Institute of Rural Management Anand

Rural Livelihood Systems (RLS)

PRM: 2021–23
Term I

Course Facilitator:
Pramod K. Singh

August 2021

Email: pramod@irma.ac.in Telephone: 221621 (Off.), 9662514668 (Mob.)

ii
 Institute of Rural Management Anand (IRMA)

PGDM (RM) – 42 (2021-23)

Academic Year 2021-22

Term I
Title of the Course: Rural Livelihood Systems (RLS) Credit: 1.5
Name of the Faculty: Pramod K. Singh
Email ID: pramod@irma.ac.in Contact No.: 9662514668

COURSE DESCRIPTION:
Livelihood is considered a way of life that not only includes employment, income and a means
of living but also provides an identity and a place in society. Practiced year after year, sometimes
over generations, livelihoods tend to impact and be impacted by natural and cultural factors.
Livelihoods are central to the poor and their social relations. Livelihoods of a household are
characterized by income, expenditure, employment and risks. Seven asset classes (natural,
physical, human, social, financial, organisational, and personal) form building blocks of
livelihoods. People’s aspirations must be met and their capabilities must be enhanced.
Institutional environment and local institutional arrangements affect livelihoods either positively
or negatively.

COURSE OBJECTIVES:
a. To understand rural production systems
b. To provide an understanding of concepts, processes, and relationships between available
endowments, production systems, and livelihoods of rural people.
c. To be able to evaluate existing livelihood interventions adopted by the prominent
development organisations in India
d. To be able to design an effective livelihood intervention in a given context

LEARNING OUTCOME:
e. Developing an in-depth understanding of rural production systems
f. Developing understanding about relationships between available endowments, production
systems, and livelihoods of rural people
g. To be able to evaluate existing livelihood interventions adopted by the prominent
development organisations in India
h. To acquire skills to design a livelihood intervention in a given socio-economic and ecological
context

iii
COURSE REQUISITES:
The course requires your greater participation in the teaching-learning process. Essentially, you
are required to read, think about the issues, and be prepared to contribute to the class discussions.
I will be only a facilitator in your learning process. The readings and cases listed in the session
plan are mandatory, meaning that you should complete the readings before the online session on
a given topic.
PEDAGOGY / TEACHING METHODOLOGY:
The course will follow an active learning approach, which calls for greater involvement of
participants in the process of teaching-learning exchange. Successful active learning requires the
student to prepare for class each time. This means that students should do the readings, think
about the issues, and be prepared to contribute to class discussions. Pedagogy for the course will
include interactive sessions, case analysis, and exercises. In order to have interactive sessions,
your preparation is necessary.

EVALUATION:
Component *Weightage %
Class Participation 10±5
Quiz 10±5
Individual Assignment 25±5
Group Assignment 25±5
Take Home Assignment 0
Research Article Review/Discussion 0
Any Other Component 0
Mid Term 0
End Term 30
TOTAL 100

DETAILS/INSTRUCTIONS FOR EVALUATION:

The End Term Examination aims at testing participant’s understanding of the livelihoods
concepts, and test skills acquired for designing a livelihood intervention in a given socio-
economic and ecological context. More weights will be given on the integration of various
concepts and critical analysis rather than factual details. Details for the assignments will be
discussed after session 4.

TEXTBOOKS: NIL

ADDITIONAL BOOKS / READINGS: NIL

iv
SCHEDULE OF SESSIONS:
Module I: Rural Production System
Module Objective: To understand rural production systems
Session 1: Morphology of Rural Production Systems in India
Objective: In-depth understanding of rural production systems and agrarian distress
Reading
1. Singh, PK (2020) The state of agriculture in India at a glance. {Agricultural
statistics compiled from various sources for class discussion only}
Session 2: Chemical, organic and natural farming in India: status and prospects
Objective: Merits and demerits of chemical, organic and natural farming
Readings
1. Trent, Brown (2013) Agrarian Crisis in Punjab and ‘Natural Farming’ as a
Response, South Asia: Journal of South Asian Studies, 36:2, 229-242, DOI:
10.1080/00856401.2013.776002 {Reproduced in abridged form by the course
instructor}
2. Government of Andhra Pradesh (2019) Andhra Pradesh Zero Budget Natural
Farming - a concept note

Module II: Livelihood Perspectives and Measurements

Module Objective: f. Developing understanding about relationships between available
endowments, production systems, and livelihoods of rural people
Session 3: Perspectives on poverty and livelihoods
Objective: To understand livelihood systems
Readings
1. Singh, PK (2021) Developing Perspectives on Poverty and Livelihoods. A note
prepared for the class discussion only
Session 4: Livelihood vulnerabilities, risks and coping strategies; Measuring livelihoods
Objective: To understand the vulnerabilities and risks of rural livelihoods; How to
measures livelihoods at different scales
Readings
1. Singh, PK (2020) Shocks, vulnerability risks, and coping strategies. A note
prepared for the class discussion only
2. Singh, PK (2020) Measuring livelihoods. A note prepared for the class discussion
only

Module III: Analysing Existing Livelihood Interventions

Module Objective: To be able to evaluate existing livelihood interventions adopted by
the prominent development organisations in India
Session 5: DAY-NRLM: A nation-wide livelihood intervention
Objective: To get exposure to a nation-wide large scale livelihood intervention
Reading
1. Ministry of Rural Development (2011) Deendayal Antodaya Yojna-National Rural

v
 Livelihoods Mission {Programme document updated in 2020—Reproduced from
http://www.aajeevika.gov.in for class discussion only}

Session 6: SLACC: A Unique experiment for a climate-resilient livelihoods

Objective: To understand how to make rural livelihood climate-resilient
Reading
1. Singh, PK (2020) SLACC: Towards climate-resilient livelihoods. A note prepared
for the class discussion only

Module IV: Designing a livelihood intervention: process, tools and techniques

Module Objective: To acquire skills to design a livelihood intervention in a given socio-
economic and ecological context
Session 7: Designing a livelihood intervention: Locating internal energy; Analysing
external and internal context
Objective: How to locate internal energy for the interventions; analyse external and
internal context for an intervention
Readings
1. Judy, S and Hammond, S (2006) An Introduction to Appreciative Inquiry, Public
Organization Review (Vol. 2, pp. 235–252). Netherlands.
2. Singh, PK (2020) Designing a livelihood intervention: process, tools and
techniques, A note prepared for the class discussion only
Session 8: Designing a livelihood intervention: Knowing economies; Analysing value
chain; Analysing value addition; Deciding on value addition
Readings
Same as above 2 of session 7
Case: Lijjat - A Women’s Enterprise with a Difference
Case: NTFP Based Livelihoods in Chattisgarh

Session 9: Designing a livelihood intervention: Design of a collective livelihood

enterprise
Objective: How to design a collective livelihood enterprise
Readings
1. Shah, T. (2016) Farmer producer companies: fermenting new wine in a new
bottle, Economic and Political Weekly, Vol LI, No.8, pp 15–20
2. Same as above 2 of session 7
Case: Wadi - A Natural Resource Regeneration Approach
Session 10: Designing a livelihood intervention: Creating pro-producer value chain;
Mustering financial resources; Initialising operations; Designing performance measures
Reading
1. Same as above 2 of session 7.

vi
IMPORTANT GUIDELINES:
Playing of Farmer’s Suicide game is mandatory before session 1. Participants are expected to
read the assigned reading before the session. There could be quiz based on the assigned reading.

PARTICIPANTS ROLES & RESPONSIBILITIES:

Participants are expected to follow through the instructions provided along with the course
progress

HOW DOES THIS COURSE IS RELEVANT TO IRMA’S MISSION?

a. The course imparts skill to build people power based on harmonious co-productive
partnership with nature
b. Participants are able to design healthy and meaningful livelihood interventions based on a
just and equitable sharing of resources
c. The course has a direct interface with several Sustainable Development Goals like SDGs 1, 2
and 10.

ADDITIONAL READINGS
Shivakumar S. (2020) State of Livelihoods in Indian Agriculture Challenges, Opportunities and
Way Forward, State of India Livelihood Report 2020. (For Session 1)
Chambers R (1995). Poverty and livelihoods: whose reality counts? Environment and
Urbanization, 7 (1): 173-204. doi: https://doi.org/10.1177/095624789500700106 (For Session 3)
Singh, Pramod K; Chudasama, H. (2021). Pathways for Climate Resilient Development: Human
Well-Being within a Safe and Just Space in the 21st Century. Global Environmental Change. doi:
https://doi.org/10.1016/j.gloenvcha.2021.102277 (For Session 3: Only section 2.4)
Singh, Pramod K; Chudasama, H. (2021). Pathways for climate change adaptations in arid and
semi-arid regions. Journal of Cleaner Production, 284, 124744. doi:
https://doi.org/10.1016/j.jclepro.2020.124744 (For Session 6)

vii
 Contents
Session Reading Page
Singh, PK (2020) The state of agriculture in India at a glance.
1 {Agricultural statistics compiled from various sources for class discussion 1-4
only}
Trent, Brown (2013) Agrarian Crisis in Punjab and ‘Natural Farming’ as a
Response, South Asia: Journal of South Asian Studies, 36:2, 229-242,
2 5-8
DOI: 10.1080/00856401.2013.776002 {Reproduced in abridged form by
the course instructor}
Government of Andhra Pradesh (2019) Andhra Pradesh Zero Budget
2 9-14
Natural Farming - a concept note
Singh, PK (2021) Developing Perspectives on Poverty and Livelihoods. A
3 15-32
note prepared for the class discussion only
Singh, PK (2020) Shocks, vulnerability risks, and coping strategies. A note
4 33-49
prepared for the class discussion only
Singh, PK (2020) Measuring livelihoods. A note prepared for the class
4 50-64
discussion only
Ministry of Rural Development (2011) Deendayal Antodaya Yojna-
National Rural Livelihoods Mission {Programme document updated in
5 65-82
2020—Reproduced from http://www.aajeevika.gov.in for class discussion
only}
Singh, PK (2020) SLACC: Towards climate-resilient livelihoods. A note
6 83-90
prepared for the class discussion only
Judy, S and Hammond, S (2006) An Introduction to Appreciative Inquiry,
7 91-102
Public Organization Review (Vol. 2, pp. 235–252). Netherlands.
Singh, PK (2020) Designing a livelihood intervention: process, tools and
7 techniques, A note prepared for the class discussion only {Also important 103-130
for session 8-10}
8 Case: Lijjat - A Women’s Enterprise with a Difference 131-140
8 Case: NTFP Based Livelihoods in Chattisgarh 141-149
Shah, T. (2016) Farmer producer companies: fermenting new wine in a
9 160-165
new bottle, Economic and Political Weekly, Vol LI, No.8, pp 15–20
9 Case: Wadi - A Natural Resource Regeneration Approach 166-169

viii
 The State of Agriculture in India at a Glance1

The agriculture sector employs nearly 44% of the workforce in the country. However, it contributes to
17.5% of the GDP (at current prices in 2015-16). Over the past few decades, the manufacturing and
services sectors have increasingly contributed to the growth of the economy, while the agriculture sector’s
contribution has decreased from more than 50% of GDP in the 1950s to 15.4% in 2015-16 (at constant
prices).

Table 1: Percentage of people employed in agriculture

Year Male Female All

1991 57.8 75.7 62.7
1996 55.8 74.4 61.0
2001 54.9 74.9 60.5
2006 49.0 69.5 54.8
2011 42.6 63.1 47.6
2016 40.1 60.6 45.1
2017 39.3 59.9 44.3
Source: Agricultural Statistics at a glance 2018 – Ministry of Agriculture and farmers’ Welfare

 The reliance on agriculture for livelihoods are declining

 Agriculture output has been volatile
 86% of landholdings are less than 2 hectares. Informal sources of credit constitute 40% of loans

Fig. 1: Yield (Productivity) in different countries (tonne/ha)

Key issues affecting agricultural productivity
include the decreasing sizes of agricultural
landholdings, continued dependence on the
monsoon, inadequate access to irrigation,
imbalanced use of soil nutrients resulting in
loss of fertility of the soil, uneven access to
modern technology in different parts of the
country, lack of access to formal agricultural
credit, limited procurement of food grains by
government agencies, and failure to provide
remunerative prices to farmers

1
Reproduced from various soutces for class discussion only

1
Fig. 2: Agricultural growth (%) Fig. 3: Agricultural growth in 21st Century(%)

India’s production of food grains has been increasing every year, and India is among the top producers of
several crops such as wheat, rice, pulses, sugarcane and cotton. It is the highest producer of milk and the
second highest producer of fruits and vegetables. In 2013, India contributed 25% to the world’s pulses
production, the highest for any one country, 22% to the rice production and 13% to the wheat production.
It also accounted for about 25% of the total quantity of cotton produced, besides being the second-highest
exporter of cotton for the past several years.

Fig. 4: Contribution of Sectors to GDP (%) Fig. 5: Agricultural production (Million Tonnes)

Table 1: Agricultural holdings (millions) The number of marginal land holdings (less than
one hectare) increased from 36 million in 1971 to
93 million in 2011.

Since smaller landholdings are either fragments

within the family or have been informally leased
by a large holder, farmers who cultivate these
holdings often do not have a formal lease
agreement. The absence of such land records does
not allow these farmers to access formal credit or
be eligible for government benefits such as input
subsidies or crop insurance schemes.

2
Table 3: Landholdings and sources of agricultural credit (as of 2013)
Availability of water
Table 4: Sources of irrigation (as of 2010-11)
Table 5: Ground water development
and coverage of irrigation in states
 Currently, about 51% of the agricultural area
cultivating food grains is covered by irrigation.36
The rest of the area is dependent on rainfall (rain-fed
agriculture).
 There is a need to improve the efficiency of
available water in the country.
 Nearly 65% of the irrigated land holdings use
groundwater sources such as tube wells and wells
for irrigation.
The past few decades has led to an overuse of
groundwater sources in states, especially those growing
water-intensive crops such as rice. For instance, in
Haryana and Rajasthan, 40%-75% of the groundwater
units are over-exploited, and the situation is worse in
Punjab, where 75%-90% of groundwater units have been
over-exploited.
In 2011 and 2013, the government released Model Bills for
Ground Water Management, based on which states could
formulate their own laws. It also launched a Policy in
2012 relating to water demand management, the efficiency
of water usage, and pricing. The Model Bills were based on
the doctrine of public trust, under which resources meant
for public use cannot be converted into private ownership.
More recently, the Ministry of Water Resources circulated
a Model Bill for Groundwater, 2016, which may be
adopted by states.
The Bill provides an institutional framework for the
protection and management of groundwater. It states that
groundwater is a shared resource of all persons, and
ownership of the land over a groundwater resource should
not deprive others of accessing it. It also states that
industrial or bulk usage of groundwater will be priced.
3
India uses 2-3 times as much water to produce one tonne of grain as countries such as China, Brazil and
the United States. If India also increases its efficiency of water use, it will be able to cover a wider area
for irrigation.

Table 6: Growth rates in major sub-sectors 2012–17

Cereals Pulses Oilseeds Horticulture Milk & Meat Fisheries

Production 0.87 7.64 1.87 3.17 5.28 5.17

Value 0.79 7.37 1.44 3.87 5.45 7.14

Source: Excerpted from https://www.indexmundi.com/facts/india/employment-in-agriculture

Within agriculture, the crop sector has muted in growth. Dairy and fisheries subsectors show vibrant growth
over the last five years. The high- growth subsectors should get better support.

Soil and fertilizers

 About 5.3 billion tonnes of soil gets eroded annually, at a rate of about 16.4 tonne/hectare.
 While the recommended ratio of use of the NPK fertilizers is 4:2:1, this ratio in India is currently at
6.7:2.4:1.
 Overuse of urea is especially observed in the states of Punjab, Haryana and Uttar Pradesh. Figure 7
shows the trend in the consumption of fertilizers over the past decade.
 Certain crops such as rice, wheat, maize, cotton and sugarcane require larger quantities of nitrogen as
compared to pulses, fruits and vegetables.
Pesticides
The consumption of chemical pesticides in the country has increased over the past few years, from
55,540 tonne in 2010-11 to 57,353 tonne in 2014-15.
Zero Budget Natural Farming (ZBNF)
Evidence that Zero Budget Natural Farming (ZBNF) is a viable, mainstream solution is so far lacking.
Anecdotes cannot be a basis for making fundamental shifts in agricultural development strategy. Not
just farm livelihoods, but food security of the country may also be in the balance. The National
Academy of Agricultural Sciences has questioned the claims of productivity arising from ZBNF. The
labour-intensive processes in ZBNF run the risk of high labour costs in the rural areas where there is
a significant withdrawal of labour force as explained earlier. The suitability of ZBNF for all crops
and all agro-climatic zones is still to be studied.

Post-harvest activities
 After agricultural produce is harvested, it requires a robust storage infrastructure in order to minimise
any losses due to adverse weather conditions or in the process of transportation.
 The quantity of food which is wasted during the harvest and post-harvest processes in the country has
increased over the past five years.
 The highest losses are observed in the case of fruits and vegetables (4.6%-15.9% of production in
2015), pulses (6.4%-8.4%) and oilseeds (5.3%-9.9%).
 Food wastage occurs at all levels of farming—the farmer, transporter, wholesaler and retailer.
 National Agricultural Market (NAM) be created to provide for a national electronic platform on
which farmers may sell their produce.

4
 Agrarian Crisis in Punjab1
Since the mid-1980s, numerous authors have described the situation in Punjab as being one of ‘crisis’. Yet,
in this literature, there is little clarity about what precisely it means to apply the term, ‘crisis’, in this context.
In the first part of this paper, I propose that the situation in Punjab may be understood as a Gramscian ‘crisis
of authority’ within the Green Revolution discourse. This implies not only that the still-dominant Green
Revolution approach to agrarian development is no longer able to deliver the results it once did, but also
that there has been an erosion of the moral and intellectual leadership that had formerly encouraged people to
embrace this approach. Such a situation provides an opening for various interest groups to put forward
alternatives.

Punjab History: From the Green Revolution to Crisis

The current situation in Punjab closely reflects the agrarian crisis being experienced throughout rural India.
From a macro perspective, India’s agrarian crisis consists of a growing imbalance between rural and urban
economies. As Reddy and Mishra outline, while the gap in the gross domestic product (GDP) between rural
and urban India has increased, there has been no corresponding shift in employment patterns. The growth in
urban and non-agricultural rural employment opportunities has not been fast enough to accommodate the
growing number of people from rural communities who can no longer sustain themselves on agriculture
alone. Furthermore, the farming population continues to increase, while the absolute size of cultivated land in
India has reduced due to urbanisation, land degradation and so on, resulting in a reduction in the average size
of landholdings. Farmers must now produce in more competitive conditions with less land, leading to
increasing marginalisation.

This situation has only been aggravated by economic liberalisation. As Lerche identifies, liberalisation
increased the availability of cheap food imports and transnational finance, making the Indian economy less
dependent upon its agricultural sector for food and capital. Consequently, agriculture became a lower priority
for governments and, consistent with neoliberal ideology, it became possible to remove subsidies and support
prices. The rural credit market was deregulated, reducing poor cultivators’ access to loans and forcing them
into exploitative relationships with local money lenders. The most direct consequence of these developments
has been a decline in agricultural growth—both in terms of GDP and output. All of these issues have had an
impact on Punjab, though due to certain features of its agrarian history, the crisis manifests there in a unique
way.

The Intensive Agricultural Districts Programme, which began in 1960, represented a sharp turn in the Indian
government’s agricultural development policy. Rather than relying on land redistribution to improve overall
agricultural output, the focus was on a smaller number of districts targeted for intensive agricultural
development. In these districts, farmers were encouraged to adopt ‘Green Revolution’ technology, consisting
principally of high-yielding variety seeds and chemical inputs. Districts were targeted that were well suited
to the uptake of this technology—specifically those with good irrigation facilities. Ludhiana, in central
Punjab, was one of the initial seven districts involved in the programme, yet the technology spread quickly
throughout Punjab. Punjab was uniquely suited to the Green Revolution because of its extensive canal

1
# Reproduced from Brown, Trent. (2013). Agrarian Crisis in Punjab and ‘Natural Farming’ as a Response. South Asia:
Journal of South Asian Studies. 36. 10.1080/00856401.2013.776002.

5
network, which had been constructed in colonial times, and the Punjab government’s willingness to facilitate
development by building infrastructure and providing farmers with access to credit. By the end of the 1960s,
the vast majority of farmers in the state were using the technology and wheat production had tripled.8
Punjab was established as a ‘food bowl’ of India, a title which it retains to this day. With 1.5 percent of
India’s geographical area, Punjab produces approximately 20 percent of its wheat and 10 percent of its rice.

While the Green Revolution did bring considerable short-term economic benefits to Punjab, by the 1980s and
particularly the 1990s, things had begun to sour. From the early 1990s, growth in yields for the three major
crops (wheat, cotton and rice) began to stagnate. Since 2000, this tendency has worsened and it appears that
yields have reached their maximum. As Singh identifies, this decline in growth has turned into an economic
crisis for farmers because it coincides with farming becoming increasingly capital-intensive as the prices of
chemical inputs and machinery rise continually. Furthermore, intensive cropping patterns have depleted soil
fertility, meaning that more and more fertiliser is necessary to achieve the same yield, while pests have
developed resistance to pesticides, requiring greater applications. With farmers spending more and earning
less, their income has gradually diminished.

Related to the economic crisis is an ecological crisis, which may be attributed to the unchecked use of Green
Revolution technology. The water table in Punjab, as throughout much of North India, is at an alarmingly
low level. This has been attributed to excessive, unregulated use of irrigation pumps and growth in the use of
water-thirsty, high-yielding varieties of rice. Equally alarming, there is evidence that the high concentration
of agricultural chemicals in surface waterways and the aquifer is having an adverse impact on human health.
In addition to causing environmental damage, such as algal blooms in rivers, there is evidence of increased
rates of cancers and reproductive health disorders in Punjab. Punjab’s health issues have become a focus for
the local media and are a source of significant public concern.

Importantly, this agrarian crisis is not experienced in the same way for all classes. The increasingly capital-
intensive nature of Punjab agriculture and the diminishing returns have had a more severe impact on small
and marginal farmers. On a per hectare basis, marginal farmers are three times more indebted than large
farmers. When this is scaled to income, it becomes clear that the stress of indebtedness is far greater for these
poor farmers. Declining profitability is making small and marginal farms less viable, and the number of
farms in this category has decreased. Former smallholders now constitute a new ‘reserve army of labour’ in
Punjab, yet employment opportunities in agriculture have declined dramatically since the 1980s,
contributing to growing unemployment. Though the media focus has predominantly been on suicides by
farmers, suicide rates among agricultural labourers are also increasing. Suicides amongst various rural
classes in Punjab, which are above the national average and increasing, are frequently taken as a strong
indicator of the ‘crisis’ situation, indicating desperation and lack of options.

The ecological and health dimensions of the crisis also have uneven effects across classes. Currently, as a
consequence of the declining water table, only wealthier farmers can afford to install tube wells deep enough
to access the ground-water. The burden of the health crisis is also felt more profoundly by the lower classes.
Due to the poor state of public health-care facilities in rural Punjab, many small and marginal farmers have
forgone treatment, despite a large portion of them suffering from serious illnesses. For farmers in these
categories, health-care expenses were the second most common reason for entering into debt, after
production costs.

6
A ‘Crisis of Authority’ of the Green Revolution Discourse?

Due to these developments, by the late 1980s, the language of ‘crisis’ had become ‘the dominant mode of
representing Punjab’, according to Jodhka. Yet, after reviewing various perspectives on the current situation
in Punjab, Jodhka argues that the language of ‘crisis’ may obfuscate realities on the ground and prevent a
more sophisticated understanding of the issues at stake. He suggests that attempts to provide a unifying
narrative for the crisis in Punjab have ended up attributing the ‘heart’ of the crisis to single issues such as
regional neglect, globalisation or the disintegration of communities. This reliance on such simplistic
narratives overlooks the heterogeneity of Punjab’s agrarian sector and the fact that crisis is experienced in
different ways by different sections of the community. In this article, I try to avoid such reductionism by
using the term, ‘crisis’, in a very specific sense, namely, in terms of Gramsci’s ‘crisis of authority’, which is
also referred to as an ‘organic crisis’.

A ‘crisis of authority’ is essentially a crisis of hegemony. For Gramscians, hegemony refers to a historical
process by which a class or social group establishes and maintains its leadership role as legitimate. It does
this partly by force to suppress opposition, but, more importantly, through gaining the consent of subordinate
groups. For Gramsci, this consent is gained through intellectual activity in the arena of civil society.26
Without some kind of discourse to establish that the rule of dominant groups is in the interests of subordinate
groups, dominant groups can lead only by force or through the weakness of their opponents. This is the case
during a ‘crisis of authority,’ a situation in which a hegemonic group has lost its connection to its usual
support base. Such a crisis may come about as a result of the hegemonic group having failed to deliver on
its political promises or through the development of a new political consciousness in the general population.
The result is that the legitimacy of the hegemonic group’s dominant position is called into question, along
with the ideas, values and practices that it promoted:

If the ruling class has lost its consensus, i.e. is no longer ‘leading’ but only ‘dominant’, exercising coercive
force alone, this means precisely that the great masses have become detached from their traditional
ideologies, and no longer believe what they used to believe previously, etc. The crisis consists precisely in
the fact that the old is dying and the new cannot be born.

For Gramsci, a crucial issue posed by the ‘crisis of authority’ is the unequal capacity of different social
groups to respond. Dominant groups may use coercion to prevent the formulation of alternatives, drawing on
their access to the state and its ‘monopoly on violence’. Subaltern groups face challenges in overcoming
their limitations (lack of resources, etc.) in formulating alternatives capable of gaining popular support.

For the Indian state, the Green Revolution served at least three functions. It was (1) a source of capital
accumulation; (2) a way to increase food production; and, as is crucial to the current discussion, (3) a means
to maintain political consent or hegemony. To a greater or lesser extent, all three of these functions are now
in a state of crisis in Punjab; however, the idea of a crisis in political consent, or a ‘crisis of authority’, is of
most interest here, as it is through this crisis that previously subaltern groups may become organised to
develop alternative approaches.

From the 1960s to the early 1970s, the Green Revolution had developed as a hegemonic discourse in Punjab,
stabilising consent around a highly-commercial approach to agrarian development. The Green Revolution
was proposed as a solution to an impasse in the initial Nehruvian agrarian development model, whose
cornerstone was land reform. Large landholders, who stood to lose from land reforms, had stalled the process
politically. In this impasse, the Green Revolution approach performed two hegemonic functions. First, it

7
allowed the central government to win the consent of large landholders for its new approach to rural
development.

Second, it allowed large landholders to retain their hegemonic position at the local level by enlisting the
consent of smaller landholders for a form of agrarian development that bypassed land reform, yet still
provided some benefits to farmers with smallholdings. Although nowhere in India was this a smooth
process, as there were various forms of resistance from agricultural labourers and small farmers, in Punjab at
least, the process eventually stabilised, with consent crystallising around an approach that involved high
levels of inputs (supported by various subsidies) and high levels of output.

To suggest that there is now a ‘crisis of authority’ in Punjab implies that the discourse of the Green
Revolution no longer performs its hegemonic functions. The idea that Green Revolution technology will
continue to bring growth and development to the region has now lost plausibility. The rates of growth
brought about by the Green Revolution had provided a temporary solution to what Bernstein terms ‘the
agrarian question of labour’—how agrarian classes can survive, given capitalism’s uneven growth
trajectories between agriculture and industry. Now that Punjab’s high rate of agricultural growth has
declined, this ‘agrarian question of labour’ has re-emerged. The Green Revolution is losing its hold as a
unifying discourse, giving subaltern groups a new impetus to articulate alternatives. Insofar as the Green
Revolution approach is still practised in Punjab, it would appear that this approach is now merely‘dominant’,
rather than ‘leading’: it remains in place purely because of a lack of alternatives.

Intellectual support for the Green Revolution has continued to decline, indicating the severing of connections
between state and civil society which characterise the Gramscian crisis of authority. Both the prime minister
and the president of India have called for a ‘second Green Revolution’, acknowledging the problems
associated with the first. Perhaps more tellingly, M.S. Swaminathan, initially one of the key promoters of
India’s Green Revolution, has for several years now been calling for an ‘Ever-Green Revolution’, in which
agricultural output can be sustainably increased without the associated ecological harm. The fact that such
prominent supporters of the Green Revolution as Swaminathan are no longer able to endorse it and are
signaling the need for new development strategies suggests that the discourse of the Green Revolution has
lost its moral authority.

A ‘crisis of authority’ is a difficult state to measure, and so the argument that Punjab is passing through such
a crisis is necessarily tentative. It is difficult to determine the extent to which various sectors of society invest
active consent in a particular discourse or leadership. High rates of farmer suicides would appear to indicate
that although the practice of Green Revolution agriculture is still very much in place, this is more through a
lack of viable alternatives than active consent. However, more importantly, it appears that the bases of
consent for the Green Revolution approach (continuation of material benefits and moral and intellectual
support from civil society) have eroded and its various side-effects have led to a questioning of its value.
Furthermore, dissatisfaction is expressed in farmers’ and activists’ attempts to articulate radically different
alternatives, as was the case with the Khalistan movement and, to a lesser extent, the farmers’ movement.
The case of the Kheti Virasat Mission, presented in the next section, provides an example of a more
contemporary attempt to engage with the realities of the crisis and to forge a new approach.

8
 Andhra Pradesh Zero Budget Natural Farming
- a concept note ( 4th March, 2019)
1. The Government of Andhra Pradesh (GoAP), Department of Agriculture (DoA) is
implementing Andhra Pradesh ‘Zero-Budget’ Natural Farming (APZBNF) Programme,
through Rythu Sadhikara Samstha (RySS) (corporation for farmers’ empowerment), a not-for-
profit organization established by GoAP. The programme has been initiated in 2015-16 with
multiple objectives of enhancing farmers’ welfare, consumer welfare and the conservation of
the environment.
2. Zero-Budget Natural Farming (ZBNF) is a holistic alternative to the present paradigm of
high-cost chemical inputs-based agriculture. It is very effective in addressing the uncertainties
of climate change. ZBNF principles are in harmony with the principles of Agroecology. Its
uniqueness is that it is based on the latest scientific discoveries in Agriculture, and, at the same
time it is rooted in Indian tradition. UN-FAO in April 2018 urged all countries to move towards
the adoption of Agroecology to meet the twin goals of global food security and conservation
of the environment.
Four Wheels of ZBNF
3. ZBNF is pioneered by Padma Shri Awardee Dr Subhash Palekar, who is regarded as the
“Father of Zero-Budget Natural Farming” in India. ZBNF practices are built on four core
principles:

1. BEEJAMRUTHAM
Microbial seed coating 1. Microbial seed coating 2.Bio Inoculants
through cow urine and
dung-based formulation

2. JEEVAMRUTHAM
Enhance soil microbiome
through an ‘inoculum’ of
fermented cow dung, cow
urine and other local
ingredients

3. ACHHADANA 3. Mulch and crop residues

(COVER CROPS and
MULCHING): Ground to
be kept covered with crops
and crop residues

4. WAAPHASA
Fast buildup of soil humus
through ZBNF leading to
soil aeration, soil structure,
and water harnessing

Zero Chemicals – no synthetic fertilisers and pesticides; minimal tillage

9
Pillars of APZBNF Programme
I. Farmer to farmer extension
4. The programme invests heavily in building the capacities of farmers and in their continuous
handholding. The crucial innovation and the strength of the programme is the farmer-to-farmer
knowledge dissemination strategy. The trainers are the best practicing ZBNF farmers, called
Community Resource Persons (CRPs). CRPs form the key pillar of ZBNF Extension. They
are highly motivated and strongly committed to ZBNF, as they have experienced the
transformation in their lives by the practice of ZBNF in their own fields. It is their dedicated
work that has resulted in new farmers in the programme villages switching over to, and,
persisting with ZBNF. They are the true heroes of this unique movement.

AP ZBNF Model
6 million farmers 28,000 106, 991 SHGs 5,900
50 million citizens farmers trained 893,076 Women Champion Farmers
Ownership and Natural Farming Ownership of Knowledge
Commitment of Principles and Women Self Help dissemination by
State Government protocols by Dr Groups (SHGs) Champion
Subhash Palekar Farmers (CRPs)

ICT for Knowledge, Tracking, Traceability Collective Action for Inputs, Models

Saturation: Farmers » Farms » Practices

5. The CRPs’ speciality is that they don’t just educate the farmers about the ZBNF practices
but also help them to make the ZBNF inputs and apply them in the field. They provide
continuous handholding support as they stay in the village, and any farmer can approach them
at any time for any concerns and queries related to his crop. The CRPs are intensively trained
in all aspects of their work.
They are trained in video dissemination and are provided handheld video projectors, called
pico-projectors. As far as content is concerned, APZBNF has produced in partnership with
Digital Green Foundation, almost 300 videos, of 8 to 12 minutes duration, on various ZBNF
practices, crop wise recommendations and case studies of successful ZBNF farmers. The CRPs
conduct video dissemination every evening in one of the villages in the cluster and follow it up
by discussions with farmers. This has greatly helped in accelerating the ZBNF adoption rates.
The CRPs are trained in using smartphones for tracking farmer and farm practices.
6. Around 900 senior-level CRPs are in the programme across the state. 3,500 new CRPs called
Internal CRPs (ICRPs) have been added in 2018. These ‘Heroes’ have emerged from the
programme villages. They are ready to work in their own villages or in adjoining villages for
ZBNF knowledge dissemination. They work closely with the women Self-Help Groups
(SHGs). They provide technical assistance to farmers in preparing inputs. The ICRPs are

2
10
directly responsible for taking ZBNF to the farmers. The initial set of senior-level CRPs have
taken the role of mentoring ICRPs.
7. A statewide ZBNF farmer verification was conducted in late 2018. In this exercise, 254,000
farmers were verified on the extent of ZBNF principles practiced and adopted. Champion
farmers were identified among the best practitioners from the villages to be utilized as future
ICRPs. Around 4,000 new ICRPs are identified through this elaborate exercise and will be
deployed in 2019.
8. A further social innovation in knowledge dissemination is the identification of one best
practicing farmer in a women Self-Help Group (SHG – a 10-member group) as a Lead Farmer.
They are being trained by the I - CRPs to provide leadership in knowledge dissemination at the
group level. It is planned to have one lead woman farmer, for each woman SHG, and one lead
male farmer to guide the spouses of the SHG members. This ensures dissemination of relevant
and high-quality knowledge, to men and women. The ZBNF knowledge is shared in their group
meetings, and the ICRP/CRPs supplement the knowledge and address the concerns of farmers.
9. Along with the CRPs, young agriculture graduates have been recruited under a Fellowship
programme. At present, 274 Natural Farming Fellows (NFFs) have joined the programme.
Their role is to be a model farmer by practicing ZBNF in a leased land in the village where
they will be staying during the entire fellowship period of three years. They are being groomed
to become trainers, researchers and integrators of ZBNF programme in their cluster of villages.

II. Women power

10. Existing women SHGs and their federations form the second key pillar of APZBNF model
and play a central role in programme
management, ZBNF knowledge dissemination
and extension with farm families, farm-wise
planning for each family in Kharif and Rabi
campaigns, meeting working capital
requirements and handling community funds,
and tracking the progress. Men SHGs and
federations are emerging as well. Women SHG-
centric extension is accelerating the ZBNF
expansion. To facilitate this process, 400
Project Resource Persons for Social Mobilization (PRP) have been working with women Self-
help Groups and men Self-help Groups of Farmers. The women SHGs and men farmer SHG s
and their federations gradually take over the programme management from the APZBNF and
ensure its self-sustenance.
11.The APZBNF approach is to saturate each village in 3 years from the year of entry into
that village.
Whole Village Approach A typical farmer’s adoption pattern
Year 1 Year 2 Year 3 Year 1 Year 2 Year 3
th
25% 60% > 80% 1/4 ½ Full area

Within a village, each farmer takes 3 years to cover the entire holding into ZBNF. Thus in 5
years, a village becomes a bio-village.

Kondabaridi, a village in Vizianagaram district has achieved the unique distinction of

becoming the first bio-village in the state. Additionally, there are 124 villages in the state,

11
where all farmers in the village have adopted ZBNF practices in their land, either fully or in
part. In the coming years, we expect more and more villages to become bio villages.

12. Around 20 Natural Farming Health and Nutrition Fellows are also on board with a major
focus on improving Health and Nutrition of all the families in the cluster. This is facilitated by
a variety of interventions – intensive knowledge dissemination around preventive health, and
balanced nutrition, smooth running of the farmer nutrition school, implementation of nutrition
garden in their cluster, facilitate nutritious meals in the schools, etc.

13. A Pilot in Community level marketing is being undertaken in 23 clusters by marketing

CRPs with focus on local consumption within the villages. Linkages between Farmer Producer
Organizations, Women SHGs, and ZBNF entrepreneurs are being strengthened for processing,
value addition, selling marketable surplus beyond the clusters. Health and Nutrition CRPs are
deployed in 8 districts, 20 clusters and 40 villages working with a focus on institutional
linkages of ZBNF products with Anganwadi and mid-day meals in schools.

ZBNF Cluster and Cluster Team

14. A group of 5 Gram Panchayats/Villages, with around 2000 farmers is regarded as a

ZBNF cluster and it is the unit of implementation. Each cluster has a group of dedicated field
functionaries with specific roles to take the ZBNF agenda forward.
Cluster Functionaries Team
Internal ZBNF CRPs (L3) @ 1 per every 100 farmers 20
GP-level ZBNF CRPs (L2) @ 1 per GP 5
Cluster-level ZBNF CRPs (L1) @ 1 per Cluster 1
Natural Farming Fellows (1 per 2 Clusters) 1
Thematic CRPs
2- 4
(Marketing, Social Mobilization, Health and Nutrition, Digital CRPs, etc.)

RySS ZBNF HR Architecture at various levels

15. The programme is implemented and coordinated by 10-15-member District Team led by
District Project Managers, at the district level. At the State level, the State team comprising of
the State Implementation Unit and Technical Support Unit is providing the overall management
support. A band of young professionals is also supporting them.
APZBNF Programme Impacts
16. The programme has been able to reach to reach 523,000 farmers in all 662 mandals, in
3,015 villages of the state in Kharif 2018. Reaching this humungous number of farmers has
been possible due to the presence of 5,600 CRPs and field functionaries working with 106,991
women SHGs. The programme is supported by funding from Government of India schemes –
Rashtriya Krishi Vikas Yojana (RKVY) and Paramparagat Krishi Vikas Yojana (PKVY). The
programme is receiving a Technical Support Grant from Azim Premji Philanthropic Initiatives
(APPI).
The results of the programme, both in terms of higher yields and lower costs, have been very
encouraging. In all the Crop Cutting Experiments (CCEs) conducted in agriculture seasons in
2017 and 2018, there has been a reduction in the cost of cultivation. Also, 88% of the CCEs in
2017 have reported an increase in yield compared to a Non-ZBNF farm under similar

4
12
conditions. The preliminary data from the 2018 Agriculture season has shown a significant
increase in yields of major crops grown across the districts.

Yields in ZBNF and Non-ZBNF

Crops ZBNF (Kg/ha) Non-ZBNF (Kg/ha) % change

Paddy (Irrigated) 5643 4932 14%
Groundnut (Rainfed) 2109 1573 34%
Cotton (Rainfed) 995 906 10%
Maize (Irrigated) 5962 4929 21%
Ragi (Rainfed) 2710 2091 30%
Sugarcane (Irrigated) (in tonnes) 147 97 51%

Net Incomes in ZBNF and Non-ZBNF

Crops ZBNF Non-ZBNF % change
(USD/ha) (USD/ha)
Paddy (Irrigated) 849 564 14%
Groundnut (Rainfed) 873 478 34%
Cotton (Rainfed) 561 189 10%
Maize (Irrigated) 372 255 21%
Ragi (Rainfed) 846 376 30%
Sugarcane (Irrigated) (in tonnes) 4,328 2,580 51%

Resilience to Climate Shocks (Droughts and Cyclones)

18. ZBNF crops have shown greater resilience to climate shocks than non-ZBNF crops.
During 2018, Andhra Pradesh has suffered from two cyclones (Pethai and Titli). Despite
heavy winds and devastation in many parts of the state, ZBNF crops have withstood the
cyclone due to better health of the plant root system.

13
Pre monsoon dry sowing models are being
promoted across the state as one of the drought
mitigation strategy. The sowing down by NFFs
in drought areas have shown excellent results
covering the soil all through the year and helping
in water conservation.

Impact on biodiversity, health and nutrition

19. ZBNF crops have demonstrated greater biodiversity in the soil, plants and the tree
tops. Earthworms, honeybees, bird nests and beneficiary insects are a common sight at
ZBNF fields.

ZBNF is also taking care of Health and Nutrition Security for the farmers and the
consumers particularly in rural areas. A pilot study is underway to quantify the impact.

6
14
 Developing Perspectives on Poverty and Livelihoods1

1.0 Introduction
Today as we understand it, livelihoods is a system of making a living where different members
of a household, and not just an individual, engage in a set of activities. These may be either
social, political, or economic activities, which come together getting influenced by their culture
in the process, performing diverse functions, such as production, exchange, conservation, and
managing relationships with others in the society, all for a means of living. HHs adopt different
strategies to best utilize their capabilities and the various resources to which they have access,
mitigating the risks they face, especially in the case of those who are very vulnerable. This way
of examining people's livelihoods recognizes that the various factors affecting their livelihoods,
including resources, and people's capabilities are formed on the basis of their aspirations, and
the needs (or the demand) that they cater to, are dynamic and changing over time.

1.1 Defining Livelihoods

Datta et al. 20142 define Livelihood as follows:
"A livelihood is the way in which people make their living - getting together basic necessities
such as food, shelter and clothing, and meeting longer-term needs such as health and
education.

Livelihood implies working and earning, but it is more than just economic activities as it is
always done in a social and cultural context and thus, livelihoods tend to become a way of life,
which gives a HH its identity, and its place in society. The dignity of livelihood is thus important.

HH (household) and individual livelihood choices are constrained and determined by historical,
political, social and cultural factors and the physical environment and not just by economic
factors".

Livelihoods, therefore, go far beyond generating income. A livelihood is much more than
employment. Livelihoods so far have been defined holistically, encompassing different assets.
But when can we speak of sustainable livelihoods? Chambers and Conway give the following
definition: "A livelihood is environmentally sustainable when it maintains or enhances the local
and global assets in which livelihoods depend, and has net beneficial effects on other
livelihoods. A livelihood is socially sustainable which can cope with and recover from stress and
shocks, and provide for future generations."3 These two different types of sustainability are very
closely linked. Maintaining and enhancing global assets means that a livelihood will also
provide for future generations and will not jeopardize the livelihood opportunities for future
generations. The criteria for ‘environmental' sustainability of having 'net beneficial effects on
other livelihoods', can also be perceived as 'social' sustainability.

Development Alternatives defines sustainable livelihood as follows: "A sustainable livelihoods

approach (SLA) encompasses activities intended to help economically disadvantaged members
of society meet their daily subsistence needs in a manner that is dignified, locally appropriate,
and environmentally sustainable." In this definition, both the environmental and the social

1
Different part of the chapter is reproduced from various sources. The chapter is meant for class discussion only and not for
quoting
2
Datta et al. 2014. Resource Book for Livelihood Promotion, Fourth Edition, The Institute of Livelihood Research and Training
3
R. Chambers and G. Conway (1992).

15
sustainability come together and another dimension is added: a sustainable livelihood should
be locally appropriate.

2.0 Defining Poverty4

Poverty can be defined as a pronounced deprivation of well-being related to lack of material

income or consumption, low levels of education and health, vulnerability and exposure to risk,
lack of opportunity to be heard, and powerlessness (World Bank, 2001, p. 15). Poverty
describes the current status of an entity with regard to the attainment of a critical level in a
dimension (like income or nutrition). So poverty is essentially capturing the outcome or end
result of an entity. However, what would perhaps be a better guide for preventive policy actions
would be to know how likely an entity is to fall into poverty, i e, the vulnerability to poverty of an
entity. Vulnerability describes the likelihood of a household falling into poverty, given the current
status of the household. Vulnerability describes the outcome of a household’s decision-making
process while faced with a variety of risks, ex-ante. It tells us what the potential outcome would
be whereas poverty describes the actual outcome. In this sense, poverty can be taken to be a
“snap-shot” view of the current status of the household, whereas vulnerability being forward-
looking provides a “crystal ball” view of the status of a household in the future [Dercon 2001].

Absolute and relative poverty

Poverty is usually viewed as either a form of absolute deprivation or relative, but significant,
deprivation. Absolute poverty is perceived as subsistence below the minimum requirements for
physical well-being, generally based on a quantitative proxy indicator such as income or
calories, but sometimes taking into account a broader package of goods and services.
Alternatively, the relatively poor are those whose income or consumption level is below a
particular fraction of the national average. Relative poverty encourages an analytical focus on
income inequality trends.

Adopting a multi-dimensional understanding of poverty introduces further possibilities for

relativity. The amount of education needed to avoid falling into poverty is likely to increase over
time, other things being equal. Exposure to more varied or more industrial risks is likely to
require increased health expenditure to maintain the same level of health. Thus if the ‘social
wage’ does not increase correspondingly, similar levels of real private disposable income would
mask an increase in poverty (or literally ill-being). Indeed, as Sen (1999:89) notes, “relative
deprivation in terms of incomes can yield absolute deprivation in terms of capabilities”,
depending on a person’s ability to convert income into well-being, which is in turn based on, for
example, health status, age, gender, and differences in social or ecological environment
(ibid.:70-1).

Capabilities and freedoms

These approaches are based on Amartya Sen’s work and see poverty as a lack of capabilities,
both intrinsic and instrumental (e.g. income, education, health, human rights, civil rights etc.)
that permit people to achieve functionings (the things they want to do) and beings (the states of
existence they want to experience). Such an approach is commonly used in relative terms
(such as through the Human Development and Human Poverty Indices in the UNDP’s Human
Development Reports), but also can be used in absolute terms if one is brave enough to define
a minimum set of capabilities that people ‘need’ or to which they have a right (see Doyal and
Gough 1991). Recently, Sen (1999) has extended the concept to argue that development is
about the pursuit of five freedoms – political freedoms, economic facilities, social opportunities,
transparency guarantees and protective security; this concept is discussed further below.

Through its recognition of the relationship between the means and ends of poverty reduction,
the capabilities approach makes strong and explicit links between human agency, poverty and

4
Major part of this section is reproduced from Hulme, D, Moore K, and Shepherd A. (2001) Chronic Poverty: Meaning and
Analytical Framework, CRC Working paper 2.

16
public policy (necessary to ensure entitlements), and as such is useful for understanding the
processes surrounding chronic impoverishment and escape from poverty. It will be applied
below to the understanding of the range of policy reforms which may be needed to provide an
enabling environment for the chronically poor.

Vulnerability
It can be argued that what poor people are concerned about is not so much that their level of
income, consumption, or capabilities are low, but that they are likely to experience highly
stressful declines in these levels, to the point of premature death. This approach suggests that
poverty can be seen as the probability (actual or perceived) that a household will suddenly (but
perhaps also gradually) reach a position with which it is unable to cope, leading to catastrophe
(hunger, starvation, family breakdown, destitution or death). The literature on food security (and
insecurity) is particularly helpful in aiding the understanding of how vulnerability arises and
strategies to reduce its impacts. Maxwell (1989 cited in Maxwell and Frankenberger 1992) has
explored the linkages between poverty, vulnerability and under-nutrition and identifies the
situations in which transitory and chronic food insecurity can occur.

Chronic Poverty
The defining feature of ‘chronic poverty’ is its extended duration. The poverty that is both
severe and multi-dimensional but does not last a ‘long’ time, is by its nature not chronic.7
However, it is hypothesised that duration, multi-dimensionality and severity of poverty build
upon each other. Thus, while those in severe income poverty at any given time are not
necessarily chronically poor, the chronically poor are likely to be experiencing severe and multi-
dimensional poverty. Further, duration (as well as multi-dimensionality) can be considered as a
specific type of poverty severity in itself. The major causes’ of chronic poverty are given in
Table 1.

Table 1: ‘Causes’ of chronic poverty

Economic Low productivity; Lack of skills; ‘Poor’ economic policies; Economic

shocks; Terms of trade; Technological backwardness/lack of R&D
Globalisation
Social Discrimination (gender, age, ethnicity, caste, race, impairment)
High fertility and dependency ratios; Poor health and HIV/AIDS
Inequality; Lack of trust/social capital; Culture of poverty
Political Bad governance; Insecurity; Violent conflict; Domination by
regional/global superpowers; Globalisation
Environmental Low quality natural resources; Environmental degradation
Disasters (flood, drought, earthquake etc.)
Remoteness and lack of access; Propensity for disease (‘the Tropics’)

3.0 Sustainable Livelihood Approach5

3.1 Origin of Chambers and Conway's or DFID's sustainable livelihoods approach

Sustainable livelihoods (SL) thinking gained ground in the Department for International
Development (DFID) poverty reduction efforts in the 1990s. The guiding assumption of the
DFID approach is that people pursue a range of livelihood outcomes by which they hope to
improve or increase their livelihood assets and to reduce their vulnerability. The five types of
assets that form the core of livelihood resources in the DFID SL framework range from
financial, human, natural, physical, to social capital. These constitute the actual building blocks

5
Adapted from www.livelihoods.org and various other sources

17
for livelihoods. In a recent extension to the DFID SL framework, political capital has been
added.

The livelihood strategies applied for achieving livelihood outcomes evolve in interaction with a
context of vulnerability and transforming institutions. The actual framework has been
considered, from the beginning, as one of many possible ways to conceive a livelihood
framework. DFID attached therefore more important to the underpinning principles of poverty.

Chambers and Conway6 observed that thinking about 'how man made a living' had evolved
substantially since the beginning of the twentieth century. By the 1980s, it was well recognized
that people perform some economic activities to make both ends meet. Chambers and Conway
proposed the SLA, which has become the dominant approach of development interventions
since the 1990s. This approach adds five additional dimensions to refine the previously
accepted thinking that people made their living by transforming assets that they could access
into useful goods and services using their capabilities.

Firstly, the SLA maintains that people utilize five different forms of resources for their
livelihoods, in the form of assets or forms of capital, for their livelihoods. Just as any other form
of capital, these are convertible and can be accumulated. These include:

a. Natural Capital such as land, water, livestock and forests, among others
b. Physical Capital made by man, such as roads, dams, canals
c. Human Capital in forms of their own skills, knowledge or abilities
d. Social Capital in form of their social relationships, caste, clans and so on, and
e. Financial Capital, not only in the form of money held but also in the form of various assets
such as jewellery, which could be liquidated to generate funds.

3.2 Main elements of the DFID SL framework

Based on the above understanding, DFID differentiates between three groups of components in
the livelihood framework:

i. the asset portfolio forming the core element of livelihood,

ii. the Vulnerability Context and Policy, Institutions and Processes, and
iii. the loop linking livelihood strategies and livelihood outcomes.

i The asset portfolio forming the core element of livelihood

DFID has developed a livelihood framework that consists of five types of assets that are
required to build a sustainable livelihood.7 This focus, on a variety of resources, emphasizes
that it takes more than just financial resources to create a stable and secure base for living.

The examples of the assets given in Table 4 are general and not context-specific. One can
think of additional examples - for the Indian context specifically - for each of these livelihood
assets. Livestock and forest are important natural assets. Caste, social institutions, customs
and traditions are the social assets. Time is a resource in itself, often not perceived as such in
rural areas. In urban areas the idea of 'time is money' is commonly accepted, but in rural areas
time as a factor is not taken into account, given the fact that people's employment opportunity
costs are often minimal. Time could be added to the list of human assets, together with access

6
Chambers, R. and Conway, G.R. (1992) ‘Sustainable Rural Livelihoods: Practical Concepts for the 21st
Century’, Discussion Paper 296. Brighton, UK: Institute of Development Studies.
7
'Sustainable Rural Livelihoods: A Framework for Analysis', Scoones (1998).

18
to information. Within the Indian context, each region or community will have again its own
specific livelihood assets.

Additional to these five assets there is one more asset, especially relevant in the context of
developing nations. Institutional assets are by many NGOs considered as a required addition to
the given framework. Organisational assets are the availability of and access to government
organisations, the local government representatives, the network of NGOs working in the region
and the local Community-Based Organizations (CBOs).

Table 2: Livelihood Assets

A. Natural Capital
B. Physical Capital
Land: terrain, quantum, quality, distribution and
uses Irrigation infrastructure: Tanks, Canals,
Water: annual rainfall, groundwater levels, Borewells
sources of irrigation Haats, Market yards
Humidity Warehouses
Forests: quantum, tree species and usage Electricity
Livestock Roads, Railway lines
Mineral wealth Transport facilities
Energy sources Post Office, Banks
Health facilities
C. Human Capital D. Social Capital

No. of earning members per family Relationships of trust and reciprocity within
Labour availability and skill levels and between communities
craft and knowledge base Gender relations
Entrepreneurial ability of various communities in Caste relations
the population Agrarian relationships
Education profile of the population Networks, cultural practices
Health profile of the population
Gender division of all the above

E. Financial Capital F Organisational Capital

Available sources of credit – formal and informal
Interest rates and collateral requirements on Local Associations
different credit sources NGOs working in the region
Credit requirements of different PRIs
income/occupational groups of people Community-Based Organizations (CBOs).
Savings mechanisms
Other financial services

These assets are interlinked and one asset can be transformed into another. To change a
social asset like gender equality for example, it will be necessary to strengthen the human
asset of education. Furthermore, to make more efficient use of natural resources, certain
financial, physical and human resources are required. Thus, the strength of the sustainable
livelihood approach is that it takes into account the whole context, and also the interplay
between these assets.

Livelihood assets can be both individually owned and community-based. Infrastructure, social
capital and urban-rural positioning are community-based, while assets like health, savings or
shelter have individual ownership. In a livelihood approach, there is a flexible and reinforcing
relation between community and individual assets, and the livelihood approach acknowledges
the role of both the individual and the community in rural development.

19
Individual livelihoods can be strengthened by the sustainable development and usage of
community-based resources and vice versa. This is the positive side of the relation between
individual and community-based assets. But the downside is that individuals are often restricted
in their use of community resources and that the access to community resources is often not
equally distributed. Gender, caste and class play a significant role in the access and distribution
of both common and individual-based resources. Therefore, it is important to work on the equal
access of different groups in the community to these assets/resources. Besides community
intervention, this will often' also require policy-level interventions. Here a sustainable livelihood
approach and a right-based approach are interlinked.

So far the word asset has been used, although social and human assets can also be defined as
capacities. Strengthening assets in this sense is a form of capacity building. The main
difference with the traditional capacity building programs is that a livelihood approach
simultaneously strengthens the material assets, like natural resources, while also building on to
capacities. The goal of a livelihood approach is to strengthen these assets and to empower
people to make the best use of these assets. For this, a change of mind-set is necessary:
creating the self-esteem and confidence to change, to change the community from followers to
actors, from receivers to demanders. This self-esteem can be built through knowledge of rights,
capabilities and opportunities, and access to information.

Figure 1 : DFID Approach to Sustainable Livelihood

P=Physical assets
N=Natural assets
H=Human assets
F=Financial assets
S=Social assets

H Livelihood
Vulnerability Outcomes
Context S N Livelihood  More income
Shocks Policies Strategies  Improve food
Seasonality NR Based security
influence Institutions
Trends Processes Non-NR based  Reduced
Changes (PIP) Migration vulnerability
P F  More sustainable
use of NR

ii The Vulnerability Context and Policy, Institutions and Processes

The sustainability and non-sustainability of a livelihood pattern depend on the context, which is
called the vulnerability context. Why are the livelihoods of a community under threat? What are
the limiting factors for the sustainable development and well-being of a community or
individual? The vulnerability context is shaped by the shocks and stresses that livelihood has to
cope with. These shocks and stresses are region, culture and time-specific. An erratic or
fluctuating pattern of rainfall, variations in temperature and humidity, natural disasters, pest
attacks, famine and scarcity, epidemics, market fluctuations, failing infrastructure, are all
examples of shocks and stresses that threaten the livelihoods of people in rural areas.

20
The vulnerability context is shaped by the economic, social and environmental context of the
individual or community. This includes the restrictions on access to livelihood assets imposed
by groups in society and the lack of a fair and equal distribution of these resources. These
inequalities and restrictions are part of the vulnerability context and should be addressed when
working on sustainable livelihoods.

The Vulnerability Context of livelihoods refers to shocks, trends and seasonality with their
potential impact on people's livelihoods, while Policies, Institutions and Processes on the other
side comprise the context of the political and institutional factors and forces in government and
the private and the civil sectors that affect livelihoods.

iii The loop linking livelihood strategies and livelihood outcomes

Given the vulnerability context of a region, it is necessary to strengthen the existing livelihoods,
introduce alternative livelihood options or do both. Generally, diversification of livelihoods
means reducing the vulnerability. If people have more than one source of income and have
several assets, their livelihood base tends to be more secure. Diversification of livelihoods can
be the result of strengthening the livelihood practices present and introducing alternative
livelihood activities. To strengthen the livelihoods and contribute to the sustainable
development of an area, it is necessary to make use of the indigenous and traditional
knowledge and integrate this knowledge in all project levels. The livelihood strategies and
outcomes are described in detail in the chapter designing livelihood interventions.

Figure 1 offers a graphical representation of the DFID SL framework. DFID stresses the
illustrative purpose of the framework, as providing a structure and focus for thinking. It
emphasises the necessity to adapt the framework flexibly to the requirements of the actual
situation under analysis and underlines the need to respect and follow the guiding principles in
the application. Poverty-focused development activities should be people-centered, flexible,
responsive and participatory. They should be conceived as multi-level approaches and be
conducted in partnership with both the public and private sectors. Finally, they should strike a
balance between key dimensions of sustainability and recognise the dynamic nature of
livelihood strategies. SL approaches must be underpinned by a commitment to poverty
eradication. Although they can, in theory, be applied to the work with any stakeholder group, an
implicit principle for DFID is that activities should be designed to maximize livelihood benefits
for the poor.

Need for integrating further dimensions

Some important dimensions appear to be under-emphasised in the SL framework or are not

made explicit enough in the underlying principles. For the purpose of this section the
‘vulnerability context’ has already been extended by the ‘context of opportunities’. Current areas
of concern include also power relations and gender issues. When it comes to understanding the
development of livelihood strategies, the DFID framework does not offer an explicit platform for
dealing with crucial elements of decision-making, such as people's individual orientations and
collective worldviews or their experience and emotional attachments. It is clearly important to
remember these 'missing' aspects and to use different tools to ensure that they feed into
development planning and our overall understanding of the driving factors behind livelihoods
and poverty reduction.

4.0 IFAD Approaches to Sustainable Livelihood8

8
Reproduced from Julian Hamilton-Peach and Philip Townsley, IFAD Sustainable Livelihoods Framework

21
Since December 2002, IFAD has organised a series of workshops to encourage IFAD staff and
consultants to reflect on their experience in development work and on ways for them to
implement the Strategic Framework for IFAD 2002-2006. These workshops have used the
Sustainable Livelihoods Approach as a means of helping participants to analyse what they
already do and ways in which they, and IFAD, could enhance their positive impacts on the
livelihoods of the poor. Sustainable Livelihoods Approach was used as a ‘thematic guide’ for
these workshops. Participants, after ‘recreating’ the SL framework, based on their own
experience, then used it to organise and rationalise their experiences in development and
clarify linkages that had not always been obvious to them before. The SL framework proved to
be a relatively intuitive and easy tool to work with.

4.1 Issues Relating to the SL Framework

During the course of these workshops, facilitators found that the way in which the framework
was built up was extremely important: starting with the poor themselves and their livelihood
assets was essential in getting people to engage in a ‘people-centered’ analysis. However, the
layout of the original SL framework did not ‘suggest’ this approach and, in some cases,
encouraged a ‘left-to-right’ reading. The poor themselves tend to be easily lost within the
livelihood pentagon and participants’ attention in looking at the framework sometimes focuses
more on the assets and other factors than on the poor themselves as people. The linkages
between different elements in the framework – the lines connecting PIPs with vulnerability, and
strategies with assets, vulnerability and PIPs – do not come across as important visual
elements and are sometimes interpreted as being relatively unimportant when they are in fact
essential to the understanding of sustainable livelihoods.

Partly because of the lack of salience given to the poor at the centre of the framework,
important elements of their livelihoods, such as their aspirations for change and the
opportunities that they perceive for change, are also left implicit when they often constitute a
key element for identifying areas of intervention and entry points for facilitating change.

When the analysis focussed on that part of the framework dealing with policies, institutions and
processes – the ‘PIP box’ or ‘transforming structures and processes’ – the help provided by the
DFID framework also seemed to be limited. Since the Interagency Forum on Sustainable
Livelihoods Approaches held in March, 2000, the attention of development practitioners has
frequently been focussed to this particular area of the SLA. There is a widespread perception
that much of the ‘added value’ of the SLA lies in the linkages it makes between the livelihoods
of the poor and the policies and institutions that either support or hinder them in achieving
successful livelihood outcomes.

This interest has generated a considerable literature aimed at ‘unpacking the PIP box‘.
However, not all of this has been easily transferable into the workshop context and it is not
always simple to analyse the PIP box in a way that helps workshop participants to quickly get to
grips with the key issues involved and link them to other elements in the framework.

Early on in the development of the IFAD SL workshops, the facilitators adopted an approach to
analysing policies and institutions based on the ‘hub model’ (Hobley and Shields 2000). This
proved to be a valuable tool for helping participants to focus less on the structures involved in
generating and implementing policy and more on the relationships between them and the ‘end-
users’. But workshop participants often experienced some difficulty in fitting this analytical tool
into the wider livelihoods framework.

These considerations encouraged the facilitators to consider how the original SL framework
might be developed and improved to make some of these linkages clearer and, at the same
time, address some of the other more common comments on, and criticisms of, the framework.

22
4.2 The ‘IFAD’ SL Framework

The result of these efforts (shown below) incorporates several changes compared to the DFID
SL framework.

Less ‘sequential’

The ‘horizontal’ arrangement of the DFID framework suggests a sequential reading and makes
the all-important linkages between the different elements in the framework less obvious and,
apparently, of relatively less importance. By rearranging the framework, these linkages have
been given greater salience and the relations between different elements have become more
immediately apparent.

Placing the poor at the centre

Although the SLA has largely developed as a tool to aid the achievement of the poverty-
focussed MDGs, the failure of the framework to highlight this sufficiently has frequently been
commented on. The new framework attempts to address this by placing the poor literally at the
centre of the diagram and arranging the other elements in the framework in relation to them.

Specific highlighting of key ‘processes’

A set of fundamental social ‘processes’ – gender, age, class (or caste) and ethnic group - are
placed immediately around the poor. These have been made more explicit than in the original
DFID framework as they are factors that influence the relations of the poor with everything else
in the framework. They also highlight the importance of a clear definition of who, or what is
being placed at the centre of the framework.

Incorporating ‘personal’ assets

An additional group of livelihood assets – ‘personal’ assets – have been added to the 5
contained in the original SL framework. As the name suggests, this reminds us of the more
personal factors that may affect the choices of individuals and households regarding their
livelihoods. It is intended to emphasise people’s internal motivations, their will to act and
promote change (for themselves or others), their drive to assert their rights, and the spiritual
side of their lives. It also incorporates their desire to engage in political activity (while ‘social’
assets include the mechanisms by which they may be able to articulate that activity),
responding to widespread concern among training participants. ‘Human’ assets might also
include some of these ‘personal’ assets: however, from experience in SL training, it is clear that
the health and education aspects of human assets tend to obscure these other extremely
important features of people’s livelihoods, therefore justifying an additional heading.

Incorporating the ‘hub model’ for analysing policies and institutions

In the original SL framework, the ‘PIP box’, or ‘transforming structures and processes’, has
often represented a problematic area in terms of communicating the key elements of the SL
framework to new ‘users’. The new framework has attempted to address this problem by
‘unpacking’ the ‘PIP box’, using the ‘hub model’ of institutional analysis to represent the two
basic levels of the institution with which the poor, and agencies such as IFAD, interact –
‘service delivery’ agencies and ‘enabling’ agencies – and identifying the poor, with their range
of livelihood assets, as the ‘users’ of these institutions.

23
 Unpacking the ‘PIP’ Box
During workshops on Sustainable Livelihoods for IFAD staff and consultants, participants were
asked to use the ‘hub model’ of institutional analysis to analyse a case study concerning
stakeholders and institutions concerned with forest policy reform. The process of distinguishing
between ‘enablers’, ‘service providers’ and ‘users’, considering what relationships exist between
these different groups and what factors influence those relationships helped participants to
appreciate the complexities surrounding policies and institutions and identify ways in which they
might be ‘addressed’ and influenced.

Service providers can include everything from national-level departments whose task is to
implement policy measures to the community-level operators with whom the poor are likely to
have direct contact in their day-to-day lives. Enabling agencies can range from the highest
national-level policy-making bodies to local administrations whose decisions on priorities and
strategies in dealing with poverty might facilitate or hinder the work of those responsible for
implementation.

The ‘hub model’ focuses on institutional roles and the relationships between different
institutions and the poor. Institutional functions, characteristics and structures (normally at the
centre of institutional analysis) are clearly important but are only part of the picture – whatever
institution is placed into this ‘hub model’ needs to be described in detail, but it is other features
that are liable to be most important from the point of view of development practitioners - the
way in which institutions work together and work with the poor, and the way in which the policy
decisions of enabling agencies to reflect the needs and priorities of the poor, and are translated
into services delivered to the poor.
Unpacking ‘processes’

Figure 2: An Alternative Sustainable Livelihoods Framework

24
In the original DFID framework, ‘processes’ include such diverse elements as policies,
legislation, the formal and informal rules governing institutions such as markets, organisations
and tenure arrangements, culture and power relations defined by gender, age, ethnicity, caste
and class. The grouping of such diverse elements often presents new users of the SL
framework with significant problems, particularly as many of the elements grouped under this
heading are relatively abstract and difficult to link to concrete influences on the livelihoods of
the poor.

In the new framework, these processes are ‘unpacked’. First of all, key aspects such as gender,
age, class, ethnicity and ability are given greater salience, and placed at the centre, to reflect
the fact that they can influence everything at all levels within the framework. Secondly, policies
are incorporated into the analysis of the agencies and institutions that produce them – they are
a key element in the relations between enabling agencies and both service providers and
service users (the poor). Thirdly, other elements that have strong influences, particularly on the
ways in which the poor interact with institutions, are identified as ‘influences’ within the ‘hub’.
These elements – broadly defined as markets, politics (differentiated from policies), rules and
norms – are placed here as they both influence relations with these institutions and can
themselves be changed or influenced by positive action of enabling institutions or service
providers.

Markets are explicitly mentioned because of the importance that they play in determining how
the poor are able to convert the resources at their disposal into livelihood assets. The specific
inclusion of markets as a key influence is also important because they are liable to play a
particularly important role in determining the opportunities for improved livelihood strategies that
the poor can generate, and the extent to which they are likely to be able to realise aspirations
(Dorward et al., 2003). Politics – the network of power relations within society, whether
formally or informally represented - need to be distinguished from ‘policies’ – the decisions
regarding objectives, distribution of resources and priorities made by ‘enabling agencies’.
Culture includes a broad range of ‘rules of the game’, social and cultural norms that are likely
to strongly influence how the poor are able to interact with the institutions that affect their
livelihoods. Rights are introduced as they represent an increasingly important set of demands
that the poor can make on their institutional environment but can be recognised to varying
degrees depending on the political and social structure of a particular country. All of these
influences may be difficult for the poor themselves to take action on, but they are not immutable
and need to be distinguished from those elements that represent the ‘vulnerability’ context,
which is difficult or impossible to change and must be ‘coped’ with instead.

Highlighting the linkages with the ‘vulnerability’ context

The new framework also makes the relationship between the ‘vulnerability’ context and the
other elements in the framework clearer and more explicit. If the poor are able to access the
livelihood assets they require and are adequately supported by service providers and enabling
agencies, and if they are able to make markets, politics, rules and norms work to their
advantage, then it should help them to cope with those elements of their vulnerability context
which they can do little to change. The representation of the vulnerability context as ‘all-
embracing’ for the poor, but mediated by the interplay of the other elements in their livelihoods,
emphasises the responsibility of development interventions to help the poor to cope with
vulnerability factors.

Introducing aspirations and opportunities

The inclusion of the aspirations of the poor, and the opportunities that they are able to pursue,
encourages users of the SL framework to focus on the hopes of the poor themselves and their
capacity to take advantage of opportunities rather than making assumptions about what options
and opportunities may exist within a given livelihoods system. This encourages a people-

25
centred analysis and an understanding of the strengths of the poor that can be built on through
the development process.

Actions instead of strategies

The terms ‘strategies’ seems to imply that the poor have choices regarding what they do to
realise their aspirations, take advantage of opportunities and cope with vulnerability. This term
is replaced by ‘actions’ in order to emphasise that they may or may not represent choices and
that they may or may not have positive, or intended, outcomes.

Emphasising the ‘feedback’ from strategies and outcomes to other livelihood elements

The change in the overall structure of the framework also allows strategies and livelihood
outcomes to become more ‘integrated’ into the framework as a whole. This emphasises the
importance of the ‘feedback’ between:

 strategies adopted by the poor;

 the livelihood outcomes they achieve;
 and the assets, institutions and influences that affect their livelihood options

For example, the strategies forced on the poor, either because of their vulnerability or as a
result of the poor support they receive from service providers and enabling agencies, may have
direct negative impacts on the sustainability of their livelihood systems as a whole. A graphical
representation of IFAD’s SL framework is shown in Figure 2.

4.3 Uses of IFAD's Framework

Clearly no framework can be all-inclusive and this version of the framework is not intended to
be used ‘as it stands’ in every situation. Like the original SL Framework, this alternative does
not provide ready-made solutions and is only as useful as the detailed analysis, discussion and
adaptation that goes into it.

This version of the SL framework has been developed above all with a view to providing an
added tool for facilitators in helping development practitioners to analyse their practice, the
conditions in which they intervene and the courses of action open to them.

It may also prove useful to practitioners by helping them to understand the factors they need to
take into account when identifying entry points for development activities, but it is not intended
as a field tool. Elements in it may provide field workers with added assistance in structuring
inquiries into local conditions, analysing situations and identifying possible entry points for
development interventions, but it must be supported by appropriate tools and methods for
working in the field.

As a guide to the analysis of development situations, the ‘unpacking’ of transforming structures

and processes – the ‘PIP box’ – should assist practitioners in addressing them in practical
terms. The hub model provides a generic means of analysing institutions that are both
adaptable to different situations but at the same time allows practitioners to look at the different
aspects of institutions on which interventions might focus.

5.0 The sustainable livelihoods approach

The sustainable livelihoods approach (SLA) is a way to improve understanding of the
livelihoods of poor people. It draws on the main factors that affect poor people's livelihoods and
the typical relationships between these factors. It can be used in planning new development
activities and in assessing the contribution that existing activities have made to sustaining
livelihoods. The two key components of the SLA are:

26
  a framework that helps in understanding the complexities of poverty
 a set of principles to guide action to address and overcome poverty

The SL framework places people, particularly rural poor people, at the centre of a web of inter-
related influences that affect how these people create a livelihood for themselves and their
households. Closest to the people at the centre of the framework are the resources and
livelihood assets that they have access to and use. These can include natural resources,
technologies, skills, knowledge and capacity, their health, access to education, sources of
credit, or their networks of social support. The extent of their access to these assets is strongly
influenced by their vulnerability context, which takes account of trends (for example, economic,
political, technological), shocks (for example, epidemics, natural disasters, civil strife) and
seasonality (for example, prices, production, employment opportunities). Access is also
influenced by the prevailing social, institutional and political environment, which affects the
ways in which people combine and use their assets to achieve their goals. These are their
livelihood strategies.

SLA has seven guiding principles. They do not prescribe solutions or dictate methods. Instead,
they are flexible and adaptable to diverse local conditions. The guiding principles are:

 Be people-centered. SLA begins by analysing people's livelihoods and how they

change over time. The people themselves actively participate throughout the project
cycle.
 Be holistic. SLA acknowledges that people adopt many strategies to secure their
livelihoods and that many actors are involved; for example, the private sector, ministries,
community-based organizations and international organizations.
 Be dynamic. SLA seeks to understand the dynamic nature of livelihoods and what
influences them.
 Build on strengths. SLA builds on people's perceived strengths and opportunities
rather than focusing on their problems and needs. It supports existing livelihood
strategies.
 Promote micro-macro links. SLA examines the influence of policies and institutions on
livelihood options and highlights the need for policies to be informed by insights from the
local level and by the priorities of the poor.
 Encourage broad partnerships. SLA counts on broad partnerships drawing on both
the public and private sectors.
 Aim for sustainability. Sustainability is important if poverty reduction is to be lasting.

6.0 Rural Livelihood System Framework at Household Level: Capturing Meaning of

Livelihood9

The Swiss Agency for Development and Cooperation (SDC) initiated an effort to blend the SLA
concept of DFID with an alternative approach, originating from a collaborative research effort on
Rural Livelihood Systems (RLS) conducted by NADEL (Postgraduate Studies on Development
at ETH Zurich) and its three research partners in India (ISEC, Institute for Social and Economic
Change, Bangalore, IRMA, Institute of Rural Management Anand and SAMPARC, a Bangalore

9
Reproduced in abridged form from Ruedi Högger (2004) Understanding Livelihood Systems as Complex
Wholes, in: Ruedi Baumgartner & Ruedi Högger, “In Search of Sustainable Livelihood Systems”, Sage
Publications. The chapter is meant for class discussion only and not for quoting

27
based NGO). The scholars working with SDC observed that though SLA captured the physical
reality of livelihoods to a great degree, it was shaped by the orientation of the people, their
families and the community. They proposed an alternate framework for the analysis of
livelihood opportunities, popular since as the Nine Mandala framework.

This is also known as the Rural Livelihood Systems (RLS) approach. The guiding assumption
of the RLS research project was that effective strengthening of the self-help capacity of rural
HH's calls for a shift from sustainability concerns about single natural resources, such as land,
water, pastures, et c., to the meta-level of sustainable livelihoods.24

It is, therefore, not surprising that when queried about the local meaning of sustainability,
farmers in the Indian state of Gujarat captured their notion of sustainable rural livelihood with
the expression 'ghar chalava', meaning, 'to keep the house (-hold) going'. 'Keeping the house
going' obviously implies more than just a narrow bundle of different income sources or assets. It
points to the almost countless number of factors, forces and efforts on which the 'sustained life
of a given social unit' - in this case, the family - depends. The mandala conceptualizes different
aspects of livelihoods in nine squares. For conceptual clarity, each square is considered to
denote one aspect of the livelihood system. In reality, they are all interlinked and cannot be
viewed in isolation.

Blending elements of the livelihood approaches of DFID and RLS combines the strengths of the
two frameworks. The resulting framework not only ensures a comprehensive analysis of the
context of local livelihoods, but it also directs attention to the significance of people's capacity to
take decisions with regard to their own livelihood strategies. This focus is essential since
successful poverty reduction ultimately requires that people are sufficiently empowered to take
decisions on improved livelihood strategies that lead to more sustainable outcomes.

6.1 The Nine-Square Mandala as a Heuristic Tool in the Study of Livelihood Systems
It was from a combination of the two metaphors, the one of the rural home and the one of its
nine-square mandala decoration, that we finally developed our tool to approach rural livelihood
systems. This tool is represented graphically in Table 3. The following explanations may help
you to "read" it properly:

6.2 The Basis of the Livelihood System

As we start "reading" from the right hand lower corner of the mandala, we first touch upon the
physical basis of any livelihood system. This seems to be the most obvious and - in a certain
sense the primary aspect of the nine-fold universe. It may refer to many realities, such as
natural or economic resources, income in cash or kind, accumulated wealth, or occasional
remittances from migrant family members. The list could of course be prolonged. The physical
basis is that specific aspect of livelihood systems which we usually study first and most easily.

At the same level, but to the far left of the row, we find a reference to the emotional basis that
any livelihood system will depend on. What keeps people alive and on the move (especially
when economic resources start to flounder) are some of their deep-rooted feelings, their sense
of belonging and their emotional attachments to what they consider to be their home and their
way of life. But there are also anxieties and emotional restrictions inherent in every livelihood
system and influencing any decision taken therein. To give an example: Whether or not a
family (or a part of it) will turn to migration, will always depend on a mixture of emotional as well
as physical necessities and constraints, In real life, the physical and the emotional basis of a
livelihood system cannot be separated neatly. Here, it is being done for the sake of conceptual
clarity.

The same applies to the middle square of the lower row. It refers to the knowledge and
activity basis, i.e. to the crafts, trades, skills or the traditional knowledge on which the family
universe is built. All such activities have of course an economic purpose, but at the same time

28
they are strongly tied to tradition, to emotions and to specific forms of self-esteem. Their role in
a livelihood system is of key importance and high complexity, binding the physical and the
emotional basis of the system together in human activities.

Table 3: The Nine-Square Mandala

9. Individual Orientation 8. Family Orientation 7. Collective Orientation

- visions - ancestors
- hopes - caste, social status
- aspirations - aspirations to
- fears leadership, education,
- self image/respect jobs
- “Gurus”, models - aspirations to power,
wealth, social mobility
Looking up to
- subsistence agriculture
- food security
- religion, traditions
- CPRs, state laws
- World views, school
- Capitalistic values, city,
new prosperity

6. Inner Human Space 5. Family Space 4. Socio-economic Space

- integrity, identity - gender relations - production relations

- awareness - nutrition distribution - systems of co-
- selfishness, - health operation
compassion - family planning - community
- responsibility - distribution of work load organisations
- affection - solidarity - govt. institution
- curiosity, courage - markets of good, land
labour and capital
- contractors, industry

3. Emotional Base 2. Knowledge and 1. Physical Base

Activity Base
- memories - natural environment
- attachments - technology (topography, climate)
- feelings - natural resource
Standing on
- agricultural patterns
- anxieties - experiences, skills - animal
- boredom - traditional knowledge - habitat
- labour, crafts, services - accumulated wealth
- modern professions

Inner Outer

6.3 Public, Private and Inner-Human Space

We now move to the second row of squares, which all refer to “space". As we have seen, the
walls of the real village home (and a great number of additional boundary lines) serve to
demarcate an intricate puzzle of highly differentiated spaces, moving from outer to inner, from
public to private, from collective to intimate, from profane to sacred. A similar complexity is
found in the social system and among human beings on which any livelihood system depends,
There is almost innumerable differentiation of the social space like neighbourhoods, caste
hierarchies, jajmani, the village community, the panchayat, the multiple relations with
government and the market. All these make up the socio-economic space, referred to in the
square at the right hand of the middle tier.

29
The family space is depicted in the very centre of the mandala, because in India it is in many
ways the key area of what we call a livelihood system. In other contexts, the family may be
replaced by other types of closely-knit social groups. Here, questions of gender, of generations,
and of seniority within generations, play important roles. Here, traditions are fostered or
despised, values are transmitted or refused., and family planning is being practiced or
neglected. Social space may be of great influence on economic and social decision making,
but family space is usually decisive and adds even more complexity to it.

On the left side of the middle row, i.e., closely related to the emotional basis of the system,
reference is made to the inner-human or intimate space. This is to say that neither the,
broadly accepted rules of the socio-economic space, nor those of the family space, will ever
determine alone what action is going to be taken in a given system. Such action always
depends also on very personal considerations and qualities of individual people, irrespective of
their social or family position. Here, we deal with the question, what kinds of considerations
and feelings would exercise their influence in the intimate space of a woman or a man, in her or
his "heart". How much awareness, affection, respect, courage or anxiety will a person allow
herself/himself to govern her/his decisions, notwithstanding the mainstream opinions of family
and public? These are non-statistical realities, but they are often of great relevance to the
quality and the development of a livelihood system.

6.4 The Roof: A Place to look up to

Finally, we turn to the roof of the house, i.e. to the top row of squares in the nine-fold mandala.
Irrespective of whether the roof of a village home is gabled or flat, it is the place to look up to
and to take orientation from. It is always near to the ceiling of their habitation that people hang
the pictures of their ancestors or other images providing guidance and commanding respect.
Thus, in this uppermost tier, we deal with all mental perspectives that shape and guide the
wider community. On the right hand, some examples of collective orientations are provided:
village or community traditions (like Gavri among the Bhils), common property rights, religious
practices and festivals, the laws of Government and the standards of schools.

The above orientations are practically the same for all inhabitants of a given area, and they are
comparatively easy to study in their broad outlines. The multitude of mental orientations will be
much bigger, however, -if we study the values and convictions prevalent in individual families.
In this context, I well remember the impressive photographs of Grandfather and Father fixed
above the doorframe right under the roof of the postman's house in Cinnaramanagarupalli
Andhra Pradesh), where ISEC's study was going on. The whole family was speaking about
them and their lives with reverence. Family orientation is taken to a considerable extent from
such images.

But even in cases of such strong family ties and traditions, the final opportunity and
responsibility to seek orientation lies again with the individual (left-hand square in the upper-
most tier). He or she may or may not, exclusively or partly, remain true to the given orientations
of family or community. Even in a traditional society, there is room for personal visions, hopes,
aspirations and even "revolutionary" changes. All of us, who have worked in villages of India or
other parts of the world, know that the dynamics of change very often originate in the attitudes
or the activities of a strong individual. We know that important initiatives are often taken by
women, i.e. by those members of households, that - according to all collective orientations - are
bound to seek guidance from men and more senior women. Here, we probably touch upon one
of the important secrets of livelihood systems, of their manifold differentiation and of their
capacity of evolution.

6.6 All Aspects are interlinked

As we read through the nine-square mandala from right to left, we always go from the outer to
the inner realities, from those aspects that can be described with "hard" data to those that must
be sensed and intuited. From the bottom to the top of the mandala, it is the transition from the

30
physical and emotional basis to the mental roof with its concepts and perspectives. In other
words, it is the passage from what people "stand upon" (looking back) to what they " look up to
(for their future).

Thus, both horizontally and vertically we move on a continuum. None of the nine chambers are
truly independent from each other. Every one of them is intricately linked with every other, and
the transitions from one to the next are gradual, not abrupt. This - it seems to me - is in itself an
important aspect of any attempt to look at reality in a holistic way.

One of our group showed surprise at the high standard of technical installations in the
workshop, like the vacuum pumps sucking off the sawdust from the working areas, Gion's
explanation: "This standard corresponds to the safety and health regulations of the European
Economic Community. Even though Switzerland is not yet a member of the EEC, sooner or
later such regulations will also apply in our own country. So I made a timely investment into the
future...” We were right in square seven, in the very broad collective orientations influencing
(quite unexpectedly!) livelihood systems even in a remote mountain village.

In providing us this information, Gion also revealed something about his individual space
(square six). He seems to be a far-sighted and courageous entrepreneur, and his inner
determination to build his own and his family's future as a carpenter in Feldis appeared quite
clearly. Note that all his brothers and sisters had left the village. Thus, Gion's, determination to
stay on points to square nine, too, i.e., to his personal orientation: "I want to be and to remain a
carpenter/entrepreneur in my small village. This is my identity."

We were wondering about the market for Gion's products and learned that it was the
Domleschg for the most part, i.e. the valley that the mountain village of Feldis is overlooking.
This, then, was the main socio-economic space (square four), wherein Gion's livelihood system
could develop. But when we asked about the customers and how Gion would look and compete
for them, he said: "They are mostly my friends, people who know me (and who knew my father)
for a long time. "It was very clear that "marketing" for Gion was mostly a matter of personal
attachments. We had touched upon square three, the emotional basis of Gion's livelihood
system.

Later, Gion spoke about his timber stock, and while he did so, his hand was stroking a beam as
if it were the body of his own child. We became witnesses of yet another aspect of what we call
an emotional basis.

Finally, we inquired about the Gion Barandun family in a broader sense. Gion's father had
started the enterprise and had been very eager to make sure that one of his several sons would
take over after him. But how to achieve this? According to Swiss law (square seven), a
heritage must be equally divided among all children (male and female!). If one son was to
continue, he would have to buy the enterprise from his brothers and sisters, the collective co-
owners, and this would be nearly impossible from an economic point of view. Thus, it was the
father's resolve (square six) not to comply with the collective orientation of the law (square
seven), but to find his own way to realise his intimate dream, his personal orientation (square
nine): He donated all machinery and tools during his own lifetime to Gion, thus making him the
"heir apparent" of his enterprise. Brothers and sisters were kept content with smaller amounts
of money. Family Space (square five) was kept unharmed.

All in all, what Gion Barandun told us during our first short visit was an impressive lesson about
what provides continuity and meaning to a rural livelihood system in the Swiss Alps today. It
was food for much thought and it was an incentive to go back to Gion twice during the
subsequent days, in order to learn much more about the fascinating "universe" he lives in.

31
6.7 Conclusion

As I mentioned at the beginning of section four, the nine-square mandala - filled with the key-
words from our discussions and experiences was conceived as a tool for our research on rural
livelihood systems. But it is important to understand the nature of this tool because they might
be misunderstandings and traps in using it. The nine-square mandala is not a model of a
livelihood system. It has nothing to do with modelling reality and is in no way explicative about
the inner dynamics of livelihood systems.

Rather, the mandala is a heuristic tool supporting our effort to look at livelihood systems from a
variety of perspectives that is broader than usual. It helps us to understand livelihood systems
in a holistic manner. We can compare the tool to the researcher's spectacles and describe it as
a nine-focal lens through which we observe and try to understand livelihood systems. Within
each square, other methods and proven tools of scientific, economic and anthropological
research will have to be applied.

32
 Shocks, Vulnerability, Risks and Coping Strategies1
The various frameworks on Livelihood Approaches emphasized that livelihoods of the poor are
vulnerable because of the different kinds of shocks and resultant risks they are exposed to.
Therefore, the promotion of livelihoods involves a deep understanding of these risks as well as
the means of mitigating or minimizing these (both as a curative as well as a preventive
mechanism). Risks are the consequences or effects of adverse events called shocks and are
mediated by the vulnerability of a HH (household). Thus in order to understand the risks to
people’s livelihoods and how they cope with them, it is necessary to understand shocks and
vulnerability, first.

1.0 Shocks and Vulnerability

Shocks are events that adversely affect a HH’s prospects. These may be extremely devastating
natural events such as earthquakes, cyclones, and epidemics, or could be more local and partly
human-made, such as floods, fire, riots, or adverse government policy (such as land-
acquisition). Some shocks last briefly, such as a raging fire, while others go on for months, such
as a drought. There may be others more permanent such as climate change leading to lower
rainfall, effects of massive volcanic eruptions and so on.

Vulnerability is specific to a HH. It refers to the predisposition of a HH to withstand shocks. For

example, a HH, whose members already suffer from malnutrition due to food insecurity, are
more vulnerable to infections and are likely to be among the first to fall ill, in case of an
epidemic. They are also prone to be more affected and likely to die by the same infection, as
compared to a healthy person. Similarly, the houses of the poor are more vulnerable to being
destroyed or damaged by cyclones, floods and earthquakes, as compared to the houses of
those who are better-off, which are built on the higher ground using reinforced cement concrete.

The vulnerability can be defined as the “diminished capacity of an individual or group to

anticipate, cope with, resist, and recover from the impact of natural and/or man-made disaster”.2
Vulnerability is of two types: biophysical and socioeconomic. The risk factors inherent in nature
that threaten a community constitute its biophysical vulnerability. Its socio-economic
vulnerability arises from internal and external characteristics that constrain its responses and
ability to adapt – poverty, inequality, marginalization, food security, housing quality, access to
insurance, alternative livelihoods, health and education, etc. The vulnerability of a group or
community is different and is based on what they do and where they live. A measurable
definition of vulnerability is given by the World Bank as follows:

“Vulnerability is defined here as the probability or risk today of being in poverty or to fall into
deeper poverty in the future. It is a key dimension of welfare since a risk of large changes in
income may constrain HHs to lower investments in productive assets—when HHs need to hold
some reserves in liquid assets - and in human capital. High risk can also force HHs to diversify
their income sources, perhaps at the cost of lower returns. The vulnerability may influence HH
behavior and coping strategies and is thus, an important consideration for poverty reduction
policies”.3

1
Reproduced from Datta et al. 2014. Resource Book for Livelihood Promotion, Fourth Edition, The Institute of Livelihood Research and Training
2
http://www.ifrc.org/en/what-we-do/disaster-management/about-disasters/what-is-a-disaster/whatis-
vulnerability/

3
“Measuring Vulnerability”. The World Bank. Accessible at: http://web.worldbank.org/WBSITE/

33
According to a recent World Bank report4 - Shocks and Vulnerability Overview, spikes in food
prices, an increasingly unstable global climate and the prolonged economic slowdown have hurt
poor people the most.
Food prices: Between 2010 and 2011, higher food prices pushed 44 million people into
poverty. Poor people spend a high percentage of their income on food, which makes them
vulnerable to fluctuations in global food prices.
Climate change: Reports issued by the World Bank in 2012 and 2013 warned that rising global
temperatures will roll back decades of development and threaten the livelihood of millions who
live in flood-prone or drought-stricken regions. Disruptive weather and other climate change-
related disasters will hit the poor the hardest as they are least able to adapt to a changing world.
Macroeconomic shocks: In developing countries, the 2008 financial crisis pushed an
estimated 53 million more into poverty. The prolonged global economic slowdown was
estimated to result in 50,000 additional infant mortality deaths in Sub-Saharan Africa. Every time
a macroeconomic shock hits, poor people bear the brunt of the impact.

2.0 Risks
Risk includes hazards plus vulnerability. Risk is the effect on a HH as a result of a shock (an
adverse event) and mediated through its vulnerability (the more vulnerable a HH, the more the
risk of the same shock). Though the effects may be physical, such as damage to the house, or
members falling ill and so on, in order to translate all the risks into a comparable scale, it is
usual to translate the effects into financial terms. A study5 for the World Bank in 1996, estimated
the percentage of rural HHs, which suffered a shock due to various types of adverse events in
the previous ten years and the annual average amount of loss per event (risk).

Table 1: Shocks Related to Adverse Events: Percentage of Rural Households and the
Rupee Value of Loss
Cause Percentage of all The average amount of loss
respondents reporting this for those reporting losses (Rs)
hock
Flood, Heavy Rain 44 7,861
Drought 39 16,994
Pest Attack 27 17,303
Sharp Price Fall 10 26,425
Fire 4 6,250
Death of Family Member 3 13,447
Death of Livestock 2 10,333
Theft 2 20,698
Accident 1 34,921
Others 1 15,020
Average 39,500
Each row is out of 100%

EXTERNAL/TOPICS/EXTPOVERTY/EXTPA/0,contentMDK:20238993~menuPK:492141~page PK:
148956~piPK:216618~theSitePK:430367,00.html
4
http://www.worldbank.org/en/topic/shocksvulnerabilities/overview
5
Mahajan, Vijay and Bharti Gupta Ramola (1996.Access and Sustainability: Financial Services for
the Rural Poor and Women in India. Journal of International Development, Vol. 8, Issue 2, pages
211–224, March 1996

34
As can be seen, the loss per HH is about Rs 39,500 per annum for those reporting losses. This
should be compared with the average annual income of Rs 45,484 for the same respondents.
The loss was 86.8 percent of the annual income, enough to cause a setback for several years.
The normal way to overcome this shock is by borrowing and the interest burden then continues
for several years. Another study showed that ill-health and health expenditures were the reason
for more than half of the HHs falling into poverty.6 Risks can be classified into two categories:
idiosyncratic, those peculiar to a HH, such as the illness of a family member; and systemic,
those which affect a large number of HHs at the same time or the same place – like epidemics,
droughts and earthquakes.

2.1 Idiosyncratic Risks Faced by the Poor

There are certain risks that affect a single HH or just a few at a time. Some examples of these
are the effects of these shocks:

 Disease or accidental injury affecting a family member

 Disease affecting livestock
 Pest attack on crops
 Fire or theft in house or/shop
 Location linked to damage to the house due to floods, projects etc.

The problem with idiosyncratic risks is that they usually do not evoke a public response, such as
relief efforts by NGOs or by the government. Thus, the affected HH copes with the risk by itself
and has to rely on its meager resources to do so. If insured, they can raise an insurance claim,
or else, they have to dip into savings if any. If there is no insurance and no savings, as is likely,
then the poor resort to selling some asset like a goat or a bicycle. They may rely on the social
safety net they may have built over the years. Since reciprocity is expected in social exchange,
accessing the social safety net built over the years, requires they are having helped others in
similar circumstances in the past or they must be considered dependable. That is one reason
why one finds apparently ‘irrational’ expenditure even by very poor HHs on events such as
marriage and death feasts. It is simply a rational investment in a safety net. The last resort of
the affected HH is to leave the effects of the shock untreated and bear the consequences.

2.2 Systemic Risks Faced by the Poor

Systemic risks can be categorized along three main dimensions:

 Breakdown of governance in several political jurisdictions, characterized by violent

conflicts, terrorism, absence of rule of law, deprivation of rights, gender related
discrimination, loss of jobs, etc.

 The unfavorable impact of globalization such as a downturn in prices of commodities

exported by developing countries, increase in the price of imported commodities,

6
Krishna A. Escaping poverty and becoming poor: Who gains, who loses, and why? World
Development. 2004;32(1):121–136

35
 increasing incidence of cross border diseases such as HIV and AIDS, SARS and bird flu.
The opening of markets in a developing country because of the compulsory lowering of
tariffs under the WTO agreements, while developed markets remain closed due to non-
tariff barriers such as food standards.

 Harmful effects of climate change, such as frequent droughts, floods, disease,

increasing soil erosion, destruction of physical infrastructure (such as roads, bridges
etc.), adverse seasonal price fluctuations, fluctuations in food availability due to seasonal
climatic changes, and so on.

2.3 Livelihoods Affected by Breakdown of Governance

Livelihood is the means of making a living and involves the transformation of some resources
into goods and services, useful either to the creator of those goods and services, or to others
who are willing to pay for them. So long as people produced and consumed enough for their
own use, the process was self-managed, meaning the amount of resources utilized was in line
with their consumption requirements. However, as people started producing more than what
they could consume, they had to ponder over the right way to allocate resources: who could use
what quantity of resources.

It was then that many norms of resource allocation started emerging which had to be in
concurrence with the views of all those involved. Resource allocation within the family was
managed by the head of the family. Resources within the village were allocated by the village
headman. They were expected to bear in mind the benefit of the entire family or the village,
while allocating resources. These mutually agreed norms were thus institutionalized. The
concept of a nation-state soon emerged, which started playing this role at the level of the nation.

The state started providing a variety of public services including national security, law and order,
while also ‘ensuring that all the citizens have enough rice, milk and clothes’ or livelihoods. As a
part of this function, the state developed rules and norms for resource allocation in various
forms. Laws related to ownership and inheritance of private property, utilization of forest
resources, mineral resources are some examples of the norms set by the state.

An American journalist Robert Kaplan, investigating the growing population pressure affecting
people’s lives in Africa, noticed that when resources were scarce, societies developed various
institutional norms for rights and entitlements to resources. However, when the resource
availability shrunk beyond a certain level, people started breaking these norms. Powerful people
used their power to control resources. On examining some African countries that were
becoming more porous, Kaplan reported that the nation-states were breaking down under the
conditions of the extreme shortage of livelihood
resources.7

This phenomenon can be seen spreading to other developing nations as well. When resources
become extremely scarce, people break regional and national boundaries. Battles over many
natural resources like water are becoming more frequent. Some scholars have argued that the

7
Robert D Kaplan (1994): ‘The Coming Anarchy: How scarcity, crime, overpopulation, tribalism, and
disease are rapidly destroying the social fabric of our planet’.

36
present development model, which promotes the culture of rampant production, will lead to
further anarchy, with livelihoods of the weaker being further endangered. Evidence of this can
be seen in the densely populated areas of India, where resource availability per capita is going
below the critical, minimum level. Some recent examples of such breakdowns can be seen in
different parts of India. West Bengal used to be a food surplus region in 1960s, but over time,
has now become a net importer of food. Most areas of West Bengal have very high productivity
as well, but the population density is high and agriculture has saturated in terms of labor. The
only source of additional employment would come from the growth of the industry, which
requires land. That poses a problem for the state. Can some agricultural land be mutated for
industrial use? When the state government could not reach a mutually acceptable solution,
people from Nandigram and Singur and other such areas where agricultural land was acquired
for industrial purpose, began to agitate. Across India, one can witness many such conflicts
between agriculture and industry for the same resources.

The conflict between the sugarcane farmers of eastern Maharashtra and sugar mills, which in
fact make their produce marketable, over the sharing of water, is another example of conflict
over limited resources between the livelihoods of two different groups of people, leading to
break-down of governance. Similarly, even ecological sustainability reduces accessible
resources to extremely low levels, leading to gross violation of mutually accepted norms.
Sometimes, even the Government violates such norms. This results in disasters like the one
faced by Kedar Valley in Uttaranchal, due to the State Government’s violation of environmental
safety norms prescribed by the Central Government. In many cases, the State is compelled to
take decisions that are sub-optimal for all parties. This also leads to loss of trust in the
institutions of the State amongst people. A classic example of this is the conflict between the
farmers of Karnataka and Tamil Nadu, over the distribution of the waters of River Cauvery. Both
parties claim that the Water Commission has been biased against them, not giving them
adequate water.

There are situations when people in many African countries like Nigeria, Sudan began ignoring
national boundaries in search of livelihood resources. This led to the formation of new fiefdoms
built using force, cutting across formally accepted borders to control resources. Similarly, even
in the central parts of India, where livelihood resource accessibility has reached levels at which
livelihoods cannot be sustained, there is clear evidence of the breaking down of the state’s
authority. The Naxalites provide an alternate, state-like functions. The spurt in violent activity in
India can be attributed to three chief causes: the inability of a democratic polity to put an end to
the exploitative structures in society, official inefficiency in expediting processes intended to help
the downtrodden, and the unification of revolutionary forces by sinking their ideological
differences.8

In response, the Government of India launched an integrated plan of action against Left Wing
Extremism (LWE) under the guidance of the former Home Minister, P. Chidambaram.9

The Government’s approach is to deal with LWE in a holistic manner, in areas of security,
development, ensuring rights and entitlements of local communities, improvement in
governance and public perception management.

8
The Maoist Challenge, K Srinivasa Reddy, http://www.india-seminar.com/2007/569/569_k_srinivas_reddy.htm

9
The Government of India’s Approach to Left Wing Extremism. http://mha.nic.in/naxal_new

37
In dealing with this old problem and after numerous high-level deliberations and interactions
with the state governments concerned, it was believed that an integrated approach aimed at the
direly affected areas would deliver results.

With this in view, a detailed analysis of the spread and trends in respect of Left Wing Extremist
violence was made and 106 most affected districts in nine states were considered for special
attention with regard to planning, implementation and monitoring of various interventions. These
include the provision of Central Armed Police Forces (CAPFs) and Commando Battalions for
Resolute Action (CoBRA); modernization and upgradation of the State Police and their
Intelligence apparatus, etc.

In 2010, the Government reported a bold confrontation of the Maoist challenge with a
consequent rise in the number of deaths in 2009 amongst civilians (591), security forces (317)
and militants (217). It was expressed that the State Governments concerned would gradually
gain the upper hand and reestablish the authority of the civil administration.10

In contrast, the voice of the Adivasis, the indigenous communities living in the area is captured
in the quote below:-

“The success of the revolutionary activist lies in forcing the ‘enemy’ (the state) to resort to
excesses, which in turn would further alienate the masses from the perpetrator of the excesses.
The more people get distanced from the institutions of governance, the more relevance they are
likely to find in an alternative red politics. On a strategic plane, the game is extremely simple.
The relevance of revolutionary politics is inversely proportional to the perceived efficacy of the
state, which tries to act in accordance with the principles of a democratic polity.

Talking to adivasi peasants in the guerrilla zone as well as in areas adjoining it, we came across
three perspectives on why the conflict had escalated in Bastar. First, that the war launched by
the Government was being waged on behalf of big corporations to grab adivasi land. They, the
peasants, were being warned that if they did not consent and take the compensation being
offered, they would not only lose their land but also might never receive any compensation.

Second, a common query was how could the land that had not only sustained them all this
while, but also was the next generation’s only guarantee of securing a livelihood, be
compensated for in monetary terms? Besides, it was

pointed out, that it was not just bare land, trees such as sulfis, mangoes and tamarinds that
gave them food and drink while also fetching them an income. Third, the development that the
Government talked of was bunkum (bakwas) having seen what was done in Bailadila. All these
years, the tribal people had fended for themselves, receiving paltry help from the Government,
and now, when their land was wanted by corporations, the Government talked of ‘development’.
They wanted the Government to just let them be.11

10
Assessment-of-Left-Wing-Extremism-2010 http://www.vifindia.org

11
Gautam Navlakha - http://www.epw.in/insight/days-and-nights-maoist-heartland.html

38
By 2011, a stalemate in the process was acknowledged by the Government and the
Government of India had, by June 2013, toned down the militaristic policy and taken up a
developmental approach. The Ministry of Rural Development launched the Roshni program to
impart skills and provide employment to 50,000 youth in 24 most critical LWE affected districts,
with training being imparted through public-private and public-public partnerships.

Another program, of recruiting and posting well-educated young professionals as ‘Prime

Minister’s Rural Development Fellows’ was launched with a focus on the LWE affected districts.
Only time will tell which of these methods will work.

2.4 Impact of Globalization on Livelihoods

Globalization is the increased worldwide competition between firms that have plants and offices
across the globe and are hardly susceptible to influences of national governments anymore.
Globalization brings consumer goods from all over the world in the local supermarket.
Schuurman12 presents two views on globalization.

The first point of view sees globalization as causing increased homogenization and
interdependency all over the world in the cultural, social and economic dimensions. Thus,
industries in poor countries, which desire to grow through international trade, are, by and large,
constrained to operate within this framework of global products and globalized supply chains.

The second view sees a close association between the global and the local and is therefore
sometimes called ‘glocalization’ (Robertson 1995).13 This view also identifies the trend towards
global markets and politics but notes an increased diversity and increased importance of
regionalism and community as well. Cultural fragmentation, for example, with its reinvention of
local traditions and identities, is seen as an answer to the loss of identity through
homogenization.

With respect to livelihood strategies, globalization may have two important consequences: (1)
because markets and social relations are becoming worldwide, livelihoods will become multi-
local (2) because of glocalization, the importance of the international and the regional-local
levels of scale will increase to the detriment of those at the national level.

The accelerated tendency toward urbanization14 that has accompanied changes in the structure
of the global economy has forced the poor to adapt their survival strategies. This has led to
increased oscillation between urban and rural livelihood contexts. Research has confirmed the
impression that there is a rising tendency for HHs to become multi-spatial,15 with some

12
Schuurman, Frans J (2002). Globalization and Development Studies: Challenges for the 21st
Century. Sage Publications, New Delhi
13
Robertson, Roland. (1995) “Glocalization: Time-space and Homogeneity- heterogeneity”,
M. Featherstone et al (ed) Global Modernities, London: Sage. pp. 25-44

14
Norman Backhaus, Christan Berndt, Benedikt Korf, Ulrike Müller-Böker, 2012. Worlds of difference,
different worlds: geographies of globalization. National Center of Competence in Research, North
South, University of Bern, Research Partnerships for Sustainable Development

15
Rural Diversification: What Hope for the Poor, D Start, 2001. Accessible at www.odi.org.uk/
resources/docs/5900.pdf

39
members residing in rural areas while others move toward peri-urban and urban settings, and at
times even migrating abroad.

The term HH can thus no longer be seen as referring simply to a residential unit. HHs are
progressively beginning to resemble highly gendered, tightly organized networks for the
exchange of goods, services and support between rural and urban locations, and sometimes,
across countries, when one member is abroad. The changing relationship between livelihood
contexts also has consequences for the development of ‘local’ decision-making processes. At
the institutional level, it demands a rethinking of such concepts as participation, decentralization
or power devolution. At the HH level, it can imply fundamental changes in the ways decisions
are reached regarding both urban and rural livelihood activities and the strategies followed for
linking them.

Globalization looks like a new round with new opportunities for livelihoods, but it is doubtful
whether social exclusion will become a thing of the past. As Reardon16 has observed, rural
livelihood diversification away from agriculture has often involved poor people crowding into a
competitive sub-sector supplying a limited market. The consequence is that returns to labor in
these sub-sectors, which are already low, fall further.

For agriculture, horticulture and floriculture, the activities in which smallholders engage, the end
markets are dominated by large retailing firms, which compete among themselves on continuing
minor innovations in products and packaging, on maintaining strict quality criteria and on price.17
These retailers dominated supply chains require producers to be able to:

• meet exacting quality criteria, covering such matters as size, color, texture, pesticide
residues and taste;
• adjust production volumes rapidly to meet short-term market trends;
• track minor product innovations by changing planting material, planting methods and
packaging;
• keep up with cost-reducing technical progress, in a context in which the partner retailer
and its competitors have multiple sourcing.

These requirements are enormously demanding in terms of information flows, capital

requirements and governance and management of the system. Dispersed smallholder suppliers
are at an increasing disadvantage, as they have much greater difficulties in accessing and then
acting on rapidly evolving price and technical information. Smallholders are simultaneously
‘locked in and locked out of the market’.

They are ‘locked in’ because:

a. Smallholder agriculture as a form of economic organization is intrinsically a non-

hierarchical form, in the sense that farmers are not workers on large farms taking orders
from superiors. (This is not to deny that smallholders are often politically marginal with a

16
Barrett, Christopher B. & Reardon, Thomas, 2000. “Asset, Activity, And Income Diversification
Among African Agriculturalists: Some Practical Issues”, Working Papers 14734, Cornell University,
Department of Applied Economics and Management
17
J. Kydd, Agren. (2002): Agriculture and rural livelihoods: Is globalization opening or blocking paths
out of rural poverty? ODI Network Paper.

40
 subordinate role in the political economy, which is a central point of the ‘theory of
peasantry’, but simply to point out that they are not farm laborers, and that they have to
manage small businesses and transact in a variety of markets).

b. Thus individual poor farms, with little or no collateral, have to depend on market
relationships to supply inputs and finance as well as to sell output. Often, this means
that transactions costs are in excess of the potential benefits of the transaction, and
therefore, there is market failure. They are ‘locked out’ because:

c. The existing model that pushes them into contracts with independent competitive
suppliers in the market is unhelpful in dealing with market failure unless they have a
certain form of hierarchical organization.

Therefore, solutions have to be found in long-term funded Institutional Development of

smallholder farmers, which can bring in better bargaining power through aggregation as well as
have a legal and transactional authority in dealing with the market, while building in resilience to
deal with market failure. In this context, the efforts by the Small Farmers’ Agribusiness
Consortium (SFAC), Government of India, under which over 600 producer companies have
been incubated and have started aggregating farmers for the market, is commendable.

While sharecropping, contract farming, and state marketing organizations have been traditional
models, producer organizations (co-operatives, companies) are the latest models being tried out
both by civil society as well as the State.

Table 22: Growth in Agriculture Sector during Pre and Post Globalization

Growth rate in agriculture (%)

Crop Pre-reform Period Post reform Period
1980-1990 1996-2006
Agriculture and allied activities
a. Agriculture 3.6 2.6
b. Forestry 4.2 2.5
c. Fishing -0.1 0.5
a. Food grains 2.9 1.5
b. Cereals 3.1 1.8
c. Rice 3.7 2.0
d. Wheat 3.6 3.6
e. Coarse cereals 0.0 -1.1
f. Pulses 1.4 0.5
g. Non-food grains 4.3 2.0

Source: Economy Survey 2005-06, Govt. of India

In India, agriculture is still the dominant source of livelihood and many analysts18 blame
globalization as a cause for its decline. Agricultural produce is of two kinds – foodgrains and
non-foodgrains. Foodgrains contribute 75 percent of the total agricultural production. According

18
Somasekhar, K. (2013) Impact of Globalization on Indian Agriculture & Challenges – A Critical
Review. International Journal of Arts Commerce and Literature Vol 1 Issue 2 February 2013

41
to the agricultural growth analysis, annual growth rate has declined from 3.9 percent to 2.6
percent in the pre and post-reform periods respectively.

[One adverse impact of this has been a decline in the per capita availability of (nationally
produced) foodgrains.] The average foodgrains available for each Indian in 1951 was 470
grams per day or 167 kilos per year, whereas in 1991, it was 175 kilos. In the post reform
period, this gradually reduced to 154 kilos per year or 445 grams per day. In 1951, the
[nationally produced] pulses available per head was 61 grams per day, whereas in 1991, rose to
75 grams, but the same declined to 32 grams per day in 2005. The demand was made up
through massive imports.

Table 3: Impact of Globalization on Agriculture (number of farmers)

Sr. Impact variable Low Moderate High Total

1 Frequent changes in cropping pattern 10 20 60 90

2 Technology component 7 27 56 90
Shift in agriculture from food crops to non food
3 8 17 65 90
crops
4 Production for international markets 22 61 7 90
5 Increasing scale of interrelationship 7 19 64 90
between agriculture and industry
6 Growing logistic support to agriculture 9 20 61 90
7 Formation of supply chains in agriculture 19 63 8 90
8 Differentiated production 6 62 22 90
9 Fortified food 57 23 10 90
10 Information intensive production 7 15 68 90
11 Emergence of ecological agriculture 60 20 10 90
12 Increasing risk taking behavior 10 21 59 90
13 Supply response on the basis of expected price 16 19 55 90

Other researchers, however,19 seem to have identified several positive benefits as well of
globalization on Indian agriculture, as can be seen from the list.20 No wonder then that, reputed
agricultural economists Hanumantha Rao and Gulati21 strongly advocate integration of Indian
agriculture with the world market, on the plea that such a process would improve terms of trade
of agriculture, the benefits of which would also percolate to the poor. They also suggest a
strategy for agricultural development, including broad policy changes in supply side factors and
a shift from foodgrain production to new activities with favorable domestic and export demand,

19
Reddy, B. Sudhakar (2014). Impact of Globalization on Agriculture: Some Grassroots Level
Reflections in Andhra Pradesh. International Journal of Scientific Research, Volume : 3 | Issue : 1 |
January 2014
20
Sample study with 90 farmers from Maddur Mandal of Mahabubnagar district of Andhra Pradesh
21
Rao, C H Hanumantha and Ashok Gulati (1994). Globalization of Indian Agriculture (‘Indian Agriculture:
Emerging Perspectives and Policy Issues’, Economic and Political Weekly, December 31,1994)

42
such as dairying and other animal products, horticulture and floriculture in order to boost agro-
processing.

Their view is based on the premise that the growth rate in domestic demand for foodgrains has
been declining and may not exceed the long-term foodgrain output growth rate of 2.6 percent
per annum basically due to the availability of a wide range of non-foodgrains and urban
consumption goods in rural areas. Therefore, agricultural growth need not any longer be limited
by the goal of self-sufficiency but may benefit from trade so as to raise the overall rate of
growth. The authors are cognizant of the fact that food self-sufficiency will continue to remain
one of the goals of agricultural policy in the face of rising population and increasing demand of
the poor.

2.5 Climate Change and Livelihoods

As per the United Nations Framework Convention on Climate Change Article 1, climate change
is, ‘A change of climate which is attributed directly or indirectly to human activity that alters the
composition of the global atmosphere and which is in addition to natural climate variability
observed over comparable time periods’.

Climate change and climate variability are the biggest threat we face today. They are the cause
for environmental degradation and extreme and largely unpredictable weather events like
floods, tsunamis, droughts and cyclones. They hit the poorest and most vulnerable communities
the hardest, i.e., those who are largely dependent on climate-sensitive occupations and are on
the natural resource base in the locality. The poorest populations are rendered the most
vulnerable: they have maximum risk and exposure and minimum resilience and adaptability.
The poor, natural resource-dependent, rural households bear a disproportionate burden of
adverse impacts (Mendelsohn et al. 2007; Kates 2000)22, 23

About, 700 million of India’s population are directly dependent on climate sensitive sectors –
agriculture, fishing, livestock management, forests and the natural resource base of water,
biodiversity, mangroves, coastal zones, and grasslands for subsistence and livelihoods. This
resource base is under threat, and in turn, so are the people whose livelihoods depend on it.
Among these people are some of the most vulnerable: the landless poor, forest dwellers and the
erstwhile ‘primitive’ tribal groups now called PVTGs. By 2045, when India is expected to be the
most populous nation on earth, this vulnerable population will be proportionately larger, while
the resource base will be further depleted.

Over the last century, the country as a whole is hotter – mean temperatures have gone up by
0.56°C, with some local variations. Rainfall patterns during July–September have changed, with
increasing trends in some regions (Gangetic West Bengal, western Uttar Pradesh, Madhya
Pradesh, Jammu and Kashmir, Konkan and Goa, Maharashtra, Rayalaseema, and Coastal
Andhra Pradesh) and decreasing in others (Jharkhand, Chhattisgarh, and Kerala). Sea levels
were changing, having risen by 0.4–2 mm a year along the Gulf of Kutch and the Bay of Bengal
though it had fallen along the coast of Karnataka.

22
Mendelsohn Robert et al 2007, “Climate and Rural Income”, Climatic change 81 (1): 101-18
23
Kates, R. 2000. “Cautionary Tales: Adaptation and the Global Poor”. Climatic Change 45: 5 – 17.

43
Climate Change Vulnerability Index (CCVI), released by global risks advisory firm Maplecroft,
United Kingdom, had ranked India the second most vulnerable country to climate change after
Bangladesh. According to the report, almost the whole of India had a high or extreme degree of
sensitivity to climate change, due to acute population pressure and a consequent strain on
natural resources. This is compounded by a high degree of poverty, poor general health and the
agricultural dependency of much of the populace.

Figure 1: Effects of Climate Change

Impacts of Climate Change on Livelihoods

 Agricultural crops are adversely affected, with declining yields, and shifts in cropping
patterns. Food and seed storage are adversely affected.
 Forests exhibit shifts in vegetation affecting forest-based livelihoods.
 Fisheries based livelihoods affected by the reduction in breeding grounds, regional
extinction and migration, altered distribution of fish.
 Livestock affected by reduced grazing lands, less productivity and increased
susceptibility to disease.
 Because of the greater run-off, water resources are affected by the reduction in
recharge of groundwater, decrease in the availability of freshwater, thus, increasing
the stress on water.

These impacts on the natural resources and livelihoods, directly and indirectly, create adverse
effects like increased health burden, increased morbidity and mortality, increased epidemics
and an increase in malnutrition. Women’s burden increases as they have to fetch water from

44
longer distances, thus affecting their health, education and number of hours available for
engaging in productive activities.

Development interventions that focus on managing natural resources and enhancing or

sustaining livelihoods are susceptible to the vagaries of climate change. These sudden events
are less predictable and hence, cannot be controlled. Unless they are understood and planned
for, they can cause unintended impacts that sometimes can be quite harmful. For example, a
project focusing on marketing farm produce can be completely derailed by the occurrence of a
climate event or risk such as sudden frost, prolonged dry spells, excessive or untimely rain, or
temperature and humidity fluctuations, prompting the farmer to give up on that crop or even stop
participating in the project. If development interventions do not consciously pay attention to
vulnerability, adaptive capacity and resilience of the target group, the very purpose of livelihood
promotion may be endangered.

The vulnerability of a community or a system is to be gauged by taking into account the external
biophysical and socioeconomic conditions, which determines its context, and the internal
characteristics that determine its coping and adaptive abilities in response to stresses and risks
caused by climate change.

Climate Change and Vulnerability

Intergovernmental Panel on Climate Change defines vulnerability in a climate change context,

as a function of exposure, sensitivity, and adaptive capacity, where:

Adaptive capacity is the ability of the system to adjust to actual or expected climate stress or
cope with the consequences, the degree to which adjustments in practices, processes, or
structures can moderate or offset the potential for damage or take advantage of opportunities
created by a given change in climate. It is considered as a function of wealth, education,
information, skills and infrastructure, access to resources and stability and management
capabilities.

Sensitivity refers to the degree to which a system will respond to a change in the climate, either
positively or negatively.

Exposure is the degree of climate stress, long-term changes, exposure to the potential climate
risk (for example, economic globalization increasing the risk of climate change).

3.0 Coping Strategies of the Poor

Scoones24 describes the coping strategies that the poor use in the face of shocks:

Drawing on reviews of the wider literature, the following distinctions can be seen:

 Agricultural intensification and extensification – between capital-led (often supported

by external inputs and policy-led) and labor-led (based on own labor and social
resources and a more autonomous process)

24
Scoones, Ian (1998) Sustainable Rural livelihoods – A Framework for Analysis. Working Paper 72.
IDS Sussex

45
  Livelihood diversification – between an active choice to invest in diversification for
accumulation and reinvestment, and diversification aimed at coping with temporary
adversity or more permanent adaptation of livelihood activities, when other options fail to
provide a livelihood. Diversification may, therefore, involve developing a wide income
earning portfolio to cover all types of shocks or stress jointly, or the strategy may involve
focusing on developing responses to handle a particular type of common shock or stress
through well-developed coping mechanisms.
 Migration – between different migration causes (e.g., voluntary and involuntary
movement), effects (e.g., reinvestment in agriculture, enterprise or consumption at the
home or migration site) and movement patterns (e.g., to or from different places). We
have seen that the poor are vulnerable to many shocks, and thus, risk their lives and
livelihoods proportionately more. But fortunately, poor HHs have a range of responses
and coping mechanisms. This is shown in Figure 2.25

Figure 2: Responses and Coping Mechanisms of the Poor to Shocks

Table 3 lists idiosyncratic risks and possible mitigating tools for poor HHs

25
Aga Khan Rural Support Program, India. A Presentation (2002).

46
Table 3: Idiosyncratic Risks and Suggested Mitigation Measures (for use in a livelihood
intervention)

Education on preventive methods and access to health care

Risk of ill health,
systems
accidents etc.
Providing access to insurance (life and health)
Arrange for tailor-made consumption credit
Non-availability of Cultivate savings habit
wage employment Educate on and generate alternate means of employment.
Migration – short-term or long-term

Facilitate acquisition of skills and resources by the

Split into families of low
family to take up appropriate economic activity
livelihood security
Provide tailored consumption loan services
categories
Liquidation of assets to meet emergency needs

Crop failures due to Technical assistance on drought and pest-resistant crops,

drought, physical methods, cultivation practices, cropping pattern
pest attack, diseases Dryland crop insurance for dealing with yield risk
etc. Index-based rainfall insurance
Reduction in demand
for the services or Offer consumption loans
products offered
Failure of yield on
activities allied to Facilitate veterinary services
agriculture like dairy, Facilitate livestock insurance
goat, sheep and pig Provide market linkages
rearing
Trade, service and
Insurance coverage for - life, accident, theft, fire etc.
manufacturing

Different strategies for risk mitigation can be followed:

 Non-financial Risk Mitigation: These include practices such as vaccination of animals,

soil and water treatment, among others.
 Financial Risk Mitigation: This means using various types of insurance products, which
may help increase livelihoods security. These include products such as rainfall-based
crop insurance, asset insurance and group based health insurance. These products are
available today and offered by various insurance companies, based on the pioneering
work in developing micro insurance products for the rural market by BASIX.

The rural poor develop adaptation practices to cope with threats linked to climate variability, but
the success of these practices depends on the nature of prevailing formal and informal
institutions. Property rights, market barriers, family (patriarchy/gender), caste and other
institutions regulate access to resources and have the potential to create exposure to risks.

The basic adaptation strategies, in the context of climate and other environmental risks to
livelihoods, can be linked to the following risk management categories (Table 4).

47
3.1 SRADH - Five Coping Strategies with or without Migration

Based on the APRLP study as well as several similar studies in southern Rajasthan’s drought-
prone Dungarpur and Banswara districts, and our own experiences observing poor people cope
with shocks, we suggest the following framework for classifying the numerous coping strategies
adopted by the poor. These five strategies go beyond Scoones’ (1998) threefold intensify-
diversify-migrate approach and each is capable of being exercised in the area where one lives
or by migrating. Thus, we treat migration as a sixth and separate coping strategy. Scoones
appears to have missed out on how the poor behave when coping strategies do not work and
we have, thus, arranged the ‘strategies’ in descending order of desperation, from the most
desperate to the least.

1. S – Sinking into seasonal bondage, small thefts and crime, sex work, starvation, chronic
sickness, or even suicide.
2. R – Reduction of consumption or sale of assets (land, livestock, jewelery).
3. A – Adaptation – adjusting within the existing portfolio of livelihood activities (e.g., the
small farmer moves from cereals to cash crops) or works in NREGA jobs.
4. D – Diversifying the livelihood portfolio (e.g., farmer starts a tea shop)
5. H – Higher Income due to sub-sectoral growth (e.g., soybean, mobile telephony) or
spatial reasons (new industrial project nearby creates jobs or a tourist place opens up)
or getting generous compensation for land acquisition by a project.

The five coping strategies are abbreviated as Sinking, Reduction, Adaption, Diversifying, Higher
Income (SRADH) (which in Hindi and other Indian languages is the name of an annual
ceremony, held to express gratitude to one’s departed ancestors. In this case, we hope, it helps
us be grateful to those less fortunate) and range from those with highly negative or negative
consequences for the HH as in S and R, respectively, to neutral as in A and with positive or
highly positive, as in D and H respectively.

48
 Figure 3: Impact of Shocks/ Favorable Conditions on Coping Strategies

Figure 4 illustrates the distribution graphically with income levels of poor HHs on the x-axis and the number of HHs on the y-axis.
The y-axis line represents the poverty line and as can be seen, there is a skew in terms of a higher number of the poor being below
(to the left of) the poverty line. Every time there is shock, the number of poor HHs whose incomes decline further goes up and the
whole curve shifts leftwards. In contrast, when there is economic growth which is equitable, the whole curve (distribution) shifts
26
towards the right. We illustrate the SRADH framework by continuing to use the details recorded in the APRLP study.

26
APRLP, 2002-2003. Drought and Coping Strategies: A Study of Four Villages of Mahabubnagar
and Anantapur Districts. Note: Coping strategies shown in [ ] are introduced by the Resource Book
authors.

49
 Measuring Livelihoods
Here we intend to discuss livelihoods measurement at two levels: i) at a geographical or
administrative scale, and ii) at community and household levels. For measuring livelihoods at
a geographical or administrative level, a paper is reproduced below.

Sustainable Livelihood Security Index in a Developing Country:

A Tool for Development Planning1

ABSTRACT
The paper presents an overview of the existing indicators of development and positions them
within the environmental, economic, and social dimensions of sustainable development. It
presents empirical evidence of the sustainable livelihood security index (SLSI) at the district
level in Gujarat. SLSI is a composite index having three component indices, i.e. the ecological
security index (ESI), the economic efficiency index (EEI), and the social equity index (SEI). It
finds that the SLSI based on its simplicity and flexibility is one of the most comprehensive yet
simple indices for measuring long-term livelihood security in rural areas. For instance, the
eastern districts of the state, dominated by scheduled tribes’ population have very low EEI and
SEI rankings, although they have high ESI ranking. These districts also have very low ranks in
gender development index, education index, health index and housing index. Thus, the SLSI
not only identifies the general priorities for development but also the nature and types of policies to
be pursued in each study unit to enhance livelihood security. The SLSI facilitates consensus
among different partisan groups like economists, environmentalists, and egalitarians by
balancing their mutual concerns could provide guidelines for achieving sustainable
development. It can function as an educational and a policy tool for promoting a holistic
perspective among planners, administrators, and development workers.

Key Words: sustainable livelihood security, development indicators and indices

INTRODUCTION
The concept of sustainable livelihood security (SLS) has a broader generic meaning,
encompassing current concerns and policy requirements pertaining to sustainable development
(SD). Chambers (1986) has defined sustainable livelihood as a ‘level of wealth and of stocks and
flows of food and cash which provide for physical and social well-being and security against
becoming poorer’. Swaminathan (1991a; 1991b) has defined SLS as livelihood options that are
ecologically secure, economically efficient, and socially equitable underscoring: ecology,
economics, and equity dimensions. Chambers and Conway (1992) proposed the concept of rural
livelihood security (RLS) to focus on: capability, equity, and sustainability. Since the concept
implies the protection or assurance of the means of livelihood for the masses not only at the
present time but also in the future, it reflects equally the concern for both the inter-generational
and the intra-generational equity.
The concept of SLS has both macro- and micro-level implications. The macro-level prescriptions
for ensuring SLS include stabilising population, reducing forced migration, preventing exploitation,

1 Reproduced (major part) from Singh, Pramod K. and B. N. Hiremath (2010) Sustainable
livelihood security index in a developing country: A tool for development planning, Ecological
Indicators, No. 10, vol 2, pp 442-451.

50
and supporting long-term sustainable resource management. At the micro and local levels, the
critical ingredients of SLS are ‘adequate stocks and flows of food and cash to meet basic needs’
and ‘access to resources, income, and assets to offset shocks’ (McCracken and Pretty, 1988:14).
While it is possible to manage forced migration mainly by reducing regional imbalances of
economic development, resource degradation and social exploitation can be minimised only
through equitable distribution, asset ownership, and access to natural and technological
resources. At the same time, ecological security needs to be ensured for the sustenance of
economic growth. Since SLS aims to provide the means for meeting the basic needs of humans, it
is more sustainable as a policy tool than as a strategy aimed at the mere provision of basic needs.
Ensuring SLS by enabling people to meet their own needs will lead to reduced pressure on the
environment, which, in turn, means that it will be possible for more people to meet their livelihood
needs in the future (Chambers, 1986).
This study presents empirical illustration from Gujarat1 state, located in western India. It is a
leading industrialised state. However, it has relatively poor and unevenly distributed natural
resources, which have been mismanaged over time. It has almost stagnant long-term growth in
agriculture and wide regional disparities (Hirway, 2002). It lags behind in several dimensions of
human development, particularly in female literacy, enrolment and retention of children in
school, infant mortality rate, and calorie intake. The state has suffered heavy ecological
damage due to industrialisation and urbanisation. The development in Gujarat is uneven in
terms of spatial distribution and across sectors. The tribal districts are lagging behind in socio-
economic terms. These districts have low food grain and milk productivity, a higher level of
poverty, and low female literacy. Gujarat needs to adopt an employment-intensive and
environment-friendly development plan to achieve sustainable livelihood security. However,
different parts of the state require different kinds of development interventions.
In the remainder of the paper, we present an overview of the existing development indicators.
An analytical framework and methodology of SLSI, developed by the MS Swaminathan
Research Foundation (MSSRF) (1993), is presented in the subsequent section. Before
describing procedures for the construction of SLSI at the district level in Gujarat, we describe
the rationale for variable selection. Finally, we present the relative status of the districts and
their policy relevance and conclude the paper.

INDICATORS OF DEVELOPMENT: AN OVERVIEW

Today an ever-expanding population, increasing consumerism, and over-exploitation of natural
resources have resulted in a population–resource imbalance, which has acquired global
dimensions leading to ecological imbalances. Therefore, the SD paradigm is broadened to
encompass ecological, economic, and equity concerns, necessitating an entirely new set of
welfare indicators that transcend disciplinary boundaries.
Much of the work on measuring sustainable development is driven by a desire to find a new
universal indicator of progress akin to GDP or the Human Development Index (Parris and
Kates, 2003). Indeed, many of the efforts include explicit references to the inadequacy of GDP
as a measure of progress (ibid). There are no indicator sets that are universally accepted,
backed by compelling theory, rigorous data collection and analysis, and influential in policy
(Parris and Kates, 2003).
There have been innumerable efforts in developing quantitative indicators of SD. The
Compendium of Sustainable Development Indicator Initiatives lists over 600 sustainability
indicator efforts (IISD, 2004)

51
We have tried to categorise some of the existing indicators into the ecology-equity domain,
ecology-economics domain, economics-equity domain, and ecology-economics-equity domain,
besides sector-specific indicators (Figure 1). Indicators focussing on the ecology–equity
interface lacks the ability to address the issues of economic development, while indicators
focussing on the ecology–economics interface lacks the ability to address distributional issues,
which limits their wider acceptability.
Although the indices such as the index of sustainable economic welfare (ISEW)/ genuine
progress indicator (GPI), city development index (CDI), sustainable net benefit index (SNBI), and
sustainable livelihood security index (SLSI), are composite indicators, combining information on
ecological, economic, and equity aspects within a unifying framework, they differ in terms of
their methodological basis and information content. CDI, as the name suggests, is not
applicable to a rural setting. While ISEW, GPI, and SNBI are temporal indicators, SLSI is
essentially a cross-sectional measure that is useful in evaluating the relative sustainability
status of a given set of entities (households, villages, districts, ecosystems, regions, nations,
etc.). Sustainable livelihood security index (SLSI), originally proposed by Swaminathan (1991b)
and later empirically illustrated by Saleth and Swaminathan (1993), is an attempt towards
formulating a comprehensive indicator to reflect the ecology–economic–equity interface of SD.
Simplicity and not the complexity of an indicator makes it easily replicable and suitable for
generalisation across various evaluation levels. In this regard, SLSI requires only a minimum
amount of easily available ecological, economic, and equity information. Furthermore, the
cross-sectional character, simplicity, and information efficiency of SLSI make the index easily
replicable and suitable for generalisation across various evaluation levels.
A critical evaluation of the indicators developed to date reveals that the major snag in indicator-
development activities is not the scarcity of approaches or methodologies but the absence or
inadequacy of crucial environmental and ecological information (Saleth and Swaminathan, 1993).
SLSI has the potential to function as a context-independent generic tool for evaluating SD
concerns at various interrelated levels—households in a village context, villages in a district
context, districts in a state context, uses or practices in a resource/ecosystem context,
projects/technologies in a policy option context, regions in a national context, and nations in a
global context. The conceptual and methodological bases as well as the information efficiency and
flexibility of SLSI have been treated in detail in the next section of this paper.

SUSTAINABLE LIVELIHOOD SECURITY INDEX: ANALYTICAL FRAMEWORK AND

METHODOLOGY
The utility and replicability of a given index or measure depend primarily on its simplicity and
flexibility, not on its complexity and rigidity. The operational measure proposed by Swaminathan
(1991b) to check whether the necessary conditions essential for the attainment of sustainable
livelihood security (SLS) are present in a given region or ecosystem is known as the
sustainable livelihood security index (SLSI), which again has the following three interacting
components:
i. Ecological security represented by variables such as forest cover, soil and water quality
parameters, air pollution, groundwater depletion, etc.
ii. Economic efficiency represented by variables such as land productivity, labour
productivity, marketable surplus, input-output ratio, etc.
iii. Social equity represented by variables such as the distribution of land, asset and income,
people above the poverty line, female literacy, etc.

52
To operationalise the concept of SLS within the context of SD, Saleth and Swaminathan (1993)
propounded the following propositions:
 Given the dynamic nature of SD, it needs to be relative rather than absolute both in time and
space as well as against any scientifically determining norms or standards;
 Since SD is contextual, what is sustainable in a given region or ecosystem need not
necessarily be sustainable in another region or ecosystem; hence there cannot be a unique
recipe for achieving SLS everywhere; and
 SD is a hierarchical and interrelated process, as the sustainability requirements of households,
resources, ecosystems, regions, nations, and ultimately, the planet itself are critically
interlinked.
The MS Swaminathan Research Foundation (MSSRF) developed SLSI for the 15 agro-climatic
regions of India (MSSRF, 1993; Saleth 1993a; Saleth and Swaminathan, 1993). They selected
forest cover and net sown area as ecological indicators; land productivity and area under
cereals as economic indicators; and people above the poverty line and female literacy as equity
indicators. Saleth (1993b) developed the agricultural sustainability status of the agro-climatic
sub-zones of India by selecting forest cover, per capita utilisable groundwater potential, and
population density as ecological indicators; land productivity, labour productivity, and per capita
cereal output as economic indicators; and people above poverty line, female literacy, and
current groundwater use as a percent of its ultimate potential as equity indicators.
Utilising the three-dimensional conception of SD, Saleth and Swaminathan (1993) described the
procedure for developing SLSI as a relative approach underlying the PQLI–HDI methodology in
a generic context, which is presented below:
Let SLSIij be the index for the ith component of SLSI related to the jth entity (households in a
village context, districts in a state context, regions in a national context, and nations in a global
context) and let Xij be the value of the variable representing the ith component of SLSI related to
the jth entity. Then the index for the ith component of SLSI of the jth entity can be calculated as
follows:
( Xij - min Xij)
j (i = 1,2,..,I) [1]
SLSIij = ──────── (j = 1,2,..,J)
(max Xij - min Xij)
j j

Notice that the numerator in [1] measures the extent by which the jth entity did better in the ith
component of SLSI as compared to the entity showing the worst performance in that component,
and the denominator indicates the range (i.e. the difference between the maximum and the
minimum values of the variable representing a given component), which is a simple statistical
measure of total variation present in the variable representing the ith component of SLSI. The
denominator, in fact, serves as a scale by which the extent of the better performance of the jth
entity in the ith component is evaluated. Having calculated the SLSIij for all the components (i = 1,
2, . . . , I) and all the sample entities (j = 1, 2, . . . , J), the composite index, which measures the
overall performance of a given entity (SLSIj), can be calculated as a weighted average of all the
component indices [SLSIij (i = 1, 2, . . . , I)]. That is:
I
Σ aij SLSIij
i=1
SLSIj = ─────── (j = 1,2,..,J) [2]
I

53
The aij in [2] denotes the weight assigned to the ith component of SLSI of the jth entity and has the
property that: a1j + . . . + aIj = 1. If aij is identical for all i and j and is equal to 1, it means that equal
weights is being assumed.
In view of our three-dimensional conception of SD and hence SLS, SLSI will have three
component indices, i.e. the ecological security index (ESI), the economic efficiency index (EEI),
and the social equity index (SEI). Each of the three component indices of SLSI can be based
on one or more variable(s) reflecting the state of affairs in a given dimension. When there are
two or more variables to represent a given component of SLSI, the index for that component
can be formed again by taking either the simple or the weighted average of the individual
indices of the representative variables. The choice of the variables to represent the different
components of SLSI is influenced inter alia by their relevance and capacity to represent a given
component, availability of data, and the level at which SLSI is constructed.
Whenever value of a variable exceeds its respective norms/ standards, then the index for such
variable will be assigned a value of 1. Otherwise, the index is based on the region-specific scale
defined by the data range.
The SLSI approach can easily be generalised to other contexts and evaluation levels. As noted
already, while the general approach is context-independent, the components and the variables
selected to represent them are context-specific. It can be generalised at:
 households in a village;
 villages in a taluka or district;
 districts in a state;
 states in a country;
 agro-climatic region in a planning context;
 project units in a project;
 resource/ecosystem level for intergenerational analysis; and
 countries at global level.
For instance, for constructing SLSI at the household level, the ecological dimension may be
fixed, since ecological endowment of the village forms the common basis for the livelihoods of
all households. SLSI at the household level may be constructed using economic dimensions
such as income status, asset ownership status, food and nutritional status, etc. and social
dimension such as educational status, health status, access to common property, etc. However,
when the SLS of the households is carried over time, the ecological dimension becomes very
crucial.
While the SLSI methodology is simple and conceptually sound, it faces the same problems
often encountered in the construction of any composite index, such as the choice of the
component variables and the identification of appropriate weights for its different components.
Within the data constraints, the variable choice becomes more of an art than a science.
Naturally, the SLSI constructed by two individuals with differential preferences will not be the
same. In this sense, it is more appropriate to consider SLSI as an approach to a measure
rather than a measure in itself (Saleth and Swaminathan, 1993). The most serious limitation of
the SLSI methodology is that it provides only a relative rather than an absolute indicator. Thus,
it helps only in establishing the ranking among a given set of entities but does not say ‘how
much’ an entity has performed compared to others. Hence, the policy-induced changes in the
SLS status could not be measured in any quantitative sense (ibid.).

54
EMPIRICAL ILLUSTRATION OF SLSI AT THE DISTRICT LEVEL IN GUJARAT, INDIA
Given the evaluation context, the selection of suitable variables, and the collection of data, there
are three steps involved in the construction of SLSI: (i) identification of three scales, one each for
the evaluation of ecological security, economic efficiency, and social equity; (ii) calculation of three
indices, i.e. ESI, EEI, and SEI, for each entity; and (iii) derivation of the overall SLSI related to
each entity by combining the three indices.
The rationale for Variable Selection
Based on ecological as well as socio-economic status, and the availability of district-wise data,
we have selected the following indicators for the construction of SLSI:
Ecological security indicators: forest cover, water quality unaffected habitations (i.e.
habitations that are not affected by pollutants such as fluorides, nitrates, and
brackishness), and groundwater recharge potential;
Economic efficiency indicators: total food grain yield, milk yield, and net sown area;
Social equity indicators: percent of population above the poverty line, female literacy,
maternal survival rate, per capita food grain production, and per capita milk production.
Sources of the raw data used for the construction of SLSI are shown in Table 1. Forest areas
play an important role in the sustenance of watersheds and thereby in enhancing livelihoods.
Both the economic and ecological functions of forests help people in sustaining their
livelihoods. Habitations that are not affected by pollutants such as fluorides, nitrates, and
brackishness ensure better health for the inhabitants and help people in sustaining their
livelihoods. Groundwater recharge potential, which is the ratio of gross annual recharge to
gross annual draft of groundwater, thus can be understood as being the opposite of
groundwater development. It signifies that groundwater is available for future use. The
recharge potential of groundwater serves not only as an indicator of ecological security but also
as an indicator of inter-generational equity of the SD paradigm.
For evaluating the economic efficiency of the agricultural systems of districts, the variable land
productivity measure was selected. Total foodgrain yield, which is the ratio of total food (cereals
plus pulses) to the food grain area, is essentially an efficiency parameter of food production.
Similarly, milk yield, which is the ratio of total milk production to the number of total milch
animals, is essentially an efficiency parameter of milk production. Food grain yield and milk
yield not only capture the physical performance of soil productivity, biochemical technologies, and
yield of milch animals but also the potential for the overall food and nutritional security of the
districts. The net sown area represents the comparable agricultural land base for farm-based
production systems.
The percent of the population above the poverty line is calculated as 100 minus the percent of
the population below the poverty line. It signifies income, asset ownership, food consumption,
employment, sanitation facilities, house type, indebtedness, etc. It shows how equitably the
resources are distributed across the population. Female literacy captures not only women’s
social and economic participation but also population stabilisation. The maternal survival rate,
which is calculated as 1,000 minus the maternal mortality rate, signifies the general health
condition of the population. Per capita, food grain production and per capita milk production for
the rural population reveal how equitably the basic food items are distributed across the rural
population.

55
Procedure for the Construction of SLSI
The indices for all the representative variables with the exception of the forest cover variable were
calculated by a straightforward application of equation [1] to the values of the selected indicators
(see Table 2). The values of the indices for the indicators are shown in Table 3. Since forest
occurrence and growth is governed by geophysical conditions, the ‘critical minimum’ forest cover
essential for ensuring ecological security will vary depending upon the geophysical condition of the
district. For instance, the critical minimum forest cover should be 20 percent, 33.3 percent, and
66.6 percent for the plains regions, plateau and hill regions, and mountainous regions respectively
(Government of India, 1952). Whenever the actual forest cover is greater than or equal to the
critical minimum forest cover in a physiographic region, the forest cover index will be one.
Otherwise, the index is based on the region-specific scale defined by the data range.
The three-component indices of SLSI, i.e. the ecological security index (ESI), the economic
efficiency index (EEI), and the social equity index (SEI), are calculated by taking the equal
weights of the indices of the respective representative variables. In calculating these indices,
we have assumed equal weights. SLSI, which is a composite index, was calculated by taking
the arithmetic mean of its component indices following equation [2].
All the indices were mapped using the ArcGIS 9.1 geographic information system (GIS)
software of ESRI. For purposes of analysis, the results were categorised by quintile based on a
relative sustainability ranking within each indicator. A quintile is deemed to be an appropriate
level of aggregation with which to achieve the goal of discerning gross differences between the
variables.
Relative SLS Status of the Districts and their Policy Relevance
Though Gujarat has less than 5 percent of India’s population, it has 6.56 percent of the national
production and about 11 percent of the national industrial output (Government of Gujarat,
1997). There are major imbalances in levels of development in Gujarat. These imbalances
include disparities among the social groups and regions in terms of employment and poverty
levels. There is an absence of income growth in agriculture and industrial development
continues to be highly concentrated in nature.
Gujarat has experienced a considerable reduction in the incidence of poverty from 46.35
percent in 1972–73 to 16.75 percent in 2004–05. The eastern belt, which includes
Banaskantha, Bharuch, Panchmahals, Sabarkantha, Surat, Dangs, Vadodara and Valsad
districts inhabited by the scheduled tribes’ population has the highest poverty 27.5 percent
(Dev and Ravi, 2007). Scheduled tribes comprise 15 percent of Gujarat’s while 43 percent of
the rural poor belong to this group (Mehta, 2006). Qualitative research corroborates the greater
vulnerability of scheduled caste and tribes to poverty. Life expectancy at birth (LEB) and infant
mortality rate (IMR) are two reliable indicators of the health of a population. Economic
development of Gujarat does not reflect in the performance of LEB and IMR. Gujarat has
alarmingly low level of calorie intake in its rural population with 20.4 percent population
consuming less than 1890 calories in 1997 (MHFW, 2002). Gujarat has to travel a long way to
attain the levels of the best performing states in all of these health and equity parameters.
While SLSI gives the overall relative performance of a district in Gujarat, the component indices
(i.e. ESI, EEI, and SEI) indicate how a district fares in the three dimensions of sustainability. SLSI
and it's component indices (ESI, EEI, and SEI) at the district level are presented in Table 4 and
Figure 2. The SLSI methodology identifies not only the general priorities but also the nature and
type of policies to be pursued in each district in order to enhance its SLS status.

56
Data for the scheduled casts and scheduled tribes populations show that they have lower level
of socio-economic development than the unscheduled sections. According to Sharma (2009)
tribal areas of Gujarat have the following features:
 Literacy among tribal families is 20 percent less than the state average;
 Tribal families in the state’s below poverty line (BPL) list accounts for 2.5 times more
than other categories;
 Food insecurity and malnutrition is a common phenomenon;
 The income levels are so low that starch-based food is their main intake, which leads to
protein deficiency.
 Low access to credit by the population even after a plethora of development
programmes.
 As a single source of livelihood, traditional farm incomes are not enough to meet even
subsistence needs. The poor tribal families in Gujarat are forced to combine traditional
cultivation with the collection of minor forest produce, maintaining small livestock and
migration to urban areas for wage labour during the lean season. Studies indicate that
nearly 30 percent of Gujarat’s tribal population migrate temporarily for earning
livelihoods every year.
Dahod being one of the tribal districts has the lowest SLSI ranking because of its very low EEI
and SEI rankings. Hence, economic development and social development require special
attention in Dahod. Similarly, another tribal district like Dangs has the lowest position in EEI
and the 22nd position in SEI, although it has the highest ESI ranking. According to the Gujarat
Human development report 2004, Dahod and Dangs are also amongst the lowest rankers in
the gender development index, education index, health index and housing index (Hirway and
Mahadevia, 2004). Narmada, another tribal district, also has a very high ranking of ESI but the
SEI and EEI rankings are low. Hence Dahod, Dangs and Narmada districts require policy
intervention for both economic and social development. Further analysis of SLSI at the taluka
level will bring out such details more effectively.
The Saurashtra region (Jamnagar, Porbandar, Rajkot, Junagarh, Amreli, and Bhavnagar
districts), north and central part of Gujarat is relatively better in terms of economic efficiency
and social equity, but it has a very poor ecological security status, warranting ecological
restoration work in this part of the state. The major ecological problems of Gujarat are soil and
water salinity, degradation of forests and pasturelands, depletion of the water table, poor
quality of water, and intrusion of seawater in the coastal areas. As per the NBSS-LUP (1994),
about 14.4 percent of the total area in the state is affected by varying degrees of soil salinity.
Improper soil and water management conditions like damming of rivers, disintegration of
traditional water harvesting systems, faulty irrigation systems and practices, over the
withdrawal of groundwater, etc. aggravate the salinity problems of the state.
Natural endowment of forests is already poor in Gujarat, loss of forest cover due to increasing
demands for land, wood and fodder and extractive management practices, particularly till
1980s, have taken a major toll on its ecological health (GEC, 2005). Over the years, several
village-level studies effectively indicate that because of the cumulative effect of several factors,
these common grazing lands are on the fast track of degradation in the state, reducing them
both in the quantity and quality (Jodha, 1986; Iyengar, 1988). According to a survey conducted
in 1995–96 by the Government of Gujarat (1996), there are a total of 2,836 villages in the state
facing the problem of high fluoride in groundwater. Fluoride is a major problem in Saurashtra,
north, and central Gujarat regions and similar is the case with nitrate concentrations.
High levels of total dissolved solutes (TDS) in groundwater are encountered in the alluvial
areas of north and central Gujarat. Over 23 percent of rural households in Gujarat do not have

57
access to safe drinking water (Ministry of Finance, 2006). TDS increases towards the south-
western parts of Mehsana and western parts of Banaskantha districts. TDS in groundwater is
generally high in the alluvial belt. TDS in groundwater is enormously high along the coastal belt
of Saurashtra. This is mainly due to coastal salinity resulting from several complex phenomena.
While the seawater ingress is a major problem in the entire coastal belt of Gujarat, the entire
coastlines of Saurashtra with its several creeks form the main front of salinity ingress. Tidal
water enters the coastal plains up to a distance of 2–6 kilometres because of topographical
depressions. On the other hand, the coastal alluvial tract (consisting of recent alluvium) is also
highly prone to intrusion due to its highly permeable nature. The groundwater in these
formations is brackish and is poorly developed.
Rajkot, Porbandar, Patan, Mehsana, and Surendranagar districts have the lowest ESI ranking.
Rajkot and Surendranagar have the lowest forest cover while Porbandar and Rajkot have very
poor water quality. Mehsana district has the highest ranking in EEI but the 22 nd position in ESI.
Similarly, Ahmedabad has the highest ranking in SEI but the 20 th position in ESI. Hence, unless
proper ecological restoration in both Mehsana and Ahmedabad is initiated, the livelihood
security of these two districts will not be sustainable in the long run. Although the Surat district
has the highest ranking in SLSI, it has the 17th position in EEI. The poor performance of the
eastern tribal talukas of Surat district in the economic dimension is responsible for its lower EEI
ranking.
Kutch district has an SLSI ranking second from the bottom because of low EEI and ESI
rankings, thus warranting special attention for improving the economic and ecological status of
the district. High inconsistency of rain along with successive droughts is the characteristics of
Kutch; groundwater forms the only reliable source of water for drinking, which is also very
saline. Another most striking cause of pastureland degradation in Kutch is the invasion of a
woody Prosopis juliflora. Banni grassland in Kutch district is the most typical example of such
degradation. Jadav et al. (1992) reported alarming shrinkage of these grasslands at a rate of
about 30 sq km per annum, mainly due to the invasion of P. juliflora. The situation is more or
less similar for other pasturelands. SAC (2001) based on its mapping exercise reported that
about 0.94 M ha area is covered by this exotic species in Kutch and Saurashtra regions of the
state. The unbalanced development has contributed to livelihood insecurity in different parts of
Gujarat especially in the tribal districts. For a balanced development to take place sustainable
livelihood security – encompassing environmental, economic and equity dimensions have to be
ensured. It is in this context, the composite SLSI plays a critical role in identifying the
components that a given area needs immediate attention vis-à-vis other components/areas.
CONCLUSIONS
SLSI is a composite index, which can work as a powerful tool for verifying the necessary
conditions for sustainable development in a functional unit of development planning. As a policy
tool, SLSI identifies not only the districts requiring immediate attention but also the specific
thematic areas in which the efforts could be focused to attain livelihood security. For instance,
the Dangs district has the highest ESI ranking, but it has the lowest position in EEI and the 22 nd
position in SEI, requiring policy intervention for improving the EEI and SEI status in the district.
The eastern districts of the state, dominated by scheduled tribes’ population have very low EEI
and SEI rankings, also have very low ranks in gender development index, education index,
health index and housing index. Thus SLSI can function as an educational and policy tool
promoting a holistic perspective among planners, administrators, and development workers.
SLSI helps to focus on the conflicts and the potential synergy between ecology, economics,
and the equity dimensions of SD. Construction of SLSI using time series data could help in
improving the progress of different development interventions over a period of time aimed at
SD in general and at livelihood security in particular.

58
 Table 2– Raw Data used for the Calculation of SLSI in Gujarat
Ecological Security Indicators Economic Efficiency Social Security Indicators
Indicators
District Forest Water Recharge Total Milk yield Net APL Female Maternal Food grain Milk
cover quality potential food (kg/day) sown population literacy survival production production
(%) unaffected (%) grain area (%) rate rate per capita of per capita of
habitations yield (%) rural rural
(%) (kg/ha) population population
(kg/yr) (kg/yr)

Ahmadabad 2 64 94 1769 2.3 62.6 99 42 919 370 216

Amreli 3.2 67 150 1665 2.8 73.3 93 42 941 105 202
Anand 1.9 68 184 1911 2.8 60.7 94 40 801 266 235
Banaskantha 8.7 62 86 1093 3.1 68 95 33 914 170 269
Bharuch 5.3 76 179 852 2.5 50.1 92 42 803 101 121
Bhavnagar 2.9 68 159 1665 2.6 55.8 97 40 926 83 194
Dahod 16 76 165 950 1.3 18.9 79 40 802 197 127
Dangs 80.4 100 493 1341 0.4 15.9 88 34 905 303 18
Gandhinagar 6.8 51 55 2190 2.9 73.7 94 41 908 181 240
Jamnagar 2.6 62 173 1480 2.7 42.7 94 41 925 102 207
Junagadh 19.4 57 142 2939 2.8 59.7 96 41 954 228 193
Kaira 2.6 79 112 1961 2.4 71.1 95 40 835 320 160
Kutch 5 60 152 717 2.3 9.9 95 38 933 124 306
Mahesana 2.8 52 67 1592 4.1 79.3 98 41 915 126 434
Narmada 39 91 318 1072 1.7 40.3 86 38 898 115 97
Navsari 14.2 96 215 2002 3.3 66.9 94 44 947 130 151
Panchmahals 12.9 57 171 860 1.9 52.3 87 36 999 125 149
Patan 3 38 75 989 3.4 66.6 96 37 884 117 341
Porbandar 4.9 21 118 1916 3.4 50.2 97 42 897 148 373
Rajkot 1.3 27 143 1991 3 66.4 97 43 955 119 228
Sabarkantha 10.8 67 121 1256 2.8 59.7 89 38 964 165 308
Surat 17.7 90 276 1499 3 55.4 95 40 992 126 186
Surendranagar 1.6 52 157 1322 2.5 65.7 95 38 950 137 194
Vadodara 8.1 73 148 1075 2.1 67.5 95 41 866 130 146
Valsad 32.9 98 233 1530 2.7 53.1 79 41 999 106 106

59
 Table 3– Indices Values of the Sustainability Indicators

Ecological Indices Economic Indices Social indices

District Forest Water Recharge ESI Food Milk NSA EEI APL Female Maternal Per capita Per capita SEI
index quality potential value grain yield index value index literacy survival food grain milk value
index index yield index index index production production
index index index

Ahmadabad 0.04 0.54 0.09 0.22 0.48 0.53 0.76 0.59 1.00 0.82 0.60 1.00 0.48 0.78
Amreli 0.10 0.58 0.22 0.30 0.22 0.67 0.91 0.60 0.71 0.82 0.71 0.08 0.44 0.55
Anand 0.03 0.59 0.29 0.30 0.76 0.65 0.73 0.71 0.74 0.62 0.00 0.64 0.52 0.50
Banaskantha 0.40 0.52 0.07 0.33 0.27 0.75 0.84 0.62 0.79 0.00 0.57 0.30 0.60 0.45
Bharuch 0.21 0.70 0.28 0.40 0.27 0.57 0.58 0.47 0.66 0.80 0.01 0.06 0.25 0.36
Bhavnagar 0.08 0.60 0.24 0.31 0.37 0.61 0.66 0.55 0.92 0.59 0.63 0.00 0.42 0.51
Dahod 0.46 0.70 0.25 0.47 0.32 0.24 0.13 0.23 0.00 0.67 0.01 0.40 0.26 0.27
Dangs 1.00 1.00 1.00 1.00 0.23 0.00 0.09 0.11 0.46 0.16 0.53 0.77 0.00 0.38
Gandhinagar 0.29 0.39 0.00 0.23 0.44 0.67 0.92 0.68 0.78 0.68 0.54 0.34 0.53 0.58
Jamnagar 0.07 0.52 0.27 0.29 0.28 0.63 0.47 0.46 0.77 0.73 0.63 0.07 0.45 0.53
Junagadh 0.97 0.46 0.20 0.54 0.64 0.66 0.72 0.67 0.85 0.70 0.77 0.51 0.42 0.65
Kaira 0.07 0.73 0.13 0.31 0.40 0.55 0.88 0.61 0.82 0.59 0.17 0.82 0.34 0.55
Kutch 0.20 0.49 0.22 0.30 0.29 0.53 0.00 0.27 0.80 0.47 0.67 0.14 0.69 0.55
Mahesana 0.08 0.39 0.03 0.17 1.00 1.00 1.00 1.00 0.94 0.73 0.58 0.15 1.00 0.68
Narmada 1.00 0.89 0.60 0.83 0.30 0.35 0.44 0.36 0.33 0.45 0.49 0.11 0.19 0.32
Navsari 0.40 0.95 0.37 0.57 0.01 0.79 0.82 0.54 0.75 1.00 0.74 0.16 0.32 0.59
Panchmahals 0.62 0.45 0.26 0.45 0.30 0.43 0.61 0.44 0.41 0.27 1.00 0.15 0.32 0.43
Patan 0.09 0.22 0.05 0.12 0.30 0.83 0.82 0.65 0.85 0.40 0.42 0.12 0.78 0.51
Porbandar 0.19 0.00 0.14 0.11 0.23 0.83 0.58 0.55 0.91 0.77 0.48 0.23 0.85 0.65
Rajkot 0.00 0.08 0.20 0.10 0.16 0.72 0.81 0.57 0.91 0.86 0.78 0.12 0.51 0.64
Sabarkantha 0.51 0.59 0.15 0.42 0.43 0.67 0.72 0.60 0.52 0.50 0.82 0.29 0.70 0.57
Surat 0.88 0.88 0.50 0.75 0.22 0.72 0.66 0.53 0.81 0.66 0.96 0.15 0.40 0.60
Surendranagar 0.02 0.39 0.23 0.21 0.34 0.57 0.80 0.57 0.80 0.43 0.75 0.19 0.42 0.52
Vadodara 0.36 0.65 0.21 0.41 0.94 0.46 0.83 0.74 0.81 0.74 0.33 0.16 0.31 0.47
Valsad 0.99 0.97 0.41 0.79 0.31 0.63 0.62 0.52 0.00 0.74 1.00 0.08 0.21 0.41

60
 Table 4– District-wise Ranking of the ESI, EEI, SEI and SLSI

District ESI EEI SEI SLSI

ESI ESI EEI EEI SEI SEI SLSI SLSI
value Rank value Rank value Rank value Rank

Surat 0.75 4 0.53 17 0.6 6 0.63 1

Junagadh 0.54 6 0.67 5 0.65 3 0.62 3
Mahesana 0.17 22 1 1 0.68 2 0.62 2
Valsad 0.79 3 0.52 18 0.41 21 0.57 5
Navsari 0.57 5 0.54 16 0.59 7 0.57 4
Vadodara 0.41 10 0.74 2 0.47 18 0.54 6
Sabarkantha 0.42 9 0.6 9 0.57 9 0.53 8
Ahmadabad 0.22 20 0.59 11 0.78 1 0.53 7
Anand 0.3 15 0.71 3 0.5 17 0.51 9
Dangs 1 1 0.11 25 0.38 22 0.5 10
Narmada 0.83 2 0.36 22 0.32 24 0.5 11
Kaira 0.31 13 0.61 8 0.55 10 0.49 13
Gandhinagar 0.23 19 0.68 4 0.58 8 0.49 12
Amreli 0.3 16 0.6 10 0.55 11 0.48 14
Banaskantha 0.33 12 0.62 7 0.45 19 0.47 15
Bhavnagar 0.31 14 0.55 15 0.51 15 0.46 16
Panchmahals 0.45 8 0.44 21 0.43 20 0.44 18
Porbandar 0.11 24 0.55 14 0.65 4 0.44 17
Jamnagar 0.29 18 0.46 20 0.53 13 0.43 20
Surendranagar 0.21 21 0.57 13 0.52 14 0.43 21
Patan 0.12 23 0.65 6 0.51 16 0.43 22
Rajkot 0.1 25 0.57 12 0.64 5 0.43 19
Bharuch 0.4 11 0.47 19 0.36 23 0.41 23
Kutch 0.3 17 0.27 23 0.55 12 0.38 24
Dahod 0.47 7 0.23 24 0.27 25 0.32 25

61
 Profiling of Livelihoods at Community and Household Levels2

Profiling Livelihoods Using Primary Methods

The livelihoods of any household or a community can be profiled along the following:
 Livelihood Activity Portfolio
 Livelihood Capabilities
 Livelihood Shocks and Vulnerabilities
 Livelihood Strategies

Livelihood Activity Portfolio

The set of economic activities carried out by the household constitutes their livelihood portfolio. It
is important to know the mix and pattern of activities that engage members of the HH at different
times of the year. The livelihood activity portfolio includes both paid activities (such as wage
work) and unpaid activities (such as collecting firewood from the village commons). Some of
these activities may be performed only for a brief period every day or may be performed only
seasonally. Some are executed locally and the others require them to move elsewhere, say
when they have to search for work every day and return home at the end of day’s labor, for short
periods or long-periods (as when migrating to a city).

Livelihood Capabilities
The capability has two parts: functionings – which is the ability or skill to do something and the
mental state, such as the self-confidence to do it, along with the freedom to pursue different
functionings. It has to be recognized that capability is dynamic. Livelihood activities carried out
by the members of a HH depends on their livelihood capacity. The livelihood capacity of a HH is
determined by many factors besides the number of members. It is influenced by their skills and
knowledge that contribute to the family’s earnings, by their attitudes towards new activities, their
asset base, and by the opportunities available to them as well as the cultural and social
conditions of the area. Therefore, it is important to know:
• The various skills and knowledge that people have.
• Shortfalls in a HH’s income and buffers from which these are met.
• Opportunities in an area that are accessible to the family as well as barriers posed by
social and cultural conditions.
• Finance, including credit available throughout the year, to make investments as well as to
even out cash-flows at different seasons.

The Livelihood Capacity of a family gets affected by different events. When the son gets married
and the bride joins the family workforce, their capacity for work goes up. similarly, a death or ill-
health of a working member of the family reduces their capacity for work. Acquisition of some
new skills by members of the HH increases their capacity to produce new objects, or provide
new services, and thereby enhances their income. Acquiring a new asset, for example, a new
plough, increases the livelihood capacity of the house, as it allows the HH to till their land better,
or it also presents an opportunity of renting out the plough after their own use.

Livelihood Shocks and Vulnerabilities

2
Partly drawn from various sections of the book by Datta et al. 2014. Resource Book for Livelihood Promotion, Fourth Edition, The Institute of
Livelihood Research and Training

62
Shocks are events that affect a HH’s prospects adversely. These may be caused by natural or
man-made events. Earthquakes, cyclones and epidemics, droughts, floods, fire and riots are
some examples of such events. Vulnerability refers to the pre-disposition of a HH to withstand or
be affected by shocks. The more vulnerable a HH is, the lesser is the capability to withstand and
hence, a higher probability of slipping back into poverty.

Livelihood Strategies
Ideally, livelihood strategies would be the steady choices made by a HH, based on which its
members engage in activities to maximize their well-being. For example, a HH consisting of a
husband and a wife, a son and a daughter and an old mother, with only an acre of irrigated land
can decide that the wife can cultivate paddy in 0.8 acres and vegetables in the rest, for the
family’s consumption and for sale. The husband may be traveling to the nearby town for six days
a week to work as a peon in a government office because he gets a regular salary and the
family gets health coverage from the Employees State Insurance Corporation. Both children go
to school and the old mother looks after the cow and six to eight poultry birds in their backyard.
This work is light enough for her and can be done at home because she cannot move out much.
To make use of available livelihood capacities, different HHs use different strategies. 3 Thus, it
may also be useful to understand:

 The preferences of the families from different livelihood strategies

 The risks and shocks faced by the family
 Their ability and coping mechanisms to endure these risks and shocks
 The entrepreneurial ability of the people: both in terms of their ability to take risks and
their attitudes towards taking up new initiatives

Different people use different strategies to cope with risks and shocks. Some work on other’s
lands, while others choose to migrate. If there is a possibility of earning some additional income,
some expand the existing activity, while others may choose to diversify.

Profiling of Livelihoods at Community Levels

The main dimensions of profiling of livelihoods at community level include:
 Natural, physical, financial, social, human and personal assets of communities
 Study of respondents’ views on their livelihood systems, risk mitigation approaches,
prioritization for asset creation & utilization, attitude for collectivization
 Understand challenges of livelihood intervention, social assets and motivational issues,
roadmap for asset utilization, challenges to manage supply chains for local produce and
services, aptitude to adopt technologies for value chains
 Understand interactions between natural, social and economic factors essential for
ensuring sustainable livelihoods

The Sustainable Livelihood Framework helps us to look at asset base of the people for whom
the livelihood is designed. To obtain this information from the local community PRA, as an
interactive and participatory method, can be used. The PRA tools can be used to get insights
into the different livelihood assets (Table 5).

3
‘Rural Livelihoods and Diversity in Developing Countries’ by Frank Ellis, 29 June 2000

63
 Table 5: Livelihood asset to be mapped by PRA
PRA Tools Livelihood dimension to be mapped
Resource mapping The quantitive and qualitative conditions of natural resources
and changes in these conditions. The resource use pattern
and the geographical distribution and location of the natural
resources.
Social mapping Social assets, like hierarchy, accessibility to physical and
financial resources. Institutional assets: social groups
represented in governing structures and accessibility of
(government) institutions for different groups.
Transect The status of natural and physical assets.
Occupation profile Livelihoods analysis
Chapatti diagram Provides people an insight in the percentile distribution of all
livelihood assets.
Matrix Provides an understanding of the complex relationship
between all the livelihood assets.
Wealth ranking Social assets; social hierarchy, financial assets and provides
insights into the needs for livelihood development.
Timeline Change of importance of the different livelihood assets.
Important events: infrastructural facilities, floods, droughts,
leadership change, etc.
Seasonal cycle (365 Insight into the importance of and the dependence on the
days) different livelihood assets.
Daily work (24 hours) Social assets and gender relations.
Credit Analysis Using FGD

Table 6: Livelihood dimensions to be mapped by FGDs

Livelihood Description
dimension
Credit analysis Data on credits, sources of credits, the purpose of credits,
seasonality, and terms and conditions
Disease analysis Types of disease, number of patients, causes, cost of
treatment
Education analysis Age-wise distribution
Migration analysis Number of person, place and period of migration
Institution/ Institution/ organisation and their purposes
organisation analysis

64
 Deendayal Antodaya Yojna-National Rural Livelihoods Mission
(DAY-NRLM)1
Introduction
Aajeevika or Deendayal Antodaya Yojna-National Rural Livelihoods Mission (DAY-NRLM) was
launched by the Ministry of Rural Development (MoRD), Government of India in June
2011. http://www.aajeevika.gov.in/
Aided in part through investment support by the World Bank, the Mission aims at creating efficient
and effective institutional platforms of the rural poor, enabling them to increase household income
through sustainable livelihood enhancements and improved access to financial services.
Aajeevika - National Rural Livelihoods Mission (NRLM) was launched by the Ministry of Rural
Development (MoRD), Government of India in June 2011.
Aided in part through investment support by the World Bank, the Mission aims at creating efficient
and effective institutional platforms of the rural poor, enabling them to increase household income
through sustainable livelihood enhancements and improved access to financial services.
NRLM set out with an agenda to cover 7 Crore rural poor households, across 600 districts, 6000
blocks, 2.5 lakh Gram Panchayats and 6 lakh villages in the country through self-managed Self Help
Groups (SHGs) and federated institutions and support them for livelihoods collectives in a period of 8-
10 years.
In addition, the poor would be facilitated to achieve increased access to rights, entitlements and public
services, diversified risk and better social indicators of empowerment. DAY-NRLM believes in
harnessing the innate capabilities of the poor and complements them with capacities (information,
knowledge, skills, tools, finance and collectivization) to participate in the growing economy of the
country.
In November 2015, the program was renamed Deen Dayal Antayodaya Yojana (DAY-NRLM).

Genesis of DAAY-NRLM
The Swarnjayanti Gram Swarozgar Yojana (SGSY) was a flagship programme of the Ministry of
Rural Development. It was started in 1999 and was restructured in FY 2010-11 for implementation as
the National Rural Livelihoods Mission. The SGSY aimed at providing sustainable income to rural
BPL households through income-generating assets/economic activities in order to bring them out of
poverty.
Evaluation of the SGSY by the National Institute of Rural Development (NIRD), Bankers Institute of
Rural Development (BIRD) and several other institutions showed mixed results.
Out of an estimated 25 million households organized into SHGs until 2010, only 22% succeeded in
accessing bank credit. The studies showed that there were significant variations in the extent of
mobilization of poor SHGs and the quality of their operation. The one-off assetization programme
focusing on single livelihood activity did not meet multiple livelihood requirements of the poor. Often,
the capital investment was provided up-front as a subsidy, without adequate investment in social
mobilization or group formation.

1
Reproduced from http://www.aajeevika.gov.in for class discussion only

65
Furthermore, uneven geographical spread of SHGs, high attrition rates among members of SHGs, and
lack of adequate banking sector response impeded the program performance. Several states did not
fully invest the funds received under SGSY. This fact indicated a lack of proper delivery systems and
dedicated efforts for skill training and building capacity for resource absorption among the rural poor.
There was a considerable mismatch between program capacity and program requirements. Absence of
collective institutions in the form of SHG federations precluded the poor from accessing higher order
support services for productivity enhancement, marketing linkages or risk management
It is in this context that the Ministry of Rural Development (MoRD), Government of India (GoI)
constituted a Committee on Credit Related Issues under SGSY (under the Chairmanship of Prof.
Radhakrishna) to examine various aspects of the scheme implementation. The Committee
recommended the adoption of a ‘Livelihoods Approach’ to rural poverty elimination. The
approach encompassed the following four inter-related tasks:
 Mobilizing poor households into functionally effective SHGs and their federations
 Enhancing access to bank credit and financial, technical and marketing services
 Building capacities and skills for gainful and sustainable livelihoods development
 Converging various schemes for efficient delivery of social and economic support
services to poor households
The government accepted the recommendation of the Committee and restructured SGSY into National
Rural Livelihoods Mission (NRLM) in FY 2010-11 to provide a sharper and greater focus as well
as momentum for poverty reduction. The decision also aimed to achieve the Millennium Development
Goals (MDG) by 2015. The Framework for Implementation for N.R.L.M was approved by the
Ministry on 9th December, 2010 and the Mission was formally launched on 3rd June, 2011.
Mission

NRLM implementation is in a Mission Mode. This enables (a) shift from the present allocation based
strategy to a demand-driven strategy enabling the states to formulate their own livelihoods-based
poverty reduction action plans, (b) focus on targets, outcomes and time-bound delivery, (c) continuous
capacity building, imparting requisite skills and creating linkages with livelihoods opportunities for
the poor, including those emerging in the organized sector, and (d) monitoring against targets of
poverty outcomes. As NRLM follows a demand-driven strategy, the States have the flexibility to
develop their livelihoods-based perspective plans and annual action plans for poverty
reduction. The overall plans would be within the allocation for the state based on inter-se poverty
ratios.

NRLM Mission
"To reduce poverty by enabling the poor households to access gainful self-employment and skilled
wage employment opportunities, resulting in an appreciable improvement in their livelihoods on a
sustainable basis, through building strong grassroots institutions of the poor."
NRLM Guiding Principles

 Poor have a strong desire to come out of poverty, and they have innate capabilities
 Social mobilization and building strong institutions of the poor is critical for unleashing the innate
capabilities of the poor.

66
 An external dedicated and sensitive support structure is required to induce the social mobilization,
institution building and empowerment process.
 Facilitating knowledge dissemination, skill building, access to credit, access to marketing, and
access to other livelihoods services underpins this upward mobility.
NRLM Values

The core values which guide all the activities under NRLM are as follows:
 Inclusion of the poorest, and meaningful role to the poorest in all the processes
 Transparency and accountability of all processes and institutions
 Ownership and key role of the poor and their institutions in all stages – planning,
implementation, and, monitoring
 Community self-reliance and self-dependence

Features
1.Universal Social Mobilization

At least one woman member from each identified rural poor household is to be brought under the Self
Help Group (SHG) network in a time-bound manner. Special emphasis is particularly on vulnerable
communities such as manual scavengers, victims of human trafficking, Particularly Vulnerable Tribal
Groups (PVTGs), Persons with Disabilities (PwDs) and bonded labour. NRLM has devised special
strategies to reach out to these communities and help them graduate out of poverty.

67
2.Participatory Identification of Poor (PIP)

The inclusion of the target group under NRLM is determined by a well-defined, transparent and
equitable process of participatory identification of poor, at the level of the community. All households
identified as poor through the PIP process is the NRLM Target Group and is eligible for all the
benefits under the programme.
Target Group is identified through the Participatory Identification of Poor (PIP) method. The NRLM
Target Group (NTG) derived through the PIP is de-linked from the BPL. The efforts to roll-out PIP in
the states have begun. PIP needs to be a community-driven process. To ensure this, the first PIP
exercise is conducted after the formation of the primary federation (6-12 months after village entry).
The PIP is conducted at frequent intervals to revise the list of poor in the village. The list of poor
identified through the PIP must be vetted by the Gram Sabha and approved by the Gram Panchayat.
All the households in the PIP list are eligible to receive all benefits under NRLM.
3.Community Funds as Resources in Perpetuity

NRLM provides Revolving Fund (RF) and Community Investment Fund (CIF) as resources in
perpetuity to the institutions of the poor, to strengthen their institutional and financial management
capacity and build their track record to attract mainstream bank finance.
4.Financial Inclusion

NRLM works on both the demand and supply sides of financial inclusion. On the demand side, it
promotes financial literacy among the poor and provides catalytic capital to the SHGs and their
federations. On the supply side, the Mission coordinates with the financial sector and encourages the
use of Information, Communication & Technology (ICT) based financial technologies, business
correspondents and community facilitators like ‘Bank Mitras’. It also works towards universal
coverage of rural poor against risk of loss of life, health and assets. Further, it works on remittances,
especially in areas where migration is endemic.

5.Livelihoods

NRLM focuses on stabilizing and promoting existing livelihood portfolio of the poor through its three
pillars – ‘vulnerability reduction’ and ‘livelihoods enhancement’ through deepening/enhancing and
expanding existing livelihoods options and tapping new opportunities in farm and non-farm sectors;
‘employment’ - building skills for the job market outside; and ‘enterprises’ - nurturing self-employed
and entrepreneurs (for micro-enterprises).
NRLM promotes and supports collectives towards Sustainable Livelihoods of the Poor (CSLP) around
these and other key livelihoods of the poor. These collectives offer their members access to livelihoods
knowledge, skills, technology, market intelligence, risk management products and credit support
through their SHGs and Federations to individual members/households.

6.Convergence and partnerships

Convergence: NRLM places a high emphasis on convergence with other programmes of the MoRD
and other Central Ministries. Convergence is also sought with programmes of state governments for
developing synergies directly or indirectly with institutions of the poor.

68
Partnerships with NGOs and other CSOs: NRLM has been proactively seeking partnerships with
Non-Government Organizations (NGOs) and other Civil Society Organizations (CSOs), at two levels -
strategic and implementation. The partnerships are guided by NRLM’s core beliefs and values, and
mutual agreement on processes and outcomes. Partnership guidelines to partner with NGOs, CSOs
have been finalized and approved this year.

Linkages with PRIs: In view of the eminent roles of Panchayat Raj Institutions (PRIs), it is necessary
to consciously structure and facilitates a mutually beneficial working relationship between Panchayats
and institutions of the poor, particularly at the level of Village Panchayats. Formal platforms would be
established for regular consultations between such institutions and PRIs for exchange of mutual
advice, support and sharing of resources.

7.Sensitive Support Structures

NRLM’s process-intensive effort requires dedicated human resources. Realizing this, NRLM has set
up sensitive and dedicated support structures at the National (NMMU), State (SMMU), district
(DMMU) and sub-district levels (BMMU/PFT). The institutions of the poor, their staff and other
social capital also provide the support in implementing the programme. These structures would have
suitable linkages with Government(s), District Rural Development Agencies (DRDAs), and PRIs.
These support structures are staffed with professionally competent and dedicated human resources
through appropriate arrangements including partnerships and outsourcing of services.
In order to implement the NRLM effectively, National Rural Livelihoods Promotion Society (NRLPS)
has been set up under the Societies’ Registration Act of 1860, under MoRD, as the technical arm of
the Mission. The NMMU has been made an integral part of NRLPS.
Implementation

N.R.L.M is a highly process-oriented programme and requires intensive application of resources, both
financial and human, in order to mobilize the poor into functionally effective institutions, promote
their financial inclusion and diversify and strengthen their livelihoods. It is, therefore, not feasible to
roll out the programme in full scale across the country in one go, and therefore, it has been decided to
phase the implementation of the programme over period of 10 years. The indicative phasing is as
under:-

The blocks and districts in which all components of N.R.L.M are implemented are treated as
‘intensive’ blocks and districts, whereas the remaining as ‘non-intensive’ blocks and districts.

69
Implementation at Block Level
NRLM intends to work in a block for a period of ten years till community federations take
responsibility of implementation. A typical block having about 13,500 (90% of total poor) mobilize-
able poor households spread over 100-120 villages is divided into 4 clusters of 30 villages each. In a
typical intensive block, the first 3 years are spent in building the organisations of the poor by
mobilising them into SHGs, Federations at Village, Cluster level and Block level. Funds flow to the
community institutions over the first 4-5 years. The middle years, years 3-6, are invested in deepening
the activities and addition of various layers such as health, nutrition, interventions for Persons with
Disability (PwD), etc. Last 4 years are essentially a maintenance and withdrawal phase where the
community institutions graduate to self-reliance and self-sustainability.
Implementation in the blocks is being done in four ways –
a) Resource Blocks* with the support from National Resource Organization(s) (NRO) [5-6% blocks
in a state];
It is envisaged that about 5-6% of the blocks in a state would be taken up as resource blocks. These
blocks would be model blocks where all the key strategies would of NRLM would be piloted. These
blocks would create a ‘proof of concept’ for other blocks to adopt and replicate. The social capital
expected to be generated in the resource blocks would support the intensive blocks in implementation.
A National Resource Organisation (NRO) supports the states in implementation in the resource blocks.
A NRO is a SRLM which has experience in successfully implementing NRLM protocols on a large
scale which are Andhra Pradesh, Bihar and Kerala SRLMs. The NRO deputes a State Anchor Person
to SRLM to anchor implementation. A Project Resource Person (PRP) is seconded to each cluster in
the resource block to facilitate implementation on the ground. External Community Resource Persons
in teams of 5 each from NRO take-up mobilisation, formation of institutions of the poor and train the
institutions in the block. NRO also nurtures social capital – active women, internal CRPs, bookkeepers
and other community activists from the resource blocks to support the institutions in the resource
block as well as other blocks. NRO also implements livelihood and layering activities in the block.
Community Resource Persons (CRPs) are members of the community who have graduated out of
poverty with the help of their SHGs. CRP rounds are the cornerstone of the Resource Block strategy.
This strategy essentially rests on the premise that the community learns from the community better.
CRPs are employed by the Community Based Organizations (CBOs) at various levels and in various
verticals. There are some CRPs who specialize in certain areas, such as gender, social action, etc.
These CRPs visit different states in teams to inspire women from other communities to form and run
SHGs.
b) Intensive Blocks** implemented with SRLM staff and internal community resource persons and
the CRPs generated in resource blocks;
SRLMs directly implement in other intensive blocks where they enter with their own staff at block
level, and take the support of the internal resources from the resource blocks. CRPs are chosen from
the resource blocks to accelerate implementation in these blocks. The protocols of implementation
followed in the resource blocks would be adopted in these blocks as well.
c) Partnership Blocks*** with the support from local community federations and NGO partners;

70
 SRLMs take up implementation in blocks where there is pre-existing significant mobilization of poor
women into SHGs as partnership blocks in partnership with Community Federations and the NGOs
working in these blocks. NRLM has developed Partnership Guidelines to identify and work with
NGOs and CBOs. NGOs that have a significant presence (done 80% mobilization or promoted a SHG
federation) in a block are identified as partner NGOs. These NGOs are expected to follow NRLM’s
implementing protocols and processes in the blocks.
d) Non-intensive Blocks**** are the remaining blocks in the state which are not taken up for
implementation in the initial phase. The remaining blocks in a state (other than resource, intensive and
partnership blocks) are non-intensive blocks. NRLM strengthens existing SHGs in these blocks with
some capacity building and limited financial assistance. No new mobilization would be done in these
blocks. Over time, as NRLM implementation progresses, these blocks also would come into the
intensive-fold. Some SRLMs have adopted 2-3 villages in the non-intensive blocks to implement
NRLM in a full-fledged manner.

Support Structure
NRLM has set up dedicated sensitive support units at the National, State, district and sub-district
levels, to catalyze social mobilization, build institutions, capacities and skills, facilitate financial
inclusion and access to financial services, support livelihoods and to promote convergence and
partnerships with various programmes and stakeholders. These units would be staffed with
professionally competent and dedicated human resources.

 At the national level, the Ministry of Rural Development (MoRD) is required to provide technical and
professional support to the states to establish the Mission societies, implement architecture and
systems and guide them in the implementation and monitor their progress. For this, NRLM
Empowered Committee (EC)has been set up which reviews and approves the Implementation Plans
and Annual Action Plans and release the funds to SRLMs.The Joint Secretary/Additional Secretary,
Rural Livelihoods (RL), MoRD leads NRLM as Mission Director and Chief Executive officer (CEO)
of National Rural Livelihoods Promotion Society (NRLPS) with the Union Minister In-charge of
the Ministry/Department dealing with the Society shall be the ex-officio President of the Society.
NRLPS comprises a multidisciplinary team of professionals from open market on contract, and
requisite support staff to provide wide-ranging professional and technical support to the National
Rural Livelihoods Mission and the State Rural Livelihoods Missions in the implementation of their
Mission Objectives.

71
 At the state level, the State Rural Livelihoods Mission (SRLM) constituted by the State
Government, would oversee the implementation of all NRLM related activities in the state. An
autonomous body under the State Government, SRLM would be incorporated as a society, trust or
company. State Mission Management Unit (SMMU) would implement the NRLM activities in the
state through an SMMU, at the state level, headed by a full-time State Mission Director (SMD). A
multidisciplinary SMMU team would comprise of experts in Social Inclusion, Financial Inclusion,
Livelihoods, Programme Management, Programme Support etc., would support the SMD in
implementing NRLM in the state.

 District Mission Management Unit (DMMU): The DMMU of the SRLM would be responsible for
meeting NRLM objectives and implementing NRLM activities in the district. DMMU, linked suitably
with DRDA, would be a facilitating and support unit for field structures. A multidisciplinary DMMU,
led by District Mission Manager (DMM), hired from open market on a contract or on deputation from
Government, includes functional specialists in Social Inclusion, Financial Inclusion, Livelihoods,
Capacity Building, Programme Management, Programme Support etc., and support staff, as required.
These specialists and staff would be hired in a phased manner, as required, on the contract or on
deputation.

 Support Structures at Sub-district level: The Sub-district level Support Structure is either -

o a Block Mission Management Unit (BMMU) led by a Block Mission Manager (BMM) and
consisting of 3-5 spearhead teams; or
o a Project Facilitation Team at cluster (sub-block) level. The members of sub-district structure(s),
including the BMMs, if any, would be recruited from the open market or on deputation.
NRLP

NRLP:
NRLM has been designed to be implemented in all States and Union Territories except Delhi and
Chandigarh. However, it would be difficult to implement NRLM which involves a fundamental
systemic reform simultaneously in all the 28 States and 7 Union Territories in India, unless a ‘proof of
concept’ is established and the states are prepared to transit from SGSY to NRLM. Apart from
creating an enabling environment in the states, the institutional capacities of the Central and State
governments need to be developed to understand, adopt and implement the NRLM to produce
significantly higher outcomes. Further, not all the states have similar community institutional
environment which is central to NRLM.
In this context, Government of India has availed credit from the International Development
Association (IDA) for implementing the National Rural Livelihood Project (NRLP), under NRLM.
National Rural Livelihoods Project (NRLP) has been designed as a sub-set of NRLM to create ‘proof
of concept’, build capacities of the Centre and States and create an enabling environment to facilitate
all States and Union Territories to transit to the NRLM. NRLP would be implemented in 13 high
poverty states accounting for about 90 percent of the rural poor in the country. Intensive livelihood
investments would be made by the NRLP in 107 districts and 422 blocks of 13 states (Assam, Bihar,
Chhattisgarh, Jharkhand, Gujarat, Maharashtra, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh,
West Bengal, Karnataka and Tamil Nadu). Distribution of project funds among the states would be
based on state inter-se poverty ratios.
NRLP will broadly support the following components:
 Institution and human capacity development at the national, state, district and sub-district level such
that support institutional structures are created,

72
 State livelihood support towards the establishment of institutional platforms of the rural poor for
improved access to financial, livelihood and public services,
 Innovation and partnership to identify and partner innovative ideas which address the livelihood needs
of the rural poor and help pilot or scale them,
 Project management and monitoring and learning systems.
The Planning Commission has allocated an amount of Rs. 29,000 crore for NRLM for the 12th plan
period. In addition, Government of India signed an agreement with IDA/World Bank in July 2011. In
order to provide additional resources for the high poverty states to undertake intensive investments,
GoI signed an agreement with IDA/ The World Bank in July, 2011, for credit of an amount of US $ 1
billion (approximately Rs. 4500 crore) for National Rural Livelihoods Project (NRLP) to be availed
over a period of five years, which has since been restructured and the credit amount reduced to $500
million. This credit amount is being used to augment resources available for implementing the mission
in select blocks of 13 high poverty states which account for 92% of the rural poor in the country.

NRLM Components:
1. Institutional Building & Capacity Building
Harnessing Latent Potential of rural poor
NRLM organizes all poor households (women) into aggregate institutions of the poor that provide
them with voice, space and resources. These platforms ‘of the poor’ and ‘for the poor’ would partner
with local self-governments, public service providers, banks, private sector and other mainstream
institutions to facilitate the delivery of social and economic services to the poor.
2. Universal Social Mobilisation
At least one member from each poor household would be brought under the Self-help network.
Poor are identified through participatory processes – participatory vulnerable assessment. The Gram
Panchayat authorises the final list of poor in the village.
Special efforts are made to identify vulnerable and marginalised households – SCs/STs, PVTGs,
single women and women-headed households, disabled, landless, migrant labour, isolated
communities and communities living in remote, hilly and disturbed areas.
3. Building Institutions of the Poor
The poor are mobilised into Self-help Groups (SHGs).
The SHGs are federated at the village and higher levels (cluster, block/sub-district, district).
Existing institutions of the poor are strengthened and integrated into the institutional architecture of
the poor.The SHG members are trained to manage their institutions, linking up with markets,
managing their existing livelihoods, enhancing their credit absorption capacity and credit worthiness,
etc.
NRLM also promotes livelihood collectives that help the poor to enhance their livelihoods through
deriving economies of scale, backward and forward linkages, and access to information, credit,
technology, markets etc.
Community professionals, Community Resource Persons (CRPs) and ‘community heroes’ are being
engaged for the capacity building of SHGs and their federations.
NRLM invests in building ‘social capital’ – community animators, activists, CRPs, etc., who are
crucial in making NRLM community-driven and sustainable.

73
4. Building Capacities
NRLM ensures the poor are provided with the requisite skills for managing their institutions, linking
up with markets, managing their existing livelihoods, enhancing their credit absorption capacity and
credit-worthiness.
A multi-pronged approach is adopted for providing continuous capacity building of the targeted
families, SHGs, their federations, government functionaries, bankers, NGOs and other key
stakeholders.
The focus is to develop and engage community professionals and community resource persons (CRP)
for capacity building of SHGs and their federations and other collectives.
NRLM plans to use ICT as an important tool in knowledge dissemination and making capacity
building more effective.
The costs incurred on professional support at the block and sub-block levels are considered as
programme costs and not administrative costs.
5. Financial Inclusion
Making poor preferred clients of financial institution
NRLM facilitates universal access to the affordable cost-effective reliable financial services to the
poor. These include financial literacy, bank account, savings, credit, insurance, remittance, pension
and counselling on financial services. The core of the NRLM financial inclusion and investment
strategy is “making poor the preferred clients of the banking system and mobilizing bank credit”.

5.1. Capitalizing Institutions of the Poor

NRLM provides Revolving Fund and Community Investment Fund (CIF) as Resources in Perpetuity
to the institutions of the poor, to strengthen their institutional and financial management capacity and
build their track record to attract mainstream bank finance.
NRLM provides Revolving Fund (RF) to SHGs of Rs.10,000-15,000 as a corpus to meet the members’
credit needs directly and as catalytic capital for leveraging repeat bank finance. RF is given to SHGs
that have been practicing ‘Panchasutra’ (Regular meetings; Regular savings; regular inter-loaning;
Timely repayment; and Up-to-date books of accounts).

74
NRLM provides Community Investment Fund as Seed Capital to SHG Federations at the Cluster
level to meet the credit needs of the members through the SHGs/Village Organizations and to meet the
working capital needs of the collective activities at various levels.
NRLM provides Vulnerability Reduction Fund (VRF) to SHG Federations at Village level to address
vulnerabilities like food security, health security etc., and to meet the needs of the vulnerable persons
in the village.
5.2. Access to Credit
NRLM expects that the investment in the institutions of the poor would leverage the bank credit of at
least Rs.1,00,000 /- accessible to every household in repeat doses over the next five years.For this,
SHGs go through Micro-investment Plan (MIP) process periodically. MIP is a participatory process of
planning and appraisal at household and SHG levels. The flow of the funds to members/SHGs is
against the MIPs. NRLM has provided interest subvention for all eligible SHGs to get loans at 7% per
annum from mainstream financial institutions. Further, an additional 3% interest subvention is
available only on prompt repayment by SHGs in most backward 250 districts.
5.3 SHG Credit Linkage
While the Mission provides only catalytic capital support to the community institutions, it is expected
that the banks provide the major chunk of funds required for meeting the entire gamut of credit needs
for the rural poor households. The Mission, therefore, expects that the SHGs leverage a significant
amount of bank credit.
The Mission assumes that over a period five years, each SHG would be able to leverage cumulative
bank credit of Rs. 10,00,000/- in repeat doses, such that on the average each member household
accesses a cumulative amount of Rs. 100000/-.
In order to facilitate bank linkages, State Level Bankers’ Committees (SLBC) would constitute
exclusive sub-committees for SHG bank linkages and financial inclusion in NRLM activities.
Similarly, District Level Coordination Committees and Block Level Coordination Committees would
review SHG-Bank linkages and NRLM.
The Mission units are also expected to use the services of the field level customer relationship
managers such as, Bank Mitra/ Sakhi.
Further, institutions of the poor are expected will be guided to constituting community-based recovery
mechanisms (sub-committees on bank linkage and recovery of loans).
NRLM works towards increasing the portfolio of products of savings, credit, insurance (life, health
and assets) and remittance through the institutions of the poor directly or in partnership with
mainstream financial institutions using various institutional mechanisms and technologies.
6. Livelihoods Promotion
6.1 Transforming Lives
NRLM focuses on stabilizing and promoting existing livelihoods portfolio of the poor through its three
pillars –
 ‘vulnerability reduction’ and ‘livelihoods enhancement’ through deepening/enhancing and
expanding existing livelihoods options and tapping new opportunities in farm and non-farm
sectors;
 ‘employment’ - building skills for the job market outside; and
 ‘enterprises’ - nurturing self-employed and entrepreneurs (for micro-enterprises).

75
6.2 Vulnerability Reduction & Livelihoods Enhancement
NRLM encourages the delivery of services/entitlements (such as MGNREGS, PDS) through the
SHGs and their federations. The institutions of the poor set aside funds towards vulnerability reduction
- food security, health security, etc. Vulnerability Reduction Fund is also used for meeting the
emergency needs of the poor and meeting the needs of the ultra-poor and vulnerable households on a
different footing. NRLM promotes and supports Collectives towards Sustainable Livelihoods of the
Poor (CSLP) around key livelihoods of the poor. These collectives offer their members access to
livelihoods knowledge, skills, technology, market intelligence, risk management products and credit
support through their SHGs and Federations to individual members/households.
NRLM, through Mahila Kisan Sashaktikaran Pariyojana (MKSP), is promoting and facilitating
scaling-up successful, small-scale projects that enhance women’s participation and productivity in
agriculture and allied activities.
Mahila Kisan Sashaktikaran Pariyojana (MKSP), launched in 2010-11, is a special programme for
livelihood enhancement under NRLM. It is a concerted effort to recognize the role of women in
agriculture, to enhance their capacities and increase their income in agriculture and allied activities.
MKSP aims to ensure household food and nutrition security of the poor and the poorest of poor.
Its primary focus is on promoting and facilitating the scale-up of successful small-scale projects with
the help of NGOs, CBOs and other government agencies across the country. It is envisaged that these
projects would emerge as resource centres.
Its key elements include –
 Focus on inclusion of the poorest of poor
 Community Managed Environmentally Sustainable Agriculture practices.
 Support to various strategies and ways of reducing drudgery of Mahila Kisans.
 Supporting institutions around agriculture and allied activities to strengthen livelihoods of the
poor.
 Developing a wide pool of community practitioners (CRPs) to ensure participatory service
delivery and country wide scale up of best practices.
7. Thematic Interventions
7.1 Sustainable Agriculture
MKSP promotes sustainable agriculture where the inputs are localized, risks are mitigated,
productivity is enhanced, food security is ensured and hence the net income of family is increased. The
important objectives of MKSP-Agriculture are as follows:
 Create sustainable agricultural livelihood opportunities for women in agriculture
 Ensure food and nutrition security at the household and the community level
 Improve the skills and capabilities of women in agriculture to support farm-based activities
 Enhance the managerial capacities of women in agriculture for better management of bio-
diversity

76
7.2 Non-Timber Forest Produce (NTFP)
MKSP promotes sustainable practices across the entire value chain of NTFP - regeneration, collection,
processing & marketing. The important objectives of MKSP-NTFP are as follows:
 Ensure greater control of the institutions of poor on NTFP value chain
 Promote regeneration of NTFP species to improve the biodiversity and enhance productivity
 Build the capacity of the community in modern harvesting and post-harvesting techniques to
increase their income
 Promote value addition and set up market linkages for NTFP to ensure higher returns

7.3 Employment
NRLM implements Aajeevika Skill Development Programme (ASDP). 25% of NRLM Funds are
earmarked for this purpose. ASDP facilitates building the skills of the rural youth and placement in
relatively high wage employment in the growing sectors of the economy.
Self-employment
One of the pillars of the Livelihoods promotion strategy of NRLM is nurturing self-employment and
entrepreneurship. In this regard, NRLM is encouraging public sector banks to set up Rural Self
Employment Training Institutes (RSETIs) in all districts of the country on the lines of the Rural
Development Self Employment Institute (RUDSETI) model. National Academy of RUDSETIs is
supporting RSETIs in this effort.
7.4 Social Inclusion & Development
In order to ensure that no poor family is left out, NRLM would use differential strategies for social
inclusion of all identified rural poor households into functionally effective and self-managed
institutions, with particular focus on more vulnerable sections like Scheduled Castes (SCs), Scheduled
Tribes (STs), Primitive Tribal Groups (PTGs), single women and women headed households, Persons
With Disabilities (PWDs), landless, migrant labour, isolated communities and communities living in
remote, hilly and disturbed areas. It would identify the poorest and vulnerable through participatory
identification of poor (PIP). The mobilization would begin with them first. The mobilization effort
would progress with the satisfactory community readiness and milestones for various stages of
mobilization and graduation as evolved and tested in a participatory manner. Existing institutions,
their leaders, staff and community resource persons (CRPs) would support the processes of inclusion
and mobilization.

NRLM Systems
a. Financial Management
Components and sub-components
 FM systems at NMMU and States, Fund flow, Budgeting, Monitoring and reporting
 Technical assistance to States
 Assessment of State FM systems
 Discloser of FM information
 CPSMS implementation
Strategy Envisaged: The primary guiding principles are as following

77
  Use the country fiduciary systems, to the extent feasible and considered satisfactory and meet
the essential fiduciary requirements
 Build upon successful models developed and tested in the World Bank-funded rural livelihood
projects implemented across eight states
 Review of Good practices in National Programs in other sectors (education, health)

b. Human Resources
NRLM realizes its success is critically linked to the quality and professional competence of dedicated
sensitive support structures at various levels and their staff. The exact staffing pattern(s) at various
levels would be based on geography, the number of blocks, population spread, implementation
strategy and phasing. Each state would make plans/ adjustments accordingly and would have its own
HR Policy and Manual, to be revised periodically. The key elements in HR Policy include staffing, job
profiles/competencies, recruitment and selection, transparency, immersion and induction,
remunerations, performance management, appraisals and incentives, grievance redressal, staff learning
and capacity building, space for HR in various formats and tenures – full-time, part-time, home-based,
short-term/long-term, internship, sabbatical, etc., and deployment flexibility etc.
Further, HR Policy should discuss inducting community professionals/CRPs as staff in support
structures, without reference to their formal qualifications; changing roles of support structures and
staff; and supporting some staff in the institutions of the poor.
Partnerships with NGOs and CSOs should be taken into account while planning HR requirements.
Care should be taken to avoid unnecessary duplication.
Staff Learning and Capacity Building: NRLM would allocate dedicated and adequate budget for staff
learning and capacity building. A structured system for the purpose would be in place across all levels
for integrating Mission learning during implementation.
Administrative & Financial Rules: Being independent implementing agencies, SRLMs would develop
and implement administrative and financial rules that facilitate smooth implementation of process-
intensive NRLM with flexibility for responding diligently to the needs of the community and, for
nurturing and retaining the skilled professional staff.
c. Procurement
The procurement of goods, civil works, non-consulting services and services will be integral to the
implementation of NRLM at National, State, District and Sub-District levels. This manual sets forth
the NRLM procurement policies and procedures for the guidance of all personnel involved with
procurement responsibilities, with the aim of ensuring that programme resources are properly
managed and safeguarded. The Manual aims to achieve economy, efficiency and transparency in the
implementation of the project, including the procurement of the goods, works and services involved;
and ensuring that all eligible bidders are provided the same information and equal opportunity to
compete in the provision of same.
It will be mandatory for all participating State and District societies and other Government and Non-
Government agencies to adhere to the guidelines and procedures outlined in this Manual for carrying
out procurement under NRLM. All State Implementing Societies will formally resolve to follow this
Manual with the release of NRLM funding being contingent on this pre-condition.
Under NRLM, federated structures of Self Help Groups (SHGs) will be formed at different levels
(village, block, district) for undertaking value chain linked activities in dairy, agri-business and similar
enterprises for better production, storage, marketing, etc. of the produce of the members of the SHGs.

78
These groups would undertake procurement of goods, works and services in line with the selected
value added activity. This manual details the principles, processes and methods for community-based
procurement that project functionaries and community groups shall follow for procurement of goods,
works and services.
The procurement manual is developed based on procurement framework and methodology suggested
by the Financial Management Rules, GoI (2005); Financial Management and procurement manual of
Sarva Shiksha Abhiyaan, MHRD, GoI; Stores Purchase Rules methods in various states; World Bank
Guidance Note For Management Of Procurement Responsibilities In Community-Driven
Development Projects?, December 2009 as well as World Bank guidelines for procurement of goods,
works and services. This procurement manual has been reviewed and is found in accordance with
World Bank‘s Guidelines: Procurement Under IBRD Loans and IDA Credits" dated January 2011
(Procurement Guidelines), and "Guidelines: Selection and Employment of Consultants by World Bank
Borrowers" dated January 2011 (Consultancy Guidelines).
d. Monitoring Evaluation & Learning (MEL)/Management Information Systems (MIS)
NRLM is process intensive and therefore at various levels, it would constantly review, assess and
learn from the qualitative and quantitative progress achieved. The primary objective of NRLM’s
MEL/MIS framework is to institute a comprehensive system of the evidence-based decision-making
process, of both strategic The MEL components are also expected to facilitate evaluation/assessment
of the ‘net’ contribution of the Mission towards rural poverty reduction, livelihoods promotion,
empowerment, quality of life and well-being of the poor. Given the scale and diversity of the Mission,
which is geographically dispersed and institutionally decentralized, a comprehensive MEL has been
provided with the following monitoring mechanisms. NRLM would put in place various mechanisms
for monitoring –
 Accountability in institutions of the poor includes institutional self-monitoring, peer internal
audit of processes and local social audit;
 Management Information System (MIS) based input-output monitoring includes Results
framework-based MIS; Milestones linked to investments/inputs; web-based MIS; real-time
input-output monitoring at various levels; and MIS with partners’ data;
 ICT-framework for dedicated digital grid includes national databases of poor, their
institutions, and skill development (jobs/self-employment), national livelihoods portal,
communication/knowledge dissemination channels, thematic e-groups etc.
 Internal review mechanisms at various levels –
 Monthly/quarterly planning/progress/process reporting and internal review;
 Field visits by staff/officials, Periodic visits of supervision teams from SRLM to districts and
field, and Theme specific supervision visits from time-to-time;
 Joint Half-yearly/Annual Review, Planning/Supervision Missions to states;
 Independent Process monitoring;
 Review and Consultation workshops with various stakeholders; and
 Meetings of Executive Committees, Governing Bodies, Advisory Groups/ Committees,
Convergence Forums, Coordination Committees at various levels
 External social audit, public expenditure tracking and community scorecards
 SRLM Annual Reports and NRLM Annual Report
e. Knowledge Management & Communications
The objective of Knowledge Management and Communications (KMC) activities under NRLM is to
create and manage the systems that will provide project staff and communities with relevant, timely
information and facilitate the exchange of knowledge throughout the project system to support:

79
  Project objectives and implementation
 Forge strategic partnerships
 Staff and community learning
 Create a brand identity for NRLM; and
 Advocate for the rural poor and issues related to them
NRLM will create communication materials at the national and state level, as per NRLM’s
communication and branding strategy and in consonance with the Annual Action Plan.
Communication materials will be packaged into products for sharing with its larger audience and
stakeholders, training community professionals and advocating the objectives of the mission. The
communication materials will also be parked at the repository/digital library for reference as and when
required. Making communication products available at one place (National Repository of Knowledge
Products) and providing access, is expected to reduce communication barriers and would also increase
the efficiency of program delivery, improve overall access and insights about the program besides
improving the program quality.
Newly formed State Rural Missions are currently learning from resource states - like Andhra Pradesh,
Kerala, Tamil Nadu and Bihar. The method adopted is immersion by visiting their program
interventions, interactions with stakeholders and learning through exposure visits. Professional
Resource Persons (PRP) and Community Resource Persons (CRP) currently are supporting new states
in resource block strategy in forming new SHGs and cleaning old SHGs at the village level. At
present, the P/CRPs are using the communication materials produced by the resource states. States
may adopt these materials translating them in regional/local languages or developing new
communication material- in line with their respective communication strategy/ action plan -
communication.

f. Governance & Accountability

The ultimate intention of efforts to infuse greater transparency and accountability in the
implementation of social policy intervention is that its users:
 Are made aware of the entitlements that they have access to under the specific Government
scheme/intervention
 Participate in its regular and institutionalized monitoring
 Play the primary role in the identification of anomalies within its implementation
Our attempts at infusing transparency in the implementation of the National Rural Livelihood Mission
is guided by focusing on processes and systems that can be incorporated in the implementation of the
project, which ensures that information related to the project is routinely disseminated on a pro-active
basis and spaces through which beneficiaries can hold the system accountable, can be provided for.
Guided by the above intentions, the NRLM is in the process of formulating its Citizens' Charter as a
statement of its obligations, duties and responsibilities to its beneficiaries. The Charter will create
awareness amongst NRLM's partners and stakeholders on the intended objectives of the NRLM and
the strategies adopted by the NRLM to achieve the same. The Citizens' Charter is being prepared by
adopting a consultative procedure wherein all members of the team are providing their inputs into the
content of the charter. We at the NRLM firmly believe that greater transparency leads to developing
greater room for demanding accountability since a system can be held accountable to only when there
is clarity on the mandate and objectives of the system. Further on, the NRLM is in the process of
devising a grievance redressal system which will ensure that all agencies entrusted with the

80
implementation of the NRLM devise mechanisms to receive grievances/complaints from the public
and devise methods to redress them in a time-bound manner.
The NRLM has also initiated efforts in pro-actively disclosing information relevant to the
implementation of the Mission, in compliance with requirements of Section 4 of the Right to
Information Act, 2005. NRLM believes in the regular dissemination of essential information related to
the implementation of the Mission in the public domain on a pro-active basis. This ensures the fact
that all concerned stakeholders are made aware of their entitlements and have clarity on some of the
key resource-related information relevant to the Mission.

Convergence & Partnerships

Government of India and State Governments are implementing a wide range of programmes to address
different dimensions of poverty and deprivation. Major Government programmes impacting on the
poor can broadly be classified as –
 Entitlements – PDS, MGNREGS, social security, Right to education etc.
 Improving the quality of life – Health & nutrition, clean drinking water, sanitation, permanent
housing, electricity etc.
 Enhancing capabilities – Elementary education, vocational, technical education, skills
enhancement, etc.
 Creating livelihood opportunities – Institutional finance, Agriculture, animal husbandry,
watersheds, MSME development, food processing, etc.
 Physical Infrastructure Schemes – Roads, electricity, telecommunications, etc.

Effectiveness of these programmes can be vastly enhanced with linkages between the institutions of
the poor, PRIs and the respective line ministries. The convergence and partnerships would enable them
and us to develop different models for service delivery. NRLM/SRLMs would work on developing
these partnerships and build synergies.
Panchayati Raj Institutions: NRLM will ensure that mutually beneficial working relationship and
formal platforms for consultations, between Panchayats and institutions of the poor are put in place in
a manner that PRIs are actively involved in various activities of NRLM but the autonomy of the
institutions of poor is also preserved/ protected.
Non-Government Organizations (NGOs) and other Civil Society Organizations (CSOs): The learning
from the rich grassroots experience and demonstrations of NGOs and other CSOs has influenced
MoRD and the state departments to formulate new strategies and fine-tune existing strategies for
improving livelihoods and reducing poverty. The partnerships with them would be critical and within
the ambit of the national framework for partnership with NGOs and other CSOs, guided by NRLM
core beliefs and values.
Academic, Training and Research Institutions: NRLM, with emphasis on ‘professionally competent
and dedicated implementation structures’ at various levels and would partner with academic and
training institutions for curriculum design, training pedagogy, faculty/ trainer development and for
training and developing professionals across. It would partner with research institutions/centers of
excellence for research/diagnosis tools and policy and strategic planning through field/action research,
social observatories to monitor trends, etc.
Public-Public, Public-Private, Public-Private-Community Partnerships: NRLM would work with RBI,
NABARD, Banks and other Financial Institutions, and Insurance Companies. It would build platforms
for Public-Private-Community Partnerships in key livelihood sectors like agriculture, livestock, non-

81
farm sectors, for developing select value chains or product clusters. It would build value-chain based
business partnerships and market linkages. It would also build a variety of partnerships for poor to
increase the access to their rights and entitlements, public services, expertise and other services.

82
 SLACC: Towards climate-resilient livelihoods1
The Sustainable Livelihoods and Adaptation to Climate Change (SLACC) Project

The SLACC project is the Global Environment Fund (GEF)-administered Special Climate Change Fund
managed by The World Bank. SLACC project used the institutional platform of the Deendayal Antyodaya
Yojana-National Rural Livelihoods Mission (DAY-NRLM). The National Rural Livelihood Promotion
Society (NRLPS) is the coordinating agency under the MoRD, whereas State Rural Livelihoods Missions
of Madhya Pradesh and Bihar are the implementing agencies. The project has been implemented in eight
blocks in four districts of Bihar and Madhya Pradesh. In Bihar, the project is implemented in Gurua and
Barachetti block of Gaya district, Khajauli and Rajnagar block of Madhubani district. In Madhya Pradesh,
the project is implemented Mandla and Bichiya blocks of Mandla district, and Karhal and Sheopur blocks
in Sheopur District. The project was started in 2015 with a four and half years’ operation plan. However,
it was extended for 18 months with a revised project closing date of 31 st December 2019. Originally 200
villages (100 per state) were selected for the intervention. In 2018, another 283 and 310 villages, called
scale-up villages, were added in the existing blocks in Bihar and Madhya Pradesh, respectively.

1.5. Project Intervention Strategies

SLACC project interventions span through four areas: production, ecology, technology and knowledge,
and finance.

Table 1.5: Components of SLACC interventions

Production Ecology
1. Climate-resilient varietal replacement 1. Conservation agriculture
2. Resource conservation practice (DSR, 2. Other soil health improvement-integrated
ZT, SRI/SWI) nutrient management and integrated pest
3. Crop diversification management
4. Climate-resilient intercropping 3. Soil testing
5. Critical irrigation assurance 4. Water conservation
6. Livelihood diversification 5. Orchard rejuvenation/ tree-based farming
Technology & Knowledge Finance
1. Farm mechanisation (custom hiring 1. Livelihood loan
centre, village tool bank) 2. Grant fund for innovative technologies
2. Automatic weather station & automatic 3. Crop insurance
rain gauge 4. Convergence with other
3. Training and capacity building (exposure departments
visits)
4. Institutional effectiveness
5. Knowledge products

Detailed SLACC Interventions

I. Production component: The production enhancement component had three broad areas of
interventions: (i) Crop production – climate-resilient varietal replacement, resource conservation
practices, crop diversification, climate-resilient intercropping, critical irrigation assurance, (ii) Livelihood

1
Reproduced from the report on Independent Assessment of SLACC, written by Pramod K. Singh in 2020.

83
diversification – livestock practices, and (iii) Package of Practices (PoP) for crop production and
livelihood diversification.

The SLACC project sought to reduce the vulnerability of farmers in the intervention blocks by
introducing climate-resilient varieties of rabi, kharif, and zaid crops. The objectives were to strengthen
and stimulate linkages and information sharing among farmers on high yielding - climate-resilient
varieties, drought and disease tolerant varieties, create awareness on seed varieties, climate-resilient
crops, and crop diversification, and establish linkages to climate change and their perception, distribute
and understand the adoption of the improved varieties amongst farmers during rabi, kharif, and zaid at the
village, block, and district levels, encourage livestock rearing for additional/alternate sources of
livelihood and combating climate vagaries through the package of practices as well as to create
awareness, adoption and linkage to climate change in an organic combating strategy. Table 1.6 illustrates
the detailed catalogue of the production enhancement interventions implemented in both the States.

Table 1.6: Interventions for production enhancement under the SLACC project

Production enhancement interventions in Bihar Production enhancement interventions in MP

Climate-resilient varietal replacement
Food Crops: Food Crops:
 Ajwain – Rajendra Mani,  Bajara – 1406,
 Arhar – Manak, Rajendra Arhar 1,  Black Gram – T-9,
 Coriander – Pant Haritama,  Flex seed – JCS 67,
 Fennel – Rajendra Saurav,  Gram – Local tan, JG14, JG14,
 Fenugreek – HM444 ,  Green Gram – Kesar-931,
 Ginger – Jamuna Safed 3,  Lentil – HUL-57,
 Lentil – HUM 57,  Maize – BDU 1, DHM-107, Azad-1, TPU-4,
 Maize Shekhar 2, hybird, samrat,
 Mung – HUM 16, IPM 2-3, PDM 139, Pusa Vishal,  Moong –Pusa 1609, Pusa 105, Pusa visal, Jawahar
SML 668, 45,
 Mustard – RH 749, RH 749,  Mustard – Kranti-2. RBM2, Pusa bold,
 Paddy – COR 51, Rajshree, Sahbhagi, Swarna sub 1,  Paddy – MTU-1010 SRI, MNH-803, JS-95-60, JS-
 Potato – K. Ashoka, K. Jyoti, K. Pukhraj, K. Sinduri, 93-05, HM-4, Pusa 4, T-9, G-2, DHM-109, Pusa-1,
 Ragi – RAU 8, TAU-1, TAU-2, Naveen, PDM139, JU-3, Krishna,
 Urad – Pant U31, Uttara - First time introduced in PB-1509, VIKAS,
Zaid in Madhubani (usually a kharif crop),  Rice – Danteswari,
 Wheat – HD 2733, HD 2967,  Sesame
 Local varieties of all the crops are also grown.  Soyabean – S-9560, S-9305,
Fodder Crops:  Urad – Pusa 131, Pusa105, Ju86, km7,
 Janer, Sudan, Berseem, Oats, Maize, Azolla  Wheat – Lokwan, GW 322, GW-273, JW 2030, JW
322, JW 3382, Sujata, DBW-110, WB-02,
 Local varieties of all the crops are also grown.
Fodder Crops:
 Napier, CO5, Hedge Lucerne, Berseem, Azolla,
Maize
Resource conservation practice in agriculture
 System of Crop Intensification (Shri Vidhi) – Rice,  System of Crop Intensification (Shri Vidhi) – Rice,
Wheat, Moong Chick pea, Mustard, Maize, Soyabean, Urad,
Moong
Crop diversification
 Millets cultivation  Millets (Kodo, Kutki) cultivation
 Commercial vegetable cultivation  Commercial vegetable cultivation
 Spice cultivation  Spice cultivation

84
 Production enhancement interventions in Bihar Production enhancement interventions in MP
 Crops on the Bunds – Sem Beans, Red Gram
Climate-resilient intercropping
 Wheat + Mustard  Wheat + Mustard
 Paddy + Arhar  Wheat + Pea
 Tomato/Brinjal + Marigold etc.  Maize + Cow pea
 Ladyfinger + Mirchi  Black Gram + Cow pea
 Masoor + Tisi  Maize + Red Gram
 Potato + Rajma/Bakla  Papaya + Pea
 Banana + Pea
 Cow pea + Brinjal/Tomato
Critical irrigation assurance
 Solar irrigation (2 HP)  Irrigation facilities through CHC
 Submersible pump-based irrigation  Group irrigation
 5 HP irrigation models (submersible pump)  Solar pumps
 Kapil dhara/ well construction
 Hand bore well
 Community bore well
 Construction/ repair of canal
 Farm pond
 Check dam
Livelihood diversification
 Cattle rearing with improved practices  Cattle rearing with improved practices
 Beekeeping  Fishery
 Mushroom  Poultry
 Sack farming  Goatry
 Aajeevika Poshan Vatika (Kitchen garden)  Mushroom
 Orchard rejuvenation  Aajeevika Poshan Vatika (Kitchen garden)
 Contingency crop planning - Arhar in drought  Tree-based farming (WADI model or Mango,
 Contingency crop planning - Water chestnut in flood Banana, Papaya, Guava, Amla plantation)

II. Ecology component: The ecology component had four broad areas of interventions: (i) Conservation
agriculture, (ii) Soil health improvement– integrated nutrient management and integrated pest
management, soil testing, (iii) Water conservation, and (iv) Agroforestry – orchard rejuvenation, tree-
based farming.

The direct consequences of climate change are observed as changes in the local ecological patterns,
especially the soil health to withstand its carrying capacity, regional crop cycles, and even varieties. It is,
therefore, recognised that the health and vitality of soil plays an integral role in ensuring sustainable food
production. The SLACC project encouraged the initiation of soil testing under the wider quadrant of
ecology. Free soil tests were conducted, following which soil health cards were created. Taking a cue
from the national scheme, Soil Health Cards enabled for the creation of field-specific soil profiles
including fertility, nutrient ratings, and suitable crops. It is also notable that the promotion of the non-
chemical (organic) approach to crop production has added to the ecological strength. Consequently,
irrigation was identified as one of the most basic determinants of agricultural productivity, especially in
the rain-fed areas, as lack of proper irrigation facilities acts as constraints on improvements in agricultural
production. The SLACC project has introduced interventions that promote water-conserving irrigation
systems which offer social benefit as well as minimize the impact of scarcity of water on agricultural
production. Thus, the primary interventions under the ecology component included soil testing and

85
irrigation along with water conservation measures. Table 1.7 illustrates the detained catalogue of the
ecology-related interventions implemented in both the States.

Table 1.7: Ecology-related interventions under the SLACC project

Ecology-related interventions in Bihar Ecology-related interventions in MP

Conservation agriculture
 Direct sowing (Minimum tillage, DSR)  Direct sowing (Minimum tillage, DSR)
 DSR for paddy  DSR for paddy
 Mulching  Mulching
 Crop rotation  Crop rotation
Soil health improvement practices (IPM, INM, Green manuring, Azolla pit, etc.)
 Biofertilisers – Sri jeevamrit, Sri ghanjeevamrit  Bio fertilisers – Sri jeevamrit, Sri ghanjeevamrut,
(solid form of Sri jeevamrit), Sri bakramrit, Sri Sri amrit paani,
pranamrit, Sri mungamrit, Sri gajramrit, Sri amrit  Bio fertilisers-cum pesticide – Sri amrut paani
paani,  Biopesticides – Sri neemashtra, Sri agniashtra,
 Biofertilisers-cum pesticide – Sri amrit paani, Sri SribBrahmashtra,
gaumata Ras,  NPM materials – Pheromone trap, sticky plate,
 Biopesticides – Sri neemastra, Sri agneastra, Sri  IPM materials – Rhizobium, PSB, Azotobacter,
brahmastra, Srilohastra, Sarvakitan-nashi, Trichoderma,
 Biofungicide – Sri belastra, Beejamrit, Sri pyajastra,  Vermicompost,
Sri tulastra, Sri sotastra,  NADEP compost,
 NPM materials – Pheromone trap, sticky plate,  Azolla,
 IPM materials – Rhizobium, PSB, Azotobacter,  Green manuring – Dhaicha/Mung/Dabholkar
Trichoderma, method, etc.,
 Vermicompost,  Foliar spray of micronutrients
 NADEP compost,
 Azolla,
 Green manuring – Dhaicha/Mung/Dabholkar method,
etc.,
 Foliar spray of micronutrients
Soil testing
 Soil testing/ soil health card  Soil testing/ soil health card
Water conservation
 Efficient irrigation technologies – sprinkler, drip  Efficient irrigation technologies – sprinkler, drip
irrigation irrigation, rain pipe, rain gun,
 Repair & maintenance of water structures – pond,
check dam,
 Development of water resource structure – pond,
well, check dam
Agro-forestry
 Orchard rejuvenation – Mango, Guava, Papaya,  Orchard rejuvenation – WADI model, Mango,
 Tree-based farming – Drumstick, Nursery Guava, Papaya, Banana, Amla, Apple Ber,
development  Tree-based farming – Bund plantation

III. Technology and Knowledge component: The technology and knowledge component had three
broad areas of interventions: (i) Farm mechanisation – custom hiring centres, village tool banks, (ii)
Weather-based agro-advisory services – automatic weather stations, automatic rain gauges, and (iii)
Training and capacity building – institutional effectiveness, exposure visits, knowledge products.

Creating new knowledge to supplement the tacit knowledge prevailing among the farmers plays the
determining role in ensuring sustenance and longevity of farming interventions. The evolution of

86
technologies capable of establishing drudgery free systems helps in increasing the scalability of farm-
level innovations. It is in this context, the SLACC project has set up Custom Hiring Centres (CHCs) and
vested the ownership in the hands of the community (Cluster Level Federation of Village Organisations
consisting of SHGs) for providing them with easy access to farm machinery and implements at subsidised
cost. To ensure the penetration of technological inputs at the farmer level, sensitisation of beneficiaries
was made through the SLACC project. Generally, it is felt that the use pattern of some of the equipment
and implements in the CHCs is limited among the farmers. Table 1.8 illustrates the detained catalogue of
the technology and knowledge interventions implemented in both the States.

Table 1.8: Interventions for technology and knowledge enhancement under the SLACC project

Interventions for technology and knowledge
enhancement in Bihar
Farm mechanisation
 CHC level-Agricultural equipment – tractor, m b
plough, disc plough, cultivator, land leveller,
rotavator, paddy transplanter, potato transplanter,
seed drill, power weeder, power sprayer, reaper,
reaper binder, wheat thresher, maize thresher, paddy
thresher, multi-crop thresher, chaff cutter, mushroom
solar dryer,
 VTB level agricultural equipments – vegetable
transplanter, spade, digital moisture meter, multi-
utility power weeder,
 Knapsack sprayer, scythe tool, crop cutter, solar
sprayer, delivery pipe
Weather-based agro-advisory services
 Automatic weather station (20 villages)
 Automatic rain-gauge (80 villages)
 Weather forecast
 Forecast on extreme weather events
 Advisory on livestock health management
 CropIn BRLPS Portal and Smart-farm application
integration for crop monitoring
 Advisory on land preparation
 Advisory on soil organic carbon enrichment
 Advisory on pest management
 Advisory on harvest scheduling
 Display board for weather forecast
 Display board of key advisory
 Audio agro advisory by IFFCO
Interventions for technology and knowledge
enhancement in MP
 VTB level-Agricultural equipment – tractor, m b
plough, disc plough, cultivator, land leveller,
rotavator, paddy transplanter, potato transplanter,
seed drill, power weeder, power sprayer, reaper,
reaper binder, wheat thresor, maize thresher, paddy
thresher, multi-crop thresher, chaff cutter,
mushroom solar dryer, power tiller, spiral grader,
 Chain pully, mist cum duster spray, irrigation-
motor
 Automatic weather station (20 villages)
 Automatic rain-gauge (80 villages)
 Weather forecast
 Forecast on extreme weather events
 Advisory on livestock health management
 CropIn BRLPS Portal and Smart-farm application
integration for crop monitoring
 Advisory on land preparation
 Advisory on soil organic carbon enrichment
 Advisory on pest management
 Advisory on harvest scheduling
 Display board for weather forecast
 Display board of key advisory
 Audio agro advisory by IFFCO

 

 
Institutional effectiveness
 Strengthening of VO (Decision Making, Community  Strengthening of VO (Decision Making in VO
Procurement) meeting, Community Procurement)
 CBO leader rotation  Technical / Experts support on field.
 Master trainers created  Master trainers created
 CBOs with regular meeting  CBOs with regular meeting

87
 Interventions for technology and knowledge
enhancement in Bihar
 Development of SLACC CRPs
 CBOs with functional sub committees
Interventions for technology and knowledge
enhancement in MP
 Development of SLACC CRPs. Dedicated CRP
 CBOs with functional sub committees
 Development of Sr CRPs as PRPs to support and
monitor implementation in other assigned villages

IV. Finance component: The finance component had three broad areas of interventions: (i) Livelihood
loans, (ii) Grant fund for innovative technologies, (iii) Crop insurance, and (iv) Convergence with other
departments.

Fund allocation and its release across activities played a crucial role in aiding the beneficiaries and
enabled the rolling out of the interventions. The livelihood loan provisions were looked at providing an
outlet to the beneficiaries of the project with an overarching objective of providing them with various
avenues to explore and be able to build themselves as climate-resilient. The livelihood loan under the
finance component is primarily lent to the beneficiary for activities that are related to agriculture. The
same is verified and cross-checked by the SHG members or mutually elected committee of beneficiaries.
Thus, specific activities carried out as a part of the finance quadrant includes crop insurance, finance
insurance, and granting loans for carrying out SLACC activities. Table 1.9 illustrates the detailed
catalogue of the finance-based interventions implemented in both the States.

Table 1.9: Finance-based interventions under the SLACC project

Finance-based interventions implemented in Bihar Finance-based interventions implemented in NP

Financial services
 SLACC Grants to VOs
 Livelihood loans – loan for the purchase of livestock,
farm machinery, seeds, and fertilisers, loan for tube well
boring, loan for crop and livestock insurance,
 Bank linkages
Convergence with other departments
 Convergence with various line departments (not
specified) for farm machinery, irrigation facilities and
financial services.
 Availing seeds and its technical input – RAU PUSA
 Exposure visit – RAU PUSA, ICAR Patna, CPRS Patna,
IIVR Varanasi, Jain irrigation, Sabour Agri university,
 CHC – District Agri Dept Madhubani
 Plant protection tool – District agri dept Madhubani
 Mushroom kit – Horti dept.
 Tree plantation (Van poshak scheme) – Horti dept. Gaya
 Farm machinery – District Agri Dept Madhubani
 Pest surveillance training at KVK – KVK Birouli &
Makhana research station
 Mushroom supply to mid-day meal in school – District
administration Gaya
 Vermicompost and Azolla – District Agri Dept
Madhubani
 Papaya sapling and technical guidance for plantation –
RAU PUSA
 Solar stove – TERI
 Soil testing – RAU PUSA
 SLACC Grants to VOs
 Loan for agriculture and allied sector activities
only – it covers all inputs cost, land preparation,
livestock, vegetables, irrigation, insurance, and
inter-cultural operations, etc.,
 Bank linkages
 Convergence with various line departments (not
specified) for farm machinery, irrigation
facilities and financial services.
 Seeds - Agriculture Dept, BISA-Jabalpur,
Producer Company, Seed & Spices Institute
Ajmer, KVK, Horticulture Dept, Private
Vendor, Vegetable Seeds Mini Kits, Prom
Organic Manure, etc.
 Seedling - Forest Dept, Private Ventor, IGFRI-
Jhansi (fodder), TAU (CO5 fodder),
Horticulture Dept
 Exposure Visits:
 Sheopur: BISA-Jabalpur, NDRI Karnal,
Lalitpur- Bhungroo, Seeds & Spices Institute
Ajmer, Udaypur- Agri Fair, JNKVV Jabalpur-
Agri Fair, Bhopal- Poultry, Jobner University
Rajasthan- Dairy & Poultry, Laporiya- Water
Conservation, Bara Rajasthan- Gir Cow, KVK
Sheopur, Horticulture Dept Sites etc
 Mandla: BISA Jabalpur, Agri University
Jabalpur, Agri University- Raipur, Veterinary

88
 Finance-based interventions implemented in Bihar
 Agro advisory support (Non-financial MoU) –IFFCO
 Solar irrigation handholding support (Non-financial
MoU) – IWMI_AKRSP(I)
 Solar irrigation set (2HP) – BREDA
 Contingency crops (64 Kg seeds) – Block Agriculture
department
 Availing seeds and its technical input – RAU PUSA,
BISA
 Mushroom kit – Horticulture department, Gaya
 Papaya sapling and technical guidance for plantation –
Horticulture department, Gaya
 Animal sheds – MGNREGA
 Zero Tillage – Block Agriculture department, Barachatti
 Crop Insurance – Block agri dept, Barachatti
Finance-based interventions implemented in NP
University Farm- Jabalpur, WoTR- Darewadi
Maharastra, WoTR Work in Mandla, KVK
Mandla, Horticulture Dept Site- Mandla, Sagar
(Multi-Layer Farming), Singarpur- Vegetable
Cultivation, Dr. Chadda Farm- Mandla, Sheopur
SLACC sites, etc.
 Agriculture Dept - Trichoderma,
 CHC - Agriculture (Sprinker Set, Pump),
Horticulture (Power Weeder, Sprinklers)
 Farm Machinery - Horticulture Dept (Chaff
Cutter, Sprayer, Urea Sprayer, Carets, Pump-
Pipes, Power Weeder, Vermi Compost Bed)
Agriculture Dept (Grader & Organic Tools Kit-
ATMA, Pump-Pipe, Sprayer)
 Irrigation Facilities:
 Gram Panchayat - Pond, Khet Talab, Fishery
Pond, Farm Bund, Kapiladhara Well, Repair &
Maintenance and other NREGA Works.
 Fal Ful Sag Bhaji Samiti - Community
Irrigation- Bore Well, Electricity & Motor-Pipe
 Agriculture & Horticulture Dept - Motor, Pipes,
Sprinkler Sets etc.
 Urja Vikas Nigam - Solar Pumps
 Community Driven - Repair & Maintenance of
Check Dam, Hath Bore, Digging Canal

1.6. Project Delivery Mechanism

The Sustainable Livelihoods and Adaptation to Climate Change (SLACC), the institutional platform of
the National Rural Livelihoods Mission (NRLM) implemented by the Ministry of Rural Development
(MoRD), Government of India (GoI). National Rural Livelihood Promotion Society (NRLPS) is the
coordinating agency under MoRD whereas the State Rural Livelihood Missions (SRLM) of Bihar and MP
are the implementing agency. The project has been supported by a USD 8 Million grant from the Global
Environment Fund’s (GEF) Special Climate Change Fund (SCCF). Figure 1.1 illustrates the project time
frame, implementation tracks and project inputs.

The pilot was designed to leverage the strong presence of SRLM initiated community-based organization
and improvising climate adaptation and community resilience methods of the member by strengthening
the work done under previous programmes. The implementation arrangements have been made at the
national, state, district, block and community levels. The institutional arrangements are as follows:

National Level: MoRD is the key implementation agency and the National Rural Livelihoods Promotion
Society (NRLPS) under the MoRD is responsible for the management, supervision, guidance and
technical support. The NRLPS coordinates with the SRLMs for implementation of the SLACC project
and is responsible for the development of a strategy for scaling-up climate adaptation interventions within
the NRLM.

The NRLPS has designated a team of four officials to support the SLACC project. The official in-charge
of Agricultural Livelihoods in NRLPS leads to the coordination of SLACC. Additionally, there are two
experts placed by the Lead Technical Support Agency (LTSA) in the NMMU.

89
Figure 1.1: Project time-frame, implementation stages, and inputs

State Level: The Bihar Rural Livelihoods Promotion Society and MP Rural Livelihoods Society are the
nodal agencies for SLACC implementation in Bihar and MP respectively. The SRLMs are established by
the state rural development departments and act as the agency for coordinating and implementing the
project. The SRLM is responsible for the outputs and outcomes of the project at the state level, and for
mobilizing co-financing through convergence. Each state, CCA Coordinator is the focal point for the
SLACC project throughout implementation. In addition, each SRLM has engaged LTSA, who is
responsible for the technical support.

Besides, “young professionals” have been placed at the block level. The implementation arrangements
include direct implementation by the SRLMs and community-based organizations. As part of SLACC
support, the SRLM has appointed Block Young Professionals who operate at the block and cluster levels.
A resource pool of individuals and organizations (NGOs and other technical service providers) on climate
adaptation have been identified to provide technical support on climate adaptation to the SRLMs, as
required.

At the state level, the SRLM leads an institutional mechanism for inter-departmental coordination
involving the line departments outside of NRLM (agriculture, livestock, forestry, watershed, water
resources, and MGNREGS) to facilitate timely convergence of departmental programs and sharing of
experiences and best practices.

Lead Technical Support Agency (LTSA): The LTSA has positioned two Climate Adaptation personnel
at the NMMU and one in each of the SRLMs.

90
 An Introduction to Appreciative Inquiry

By Stephanie Judy and

Susan Hammond

An effective forest use planning process requires groups of people to work together
efficiently and flexibly, while also ensuring that all voices are heard and all positions are
respected.
The tool recommended by Silva for this application is called Appreciative Inquiry
(usually abbreviated to AI).
AI is a way of working with change in any human group—a family, a First Nation, a
community, an organization, a business—by asking questions about the group at its best
and designing a future that draws on the strengths uncovered.

What is Appreciative Inquiry?

Appreciative Inquiry (AI) encourages groups to inquire about, learn from, and build on
what is working when they are at their best, rather than focusing on what’s gone wrong
and fixing problems. By using AI to understand their capabilities and resources,
organizations bring about and sustain positive change.
The simple principles behind AI are that in every group something works (if nothing at
all were working, the group would not exist) and that no problem happens all the time.
The group moves forward by identifying the factors that contribute to their success, rather
than studying the reasons for their problems and their failures.
First proposed by David Cooperrider at Case Western Reserve University, AI has been
practiced around the world for more than a decade by non-profit organizations,
businesses, families, schools, health care organizations, and governments. It has been
used in small, rural, third-world villages, and in huge North American cities; with
executives of Fortune 500 corporations and with street children in Bangladesh; in
environments characterized by stability and cooperation, and in environments full of
turbulence and conflict.
One of the best ways to describe AI is through a brief example:
A hospital in Arizona operated by Lovelace Health Systems was concerned about
high turnover in their nursing staff—a rate of about 20-30% per year. Had the
hospital administration used a conventional problem-solving approach, they
would have hired a consultant to collect data about why nurses leave—perhaps by
interviewing supervisors, assessing personnel files, and carrying out exit
interviews. This data would then have been analyzed to figure out the source of
the problem—i.e., to discover the conditions that contribute to high turnover.
Then attempts would have been made to correct or alter those conditions in hopes
of solving the problem.

91
Introduction to Appreciative Inquiry Page 2
____________________________________________________________________________________

In contrast, the AI approach that was actually used at this hospital did not ask why
20-30% of nurses leave each year, but rather why 70-80% of nurses stay. The
nurses themselves—a staff of 300—collected data from one another, sharing
stories about their best experiences on the job. From these stories, they identified
key factors in their working conditions that let them function at their best. The
nursing staff then worked with one another and with the hospital administration to
support and reinforce those optimal conditions.
The outcome was a 30% reduction in nursing staff turnover in the first year, as
well as additional unexpected positive effects, including a substantial increase in
patient satisfaction with nursing care and measurable improvements in employee
communications. According to Susan Wood, a consultant who worked on the
Lovelace AI project, “The process unleashed nurses’ capability and energy to
realize their value within the system. It gave nurses a heightened responsibility for
their own satisfaction.” (Whitney and Trosten-Bloom 2003)

How does Appreciative Inquiry differ from other approaches?

Many other participatory change strategies exist, and have been used in various settings
with varying degrees of success. What makes Appreciative Inquiry different is its
focus on local strengths and achievements, rather than on deficits and problems.
Other kinds of planning and change strategies often proceed by defining needs, problems,
opportunities, and obstacles. These approaches typically encourage local participation,
emphasize local knowledge, and address real problems. However, such approaches often
fail to sustain participation and commitment. Deficit-based approaches leave people with
the impression that their community is full of problems and needs, many of which require
the help of outside experts to overcome. The focus on needs entrenches a sense of
dependence, and reduces people’s motivation to initiate their own activities, projects, and
enterprises.
By building on local strengths and generating a sense of hope, Appreciative Inquiry
avoids the unintended consequences that accompany deficit-based models. The outcomes
of many AI processes are totally surprising to the participants. Future paths are identified
that no one had thought of before, and there is usually broad-based support for and
commitment to this future.
Appreciative Inquiry cannot guarantee a path to the future that is free of obstacles. What
it can do is consolidate and sustain the vision and energy of the members of a group—a
family, an organization, a community, a business—so that they face their future from a
position of strength, confidence, self-knowledge, and self-respect.

Who is involved?
The ideal goal for an AI process is to get everyone in the room—i.e., the most complete
and diverse group of people who are affected by the topic, decisions, or changes being
made. In a school district, for example, such a group would include not only the school
board, administrators, and principals, but also teachers, support staff (secretaries to
janitors), students, parents, community members, business owners and employers in the
community, and representatives from local colleges and universities that receive students
from that district for further education.

Silva Forest Foundation Revised Febru ary 2006

92
Introduction to Appreciative Inquiry Page 3
____________________________________________________________________________________

Sometimes, however, getting every affected person involved at the beginning is not
possible, or—where power is distributed very unevenly—not even wise. An intermediate
goal is to begin with a community of interest. In the case of forest use planning, this
would include forest users, such as First Nations, small-scale loggers, trappers, and
recreational users; environmentalists—not only community-based environmentalists, but
also representatives from any provincial or national environmental groups that are taking
an interest in local issues; local small businesses that depend on the forest (organic
farmers, tourism operators); educators and students; and any interested community
members.
The group need not have worked together as a group in the past—Appreciative Inquiry
can bring a group together. For example, Stephanie Judy, an AI facilitator who works
with Silva, recently initiated an AI process with representatives from community groups,
arts groups, businesses, and local government in a small B.C. town where there was a
sudden opportunity to bid for a large project that could bring substantial benefits to the
town. However, the groups needed to organize quickly and needed to cooperate closely in
order to submit a timely proposal. Prior to their initial meeting, most participants were
apprehensive about the likelihood of effective cooperation, since some of the groups had
a difficult history with one another, and there were still open wounds from past events.
The facilitator acknowledged the issues—that cooperation was key to the success of the
project but that cooperation had been elusive in the past. Each participant was asked to
tell a story about a time when they were part of a group that had demonstrated a high
level of cooperation. After hearing one another’s stories and analysing them for the
factors that foster cooperation, the group quickly coalesced to generate the needed
proposal and letters of support, and to set dates and agendas for subsequent meetings.

What does an AI process look like?

A typical AI process may take place over a one- to five-day period (depending on the size
of the group and its goals), or it may be an on-going process that occupies a group for
some part of each weekly or monthly meeting. The process follows what is called the 5-D
cycle:
 Define—A steering committee or core group, with the help of an AI facilitator,
defines the topic, and decides who should be involved and how the process will
take place. Some groups, for example, decide to hold what is called an “AI
Summit”—a two- or three-day process where everyone is involved all the time.
Other groups choose to meet once a week for four to six weeks. Other groups
begin by training interviewers who collect initial data throughout the
community with one-on-one “kitchen table” interviews before convening a
larger group. AI is flexible—it can be used with groups of all sizes and
scheduled in a way that accommodates the group’s other activities.
 Discover—Participants interview one another in pairs, collecting stories about
the group at its best, collecting ideas about the group’s most valuable resources,
and collecting information about the group’s desired future. A typical set of
questions for a community would look something like this:
1. Tell me about a peak experience in your community life . . . a time when you
felt most alive, engaged, energized, and proud of yourself and your
community.

Silva Forest Foundation Revised Febru ary 2006

93
Introduction to Appreciative Inquiry Page 4
____________________________________________________________________________________

2. Without being humble, what do you value most about yourself? your work?
your community?
3. What are the core factors that give life to your community when it is at its
best?
4. If you could make three wishes for your community that would come true in
the next ten years, what would they be?
Following the paired interviews, the group as a whole (or small sub-groups of
whole) analyzes the stories and data collected to discover key factors,
ingredients, values, and resources that account for the group’s previous
successes.
 Dream—Participants imagine their desired future and give it shape. A dream
may be in form of a written vision of the future, or it may be expressed in
artwork, songs, poetry, stories, dance, celebrations, and skits. Commonly both
written and artistic or action modes are used to express the dream.
 Design—Working toward the direction implied in the Dream, the group begins
to define the values, ideals, and methods of change and growth that will achieve
these dreams. These are written in the form of Provocative Propositions—bold
statements written in the present tense that challenge the group to give form to
its dreams.
 Deliver—The group, or appropriately delegated sub-groups, make specific,
real-time plans for realizing the Design elements defined in the previous step.
At any point in this process, the group can return to the Discover stage and do a “mini-
AI” to help them move forward. If, for example, a community group decided to initiate a
water quality monitoring system, but felt uncertain about their ability to follow through in
the long-term, they could stop and Discover the elements that make it possible for long-
term community projects to succeed.

What are the benefits of AI?

Compared to other methods of organizing and planning, Appreciative Inquiry provides
the following advantages to groups and communities:
 AI promotes ownership of the process and the result. An ideal AI process
brings all stakeholders together to work actively with one another. The process is
assisted by a facilitator, but the product (the plans for change) grows from the
collective experience, wisdom, and resources of the stakeholders. Outside
“experts” need not be involved, unless the community or group wishes to invite
them.
 AI honours diversity and opens the way for a group to benefit from its
diversity. An AI process, by definition, gives a role and a voice to everyone, from
student to school board chairman, from cafeteria worker to CEO, from mayor to
ordinary citizen. Genuine respect for diversity leads to richer solutions, better-
informed group members, and a willingness to work toward mutually beneficial
goals.
 AI leads to immediate change, even in complex situations. At the moment that
we begin to investigate something, we also begin to change it. The Appreciative

Silva Forest Foundation Revised Febru ary 2006

94
Introduction to Appreciative Inquiry Page 5
____________________________________________________________________________________

Inquiry process begins by asking carefully crafted questions. Asking people to tell
stories about how their group succeeds and how it functions at its best sets in
motion creative, productive energy—the very same energy that is suppressed
when a group is asked, “What’s wrong here?”
 AI is sustainable. The appreciative process itself generates the positive energy
that is needed to carry out changes. Because the changes proposed are based on
the group’s own experience, and are developed by the stakeholders themselves,
the group members have a significant investment in the outcome. The AI process
is also cyclical. It is not a linear process that is carried out and completed. At its
best, an AI process yields an “appreciative organization” or an “appreciative
community,” where many members are skilled at designing a future that carries
forward the best of the past.
 AI generates solutions that are grounded in reality. Plans that are put forward
by outside experts may not fit a community appropriately. The AI process is
designed to build a future that honours and carries forward the best of the
community’s past, and that makes optimal use of its present resources. The
solutions that a community designs through an AI process are not based on
abstract principles, but rather are “grown” from their collective experience.

What about problem solving?

. . . In the long run, what is likely to be more useful: Demoralizing a successful
workforce by concentrating on their failures? or helping them over the last few
hurdles by building a bridge with their successes? Don’t get me wrong. I’m not
advocating mindless happy talk. Appreciative Inquiry is a complex science
designed to make things better. We can’t ignore problems. We just need to
approach them from the other side.
~ Thomas H. White, President, GTE Telephone Operations
Appreciative Inquiry has much in common with what is known by classroom teachers as
the Pygmalion effect. Numerous studies have shown that when teachers believe that they
are teaching groups of unusually intelligent students, the students’ performance meets the
teachers’ expectations. In other words, what we look for, we get more of. If we look for
outstanding performance, we find it.
In contrast, if teachers are told that their students are below average in intelligence, or
that they have behaviour problems, the students once again meet the teachers’
expectations. Again, what we look for, we get more of. If we look for problems, we find
them.
Most of us are familiar with “problem-solving approaches” to change, and we can
confirm from personal experience that these approaches . . .
 are slow to show results, since no step forward can be taken until the situation is
thoroughly analyzed;
 rarely create the conditions that inspire innovative, creative, or unusual solutions;
 usually generate defensiveness, as participants seek—openly or covertly—to
assign blame for the problem;

Silva Forest Foundation Revised Febru ary 2006

95
Introduction to Appreciative Inquiry Page 6
____________________________________________________________________________________

 exclude many participants, sometimes because “problem” content needs to be

kept confidential, and sometimes because potential stakeholders are judged—by
themselves or others—to be unable to understand the problem fully; and
 drain the energy of participants, alienating many stakeholders from the group and
its issues.
Even if a problem-oriented process arrives at a solution, the outcome may not be in the
best interests of the group or the community, and may, as a result, bring more problems
in its wake, by, for example,
 reinforcing deficit-based perceptions, so that individuals or groups are labelled
and subsequently need to be “treated” or “developed” under the supervision of
experts;
 eroding community confidence, capacity, and self-trust, by encouraging
professionals or consultants to fill roles that previously would have been assumed
by individuals within the community;
 creating a self-fulfilling prophecy (like the Pygmalion effect mentioned above)
where problems are seen as normal community expressions, and/or where certain
individuals or groups within the community are designated as “problems” in and
of themselves; and
 altering the language that a community uses to describe itself, as they adjust their
recollected history and their current actions to a disease- or deficit-based model,
and begin to employ diagnostic labels and problem-solving interventions.
[Some of the points above were first proposed by David L. Cooperrider and Diana Whitney in an essay
titled “A Positive Revolution in Change: Appreciative Inquiry.”]

Appreciative Inquiry does not ignore problems; rather, it approaches them from a
completely different perspective. The practical results of AI sometimes look exactly like
the results of good problem-solving, with one profound difference: at every point in the
process, AI sustains a high level of commitment and energy among participants, rather
than leaving them drained and demoralized, as deficit-based problem-solving processes
usually do.
On the other hand, the practical results of AI sometimes look nothing like the results of
problem-solving. Brilliant ideas are often generated that no participant (and certainly no
outside expert) could possibly have anticipated.

How can a community apply AI to ecosystem-based planning?—a case study

For a group’s first experience with AI, it is helpful to have a facilitator who is specifically
trained in AI facilitation and has experience using the process. (Note that not all
facilitators have AI training or experience. Appreciative Inquiry is distinct from other
organizational processes and facilitation models.) Once a group has been through the
entire AI process and once a core group or steering committee understands the principles
of AI, the process becomes cyclical and self-sustaining. Many groups that have used AI
speak of themselves as “appreciative organizations.”

Silva Forest Foundation Revised Febru ary 2006

96
Introduction to Appreciative Inquiry Page 7
____________________________________________________________________________________

The first step is to form a core group or steering committee that can work with the
facilitator. It is helpful for this group to familiarize themselves with the principles of AI.
The Resources section below includes a list of resources and websites about AI.
The participants in the process who are not members of the core group or steering
committee need not understand AI in detail, although they may be curious about it, since
the process will be unlike the kinds of problem-solving group activities that many people
will be used to.
If no facilitator is available, a core group can form an AI study group, reading one or
more of the recommended books in the Resources section, and discussing how best to
adapt the process to the group’s needs. While a facilitator can make the process go
smoother, and can provide a neutral or impartial viewpoint when needed, Appreciative
Inquiry is one of those processes that can be used with confidence because it will “do no
harm.”
In applying AI to ecosystem-based planning, a community or First Nation would follow
the 5 D’s outlined above.
As a case study, some of the highlights of an AI process carried out with the Skownan
First Nation in Manitoba in 2000-2001 are described below. This community was
specifically looking for land-based economic opportunities related to its culture. More
information about this project is available from the International Institute for Sustainable
Development (IISD) at http://www.iisd.org/ai/waterhen.htm .
The final report of this project (46 pages) can be downloaded in .pdf format at
http://www.iisd.org/pdf/skownan_final_nopics.pdf . All quoted material below is taken
from this final report: “Integrating Aboriginal Values into Land-Use and Resource
Management: Final Report, January 2000 to June 2001” published by IISD in 2001.
Define
With the help of an AI facilitator, the steering committee or core group defines the topic,
and decides who should be involved and how the process will take place. The Skownan
First Nation worked with project managers and project assistants from the International
Institute for Sustainable Development (IISD) in Winnipeg.
The topic chosen needs to be as broad as possible. It is better to choose a topic that
encompasses many possibilities over the long term, rather than a topic that narrows the
focus or concentrates on the short term. The Skownan First Nation chose as their topic
“Integrating Aboriginal Values into Land Use and Resource Management.”
The core group then decides on interview questions and the interview protocol. In some
cases, it will be necessary to generate an interview guide, particularly where paired
interviews will be taking place over time and carried out by a team of interviewers. In the
Skownan project, experienced AI facilitators trained six young adults from Skownan First
Nation in Appreciative Inquiry and practical interviewing techniques.
Other factors to be decided at the “Define” stage are too numerous to outline here, but are
well-explained in The Power of Appreciative Inquiry: A Practical Guide to Positive
Change by Diana Whitney and Amanda Trosten-Bloom (see Resources section for
publication details.

Silva Forest Foundation Revised Febru ary 2006

97
Introduction to Appreciative Inquiry Page 8
____________________________________________________________________________________

Discover
In the “Discover” phase, participants interview one another in pairs, collecting stories
about the group at its best, collecting ideas about the group’s most valuable resources,
and collecting information about the group’s desired future.
Some of the questions used in the Skownan First Nation Project, as listed in their Final
Report were:
 Skownan is in an area of wonderful natural resources such as forests, lakes and
rivers, and fresh air. People in Skownan value these resources for the many
benefits that they provide. When you think back on your life in Skownan, what
do you think are the most important benefits that the land and waters provide to
you, your family and the community?
 Please tell a story of one particular incident when you were out on the land and
felt really excited and fortunate to live where you do—close to nature. Who was
there and what made it special?
 The people of Skownan have many skills; some have been passed down from
their parents and grandparents, others have been learned new. What skills do
you think are most important to a strong and close community?
 When you think back on your life in Skownan, can you think of a time when
the bond between people in the community was closest? What was it that made
people feel so connected? What were they doing together?
 If you were to recount a story of Skownan First Nation that makes you feel
proud, what would it be?
Following the paired interviews, the group as a whole (or small sub-groups of the whole)
analyzes the stories and data collected to discover key factors, ingredients, values, and
resources that account for the group’s previous successes.
A few of the factors and values that emerged from the Skownan interviews included:
 The forest gives protection and comfort to the people.
 The forest is a magical and mystical place, connecting Ojibwa people.
 The forest provides food, shelter and medicines.
 Going onto the land provides peace and healing. People feel good about
themselves. They develop a spiritual and loving relationship with the land.
 It is fun to spend time on the land; people are happy in the bush. The land gives
a feeling of togetherness to the people.
 Hunting moose and deer brings happiness and pride to the hunter and feeds
families. Wild meat tastes better and is healthier than store-bought meat.
Dream, Design, and Deliver
At this stage, participants imagine their desired future and give it shape. These three steps
are intertwined, and cyclic. Here are some examples, organized by topic, of Dreams,
Designs (strategies), and Deliver statements (specific, practical steps for implementing
the design) that resulted from the Skownan First Nation’s AI process:

Silva Forest Foundation Revised Febru ary 2006

98
Introduction to Appreciative Inquiry Page 9
____________________________________________________________________________________

Topic Dream Design Deliver

Respecting the Land Our people respect the Keep the land much the Have summer camps on
lands and the waters. same as it is now the land for fathers and
sons, mothers and
Our people work to More people active on
daughters
ensure that the land and the land hunting and
water are clean and trapping Have Elders teach
healthy for our children traditional skills in the
Teach young people
and the animals. schools
outdoor skills

Spirituality Our people respect each More love, spiritual Meeting of spiritual
others’ spirituality or freedom, healing, unity, leaders
ways, be they Roman and respect in Skownan
A sharing circle to
Catholic, Pentecostal,
discuss the impact of the
Native culture or atheist,
blockade on the people
and we are free to
living in Skownan
practice our own beliefs.

Chitek Lake Skownan First Nation’s Joint management of the Know what a protected
place of peace and Chitek Lake Protected area is and how it can be
freedom for our people Area between the used
and the bison. It is a province and Skownan.
Inform more people
natural place that
Retain hunting rights for about the protected areas
supports our community
Skownan First Nation in initiative
through fishing, small-
the traditional use area
scale logging, and eco-
tourism, and provides
habitat for our animals.

Community Our people work Define expectations of Hold community

together to build a respect and tolerance at dinners
strong, safe and united the Band level, in the
Develop a newsletter on
community for our school, and have
respect and other topics,
children and future children respecting each
including announce-
generations other
ments and safety tips
More open
Explore and assess the
communication between
value of restorative
community members
justice approaches for
the community

Livelihoods Our people provide for Establish a lodge for Build a cover for the
our families through eco-tourism portable sawmill
productive work based
Develop a small-scale Obtain the skills and
on traditional activities
sawmill to provide knowledge to develop a
on the land. Working
timber for housing and Five-Year Management
individually, we support
to sell Plan for an eco-tourism
our community as a
lodge
whole.

Silva Forest Foundation Revised Febru ary 2006

99
Introduction to Appreciative Inquiry Page 10
____________________________________________________________________________________

Education Our people strive for Develop policy manual Re-establish Parent
higher education. We for Skownan School Program in Skownan
complete high school, School
Talk to community
excel at our jobs,
leaders about school Involve Elders in
achieve our goals, and
issues Skownan School and
bring meaningful
Adult Education to teach
employment requiring Develop adult education
survival skills on the
skills and education program that includes
land and respect
back to Skownan First life skills, academics,
Nation. and employment Secure nominal roll
preparation funding for adult
Our children are
education
educated in our
traditional values, and
we have the skills
knowledge, and respect
needed to survive on the
land. Our people speak
Ojibway.
Recreation Our people build pride, Build a new arena in the Identify resources for
unity, and strength in community building the first phase
our bodies and minds of the new arena,
through recreation and including human
meditation. resources, plans,
materials, and money
Prepare a three-phase
plan for expansion of
the existing recreation
hall

The expected outcome of AI

AI treats an organization like a stream flowing toward the sea. (Thanks to Bernard Mohr
and Jane Watkins for this metaphor.) The water in the stream will inevitably encounter
obstacles on the way—logs, stones, narrow places, dams. When it comes to an
obstruction, the stream continues to move toward the goal, circumventing the obstacle in
the most efficient possible manner. The stream doesn’t stop at an obstacle—a log, for
example—and attempt to “deal with it” by measuring the log, finding out where it came
from, how long it has been there, and why it lodged in that particular place. Nor does the
stream make any plans for moving the log. Rather, the stream continues toward its goal—
the sea— circumventing the log in the most efficient manner possible. (In many cases,
the log actually improves the stream.)
Organizations that work with AI report remarkable results—increased levels of
commitment and energy, innovative plans, and improved communication.
The first steps of an AI process are crucial, because they point the way to the outcome.
The axiom (once again) is that what we look for, we get more of. As explained in the
examples above—the hospital that looks for reasons why nurses are loyal employees
tends to find nurses who are loyal employees; the community groups who look at how
diverse groups can cooperate tend to find ways for their diverse groups to cooperate; the

Silva Forest Foundation Revised Febru ary 2006

100
Introduction to Appreciative Inquiry Page 11
____________________________________________________________________________________

community that looks at how young people contribute to the community finds young
people making a significant contribution to community life.

AI resources
Books
*Titles marked with an asterisk are especially recommended for community groups.
*Browne, Bliss and Shilpa Jain. 2002. Possibility Handbook: Ten Years of Imagination in
Action. Chicago: Imagine Chicago. [can be downloaded as a .pdf file at
http://www.imaginechicago.org/home.html]
Cooperrider, David L. and Diana Whitney. 1999. Collaborating for Change:
Appreciative Inquiry. San Francisco: Berrett-Koehler Publishers, paperback, 48 pp.
Cooperrider, David and J. Dutton (Eds.) No Limits to Cooperation: The Organization
Dimensions of Global Change. Thousand Oaks, CA: Sage Publications.
Cooperrider, David., P.F. Sorensen Jr., Diana Whitney, and T. Yaegar (Eds). 2000.
Appreciative Inquiry: Rethinking Human Organization Toward a Positive Theory of
Change. Champaign, IL: Stipes Publishing.
Cooperrider, David and Diana Whitney, D. 2001. Appreciative Inquiry Handbook: A
Constructive Approach to Organization Development and Change. Lakeshore Publishers,
Cleveland, Ohio.
* Elliott, Charles. 1999. Locating the Energy for Change: An Introduction to
Appreciative Inquiry. Winnipeg: International Institute for Sustainable Development,
[This document—288 pages—can be downloaded from the IISD website at
http://www.iisd.org/ai/locating.htm]
Hammond, Sue Annis. 1998 (2nd ed.). The Thin Book of Appreciative Inquiry. Plano,
TX: Thin Book Publishers, paperback, 70 pp. [http://www.thinbook.com/]
Hammond, Sue Annis and Andrea B. Mayfield. The Thin Book of Naming Elephants.
2004. Bend, Oregon: Thin Book Publishing Co., paperback, 110 pp.
[http://www.thinbook.com/]
* Hammond, Sue Annis and Cathy Royal (Eds.). 1998. Lessons From the Field: Applying
Appreciative Inquiry. Plano, TX: Thin Book Publishing Company, 295 pp.
[http://www.thinbook.com/]
Mohr, Bernard and Jane Magruder Watkins. 2001. Appreciative Inquiry: Change at the
Speed of Imagination. John Wiley & Sons, paperback, 288 pp.
*Rich-New, Kathleen and Bob New. 2003. Looking for the Good Stuff: A Guide to
Enjoying and Appreciating Life. Clarity Works!, paperback, 52 pp.
*Stavros, Jacqueline M. and Cheri B. Torres. Dynamic Relationships: Unleashing the
Power of Appreciative Inquiry in Daily Living. Chagrin Falls, Ohio: Taos Institute
Publications., paperback, 169 pp.
Srivastva, S. and D. L. Cooperrider (Eds.), Appreciative Management and Leadership:
The Power of Positive Thought and Action in Organizations. San Francisco, CA: Jossey-
Bass Inc.

Silva Forest Foundation Revised Febru ary 2006

101
Introduction to Appreciative Inquiry Page 12
____________________________________________________________________________________

* Whitney, Diana, and Amanda Trosten-Bloom. 2003. The Power of Appreciative

Inquiry: A Practical Guide to Positive Change. San Francisco: Berrett-Koehler, 264
pages.

Websites
 http://appreciativeinquiry.cwru.edu/ This in the “AI Commons”—an academically-
based site for discussion, announcements, .pdf documents, conference and training
schedules, and links. You can also subscribe to ai-list (an e-mail discussion list) from
this site.
 http://iisd1.iisd.ca/ai/default.htm This is the AI page of the website of the
International Institute for Sustainable Development (IISD) in Winnipeg. The site
includes detailed descriptions (much of it downloadable in .pdf format) of AI
processes with the Skownan First Nations in Manitoba and the Myrada project in
Southern India, which used AI to address poverty in four small communities. This
site also contains Charles Elliott’s excellent book about AI, called Locating the
Energy for Change, in a downloadable .pdf format.
 http://www.iisd.org/ai/waterhen.htm This is the IISD webpage that describes the
Skownan First Nation (formerly called Waterhen First Nation) Community Values
Project—“Integrating Aboriginal Values into Land Use and Resource Management.”
The final report of this project can be downloaded in .pdf format at
http://www.iisd.org/pdf/skownan_final_nopics.pdf
 http://imaginechicago.org This is the website of Imagine Chicago—a huge youth-
and community-based AI project that has now conducted interviews with more than a
million people, and has initiated dozens of citizen-controlled on-going social and
community initiatives. The site includes a downloadable document outlining the
processes and accomplishments of this 10-year-long (and still on-going) AI process.
A mild caution for communities who are meeting AI for the first time—you’ll find lots of corporations
using AI, and the “corporate presence” on some websites is substantial. Corporations know a good thing
when they see it, and AI works for corporations as well as for communities and non-profits.

AI Facilitators
Susan Hammond Stephanie Judy
Silva Forest Foundation Heartleaf Consulting
Box 9 #2 Press Road
Slocan Park, B.C. V0G 2E0, Argenta, B.C. V0G 1B0
Phone 250-226-7222, Fax 250-226-7476 Phone/Fax 250-366-4623
silvafor@netidea.com sjdks@direct.ca

Silva Forest Foundation Revised Febru ary 2006

102
 Designing a Livelihood Intervention: Process, Tools and Techniques1

1.0 Introduction
The primary reason to promote livelihoods is the belief in the essential right of all human beings to
equal opportunity. Poor people do not have life choices nor do they have opportunities. Ensuring that
a poor household has a stable livelihood will depend on substantially increase in income, and over a
period of time, asset ownership, self-esteem and social participation. The second reason for livelihood
promotion is to promote economic growth. The ‘bottom of the pyramid’ comprising nearly 4 billion
out of the 6 billion people in the world, who do not have the purchasing power to buy even the bare
necessities of life – food, clothing and shelter. But as they get steadier incomes through livelihood
promotion, they become customers of many goods and services, which then promote growth. The
third reason for promoting livelihoods is to ensure social and political stability. When people are
hungry, they tend to take to violence, crime, etc. Thus, we see that there are idealistic, utilitarian based
arguments for livelihood promotion.
Livelihood interventions are conscious efforts by an agency to promote and support livelihood
opportunities for a large number of people (other than those directly or indirectly employed by them).
The government of India has been one of the largest agencies involved in such livelihood promotion
efforts. However, the cooperative sector, the corporate sector as also the NGO sector has also
contributed to promoting livelihoods. Livelihood interventions can be in many forms and go far
beyond running an income-generation program. Some of the approaches of livelihood interventions in
India are:
Spatial Approach: Many livelihood interventions have a spatial geographical boundary. It may be a
single village, a watershed, a river basin, a block, taluka or a district or a region. The main difference
between other approaches and a spatial (or area development) approach is that it tries to tackle all the
sectors and segments of the population in that area.
o Supporting locally inter-dependant economic activities, based on a leading intervention, as done
by various state governments in the irrigation command areas.
o Supporting livelihoods in a degraded watershed or degraded forest area.
o Intervention in a cluster of enterprises, such as Ludhiana for hosiery, Badohi-Mirzapur for
carpets, Kancheepuram in Tamilnadu and Sualkuchi in Assam for silk sarees, and so on.
Segmental Approach: Promoting livelihoods for a vulnerable segment of the population, such as
landless households, tribals, women and the disabled.
o Supporting livelihoods of the poor through micro-credit, for example by SEWA, BASIX, etc.
o Investing in human development - nutrition, health, education, and institutional development
(for example CARE’s Women’s Income and Self-Help project, Jharkhand)
o Asserting the rights and entitlements approach of the poor – whether to minimum wages, land
tenure or access to public services, for example, the National Association of Street Vendors of
India asserted the rights of livelihood of street vendors.
While spatial livelihood interventions try to cover a whole region or a sub-region, the segmental
approach focuses its attention on one specific group of vulnerable poor people: landless, or tribals, or
women or any such other.
However, even this can be limiting since many of the poor have little in terms of human endowments
– and need investments in nutrition, health, education, vocational training and organising into
producers’ groups and cooperatives, before they can benefit from microfinance or livelihood
promotion efforts.

1
This reading is collage of materials drawn from various sources. These are: Datta et al. 2014. Resource Book for
Livelihood Promotion, Fourth Edition, The Institute of Livelihood Research and Training; and Datta et al. 2004. A Resource
Book for Livelihood Promotion, BASIX and New Economic Foundation pp. 233-262. Sources for other sections are
mentioned at respective places. This chapter is meant for class discussion only and not for quoting

103
While some see this as merely a matter of changing the resource allocation priorities of the
government, others see it as a more radical task. They feel that unless the poor are empowered and
assert themselves, they will never get their rights. The rights-based advocacy is the hallmark of the
movement led by Medha Patkar of the Narmada Bachao Andolan. The National Association of Street
Vendors of India, Patna, is another example of a rights-based approach to livelihood promotion.
Sectoral Approach: Promoting livelihoods along with a sector of the economy such as agriculture,
or a sub-sector such as cotton, soyabean, dairy, etc.
o Sub-sector Interventions, such as dairy, fishery, and sericulture, usually covering the value
chain from primary production to the ultimate consumer, e.g. NDDB in dairy.
o Intervention along a Vector (something which cuts across all sectors): such as water, power or
market linkages. E.g. MART, which has worked on rural haats – local markets.
There are several facets, which need to be looked into for the sub-sector to generate a large number of
livelihoods and smoothly pass the larger proportion of the value addition to the primary producers.
These include:
 Market: demand conditions
 Basic agro-climatic conditions or, natural conditions
 Infrastructure
 Capital in various forms
 Technology; Knowledge; Research
 People, their skills and attitude, and how they are organized
 Policy and regulatory framework
 Inefficiencies in any of these elements can block flow of resources and hinder number of
livelihoods supported by the sub-sector.
Sub-sector intervention, therefore, involves:
 A detailed study of the sub-sector, identifying-
 Demand profile: is it growing or stagnant, what are the prospects?
 The whole value addition chain
 Various players who are involved in value addition
 Technology used for each stage of value addition
 Identifying the bottlenecks in each stage of value addition and the key players who are involved in
that stage of transformation
 Identifying the possible interventions that can help overcome the bottlenecks, in consultation with
the key players
 Motivate the important players to take necessary action. Working with the key stakeholders,
including the gram panchayats, to resolve growth constraints
 Providing various transformations, supports; such as strategic reorientation to the market and
livelihoods; building consensus, developing systems of information processing and sharing
among key stakeholders.
 Continuously scan market opportunities to tap into demand, using secondary sources and give this
feedback to the various stakeholders.
 Continuously monitoring the bottlenecks and informing the same to the agency for identifying
any change in intervention when needed
 In a very similar manner intervention can also be made into a vector, which influences many sub-
sectors. For example, water is a vector, which influences not only the cultivation of food crops,
but also animal husbandry, industrial activities and even tourism in an area.

104
Designing a Livelihood Intervention

The basic process of designing a livelihood intervention involves the following steps:

Stage I: Understanding Internal and External Contexts: Coolie's Framework

Step 1: Understanding the Internal Context

Step 2: Understanding the External Context
(Exercise for 3-E (Explore the External Environment)

Stage II: Deciding on intervention

Step 3: Knowing economies
Step 4: Analysing Value Chain
Step 5: Analysing Value Addition
Step 6: Deciding on Value Addition
Step 7: Overlaying competence (intervening organisation)

Stage III: Designing the Intervention

Step 8: Design of the Collective Organisation
Step 9: Creating Producers Member-Driven Value Chain
Step 10: Mustering Financial Resources
Step 11: Initiating and initializing operations

2.0 Stage I: Understanding Internal and External Contexts: Coolie's Framework

Step 1: Understanding the Internal Context

Vijay Mahajan and Thomas Fisher2 had extensively used Michael Porter’s3 framework for analyzing
the strengths and weaknesses of an industrial subsector. The authors then helped Sankar Datta adapt
this framework for analyzing livelihood intervention choices for the poor. They cheekily named it the
‘Coolies’ Framework’, taking into account the fact that a porter is called a Coolie in Hindi! The main
elements of the Coolies’ Framework are the Internal Context and the External Context, under which
livelihoods for a particular target segment are sought to be promoted. These contexts are discussed
below:

There are two important elements of Internal Context that must be borne in mind, while designing or
assessing a livelihood intervention.4 These are:

Understanding People’s Livelihoods; and Understanding organizational competence of the agency

who is promoting livelihoods.

2
Mahajan, Vijay and Thomas Fisher, with Ashok Singha, 1996. The Forgotten Sector: Non-farm
Enterprises and Employment in Rural India. ITDG, Rugby, UK.

3
Porter, Michael E. 1990. The Competitive Advantage of Nations. The Free Press, London
4
From the Resource book on Livelihood Promotion, 3rd Edition

105
 Figure 1: The Coolie’s Framework

Step 1.1 Understanding People’s Livelihoods

There is four elements of livelihood profile of a poor household: Livelihood Activity Portfolio,
Livelihood Capabilities, Livelihood Shocks and Vulnerabilities, and Livelihood Strategies of the
people (Please refer to the profiling of livelihoods in the chapter Measuring Livelihoods).

It is very important for us to pay attention to the People of the area. We must get to know our target
group very closely to ensure that we do not make the same mistake. We need to consider:

 How will the proposed livelihood opportunities meet the needs of the household?
 How well does it match the resources and skills available to the household?
 How will it fit into the daily and seasonal rhythms of the household?
 Will it increase the household’s income or assets?
 Will it reduce or enhance the risks faced by the household?
 What assurances can be put in place to mitigate risk?
 Will the activity require organizing poor households in groups?
 How capable is the household to participate in such an organisation?
 What inputs will it require from us?

Let us remember that the poor people, even before our intervention, are deployed into different
activities. Influencing any one of them, or introducing a new piece of action often happens at the cost
of one of the existing activities.

106
Livelihood Activity Portfolio
The poor people are often engaged in more than one activity for their livelihood in order to maintain
their cash-flow and also as a risk management strategy. Since we are trying to promote livelihoods for
poor people, it is important to understand the livelihood profile of that people in the area have, well so
that the proposed intervention fits into their daily and seasonal rhythm of life. In order to know the
livelihood profile of poor households:

 First, identify three groups of people from within the group of people we would like to work
with. These could be groups from three villages, or three communities or any other social
segment we are working with.1
 Go to these poor families and do a seasonality mapping exercise to understand their
livelihood patterns throughout the year. Make a list of the various activities they are involved
in at different points in time. Understanding the income from various sources may help us
formulate the seasonality diagram. Often poor people find it difficult to assess their income.
Therefore, we may try to understand their expenditure pattern to know their income pattern
and draw the seasonality diagram.
 Also, try to understand the major bottlenecks in each activity. Make a note of these.
 Make a note of the months in a year they are without work or migrate.
 Consolidate the seasonality diagrams from different groups to develop a list of various
activities people in the area are involved in, with an indication of their magnitudes.
The exercise above would have given us a fair sense of the livelihood portfolio of the people in our
area. It may also have given us some sense of the livelihood capacities of the people in the area, and
livelihood strategies used by them.

Understanding the diversified livelihood portfolio in the area: The selection of the livelihood
intervention that will be implemented should be done on the basis of an analysis of the current
livelihood, the needs and the vulnerability context. Is the intervention within the caring capacity
(existing and potential) of the natural resources? What are the aspirations for development within the
community? In some situations, an alternative livelihood will be required to meet the most basic
needs of a household or village, while other livelihood interventions are aiming for an increased level
of well-being.

Besides, knowing about Livelihood Capacity, Livelihood Strategy of the people, and their Asset Base,
and Livelihood Shocks and Vulnerabilities are also important (Please refer to the profiling of
livelihoods).

Step 1.2 Understanding organizational competence

The other important element of the internal context is the organization making the intervention. With
regard to the intervention, the following aspects are important for the agency involved, and must be
understood well:

Mission: Does the intervention fit with the organization’s mission? How core is livelihood promotion
to the organization’s mission? It is important to figure these out since the organization’s functioning
must align with its mission. Any mission is translated into specific objectives that the organization
tries to achieve. In order to achieve those objectives, it adopts a Strategy, which is the way to achieve
the objectives and creates a Structure to implement the strategy. The organization’s Staff executes
their work and adopts a particular style of functioning, which is appropriate for the organization.
Appropriate alignment of these elements helps the organization achieve its mission.

1
Usually we talk about a minimum respondent size of three. Talking to one sample group may leave an error.
But then if we check it with one more, and that shows a different view, to assess which of the two views are
closer to reality we need check with a third one.

107
Capacity: The capacity of an organization includes its set of competencies, and it depends on the
availability of relevant financial and human resources. It is important to be aware of an organization’s
core competency, as it is likely to have serious implications on the interventions they take up.
Similarly, different funding sources and their nature may also influence the organization’s capacity.

Step 2: Understanding the External Context

After understanding the relevant aspects of the segment of people for whom the livelihood
intervention is shaped and the intervening agency, it is important to grasp the external livelihood
context. There are four elements of the external environment that influence livelihood choices: the
Factor Conditions, the Demand Conditions, the Industry Conditions and the Institutional Conditions
(See Figure 1 or 2).

Figure 2: Elements of the External Context

Factor Conditions
Livelihood activities utilize various accessible resources. Resources that go into the production of
goods and services constitute the Factor Condition. For example, land, water, agro-climatic
conditions, availability of skilled people, the prevailing political economy, conditions of roads,
availability of electricity, general development indicators of the region define the activities that can
support a number of livelihoods in that area. Such Factor Conditions must be understood before
considering an intervention.

The presence or dearth of different Factor Conditions can imply the adoption of different livelihood
intervention strategies. For example, the organization PRADAN, promoted lift irrigation in the
Ranchi-Lohardaga area, while choosing to work in the leather sub-sector in Barabanki-Uttar Pradesh.
This choice was made on the basis of several favorable factor conditions (many of the resources) in
these two locations. In Ranchi-Lohardaga, water from small streams was plentiful and the tribals who
owned land near the streams were able to undertake cultivation once they got irrigation. In Barabanki,
there was a large cattle population and a lot of landless people who had the skill of handling dead
animals and did not have any social/cultural prejudice against such occupation. The ready availability
of hides from dead cattle was a source of raw leather and therefore PRADAN chose to work with the
tanning of leather in Barabanki. While examining the Factor Conditions, one must note that the mere
presence of the factor conditions in the area may not be adequate to deem them useful. In order to
actually enable livelihood opportunities, a factor condition must have the 4-As:

• Asset : The asset, physical or otherwise must exist.

• Awareness : People must be aware that such an asset exists.
• Ability : People must have the ability to use that asset.
• Access : People must have access to the asset.

108
Unless these 4-As are also present with the resources, they are not useful to any livelihood
intervention effort. Some tools related to the access and ownership of resources are discussed in the
chapter on Tools as well.

Demand Conditions
Whatever be the chosen livelihood activity, there is always some output in the form of goods or
services. These goods or services are either useful to the HH (self-consumption) or to others who are
willing to pay something equivalent to their value, and which constitutes its demand. When
examining Demand Conditions, it is necessary to find out who is demanding the goods and services
produced by the people. Is the demand local? Is it increasing, decreasing, or stagnant?

It is aspects such as these that determine Demand Conditions, and which in turn, determines the
number of livelihoods that can be supported, and the income that can be generated from the activity.
Demand Conditions play a significant role in determining the livelihood intervention strategy.

How do we understand Demand Conditions Better?

Economic opportunities in the present-day world can be found in the Market. Market means demand;
though we have already looked at the demand conditions briefly, we have not yet looked at some of
the global and national market trends for these selected activities.

While looking at the market and market trends, it is always good to scan the global or national
markets and assess the characteristics of the market.

For example, the market for fruits and vegetables is growing the world over, but not the markets for
cereals. Therefore, even if the local markets for cereals are larger than fruits and vegetables, it may be
easier to work with the later, than with cereals, if other conditions in our area permit.

However, identifying the future trend of a product or a service is a complex task. But it needs to be
done. Variety of factors influence these trends:

i. New technologies
ii. Change in people’s lifestyle
iii. Change in demography
iv. Change in the political balance
v. Or a mix of all of them

What Do We Look for in the Market?

While scanning the markets, one should look for:

 Market Size: Large markets can support a large number of livelihoods. For example, millions of
households depend on wheat production, while only a few thousand people can produce Psyllium
(Isabgol) that the whole world can consume, or a hundred thousand people can produce all the
bamboo baskets that we need. Intervention, where there is a fairly large demand, makes good
business sense
 Growing Market: A growing market throws up new potential for more people to join in at
different parts. It offers better opportunities for supporting a larger number of livelihoods. An
existing large demand, which has no future growth or that which is likely to dwindle, cannot be
called a growing market; therefore it does not offer a very good prospect
 Dynamism: Markets which are dynamic; absorb changing technologies; constantly witness entry
and exit of players; offer scope for a wide range of activities, are dynamic markets and can
support many livelihoods
 Transparency: Transparent markets are usually fair, giving all players a level playing field.

109
 Low Barriers: Markets with low exit and entry barriers are an ideal choice. Usually, these
markets become very competitive and are efficient.
 Systems: Look for markets which have well-developed systems in place
 Support: A well-developed chain of related and support industry is usually helpful

Analyzing Market Trend

We need to analyze market trends carefully. We need to keep our eyes and ears open so that we can
quickly pick up signals of change. We need to consciously keep ourselves open to such signals. In a
simple manner, we could plot the market size (either in terms of total production, or in terms of total
value) of some of the commodities/ products that are/ can be produced in the area, on a graph. Let us
look at the production of some crops in India, in million Metric Tonne over the decade of 1990s.

Table 1: Production of Select Crops in India

Year Millets Potato Beans dry Soybean

1991 8.13 15.21 3.53 2.49
1992 12.28 16.39 3.87 3.39
1993 8.49 15.23 3.27 4.75
1994 10.30 17.39 3.06 3.93
1995 8.66 17.40 3.44 5.10
1996 10.94 18.84 3.51 5.40
1997 10.38 24.22 2.96 6.46
1998 10.60 17.65 2.75 7.14
1999 10.23 23.61 2.69 6.79
2000 8.68 25.00 2.63 5.09
2001 8.32 25.00 2.57 5.60
Growth in the 2% 64% -27% 125%
Decade

What does Table 1 tell us? It shows that the potato and soybean markets seem to be growing, though
potato market looks much bigger than the soybean market. Beans and millets markets, however, seem
to be stagnant, if not declining marginally. If our farmers are to produce these four crops, it may be
good to help them improve their production of potato or soybean, whose markets are growing.

Please remember that though these are national-level production figures, these give us a fair sense of
the market behavior. This also shows us that the potato and millets are riskier as compared to beans or
soybean.

Table 2: Various Information Sources for Understand Local Economy

Particulars Information Needed Sources

District  Location  District Economic Census: District

Background
 Rainfall Statistical Office/ Planning Office in
some districts
 Climate
 District Potential Link Plan (published
by NABARD for every district)
 District Credit Plan (published by the
lead bank of every district)

110
Particulars Information Needed Sources

Population  Rural - male, female  District Census Data: District Statistical

 Urban - male, female Office/Planning Office in some districts
 Computed Annualised Growth Rate -
Rural, Urban
Literacy Rate  Rural - male, female  District Census Data: District Statistical
 Urban - male, female Office/Planning Office in some districts
 Computed Annualised Growth Rate -
Rural, Urban
Workers  Rural - male, female  District Census Data: District Statistical
Participation
 Urban - male female Office/Planning Office in some districts
Rate
 Computed Annualised Growth Rate -
Rural, Urban
 Workers Classification as per NIC

Land  Land Use Classification  Seasonal Crop Report: ICAR

 Cultivable Land Classification: small,
marginal, medium, etc. both acre-wise
and landholding-wise
Agriculture  Cultivable Lands: Net, Gross & trend  Seasonal Crop Report
 Reasons, for changes, if any
(Compare data  Major food crops: cultivable area,  NABARD: District Potential Link Plan
with adjacent productivity & trends  LEAD Bank: Annual Credit Plan
district or state
 Major Non-food crops: cultivable area,  APMAC
averages)
productivity & trends
 Discussion with Stakeholders
 Availability of Market Infrastructure
 Constraints in agriculture production &
marketing
Water  Irrigated Land: Net, Gross, trend  Seasonal Crop Report
 Sources of Irrigating Water
Animal  Major animals reared: Population,  Census of Animal Husbandry
Husbandry products production  NABARD: District Potential Credit Link
 Infrastructure for value addition & Plan
marketing trends  Discussion with Stakeholders
 Marketing Trends and Constraints
Forestry  Coverage, type & trend  Seasonal Crop Report
 Forest Produce - kinds and in Rs and  NABARD: District Potential Link Plan
trends  Directorate of Economics & Statistics
 Participation of JFM  Discussion with Stakeholders
 Scope for income generation
Mining and  Major elements mined/quarried  Directorate of Economics and Statistics
Quarrying
 Production - kinds and in Rs  Discussion with Stakeholders
 Employment opportunities: Scope
Manufacturing  Units as per NIC 2 digit classification,  DIC
 Persons employed  Discussion with Stakeholders
 Employment opportunities: Scope

111
Particulars Information Needed Sources

Services  Identify potential activities by assessing  Random survey in at least five market
current employment, areas
 employment absorption capacity by
calculating Computed Annualised
Growth Rate, etc
Financial  Scheduled commercial Banks: Loan  NABARD: District Potential Credit Link
Services outstanding sector-wise: accounts and Plan
amounts  Lead Bank: Annual Report; RBI:
 Portfolio Analysis Banking Statistics
 Discussion with LEAD Bank
Government  Performance status: Various  Discussion with DRDA, Govt.
Schemes development schemes departments

How do we get the Information?

Many sources provide information on global market trends and opportunities:

 Internet Search: Websites are the latest and most interactive sources of information. They provide
an opportunity to interact with specialists on the site who respond to various queries. Also, the
Internet is a major source for tracking worldwide trends and getting every kind of market
information however specialized, in a matter of minutes. (The information, however, comes at a
price). You could look at some of the sites like www.agriwatch.com, www.commodityindia.com,
www.cmie.com
 Directories: Trade directories, economic databases, which are periodically brought out and
updated by research organizations, give the latest status of the markets
 Publications: Business publications, such as Economic Times, Business Line, etc. give day to
day information on the developments in the local, national and global markets. Also, they are a
very good source for obtaining data on sectoral studies of various industry trends. Business
magazines and special journals dedicated to specific areas of interest can form a great secondary
source of information

If you are getting impatient to start your intervention, you can right away start with these short listed
activities.

Industry Conditions

The third element of the external context is the nature and status of the industry, of which, the
livelihoods activity forms one part. Here we use the word ‘industry’ in a broader sense, to include all
economic activities. For example, the production of paddy is a part of the cereal food industry. Thus,
it is important to assess the status of the industry, in which the livelihoods are to be promoted. Is the
industry growing and vibrant, or is it stagnant and dying? Are there other related and supporting
industries that extend their services? These related and support industries often play a critical role in
the chosen livelihood activity. Their presence or absence creates conditions that make one livelihood
intervention more effective or appealing than the other.

Institutional conditions
All livelihood activities, and for that matter, all economic activities, are bound by some institutional
context. Apart from state policies and tax laws that govern the activity, there are local norms, social
arrangements that also infringe upon livelihood choices. Often these local institutional arrangements,
which express themselves as Social Norms, help people manage their risks and vulnerability.

The presence of various institutions such as promotional, research and training institutions, producer
associations, also significantly influences the choice of livelihoods. Together such elements define the

112
Institutional Conditions, which form the fourth element of the external context influencing the choices
in a livelihood intervention.

The 3-E Exercise (Explore the External Environment) for Understanding External Context

We will now look at an exercise to Explore the External Environment, in short, the 3-E Exercise. This
is an exercise designed to collect and consolidate information about various elements of the external
context (Demand Conditions, Factor Conditions, Industrial Conditions and the Institutional
Conditions).

Step 2.1 : Identify Key Informants

 Identify at least three key informants or players in every selected activity

o It is useful to choose people from different interest groups because they will help us build
different perspectives on the chosen livelihood activity

Step 2.2: Develop a Questionnaire for Assessment

 Generate simple questions, which helps assess conditions of various factors, which limit
livelihood choices in the area.

Step 2.3: Scoring by Key Informants

 Ask different key informants to assess each of these parameters on a scale of 1-5, where 1 is
highly unfavorable and 5 is highly favorable, individually
o Only the respondent should give the score and we should not prompt him in any way. If
necessary we can use some PRA methods to help them score, but evaluation should come
only from them.
o It is necessary to go to at least three Key Informants. If we have the time and the
resources, we can definitely seek views of more.
o Score the responses of the Key Informants in the columns and find out the average score
on each of the 25 parameters.

Table 3: Format for 3-E Exercise

SN Activity Response (1 to
10)
A Factor Conditions for collective enterprises
1 Availability of Raw Materials
2 Availability of Skilled and willing SHG Members
3 Availability of credit
4 Availability of subsidy
5 Availability of Infrastructure (electricity, water, roads, storage, etc.)
6 Access to information
7 Access to services
8 Proximity to resources
B Demand Condition for collective enterprises
1 Availability of demand aggregators
2 Proximity of demand aggregators
3 Competence to meet demand
4 Competence to create demand
5 Adaptability to technology induction
C Industry Conditions for collective enterprises

113
 SN Activity Response (1 to
10)
1 Availability of market leaders for product
2 Availability of market leaders for process
3 Availability of market leaders for services
4 Availability of process maturity with technology
5 Opportunities for process outsourcing
6 Existence of enabling policies
7 Awareness to adapt environment-friendly activities
D Institutional Conditions for collective enterprises
1 Presence of efficient Promotional Agencies (Very Efficient =10;
Inefficient/Not Present =1)
2 Existence of Functioning Producer Organizations
3 Existence of brand owners
4 Availability of incubators, innovators and R & D institutions
5 Members capability/role in governance
6 Ability to manage the economy of scale
7 Ability to manage the economy of scope
8 Ability to manage the economy of integration

Step 2.4: Compare Scores of Different Activities

o Place the scores obtained by different activities in column totals at the end of each
column, and work out the averages of the score in the rows.
o Examine the column totals. Compare and see which activities have got high scores. For
instance in the table above, stone cutting has got the highest score followed by dairy, goat
rearing, leather and carpet making.
o The activities, which have scored high totals, are likely to have had favorable conditions
for most of the elements. Poor people may find it easier to work in such a sector than the
one where many conditions are unfavorable.

Step 2.5: Identifying Bottlenecks

 Now examine the row scores. The row that gets the lowest score indicates bottlenecks
 For example: In the stone cutting industry absence of appropriate organization of the
producers and availability of credit in dairy seems to be the critical bottlenecks.

Step 2.6: Identifying Interventions
 Chose an intervention point which can help overcome a bottleneck in the activity, and which
suits your own internal context.
 For example, given that credit is a ruling bottleneck in the spread of the dairy activities, you
may choose to extend credit yourself, or
One important element of the Internal Context; the people, we have already assessed in the 3E
Exercise.

3.0 Stage II: Deciding on intervention

Step 3: Knowing economies
Step 4: Analysing Value Chain
Step 5: Analysing Value Addition
Step 6: Deciding on Value Addition
Step 7: Overlaying competence (intervening organisation)

114
Step 3: Knowing Economies

Economies of scale: In microeconomics, economies of scale are the cost advantages that an enterprise
obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the
scale of output is increased. "Economies of scale" is a long-run concept and refers to reductions in
unit cost as the size of a facility and the usage levels of other inputs increase.

Economies of scope: Economies of scope are conceptually similar to economies of scale. Whereas
'economies of scale' for a firm primarily refers to reductions in average cost (cost per unit) associated
with increasing the scale of production for a single product type, 'economies of scope' refers to
lowering the average cost for a firm in producing two or more products. The term and concept
development are due to Panzar and Willig (1977, 1981).[1] Here, economies of scope make product
diversification efficient if they are based on the common and recurrent use of proprietary know-how
or on an indivisible physical asset.[2] For example as the number of products promoted is increased,
more people can be reached per dollar spent. At some point, additional advertising expenditure on
new products may start to be less effective (an example of diseconomies of scope). Related examples
and distribution of different types of products, product bundling, product lining, and family branding.

If a sales force is selling several products they can often do so more efficiently than if they are selling
only one product. The cost of their travel time is distributed over a greater revenue base, so cost
efficiency improves. There can also be synergies between products such that offering a complete
range of products gives the consumer a more desirable product offering than a single product would.
Economies of scope can also operate through distribution efficiencies. It can be more efficient to ship
a range of products to any given location than to ship a single type of product to that location. Further
economies of scope occur when there are cost-savings arising from by-products in the production
process. An example would be the benefits of heating from energy production having a positive effect
on agricultural yields.

A company that sells many product lines sells the same product in many countries, or sells many
product lines in many countries will benefit from reduced risk levels as a result of its economies of
scope. If one of its product lines falls out of fashion or one country has an economic slowdown, the
company will, most likely, be able to continue trading. Not all economists agree on the importance of
economies of scope. Some argue that it only applies to certain industries, and then only rarely.

Economy of Integration: Backward and forward integration are strategic initiatives companies may
perform to reduce risks and interdependencies with external business partners in the supply chain.
Fundamentally, companies may increase their control over a wider scope of the supply chain by
performing backward and/or forward integration and increase their own decision-making power over
key resources and competencies important to the competitiveness of the organization.

Backward integration can involve a purchase of suppliers in order to reduce supplier dependency with
regard to e.g. timely deliveries, quality concerns, innovation ability, etc. Forward integration is a
strategy in which companies expand their activities to control the direct distribution of their products.
This might be required, if companies would potentially benefit from handling e.g. the shipping of
their own products directly to customers, or the retail selling of own brands in brand stores. There
might be various good reasons for companies to perform either backward or forward integration, but
such strategic initiatives should always add specific value to the company, and should always be
aligned with the overall strategy of the company and with customer needs and wants.

Step 4: Analysing Value Chain

Value chain analysis is a description of (a) all the steps through which something attains its
value, (b) the processes, technology and costs involved in the steps, and (c) the manner in
which the value created gets divided among the actors involved in the steps. This tool traces
the changes that happened in the steps in the recent past, the ways in which the actors coped
with the change and the manner in which the change affected the relationships between various

115
actors. It also looks at the attempts made by the actors to vary the costs and the value
appropriated at various stages and the effect of these attempts on the value created in the entire
chain. It gives a broad social description of the actors involved in the chain at various stages. The
tool also records the practices followed by the best practitioners at various stages. After livelihoods
mapping, the facilitator identifies the most important 3-4 livelihoods/vocations for further analysis
using the tool of value-chain analysis. Information for this tool is obtained in a four step process:

Step 4.1: Information from the practitioners of the livelihoods

Step 4.2: Information from persons outside the village, who are related to value addition and
marketing activities, following the product through the chain of actors that it passes through till it
reaches the end consumer in its various forms. If inputs (like vermicompost) are made in the village
itself, the value-chain analysis starts from this point. Else, the value-chain simply takes them as
inputs.
Step 4.3: Identification of best practitioners within the community or nearby
Step 4.4: Best practices adopted anywhere else Value chain analysis formats vary based on the
category of livelihood - the format for a farm-based livelihood is different from the format for
service, or labour. The format for farm-based livelihoods begins with inputs and go through
pre-production, production, harvest, post-harvest, local value- addition and marketing stages. The
format for services may combine service provision/production and marketing into a single stage.
For labour, only the stages inputs and pre-production may be relevant.

Step 5: Analyzing Value addition5

Under the present technology conditions material, labour and capital have emerged as key factors of
production. Factor owners make contributions with fixed pay off rewards or proportionate share of
value. Any of the factor owners can take lead and come forward to organise production of goods and
services. Those coming forward and taking lead usually negotiate fixed rewards for securing
contributions from other factor owners and retain claim to residual for themselves. It is but natural for
those who are assuming risks to try negotiating on conservative estimates of value generated and
highlights uncertainty and risk. Whereas, others who are negotiating for fixed and definite return tend
to base their negotiations on optimistic, if not on exaggerated, estimates of value generated and to
undermine the risk and uncertainty.

The divergence in the estimated and realised value of goods and services produced may leave those
who assumed risks better off or worse off. If they emerge better off, others will feel jealous, cheated
and exploited. If, the risk takers do not emerge better off but become worse off, others feel relaxed
and congratulate themselves for having wisely negotiated a fixed and definite return for their
contributions. Fixed pay off factor owners do not receive benefits due to increased productivity and/or
increased value realisation than anticipated and the demand for extending their claims beyond fixed
pay off rewards derives force and legitimacy from this. Labour based production (fruit gathering and
hunting), land based production (agriculture) systems were first to emerge. The advent of new
methods of mass production and large-scale marketing make it almost impossible to organise
production of goods and services in the absence of capital on a large scale.

Providers of each factor are trying to claim a major chunk of the value generated for them, often
disregarding the claims of others. Aggregation by absorption and elimination by displacement or
replacement are the methods employed to achieve complete control over production and supply of
goods and services. The level of technology moderates this struggle and forces material, labour and
capital factors to coexist in the process of production of goods and services. The distribution of the
value realised from the goods and services jointly produced by these factors is based on their relative
negotiating strengths backed by their relative scarcity rather than their objective contributions to the
production of the same.

5
This section is prepared by KV Raju for classroom discussion

116
Table 4: Value Chain Analysis of Crop Cultivation (Groundnut)
Inputs Pre Production Production Post Production Local Value addition Local market
Activity Land, Implements, Water, Land Preparation, Weeding, Watering, Picking the plats, Separating the nuts and Directly to the local
Oxen, Seeds, Fertilizers, Application of fertilizers, Application of fertilizer, Drying the plants, the shells, Separating buyers/procurement
pesticides Seed treatment, Sowing. Application of Transportation, to seeds from nuts, Storage agencies, Sale to the
pesticides, Protection home for seed purpose and money lender
from wild boars/bears. marketing
Risks involved Substandard quality of Rains deficiency Rats, wild boar, Crop damage because of Price down in the market
fertilizers & pesticides Diseases, Pest attach Heavy rains lack of storage
Gender Men involve in purchasing Men involve in plowing Women involve in Mostly women involve Mostly women involved
inputs activities weeding work and men in groundnut picking in value addition like Men involved in
involve applying separating nuts and marketing activities.
fertilizers and pesticides seeds. Men involved in
activities packing and transporting
Seeds: 2000/- Fertilizers Income: Sale of 30 bags @ 1200 per bag
Input cost 1300/- Pesticide 600/- 1200 x 30 = 36000
Land leveling and plowing Applying fertilizers and Groundnut picking Separating the nuts
Labor Cost charges: Rs.3200/- pesticides charges: charges: 7800 Women: 400
Seeding: Rs.2300/- Rs.600/- x 2 = 1200
Total Cost (Rs.) 3900 5500 1200 7800 400
Lack of investment Scarcity of water, scarcity of Waiting buyers
Limitations Scarcity of seeds and good quality pesticides, Labor scarcity Depending on rains Price decided by the
fertilizers in time Increasing inputs costs buyers
Purchasing good quality of Preparing land on time. On-time weeding works Taking all measures on Segregating quality nuts Selling into the wholesale
Best Practices seeds and fertilizers; Applying sufficient water Applying water on time time of picking, and drying and storing in market.
Taking loans from the Applying a sufficient separating of nuts and a proper way
bank; Making crop quantity of good quality seeds
insurance fertilizers on time
Gaps No seed treatment No timely application of High dosage of chemical Delay picking of No grading, No storage Selling to the middleman,
irrigation and fertilizers fertilizers applied groundnut. facilities getting low income.
Possible Proper cultivation, Weed Good seed selection, Seed Should apply water on Grading; Separating Grading, quality seeds, Should sell in the direct
Interventions control on time seedling treatment time; Use of Organic the nuts. storage market without a
fertilizer middleman.
Total Cost (Rs.): 18800; Total Income (Rs.): 36000; Profit/ Loss: 17200

117
Step 6: Deciding on Value Addition6

The value chain precedes a well-identified supply chain. The supply chain is one of the most
innovative, complex and dynamic chains that any organization can hardly ignore. The supply chain
approach in the world today is widely accepted as a complex phenomenon because of the agents and
processes involved and the need for performance management. During the study of a value chain, it is
necessary to incorporate a broader and more balanced approach of identifying and measuring the
overall integration issues which are vital for the ongoing supply chain.

The concept of value in supply chains concentrates on the internal operations of individual
participants. It does not cover the various inter-relationships, combinations or integrations that occur
along the chain. Good planning starts with a clear understanding of the ideal supply chain operating in
a given environment. Unless you know what the required results expected from the plan are, you will
not reach it. Assuming that these needs are captured adequately by whatever method is used, and then
appropriate can be determined. If there is uncertainty about what the actors in the chain want from the
overall chain or system, perhaps because they are unfamiliar with the capabilities of technology, or
the extent of the chain capabilities, then there could be fuzzy and hard to determine. In that case,
methods more suited for such circumstances should be used – including prototyping or evolutionary
acquisition. Determining value is not about getting the value right; it is about getting the right value.
With inappropriate, you can make a Type III error i.e., “Provide a Good Solution to the Wrong
Problem.” The success of a value chain depends upon a system that reflects, as much as possible, the
wishes and wants of the range of people involved in influencing the system or influenced by the
system.

There are many types of value. Unfortunately, there is a tendency for planners to concentrate only
upon the value that indicates desired features or capabilities of a product, process, system or indeed
total supply chains. This concentration can lead to the neglect of others that may not be so visible but
are essential to the success of a plan. They can describe the different aspects of performance or
conformance. A shortfall in any one of these outcomes will lead to difficulties in implementing the
plan. Effectiveness refers to functions to be provided: able to prepare documents, able to monitor
performance, able to calculate. The assessment of effectiveness is measured in terms of value-added
to the organization’s objectives. The capability refers to the features of a system or its necessary
output. A capability provides the desired features or attributes. Capacity refers to the throughput of the
chain. It is the flows, which include physical capacity, information and financial flows. The capacity
of the system is a measure of its ability to support the required number of users over the required time
for the required number of tasks. All these must be integrated.

Achieving value in the total value chain needs overall alignment of similar goals and objectives of all
actors and is crucial to develop the value from the chain. All actors must be aware of tangible
outcomes such as financial, product and service quality; intangible outcomes of the holistic chain and

6 Altenburg, T. (2006), “Governance patterns in value chains and their development impact”,
The European Journal of Development Research, Vol. 18 No. 4, pp. 498-521.

118
the outcomes of relationships. Value is achieved from both the tangible and operational aspects as
well as the intangible and managerial/entrepreneurial aspects of the total chain. In developing this
holistic supply chain scorecard further to incorporate both the tangible and intangible value-adding
concepts, the following diagram emerges.

The diagram covers the tangible and somewhat easily measured components that support or impact
operational capabilities. These include the financial flows, the informational flows and the process
and procedural flows. The industry standards, regulations and corporate governance aspects need to
be included to balance the overall stakeholder satisfaction levels. All these aspects will improve or
constrain the flows and operational performance of the total chain. The tangible aspects are important
as the operational efficiencies of the total chain will operate more efficiently when all the flows and
processes align smoothly. Core business processes are related activities that combined create value as
they sequence the activities within and between the participants along the chain. When the procedures
and processes integrate smoothly there are little disruption to the physical, informational or financial
flows. The governance of these processes and policies of the organizations along the chain need also
to align. Governance is listed together with regulations and industry standards. It could be an
overarching managerial component as it affects the financial, regulatory and information flows. The
approach to industry standards, regulations and external environmental pressures such as political,
economic and social all need to be considered under this scorecard grouping. Every participant along
the chain needs to comply with the overall decisions and coping approaches to regulatory, economic,
political and societal pressures. If one area of the chain does not comply with a regulation then further
along the chain the good or process may be held up to accommodate the compliance of a regulation.
The asset management of the information technologies required for order and invoice processing,
visibility and accuracy of billing and notifications and linkages to appropriate members inside and
outside of the chain needs to be managed so that disruptions do not occur. Accuracy, visibility and
flexibility all add value to a supply chain.

The second issue covers the intangible and more difficult to measure components and these are the
managerial and entrepreneurial aspects of the chain. These include the collaborative and relationship
management aspects, the strategic and financial targets and goals and the alignment along the total
chain. It also covers the management of change and innovation.

Step 7: Overlaying Organizational Competency

The 3-E Exercise gives us a fair amount of information about some of the potential activities in the
area. Apart from the information, the dialogue with three key informants of these activities is also a
very enriching process. By completing this exercise, we become quite familiar with:

 Some of the activities that can be taken up by the people in the area for their livelihoods;
 Factor and demand conditions for the production of these activities present in the area; and
 The major bottlenecks in taking up this activity.

We now need to choose the exact intervention that we need to start with. We can also plan for some
interventions that we could take up later, and prioritize/ sequence them. This choice needs to be made
on the basis of the capacity of the organization that will have to make the intervention.

It is important for us to recognize that livelihood intervention is a complex task. Therefore, we need
not have all competencies within the organization for us to say that the organization has the
competency. There could be different stages of competency of the organization.
 It already has the competency
 It can build the competency within the existing people in the organization.
 It can choose to collaborate with some other organization, which has the competency.
 It can hire new people and build the competency.
 Required competency may not be available at all.

119
A similar analysis is also applicable for not only the human resources of the organization, but also on
financial resources, infrastructure and so on. In these cases also we need to ask:
 Do we have to resource (which in turn will make the organization capable) within the
organization?
 Is there some other organization we can collaborate with who can bring in the resource.
And so on…
This analysis involves two steps.

Step 7.1: Identifying intervention that can help overcome bottlenecks

Step 7.2: Assessing Need for Services in Livelihood Promotion: Livelihood Triad
Step 7.3: Assess whether the organization has the competence required for the task or can
acquire such competency in collaboration with some other agency.
Step 7.4: Pulling out additional Strengths: Collaborative Polygon

Step 7.1: Identifying intervention that can help overcome bottlenecks

Identifying the specific interventions that can help overcome a bottleneck identified through the 3-E
Exercise is a creative task. For this, we need to consult a variety of stakeholders, look at efforts done
by other organizations. Many suggestions would have come during the interaction with the key
informants during the 3-E Exercise. We need to consolidate these ideas. For example, in the dairy
intervention in the above case, if credit is a major bottleneck identified, we could choose from the
following:

 Making credit available through our organization’s micro-finance activities

 Making credit available by collaborating with one of the micro-finance agencies working in the
area
 Making credit available by promoting a new people-owned micro-finance agency in the area
 Making finances available by linking the producers with banks in the area.

The first step is to generate all these ideas. We could use any of the brainstorming processes for
generating such a list.

7.2 Assessing Need for Services in Livelihood Promotion: Livelihood Triad7

The endeavour called livelihood promotion is very complex. Though many development
organizations have attempted to extend a wide variety of services, there are few, which have
attempted to address it in its full range. One of the very good examples of providing them could be the
Self Employed Women’s Association (SEWA), which has over 750,000 members. The Livelihood
Triad includes microfinance services (MFS), livelihood promotion services (LPS), and institutional
development services (IDS)

Micro-finance services (MFS): Savings and credit through the SEWA Bank, district-level self-help
group federations linked to the SEWA Bank and insurance services through Vimo SEWA.

Livelihood Promotion Services (LPS): the SEWA staff takes up livelihood identification in the retail
outlets and the market facilitation center, which then informs various occupational cooperatives about
market opportunities. The producers are also provided a number of training programs in both
technical and commercial aspects of their occupation, linked with input suppliers and equipment
makers. SEWA also runs a chain of retail outlets for marketing the products of its members, and a
market facilitation center to link them with overseas customers.

7
This section is extracted from Datta et al. 2004. A Resource Book for Livelihood Promotion, BASIX and New
Economic Foundation pp. 19-28

120
 IDS

Livelihood
Triad
MFS LPS

Figure 3: Livelihood Triad

Table 5: Services Required for Livelihood Promotion

MICRO FINANCE SERVICES LIVELIHOOD PROMOTION INSTITUTIONAL DEVELOPMENT

(MFS) SERVICES (LPS) SERVICES (IDS)

 Savings  Identification of  Formation of groups,

 Credit for consumption as
well productive needs
 Insurance, for lives and
livelihoods
 Commodity futures, to
reduce price risk
 Financial orchestration
livelihood cooperatives, federations, etc.
opportunities of producers
 Productivity  Capacity building of the
enhancement above
 Market linkages - Input  Accounting and management
supply, output sales information systems
 Local value addition  Performance management
systems
 Risk mitigation (non-  Policy analysis and sector
insurance) work

Institutional Development Services (IDS): SEWA itself is a registered trade union and places a lot
of emphasis on member organization and member education. It has also adopted the cooperative form
for organizing those of its members who need to come together for their work on a day-to-day basis.
SEWA also undertakes policy research and advocacy work. It has collaborated for decades with
researchers in the field of gender issues, informal sector and micro-finance, and through them
influenced thinking and policy. Ela Bhatt has been a member of the National Commission on Labor
as well as a member of the Planning Commission of India as also a Rajya Sabha MP and has actively
tried to draw attention to the cause of self-employed poor women.

There is no better example of holistic livelihood promotion in India than SEWA. There are other
examples, such as the NDDB, CDF, SIFFS, BAIF, MYRADA and PRADAN, all of whom have used
different combinations of this strategy. It is possible to conceptualise this work in the form of a
“Livelihood Triad”, as shown in Figure 3.

The rationale behind this is as follows: Micro-credit in particular, and micro-finance (including
savings and insurance) in general, is helpful for the more enterprising poor people in economically
dynamic areas. However, for poorer people in backward regions, a whole range of other livelihood
promotion services (input supply, training, technical assistance, market linkages) needs to be
provided. Likewise, it is not possible to work with poor households individually as they need to be
organized into groups, informal associations and sometimes cooperatives or producer companies, all
of which require institutional development services. Other services include training and capacity
building, information-education-communication (IEC), marketing support, etc.

121
Step 7.3: Assess the Organization’s Competence
Having generated the list of possible interventions, we need to check for ourselves, if we have the
competence and the mandate to take up that intervention. We can use the following Table-6 to
facilitate this analysis. Let us remember that, the mission of the organization influences these choices.
If the mission of the organization is to extend ‘any services necessary for supporting livelihoods’ we
could explore all the choices above. But if the mission is ‘to extend any non-financial services
necessary for supporting livelihoods’, the choice will be limited to options 2 and 4 above.

Use a scale of 1 to 5 to assess the competence of the organization, where 5 is Competence Available
for Use within the Organization, 1 is where it will be extremely difficult to mobilize this even from
the organizations known to us. This level of analysis is often good enough for us to start the livelihood
intervention process. However, in case we are planning a large intervention, and would like to be
much more accurate, we can also undertake a sub-sector study.

Table-6: Assess Organization’s Competence

Sl Interventions MFS LFS IDS Total
No Strengths Strengths Strengths Strengths
1 Through our organization’s micro-
finance activities

2 In collaborating with one of the

micro-finance agencies working in
the area
3 Promoting a new people-owned
micro-finance agency in the area
4 Linking the producers with banks in
the area

Step 7.4: Pulling out additional Strengths: Collaborative Polygon8

Over the years, the economy has become specialized, dynamic and complex. Thus, on one hand,
services required for supporting large numbers of livelihoods have become more diverse, on the other,
it has become necessary for agencies providing any of the services to be more specialized. For
example, while setting up the Sriniketan Experiment, Tagore recognized that the weavers needed
inputs in design and some related skill development. Most of the raw materials were produced locally
and so was the marketing of the cloth, which the weavers were accustomed in doing. However, with
the development of the industry, today the raw material comes from distant markets. The fabric
manufactured by him also goes to markets that s/he neither has information about nor has access to.
Thus, the range of services required for supporting livelihoods have become wider: it includes the
supply of raw material, marketing, in addition to helping them design.

But, earlier the designer could also help in skill building, as a trainer. But today, with the rapidly
changing tastes for design, increasing competition, the designer has to become specialized in
designing only to remain effective and efficient. Thus, for providing the larger number of services
required today, larger number of specialists are required. This also has serious cost implications in the
era of reducing margins and the cherished value of making things available to the ultimate consumer
at the lowest possible price.

This problem is addressed by the creation of collaborative arrangements indicated above. For
supporting livelihoods, services are required in input supply, output marketing, infrastructure,
technology development, research, training, community organization among others. In today’s
economy one agency cannot develop the competency of providing all of them. Thus, an input supply

8
This section is extracted from Datta et al. 2004. A Resource Book for Livelihood Promotion, BASIX and New
Economic Foundation pp. 19-28

122
company needs to collaborate with an output marketing company, which in turn needs to collaborate
with a credit provider, and build a collaborative polygon.

Figure 4: Collaborative Polygon

Collaborative Polygon

Effective intervention in livelihoods requires collaboration

between agencies with complementary strengths.

Credit
Provider
Input Output
Supplier Processor/
Marketer
Rural
Producer

Research Extension
& Training Agency

In various forums of livelihood practitioners the need for collaboration for addressing the problem has
been acknowledged. However, it has also been recognized that effective collaboration requires not
only appreciation of the competencies of the other partners, but also making space for each of them.

4.0 Stage III: Designing the Intervention

Step 8: Design of livelihood organisation
Step 9: Creating pro-producer value chain
Step 10: Mustering Financial Resources
Step 11: Initiating and initializing operations

Step 8: Design of Livelihood organisation

As discussed earlier, livelihood involves participating in a value chain, adding some value to some
resources to make them more useful to self or others, who are willing to pay for the value-added
product. The nature of these value addition functions is not the same. More often than not, these are
performed by different enterprises. Therefore, many livelihood initiatives require planning for several
enterprises. Ownership and management of these enterprises depend upon the nature of value addition
function performed, the investments required and the control proposed.

For example, in the Anand Pattern Co-operatives promoted by NDDB, which has affected the
livelihoods of many, the milk production function is performed by individual milk producers. But,
processing this milk into skimmed milk powder and butter oil requires a much larger scale. Therefore,
the dairy plant is created at the district level. As this requires a larger investment, this is owned by a
collective. But if this dairy plant has to be at the district level, one more value addition function, such
as collecting milk from different individual milk producers becomes necessary. This is done by the
third set of enterprises — the Village Level Cooperative, which is owned by all the milk producers in
the village. Whereas, the district level plant is owned and managed by a collective enterprise, the
entire village-level cooperatives in the district. After the milk is processed and converted into long

123
table-life milk-products like butter and cheese, these can be marketed across the country through a
Producer Company.

Therefore, what we see is that livelihood promotion initiatives often involve the promotion of multiple
enterprises to undertake different value addition functions. These need not be in the same form. Their
ownership will also be different, depending on the nature of the value addition and the capital
requirements. An appropriate mix of enterprises and other supporting institutions need to be
developed.9

Different Ownership Options

Before examining the various combinations of Ownership Models of Enterprises in the livelihood
intervention design, let us look at some of the most common forms of ownership of enterprises. This
poses questions such as: Who will own the plants and equipment required for the value addition
activity? What stages of the value chain are appropriate for individual micro-enterprises? Which of it
is appropriate for group enterprises and which stages require a formal structure like a cooperative or a
producer company? Do they also own the activity? Do they have the capacity to discharge the roles of
the owner? What interest do they represent? Is there some party whose say in the management of the
activity has to be considered? Are we willing to give the power to the chosen group of owners?

All of these have significant legal implications. It would be helpful to consult someone who has good
understanding of the legal issues related to organizations

Livelihood Enterprise Owned by Individuals

Some parts of the production or value chain may be owned by individual producers. The cow is
owned by an individual dairy farmer. The tasar (silk) grainage promoted by PRADAN is owned by
individual entrepreneurs, who produce the seeds and sell them to cocoon producers. Many of the
support services required for livelihood activities are often owned by individual enterprises. Many
Community Resource Persons (CRPs) selected from the paddy producers in Bihar, have been trained
by BRLPS and PRADAN together to supply inputs to farmers who adopt SRI. Many Livelihood
Service Providers (LSPs) appointed by BASIX or DHRUVA are also individual entrepreneurs who
supply a variety of inputs to the producers.

Livelihood Enterprise Owned by a Collective of Producers

Some enterprises in the value chain, such as the enterprise which collects milk from individual milk
producers in the example of the Anand Pattern Cooperative, are owned by a collective of all the milk
producers in the village. In some cases, they are registered as a Co-operative. In some cases they may
be registered as Mutual Benefit Trusts or Producer Companies. Examples of similar collectively
owned livelihood activities include MEADOW, a watch producing ancillary promoted jointly by
MYRADA and Titan, fish marketing cooperatives promoted by SIFFS, and a variety of Farmer
Producer Organizations (FPOs) promoted by Small Farmer’s Agri-Business Consortium (SFAC).
These collectives can be registered under different legal forms, such as cooperatives, partnership firms
with an inter-se agreement between the producer partners, mutual benefit trusts, producer companies,
trade-union with mutual trade license, to mention a few. Each of these forms has their own strengths
and weaknesses. The specific context in which these forms can be used and the process of their
promotion has been discussed in Institutional Development – An operational guide.10

Livelihood Enterprise Owned by the Livelihood Promotion Organization

10
Different mix of agencies/enterprises required for livelihood promotion and/or support has been
discussed by Pastakia, Astad (2007); ‘Making Institutional Choices for Livelihood Interventions’: A
research study based on on-line data collected through Solution Exchange

10
Rama Kandarpa and Radhika Mathur (2007), Institutional Development – An operational guide,

124
In some specific cases, where either the producer’s collective or individual entrepreneurs are not in a
position to own the enterprise required for a particular function, livelihood activities also need to be
owned by the livelihood promotion organization. Examples of these include several marketing
organizations such as Dastkar, Daaram, Mother Earth, which market handicrafts of a variety of
producer groups. In these activities, often the individual producer is not in a position to invest the
capital required, but a fair system of pricing has not yet been developed for it to be handed over to
individual entrepreneurs. These livelihood promotion institutions could be developed through CSR
initiatives, by civil society or by the Government.

Livelihood Enterprise with Mixed Ownership

Often livelihood activities are organized in multiple tiers, with each tier performing different
functions in the value addition chain. This creates opportunities for having the structure and
ownership of different tiers being created differently. For example, in Marathwada, SHGs at the
village level have promoted a mutual benefit trust at the district level. These trusts in turn have
invested in Non-Banking Finance Company, Anik Financial Services Limited. What are the
advantages and disadvantages of such an arrangement?

Management of the Livelihood Enterprise

Management of the livelihood activity need not always rest with the owners. Even in large
corporations, owners engage a group of professionals to manage the enterprise. AMUL, though
owned by farmers of Khaira District, is professionally managed. There are various choices available
to the practitioner.

Producer-Managed Livelihood Activities

Local producers very successfully manage many small livelihood activities that deal with local
markets. However, there are many functions in larger business processes that local producers cannot
replicate, or may find difficult to manage. For example, functions such as estimating sales trends for
broiler chicken in Bhopal or one of the major metros, negotiating prices with urban consumers,
surveying urban markets for consumer preferences in handicraft design, etc. may be some functions
that an individual local producer may not be able to handle.

Livelihood Activities Managed by Hired Professionals

Many producer-owned livelihood enterprises hire professionals to manage key functions of their
business. Managing business activities with a developmental focus involve special people. Such
special people, however, are in short supply. When hiring professionals to manage producer-owned
organizations, it may be challenging to build the capacities of local producers to maintain control over
the management.

Design Concept of Collective Organizations11

How do we, then, define `design-concept’ of a successful community-based organization? Or if we

come across a lone example of a successful experiment, how do we figure out whether it offers
potential for a robust design concept or not? This, in our view, is one of the most important questions
in the development world, which has a powerful propensity to generalize from singular success.
Design-concept of an organization can be viewed as its central architecture or configuration,
particularly as it affects the relationships amongst its members, employees and leaders. It subsumes a

11
Adapted from Tushaar Shah’ note on Design of Energetic Farmer Cooperatives. This abridged version is
prepared by Prof. K. V. Raju, IRMA

125
testable theory of why this particular method of organizing has greater changes of success than several
alternative ones.

In evolving the idea of the design concept, it is useful to view a community (or member) organization
as consisting of three inter-connected entities as shown in figure 5: membership, the `operating
system’, and the governance structure, which is the elected board of the members. The operating
system provides a range of services members need; in turn, it receives member business and capital
from members to build it. Since members are too numerous to hold the operating system accountable
to themselves, they use an elected board as their governance structure.

Design principle 1: core purpose central to members

Robust design-concept of a community organization aims at purposes, which are central to members
and not to government, donor agencies, or implementing organizations. In understanding a
cooperative that has failed, the first question one can profitably ask is: whose purpose was it meant to
serve? Canal irrigation cooperatives in many regions exemplify this: most often, the purpose they are
designed to serve is of the irrigation bureaucracy rather than of members; it is therefore not surprising
that they have not taken off. For a design-concept to be robust, it is not enough that the purpose it
serves be relevant to members; it must be central, and it should be achievable through some form of
organizational intervention.

Figure 5: Basic Design of a Community Based Organisation

GOVERNANCE

SYSTEM

Performance
Demands
Transparency /
Accountability

Performance
Leadership

Rewards
Elects

Patronizes
Services
OPERATING
MEMBERS
SYSTEM
SYSTEM
Delivers
Services

Design principle II: get the right operating system

The `operating system’ is the device organizations evolve and use to achieve purposes important to
their members; it includes the business enterprise of the cooperative, and systems, structures, rules,
norms that govern its working. Everything of significance we find in a community organization --
other than members and their elected leaders --would generally be part of the `operating system’. In a

126
chit fund group, it is simple and includes the foreman and a set of simple rules about the periodicity of
installments and meetings, about the disposal of pooled funds and compensation to the foreman. In a
marketing cooperative, it will include office, storage and processing facilities, managers, employees,
and norms of pooling and for wholesaling, grading facilities and routines. The design-concept of a
cooperative aiming at purposes central to its members will be robust only to the extent that its
operating system is able to find, develop and sustain distinctive competitive advantages so as to out-
perform its competitors and/or alternative organizations. They typically do so by finding newer end-
users for member outputs, by forging newer linkages between members and the users of their
service/outputs, by modifying the technology used at intermediate stages, and, in general, by finding
innovative ways to addressing critical anomalies in the operation their sectors which most restrict
their members’ opportunity sets. Moreover, in cooperatives that gain enduring success, their design-
concepts ground their unique competitive advantages in their very nature as a community
organization.

Design-principle III: patronage cohesive governance

The potential of otherwise similar operating systems to generate value tends to vary over a wide
range. Ceteris paribus, the level at which the operating system actually operates as an engine of value
generation depends upon the quality and level of performance-related demands made upon it and of
performance-related support provided to it by members through their governance structure. Owner-
operated and investor-owned organizations, which are the usual competitors with cooperatives, enjoy
a structural advantage over them in this respect; and robust design-concepts overcome their
governance weakness by promoting design-features that enhance the `patronage cohesiveness’ of its
governance structures and processes. Patronage cohesive governance implies, in the first place, that
supreme policy-making authority for the organization is vested in the elected board of members to
whom managers are fully accountable. High levels of patronage cohesiveness ensure that achieving
purposes for which members patronize the cooperative remains the central talisman in the governance
of the cooperative. Patronage cohesiveness thus ensures the double accountability crucial to success:
of `operating system’ to the governance structure, and of the governance structure to the membership.
However, powerful the `operating system’ may be as an engine of value generation, it must eventually
degenerate unless the governance structure is able to hold it continually accountable for serving
purposes important to members.

Design principle IV: securing and retaining member allegiance

Shaping and managing member expectations and behaviour vis-à-vis the cooperative is the constant
and trickiest challenge that faces cooperative governance structures. In this, the most crucial is its
launch. The skill with which a new cooperative based on an otherwise robust design concept is
launched and run in has a decisive impact on its steady-state performance. Cooperatives sustain
member allegiance over a long period only to the extent that purposes important to their members
whom they serve cannot be served better through other means. The moment new and attractive
options become available, the cooperative should expect to lose its patronage base unless it is able to
surpass its new competitors through innovation and improvement. In the long run, thus, there is no
such thing as member-loyalty. Finally, functional allegiance of members depends strongly and
directly on the extent of `private’ benefits but weakly on the collective benefits conferred by the
cooperative on its members. Finally, robust design-concepts build and sustain member allegiance by
progressively evolving and enforcing a structure of rights of the members on the cooperative and of
the cooperative on its members by linking private benefits with patronage.

Design-concepts vary in the demands they make on domain conditions. Robust design concepts –
such as of chit fund groups – are likely to survive and work in hostile domain conditions; fragile
design-concepts, in contrast, require highly favourable domain conditions to work. Robust design-
concepts differ from fragile ones in the effectiveness with which they serve purposes important to
their members better than existing or alternative organizations do; and the proof of this is that
organizations based on robust design-concepts come up swayambhoo or with little external nudge,
continuously propagate and improve themselves, and resist, adapt or mutate when threatened with
external assault on their design sanctity. Fragile design-concepts do none of these.

127
Step 9: Creating Producer-Member Driven Value Chain

“Pro-Producer12” as a concept is fundamental for the existence and continuance of the cooperatives
globally. Though there are various sectors in cooperatives including farm, non-farm, cases discussed
in this series relate to producer members and therefore, the term pro-producer is more appropriate for
discussion through generally cooperative members are poor as well. It is therefore, useful for the
reader to debate on the issues related to cooperative principles that are “pro-poor”, “pro-producer” and
“pro-member” before proceeding further on case analyses. However, these issues deal with a
fundamental and common question that needs an answer: “why producers come forward to from these
cooperatives and continue to stay with it?” ILO has come forward with certain understanding on pro-
poor strategies which may be well mapped to the pro-producer environment on cooperatives. First of
these imperatives are “pro-producer growth which means income of producers increases (e.g. of the
lowest quintile) equally or more than the average income”. It means producer members participate
directly in economic growth, not rely on “trickle-down” processes or social transfers. The second is
related to “gender equity” in the governance and memberships with the conditions of freedom,
equality, security, and human dignity. The third imperative is related to “inclusion”, “participation”
“transparency” and “accountability”. The fourth and most critical imperative is “producer-member
centrality” which means the cooperative needs to recognize the capabilities and potential of member
households and their income centrality and map them with that of the cooperative’s mission. It argues
in favour of strong market orientation for the products and services that cooperative is pursuing and
ensure that producer members are aligned to this strategy. This is likely to succeed through
continuous innovation and interventions of the cooperative and translating them for adoption at the
member level.

Step 10: Mustering Financial Resources

Budgeting

Having developed the Activity Plan and the HR Plan, we are now ready to move to the next step of
developing a budget. Though budgeting sounds a complicated work, its basic principles are very
simple. Any activity that is to be taken up requires some resources and every resource is required in
some quantity, which we need to estimate. There is also some prevailing price of the resource.

Budget for that Resource = Quantity of Resources Required x Its Price Once we have developed the
budget for one resource, we have to do the same for all other resources. When developing a budget, it
is useful to think in four bundles.

People-Related Costs

From the HR Plan by this stage one would know the number of people required (Quantity), their
Remuneration (Price) and the period for which their services are required (months or days, depending
on whether the remuneration used was given as a rate per month or per day).

Total HR Budget = No. of People x Average Remuneration x Time

In the example used earlier, we may require, say, two CRPs to conduct training. They may be given a
remuneration of Rs 150 per day. Therefore for conducting 20 training programs the People-Related
Cost would be (20 programs x 2 persons x Rs 150 =) Rs 6,000 for the complete year.

As people with different skills and capabilities may be required for different periods of time, and
whose services may be available at different wages or salaries, it may be useful to do this estimation
for all the different categories of people required for the program. In the above example, one may
require a Training Coordinator at the District, who not only trains the CRPs but also ensures delivery
12
Source: ILO (2006 ) Decent Work and Poverty Reduction Strategies (PRS) - An ILO Advocacy Guidebook:
A supplement to the PRS reference manual, Policy Integration Department, ILO Geneva

128
of the programs, for Makhana, paddy, dairy and two other activities. That person needs to be paid a
remuneration of Rs 30,000 per month. There are two ways we can budget for her time. First, we can
do the estimation of all the five activities together (that is, adding a number of training programs for
paddy, dairy and so on) and add her cost to that. The second method could be we divide her total cost,
Rs 360,000 in the year into five parts and add Rs 72,000 to the budget. There are two different parts of
the related administrative costs. Some of these may be substantial and will have to be spent
irrespective of the quantity of work done, such as rent. Usually, for such administrative expenses, the
approved budget specifies their limits. Then there are other expenses, which are related to the quantity
of the work done, or which are also related to the number of people, such as travel. These are
estimated as a proportion of the total Remuneration Budget. These are estimated as 10 percent of the
Staff Cost. The percentage of cost permitted here may also be specified in the Approved Budget.

Specific Activity-Related Costs

For these costs use the same logic as before. For example, if as per the action plan we have to conduct
20 training programs in Makhana Processing and each training program costs Rs 1,000 then the
budget required for training will be Rs 20,000.

One-time Expenses

In addition to these three categories of expenses, sometimes we may have to budget for one-time
expenses, such as LCD Projector. Here too, the same logic needs to be applied. If we need One LCD
projector and it costs Rs 55,000 our total budget will be (1 quantity x 55,000 price), that is Rs 55,000.

The sum of these four components gives us the total budget.

We must remember that many of these numbers are estimates. Though we may plan to conduct 20
training programs, in reality, we may actually have to conduct only 18. Though we expect that it
would cost us Rs 1,000 to conduct a training program (not including the remuneration to the trainer
which would have been counted as a part of People Related Costs and their Travel cost, which may
have been counted as 25 percent of the Person Cost) it may have actually cost us Rs 1,100 for a
program. Therefore, the budget is just our ‘best estimate’ and not the real or actual cost.

Sources of Financing — Supplementing through Convergence

After developing the budget we need to worry about the sources of finance. This must be done with a
close eye on the main project. Most activities whose planning and execution are required for
promoting or supporting a large number of livelihoods are usually provided for in most contemporary
projects. However, this may require a careful study of the Inception Document. Depending on the
design of the program, many of the budget items may have been reclassified under different budget
items. For example, if our intervention requires the purchase of a few boats for plucking of Makhana,
there is a provision of Community Investment Fund (CIF) in NRLM, which is so designed that the
community institutions can make some investments into facilities to be used by all the members of the
institution, in this case, the SHG. Therefore, the SHGs which are engaged for Makhana cultivation in
some ponds can apply for some support from CIF. Under NRLM there are provisions for
remuneration support to CRPs till the time when the community institution is capable to pay for their
services. This provision also needs to be formulated in the activity plan. So, while designing our
activities, we have to plan to utilize the services of the CRPs, wherever possible. For this, if some
additional training of the CRPs also needs to be organized, then there are suitable provisions for it in
the program.

But apart from the main program itself, if there are some additional activities required, such as
deepening of some of the ponds where Makhana can be grown. We need to explore other programs
being implemented in the district. The District Rural Development Agency (DRDA) prepares a list of
all Centrally Sponsored Programs in the district. In many districts, this list has also been uploaded in
the website. In addition many departments such as the Department of Agriculture, Social Welfare

129
Department bring out their own lists. It may be useful for the livelihood professional to get a copy of
these programs. For example, the deepening of the ponds can be taken up under MGNREGA. Today,
both NRLM and MGNREGA place a great deal of emphasis on convergence. Convergence is a
process where activities of two or more programs are done together, with the aim of benefiting the
people.

Similarly, if one of the objectives of the project is ‘ensuring that all of them get immunized against
water borne diseases’ , it may be useful to explore whether such immunization is being done under
the National Rural Health Mission, which also aims to protect people from work-related-health-
hazards. However, each of these programs has its own requirements. For example, for undertaking an
activity under the MGNREGA, the local Gram Sabha is required to pass a resolution. We may have to
facilitate a dialogue between the SHGs or their Federation with the Panchayat. However, only by
studying the NRHM and MGNREGA documents carefully and knowing these requirements
beforehand, can we use them in our activity plan?

Step 11: Initiating and Initializing Operations

After mobilizing the necessary resources, both financial and non-financial, the next important step is
to initiate action. At this stage, the action is primarily taken up by the members or representatives of
the community. Therefore, it is very important to design this process meticulously. Apart from
initiating the operations, it also helps build social capital around the intervention. As the improvement
of the people’s livelihoods involves multiple stakeholders, this event could be used to communicate
the purpose and nature of this intervention to a wider audience. A clear statement about the program
also enables the involvement of many other stakeholders in the effort. A vast majority of livelihood
promotion efforts suffer from ‘infant mortality’, because this phase is not properly managed. In spite
of the best planning, when operations are initiated, things go very differently and many contingencies
arise. Thus the initiators have to come up with an implementation of one or even many alternate
plans! This causes a lot of stress, on both financial and human resources, and it becomes vital to
remain focused on long-term goals to overcome this stage.

130
 Lijjat - A Women’s Enterprise with a Difference1
Introduction

Shri Mahila Griha Udyog Lijjat Papad, popularly known as Lijjat, is an Indian women's
cooperative involved in the manufacturing of various fast-moving consumer goods. The
organisation's main objective is the empowerment of women by providing them employment
opportunities. Started in the year 1959 with a seed capital of Rs. 80, Lijjat has an annual
turnover of around Rs. 6.50 billion (over 100 million USD) in 2010, with Rs. 290 million in
exports. It provides employment to around 45,000 sisters across India. Lijjat is headquartered in
Mumbai and has 81 branches and 40 divisions all over India. Lijjat is primarily a cottage
industry, urban by its origin, that has spread to the rural areas. It is considered as one of the
most remarkable entrepreneurial initiatives by women that is identified with female
empowerment in India.

Lijjat is an atypical model since the members believed and practiced principles of co-operation
and collective ownership from the very beginning and in the process built an institution that
could compete and survive in a fiercely competitive market on its own strength. We are
conditioned to expect that cooperative economic ventures must have an in-built element of
subsidy, at least in the initial stages (e.g. NDDB and the milk revolution, or even sugar
production). However, Lijjat's success is entirely without any official support or subsidy. It is also
noteworthy that the venture began without any external agency or promoter. It was the up-
scaling of a cottage industry by a group of completely untrained and semi-skilled women. These
several factors make Lijjat an unusual and typical livelihood model. The fact that Lijjat not only
helped its members attain a steady income but also indirectly contributed to their empowerment,
which makes it unique among all the cases, studies in this series.

Case Methodology

In order to understand the process and its impact, the following methodology was used:

• Discussion with the key officials at the headquarters of Lijjat as well

as in the branches
• Semi-structured interviews with the members
• Sharing of preliminary findings with Lijjat functionaries to check the veracity
of the conclusions drawn
• Study of the secondary material on the organization

Based on the above, inferences were drawn about major learnings from the intervention and the
potential for replicating it in other areas.

Process of Intervention

Lijjat Papad is a highly decentralised enterprise where the production process is broken up into
several self-contained steps that engage a large number of women with low skills using their
homes as a workplace. Seven women initiated the venture in 1957 to earn additional income
through the use of their idle time. Even though these women made initial losses, they persisted
in their operations using ingredients from their houses. Their low overheads and attractive
1
Based on materials on official website of Shri Mahila Griha Udyog Lijjat Papa http://www.lijjat.com/ and other
documents available online. This meant for class discussion only

131
prices rapidly created a demand for their product. As demand increased, more and more
women entered the production process and the number rose to 25 within three months. With the
profits of the first six months, each of the members of the group bought 5 grams of gold.

Thus was born, again unconsciously, the practice of equal profit sharing among the group,
irrespective of their individual contribution. Additional rooms and space were rented as and
when required for rolling and drying papads, but by the third year, the physical space required
for rolling out the volume of papads in demand was simply not available. This paucity of space
forced the Lijjat sisters into their single most innovative production decision. This was a
significant decision to decentralise the production of papads from a centralised location to the
homes of the members of the group. Thus, at one stroke, the physical capacity to produce
papads dramatically multiplied. This enabled the group to respond to the growing demand
without having to invest upfront in workspace, machinery or overheads.

The new model of decentralised production was simplicity itself. Papads were prepared at home
premises using a simple technology through rolling and drying. The prepared papads were then
delivered to the branch office the next morning while another batch of pre-mixed dough is
collected for the next day production. The quality check of the papads was done by experienced
members in the branch on the spot at the time of delivery through visual inspection and the
rejection percentage was intimated and recorded. Payment for the production was made the
following day for each member. This is the standard operating practice of Lijjat Papad even
today. Thus a systematic production process evolved, with a keen eye on every detail leading to
high-quality standards and timeliness.

In addition to streamlining the production process as described above, Lijjat also carved out a
market niche for itself through the systematic brand building over the years. The strategy of
identifying commission agents and cash only sales resulted in the ready availability of funds in
the business rapid and continuous growth. Marketing was ensured through seven sales offices
across the country. Lijjat has also geared up towards changing times and exploring new
markets, including the exports.

One of key factors to Lijjat's success in terms of outreach and rapid scaling up is the policy of
internal generation of resources and rotating working capital on a weekly/biweekly cycle.
Marketing is on a strictly cash-and-carry basis, allowing for funds to be continuously recycled in
the business profit margins were such that they enabled a rapid scaling up of operations
through continuous expansion. The Sisters Savings Fund is also available to the each of the
Lijjat branches, to tide over short-term cash deficits, in case of necessity. In addition to self-
generated resources, borrowings from KVIC were resorted to as and when required.

Another innovative and strong aspect is the system of accounting. A daily record of sales and
payments is maintained and a statement of accounts is prepared every evening by the
accountant and vetted by the Sanchalika2. At the end of each month, a profit and loss account
as well as balance sheet has to be completed. Even today, if the accounts are incomplete, the
branch does not open for work the next day till the accounts are finalised. This has given a
tremendous sense of discipline to both workers and managers alike and has evolved to the level
of an ethic. Despite the effort required to achieve this level of updation through a largely manual
system, the exercise is treated as a routine and not exceptional.

2
The woman heading the branch is called the Sanchalika

132
Over time the intervention kept expanding horizontally. As the scale of operations grew, more
and more in-house divisions were formed - the processing of flour, grinding masala, printing and
polypropylene packing were formed one by one. Lijjat also expanded into producing and
marketing other products, such as powder detergent which have become fairly successful.

Organisational Structure: The running of the organisation is entrusted to a managing

committee of twenty-one members, including the President, the Vice-President, two secretaries,
and two treasurers. Sanchalikas are in-charge of various branches and divisions. The office-
bearers of the managing committee and the sanchalikas are chosen from among the member-
sisters on the basis of consensus every three years Each branch has a committee of eleven
member-sisters, again chosen by consensus.
Organisational Structure

Quality Control: The quality of papads can vary due to the quality of water used in various
parts of India. To avoid any inconsistencies, the final products are tested in the Lijjat's laboratory
in Mumbai. In the monthly meetings, the quality issue and modifications are tested. The central
office purchases and distributes all ingredients to maintain the quality of the final product. For
example, the urad dal is imported from Myanmar, asafetida is imported from Iran, and black
pepper comes from Kerala. The committee often makes surprise visits to various branches to
assure that production conditions are hygienic. When a new branch of Lijjat opens, a
neighbouring Lijjat branch helps it by guiding and training new members.
Marketing and Technology Linkages

In a pragmatic departure from the accepted practice of cooperative endeavours to rely on

official marketing outlets or on other semi-official organisations (such as KVIC or state
government retail outlets), Lijjat adopted strictly commercial techniques from the very beginning.
It appointed agents on a commission basis for marketing its products.

Marketing is a centralised function in Lijjat. The branch office is responsible for setting a target
for monthly production and marketing. Each Lijjat centre has a clearly delineated marketing
territory to avoid competition amongst centres. Commission agents are attached to almost all
Lijjat Centres and they account for a major part of the Lijjat sales. Another significant aspect of
marketing in Lijjat has been the decision to export its products.

Lijjat has grown and prospered with its strategy of forward and backward linkages. The setting
up of various divisions for its input supply and output packaging needs has contributed to

133
creating economies of scale in procurement as well as production. Head Office sources
informed that they prefer dal from Myanmar, followed by algaon and Latur, as the Indian
varieties do not give them adequate yields, large quantities being wasted as a husk. Purchases
in bulk are made through agents. The dals are processed centrally in Lijjat's own mills at Vashi
and Nasik. Heeng (asafoetida) is imported from Iran whereas black pepper is purchased from
Cochin.

Lijjat: Distribution Flow Chart

134
Lijjat has separate marketing, sales, and advertising divisions. The commission/discounts paid
were over half of the total selling expenses incurred by Lijjat in the financial year 2003-04. The
advertisement expenses at around 3.71 crores were around 15% of the selling expenses.

The use of technology in production at Lijjat Papad would go against the basic principles of low
skill production techniques and decentralised production. As a natural corollary to its lack of
upgradation of production technology, its outreach in terms of the number of women it engages
is very high. Thus a successful balance has been achieved between scale, quality and
employment.

Core Values
Shri Mahila Griha Udyog Lijjat Papad is a synthesis of three different concepts, namely

(1) The concept of Business

(2) The concept of family
(3) The concept of Devotion

All these concepts are completely and uniformly followed in this institution. As a result of this
synthesis, a peculiar Lijjat way of thinking has developed therein. The institution has adopted
the concept of business from the very beginning. All its dealings are carried out on a sound and
pragmatic footing - production of quality goods and at reasonable prices. It has never and nor
will it in the future, accept any charity, donation, gift or grant from any quarter. On the contrary,
the member sisters donate collectively for good causes from time to time according to their
capacity.

Besides the concept of business, the institution along with all its member sisters have adopted
the concept of mutual family affection, concern and trust. All affairs of the institution are dealt in
a manner similar to that of a family carrying out its own daily household chores. But the most
important concept adopted by the institution is the concept of devotion. For the member sisters,
employees and well-wishers, the institution is never merely a place to earn one's livelihood - It is
a place of worship to devote one's energy not for his or her own benefits but for the benefit of
all. In this institution work is worship. The institution is open for everybody who has faith in its
basic concepts.

Scaling up Strategy
From an initial membership of 7 women in Mumbai, the organisation today boasts of a
membership of around 45,000 women across the country. Again, from a one-stop organisation
which completed all processes under one roof, the organization today has 81 branches and 40
divisions spread out in 17 states of India.

Lijjat scaled up its operations through a strategy of replicating the standard operating structure
and procedures of the Mumbai model in other parts of the country. The need for expansion was
caused by a "demand pull, whereas word of mouth publicity combined with good quality and
attractive pricing created an ever-increasing demand for the product. The decentralised
production model enabled Lijjat to rapidly respond to market demand, while its low-cost model
kept competitors from eating into its market share. The mode of replication is also highly
systematic. A few experienced members physically relocate to the city or site of the new branch.

The team goes through a checklist that includes finding adequate premises, selecting and
training core staff, training new members and establishing the physical and financial systems.

135
This can last for a period of several months. If one or more of the team members deputed from
the head office needs to return to Mumbai before the systems are fully functional, new
volunteers replace them to complete the job. This handholding period generally lasts up to 6
months but can continue till such time the new unit is able to run its own affairs efficiently. This
in essence is the basic manner of branch expansion. When the new branch stabilizes, it
nurtures additional branches in a similar manner. Members are deputed to fan out and are given
the responsibility of ensuring the proper functioning of the unit. Thus, the in-house method of
expansion through replication ensures both training and hand-holding support to new units. This
is the key to the high level of standardisation that Lijjat has been able to achieve.

Due to their consistent high quality, reasonable pricing, regularity and reliability of its supply
chain, Lijjat's papad slowly began to occupy a market niche. Largely by virtue of word of mouth
publicity of the home fresh nature of the product and the authentic cottage nature of the
enterprise, the demand for Lijjat products far outstripped its supply. This led to the opening of
more branches, first in Mumbai city, where operations were concentrated and then later in other
parts of Maharashtra, Gujarat and other states.

Today Lijjat has 81 branches, 17 being in Mumbai and its suburbs, 11 in the rest of Maharashtra
and 12 in Gujarat. The remaining branches are spread across the states of Andhra Pradesh,
Bihar, Delhi, Haryana, Jharkhand, Jammu & Kashmir, Kerala, Karnataka, Madhya Pradesh,
Orissa, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh and West Bengal. The strong
concentration in Mumbai, Maharashtra and Gujarat reflects the origins and growth of the
organisation as a natural progression of sorts, where affinity and perhaps more responsive for
growth and diversification than a conscious scaling-up strategy. It also reflects on consumer
dietary preferences in the region which Lijjat was able to identify and exploit successfully.

In the first 7 years of its existence (1959 to 1966) Lijjat functioned as an unregistered
organisation. In 1966-67 it was registered as a public trust and recognised by the Khadi &
Village Industries Commission (KVIC) for tax breaks and interest subsidies. Yet the professional
manner in which it was managed by women without any formal training in running an enterprise
reflects on their motivation and self-learning abilities. It also supports the notion that
entrepreneurship is an acquired asset and need not always be attained through formal learning
processes.

Lijjat is an excellent case of in-built expansion and diversification of a successful livelihood

strategy. Besides its branches in several parts of the country, it has also established its own
support divisions catering to most input supply and output packaging needs, thereby ensuring
that quality inputs are used in its production processes, which contributes to sustaining quality.
The allied divisions include dal and flour mills. Some godowns were also constructed to support
logistics.

The brand recognition of Lijjat was also used periodically into both related and unrelated
products. The Khakra division set up in 1974, flour mills in 1975, masala division in 1976 are
some of the related examples of diversification of the Lijjat enterprise. The attempt was to use
the positive brand image of Lijjat papads to push other food products. However, these products
did not succeed in the same manner as the papad venture, largely because Lijjat was not able
to independently promote them through a focused marketing effort. It relied on the goodwill for
the Lijjat brand to carry these products forward but did not factor in the much bigger competition
and cut¬throat marketing and advertising efforts that other competing products in these
categories could muster. Recently, Lijjat has ventured into the supply of chapattis in Mumbai. In
other unrelated diversification choices, there were failures such as leather and production of

136
matches. Both had to be closed down as these turned out to be unviable. However, the most
successful diversification was the production of detergent. The Lijjat detergent brand, SASA,
has met with tremendous success. SASA has 6 production units, a research and quality control
division and a sales and purchase office. Occupying a niche in a highly price-sensitive market
without the advertising blitz associated with larger brands, SASA is another example of
innovation and responding to market needs.

Marketing of Lijjat products is supported by the advertising division, seven sales offices and the
export division. This reflects another strong element of learning involved in the enterprise and
can be compared with many larger organizations that devote considerably greater resources to
these aspects.

Impact of the Experiment

The impact of the enterprise can best be understood by the outreach that Lijjat has been able to
attain over these years. Lijjat has a membership of around 43,000 women in 17 states of the
country. Lijjat has been a vehicle of social empowerment for these women as also benefiting
them financially by providing them sustained returns for their work3.

The decentralised production methodology has ensured that the women do not have to leave
their homes for work and allows them flexible working schedules enabling them to discharge
other household responsibilities. This account for the easy acceptance of the work among such
a large number of women since they feel their economic activity will not disrupt the family by
their absence. Men are also less hostile to women working at home for extra income than
travelling to the workplace.

Lijjat has engendered democratic principles through member participation as part of its
administrative culture. The women not only make day-to-day decisions but also elect members
to the management committee from among themselves. In this respect Lijjat was much beyond
just an entrepreneurial venture, it was a symbol of women's strength. These women were
actually helping each other to grow beyond the confines of their homes, to take on greater
responsibility and develop a sense of self-worth and self-esteem. Many women who had little
formal education were handling money and banking transactions and managing a business of
over Rs. 600 crores annually.

Role of Institutions

The most remarkable aspect of Lijjat is the absence of an outside agency in kick-starting the
enterprise. It is truly a homegrown model based on the intuitive intelligence and self-learning
skills of a small group of poor women. It reiterates the now widely held belief that the poor are
highly entrepreneurial and only seeking an enabling environment to realise their potential. It is
equally remarkable that while the venture began on a very small scale, and went on to
organically grow in size, it retained its essential character in spirit and in practice all through.
Lijjat is a voluntary organisation with collective ownership and trusteeship being practiced. In the
process, Lijjat evolved into an institution based on some core principles strictly adhered by the
members and simultaneous development of simple systems and processes, understood and
practiced diligently by all members. The other unique feature in Lijjat is that it has remained a
member owned and managed body resisting the rise of small managerial elite that normally

3
Technically this income is in the form of profit sharing for all women of a centre/branch.

137
takes control in all such institutions as they grow in size. This helped Lijjat become a highly
effective livelihood intervention which also promoted economic and social growth and mobility of
its women members.

Some initial guidance, which in effect laid the founding principles of Lijjat Papad, was provided
by Chaganlal Karamshi Parekh or Chaganbapa, a community elder and social worker. He
advised these women on how to translate core Sarvodaya values into working principles.

One institution involved in promoting the growth of Lijjat was the Khadi and Village Industries
Corporation (KVIC), which recognised the value of Lijjat's work and registered it under the
'Processing of Cereals and Pulses Industry Group', under the KVIC Act which helped them to
access cheaper funds from banks and enjoy tax benefits.

Jyoti Naik-An Epitome of Women Empowerment

Jyoti Naik is the eldest of the family of four brothers and sisters. She is associated with Lijjat from 1971
when she started rolling pappads at the age of twelve. She got additional work in Lijjat through her
deputation into the packaging section. Thereafter, she has been taking higher responsibilities in the
organization and rose to rank of President. She started managing inventory at the Bandra branch in
1973, when she was in charge of stores, looking after stocks, preparing and packaging papad dough.
Despite tragedy of untimely demise of her mother in 1976, she was rolling papads and managing Lijjat
packaging section and in the process continued to earn well. Simultaneously, she managed four siblings
at home. She had to discontinue her education after class X as the demands on her time were too high.

From then onwards, Jyoti was transferred to the Vadala branch in 1981 as Sanchalika, also become the
Editor of the Lijjat Patrika. Later she became member of the Central Committee, which in turn made her
Vice President in 1989 and thereafter rose to rank of President. As is the practice of paying on basis of
papad rolled, Jyoti's income is equivalent to the value of 30 kg of rolled papads a day, attesting to the
value the organisation puts on her increased responsibilities.

Her long years with Lijjat have given her a huge wealth of intuitive institutional knowledge. Even today
Jyoti goes to a branch at 4 am 2 or 3 times a week, comes to the head office at 10 am and often stays till
7-8 pm in the evening for all seven days. Jyoti is in touch with Sanchalikas over phone daily across the
country ironing out administrative details, responding to queries and monitoring supply and production
figures. There is a collegiate atmosphere in her chamber as she confers with the VP and local
Sanchalika discussing issues that in other organisations of such size would be the preserve of male,
upper class, English speaking professionals. The next day, Jyoti ben, the VP, Smt. Kamal Bhandore and
the Sanchalika Mulund were going to Pune as the Pune Sanchalika had lost her husband and they
wanted to condole his demise.

Thus, Lijjat fosters a strange sense of dignity and equality among the women as all have risen from the
ranks. There is no organisational elite at Lijjat - only seniority within a sisterhood - bound together by
hard work and almost similar class background. "Sab papad belne wale hai” (all the women are those
that would roll papad), with strong shared ideals of collectivity, equality and mutual respect. In fact the
women refer to their co-sharers as "sisters”, or "sister workers.”

Equity
The perspective of equity was also strongly present in Lijjat's organisation and functioning. Only
women could be members and thus owners of the organisation. The member sisters had started
sharing the profits or losses among themselves from the start.

138
The other important learning in this regard is the fact that women have an innate ability to adapt
to new roles. Women who began by rolling papads went on to establish new branches, serve in

management positions, direct marketing efforts and undertake planning and strategic decision-
making functions. This adaptability has enabled Lijjat to achieve a virtually frictionless transition
from a cottage to a large-scale enterprise

All members, irrespective of their position in the organisation, receive the same per unit rolling
charges. In cases where a branch makes losses due to a fall in quality standards, all the
members share the losses equally by reducing their rolling charges. The office-bearers in the
organisation, such as the president and secretary, have to be not only from the same social
milieu, but must also have to be erstwhile members who rolled papads. The members who
show leadership skills are gradually given greater and greater responsibility, such as becoming
the sanchalika or the branch head and other administrative duties. This model of power-sharing
is unique and puts Lijjat virtually in a class of its own in respect of equity. As is stated in the oath
that each member takes on enrolling Lijjat fosters a sense of dignity and equality.

It is also noteworthy that there is no organisational elite at Lijjat -only seniority within a
sisterhood - bound together by hard work and a common social background. "Sab papad belne
wale hai" (all of us roll papads), is a slogan truly lived in practice. Strong shared ideals of
collectivism, equality and mutual respect are manifested in the organisation.

Sustainability
The scale of operations and phenomenal success of Lijjat Papad without any external
institutional support right from its inception is proof of the basic soundness and sustainability of
Shri Mahila Griha Udyog Lijjat Papad as an institution. The tenacity with which Lijjat has held on
to its principles over a period of 55 years and yet continues to grow with all its members is a
great tribute to the strength and versatility of the organisation. The responsibilities of every office
bearer and member have been laid down in the constitution and have been modified with
changing times and growth of the organization. The social and economic milieu it engages in
the decentralised papad production, model the high sense of discipline in timing are among
many other such factors that fuel hope of its sustainability into the future.

In addition, Lijjat has kept pace with the changing marketplace and has emerged not just as
another profitable institution, but a world leader in papad manufacturing. The uncompromising
quality standards of Lijjat, its diversification into newer divisions to address its own growing
needs better, the scale it has managed to achieve has helped it achieve financial sustainability.

Replicability Potential
The model is replicable into other sectors which require labour intensive but simple production
processes with minimum use of technology. The caution is how the model is to be adapted to
create and maintain the quality standards as well as ensure concomitant sales of the produce.
This is where the greatest challenge during replication would come.

One of the key factors is the 'development of market power' which Lijjat has been able to enjoy
through its brand. Any replication model should have the aim of building the same, in case; it
has to succeed in the medium term of about ten years. The important factor underlying the
success of Lijjat is management by member-owners rather than by professionals, an effort
needs to be geared on similar lines from initiation.

139
Conclusions
Lijjat is a movement as much as an enterprise considering the number of women it has
productively engaged, the social impact it has had, and the augmented incomes it gave to its
members. The success of Lijjat does not need speaking for. The tremendous growth it has
achieved in around four decades while combining social and economic imperatives for its target
segment is unparalleled.

While Lijjat Papad is an outstanding institution, it might be in place to attend to the primary
factors that make it so. The institution was created on the planks of collective ownership and
management. The core factors behind its success and sustainability also remain its collective
ownership, management and its adaptability to changing market conditions.

140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159

Farmer Producer Companies
Fermenting New Wine for New Bottles
Tushaar Shah
India’s track record of forming
robust, self-sustaining farmer
cooperatives has been poor ever
since the early 1900s when the
movement began. For long,
restrictive laws were blamed for
their failure. But most of the
2,000 farmer producer companies
registered under a new amendment
to the Companies Act 1956 appear
like old wine in a new bottle. This
article explores why, and argues
for the need to focus on the logic
and process of promoting new
farmer cooperatives to improve
their success rate.
This article is a revised version of the foreword to
the reprint of the book Catalysing Cooperation:
Design of Self-governing Organisations.
Tushaar Shah (T.Shah@cgiar.org) is with the
International Water Management Institute,
Colombo, Sri Lanka.
Economic & Political Weekly EPW FEBRUARY 20, 2016
W
ith two back-to-back droughts,
Indian agriculture is now in
deep distress. Seldom in the
past have price risk and production risk
in agriculture moved in unison, as they
are now. Normally, when production
took a hit, farmers had less to sell,
but got a better price and vice versa.
With globalisation, the Indian farmer
is also hit by the global free fall in
commodity prices. When far more pros-
perous industrial farmers in California
and Australia find the going tough,
there is little wonder that India’s small
farmers are driven to the wall, at times,
to take their own lives.
Things would arguably be much better
had India succeeded in organising small
farmers into strong cooperatives that
could guard against price as well as pro-
duction risks, as, for instance, dairy coop-
eratives have done in places where they
have taken root. We seldom hear about
dairy cooperative members in a state
like Gujarat committing suicide. In semi-
arid North Gujarat, the entire farming
system is drought-proofed by strong
vol lI no 8
160
INDIAN AGRICULTURE TODAY
dairy cooperatives which experience a
spurt in milk production during a
drought as farmers concentrate on in-
creasing milk production to counter the
income loss from crop failure.
The 1991 liberalisation, which exposed
Indian agriculture to international com-
petition, had made it essential for small
farmers to collectively fight for their
interests. Member-controlled dairy and
sugar cooperatives in western India have
demonstrated formidable lobbying power
in defending the interests of their
members. Had we such strong member-
controlled cooperatives in other spheres
of the agricultural economy, the agrarian
distress we witness today would have
arguably been far less severe.
The trouble is that since the early
1900s, when the idea of cooperatives
was mooted, India has found it hard
to launch cooperatives that grow into
robust, self-sustained, and member-
controlled businesses. Especially after
independence, governments and non-
governmental organisations (NGOs) have
made countless attempts, and invested
massive sums in founding all manner of
farmer cooperatives. But most became
known for corruption, apathy, inefficiency,
lack of market orientation, bureaucratic
lethargy, and stagnation. A few coopera-
tives that did not, unleashed an enigmatic
search for a theory of how to grow their
tribe. A frequently asked question was:
15
INDIAN AGRICULTURE TODAY
under what conditions do cooperatives
succeed in our small farmer context?
Why Some Cooperatives Succeed
A common explanation for a cooperative
enterprise that succeeds is that it has an
honest and selfless leader who enjoys
the allegiance of its members. But this
was based on study of stand-alone, un-
replicable “boutique” cooperatives (such
as the Gambhira Cooperative Farming
Society in Gujarat led for decades by the
Gandhian, Chhaganbhai Patel) and was
of little use as a theory for cooperative
action without the theory of leadership
in a social enterprise. A more credible
and interesting explanation was offered
by sociologists Baviskar and Attwood
(1991) in their “fertile grounds” argu-
ment. They asked why successful co-
operatives have emerged only in western
Indian regions like Central Gujarat and
Western Maharashtra. Their answer was
that hardy and enterprising farming
communities such as the Patidars in
Gujarat and Marathas in Western Maha-
rashtra created a fertile ground for the
seeds of cooperative action to take root.
The reasoning was compelling, but of
little use to practitioners unless they fig-
ured out how to imbue, for example,
Adivasi farmers in Central India with
the social capital and entrepreneurial
spirit that Patidars and Marathas had ac-
quired over centuries of sociocultural
evolution. A third explanation that got
wide appeal was advanced by a group of
cooperative ideologues, mainly the late
L C Jain, Mohan Dharia and V Kurien. In
their vision, farmer cooperatives of all
manner would emerge and come into
their own if only the legal and policy
environment was more liberal and nur-
turant, instead of repressive and pater-
nalistic as it had been so far.
In the early 1990s, a group of re-
searchers at the Institute of Rural
Management Anand (IRMA), who were
strongly influenced by the Amul experi-
ence, offered a fourth explanation. They
asked why dozens of Amul-pattern dairy
cooperative unions and scores of large
sugar cooperatives in Western India had
grown and multiplied into viable, self-
sustained, and member-controlled co-
operatives even without exceptional
16
leadership and despite the repressive
legal and policy environment. They
found the organising features and oper-
ating rules of successful cooperatives
remarkably similar. They argued that
there was more to building strong
farmer cooperatives than charismatic
leadership, supportive laws, and social
capital; and that with some catalytic
support, cooperatives can be designed
and incubated to be viable, self-sustained,
and member-controlled enterprises (Shah
1995, 1996).
Role of Design Thinking
Many critics of the IRMA’s research mis-
took its use of the term “design” to mean
some kind of social engineering with all
the manipulative connotations associated
with that term. In retrospect, the use of
design in IRMA studies was more akin to
what is now known as “design thinking,”
which Herbert Simon (1969: 55) suggested
was about the “transformation of exist-
ing conditions into preferred ones.”
Design thinking is always linked to an
improved future, in this case, for farmer
cooperatives and more so for their mem-
bers. The IRMA studies suggested that
the design of cooperative enterprises
should be about constantly reimagining
how thousands of potential members
interact with their cooperatives in ways
that impart strength and vitality to the
cooperatives. It argued that the failure
of cooperatives was often rooted in the
inability of their promoters to master
this interaction.
Cooperatives in India have been
organised following a set of ideological
principles enunciated by the Inter-
national Cooperative Alliance (ICA). These
prescribe that: (i) a cooperative must
follow voluntary and open membership;
(ii) regardless of differing patronage
stakes of different members, manage-
ment committee/board should be elected
on one-member-one-vote principle;
(iii) the cooperative must give limited or
token interest on share capital; (iv) sur-
pluses must be distributed according to
patronage; (v) a cooperative must coop-
erate with other cooperatives but retain
its autonomy; and (vi) cooperatives
should invest in wider community devel-
opment activities.
161 FEBRUARY 20, 2016
ICA principles were part of the vision
of a just, socialist society. But there is no
evidence to suggest that adhering to the
ICA principles strengthens cooperative
organisation development, or their busi-
ness performance, or even their equita-
ble management. Yet, cooperatives and
cooperative laws have uncritically ac-
cepted these normative principles in de-
signing member’s interactions with the
cooperative. In reality, the IRMA studies
discovered that successful member-con-
trolled cooperatives of sugar cane grow-
ers, dairy farmers, and others tweaked
the normative ICA principles in myriad
ways to strengthen the instrumentality
of their cooperatives to further patron-
age priorities and interests of its mem-
bers (Shah 1996). In many cases, ICA
principles were followed in letter but in
reality a different set of rules were in
force. Shah (1996) argued that success-
ful cooperatives sought not to maximise
profits but their socio-economic signifi-
cance in their domain. To this end, they
constantly sought to enhance their
member centrality (that is, the signifi-
cance of the cooperative to member
livelihoods), patronage centrality (sig-
nificance in the sectoral economy), and
domain centrality (significance in the
local economy as a whole). They do this by
choosing organising and operating rules
for the organisation that ensure (i) a co-
hesive system that promotes patronage
interests of members (patronage cohe-
siveness); (ii) a high level of tenacity and
vigour in the governance process in
holding the operating system account-
able (governance effectiveness); and
(iii) performance pressure and support
to the operating system to respond crea-
tively to member’s requirements and
also to ensure that members remain
faithful to the cooperative and its opera-
tive norms (operating effectiveness).
Following only the ICA principles did not
ensure these outcomes (Shah 1996).
Did Law Catalyse Cooperatives?
There was nothing novel or profound
about this conclusion about ICA princi-
ples. “New generation cooperatives” in
the United States, Canada, Europe, and
other developed countries had already
been tweaking cooperative ideology and
vol lI no 8 EPW Economic & Political Weekly

experimenting with new design features
for three decades (Singh 2008). Yet, new
cooperatives in India continue to suffer
from an “external locus of control,” and
the nature of the discourse on coopera-
tives has hardly changed. Influential
thinkers have demanded a more liberal
and supportive legal framework for co-
operatives—without of course commen-
surate control from governments and
financiers.
In 1995, Chief Minister of Andhra
Pradesh, N T Ramarao (NTR) got the Mu-
tually Aided Cooperative Societies Act
passed following the recommendations
of the Brahma Prakash Committee. One
could scarcely ask for a better, more lib-
eral, cooperative law than what NTR
gave Andhra Pradesh. Many proponents
of liberal cooperative law waited with
bated breath for a groundswell of
new, viable, self-sustained, member-
controlled cooperatives to spring up in
that state. But nothing of the sort hap-
pened even after 20 years of this dream
law, which was replicated by nine other
states as well. Meanwhile, Gujarat and
Maharashtra—which have all of India’s
large, successful, member-controlled co-
operatives—have steered clear of this
liberal law while their cooperatives kept
growing famously under their old, il-
liberal cooperative law. The states with
Mutually Aided Cooperative Societies
Act neither had such strong cooperatives
before the law, nor after it.
Following another such committee
led by Y K Alagh, in 2003, the Compa-
nies Act 2003 was amended to allow
for the registration of producer compa-
nies. This provision liberated the coop-
erative from the arduous process of
working under the Registrar of Cooper-
atives, but the ICA cooperative princi-
ples remained the bedrock of the design
of the producer company with the same
five organising principles—(i) volun-
tary and open membership; (ii) equal
voting right independent of sharehold-
ing; (iii) elected board from amongst
members; (iv) limited return on share
capital; and (v) distribution of surplus
on patronage basis. This new legal facil-
ity was widely expected to unleash a
new wave of farmers’ cooperative enter-
prises, but this time under the more
Economic & Political Weekly EPW FEBRUARY 20, 2016
business-friendly amended Companies
Act of 1956.
Producer Companies
According to Sriram Singh (2015), by
2015, over 2,000 farmer producer com-
panies (FPCs) had been formed under
the new amendment to the Companies
Act, 1956. Earlier, interference by politi-
cians and bureaucrats was blamed for
the poor state of cooperatives. But these
were no longer a concern for FPCs with
their new-found legal protection. There
has been not a single case of superses-
sion of a producer company board by the
government, nor have any of them com-
plained about political interference. Yet,
a majority of FPCs have struggled to
grow and become viable. Of the more
than 2,000 registered, there are not
even a dozen FPCs that have enrolled
over 1,00,000 members and/or reached
an annual business turnover of over
Rs 100 crore, the scale of a small-sized
dairy cooperative union. Size may not be
the only or even a major indicator of suc-
cess, however, survival as a viable, self-
sustained, member-controlled producer
organisation is. But even on that count,
most FPCs remain fragile, if a 2011 study
of 24 FPCs by Sukhpal Singh and Tarunvir
Singh (2013) is anything to go by. A
spate of recent reviews and evaluations
of producer companies has identified all
manner of problems facing them. In
sum, neither the ultra-liberal Mutually
Aided Cooperative Societies Act, nor the
Multi-State Cooperative Societies Act
nor the producer company provision in
the Companies Act 1956 has over the
past 10 years given birth to a single
farmer producer organisation of the
quality and size of Amul or Bardoli
Sugar Cooperative.
A core issue is the logic of founding a
FPC which should ideally arise from a
new way of doing business—involving
new technology, product development,
and innovative promotional and market-
ing strategy. When Tribhuvandas and
Kurien began organising farmers into
dairy cooperatives, they were confident
that Bombay offered a much more lucra-
tive market than milk producers con-
verting surplus milk into ghee at house-
hold level, and that the Bombay market
vol lI no 8
162
INDIAN AGRICULTURE TODAY
could be best conquered by a coopera-
tive of milk producers equipped with a
dairy plant to process liquid milk and to
manufacture milk powder. They did not
first organise Amul and then look for
opportunities for value-addition but the
opposite. Many FPCs formed under the
new law do not have the organising logic
like the value-addition model. Most
were started to do what traders were do-
ing anyways, but with greater presumed
efficiency and transparency. Notably,
most FPCs were formed under some gov-
ernment programme or the other, which
offered to cover the promotional cost
incurred by the promoting NGO.
In Madhya Pradesh, Action for Social
Advancement (ASA) and Professional
Assistance for Development Action
(PRADAN) formed dozens of producer
companies as part of the state govern-
ment’s District Poverty Initiatives Project
which, by way of assistance, offered
them little more than a management
subsidy to cover the salaries of NGO staff
for a few years. In Gujarat, Development
Support Centre (DSC) and Aga Khan Rural
Support Programme (AKRSP) formed
FPCs of farmers they were working with;
but there was no clarity about how they
will grow and become viable. Small
Farmer Agri-business Consortium (SFAC)
became a catalyst for the formation of
hundreds of FPCs, most without a com-
pelling business model.
Many FPCs were formed under the
National Vegetable Cluster and National
Accelerated Pulses Production Programme
of the Government of India under which
SFAC provided two-year management
subsidy to NGOs for forming FPCs. It was
as if the formation of FPCs itself was the
beginning and end of the game.
It was one thing to register FPCs and
enrol members, but quite another to sup-
port their growth into viable entities.
Farmers contributed initial token share
capital, SFAC subsidy covered promotional
costs, but as the business grew, FPCs
needed capital, management skills, and
other resources for further growth.
During the 1970s and 1980s, the National
Dairy Development Board (NDDB) played
SFAC’s role with dairy cooperatives, while
the Industrial Finance Corporation of
India (IFCI) played the same role with
17
INDIAN AGRICULTURE TODAY
sugar co-ops. But both these clusters
began generating cash early in their lives
and most paid their term loans earlier
than scheduled to reduce interest costs
(and to evict funding agency nominees
from their boards) because they had
strong business models. This is not the
case with most FPCs today. Like early
government-promoted cooperatives, the
new generation of FPCs have also looked
to the governments/donors to provide
capital and capacities needed for growth.
So the SFAC has now launched an Equity
Grant Scheme to match member equity
contribution 1:1 up to a limit of Rs 10 lakh.
In a separate Credit Guarantee Fund, the
SFAC will offer 85% guarantee for a bank
loan of up to Rs 1 crore to the FPC.
Aside from government agencies,
private financiers like the Rabo Bank
Foundation, Ananya Finance, and the
IGS LAMP Fund of the Basix Social En-
terprise Group have also offered loans
to producer companies. The National
Bank for Agriculture and Rural Develop-
ment (NABARD) too is likely to play some
role (Mahajan 2015). While much energy
is devoted to generate support from gov-
ernments, donors, and corporate social
responsibility (CSR) programmes, there
are not many examples of FPCs going to
their members to contribute more share
capital to finance growth and value addi-
tion. India’s small farmers are resource-
poor and risk averse; but the idea of a
cooperative is not only for pooling of
produce, but is also for pooling members’
capital. If FPCs promise attractive returns
to investment and enjoy trust of their
members, there is no reason why farmers
would not provide them capital.
Is the experience with promoting pro-
ducer companies any different from ear-
lier experience with promoting tradi-
tional cooperatives? In my view, it is not.
Like the old-world conventional cooper-
atives, most FPCs too are sheep in wolf’s
clothing. Their promotional process pro-
vides little evidence of design thinking
for “transforming existing conditions
into preferred ones.” The discourse on
the future of FPCs is not about how they
can mobilise energy for growth from
within but about how to garner resources
and concessions from governments and
external agencies. Had this not been the
18
case, we would not hear promoting NGOs
bemoaning lack of capital, capability,
and facilitation as key constraints facing
FPCs. Had they thought about the
growth trajectory of FPCs at the time of
formation, it would have been hard to
ignore these as future challenges that
needed preparation from the beginning.
The flaw lies not in FPCs, but in the think-
ing and process of promoting them.
New Dairy Co-ops Show the Way
Refreshingly different from the NGO-
promoted FPCs is the manner in which
the NDDB Dairy Services Company (NDS)
has promoted five new Milk Producer
Companies (MPCs). The hallmark of
their promotional process is high quality
design thinking. The NDDB’s trigger to
create MPCs came from the dissatisfac-
tion with infirmities in the Anand-
pattern dairy cooperatives. Two of these
were critical: first, Amul-pattern dairy
cooperatives were thought to be vulner-
able to growing political1 and bureau-
cratic interference; second, this vulnera-
bility impaired their capacity to compete
in a post-1991 liberalised economic envi-
ronment which pitted cooperatives
against multinational dairy giants. In the
NDDB’s vision, as “New Generation Coop-
eratives,” MPCs will have to be more
robust producer organisations capable
of defending member-control against
political or bureaucratic capture or in-
terference. The rapid growth and matu-
ration of NDS’s MPCs present a stark con-
trast to the 2,000 odd NGO-promoted
fledgling FPCs. The first one, Maahi,
based in Saurashtra and Kachchh, was
incorporated as a producer company in
2012, under the Company Act amend-
ment; and the other four thereafter. In a
short period of three years, all these five
MPCs have achieved scale in terms of
membership, business turnover, market
Table 1: Growth of Milk Producer Companies Promoted by NDDB Dairy Services
Parameter Paayas,
Rajasthan
No of members 69,647
Women members 25,025
Women membership as % of total members 37
Smallholders as % of total members 47
Paid-up share capital (Rs million) 154.0
Average milk procurement ('000 kg/day) 412
Business turnover 2014–15 (Rs million) 5,968
Source: Singh (2015).
163 FEBRUARY 20, 2016
position, and have built up internally
generated equity capital (Table 1).
NDS is a resourceful organisation with
a deep understanding of the dairy eco-
nomy and formidable experience in or-
ganising dairy farmers. It also has access
to World Bank funding under the Na-
tional Dairy Plan. One can understand
that NGOs that have been engaged in
promoting FPCs are no match for the
NDS. Yet, what is remarkable about the
NDS’s promotional programme are the
design features that it has incorporated
to enhance patronage cohesiveness, gov-
ernance effectiveness, and operating
effectiveness of these new businesses.
Take for example their by-laws gov-
erning the relationship between mem-
bers and the MPC:
(i) The MPC will do business only with
registered members; members without
business with the cooperative have to
surrender their membership.2
(ii) New members can join, but only dur-
ing specific windows in each year, by
paying admission fee of Rs 100 and buy-
ing five shares with a book value of Rs
100 each. Only those members can vote
who have supplied at least 500 kg of
milk and supplied milk for at least 200
days during the year.3
(iii) Members have to maintain a 3:1
flush-to-lean ratio of milk supply, that
is, to be able to supply 300 litres to the
MPC during flush months, a member
should have supplied 100 litres during
lean months.
(iv) After their first year of membership,
members have to ramp up their equity
capital in proportion to (at present Re 1/kg
of milk supplied) their business with
the MPC during the previous year.
Returns to members too are similarly
tied to patronage and equity shares.
During 2014–15, Paayas did a total busi-
ness of Rs 600 crore but gave Rs 3 crore
Maahi, Saurashtra Shreeja, Baani, Saahaj,
and Kachchh Andhra Pradesh Punjab Uttar Pradesh
86,938 41,292 22,972 44,999
17,688 41,292 2,689 9,695
20 100 12 22
51 75 45 43
262.0 20.3 13.8 22.0
536 236 170 425
9,793 1,381 868 1,582
vol lI no 8 EPW Economic & Political Weekly

as loyalty incentive to members and
Rs 1.5 crore as dividend on equity on a
total share capital of Rs 16 crore, which
is well over 25% annual return on
member-equity.
(v) Voting members are divided into pa-
tronage classes A, B and C; each class sends
to the board elected members in propor-
tion to its share in the FPCs business.4
(vi) The face value of the equity share is
to be revalued periodically; new members
can join by buying shares at a re-valued
price (net worth/no of shares).5
(vii) Old members can exit the MPC
and retire their equity capital at today’s
valuation.
(viii) Up to 1/5th of the directors on
board can be co-opted experts.
Together, these provisions tweak
three ICA principles. First, membership
is open and voluntary but “conditions
apply.” Second, board is elected by one-
member-one-vote rule, but vote comes
only with threshold-level of patronage.
Moreover, A-class vote is weightier than
a C-class vote. The more business you do
with the cooperative, the greater your
say in its decision-making. Finally, buy-
ing a share is not just a token admission
fee, it is buying or selling a piece in the
cooperative’s accumulated net-worth in
a manner that protects the senior rights
of early members who are now incentiv-
ised to supply capital.
To enhance governance effectiveness,
MPC boards ensure that: (i) professional
managers run the business efficiently in
the interest of members; (ii) the chief ex-
ecutive officer (CEO) is under the elected
MPC board, which is trained to view the
CEO as the personification of the entire
operating system; (iii) frequent board
meetings,6 continuous training and ca-
pacity building for the board, managers,
field staff, and primary members places
strong focus on building a common vi-
sion and mission, and an understanding
of the five-year business plan; (iv) per-
formance-linked managerial compensa-
tion at market rates.7
Above all, the by-laws of MPCs forbid
elected board members from holding
any political positions; a few elected
board members have had to resign MPC
board membership when they got elected
to political posts.
Economic & Political Weekly EPW FEBRUARY 20, 2016
Finally, the key strength of the MPC is
its operating system designed as a value-
adding machine that delivers high share
of consumer rupees to farmers (that is,
the share the farmer earns from what the
consumer pays for the product). Paayas
in Rajasthan returns 85% of the consumer
rupees to farmers, probably the highest
by any dairy operator in the country. The
highlights of the New Generation Co-
operatives business model are: (i) direct
payment of milk price to member’s bank
account to ensure transparency and re-
duce transaction cost; (ii) replacing the
Village Dairy Cooperative by a sahayak
to operate and manage a frugal Village-
based Milk Procurement System (VBMPS)
to ensure transparency, cut pooling costs,
reduce storage, and improve quality;
(iii) asset-light business model of owning
low fixed asset and maintaining high
asset turnover;8 (iv) low debt (or debt-
free) capital structure with member equity
dominating capital structure; (v) work-
ing capital generation through continu-
ous cash generation and limited use of
commercial bank credit; (vi) variable cost
model that reduces the business risk of
sales slowdown; (vii) healthy retention of
earnings to build reserves and net worth
to raise credit-worthiness; and (viii) con-
stant effort to accelerate value addition
by reducing bulk institutional sales and
enhancing branded retail sales. Thanks
to these, all the five MPCs are already in
healthy financial condition. Maahi MPC
had a seven-year term loan of Rs 19.26
crore from NDDB which was due in 2019,
but it fully repaid the loan in 2015 itself
to reduce interest burden. All other MPCs
are well on the way to retiring their debt.
What explains the gap between MPCs
and NGO-created FPCs is the quality of the
promotional process. In a short period
of time, in many geographies, MPCs
are giving tough competition to long-
established Amul-pattern dairy unions,
leave alone private players in organised
and unorganised sectors. In Saurashtra
and Kachchh region of Gujarat—which
for 50 years were written off as unsuita-
ble for cooperative dairy development—
the formation of Maahi MPC forced Amul
to quickly follow suit and organise
village dairy cooperatives in campaign
mode. In 10 years, the contest between
vol lI no 8
164
INDIAN AGRICULTURE TODAY
Maahi and Amul has transformed
the dairy economy of this semi-arid
landscape in ways that was hard to
imagine at the turn of the millennium
(Shah et al 2014). Until 2005, dairy co-
operatives collected less than 1,00,000
litres/day (l/day) of milk from these
regions; today, Maahi and Amul together
collect over 20 lakh l/day pumping over
Rs 2,500 crore/year as milk income
of farmers.
Way Forward
In some ways, even more revealing than
the NDDB’s MPCs has been the case of
Mulukanoor Women’s Cooperative Dairy
Union as an example of design thinking in
creating a robust farmer-owned business.
In this case, the promoter, the Coopera-
tive Development Foundation (CDF) was
far less resourceful than NDDB. Yet, this
20,000-member all-women MPC has,
over a decade, grown and has a turnover
of Rs 75 crore. It markets milk under its
own brand Swakrushi, and returns 87
paise of each consumer rupee as producer
price, besides an attractive year-end
bonus. G V Krishnagopal,9 who watched
the cooperative closely as a CDF employ-
ee attributed its economic success and
robustness to a set of design features:
(i) market only liquid milk and avoid
product business to minimise working
capital need; (ii) avoid large cities and
dominate tier II and III town markets
within a radius of 100 km to minimise
transport cost; (iii) collect milk from
100 villages within a radius of 35 km to
keep procurement cost at Rs 0.60/l; (iv)
retain 5% of milk payment as member
deposit to raise capital; (v) hire and train
local people to keep staff cost/l to the
minimum; (vi) only active members are
allowed to vote; each board member is
monitored for the performance of village
co-ops in her constituency.
In a recent visit to Amul cooperative in
Anand, Gujarat, Arvind Subramanian,
Chief Economic Advisor to the Govern-
ment of India, asked if organising pulse-
growers into Amul-type cooperatives
can help increase India’s pulse produc-
tion, just as dairy cooperatives have
helped India become the world’s largest
dairy producer. The answer is yes. But
merely registering dozens of FPCs will
19
INDIAN AGRICULTURE TODAY

clearly not help. Someone needs to
engage in design thinking about how
best to turn around the country’s pulse
economy. FPCs can turn around the agri-
cultural economy provided they promise
farmers sustainable and better returns
to farming. Many NGOs promote FPCs us-
ing the good old “forming, storming,
norming, performing” model (Tuckman
2001 [1965]). The trouble is some tough
norming to control free-riding and op-
portunism necessary for performing is
hard to brainstorm when the FPC is
formed without farmers buying into an
exciting, self-sustained business model.
The examples of promotion of MPCs
discussed here suggest at least four stages
involved in launching successful FPCs
among farmers growing pulses or any-
thing else: first, of creating and commu-
nicating a compelling vision of a poten-
tially successful enterprise with signifi-
cant rewards to farmer-members; sec-
ond, of creating (and registering) the
member-organisation best designed to
actualise the vision; this done, the third
stage is of utilising early success to insti-
tute rules/norms that reinforce patron-
age cohesiveness, governance effective-
ness, and operating performance; and
f­inally, at maturity, utilise the strength
from enterprise growth to enhance mem-
ber, patronage and domain centrality.
Notes
1 Worries about political interference have been
increasingly validated with party politics play-
ing an increasingly strident role in dairy coop-
erative elections. Equally worrying is the
w­ayward behaviour of elected boards of many
celebrated Gujarat dairy unions, leading to bit-
ter controversies about corruption and nepo-
tism. A common aspect of all such behaviours
are the board decisions not perceived to be in
the best patronage interests of members.
2 Accordingly, in 2014, Maahi retired some
12,000 members who did not meet all member-
ship criteria including maintaining the lean–
flush milk supply ratio with the MPC.
3 These by-laws are vigorously enforced. In the
annual report of the Maahi MPC of Saurashtra,
for example, of the 86,938 registered members,
only 46,056 members enjoyed voting rights. The
rest did not fulfil the patronage criterion and were
denied voting rights in the 2015 board election.
4 According to Maahi MPC annual report, in 2015,
only 69% of registered members were eligible
to vote. Of these, 8% were A-class, 26% were in
B–class, and 66% were in C-class contributing
39%, 34% and 29% respectively of total milk
procurement. In patronage-based voting, A-
and B-class members sent four board members
each, while C-class members elected three.
5 Maahi (Saurashtra–Kachchh) and Paayas (Ra-
jasthan) are likely, in 2015, to revalue their
Rs 100 shares to around Rs 150 in keeping with
their growing net worth.
6 For example, the Paayas board met 23 times in
three years.
7 About 10%–15% of the total compensation of
top managers is variable pay linked to perfor-
mance, as are annual salary increments.
8 None of the five dairy FPCs own dairy process-
ing plants or even chilling plants which are all
leased. The only assets they own are electronic
milk testing and weighing machines at Milk
Procurement Points at the village level.
9 Email correspondence 15 December 2015.
References
Baviskar, B S and D W Attwood (1991): “Fertile
Grounds: Why Do Cooperatives Flourish in
Western India?,” Indian Association of Social
Science Institutions Quarterly, Vol 9, No 4.
Mahajan, V (2015): “Farmer Producer Companies:
Need for Capital and Capacity to Capture Value
Added,” Hyderabad: BASIX Social Enterprise
Group.
Shah, T (1995): Making Farmer Co-operatives
Work: Design, Governance and Management,
New Delhi: SAGE Publications.
— (1996): Catalysing Co-operation: Design of Self-
governing Organizations, New Delhi: SAGE
Publications.
Shah, T, Y Mehta, V Kher and A Palrecha (2014):
“Generating Agrarian Dynamism: Saurashtra’s
Lessons for Vidarbha,” Economic & Political
Weekly, 49(26 and 27): 86–94
Simon, Herbert (1969): Sciences of the Artificial,
Cambridge: MIT Press.
Singh, Sukhpal (2008): “Producer Companies as
New Generation Cooperatives,” Economic & Po-
litical Weekly, 17 May.
Singh, Sukhpal and Tarunvir Singh (2013): Producer
Companies in India: A Study of Organization
and Performance, publication No 246, Centre
for Management in Agriculture, Indian Insti-
tute Management, Ahmedabad, http://www.
iimahd.ernet.in/users/webrequest/files/
cmareports/14Producer_Company_Final.pdf.
Singh, Sriram (2015): “Promotion of Milk Producer
Companies: Experience of NDS,” Presentation
in Workshop on Producer Companies organ-
ised by National Dairy Development Board,
Anand, Gujarat, 8 October.
Tuckman, B (2001) [1965]: “Developmental Sequence
in Small Groups,” Group Facilitation: A Research
and Applications Journal, No 3, Spring.

Higher Education in India

In Search of Equality, Quality and Quantity
Edited by
Jandhyala B G Tilak
India has a large network of universities and colleges with a massive geographical reach and the facilities for higher
education have been expanding rapidly in recent years. The story of higher education in India has seen many challenges
over the decades and has not been without its share of problems, the most serious being a very high degree of inequity.

Pp xiv + 538  Rs 745 Drawn from writings spanning almost four decades in the EPW, the articles in this volume discuss, among other things,
ISBN 978-81-250-5131-2 issues of inclusiveness, the impact of reservation, problems of mediocrity, shortage of funds, dwindling numbers of
2013 faculty, and unemployment of the educated young.
Authors: André Béteille • Shiv Visvanathan • Suma Chitnis • Satish Deshpande • K Sundaram • Rakesh Basant, Gitanjali Sen • Jayati Ghosh •
Thomas E Weisskopf • Lloyd I Rudolph, Susanne Hoeber Rudolph • A M Shah • Errol D’Souza • G D Sharma, M D Apte • Glynn L Wood •
D P Chaudhri, Potluri Rao • R Gopinathan Nair, D Ajit • D T Lakdawala, K R Shah • Chitra Sivakumar • Amrik Singh • Jandhyala B G Tilak • Anindita
Chakrabarti, Rama Joglekar • Karuna Chanana • Saumen Chattopadhyay • Samuel Paul • Deepak Nayyar • V M Dandekar • M Anandakrishnan •
Thomas Joseph

Orient Blackswan Pvt Ltd

www.orientblackswan.com
Mumbai • Chennai • New Delhi • Kolkata • Bangalore • Bhubaneshwar • Ernakulam • Guwahati • Jaipur • Lucknow • Patna • Chandigarh • Hyderabad
Contact: info@orientblackswan.com
20 165 FEBRUARY 20, 2016  vol lI no 8  EPW   Economic & Political Weekly
 Wadi - A Natural Resource Regeneration Approach1
Dharampur Utthan Vahini (DHRUVA) an NGO promoted by the Bhartiya Agro Industries
Foundation (BAIF), founded by the Gandhian, Late Manibhai Desai and currently led by Girish
Sohani, who personally led the DHRUVA program and built it into an integrated livelihoods
development program based on natural resource regeneration.

The Context
The operational area of DHRUVA, comprising of Ahwa taluka of Dangs district, Dharampur,
Kaprada taluka of Valsad district, and the Vansda taluka in the Navsari district of south Gujarat is
mainly inhabited by tribals. The region is characterized by steep, undulating, inaccessible terrain, with
heavy rainfall (up to 2500 mm) and high run off. The habitations are scattered and remote and only a
third of the area is cultivable with limited irrigation facilities. A typical tribal family has three, or five
acres of land, of which only two acres may be cultivable. The soil conditions are poor, and therefore
even with heavy rainfall the productivity is pretty low.

A typical annual livelihood cycle of the tribals of this region begins with the cultivation of one rainfed
paddy crop and finger millets during the monsoons. After this spell of subsistence farming is
complete, they migrate to nearby towns- Vapi, Surat or Ankleshwar, for six to eight months. The
income from the work done in the course of migration is meagre, with high overheads. Migration also
destabilizes their family life, and creates many social problems. Therefore, DHRUVA’s intervention
was aimed at reducing migration by creating self-employment avenues in their native land. They
started the Wadi program with this objective. As of now, DHRUVA does not have a separate identity.
It is named as BAIF Institute for Sustainable Livelihoods & Development (BISLD) and becomes part
of the parent organisation. However the case will continue using the name DHRUVA instead of
BISLD.

The Intervention

Integrated development: The program has a core activity in the form of the Wadi – a horti-forestry
orchard of one to two acres raised by the tribal family on sloping uplands. In this model, the central
focus is on the wadi. The other development interventions are built around the Wadi. The other
programs that converge on this intervention around the Wadi are: agri-business development, water
resources development, soil and water conservation, dairy husbandry promotion, development
finance, and improving quality of life (health and sanitation, education, and provision of potable
drinking water).

Wadi in Gujarati means a small orchard covering one to two acres. The Wadi may be of mango,
cashew, or amla, or any other fruit suitable to the region, or a combination of these fruits. In the south
Gujarat region, a typical Wadi on one acre of wasteland has 40 cashew and 20 mango trees bordered
by a peripheral plantation of forest trees and bamboo, providing timber, fodder and Minor Forest
Produce (MFP). Two or more varieties of trees are selected in the Wadi program to minimize
biological and marketing risks. The program started in the year 1984 with only 44 farmers.

The Wadi program is implemented through a Four-Tier Commodity Cooperative system. The
fourth-tier, which was recently added, is the consolidation of all the co-operatives of BAIF into a
producer company that takes care of the trade channels in the pan-Indian market. The first tier
consists of the Wadi owners, who are the primary members of the cooperatives. Unlike any other
cooperative, the landless are also the primary members of the cooperatives.

The second tier in the system is made up of the Gram Vikas Mandals (GVMs) at the village level.
All the Wadi owners are members of the GVMs. The GVMs are responsible for planning and
executing the Wadi program in their villages. The planning and execution group (Ayojan Samiti) made
1
Updated the earlier version taken from Datta et al. 2014. Resource Book for Livelihood Promotion, Fourth Edition, The
Institute of Livelihood Research and Training

166
of 6 to11 members, is part of each Gram Vikas Mandal. GVMs are instrumental in running the Krishi
Sewa Kendras, and are the procurement points of cashew and mangoes from the Wadi farmers. The
produce from the villages is supplied to the cooperatives. However, the GVMs also buy food grains
from the open market and the SHGs, and sell it to the cooperatives. The credit facilities are also
devolved through 201 GVMs that have a membership of 2676. The responsibility of generation of
needs, appraisal of credit requirements and recovery of loans lies with the GVM. The accountant is
paid on the basis of a performance-based incentive system for recovery of loans. The GVMs are also
responsible for mobilizing farmers to take up the Wadi programs with its assistance of subsidy and
credit products.

The third tier has mandal or taluka level co-operatives where post-harvest, part-value addition is done
locally. It then goes to the Vasundhara Co-operative, which is the marketing body of all
cooperatives. Twelve co-operatives with primary membership of 18,000, and with 3000 non-
members, transact with Vasundhara. Advanced processing and packaging is done by Vasundhara,
which has a retail outlet as well. Vasundhara operates as a ‘mother co-operative’ in the cashew
processing value chain. Cashew procured from all the co-operatives is processed and packed, and
marketed under the brand name Vrindavan, through the network of retail outlets.

All together there are 12 co-operatives operational in the intervention area. Each co-operative has an
entry level fee of Re 1, with a share of Rs 50 for the members. The co-operative has an Advisory
Committee and a Management Committee in which the DHRUVA staff are nominated as members.
DHRUVA extends capacity building support to the cooperatives towards developing selfsufficiency.
Vasundhara has planned a new setup in Lacchakhadi with a plan outlay of Rs 1.8 crore, which has
been leveraged from the Bank of Baroda.

The fourth tier is a producer company that has been registered at Pune under the name
Vasundhara Agri-Horti Producer Company Limited (VAPCOL). However, processed mango
products such as pickles, mango pulp and so on, are marketed by Vasundhara under the same brand
‘Vrindavan’.It has three operational, licensed branches. One of the branches is located at
Lacchakhadi, and the other two are at Udaipur in Rajasthan, and at Peth in Maharashtra. All the co-
operatives formed by DHRUVA have been federated to VAPCOL with one member from Vasundhara
on its board. The Producer Company was floated with the idea of enabling inter-state transactions and
to help re-route profits to the farmers, irrespective of the state to which they belong. The program is
directed towards involving the masses following the Gandhian approach- ‘Not mass production
but production by the masses’. Therefore, there has been an overriding emphasis on decentralized
and well-disseminated activities with adequate centralized efforts for providing technical, financial
and managerial support and inputs for capacity building-whether it is for raising nurseries, or for
processing cashew-nuts or mangoes.

An Integrated Model
The Wadi program of DHRUVA aims at creating employment opportunities at the local level while
strengthening the local economy. The Wadi approach is essentially a land based intervention and
therefore would have only benefited the landed farmers, if it were not carefully planned. Since
developing the local economy necessitates retaining more and more of the value-addition in the local
area, it calls for involving the entire rural community-landed and landless, women and vulnerable
classes, within its intervention strategy. For this to work, it entails building linkages within the context
of the local economy. These linkages have been built very strategically in DHRUVA.

Both the landed and the landless are members of the cooperatives. While the landed farmers manage
the orchard and also toil there, the landless inhabitants are also employed as laborers on the orchards
and for post-harvesting value addition. This kind of a unique arrangement of having both the landed
and the landless in the same cooperative with equal rights suits the landed too, as they understand the
importance of the contributions from the landless in value-addition. For example, one kg of raw
cashew-nut only fetches Rs 40-45 (depending on its quality) to the farmer. The same cashew-nut
fetches a market price of Rs 400-500 per kg after processing and packaging.

167
Likewise mango fetches an average of Rs 15-20 per kg, whereas mango pickle fetches a rate of Rs
100 per kg. Thus the actual value-addition takes place only in the post-harvest period. Owing to the
cooperative system, much of this value-addition is retained within the community, and both the
landed and the landless benefit. Again, the landless are involved in providing inputs for the orchards.
The women SHGs of the intervention area make vermi-compost, which the farmers in turn use as
inputs.

BAIF launched its Wadi program in 1987 in some of the villages around Chondha in Navsari district
of South Gujarat. Encouraged by the good results from the Wadi program, the village community
joined the Cattle Development Scheme introduced by the government. Seventy five crossbred cows
were purchased under this scheme and a Milk Co-operative was formed in 1989 with the active
cooperation of the Wadi owners. Dairy promotion happens through the provisioning of credit
facilities, which are channelized through the GVMs to its members and the SHGs for rearing cattle.
The District Milk Co-operative Federation (Vasundhara) has fixed its milk routes for procurement of
milk and some of the SHGs have come forward and bid for managing milk collection points on behalf
of Vasundhara.

NABARD refinances DHRUVA and the beneficiaries avail the loan through the GVMs at the rate of
12-15 percent. DHRUVA charges 3.5 percent for its services to the beneficiaries. As of 30th March
2008 Rs 481.95 lakhs were disbursed as loans under the program, and the net outstanding was Rs
86.11 lakhs with a cumulative recovery rate of 92 percent. The beneficiaries of DHRUVA’s credit
program are both individuals and groups. Individuals are mostly Wadi owners, landless people, or
people not owning Wadis, while groups such as groups of Wadi owners (GVM members), SHGs
(members of GVM), GVMs and cooperatives, also take loans from DHRUVA.

The GVMs also act as financial intermediaries between end-users and DHRUVA, for the GVMs also
lend internally to its members at an interest of 12 percent. This program is an attempt to pave ways for
inclusion of large number of people, with a simple pre-requisite that the person should be a
shareholder in the cooperative and must be a Wadi owner. The program also is an attempt to create a
platform at the village level for financial intermediation and for fostering linkages with mainstream
financial institutions in the future.

The Wadi Program Today

Over these years-BAIF since 1982, and DHRUVA from 1995- DHRUVA’s Wadi program has been
implemented on approximately 12,373 acres of land covering more than 33,011 families from 6
talukas of 3 districts of south Gujarat and 15 villages of Dadra and Nagar Haveli. All the products of
the Wadi are either sold in the local markets such as Chondha Bazaar, or through the Vasundhara
Cooperative under the brand name Vrindavan. The Vasundhara Cooperative has been able to sustain
its brand image in the market over the years and now has a good distribution network in Gujarat and
Bombay.

The produce from the villages are collected at the GVM level and the farmers are paid at the source. If
a competitive price is obtained, mangoes generally go to the local mandis (markets) or they go to the
Vasundhara Cooperative for processing into mango pulp and pickle. Cashew-nuts are semi-processed
and graded at the local cooperative level and then it comes to Vasundhara for labeling and marketing.
Marketing is still done only through Vasundhara as the other cooperatives are yet to mature into
independent bodies.

It is now known that one acre of Wadi gives a farmer an additional income of about Rs 25,000
after the sale proceeds by his GVM to the cooperatives. The farmer also gets a share of the profit
made by the cooperative after it has processed the produce and completed its sale. In addition, the
farmer can get more yields from other crops as well as increased quantity of fodder. Some farmers get
additional income by raising nursery beds. Cashews produced by the Wadi owners are collected by
the GVMs at Rs 35-37 per kg. The GVMs sell it to the mandal or taluka cooperatives at Rs 38.50 per

168
kg where the processing and grading takes place. From the cooperatives, the cashews are sent to
Vasundhara, which sells it for Rs 390-430 per kg, depending on the cashew grade.

Vasundhara redirects the profit margins to the producers in the form of second payment during Holi.
However the rate list for the season is supplied to all the players in the value chain, well in advance.
Fresh mangoes are marketed by VAPCOL. In the financial year (2007-08) Vasundhara Cooperative
made a profit of Rs 2.20 lakhs from processing and other activities. Vasundhara is also the trade
channel in amla and honey for the Gujarat Forest Development Corporation. It also sells fresh
mangoes to ITC Ltd.

Investments Details
The Wadi intervention of DHRUVA has so far been largely on grant basis. In the initial years, most of
the funds for this program had been allocated from DRDA (under its NREP/RLEGP), CAPART and
the National Watershed Development Board (mid-1980s). Subsequently funds were leveraged from
The Ministry of Finance, Ministry for Tribal Affairs, Government of India, German Development
Bank (KfW), NABARD, State Government of Gujarat and from UNICEF. A major funding is
channelized through BAIF and re-financing is through NABARD. The funds from the state
government of Gujarat are directly devolved through DHRUVA. The operations of DHRUVA are
being grounded with a corpus of Rs 939,000 and at present, DHRUVA is implementing 32 projects in
South Gujarat and Dadra & Nagar Haveli. At prevailing rates, the cost of cultivation per acre comes to
Rs 35,000. The list of 19 loan-cum-subsidy products with asset insurance ranging from a sum of Rs
250-1.5 lakhs bundled with it caters to the productive and consumptive needs of the Wadi farmers and
the landless.

Impact
The most distinct impact of the Wadi program is seen in the increased employment due to farms
providing an average yield of 500 kgs of mangoes and 50 kgs of cashew, which are sold to GVM at
the rate of Rs 20/kg and Rs 45/Kg respectively. As a result of this, migration has reduced and in many
family now the wives and children stay back home. As a result, the children are able to go to local
schools, thus improving the educational levels. The Wadi program (agri-horti-forestry) is able to bring
significant reduction in the cases of distress migration as a means of livelihood by providing alternate
livelihood in their own backyards.

Table 2: Annual Income of households with Wadi and Non-Wadi

Income Head Wadi Non-wadi Impact

Agriculture 19606 8382 157%
Horticulture 12538 724 -
Animal Husbandry 27363 13156 140%
Migration 5849 16324 -67%
Other sources 49176 35338 39%
Net Total Income 120,531 79,924 59%

Over a 15-year period, the villages have undergone many changes. The various interventions have
helped in raising the income levels of the people. This was evident from the number of motorcycles
owned by the villagers, the number of pucca houses and children benefiting from higher education; if
required, even outside the state.

There is a substantial rise in employment opportunities for landless in activities around procurement
and marketing of farm produce, processing of cashew and mango and other income generating
activities in the non-farm sector. A significant contribution of the Wadi program has been in terms of
replication in other states of Rajasthan, UP, Maharashtra, Karnataka and Madhya Pradesh.

169