The National Rural Livelihoods Project will also support specific investments in
12 states which account for 85 percent of India’s rural poor
WASHINGTON, DC, July 05, 2011- The World Bank today approved US$1 billion credit for the National Rural Livelihoods Project (NRLP) aimed at strengthening the implementation of the Government of India’s newly launched National Rural Livelihoods Mission (NRLM), one of the world’s largest poverty reduction initiative of approximately US$7.7 billion, aiming to reach 350 million people or almost a quarter of India’s population.
Enabling voice and accountability
The Project will help NRLM create an institutional platform by mobilizing rural poor, particularly women, into robust grassroots institutions of their own where, with the strength of the group behind them, they will be able to exert voice and accountability over providers of educational, health, nutritional and financial services. This, based on past experience in several Indian states, is expected to have a transformational social impact, supporting India’s efforts to achieve the Millennium Development Goals (MDG) on Nutrition, Gender, and Poverty.
“The success of NRLM, which is expected to serve as a backbone for pulling together all other poverty reduction efforts under one umbrella, will help India move closer to some of the key MDGs in the near future,” said Mr Venu Rajamony, Joint Secretary in the Department of Economic Affairs, Ministry of Finance, Government of India. “Past experience in implementing livelihood projects have shown that such programs have made a significant impact in the ability of the rural poor to access better quality services be it in education, health or financial services. World Bank’s support for this project is a classic example of the country up scaling small experiments tried out domestically and with World Bank support at a regional level, to a major national program with huge infusion of domestic resources.”
Scaling up past successes
The National Rural Livelihoods Project (NRLP), approved today, will help the program scale up the successes of past livelihoods initiatives to other lagging regions of the country. World Bank supported livelihoods projects in Andhra Pradesh, Bihar, Madhya Pradesh, Rajasthan, and Tamil Nadu have mobilized some 35 million rural poor since 2000. Under the aegis of the NRLM, the Project will now support specific additional investments in 12 states with a high number of poor people, namely Bihar, Chhattisgarh, Gujarat, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Orissa, Rajasthan, Tamil Nadu, Uttar Pradesh, and West Bengal – which have the highest number of absolute poor and account for almost 85 percent of India’s rural poor.
Bank-supported state livelihood projects in several districts of Madhya Pradesh, Bihar, Andhra Pradesh, and Rajasthan show that such projects have so far resulted in household savings in excess of US$1 billion. SHGs have leveraged nearly US$7.5 billion in credit from commercial banks, and achieved annual turnover of US$500 million through collective marketing of farm and non-farm produce.
“Rural India will continue to play a significant role in the coming decades and programs such as these will help shape the country’s future human capital which resides in its villages,” said Mr Roberto Zagha, World Bank Country Director for India. “World Bank-financed state livelihood projects, which reached over 35 million people, have given the rural poor a greater sense of identity, and better services and livelihood opportunities. Through NRLP, the World Bank is supporting the Government of India’s initiative to provide similar opportunities to over 350 million people residing in rural areas.”
Expanding access to finance and private sector investments in rural India
By encouraging thrift and prudent financial behavior, and instituting mechanisms for imparting financial literacy and credit counseling, the SHGs will create the space for financial services providers, both commercial banks and Micro Finance Institutions (MFIs), to bring in a range of affordable financial services for the poor. Current state livelihood programs have helped open 1.5 million SHGs accounts and 4.5 million savings accounts for the poor in commercial banks; set up 3000 help desks in commercial banks to facilitate banking services for poor clients and enabled 21,200 community institutions to function as village level “banking correspondents”.
“Most of the lagging regions, where NRLP will focus, have poor banking facilities especially in terms of branch spread, low credit deposit ratio and risk aversion to financing the poor. Therefore, partnership with formal financial institutions, including MFIs, will, widen the options for the rural poor to access credit to set up micro or nano enterprises and build their assets, NRLP will enable development of good quality and responsible clients for the financial sector,” said Parmesh Shah, Project Team Leader and Lead Rural Development Specialist, World Bank.
The Project will draw lessons from some of the current state livelihood programs that have, for example, enabled the self-help groups to access savings of more than US$1 billion which helped them make accumulated investment of US$9 billion over the last ten years in micro, small, and community enterprises. This resulted in expansion of rural markets and attracting several private sector and multinational firms to partner with these projects.
Building job skills
Support for the rural poor in building their skills and capabilities for self-employment will enable them to graduate from dependence on safety nets to building productive assets of their own. Producer groups in agriculture, dairying, and the non-farm sector will be better able to upgrade technologies to improve the productivity and quality of their products, access market information, develop value chains, attract the private and cooperative sector to do business with them, and negotiate fairer terms of trade for their products and services. Large multinationals like Hindustan Unilever leveraged SHG networks to increase their rural footprint to 100,000 villages in India. About 500,000 youth from poor households were trained and placed in leading companies like Nokia, Hyundai, Samsung, HSBC, Group 4, More, Future Group etc.
The Project will also invest in a robust Management Information System (MIS) which will help both the National and State-level Rural Livelihood Mission Management Units (i.e., NMMU and SMMU) to monitor the overall livelihood and financial performance of the SHGs and federations. The project will establish an e-governance architecture for NRLM with use of ICT including mobiles up to the village level.
The credit is from the International Development Association (IDA) – the World Bank’s concessionary lending arm – the Credit is on IDA terms with a maturity of 25 years, including a five year grace period.
For more on the project, visit http://www.worldbank.org.in/external/projects/main?pagePK=64283627&piPK=73230&theSitePK=295584&menuPK=295618&Projectid=P104164
For more information about World Bank activities in India, visit www.worldbank.org.in
In Washington – Benjamin Crow, (202) 473-5105, Bcrow@worldbank.org