An evaluation commissioned by the government has assessed various central schemes tailored for the rural sector, including the Deendayal Antyodaya Yojana-National Rural Livelihoods Mission (DAY-NRLM). The findings indicate that a significant number of self-help groups (SHGs) established for women have not utilized the provided funds to initiate income-generating activities. Instead, the revolving fund of Rs 20,000 to Rs 30,000 allocated to each group was frequently diverted for household expenses, as highlighted in the report submitted to the Ministry of Rural Development.
This evaluation is particularly crucial in light of the Finance Ministry’s directive last year, which stated that no centrally financed program would be extended beyond March 31, 2026, without undergoing a third-party assessment. The results of this evaluation will influence the future of the DAY-NRLM in the upcoming five-year cycle of the 16th Finance Commission starting in April 2026.
Titled ‘Evaluation of Centrally Sponsored Schemes in Package 5-Rural Development Sector’, the study also points out that officials faced pressure to rapidly establish SHGs to meet predetermined targets, even in areas with limited business prospects.
The Ministry of Rural Development has yet to comment on the findings of the evaluation.
The report reveals that a mere fraction of SHGs have embarked on group enterprises, with nearly half doing so without accessing formal loans. This situation largely stems from the urgency to form SHGs following the Participatory Identification of the Poor (PIP) process, which often overlooks the actual availability of viable business opportunities in rural regions.
Additionally, the findings indicate that SHG members have utilized bank loans for purposes such as home construction, sanitation facilities, and medical expenses.
The report notes, “Many members of SHGs hesitate to take out loans due to the absence of a reliable market for the products produced by group enterprises. This lack of certainty leads to fears about loan repayment, which discourages borrowing.”
Due to low product demand and concerns about defaulting on loans, many members are reluctant to seek bank financing. Consequently, the revolving fund is often distributed among members and used to satisfy immediate consumption needs.
Access to other financial resources within the scheme has also been limited, with less than half of respondents receiving the Community Investment Fund (CIF). Only 42 percent managed to secure bank loans, and fewer than 4 percent accessed the Community Enterprise Fund (CEF) intended for larger projects. The lack of on-the-ground support from facilitators and federations has exacerbated these issues.
While 74.6 percent of respondents in 13 surveyed states reported receiving the revolving fund, only 49.9 percent accessed the CIF, 41.8 percent obtained bank loans, and a mere 3.8 percent benefited from the CEF. The report attributes this limited access to inadequate support from village organizations, community resource persons, and cluster-level federations, alongside the fact that only 15 percent of SHGs had initiated group enterprise activities.
The uptake of bank loans and cash credit limits was even lower, primarily due to fears of loan defaults, as members perceived a weak market for their products.
This evaluation was conducted by Sambodhi Research and Communication Pvt Ltd, a think tank engaged by NITI Aayog’s Development Monitoring and Evaluation Office (DMEO).
The evaluation involved surveying 2,206 households across 11 states, including Andhra Pradesh, Bihar, Chhattisgarh, Maharashtra, Rajasthan, Tripura, Arunachal Pradesh, Himachal Pradesh, Kerala, Odisha, Uttar Pradesh, as well as two Union Territories (Jammu and Kashmir, and Dadra and Nagar Haveli and Daman and Diu).
Out of the 2,206 households surveyed, approximately 86 percent (1,895 households) reported benefiting from the NRLM.
Initiated in 2011 by the UPA government and rebranded in 2016, the DAY-NRLM aims to alleviate rural poverty by organizing women into SHGs and connecting them with financial institutions, markets, and government assistance.
In addition to the revolving fund of Rs 20,000-30,000 per SHG, groups are eligible for up to Rs 2.5 lakh as a Community Investment Fund (CIF) to support income-generating activities and entrepreneurial initiatives.
According to government statistics, over 100 million rural women have been mobilized into more than 9 million SHGs, which collectively have received nearly Rs 59,000 crore in capital support since the inception of the scheme.
Harikishan Sharma, Senior Assistant Editor at The Indian Express’ National Bureau, specializes in governance, policy, and data reporting. He covers key central ministries, including the Ministry of Rural Development, and authors a weekly column titled “STATE-ISTICALLY SPEAKING,” which provides in-depth analysis of socio-economic and political data.
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