Amarjeet Sinha, DK Singh & NN Sinha
There are many challenges in developing the credit linkage for higher order economic activities. When women borrow from the SHG account, the mapping of the SHG account to the beneficiary account is often not there. As a consequence, the credit history of the individual does not get created and CIBIL scores are low.
This reduces credit worthiness and the confidence of Banks to lend higher amounts. Painstaking work to get every Members Bank account Adhaar linked with mapping with the SHG account has been done in most of the states. This is improving the CIBIL score of women wanting to come out of deprivation and poverty.
The second challenge is with regard to working capital as many larger production arrangements need purchase of raw materials as per seasons and over a short period of time. Without formalisation through an Income Tax Registration, the MSME Adhaar registration, and the mapping of the individual to the SHG account, banks cannot extend working capital. This too is being resolved.
Lack of revenue records
The third challenge is that housing and dwelling units in many states do not have revenue records and agricultural land cannot be offered as a collateral or mortgage, limiting the options for mobilising formal bank credit. The Swamitva initiative for giving revenue cards for dwelling and housing units of the Ministry of Panchayati Raj with the use of drone-based survey, Panchayat based resolution of disputes through the Gram Sabha, and the issue of revenue cards is facilitating access to formal Bank credit that requires collaterals. The fourth challenge is that without collateral lending to an SHG was limited to Rupees Ten lakhs only by the Reserve Bank of India.
In 2020, it has been enhanced to Rupees twenty lakhs by providing for a credit guarantee fund on the lines of the M SME loans for SHGs. The fifth challenge in going to scale is not subsidies but human resources. Scaling up of businesses, setting up of Producer Companies, require quality professional technical and finance Managers. The biggest scarcity in rural areas is the difficulty in getting good professional managers to work with women collectives to develop a sound system of production and marketing.
HR support for Mission
On an experimental basis, we extended support to milk producer companies that we set up in a few districts of Madhya Pradesh and Bihar, through the National Dairy Development Board Services (NDDB Services) on a clear understanding with the producer company that HR support from the Livelihood Mission will be for three to five years by which time, the scale of operations of the producer company should be such that the salaries of the professional managers can come from the incomes of the producer company. A few have already broken even and will not need further support from the Mission. It is easier to do this in dairy which lends itself to easier collectivisation and a discipline of daily milk pouring and payments.
The Farmer Producer Organisations supported by the Agriculture Ministry has also provided for professional support for a few years. It is important to understand that it is not subsidies but professional support and market linkages that make the difference.
The sixth challenge is of marketing after processing. The Food Processing Ministry decided to work with NRLM SHG collectives with good social capital Under the Prime Ministers’ Formalisation of Micro Enterprises. Efforts to on board production units on the GEM portal on a large scale as also other e-marketing portals like Amazon, Flipkart, Big Basket, etc. has also facilitated the linkages.
Lakh-plus units benefit
Under the Start-Up Village Enterprises Programme of NRLM, over a lakh unit have already been extended higher concessional loan from the Cluster Level Funds and bank linkage. They also provide for Community Resource Persons of Enterprise (CRP – Enterprise) who is a local, with `business practices, costing, marketing, pricing and supply chain professionalism.
They have been intensively trained by the Entrepreneurship Development Institute (EDI) Gandhinagar and Kudumbsree Kerala across the country. The first Evaluation of SVEP clearly indicates the success of the initiative in promoting local level enterprise for businesses.
Many of these challenges find a place in the case studies in Sourav Mukherji’s Study on Inclusive Business Models – Transforming Lives and Creating Livelihoods. The Dungarpur solar light production unit and the assembly units of solar lamps in a large number of states by SHG women shows how prime movers like Professor Chetan Solanki, with the support of MNRE, and the social capital of SHGs, could take the solar lamp provision to scale. More power to such prime movers. Mukherji’s case studies bring out the challenges of leadership and professional management to take the scale enterprises to scale.
Govt’s pro-active steps
There is continuous effort from the Union Government to take pro-active measures to formalise enterprises. Self Help Groups, though started as a livelihood concept are essentially micro enterprises as defined for Udhyam registration of the Ministry of MSME.
Registration by the Self Help Groups on the Udhyam portal is a permanent getaway to develop and enhance livelihood in entrepreneurial manner. It also creates and opens up the window to avail various facilities available to Enterprises under different Ministries including the Ministry of MSME besides getting priority sector lending.
However, the challenge is the mindset and some inhibition to join Udhyam portal. Out of 1.10 crore Enterprises registered on the Udhyam portal so far, only about 85,000 Self Help Groups have got registered.
(Amarjeet Sinha is former Secretary, Ministry of Rural Development, DK Singh is Secretary General of the NHRC and NN Sinha is Secretary in the Ministry of Rural Development)
