81

CHAPTER – 4

EMPLOYMENT GENERATION
PROGRAMMES IN INDIA

Employment Generation Programmes during Pre-

liberalisation Period.

Employment Generation Programmes during Post-

liberalisation Period.

Changing Scenario of Employment Generation

Programmes.
 82

Unemployment is a basic economic problem of India. It is

considered to be the greatest obstacle in the way of economic
development of our country. Had this problem been solved, the economic
scenario of India would have been revolutionarily changed. Government
of India has ever been very serious about this problem. All the five year
plans completed so far in the country have concentrated upon this
problem. A number of measures have been taken and a number of
programmes have been launched with a view to eradicate or at least to
minimize the problem of unemployment. In this chapter, we shall discuss
some of these programmes, particularly which are in operation now-a-
days.

EMPLOYMENT GENERATION PROGRAMMES

DURING PRE-LIBERALISATION PERIOD
Though removal of unemployment has ever been a proclaimed
objective of India's economic planning, yet until the sixth five year plan,
one does not find any reference to long-term employment policy with a
bold approach to tackle the unemployment problem in a forthright
manner. For a long time, it was assumed that employment situation would
automatically improve as a result of economic growth. Direct measures to
eliminate unemployment were not preferred as the apprehension was that
they could slow down the growth process by raising consumption
expenditure on one hand, and cutting down economic surplus on the
other. For two decades or so in peripheral manner, reliance was placed on
cottage and agro-based industries and infrastructural projects for
absorbing the backlog of unemployed and the additional labour force
joining the labour market in search of jobs. This Policy was obviously
inadequate to tackle the unemployment problem and as a result, the
number of unemployed rose to about 22 million in 1969.
 83

The Planning Commission acknowledged in the Sixth plan

document the hard reality that despite economic planning, employment
opportunities had not adequately increased over the years. The position
was not satisfactory even in terms of long-term employment. Keeping in
view these facts the employment policy in Sixth Plan aimed at "The two
major goals of reducing underemployment for the majority of labour
force and cutting down on long-term unemployment".1 Obviously, for a
lasting solution to these problems, employment-oriented rapid economic
growth was necessary. Hence, efforts in the direction were combined with
short-term measures which provided some relief at least on temporary
basis.

Since in our mixed capitalist economy, private and cooperative

sectors coexist with public sector, the government committed itself to a
policy of employment generation in all the sectors. It was admitted that
production in the public sector is highly capital intensive and, thus, there
was not much scope for the creation of fresh employment in this sector.
Therefore, the government decided to concentrate particularly on policy
measures seeking to influence the private demand and utilisation of
manpower in private sector. This required emphasis on self-employment
ventures in agriculture, cottage and small industries and allied activites as
well as non-farm operations. Some of the major employment
programmers undertaken were: Integrated Rural Development
Programmers (IRDP), National Rural Employment Programme (NREP),
National Scheme of Training for Rural Youth for Self-Employment
(TRYSEM), Operation Flood II Dairy Project and Fish Farmers
Development Agencies. Planning Commission acknowledged the
limitations of macro-approach to the problem of unemployment. The

1
Government of India, Planning Commission, Sixth Five Year plan, 1980-85, P-207.
 84

Sixth Five Year Plan Stated, "It is, therefore, necessary that a
disaggregated approach is introduced to find meaningful solution to this
complex and challenging problem".1 For this purpose, it was proposed to
organise in all the districts of the country a District Manpower Planning
and Employment Generation Council with appropriate professional staff
support. The Council was to be assisted by the District Employment
Exchange, District Industries Centre, District Agricultural Office, lead
bank and those connected with the organisation of services in preparing a
portfolio of opportunities for salaried, self and wage employment during
the plan period.

During the late 1970s and 1980s having recognised the fact that in
Indian conditions, the percolation effects of growth were not sufficient to
generate the required employment opportunities, the need for
supplemental employment opportunities and employment programmes
for specific target groups/areas was felt and under the Fifth and the Sixth
Plans, attempts were made in this direction. The Seventh Plan sticking to
the basic approach of these Plans, asserted, "The task is one of adopting a
suitable structure of investment and production, appropriate types of
technology and mix of production technique and organizational support
which would help promote growth in productive employment".2 The
Planning Commission, thus, argued that in pursuing the objective of
employment generation, the country cannot stick to a static technology.
However, it stressed that technological upgradation and modernisation
should not result in considerable dislocation of labour.

The Seventh Plan assigned a key role to the agricultural sector for
employment generation. However, it was well realised that the
agricultural sector cannot eliminate the entire unemployment backlog and
also absorb additions to the labour force. Therefore, programmes of rural

1
Government of India, Planning Commission, Sixth Five Year Plan, (1980-85), P. 207.
2
Government of India, Planning Commission, Seventh Five Year Plan, (1985-90, Vol. II),P. 112
 85

development, particularly those of rural capital formation in the form of

construction were undertaken. The planners were clear that even the
realisation of a high rate of industrial growth could not absorb more than
a fraction of unemployed and underemployed labour force in the
organised industrial sector.

According to Planning Commission, employment generation does

not necessarily imply creating wage employment. Under the Seventh Plan
there was considerable emphasis on the creation of conditions for
additional self employment. Therefore, apart from sectoral programmes,
the package of poverty alleviation programmes aimed at giving self-
employment and wage employment to the poor sections of the
community were continued on a big scale. From this point of view the
National Rural Employment Programme (NREP), the Rural Landless
Employment Guarantee Programme (RLEGP), and the Integrated Rural
Development Programme (IRDP) were particularly important. The first
two were merged into the Jawahar Rozgar Yojana (JRY) in 1989.

EMPLOYMENT GENERATION PROGRAMMES

DURING POST-LIBERALISATION PERIOD
It is often rightly argued that a high rate of economic growth is a
necessity, but not a sufficient condition to solve the unemployment
problem in India. In India, where employment elasticity is quite low, an
annual growth rate of 8-9 per cent can provide only a partial solution to
the unemployment problem. Raj Krishna has shown the on that
assumption the population and productivity would continue to grow at
existing rates, the most comprehensive daily status unemployment could
be eliminated in the next two decades if the long-term employment
elasticity could rise to 6.5 per cent.1 When Raj Krishna did this exercise,

1
Raj Krishna, "The Growth of Aggregate Unemployment in India", World Bank Staff Working
Papers No. 638, P. 17-18
 86

employment elasticity for all sectors was around 0.68. Since then, the
employment elasticity has further declined. It has been estimated to be
0.16 for the period of 1993-94 to 1999-2000. This implies that for
generating additional employment at 3 per cent annum, GDP should
register an annual growth of 18-19 per cent which is something
impossible in the given structure of the Indian economy.1 Therefore, in
India, economic growth by itself can never solve the unemployment
problem and the government policy which gives overriding priority to
economic growth would add to unemployment backlog rather than
reducing it. Therefore, under the Eighth Plan, there was emphasis on both
the growth of the economy and restructuring of output composition of
growth. Defining its employment perspective, the Eighth Plan clearly
stated, "The employment potential of growth can be raised by readjusting
the sectoral composition of output in favour of sectors and sub-sectors
having higher employment elasticity".2 In certain sectors, where
technologies are to be upgraded to a higher level of efficiency and
international competitiveness, there is a little scope for generating
additional employment. However, in respect of certain other sectors,
some flexibility may be available in the choice of technologies and, thus,
it may not be difficult to generate considerable employment.

Agriculture, even now, occupies a predominant place in

employment structure. In the recent past, agriculture has shown the
lowest and rapidly declining employment potential, largely due to the
extremely low employment elasticity in Punjab, Haryana and U.P. In
order that agricultural growth becomes employment generating, it is
necessary that it is diversified, both geographically and crop wise.

1
Alok Ghos, "Eighth Plan : Challenges and Possibilities – III, Employment, Core of the plan", 1991
P.198
2
Government of India, Planning Commission, Eighth Five Year Plan.(1992-97, Volume I),P.120
 87

Activities allied to agriculture and crucial for employment

generation are animal husbandry, fishery and horticulture. Apart from
these activities, programmes of afforestation, regeneration and restoration
of degraded land should receive attention due to their large employment
potential. The rural non-farm sector comprising manufacturing, services,
trade and construction, accounts for over one-fifth of rural employment. It
has significant potential for absorbing rural labour. Employment has
grown in this sector at a high rate of 5 per cent per annum in recent years.

In urban manufacturing, employment elasticity has declined to a

very low level of about 0.33 and in future also with further stress on
increasing modernisation of technology, prospects for the expansion of
employment in this sector are not at all encouraging. Even the modern
small-scale industry has been over capitalised and as a result, its
employment potential has very much diminished.

According to present estimates, the employment strategy will

enable the attainment of goal of full employment in any case not before
2020 A.D. Therefore, Special Employment Programmes may be
continued to provide short-term employment to unemployed and
underemployed among the poor. Under the Eighth Plan, the Special
Employment Programmes were regarded only an interim measure to
provide supplementary employment. The Eighth Plan stated, "The main
thrust should be on the acceleration of the rate of employment growth
over the years so that the need for special programmes declines in
successive years and tapers off by the end of the decade. Continuing
necessity of such programmes on a large scale would, in fact, imply the
failure of employment oriented development strategy that is envisaged as
the main plank of the Eighth Plan".1

1
Government of India, Planning Commission, Eight Five Year Plan, Volume II (1992-97), P.32
 88

Employment Opportunities during the Ninth Five Year Plan.

The growth of labour force accelerated in the Ninth Plan period in

comparison to the preceding decade, which required a commensurate
increase in the pace of creating additional work opportunities in this
period. This factor needs to inform every aspect of formulation of the
Ninth Plan.

Every effort would need to be made in attaining full employment in

the post – plan period. Since labour force growth is expected to be at its
peak in the Ninth Plan period, attainment of near full employment by the
year 2007 may not be an unreasonable target provided that the conditions
are created for further acceleration in the growth rate and the intensity of
labour absorption is not substantially reduced both sectorally and in terms
of the sectoral structure of growth. It is estimated that full employment by
2007 is contingent upon the acceleration in growth of employment in post
Ninth Plan period to 2.8 percent compared to a realised growth of 2.36
per cent (1978-94) and projected at 2.44 per cent in the Ninth Plan. This
would require GDP to grow at 7.7 percent per annum during the post-plan
period, which is well within the realm of feasibility.

Employment Generation Strategies during Tenth Five Year Plan.

The tenth plan aimed at providing gainful employment

opportunities to the entire additions to labour force during the tenth plan
and beyond. This is an essential condition for improving the quality of
employment of an average worker. For, if labour markets do not clear, no
strategy for improving the quality of employment is likely to succeed. In
a large labour surplus situation, there may be employment of a high
quality but only for a select group. Hence, the first strategy to improve
the quality of employment, is to increase the aggregate demand for
labour.
 89

While a higher rate of economic growth is a necessary condition

for increasing the demand for labour, the pursuit of growth objective in
isolation may not be sufficient, at least in an immediate foreseeable
future, to gainfully absorb the annual additions to labour force. Therefore,
in the short-term perspective of a five year plan, growth will have to be
supplemented by increasing the employment content of growth in order to
fulfil the employment objectives of Plan.

In the rural sectors, Pradhan Mantri Gram Sarak Yojna (PMGSY),

Sampoorna Gramin Rozgar Yojana (SGRY) and Swarnajayanti Gram
Swarozgar Yojana (SGSY) are expected to create incremental
employment opportunities to the extent of 2.86 million. The rural
employment generation programmes of KVIC, PMRY and new initiatives
for the development of small and medium enterprises are expected to
create additional 4.2 million employment opportunities during the Tenth
plan.

Employment Generation Strategies during Eleventh Five Year Plan.

The ability to generate an adequate number of productive

employment opportunities will be a major factor on which the
inductiveness of growth will be judged. India is currently at a stage of
"demographic transition" where population growth is slowing down but
the population of young people entering labour force continues to expand.
This will mean that a working person would have fever dependents,
children or parents. The dependency ratio (ratio of dependents to working
age population) declined from 0.8 in 1991 to 0.73 in 2001 and is expected
to decline further to 0.59 by 2011. If the workforce is gainfully employed,
a lower dependency ratio means a higher rate of savings which, in turn,
can raise the growth rate. This young demographic profile places India
favorably in terms of manpower availability and could be a major
 90

advantage in an environment where investment is expanding in India and

the industrial world is ageing.

It is however, essential to produce a growth process in which

employment would be available not only for the new entrants to labour
force but also in the non-agricultural sector for the workers leaving
agriculture. Over 1999-00 to 2004-05, urban employment has grown at a
faster rate than population. However, since more urban women have
joined the workforce, the unemployment rate has increased over these
years.

Rapid growth focused on labour intensive industries and small and

medium enterprises will create employment opportunities in the
manufacturing and services sectors. The ability to create jobs will be
enhanced by greater labour flexibility which may require some changes in
labour laws. This is a controversial issue on which it is difficult to reach a
consensus but the weight of evidence suggests that while outright hire
and fire approaches may not be desirable, there is room for creating
greater flexibility short of this position.

The ability to sustain a labour intensive growth process depends

crucially upon the expansion of skill capabilities in the labour force.
Specific programmes for the development of skills at all levels will be a
part of the eleventh plan. The growth rate of labour force rose to the level
of 3.06 per cent during 2004-05. Hence, there is an urgent need to provide
employment for these increasing additions to labour force. The Tenth
Plan had no strategy for employment creation. It wrongly hoped that the
targeted 8.0 per cent per annum increase in GDP during the Plan period
would do the trick. Jayashree Sengupta very aptly discussed the failure of
the Government policy in India, in her though providing article "Aam
 91

Aadmi Ko Kya Mila".1 Relevant portions of the article are being

reproduced in Box 4.1:

Box 4.1
Jobless Growth in India in Recent Years ('Aam Aadmi Ko Kya Mila')

In India, the rise in unemployment has been a silent phenomenon. We have had
disguised unemployment in the past, but unemployment never reached more than 5
per cent of the population. According to the National Sample Survey's 55th round,
unemployment as a percentage of labour force rose from 5.99 per cent in 1993-94 to
7.32 per cent in 1999-2000. Perhaps we have been witnessing jobless growth in recent
years because while the GDP grew at an average rate of 6.4 per cent between 1992-93
to 2000-01, employment growth declined from 2 per cent to 1 per cent.
In the recent past, thousands of workers in agriculture and the organised sector have
been laid off. The organised sector (establishments employing 10 or more workers)
has been shrinking. The private manufacturing units within the organised sector have
been shedding labour in response to higher wages and global competition.
Retrenchment of labour has been common in other countries, but in India it is a new
phenomenon and the Voluntary Retirement Scheme (VRS) has not been painless.
Some workers have been laid off without any severance pay from loss making
enterprises. All this has led to widespread human trauma especially because there are
no social safety nets, nor facilities for re-training and skills development.
The restructuring exercise may have led to more productivity, but the
retrenchment process has thrown several families off balance. Employees lost their
jobs and houses, children's schools, healthcare and an 'address', so important in India.
In the last decade, those accepting VRS have witnessed a new phenomenon-even their
children can't find a job.In the organised sector, labour laws have blamed for keeping
millions of workers out of jobs while 'protecting' the jobs of 'permanent' staffers. The
fact is that most employers are successfully circumventing labour laws through
contractual labour whom they routinely hire and fire. Also, the lack of skills and
training among workers encourage industrialists to go for higher technology rather
than labour. The Indian labour force is among the least skilled and literate as
compared to the skill levels of workers in China or South Korea, especially in the
manufacturing sector.

1
Jay Shree Sengupta," Aam Aadmi Ko Kya Mila" Tehalka, September 25, 2004
 92

The decline in employment has been most striking in agriculture. Total

employment in agriculture dropped. Agricultural employment engaged 56 per cent of
the population in 1999-2000. Low agricultural productivity, frequent crop failures due
to drought and lack of adequate irrigation localities have made agriculture less
profitable; the number of farm workers has been declining. In some areas, high
agricultural growth due to mechanisation has led to a permanent fall in demand for
agricultural labour. Indeed, low productivity and falling income has created a boom in
casual labour.
The government's response to stagnant agriculture has been poverty alleviation
programmes aimed at raising rural incomes. But the delivery of these programmes has
not been satisfactory as there have been numerous 'leakages' due to corruption. The
jobless from rural areas have been entering the 'informal' sector. It absorbs 92 per cent
of the workforce and is characterised by unprotected jobs without regular salaries and
engulfs a vast population of self-employed people and daily-wage workers.
These workers also migrate to big cities and end up in slums in sub-human
conditions. In a cyber city like Bangalore, 20 per cent of the population lives in slums.
It's strange paradox. Unless the government acts fact to give jobs to the 42 million
unemployed, its own query might boomerang: aam aadmi ko kya mila?

CHANGING SCENARIO OF EMPLOYMENT

GENERATION PROGRAMMES
Realising the need of generating employment opportunities to
achieve a satisfactory rate of employment in the country, Government of
India launched a number of employment generation programmes. A few
of these programmes are listed below-

Nehru Rozgar Yojana (NRY).

In response to the challenge posed by Urban Poverty, the Nehru

Rozgar Yojana was launched by the Ministry in October, 1989. It was
recast in March, 1990 and accordingly the guidelines were suitably
revised. The Yojana consisted of three schemes:

(i) The Scheme of Urban Micro Enterprises (SUME)

(ii) The Scheme of Urban wage Employment (SUWE), and

 93

(iii) The Scheme of Housing and Shelter Upgradation (SHASU).

The entire expenditure on the Yojana was shared on a 60:40 basis

between the Central Government and the State Governments. With effect
from VIII Plan, The Yojana has been wound up and replaced by
Swarna Jayanti Shahari Rozgar Yojana w.e.f. 1.12.97.

National Food for Work Programme (NFWP or FWP).

National Food for Work Programme, known as Food for Work

Programme also was launched on November 14, 2004 in 150 most
backward districts of country with the objective to intensify the
generation of supplementary wage employment. The programme is open
to all rural poor who are in the need of wage employment and ready to do
the manual unskilled work. It is implemented as a 100 percent centrally
sponsored scheme and the food grains are provided to States free of cost.
However, the transportation cost, handling charges and taxes on food
grains are the responsibility of the States. The collector is the nodal
officer at the district level and has the overall responsibility of planning,
implementation, coordination, monitoring and supervision.

Training of Rural Youth for Self-Employment (TRYSEM).

The Scheme of Training of Rural Youth for Self-Employment

(TRYSEM) was initiated in 1979 with the objective of tackling
unemployment problem among the rural youth. It aimed at training about
2 lakh rural youths every year to enable them to become self-employed.
Under this scheme, 40 youths were to be selected from each block and for
being eligible for selection, the person should belong to a rural family
having an income less than Rs.3,500 per year. In making selection,
members of scheduled castes and scheduled tribes were to be given
preference. Under the scheme, a minimum of one third of the rural youths
 94

trained were to be women. The TRYSEM was merged into

Swarnajayanti Gram Swarozgar Yojana in April 1999.

National Rural Employment Programme (NREP).

The National Rural Employment Programme (NREP) was started

as a part of the Sixth Plan and was continued under the Seventh Plan. The
NREP was meant to help that segment of rural population which largely
depends on wage employment and has virtually no source of income
during the lean agricultural period. Under the NREP, development
projects and target group oriented employment generation projects were
to be closely intertwined. The programme was implemented as a
centrally-sponsored scheme. But its financial burden was to be shared
between the Central government and the State governments on 50:50
basis. Under the scheme, a district level employment plan (disaggregated
block-wise) was prepared. On April 1, 1989 it was merged into the
Jawahar Rozgar Yojana.

Rural Landless Employment Guarantee Programme (RLEGP).

The Rural Landless Employment Guarantee Programme (RLEGP)

was launched on the 15th August, 1983 with the objective of generation
gainful employment, creating productive assets in rural areas and
improving the overall quality of rural life. The programme was funded by
the Central government on 100% basis. Resources were allocated to the
States/ Union Territories on the basis of the prescribed criteria giving
50% weightage to the number of agricultural labours, marginal farmers
and marginal workers and 50% weightage to the incidence of poverty.
Wages were to be paid to the workers under the provisions of the
'Minimum Wages Act'. Part of the wages was required to be paid in the
form of subsidised foodgrains.
 95

It was also stipulated that the wage component on a project should

not be less than 50% of the total expenditure of the project. The
programme included the projects of social forestry, Indira Awaas Yojana
and Million Wells Scheme. The Government decided to merge NREP
and RLEGP. The merger was based on the premise that the objectives
and implementation these two programmes are by and large similar.

Jawahar Rozgar Yojana (JRY).

In February 1989, the government announced a new wage

employment scheme, the Jawahar Lal Nehru Rozgar Yojana for intensive
employment creation in 120 backward districts. However, later on, it was
felt that there was no need to have the separate NREP, RLEGP and the
Jawahar Lal Nehru Rozgar Yojana. These wage employment programmes
had the same objective and similar thrust. Therefore, these programmes
were merged into a single rural employment programme on April 1, 1989
and it was given the name Jawahar Rozgar Yojana (JRY).

The JRY completed eleven years in March 1999. The JRY was
restructured with effect from April 1999 and was renamed as
Jawahar Gram Samridhi Yojana (JGSY). In the first ten years, the
JRY generated 7,373 million mandays of employment. Thus, in
quantitative terms, the performance of the JRY was not distinctly better
than that of the NREP and RLEGP. However, in two respects, the JRY
was superior to the NREP/ RLEGP regime. First, under the JRY there
was a clear change in the priorities in favour of economically productive
investments, especially which enhance the productivity of land. Second,
the JRY approach involving Panchayats in the planning and
implementation of employment schemes was superior to the bureaucratic
approach followed under the NREP/ RLEGP.
 96

Rural Employment Generation Programme (REGP).

REGP, launched in 1995 with the objective of creating self-

employment opportunities in the rural areas and small towns, is being
implemented by the Khadi and Village Industries Commission (KVIC).
Under REGP, entrepreneurs can establish village industries by availing
margin money assistance from the KVIC and bank loans, for project with
a maximum cost of Rs.25 lack. Since the inception of REGP, upto 31
March 2004, 1,86,252 projects have been financed and 22.75 lakh job
opportunities have been created.

Scheme for Providing Self-Employment to Educated Unemployed

Youth (SEEUY).

This scheme was launched with a view to provide self-employment

to educated rural youth of the country. Under this scheme, a loan upto Rs.
20,000 is provided to such youth at concessional rate of interest and the
bank is responsible for the implementation of programme. Rate of interest
is fixed at 10% per annum for backward districts and 12% per annum for
other districts.

From 1994-95 onwards, present scheme of Self-Employment for

Educated Unemployed Youth (SEEUY) has been integrated into Prime
Minister's Rozgar Yojana (PMRY).

Self-Employment Programme for Urban Poor (SEPUP).

This programme is launched with a view to provide self-

employment to the poor youth in urban and semi-urban areas. Under this
programme, bank loan is provided to such youth at concessional rate of
interest and the bank is responsible for the implementation of the
programme.
 97

Prime Ministers Rozgar Yojana for Educated Unemployed Youth

(PMRY).

PMRY was started in 1993 with the objective of making available

self-employment opportunities to the educated unemployed youth by
assisting them in setting up any economically viable activity. By the end
of 2005-06, about 20 lakh units have been set up under the PMRY,
creating 30.4 lakh additional employment opportunities. While the REGP
is being implemented in the rural areas and small towns (population up to
20,000) for setting up village industries without any cap on income,
educational qualification or age of the beneficiary. PMRY is meant for
educated unemployed youth with family income upto Rs. 40,000 per
annum, in both urban and rural areas, for engaging in any economically
viable activity. From 1994-95 onwards, scheme for self-employment for
educated unemployed youth (SEEUY) has been integrated into this
scheme.

Swarn Jayanti Sahari Rozgar Yojna (SJSRY).

In December 1997, the Urban Self-Employment Programme

(USEP) and the Urban Wage Employment Programme (UWEP), which
are the two special compoents of the SJSRY, substituted for various
programmes operated earlier for urban proverty alleviation. In SJSRY is
funded on the same sharing basis as IAY and SGSY. The number of
urban poor assisted for setting up micro group enterprises in 2005-06 was
0.98 lakh against a target of 0.80 lakh, while in 2006-07. Against a target
of 1.20 lakh, 0.53 lakh was achieved by December 31, 2006. The number
of urban poor imparted skill training year, against a target of 1.50 lakh,
0.72 lakh was achieved by was 43.48 lakh in 2005-06 and 1.78 lakh up to
December 31, 2006.
 98

Swarn Jayanti Gram Swarojzgar Yojna (SJGSY).

SJGSY, a holistic self employment generation programme, was

launched on April 1, 1999 by restructing the earlier integrated Rural
Development Programme (IRDP) and allied programmes. The emphasis
of SJGSY is on poverty alleviation, capitalising advantages of group
lending and overcoming the problems associated with a multiplicity of
programmes. The scheme is being implemented on a cost-sharing basis
between the Centre ans States of 75:25 for non-north-eastern States and
90:10 for north-eastern. Upto December 31, 2009, 36.78 lakh self- help
groups (SHGs) have been formed and 132.81 lakh Swarojgaries have
been assisted with a total outlay of Rs.30,896.08 crore.

Sampoorna Grameen Rozgar Yojna (SGRY).

SGRY, launched on September 25, 2001 to provide additional

wage employment in rural areas, has a cash and foodgrains component.
The cash-component of SGRY is funded on the same sharing basis as
IAY and SJGSY, while foodgrains are provided free of cost to the States
and UTs. In 2005-06, 82.18 crore person days of employment were
generated with the Centre releasing Rs.5497.43 crore as cash component
and about 37.30 lakh tonnes of food grains to the States/UTs. Besides,
under the special component of SGRY, with the state/UTs meeting the
cash components, the Centre released 15.64 lakh tonnes of foodgrains to
the 11 calamity affected States. In 2006-07 upto October 31, 2006, the
number of person – days of employment generated under SGRY was
18.41 crore while the Centre's contributions in terms of cash and
foodgrains component upto December 31, 2006 were Rs.2,762 crore and
16.67 laks tonnes, respectively. Under the special component, about 4.44
lakh tonnes of food grains have been released to calamity – hit States in
current year upto December 2006.
 99

Integrated Rural Development Programme (IRDP).

The Integrated Rural Development Programme (IRDP) launched in

1978-79 and extended all over the country in 1980-81 was essentially
conceived as an antipoverty programme under the Sixth Five Year Plan.
It, however, through a programme of asset endowment also meant to
provide self-employment in a variety of activities like sericulture, animal
husbandry and land-based activities in the primary sector; weaving,
handcrafts, etc., in the secondary sector; and service and business
activities in the tertiary sector. Under the Plan, the IRDP aimed at
covering 15 million families in all the blocks of the country.

National Rural Employment Gurantee Scheme (NREGS).

With the NREG Act being passed in September, 2005, the NREGS
was implemented since February 2, 2006 in 200 identified districts of the
country with an object of providing 100 days of guaranteed unskilled
wage employment to each rural household opting for it. The ongoing
programmes of SGRY and National Food for Work Programme (NFWP)
have been subsumed undo NREGS in these districts. NREGS was
extended to 300 districts during 2007-08. The coverage was extended to
all rural districts of the country in 2008-09. As against the budgeted
outlay of Rs.39,100 crore for the year 2009-10, an amount of
Rs.24,758.50 crore has been released to the States/UTs till Secember,
2009. During the year 2009-10, 4.34 crore households have been
provided employment under the scheme. Out of the 182.88 crore person
days created under the scheme during this period, 29 per cent and 22 per
cent were in favour of SC and ST population respectively and 50 per cent
in favour of women. The NREGS, a demand-driven scheme, has its
focus on works relating to water conservation, drought proofing
(including afforestation/tree plantation), land development, flood control/
 100

protection (including drainage in water logged areas) and rural

connectivity in terms of all – weather roads etc.

Employment Assurance Scheme(EAS)

The EAS is being implemented in 1752 backward blocks. The

scheme aims at providing 100 days of unskilled manual work to the rural
poor who are seeking employment. It is targeted at the poor, particularly
during the lean agricultural season in rural areas.

MAJOR EMPLOYMENT PROGRAMMES

In this part, we shall study selected the following major

employment generation programmes in details –

National Rural Employment Programme (NREP)

Food for Work Programme (FWP)
Rural Employment Generation Programme (REGP)
Jawahar Rozgar Yojana (JRY)
Jawahar Gram Samridhi Yojana (JGSY)
Integrated Rural Development Programme (IRDP)
Swarana Jayanti Shahari Rozgar Yojana (SJSRY)
Sampoorna Grameen Rozgar Yojana (SGRY).
Swarjnayanti Gram Sworozgar Yojana (SGSY).
Employment Assistance to Special Categories.
Prime Minister's Rozgar Yojana (PMRY).

1. National Rural Employment Programme (NREP)

The problem of employment in rural areas is mainly of seasonal
unemployment and under employment. Full employment opportunities
for the rural work force will have to be found within the agricultural and
allied sectors themselves, through intensification and diversification of
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agriculture based on the expansion of irrigation and unproved technology.

However, the very dimensions of the problem call for a multifarious
strategy which aims, on one hand, at resource development of vulnerable
sections of the population, and on the other, necessities supplementary
employment opportunities to the rural poor, particularly during lean
periods, in a manner that will contribute directly to the creation of durable
assets for the community. Programmes in the nature of Small Farmers'
Development Agencies, Integrated Rural Development, Drought Prone
Areas Programme, Desert Development Programme, Command Area
Development Programme, TRYSEM and the like, aim at resource
development on individual or area basis. So far as the object of providing
supplementary employment opportunities, is concerned a beginning was
made in this direction through the Food for Work Programme. Based on
the experience of this programme, it is possible to build it into a well
directed and sustained national programme for providing supplementary
employment opportunities to those seeking work, particularly during the
lean employment periods of the year. In the past, however, special
programmes for solving the problem of unemployment and, under-
employment have often tended to be formulated and implemented in
isolation of the on-going developmental projects. It is necessary to view
employment as an indivisible component of development and ensure that
both in concept and implementation, employment and development
become catalysts of each other, and the benefits to the community from
the limited resources available may be maximised.

During the Plan period, additional opportunities for employment

will become available through the large number of developmental
projects to be undertaken in the public and private sectors. Such
opportunities will, however, not be sufficient to absorb the growing
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number of the rural work force. Rural development programmes in the

form of individual beneficiary and area development schemes and other
sectoral programmes in the Plan will also provide opportunities to many
of the rural poor for gainful employment through production enhancing
activities. Beneficiaries of these activities will in the main be those with
an asset base. A large number of people in the rural area are without
assets or with grossly inadequate assets and need to be provided wage
employment. This segment of the rural poor which largely depends on
wage employment, virtually has no source of income during the lean
agricultural period. The National Rural Employment Programme is
conceived, to take care of this segment of the rural poor. Under this
Programme, development projects and target group oriented employment
generation projects will be closely intertwined.

NREP will be implemented as a centrally sponsored scheme on

50:50 sharing basis between the Centre and the States. The Centre will
provide its share in the form of foodgrains to the extent surplus
foodgrains are available, and the rest in cash. Inter-State allocation of
foodgrains will be made on a rational criteria related to the population
size of target group, i.e., a States' population of marginal farmers and
agricultural labourers and its rural population below the poverty line. The
States will be encouraged to procure sorghum, millets and other locally
grown foodgrains and utilise them under the scheme. Suitable financial
and operational arrangement will be worked out in each State on this
behalf. This would besides, making additional foodgrains available for
NREP, help insulting the producers from uneconomical sale of their
produce and also save substantially the cost of movement of foodgrains
from distant work sites to markets or godowns. For the storage of
foodgrains so procured, rural godowns programme and other programmes
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for building up storage capacity in rural areas e.g., cooperative societies

godowns, can be suitably used.

The wage paid under the programme should be at par with the
minimum agricultural wage prescribed for the area. The quantum of
foodgrains as part of the wage should be such as to be adequate for the
family's need. In any case, the foodgrains component should not exceed
two Kgs. per head per day. Efforts will also be made to organise mobile
fair price shops at the centres where rural works are in progress so that
the cloth, vegetable oil, salt and other essential items of consumption may
also be made available. Contractors are to be totally excluded from the
execution of rural works on which the employment is offered through
NREP. Neither will the distribution of foodgrains be entrusted to
middlemen or contractors.

Only about half the States had involved Panchayati Raj institutions
in the Food for Work Programme. Given proper technical and
administrative supervision, these institutions have the capability of
planning and executing works answering to local needs, at comparatively
low cost. It is, therefore, desirable that these institutions are involved in
planning and execution works under NREP to the extent possible,
considering local conditions and nature of the work. The educational
research and technical institutions in the block would be associated with
the Panchayati Raj Institutions in preparing a shelf of the projects which
will help to ensure that the assets created are at least equal in value to the
wages paid. Following pictures shows the beneficiaries getting training
under NREP:
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It is contemplated that a district level employment plan

disaggregated blockwise will be formulated. This plan will estimate the
numbers likely to be seeking work, separately for skilled and unskilled
workers, and the work opportunities likely to be available under various
plan and non-plan works in different districts The work opportunities and
shortfalls will be identified, preferably in terms of blocks and the
programme of works under NREP be formulated accordingly. The aim of
the NREP should be to provide employment opportunities during the lean
agricultural period.

It is necessary that the State Governments have a shelf of projects

on a sufficiently dispersed scale prepared for each block so that the
programme may be implemented on a planned and systematic basis and
technical soundness of the works be ensured. Preparation of projects
should be a continuous process. For this purpose, the State Governments
will have to strengthen/build up adequate technical personnel at the block
and higher supervisory levels. Some of the States have a rural engineering
organisation or some technical personnel at the block level, but
considering the size and spread of the programme, it is quite inadequate.
Some States have none at all. It is necessary that each block should have
a reasonable complement of technical staff (supervisors). To ensure the
effective monitoring of, programme, suitable strengthening of staff will
be necessary at all levels. The locally available expertise of technical
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institutions like IITs, Agricultural Universities, Engineering Colleges, etc.

as well as of voluntary organisations should be fully utilised. Block level
project preparation and monitoring groups could be set up wherever the
size of the programme warrants it.

The implementation agencies would be required to give priority to

the works relating to the social forestry and pasture development, soil and
water conservation, irrigation, flood protection and drainage, field
channels in irrigation command areas, construction and improvement of
village tanks and ponds, school and dispensary buildings and the works to
improve village environments, hygiene and sanitation. Only those roads
may come in the priority category which can be made at least semi-pucca
with culverts or have a reasonable prospect of being brought within the
regular road programmes of the State or Panchayati Raj Institutions, as
the case may be. While only such works as create community assets
should be taken up, an exception may be made in case of the works
benefiting the individuals belonging to Scheduled Castes and Scheduled
Tribes in respect of group housing and land development projects.
Special attention will be paid to the programmes where women can be
gainfully employed.

In order to ensure that the benefits of this programme reach the

weaker sections of the society, at least 10 per cent of the allocation under
the programme would be earmarked for utilisation exclusively on the
programmes of direct benefit to Scheduled Castes, viz., drinking water
wells in Harijan Bastis, community irrigation schemes in which majority
of the beneficiaries are Harijans, environmental improvement works in
Harijan localities and housesites/group housing for the Harijans. Another
at least 10 per cent of the allocation under the Programme would be
specifically earmarked for utilisation on the programmes of social
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forestry and fuel plantations. The utilisation of provisions by the States on

these two activities will be specially monitored.

It will be desirable to regulate employment on the rural works

taken under the NREP and other Plan works so as to take particular care
of the of the families in target group. Specific attention will also be paid
to promoting women's participation is this programme.

2. Food for Work Programme (FWP)

The Food for Work Programme was started in January, 2000-01 as
a part of the Employment Assurance Scheme (EAS) in eight drought
affected States viz. Chattisgarh, Gujarat, Himachal Pradesh, Madhya
Pradesh, Maharashtra, Orissa, Rajasthan ans Uttaranchal. The Food for
Work Programme (FFWP) was later expanded to form a part of any wage
employment scheme of the Central or State Governments being
implemented in the notified districts during the period of natural
calamities, such as drought, flood, cyclone or earthquake. Now the
programme is in operation in the States of Andhra Pradesh, Bihar,
Chattisgarh, Gujarat, Himachal Pradesh, Karnataka, Kerala, Madhya
Pradesh, Maharashtra, Orissa and Rajasthan. For the States/areas which
are formally notified natural calamities affected, the programme continue
up to 31st of March 2002.

Salient Features of the Food for Work Programme (FFWP)

The Food for Work Programme is a general scheme, which can

form a part of any wage employment scheme of the Central or
State Government being implemented in the notified district of the
State during the period of natural calamities. The cash component
of the wage and material is met from the Scheme under which it is
being implemented. The cost of transportation of foodgrains from
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FCI godowns to the worksites/PDS and its distribution is the

responsibility of the State Government.

Government of India makes available appropriate quantity of

foodgrains to each of the affected States. Foodgrains are supplied
to the States free of cost. The cost is borne by the Government of
India to enable the State Governments to provide adequate wage
employment opportunities to the needy rural poor. The eligibility
criteria for employment are relaxed so as to include both BPL and
APL families. The States may make payment of wages partly in
kind (upto 5 Kgs. of foodgrains per manday) and partly in cash.
The State Governments are free to calculate the cost of foodgrains
paid in wages, at either BPL rates, or APL rates, or any rate
between the two. The workers are paid the balance wage in cash, so
that they are assured of the notified minimum wages.

For foodgrains released, Ministry of Rural Development directly

makes payment to the FCI on the submission of bills against the
lifting of foodgrains by the States.

Supply of foodgrains is made to the workmen preferably at the

work site. The officials supervising the work (decided by the State
Government) under the Food for Work Programme will be
responsible for the distribution of foodgrains at the worksite or
through PDS. The payment of wages, cash as well as foodgrains,
must be made weekly.
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Following Works should be given Priority

Since the Food for Work Programme is meant for providing wage
employment in the natural calamity affected States, preference shall be
given to labour-intensive works, particularly those which would help in
drought-proofing such as moisture conservation works, watershed
development works, water harvesting, digging up village ponds/tanks and
construction of rural-link roads (Kutcha Road) etc. As far as possible, the
works to be taken up should result into durable assets.

3. Rural Employment Generation Programme (REGP)

Introduction

On the basis of recommendation of the High Power Committee

report, submitted in May 1994, headed by the then Prime Minster of
India, the KVIC launched Rural Employment Generation Programme
(REGP) with effect from 1st April, 1995 for the generation of two million
jobs under the KVI sector in the rural areas of the country. The term
'Rural Area' has been defined under the KVIC Act, 1956 as under:
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Any area classified as village as per the revenue records of the

state, irrespective of population.It also includes an area classified as town,
provided its population does not exceed 20,000 as per 1991 census.

Similarly, the term village industries has been defined as "Any

industry located in rural area which produces any good or renders any
service with or without the use of power in which the fixed capital
investment per head of artisan or worker does not exceed Rs.50,000 or
such other sum as may be specified by Central Government from time to
time". All activities which do not appear in the negative list circulated by
KVIC are eligible for financing under the scheme.

Main Objectives:

To generate employment in rural areas.

To develop entrepreneurial skill and attitude among rural
unemployed youth.
To achieve the goal of rural industrialization.
To facilitate the participation of financial institutions for higher
credit flow to rural industries.

Salient Features of the Scheme

The scheme is applicable to all village industries project set up in

rural areas. The eligible agencies under the scheme are: (i) individuals
(rural artisans/entrepreneurs) (ii) institutions, cooperative societies, Trusts
& SHGS for projects upto Rs.25.00 lakhs. Partnership Firms,
Private/Public Limited companies, Joint ventures, Joint Borrowers, Co-
obligators of HUF are not eligible under the Scheme.

Under this programme, capital subsidy in the form of margin

money is provided at the rate of 25% of the project cost upto Rs. 10 lakhs
and 10% of the balance project cost upto Rs. 25 lakhs.
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In case of weaker section beneficiaries viz., SC/ST/OBC/

Women/Physically Handicapped/Ex-servicemen and for Hill Border,
Tribal Areas, North Eastern Region, Sikkim, Andaman & Nicobar
Islands, Lakshadweep, Margin Money grant will be at the rate of 30 per
cent of the remaining cost of the project. Cost of land should not be
included in the project cost. Under the scheme, the borrower is required
to invest his own contribution of 10 per cent of the project cost. In case of
SC/ST and other weaker section borrowers, the beneficiaries contribution
will be 5% of the project cost. Banks will sanction 90 percent of the
project cost in case of general category borrowers and 95 percent to
weaker section beneficiaries/institutions and disburse full amount of the
loan. After the sanction of the credit facility by the bank, eligible amount
of margin money will be kept in term deposit for two years in the account
of borrower at the leading bank branch, which will be credited to the
borrower's loan account after a period of two years from the date of first
disbursement of loan.

Status and Progress of REGP

During the year 2004-05, the number of projects financed was

23,453 as against 24,747 financed in the previous year. Further in
employment generation through the scheme, the Andhra Pradesh stood at
No. 1 followed by Uttar Pradesh, Rajasthan, Madhya Pradesh, West
Bangal and Haryana.

(a) Flow of Funds: For extending the support to entrepreneurs for

providing margin money and other backward-forward linkages, an
amount of Rs.292.40 crore was released to meet the margin money
claims of entrepreneurs and another Rs.3.48 crore for the purpose of
arranging backward, forward linkages for REGP units in the
Country. The banks which include nationalized commercial banks
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as well as cooperative banks, extended financial assistance of about

Rs.665.21 crore which helped the entrepreneurs to establish the
units. Percentage in each category to the total number of projects
was fairly good for all the categories i.e., for Scheduled Castes it
was 11.50%, for Scheduled Tribes 7.50%, OBCs 23.58%, Women
Entrepreneurs 26.56% and Others which include Ex-servicemen,
Physically handicapped, hill and border areas 2.46%.

(b) Industry-wise Development: The KVIC has broadly classified all

village Industries into 7 groups and care is being taken to ensure
that the development in all industries is according to the availability
of local needs, raw material, technical competency and market
requirements. The maximum number of units established was in the
agro and food processing followed by services sector.

(c) Physical Performance of REGP: During the year 2004-05, a total

of 23453 projects have been financed under the scheme generating
5,30,025 number of employments. A sum of Rs.292.40 crore has
been utilised as margin money for this period.

The amounts allocated and utilised under REGP, during the last three
years are given below:

Table 4.1: Amount Allocated and Utilised under REGP

Amount Allocated Amount Utilised

Year
(Rs. lakh) (Rs. lakh)
2004-05 34401.50 29239.95
2005-06 36669.09 32095.75
2006-07 36291.73 34979.35
(Provisional)
Source: Ministry of Rural Development, Government of India.
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The estimated number of people benefited under REGP, during the

last three years is given below:

Table 4.2: People Benefitted under REGP

Year People Benefitted (Lakh Persons) (Estimated)

2004-05 5.30

2005-06 5.68

2006-07 5.95

Source: Ministry of Rural Development, Government of India.

New Initiatives

For the smooth implementation of the programme, following new

initiatives were taken by KVIC during the year 2004-05:

Decentralisation of the implementation of scheme by making

payment of margin money through the State offices and KVI
Boards.

Fixation of targets for projects and margin money for all field
offices based on rural population of the State.

Financing of units based on coir as raw material is allowed.

Financing of auto-rickshaws in Andaman and Nicobar Islands,

house boats, shikaras and tourist boats in Jammu and Kashmir are
also allowed under rural transport, keeping in view the special
requirement of these States.

For providing information/guidance to new entrepreneurs, REGP

helping counters are opened in all the field offices of the KVIC and
the State KVI Boards.
 113

346 number of model branches of public sector banks are

identified. They are provided margin money in advance on
quarterly basis.

Training to all KVIC/KVIB's field offices' staff is providing to

acquaint them with the implementation of programme.

Extensive publicity programme was made through workshops,

awareness camps, exhibitions etc.

4. Jawahar Rozgar Yojana (JRY)

Introduction

By merging the two erstwhile wage employment programme-

National Rural Employment programme (NREP) and Rural Landless
Employment Guarantee Programme (RLEGP), the Jawahar Rozgar
Yojana (JRY) was started with effect from April 1, 1989 on 80:20 cost
sharing basis between the Centre and the States. The main object was
additional gainful employment for the unemployed and under-employed
persons in rural areas. The other object was the creation of sustained
employment by strengthening rural economic infrastructure and assets in
favour of rural poor for their direct and continuing benefits. Though the
people below poverty line were the target group for employment,
preference was to be given to Scheduled Castes, Scheduled Tribes and
freed bonded labourers. Thirty percent of employment opportunities were
to be reserved for women in rural the areas. Gram Panchayats were to be
involved in the planning and implementation of the programme. This
yojana has been restructured as Jawahar Gram Samridhi Yojana (JGSY)
w.e.f. 1999.

At the instance of Planning Commission, the Programme

Evaluation Organisation (PEO) undertook a quick study of JRY with a
 114

view to assess the extent to which the Yojana helped in providing

employment to the target group; to analyse the type of asssets created
under the yojana including their quality and usefulness; to comprehend
the arrangements for the maintenance of assets created; and to study the
problems encountered in the implementation of the Yojana.

Criteria for Sample Selection

Though JRY being implemented in all States/Union Territories, a

closer analysis of data revealed that it covered a little over 90 percent of
the rural poor (population below poverty line) and 80 percent of the total
rural population lived in 10 States. These were: Andhra Pradesh, Bihar,
Karnataka, Madhya Pradesh, Maharashtra, Orissa, Rajasthan, Tamil
Nadu, Uttar Pradesh and West Bengal. In these States, rural population
living below poverty line ranged from 26 per cent in Rajasthan to 48 per
cent in Orissa. It was, therefore, decided to take up the study in these 10
States.

From each of these ten selected States, two districts-one identified

as 'best performing' and the second as 'least performing' with reference to
the percentage utilisation of available funds under the JRY during 1990-
91 were selected. Similarly, from each of the selected districts, two Gram
Panchayats - one 'best performing ' and the other 'least performing' were
selected. From each selected Gram Panachayat, I5 beneficiaries who
worked under JRY and received, wages were selected at random from the
muster rolls maintained by the Gram Panchayats. On the basis of the
above sampling design, 10 States, 20 districts, 40 Gram Panchayats and
600 beneficiaries were selected for the study.
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Main Findings

1. The percentage achievement in terms of mandays of employment

generated was more than the percentage utilisation of total funds
available during the years 1989-90 and 1990-91 at all levels.

2. The proportion of mandays of employment for Scheduled Castes

and Scheduled Tribes to the total mandays of employment
generated was more than 50 percent. But the women's share
remained at 22 to 25 percent at the district level. However, at the
selected Gram Panchayat level, it was 15 to 18 percent, only.

3. Based on the data collected, it is observed that 35.9 percent of the

total population in all the selected Gram Panchayats was available
for employment. Of these, 14.8 percent and 14.3 percent were
actually employed during 1989-90 and 1990-91 respectively. The
Yojana had provided negligible employment during the first half of
the year and the major work was left to be done during the second
half.

4. Of the total women available for employment, women employed

under the Yojana declined from 7 per cent in 1989-90 to 4 per cent
in 1990-91.

5. It has been noted that of 40 selected Gram Panchayats, 2 in 1989-

90 and 6 in 1990-91 did not utilise the funds at all. In the first half
of 1991-92, 19 Gram Panchayats did not report any utilisation of
funds.

6. The Gram Panchayats which had utilised the funds, could provide
employment to a person, for an average number of 11.44 and 15.68
days during 1989-90 and 1990-91, respectively. This shows that
the Yojana did not provide employment to the extent expected.
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7. It has been revealed that the illustrative list of works, as per the
JRY Manual has become exhaustive at the operational level.

8. It was observed that the quality of assets created was not upto the
mark in 56 per cent of the Gram Panchayats. Eight-nine per cent of
the selected assets created were useful. It was observed that no
adequate attention was given to the maintenance of assets.

9. At the Gram Panchayat level, it was felt that wage - material ratio
was not workable. The Panchayat Secretary was over worked and
the plan of action instead of being prepared by Gram Panchayat,
was being prepared by the block agency thereby ignoring the felt
needs of the area. In respect of technical problems at the Gram
Panchayat level, it was reported that technical guidance was not
available, measurement of works was delayed, and operational area
of the junior engineer was too big. Following pictures shows the
beneficiaries working on a field under JRY:
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Major Suggestions

1. The number of persons available for employment and who actually

got employed under JRY was not maintained at any level. It is,
therefore, suggested such information may be maintained in the
interest of proper planning and execution of the Yojana.

2. As Gram Panchayats are mainly responsible for the planning and

execution of the Yojana, it is suggested that the Gram Panachayat
elections may be held regularly and in time.

3. As the illustrative list of works given in the JRY Manual, issued by

the Ministry of Rural Development, has become the exhaustive list
at the operational level, it is, therefore, suggested that the assets as
per the felt need of the area may be taken up and illustrative list
should serve only as a guideline.

4. As the quality of maintenance of assets in most of the cases was

found to be either average or poor, it is suggested that the Gram
Panchayats may be involved so as to ensure regular and good
quality maintenance of the assets. A regular supervision and
monitoring of the maintenance of assets should be ensured at
higher level.

5. Training of Pradhans of the Gram Panchayats and proper

awareness of the Yojana may be ensured by implementing agencies
at the State and District levels. Involvement of contractors may be
discouraged.

6. Last but not the least, it is suggested that the Yojana be

implemented on selectivity basis- in the areas of concentration of
the poor. This is important particularly at the Gram Panchayat
level.
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5. Jawahar Gram Samridhi Yojana JGSY)

Jawahar Gram Samridhi Yojana (JGSY) has been launched to
ensure the development of rural infrastructure at the village level by
restructuring the erstwhile Jawahar Rozgar Yojana (JRY). Jawahar
Rozgar Yojana was one of the major wage employment programmes. It
also contributed to a great extent in creating durable rural infrastructure,
which has a critical importance in the development of village economy
thereby improving the standard of living of the rural poor. Both Jawahar
Rozgar Yojana and Employment Assurance Scheme resulted in the
creation of durable assets in the form of school buildings, roads and other
infrastructure.

It was, however, felt that a stage has come when the development
of village infrastructure needs to be taken up in a planned manner.
Accordingly, the Government restructured the existing wage employment
programme namely Jawahar Rozgar Yojana (JRY) and Employment
Assurance Scheme (EAS). The new programme- Jawahar Gram Samridhi
Yojana (restructured JRY) is dedicated entirely to the development of
rural infrastructure at the village level and is being implemented through
village panchayats. This programme has come into effect from 1st April
1999.

Objectives of JGSY

The primary objective of JGSY is to create the demand driven

community village infrastructure including durable assets at the village
level and also the assets to enable the rural poor to increase the
opportunities for sustained employment. The secondary objective is to
generate the wage employment for the unemployed poor in the rural
areas.
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Main Features of JGSY

The main emphasis of Jawahar Gram Samridhi Yojana (JGSY) is

to create rural infrastructure at the village level.

Implementation of Jawahar Gram Samridhi Yojana entirely by the

Village Panchayats.

Direct release of funds to the Village Panchayats by District Rural

Development Agencies (DRDAs)/Zilla Parishads (ZPs).

A Village Panchayat is the sole authority for preparation of

Annual Action Plan and its implementation with the approval of
Gram Sabha.

Empowerment to the Gram Sabha for approval of schemes/works.

Village Panchayats can execute works/schemes up to Rs.50,000/-

without technical/ administrative approval. However, Gram
Sabha's approval is must.

22.5% of JGSY funds have been earmarked for individual

beneficiary schemes for SCs/ STs.

3 per cent of annual allocation would be utilized for creation of

barrier free infrastructure for the disabled.

Wage under JGSY will either be the minimum wage notified by the
State or higher wage fixed by State through the prescribed
procedure.

The Panchayats can suitably relax 60:40 wage-material ratio for

building up demand driven rural infrastructure.

15 per cent of funds can be spent on the maintenance of assets.

Social Audit by the Gram Sabha.

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Village level Monitoring & Vigilance Committee to oversee and

supervise the works/schemes undertaken.

DRDA/ZP will be responsible for overall guidance, coordination,

supervision, monitoring and periodical reporting.

Works to be Taken Up

All works that result in the creation of durable productive

community assets can be taken up by the village panchayat under the
programme as per the felt need of the area/people.

While creating rural infrastructure, the wage-material ratio of 60:40

prescribed under JRY may suitably be relaxed so as to enable the build-
up of demand driven rural infrastructure. Care shoukd, however, be taken
to ensure that purely material oriented works are not taken up and
simultaneous efforts should be made to take up the labour intensive
works with sustainable low-cost technology.

Following Works should be given Priority:

Infrastructure for SCs/STs habitations.

Infrastructure support for SGSY.
Community infrastructure for education and health.
Other social, economic and physical infrastructure.
The Following Works will not be allowed to be Taken Up:

Building for religious purposes such as temple, mosque,

gurudwara, church etc.
Monuments, memorials, statue, idols, arch gate, welcome gate.
Bridges.
Building-for higher secondary schools.
Building for colleges.
Desiltation of tanks.
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Black topping of roads.

Earmarking of Resources

There is no sectoral earmarking of resources under JGSY, except

the following:

(a) 22.5% of annual allocation must be spent on individual

beneficiary scheme for SCs/STs as per JGSY Guidelines.
Diversion of funds meant for SCs/STs to other works is not
permitted.

(b) 3% of annual allocation should be utilized for the creation of

barrier free infrastructure for the disabled. In case, funds are not
utilized under this head, the village panchayats may utilize the
funds for other works under JGSY.

(c) The State Governments are provided an amount of Rs.10.00

lakh each or 1% of the annual allocation, whichever is less, to
meet the training expenses of officials/non-officials (elected
Panchayat functionaries) involved in the implementation of
JGSY provided that at least 75% of this amount must be spent
on the training of non-officials (Panchayat functionaries).

6. Integrated Rural Development Programme (IRDP)

Introduction

This programme was launched in 1978-79 and extended all over

the country in 1980-81.

The Integrated Rural Development Programme (IRDP) aims at

providing self-employment to the rural poor through the
acquisition of productive assets or appropriate skills that would
generate additional income on a sustained basis to enable them
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to cross the poverty line. Assistance is provided in the form of

subsidy and bank credit.

The target group consists largely of the small and marginal

farmers, agricultural labourers and rural artisans living below
the poverty line. The pattern of subsidy is 25 per cent for small
farmers, 33-1/3 per cent for marginal farmers, agricultural
labourers and rural artisans and 50 per cent for Scheduled
Caste/Scheduled Tribe families and physically handicapped
persons.

The ceiling for subsidy is Rs.6,000/- for Scheduled

Caste/Scheduled Tribe families and the physically handicapped;
for others, it is Rs.4,000/- in non-DPAP/non-DDP areas and
Rs.5,000/- in DPAP and DDP areas. Within the target group,
there is an assured coverage of 50 per cent for Scheduled
Castes/Scheduled Tribes, 40 per cent for women and 3 per cent
for physically handicapped. Priority in assistance is also given
to the families belonging to the assignees of ceiling surplus
land, green card holders covered under the Family Welfare
Programme and freed bonded labourers.

Allocation of Funds under IRDP

IRDP Is a Centrally Sponsored Scheme that is in operation in all

the blocks of the country since 1980. Under this scheme, Central
funds are allocated to States on the basis of proportion of rural poor
in a State to the total rural poor in the country.

The IRDP has been successful in providing incremental income to

the poor families, but in most of the cases, the incremental income
has not been adequate to enable the beneficiaries to cross the line
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on a sustained basis mainly because of a low per family

investment.

The major constraint in the implementation of IRDP has been sub-

critical investments that have adversely affected the Incremental
Capital-Output Ratio (ICOR) levels and thereby undermined the
viability of projects. Though the average per family investment has
been rising steadily in monetary terms, but in real terms, the
increase has been inadequate and in some cases, sub-critical due to
the inflationary trends and increase in the cost of assets.

At the instance of the Ministry of Rural Development (now

renamed as the Ministry of Rural Areas & Employment), the
Reserve Bank of India appointed a High Powered Committee in
1993 under the Chairmanship of Dr. D.R. Mehta, Deputy Governor
of Reserve Bank of India to make an in-depth study of the IRDP
and recommend suitable measures for its improvement. The
Committee was asked to review, among other factors, the process
of selection of appropriate income generating assets, credit
structure, recovery of loans and procedural matters in respect of
obtaining loans, and also the efficacy of existing administrative
structures of the District Rural Development Agencies (DRDAs).

In consonance with the recommendations of the High Powered

Committee, the initiatives taken by Government under IRDP included:

(a) Targeting the segment of literate unemployed youth below

the poverty line for IRDP activities by giving them subsidy
upto Rs.7500 or 50 per cent of the project cost (whichever is
lower).
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(b) Promotion of group activities through the enhancement of

ceiling on subsidy to Rs.1.25 lakh or 50 per cent of the
project cost (whichever is lower) for all group ventures
involving at least 5 members

(c) Back-ending of subsidy to prevent leakages in subsidy

administration.

(d) Shifting the emphasis to financial targets and qualitative

parameters from physical coverage of families, and

(e) Enhancing the limit of allocation to programme

infrastructure from 10 percent to 20 percent in all the States
and 25 per cent in the North Eastern States.

Among the other steps taken to enhance the efficacy of the

programme are: abolition of the cut off line to enable all families
below the poverty line to be assisted under the programme,
targeting the investment per family at progressively higher levels
each year, extension of the family credit plan to 213 districts of the
country, enhancing the ceiling limit of collateral free loans to a
uniform limit of Rs.50, 000 with a view to easing the constraints
faced by poor beneficiaries while taking loans from the banks,
extension of the cash disbursement scheme to 50 percent blocks in
the country, decentralisation of the sanctioning powers for
infrastructural projects below Rs.25 lakh and entrusting the banks
with the task of identification of beneficiaries in about 50 districts
on a pilot basis.

In pursuance of the High Powered Committee's recommendation,

for the first time in 1995-96, credit targets were fixed. There has
been a continuous increase in the volume of credit mobilised by
 125

banks. However, there are genuine reasons for the inability of banks
to meet credit requirements of IRDP beneficiaries in full. These
include: poor recovery of IRDP loans, lack of adequate rural
banking infrastructure in certain areas and the weak financial
performance of Regional Rural Banks and Cooperative banks.

Inadequate development of infrastructure and Insufficient forward

and backward linkages and market facilities has been an area of
concern under the IRDP. In an attempt to fill up the critical
infrastructural gaps and strengthening the linkages and marketing
facilities, the allocation under IRDP towards the development of
infrastructure was increased from 10 percent to 20 percent in all the
States and to 25 percent in the North Eastern States. However,
despite this enhanced provision and relaxation in sanctioning
norms, the actual expenditure on infrastructural development was a
mere 5 percent to 7 percent of total allocation under the programme
at all-India level. There is, therefore, a critical need to prepare a
perspective infrastructural plan at the district and block level and to
ensure that the earmarked for infrastructural development under
IRDP are closely monitored and not diverted elsewhere.

New Initiatives under IRDP:

IRDP will be a holistic programme covering all aspects of self-

employment, namely, the organisation of beneficiaries and their
capacity building, planning of activity clusters, infrastructure,
technology, credit and marketing.

The existing sub-schemes of TRYSEM, DWCRA, SITRA and

GKY to be merged into IRDP.

Progressive shift from the individual beneficiary approach to the

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group and/or cluster approach.

To facilitate group approach, SHGs will be formed and steps will be

taken to nurture them.

For cluster approach, each district will identify 4 to 5 activity

clusters in each block based on local resources and occupational
skills of the people. The infrastructure needs for identified activities
will be met in full.

Banks will be closely involved in the planning and preparation of

projects, identification of activity clusters, infrastructural planning
as well as capacity building and choice of activites of SHGs.

Promotion of multiple credits rather than one time credit injection.

Following pictures show the women of two different Self Help Groups
(SHGs) working on their activities:

Project for Linking Banks with Self-Help Groups:

NABARD initiated a Pilot project to link Banks with Self-Help

Groups (SHGs), with the objective of meeting the credit needs of
the poor through formal financial institutions.

Evaluation studies show success with increase in loan volume to

SHGs, shift to income generating activities, nearly 100 percent
recovery and reduction in transaction costs.
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85% of the groups linked with banks were exclusively of women.

Scheme is being expanded, and will be replicated all over the

country.

Furthermore there would be a strategic shift from an individual

beneficiary approach to a group and/or cluster approach:

(a) To facilitate this process, Self Help Groups (SHGs) will be

formed under IRDP and steps will be taken to nurture these
groups to enable them to function effectively. Efforts would be
made to involve women members in each SHG. Besides,
formation of exclusive women groups will also continue as at
present under DWCRA.

(b) Alternatively, a cluster approach would be preferred wherein a

few specified activities are identified for assistance in an area.
This would necessitate the formulation of a menu of "activity-
based" project profiles in different sectors to suit the local
resource endowment and the occupational skills of the local
people. Accordingly, each DRDA would set up four to five
activity clusters. Appropriate infrastructure and technology
inputs would be built into the project.

(c) The Family Credit Plan would be extended to all the districts of
the country in a phased manner. The feedback from the States
suggests that this strategy has met with reasonable success and
has raised investment levels.

Investment is the most crucial variable in determining the

incremental income generated under IRDP. Credit flows and the
average level of investment per family would aim at achieving
enhanced levels of investment in the range of Rs.25,000 to
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Rs.50,000 depending on the estimate of the poverty line and the

poverty gap. These higher levels of investment will give the
beneficiary the necessary financial support for diversifying into
high-value-addition sectors and non-traditional activities that have a
market potential.

In this effort, financial institutions would have to play a more

significant and dynamic role by enhancing credit flows and
tendering constructive assistance to the beneficiary making their
investments viable under this programme. Adoption of simplified
procedures by financial institutions would facilitate the BPL
families in accessing groups' loans under IRDP.

At present, there is a complex gamut of ceiling limits on subsidy.

The ceiling limit on subsidy would be fixed at 30% of the project
cost subject to a maximum of Rs.7,500. However, in the case of
SC/ST it would be fixed at 50% of the project cost subject to a
ceiling of Rs.10,000. Therefore, for the purpose of administrative
expediency, the area specific differential in subsidy administration
would no longer exist. For group activities, however, the subsidy
would continue to be Rs.1.25 lakh or 50 per cent of the project cost,
whichever is lower.

The emphasis, therefore, would be on establishing a continuous line

of credit for the beneficiary, wherein it would be possible for the
borrower to the obtain need-based additional credit for working
capital purposes, meeting unforeseen expenditure related to proper
maintenance of assets etc.

Experience has shown that the IRDP has been relatively more
successful in land-based activities. In recognition of this fact,
purchase of land was made a permissible activity under the
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programme. For land-based activities, besides providing assistance

for the purchase of inputs to enhance the productivity of land, there
exists a potential for diversifying into other allied activities which
have a high value-addition, such as sericulture, aqua-culture,
horticulture and floriculture, on the existing lands of the small and
marginal farmers. In addition to these activities, SHGs would be
given 'pattas' for development of wastelands, social forestry, soil
conservation and watershed projects.

Non-farm sector in the rural areas has witnessed both growth and
diversification in the past few years. Around 50 percent of the IRDP
investments are now made in the secondary and tertiary sectors,
based on local resources and local requirements. These include
processing industries, handlooms and handicrafts. Again, in most
villages, there is scope for tailoring and ready-made garments,
chemist shops, woodcraft, country tiles, general store etc. In
addition, in the villages of a reasonable size, other business/service
ventures like flour milling, motor rewinding, cycle repair etc. could
also be promoted under IRDP.

Greater emphasis should be placed on developing rural industries

that would catalyze the overall development of that area.

The artisans in the rural areas, despite their rich heritage and skills,
largely belong to the poverty group. The scheme for Supply of
improved toolkits to rural artisans is directed to this particular target
group.

To enable the rural artisans to take the advantage of new

opportunities thrown up by the market, it is also necessary to
support them with appropriate product designs and training,
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improved technology on one hand and professional management

and marketing support on the other.

The Department of Science and Technology, National Small

Industries Corporation, Small Industries Services Institutes and the
IITs would interact with the State Governments for development of
appropriate technology and improved toolkits for various artisan
groups.

States would be required to conduct a district-wise survey of the

total number of rural poor artisans, the number of such artisans
provided with improved toolkits and the balance number to be
covered.

Availability of infrastructural facilities is an essential pre-requisite

for the success of IRDP activities. Substantial investment in
programme infrastructure would be ensured, through a larger
apportionment of funds, in consonance with the enhanced provision
of 20 per cent for IRDP infrastructure.

Workshops would also be set up in tribal areas so that the tribal

themselves could undertake the process of initial value-addition to
minor forest produce. Funding for infrastructure would also include
the setting up or upgradation of technology resource centres.

There are certain areas in the country that have a very poor banking
infrastructure. The areas of Northeast and some parts of Jammu &
Kashmir fall under this category. Attention would be given to
evolving innovative strategies and programmes to take care of the
unbanked areas.
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While diversifying the rural economies in high-productivity sectors,

provision of adequate training facilities and upgradation of skills
would be given priority.

To strengthen the contents and design of the training curriculum,

the training institutes would have to constantly upgrade their syllabi
in tune with the rapid changes in the job market A basic foundation
course would be a critical ingredient of the training curriculum
which would make the trainees aware of simple accounting
procedures, book keeping techniques and procedures in financial
management, information on how to approach the banks and other
financial institutions for loans, where to access the latest
technology, etc.

The quality of training would be improved. Inadequacy of proper

infrastructural support has posed as a bottleneck in this effort.
While the emphasis would continue to be on imparting training
through the established and recognised training institutes like ITIs,
Community Polytechnics, Krishi Vigyan Kendras, etc., the training
infrastructure in these professionalised training institutes would be
suitably strengthened. Special thrust will be given to the creation of
training opportunities for women via strengthening of women ITIs,
womens wings in general ITIs and women polytechnics.

With a view to ensuring that the benefits under the programme

reach the more vulnerable sections of society, the Plan would
continue with the assured coverage of at least 60 per cent for
Scheduled Caste and Scheduled Tribe families, 40 per cent for
women and 3 per cent for the physically handicapped.

Experience in the implementation of IRDP suggests that

programmes focussed on women, or in which women have played a
 132

dominant role, have performed better. The DWCRA programme

has been an excellent vehicle for extending IRDP credit support for
women beneficiaries in some States. The group strategy would,
thereby, become the main plank for achieving the stipulated
reservation for women over the next few years.

A voluntary organisation or a technology group could lend support

to group activities by ensuring training, technological upgradation
and convergence of various schemes. In addition, the DRDAs and
PRIs would provide support for capacity building and provide
access to credit, technology and markets to SHGs. A cadre of para
professionals from within the community would be created to
enhance the capability of the SHGs and help the community to
access the facilities and services meant for them.

The organisational structure (staffing pattern) of the DRDAs would

be suitably revamped and strengthened with the induction of
professional cadres and technical experts. The expertise would have
to be developed in the fields of credit technology upgradation,
activity-specific training and infrastructural development.

The DRDA's agenda for operation would not be limited only to the
achievement of physical targets, but also to ensure the quality of the
programme and realisation of intended benefits for the targeted poor
beneficiaries.

7. Swarna Jayanti Shahari Rozgar Yojana (SJSRY)

Government of India launched a rationalised poverty alleviation
scheme Swarna Jayanti Shahari Rozgar Yojana replacing three existing
schemes, viz.

(i) Nehru Rozgar Yojana (NRY),

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(ii) Urban Basic Services for the Poor (UBSP), and

(iii) Prime Minister's Integrated Urban Poverty Eradication

Programme (PMI UPEP)

(1) The Scheme

The scheme contains all essential features of the three schemes and
is operative since 1st December, 1997 in all urban towns in India.

SJSRY seeks to provide gainful employment to the urban poor

(living below the urban poverty line) unemployed or under-employed,
through setting up of self-employment ventures or provision of wage
employment. Inputs under the scheme would be delivered both
through the medium of community structures to be set up on UBSP
pattern and Urban Local Bodies (ULBs). The scheme is to be funded
on a 75:25 basis between the Centre and the States.

Swarna Jayanti Shahari Rozgar Yojana consists of Two Special

Schemes, namely

(a) The Urban Self-Employment Programme (USEP)

(b) The Urban Wage Employment Programme (UWEP)

Among other components of the scheme, the following are the two
components of Urban Self-Employment Programme (USEP) where
credit from banks is involved:

(a) Urban Self Employment Programme (USEP)- Assistance to

Individual Urban Poor Beneficiaries for setting up Gainful Self-
Employment Ventures.

(i) Identification: A house-to-house survey for the

identification of genuine beneficiaries should be done. Non-
economic parameters also should be applied to identify the
 134

urban poor in addition to the economic criteria of the urban

poverty line. Community structures like Community
Development Societies (CDS) should be involved in this task
under the guidance of the Town Urban Poverty Eradication
Cell (TUPEC)/Urban Local Bodies (ULBs).

(ii) Eligibility: Under-employed and unemployed urban youth

whose annual family income is below the poverty line and
who have got education upto ninth standard, shall be assisted
with bank's loan and Government subsidy.

(iii) Minimum/Maximum Age Limit: No age limit is prescribed.

(iv) Definition of Family: Identification of the family will be

done on the basis of independent kitchen.

(v) Coverage: SJSRY would be implemented in all areas falling

under the jurisdiction of Urban Local Bodies of any category,
irrespective of population size.

(vi) Project Cost: Project cost upto Rs.50,000/- is provided under

the scheme in case of individual. If two or more eligible
persons join together in a partnership, the project with higher
costs would also be covered provided the share of each
person in the project cost is Rs.50,000/- or less.

(vii) Subsidy: Subsidy would be provided at the rate of 15% of

the project cost, subject to a ceiling of Rs.7,500/- per
beneficiary (for individual USEP). In case of more than one
beneficiary join together and set a project under partnership,
subsidy would be calculated for each partner separately at the
rate of 15% of his share in the project cost, limited to
Rs.7,500/- per partner.

(viii) Margin Money: The borrower has to bring in 5 per cent of

the project cost as margin money. Partnership would be
 135

permitted wherein the overall project cost will be a simple

sum of individual project cost allowable per borrower. Such
project would be eligible for subsidy equal to the total
permitted subsidy per person and each member would have
to bring in 5 percent of his share of project cost as margin
money.

(ix) Repayment: Repayment schedule ranges from 3 to 7 years,

after initial moratorium of 6 to 18 months, as decided by the
bank.

(x) Physical Targets: Physical targets under the USEP of

SJSRY will be decided by the State Governments in
conformity with the guidelines of the scheme as also the
result of beneficiary survey to ensure adequate flexibility of
operation of the scheme.

(b) Development of Women and Children in Urban Areas

(DWCUA)

(i) Activities: The programme envisages special incentive to

urban poor women who decide to set up self-employment
ventures in a group. Such groups may take up any economic
activity suited to their skill, training, aptitude and local
conditions.

(ii) Size of the Group: DWCUA group shall consist of at least 10

urban poor women and will be entitled to a subsidy of Rs.
1,25,000/- or 50 percent of the cost of project, whichever is
less. Best efforts should be made to encourage the group to
set itself up as a credit society.
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(iii) Loan Component if the Project Cost is upto Rs.2,50,000:

The loan component would be equal to the, project cost less
50% subsidy and less margin money (5% of the project cost).

(iv) Loan Component if the Project Cost exceeds Rs.2,50,000:

No maximum ceiling is prescribed for the project cost. In
cases where the project cost exceeds Rs.2,50,000/-for the
DWCUA Group, the loan component would be equal to the
project cost less subsidy (Rs.1,25,000) and margin money (at
the rate of 5% of the project cost), would be the component
of bank loan.

(v) Margin Money: 5 percent of the project cost will be

contributed as margin money by the group as a whole.

(vi) Repayment of Loan: Same as under the USEP for individual

self-employment.

(vii) Income Criteria: Each member of the Group should fulfil the
urban poverty norms as per official methodology as decided
by the Planning Commission. The beneficiaries under SJSRY
will be identified on the basis of monthly per capita income
and not on the basis of annual family income.

(2) Instructions and Guidelines

Sub-targets: The percentage of women beneficiaries under the

SJSRY Scheme shall not be less than 30 percent. SCs/STs must be
benefited to the extent of the proportion of their strength in the
local population. A special provision of 3 percent shall be made for
the disabled under the scheme.

Priority Sector Status: Loans granted under the scheme should

be treated as the advances under priority sector and accordingly the
 137

loan applications should be disposed of expeditiously within the

time schedule prescribed in this regard i.e., applications for loans
upto Rs.25,000/- within a fortnight and those for credit limits
above Rs.25,000/- within 8 to 9 weeks.

No Dues Certificate: The loan application may contain a clause

for eliciting particulars about any loan taken by the applicant from
any banking / financial institution of the State/Central Government,
repayment particulars and the balance outstanding if such a facility
is availed of. All the particulars furnished by an applicant in his
application should be certified by him. Based on the information
furnished by an applicant, the bank may consider dispensing with
production of 'No Due Certificate' as a compulsory requirement, if
satisfied about the status of the borrower, so that the delay in
sanction and disbursement of loan could be avoided. In case the
bank decides to verify the status of the loan account of the
borrower with other banks in the area, it should send specific
communication in duplicate and requesting the other banks to send
back the duplicate copy duly certified. The banks receiving the
reference for verification should furnish the same or provide details
of its dues within a maximum period of 10 days. If no response is
received within 15 days of request of verification from any bank, it
may be presumed that the referred bank has no dues.

Rejection of Applications: Branch Manager may reject

applications (except in respect of SC/ST) and such cases of
rejection are to be verified subsequently by the Divisional /
Regional Manager. In case of proposals from SCs/STs, rejection
should be at a level higher than that of a branch manager. Further,
rejection of applications should not be on flimsy grounds.
 138

Security: An entrepreneur eligible for assistance under the self-

employment scheme, can take a composite loan upto Rs. 50,000/-
and group loans upto Rs.3.00 lakhs which would not require a
collateral security or guarantee. Besides margin, as also the subsidy
by the Government, the borrower would hypothecate/mortgage/
pledge to the bank the assets created out of the bank loan.

Training: The entrepreneurs selected under the scheme would be

provided training and other entrepreneurial development assistance
by Government. Training is a compulsory input before the
disbursement of loan under scheme. This requirement may be
waived if a borrower has already received the training from a
registered NGO/VO or has learnt the activity such as cobblery,
carpentry etc., or learnt the trade as an apprentice from
private/public registered body and requisite certificate to that effect
is produced. However, training may not be insisted upon as a pre-
condition for loan in respect of the activities not requiring special
skill.

Rate of Interest: Loans under the scheme will carry interest as per
the directives on interest rates issued by Reserve Bank of India
from time to time.

Defaulter: A defaulter to a bank/financial institution will not be

eligible for assistance under the scheme.

(3) Administration of Subsidy

Subsidy under USEP/DWCUA component of SJSRY is to be

treated as back-ended subsidy with lock-in-period of two years.
The subsidy amount may be utilized / adjusted towards the
repayment of loan at the time of maturity. The subsidy admissible
 139

to the borrower should be kept in 'Subsidy Reserve Fund Account'.

Further, it has been decided that no interest will be paid on the
subsidy amount held by banks and for the purpose of charging
interest on loan, the amount of subsidy would be excluded.

While arriving at the project cost (including subsidy amount

disbursed to the beneficiary), bank should make clear distinction
between the loan and subsidy component and the interest may be
charged on loan component. If subsidy is not given (where
beneficiaries are not eligible for assistance under the scheme), bank
would be liable to return the subsidy amount to the Government of
India.

As regards the treatment to be given to the subsidy portion, held

back-ended, when the loan under SJSRY becomes bad / doubtful /
long overdue for repayment, it is clarified that the amount of
subsidy may be adjusted against defaulted loan only at the end of
the transaction at the time of closure of loan provided that ;

(i) The loan becomes bad and doubtful of recovery in the

circumstances beyond the control of bank,

(ii) Appraisal procedure for the sanction and disbursement of

loan, post-disbursement supervision, etc. are carried out in
accordance with the instructions issued by head/controlling
Office, and

(iii) The loan is not misutilised. In case of misutilisation of loan,

the subsidy is required to be refunded/ not to be claimed by
banks.

The balance lying to the credit of Subsidy Reserve Fund Account

will not form part of DTL for the purpose of CRR/SLR.
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(4) Monitoring and Review

The scheme will be monitored by the District Level Consultative

Committee and the State Level Bankers' Committee at their periodical
meetings.

Community Based Organisations to be set up Under the SJSRY

The community based organisations include Neighbourhood Groups

(NHGs); Neighbourhood Committees (NHCs) and Community
Development Society (CDS).

1. Neighbourhood Group (NHGs)

This is an informal association of women living in a mohalla or

basti or neighborhood. This is a group of manageable size
(preferably from 10 to 40 to represent urban poor or slum families).
Geographic contiguity and homogeneity should be the basis to
carve out the boundaries of the NHGs. At least one woman resident
among them who is willing to serve as a volunteer, should be
selected as a Resident Community Volunteer (RCV) through
community consensus or election or any other democratic process.
There should be a change or rotation (if the need be) of such
volunteers at periodic intervals. The responsibilities of RCVs
include:

(i) to serve as a channel of information and communication

among the families in cluster;

(ii) to represent the views of the group in the neighborhood

committees and community development societies and other
forums;

(iii) to support the planning, implementation and monitoring of

activities at the neighborhood level;
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(iv) to foster and encourage the participation in community

improvement and

(v) to motivate the community for being the members of thrift

and credit society and to contribute to community
development fund.

2. Neighbourhood Committees (NHCs)

A Neighbourhood Committee (NHC) is a more formal

association of women from the above neighbourhood groups
located in close proximity and as far as feasible within the same
electoral ward. The Committee should consist of all the RCVs from
neighbourhood groups as executives (with voting right) of NHC.
There can also be a provision for honorary membership without a
voting right for Community Organizers (COs), representatives
from other sectoral programmes in the community, supervisor,
school teacher, etc. The Convener / President of the NHC will be
selected / elected by the executive members of the NHC. The
convener will ensure that the meetings are convened on regular
basis. The NHC would be responsible.

(i) to identify local problems and priorities;

(ii) to ensure the groups involvement in meeting community

needs and goals (mini-plans);

(iii) to support local action with the partnership of responsible

agencies including community contracts;

(iv) to provide feedback to agencies of programme effectiveness

and out-reach especially for children and women;

(v) to develop community capacity through training in

association with COs, NGOs and other sectoral departments;
 142

(vi) to develop community based thrift and credit system as well

as neighborhood development fund; and

(vii) to facilitate the recovery of loans from beneficiaries in time.

The NHC may be registered under the Societies Registration Act or

other appropriate Act, if so desired. If registered, these NHCs may also
apply for grants-in-aid under various schemes.

3. Community Development Society (CDS)

The CDS is a formal association of all the neighborhood

development committees at the town level, based on common goals
and objectives. The CDS may consist of elected/selected
representatives of NHCs as executive members (with voting right);
and other members with honorary membership (with no voting
right) which may include community organiser representatives of
NGOs, sectoral department, leading citizen, elected representatives
of the area and other resource persons. The Community
Development Society (CDS) should be registered under the
Societies Registration Act or other appropriate Act to provide
access to grants-in-aid under various schemes and for a wider
Financial and credit base. The CDS would be responsible:

(i) to represent the need of all communities, especially women

and children;

(ii) to keep in touch with other agencies and departments to

promote the action in community towards fulfillment of their
needs.

(iii) to identify the needs of specific training and to arrange for

the same;
 143

(iv) to facilitate community surveys to be carried out to identify

the genuine beneficiaries for economic and shelter benefits;

(v) to prepare community plans and proposals, mobilizing

resources from the community, town or other sectoral
departments;

(vi) to extend help to Bank in coordination with UPE Cell, for

ensuring repayment of loans by the beneficiaries in time; and

(vii) to create small community assets in low income areas in

consultation with town UPE Cell and Urban Local Body
(ULB).
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Operational Details in Regard To

"Training and Infrastructural Support under USEP"

1. Norms For A Training Course:

(i) Average size of Training Class ...............................= 25 Trainees
(ii) Duration per Training Course .................................= 300 Hours*
(Minimum)
(iii) Average expenditure on training, including material cost, trainer's fees, other
miscellaneous expenses to be incurred by training institution as well as
monthly stipend to trainee. = Rs.2000/-**
2. Support To Training : Any training institution, including private
Institution institutions, can seek training support for
undertaking training programmes for the
beneficiaries in relation to equipments/training
aids or construction of workshops, by
submitting a proposal to the DUDA through the
ULB concerned. The DUDA can allocate upto
15% of the funds earmarked for training and
infrastructure support to the training
institutions.
3. Infrastructural : The DUDA, in consultation with the ULB
Support To Micro concerned, can approve projects for this
Enterprises In support. The total expenditure. On the
Relation marketing of products should not exceed 15%
of funds earmarked for training and
infrastructure support. The DUDA, in
consultation with ULB concerned, will decide
the infrastructural facilities to be created for the
marketing of products of micro enterprises
getting support under this programme, if
required. Any unspent amount should be
utilized for imparting, training.
* Total training days for a skill up gradation training may vary from a minimum of two months to six
months, subject to minimum 300 hours training and total expenditure not exceeding Rs.2000/- per
trainee.

** Monthly expenditure on training per trainee, including material cost, trainer's fees, other
miscellaneous expenses to be incurred by training institution, as well as monthly stipend to trainee,
may vary depending upon the trade and duration of training, subject to the minimum stipend of
Rs.100/- per month and Rs.230/- per month as training cost respectively.
 145

8. Sampoorna Grameen Rozgar Yojana (SGRY)

There were two major Programmes of this Ministry for Wage-
Employment Generation in the rural areas: Employment Assurance
Scheme (EAS) and Jawahar Gram Samridhi Yojana (JGSY). The EAS
was basically meant for the creation of additional employment
opportunities during the period of acute shortage of wage employment
through manual work for the rural poor living below the poverty line and
the JGSY aimed at the creation of need based rural infrastructure at the
village level. These programmes contributed to a great extent in
alleviating rural poverty and in improving quality of rural life.

The need was felt that different programmes for wage-employment

in the rural areas be merged and one ambitious programme be introduced
which would take care of food security, additional wage-employment and
village infrastructure at the same time. With this noble idea, a new wage-
employment programme namely the Sampoorna Grameen Rozgar Yojana
(SGRY) was announced by the Hon'ble Prime Minister on 15th August,
2001. The new programme was launched on 25thSeptember, 2001.

Objectives

The objectives of the Programme are to provide additional wage

employment in the rural areas alongwith the creation of durable
community, social and economic infrastructure in rural areas. The
programme is self-targetting in nature with special emphasis providing
wage employment to women, scheduled castes, scheduled tribes and
parents of the children withdrawn from hazardous occupations.
 146

Strategy

The programme is being implemented in two streams:-

(i) The First Stream of the Programme is being implemented at

the District and intermediate level Panchayats. 50% of the
funds are earmarked out of the total funds available under
the SGRY and distributed between the Zilla Parsihad and the
intermediate level Panchayats or Panchayat Samitis in the
ratio of 40:60.

(ii) The Second Stream of the Perogramme is being

implemented at the village Panchayat level, 50% of the
SGRY funds are earmarked for this stream. The entire funds
are released to the village Panchayats through the DRDAs/
Zilla Parishads.

Salient Features of SGRY

The objective of Sampoorna Grameen Rozgar Yojana is to ensure

the food security, gainful employment and also to strengthen the rural
infrastructure. The salient features of SGRY are:

The Sampoorna Grameen Rozgar Yojana (SGRY), a Centrally

Sponsored Scheme (CSS), is being implemented with the total
outlay of Rs. 10,000 crores.

Under the Scheme, 50 lakh tonnes of foodgrains amounting to about

Rs. 5,000 crore (at economic cost) is being provided every year,
free of cost, to the State Governments and Union Territory
Administrations.

Rs. 5,000 crore has been kept to meet the cash component of wage
and material cost.
 147

The cost of the cash component of the programme is shared by the

Centre and State in the ratio of 75:25.

The payment of foodgrains is to be made by the Ministry of Rural

Development to the Food Corporation of India (FCI) directly.

About 100 crore mandays of employment are envisaged to be

generated every year in the rural areas through the SGRY.

Every worker under the SGRY, will be provided minimum 5 kgs. of

foodgrains per manday as part of wages.

The balance of wages will be paid in cash so that they are assured
of the notified minimum wages.

The State Governments and UT Administrations will be free to

calculate the cost of foodgrains (paid as a part of wage) at either
BPL rates or APL rates or anywhere between the two.

Panchayati Raj Institutions (PRIs) can take up works as per the felt
need of particular areas.

Special Component of SGRY

There is a provision of special component under the SGRY for

augmenting food security through additional wage employment in the
calamity affected rural areas. The main features of the Special
Component are as under:
 148

Special component of the SGRY is in operation w.e.f., 1st April,

2002.

10% of the foodgrains allocated under the SGRY earmarked for the
Special Component, which is about 5 lakh tonnes of foodgrains.

Special component of the SGRY is demand driven and allocated to

particular the States on the basis of the requirement to deal with the
calamities such as drought, earthquake, cyclone, flood, etc.

Under special component, only foodgrains are provided free of cost

to the States. Cash component for the scheme is provided by the
State Governments either from the State Sector Scheme or Centrally
Sponsored Scheme.

Quality Control of Foodgrains

The normal procedure by way of joint sampling, as is done for the

PDS, will operate. In case of any complaint, the sample from the field
will be compared with the sample packet retained at the FCl Depot and
action initiated against all responsible in this behalf, if any discrepancy is
established.

Ban on Contractors

No contractor is permitted to be engaged for the execution of any

the work and no middle men/ intermediate agencies employed for
executing works under the scheme. Full benefit of wages to be paid
should, at all times, reach the workers.

Annual Action Plan

The Annual Action Plan (AAP) will independently be prepared

every year at all Panchayati Raj Institution levels. Responsibility for the
preparation of Annual Action Plan will be that of the Zilla Panchayat for
 149

the works to be taken at the District level while the Panchayat Samitis
will be responsible for the preparation and approval of their own Plans. In
respect of the works to be taken up at Samiti level. The Gram Panchayats
will be responsible for preparation of their own plans, which are to be
approved by the Gram Sabha. The Gram Panchayats can take up any
work with the approval of the respective Gram Sabhas. No financial limit
has been proposed as several States have already delegated powers to the
Gram Panchayats and it would be left to the State Government to
prescribe the same in the light of prevailing delegation of powers. The
works will need to be approved and incorporated in the Annual Action
Plan, as approved by the Gram Sabha.

Monitoring and Evaluation

Responsibility and accountability of implementation of the

programme will be of the States/UTs. The programme is regularly
monitored by the Department of Rural Development in accordance with
the existing inbuilt mechanism through periodical reports, Vigilance and
Monitoring Committees and visits by officers of the State Government
and by Area Officers of the Ministry of Rural Development. The
Programme will also be evaluated through reputed institutions /
independent institutions / organisations also.

Works to be Taken Up

The works to be taken up will be labour intensive, leading to the

creation of additional wage-employment, durable assets and
infrastructure, particularly those which would assist in drought-proofing
such as soil and moisture conservation works, watershed development,
promotion of traditional water resources, afforestation and construction of
village infrastructure, link roads, primary school buildings, dispensaries,
veterinary hospitals, marketing infrastructure and Panchayat Ghars.
 150

Works Prohibited

(i) Buildings for religious purposes and the like,

(ii) Monuments, memorials, statues, idols, arch gates/welcome
gates and the like,
(iii) Big buildings and bridges.
(iv) Government office buildings and compounds
(v) Buildings for Higher Secondary Schools and Colleges.

Table 4.3: Financial Performance of SGRY

(Rs. Crore)

Total
Total
Release Other
Year Stream OB Available
(Centre Receipts
Funds
+State)

2001-02 Ist 435.37 2414.56 40.46 2890.39 2020.85 69.92

nd
2 346.02 2521.87 - 2867.89 2171.22 75.71
2002-03 Ist 710.26 1536.98 51.59 2298.83 1159.75 50.45
(upto
2nd 531.50 1464.01 37.07 2032.58 1009.77 49.68
Nov.)
Source: Government of India, Ministry of Rural Development

Table 4.4: Physical Performance of SGRY

(Lakh Mandays)

2001-02 Ist 822.96 596.24 1175.00 2605.54 750.43 170928 94593 16.93

2nd 881.76 559.17 1183.31 2624.24 693.77 936261 284731 17.56

2002-03 Ist 533.23 344.38 706.09 1583.70 390.13 115578 143167 13.64

2nd 574.01 281.80 691.56 1547.37 369.03 384869 367292 13.62

Source: Government of India, Ministryof Rural Development
 151

9. Swarnjayanti Gram Swarozgar Yojana (SGSY)

Introduction

The Swarnjayanti Gram Swarozgar Yojana (SGSY) is the major

on-going programme for the self-employment of rural poor at present.
The programme was started on 01.04.1999 after the review and
restructuring of erstwhile Integrated Rural Development Programme
(IRDP) and allied programmes namely: Training of Rural Youth for Self
Employment (TRYSEM), Development of Women and Children in Rural
Areas (DWCRA), Supply of Toolkits in Rural Areas (SITRA), Ganga
Kalyan Yojana (GKY), and Million Wells Scheme (MWS). The earlier
programmes are no more in operation with the launching of this scheme.

Objectives

The basic object of the SGSY is to bring the assisted poor families
(Swarozgaris) above the poverty line by providing them income-
generating assets through a mix of bank credit and government subsidy.
The programme aims at establishing a large number of micro enterprises
in rural areas based on the ability of the poor and potential of each area.

Salient Features

Swaranjayanti Gram Swarojgar Yojana (SGSY) is a holistic

programme for promoting self employment of rural poor.

It covers all aspects of self employment of rural poor -organisation

of rural poor into Self Help Groups (SHGs).

It focuses on the capacity building of the Groups through financial

assistance, training, selection of key activities, infrastructure build
up, technology and marketing support.
 152

Self Help Groups (SHGs) to be a national movement - 11.47 lakh

Self Help Groups already formed.

Involvement of NGOs/CBOs/Animators for social mobilisation,

training and capacity building of Self Help Groups.

15% of the Central allocation earmarked for the sanction of projects

for the development of infrastructure and activity cluster.

Social Mobilisation of the Poor

A major shift of the SGSY from the erstwhile programmes is in

terms of its emphasis on social mobilisation of the poor.The programme
focuses on the organisation of the poor at grassroot level through a
process of social mobilisation for poverty eradication. Social mobilisation
enables the poor to build their own organisations 'Self-Help Groups'
(SHGs), in which they participate fully and directly and take decisions on
all issues that will enable them to cross the poverty line. An SHG may
consist of 10-20 persons belonging to families below the Poverty Line
and a person should not be a member of more than one group. However,
if necessary, 20% and in exceptional cases upto 50% of the members in a
group may be from APL (marginally above the poverty line and residing
continuously with BPL families) if agreed to by BPL members of the
group.Efforts have to be made to involve the women members in each
SHG. 10% of Self-Help Groups in each block should be exclusively for
women.

Following pictures show the Swarozgaris working on their rozgar under

SGSY:
 153

Activity Clusters - Planning and Selection

The SGSY emphasises on providing assistance to the Swarozgaris

for those activities which have been identified and selected as key
activities in terms of their economic viability in the area. Each block may
select about 10 key activities but focus should be on 4-5 Key activities
based on local resources, occupational skills of the people and availability
of markets so that the Swarozgaris can draw sustainable income from
their investment. The SGSY adopts a project approach for each key
activity. Project reports are to be prepared in respect of each identified
 154

key activity. The banks and other financial institutions have to be closely
associated and involved in preparing these project reports, so as to avoid
delay in sanctioning of loans and to ensure the adequacy of financing.
Selection of the activities has to be done with the approval of the
Panchayat Samitis at the block level and District Rural Development
Agency/Zilla Parishad at the district level These key activities should
preferably be taken up in activity clusters so that the backward and
forward linkages may effectively be established and the economies of
large scale production may be reaped. It is desired that a major share of
the assistance to be provided under the SGSY should be for activity
clusters.

Target Group

Families below the Poverty Line (BPL) in rural areas constitute the
target group of the SGSY. Within the target group, special safeguards
have been provided to vulnerable sections, by way of reserving 50%
benefits for SCs/STs, 40% for women, 15% for minorities and 3% for
disabled persons.

Financial Assistance

Assistance under the SGSY, to individual Swarozgaris or Self Help

Groups, is provided in the form of subsidy by the government and credit
by the banks. Credit is critical component of the SGSY, subsidy being a
minor and enabling element. Accordingly, the SGSY envisages greater
involvement of banks. They are to be involved closely in the Planning
and preparation of project reports, identification of activity clusters,
infrastructure planning as well as capacity building and choice of activity
of the SHGs, selection of individual Swarozgaris, pre-credit activities and
post-credit monitoring including loan recovery.
 155

The SGSY also seeks to promote multiple credit rather than a one-
time credit 'injection'. The credit requirements of the Swarozgaris need to
be carefully assessed. The Swarozgaris are allowed and, in fact,
encouraged to increase credit intake, over the years.

Subsidy under the SGSY to individuals is uniform at 30% of the

project cost subject to a maximum of Rs.7500/-. In respect of SCs/STs
and disabled persons, the subsidy may be upto 50% of the project cost,
subject to a maximum of Rs.10,000/-. For groups of Swarozgaris, the
subsidy is 50% of the cost of the scheme, subject to per capita subsidy of
Rs.10,000/- or Rs.l.25 lakh, whichever is less. There is no monetary limit
on subsidy for Irrigation Projects. Subsidy is back ended.

Training of Swarozgaris

The SGSY seeks to lay emphasis on skill development through

well-designed training courses. Those, who have been sanctioned loans,
are to be assessed and given necessary training. The design, duration of
training and the training curriculum is tailored to meet the needs of the
identified key activities. The DRDAs will be entitled to meet the
expenses, incurred by training institutions for both the basic orientation
and skill development training from out of the SGSY funds. However,
total expenditure on basic orientation and skill development training will
not exceed Rs.5,000/- per trainee. Duration of skill development will be
decided by the State Government depending upon the activities and skill
level of Swarozgaris.
 156

Marketing and Technology Support

The SGSY attempts at ensuring upgradation of technology in

identified key activities. The technology intervention seeks to add value
to the local resources, including the processing of locally available
material from natural and other resources for local and non-local market.

The SGSY provides for the promotion of marketing of goods produced

by the Swarozgaris, by organising exhibitions/ melas at District/State/
National/International levels for exhibition and sale of goods produced,
provision of market intelligence, development of markets and
consultancy services, and institutional arrangements for the marketing of
goods including exports. DRDAs could spend upto Rs.5.00 lakh per
annum for the management of professional inputs related to identification
of the viable activities, preparation of projects for product & design
development, value addition, packaging, etc.

Implementing Agencies & Funding Pattern

The SGSY is being implemented by the District Rural

Development Agencies (DRDAs), with the active involvement of
Panchayati Raj Institutions (PRIs), the Banks, the Line Departments and
the Non-Government Organisations (NGOs). The Yojana (SGSY) is
financed on 75:25 cost sharing basis between the Centre and the States.

Monitoring

A comprehensive system of monitoring has been adopted under the

SGSY. The programme is monitored from the Central level down to the
grass-root level. At the Central level, the Central Level Co-ordination
Committee (CLCC) monitors and reviews the implementation of the
programme and lays down policy guidelines for all aspects related to
credit linkages for the SGSY. The Performance Review Committee of the
 157

Department of Rural Development also reviews the implementation of

the SGSY. At the State level, a State Level Coordination Committee
(SLCC) monitors the programme. In addition, the progress under the
SGSY is monitored periodically through the reports and returns submitted
by DRDAs/States. Detailed monitoring formats for reporting the progress
of the programme have been circulated to all the DRDAs.
Implementation of the programme is monitored and reviewed through the
Project Directors' Workshops and periodic meetings with the State
Secretaries. At the Block/DRDA level, monitoring is done through field
visits and physical verification of assets. Efforts are underway to bring all
the DRDAs of the country within online networks for the smooth flow of
information from the Districts to the Centre and the States/UTs.

Special Projects under the SGSY

To try out new initiatives and for the co-ordinated efforts of

different departments in poverty reduction, 15% of the funds under the
SGSY is set apart by the Ministry for such efforts for special projects.
The projects can be in any individual district or across the districts. The
objective of each special project is to ensure a time-bound programme for
bringing a specific number of BPL families above the poverty line
through self-employment programmes. The projects may involve
different strategies to provide long term sustainable self-employment
opportunities either in terms of organisation of the rural poor, provision
of support infrastructure, technology, marketing, training etc. or a
combination of these
 158

Tablse 4.5: Financial and Physical Progress under SGSY

Items 1999-2000 2000-2001 2001-2002 2002-2003 Total/
Average
A. Financial Progress (Rs.
Crores):
Total Allocation 1472.33 1332.50 774.50 756.37 4335.70
Total Funds Available 1961.97 1608.18 1299.01 912.90 3577.46
Total Funds Utilised 959.86 1117.94 969.78 439.99 3487.57
% age of Utilisation to 48.92 69.52 74.66 48.20 60.32*
Funds Available
%age of Utilisation to 65.19 83.90 125.21 58.17 3.12*
Allocation
%age Utilisation to 36.79 52.67 85.85 36.82 53.03*
Subsidy
Total Credit Target 3205.00 3205.00 3195.03 2545.98 12151.01
Total Credit Mobilised 1056.46 1459.44 1329.63 524.57 4370.10
% age of Credit Mobilised 45.10 45.54 41.62 20.60 38.21*
Credit Disbursed to SHGs 187.30 256.64 318.29 187.40 949.63
Credit Disbursed to 869.16 1202.80 1011.34 337.17 3420.47
Individual Swarozgaris
Total Subsidy Disbursed 541.69 701.85 665.11 278.49 2187.14
Subsidy Disbursed to SHGs 124.58 167.93 209.92 124.68 627.11
Subsidy Disbursed to 417.11 533.92 455.19 153.81 1560.03
Individual Swarozgaris
Total Investment 1598.16 2161.29 1994.74 803.06 65557.24
Per Capita Investment (In 17113 21481 21255 22153 20501*
Ruppes)
Credit Subsidy Ratio 1.95 2.08 2.00 1.88 1.98
B. Physical Progress
(Nos.)
Self-Help Groups (SHGs) 292426 515691 950078 1195023 1195023
formed since 1.4.99
SHGs Taken up Economic 29017 26317 30575 15588 101497
Activities
%age of SHGs Taken up 39.09 25.98 56.60 20.32 35.50*
Eco. Activity to Grade-II
SHGs Swarozgaris Assisted 347912 318803 365668 183633 1216016
Individual Swarozgaris 585956 687349 572792 178872 2024969
Assisted
Total Swarozgaris Assisted 933868 1006152 938460 362505 3240985
% age of SHGs Swarogaris 37.25 31.69 38.96 50.66 39.64*
Assisted
Total SC/ST Swarogaris 413882 448736 427647 162517 1452782
Assisted
Women Sarozgaris Assisted 416690 410231 385844 171502 1384267
Disabled Sarozgaris 8529 6737 6059 2910 24235
Assisted
% age of SC/STs Assisted 44.32 44.60 45.57 44.83 44.83*
% age of Women Assisted 44.62 40.77 41.11 47.31 43.45*
%age of Disabled Assisted 0.91 0.67 0.65 0.80 0.76*
*Average per year
Source: Government of India, Ministry of Rural Development
 159

Reasons for the Slow Progress of the SGSY

The SGSY is a process oriented scheme. The initial preparatory

works, i.e., the organisation of poor, formation of Self-Help Groups, their
training and capacity building, gradation of groups requires substantial
time and follow up. The Groups become eligible for financial assistance
for the economic activities after about one year of formation. Therefore,
the progress was slow than expected, during earlier the years of
implementation.

A related important reason for the slow progress of the programme

is delay in the sanction and disbursement of loans by Banks. Slow
progress in the utilisation of infrastructure and training funds by the
States is also the reason for slow progress of the SGSY.

Steps Taken for Proper Implementation of the SGSY

(i) Based on the recommendations of National Conference on the

"SHG Movement and the SGSY", held last year, report of the
Working Group on Poverty Alleviation for the 10th Five Year Plan
and feedback / suggestions from the States/UTs, certain
amendments have been made in the SGSY guidelines to make the
scheme more effective:

(a) Size of SHG. In case of minor irrigation and disabled and in

difficult areas i.e. hills, deserts and sparsely populated areas, the
number of persons in a group may range from 5-20.

(b) Composition of SHG. A Self-Help Group (SHG) may consist

of 10-20 members from families below the poverty line.
However, if necessary 20% and in exceptional cases upto 30%
of the members in a group may be from APL; (marginally
 160

above the poverty line and residing continuously with BPL

families).

(c) No. of Key Activities. About 10 key activities may be selected

in each block. Focus should be, however, on 4-5 key activities
for Micro enterprise development in clusters.

(d) Subsidy Norm. The subsidy for group of Swarozgaris, would

be 50% of the project cost, subject to per capita subsidy of
Rs.10,000/-. Subsidy for disabled persons will be 50% of the
project cost, subject to a maximum of Rs. 10,000/-.

(e) Relaxation of Time in Grading. For minor irrigation schemes,

relaxation of time for second grading could be allowed by the
Block SGSY Committee, if the group is found creditworthy and
project is viable.

(f) Provision for Animators / Community Coordinators.

Provision has been made for utilising the services of individuals
as animators/ community coordinators for social mobilisation,
training and capacity building of SHGs by the DRDAs.

(g) Flexibility in Utilisation of Funds. The funds can be utilised

on the following items depending upon the requirement in the
district keeping in view the stage of implementation of the
scheme. However, expenditure on infrastructure will not exceed
20% of the allocation (25% in case of NE States):

(i) Training.

(ii)Infrastructure.

(iii) Revolving Fund to SHGs.

(iv) Subsidy for Economic Activities.

 161

(h) Expenditure on Basic Orientation and Skill Development

Expenditure on training has been enhanced upto Rs.5000/- per
Swarozgari.

(i) Income from the Economic Activity. The economic activity

taken up by the SHGs / Swarozgaris should generate anticipated
incremental income; as envisaged in the Project to enable them
to cross the poverty line.

(j) Expenditure incurred on Fairs and Exhibitions for Swarozgaris

may be met from the funds available under the SGSY
Programme Infrastructure,

(k) An Amount up to Rs. Five Lakh annually may be spent from the
funds available under the scheme on Management of
Professional Inputs related to marketing research, value
addition or products diversification or any other input which
would facilitate the marketing of produce.

(ii) To review the progress of SGSY, a meeting of the Central Level

Coordination Committee (CLCC) was held with the
representatives of Reserve Bank of India, National Agricultural
Bank for Rural development (NABARD) and also the Banking
Division of the Ministry of Finance. The following major
recommendations have been made by the CLCC :

(a) There should be greater co-ordination at the block level

between the bankers and Government functionaries for
sorting out the problems relating to banks under SGSY.

(b) The Subsidy portion of the Revolving Fund under SGSY be

enhanced to Rs. 20,000/- (currently Rs. 10,000/-).
 162

(c) The amount payable by the Life Insurance Corporation

(LIC) against claims under GLIS be enhanced to Rs. 6,000/-
in case of natural death (currently Rs. 5,000/-) and Rs.
12,000/- in case of death due to accident (currently Rs.
10,000/-).

(d) The banks operating in rural areas i.e., Commercial Banks,

RRBs and Co-operative Banks and those willing to play the
role of facilitator under the SGSY in forming, developing
and nurturing SHGs, may be involved as SHPIs and requisite
incentives in this regard may be provided by the States/UTs.

(e) Regional SARAS would be organised in different States/UTs

so as to increase the marketing of products produced by
Swarozgaris under the SGSY.

(f) The issue of high interest rates would be examined suitably

by the RBI and all the Banks.

(iii) Vigilance and Monitoring Committees have been formed at the

State, District and Block levels for monitoring the
implementation of the programme. Local MPs and MLAs are
the members of the District and Block level Committees.

(iv) Training of field level functionaries as well as bank officials

about the programme, are organised in every State/UTs.

(v) The Swarozgaris from different State /UTs participate both in

National and International Trade Fairs to promote the marketing
of the SGSY products.

(vi) For individual loans upto Rs.50,000 and group loans upto
Rs.5.00 lakhs, the assets created out of bank loan would be
hypothecated to the bank as primary security. In cases where
 163

movable assets are not created mortgage of land may be

obtained. Where mortgage of land is not possible, third party
guarantee may be obtained at the discretion of the bank.

Concurrent Evaluation of SGSY

In order to evaluate the functioning and implementation of the

SGSY the Centre for Management Development (CMD),
Thiruvananthapuram was given the responsibility to carry out a detailed
study on the scheme. Major findings of the study are summarised below:

Utilisation of funds

Based on the parameters of coverage of Below Poverty Line (BPL)

families to total BPL families, proportion of funds utilised to total
funds available, proportion of receipt of funds to total allocation,
preference given to group in fund utilisation etc., the study tried to
establish provisional ranking of States/UTs on the performance
under SGSY. Among the major States, Tamil Nadu, Punjab, and
Andhra Pradesh were the top three whereas among the group of
Other States/UTs, Himachal Pradesh, Tripura and Goa were among
the top three. The performance of SGSY in Assam, MP, Orissa,
West Bengal and Bihar was the lowest.

As far as the utilisation of funds is concerned, apart from the

economic assistance for Swarozgaris, infrastructure development
constituted as much as 17.61% of the total funds.

Economic Upliftment

The average income generated by the sample individuals and

Groups were found to be steadily increasing. The average annual

incremental income obtained by the individuals was Rs. 8,673 and
that of groups was Rs. 40,442.
 164

The average cost of the various projects taken up under SGSY in

different States varied from Rs. 15,970 to Rs. 37,965.

SGSY activities helped to satisfy the desire of self-employment in

a majority of beneficiaries (56.35%).

46.39% SHGs achieved increment in their income through SGSY

activity.

Increase in savings in SHGs was reported in 39.88% of the cases.

57.29% of the SHGs were involved in the primary type of micro
enterprises and 8.57% had invested in land development activities.

The average loan amount of the group in different States varied

from Rs. 54,095 in Nagaland to a maximum of Rs. 3,31,099 in
Madhya Pradesh.

Training, Skill Development, Product Design and Product

Development

Though 20 States have identified State Level Agencies for training

purposes, yet only 12 were able to organise State Level Training
Programmes.

Only 10 States took steps for ensuring exclusive mechanism for

providing product design and product development.

66.50% individual beneficiaries had not undergone any kind of

skill development.

53.36% of the sample group Swarozgaris did not undergo training

for skill development.

The products produced by the Swarozgaris were found to be of

inferior quality due to non-adequate training and skill development
facilities.
 165

Problems with Banks

The major complaints of the Swarozgaris were non-co-operation

from the banks, delay in bank procedures and delay in the
disbursement of loans.

52% of the Swarozgaris reported that the loan amount was

provided in a single dose.

Credit portion of the Revolving Fund was found to have been

postponed in certain cases.

Lack of co-ordination between banks and block officials was also

noted.

No effective follow up was being made after sanctioning loans to

the Swarozgaris.

Social Upliftment

67.44% of the total sample beneficiaries were women and 46.79%

were from SC & ST category and physically challenged constituted
2.45%.

60% of the total swarozgaris were found to be illiterate and 50.92%

were agrarian.

93.37% of sample beneficiaries participated in group decision-

making process.

Most of the assets (45.52%) created under the SGSY were

livestock assets.

SHGs

A number of SHGs were formed with an eye to avail of the

revolving fund and subsidy and no economic activity was being
 166

carried out. SHGs getting active support from the NGOs and other
community-based organisations were found to be doing better in
their selected economic activities. In most of the States, especially
in Northern States, the influential persons in the village were found
to own a group.

The grading of the group was found to be time consuming and in

certain cases, SHGs / Swarozgaris from the same village were
found to be engaged in similar types of micro enterprises thereby
reducing the demand for their produce and lowering their
profitability.

Only 2.5% of the total groups participated in trade

fairs/exhibitions.

In order to achieve the targets set, the officials encouraged

formation of SHGs without assessing the entrepreneurial potential
of the rural poor.

Recommendations

Keeping in view the problems faced under the SGSY, the study calls
for certain recommendations:

Banks

Efforts should be made to motivate the banks to take active interest

in the project and reduce the time taken for processing the
applications and disbursing loan.

The loan should be given immediately after the swarozgari

completes the training for skill development as envisaged in the
SGSY Guidelines.
 167

Facilitating Agencies

Appropriate agencies have to be identified for providing assistance

in product design and product development.

Professional agencies with expertise in identifying key activities

may be appointed for the identification of the same. Key activities
are to be identified keeping in view the local demand, availability
of raw materials and aptitudes as well as the skill of the people.

Service of better NGOs having good track record may be ensured

for the successful implementation of the schme.

Monitoring and Evaluation

In order to develop a consistent system of monitoring the

implementation of SGSY at the Block/DRDA level through field
visits and physical verification of assets as well as progress of the
swarozgari towards income generation, a schedule of inspection of
families by various levels of officers are a must.

There is a need for the installation of strong follow-up, reviewing

and monitoring systems apart from the identification of committed
manpower and resource persons at all levels to take the scheme
forward and to augment its outreach and efficacy.

Gram Panchayat

Gram Panchayats may be given a greater role in the recovery of

loans along with the bank and block officials. Wilful defaulters
should be identified and dealt with strictly.

Extensive awareness campaign may be launched with the help of

Gram Sabha and Block officials in order to impart proper
awareness regarding the scheme.
 168

Marketing

The marketing of SGSY products may be tried through special co-

operatives formed for the purpose in each village by organising
melas and exhibitions.

10. Employment Assistance to Special Categories

Employment services continued making efforts to cater to the
special needs of vulnerable sections like women, Scheduled
Castes/Scheduled Tribes, persons with disabilities and disabled Ex-
servicemen job-seekers.

(i) Women

Year-wise performance of Employment Exchanges in respect of

woman job-seekers for the period 2001 to 2006 is given in following
Table:

Table 4.6: Performance of Employment Exchanges in Respect of Women

Job-Seekers (in Thousands)

% of Live
Live Total Register of
Year Registration Placement Register Live Woman to
of Register Total Live
Women Register
2001 1540.8 31.5 10884.8 41995.9 25.9
2002 1343.1 25.9 10649.5 41171.2 25.9
2003 1448.8 26.7 10752.3 41388.7 26.0
2004 1551.5 24.5 10711.5 40457.6 26.5
2005 1606.9 32.4 10605.6 39347.8 27.0
2006 1281.9 17.4 11305.5 40675.7 27.8
(Jan-June)
Source: Report of Task Force on Employment Opportunities, Planning Commission, Government of
India.
 169

(ii) Scheduled Castes / Scheduled Tribes

Performance of Employment Exchanges in respect of Scheduled

Caste/Scheduled Tribe and Other Backward Class Job seekers during
2004 is indicated in following Table:

Table 4.7: Performance of Employment Exchanges in Respect of SCs, STs and

OBCs Job-Seekers (in Lakhs)

Years
Category Activity
1994 2004
Scheduled Caste Registration 7.05 7.19
Placement 0.19 0.16
Live Register 66.28 64.70
Scheduled Tribe Registration 3.47 2.78
Placement 0.08 0.08
Live Register 23.10 22.18
Other Backward Registration 9.23 9.52
Clases Placement 0.17 0.14
Live Register 82.32 82.05
Source: Report of Task Force on Employment Opportunities, Planning Commission,
Government of India.

Salient Features in Respect of SC/ST Job Seekers are as under

Live Register of SC Job-seekers has decreased from 66.28 lakh in

1994 to 64.70 lakh in 2004.

Live Register of ST Job-seekers has decreased from 23.10 lakh in

1994 to 22.18 lakh in 2004.

SC & ST job-seekers were 16.0% and 5.5% respectively of the

total job-seekers on the live register at the end of year 2004.

Placement of SC job-seekers has declined from 19.0 thousands in

1994 to 16.0 thousands in 2004.
 170

Coaching-Cum-Guidance Centers

Twenty two Coaching-cum-Guidance Centres for SCs/STs have

been set up, These Centres:-

provide employment related coaching-cum-guidance to SC/ST

applicants.

provide information on job requirements and the type of

test/interviews.

take up appropriate follow up action with employers to ascertain

the results of submission against reserved vacancies.

undertake job development work besides providing occupational

information/vocational guidance and counselling and organising
confidence building programme for job-seekers.

provide facilities to SC/ST job-seekers for practising shorthand and

typing at some of the above centres;

arrange from time-to-time, pre-recruitment training programme for

SC/ST candidates to improve their employability in competitive
examinations.

Special Coaching Scheme for SCs/STs

A Special Coaching Scheme to prepare SC/ST candidates for

competitive examinations/selection tests for Group 'C' posts is also
being operated by DGE&T in Delhi and Ghaziabad.

So far, 6680 SC/ST job seekers have successfully completed

coaching till 30th June, 2006 for clerical/stenographer posts in 23
phases.
 171

The coaching is of 11 months' duration and the trainees are given a

stipend @ Rs.175/- per month besides free course books and
limited stationery.

Introduction of New Courses in Existing Coachin-Cum-Guidance

Centre for SCs/STs

This scheme was started with effect from February 2004, with a
view to provide computer training to SC/ST educated job seekers
registered with employment exchanges through outsourcing training
facilities. The training of six months duration is arranged at many centres
and is coordinated by respective Centres of the DGE&T located at these
places. During 2004-05 and 2005-06, 467 and 518 SC/ST candidates
respectively were imparted training under the scheme. During the 2006-
07, 672 candidates were imparted training.

Twenty two coaching-cum-guidance centre for SCs/STs have been

set up in 22 States. Vocational guidance and training is provided to
SC/ST job seekers through these centres. Besides, the facilities for
practicing typing and shorthand are provided to SC/ST job seekers in 13
coaching-cum-guidance centres. These centes have aslo been arranging
pre-recruitment training programme for SC/ST candidates to improve
their employability in competitive examinations conducted by Staff
Selection Commission and other recruitment boards for Group 'C' and
equivalent posts.

(iii) Disables Persons

Employment Exchanges

The Employment Exchanges have been making special efforts to

cater to the special needs of disable job-seekers as under:-
 172

Table 4.8: Performance of Employment Exchanges in Respect of Disabled Job-

Seekers (in Thousand)

Year Registration Placements Live Register

2001 60.1 3.5 510.0
2002 59.4 3.4 532.7
2003 66.1 4.9 661.7
2004 52.4 3.4 565.9
Source: Report of Task Force on Employment Opportunities, Planning Commission,
Government of India.

There has been consistent increase in the number of persons with

disabilities on the live register.
The number of disabled job-seekers placed in employment during
2004 was 3.4 thousand.
Special Employment Exchanges for Physically Handicapped

Special, employment exchanges under established the National

Employment Service, are generally responsible for the placement
of physically handicapped.

Special employment exchanges were also set-up over three decades

ago for their selective placement. These exchanges attempt at
securing the most satisfying form of employment for the disabled
suitable to their physical and mental potentialities. At present, 43
Special Exchanges (as on December 2005) are functioning in the
country.

In pursuance of the recommendations of the Working Group on

Employment Service and the Task Force on the reorganization of
special employment exchanges, it was decided to set up special
cells in employment exchanges for the promotion of employment
of physically handicapped.
 173

Thirty eight special cells for the physically handicapped with a

special placement officer attached to the normal employment
exchanges and funded by the Central have been set up by the
Ministry of Social Justices & Employment.

The Performance of the Special Employment Exchanges during

2005 is given in the following table:

Table.4.9: Performance of Special Employment Exchanges During the year 2005

Registration 11790
Placement 1150
Live Register 111927
Source: Report of Task Force on Employment Opportunities, Planning Commission,
Government of India.

Vocational Rehabilitation Centres for Handicapped

The Ministry of Labour & Employment had been fully responsive

and committed to the implementation of the provisions of the 'Persons
with Disabilities Act, 1995'. The Directorate General of Employment and
Training (DGE & T) has been regularly co-ordinating and supporting the
Ministry of Social Justice & Empowerment (Ministry of SJE).

Twenty Vocational Rehabilitation Centres (VRCs) for handicapped

have been functioning in the country, out of which, one centre at
Vadodara has been set up exclusively for women with disabilities.

These centres evaluate the capacities of people with disabilities and

provide them adjustment training and skill training with a view to
integrate them in the economic mainstream and make them the
productive citizens of the country.

These centres play pro-active role in creating the public awareness

and community participation in the rehabilitation of people with
disabilities.
 174

During 2005-06, these centres registered 30967, evaluated 30452

and rehabilitated 10518 persons with disabilities.

The targets for newly established centres are being assessed

keeping in view the local conditions.

The performance of twenty Vocational Rehabilitation Centres for

the period January 2006 to July 2006 is given in following.
Table.4.10: Performance of Vocational Rehabilitation Centres During January-
July, 2006

Sl.
Description
No.

1 No. of Clients at 14 19 60 - 4 97
beginning of 2006
2 No. of Clients 1950 2829 15226 26 659 20690
Admitted during
Jan-July 2006
3 No. of Clients 1947 2758 15030 24 650 20409
Evaluated during
Jan-July 2006
4 No. of Clients who 2 29 83 - 4 118
left the Centre
without
Completing
evaluation
5 No. of Clients still 15 61 173 2 9 260
under evaluation at
the end of 2006
(Jan-July)
6 No. of Clients 462 1347 4322 11 139 6281
rehabilitated during
Jan-July 2006
Source: Report of Task Force on Employment Opportunities, Planning Commission,
Government of India.

Assistance to Disabled Ex-Servicemen and Dependants

In order to provide placement services to the disabled Ex-

Servicemen/Border Security Force Personnel and the dependants of
 175

Defence Service Personnel/Border Security Force personnel killed

or severely disabled in action, against the vacancies reserved for
ex-servicemen earmarked for priority categories. An Ex-
Servicemen Cell was set up in the Directorate General of
Employment & Training in July, 1972. Subsequently, the scope of
the special service was also extended for the benefit of ex-
servicemen during peace time as well as the dependants of
Defence Service Personnel killed or severely disabled in peace
time provided that the death or disability attributable to military
service with effect from February, 1981.

At the end of August, 2006, there were 235 disabled soldiers and
2344 dependants awaiting employment assistance through the Ex-
Servicemen Cell.

Minorities

In pursuance of the Prime Minister's directive for full integration of

minorities in all aspects of national life, the State Governments
have been advised to ensure that no discrimination is made against
minority communities in the matters of registration and in
sponsoring names by employment exchanges. The State
Governments have also been advised to create monitoring cells to
watch the progress of minorities in the matter of their registration
and placement and to instruct the employment exchange
registration camps in minority concentration areas.

In all, there were 60.57 lakh job-seekers on the live registers of

Employment Exchanges belonging to the minority communities at
the end of December, 2004. These account for 15.0% of total job-
seekers on the live register.
 176

11. Prime Minister's Rozgar Yojana (PMRY)

Salient Features

Prime Minister's Rozagar Yojana (PMRY) for providing self-

employment to educated unemployed youth of economically weaker
sections has been in operation since October 2, 1993. The scheme aims at
assisting the eligible youth in setting up self-employment ventures in
industry, service & business sectors. The scheme intends to cover urban
and rural areas.

Sl. Parameters Salient Features

No. for Eligibility
1. Age (i) 18 to 35 years for all educated unemployed
(ii) 18 to 40 for all educated unemployed in North-East
States, Himachal Pradesh, Uttarakhand and J&K.
(iii) 18 to 45 years for scheduled Castes/Scheduled Tribes,
Ex-servicemen, Physically Disabled and Women.
2 Educational VIII pass. Preference will be given to those who have been
Qualification trained for any trade in Government recognised/approved
institutions for the duration of at least six months.
3 Family Income Neither the income of the beneficiary along with the spouse
nor the income of parents of the beneficiary should exceed
Rs.1,00,000/- p.a.
4 Residence Permanent resident of the area for at least 3 years. (Relaxed
for married men in Meghalaya and for married women in rest
of the country.
5 Defaulter Should not be a defaulter to any nationalized bank/financial
institution/ co-operative bank. Further, a person already
assisted under other subsidy-linked Government schemes,
would not be eligible under this scheme.
6 Activities All economically viable activities including agriculture and
Covered allied activities but excluding direct agricultural operations
like raising crop, purchase of manure etc.
7 Project Cost Rs. 2.00 lakh for business/ service sector and Rs. 5.00 lakhs
for industry sector, loan to be of composite nature. If two or
more eligible persons join together in a partnership, project
upto Rs. 10.00 lakhs are covered. Assistance shall be limited
to individual admissibility.
8 Self Help Self Help Groups can also be considered for assistance
Group (SHG) under the scheme.
 177

Educated Unemployed Youth Satisfying the eligibility

criteria laid down under the Scheme
A SHG may consist of 5-20 educated unemployed youth.
No upper ceiling on project cost.
Loan may be provided as per individual eligibility taking
into account the requirements of the project.

The subsidy ceiling is Rs.. 15,000/- per beneficiary

subject to a maximum of Rs. 1.25 lakh per Group.
Subsidy may be provided to the SHG as per the
eligibility of individual members taking into account the
relaxation provided in North Eastern States, Uttarkahand,
Himachal Pradesh and Jammu & Kashmir.
Required margin money contribution should be brought
in by the SHG collectively.

Implementing agencies may decide the need of

predisbural training for all the members/majority of the
group.
9 Subsidy & Subsidy will be limited to 15% of the project cost subject to
Marging ceiling of Rs.12,500/- per entrepreneur. Banks will be
Money allowed to take margin money from the entrepreneur varying
from 5% to 12.5% of the project cost so as to make the total
of the subsidy and the margin money equal to 20% of the
project cost.

10. Collateral No collateral security for units in Industrial sector with

Security project cost upto Rs.5.00 lakh (the loan ceiling under the
PMRY). For partnership projects, the exemption limit for
collateral security will be Rs.5.00 lakh per borrowed account.
For units in service and business sector, no collateral security
for project upto Rs.2.00 lakh.
11. Rate of interest Normal rate of interest shall be charged. Repayment schedule
& Repayment may range from 3 to 7 years after an initial moratorium as
Schedule may be prescribed.
12. Reservation Preference should be given to weaker section Including
women. Assistance to SC/ST beneficiaries should be targeted
in such a manner that they are benefitted in proportion to
their population in the respective district/state. However, the
number of SC/ST beneficiaries should not the less than 25%
and 27% for Other Backward Clases (OBCs).
13. Training Each entrepreneur whose loan is sanctioned is provided
training as per details given below:
 178

(i) For industrial sector:

Duration : 15-20 working days
Stipend : Rs.750/-
Training expenditure: Rs.1750/-
(ii) For Service and Business sector:
Duration: 7-10 working days
Stipend : Rs.375/-
Training expenditure: Rs.875/-
14. Recovery of (i) Panchayat Raj Institutions like Gram Panchayats be
loans empowered to identify and sponsor candidates to the District
Task Force Committee so as to ensure the disbursement of
loan to genuine persons and better recovery of loan.
(ii) To reduce the level of sickness/closure of PMRY units,
the District Level Selection Committee/Task Force
Committee be made accountable for the proper scrutiny of
applications and selection of viable projects.
15. Implementing The District Industries Centers and Directorate of Industries
Agency are mainly responsible for implementation of the Scheme
along with the banks.