Explained | Lakhpati Didi initiative

Rural Development Minister Giriraj Singh chaired a national conclave to review the ‘Lakhpati Didi’ scheme under the Deendayal Antyodaya Yojana-National Rural Livelihoods Mission (DAY-NRLM).

Lakhpati Didi initiative

• Prime Minister Narendra Modi announced the scheme, which aims to encourage women to start micro-enterprises, in his Independence Day speech on August 15, 2023.

• The programme is aimed at training women in self-help groups (SHGs) so that they can earn a sustainable income of at least Rs 1 lakh per annum per household. 

• The ministry of rural development is adopting a whole-of-government approach for maximum impact through convergence to transform the rural economy with the enabling of ‘Lakhpati Didis’. 

• To give impetus to economic empowerment of women, the Lakhpati Didi initiative has been initiated by DAY-NRLM, wherein each SHG household is encouraged to take up multiple livelihood activities coupled with value chain interventions, resulting in a sustainable income of Rs 1 lakh or more per year.

Role of self-help groups in women’s empowerment

• The percentage of the population living in India’s rural areas was as high as around 80 per cent in the 1960s and remained over 70 per cent till 2007. According to the Economic Survey 2022-23, it stands at 65 per cent for 2021. 

• Further, 47 per cent of the population is dependent on agriculture for livelihood. Thus, the focus of the government on rural development is imperative. The emphasis has been on improving the quality of life in rural areas to ensure more equitable and inclusive development.

• Various measures have been taken to enhance the quality of life in rural areas encompassing rural housing, drinking water, and sanitation, clean fuel, social protection, rural connectivity along with enhancing rural livelihoods.

• The financing needs of rural households and small businesses are being met through microfinance institutions, self-help groups (SHGs), and other financial intermediaries. 

• It may be noted that more than 75 per cent of rural female workers are employed in the agricultural sector. This implies a need to upskill and create employment for women in agriculture-related sectors such as food processing. 

• Here, the self-help groups can play a crucial role in shaping rural women’s potential into concrete developmental outcomes of financial inclusion, livelihood diversification, and skill development.

• SHGs, having demonstrated their resilience and flexibility during the pandemic, can be  an effective conduit to tap the rising willingness of females to work. 

Transformative potential of SHGs

• The self-help groups (SHGs) movement, based on the principles of group solidarity and microfinance, has existed in India for 50 years in one form or another, with its roots tracing back to the formation of the Self-Employed Women’s Association in 1972.

• An SHG is a socially and economically homogenous group of up to 20 persons, formed voluntarily for the collective purpose of savings and credit, with no insistence on collateral for loans and end usage of credit.

• These SHGs are federated at the village/gram panchayat, cluster and block level. The institutions provide services (savings, credit, livelihood support) to their members that help them strengthen and sustain livelihoods. 

• The transformative potential of SHGs, exemplified through their key role in the on-ground response to COVID-19, has served as the fulcrum of rural development through women empowerment.

• India has around 1.2 crore SHGs, comprising 88 per cent of all-women SHGs, which cater to 14.2 crore households.

• Success stories include Kudumbashree in Kerala, Jeevika in Bihar, Mahila Arthik Vikas Mahila Mandal in Maharashtra, and recently, Looms of Ladakh.

• The SHG Bank Linkage Project (SHG-BLP), launched in 1992, has blossomed into the world’s largest microfinance project. 

• The SHG movement has emerged as a powerful intervention to cover the small and marginalised sections. 

• Currently, bank-linked SHGs are promoted through central government, state governments, NGOs, etc. They must practice the ‘Panchasutra’ of regular meetings, regular savings, regular inter-loaning, timely repayment and up-to-date books of accounts to avail of loans from banks. 

• With the active collaboration of stakeholders, the SHG-BLP covers 14.2 crore families through 119 lakh SHGs with savings deposits of Rs 47,240.5 crore and 67 lakh groups with collateral-free loans outstanding of Rs 1,51,051.3 crore, as on March 31, 2022. 

• The number of SHGs credit linked has grown at a CAGR of 10.8 per cent during the last ten years (FY13 to FY22), while credit disbursement per SHG has grown at a CAGR of 5.7 per cent during the same period. 

• Notably, SHGs’ bank repayment is more than 96 per cent, underscoring their credit discipline and reliability.

Deendayal Antyodaya Yojana-National Rural Livelihoods Mission

• Aajeevika-National Rural Livelihoods Mission (NRLM) was launched by the ministry of rural development in June 2011. 

• It was later renamed as Deendayal Antyodaya Yojana-National Rural Livelihoods Mission (DAY-NRLM).

• DAY-NRLM is a flagship poverty alleviation program implemented by the ministry of rural development. 

• It aims to reduce poverty by enabling the poor household to access gainful self-employment and skilled wage employment opportunities resulting in sustainable and diversified livelihood options for the poor. 

• This is one of the world’s largest initiatives to improve the livelihoods of the poor.

• DAY-NRLM seeks to reach out to around 10 crore rural poor households in a phased manner and organise one woman member from each household into affinity-based women self-help groups (SHGs) and federations at village level and at higher levels.

• The Mission is for creating efficient and effective institutional platforms for the rural poor enabling them to increase household income through sustainable livelihood enhancements and improved access to financial services. 

• It will then provide them long-term support to diversify their livelihoods, improve their incomes and quality of life.

The Mission seeks to achieve its objectives through investing in four core components:

i) Social mobilisation and promotion and strengthening of self-managed and financially sustainable community institutions of the rural poor.

ii) Financial inclusion.

iii) Sustainable livelihoods.

iv) Social inclusion, social development and access to entitlements through convergence.

• The Mission has covered 7,091 blocks spread over 742 districts across all states and Union Territories except Delhi and Chandigarh. 

• More than 9.54 crore women have been mobilised into 87.39 lakh SHGs.