beneficiary utilize the loan for sustainable income generation, the system for Front-End subsidy has been replace by the Back-End subsidy. The subsidy would be adjusted only in the last few instillments. At the same time a lock-in period for subsidy has also been stipulated and the subsidy would be adjusted only in the last few installments and it will not be allowed in the event of the repayment made

Programme Support
Programme Infrastructure under IRDP Absence of linkages has long been identified to be

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one of the important reasons for lack of sustainability of IRDP schemes. IRDP infrastructure funds are spent for filling critical gaps in infrastructure requirements and to enable IRDP beneficiaries full utilisation of their assets. Marketing linkages / infrastructure are given priority. Recognizing that infrastructure gaps often lead to difficulties in sustaining IRDP projects, the sanctioning powers for infrastructural gaps often lead to difficulties in sustaining IRDP projects, the sanctioning powers for infrastructural projects were considerably decentralised with effect from 1994-95. Currently, projects upto Rs.10 lakhs can be sanctioned with the approval of the Governing Body of the DRDA and upto Rs. 25 lakhs with the approval of the Divisional Commissioner or Secretary, Rural Development at the State level. Only infrastructural projects beyond Rs.25 lakhs need to be approved by the State Level Sanctioning Committee. Similarly, the ceiling on permissible expenditure on infrastructure has been raised to 20% from the present level of 10%. For States in the North-Eastern region, including, Sikkim, this has been enhanced to 25%.

(which is usually the bank with substantial lead responsibility in the State). The agenda items discussed by SLBC relate mainly to branch expansion, implementation of Annual Action Plan/ District Credit Plans, support from government agencies, inter-bank differences, problems raised at District Consultative Committee which require attention at State Level etc. III. District Level Consultative Committee At the District Level a District Level Consultative Committee (DLCC) has been constituted under the Chairmanship of the District Collector. All the banks and the District level officers of the Government, NABARD, DRDA and DIC are represented on this Committee. This forum should be utilised for allocation share of Credit disbursement to various banks, monitoring and reviewing the overall progress in physical and financial terms, ironing out inter-agency differences and to prepare items for consideration of State Level Committee. IV. Block Level Consultative Committee The Block Level Consultative Committee (BLCC) has been constituted at the block level under the chairmanship of the Sub-Divisional Officer. Meetings are to be attended by Block Development Officer, Branch Managers of all commercial banks and Chairman/Secretary of the Primary Land Development Bank, District, Tehsildar and APO (Credit). The project officer DRDA, the Lead Bank Officer and the Lead District Officer may attend the meetings as special invitees. V. Block Level Bankers Committee Under Service Area Approach, a Block Level Bankers committee (BLBC) is to be constituted in each block. All the banks operating in the Block including the District Central Cooperative Bank and RRB are members of the committee. The BDO and other technical officers in the Block such as Extension Officers for agriculture, industries and cooperatives will also be its members. The Chairman of the committee will be the Lead Bank Officer. Lead Bank Officer will also be the convenor.

Institutional Arrangement For Credit Financing

Consultative Arrangements for Credit I. High Level Committee at Central Level A High Level Committee on Credit (HLCC) for IRDP, headed by the Secretary, Department of Rural Employment and Poverty Alleviation, Government of India and including senior representatives from the Government of India, State Governments, Commercial Banks, NABARD and RBI has been constituted to consider the various problems arising from time to time in the course of implementation of the programme and review the credit arrangements to recommend changes and improvements as and when necessary. This Committee meets regularly. II. State Level Bankers Committee State Level Bankers Committees (SLBCs) have been set up for inter-institutional coordination and joint implementation of development programmes. The meetings of this committee are convened by the designated convener bank

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Risk Fund for Consumption Credit To meet the small consumption needs of weaker sections of society, a scheme of Risk Fund for Consumption Credit has been in operation as a nonPlan Scheme since 1977-78. The Scheme is intended to enable commercial banks, Cooperative banks and Regional Rural Banks to provide consumption loans, not exceeding Rs.1000 per borrower to weaker sections of society. Insurance Cover for Various Assets Insurance Cover is available for livestock assets given under the programme. The General Insurance Corporation provides this cover on certain terms and conditions. Performance During the Eighth and Ninth Plan Review of Progress (1992-97) During the Eighth Five Year Plan, more than 108 lakh families have been assisted. There has been a shift of emphasis from mere coverage of families to qualitative aspects of the programme through enhancement of the average level of per family investment. Credit targets have been fixed from 1995-96 onwards. As a result of these interventions, the average level of investment per family which was Rs.7889 at the beginning of the Eighth Plan period rose to more than Rs.14,950 during 1996-97 and further increased to Rs.17,771 during the current year. Performance During the Eighth and Ninth Plan
year No. of Subsidy Credit Total Subsidy Per Families Dis - Mobile InvestCredit family Assisted bursed sation ment ratio invest(No.in (Rs.in (Rs.in (credit ment (Rs. lakhs( crores) crores)+ subsidy

Performance During the Eighth Five Year Plan 1992-93 20.69 1993-94 25.39 1994-95 22.15 1995-96 20.89 1996-97* 19.24 579.68 1036.80 1616.48 1:1.79 7889 800.82 1408.44 2209.26 1:1.76 8746 818.30 1450.58 2268.88 1:1.77 10313 870.20 1701.33 2571.53 1:1.96 12310 905.94 1969.16 2874.10 1:2.17 14943

Performance During the Ninth Five Year Plan 1997-98* 17.07 1998-99** 7.82
* Provisional ** Upto Nov., 98

863.11 1996.64 2859.75 1:2.31 16753 407.98 980.72 1389.69 1:2.40 17771

Performance during 1997-98 During 1997-98, total allocation was Rs.1133.51 crores against which Rs.1109.54 crores have been utilized. The physical and financial progress amy be seen at Annexure-X. The Ministry has fixed a credit target totaling Rs.2,700 crores fro the programme of which Rs.1996.64 crores have been mobilized during the year. A total of more than17.07 lakh families have been covered during this period of which SC/ST

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account for 46.40% and women 34.33% of total coverage. The lower coverage of families is due to a shift of emphasis to qualitative aspects of the programme such as enhancement of average level of investment per family. Performance During 1998-99 During 1998-99, the total allocation is Rs.1456.28

Development of Women And Children In Rural Areas

Development of Women and Children in Rural Areas (DWCRA) was launched as a sub-scheme of IRDP during the year 1982-83 in 50 districts. It subsequently expanded to cover all the districts in the country by 1994-95. The flow of benefits to poor women, in spite of reservation, under various poverty alleviation programmes viz., IRDP and TRYSEM were found to be not making much impact. Therefore, in order to overcome this situation and to involve the rural women more intensely in economic activities and matters that concern the rural community, one of the initiatives taken by this Ministry was the introduction of an exclusive programme for women viz., Development of Women and Children in Rural Areas. Since economic empowerment involves provision of additional channels of funds in the form of working capital and credit, training, employment, management skill etc., DWCRA with exclusive focus on economic empowerment of women provides all these inputs by considering women as critical to development. This intervention aims at not only raising the incomes of rural women of poor households, but also enabling organized participation of groups of women in the programmes of credit, skill training and infrastructure support for self employment, who cannot take up economic activities individually or on their own. DWCRA was introduced for ensuring that the benefits of IRDP programme reach women directly. The programme seeks to improve the access of rural women to health, education, safe drinking water, sanitation, nutrition etc., thereby bringing about an enhancement in the quality of the general wellbeing of women and children.

crores against which Rs.541.87 crores have been utilized up to November, 98. The physical and financial progress may be seen at Annexure-XI. The Ministry has fixed a credit target totaling Rs.3200 crores for the programme of which Rs.980.72 crores have been mobilized during year (upto November, 98). A total of more than 7.82 lakh families have been covered during this period of which SC/ST account for 45% and women 34% of total coverage. The lower coverage of families is due to a shift of emphasis to qualitative aspects of the programme such as enhancement of average level of investment per family. The average level of investment per family which was Rs.7,889 at the beginning of the Eighth Plan period rose to more than Rs.17,771 during 1998-99 (upto November, 98).

Cane and Bamboo products unit under DWCRA in Madhura village of South Andaman

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