1.resource Book PDF

Resource Book for
Livelihood Promotion
Fourth Edition
Sankar Datta
Rama Kandarpa
Vijay Mahajan
Institute of Livelihood Research and Training
(Formerly The Livelihood School)
Resource Book for
Fourth Edition
Sankar Datta
Rama Kandarpa
Vijay Mahajan
(Formerly The Livelihood School)
There is no copyright on this Resource Book.
Anybody anywhere can use this book or part thereof for
promoting the livelihoods of the poor.
First Edition:
August 2001
Second Edition:
April 2004 (Revised and Enlarged)
Second Reprint Edition:

August 2005
Third Edition:
November 2009
Fourth Edition:
January 2014
Price: Rs 1000/- (Including a CD)
Available at:
Dean’s Office
3rd Floor Surabhi Arcade Bank Street, Koti, Hyderabad- 1
Ph: 040 - 66585800
E-mail: info@ilrtindia.org
Website: http://ilrtindia.org
Design, layout and printing:

New Concept Information Systems Pvt Ltd
Email: communication@newconceptinfosys.com,
hyderabad@newconceptinfosys.com
Contents
List of Tables vi
List of Figures ix
List of Boxes xi
List of Abbreviations xiii
Acknowledgements xxi
1. Introduction to the Fourth Edition of the Resource Book 1

1.1 The Fourth Edition of the Resource Book 1
1.2 What We Knew When We Started Writing the Resource Book 2
1.3 Evolution of the Resource Book 6
1.4 The Trilemma – the Posited, the Practiced and the Possible 7
1.5 The Fourth Edition - What’s Different? 8
2. Livelihoods – A Conceptual Understanding 13

2.1 Environment and Livelihoods: A Slow Realization of 14
Interdependence
2.2 Culture Influences How People Make a Living 18
2.3 Well-Being and Capabilities 19
2.4 The Poor Adopt Different Livelihood Strategies to Manage 20
Risk
2.5 Various Conceptual Livelihood Approaches and Frameworks 20
2.6 Our Working Definition of Livelihoods 40
3. Describing and Measuring Livelihoods 41

3.1 Historical Evolution of Livelihoods 41
3.2 Changing Patterns of Livelihoods since Independence 45
3.3 Livelihoods in the Farm, Rural Non-Farm & Urban 63
Informal Sectors
3.4 Profiling Livelihoods Using Primary Methods 69
Contents iii
4. Shocks, Vulnerability, Risks and Coping Strategies 75
4.1 Shocks and Vulnerability 75
4.2 Risks 77
4.3 Coping Strategies of the Poor 93
4.4 Migration as Coping Strategy 105
5. The Political Economy of Livelihoods in India 124

5.1 Land 125
5.2 Water 129
5.3 Forests 139
5.4 Capital 142
5.5 Three Dimensional Approach to Power 148
5.6 Three Options for the Poor - Exit, Voice or Loyalty 155
5.7 Livelihoods Agenda in Mainstream Politics 157
5.8 Implications for Livelihood Practitioners 161
6. Lessons from Practical Livelihood Promotion Approaches 163

6.1 Pre-Independence Efforts for Livelihood Promotion 163
6.2 Post-Independence NGO Efforts for Livelihood Promotion 165
6.3 Post-Independence Government Efforts at Livelihood 171
Promotion
6.4 Microfinance as a Livelihood Intervention in India 176
6.5 New Generation Government Development Programs 187
6.6 Private Sector Interventions with Significant Effect on 203
Livelihoods
7. Three Main Approaches for Livelihood Promotion 213

7.1 Three Practical Approaches That Have Emerged 213
7.2 Opportunities Based Approaches 215
7.3 Approaches Ensuring Access to Rights and Entitlements 234
7.4 Approaches for the Highly Disadvantaged 252
8. The Contingency Approach to Selecting a Livelihood 269

Promotion Methodology
8.1 Key Learnings from the Conceptual and Practical Livelihood 269
Approaches
8.2 Mapping Livelihood Approaches onto the Socio-Political 273
and Economic Space
iv Resource Book for Livelihood Promotion - Fourth Edition

8.3 How to Select the Approach to Promote Livelihoods 276
8.4 Designing the Localized Intervention 280
8.5 Setting Objectives 292
8.6 Mustering Financial Resources 294
8.7 Initiating and Stabilizing Operations 297
8.8 Monitoring, Evaluation, Learning and Redesign 298
8.9 Mid-term and End of Project Evaluation and Learning 299
Therefrom
9. Tools for Livelihood Promotion Design, 303

Implementation and Evaluation
9.1 Tools Developed as Part of the Fourth Edition of the 303
Resource Book
9.2 Tools Added in this Edition from Other Sources 304
9.3 Tools Referred to in the Resource Book Third Edition 305
9.4 Tools of General Utility 306
10. Appendix 309

List of Cases/Articles being provided in the CD 309
(as part of Resource Book)
Contents v
List of Tables
Table 1: Trends in Sectoral Share of GDP over Four Decades in India 49
Table 2: Trends in Sectoral Share of Employment over Four Decades 50

in India
Table 3: Distribution of Population and Average Daily Per Capita 51

Expenditure by Poverty Status (2004-05)
Table 4: Percentage Distribution of Unorganized Workers in Different 51

Poverty Status by Social Groups (2004-05)
Table 5: Comparative Estimates of Household Characteristics by 52

Poverty Status (All India 2004-05)
Table 6: Distribution of Total and Unorganized Workers (2004-05) 52
Table 7: Labor Force Participation Rate by Sex and Place of Residence 53

(1983-2010)
Table 8: Distribution of Workforce and GDP as per the Industry of Origin 54
Table 9: Landholding Pattern in India 55
Table 10: Sector wise Distribution of Employment and GDP 56
Table 11: Literacy Rates in the Period 1951 to 2011 57
Table 12: Average Wage/Salary Earnings (Rs per day) Received by 57

Different Education Levels
Table 13: Average Wage/Salary Earnings in (Rs per day) by Industry of 58

Work and Education Category
Table 14: Per 1000 Distribution of Population by Type of Employment 59
Table 15: Unemployment Rates (per 1000 Persons in the Labor Force) 61
according to Usual Status, Current Weekly Status (CWS) and
Current Daily Status (CDS) during 1972-73 to 2004-05
Table 16: Unemployment Rate (per 1000) in Usual Status (ps), Usual 61
Status (Adjusted), CWS and CDS
vi Resource Book for Livelihood Promotion - Fourth Edition

Table 17: Distribution (percentage) of Individuals by Occupational 62
Categories: All-India, Rural and Urban Areas
Table 18: Occupational Transition Matrix : Rural India 63
Table 19: A Comparative Account of Growth in Employment and Income 64

for Selected Industries/Industry-Groups during 1980s and 90s
Table 20: Proportion of Time Spent on each Activity by Mal Paharias (2003) 73
Table 21: Shocks Related to Adverse Events: Percentage of Rural 77

Households and the Rupee Value of Loss
Table 22: Growth in Agriculture Sector during Pre and Post Globalization 87
Table 23: Impact of Globalization on Agriculture (number of farmers) 88
Table 24: Idiosyncratic Risks and Suggested Mitigation Measures 95

(for use in a livelihood intervention)
Table 25: Adaptive Strategies based on Risk Management Category 95
Table 26: Status of Water Sources in the Sample Villages 96
Table 27: Population and Agricultural Workers (1951-2011) (in millions) 125
Table 28: Distribution of Ownership Holdings of Land, India 126
Table 29: Decadal Change in Landholding among Scheduled Tribes and 127
Scheduled Castes (1980-2000)
Table 30: Hunger and Poverty by Farm Size in Rural India 128
Table 31: Fishery as a Livelihood Option 131
Table 32: State-wise Share of Rural and Semi-urban Credit to Total Credit 145
Table 33: Sectoral GDP and Credit Availability (in billions) (2011-12) 145
Table 34: Percentage Distribution of Number of Accounts from 146

Institutional Sources across Size and Class, 2001-02
Table 35: Loan and Deposit Accounts per 10,000 persons, for Women 147
and Men
Table 36: Current Daily Status of Unemployment Rates (Uttar Pradesh) 160
List of Tables vii

Table 37: Growth of Commercial Bank Branches and Priority Sector 177
Credit (1969-2010)
Table 38: Growth of Microfinance in India: 1995-2010 181
Table 39: Key Data on MFIN Member MFIs December 2013 186
Table 40: Data on SHG Bank Linkage Program March 2012 187
Table 41: Project Development Objective Indicators- APRPRP 197
Table 42: Govt of India- Key Livelihood Programs Annual Outlays 200
(2011- 2014)
Table 43: Services Available under the BASIX Triad 231
Table 44: Role Played by Different Institutions during the Intervention 256
Table 45: Sustainable Livelihood Approach of UNDP & DFID 271
viii Resource Book for Livelihood Promotion - Fourth Edition

List of Figures
Figure 1: Illustration of Factor Conditions Affecting Livelihood Choices 4

under Contingency Approach to Livelihood Promotion
Figure 2: Emergence of Livelihoods Perspective 21
Figure 3: The Sustainable Livelihood Approach 22
Figure 4: Sustainable Livelihoods Framework, Ian Scoones, IDS 25
Figure 5: The Sustainable Livelihoods Approach Considering an 27

Enhanced Approach
Figure 6: IFAD’s Sustainable Livelihoods Approach 28
Figure 7: Rural Livelihoods Systems Framework: Capturing 30

Meaning of Livelihood
Figure 8: The DFID SLA and the SDC RLS Blended 31
Figure 9: Elements of the External Context 35
Figure 10: The Coolie’s Framework 37
Figure 11: The Stages in a Value Chain 39
Figure 12: The Evolutionary Path Across Sectors in a Developing 48

Economy
Figure 13: Vulnerability to Risk 71
Figure 14: Effects of Climate Change 90
Figure 15: Responses and Coping Mechanisms of the Poor to Shocks 94
Figure 16: Impact of Shocks / Favorable Conditions on Coping Strategies 101
Figure 17: Migration Labor per Sector 106
Figure 18: Major Migration Corridors in India 111
List of Figures ix
Figure 19: Balancing between Development Benefits and Business 204
Benefits
Figure 20: Mapping the Economic and Socio-political Situation to the 214
Economic Pyramid
Figure 21: The BASIX Livelihood Triad 230
Figure 22: Collaborative Polygon 233
Figure 23: Contrasting the DFID (SLA) Approach with the RLS Approach 272
Figure 24: Map of Various Livelihood Promotion Efforts in India 273
Figure 25: Livelihood Approaches Mapped onto Economic Pyramid 274

Segments
Figure 26: Working with the Extremely Poor using Rights and 275
Entitlements Approach (Scenario A)
Figure 27: Working with the Extremely Poor to Create Economic 275
Security (Scenario B)
Figure 28: Working with the Poor to Create Access to Entitlements and 276
Economic Returns (Scenario C)
Figure 29: Triple Loop Learning 301
x Resource Book for Livelihood Promotion - Fourth Edition

List of Boxes
Box 1: Highlights of the Situation Assessment Survey of Farmers 65
Box 2: Highlights of the 5th Economic Census, 2005 68
Box 3: Climate Change & Vulnerability 91
Box 4: WOTR Approach to Climate Change 92
Box 5: Coping Strategies of Small and Marginal Farmers 102
Box 6: An Illustration of Coping Strategy of the Landless 103
Box 7: An Illustration of Coping Strategy of a Woman Headed Household 104
Box 8: Migration Caused by Drought 109
Box 9: An Illustration of a Migrant Sugarcane Cutter 118
Box 10: Consequence of Landlessness 128
Box 11: Draft National Water Policy (2012) 130
Box 12: Water Conflict: Case of Kolleru Lake 132
Box 13: The Lives and Livelihoods of Marine Fishermen 135
Box 14: Water for Traditional Livelihoods or Industries? 138
Box 15: Evolution of Forest Policy – A Case Study of Andhra Pradesh 140
Box 16: Long March to Assert People’s Rights on Jal, Jangal, Jameen 151
Box 17: Key Principles of NRLM 199
Box 18: Learnings from the DHRUVA Experience 215
Box 19: Reaching the Poorest: BRAC’s Graduation Model 262
List of Boxes xi
List of Abbreviations
AAJ Artisan’s Alliance of Jawaja

ACGR Annual Compound Growth Rate
ADS Area Development Society
AFPRO Action for Food Production
AGLEDS Agriculture, Livestock and Enterprise Development Services
AIVIA All India Village Industries Association
AKRSP Aga Khan Rural Support Program
AMUL Anand Milk Union Limited
APL Above the Poverty Line
APRLP Andhra Pradesh Rural Livelihoods Program
APRPRP Andhra Pradesh Rural Poverty Reduction Program
APSERP Andhra Pradesh Society for Elimination of Rural Poverty
APU Azim Premji University
ARAVALI Association for Rural Advancement through Voluntary Action
and Local Involvement
ARDR Agricultural and Rural Debt Relief
ASA Action for Social Advancement
ASK Ain O Salish Kendra
ASSEFA Association for Sarva Sewa Farms
AUD Ambedkar University Delhi
AVARD Association for Voluntary Action in Rural Development
B-ABLE Basix Academy for Building Lifelong Employability
B2C Business to Citizen
BAIF Bhartiya Agro-Industries Foundation
BGREI Bringing Green Revolution to Eastern India
BJP Bhartiya Janata Party
BLS Baseline Study
BLTM BASIX Livelihood Triad Model
List of Abbreviations xiii

BNWLA Bangladesh National Women Leader’s Association
BOOT Build-Own-Operate-Transfer
BPL Below Poverty Line
BRAC Bangladesh Rural Advancement Committee
BRLPS Bihar Rural Livelihood Promotion Society
BSFL Bhartiya Samruddhi Finance Limited
BSP Bahujan Samaj Party
C-DOT Center for Development of Telematics
CA The Community Activists
CAGR Compound Annual Growth Rate
CAPART Council for Advancement of Peoples’ Action and Rural
Technology
CAPFs Central Armed Police Forces Service
CARE Cooperative for Assistance and Relief Everywhere
CBO Community Based Organization
CC Community Coordinator
CCVI Climate Change Vulnerability Index
CD ratio Credit-Deposit Ratio
CDM Center for Development Management
CDS Current Daily Status
CDSs Community Development Societies
CESS Center for Economic and Social Studies
CETP Common Effluent Treatment Plant
CFPR-TUP Challenging the Frontiers of Poverty Reduction – Targeting the
Ultra Poor
CGMSS Charan Ganga Mahila Samruddhi Sangh
CGSS Chhattisgarh Gramin Shramik Sangh
CIF Community Investment Fund
CMM Chhattisgarh Mukti Morcha
CMMS Chhattisgarh Mines Mazdoor Sangh
CMSA Community Managed Sustainable Agriculture
CMSS Chhattisgarh Mines Shramik Sangh
CoBRA Commando Battalions for Resolute Action
xiv Resource Book for Livelihood Promotion - Fourth Edition

CoDriVE PD Community Driven Vulnerability Evaluation - Program
Designer
CPM Critical Path Method
CPR Common Property Resources
CRP Community Resource Person
CSC Common Service Center
CSIDC Chhattisgarh State Industrial Development Corporation
CSO Central Statistical Organization
CSR Corporate Social Responsibility
CWS Current Weekly Status
DFID Department for International Development
DHRUVA Dharampur Utthân Vahini
DIC District Industries Center
DLA Detailed Livelihood Assessment
DPAP Drought Prone Areas Program
DPIP District Poverty Initiatives Program
DPSA Diversified Portfolio of Subsistence Activities
DPSIR Driver-Pressure-State-Impact-Response
DRDA District Rural Development Agency
EDC Eco Development Committees
EDF Environmental Defense Fund
EEZ Exclusive Economic Zone
EGS Employment Guarantee Scheme
EPW Economic and Political Weekly
ERR Economic Rate of Return
ESIC Employees State Insurance Corporation
FAO Food and Agriculture Organization
FCRA Foreign Contributions Regulation Act
FD Forest Department
FFW Food for Work
FINCA Foundation for International Community Assistance
FLRC Family Livelihood Resource Center
FPOs Farmer Producer Organizations
List of Abbreviations xv
FRA Forest Rights Act
FRR Financial Rate of Return
FTDR Foreign Trade Development and Regulation Act
FWWB Friends of Women’s World Banking
G2C Government to Citizen
GCC Girijan Co-operative Corporation
GDP Gross Domestic Product
GIS Geographic Information System
GO Government Order
GoI Government of India
GR Government Resolution
GS Gram Sabha
GVM Gram Vikas Mandal
HH Household
HIV and AIDS Human Immunodeficiency Virus and Acquired
Immuno Deficiency Syndrome
HPCL Hindustan Petroleum Corporation Limited
HRLE Human Rights and Legal Education
HUL Hindustan Unilever Limited
IA-SPS Inventory for Assessing Socio Political Situation
IAAP Intensive Agricultural Area Program
IADP Intensive Agricultural District Program
ICT Information and Communication Technology
IDFC Infrastructure Development Finance Company
IDS Institutional Development Services
IFAD International Fund for Agricultural Development
IFC International Finance Corporation
IFMR Trust Institute for Financial Management Research Trust
IFS Inclusive Financial Services
IGIDR Indira Gandhi Institute of Development Research
IGS Indian Grameen Services
IHDS India Human Development Survey
IKP Indira Kranthi Patham
xvi Resource Book for Livelihood Promotion - Fourth Edition

ILH-ESL Instrument for Locating a Household on the Economic Snakes
and Ladder Space
ILIA Initial Livelihood Impact Appraisal
ILO International Labor Organization
IPO Initial Public Offering
IRDA Insurance Regulatory and Development Authority
IRDP Integrated Rural Development Program
IRMA Institute for Rural Management (Anand)
ISEC Institute for Social and Economic Change
ITDG Intermediate Technology Development Group
JFM Joint Forest Management
JMM Jharkhand Mukti Morcha
KfW German Development Bank
KVIC Khadi and Village Industries Commission
KYC Know Your Customer
LAT Livelihood Assessment Toolkit
LB Livelihood Baseline
LFA Logical Framework Approach
LFPR Labor Force Participation Rate
LFS Livelihood Financial Services
LPG Liquefied Petroleum Gas
LPO Livelihood Promotion Organization
LSG Local Self-Government
LSP Livelihood Service Providers
LWE Left Wing Extremism
MED Microenterprise Development
MFI Microfinance Institution
MFP Minor Forest Produce
MGNREGA Mahatma Gandhi National Rural Employment Guarantee Act
MKSS Mazdoor Kisan Shakti Sangathan
MoHUPA Ministry of Housing and Urban Poverty Alleviation
MoRD Ministry of Rural Development
MPRLP Madhya Pradesh Rural Livelihoods Project
List of Abbreviations xvii

MS Mandal Samakhya
MSCTWU Maharashtra Sugarcane Cutting and Transport Workers Union
MYRADA Mysore Resettlement and Development Agency
NABARD National Bank for Agriculture and Rural Development
NADP National Agriculture Development Program
NBA Narmada Bachao Andolan
NBFC Non-Bank Finance Company
NCAER National Council for Applied Economic Research
NCDC National Cooperative Development Corporation
NCPRI National Campaign for the People’s Right to Information
NDDB National Dairy Development Board
NGO Non-Governmental Organization
NHG Neighborhood Group
NID National Institute of Design
NPBA Normal Private Business Activity
NPOP National Program on Organic Production
NREGA National Rural Employment Guarantee Act
NREGS National Rural Employment Guarantee Scheme
NREP National Rural Employment Program
NRLM National Rural Livelihoods Mission
NSS National Sample Survey
NSSO National Sample Survey Organization
NTFP Non-Timber Forest Produce
NULM National Urban Livelihoods Mission
NWDP National Watershed Development Program
OAE Own Account Establishment
OBC Other Backward Class
ODI Overseas Development Institute
OTEP Oral Therapy Extension Program
PDO Project Development Objective
PDS Public Distribution System
PERT Program Evaluation and Review Technique
PESA Panchayats (Extension to Scheduled Areas) Act
PIL Public Interest Litigation
xviii Resource Book for Livelihood Promotion - Fourth Edition

PLA Participatory Learning And Action
PRADAN Professional Assistance for Development Action
PRIA Participatory Research in Asia
PVO Private Voluntary Organization
PVTG Particularly Vulnerable Tribal Group
PWG People’s War Group
RBI Reserve Bank of India
RCT Randomized Control Trial
RDT Rural Development Trust
RED Research and Evaluation Division
RF Reserved Forest
RKVY Rashtriya Krishi Vikas Yojana
RLEGP Rural Landless Employment Guarantee Program
RLS Rural Livelihood Systems
RMK Rashtriya Mahila Kosh
RRB Regional Rural Bank
SAMPARC Social Action for Manpower Creation
SAPAP South Asia Poverty Alleviation Program
SARS Severe Acute Respiratory Syndrome
SBLP SHG Bank Linkage Program
SCA Service Center Agency
SC Scheduled Caste
SDC Swiss Agency for Development and Cooperation
SE Shakti Entrepreneur
SERP Society for Elimination of Rural Poverty
SEWA Self-Employed Women’s Association
SF Social Forestry
SFAC Small Farmers’ Agribusiness Consortium
SFC State Financial Corporation
SFDA Small Farmers Development Agencies
SGSY Swarnjayanti Gram Swarozgar Yojana
SHG Self-Help Group
SHT Spearhead Team
SIDBI Small Industries Development Bank of India
List of Abbreviations xix

SIFFS South Indian Federation of Fishermen’s Societies
SJSRY Swarna Jayanti Shahari Rozgar Yojana
SLA Sustainable Livelihoods Approach
SME Small and Medium Enterprises
SOIL State of India’s Livelihood
SoP-BoP Service Or Product suitable for the Base Of Pyramid
SPS Samaj Pragati Sahayog
SRADH Sinking, Reduction, Adaption, Diversifying, Higher Income
SSP Sarda Sarovar Project
ST Scheduled Tribe
SWRC Social Work and Research Center
TCP Traditional Corporate Philanthropy
TIFR Tata Institute of Fundamental Research
TLS The Livelihood School
ULFA United Liberation Front of Assam
UNDP United Nations Development Program
UNEP United Nations Environment Program
UPA United Progressive Alliance
UR Unemployment Rate
US Usual Status
USDA United State Department of Agriculture
VAPCOL Vasundhara Agri-Horti Producer Company Limited
VLE Village Level Entrepreneur
VO Village Organization
VSAT Very Small Aperture Terminal
VSS Vana Samarakshana Samithi
WCED World Commission on Environment and Development
WHH Women-Headed Households
WOTR Watershed Organization Trust
XIMB Xavier Institute of Management, Bhubaneswar
YMCA Young Men’s Christian Association
xx Resource Book for Livelihood Promotion - Fourth Edition

Acknowledgements
The Fourth Edition of the Resource Book on Livelihood Promotion is a knowledge

product of the Institute of Livelihood Research and Training-ILRT (earlier,
The Livelihood School) in response to the contemporary needs of livelihood
promotion. The previous three editions have been extensively used by the
faculty of ILRT as well as several institutions engaged in livelihood promotion.
This edition of the resource book meets the needs of practitioners and academics
alike. On the one hand, it describes the contours of the discourse on sustainable
livelihood promotion while on the other hand, it is a compendium of some of the
most highly regarded livelihood promotion programs.
This edition is in response to the demand by the ever expanding fraternity

of professionals and practitioners from livelihood promoting organizations
(LPOs), who are being deployed rapidly across the country to help implement
programs under very divergent social, political and, geographical contexts.
While some of the fundamentals of livelihood promotion captured in the
previous editions are still very relevant, we have gleaned much more knowledge
and wisdom from a variety of individuals and institutions in the last five
years. Our own experiences of delivering training courses and providing
accompaniment support during this period gave us valuable clues about the
gaps and imperfections in the previous editions. The authors have tried to
ensure that much of this incremental knowledge and experience is reflected in
the new edition.
We are grateful to Dr Sankar Datta, former Dean of The Livelihood School,

Ms Rama Kandarpa, a livelihood practitioner of over two decades’ experience
and the current Dean, ILRT, Mr Vijay Mahajan for co-authoring the fourth
edition of the Resource Book. We are thankful to the reviewers Dr Somanth
Ghosh, Ms Kaushiki Rao, Mr Manab Chakraborthy, Dr Srinivas Surisetti,
Mr Sanjeev Kumar, Dr Shashi Enarth and Dr Gouri Krishna, as well as several
of the faculty members of the ILRT for providing constructive feedback and
comments on the earlier drafts.
Acknowledgements xxi
We are also thankful to the professionals and authors whose articles and case
studies have been extensively quoted in the fourth edition. We would like to
place on record our appreciation for the efforts of BASIX staff - Mr Ajit Golchha
in data analysis, Mr Suman Laskar for detailing and testing some of the tools,
Mr Raja Babu for diagrammatic depiction of the conceptual and practical
frameworks, Mr Naveen Babu and Mr Mahender for administrative assistance.
We thank Ms Anitha, Mr Radheshyam Solanki and Mr Prashant Deokar of
ILRT for logistics support and coordination.
We are especially grateful to the Ford Foundation, New Delhi who supported
ILRT to contemporize livelihood education during the past three years. This
helped us in understanding the current livelihood promotion efforts and
challenges and build adequate knowledge that contributed to the revision of
the Resource Book.
We thank all those organizations who had used the previous editions of the
Resource Book and who readily provided their feedback when the authors
contacted them before commencing writing this edition. We are thankful
to New Concept Information Systems in editing the Resource Book and to
Dr Gouri Krishna, Deputy Dean for ensuring that the outputs were delivered on
time and met the requisite standards.
xxii Resource Book for Livelihood Promotion - Fourth Edition

Introduction to the Fourth Edition of the
1. Resource Book
This chapter introduces the Resource Book for Livelihood Promotion and its
progress up to this Fourth Edition. It traces the history of the Resource Book
and explains how it has evolved to keep pace with the growing knowledge and
practice in this field. Subsequently, it introduces major conceptual approaches
and frameworks on livelihoods.
1.1 The Fourth Edition of the Resource Book
BASIX is one of the pioneering institutions that initiated implementation

of livelihood interventions back in 1996. BASIX was created with a mission
to ‘promote or support a large number of livelihoods’. Being a ‘learning
organization’ with a strong focus on field work, it initiated several action
research initiatives to see what could be done to ‘promote or support a
large number of livelihoods’. In 1997, the Sustainable Livelihoods Approach
(SLA) was conceptualized by several British scholars and adopted as a new
development approach by the Department for International Development
(DFID), UK. By that time, many other partner had after organizations also
started designing their interventions around the SLA since the DFID, the
United Nations Development Program (UNDP) and the International Fund
for Agricultural Development (IFAD) had adopted it as their primary approach.
People and organizations that were interested in working in the area of

livelihoods were aware that BASIX was a practical organization with its feet
firmly planted on the ground. They began asking BASIX how they could
promote livelihoods of the poor. Thomas Fisher, a British development
practitioner, who worked with one of the co-authors of this Resource Book,
Vijay Mahajan in India from 1991 to 1996, urged Sankar Datta, another co-
author, to develop a Manual for Livelihood Promotion. Thomas believed that
a livelihood promotion practitioner could be well served by bringing together
various conceptual frameworks, best practices, approaches and cases studies
in a Resource Book for Livelihood Promotion. Vijay suggested that given the
evolving nature of the knowledge in this field, BASIX call it an Annual (rather
than a Manual) of Livelihood Promotion.
Introduction to the Fourth Edition of the Resource Book 1

Sankar felt that though the understanding of livelihoods had progressed to some
extent, knowledge about different aspects of its promotion was still nascent.
A literature review revealed that there was little or no documentation of the
efforts taken to ‘promote’ livelihoods. After reviewing the material available
with BASIX and other similar organizations, Sankar concluded that a triennial,
and not necessarily an annual document, would significantly contribute to the
evolution of the field of livelihood promotion. Of course, he supplemented that
by editing the State of India’s Livelihood (SOIL) Report1 annually.
1.2 What We Knew When We Started Writing the

Resource Book
When we started writing the Resource Book in 1996, we had little theoretical
understanding of livelihoods. We recognized that:
1.2.1 Livelihood is Primarily the Concern of a Household
After years of working closely with the poor in Association for Sarva Sewa
Farms (ASSEFA) and later in Professional Assistance for Development Action
(PRADAN) we learnt that the poor are a distinct community and livelihood
deprivation hit communities as a whole. Working in ASSEFA with the landless,
who received a parcel of land as a gift (bhoodan), or in PRADAN with tribals
rearing tasar silkworms in Santhal Parganas, or with dalits engaged in dragging
cattle carcasses and flaying them for hides and bones, reinforced our belief that
livelihood is a community issue. At the same time, we also recognized that
rarely did communities act on it collectively.
In practice, it was the household (HH) — a family, comprising of not just

the husband, wife and their children, but often elders, parents or other
dependents, who shared a common ‘chulha’ (hearth) — and not the individual
worker who was the prime actor in earning a livelihood. The cash income or
non-cash earnings of any member were pooled at the HH level. While there
were differences in each member’s contribution and consumption, yet the
Marxian maxim ‘from each according to his ability and to each according to
his need’ could be easily observed at the HH level. As a result, we discovered
that livelihood promotion interventions had to be aimed at the level of a HH
and not at the individual, to ensure that they made a difference. Of course, if
one could galvanize the community as a whole, the impact of the intervention
would be far greater.
1
State of India’s Livelihood (SOIL) Report http://www.sagepub.in/books/Book238935
2 Resource Book for Livelihood Promotion - Fourth Edition

1.2.2 Access to Capital, Even in Small Amounts, is
Central to Livelihoods
Over the last few decades, the economy has been fully monetized and now, barter
has a negligible role in the economy of poor people. As a result, everybody needs
cash income and cash savings to help tide over periods when income falls below
consumption needs. Those without accumulated savings need some cash, which,
in the short run, can be sourced on a mutual help basis. This mutual give-and-
take works fine, till such time when in a community, everyone’s income falls
below consumption needs. At these times, they need to be provided with capital
for augmenting their income, for improving their livelihoods.
This was the simple logic behind poverty alleviation programs like the Integrated
Rural Development Program (IRDP), launched by Indira Gandhi on 2nd October,
1980. It was only over a period that we learnt, while working on a pilot project
(through PRADAN) of the Ministry of Rural Development in Kishangarh Bas
block of the Alwar district of Rajasthan, for improving implementation of IRDP
from 1987-1990, that providing capital in the form of a subsidy and a loan, as
was done through IRDP, led to many perverse results.2, 3
International experience on this issue was also growing—for example, a series

of papers by Adams, et al4 in their critique of agricultural finance in 1984-
85. Then again, “full-cost” credit seemed to work well in other contexts, as
experiences of the Grameen Bank in Bangladesh, the Bank Rakyat in Indonesia
and some Latin American experiments by Foundation for International
Community Assistance (FINCA) and Accion, demonstrated. A new term was
being popularized – ‘microcredit’ – as a way of promoting livelihoods for the
poor. Based on this, many in the development community began asserting
that all that poor people needed was credit – the so called ‘minimalist credit’
approach to promoting livelihoods for the poor.
1.2.3 Minimalist Credit vs. the Integrated vs. the

Contingency Approach
Based on his experiences in PRADAN, Vijay Mahajan was in favor of an

integrated approach, where credit was coupled with training, input supply,
2
Mahajan, Vijay 1990 – Rethinking the IRDP, Mimeo, PRADAN, New Delhi.
3
Pulley, Robert van, 1989. Making the Poor Creditworthy. A Case Study of the Integrated Rural
Development Program in India. World Bank Discussion paper.
4
Adams, DW, DH Graham and JD von Pischke, ‘Undermining Rural Development with Cheap Credit’.

output marketing assistance and so on. In fact, enterprises of the poor required
more hand-holding. Having examined the work of Self-Employed Women’s
Association (SEWA) at Ahmedabad, BRAC* in Bangladesh and TechnoServe,
USA (an NGO working in Latin America and Africa), Vijay Mahajan was
convinced that the poor needed much broader support for livelihood
promotion, beyond credit. When working for a month with Tom Dichter,
TechnoServe’s former Research Director, he transcended the debate on the
‘minimalist credit’ approach versus the ‘integrated approach’, by proposing a
‘Contingency Approach to Enterprise Promotion’.5
Figure 1: Illustration of Factor Conditions Affecting Livelihood

Choices under Contingency Approach to Livelihood Promotion
Fig 1a Fig 1b
This approach is graphically explained in Figures 1a, 1b above. The quantity

of water that can be held in a barrel made of planks of different heights is
determined by the height of the smallest plank. If we replace one plank
with a bigger plank then some other plank becomes relatively the ‘smallest’,
and therefore limits the amount of water that can be filled in the barrel.
5
Mahajan, Vijay and Thomas Dichter, 1990, “A Contingency Approach to Enterprise Promotion”, Small
Enterprise Journal, Vol.1, No. 1.
*
Earlier Bangladesh Rural Advancement Committee

The planks of different heights represent different factor conditions and
consequently the maximum number of livelihoods that can be supported are
determined by the weakest factor. A livelihood intervention agency needs to
identify the bottlenecks and provide services to overcome them. At any point
in time, one deficient factor is addressed, till in comparison to it, another factor
become deficient and needs attention. Thus, various inputs become critical at
various times and need to be addressed accordingly.
We were aware that there were many other socially concerned institutions or
individuals engaged in livelihood promotion efforts, such as Self-Employed
Women’s Association (SEWA) at Ahmedabad, Bhartiya Agro-Industries
Foundation (BAIF) at Pune, Mysore Resettlement and Development Agency
(MYRADA) at Bangalore, and of course, PRADAN at New Delhi. In addition
to NGOs, government agencies like the National Dairy Development Board
(NDDB) at Anand and some corporate houses had also undertaken efforts for
livelihood promotion. However, as the knowledge in this field was nascent,
most of these experiences were not documented adequately. Therefore, as a
first step towards writing this Resource Book, we started documenting various
experiences of livelihood promotion. At that point in time, we believed that
income was a necessary condition for enhancing livelihoods, and that in order
to promote livelihoods, we had to extend credit support along with technical
assistance and support services, which could include building capacities,
linking them to input/output markets and helping insure risks. We learnt that
‘Credit is a necessary; but not a sufficient condition, for livelihood promotion’-
a maxim that was to prove good many years later!
While looking around for innovative livelihood interventions, we came across

an NGO, NIDAN at Patna, in the state of Bihar, which claimed to promote
livelihoods of street vendors using street theatre and public interest litigation
(PIL). Arvind, the founder of NIDAN, argued that the biggest fixed cost for a
street vendor was ‘payments’ made to local policemen and municipal workers.
In addition, they also had to pay protection money to local gangs, which was also
a fixed cost. NIDAN’s interventions brought down their costs by about 40 to 50
percent. We realized that there could be many ways of supporting livelihoods of
the poor and sought out different interventions. Institute of Livelihood Research
and Training has documented over 120 cases of livelihood promotion covering
different approaches, sectors, segments and geographies.6
6
See http://ilrtindia.org for downloading several of these case studies

1.3 Evolution of the Resource Book
To understand the evolution of the Resource Book, we need to understand the

context when the Resource Book was first written in the late 1990s. Though by
then activists and policy makers alike had started recognizing that sustainable
development efforts would have to consider the livelihood perspective, it was
not very clear how one could go about promoting livelihoods. For the first time,
the Resource Book compiled diverse experiences of livelihood promotion or
support. It did not prescribe any one method of promoting livelihoods. For the
practitioner, it made available in one place, cases of diverse processes adopted
by different agencies at various places, in different sectors, and for different
segments of vulnerable people.
We were clear that this Resource Book was not targeted at an academic
audience, and hence a simple language was used. As the Resource Book
encouraged use of any part of the book without any copyright restrictions and
without prescribing any ‘one-way’ of promoting livelihoods, it gained popularity
amongst field practitioners. Various agencies or institutions used different parts
of the Resource Book when they initiated their work on livelihood promotion
or support. Some acknowledged the Resource Book, while others did not. In
various ways, the Resource Book, thus, reached a significant number of people,
from grassroots workers to policy makers.
For example, traces of different sections of the Resource Book can be seen in
the training programs and materials used by the Society for Elimination of
Rural Poverty (SERP), Hyderabad, The National and State Rural Livelihood
Missions, various state Public Administration and Rural Development
Training Institutes, and educational institutions such as the Xavier Institute of
Management, Bhubaneswar (XIMB), Azim Premji University (APU), Bangalore,
The Ambedkar University, Delhi (AUD) and FAO’s ruralfinance.org website, to
name a few. In addition, the Livelihood School has used this Resource Book
extensively and has reached more than 15,000 livelihood practitioners. This
Resource Book has thus reached a very large number of people engaged in
livelihood promotion.
One of the limitations of the Resource Book was that while it included
cases using different approaches to livelihood promotion: some market
based, or some that established the claims of people on their entitlements,
or others aimed at strengthening the local economy, the methodology for
livelihood promotion mainly focused on one type of approach, which we term
‘Opportunities-based Livelihood Promotion’ in this edition.

The diversity of livelihood promotion approaches has increased in the last
decade. In addition, the work of rights activists and left-wing extremists,
though not directly aimed at promoting livelihoods, has had a big impact on the
overall context. Many practitioners alluded to those lessons during our training
programs but we had no written material based on those experiences. This has
been corrected and many significant practical approaches are discussed in this
Fourth Edition.
The Resource Book not only discusses numerous conceptual frameworks along
with a number of practical approaches to livelihood promotion, but it also makes
an attempt to map the frameworks and approaches along two axes – the political
economy and economic opportunity. This method, coupled with new tools to
locate a community along these two axes. We believe, now gives us a rigorous
method to actualize the contingency approach to livelihood promotion.
1.4 The Trilemma – the Posited, the Practiced and the

Possible
By the 1990s, literature on the theory of livelihoods and documents on the

initial attempts at promoting livelihoods of the poor started getting published.
However, materials addressing the needs of practitioners for applied knowledge
were scarce. Hence, we consciously aimed this Resource Book at the livelihood
practitioner, though we were not agnostic to the theoretical constructs that
form its basis or the theory resulting out of practice.
However, one of the serious limitations of the Resource Book also arose
from its strength as a guide for the field practitioner. There were areas with
a clear disconnect between what was being theoretically proposed, what
was being practiced by many organizations and what we could recommend
for implementation. For example, the Resource Book stated that livelihoods
ought to be considered at the HH level , though it was played out in the arena
of a community, where there was inter-dependence as well as competition
for resources. Yet, while investigating instruments to assess or enhance the
livelihoods of the community as a whole, we encountered a lot more complexity,
caused by the need for collective action.
Though there were outstanding examples, such as SEWA or ASSEFA, where

the livelihood issues of an entire community were addressed, when assessed
from the point of operationalizing it, we found their methods difficult to put
into regular practice, as they represented the lifetime work of exceptional
individuals like Ela Bhatt and S Loganathan.

Moreover, both movements had exceptional legacies: in the first case, a trade
union movement in Ahmedabad initiated by Gandhiji himself, and in the
second, the bhoodan (land-gift to the landless) movement launched by Acharya
Vinoba Bhave. As a result, though ASSEFA and SEWA were described, the
recommendation to promote livelihoods at the community level was toned
down and the Resource Book focused mainly on livelihood promotion for a
HH or a group of HHs.
A similar dilemma arose when we looked at the work of rights activists like
the late Sankar Guha-Neogi of the Chhattisgarh Mines Shramik Sangh
(CMSS), PV Rajagopal of the Ekta Parishad, Aruna Roy of the Mazdoor
Kisan Shakti Sangathan, or Medha Patkar of the Narmada Bachao Andolan.
Even more difficult was the case of the left-wing extremists. No doubt their
work impacted livelihoods of thousands, if not lakhs of people, but could we
recommend their means and methods to regular livelihood practitioners,
mainly those working in non-struggle oriented NGOs and in government
livelihood promotion programs? The previous edition was silent on
such issues.
It was these and such other issues that made it obligatory to bring out this
fourth edition. In the process, we revised it so thoroughly and made so many
additions that a new name would not have been out of place but we decided
to continue with the previous title. Two former authors - Sankar Datta and
Vijay Mahajan – continued and were ably supplemented by Rama Kandarpa, a
livelihood practitioner with over 25 years of experience.
1.5 The Fourth Edition - What’s Different?
1.5.1 Describes Several Different Livelihood

Frameworks and Approaches
In this edition, we have tried to present many other livelihood frameworks

proposed over these years. In addition to the frameworks, we have provided
various theoretical constructs about livelihoods. We recognize that livelihoods
are highly dependent on the context. Appropriate livelihood choices not only
depend on the external context, such as soil and water conditions, markets,
policies and so on, but also on internal factors such as family aspirations, the
number of healthy members in the family and so on. Therefore, no one single
approach would work for all segments, or in all cases.

Therefore, in this edition we have tried to comprehensively cover the different
approaches used for livelihood promotion. These include the middle-of-the-
road approaches followed mainly by large NGOs such as MYRADA, BAIF
and PRADAN in India and BRAC in Bangladesh, and by larger government
programs such as Velugu or Indira Kranti Patham of the government of
Andhra Pradesh, or the Kerala government’s Kudumbashree. We have also
considered, and in some cases, described the work of different peoples’
movements such as the Chhattisgarh Mines Shramik Sangh, the Chipko
Movement, the Narmada Bachao Andolan, the Jharkhand Mukti Morcha
(JMM) (before it became a political party), the Ekta Parishad and the
Mazdoor Kisan Shakti Sangathan (MKSS). The Fourth Edition not only
details these endeavors, but it also shows how they increased the effectiveness
of the middle-of-the-road programs, and recommends selective adoption of
some of their means and methods.
From these frameworks we synthesized a “contingency approach” that

depends on the initial conditions of the target segment of people in economic
and political terms. This starting point, for the exercise, can be determined
fairly rigorosly by administering the two tools expressly developed for this
purpose.
1. The Inventory to Assess the Socio-Politico Situation (IA-SPS) Surrounding

a Village Community, Rural HH and Rural Individual, and
2. The Instrument for Locating a HH on the Economic Snakes and Ladder

Space (ILH-ESL).
Once the starting point and the overall approach of the Livelihood Promotion
Organization (LPO), including the constraints it may face if it is a government,
private sector or NGO-led effort are known, the livelihood promotion strategy
can be suitably fine-tuned. Chapter 8 describes this in greater detail.
1.5.2 Improved Social, Cultural and Political Analysis
The understanding of livelihoods is now much broader. It is considered a way

of life that not only includes employment, income and a means of living, but
one that also provides an identity and a place in society. Practiced year after
year, sometimes over generations, livelihoods tend to impact and be impacted
by cultural factors as well.

One significant criticism of the Sustainable Livelihoods Approach (SLA) has
been that though it pointed out that people make their living using several
sets of capitals other than financial capital, it has not delved into the powers7
that control access and use of these capitals. Though the body of knowledge
about the political economy has grown significantly in the latter half of the 20th
century, the SLA did not incorporate it adequately in its analysis. Therefore,
in the Fourth Edition of the Resource Book, we have, in addition, included
several other frameworks that take into account these aspects, and provide,
an additional chapter that traces the prevailing pattern of control over key
resources – land, water, forests and capital – which impact livelihoods of poor
HHs. Though the Sustainable Livelihoods Framework considers the HH as the
primary unit of action for most livelihood related decisions, it does not address
the power dynamics within the family. The Fourth Edition of the Resource
Book addresses such concerns by promoting the use of suitable instruments.
1.5.3 Aimed at the Livelihood Practitioner, yet More

Deeply Based In Theory
We recognize that livelihoods, especially promotion of livelihoods is an

emerging field of knowledge. Internationally reputed scholars of our times,
such as the Nobel Laureate Amartya Sen, Robert Chambers, Gordon Conway,
Ian Scoones, Rudolf Hogger and Leo de Haan, to name a few, and several
organizations such as the DFID from the United Kingdom, the UNDP, FAO and
IFAD are attempting to understand how people, especially the resource - poor
and disadvantaged, make a living.
On the other side, a large number of organizations that operate in the field such
as BRAC and the Nobel Peace Prize winning Grameen Bank in Bangladesh,
the various state government livelihood promotion programs in India such
as SERP in Andhra Pradesh, Kudumbashree in Kerala and the BRLPS in
Bihar and NGOs such as ASSEFA, AKRSP, BAIF, PRADAN and SEWA, not
forgetting BASIX, which calls itself a “new generation livelihood promotion
institution” and others, developed numerous approaches, which are worthy
of consideration and replication. While this knowledge is being developed,
millions of poor people are struggling to make ends meet. Moreover, there are
thousands of socially-conscious policy makers and practitioners engaged in
helping improve people’s livelihoods.
7
‘The Livelihood Approach: A Critical Exploration’ by Leo. J. De Haan; 12. October 2012, ERDKUNDE,
Vol. 66 · No. 4 · 345–357

Their work and operations can be improved if they get to access the work of
other practitioners and the theoretical frameworks developed so far. Therefore,
this Resource Book actively uses conceptual frameworks, to help improve the
effectiveness of livelihood practitioners.
1.5.4 Larger Number of Cases Have Been Referred to
When the last edition of the Resource Book was developed, livelihood
interventions undertaken by different organizations were not so well known or
documented. Therefore, we felt the need to record them in a single document.
Since then, there have been two significant changes. Over the last ten years a
number of livelihood promotion efforts have been documented, of which many
are available as cases. Secondly, the web-based, electronic media has developed
and is easily accessible. As a result, the Fourth Edition of the Resource Book
includes many materials from relevant websites (with the source cited and
acknowledged). Thus, footnotes cite links of references, wherever available and
users interested in downloading cases from these external sources can do so
from the links provided. Most of the cases, articles, papers have been included
in the accompanying CD for easy reference.
1.5.5 Comprehensive Collection of Tools
Chapter 9 of the Fourth Edition of the Resource Book has over a dozen tools,
which practitioners will find useful. These tools have been designed and
developed to support the approaches described in this Resource Book, and are
provided in a CD.
1.5.5.1 Livelihood Profiling & Display Using Google Maps

This tool helps locate data on Google Maps. The data collected for places on
Google Maps can be uploaded using a spreadsheet. Once this is complete,
clicking place markers on Google Maps displays data of those places. This is
not as powerful as GIS (Geographic Information System), but is much easier
to use and is accessible to professionals who are either not familiar, or do not
have access to other IT tools.
1.5.5.2 Tool to Estimate Demand for Mass Consumption Items

This is based on the use of the Monthly Per Capita Expenditure data available
from the National Sample Survey (NSS) for each State, separately for rural and
urban areas. This is then applied to a district population, rural and urban and
the district’s “local demand” is computed. The locally expressed demand is that

by traders and buyers from outside who come to a district known for producing
a commodity or product. Non-local demand means the demand from distant
export markets, whose buyers or representatives may not be present in or even
aware of this market.
1.5.5.3 Socio-Political Analysis - IA-SPS Tool

The Resource Guide provides three sets of self-explanatory, scoring worksheets
that practitioners can use to generate an IA-SPS score: Inventory to Assess
the Socio-Political Situation Surrounding a Village Community, Rural HH
and Rural Individual. The score thus generated helps decide the nature of the
Livelihood Promotion Approach that the organization can pursue.
1.5.5.4 Instrument for Locating a Household on the Economic

Snakes and Ladder Space (ILH-ESL)
This tool measures the sources of income, identifying each economic activity
that a HH engages in seasonally, and gathers data on revenues and costs for
each activity. These are the “ladders” that lead to probable increase in income.
It measures sources of credit and incurred costs, and also lists sources of risks
such as disease, drought, floods, and so on. These are the “snakes” potentially
leading to a fall in income and possibly a loss of livelihood.
In addition, there are other general utility tool sets for livelihood practitioners,
such as Mapping the Market by Practical Action, the 3-M Framework of
MART, Logical Framework Analysis, Stakeholder Analysis, Disaster Livelihood
Assessment Toolkit, and a Preliminary Processes to Advocacy. Some of these
are new and some have been carried forward from the previous edition.
These tools are available in a separate CD (provided with this Resource Book)
and can also be downloaded from the ILRT website - http://ilrtindia.org

2. Livelihoods – A Conceptual Understanding
In this section, we trace a variety of strands from various disciplines -

anthropology, sociology, ecology and economics, which have enriched the
conceptual understanding of livelihoods. Then in the following section, we
describe and critically analyze a number of conceptual livelihood approaches
and frameworks.
In the early stages of society and the economy, people made a living by
consuming whatever they foraged or produced. The earliest communities
were hunter-gatherers. Later, some settled and become farmers, while others
became migrant pastoralists. As society evolved and small habitations grew to
become villages, towns and cities, others took to skilled jobs such as clay work,
woodwork and metal work. Early scholars constructed an image of an economic
man, Homo economicus, who rationally maximized his or her own interest.
“It is not from the benevolence of the butcher, the brewer, or the baker that we
expect our dinner, but from their regard to their own self-interest. We address
ourselves not to their humanity but to their self-love, and never talk to them of
our own necessities, but of their advantages”.8
People used their ingrained capabilities, to modify resources around them,

and to make them more useful for themselves (self-consumption) or for others
by marketing them. As technologies evolved and later with the discovery of
machine power during the industrial revolution, a new phenomenon was
observed, especially in Western Europe of the 17th century. There emerged a
class of people who owned machines. This group started employing others,
who did not own the machines. Over time, the livelihoods of those who owned
the means of production, such as land, machinery, etc, became very different
from those who were employed by them. This led to class differences and to
‘division of labor’ among the working classes, paving the way to the growth of
highly specialized occupations. Adam Smith illustrated this with the example of
a pin making factory where the productivity showed around 240 to 4,800 fold
increase due to division of labor:
8
Smith, Adam (1776). An Inquiry into the Nature & Causes of the Wealth of Nations, Vol 1 Republished
in 2007 by Cosimo Classics
Livelihoods – A Conceptual Understanding 13

“One man draws out the wire, another straights it, a third cuts it, a fourth points
it, a fifth grinds it at the top for receiving the head; to make the head requires two
or three distinct operations; to put it on, is a peculiar business, to whiten the pins
is another; it is even a trade by itself to put them into the paper; and the important
business of making a pin is, in this manner, divided into about eighteen distinct
operations, which, in some manufactories, are all performed by distinct hands,
though in others the same man will sometimes perform two or three of them”.9
With increasing accumulation of capital, some nations searched for new markets
and sources of raw material and labor. This led to colonialism, a phase that lasted
about 300 years and ended only in the middle of the 20th century. A dual pattern
of livelihoods characterized most colonized countries with a vast majority eking
out a subsistence livelihood from agriculture as before, while a small proportion in
coastal cities became industrial workers or service workers in shipping, banking,
trade, commerce, administration, and so on. The second half of the 20th century
was characterized by increasing industrialization and massive increases in
production and consumption. This led to a jump in the exploitation of natural
resources, most of which were non-renewable. It is at this point that ecological
view points started influencing economic thinking as well as the conceptualization
of livelihoods. We trace the origins of this development in the next section.
2.1 Environment and Livelihoods: A Slow Realization of

Interdependence
Scholars from different walks of life started recognizing that economic choices
were embedded in a social reality. When describing the African tribe Nuer’s
strategies for making a living, the anthropologist, Evans-Pritchard10 (1940),
observed that communities undertook many livelihood activities, particularly
rearing cattle, but these activities acquired significant social or cultural
meaning, thus becoming an integral part of their lives. Evans-Pritchard wrote:
“Ecology shapes the nature of human production, and the Nuers are no
exception to this rule. The Nuers were predominantly cattle pastoralists who
also engaged in limited horticultural pursuits. They consider that horticulture
is an unfortunate necessity involving hard and unpleasant labor and not an
ideal occupation, and they tend to act on the conviction that the larger the herd
[of cattle] the smaller need be the garden”.
9
http://divisionoflabor.com/archives/000006.php
10
Evans-Pritchard, E. E. 1940. The Nuer: A description of the modes of livelihood and political
institutions of a Nilotic people

One can extend Evans-Pritchard’s line “Ecology shapes the nature of human
production” by saying that, in turn, human production impacts livelihoods and
those then give a distinct cultural identity to that group of humans. An Indian
livelihood researcher, Purnendu Kavoori made the following observation about
the livelihood activity choices of people in Western Rajasthan, which is a near
desert area:
“One of the drought mitigation strategies of livestock raisers is that in adverse

conditions they migrate with their herds of animals (both seasonal migration
and/ or long term migration) within and outside the state depending upon the
availability of fodder and cooperation of people on the routes of migration”.11
Mahatma Gandhi was one of the first and earliest thinkers reflecting on the root
cause of scarcity, and its opposite, which we now call sustainability. In his book written
in 1909, Hind Swaraj,12 he enquired, “What is civilization?” and then answered:
“Civilization is that mode of conduct which points out to man the path of duty.
Performance of duty and observance of morality are convertible terms. To observe
morality is to attain mastery over our mind and our passions. So doing, we know
ourselves. The Gujarati equivalent for civilization means ‘good conduct’. If this
definition be correct, then India has nothing to learn from anybody else, and this
is as it should be. We notice that the mind is a restless bird; the more it gets the
more it wants, and still remains unsatisfied. The more we indulge our passions
the more unbridled they become. Our ancestors, therefore, set a limit to our
indulgences. They saw that happiness was largely a mental condition. A man is
not necessarily happy because he is rich or unhappy because he is poor. The rich
are often seen to be unhappy, the poor to be happy. Millions will always remain
poor. Observing all this, our ancestors dissuaded us from luxuries and pleasures”.
“We have managed with the same kind of plough as existed thousands of years
ago. We have retained the same kind of cottages that we had in former times and
our indigenous education remains the same as before. We have had no system of
life corroding competition. Each followed his own occupation or trade and charged
a regulation wage. It was not that we did not know how to invent machinery, but
our forefathers knew that if we set our hearts after such things, we would become
slaves and lose our moral fibre. They therefore, after due deliberation decided that
we should only do what we could with our hands and feet.
11
Kavoori, Purnendu (1999), Pastoralism in Expansion: Transhuming Herders of Western Rajasthan,
Oxford, New Delhi
12
Gandhi, Mohandas K. (1909) Hind Swaraj

They saw that our real happiness and health consisted in a proper use of our
hands and feet. They further reasoned that large cities were a snare and a
useless encumbrance and that people would not be happy in them, that there
would be gangs of thieves and robbers, prostitution and vice flourishing in
them and that poor men would be robbed by rich men. They were, therefore,
satisfied with small villages”.
Gandhi had recognized, as early as 1909, that growth could not be unlimited.
Therefore, instead of producing more, using more and more of resources,
people must produce what they consume, and limit their consumption to
what they need. He also observed that diversity is natural, while equality is
not. All people are not born with equal endowments or equal abilities. Any
efforts to enforce equality would not last long. Therefore, Gandhi proposed that
those who have more, need not and must not be deprived of their possessions.
However, they must be educated to care for the others, and hold all resources as
a trustee of the community they live in. And this form of a care-based support
to all is feasible only when people live in a community, where they know each
other as individuals. Gandhi argued that only if everybody limited production
together to what the community required, there would be no over-exploitation
of natural resources. He believed that all transactions should be limited
within the community. As production would not exceed the community’s
consumption, there would be no need to ‘market’ products. He envisaged that
if such a need arose, it would lead to a situation where the ‘haves’ were bound
to have an advantage over the ‘have-nots’.
The 1970s witnessed growing concern about the degrading ecological resources.
In the 50s and 60s, in their zeal to increase production, industries adopted
technologies that ravaged the environment. In the seventies, across the
world, society raised its voice against indiscriminate exploitation of natural
resources and adoption of technologies focused on boosting production,
often at the cost of the environment. Some leaders of this movement, such
as EF Schumacher,13 a British economist argued that “the modern economy
is unsustainable”. Natural resources (like fossil fuels) are not renewable and
thus, subject to eventual depletion. He further argued that nature’s resistance
to pollution was limited. He propounded the philosophy of ‘enoughness’, which
took into account human needs, limitations and appropriate use of technology.
He faulted conventional economic notions that ‘growth is good’ and ‘bigger
is better’, and questioned the suitability of mass production in developing
countries, promoting in its place, ‘production by the masses’.
13
Schumacher E.F.(1973). Small Is Beautiful: A Study of Economics As If People Mattered. The excerpts
are adapted from the Wikipedia article on the book.

Schumacher was one of the first economists to question the appropriateness of
the use of gross national product to measure human well-being, emphasizing
that “the aim ought to be to obtain the maximum amount of well-being with the
minimum amount of consumption”. This was a remarkable return to Mahatma
Gandhi’s ideas in Hind Swaraj in 1909.
Around the same time, the Club of Rome, a global think tank founded in 1968
and dealing with wide ranging international political issues, commissioned
a unique study. The study, Limits to Growth, used a computation world
model with five variables: world population, industrialization, pollution, food
production and resource depletion. The authors explored the possibility of
achieving a sustainable feedback pattern by altering growth trends among
the five variables under three scenarios. Two scenarios modeled showed
overshooting and collapse of the global system by the mid to latter part of the
21st century, while a third scenario resulted in a stabilized world.14 The first two
were based on assumptions of continuous growth in consumption while the
third assumed consumption tapering off.
After the 1972 Stockholm Conference on the Human Environment and

the 1980 World Conservation Strategy of the International Union for the
Conservation of Nature, the leaders of the world realized the need to create
an organization with the sole purpose of raising awareness of the need for
sustainable development. At the UN General Assembly in 1983, they saw a
growing need for an organization to address these environmental challenges
which were intertwined with economic and social conditions as well.15
United Nations set up World Commission on Environment and Development

(also known as the Brundtland Commission) in 1983, under the leadership
of Gro Harlem Brundtland, the former Prime Minister of Norway, regarded
for her experience in the sciences and public health. The Brundtland Report,16
coined and defined the meaning of the term ‘Sustainable Development’ as:
“Development that meets the needs of the present without compromising the
ability of future generations to meet their own needs”.
14
Meadows, D.H, et al (1972). Limits to Growth. Universe Books. Excerpts summarized from
Wikipedia article
15
Report of the World Commission on Environment and Development, Our Common Future, United
Nations, 1987
16
Bruntland, et al (1987). Our Common Future. Oxford University Press

The Report recognized that poverty reduction, gender equity and wealth
redistribution were crucial to formulating strategies for environmental
conservation, and it also recognized the environmental limits to economic
growth that existed in industrialized and industrializing societies. There has
been an upsurge of interest in the environmental underpinnings of sustainable
livelihoods, since then. In addition to the influence of ecological thinking,
thoughts and opinions from the fields of anthropology, sociology and development
economics have influenced the conceptualization of livelihoods. We examine
these influences next, in order to develop a more holistic view of livelihoods
beyond the economic view circumscribed by employment and income.
2.2 Culture Influences How People Make a Living
A Hungarian thinker, Karl Polanyi (1886-1964), gave the concept of livelihood

a theoretical foundation in some of his works in the 1940s.17 He emphasized
that economic behavior is historically embedded in social and cultural reality.
Polanyi agreed that in order to live, people need a material base to satisfy their
needs and wants. But the means they used to meet these needs depended
on their social, political and cultural situation. He stressed that ‘the means,
not the wants, are material and formed the basis of their livelihoods’. In his
definition of substantive economy, he emphasized the central role of rights and
obligations, and of norms such as reciprocity.
Kimble, the former Head of the National Geographic Society of America, in

a vast, 1100-page study18 of the economy, society, and politics of the African
continent, urged Americans to adopt a more enlightened view. He argued,
“Americans found it hard to believe, that Africa’s six hundred groups, or
peoples, were not like us. Isn’t it time to concede the possibility of our thoughts
not always being their thoughts, or our desires their desires?”
In dealing with Africa, Kimble warned, Americans should be respectful of the

fact that many Africans were skeptical of Western political institutions, and not
eager to imitate them. It was becoming clear from the detailed documentation by
scholars, of the livelihood patterns of people in different parts of the world that
many of the activities that people engaged in, otherwise categorized as social or
cultural rituals, had their roots in the economic rationale of making a living.
17
Polanyi, Karl (1977). The Livelihood of Man’ 1977, edited by Harry W. Pearson. Academic Press. Written in the
early 1960s, this book was based on his field work in 1940s, and was only published posthumously.
18
Kimble, George H.T. 1960. ‘Tropical Africa: Land and Livelihoods’ The Twentieth Century Fund as
explained in TCF’s 75th Anniversary Publication

These accounts illustrated that en-masse participation in social events played a
very important role in risk mitigation. They argued that any attempt to enhance
livelihoods of people, especially the poor, without regard for social and cultural
norms, would not work.
The fact that culture and livelihoods strongly interrelate, is now globally recognized.
In February 2005, a group of experts, the Jodhpur Initiatives, defined ‘cultural

industries’ as those producing tangible or intangible artistic and creative
outputs, and which have a potential for wealth creation and income generation
by utilizing cultural assets and production of knowledge-based goods and
services (both traditional and contemporary). A common feature of cultural
industries is that they all use creativity, cultural knowledge and intellectual
property to produce products and services with social and cultural meaning.
2.3 Well-Being and Capabilities
Amartya Sen (1976)19 and others recognized that people worked towards
their well-being. This well-being is a multidimensional phenomenon and not
unidimensional income poverty alleviation. They recognized that measuring
development using common yardsticks of economic growth obscures the
problems posed by poverty. They recommended a ‘basic needs’ approach to
help the poor overcome poverty. This meant supplementing efforts to increase
productivity of the poor by providing for their basic needs, not met otherwise,
in areas such as (i) education and health, (ii) human resource development,
(iii) wage goods and public services, along with short-term subsidy programs
to enable them to afford at least a minimum bundle of basic needs, till the time
their productivity levels improved.
Amartya Sen20 was the first amongst thinkers to define ‘functionings’ as

consisting of ‘beings and doings’, a state of mind and a set of activities. For
Sen, capabilities are the alternative combinations of functionings a person is
feasibly able to achieve. Thus, capability has two parts: functionings and the
substantive freedom to pursue different functioning combinations.
Though it was initially believed that capability was the sum total of all the skills and
knowledge of the people, it was later recognized that capability was also dynamic.
19
Sen, Amartya, 1976. Poverty: An Ordinal Approach to Measurement. Econometrica, Vol 44 (2), March 1976.
20
Sen, Amartya. (1999). Development as Freedom. New York: Knopf

Any addition or a death in the family or an adverse health condition of
important members altered capabilities. Moreover, people responded to
changing contexts of resource availability and market demand to modify their
capabilities. Therefore, one has to take into account the social, political and
cultural aspects in order to understand livelihoods.
2.4 The Poor Adopt Different Livelihood Strategies to

Manage Risk
Chambers and Conway21 observed that the poor were much more vulnerable
to risks and shocks than their privileged counterparts. Often the poor cannot
take up livelihood activities, which quite possibly could fetch them a far higher
return. If the activity does not work out due to some unexpected reason, it may
mean a matter of life or death. They often chose a mix of activities, which do
not give them the highest return, but even if one of the activities fails, they can
fall back on others to ensure their survival. Therefore, Chambers and Conway
argued that a better strategy for the most vulnerable poor was not to maximize
return, but to ensure survival by optimizing risk. Vijay Mahajan observed the
same phenomenon in the field and posited that the poor tend to establish their
livelihoods as a diversified portfolio of subsistence activities (DPSA) rather than
a single, or just a couple or more economic activities that fetch higher returns,
but in reality, have higher attendant input costs and risks.22
2.5 Various Conceptual Livelihood Approaches and

Frameworks
Figure 2 traces the emergence of various conceptual livelihood approaches

and frameworks.
With these changes in the perspective, which were further strengthened by

Indian economist Amartya Sen’s work on various non-economic factors
affecting economic choices and consequences, the United Nations set up the
World Commission on Environment and Development (also known as the
Brundtland Commission) in 1983. It was intended to review the development
experiences in different parts of the world and suggest a future course of
action. All member nations agreed that it is essential for people to lead long
and healthy lives, to acquire knowledge and to have access to resources needed
21
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.
22
Mahajan, Vijay (2004). The Algebra of Livelihoods - A Presentation. Basix, Hyderabad.

Figure 2: Emergence of Livelihoods Perspective
Elwin (1964)
Hart (1973)
Hogger (1994)
Ellis (2001)
Gandhi (1920s)
Brundtland
 Multiple Pritchard (1940)
Committee (1987) economic Polanyi (1944)
activities
Socio,
Multi- political and
disciplinary economic
Livelihoods interrelations
Chambers
& Conway 1992;
Vidal
 de la Blache (1911) De Haan (2000) Baerwald
 (1995)
de Haan (2000) Geography/ Household/ De
 Haan &
de Haan &
 Globalization family Zoomers (2003)
Zoomers (2003)
Risks and
vulnerability
Chambers
 (1989)
for a decent standard of living, at all levels of development, which is sustainable

in terms of meeting the needs of the present generation without compromising
the options of future generations. The various Livelihood frameworks and
approaches do not offer models or theories of livelihood systems. Instead, they
suggest conceptual frameworks in line with Rapport’s23 definition:
“Conceptual frameworks are neither models nor theories. Models describe how
things work, whereas theories explain phenomena. Conceptual frameworks
do neither; rather they help to think about phenomena, to order material,
revealing patterns – and pattern recognition typically leads (thereafter) to
models and theories”.
2.5.1 The Sustainable Livelihoods Approach (SLA)
Chambers and Conway24 observed that the thinking about ‘how man made a
living’ had evolved substantially since the beginning of the twentieth century. By
23
Rapoport, Anatol.1986. General System Theory.
24

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 jewelery, which could be liquidated to generate funds.
In addition, the SLA holds that most people, especially the poor, are vulnerable
to risks and shocks, hence, they try to choose a livelihood strategy that not
only maximizes returns but also helps manage uncertainty. The outcome of this
strategy is seen in the fact that different members of the family pursue multiple
activities, at different times of the year, with the choices changing dynamically
over time in response to changing circumstances (See Figure 3).
Figure 3: The Sustainable Livelihood Approach

Key
H - Human Capital S - Social Capital
N - Natural Capital P - Physical Capital
F - Financial Capital
i
n LIVELIHOOD
o OUTCOMES
LIVELIHOOD ASSETS r
d
 More income
TRANSFORMING e  Increased
VULNERABILITY H STRUCTURES & PROCESSES r well-being
CONTEXT STRUCTURES t  Reduced
S N o vulnerability
INFLUENCE  Levels of LIVELIHOOD
 SHOCKS  Improved food
& ACCESS  Laws a
 TRENDS government STRATEGIES
 Policies
c security
 SEASONALITY P F  Private h  More
 Culture i sustainable
sector e
 Institutions use of NR
v
PROCESSES base
e

Thirdly, all economic choices are made within an Institutional Context, which
define the ‘rules of the game’. The context is not only defined by large institutional
mechanisms, such as state policies, institutional arrangements made by the
state to regulate trade and commerce, or build their capacities, but also by many
smaller local institutions, like widely adopted practices of a caste or community,
market entry barriers, formal institutions such as co-operatives and so on.
Fourthly, in line with Amartya Sen’s conception of Capabilities, the SLA does
not consider capability as only an aggregation of skills and knowledge, but in
addition, it takes into account the set of abilities of a family that help them to
achieve their aspirations, influenced by the number of members in the family,
their health, and education levels.
Lastly, this approach does not consider all these elements, including the five types of
Capital and Capacities, as static, but takes into account their dynamic nature.
A team of scholars from IDS, Sussex, under the leadership of Scoones,

working on the initial concept proposed by Chamber and Conway,25 proposed
that livelihoods of the poor are developed around livelihood resources, but
their access and utilization is determined by the local context and by an
institutional framework, which govern its use. Different HHs adopt different
livelihood strategies to use these resources in line with their ‘Capabilities’,
which are influenced by their aspirations.
They argued that a sustainable development intervention must affect all these
dimensions in order to impact the livelihoods of the people. For example, an
intervention, which increases income while enhancing risk or doing nothing
to improve the health of the members of the HH would be a mere income
generation program, and cannot be considered a livelihood intervention.
They argued that livelihood outcomes must be viewed from two perspectives.
To begin with, livelihood outcomes can be viewed from the point of
augmenting livelihoods by:
• Increasing income by either enhancing production, or increasing the
number of days of wage employment
• Considering the effect of this increase on different dimensions of poverty,
not just income poverty
• Taking into account the fact that this increased income or asset base leads
to improved well-being of the HH, and
25

• Increasing the capability of the HH, to make better choices for themselves
and to utilize resources in a better and sustainable manner.
They can also be viewed from the perspective of sustainability, paying special
attention to:
• The adaptation of the livelihood intervention to suit the local context
• Reduction of risk in the face of people’s vulnerability
• Enhanced resilience to shocks and risks, and
• Sustainable use of resources
2.5.1.1 Scoones’ Modification in the SLA
Scoones26 elaborated the various elements of the context, including their
historical background, their ownership and control pattern that influence the
access and use of the five forms of capital discussed earlier.
Scoones detailed various elements of the Sustainable Livelihoods in this

improvised SL Framework. He contended that in addition to financial capital,
people build their livelihoods around four resources: Natural, Physical,
Human and Social. However, by this time, another concept - the Political
Capital of the poor, especially in a system of democratic governance started
gaining prominence. With the recognition that people used different forms
of assets, often inter-changeable, as their forms of capital, the Sustainable
Livelihoods Framework took into account ‘Other forms of capital’. This simple
change strengthened the Framework and its applicability in different contexts
(See Figure 4).
Access to the resources, mentioned earlier, depends on the policies created.

Scoone asserts that the utilization or non-utilization of these resources is also
shaped by demographic characteristics. An illustration of this is the control of
all natural resources in South Africa by a handful of white settlers.
These controls are often set and managed through a series of institutionalized
norms - some formal and others, informal. We must bear in mind the definition
of institutions: ‘humanly devised constraints on human behavior’, as given by the
Nobel Laureate Douglass North. Thus, institutions are the ‘rules of the games’ that
structure political, economic and social interactions.
26
Scoones, I. (1998) ‘Sustainable Rural Livelihoods: A Framework for Analysis’, Working Paper 72,
Brighton, UK: Institute for Development Studies institutions of a Nilotic people.

Figure 4: Sustainable Livelihoods Framework, Ian Scoones, IDS
Sustainable Livelihoods Framework Adapted from Sustainable Rural

Livelihoods: A framework for
analysis IDS working
paper-72, Ian Scoones
Contexts, Livelihood Institutional Livelihood Livelihood Outcomes

Conditions and Resources Processes & Strategies of
Trends Organizational Households
Structures
Policies Natural Power and Control Intensify Livelihoods
Resource Over Resources Existing
Capital Activities
History Physical 1. Increased Workdays

(Man-made)
Capital
Politics Institutions/ 2. Reduced Poverty
Organizations 3. Enhanced Well
of the People being
Micro-economic Economic Livelihood 4. Increased Capabilities

Condition and Financial Diverfication
Capital
Terms of Trade Institutions supporting Sustainability

livelihoods of people
Climate Human Capital 1. Livelihood Adaptation
incl. those connecting
people to Markets,
Agro-Ecology Social Capital Technologies 2. Vulnerability and
Risk Reduction
Demography 3. Enhanced
Resilience
Social- Any other form Aspirations and Migration 4. Sustainable Use
Differentiation of Capital Dispositions of of Resources
HHs
Contextual Analysis of Analysis of Analysis of Analysis of Livelihood

Analysis of Livelihood Institutional Livelihood Outcomes & Trade-
Trends, Resources, Influences Strategy and offs
Conditions Trade-offs, on Access to Portfolio
& Policy Combinations, Resources,
Analysis Sequences Capabilities and
& Trends Livelihood Strategy

They are often confused with significant organizations, such as universities, large
corporations, government agencies and well-established NGOs. Indeed some
of these organizations often help actualize a set of norms and to that extent they
are institutions, but there are many other norms which do not have a formal
organization behind them. Weekly markets (haats or shanties) are examples of such
institutions. There are several norms, like the day on which they work, particular
spaces people occupy and so on, which are observed by a very large number of
people, without any formal organization, proclaiming them to be that way.
Some institutional norms get codified and become the law. People also create
organizations, often called institutions, for utilizing or enforcing those laws. For
example, in India, there were many mutually agreed norms that governed people’s
lives locally and which were administered using the services of five-wise-men
(‘pancha’ or ‘the five’ ) of the village, chosen by the villagers. When these norms
were codified across India, they came to be known as Panchayati Raj Institutions
(PRIs).
For giving a shape to these norms on the ground, some organizations, called
panchayats, were created. Each panchayat is headed by an elected member
(selection is the more common, mutually accepted norm) the sarpanch, who is
supported by a secretary and other staff. The organization, the panchayat, is
built under the framework of the PRIs. The village panchayat often sets local
village norms: who can graze their cattle in the local forest, or can a particular
well be reserved for drinking water or for irrigation, and who all can use it, and
so on.
Similarly, at the national level, there is a norm or practice, widely accepted that
the nation must provide industrial training to its youth. To actualize this idea,
also accepted by the Government of India, many training organizations called
the Industrial Training Institutes were set up. Such institutions play a vital role
in shaping the livelihood choices of people. They determine which resources
can be used, and by whom, and the purpose of its use. These mutually accepted
norms also outline people’s entitlements. It is for these reasons that the SLA
proposes that resources be viewed through the lens of institutional norms.
The authors of the SLA (Conway & Chambers 1992, and Scoones 1998)
emphasized considering both supportive institutions (such as training
institutions) and enabling institutions (such as marketing co-operatives) for
livelihoods. However, neither paid adequate attention to the power
relations that control the use of these resources. It is for this reason
that we have added that dimension to this framework.

The Sustainable Livelihood Approach provides a new perspective on people’s
development. As Farrington,27 2001, states, it is:
• A set of principles guiding development interventions (whether
community-led or otherwise). The fundamental point here is that an
intervention has to be evidence-based rather than being one instigated in a
top-down fashion without adequate knowledge of the community.
• An analytical framework to help understand what is and what can be done.
Thus the logic as set out here is to appreciate the current, available forms of
capital, the HH’s vulnerability and the involvement of institutions. The logic
provides a framework that can serve as the basis for an analysis.
• An overall developmental objective. In this case, development is the
improvement of livelihood sustainability, perhaps by making the capital
less vulnerable, or by enhancing contributions made by some forms of
capital or even by improving the institutional context.
This SLA necessitates expanding our vision on three dimensions: from an

individual to a HH, from an activity to a set of activities, and by expanding
its scope from the economic to include social, political and cultural activities.
Figure 5 below illustrates this approach.
Figure 5: The Sustainable Livelihoods Approach Considering an

Enhanced Approach
Household as part
of community
with norms and
institutions
Individual
Income,
One activity
Jobs
Economic, Political, Multiple activities - both

Social, Cultural economic and non-economic
27
Farrington, J. (2001) ‘Sustainable livelihoods, rights and the new architecture of aid’. Natural Resources
Perspectives 69. London: ODI. Also available at www.odi.org.uk/nrp/69.pdf.

2.5.2 The SLA as Modified by IFAD
The International Fund for Agriculture and Development developed an

‘alternative’ SLA (Figure 6). It accepts the basic construct of the SLA but
emphasizes markets, rights, culture and politics. In this sense, the IFAD
approach incorporates the theoretical work of Karl Polanyi, the quibble
of George Kimble and the insights of Arjan de Haan28 on social exclusion.
In addition, Sen’s ideas of capability are integrated as ‘Aspirations and
Opportunities’.
The alternative sustainable livelihoods approach recognizes that policies,

institutions and processes influence access to assets and their use, which
ultimately affects livelihoods. India’s land laws, policies and land reform
distribution processes may have a bearing on whether a family can have a plot
large enough to maintain a cow and whether it can augment its land holding.
Figure 6: IFAD’s Sustainable Livelihoods Approach
Seasonality Tren
Sh ocks ds -
TY- VU
LN
ILI E
A B
RA
ER
B
LN
Service
IL
Enabling
Market Politics
VU
ITY
agencies providers
Culture Rights
Personal
e
Social Human
d er Age Cla
en ss
G
THE
Financial POOR Physical
Et
hnic Ability
AS
RA
IE
PI
T
T IO Natural U NI
N S RT
OPPO
ACTIONS
OUTCOMES
28
Haan, Arjan (1998) Social Exclusion: An Alternative Concept for the Study of Deprivation? IDS Bulletin,
Sussex.

The panchayat has the power to stipulate whether a family can qualify for
a governmental housing plot program. A credit market can allow a family
to obtain a loan, and formal and informal village governance groups may
dictate whether common land may be used for grazing. These institutions
play a critical role in supporting and supplementing assets and livelihoods.
A third dimension that can be added to this analysis of institutional influences

on livelihood choices is the orientation of the individual, and of her or his
family. Orientation, or the general world view or their aspirations play an
important role in determining a HH’s livelihood strategy. Amartya Sen29 argued
that different people, cultures and societies may well have different values and
aspirations, which may lead them to attach different utilities (or values) to
different commodities.
Rudolf Hogger30 dealt with this in great detail in the course of developing the
Nine-Mandala Framework (discussed below). He argued that the orientation of
the individual, the family and the community in which they lived were critical
determinants for a family deciding on their livelihood strategy.
Thus, in short, the SLA shows that families choose a livelihood strategy, taking
into account their resource endowment, as negotiated through the institutional
context in which they live, with its historical, social and political context, not
only to augment their income, but also to ensure it is done in a sustainable
manner, considering the risks and vulnerabilities they face.
2.5.2.1 The Nine Mandala Framework of the SDC

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
and SAMPARC, a Bangalore 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.
29
Sen, Amartya, 1985. Commodities and Capabilities.
30
Rudolf Hogger (1994) ‘The Family Universe: Towards a Practical Concept of Rural Livelihood
Systems’.

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, etc., to the meta-level of sustainable livelihoods.31
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. The mandala is depicted in
Figure 7 (Baumgartner and Hogger, 2004).32
Figure 7: Rural Livelihoods Systems Framework: Capturing Meaning

of Livelihood
The house as metaphor The RLS mandala as a

for livelihood heuristic tool for approaching
The nine mandala
livelihood
Individual Family Collective
Orientation Orientation Orientation
e.g., vision, e.g., ancestors, e.g., religion,
aspirations caste, social tradition,
status world views,
education
Inner Human Socio-
Space Family Space economic
e.g., integrity, e.g. gender Space
‘Ghar Chalava’ meaning relations,
identity, e.g., systems of a cross-culturally
‘keeping the house going’ solidarity
selfishness/ co-operation, valid archetypical
a local perception for
compassion community, symbol for a centered
sustainable livelihood
organization universe
Emotional Knowledge Physical
Base and Activity Base
e.g., memories, Base e.g., natural
attachments e.g., technology, resources,
experience, assets
skills
Inner realities Outer realities
31
Working with A Sustainable Livelihoods Approach, SDC and Nadel, 2007
32
Baumgartner, Ruedi and Rudolf Högger 2004. In Search of Sustainable Livelihood Systems: Managing
Resources and Change. Sage Publications.

Figure 8: The DFID SLA and the SDC RLS Blended
Livelihood
Outcomes to be
achieved with the
chosen Strategy
Risks Policies
Vulnerabilities Institutions
Political Organizations
Processes
Individual Family Collective
Orientation Orientation
Social Human
Family Socio-
Inner Space economic
Human
Space
Space
Physical Knowledge Natural

Emotional and Physical
Base Activity Base
Base
Livelihood
Financial Strategy
Services
Opportunities Development of
Livelihood
Strategy
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. This is shown in the Figure 8.33
2.5.3 The Coolies’ Framework
BASIX, the livelihood promotion institution, recognized that though a considerable

number of livelihood decisions are taken by the HH, it is done within the
substantial influence of the external context. Though the SLA made a serious
attempt to factor in the context, by developing the ‘Analysis of Context’, it required
33
NADEL, 2007. Common features of the livelihood approaches of DFID and RLS. Accessible at
http://www.poverty-wellbeing.net/media/sla/docs/2-3.htm

further development and detailing before it could be used practically in the field.
Vijay Mahajan and Thomas Fisher34 had extensively used Michael Porter’s35
framework for analyzing the strengths and weaknesses of an industrial sub-
sector. 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:
2.5.3.1 Understanding the Internal Context of Intervention

There are two important elements of Internal Context that must be borne in
mind, while designing or assessing a livelihood intervention.36 These are:
• The People, whose livelihoods are to be promoted, and

• The Organization or Agency, promoting or supporting livelihoods.
Livelihood promotion activities, or support activities are always developed

around a group of people. Therefore, before designing any intervention it is
vital to know the target group and be familiar with their livelihood patterns.
Even if their current livelihood options are inadequate, people may have
some livelihood activity or the other. Therefore, it is always desirable, when
developing livelihood promotion efforts, to take up activities incremental to
present livelihoods, or which easily dove-tail into people’s present way of living.
It is therefore, important to know three aspects about the HH:
The Livelihood Portfolio of the HH, their Capacities and their Livelihood
Strategy.
Livelihood Portfolio: The set of economic activities carried out by the HH

constitute their livelihood portfolio. It is important to know the mix and pattern of
activities which engage members of the HH at different times of the year. Consider
this example of a poor HH with an acre of land, typical of many small-holding
farmers. It uses it completely to cultivate paddy. However, this is not adequate to
meet the requirements of the entire family, and this land also does not keep them
fully occupied throughout the year. Thus, after completing transplantation in
34
Mahajan, Vijay and Thomas Fisher, with Ashok Singha, 1996. The Forgotten Sector: Non-farm
Enterprises and Employment in Rural India. ITDG, Rugby, UK.
35
Porter, Michael E. 1990. The Competitive Advantage of Nations. The Free Press, London.
36
From the Resource book on Livelihood Promotion, 3rd Edition.

their land, the lady of the house earns some wages from paddy transplantation in
other’s fields. When the rainy season ends, the man gets some wage employment
as the construction activities resume. During this period, the lady also gets some
wages from weeding activities. The family has two cows, and gets some income
from the sale of milk. Their daughter looks after these two animals as well as
the dozen country chicken in their back-yard. However, they sell the fowl only
when they need some cash. The son works in the tea-shop near the bus stop. The
livelihood portfolio of this household constitutes of the return from sale of paddy,
milk, chicken and wage earnings from transplantation, weeding, construction, as
well as wages earned at the tea shop.
Livelihood Capacity: 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 Strategies: To make use of available livelihood capacities, different

HHs use different strategies.37 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
37
‘Rural Livelihoods and Diversity in Developing Countries’ by Frank Ellis, 29 June 2000

• Their ability and coping mechanisms to endure these risks and shocks
• 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.
The Intervening Agency: 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 to the organization. An
appropriate alignment of these elements helps the organization achieve its
mission.
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.
2.5.3.2 Exploring 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 9).

Figure 9: Elements of the External Context
Institutional
Conditions
Demand Factor
Conditions Conditions
Industry Conditions
Factor Conditions
Livelihood activities utilize various accessible resources. Resources that go
into 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 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.
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 livelihood intervention strategy.
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, 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.
Presence of various institutions such as promotional, research and training
institutions, producer associations, also significantly influence the choice of
livelihoods. Together such elements define the Institutional Conditions, which
forms the fourth element of the external context influencing the choices in a
livelihood intervention.
These ideas have been converted into measurable instruments (the 3-E
Exercise), which are available in the accompanying CD.
Figure 10: The Coolie’s Framework
External Context
Institutional Conditions
Intervening People’s
Agency Livelihood
- Mission - Portfolio • Assets
- Capacity - Capacity • Awareness
Demand Conditions - Funding - Strategy Factor Conditions • Ability
• Access
Internal Context
Industry Conditions
External Context

2.5.4 Framework for Value Chain Based Livelihood
Interventions
Some examples of livelihood interventions based on integrated sectoral

strategies covering the entire value chain are endeavors such as cooperatives
in sugarcane processing and AMUL and the NDDB in milk and later soybean
processing, which emerged in the 1950s and grew right through the 1980s.
In order to understand a value chain, one needs to understand the meaning of

‘value addition’. Value Addition is the difference between the total income and
total costs of all purchased inputs and services.
VA = (P*Q) – (Ci) where Ci = w + r + i + y + π
Where P refers to price, Q is quantity produced; Ci is the summation of the

cost of all purchased inputs and services. Further, Ci constitutes the economic
value of all the ‘factors of production’ such as wages (w) for labor, rent (r) for
land, interest (i) on capital, royalty (y) on technology and profit (π)for the
enterprise or the entrepreneur.
Each player wants to increase his or her share of the value, depending on the
market and its competitiveness. The generic value chain can be depicted as a
tree with numerous roots and branches.
The roots represent a large number of producers; the stem having three
stages of processing i.e., primary, secondary and tertiary leading to numerous
branches representing consumers.
Stage-1 : Producers: example, dairy farmers, paddy farmers
Stage-2 : Local processing: example, drying, threshing and bagging etc.
Stage-3 : Secondary Processing: example, pasteurization, homogenization;
milling
Stage-4 : Tertiary Processing: example, skimmed milk powder, pouches;
flakes, rice
Stage-5 : Distribution, retail
Stage-1 Primary Production: There is high transactional cost and high risk,
which can be mitigated to some extent by forming producer collectives such as
farmers’ groups which can be jointly liable and the risks can be managed using
insurance services.

Stage-2 Local Processing: is largely done by the farmers themselves through self-
financing or with some loans from a katcha adatiya (a local trader who sells
onward to a larger trader). There is scope for such lending for collective activities.
Stage-3 Secondary Processing: Needs substantial capital investment, both

term loans and working capital. This stage witnesses entrepreneurs largely
from agricultural or commercial backgrounds who take term loans from banks
or SFCs.
Stage-4 Tertiary Processing: Needs larger capital investment, both term loans
for plant, machinery and buildings and working capital for inventory. Banks,
SIDBI, IFC are involved. Institutions such as IFC may even consider holding
equity in such initiatives.
Stage-5 Distribution: Two types – localized and nationwide. The latter needs
larger capital investment, both term loans and working capital, for building
warehouses, transport vehicles and retail outlets. There is existing scope for
building distribution and retail chains. Banks, SIDBI, IFC are involved. Private
equity is also needed for such initiatives.
Figure 11: The Stages in a Value Chain
CONSUMERS
VA 5
Stage 5
DISTRIBUTORS
VA 4
Stage 4 TERTIARY PROCESSING
VA 3
Stage 3 SECONDARY PROCESSING
VA 2
Stage 2 LOCAL PROCESSING
VA 1
Stage 1 LARGE NUMBER OF PRIMARY PRODUCERS

2.6 Our Working Definition of Livelihoods
Today as we understand it, livelihoods is a system of making a living where

different members of a HH, 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.
For the purpose of this Fourth Edition of the Resource book, we define
‘livelihoods’ 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. Dignity of a livelihood is thus important.
HH 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”.

3. Describing and Measuring Livelihoods
In this chapter, we trace how livelihoods evolved from pre-historic times to

the present and describe the broad pattern of livelihoods in each important
historical period in India. Then we deal in greater detail with the issue
of livelihoods in post-independence India. We look at data with variables
such as employment, unemployment, inter-sectoral distribution of
workers and of income over time, in addition to inter-status distribution
of workers over time. We learn how some aspects of livelihoods can be
‘measured’ and interpreted in order to understand the inherent complexities
a little better.
3.1 Historical Evolution of Livelihoods
In this section, we will see how people made a living in India during different
periods of history and how social structures evolved to support such lifestyles.
3.1.1 Hunting-Gathering Livelihood Equilibrium
In the very early stages of human society, communities were primarily hunters
and gatherers. During this period, human beings, recognizing the superior
strength of other animals started living in groups. Community living was the
predominant mode of living. However, during this phase there was very little
accumulation of wealth, in the form of food. People hunted and gathered as
much food as they could eat. The two main technologies developed at this time
were fire and sharpened stones. As the human child took longer, compared
to other primates, to stand erect and fend for itself, the system of the females
taking care of the children emerged, while the males hunted.
As societies evolved, they became more complex and hence we see even
during the pre-vedic period, some large centers of exchange (or trade) started
developing in the Indus Valley region, which was the beginning of the process
of urbanization. It gave rise to some non-farm livelihoods – people who did not
produce their own food to make a living.
Describing and Measuring Livelihoods 41

3.1.2 The Vedic Period
Over time, humans learned that they could cultivate some grasses and eat
the seeds for nutrition. This paved the way for a settled way of life, with the
commencement of agriculture. Tools for tilling the soil were developed. It
also became important to determine, which crops were grown, who tended
them and the lands on which they were grown. Therefore, the concept of a
family and private property emerged. People also saw seasonal variations
in production and availability of food. Large scale grain storages were built.
With man’s cognitive abilities, people started perceiving risks and the means
to reduce them. Various forms of risk mitigation strategies, especially in the
form of prayers to various elements of nature, emerged. However, in spite
of the fact that these settlements came up along navigable rivers leading to
growth of trade centers, a group of people who continued to live in undulating
terrains with thick forest cover, continued with the hunting and gathering
type of livelihoods. With development of technologies, some people started
specializing in production of some tools or materials. Occupation based groups
evolved. This was eventually codified into the varna or the caste system.
3.1.3 The Mauryan Period
The subsequent period witnessed a growth in production. Surpluses from

agriculture were invested in producing handicrafts especially textiles. This
meant, that traders accumulated more wealth than before. They controlled grain
storages, which were earlier owned by kings. The practice of money-lending to
meet the off-seasonal requirements also became common. This was the period
when Kautilya prescribed norms to be followed for such lending. He also argued
that
“A king’s happiness lies in the happiness of his subjects. He must ensure people
have rice, cows and clothes.”
With external armed invasions becoming more frequent, this period also saw
a large number of people depending on the army or joining it to form the base
of their livelihoods.
3.1.4 The Gupta Period
The growth saga continued. With the occupation-based caste system

entrenched in society, and also acquiring its rigid, hereditary character, human
capital accumulation got a strong boost.

A weaver’s children produced better quality textiles; the farmer’s children
understood the character of their land and the seasons and produced more
food, while the navigator’s children invested their energies in developing
stronger and stable shipping. With improved food and textile production,
and superior navigation methodologies, maritime trade with East Asian
countries flourished. As Indian produce became popular in other parts of
the world, trade flourished. India also started exporting skilled manpower.
In this period, Indian sculptors built many temples in other countries and
kingdoms. However, most traders, as was their custom, returned back to their
Indian bases and Indian kings rarely took political control of countries they
traded with.
This period also witnessed growth of capitalism as a new form of livelihood.

Irfan Habib’s writing in the Cambridge Economic History of India, has
revealed that in this era, some artisans or craftsmen, who did better than
others, started accumulating surpluses. These surpluses were converted into
productive assets such as looms. This led to emergence of a new pattern of
livelihoods. Master Weavers, often efficient producers themselves, began to
own several looms and employed other weavers to work as wage earners.
They made their livelihoods not by producing cloth, but from the rent they
earned from their looms.
3.1.5 The Dark Ages
On the other hand, this increasing popularity of Indian products also

invited immigrant peoples and tribes from Central Asia into India, leading
to expansion of Central Asian empires into India. The Kushan Empire,
the Indo-Scythians, and the medieval Islamic conquest by Mohammed Bin
Qasim of the Indian subcontinent were followed by numerous intrusions
by clans of the Shakas, the Yavanas, Kambojas and the Pahlavas, first
through the Punjab and the Indus Valley, which sometimes expanded
further into the Ganges Plain. This led to serious breaks in economic
progress, breakdown of governance and rise of many smaller kingdoms in
different parts of the country. Considerable resources and efforts were spent
in strengthening the defense forces. At the same time, several kingdoms
such as the Chandelas, the Cholas, the Kadambas, the Rashrakutas and
the Chalukyas encouraged development of the performing arts. The arts
flourished and became a major source of livelihood during the rule of
Vikramaditya VI. The army provided a means of livelihood too, especially
during times of lowered agricultural activity.

3.1.6 The Mughal Period
The Mughal rule in India witnessed systematization of land records and

agricultural revenue settlement. This had several ramifications on the livelihoods
of the people. It formalized the positions of many layers of tax collectors, who
were far disengaged from the nuances of cultivation as one went up the hierarchy.
It also introduced and almost standardized the system of fixed rent, replacing
former systems of production-linked taxation. Construction of long roads and
military expeditions had a bearing on the livelihoods of people. Foodgrains and
hand woven textiles were transported long distances, increasing the wealth and
control of traders. With the active encouragement of many rulers and wealthy
traders, the work of artisans and craftsmen started getting prominence.
The Mughals also brought the culture of building of large monuments and
mausoleums. These helped generate large scale employment, especially
during periods of food shortages. During the Mughal rule, the emperors also
shifted their capitals several times: from Delhi to Fatehpur Sikri, to Agra, to
Aurangabad and so on. These transfers were accompanied by shifts in the regal
paraphernalia, the court and the kingdom’s major activities. Thus, apart from
the large number of people who were engaged in such transfers, the livelihood
patterns in some of these areas also went through significant changes.
3.1.7 The British Colonial Period
The British colonial period brought in several changes that affected the
fabric of livelihood in this country. The first century of their rule saw mass
displacement of weavers and artisans, as mill cloth and manufactured goods
were imported from England. Later, the British decided to produce goods
in India and introduced modern, mechanized production of cloth, opening
employment in textile mills to all people, not limiting themselves to the weaver
castes. They also introduced rail transport, improving mobility of goods and
people’s mobility across large areas. The British also introduced the system
of permanent land settlement and fixed land revenue. This also brought land
as an asset into the market. Just as other assets, land with proper documents
could be sold or purchased. As land revenue was collected in cash, it increased
the dependency of peasants on traders and money lenders.38 The British also
introduced the system of canal irrigation.
38
Darling, Malcolm Lyall The Punjab Peasant In Prosperity and Debt. 1928. And… Hardiman, David,
1996. Feeding the Baniya – Peasants and Userers in Western India, Oxford University Press

Apart from increasing agricultural production, this also significantly affected
the value of land (from its previous hereditary value to a productivity-linked
valuation) and also altered the natural course of drainage affecting water-
holding, biomass in soil, its salinity and other factors.
This period of European Colonial rule also witnessed growth in international

maritime trade, especially with western nations, leading to growth of port
towns, which became centers of export-import on adverse terms, leading to a
sharp decline in the condition of artisans and craftsmen. Unlike its historical
experiences in trade with China, Indonesia and other regional countries, trade
with these western nations was transacted with a significant difference. The
British, Portuguese and French traders were accompanied by their armed
forces. Moreover, these foreign traders also started recruiting local people for
their colony’s army and for tax or revenue collection. This affected the livelihood
pattern significantly and also created fault lines in society with some exhibiting
loyalty to the land of their birth and others loyal to the British or colonial powers.
The presence of colonial powers also affected cropping patterns, with the
requirements of European markets favored over local needs, in the process
changing basic prices, as also the nature of incentives for enhancing
production. Apart from exploiting the natural resources of the colonies, the
colonial powers also began the process of shipping a large number of laborers,
initially as prisoners and slaves and later as indentured labor, from populated
colonies to less populated ones, for purposes such as cotton, sugarcane and
other plantations, as well as for felling timber, and for mining and construction.
This process of development and recruitment of natives for army and land
revenue administration not only led to establishment of the service sector in
the livelihood scenario, but also introduced a different system of education,
alienating a section of the society ‘Indian by birth but British by attitude and
opinion’ from the common people and their livelihood patterns.
3.2 Changing Patterns of Livelihoods since

Independence
In 1947, India’s independence from its colonial rulers brought in a new era in
livelihood patterns. Now, there was a nationally elected government, which was
mandated by Article 39 (a) of The Constitution of India that states:
‘‘The State shall, in particular, direct its policy towards securing … that the
citizens, men and women equally, have the right to an adequate means to
livelihood”.

However, in practice this has not been enforced. Partly, this is because the
right to livelihood was placed by the Constitution makers in the chapter on the
Directive Principles, which are not enforceable in a court of law, and not in the
previous chapter on Fundamental Rights, which are protected by the courts.
In 1981, the State of Maharashtra and the Bombay Municipal Council decided
to evict all pavement and slum dwellers from the city of Bombay. The residents
claimed such action would violate the right to life, since a home in the city
allowed them to obtain a livelihood, and demanded that adequate resettlement
be provided if the evictions proceeded. The Bombay High Court, in the Olga
Tellis and Ors vs Bombay Municipal Corporation case, “declined to provide
the remedies requested by the applicants but found that the right to a hearing
had been violated at the time of the planned eviction. The Court held that the
right to life, in Article 21 of the Constitution, encompassed means of livelihood
since, if there is an obligation upon the State to secure to citizens an adequate
means of livelihood and the right to work, it would be sheer pedantry to exclude
the right to livelihood from the content of the right to life. However, the right
to a livelihood was not absolute and deprivation of the right to livelihood could
occur if there was a just and fair procedure undertaken according to law”. 39
Recognizing that India was an agrarian society, where close to 70 percent of

the people depended on agriculture for their livelihoods around the time of
her independence in 1947, and that skewed ownership of land posed a serious
bottleneck for a majority of those people, the state initiated several legislations
for land reforms and abolition of the zamindari system, starting with Bihar in
1948. It also launched various programs such as the Community Development
Program and the Intensive Agricultural Districts Program (IADP), to promote
food production. It also created the Public Distribution System (PDS) to ensure
that food was available to people at an affordable price.
But a significant shift in the livelihood patterns in the lives of people of India
could be noticed with the introduction of high yielding crop varieties in the
late 1950s. In the entire decade of the 50s, the Government of India invested
in developing infrastructure such as the extensive networks of National and
State Highways, irrigation projects such as the Bhakhra-Nangal, Mahanadi and
Damodar Valley Corporation, and fertilizer factories and warehouses under the
39
Olga Tellis & Ors v Bombay Municipal Council [1985] 2 Supp SCR 51. http://www.escr-net.org/
docs/i/401006

Food Corporation of India’s system to maintain large foodgrain procurement
and distribution systems. This was followed by establishment of numerous
agricultural universities in 1960s, which carried out research to develop locally
adaptable agricultural practices, leading to the Green Revolution. This not only
changed the livelihoods of a large number of people dependent on agriculture
significantly, but it also resulted in the engagement of countless people in many
related support services such as trade of agro-inputs and commodities, their
transport and storage.
The surplus foodgrain production led to an enormous increase in related

and supporting services, generating employment in activities all the way
from supply of inputs – seeds, fertilizers, agro-chemicals, to agricultural
services such as tractor-ploughing, irrigation, pesticide spray, mechanical
harvesting and post-harvest, on-farm processing. Warehousing, trade,
transportation and financial services became important and generated
many new employment opportunities in rural areas and small towns. In the
final stages, agricultural surpluses created both the supply of raw materials
and also the capital for setting up many agro-processing industries such as
rice mills, roller flour mills for wheat, sugarcane mills and oilseed crushing
extraction plants.
Rural-Urban Shift in Livelihoods

In any economy, the normal transition is from the rural farm sector (mainly
crop cultivation and animal husbandry), (shown in quadrant I in Figure 12), to
the rural non-farm sector, clustered in small towns (quadrant II). This is then
followed by rural–urban migration, with a vast majority working in the urban
informal sector (quadrant III) and some graduating to the urban formal sector
(quadrant IV). This classical path has been represented as a dotted S path in
the Figure 12.
In the case of India, however, the transition to the rural non-farm sector did
not happen adequately, except in a few states like Kerala, Tamil Nadu, West
Bengal and Punjab. The larger states like Uttar Pradesh, Bihar, Odisha, Andhra
Pradesh and even Maharashtra, saw massive rural-urban migration to large
cities inside and outside the respective state. A vast majority of these workers
went to work in the urban informal sector.

Figure 12: The Evolutionary Path Across Sectors in a Developing Economy
III IV
Urban Informal Urban Formal
India
China
I II
Rural Farm Sector Rural Non-Farm Sector
In contrast, China managed to shift over 100 million workers from farm to
manufacturing by establishing a network of township and village enterprises.
The advent of independence followed by economic growth in India saw a

significant shift in livelihoods – from the agricultural to the urban secondary
and tertiary sector jobs, mostly in the informal or the unorganized sector.
Unfortunately, the shift in GDP share was much more dramatic, thereby leaving
workers in agriculture and in other workers in rural areas, with lower incomes.
The significantly higher urban wage rates, even when adjusted for higher cost
of living and a lower quality of life, remained the magnet which attracted steady
rural-urban migration, mostly to the larger cities.
This can be seen in the two tables viz., Table 1 and 2. While the GDP share of
agriculture and minor primary sub-sectors went down from 41 to 15 percent in
the four decades from 1972-2010, the share of employment came down from 74
to 51 percent. This 23 percent shift, though significant in itself, was lower than
the GDP share decline of 26 percent in the same period.
The reduction of 23 percent in employment in the primary sector was mainly

offset by increase in construction, trade, hotels and restaurants and transport

and communications – all large employers of low-skill, casual workers and self-
employed street vendors, etc. The organized sector in manufacturing and services
employed only 7 percent of all workers.
Thus, the livelihood challenge in India remains two-fold:

how to create more productive employment and thus income in rural areas -
both in the farm and the non-farm sectors
how to increase the skill levels and capital usage of urban informal workers so
as to enhance their productivity and thus, income.
Table 1: Trends in Sectoral Share of GDP over Four Decades in India
Sector Sectoral Share in GDP %

Sectoral share in GDP (constant at 1900-2000 prices)
1972- 1977- 1983 1987- 1993- 1999- 2004- 2009-
73 78 88 94 2000 05 10
Primary Sector 40.92 40.41 37.15 31.72 30.01 24.99 20.2 15.23
Mining & Quarrying 1.83 1.86 2.25 2.39 2.51 2.33 2.2 1.74
Manufacturing 13.45 13.6 14.52 14.87 14.46 14.78 15.12 15.41
Utilities 1.27 1.45 1.71 2.08 2.43 2.49 2.29 2.1
Construction 6.77 6.76 5.81 5.88 5.76 5.71 6.62 6.67
Secondary Sector 23.32 23.67 24.3 25.23 25.15 25.31 26.24 25.92
Trade, Hotels, 10.39 11.11 11.51 12.26 12.18 14.23 15.54 15.53
Restaurants
Transport & 5.05 5.4 5.99 6.64 6.62 7.47 10.25 14.00
Communication
Financing, Insurance, 7.35 7.28 8.31 9.94 12.17 13.07 13.53 15.64
Real Estate and
Business Services
Community, Social 12.97 12.13 12.75 14.21 13.86 14.93 14.25 13.67
and Personal Services
Tertiary Sector 35.75 35.92 38.56 43.05 44.84 49.69 53.56 58.84
All Non –Agricultural 59.08 59.59 62.85 68.28 69.99 75.01 79.8 84.77
Total 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
Source: Various NSS Surveys

Table 2: Trends in Sectoral Share of Employment over Four Decades in India
Sector Employment (UPSS) Share of Major Sectors (%)

Sectoral Share in Employment
1972- 1977- 1983 1987 1993 1999 - 2004 2009-
73 78 -88 -94 2000 -05 10
Primary Sector 73.92 70.98 68.59 64.87 63.98 60.32 56.3 51.3
Mining & Quarrying 0.43 0.47 0.61 0.72 0.69 0.57 0.56 0.64
Manufacturing 8.87 10.16 10.66 12.22 10.63 11.01 12.27 11.5
Utilities 0.16 0.17 0.28 0.36 0.4 0.26 0.27 0.28
Construction 1.84 1.75 2.24 3.76 3.24 4.41 5.69 9.6
Secondary Sector 11.30 12.55 13.78 17.04 14.96 16.24 18.78 22.02
Trade, Hotels and 5.11 6.12 6.35 7.06 7.59 10.27 10.89 11.38
Restaurants
Transport & 1.77 2.11 2.49 2.66 2.87 3.63 4.08 4.48
Communication
Financing, Insurance, 0.51 0.62 0.83 0.82 0.97 1.24 1.71 2.25
Real Estate &
Business Services
Community, Social 7.39 7.62 7.96 7.54 9.64 8.29 8.24 8.57
and Personal Services
Tertiary Sector 14.78 16.47 17.63 18.09 21.07 23.43 24.92 26.67
All Non –Agricultural 26.08 29.02 31.41 35.13 36.02 39.68 43.70 48.70
Total 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

Source: Various NSS Surveys
In the 1990s, a major shift in the livelihood patterns of people came about
with rapid changes in the Information and Communication Technology field. A
whole new range of livelihood opportunities emerged in the country. An early
example was the introduction of the STD PCOs – long-distance phone calling
booths. Later, with the widespread availability of mobile telephony, millions of
people got employed in outlets for selling mobile phone talktime coupons and
mobile handsets, while some have become internet service providers.
3.2.1 Who are the Poor in India?
The late Prof Arjun Sengupta, an eminent Indian economist wrote an article40
in 2008, along with two colleagues, and asserted that. “a little more than three-
fourths of the Indian people were poor and vulnerable in 2004-05”.
40
Senguta, Arjun, KP Kannan and G Raveendran, 2008. India’s Common People: Who Are They, How
Many Are They and How Do They Live. Economic and Political Weekly, March 15, 2008.

They used data from the various rounds of the NSS on monthly per capita
expenditure to infer this and classified the population into six segments: the
extremely poor, the poor, the marginal, the vulnerable, the middle class and
the high income group.
Table 3: Distribution of Population and Average Daily Per Capita Expenditure

by Poverty Status (2004-05)
Sl Poverty Distribution of Population Average Average

No. Status Population Percentage DPCE DPCE
(in million) Distribution (in Rs) (in US $
PPP)
1 Extremely poor 69.7 6.4 9 0.9
2 Poor 167.3 15.4 12 1.3
3 Marginal 207.1 19.0 15 1.6
4 Vulnerable 392.0 36.0 20 2.2
5 Middle class 209.8 19.3 37 4.0
6 High Income 43.7 4.0 93 10.1
7 Extremely Poor & 237.0 21.8 11 1.2
Poor (1+2)
8 Marginal and 599.1 55.0 18 2.0
Vulnerable (3+4)
9 Poor and 836.1 76.7 16 1.8
Vulnerable (7+8)
10 Middle and High 253.5 23.3 46 5.1
Income (5+6)
11 All 1089.6 100.0 23 2.5
The tables from Prof Sengupta’s article gives us data on their total numbers
and also key economic characteristics, such as the average HH size, work
participation rate (working population as percentage of total population in
that segment), dependency ratio (the proportion of workers in a HH to total
members), the monthly per capita expenditure. This data is worth perusing.
Table 4: Percentage Distribution of Unorganized Workers in Different Poverty

Status by Social Groups (2004-05)
Sl No. Poverty Status Total ST/SC OBCs Muslim Others

1 Extremely Poor and Poor 100.0 44.9 33.6 12.9 8.6
2 Marginal and Vulnerable 100.0 30.5 40.6 10.8 18.1
3 Poor and Vulnerable (1+2) 100.0 34.3 38.7 11.3 15.6
4 Middle and High Income 100.0 16.4 35.6 7.6 40.4
5 Total 100.0 30.5 38.0 10.5 20.9
Each row does not add up to 100 as the distribution by social status does not include non-reporting cases in 2004-05

Table 5: Comparative Estimates of Household Characteristics by Poverty Status
(All India 2004-05)
Sl Poverty Status MPCE+ Land HH No of Dependency Workforce

No. (Rs) Possessed Size Workers Ratio (%) Participation
(ha) Rate
1 Extremely Poor 321.0 0.38 5.74 2.18 2.64 37.68
and Poor
2 Marginal and 550.0 0.59 4.83 2.07 2.33 42.70
Vulnerable
3 Poor and 485.0 0.54 5.06 2.10 2.41 41.28
Vulnerable (1+2)
4 Middle and High 1388.0 0.67 3.62 1.61 2.25 44.32
Income
5 Total 695.0 0.58 4.63 1.95 2.37 41.98
+
Monthly Per Capita Expenditure
The data in these tables helps understand the distribution and characteristics
of HHs by poverty status.
Focusing on employment and unemployment, only in terms of person-days,

fails to capture an important aspect of the employment problem, the quality of
employment. Income or wages is one of the variables reflecting quality. Many
people are employed in the unorganized sector but they get low wages and
income. That is why there are so many gaps between unemployment (based
on time criterion) and poverty and we have large numbers of ‘working poor’.
Table 6: Distribution of Total and Unorganized Workers (2004-05)
Sl Poverty Status Total Work Unorganized Share of

No. Workers Participation Workers Unorganized
(in million) Rate (%) (in million) Workers
to Total
Workers (%)
1 Extremely Poor and Poor 89.3 37.7 87.8 98.3
2 Marginal and Vulnerable 255.8 42.7 244.8 95.7
3 Poor and Vulnerable (1+2) 345.1 41.3 332.6 96.4
4 Middle and High Income 112.4 44.3 90.0 80.1
5 Total 457.5 42.0 422.6 92.4
Work Participation Rate = (Total workers/Total Population)*100

3.2.2 Trends in Labor Force Size
The stark reality of livelihoods becomes clear by just looking at the numbers.
India is a large country with a population of 1.25 billion persons and its labor
force is growing every year. No other nation, with the exception of China, has
had to deal with such large numbers when it comes to provision of livelihoods.
The increment was ten million a year in the 2003-2012 decade and will be
about eight million a year in the current (2013-2022) decade. The overall labor
force which was about 440.2 million persons (329.2 rural and 111.0 urban) in
2002, has already grown in a decade by just over a 100 million to 541.8 million
in 2012 (391.2 rural and 150.6 urban). The projections41 are of further growth to
623.4 million (434.3 rural and 189.1 urban) by 2022. In other words, the labor
force in the current decade (2013-2022) is projected to go up by another 81.6
million persons. The projected growth rate is slower because of the tendency
for reduction in the female labor force participation rate. (For more on that,
see below).
3.2.3 Trends in Labor Force Participation Rates

The labor force is defined as all persons working (or employed), or those
seeking employment and available for work (but unemployed).
Table 7: Labor Force Participation Rate by Sex and Place of Residence

(1983-2010)
NSS round Male Female

Rural Urban Rural Urban
1983 55.5 54.0 34.2 15.9
1987/88 54.9 53.4 33.1 16.2
1993/94 56.1 54.3 33.0 16.5
1999/2000 54.0 54.2 30.2 14.7
2004/05 55.5 57.1 33.3 17.8
2009/10 55.6 55.9 26.5 14.6
Source: Visaria (1998) and NSS employment and unemployment survey reports
41
Report of the Working Group on Labor Force & Employment Projections constituted for the Eleventh
Five Year Plan (2007 – 2012). Planning Commission, 2008. Accessible at:
http://planningcommission.nic.in/aboutus/committee/wrkgrp11/wg11_lproj.pdf

As Table 7 shows, the labor force participation rate (LFPR) for males has
been steady, around 54 to 56 percent over a quarter century. But the LFPR
for females which was also steady around 32 to 34 percent in rural areas and
16 percent in urban areas has declined in the last decade. This trend in the
decline of female participation in labor force has attracted a lot of scholarly
attention42 and it has been attributed to various causes – additional years of
schooling for girls in the last decade and also the tendency of women of high
income HHs to withdraw from the labor force. The disquieting causes are
those of measurement where women’s employment may be undercounted and
occupational segregation i.e., women tend to be grouped in certain industries
and occupations,43 which in turn, have not witnessed growth in recent years.44
3.2.4 Trends in Occupational Diversity
Over a period of time, the occupational diversity and thus livelihood patterns
of people have changed. Till the 1990s, workers were divided into three groups:
(i) those engaged in agriculture, animal husbandry and allied activities, (ii)
those engaged in HH industries and (iii) those engaged in other services. Later,
these were further divided into other categories such as (i) Agriculture, Forestry,
Fishing & Mining and Quarrying; (ii) Manufacturing, Construction, & Electricity,
Gas and Water Supply; (iii) Trade, Hotels, Transport & Communications;
(iv) Finance, Insurance, Real Estate and Business Services and (v) Community
Social and Personal Services. Therefore, to maintain consistency we have used
the classification on 1950’s for which data was available.
Table 8: Distribution of Workforce and GDP as per the Industry of Origin

Year Agriculture and Allied Household Industry Other Services
Percentage of
Workforce GDP Workforce GDP Workforce GDP
Engaged Contributed Engaged Contributed Engaged Contributed
1951-52 69.4 52.6 NA 17.1 30.6 30.3
1961-62 69.8 47.2 NA 21.2 30.2 31.5
1971-72 NA 41.1 NA 24.3 NA 34.6
1981-82 60.5 35.7 NA 26.5 39.5 37.8
1991-92 59.0 28.6 NA 27.4 41.0 44.0
2001-02 58.2 22.4 4.2 26.6 37.6 51.0
2011-12 54.6 14.1 3.8 27.5 41.6 58.4
42
Sandhya Rani Mahapatro, 2013. Declining Trends in Female Labor Force Participation in India:
Evidence from NSSO, Institute for Social and Economic Change, Bangalore.
43
basic agriculture, sales and elementary services and handicraft manufacturing.
44
http://www.ilo.org/global/about-the-ilo/newsroom/comment-analysis/WCMS_204762/lang--en/
index.htm

A look at this table shows that in the 1950s, 69.4 percent of the people were
dependent on agriculture for their livelihoods. Over time, this number has
slowly come down to about 54.6 percent. But what is worrisome is that these
69 percent of the people used to share 52.6 percent of the national income,
which now has come down to only 14.1 percent. This indicates that the
livelihoods of the 50 percent of the people engaged in agriculture and related
activities who feed the other half, have come under tremendous stress.
This fall has been accompanied by a steady decline in the size of operational
holding of agricultural land. As the following table shows, the average size of an
operational holding came down from 2.63 ha in 1960-61 to 1.06 ha in 2002-03.
Table 9: Landholding Pattern in India
1960-61 1970-71 1981-82 1991-92 2002

No. of Operational Holding in mn 50.77 57.07 71.04 93.45 101.27
Total Area Operated mn. ha 133.48 125.68 118.57 125.1 107.65
Average area operated per holding 2.63 2.2 1.67 1.34 1.06
(ha)
Source: ‘Some Aspects of Operational Land Holding in India 2002-03’, NSSO, Ministry of Statistics & Program
Implementation, Government of India
With a larger number of people taking up non-farm activities in the urban

centers, there was a political imperative for keeping the food prices under
control. Therefore, as studies by various scholars have shown, with reducing
operational holdings and non-remunerative returns from most agricultural
crops, it became difficult for people engaged in farming to make both ends
meet. This prompted many of them to diversify and supplement their farm
income with income from other activities.
Over time, this combination of farming in the rainy season and migration
to cities for manual work in the winter months, while returning by summer,
became a dominant livelihood pattern in rural India. While farming activities
remained in the rural areas, most non-farm activities developed in larger growth
centers, which often grew into small urban areas, diffusing the rural- urban
boundaries. Most rural HHs engage in a portfolio of subsistence livelihood
activities, none of which could individually meet the total requirements of
the family. With improvement in transportation and the road networks, the
number of people engaged in daily-migration to towns has increased. Apart
from augmenting their income, this has several other implications for the
livelihoods of these HHs.

A close look at the data for the period between 1999-2000 and 2010-11, for
which greater detail is available, shows that sectors (such as Financial and
Business Services) whose contribution to the GDP increased, employed a
relatively small proportion of the workforce.45 This is commonly known as
‘jobless growth’, and it was the bane of India’s otherwise creditable growth
story since the 1990s.
Table 10: Sector wise Distribution of Employment and GDP
Sector 1999-00 2004-05 2009-10
Urban
Urban
Urban
Rural
Rural
Rural
Total
GDP
GDP
GDP
emp
emp
emp
emp
emp
emp
emp
Agriculture/Fishing 76.2 8.8 25.0 72.7 8.8 19.0 68.0 7.5 53.1 17.8
Mining/Quarrying 0.5 0.8 2.3 0.5 0.8 2.9 0.6 0.6 0.6 2.5
Manufacturing 7.4 22.6 14.8 8.1 24.5 15.3 7.2 23.0 11.0 14.8
Electricity water etc. 0.2 0.7 2.5 0.2 0.7 2.1 0.2 0.6 0.3 1.5
Construction 3.3 8.0 5.7 4.9 8.0 7.7 9.3 10.2 9.6 8.2
Trade, Hotels and 5.1 26.8 14.2 6.1 24.6 16.1 6.4 24.2 10.8 16.3
Restaurants
Transport 2.1 8.7 7.5 2.5 8.6 8.4 2.9 8.7 4.3 7.8
Financial and 0.3 4.1 13.1 0.5 5.3 14.7 0.6 6.7 2.1 16.7
Business Services
Public 4.9 19.5 14.9 4.5 18.7 13.8 4.8 18.5 8.2 14.4
Administration,
Education,
Community Services,
etc.
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Source: NSS Report No. 515: Employment and Unemployment Situation in India, 2004 -05.
Part II, p. A436
45
NSS Report No. 515: Employment and Unemployment Situation in India, 2004 -05. Part II, p. A436

At the same time, as can be seen from Table 11, overall literacy rates were going
up, both for males and females.
Table 11: Literacy Rates in the Period 1951 to 2011
Literacy Rate 1951-2011

Year Persons Males Females
1 2 3 4
1951 21.82 30.32 12.87
1961 31.47 42.49 19.74
1971 36.95 47.60 25.56
1981 44.92 55.95 33.20
1991 61.29 73.13 48.64
2001 69.14 79.66 57.80
2011 79.31 87.23 70.73
Note: Literacy rates for 1951, 1961 and 1971 related to population aged five years and above. The rates for the
years 1981 to 2011 related to population aged seven years and above.
This led to changes in occupational aspirations, though not necessarily in

available opportunities. This was amply rewarded by the labor market, as
Tables 12 and 13 show – the more years of education a person had, the higher
the wages he or she earned.46
Table 12: Average Wage/ Salary Earnings (Rs per day) Received by Different
Education Levels
General Education Level Rural Urban

Male Female Person Male Female Person
1 2 3 4 5 6 7
Not literate 72.47 35.74 60.42 98.79 48.70 77.34
Literate and up to Primary 98.59 47.75 91.23 111.44 64.79 105.16
Secondary and Higher 158.04 100.19 148.39 182.58 150.41 178.29
Secondary
Diploma/Certificate 214.38 200.40 211.13 274.87 237.02 267.11
Graduate and above 270.02 172.70 253.19 366.76 269.17 344.14
All 144.93 85.53 133.81 203.28 153.19 193.73
46
NSS Report No. 515: Employment and Unemployment Situation in India, 2004-05 p. 86

Table 13: Average Wage/ Salary Earnings in (Rs per day) by Industry of Work and
Education Category
Sector of work Not Literate Education Category All Sample
(industry division/group) Literate & upto (incl.n.r.) persons
Secondary Diploma/ Graduate
Middle
& Higher Certificate & above
Secondary
1 2 3 4 5 6 7 8
Urban Male
Agriculture 68.83 70.66 182.06 0.00 237.37 104.80 1,496
Mining & Quarrying 266.71 248.61 348.64 343.22 806.61 359.41 2,662
Manufacturing 79.41 88.45 122.10 199.92 218.85 113.22 14,336
Manufacturing 106.70 108.62 176.79 239.36 362.06 189.41 17,103
Electricity, Gas and Water 159.10 188.21 325.56 384.04 523.53 340.51 2,968
Construction 81.03 115.36 106.45 259.93 376.45 171.47 2,506
Trade 62.44 76.41 112.21 146.67 208.97 103.47 24,050
Transport & Storage etc. 104.74 138.84 211.92 341.87 361.17 207.57 16,244
Services 64.01 122.25 174.19 287.73 501.69 360.15 9,080
Services 126.8 150.14 239.72 309.62 345.63 265.72 47,848
Private HHs. with Emp. 78.77 89.82 62.95 0 164.08 86.94 2,548
Persons
Others 0.00 0.00 134.00 0.00 0.00 134.00 7
Non-agriculture 99.75 111.89 182.59 274.87 367.06 204.09 1,39,352
All 98.79 111.44 182.58 274.87 366.76 203.28 1,40,847
Sample Person Days 9,296 49,833 37,604 8,134 35,910 1,40,847 x
Urban Female
Agriculture 55.60 73.45 74.20 266.71 225.56 79.59 392
Mining & Quarrying 154.15 75.78 714.29 212.36 351.3 186.30 119
Manufacturing 34.23 53.25 70.71 54.81 235.1 65.58 2,564
Manufacturing 54.81 45.81 113.24 238.87 219.39 102.16 1,386
Electricity, Gas and Water 127.06 103.33 240.48 273.17 422.72 233.34 308
Construction 69.08 122.35 147.59 127.07 253.59 191.75 231
Trade 48.81 53.63 95.07 88.97 204.85 104.53 1,688
Transport & Storage etc. 90.72 144.69 228.99 138.83 414.48 278.41 840
Services 45.77 108.36 131.04 356.09 372.6 304.07 1,812
Services 78.53 116.16 186.33 236.3 247.12 205.35 19,016
Private HHs. with Emp. 38.2 42.77 51.67 34.23 67.61 41.26 9,268
Persons
Others 0.00 0.00 66.71 0.00 0.00 66.71 7
Non-agriculture 48.54 64.69 150.64 237.02 269.29 153.83 37,240
All 48.7 64.79 150.41 237.02 269.17 153.19 37,632
Sample Person Days 7,777 9,135 6,965 2,520 11,228 37,632 x

3.2.5 Trends in Casual Employment
This period has also witnessed rapid deterioration in the quality of employment.
While the Government has taken efforts to tighten labor laws, making them
equitable for the workers, there has been an increase in the number of casual
employment as compared to regular employment. While employment security
has decreased, the number of working hours has increased with reduced leave
and holidays, and increased uncertainty in terms of employment. Refer to
Table 14 and Table 15.47, 48
Table 14: Per 1000 Distribution of Population by Type of Employment
Type of Employment 1993-94 1999-2000 2004-05 2009-10

Self-employed 388 393 433 406
Regular wage/ salaried 428 402 396 385
Casual labor 129 141 118 142
Others 55 63 52 66
All 1000 1000 1000 1000
Source: Computed from various rounds of NSS Surveys: 50th, 55th 61st and 66th Rounds
3.2.6 Trends in Unemployment
Unemployment is measurable and there are different standard measures

available. The Unemployment Rate is the proportion of persons in the
workforce to those who are currently unemployed, though seeking and available
for work (as against those not seeking or not available for work). Currently, the
National Sample Survey Organization (NSSO) deems the status ‘unemployed’
in three different ways:
• Usual Status (US) – This is based on the principal activity and subsidiary
activities that a person performs during the year. A person is considered
unemployed if he or she was not pursuing some economic activity for at
least 30 days during 365 days preceding the date of survey. US (ps) is based
on the principal activity whereas US (adj.) takes into account subsidiary
employment, as well.
47
For a detailed discussion on this, see Papola T.S. and Partha Pratim Sahu (2012) ‘Growth
and Structure of Employment in India: Long-Term and Post-Reform Performance and
the Emerging Challenge’, Institute for Studies in Industrial Development, New Delhi,
March 2012
48
NSS Report No. 515: Employment and Unemployment Situation in India, 2004-05 p. 86

• Current Weekly Status (CWS) - This is based on a study of the week
preceding the survey. If a person was not engaged in any economic activity
for at least one hour on at least one day during the seven days preceding
the date of survey, he or she is considered ‘unemployed’.
• Current Daily Status (CDS) - This is based on hourly time disposition study
in the week preceding the survey. If a person was not engaged in any ‘work’
even for one hour on a day but was seeking or available for work for four
hours or more, he or she was considered ‘unemployed’ for the entire day.
This is done for a whole seven day period.
For rural unemployment (Table 15), the CDS unemployment rates (UR) varied
from a low of 46 per 1000 in 1987-88 to as high as 80 in 2004-05 for rural
males and 56 in 1993-94 to 112 in 1972-73 for rural females. The latest available
data is for 2011-12 and the UR was 55 for rural males and 62 for females (Refer
Table 16). Though there is no long-term trend in these numbers, one can
see that rural unemployment is certainly not declining with overall growth.
In fact, the numbers for 2011-12 are lower because the major government
funded employment program Mahatma Gandhi National Rural Employment
Guarantee Act (MGNREGA) had commenced nationwide. Another fact to be
noted is that female unemployment rate is always higher than that of males.
For urban unemployment, we see (Table 15) that the CDS unemployment rates
(UR) varied from a low of 67 per 1000 in 1993-94 to as high as 94 in 1993-94
for urban males and 145 in 1977-78 to 94 in 1999-2000 for urban females. The
latest data available is for 2011-12 and the UR was 49 for urban males and
80 for urban females (Refer Table 16). It appears that urban unemployment
is declining with overall growth. Once again, however, the urban female
unemployment rate is higher than that of urban males.49
49
Key Indicators of Employment and Unemployment in India, 2011-12

Table 15: Unemployment Rates (per 1000 Persons in the Labor Force) according
to Usual Status, Current Weekly Status (CWS) and Current Daily Status (CDS)
during 1972-73 to 2004-05
All India
Round (year) Unemployment rate
Male Female
Usual Us CWS CDS Usual Us CWS CDS
Status (adj.) Status (adj.)
(ps) (ps)
1 2 3 4 5 6 7 8 9
Rural
61 (2004-05) 21 16 38 80 31 18 42 87
55 (1999-2000) 21 17 39 72 15 10 37 70
50 (1993-94) 20 14 31 56 13 9 29 56
43 (1987-88) 28 18 42 46 35 24 44 67
38 (1983) 21 14 37 75 14 7 43 90
32 (1977-78) 22 13 36 71 55 20 41 92
27 (1972-73) - 12 30 68 - 5 55 112
Urban
61 (2004-05) 44 38 52 75 91 69 90 116
55 (1999-2000) 48 45 56 73 71 57 73 94
50 (1993-94) 54 41 52 67 83 61 79 104
43 (1987-88) 61 52 66 88 85 62 92 120
38 (1983) 59 51 67 92 69 49 75 110
32 (1977-78) 65 54 71 94 178 124 109 145
27 (1972-73) - 48 60 80 - 60 92 137
Table 16 : Unemployment Rate (per 1000) in Usual Status (ps), Usual Status
(Adjusted), CWS and CDS
Category of Age all Age 15-59

persons Usual Usual CWS CDS Usual Usual CWS CDS
Status Status Status Status
(ps) (adjusted) (ps) (adjusted)
Rural Male 21 17 33 55 23 19 35 57
Female 29 17 35 62 30 17 36 63
Person 23 17 34 57 24 18 35 59
Urban Male 32 30 38 49 34 31 40 50
Female 66 52 67 80 69 55 70 82
Person 38 34 44 55 40 36 46 55
Rural + Male 24 21 35 53 26 22 36 55
Urban Female 37 24 42 66 39 25 43 65
Person 27 22 37 56 29 23 38 58
Reference: State/UT tables s15, s10, s18, s31, s32 and s34

3.2.7 Trends in Inter-Generational Mobility
For this section, we rely heavily on a single article.50 Its findings are stark and
clear, so we quote it verbatim.
We find considerable intergenerational occupational persistence – across all

occupational categories, the father’s category is the most likely one that a son could
find himself in (e.g., a likelihood of almost half for agricultural laborers). But, there
are differences across occupational categories – the probability that a son would
fall in the father’s category is higher for the low-skilled or low-paying occupations.
There are also differences across sectors. As expected, mobility is higher in urban
areas as compared to rural areas. Comparison of mobility for scheduled castes and
scheduled tribes (SCs/ STs) and non-SCs/ STs gives ambiguous results. However,
we document considerable downward mobility for the SCs/ STs and show that
this is higher than the same for non-SCs/ STs. For SCs/ STs, we also observe
higher persistence (as compared to the same for non-SCs/ STs) in low-skilled/
low-paying occupations. Overall, our results show, as expressed by the popular
German proverb, that the apple does fall close to the tree.
Table 17: Distribution (percentage) of Individuals by Occupational Categories:

All-India, Rural and Urban Areas
All India Rural Urban
Fathers Sons Fathers Sons Fathers Sons
(i) (ii) (iii) (iv) (v) (vi)
Farmers (1) 47.19 24.45 55.19 32.70 25.62 2.16
Self-employed in 3.79 14.47 1.75 10.88 9.29 24.15
non-agriculture (2)
Agriculture Laborers (3) 22.57 19.83 25.87 25.64 13.66 4.15
Professionals, Officials 6.22 6.01 3.93 3.46 12.42 12.88
and related (4)
Clerks, Service workers, 6.42 8.33 3.47 4.56 14.36 18.50
Skilled, Agriculture and
Fisheries’ workers and
related (5)
Craftsmen, Plant 7.62 8.83 5.31 5.56 13.86 17.64
Operators and related (6)
Elementary Occupations 6.18 18.1 4.47 17.20 10.79 20.53
and others (7)
The number of individuals at the rural, urban and all - India levels are 18,679,9,591 and 28,270 respectively
Source: Authors’ computations based upon IHDS (2004-05)
50
Motiram, Sripad and Ashish Singh, 2012 How Close Does the Apple Fall to the Tree? Some Evidence
from India on Intergenerational Occupational Mobility. Economic & Political Weekly Vol xlviI no. 40,
p. 56 Oct 6, 2012

Table 18: Occupational Transition Matrix : Rural India
Occupational Categories Occupational Categories of Sons (Percentage)

of Fathers
1 2 3 4 5 6 7
Farmers (1) 49.52 8.55 16.85 3.36 3.95 3.22 14.55
Self-employed in 9.76 62.40 7.00 3.51 4.24 4.29 8.80
non-agriculture (2)
Agriculture Laborers (3) 10.44 5.95 55.87 1.51 2.69 4.12 19.43
Professionals, Officials and 26.55 17.49 10.25 18.19 10.25 7.15 10.13
related (4)
Clerks, Service workers, 15.62 18.93 11.00 6.64 21.27 6.84 19.70
Skilled Agriculture and
Fisheries workers and
related (5)
Craftsmen, Plant operators 10.64 23.94 8.07 2.75 5.35 35.27 13.98
and related (6)
Elementary Occupations 7.93 20.46 12.36 1.25 4.05 5.64 48.31
and others (7)
Source: Authors’ computations based upon IHDS (2004-05)
Broadly speaking, we believe that our results suggest considerable rigidity in

class positions, particularly for the lower classes. Overall, we interpret our
findings as suggesting that considerable inequality of opportunity exists in
India. Given that the rich and wealthy are likely to be underrepresented in the
IHDS51 (as in other surveys, including NSS) and since the children of the rich
seem to be doing quite well (at least going by media reports), we believe that
inequality of opportunity is higher than what we have documented.
3.3 Livelihoods in the Farm, Rural Non-Farm and

Urban Informal Sectors
In 2001, India’s work force of nearly 400 million (which has crossed 550
million by 2014) was largely (93%) engaged in either agriculture and allied farm
sector activities or in the rural non-farm sector or in the urban informal sector.
For an analysis of the trends during the 1980s and 1990s, we cite extensively
from a paper by Jha of the Institute of Economic Growth.52
51
The India Human Development Survey (IHDS) is a nationally representative, multi-topic survey first
conducted in 2004-05
52
Jha, Brajesh (n.d.) Rural Non-Farm Employment in India: Macro-Trends, Micro-Evidences and
Policy Options. Institute of Economic Growth, New Delhi

Table 19: A Comparative Account of Growth in Employment and Income for
Selected Industries/ Industry-Groups during 1980s and 90s
Industries ACGR in Employment ACGR in Employment

Income Elasticity
1983-94 1994-2000 1983- 1994- 1983- 1994-
Rur Urb Rur Urb 94 2000 94 2000
Agriculture & Allied 1.13 2.33 0.06 -1.58 1.22 1.24 0.95 0.01
Mining & Quarrying 1.47 1.47 0.27 -1.56 2.61 2.21 0.56 -0.04
Manufacturing 0.89 0.85 0.84 1.32 2.52 3.1 0.34 0.35
Utilities 0.41 0.67 -0.08 -1.22 3.51 2.92 0.16 -0.26
Construction 1.03 3.11 2.28 2.61 2.1 2.67 0.82 0.89
Trade+Hotels 1.67 1.88 1.22 4.31 2.36 3.81 0.76 0.82
& Restr.
Transport+ 1.16 1.01 2.93 1.92 2.57 3.89 0.43 0.59
Storage+Com.
Fin+Insu+RE+ 1.18 1.62 1.9 2.72 4.18 3.48 0.36 0.73
B services
Com+Social+ 0.66 1.93 -0.63 -2.4 2.4 3.37 0.59 -0.47
Pers. Servi
Non-agriculture 1.03 1.57 0.91 1.24 2.7 3.39 0.48 0.32
Total 1.11 1.64 0.26 0.99 2.19 2.79 0.54 0.16
Note: These estimates have been worked out with the Current Daily Status (CDS) figures of employment from the
NSSO and figures from the CSO, New Delhi.
Though the share of agriculture in the economy has declined, three-fourths of

the rural work force is dependent on it. The bulk of employment in agriculture
is rural-based (97%) and rural employment growth in agriculture is abysmally
low (0.06%) and insignificant during the 90s. The corresponding growth was
moderate and significant (1.1%) during the 80s. The growth of agricultural
income during the 90s is higher (0.02%) than in the 80s. Further, livestock
which had emerged as an important source of rural employment during the
80s has undergone structural changes, as the livestock population had declined
leading to a decline of employment in the livestock sector.
The Annual Compound Growth Rate (ACGR) of employment in the non-

agricultural sector, unlike for agriculture, has been positive and significant
during the 90s; this has held true for both rural and urban sectors. The non-
agriculture industrial categories, where employment growth during the 90s
was positive and also higher than in the previous reference period, were
manufacturing, construction, trade, transport and business services. In the
rural sector Construction, transport and business services recorded a higher
growth during the 90s as compared to the previous decade.

3.3.1 Farm-based Livelihoods
India has a large agrarian economy with most of its rural population
subsisting on farming. The NSSO conducted a Situation Assessment Survey
of Farmers53 during 2003 as part of the NSS 59th round. Data for the survey
were collected from 51,770 HHs spread over 6,638 villages from across the
country. Agricultural activities included cultivation of field and horticultural
crops, growing of trees or plantations, such as rubber, tea, etc., and animal
husbandry, fishery, sericulture etc.
Box 1: Highlights of the Situation Assessment Survey of Farmers
The most notable finding

• An estimated 27 percent of farmers did not like farming because it was
not profitable. In all, 40 percent felt that, given a choice, they would take
up some other livelihood [Indeed, this proportion in 2014 may be even
higher.]
Awareness Levels
• The break-up of members of farmer HHs by educational level was very
similar to that of the entire rural population.
• About 18 percent of farmer HHs knew about bio-fertilizers and 29
percent understood what the minimum support price meant. Only
eight percent had heard of the World Trade Organization.
• Only four percent of farmer HHs had ever insured their crops and
57 percent did not know that crops could be insured.
Organized or Not
• Nearly five percent of farmer households had a member who belonged to a
self-help group (SHG). Only two percent had a member who belonged to a
registered farmers’ organization.
• About 29 percent of farmer HHs included a member of a cooperative
society. Only 19 percent had availed themselves of services from a
cooperative. Most of these HHs availed themselves of either credit facilities,
or services related to seeds or fertilizers.
53
NSS Report No.496: Some Aspects of Farming, 2003. Classifications and comments in [ ] added by
Resource Book authors.

Land Use
• Among the various agricultural activities covered in the survey,
96.2 percent of all land used for farming during the kharif and 95.1 percent
during the rabi season was devoted to cultivation, including horticulture,
sericulture and vermiculture. In case of leased-in land, 98.2 percent was
cultivated during the kharif and 97 percent during the Rabi season.
• The share of orchards and plantations in total farmed land was three
percent during the kharif and four percent during the rabi season. In
land farmed by SC HHs, the share of orchards and plantations was
one-two percent.
Irrigation
• Almost 50 percent of all land irrigated during the kharif season and
60 percent during the rabi season was irrigated by tube-wells. Wells were
used to irrigate 19 percent of land during kharif and 16 percent during
rabi. Canals accounted for irrigation of 18 percent land during kharif and
14 percent during rabi.
• An estimated 62 percent of net irrigated area during kharif and 69 percent
during rabi was devoted to cultivation of cereal crops.
• Gross irrigated area accounted for 42 percent of cropped area during the
kharif and 56 percent during the rabi season.
• About 79 percent of gross irrigated area during the kharif and 83 percent
during the rabi season was irrigated without the use of any device. Around
five percent was irrigated with the help of diesel pumps and four percent
with electric pumps.
Inputs –Seeds, fertilizers, Pesticides

• Almost 48 percent of farmer HHs purchased their seeds and 47 percent used
farm saved seeds. Whereas 30 percent farmers replaced seed varieties every
year, another 32 percent replaced them every alternate year.
• Fertilizers were used by 76 percent farmer HHs during the kharif and
54 percent during the rabi season. For 27 percent HHs, fertilizers were
available within the village.
• Organic manure was used by 56 percent farmer HHs during the kharif and
38 percent during the rabi season. It was available within the village for 68
percent HHs during the kharif and 75 percent HHs during the Rabi season.
• Improved seeds were used by 46 percent farmer HHs during the kharif and
34 percent during the rabi season. They were available within the village
for 18 percent farmer HHs.

• Pesticides were used by 46 percent farmer HHs during kharif
and 31 percent during rabi. Veterinary services were used by
30 percent during kharif and 22 percent during rabi. Only 1.5-2 percent
of farmer HHs said facilities for testing of fertilizers or pesticides were
available to them.
Energy use
• Of the farmer HHs using non-human energy sources for ploughing,
about 47 percent used diesel tractors while 52 percent relied on animal
power. Among those using non-human energy sources for harvesting,
59 percent used diesel-powered machines. Of those reporting non-human
energy use for irrigation, 66 percent used diesel pumps and 33 percent used
electric pumps.
Landless farmers
• Farmer HHs possessing less than 0.01 hectares of land - who dedicated
only 14 percent of farmed land for cultivation - reported 69 percent of
farmed land was used for dairy activities, compared to 0.35 percent for all
farmer HHs taken together.
3.3.2 Rural Non-Farm and Urban Informal Sector

Livelihoods
After the agricultural sector, we turn our attention to the next two major sectors
for livelihoods - the Rural Non-Farm Sector and the Urban Informal Sector.
The major source of information on the Rural Non-Farm Sector and the Urban
Informal Sector is the Economic Census, 2005,54 the latest for which data is
available. This is because in rural areas, the Economic Census does not cover
farms and cultivators, and in urban areas, it does not cover factories and large
service establishments. It does cover ‘Agricultural Establishments’, which
provides employment to about 11 percent (10.9 million out of 100.9 million
total employment) and 87 percent of those were engaged in farming of animals.
It provides a perfect data base for understanding the Indian non-farm rural and
the urban informal sector livelihoods.
54
Accessible at: http://mospi.nic.in/mospi_new/upload/economic_census_prov_results_2005.pdf

Box 2: Highlights of the 5th Economic Census, 2005
Highlights of Establishments:
• There were 41.83 million establishments in operation during the year
2005, 25.54 million in rural areas and 16.29 million in urban areas. While
the non-agricultural establishments accounted for 35.75 million, the
agricultural establishments (excluding those engaged in crop production
and plantation) accounted for 6.08 million.
• Establishments registered a growth rate of 4.69 percent per annum (5.37%
rural and 3.69% urban) during 1998-2005 as their number increased from
30.35 to 41.83 million.
• Non-agricultural establishments grew at the rate of 4.16 percent per
annum (4.56% rural and 3.67% urban), while at the same time, agricultural
establishments grew at the rate of 8.32 percent per annum (8.62% rural
and 4.42% urban) during 1998-2005.
• There were 26.94 million (64.41%) Own Account Establishments (OAEs
i.e. establishments without any hired workers) and the remaining 14.89
million (35.59%) were establishments with hired workers. OAEs grew at
the rate of 3.36 percent per annum (4.18% rural and 1.83% urban) while
the growth of establishments with hired workers was of the order of 7.50
percent per annum (8.83% rural and 6.30% urban) during the period
1998-2005.
• Of 41.83 million establishments, around 39.61 million establishments were
under private ownership. Around 7.54 million (18.03%) worked without
any designated premises i.e., floating establishments, around 2.22 million
(5.3%) were seasonal establishments.
• About 76 percent of the establishments (31.74 million) worked without any
power.
• While farming of animals was the major economic activity (87%) pursued
by the agricultural establishments, ‘retail trade’ (41.8%) followed by
manufacturing (23.3%), and other community, social and personal service
(7.3%) were the dominant activities of the non-agricultural establishments.
Highlights of Employment:
• Around 100.9 million persons, 52.1 million rural and 48.8 million urban,
were working in these 41.83 million establishments. While employment in
own account establishments were of the order of 35.7 million, employment
in establishments with hired workers were of the order of 65.2 million.
Agricultural establishments provided employment to around 10.9 million
persons at the same time the non-agricultural establishments (NAE)
provided employment to around 90.0 million persons.

• The growth rate of employment during 1998 to 2005 was of the order
of 2.78 percent per annum (3.88% rural and 1.70% urban). This is
considerably higher than the growth rate (1.75%) observed during 1990
to 1998.
• Of the total employment of 100.9 million, 78.3 million (37.6 rural and
40.7 million urban) were male, 20.2 million (13.0 million rural and
7.2 million urban) were female and around 2.4 million (1.5 million rural
and 0.9 million urban) were children.
• Around 54.4 million persons (53.9%) were hired workers and the remaining
46.5 million were own account workers. Out of these hired workers, 41.3
million were male, 11.6 million were female and 1.5 million were children.
• The manufacturing sector was the largest employer providing employment
to 25.5 million (25.25%) persons. This was followed by the retail trading
activity, which employed 25.1 million persons (24.91%) and 9.2 million
(9.13%) in farming of animals.
• Average employment per OAE was 1.33 persons and that per establishment
with hired workers was 4.38 persons. Overall, average employment per
establishment was 2.41 persons. Average employment per establishment
which was 2.88 persons in 1990 had come down to 2.75 persons in 1998
and further gone down to 2.41 persons in 2005.
• Distribution of establishments by size class of employments revealed that
around 95 percent of establishments had one to five workers, 3.42 percent
of establishments employed six to nine workers and only 1.51 percent of
establishments employed 10 workers and above.
3.4 Profiling Livelihoods Using Primary Methods
The livelihoods of any HH or a community can be profiled along the following:

• Livelihood Strategies
• Livelihood Activity Portfolio
• Livelihood Capabilities
• Livelihood Shocks and Vulnerabilities

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.
The livelihood activity portfolio is basically a list of all activities that the
members of a HH perform to make a living and 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).
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.
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.
In this Resource Book, we have developed a tool for capturing these four
aspects of livelihoods and it is called the Instrument for Locating a Household
on the Economic Snakes and Ladder Space (ILH-ESL). This is discussed in
the chapter on Tools and is also included in the accompanying CD. The data
based on a survey of a number of HHs can be displayed on a map using the
tool- Livelihood Profiling & Display Using Google Maps, is detailed in the Tools
Chapter and is available in the accompanying CD.

Figure 13: Vulnerability to Risk
The poor are more Vulnerable to risk than well offs
Risk event
HHs The slimming of an

Income/ elephant and losses of
Assets a rich man
are not noticeable
Poverty Line
Mix of
Livelihood
Activities
Time
We used the (ILH-ESL) tool to study the livelihood profile of a highly

disadvantaged group, the Mal Paharias in Jharkhand and the results given
below are illustrative of the tool.
3.4.1 Livelihood Activity Portfolio – Mal Paharias55 of

Santhal Parganas
The Mal Paharias are counted among the so-called ‘primitive’ tribe groups,
now called Particularly Vulnerable Tribal Groups (PVTGs). The Mal Paharias
are found in the South of Rajmahal Hills and constitute 1.39 percent of the
total tribal population in the state of Jharkhand. They follow a patriarchal
system, where polygamy and widow marriage with the brother of the deceased
is permitted through mutual consent. Over 90 percent Mal Paharias are
Hindus, while a few are Christians. The houses of the Mal Paharias are usually
temporary structures with mud walls and thatched roof materials. The Mal
Paharias are predominantly agricultural laborers, working on fields mostly
owned by the Santhals and others.
55
A sample of 21 Mal Paharias HHs taken from an overall sample of 152 HHs in five districts

A small section of the Mal Paharias do have some agricultural lands, but the
cultivation method is such that there is barely enough for subsistence. The
method used, called kurao, is a type of shifting cultivation. The Mal Paharias
have now taken to cultivation in the plains, near the foothills. They produce
paddy, cowpea, maize and other coarse grains using methods that are barely
sustainable. Their poverty forces them to servitude under a system of bonded
labor. The average family of the Mal Paharias has six to seven members. Male
literacy is low – only 28.5 percent. A low life expectancy is indicated by the
fact that only 0-3 percent of family members are in the 55 years and above age
group. Average land holding is low (2.3 acres) with minimal access to irrigation.
The Mal Paharias are poor at rearing animals. Only a few families rear pigs
or poultry. A good number of Mal Paharias raise oxen for use in agricultural
activities. Their oxen are usually of poor quality. The Mal Paharias do not
possess any irrigation assets. To sum up, the Mal Paharias are one of the most
vulnerable segments of the populace with smaller land holdings, inadequate
irrigation and a traditional system of cultivation practices.
3.4.2 Livelihood Strategies of Mal Paharias
Agricultural labor and agriculture are the main economic activities for the Mal
Paharias. Paddy is the major crop in this region, followed by pulses and maize.
Mal Paharias cultivate paddy in 40–50 percent of their lands. Pulses and maize
are cultivated in the rabi season in about 15–20 percent of land. Oilseeds are
cultivated in small quantities in small parcels of land (0.4–0.5 acres). As only
food crops are cultivated, farming is at the subsistence level.
The Mal Paharia families are hardly involved in livestock activity. They
depend only on agriculture; hence, most of the time is spent in this activity.
The communities spend some part of their time especially in summer for
NTFP (Non-Timber Forest Produce) collection. These activities usually last for
a month at the most, in summer; hence, very little time is allotted for this.
Tasar cultivation is another important activity taken up during a short period
(from September to November) by a few Mal Paharias. On an average, the Mal
Paharias spend about 32 percent of their time in HH activities, seven to nine
percent on marketing and the rest on productive activities (most productive
season is kharif).

Table 20: Proportion of Time Spent on each Activity by Mal Paharias (2003)
Activities (Percentage) Income
in Rs
Seasons Agriculture NTFP Livestock Household Marketing
Rabi 33 7 12 36 9 4,446
Summer 12 7 7 32 8 4,856
Kharif 28 3 12 32 7 7,866
The table shows the proportion of time spent by the Mal Paharias in various
activities, their incomes and expenses incurred during 2003. While the total
income was Rs 17,168, the expenses were Rs 19,244, a 12.1 percent deficit!
The expenditure pattern reveals 47 percent was spent on food, 13 percent on

agri inputs, nine percent on clothes, eight percent on medical expenses and
zero percent on education. They access credit from the mahajans (moneylenders)
for purchasing agri inputs (22%), medicines (17%), food items (18%) and are
charged an interest rate of 50–150 percent.
3.4.3 Livelihood Capacities of Mal Paharias
The Mal Paharias depend to a great degree on forests and forest-based

agriculture, which provide them with important sources of income. Animal
husbandry is rare, though pigs and backyard poultry are reared. The Mal
Paharias lack entrepreneurial skills and also do not have any traditional
handicrafts skills. Exploitation by intermediaries, irrigation and credit
availability are emerging as the most common constraints, limiting the growth
of livelihoods for the Mal Paharias.
Sector/Sub-sector Constraints
Non Timber Forest Produce Exploitation by intermediaries
(NTFP) Lack of processing facilities
Reduced availability of edible fruits or plants
Agriculture: Cereal and Pulses Lack of irrigation facilities
Non-availability of credit and high interest rates
Exploitation by intermediaries
Poor quality inputs
Animal Husbandry: Goatery Non-availability of credit and high interest rates
and Piggery Exploitation by intermediaries
Lack of transportation

3.4.4 Livelihood Shocks and Vulnerabilities
The shocks faced by a Mal Paharia HH are malarial attacks, drought, and
occasional fires. Among their vulnerabilities are landlessness, homes with no
access to safe drinking water sources within half an hour’s walk, HHs headed
by a single woman (widows, divorcees, abandoned women or unwed mothers)
with either no regular means of employment or no support from someone
with a regular means of employment), a HH with no member with regular
employment due to illness, physical handicap, old age or addiction.
The Mal Paharias are an intensely socially disadvantaged group and prone to
exploitation as a result of their limited contact with the outside world.

4. Shocks, Vulnerability, Risks and Coping
Strategies
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. Thus in order to understand the risks to
people’s livelihoods and how they cope with them, it is necessary to understand
about shocks and vulnerability, first.
4.1 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 man-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 which go on for months, such as a
drought. There maybe 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 higher ground using
reinforced cement concrete.
Shocks, Vulnerability, Risks and Coping Strategies 75

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”.56 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.
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. Vulnerability may influence HH
behavior and coping strategies and is thus, an important consideration for
poverty reduction policies”.57
According to a recent World Bank report58 - 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 warn
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.
56
http://www.ifrc.org/en/what-we-do/disaster-management/about-disasters/what-is-a-disaster/what-
is-vulnerability/
57
“Measuring Vulnerability”. The World Bank. Accessible at: http://web.worldbank.org/WBSITE/
EXTERNAL/TOPICS/EXTPOVERTY/EXTPA/0,contentMDK:20238993~menuPK:492141~page PK:
148956~piPK:216618~theSitePK:430367,00.html
58
http://www.worldbank.org/en/topic/shocksvulnerabilities/overview

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.
4.2 Risks
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 study59 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 21: Shocks Related to Adverse Events: Percentage of Rural Households

and the Rupee Value of Loss
Cause Percentage of all Average amount of loss for

respondents reporting this those reporting loss (Rs)
shock
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%
59
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

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.60
Risks can be classified into two categories: idiosyncratic, those peculiar to a

HH, such as 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.
4.2.1 Idiosyncratic Risks Faced by the Poor
There are certain risks which affect a single HH or a 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 damage to house due to flood, 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 years,
requires their 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.
60
Krishna A. Escaping poverty and becoming poor: Who gains, who loses, and why? World
Development. 2004;32(1):121–136.

4.2.2 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.
• Unfavorable impact of globalization such as downturn in prices
of commodities exported by developing countries, increase in price of
imported commodities, 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 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.
4.2.3 Livelihoods Affected by Breakdown of Governance
Livelihood is the means of making a living and involves 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 extreme shortage of livelihood
resources.61
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 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 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.
61
Robert D Kaplan (1994): ‘The Coming Anarchy: How scarcity, crime, overpopulation, tribalism, and
disease are rapidly destroying the social fabric of our planet’.

The conflict between the sugarcane farmers of eastern Maharashtra and sugar
mills, which in fact make their produce marketable, over 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 which 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 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 have reached levels at which
livelihoods cannot be sustained, there is clear evidence of the breaking down
of the state’s authority. The Naxalites provide 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.62
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.63
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.
62
The Maoist Challenge, K Srinivasa Reddy, http://www.india-seminar.com/2007/569/569_k_
srinivas_reddy.htm
63
The Government of India’s Approach to Left Wing Extremism. http://mha.nic.in/naxal_new

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
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.64
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
64
Assessment-of-Left-Wing-Extremism-2010 http://www.vifindia.org

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.65
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.
4.2.4 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 any more. Globalization brings consumer goods from all
over the world in the local supermarket. Schuurman66 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.
65
Gautam Navlakha - http://www.epw.in/insight/days-and-nights-maoist-heartland.html
66
Schuurman, Frans J (2002). Globalization and Development Studies: Challenges for the 21st
Century. Sage Publications, New Delhi.

The second view, sees a close association between the global and the local,
and is therefore sometimes called ‘glocalization’ (Robertson 1995).67 This
view also identifies the trend towards global markets and politics, but notes
an increased diversity and an 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 urbanization68 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,69 with some 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.
67
Robertson, Roland. (1995) “Glocalization: Time-space and Homogeneity- heterogeneity”,
M. Featherstone et al (ed) Global Modernities, London: Sage. pp. 25-44
68
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
69
Rural Diversification: What Hope for the Poor, D Start, 2001. Accessible at www.odi.org.uk/
resources/docs/5900.pdf

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
Reardon70 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, falls 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.71 These
retailer 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 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).
70
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.
71
J. Kydd, Agren. (2002): Agriculture and rural livelihoods: Is globalization opening or blocking paths
out of rural poverty? ODI Network Paper.

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.
In India, agriculture is still the dominant source of livelihood and many

analysts72 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 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.
72
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

Table 22: Growth in Agriculture Sector during Pre and Post Globalization
Crop Growth rate in agriculture (%)

Pre-reform Period Post reform Period
1980-9000 1996-2006
Agriculture and allied activities
a. Agriculture 3.6 2.6
b. Forestry 4.2 2.5
c. Fishing -0.1 0.5
Crop
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
Other researchers, however,73 seem to have identified several positive benefits

as well of globalization on Indian agriculture, as can be seen from the list.74
No wonder then that, reputed agricultural economists Hanumantha Rao and

Gulati75 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, such as dairying
and other animal products, horticulture and floriculture in order to boost agro-
processing.
73
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
74
Sample study with 90 farmers from Maddur Mandal of Mahabubnagar district of Andhra Pradesh
75
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)

Table 23: Impact of Globalization on Agriculture (number of farmers)
Sl. Impact variable Low Moderate High Total

no
1 Frequent changes in cropping pattern 10 20 60 90
2 Technology component 7 27 56 90
3 Shift in agriculture from food crops 8 17 65 90
to non food 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
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.
4.2.5 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)76, 77
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.
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.
76
Mendelsohn Robert et al 2007, “Climate and Rural Income”, Climatic change 81 (1): 101-18
77
Kates, R. 2000. “Cautionary Tales: Adaptation and the Global Poor”. Climatic Change 45: 5 – 17.

Figure 14: Effects of Climate Change
Rising Forest cover is

temperatures affected and at
and changed greater risk of
rainfall patterns wildfires
Rising sea levels

Disappearance of and degrading
small mountain coastal
glaciers ecosystems
Long dry spells,

and frequent
intense
downpours
Impacts of Climate Change on Livelihoods

• Agricultural crops are adversely affected, with declining yields, and shifts in
cropping pattern. Food and seed storage are adversely affected.
• Forests exhibit shifts in vegetation affecting forest based livelihoods.
• Fisheries based livelihoods affected by 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 ground water, decrease in availability of fresh water, 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 increase in malnutrition. Women’s burden
increases as they have to fetch water from 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.
Box 3: Climate Change and Vulnerability
In a climate change context, vulnerability is 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).
Source: Intergovernmental Panel on Climate Change

Box 4: WOTR Approach to Climate Change
A practical approach to integrated planning for climate change

In its studies, the Watershed Organization Trust (WOTR)78 found that risks and
uncertainties to project implementation had increased over time with the rapidly
changing context, increasing variability in climate and occurrence of extreme
climate events new to that region. This observation led to the development of
the idea about the need to build appropriate measures in the project that would
indicate, at suitable intervals, its vulnerability to climate change. This would
help plan projects more efficiently, make mid-course project adjustments
as appropriate and identify timely interventions that would help reduce the
vulnerability of the ecosystem and the communities inhabiting it.
If ignored, the vulnerabilities associated with climate change can result in either
failure due to wasted investments or unintended consequences that adversely
impact the ecosystem and communities. This is because the adaptive response
of communities change with changing risks and environmental conditions (the
availability of the five livelihood capitals – human, natural, social, physical,
financial). In case the livelihood capitals are already low, the chances are that the
communities’ coping responses to climate risks would result in greater vulnerability.
The handbook entitled ‘Community Driven Vulnerability Evaluation’ brought

out by WOTR is meant for development practitioners, to enable them to
undertake a thorough assessment of vulnerability, including climate change,
in a development context. It includes a tool called CoDriVE-PD. The tool
provides clear instructions and steps for collection, compilation, analysis
and documentation of data or information that helps to precisely identify the
complexities of vulnerability, using a Vulnerability Code.
It is a recombinant tool developed by converging key aspects of three known

international research methodologies namely: Participatory Tool on Climate
and Disaster Risks, DFID’s Sustainable Livelihoods Framework and the
Driver-Pressure-State-Impact-Response (DPSIR). As synthesized, this tool
not only helps accurately assess the who, what and why of the climate risk
(vulnerability), but it also simultaneously helps design a response that can be
incorporated either pro-actively during the design stage or employed as a mid-
course intervention. However, efforts to reduce vulnerability and improve the
adaptive capacities of the poor call for strategizing and paying closer attention
to institutions at different levels to ensure they work to benefit the poor.
The CoDriVE-PD tool may be accessed in the Tools Chapter.
78
Watershed Organization Trust, an NGO working on watershed development in fragile rain-fed areas
in India

4.3 Coping Strategies of the Poor
Scoones79 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)
• 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 15.80
79
Scoones, Ian (1998) Sustainable Rural livelihoods – A Framework for Analysis. Working Paper 72.
IDS Sussex
80
Aga Khan Rural Support Program, India. A Presentation (2002).

Figure 15: Responses and Coping Mechanisms of the Poor to Shocks
Risk Events Immediate Responses Secondary
Impact Shock Impact
Less Stress
Monthly

consumption Relocate

Improve family
 household assets
budget Reduce

Draw in small
 unnecessary
insurance expenditure
Draw on formal
 Temporary

group based change in lifestyle
insurance
Medium Stress Depleted

 assets
Death Income Loss indebtness
Use savings

Illness Assets Loss Long hours of

Mobilize labor

Loss of property Need for Cash work
Migrate

Seek help from
 Interference with

friend Family life

Increased social

obligation
High Stress
Sell assets

Default on loans
 Loss
 of
Cut in
 productive assets
consumptions Loss of income

Take children out
 Loss of access to

of school financial market
Social isolation

Table 24 lists idiosyncratic risks and possible mitigating tools for poor HHs
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.

Table 24: Idiosyncratic Risks and Suggested Mitigation Measures (for use in a
livelihood intervention)
Risk of ill health, accidents etc. Education on preventive methods and access to health
care systems
Providing access to insurance (life and health)
Non availability of wage Arrange for tailor made consumption credit
employment Cultivate savings habit
Educate on and generate alternate means of employment.
Migration – short-term or long-term
Split into families of low Facilitate acquisition of skills and resources by the
livelihood security categories family to take up appropriate economic activity
Provide tailored consumption loan services
Liquidation of assets to meet emergency needs
Crop failures due to drought, Technical assistance on drought and pest resistant crops,
pest attack, diseases etc. physical methods, cultivation practices, cropping pattern
Dry land crop insurance for dealing with yield risk
Index based rainfall insurance
Reduction in demand for the Offer consumption loans
services or products offered
Failure of yield on activities Facilitate veterinary services
allied to agriculture like dairy, Facilitate livestock insurance
goat, sheep and pig rearing Provide market linkages
Trade, service and Insurance coverage for - life, accident, theft, fire etc.
manufacturing
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 25).
Table 25: Adaptive Strategies based on Risk Management Category
Risk management category Typical adaptive strategies

Mobility - risk distribution Agro-pastoral migration, wage labor migration,
across space involuntary migration
Storage - the distribution of risk Water storage, food storage (crops, seeds, forest
across time produce), animal pens, pest control
Diversification - the distribution Asset portfolio diversification, skills and occupational
of risk across asset classes training, cropping choices, production techniques,
consumption choices, animal breeding
Communal pooling - the Forestry, information gathering, disaster preparation
distribution of risk across HHs
Market exchange - the purchase Improved market access, insurance provision, new
and sale of risk via contract product sales
Warehouse receipts or micro-derivatives for dealing
with price risk

4.3.1 Coping Strategies - Lessons from a Study of
Drought Affected Villages
In this section, using an illustration we will draw out a suggested framework on

coping strategies adopted by the poor.
The illustration is based on a micro-study81 carried out by the DFID, UK funded

Andhra Pradesh Rural Livelihoods Program (APRLP). The study was done in
the Anantapur and Mahabubnagar districts of Andhra Pradesh in 2002-2003
when BASIX was very active in those districts and many of its staff worked as
observers in the study.
Drought is a recurrent phenomenon in both Anantapur and Mahabubnagar

districts. However, the drought situation in 2002-2003 was particularly severe
and its intensity was felt by all sections of society because of the cumulative
impact of continuous drought for four preceding years. The recurrent drought
conditions resulted in loss of crops, reduction of acreage under crops and
income, severe shortage of fodder, and distress sale of livestock, reduction of
employment opportunities and increase of distress migration in villages. Bore
wells, open wells and tanks were the major sources of irrigation in the study
villages. Water tables fell to record lows and water could only be pumped at the
depth of 300-600 ft. Most of the bore wells - both agricultural and drinking
water bore wells - had already dried up and even the few bore wells that
supplied water at the time of the study were on the verge of drying up. Even
if water was available, pumping it was a big problem as electricity supply was
irregular. There was an acute drinking water shortage for both humans and
livestock in Chinnababaiapalli village. It was not a severe problem in the other
study villages. People depended on the private bore wells of a few farmers for
drinking water in Chinnababaiapalli. Drinking water for cattle had become a
big problem as most water bodies such as ponds, tanks, etc., had long dried up.
Table 26: Status of Water Sources in the Sample Villages
Village Bore wells Open wells Tanks

Total Dried Total Dried Total Dried
Thimmaipalli 45 41 8 8 2 2
Rangapur 80 25 25 21 2 2
Sivarampet 47 22 30 17 1 1
Chinnababaipalli 32 28 5 4 3 3
81
APRLP, 2002-2003. Drought and Coping Strategies: A Study of Four Villages of Mahabubnagar and
Anantapur Districts.

Table 26 clearly indicates severe depletion of groundwater and the complete
drying up of surface water in the four sample villages. Of the 204 bore wells,
116 had dried up. In Thimmaipalli, 41 bore wells out of the 45 had dried up. In
Rangapur, of the 80 bore wells, 25 had dried up, while 50 open wells of the 68
had dried up. In Thimmaipalli, all the open wells had dried up. The same was
the case with all the tanks (8) in the sample villages.
The drought situation had a negative impact on all sections of society in the
rural areas and had affected their livelihoods. The farmers bore the brunt, as
yields fell and the acreage under cultivation reduced. They suffered due to
crop losses. All this had a cascading effect on several related areas, including
the coping strategies of different categories of HHs. HHs in the study villages
disposed of their liquid assets, defaulted on bank loans, electricity bills, etc.,
due to successive crop failures. Farmers lost not only their crops but also the
seeds required for the next cropping season.
There was decrease in area under cultivation of paddy from 2001-02 to

2002-03 across all sample villages. Contrary to the general view that farmers
opt for dryland crops such as jowar, ragi, etc., the study revealed that no such
trend was seen in any of the villages and in fact, there was an overall shrinkage
of crop acreage for all crops in all the villages. Perhaps this was largely due
to the risks perceived in agriculture during extended periods of drought
and also because migration offered an alternative livelihood option in these
semi-arid areas. The area under groundnut, a dominant crop in Anantapur
district, declined. When compared to the other sample villages, the area
under cultivation of groundnut was more in Sivarampet. Castor, a dry crop,
too showed a decline. In Thimmaipalli and Rangapur, the area under castor
cultivation declined. The decline was more pronounced in Thimmaipalli. The
cultivation of vegetables and mulberry had also reduced.
Livestock continued to be an important asset in the dry land areas. Drought not
only affected farmers, but also livestock-rearers. The wild grasses that grow on
the common pastures during the monsoon season had virtually been depleted
in the study villages. With the near-total failure of crops, only small quantities
of grass or weeds from the fields and virtually no crop waste or residues were
available. The village’s stock of dry fodder was almost exhausted. Farmers had
to go in search of fodder or move to places where it was available. In most cases,
livestock rearers sold their unproductive cattle and retained only productive
cattle to cut costs.

In the study villages, it was found that cattle rearers and farmers with livestock
sold cows and calves and retained bullocks that were valued more and were more
useful for agricultural activities. However, some farmers in Sivarampet sold their
healthy bullocks and cows, as they were unable to bear fodder expenses and they
had no fodder with them. They sold them at very low prices, around Rs 2000-3000
per pair, knowing full well that if the need arose, the bullocks would cost them
between Rs 7000- 8000, a pair. There was a steady decline in livestock population
between 2002 and 2003. All the sample villages reported a substantial decline in
livestock. The reasons for this trend included distress sale of livestock due to lack of
sufficient fodder and to tide over these periods of lean income in order to meet HH
needs. Thimmaipalli reported a fairly high decline in bullock population compared
to the other villages. The population of cows, buffaloes, sheep, hens and goats also
declined. Hens were mostly used for HH consumption and to meet the immediate
requirement of small amounts of cash in the house.
To tackle the severe drought situation in these two districts, the government
had implemented a series of relief measures that included Food for Work (FFW)
Program, drought pensions, fodder camps, etc. Most of these programs were
meant to soften the impact of the drought, especially on the more vulnerable,
poorer sections, which did not have any wage employment opportunities for
survival. However, problems abounded as the implementation of these relief
measures was not transparent and corruption was all pervasive.
The untimely relief programs were also inadequate to address the scale and
intensity of drought in the two districts. Some of the works such as trench digging
and road-laying under the food for work program were un-remunerative and
did not attract laborers. Drought pensions were distributed to a few in each
village, but did not cover many poor HHs that deserved government support.
Similarly, fodder camps were overcrowded and there was enormous pressure
on the governmental machinery and livestock rearers or farmers, who barely
managed to keep their cattle alive. Farmers from Chinnababaiapalli took their
cattle to the cattle camp at Penugonda, while the villagers of Sivarampet shifted
their cattle to a cattle camp at Pennahobilam, three kilometers away.
In order to face the recurrent drought and stress conditions, people adopted
different coping strategies. It was found that people have a variety of coping
strategies that see them through recurring droughts. Some of the traditional
coping or support systems available to HHs during droughts were:
• Patron-client relationship or attached labor
• Family or kinship

• More subsistence and food crops
• More use of common property resources (CPRs)
• Migration
• Credit from moneylenders
Though most of these strategies had gradually changed over time, they had not
entirely gone out of use for the poor HHs in the semi-arid areas. There were
several reasons for the erosion of these systems, including changes in cropping
patterns, break-up of traditional social systems such as the joint family and the
patron-client relationship, demographic pressures on land, depletion of natural
resources and CPRs, etc.
4.3.2 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, where BASIX
was active, 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 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.
S – Sinking into seasonal bondage, small thefts and crime, sex work,
starvation, chronic sickness, or even suicide.
R – Reduction of consumption or sale of assets (land, livestock, jewelery).
A – Adaptation – adjusting within existing portfolio of livelihood activities
(e.g., small farmer moves from cereals to cash crops) or works in NREGA jobs.
D – Diversifying the livelihood portfolio (e.g., farmer starts a tea shop)
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.
Figure 16 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 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
towards the right.
We illustrate the SRADH framework by continuing to use the details recorded

in the APRLP study.82
4.3.2.1 Small and Marginal Farmers

There were 62 sample HHs belonging to small and marginal farmers in the
sample villages. A majority of the HHs had reduced consumption, as there
were no earnings. With frequent crop failures, small and marginal farmers lost
whatever investments they had made in land and with shrinking employment
opportunities, the only means of survival was by reducing consumption
expenditure. Festivals, always an occasion to celebrate with fervor, for the small
and marginal farmers in the sample villages now were times to ponder as to
how they could cut down their expenditure. Earlier, migrants always returned
home to celebrate festivals with their families but now they chose to stay back,
as traveling home meant unwarranted expenditure. The study team observed
that marriages of daughters were postponed in some HHs. Unlike the past,
the small and marginal farmers had no savings and had fallen into a debt trap
because of frequent crop failures.
82
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.

Figure 16: Impact of Shocks/Favorable Conditions on Coping Strategies
The number of households
Reduction in
Consumption/
Sinking Sale of Assets Adaptive Change Diversification Higher Income
Income
O X
Shocks
Re
Reduction in
Consumption/
Income
O X
Economic growth
with equitable
distribution
Reduction in
Consumption/
Income
O X

Box 5: Coping Strategies of Small and Marginal Farmers
Surviving on Food for Work [Coping Strategy – Adaptation]
Boya Yerriswamy (35) from the Boya (B.C) caste of Sivarampet village is illiterate
and works as a laborer for wages. His family consists of his wife, Kamalamma
(29), two daughters and a son. This year, in 2002, after returning from Mumbai
they got 15 days of work at a road construction project under the FFW program.
The couple worked for 15 days and got a bag of rice (70 kg) and Rs 300. At the
time of the study, they were living on those earnings. Though the quality of rice
obtained under Food for Work was inferior, it helped poor families like the
Yerriswamys stave off hunger. His wife Kamalamma, while getting rid of small
insects from the rice they got under the scheme commented, “This is the food we
eat. What can we do? We have neither work nor money. The drought had made
us helpless. We have to be content with the rice given to us”.
For the elderly and the people who stay back in the villages, the rice obtained
under PDS is an important coping mechanism during drought conditions. A
majority of the poor families in the sample villages receive PDS rice every month.
Though this quantity is not sufficient for the entire month, it provides some relief,
as the price of rice in the open market is double of what they pay at the fair price
outlets. The government responded to the drought through the FFW program
and distributed drought pensions to the poorest. These schemes saved the poor
from starvation. Though the quality of food grains given under FFW was inferior,
at least it helped keep hunger at bay.
Selling PDS rice to meet medical expenses [Coping Strategy –
Reduction]
Lakshmidevi, aged 25, is a marginal farmer from Chinnababaiapalli. Her
husband suffers from asthma and so cannot toil. Lakshmidevi takes care of
everything in the family. She works on the farm and sells vegetables in the
neighboring villages. When her husband fell ill, she spent all the money she had
with her. She then sold the PDS rice, charging one rupee extra on each kilogram
to meet treatment costs.
Income from NTFP is an important income source for the women in Sivarampet
and Chinnababaiapalli villages. The women weave mats or baskets and get the
raw materials from the Common Property Resource (CPR) lands. They earn
fairly well in the lean months. Collection of tendu leaves, plate leaves, neem and
kanuga fruits is an important activity for the marginal farmers and agricultural
laborers in Chinnababaiapalli. This activity is mostly carried out by women
from February to April and it helps them earn some money to meet HH needs.

Diversifying into other livelihood activities [Coping Strategy –
Diversification]
Imaam Saab, 48 years, lives in Sivarampet village. His wife Fatima, aged 42,
works in the neighboring fields and is also engaged in making baskets, which
she sells for Rs 9 and makes an important financial contribution to her family.
Imaam Saab has a big family, including four sons and three daughters. Two
of his four sons and a daughter are already married. He had five acres of land,
which was distributed by the government (as D-Form: landless poor). He had
no patta for the land. Fatima contributes to the family economically by selling
vegetables. The drought had resulted in substantial financial loss, as their land
remained barren and they were unable to cultivate any crops. Imaam Saab
possesses a ration card through which they get 20 kg of rice, three liters of
oil and one kg of sugar. Their sons Imaam Saab (Jr) and Basha migrated to
Hyderabad but they have decided to come back to their village because of lack
of work. Imaam Saab (Sr) and his wife Fatima were coping with the drought by
making baskets and mats and by selling vegetables.
4.3.2.2 Landless
The plight of the landless poor during times of drought is pitiable since they
depend entirely on daily wages. During drought there is little or no employment.
With a fall in the area under cultivation, employment opportunities for landless
agricultural laborers in the sample villages shrink. Since most of them had no
assets, coping with the drought situation is very difficult. There were 15 landless
HHs in the sample villages.
Box 6: An Illustration of Coping Strategy of the Landless
Learning new skills - [Coping Strategy – Diversification]
Allabaksh (25) is a landless migrant from Sivarampet and lives with his family
in a rented hut. His wife Fathima (20) works as an agricultural laborer. Both
of them are illiterate and do not own any assets like land, livestock or a house.
They survive solely on wage labor. Allabaksh earns Rs 20 to 25 per day through
agricultural and non-agricultural labor. He has no permanent steady work which
can meet his family’s expenses. Sometimes, the situation is so dire that they have
to starve. They do not have proper clothes to wear and food to eat. To support
her husband, Fathima learnt basket and mat making. She gets Rs 7 per basket or
mat. Though it is very little, it still makes an important financial contribution to
the family in these deplorable conditions. In Sivarampet, around 10 Muslim and
three Erukala families were engaged in basket and mat making activities.

In order to cope with the drought, the landless reduce their HH expenditure.
There is change in food habits and expenditure behavior in the sample HHs.
In Thimmaipalli, the poor eat only one meal a day. In Chinnababaiapalli, the
landless poor sometimes starve. They are forced to survive on wild leaves
collected from the forest (Gadiraku) when all food stocks are exhausted and
no credit is forthcoming. In Chinnababaiapalli, women left behind by their
migrant husbands earn a livelihood by working in the houses of big farmers.
In return they get food grains and have a credit access. In Sivarampet, laborers
demand wages in kind as they are worried about food security.
4.3.2.3 Women-headed Households (WHH)

Women, in general, were more vulnerable to shocks and risks. With regard to
women-headed households (WHHs), there is always the burden of running
the family and also earning a livelihood, as there is no one to look after them.
Along with HH chores, there is the additional responsibility of tending to cattle
and agriculture and these women face more psychological pressure than other
women. Compared to the other caste groups, the financial status of upper caste
women is better (in Sivarampet village).
However, many of the WHHs of lower caste groups were living in acute
distress conditions due to non-earning members in the family. WHHs were
mostly non-migrants due to security problems and problems of looking after
children, agriculture and livestock. They have few or no sources for credit.
Early marriages (13-16), dowry and burden of family were common features
of WHHs. The study observed both positive and negative coping strategies
adopted by women in response to the drought. Positive factors included
diversification of livelihood activities by undertaking vegetable vending and
building of human capital through self help groups (SHGs). Brewing of illicit
liquor was taken up. Working as housemaids with the local landlords and
taking loans from moneylenders were other strategies.
Box 7: An Illustration of Coping Strategy of a Woman Headed

Household
Brewing illicit liquor - [Coping Strategy – Sinking]
Lakshmi and her husband hail from Vanaparthi village but they have settled
down in Rangapur. They migrated once to Guntur for seasonal employment.
The family consists of three daughters and a son. The son is deaf and dumb,
probably because Lakshmi and her husband are maternal cousins and their

marriage was consanguineous. After returning from Guntur, they used to
earn some money by collecting grass from the forest for fodder. However, this
arrangement did not last long as Lakshmi’s husband contracted jaundice and
passed away soon after, despite all efforts to treat him. After her husband’s
death, Lakshmi started brewing and preparing liquor in the house. Now, she
sells it in the neighboring villages and makes a small profit. She also goes to the
forest to cut grass. If she falls sick, there is nobody at home to take care of her
and to earn in her place. Lakshmi’s elder son got married three years ago. He
took care of her for a year and left her after the birth of his daughter. Last year,
her second daughter got married. She incurred a debt, which she is repaying
at five percent interest. The police caught her many times in the past but she
bribed the police and escaped.
4.4 Migration as a Coping Strategy
Migration, in search of livelihood, is a pervasive reality in India today. The

bleak livelihood scenario in rain-fed areas, flood or drought-affected regions,
high-density or conflict-ridden areas has meant migration is an effective
survival strategy for a large number of poor people in the country. More than
100 million people,83 almost one tenth of India’s population, are believed to
derive their livelihood out of seasonal migration. The construction sector
and brick kiln work, employing 40 million migrants, is known to be the
largest employer of migrant workers (See Figure 17). This is followed by
employment in textile industries (35 million), food-processing (8.5 million),
transportation, mines and quarries and agriculture (ibid). Within these
sectors, seasonal migrants are mostly employed to do bottom-end tasks,
which entail back-breaking labor and high risks; tasks that the local labor
would be unwilling to execute.
Various forms of seasonal, short term or temporary and circular migration are
the main types of migration and not permanent migration. Such migration has
become a routine livelihood strategy that allows people to continue living in
the village while accessing remunerative employment outside the village. The
evidence gathered across India suggests that short-term and circular migration
is growing, most likely due to improvements in roads, transport networks and
communications and to maturing social networks which help migrants manage
the risks involved in migration.
83
Deshingkar, Priya, and S. Akter, 2009, ‘Migration and Human Development in India’, Human
Development Research Paper 2009/13, United Nations Development Program.

Figure 17: Migration Labor per Sector
Migration Labor per Sector (in millions)
Textile (35)
Construction (30)
Brick-Kilns (10)
Food Processing (8.5)
Rickshaw Pullers (8)
Small Mines (3)
Leather (2)
Agriculture (1)
Diamond Cutting (0.9)
Others (1.6)
While there were debates on the impact migration had in bringing people
out of poverty and decreasing inequality,84, 85 the centrality of its contribution
to a HH’s income basket is backed by data. For example, in Jhabua, a tribal
district of western Madhya Pradesh, HHs in the three poorest quintiles
were shown to earn between 65 to 70 percent of wage income from seasonal
migration.
According to the NSS, 58 percent of internal migrants remit money home,

with an average annual value of Rs 13,000. Male migrants remit more money
than female migrants. The remittances improve the spending capacity of rural
HHs. Of these, those who work in semi-skilled occupations remit the most (Rs
2,000 and Rs 3,000 monthly), as many were single and had migrated with
the intention of remitting money home. For example, in Udaipur district
in Rajasthan, an area with large numbers of tribal migrants, remittances
accounted for between 42-48 percent of total annual household earnings.
84
Mendola, Mariapia, 2008. “Migration and technological change in rural households:
Complements or substitutes?”, Journal of Development Economics, Elsevier, vol. 85(1-2),
pages 150-175, February.
85
Taylor, J. Edward. June 2006”. International Migration and Economic Development” International
Symposium on International Migration and Development. Turin, Italy.

Another study of six villages, across three diverse regions in Madhya Pradesh,
showed that remittances accounted for 30 percent of total HH earnings.
Remittances received by the poorer sections of society can have a substantial
impact on the standard of living of the receiving HHs. Remittances enable
higher spending on education, health, HH consumption, human capital
formation and small enterprises. Where opportunities exist and where
consumption goals have been satisfied, remittances are used for investment
purposes. Moreover, the literature argues that remittances support economic
growth and poverty reduction, if they were properly harnessed. Even if
remittances do not reduce poverty, they may help the HH to maintain its
standard of living.
In a longitudinal analysis of the impact of migration on the rural labor market

and rural society, Rodgers et al86 point out:
“The potential for sustained growth (through migration) is certainly present.

But the existing institutions, both state and social institutions in the village were
clearly inadequate. It is necessary to think how the state could take advantage
of this opportunity for growth by providing incentives, the institutions and the
public investment in infrastructure which can convert this potential to reality.”
There is an imminent need to come up with solutions that can possibly

transform work opportunities for migrants into a more lucrative means of
livelihood.
4.4.1 Who Migrates? When and Where?
Economic approaches to answer these questions focus on individual behavior

and emphasize positive aspects of migration. Todaro’s87 pioneering analysis
of rural-urban migration is well-known. Push-pull models were an extension
of this. These analyses assume that migrants act individually according to a
rationality of economic self-interest. The decision to move to cities would be
determined by wage differences, plus expected probability of employment at
the destination.
86
Rodgers, G. and J. Rodgers, 2001, ‘A leap across time: When Semi-feudalism met the markets in rural
Purnia’, Economic and Political Weekly, 2 June 2001, pp. 1976–1983.
87
Todaro, M P, 1969, A Model of Labor Migration and Urban Unemployment in Less Developed
Countries, American Economic Review, 59, I, 138-48

In the ‘new economics of migration’, Stark88 extended the Todaro model, by
emphasizing HHs rather than individuals as units of anlysis, and remittances
as an inter-temporal contractual arrangements between the migrant and the
family.
Managed by private labor contractors and social kinship networks, migrants

show clear trends in movement across regions – people from a region move to
work at a certain specific destination, the choice being determined by a range
of factors – a leading one being social contacts/networks.89 While providing a
safety net and access to job opportunities, these informal networks, however,
tend to perpetuate caste and gender relations and often limit the mobility of
workers up the value chain. Gupta and Mitra90 also observe that in the informal
labor markets, which were the primary destination for workers, jobs were
highly segmented across lines of caste, religion and kinship. Causes of such
segmentation were complex, and historically determined.
Such segmentation may lead to unequal access to opportunities. Families, that

were slightly less poor and somewhat more food-secure, migrate less often
with the whole family. They send out young men, for relatively short periods of
time and short distances, and combine migration with agricultural work in the
home village. The poorer migrate more often with all members of the family,
for longer periods. Among these groups, female migration tends to be high.
Whereas for the poorest families migration is an option of last resort and often
a reaction to indebtedness, those who were less destitute use migration as a
means to reduce vulnerability and for some investment in agriculture.
There is often an unresolved question of causality: were migrants richer or

more educated because they have migrated, or do they migrate because they
were better-off?91
Migration needs investment, for transport, for food during the journey,
bribes for employment officers or officials implementing immigration and
settlement policies, and it needs contacts - assets that the poor were less
88
Stark, Oded (1991). The Migration of Labor. Basil Blackwell, Oxford.
89
de Haan, Arjan and Ben Rogaly Labor mobility and rural society edited by. (London: Frank Cass,
2002, pp. 200)
90
Rural Migrants and Labor Segmentation: Micro Level Evidence from Delhi Slums A. Mitra and I
Gupta. The Economic and Political Weekly. Vol XXXVII, No. 2, January 12. 2002.
91
de Haan, Arjan 2000. Migrants, Livelihoods and Rights: The Relevance of Migration in Development
Policies.

likely to possess. HH composition may play a role, as HHs with fewer earning
members may be less likely to take up opportunities for migrant work.
Also, migrants do not necessarily come from the poorest areas, as physical
infrastructure is crucial for people to migrate, particularly if they migrate regularly.
Micro-studies undertaken by different organizations show two broad types of

migration among the wider category of the poor.
• Migration undertaken by the poorer, least educated, and most
disadvantaged social groups (mainly SCs, STs, and Extremely Backward
Castes) typically to work in brick-kilns, unskilled construction, loading
and unloading of trucks and in agriculture, where living and working
conditions leave much to be desired. Such migration may allow only slow
asset accumulation, but it does prevent a downward slide into poverty.
• Migration is undertaken by slightly better off groups, with more education
and skills, more assets, and a higher social standing. Backward Castes were
heavily represented in such migration, typically working in small industrial
units, in security services, as drivers, in the hospitality industry and in
plumbing and carpentry. Though many such jobs were in the informal
sector, this second type of migration often leads to substantial remittances,
asset accumulation, and investment which can lead to an exit from poverty.
Box 8: Migration Caused by Drought
Drought had affected the livelihoods of most HHs in the study villages in
various ways.92 Continuous drought had increased their vulnerabilities in terms
of basic HH consumption expenditure, availability of credit, food security,
maintenance of livestock, etc. This had forced most HHs into adopting various
coping strategies to tide over the crisis as mentioned earlier. However, the
various coping strategies adopted by the HHs were found to be inadequate
in mitigating the ill effects of drought, as agriculture, agriculture-related
diversification as also non-farm diversification were limited in these villages.
In addition to this, the short-term nature of government interventions had not
really helped people in coping with the severe drought.
It is in this context that migration is seen as an important livelihood

diversification and coping strategy by most poor rural HHs in the semi-arid
areas such as Anantapur and Mahbubnagar districts. In fact, migration and
remittances through migration had overshadowed all other coping strategies
for most HHs in the study villages during this drought year.
92
APRLP, 2002-2003. Drought and Coping Strategies: A Study of Four Villages of Mahabubnagar and
Anantapur Districts.

First-time migrant
Devojee, his wife Roopli, their six daughters (three were married) and two sons
and Devojee’s mother Motiamma (60) made up the household. They were the
inhabitants of Thimmaipalli thanda. His elder son was married. The couple had
a two year-old daughter. There were 10 members in their HH. The persistent
drought since the last three - four years had forced their elder son to migrate to
Mumbai along with his wife and daughter for the first time. Devojee had never
migrated in his life.
He always managed to sustain himself because of his livestock and by doing

agricultural labor in the village. He used to have 20–30 goats, but now only
four were left because the others have either died or have been sold. Out of
his five hens, two were dead. The continuing severity of drought had severely
affected his economic position.
Devojee was very worried about his son. He had never seen Mumbai and his
son is a first-time migrant. His son will have to find a place to stay there and
then find some employment as a wage laborer. The presence of other migrants
from the thanda will help. Devojee gave his son Rs 2,000 when he went to
Mumbai. He hoped that this would give them security till they found some
work. Devojee hopes that his son finds work and settles down soon so that he
can send some remittances home. They left for Mumbai because there was no
income in the thanda and as the elder son, he had a responsibility to help his
family at a time of financial insecurity.
4.4.2 Major Migration Corridors in India93
There were 3.4 million migrants in Mumbai from UP, many from Eastern UP, a
poverty stricken area where migration had emerged as an important livelihood
strategy. After Delhi, Mumbai attracts the largest number of migrants from
UP. In Mumbai, these migrants mainly work in trade, hotels, transport and
communication (39%) and in manufacturing (34%). Migrants from Odisha go
mainly to Chhattisgarh, West Bengal and Andhra Pradesh. The total number
of migrants from Odisha in Hyderabad is 0.6 million. About 71 percent of
migrants going to Hyderabad were occupied in construction.
93
Remittance Needs and Opportunities in India, Thorat and Jones, 2011.

Intrastate migration within Maharashtra - Intrastate migration within
Maharashtra accounts for as many as 32.8 million migrants, of whom around
16 percent migrate to Mumbai. Of the total domestic migration in Maharashtra,
88 percent is intra-state and only 12 percent interstate. Of non-Mumbai based
intrastate migrants, nearly 68 percent were employed in agriculture and allied
industries, while for those intrastate migrants in Mumbai, just 20 percent work
in agriculture and allied industries, 23 percent in trade, hotels and transport,
and 18 percent in manufacturing.
Figure 18: Major Migration Corridors in India
4.4.3 Supporting Migration as a Coping Strategy94 -

Some Experiences
In the recent past, some focused interventions have addressed certain specific
vulnerabilities faced by migrants. The Aajeevika Bureau in Udaipur, Rajasthan
94
Excerpts from UNESCO - UNICEF National Workshop on Internal Migration and Human
Development in India | Creative Practices and Policies for Better Inclusion of Migrant Workers

was a pioneer in this field. Certain NGOs in Odisha, Maharashtra and Gujarat
worked on integrating children, from migrant HHs, who were school dropouts,
back into the formal schooling system. Labornet in Bangalore had made
attempts to establish a credible interface between informal sector workers and
employers, addressing problems of information asymmetry in informal labor
markets.
These specialized migrant support programs have been categorized by

Deshingkar et al95 into four broad categories – social protection model, market-
led approach, unionization model and rehabilitation model.
4.4.3.1 The Aajeevika Bureau, Udaipur

Aajeevika Bureau is an example of a social protection model which strives
to work with migrant communities at both source areas and destination areas,
and to address the specific vulnerabilities of both places.
With the mandate of improving livelihoods and social security for migrant
workers, Aajeevika Bureau works in a pocket of high out-migration in Rajasthan
in the western part of India. The initiative includes a comprehensive set of
services aimed at reducing hardships, enabling access and facilitating better
returns for vulnerable migrant groups. Unlike earlier development interventions
that tried to address rural deprivation and urban exclusion in isolation, this
initiative treats mobility as a given and works with migrant groups at both source
areas and destination areas. This section gives an overview of the core migration
services piloted at Aajeevika and dwells on the operational model adopted for
their delivery, while also discussing their impact.
Creating Migrant Facilitation Centers

The initiative is anchored by a network of walk-in resource centers for migrant
workers, namely, Shramik Sahayata evam Sandarbha Kendras. These centers
work as the operational nodes of the model, offering pre-departure counseling,
access to information and targeted services to workers. They were functional
at both ends of the migration corridor – the source and the destination. At the
source, the centers were based at the block level, while at the destination, they
were set up close to either the work sites or residence of the targeted migrant
community.
95
Support for migrant workers: The missing link in India’s development: Deshingkar, Khandelwal and
Farrington, 2008. www.odi.org.uk/resources/docs/3343.pdf

Migration Services and Solutions
Registration and Skill Training

Photo IDs to and Placement
Migrant Labor Services
Financial Services
(Credit/Savings/ Legal Aid and
Pension/Insurance) Counseling
Collectivization Destination
and Organization Services
Addressing concerns related to identity and establishing numbers

As a response to lack of documentation and valid identity proof, the centers
carry out the process of registration and issuing of photo IDs to workers. With
the help of a simple registration form, important demographic, migration and
work-related information are collected. Verification is done with the help of
the head of the panchayat and an identity card is issued to the workers. The
photo IDs were recognized by the Rajasthan Labor Department through a
government order. This simple yet powerful innovation resulted in securing
the identities of a mobile and vulnerable population. It had gone beyond a mere
proof of introduction and is serving as a gateway to banking services and in
getting SIM cards and gas connections at the destination.
There were several instances where it had helped workers avoid harassment
by the police and civic authorities. The card had also been used by workers
left out of the voter ID registration process at the source to vote in elections.
The most important contribution is the visibility that the card had brought to
seasonal migrants who otherwise remain invisible in the urban space. Till date,
the Bureau had registered more than 60,000 migrant workers. This initiative
had also helped the larger goal of creating a database of migrants at the block
level. Details provided by migrants were digitized with the help of registration
software and shared with the Rajasthan Labor Department on a quarterly basis,
thus, building strong evidence on inter-state labor mobility from southern
Rajasthan and impacting the policy agenda of the state.

Vocational skill training and placement services
These were aimed at helping rural youth upgrade their skill-sets and enter the
labor markets with greater competitive advantage. Given that the target group
is already in the labor market, focused short-term training courses have been
designed that provide rigorous inputs on both theoretical and practical aspects
of the trade. There is an emphasis on hands-on training where trainees spend
close to 60 percent of the training time on worksites. Imparting specialized
inputs in life-skills is a vital component of this program.
Sessions were conducted on improving communication, self-confidence, and

interaction with customers with the intention of improving employability
and retention of the youth in the labor market. Inputs were provided on
time and stress management, legal and financial literacy and on managing
both occupational and health risks. In addition to direct training, the centers
offer job counseling, short-term preparatory trainings, life skills training and
linkages to placement opportunities. Elaborate tools for testing person-job fit,
systematic evaluation and periodic follow-up mechanisms help ensure quality
and test the final impact of the training.
By Dec 2011, Aajeevika had trained 1,822 youth and provided placements
for 3,026 youth. The initiative to help the youth upgrade their skill-sets
and diversify to organized work settings, however, had been fraught with
challenges. In particular, taking this intervention to scale had been a test for
the Bureau. The manner in which present day labor markets are structured is
such that entry-level wages in the organized settings are lower when compared
with casual daily wage work. This becomes a serious deterrent to encouraging
rural youth to diversify to organized sector jobs. A bigger problem is that of
resources for skill development, especially for sectors such as construction.
While the state programs focus on skills on the higher end of the spectrum,
such as computer training and retail, the corporate sector absolves itself of
all responsibility – it needs skilled labor but is not ready to make required
investments in skill building.
Legal Support and Platform for Collective Action

The walk-in resource centers offer legal counseling, arbitration services and
legal literacy to workers. In case of a dispute, workers can approach the centers
to register their case and seek counsel or aid. This process of intermediation
is institutionalized through regular legal clinic days. Legal clinic days were
adaptations of the formal court mechanism, wherein disputing parties were
given an objective hearing and advice by a trained lawyer. The center plays
the role of an objective arbiter between the complainant and the offenders.

There is an emphasis on resolving disputes through intermediation and
negotiation, rather than litigation, which can be expensive and hugely time
consuming for workers to pursue. Only the more complex cases that were not
amenable to arbitration strategy were taken to the labor court. So far, Aajeevika
had resolved 550 disputes and facilitated compensation worth Rs 52 lakhs.
The overwhelming number of cases that reach the center, however, pertain to
wage payments and were limited mostly to male workers. Instances of disputes
being reported by women were less and the initiative to reach out to female
workers continues. Further, while elaborate mechanisms have been developed
for settling disputes in cases of short-distance movement, there is a need to
develop response mechanisms for long-distance migration. Nevertheless, the
success of the legal-aid service offered by the Bureau so far and the high rate of
calls to the Labor Line demonstrates that there is a great need to provide fast-
track dispute redressal forums to workers in the unorganized sector.
Aajeevika launched a phone-based helpline called Labor Line for workers in

Udaipur in August 2011. The helpline involves a dedicated phone line answered
by a trained counselor. It allows workers to reach out for counsel in case of
problems related to wages, retrenchment or abuse. Effort is being made to
create a wider support network which can respond in case of emergencies. In
a period of less than six months, Labor Line had received more than 600 calls,
350 of them being from a small destination city of Udaipur.
Financial Inclusion Services

The Aajeevika Bureau had promoted a specialized agency called Rajasthan
Shram Sarathi Association (RSSA), a Section 25 Company that offers targeted
financial services to migrant workers moving from southern Rajasthan. The
initiative had been quite successful in linking the migrant workers to a diverse
range of financial products such as micro-credit, insurance and pension.
Micro-loans offered by RSSA help migrants to prevent abrupt breaks in the
migration cycle and help women to manage volatility in cash flows through
informal savings instruments at the source areas. It is a decentralized model
that had the ability to cater to the various life-cycle needs of the clients. Under
its financial inclusion program, migrant workers were linked to bank accounts
at both source and destination – the major objectives being promotion of
savings and facilitating remittances. This service is much in demand, especially
at the destination, where the banks have started accepting ID cards issued by
the Bureau as a valid document to satisfy their Know Your Customer (KYC)
requirements. It deserves mention, however, that this acceptance is limited to
some banks and often depends on the sensitivity levels of branch managers.

Migrant workers were also linked to different social security provisions of the
state and insurance products available in the market. Lately, workers were
being linked to the Construction Welfare Board in both Rajasthan and Gujarat.
Access to essential services at the destination

In addition to the services mentioned above, facilitation centers at the
destination help migrants link up with health and banking services. Community
kitchens have been promoted in Ahmedabad in partnership with Hindustan
Petroleum Corporation Limited (HPCL), where workers have access to
subsidized Liquefied Petroleum Gas (LPG) at the rate of Rs 6 per hour. Regular
advocacy events were organized and there were efforts to create a healthy
interface between civic authorities, police and migrant worker communities.
An important strategy in service delivery in cities is formation of trade-based
collectives.
At the destination, migrant workers live in groups that were dispersed through
the expanse of the city. This greatly constrains their chances of coming together
or exercising collective bargaining power. The trade-based collectives promoted
by the Bureau serve as unique platforms for the workers to come together,
find solutions to their common problems and negotiate with the government
for their rights. Regular inputs on leadership building and technical skills
were imparted to the collective members. Many collectives have organized
public hearings to protest against human rights violations such as atrocities
committed against migrant workers and to advocate for access to amenities
at the labor congregation points. These collectives also serve as vehicles for
service delivery on food, health and banking.
Strengthening support systems for migrant families at source

A range of family support and empowerment programs were carried out in
the source areas. These programs, while addressing specific vulnerabilities
faced by migrant HHs, play a crucial role in helping migrants complete their
migration cycle successfully. There were special initiatives for enabling
the access of women to public welfare schemes, promoting food security
and agricultural outcomes, and linking families to specialized healthcare
services.
Under the leadership of change agents from the community, women from
migrant HHs were mobilized into common-interest groups that serve as
platforms to facilitate negotiation in public space and enable mutual support.
Through these programs, families have also come to benefit from better access
to work entitlements and social security schemes.

A strong emphasis on individual and group education directly empowers
women to equally gain from the benefits and thrive despite the challenges
of male migration. The family support programs were carried out in close
partnership with panchayat representatives. One of the early outcomes of
these interventions was the authorization by the Rajasthan Labor Department
of the photo ID issued by Aajeevika.
This was the first ever example of a state government’s acknowledgment of

the high incidence of labor migration and its decision to take a concrete step
towards better documentation and management of the phenomenon. Advocacy
efforts by the Bureau have also led to inclusion of Rajasthan migrants in the
Construction Worker Welfare Board of Gujarat. The Bureau had also been an
active participant in the Rajasthan Construction Worker Welfare Board for the
design and delivery of welfare programs.
4.4.3.2 Social Protection of Migrants by Enabling Portability of Entitlements

As a measure to address food security concerns, efforts have been made by
civil society organizations to help migrants access subsidized rations through
temporary ration cards in cities. The Government Resolution (GR) passed by
the Maharashtra government on 9th November 2000 to ensure portability of
ration cards, acknowledges the vulnerabilities of migrant communities and
the problems they face in obtaining and producing documentary proof of
their identity and residence. Certain relaxations were proposed under the GR
that would enable migrants to access subsidized grain and fuel in destination
cities.
Ration Kruti Samiti, a network of civil society organizations in Maharashtra,

working with the urban poor was instrumental in the passing of the GR. The
network had reached out to both inter- and intra-state migrants, who constitute
the majority of the urban poor population. Disha, a pioneer organization
working on migration in Nashik, used this GR to help seasonal migrants in
Nashik get temporary ration cards for a period of four months (extendable to 12
months) with relaxed documentary requirements. As per the existing practice,
a migrant is required to cancel his card on departure so that his/her ration
entitlement at the origin can be renewed.
4.4.3.3 Labornet
As an effort to mainstream unorganized workers and link them gainfully with
the urban labor market, organizations such as Labornet, Bangalore, set up
elaborate systems for member registration, certified training and placement.
This is an example of the market-led approach.

The registration process aims to formalize the identity of informal sector
workers across trades and occupations. A social enterprise, Labornet had both
a profit and non-profit component in its work as it actively provides an interface
between workers and employers.
This interface, a charged service for employers, offers them a centralized

and convenient access to trusted, certified workers. To the workers, it offers
regular access to jobs with social security safeguards and skill upgradation
opportunities through a mix of technology and an apprenticeship system. The
organization had so far developed a database of 45,000 workers and offers
wide-ranging services on financial inclusion, linkage with social security and
welfare schemes to unorganized sector workers.
4.4.3.4 Organizing Migrant Unions to Assert their Rights

(Unionization model)
The Maharashtra Sugarcane Cutting and Transport Workers Union (MSCTWU)
is a trade union of the sugar field workers of Maharashtra and is affiliated to the
Center of Indian Trade Unions. In October 2002, lakhs of cane cutting workers
stayed away from work to protest against the organized attempts to mechanize
cutting of sugarcane in the state and fearing permanent loss of income in future
because of the use of harvesters. The article below shows the condition of the
migrant sugarcane cutters.
Box 9: An Illustration of a Migrant Sugarcane Cutter
Maharashtra’s Crushed Labor

Bleary-eyed, Shivaji Randale wakes up in the biting cold at 3 a.m. and makes
his way, along with his toli (group of around 10 workers), to the sugarcane
fields in Baramati in Maharashtra’s Pune district. He had been able to snatch
only two hours of sleep. But sleep does not matter when there is a loan to be
worked off. By afternoon, he loads his bullock cart with the cane his family had
cut, and leaves for the crushing factory. There, he waits in queue until late at
night. For some others, the wait could last till the next day. Yet, after laboring
round-the-clock, Shivaji may not be able to work off the advance he had taken
from the contractor.
Before leaving their village in Beed district, around 200 km away, his family
was given Rs 20,000 by the contractor, which is set off against the quantity
of sugarcane they cut. Like most migrant workers who travel from the dry

Marathwada region to western Maharashtra’s sugarcane belt in search of work,
Shivaji may return to his village with a debt to repay. ‘‘If, at the end of the
season, we have not cut enough cane to set off the advance given to us, we have
to pay back the rest of the money. The rate of interest on this loan is 60 percent
a year’’, he says. (Workers from Nandurbar and Dhule in northern Marathwada
travel to Gujarat’s sugar factories. Similarly, many workers from Karnataka
cross the border into Kolhapur’s sugar fields.) The sugar mills have made it
even more difficult for the migrant workers to shake off their bondage. Ever
since 2001, when the sugar cooperatives began using imported cane harvesting
machines, not only have the number of the workers reduced, but their working
days have also dwindled.
“This season, we’ve got work for only 20 days in a month. How were we
supposed to pay back the contractor? We’ve travelled this far to work - not
to sit here, twiddling our thumbs”, says Shivaji, who cuts cane for the Shri
Chattrapati factory in Nationalist Congress Party (NCP) leader Sharad
Pawar’s parliamentary constituency, Baramati. This factory and the Malegaon
cooperative in the same region, were among the first to use the cane harvesting
machines. So far, 12 cooperative factories have decided to purchase altogether
25 cane cutting machines.
Political bosses, who effectively control Maharashtra’s cooperative sugar

factory syndicate, have taken a special interest in importing the machines,
each costing around Rs 1.2 crore, from Germany and Australia. They have
even urged the Central government to waive the 32 percent import duty on
the machines. Maharashtra’s sugar barons, many of whom were Congress (I)
or NCP ministers, have built their fortunes on the labor of more than a million
migrant workers. But now, the sugar lobby is gradually replacing the laborers
with these harvesting machines, each of which can deprive 300 to 400 workers
of their source of livelihood, thereby pushing them deeper into debt. (Each
machine can cut 300 to 400 tons a day.)
Also, workers transporting cane to the factory on bullock carts have to wait, for
up to 36 hours, as priority is given to sugar cane cut by machines. When the
machines were first introduced at the Shri Chattrapati factory in January 2001,
some workers, frustrated with the long delay, held an agitation spontaneously at
the factory. Several of them were arrested and work in the factory was disrupted.
This was not the first time that the laborers had fought back. Several strikes
demanding better pay and working conditions have been squelched by the
powerful sugar magnates. Conditions of work have not improved for decades.

Every year after celebrating Deepavali, groups of workers leave their villages
knowing that they may not find work. The migrants, with their cattle
and meagre belongings, were herded into trucks and taken from the arid
Marathwada region to the lush sugarcane belt. Inhabitants of entire villages
were transported. They included barbers, shopkeepers and cobblers; only the
elderly and a few children, whose parents preferred to keep them at school,
were left behind. But the education of most children is disrupted. “Which
school is going to take them? They spend six months here and the rest in the
village. Even our children don’t have a way out of this kind of work”, says
Sultana Hanif from Parbhani, whose three daughters were with her. There were
only 30 schools for migrant children around the State’s 198 sugar factories.
The workers were of two types - the ones who use bullock carts and the ones
who use tractors to move from village to village to transport the cane. For both
categories, the working hours blur from one day to the next. Workers using
bullock carts often wait until dawn outside the factory in miserable conditions.
“Look at the state of this yard. We have to sit amidst cow dung all night. They
don’t even clean the place or provide basic facilities like water, a shed or even
proper pathways for the bullocks”, says Ganpati Shankar Kumbar, a worker
from Karnataka who had come to Kagal in Kolhapur.
The tractor-borne workers were hauled up at any time of the night to load the
tractor. Bonfires were the only source of light and warmth as they work at night.
For these workers, there is barely any shelter. Those with bullocks build straw
huts on the outskirts of villages. The tractor-borne workers pitch tents, which
they shift every two or three weeks, as they move to another village. Some have
no place to live. Like Ganpati Kumbar, who snatches a nap under his bullock
cart, while waiting in queue. “What hut? This is my home”, he says, pointing
to his cart. What makes them leave their homes to endure these harsh working
conditions? Why do they come here, uprooting their families and disrupting
their children’s education? “There’s no water in our fields. If the government
irrigated our land, we wouldn’t have to come here”, says Janabai Marade from
Beed, whose family owns 12 acres (4.86 hectares) of land.
“During a good monsoon we can grow some jowar or groundnut. After

that, there is nothing. Barely a few days of agricultural work, which pays a
pittance of Rs 20 a day for women”, she says. The farming crisis had made
agriculture unviable for several farmers like her. Agricultural growth (in terms
of production and income) decelerated in the 1990s. Investment in rural
infrastructure, including in irrigation, had dropped.

The removal of subsidies had increased input prices, while produce prices have
fallen in the wake of liberalization. Farmers’ profitability had taken a tumble,
sharpening indebtedness.
Trapped in a cycle of loans, workers keep coming back to the sugar factories
every year. The need for a lump sum advance for consumption expenditure, to
get their children married or pay medical bills, makes the workers approach
the contractor. Families repay in labor by cutting between one and two tons of
cane a day, at the rate of Rs 100 to Rs 115 a ton for bullock cart-borne workers
and Rs 65 a ton for tractor-borne workers. The bullock cart-borne workers were
paid advances between Rs 15,000 and Rs 25,000 a family, while the tractor-
borne workers’ families were given up to Rs 15,000.
Uttam Siserao, a landless laborer from Parbhani, is working for free this
season. While waiting for work in a shed outside the Dutta sugar cooperative
factory in Kolhapur for the third day, he explains, “My wife was ill last year,
and could not work. We had taken Rs 10,000 from the contractor. I worked
off Rs 5,000 and the other half was due. After that she passed away. This
year I am repaying the advance she had taken.” Most workers use up the pay
advanced in the village itself, and then buy their daily food requirements by
selling the sugarcane leaves as cattle fodder for Rs 20 to Rs 25 a bundle. “We
leave home with nothing and return home empty-handed. When we return to
the village, it’s back to borrowing and agricultural work,” says Sarubai Auchar,
who had also migrated from Parbhani. It is not surprising that these migrants
work under the most insecure conditions with minimal legal protection. Their
employers also run the government. Moreover, since workers were scattered in
different places, they do not constitute a strong vote bank. “Sugar is the most
organized industry, but this sector had the most unorganized workers,” says
Kumar Shiralkar, leader of the Sugarcane Transporters and Workers Union.
Although the factory pays their advances through the contractor, it refuses to
acknowledge them as workers. “They should be given the same benefits and
status as those working inside the sugar factory,” says Shiralkar. No labor laws
were implemented to protect their rights. Considering the distinctive nature
of their work, the union is demanding the setting up of a mathadi board
with which every worker can register and which will regulate their working
conditions. However, the sugar syndicate seems to be against this idea. ‘‘Since
our factories work for only six months in a year, we would like to keep a
contractual relationship with the workers. Anyway, the whole labor issue will
die in the course of time as harvesting machines come in.’’

If all the factories buy the machines, we will save up to Rs 691 million every
year - Rs 12 a ton of cane”, says Prakash Naiknavare, Managing Director of
the Maharashtra Cooperative Sugar Factories Federation. At present, the sugar
cartel revises the wages every three years.
Although India is the world’s largest producer of sugar and the industry
is growing at the rate of 8.5 percent a year, the industry neither provides
its workers with basic facilities nor shares profits with them. The 192 sugar
cooperatives provided the platform on which many Congress and NCP
Ministers could build their fiefdoms. The Bharatiya Janata Party is also now
apparently trying to get into the act by indirectly sponsoring the setting up of
private sugar factories.
Local farmers and economies in western Maharashtra benefited from the

infrastructure development that accompanied the establishment of factories.
For instance, although sugarcane constitutes only three percent of the total
area under cultivation in the State, the water-intensive crop corners 60 percent
of the State’s irrigation supply. The Marathwada districts, from where the
workers migrate, have an irrigation cover as low as six percent. On the whole,
Maharashtra had a low irrigation cover of 15 percent, way below the national
average of 38 percent. But irrigation facilities for sugarcane were abundant.
Patronage politics and vote banks have developed in the sugarcane belt. But
the migrants themselves do not constitute a vote bank. So it is convenient to
keep them tied to the contractors, generation after generation. “Politicians have
risen by climbing on the backs of these bonded workers,” says Shiralkar.
Krishna Pawar, a worker who had migrated within Kolhapur district, puts it
eloquently: “We cut the cane, but we do not get to taste sugar, not even a pinch.”
‘Maharashtra’s Crushed Labor’: Dionne Bunsha. Frontline, Vol. 19: No.

03, February 02 - 15, 2002. Accessible at: http://www.frontline.in/
navigation/?type=static&page=flonnet&rdurl=fl1903/19031020.htm
In another example of the Unionization Model, in Rajasthan, Prayas

Center for Labor Research and Action has been a leading agency, working by
unionizing vulnerable migrant streams. It focuses on specific migrant groups,
such as those working in the cotton ginning, brick-kiln and construction
sectors. The model rests on extensive mobilization of workers to help them
assert their rights collectively and promotion of their unions as platforms to
negotiate with employers, contractors and the government.

They have used the media extensively for creating public sensitivity around
problems faced by the highly vulnerable migrant populations.
This initiative had met with substantial success through checking of child labor
trafficking to Bt cotton seed farms in northern Gujarat and collectivization of
intermediary labor agents through whom an increase of 40–50 percent in local
wages was achieved. Similarly, efforts of the union promoted by Prayas in the
brick-kiln sector have led to substantial wage increase for workers. Prayas’s
work with child migrants had triggered a response both from the sending and
receiving State Governments from Rajasthan and Gujarat, through the creation
of a special task force and an increased fund allocation for education.

5. The Political Economy of Livelihoods
in India
The political economy of livelihoods has perhaps been the most underexplained
yet critical aspect that people/organizations engaged in promoting livelihoods
should understand and integrate into the livelihood interventions of the poor.
“Political economy was the original term used for studying production,
buying and selling, and their relations with law, custom, and government,
as well as with the distribution of national income and wealth. Political
economy originated in moral philosophy. It was developed in the 18th
century as the study of the economies of states, or polities, hence the
term political economy”.96
Another definition of political economy was, “the study and use of how
economic theory and methods influence political ideology. Political economy
was the interplay between economics, law and politics, and how institutions
develop in different social and economic systems, such as capitalism, socialism
and communism. Political economy analyzes how public policy was created and
implemented”.97
For the purposes of this Resource Book, we define political economy as “the
pattern of control over resources, the reasons thereof and the dynamics of
change in the pattern over time”. Resources – land, water, forests, and capital
are not evenly distributed. Some persons control significant parts of these scarce
resources and by that token, acquire power over those who do not have these but
need them, to make a living. The control over resources may be customary, as in
the case of all land in the village being owned by hereditary chiefs in Meghalaya,
or may be law-based as ‘forest land’ belonging to Forest Department is, or may
be illegally acquired, as in the case of urban land controlled by a slumlord.
To the extent livelihoods have been examined from the point of view of political
economy, the focus had largely been on land as a resource which was unequally
distributed.
96
http://en.wikipedia.org/wiki/Political_economy
97
http://www.investopedia.com/terms/p/political-economy.asp

Thus, agrarian relations and the problems of farmers, tenants and landless
agricultural laborers, have been viewed through this lens. But there are a large
number of others, such as tribals, pastoralists, and forest produce gatherers,
whose livelihoods are threatened and yet it takes a lot for this to come into the
‘political’ view. To actually understand the situation, it is necessary to look at the
ground situation pertaining to the key resource bases of livelihoods, namely land,
water, forests and capital. We examine them one by one.
5.1 Land
Land is the major basis of livelihoods for cultivators, landless laborers, livestock
rearers and forest dwellers, in rural areas and for industry and habitation-based
services in urban areas. India has a total land mass of 320 million ha and of
this, data for 305. 6 mn ha was reported in 2009-10.98 In that year, 140 mn ha
Table 27: Population and Agricultural Workers (1951-2011) (in millions)
Year Total Average Annual Rural Agricultural Workers

Population Exponential Population Cultivators Agricultural Total
Growth Rate (%) Laborers
1 2 3 4 5 6 7
1951 361.1 1.25 298.6 69.9 27.3 97.2
(82.7) (71.9) (28.1)
1961 439.2 1.96 360.3 99.6 31.5 131.1
(82.0) (76.0) (24.0)
1971 548.2 2.22 439.0 78.2 47.5 125.7
(80.1) (62.2) (37.8)
1981 683.3 2.2 523.9 92.5 55.5 148
(76.7) (62.5) (37.5)
1991 846.4 2.14 628.9 110.7 74.6 185.3
(74.3) (59.7) (40.3)
2001 1028.7 1.95 742.6 127.3 106.8 234.1
(72.2) (54.4) (45.6)
2011* 1210.2 1.64 833.1 na na na
(68.8)
Figures within parentheses in column 4 are percentages to the total population.
Figures within parentheses in columns 5 and 6 are percentages to column 7.
Source: Agricultural Statistics at a Glance, 201299
98
http://data.gov.in/dataset/pattern-land-utilization
99
Agricultural Statistics at a Glance, 2012. Govt. of India. Ministry of Agriculture. Directorate of
Economics and Statistics.
The Political Economy of Livelihoods in India 125

was cultivated, 15.7 mn ha was currently fallow; 70 mn ha was under the Forest
Department (though not all of it forest covered); 10.1 mn ha was permanent
pastures and grazing land; 3.3 mn ha was under tree crops; 12.8 mn ha was
cultivable waste; and 42.9 mn ha was barren and uncultivable land or under
urban and industrial uses. According to data from the Ministry of Environment
and Forests, nearly 47 percent of India’s land is used for agriculture, followed by
22.6 percent as forested and 13.6 percent as non-cultivable (roughly 41 million
ha). The Central Statistical Organization (CSO) data also puts the percentage
distribution of the country’s total land area at nearly the same (46.3% net sown
area, 22.2% forests, 13.3% uncultivable; 3.3% as permanent pastures and other
grazing land, 1.2% under tree crops included in net sown area, 5.1% cultivable
wasteland and 8.2% fallow-land).
According to the India Rural Development Report of 1992, nearly half of the
country’s rural population was absolutely or near landless. Landlessness has
been steadily rising among the SC and ST. According to NSSO data (2003-04),
about 41.63 percent of HHs do not own land other than their homesteads. The
data also shows that while one third of the HHs are landless, those near to
landlessness add up to one third more. The next 20 percent hold less than one
hectare.
In other words, 60 percent of the country’s population has right over only
five percent of country’s land; whereas 10 percent of the population has control
over 55 percent of the land.100
Table 28: Distribution of Ownership Holdings of Land, India

Category Households (%) Area Owned (%)
Landless 31.12 0
Less than 0.4 ha 29.82 5.11
0.4-1 ha 18.97 16.89
1 -2 ha 10.68 20.47
2-3 ha 4.22 13.94
3-5 ha 3.06 16.59
5-10 ha 1.6 15.21
More than 10 ha 0.52 11.77
Source: (NSSO 2003-04)
100
Draft National Land Reforms Policy, 24th July, 2013, Department of Land Resources, Ministry of
Rural Development, Government of India. Accessible at: http://dolr.nic.in/dolr/downloads/pdfs/
Draft_National_Land_Reforms_Policy_July_2013.pdf

The situation gets worse as we socially disaggregate the land-ownership
pattern. As Table 29 below shows, between 1980 and 2000 for STs and STs in
Odisha,101 a process of dispossession drove a larger number into the landless
category.
Table 29: Decadal Change in Landholding among Scheduled Tribes and

Scheduled Castes (1980-2000)
Type of holding Scheduled Tribe Scheduled Caste

Increase Decrease Increase Decrease
(%) (%) (%) (%)
Marginal 64 - 95.55 -
Small 40 - 38 -
Semi-medium - 10.25 - 0.6
Medium - 37.22 - 28.42
Large - 55.25 - 71
Source: Analysis Table 12, Report on Agriculture Census 1981, 1985/Agriculture Census
Commissioner, Board of Revenue, Cuttack, Odisha
The stark implication of landlessness can be inferred from Table 30.112 About
half of the landless reported going hungry some days of the year (1993-94) and
the proportion was one-third for those with less than half a hectare of land. Of
course, numerous State and Central food security and employment guarantee
programs have since then corrected the hunger situation to a large extent,
but it still does not address the question of livelihoods on a sustainable basis,
particularly for the next generation, as they would suffer the effects of mal-
nutrition and most likely would also be educationally disadvantaged. Another
important aspect of social development— health and nutrition—has, despite
its importance, received very low public spending and attention. Child and
maternal mortality rates in rural areas are high and the alarming malnutrition
levels have shown little improvement. There is also large social stratification,
with STs and SCs having much higher rates of malnourishment, child mortality,
and lower healthcare access.103
101
Status Report: Land Rights and Ownership: Orissa, 2008. UNDP, New Delhi. Accessible at
http://www.undp.org/content/dam/india/docs/land_rights_ownership_in_orissa.pdf
102
Status Report: Land Rights and Ownership: Orissa, 2008. UNDP, New Delhi. Accessible at
http://www.undp.org/content/dam/india/docs/land_rights_ownership_in_orissa.pdf
103
India Rural Development Report 2012-13, IDFC Rural Development Network, (IDFC Foundation,
IRMA, CESS, IGIDR)

Table 30: Hunger and Poverty by Farm Size in Rural India
Land Class % of population

Hungry Poor
Land less 49 54
<0.5 hectares 32 38
0.5-1 hectares 24 27
>4 hectares 12 13
Source: IARI FAD/RAP study based on 50th NSS Round (1993-94)
To bring home the consequence of landlessness, we cite just one case study.
Box 10: Consequences of Landlessness
Grazing Land Dispute Turns Violent, 15 Hurt104
AURANGABAD: The long-standing dispute between villagers of Sindhi

Sirajgaon on Aurangabad-Mumbai highway and the Pardhi community settlers
over the possession of grazing land turned violent on Sunday night. Eight
people arrested on early Monday, for assaulting and setting the huts inhabited
by the Pardhi community on fire on Sunday, were sent to police custody till
Thursday. The village is around 18 km from Aurangabad.
At least 15 people of the Pardhi community including women and children were
injured in the assault. One of them identified as Sunil Rajat Kale (30) sustained
serious injuries and is struggling for life, the police said. The Pardhi community
and the villagers have had a long-standing dispute over gairan land (grazing
ground owned by the Government). The area is spread over 110 acres of which
60 acres fall under the jurisdiction of Sindhi Sirajgaon, while the remaining 50
acres fall in adjoining Fatulabad. The Pardhi community has been visiting and
staying on a portion of the 60 acres of grazing land for generations, said police
sources. The State Government had regularized 29 acres of the grazing land,
following which the community began to occupy it for grazing. During their
absence, some villagers who had been eyeing the land, tried to illegally take
possession of the land.
104
http://articles.timesofindia.indiatimes.com/2012-12-11/aurangabad/35750365_1_police-custody-
villagers-huts

There are, of course, thousands of such cases of dispossession of the weak
by the strong, irrespective of customary or conferred rights to use of land.
Indeed, only in states or regions, where the marginal and small farmers and
the landless became militant and took to violence, has this tendency been
curbed to a large extent, as in the Telangana region of Andhra Pradesh, the
Marathwada region of Maharashtra and the central districts of Bihar, like
Gaya. In Kerala and West Bengal, the elected Communist governments took
steps to recognize the rights of tenants. ‘Operation Barga’105 was carried out
between 1978 and 1980 in West Bengal to recognize the rights of ‘bargadars’
or tenants and benefited millions.
Unrecorded tenancies, in particular, leave tenant farmers exposed to eviction

and without institutional support such as credit or subsidies. To date, the
process of land acquisition based on the 1894 Land Acquisition Act, has been
fraught with difficulties, with many HHs losing access to lands and livelihoods
as a result of poor compensation and inadequate resettlement.
The new Right to Fair Compensation and Transparency in Land Acquisition,

Rehabilitation and Resettlement Act is also trying to redress the power
imbalance by providing the displaced with better compensation and, in
addition, resettlement and reallowance in the form of land-for-land, housing
and employment or annuity payments. The Act also provides for those who may
not own the acquired land but depend on it for their livelihoods. This is indeed
a ‘land’mark Act!106
5.2 Water
After land, water is the next important resource affecting livelihoods. Since
in India, the main use of water is for agriculture which is tied up with land
issues, we will not discuss the numerous conflicts related to irrigation water.107
Instead, we will focus on other livelihood uses for water, such as fisheries,
and also the conflict between water for traditional livelihoods (agriculture,
livestock-rearing and fisheries) and the demands of the modern sectors –
industrial and urban use.
105
Bandyopadhyaya, Nripen (1981). ‘Operation Barga’ and Land Reforms Perspective in West Bengal: A
Discursive Review. Economic and Political Weekly. Vol. 16, No. 25/26 (Jun. 20-27, 1981)
106
Excerpt from India Rural Development Report (ibid)
107
For an excellent overview on this, visit www.waterconflictforum.org

Box 11: Draft National Water Policy (2012)108
India has more than 17 percent of the world’s population, but has only
four percent of the world’s renewable water resources with 2.6 percent of the
world’s land area. There are further limits on utilizable quantities of water
owing to uneven distribution over time and space. Public policies on water
resources need to be governed by certain basic principles, so that there is
some commonality in approaches in dealing with planning, development and
management of water resources. These basic principles are:
(i) Planning, development and management of water resources need to

be governed by a common integrated perspective considering local,
regional, state and national context, having an environmentally sound
basis, keeping in view human, social and economic needs.
(ii) Principle of equity and social justice must inform use and allocation of
water.
(iii) Good governance through transparent informed decision making is
crucial to the objectives of equity, social justice and sustainability.
Meaningful intensive participation, transparency and accountability
should guide decision making and regulation of water resources.
(iv) Water needs to be managed as a common pool community resource held
by the state, under public trust doctrine to achieve food security, support
livelihood and ensure equitable and sustainable development for all.
(v) Water is essential for sustenance of the ecosystem, and therefore,
minimum ecological needs should be given due consideration.
(vi) Water, after meeting the pre-emptive needs for safe drinking water,
sanitation and high priority allocation for other domestic needs
(including needs of animals), achieving food security, supporting
sustenance agriculture and minimum eco-system needs may be treated
as economic good so as to promote its conservation and efficient use.
(vii) All the elements of the water cycle, i.e., evapo-transpiration,
precipitation, runoff, river, lakes, soil moisture, and ground water, sea,
etc., are interdependent and the basic hydrological unit is the river
basin, which should be considered as the basic hydrological unit for
planning.
108
Draft National Water Policy (2012), Ministry of Water Resources, Government of India. Accessible at
http://mowr.gov.in/writereaddata/linkimages/DraftNWP2012_English9353289094.pdf

(viii) Given the limits on enhancing the availability of utilizable water resources
and increased variability in supplies due to climate change, meeting the
future needs will depend more on demand management, and hence, this
needs to be given priority, especially through (a) evolving an agricultural
system which economizes on water use and maximizes value from water,
and (b) bringing in maximum efficiency in use of water and avoiding
wastages.
(ix) Water quality and quantity are interlinked and need to be managed in an
integrated manner, consistent with broader environmental management
approaches inter-alia including the use of economic incentives and
penalties to reduce pollution and wastage.
(x) The impact of climate change on water resources availability must
be factored into water management related decisions. Water using
activities need to be regulated keeping in mind the local geo climatic and
hydrological situation.
5.2.1 Fishery as a Livelihood

Table 31: Fishery as a Livelihood Option
Fishermen population (as per Livestock Census, 2003)

a) Number of family members
Total 14,485,354
Males 4,696,158
Females 4,033,963
Children 5,755,233
b) Engaged in fishing operations
Full time 933,124
Part time 1,072,079
c) Engaged in fishing related activities other than actual fishing
Marketing of fish 391,000
Repair of fishing nets 245,100
Processing of fish 46,200
Other activities 334,700

As can be seen from Table 31,109 in 2003, around three million people were
engaged in fishery related livelihoods: fishing, processing, marketing and
support services. In 2003, around 14.5 million people (including family
members), were dependent on this livelihood. The case study below illustrates
how the elegantly articulated precepts of the National Water Policy actually
plays out. These include the ‘need for safe drinking water, sanitation and high
priority allocation for other domestic needs (including needs of animals),
achieving food security, supporting sustenance agriculture and minimum eco-
system needs’, (principle vi).
Box 12: Water Conflict: Case of Kolleru Lake
Conflict between traditional and ‘modern’ livelihoods: Kolleru Lake,

Andhra Pradesh110
Kolleru, one of Asia’s largest fresh water lakes, is located in Andhra Pradesh and is
a famous habitat for a number of resident and migratory birds. Situated between
the Godavari and the Krishna river basins, it is an invaluable wetland ecosystem.
The lake spans 90 to 100 ha and the water shrinks or expands depending on the
rains; many rivulets drain into the Kolleru and surplus waters runs off into the
Bay of Bengal. Abutting the lake, there are about 75 villages spread over nine
mandals in Krishna and West Godavari districts with a population of 3.5 lakh
as per 1991 Census. Twenty-five years ago, the water surface of the lake was 918
sq km. At the Ramsar Convention held in Spain in November 2002, Kolleru was
designated one of the 11 new Indian wetlands of international importance.
Rich in aquatic life, Kolleru has for a long time, provided a habitat where
there is a harmonious coexistence of birds, people and life-supporting water.
The resources of the lake – many rivulets such as Tammileru, Ramileru and
Budameru – that brought in the floodwaters necessary to sustain it were being
used by the local communities for fishing, agriculture, catching birds and so
on. Records of fishing licences exist since 1956. People from Odisha and other
nearby places used to migrate to the region to make a living. The government
had assigned lands in the lake area to scheduled and backward castes (SCs and
BCs respectively); while the BCs, who are mostly fishermen converted their
lands to fish tanks, the SCs used their lands for agriculture.
109
Handbook of Fisheries Statistics, 2008, Department of Animal Husbandry, Dairying and Fisheries,
Ministry of Agriculture, Government Of India, New Delhi
110
J Rama Rao, Jasveen Jairath, P Umesh, Pollution through Aqua Culture: Kolleru Wildlife Sanctuary,
Economic and Political Weekly February 18, 2006

There are various small islands in the lake that were inhabited by fisher folk
from lower castes. The fishermen would fish during the rains and take up
seasonal cultivation of paddy on the land vacated by receding waters around
the islands and the edge of the lake during the winter and the summer seasons.
During the late 1970s, under the chief ministership of J. Vengal Rao, the
fishermen were encouraged to form registered cooperative societies and loans
were sanctioned to members for seasonal cultivation of one ha dry land per
family. There were repeated floods and the banks and government encouraged
them to convert agricultural land into fishponds and tanks. The beneficiaries
were to practice collective cultivation and their remuneration was in proportion
to their share. At this point, the better-off sections of the community entered
the scene and took the land or water area on lease from the society members
for periods ranging up to five years.
This continues till date. It means that the land is actually in the name of the
poor ‘beneficiaries’ – but is in fact used by the well- off sections of society while
the real fishermen work for a salary of Rs 20 a day for women and Rs 40 for
men. Ironically, those legally entitled to the benefit have been reduced to wage
earners on their own land and water. The rich have not only taken over all the
cooperative societies but have also started illegal encroachments. Till 1990,
this influential class, also comprising political leaders and policy-makers who
successfully did away with the real beneficiaries, were only involved in fishing
– an activity that requires sweet water.
Aqua Boom, Induced Death

The fishermen, who were dependent on traditional fish capture until the lands
were assigned, were encouraged by the government to go in for aquaculture.
Some rich enterprising farmers, taking advantage of the government policy,
reaped rich harvests through the scheme and their success and prosperity in the
1990s encouraged the outsiders to invest in fish tanks leading to an aquaculture
boom and overexploitation of the lake. From 1992-93, aquaculture has been
practiced in a big way. The problem is, it needs saline water to flourish and
borewells have been sunk in the lake bed to pump out saline water for the aqua
ponds; the lake bed level has sunk, the tides bring in more and more saline
water into the lake since the banks have also sunk. Prawn seed is cultivated
for one month in small ponds and then transferred to larger ponds with saline
water. Both fish and prawn cultivation require use of chemical fertilizers,
farmyard manure, chicken waste, etc. Once the harvest is over, this water
stagnates and pollutes the surrounding water.

Unscientific and illegal aquaculture coupled with agricultural runoff from the
area that also contains chemical residue, untreated water from neighboring
industries and domestic sewage from areas like Vuyyuru, Hanuman Junction,
Gudivada, Eluru, and Tadepalli Gudem, etc., flow into the lake and contribute
to its pollution. At present, aquaculture is carried out in over 80,000 ha
producing more than seven lakh tons of products with an annual turnover of
Rs 4,000 crore.
When Water Is Poison

The degradation of the Kolleru has many implications for the weaker sections
of the community. It is ironic that the main problem is to do with dearth
of drinking water in the neighborhood of the largest fresh water lake in the
country! It has been found that:
(a) The government does not supply drinking water to the island villages and
no investments have been undertaken to rectify this situation. The few
taps that exist supply polluted water. Till almost 15 years ago the villagers
used to drink only lake water and now they walk three to six kilometers to
get water for domestic use. Many buy sachets of water – a thriving local
industry – but there are no quality checks; there is no expiry date on the
packets and no treatment of water before packaging. But the illiterate
villagers have no idea about the risk they incur and suffer from various
water-related diseases such as diarrhea, typhoid, amoebiasis, etc.
(b) During the last two years, prawn and fish became prone to diseases and
some farms have been abandoned. These lands are useless for agriculture
as well since the soil and water have been contaminated.
(c) Young men from the area have migrated elsewhere in search of jobs while
old people have taken to begging. This when ‘prawn dons’ earn up to Rs
22.5 lakh per ha in four months.
According a World Bank report,111 the total fish production in India was about
7.6 million tons, of which 61 percent was from inland fisheries and the rest was
from marine sources. The situation of livelihoods in the marine fishery sector is
no different. As ‘modernization’ has brought in the need to induct more and more
capital, the traditional fishermen are reduced to mere wage laborers, eking out
a more and more uncertain living as can be seen from the excerpts of the report:
111
India Marine Fisheries: Issues, Opportunities and Transitions for Sustainable Development. August
2010, Agriculture and Rural Development Sector Unit South Asia Region, The World Bank. Report
No. 54259-IN. Accessible at https://openknowledge.worldbank.org/bitstream/handle/10986/3002/
542590ESW0whit0ries0Report00PUBLIC0.pdf?sequence=1

Box 13: The Lives and Livelihoods of Marine Fishermen
The current condition of marine fishing is affecting fisher folk in the form of
declining catches, reduced incomes, and increasing conflicts. This is particularly
true for smaller boat owners and their crew who are unable to protect access to
their resources effectively, or shift to newer and more distant fishing waters in
the Indian EEZ. The rapid growth of the mechanized trawler fleet, often buoyed
by the benefit of public subsidies, has increased competition for those fishing
with smaller inshore vessels. Trawlers now account for an estimated 20 percent
of the fishing labor force but haul in 60 percent of the catch.
These issues appear to trap the poor inshore fisher folk and processors into a
cycle of perpetual low profits and debt. Rising world fuel prices (until recently)
put even more pressure on the viability of motorized vessels and increased
calls for further subsidies from the government. Small-scale fisher folk have
few points of entry into the broader state or national policy debate on marine
fisheries, nor do they have easy access to programs that could sustain their
livelihoods both from fishing and non-fishing sources. Education levels tend
to be low, making it difficult for fisher folk to take advantage of alternative
employment opportunities in the expanding national economy. Fishing
communities are characterized by high levels of illiteracy, and only six percent
of the fisher folk have education above secondary level. There is poor access to
piped water and efficient sanitation services.
Since fishing (as well as processing and trade) are labor intensive, age is an
important criterion for carrying out the activity. Factors such as hard working
conditions, poor living conditions, early marriages and child birth, alienation,
lack of insurance and healthcare, force these people out of productive work
at a relatively early age (about 50 years). The absence of old age insurance
and pension adds to their problems. On the other hand, poverty and the fact
that the resource can be openly and easily accessed forces children to take
to fishing at a very early age, reducing opportunities for education and/or
diversification.
In general, all laborers without assets, working in motorized and non-motorized

sectors (constituting about 60 percent of the producer’s workforce as fishing
crew) are poor. The boat owners, by virtue of their assets are relatively better
off, but face more risks than their workers. The crew can always move on to
another activity (where these exist) or a different boat, which the boat owners
cannot do so easily.

There is a heavy dependence on the informal money market for almost all
stakeholders in the fisheries sector, except the large boat owners and traders
who often double as money lenders to other stakeholders further down the
supply chain. Smaller fisher folk rely on informal money markets to meet
almost all of their consumption and life cycle needs. This dependence on the
‘informal’ and ‘internal’ money market is largely on account of cumbersome
procedures of taking loans from the formal money market.
The Three Phases of Development of Indian Fisheries
3
Total catch (million tonnes)
Motorisation Expansion Diversification
2.5
Mechanisation Start of motorisation
1.5
Non
Non-motorised traditional boats Mot
1 Mec
Non
Mot
0.5
Non Mec
Mot
Mec
0
1950 1960 1970 1980 1990 2000
Source: CMFRI 2003. Note: Non=non-motorized; Mot=motorized; Mec=mechanized
The phenomenal growth of the fisheries economy in the modernization phase

was accompanied by the entry of new fishing methods, players, and trading
systems that have had long-lasting impact on the life and livelihoods of the
fisher folk, especially the small-scale fishermen. Mechanized trawlers now
account for 20 percent of the labor force in primary fishing, yet they corner
60 percent of the catch. Smaller scale vessels (motorized and non-motorized)
account for 80 percent of the labor and account for 40 percent of the catch.
These changes have affected the terms of access to resources for the poor, the
focus and organization of production, new systems of preservation, new market
intermediaries, altered terms of trade and access to markets.

An FAO study in Tamil Nadu (Neiland et al 2006) indicated that of 212 small
scale fisherfolk surveyed, 59 percent indicated that the viability of their principal
livelihood had declined from the previous year. Of these individuals, 85 percent
said that it was a matter of concern because of a greater risk of starving. Major
reasons for the downturn in livelihoods were decreased fish catches and scarcity
of fish during poor fishing seasons; low fish prices, especially during supply gluts,
increased input costs and poor access to more distant and lucrative markets.
Field results suggest that the options chosen by men under pressure from
poor catches, weather patterns, etc., frequently stem from the nature of their
occupation. The options chosen include shifting to another location or shifting
from fishing to shore-based trade activities related to fishing and so on. One
conclusion that can be drawn is that many of the alternative activities that these
people take up may be no more sustainable than the ones they have left behind.
This is because, the availability of alternative options as well as improving access
to credit requires concerted efforts by the Government, private sector links, and
long-term strategic thinking to assure the viability of the options promoted.
One possible strategy to improve fisheries and non-fisheries-based livelihoods

is to consider coastal dwellers within the wider economy. Salagrama and Koriya
(2008) suggest that programs need to address vertical diversification (move
the producer higher up the fisheries value chain) and horizontal diversification
(invest in livelihood alternatives outside fishing). The new livelihood
opportunities could of course be created either within the sector (e.g., new fish
processing and value-added product development) or outside the sector (e.g.,
fisher folk developing new skills and trades in small business development,
coastal forestry, agriculture, or handicrafts), or some combination of the two.
5.2.2 Alternate Demand for Water – from Industry
Fisheries are not the only place where there is conflict over water as a resource
for livelihoods. Increasingly, the demand from industry is becoming an
important competitor to the traditional uses of water – mainly subsistence
agriculture. There are hundreds of cases where water is being drawn from
rivers for industrial use and this has been privileged by more recent contractual
arrangements than the traditional uses. The case study below of the Sheonath
River water from Chhattisgarh illustrates this conflict.112
112
Binayak Das, Ganesh Pangare: In Chhattisgarh, a River Becomes Private Property.
Economic and Political Weekly, February 18, 2006

Box 14: Water for Traditional Livelihoods or Industries?
Sheonath River flows through Borai in Durg district, Chhattisgarh. This case
is about the handing over of a stretch of the river near Borai to a private firm
for supplying water to the region lying between two district headquarters,
Durg and Rajnandgaon. Borai is a newly developed industrial hub, promoted
by the Chhattisgarh State Industrial Development Corporation (CSIDC).
It is 45 km from the Raipur airport, on the National Highway 6 and the
main Mumbai-Howrah railway line. The region is rich in natural minerals
and Borai is at a reasonable distance of 10 km from the Bhilai Steel Plant
(BSP). Surplus power is available at a reasonable cost. Surrounding the Borai
region is a cluster of villages that traditionally used river water for irrigation
and fishing.
Sheonath River, a semi-perennial tributary of the Mahanadi had been

contracted to Radius Water, a division of Kailash Engineering, for a period
of 22 years. Radius Water is based in Rajnandgaon near Borai and had been
managing the water distribution from the river. The build-own-operate-transfer
(BOOT) project was commissioned in 2001 by the Chhattisgarh government.
Under the scheme, water from the river was supplied to the industries in bulk
as part of an agreement with the CSIDC. Most of the industries located here
are water-intensive– distilleries, sponge iron units and thermal power plants –
and CSIDC attempted to make it the hub for all water-based industries. Radius
was not only responsible for supplying water but also for operating a common
effluent treatment plant (CETP). Radius Water built a 4 m high dam through a
technique called the Flood Regulating Barrier System along a 3.5 km stretch of
the Sheonath river at a cost of Rs 4 crore. The total cost for the project was Rs
9 crore for 30 million litres per day (mld).
The conflict did not start immediately. Initially, the locals were not aware that
a private firm managed the new barrage that had sprung up across the river.
No prior information was provided about this contract. After a few months,
however, Radius Water informed the local fishermen that they were no longer
permitted to fish in the 200 m zone from the barrage (on both sides) for
safety reasons. There were a few skirmishes and employees of Radius Water
allegedly destroyed some of the fishermen’s nets. The latter complained
that their catch had dwindled after the construction of the barrage. Farmers
who owned land near the river were also barred from lifting water from
the river with motor pumps. This ban had the endorsement of the district
administration, which also banned the installation of tube wells.

Many villagers from Pipalcheda, one of the surrounding hamlets, insisted
that the water level in their wells had plunged since the construction of the
barrage.
A huge rally took place on November 1, 2003 under the banner of the Sheonath
Nadi Mukti Andolan. The protesters have been questioning the very concept
of the privatization of the river. They wonder how the industries department
signed a contract for a river that legally falls in the purview of the irrigation
department. Activists and lawyers argue that the deal violates the Madhya
Pradesh Irrigation Act of 1931 and the National Water Policy, which prioritizes
agriculture over industries. Natural resources cannot be signed over to
individuals without taking all the stakeholders into confidence. Radius Water
on the other hand insists that the upcoming industries at Borai will boost the
state’s economy and that they were merely ensuring that water was supplied
to them at a low price. According to them the industrial water tariff in Borai is
the lowest in the country.
5.3 Forests
Starting with the Indian Forests Act, 1865, the colonial government began to
stake to its monopoly claim over forests, recognizing only meagre customary
(‘nistar’) rights of prior use such as grazing, collection of head loads of
firewood, a little bit of timber and some minor forest produce. This Act was
substantially amended with a much more repressive Indian Forest Act 1879,
which among other provisions, permitted arrest without warrant of those
seen to be encroaching on or stealing from forests. This converted what was
a symbiotic relationship between communities living on the periphery of
forests and the forest ecosystem, to an adversarial one. The Forest Act, though
amended several times, basically continued in the spirit of the 1879 Act. To get
an idea of how this panned out after Independence, let us look at the excerpts
of a report from Andhra Pradesh.113
113
V. Ratna Reddy et al Participatory Forest Management in Andhra Pradesh: A Review. Working Paper
No. 62, October 2004. Center for Economic and Social Studies, Hyderabad. Accessible at http://
www.cess.ac.in/cesshome/wp percent5Cwp-62.pdf

Box 15: Evolution of Forest Policy – A Case Study of Andhra Pradesh
About 19 percent of the 26,586 villages in Andhra Pradesh have ‘forest’ as land
use. The forest area in these villages is 2.57 mha. With a total population of
10.67 million, they represent about 22 percent of the total rural population.
Villages having less than 100 ha, between 100-500 ha and more than 500 ha
forest area in each village, constitute 35 percent, 39 percent and 26 percent of
the total villages respectively. The mean forest area per village is 506 ha. There
are a number of ways land under Forest Department (FD) management may
be reallocated to another use. For instance, area allotted for those rehabilitated
due to projects, area occupied for different Government projects, area
‘alienated’ or ‘encroached’ by local people, irrigation projects, and so on. These
kinds of activities increased over the post-independence period. For example,
between 1950s and 1983-84, 2.07 lakh hectares of forestland were lost, of
which, two-thirds were diverted for rehabilitation and agricultural purposes.
Much of the forest area lies in Schedule V areas of the state, in which the
Constitution requires the protection of tribal rights, identity and culture
through a different form of administration. However, the FD has not yet
acknowledged the need to subordinate forest management practices to these
constitutionally more important objectives. Neither has it acknowledged that
much of what it classifies as ‘encroached land’ is actually land under customary
tribal podu forest fallows management. Podu cultivation involves the clearance
of small patches of hill forests for subsistence cultivation (e.g., various crops
including sorghum, millet). After a few years, the cultivators move on to
another area. A cultivator HH may have customary tenure to a long rotation
cycle of plots over perhaps 10 years or more, and move between them.
A particularly significant change for local forest-dependent communities was

the introduction of the AP Minor Forest Produce (MFP) (Regulation of Trade)
Act, 1971, introduced with regard to Tendu leaves (used for making beedis) to
ensure revenue to the government, creating a state monopoly in trading of forest
produce in the state. Under this regulation, the government or an officer or an
agent appointed for a unit was identified for sale, purchase , cure or otherwise
process, collect, restore or transport any MFP. Penalty was to be imposed for
the violation of the Act. The Andhra Pradesh Scheduled Areas MFP (Regulation
of Trade) Regulations, 1979, was introduced to make provisions for the trade of
certain MFP by creation of a state monopoly in such trade in the scheduled areas
of the state – the Girijan Co-operative Corporation (GCC). In a major change in
policy, Joint Forest Management (JFM) was implemented in Andhra Pradesh
from 1992, consequent to the issuance of the first Government Order (GO).

Later, this Order was changed several times to incorporate pro-people measures,
resulting in the GO No. 173 of December 1996. In consonance with the National
Policy, the Government of Andhra Pradesh framed a revised State Forest Policy
in 1993. Under this, Vana Samarakshana Samithis (VSS) were established
to protect the forest resources, mainly in the hill areas. Although JFM was
introduced in early 1990s, the growth in numbers was very slow till 1995-96.
SD Mukherji, previously the Principal Chief Conservator in Andhra Pradesh,

and an enthusiast for JFM, describes the initial scenario: “The most difficult
part of JFM was to change the mindset of the foresters and restore trust
between them and the people. Most foresters genuinely believed that due to
their protection, JFM would bring an end to whatever little forest was left. They
were also of the strong view that people’s need of forest produce, if any, should
be met from Social Forestry (SF) plantations of fuelwood and fodder outside
the reserved forest (RF) area. They were also afraid of losing their power and
authority over the people. On the other hand, the people refused to come to the
foresters even for a discussion. They would not believe the foresters because
of their past experiences, where the latter mainly visited villages to book cases
against the people for ‘forest offences’ such as collection of fuelwood, bamboo
and timber and grazing of cattle.”
From a mere 133 VSS during 1994-95, the numbers had gone up to 6,726 VSS
in 2001-02, managing 16.89 lakh ha of forest area, of which about 7.85 lakh
ha of degraded forests had been treated through these VSS. Around 13 lakh
people, including six lakh women were involved. By 2004, the official number
stands at 7,245 VSS, managing 1,886,764 ha, (or over 29% of state forest land)
and involving 611,095 families.
Andhra Pradesh’s benefit sharing policy is apparently the most liberal, thanks to
the effective lobbying of the networks. Under the revised order of 1996, the VSS
is entitled to 100 percent of the ‘net incremental value’ of timber and bamboo
harvested after deducting costs. The VSS is entitled to all non-nationalized
NTFP. This was further revised in January 2004 (G.O. Ms No. 4) to bring clarity
into the ‘net incremental value’. According to this, the VSS shall be entitled to
the following forest produce obtained from forests managed by them. i) All
NTFPs, ii) all intermediate yields obtained from silvicultural operations in
natural forests, iii) all timber and bamboo (including bamboo plantations)
except in case of plantations, iv) in the case of teak plantations within the VSS
area, whose age is known, twice the proportionate yield harvested (including
yield from thinning) with reference to age of the plantation and the period of
maintenance by the VSS.

There is, however, a total absence of mechanisms for addressing and resolving
the serious conflicts related to people’s rights over lands declared as state
forests. A study undertaken by Samata (an NGO) in 1999 in North Coastal
Andhra on the impact of JFM found that of the 1,500 acres of podu lands in 29
VSS, only 520 acres are with the people after the formation of VSS. The rest of
the podu lands have been taken away under the JFM program, which some say
exposes the government’s hollow claims.
Struggles in many parts of rural India over forest rights are now redefining
rural politics and the ‘left-wing extremism’ is partly a manifestation of this
tension. These various conflicts have brought issues of resettlement of, and
compensation for, people affected by development projects to the fore. Their
challenges have slowly been recognized and their rights have been provided
some legislative support. Recent legislation—such as the Panchayats
(Extension to Scheduled Areas) Act (PESA) and Scheduled Tribes and Other
Traditional Forest Dwellers (Recognition of Forest Rights) Act (FRA)—has
granted communities rights to live in forests and collect and use minor forest
produce, and prevent alienation of land in Scheduled Areas. But the actual
implementation of these Acts has been hesitant and incomplete. Yet, the
success of tribal protests against bauxite mining in the Niyamagiri hills in
Odisha, with all twelve Gram Sabhas (GSs) rejecting the mining proposal in
August–September 2013 under PESA, is a sign of their empowerment.114
5.4 Capital
We saw in the earlier sections how lack of access to capital is a source of lasting
weakness for the poor. The Indian banking sector is supposed to have been
a developmental instrument, which while mobilizing savings from all HHs,
would offer credit to those HHs with creditworthy projects. In 1967, Indira
Gandhi put banks under ‘social control’ and then in 1969, nationalized the
twenty largest private banks to ensure that banks served the needs of all-round
socioeconomic growth. Following the economic reforms introduced in the
1990s, banks tried to veer away from the social banking mandate.115 But within
a few years, it became clear that for reforms to work, growth must be inclusive.
The realization that financial inclusion is a necessary though not a sufficient
condition for inclusive growth, dawned soon.
114
India Rural Development Report 2012-13
115
This section is largely taken from a recent paper by Mahajan, Vijay 2013. Call for an Inclusive
Banking Structure for India by 2019, Fifty Years after Bank Nationalization. DFID and SIDBI,
New Delhi.

5.4.1 Four Dimensions of Financial Exclusion
Data released by the RBI indicates that 58.7 percent of HHs in India avail
of banking (savings) services, with the figure being 54.4 percent for rural
areas and 67.8 percent for urban areas.116 The number is much lower, at
21 percent, if one talks of credit. For over a century, the Indian state has tried
to address the financial needs of the masses – both credit and savings. The RBI
claims that, “The banking structure played a major role in the mobilization of
savings and promoting economic development.” Yet, data shows that this is far
from the facts.
One of the peculiar characteristics of the Indian economy is that while the savings
rate is high as a percentage of GDP, running at well above 30 percent since
2000, the extent of savings in financial terms (bank deposits, bonds, insurance,
mutual funds, pensions, etc.,) is usually only about half of the savings rate. The
rest is saved in the form of physical assets such as gold and silver jewelery, land
and buildings, livestock, durable goods and just hard cash. This dramatically
reduces the possibility of utilizing the surplus of one HH or enterprise to meet
the investment needs of another and, therefore, the growth prospects of the
economy. To make matters worse, the banking system is able to attract only
about 50 percent of the financial savings, the rest going into ‘contractual savings’
(like insurance and pensions and non-bank recurring deposits) and shares and
debentures (very small proportion). Thus, we cannot conclude that the banking
sector has played a major role in the mobilization of rural savings. In fact, the
Post Office with 96.5 million savings clients and Rs 34,068 crore of deposits in
March 2012, as also many so-called residuary non-bank finance companies were
the mainstay of savings made by the lower income groups and the rural HHs, till
they were barred a few years ago. Had the banks been more pro-active, a larger
share of savings would have come to them.
We have identified at least four dimensions to financial exclusion and we will

present data on each of them.
• Spatial – metro-urban-rural and across regions, states and districts
• Sectoral – agriculture, industry, services and sub-sectors within
• Segmental – sections of population – women, scheduled tribes, scheduled
castes, minorities and the disabled
• Size and status – large and formal/organized vs small and informal
116
http://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=813 consulted on 14 Jun 2013

The most obvious spatial inequality is across the rural-urban spectrum.
Before we go into the detail of this, we hasten to add that ‘urban’ does not
mean ‘included’ and indeed, there is a sizeable lower-income population in
metropolitan areas that endures financial exclusion as much as the rural
populace. Unfortunately, urban exclusion is not measured since urban
data gets aggregated across wards. Generally, policy makers think of
exclusion in terms of lack of access to credit but as can be seen from Table
32, even on the issue of savings, where the rural-urban differences should
not be as stark, there is much lower deposit mobilization in rural areas.
Thus, rural areas account for only 9.2 percent of the deposit amount, while
metropolitan areas account for 56.9 percent of the deposit amount as on
31st March 2011.
A similar situation exists for credit – rural areas account for 9.6 percent
of the outstanding loan amount, while metropolitan areas account for
60.4 percent of the loan amount as on 31st March 2011. The share of semi-
urban credit was about 11.1 percent the share of urban areas was 19.1 percent,
while metropolitan credit was about 60.2 percent. In terms of the number of
loan accounts, again the inequality is less, with rural areas having 33.1 percent
of the accounts, whereas all the others have 66.9 percent as on 31st March 2011.
The CD ratio for rural areas at 79.6 percent is better than the system average of
75.6 percent in 2011. This is due to the expansion of rural bank branches and
setting up of Regional Rural Banks (RRB) network.
There is a lot of inter-state disparity in availability of credit. Maharashtra,

which accounts for more than one-fourth of gross credit by banks in the
country, has one of the lowest shares of rural credit to total credit. The gross
bank credit by banks in Maharashtra as on September 2012 was Rs 14,109
billion which is about 29 percent of India’s gross credit. However, the share
of rural credit in the credit given by banks in the state was Rs 289 billion or
just two percent of the state’s gross bank credit. In fact, it appears, the less
urbanized a state, the lower is this inequality. Given is data on rural credit as a
proportion of the total in the major states of India.

Table 32: State-wise Share of Rural and Semi-urban Credit to Total Credit
State Percentage of rural credit of Percentage of semi-urban

total credit credit of total credit
Bihar 33 25
Uttar Pradesh 23 14
Madhya Pradesh 17 19
Rajasthan 15 16
Andhra Pradesh 13 14
Karnataka 11 10
Tamil Nadu 9 17
Gujarat 8 10
West Bengal 7 3
Maharashtra 2 2
New Delhi 0.87 0.07
Source: http://www.business-standard.com/article/finance/only-8-of-gross-bank-credit-of-all-
scheduled-commercial-banks-go-rural-areas-113061200564_1.html
As can be seen from Table 33 below, the industrial sector gets more than its
proportion of the sectoral GDP, while agriculture gets less. Yet, agriculture is
getting credit more or less in proportion to its GDP share (about 14% each).
The share of credit to the services sector is far below the share of GDP. This is
partly because a large part of the services sector, particularly health, education,
public administration and defence services is government funded and does not
use any bank credit. Also, the larger share of services is in the informal sector,
where again credit, though needed, is not available.
Table 33: Sectoral GDP and Credit Availability (in billions) (2011-12)
Sector Availability Sectoral credit Sectoral Sectoral GDP Credit as a
of Credit as % of total GDP as % of total percentage
of GDP
Agriculture 5,225 14.9 7,395 14.1 70.7
Industry 19,675 56.1 14,425 27.5 136.4
Services 10,168 29.0 30,616 58.4 33.2
Total 35,068 100.0 52,436 100.0 66.8
Source: 1. Planning Commission 2. Central Statistics Office (CSO)

Within each sector, there is further inequality. The Micro and Small
Industry (mainly small) accounts for only six percent of the 46 percent share
of credit availed by industry. Within services, trade (wholesale and retail)
and financial services account for a lion’s share of the credit. Inequality
of access to credit in agriculture is well-known. While large farmers grab
a lion’s share of the agricultural credit given by banks, marginal farmers,
who constitute over 80 percent of the farmers by number, got less than 42
percent of the total agricultural credit in 2001-02. Until recently, share-
croppers and oral (unrecorded) tenants had no recourse to formal credit.
Table 34: Percentage Distribution of Number of Accounts from Institutional

Sources across Size and Class, 2001-02
Size and Class of Share of Proportion PACS LDB CB RRB All

Holding (hectare) Holdings taking
Institutional Credit
Marginal, <1.00 60.6 14 67.1 8.2 10.8 16.8 102.8
Small, 1.00-1.99 20 27.7 65.5 8.6 12.9 17.4 104.3
Semi-Medium, 12.4 31.6 66.1 9.1 13.1 17.8 106.1
2.00-4.99
Medium, 4.00-9.99 5.9 33.1 67.2 10.4 12.5 19.6 109.7
Large, 10.00 and 1.1 29.4 69.3 13.6 13.1 22.4 118.5
above
All Classes 100 20.2 66.5 8.8 12 17.5 104.8
(Numbers in lakhs) 1077.1 218 144.9 19.1 26.2 38.2 228.4
Note: PACS denotes Primary Agricultural Cooperative Society, LDB denotes Land Development Bank,
CB denotes Commercial Bank, RRB denotes Regional Rural Bank. The % from all do not add up to
100 because some holdings have loans from multiple sources. Calculations are based on estimates of
credit from Agricultural Census, 2001-02
Source: Agricultural Statistics at a Glance, 2009, Ministry of Agriculture, Government of India.
As per the Economic Census of 2005, there were 51 million enterprises in India
in the non-agricultural informal sector. Only 4.2 percent obtained credit from
formal institutions (banks, SFCs, SIDBI, etc.). There is a desperate shortage of
financing for micro and small enterprises. Less than three percent of net bank
credit goes to them. The amounts needed ranged from Rs 25,000 to 1 million,
which was too small for most lenders.
There are certain segments of the population who are structurally excluded
from participation in formal organized economy. These include the women of
any community, the SCs, the STs, the minorities and the disabled.

As can be seen from Table 35, in 2007 only 0.21 percent of women had loan
accounts and 21.2 percent had savings accounts, compared to 1.2 percent of
men who had loans and 58.6 percent who had deposits. Even when women
managed to get loans, they got one-fifth of what the men got.
Table 35: Loan and Deposit Accounts per 10,000 persons, for Women and Men
Year Loan Accounts per 10,000 persons Deposit Accounts per 10,000 persons
Women Men Women Men
2007 21 118 2,123 5,858
(18) (36)
Credit per capita Rs Deposits per capita Rs
Women Men Women Men
2007 1,139 5,652 5,310 17,721
(20) (30)
Notes: 1. Figures in brackets indicate percentage share of accounts of women to those of men.
2. Loan accounts for women for 2007 include individual loan accounts for women and loan
accounts of SHGs.
Source: http://rbidocs.rbi.org.in/rdocs/Content/PDFs/4PCHBB060810.pdf
As a community, Muslims suffered more than proportionate financial exclusion117

– partly due to a higher level of poverty in the community and partly as the Shariah
prohibits the giving and taking of interest. On the basis of the difference in the CD
ratio between Muslims and the general population, Syed Zahid has estimated that
Muslims lost out on additional credit worth Rs 11,000 crore in March 2005. (For
a detailed discussion, see the weblink below) But this understates the point that
Muslims do not get loans proportionate to their number.
What this survey shows is that Indian policy making has not been able to
equalize the playing field for access to capital and the small farmers, the small
industrialists and the less developed regions and sub-sectors still have a hard
time getting access to credit. The results can be stark. In a study on farmers’
suicides in India, Navadanya118 cited lack of credit as the first of six reasons for
farmers’ suicides: “Study has shown that following are some of the reasons for
the increasing suicides among farmers: (i) Failure of institutional credits for
small and marginal farmers.” This finds an occasional political echo, as follows:119
117
http://www.aicmeu.org/Financial_Exclusion_of_Indian_Muslims.htm
118
Vandana Shiva and Kunwar Jalees, Farmers, Suicides in India Research Foundation for Science,
Technology and Ecology, New Delhi. Accessible at http://www.navdanya.org/attachments/Organic_
Farming10.pdf
119
Source: Press Trust of India, Gandhinagar, September 9, 2013

A Chief Minister attacked the Central Government on the issue of farmers’
suicides, blaming it for non-facilitation of easy bank credit for the agriculture
sector. “Because of cumbersome banking processes and under the burden of
debt, farmers are resorting to suicide. Around 270,000 farmers have committed
suicide in the past 20 years”, he said. “The Central Government is merely
talking about the banking sector, about National Bank for Agriculture and Rural
Development (NABARD), but it is very painful to state that even today, less than
30 percent of farmers are able to avail of bank loans. The rest are forced to take
loans from private money lenders who are charging such a high interest rate
that it destroys farmers.”
5.5 Three Dimensional Approach to Power
We saw in the preceding sections how the livelihood bases of the rural poor have
been consistently eroded by state policy and market forces and they are being
forced to pursue less viable options of livelihoods. Will these people come together
to fight for their rights? What is it that makes them acquiesce to their situation?
In order to answer this question, we shall rely heavily on a framework developed

by Gaventa120 in a study of the coal mining workers in the Appalachian Valley in
the United States, where he found a remarkable degree of quiescence in the face
of all-round exploitation. Gaventa talks about a three dimensional approach to
understanding of power and powerlessness. Starting with Dahl121 who said, “A
had power over B to the extent he can get B to do something that B would not
do otherwise,” Gaventa first describes the one dimensional approach, essentially
that of American pluralists such as Polsby,122 in which power may be studied by
examining “who participates, who gains and loses, and who prevails in decision
making.” The underlying assumption was that entry to the arenas of decision
making was open. In a sense, this model was the equivalent of the economists’
perfect competition model, where barriers to entry are non-existent and all the
sellers and buyers compete from an equal standing.
120
Gaventa, John Power and Powerlessness: Quiescence and rebellion in an Appalachian Valley,
University of Illinois Press, Urbana and Chicago, 1980.
121
Dahl, Robert A The Concept of Power”, Behavioral Science (2), 1957.
122
Polsby, Nelson, Community Power and Political Theory, Yale, 1963.

The two dimensional approach accepts this as only part of the explanation but
goes on to add that “power was not just upon participants within the decision-
making process but also towards the exclusion of certain participants and
groups altogether. In other words, A not only prevails on issues raised by B
but also decides what issues B may raise or whether B should participate at all.
This approach, developed by Bachrach and Baratz123 maintains that the study
of politics must focus, both on who gets what, when and how, and who gets left
out and how and the interrelationship between the two. The second dimension
of power was generally exerted through the mobilization of bias in favor of
some issues, to the exclusion of others. The media is extensively charged on
this count now.
Finally, in the three dimensional approach to power, Lukes124 deals with the
ability of the powerful to influence and shape the perceptions of the powerless
about their own interests, in addition to be able to prevail in decision-making
arenas and in effectively controlling who participates. Not only might A exercise
power over B, by prevailing in the resolution of key issues or by preventing
B from effectively raising those issues, but also by affecting B’s conceptions
of those issues altogether. The third dimension of power was largely exerted
through the processes of myth-making, information control and manipulation
of ideology. In addition, the calculated use of violence, including display of
brutality, was regularly used to indoctrinate by intimidation and create deep
psychological compliance.
The three dimensional framework of power and powerlessness is aptly

applicable to the situation of the people with threatened livelihoods in India. It
explains why the major issue of the eroding livelihoods in the rural sector have
not gained due importance in the mainstream political process in India. If the
Indian democratic system were truly a perfectly competitive arena, then the
sheer numerical strength of the rural poor would have been able to ensure that
their demands were acceded to by the political process. This has not happened
over the last 66 years, since independence. In the early 1990s, an attempt was
made to bring a disadvantaged group together as an electoral entity, when
VP Singh of the Janata Dal promised reservations (quotas) in government
jobs to the OBCs. (The SCs and STs already have such reservations.) But in
the absence of working at the other two dimensions of power, such quotas
may become only tokens and be appropriated by the powerful among the
disadvantaged groups.
123
Bachrach, Peter and Baratz, Morton S. Power and Poverty: Theory and Practice, Oxford University
Press, New York, 1970.
124
Lukes, Steven, Power: A Radical View, Macmillan, London, 1974.

At the level of the second dimension of power, we see that the real issue of
declining livelihood possibilities had been systematically left out from the political
debate by all mainstream parties. As pressure on the political parties increased
over the years, they only indulged in token acknowledgment of the issue in one
form or the other. Indira Gandhi did this for the first time in 1972 when she
launched a series of poverty alleviation programs in line with her Garibi Hatao
(banish poverty) slogan. Thereafter, the number and variety of such programs
have increased steadily, but in the absence of a willingness to address the
underlying issue of livelihoods, the programs have had very limited impact. The
Janata Dal, in its brief rule in 1989-90, also skirted the issue of livelihoods by
diverting attention to the debate on whether the right to work should be made
a fundamental right. Unlike the farmers, the poor in rural livelihoods have not
been able to come together to break this ‘mobilization of bias’ by all the political
parties in favor of issues not material to their real well-being.
At the level of the third dimension of power, various mechanisms are being used
to keep the people with threatened livelihoods in check. The first and foremost
of this was the caste system, which ensured that people in a vast majority of
manual livelihoods saw themselves in a socially inferior and subservient role,
which was ‘justified’ by their birth in a low caste. In recent times, the oppressive
power of caste system has reduced, only to be replaced by other beliefs. One of
these was that the state was a benevolent protector of the interests of the poor
against the rich. In the name of protection or conservation of resources, those
are appropriated by the state. Thereafter, in reality, the resources of the state
are made available to the industrial sector.
This may be done in the name of promoting economic development, industrial

growth, developing the country’s exports, conserving the environment, or
guarding an all-encompassing ‘public interest’. Millions of tribals and others
in rural livelihoods have been evicted from their homelands or have seen
their livelihoods destroyed because of submergence by dams, construction of
hydroelectric and thermal power stations, mining projects, industries etc. The
proposed series of dams on the Narmada River are an example of this. Forests
were reserved to ensure their conservation, but in the hands of the state, the forest
cover had come down drastically, to feed the timber needs of the urban-industrial
complex, while simultaneously denying access to those whose livelihoods were
based on the forests since prehistoric times. Modernization of the fisheries and the
leather sector was done to enhance the country’s export earnings, without paying
any heed whatsoever to the harm that would be done to traditional fishermen
and leather workers. Numerous examples of such exploitation of those on the
periphery to meet the needs of the center can be quoted.

Another belief that was popularized was that the state must sanction all
economic activity, as this would ensure a proper coordination of all efforts.
This had resulted in a phenomenal amount of control over the livelihoods
of millions of people by the state. Apart from licensing individual economic
activity, only the state had powers to permit any form of group enterprise.
Cooperative societies, ostensibly a people’s structure, are subject to compulsory
registration and stifling control by the state. Access to credit from the public
sector banks also requires a lot of paperwork and certification of various sorts
by petty officials.
Gaventa’s framework is also helpful in explaining why, in the few cases

that people have come together, this had been almost always catalyzed by
an external activist group. The approach taken by a wide cross-section of
such groups, irrespective of their ideological standpoint, had two essential
components in it; awareness building and organizing. A graphic example of
this comes from the work being done by the Ekta Parishad.125 In the case study
below, we see how an activist organization intuitively works to undo all the
three dimensions of power one by one, to eventually achieve some justice.
Box 16: Long March to Assert People’s Rights on Jal, Jangal, Jameen
Ekta Parishad (unity forum in Hindi) is an Indian activist movement founded

in 1991 by PV Rajagopal. Ekta Parishad is a federation of approximately 11,000
community-based organizations and has thousands of individual members. It
currently operates in 11 states. The two main activities of Ekta Parishad are:
communicating with the government at the state and national level and mobilizing
the villagers for struggle at the grassroots level. Yet both are interlinked: people
struggle at the base and their struggle is supported by a formation of institutions
giving them the tools to fight for their rights (using democracy) at the upper levels,
through dialogue. On the other hand, there are supporters setting the discourse at
the top level to give space for political action or struggle at the bottom level.
The grassroots struggle is centered on the struggle for land rights. Approximately
70 percent of India’s population depends on access to land and its natural
resources for their livelihood. Without any legal claim to these lands, thousands
are forced to migrate to urban centers everyday where they are left with no choice
but to become manual laborers without rights or financial and life security.
125
Synthesized from http://en.wikipedia.org/wiki/Ekta_Parishad and http://en.wikipedia.org/wiki/
Jan_Satyagraha_2012 and http://www.ektaparishad.com/en-us/about/history.aspx#history2

A vast number of people come together to free themselves from the oppressive
hold of land policies of this country over their lives.
Ekta Parishad thus compels the top and the bottom of the Indian political
and administrative system, which is mainly blocked due to corruption, to act.
The latter engenders an inefficient distribution of information and inequitable
distribution at the grassroots levels. The people at the bottom level don’t
receive what they need to live in a decent way and are powerless.
Ekta Parishad helps the people by empowering them to defend their rights and
provides a platform for people to share their experiences and ideas with the
confidence that their voices will be heard.
Ekta Parishad was formally established in 1991. Considering the large

population of tribal communities, the initial emphasis of the movement was
access to forest resources. Later, it became evident that due to displacement,
right to land was the most critical issue. Without right to land, people were
being constantly displaced, disenfranchised and uprooted.
Focus now shifted to forced evictions, indebtedness, alcohol trade, and nistar
rights (usufruct rights related to the collection of forest produce). Gradually,
Ekta Parishad developed its capacity to mobilize communities to speak on
their own behalf and strengthened its base for the larger struggles for land and
livelihoods rights that would be the future of its work. Here are some of the
main events that occurred during this period:
1993-1994: Land problems were taken up for the first time at the state level and
7,000 applications were submitted to the Madhya Pradesh government for action.
1994: The voice of deprived communities was raised through many different
rallies, demonstrations at the district and local levels, across the state of
Madhya Pradesh by organizing Land Day.
1996: A big rally of 20,000 people was organized on the World Human Rights
Day and applications were handed over in the form of a memorandum to the
Chief Minister of Madhya Pradesh. The padyatra becomes a main tool of
social action. This period saw Ekta Parishad grow from a localized grassroots
movement into a force that spanned all of Madhya Pradesh. By the end of the
1990s, Ekta Parishad had gathered a constituency of about 2 lakh (200,000)
members.

In 1999-2000, the first padyatra (foot-march), which traversed from western to
eastern Madhya Pradesh (before the partition of Chhattisgarh), was organized.
During this padyatra, Ekta Parishad discovered that ‘walking’ was an
enabling tool, one that allowed the marginalized people to participate readily
and with dignity, since it only demanded their physical prowess and not funds
or political patronage. The foot-march, like Gandhi’s Salt Satyagraha of 1931,
was also a way for people to highlight their rights and become visible by
attracting the attention of the media, policy-makers and the general public.
Following that first foot-march, about a dozen marches took place in different
states of India on various issues. However, they did not have the desired
societal impact. It was then decided to hold a national march in October 2007
in the Declared Year of Non-Violence, starting on the UN day of Non-Violence,
October 2nd, which is the birth date of Mahatma Gandhi. The march was
named Janadesh, which means ‘People’s Verdict’. A total of 25,000 people
came together in Gwalior, a city about 350 km south of the capital. For one
month, the landless poor, tribals, poor women, bonded laborers, children and
old people walked along the national highway, attracting the attention of people
from all walks of life.
After their arrival in Delhi, the government reacted swiftly and promised to
meet their demands. It was one of the largest non-violent actions in human
history.
Bhu Adhikar Satyagraha Padyatra 1999 : A six months march beginning in

December 1999 in Sheopurkalan and ending in June 2000 in Raigarh mobilized
more than 10,000 villages and 300,000 people. Despite the challenges posed
by marching in remote areas, the spirit of the people carried them through five
regions (Chambal, Bundelkhand, Baghelkhand, Mahakoshal and Chhattisgarh,
which is a state since 2000) of Madhya Pradesh, covering 8,000 villages and
more than 3,800 km. The following were the results:
• A staggering 24,000 grievances were submitted to the State Government
that dealt with hundreds of issues raised by the public.
• The State Government announced the formation of a two-tiered task force;
the state level task force was responsible for land re-distribution policies
and the district level task force dealt with the land re-distribution process.
• For the next four years, Ekta Parishad worked to establish task forces in
each district of the state, and saw the distribution of about 350,000 land
entitlements. The Forest Department dropped 558,000 charges for forest-
violations against tribal people, significantly impacting the focus of the
state’s pro-poor agenda.

It helped to increase the pressure from village to district to state levels, with
task forces acting as a monitoring mechanism. The padyatra forced the state
government to work with Ekta Parishad in 30 districts of Madhya Pradesh
and this success brought the strength of other states into the organizational
fold. People sought Ekta Parishad’s strength across the country, including
Chhattisgarh, Jharkhand, Bihar, Odisha, Tamil Nadu, Kerala, Uttar Pradesh and
Gujarat. The development of task forces became a priority in two other states
(Odisha and Chhattisgarh) in order to monitor the work of district collectors and
revenue officers. Ekta Parishad activists held a number of seats in each task force,
helping to counter the highly lethargic and corrupt Revenue Department officials
and to promote land re-distribution, as well as the redress of disputes between the
Forest and Revenue Departments by exerting pressure at the state level.
Conflicts over classification of land - as Forest or Revenue land was a major

stumbling block and is still a major issue today. These disputed lands, or
“orange lands”, became an issue for the courts when Ekta Parishad took the
problem to the Supreme Court (PV Rajagopal vs. the State of Madhya Pradesh
and Chhattisgarh, 2003-04. Ekta Parishad argued that the Forest Department
had a huge quantity of “orange” land without actual tree cover that they had not
de-notified to allow for redistribution as Revenue Land.
In October 2012, Ekta Parishad organized Jan Satyagraha, a 350 km

non-violent foot march between Gwalior and Delhi. The march started
at Gwalior on October 2, 2012, and arrived in Delhi on October 29, 2012.
Jan Satyagraha means Keenness to Truth and is based on Mahatma Gandhi’s
non-violent resistance. The objective was to obtain a comprehensive National
Land Reforms Act and effective implementation and monitoring institutions to
provide access to land and livelihood resources to the poor landless, homeless
and marginalized communities.
Ekta Parishad was also demanding implementation of PESA or Panchayat

(Extension to Scheduled Areas) Act 1996 in tribal areas so that the local
population have a say in how the land and natural resources in their respective
areas are used. They also demanded fast-track courts to settle thousands of
pending land disputes and the implementation of the Forest Rights Act, 2008.
Between September 20 and 24, several meetings took place between the
representatives of Ekta Parishad and Government Ministers, but no agreement
was reached. On October 2, 2012, 50,000 landless and small farmers gathered
in Gwalior on the Mela Ground.

Jairam Ramesh, Minister of Rural Development, Government of India,
Jyotiraditya Madhavrao Scindia, Member of Parliament from the Congress
Party and PV Rajagopal, president of Ekta Parishad, gave speeches. Many
other personalities were present.
On October 8, an Ekta Parishad delegation met Jairam Ramesh again in New

Delhi. An agreement was reached and the march stopped at Agra. The two
major points of the agreement were: (i) establishment of a draft national land
reforms policy in the next six months, to be finalized soon thereafter and (ii)
adoption of a legal provision to provide agriculture land to landless people
and homestead land to homeless people.
As can be seen from the case of Ekta Parishad, first by working on the third
dimension of power, making people overcome their deep psychological
acceptance of the status quo, the ground was made ready for the second
dimension of power: people demand that they be heard and the issues of
concern to them be brought into the political agenda. In the final stage, the
first dimension of power would also be addressed.
When people find that their livelihood related demands are not being given
adequate priority by mainstream political parties, they may turn to actually
participating in the political process themselves, by turning their bloc voting
power to new political parties such as the Jharkhand Mukti Morcha, the party
of tribals in Bihar which led to the birth of Jharkhand as a separate state in
2000 after decades of struggle and the Bahujan Samaj Party, the party of
socially discriminated castes, mostly Dalits, which managed to come to power
in Uttar Pradesh, the most populous state of India with over 200 million
inhabitants in 2011 and 16 percent of the seats in the Lok Sabha, for the first
time for a brief period of four months in 1995.
5.6 Three Options for the Poor - Exit, Voice or Loyalty
These are three options in front of citizens facing a repressive or unresponsive

regime, articulated by Albert O. Hirschman.126 He wrote that essentially
three responses are possible – Exit, Voice or Loyalty. Exit implies leaving
the membership (or citizenship) if that is a possibility, but could also be just
behavioral – a substantial disengagement from their group and its activities to
become passive members.
126
Abert O. Hirschman. 1970. Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations,
and States. Cambridge, MA: Harvard University Press. ISBN 0-674-27660-4 (paper).

Voice signifies the act of expressing resentment, protesting and agitating
and this may sometimes take a violent turn. Loyalty connotes patriotism,
when considering a nation, or feelings of solidarity towards a membership
organization or a natural group like a caste or a clan, even if the personal
circumstances of the citizen or member are pitiable.
Assuming that the starting position is ‘loyalty’ or at least passive loyalty, a

member would opt for voice or exit only if the situation deteriorates so much
that the cost of being quiet or of being a member exceeds the benefit. But to
express voice – to protest or agitate – requires taking a risk, and thus, some
courage. Not all members are able to cross the threshold. Most suffer quietly.
But when the situation becomes unbearable or there is an external trigger,
people do come together and give voice to their grievances. In the case of the
tribals, this began in the British colonial period itself, which was dotted with
a number of local tribal uprisings. The British brought peace by recognizing
customary rights of tribals to forests in the Indian Forest Acts, 1865 and 1879
and also by enacting laws against land alienation by tribals. This prevented
non-tribal traders and moneylenders from acquiring tribal lands.
But the problems of tribals getting dispossessed of their bases of livelihoods –

mainly forests – remained and became exacerbated as the population grew after
Independence. The Indian Constitution gave tribals a special status, and included
them in a list or Schedule, while providing for separate reserved electoral
constituencies and reservations in educational institutions and government jobs.
But these measures benefited very few. Others joined in protests and agitations,
which became more frequent, though those did not yield much result in the initial
decades. Some tribals began to migrate from their homelands for several months
a year in search of agricultural and other manual work. This was a form of exit.
Others took to militancy and eventually to armed struggle, inspired by the leftist
ideology of Naxalites. A situation arose where the tribal heartland of India,
particularly Chhattisgarh, parts of Andhra Pradesh, Odisha, Jharkhand, Madhya
Pradesh and Maharashtra became coterminous with the Naxalite dominated
areas. The core of these regions has effectively ‘exited’ from the Indian state and
in that sense is extra-Constitutional. The enactment of The Scheduled Tribes and
Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006, by
the government was in some ways, an ameliorative response.
Dalits too, after centuries of ‘loyalty’ to Hinduism, began to give voice to their
situation, again despite the Constitution providing them a Scheduled Caste status,
and electoral, educational and public job benefits similar to those for tribals.

The first major act of protest was ironically under the guidance of Dr Ambedkar,
the father of the Indian Constitution, when he converted to Buddhism along with
his about 5,00,000 followers on October 14, 1956. This was a symbolic exit from
Hinduism and shocked many middle of the road Hindus into taking account
of the genuine grievances of the Dalits, as they later began to call themselves.
Another form of ‘exit’ for the Dalits was to escape from the villages and go to
towns and big cities, where segregation on the basis of caste was much more
difficult. Others exited from professions which were stigmatized like scavenging,
dragging and flaying of dead animals, cremating the dead, and so on. The final
exit was the formation of the Bahujan Samaj Party.
5.7 Livelihoods Agenda in Mainstream Politics
Let us examine to what extent have the mainstream political entities such as
political parties incorporated these groups’ demands into their agenda?
The Congress Party had historically devoted a fair amount of attention to rural
livelihoods. This was the result of its legacy from the freedom movement, in which
Mahatma Gandhi inter-wove the struggle for independence with ‘constructive
work’ among the rural poor. After Independence, following Gandhiji’s advice to
disband the party, some constructive workers formally left the Congress, while
their former colleagues who were in power, continued to support such efforts,
mainly by extending state patronage to activities such as khadi (homespun cloth)
and village industries. Along with state patronage, however, came state control
and over a period of time, constructive work organizations such as the Khadi and
Village Industries Commission, the Harijan Sevak Sangh and the Adim Jati
Sevak Samaj became mere extensions of state governments.
The national development process unfolded later in the 1960s. However, the
rural poor with lower castes and tribals constituting a significant proportion
of this group were left behind. The constructive segment of former Congress
workers, who had opted out of the politics of state power to work with the poor,
became disillusioned with the Congress and by 1973, actively opposed it. Their
leader, Jayaprakash Narayan (JP), gave a call for ‘total revolution’ and the
consequent turmoil led Mrs Gandhi to impose an emergency in the country and
suspend civil liberties. The elections called after this 19-month long emergency
led to the defeat of the Congress Party for the first time since Independence.
The Janata Party, which replaced it in power in 1978, took a more favorable
stand towards rural livelihoods. For example, it provided greater outlays to
handlooms and handicrafts and created a formal category of industries known
as the ‘tiny’ sector and reserved certain items for production by this sector.

Even before her defeat in the post-emergency elections, Mrs Indira Gandhi
had sensed a certain degree of alienation among the rural poor with the ruling
Congress Party. She attempted to counter this by the slogan ‘Garibi Hatao’
(banish poverty), as early as 1972. A host of poverty alleviation programs were
started by the government, including some directly targeted at the groups
which constitute the core of threatened livelihoods, such as the Small Farmers’
Development Agency (SFDA). Successive avatars of these programs gave the
rural poor some access to credit from nationalized banks, capital subsidies and
training and inputs for new livelihoods.
After Mrs Gandhi’s Congress Party came back to power in 1980, it launched,
what was perhaps the world’s biggest poverty alleviation program — the
Integrated Rural Development program (IRDP), which covered over 56 million
HHs below the poverty line, in the ten year period till 1999. The loans given in
the IRDP were for rural self-employment and it was a clear attempt to respond
to the voters in this sector. In spite of these efforts, the Congress Party lost its
grip over the rural poor, who increasingly drifted to other means of articulating
their political demands. Some of the alternatives that people turned to were
regional or caste-specific political parties.
An example of the emergence of a regional political party was the mobilization

of the tribals in south Bihar who had long standing grievances related to the
destruction of forests due to mining, hydroelectric and industrial projects
in the area, without getting any benefits in terms of employment, or even
compensation for lost livelihoods. Over a period of time, this was transformed
into a demand for a separate tribal State ‘Jharkhand’ (literally, region of trees).
This coalesced around a party known as the Jharkhand Mukti Morcha, which
drew its following mostly from the tribal areas of South Bihar and also from
the neighboring districts of Odisha, West Bengal and Madhya Pradesh. The fact
that the Jharkhand movement had been slowly gaining momentum was evident
from the increasing level of state repression in the 1980s.127
The Subarnarekeha-Kharkai dam project due to which 120 tribal villages of

Singhbhum are going to be submerged, will displace over 8,000 tribal families.
On April 2, 1982, Gangaram Kalundia an ex-serviceman and winner of the
President’s Medal, was brutally killed by the Bihar police for protesting against
the construction of the said dam. On April 19, 1985 Father Anthony Murmu, an
ex-member of Parliament and 14 of his associates were butchered by the Bihar
police in Banjhi for demanding the traditional fishing rights of tribals.
127
Das, Victor ‘Jharkhand movement: From Realism to Mystification’, EPW, July 28, 1990.

In spite of the repression, the Jharkhand Mukti Morcha and the All Jharkhand
Students Union continued to rally around the tribals to protect their livelihoods
and identity. In 1991, their demand for a separate state was partially conceded by
promising them an autonomous district council and a separate budget. The then
Chief Minister of Bihar also declared that the tribals traditional fishing rights
would be restored. Eventually, Jharkhand was born as a separate state in 2001.
What was the impact of this on the livelihoods of tribals in Jharkhand? As per
NSS data, poverty in Jharkhand came down from 51.6 percent of the population
to 41.6 in percent in 2009-10 versus fall from 42.0 percent in 2004-05 to 33.8
percent in 2009-10 for all-India. Thus, though poverty remained higher in
Jharkhand at the end of the decade, it fell faster than in the rest of India.
As the mainstream parties the Congress and the BJP realized they had lost the
support of the tribals, they tried to woo them using different strategies. The
BJP tried first by extending to the tribals an invitation to the fold by saying
that they were basically ‘Hindus’ and the missionaries had misled them using
various inducements to convert them to Christianity. But the Hindutva card
failed to attract tribals. The Congress then tried to address the issue of access to
forests as a basis of livelihoods of the tribals. This they did soon after coming to
power as United Progressive Alliance (UPA) I. The Scheduled Tribes and Other
Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006, was
passed on 18 December 2006.128 The law concerns the rights of forest-dwelling
communities to land and other resources, denied to them over decades as a
result of the continuance of colonial forest laws in India. Supporters of the
Act claim that it will redress the ‘historical injustice’ committed against forest
dwellers, while including provisions for making conservation more effective
and more transparent.
More than the tribals, it was the lowest caste, erstwhile ‘untouchables’ who
constituted a traditional support base of the Congress Party. Mahatma Gandhi
was the first major political leader to realize the plight of the untouchables,
or Harijans (literally, Gods own people) as he named them. He made the
removal of untouchability and restoration of the social standing of the Harijans
a major agenda of the freedom movement. He took many steps towards this,
from having a Harijan family live and eat in his ashram to leading numerous
agitations for allowing entry into Hindu temples to Harijans (Chandra,
et al 1988).129
128
123http://en.wikipedia.org/wiki/The_Scheduled_Tribes_and_Other_Traditional_Forest_
Dwellers_(Recognition_of_Forest_Rights)_Act,_2006.
129
Chandra, Bipin, et al India’s Struggle for Independence, Penguin India, New Delhi, 1988.

After Independence, the founding fathers of the Indian Republic extended
Constitutional protection to the Scheduled Castes and Scheduled Tribes
so-called because they are guaranteed certain reservations in legislative
representation and public appointments under a schedule of the constitution.
The Congress Party, however, steadily lost the support of these groups due to
reasons similar to those outlined above.
In the 1980s, the SCs, who now refer to themselves as Dalits (the oppressed)
were no more willing to be taken for granted as the docile vote bank of the
Congress, as they had been, in the previous three decades. In certain regions,
particularly Uttar Pradesh, they coalesced into a new party, known as the
Bahujan Samaj Party (BSP). Though the BSP claims that its base is wider, in
practice it began as a party of the Dalits.
“The ideology of the Bahujan Samaj Party (BSP) is ‘Social Transformation

and Economic Emancipation’ of the ‘Bahujan Samaj’, which comprises of the
Scheduled Castes (SCs), the Scheduled Tribes (STs), the Other Backward Classes
(OBCs) and Religious Minorities such as Sikhs, Muslims, Christians, Parsis and
Buddhists and account for over 85 percent of the country’s total population.”130
This party did remarkably well in the assembly elections in 1989 as an alliance
partner of the BJP. It first came to power when Mayawati became Chief Minister
for a period of four months in 1995. This was followed two more spells in power
– one lasting six months in 1997 and another of fourteen months in 2002-03.
But in the 2007 elections, BSP came to power on its own and Mayawati served
as Chief Minster for a full five-year term. Did it really impact the livelihoods of
the Dalits is debatable. The current daily status unemployment rates for rural
Uttar Pradesh,131 according to various rounds of the NSS, were as follows:
Table 36: Current Daily Status of Unemployment Rates (Uttar Pradesh)
UP Rural Male Female Persons
2011-12 56 27 51
2009-10 61 28 56
2007-08 58 32 53
2004-05 43 17 37
Source: NSS
130
http://www.bspindia.org/bsp_amazing_journey.php
131
http://mospi.nic.in

As it can be seen, throughout her five year tenure from 2007-12, Mayawati
never managed to reduce the unemployment rate for rural UP even to the
2004-05 level. Though data is not separately available for SCs, it is unlikely
that they fared any better and probably did worse than the population average.
Thus political power did not help the Dalits economically.
5.8 Implications for Livelihood Practitioners
What is the implication of this study of political economy of livelihoods in India

for livelihood practitioners? In a sense, we must acknowledge that almost all
programmatic livelihood promotion efforts are an extended form of Loyalty,
or at least meant to promote loyalty. Whether it was the Integrated Rural
Development Program (IRDP), now being recast for the second time as the
National Rural Livelihood Mission, or it is the National Rural Employment
Guarantee Scheme (NREGS), these are all ameliorative. Even NGO programs
for livelihood promotion are in the same category.
Voice: There are NGOs or activists who do not directly promote livelihoods
but help people to become aware of their rights to the bases of livelihoods
and also claim their rights. (See box on the Ekta Parishad of PV Rajagopal
earlier in this chapter). Some others are helping people assert their claims on
entitlements – such as Aruna Roy of the Mazdoor Kisan Shakti Sangathan,
which was instrumental in pressuring the government to convert the National
Rural Employment Program into the NREGS. The work of Medha Patkar
with the Narmada Bachao Andolan, established once and for all, the right of
‘project affected persons’ to adequate compensation and rehabilitation. The
Chipko Movement in the Uttarakhand Hills established the rights of people to
the forests in their vicinity. These have reached a point where the last decade
can be characterized as one of rights based legislation - from the Right to
Information to the Right to Education, the Right to Work for 100 days a year
to the right to food security. Indeed all that is left is to move Article 39(a) of
the Constitution:
“The State shall, in particular, direct its policy towards securing (a) that the
citizens, men and women equally, have the right to an adequate means of
livelihood”
from the chapter on Directive Principles (which are not enforceable in a court
of law) to the chapter on Fundamental Rights, which are enforceable in the court
of law.

Finally, the Naxalites or the Left Wing Extremists are an example of Exit.
Many of them are as concerned about the livelihoods of people they work with,
particularly tribals and landless laborers. Indeed, one of the reasons for their
popularity is that they are able to assure better wages and working conditions
to farm laborers and better access to forests to tribals living in the areas they
control.
The mainstream livelihood practitioners, though ‘loyalist’, need to learn

from both the Rights Activists and the Left Wing Extremists and modify
their program strategies to take into account incidents or processes where
exploitation is taking place and confront and curb these. If necessary, this may
require protests or agitations against vested interests and can, in some cases,
be done with state assistance. In other cases, the focus on participation and
equitable distribution, which characterizes the Left Wing Extremists, may have
to be adopted as a norm till the long-oppressed people feel confident. Indeed,
as poverty reduces in India and it becomes more difficult to uplift segments of
the poor left behind, the means and some of the methods of Rights Activists
and the sub-set of constitutional methods of the Left Wing Extremists may
have to be incorporated in mainstream programs.
Any good livelihood practitioner, whether in the government or in an NGO,

who has perceived that its cause lies in extreme poverty and exploitative
structures and processes, will agree with this. The point now is to mould that
into our practice, if we have to eradicate poverty. Thus, advocacy, social action
and political mobilization will have to be inter-woven in the new generation
livelihood programs. Advocacy is the active support of an idea or cause
expressed through strategies and methods that influence the opinions and
decisions of individuals and organizations alike i.e., those who either influence
policy or those who impact people’s lives through their actions.
The aims of advocacy are to create or change policies, laws, regulations,

distribution of resources or other decisions that affect people’s lives and to
ensure that such decisions lead to implementation. Such advocacy is generally
directed at policy-makers including politicians, government officials and public
servants, but also private sector leaders whose decisions impact people’s lives
as well as those whose opinions and actions influence policy-makers, such as
journalists and the media, development agencies and large NGOs. In the Tools
Chapter we have included a note on the techniques for effective advocacy.

Lessons from Practical Livelihood
6. Promotion Approaches
6.1 Pre-Independence Efforts for Livelihood Promotion
The thinking on livelihood promotion has evolved a great deal since the early
days, with contributions from people such as Rabindranath Tagore, conceiver
of the Sriniketan Experiment, Spencer Hatch of YMCA Martandam project, F.R.
Brayne of the Gurgaon Project and Albert Meyer of the Etawah project, who
initiated livelihood promotion in their own ways. In 1912, Rabindranath Tagore
set up the Institute of Rural Reconstruction in Surul (Sriniketan experiment).
Sriniketan introduced improved agriculture through new technologies, new
breeds of cows and poultry and village crafts in 17 surrounding villages with
a total population of 7,000. It emphasized a scientific study of the problem in
villages before attempting a solution, to help people solve their own problems.
In consonance with such ideas, they set up an agricultural college and a rural
research center, created regular and non-formal schools, and trained village
teachers over the years.
Mahatma Gandhi, one of the early livelihood thinkers of 20th century had a
deep concern both for the poor and for sustainability and had a holistic vision
of livelihoods. Gandhiji suggested that as members of a mutually supportive
community people should get involved in development of local economies by
promoting inter-dependent activities, eventually leading to ‘Gram Swaraj’.
The All India Spinners Association was set up to promote khadi (hand-spun,
hand-woven cloth). Later, in 1935, the All India Village Industries Association
(AIVIA) was set up in Wardha. The major focus of this initiative was village
reorganization and reconstruction through revival of village industries. During
this period, the emphasis was on building human capital and imparting
knowledge as it was believed that people were not getting good remuneration
because they lacked the knowhow to carry out their work better.
The Gurgaon project was implemented during the early 1920s by the then
District Collector Mr Frank Brayne, as part of the Government’s initiative
for increasing production. The main focus of this experiment was to educate
farmers on the use of tools and technology, improved seed varieties, improving
soil fertility and raising better animal varieties. In 1921 Spencer Hatch initiated
Lessons from Practical Livelihood Promotion Approaches 163

the YMCA experiment at Martandam, a village near Thiruvananthapuram.
He aimed at not only bringing about physical and economic transformation,
but also cultural and spiritual enrichment through utilization of available
resources, self-help and cooperation among the village folk, involving all the
people and reaching the poorest in a hundred villages. The activities included
promotion of cottage industries, literacy programs, training of workers and
establishment of cooperatives. Innovative and scientific methods were used for
poultry farming, bee-keeping, cattle care, weaving etc.
In 1948, Albert Mayer, an American engineer and town planner started the
Etawah Pilot Project in the Etawah district of Uttar Pradesh, with the ultimate
goal of comprehensive modernization of villages through self-help and people’s
participation. It aimed at revitalization of 100 villages through village level
workers who were trained to provide technical assistance, adult education and
community organization to enhance agricultural production.
The Community Development Program of the Government of India was also

designed on these lines. The second five year plan attempted to institutionalize
this through various programs.
Two of the fountainheads of voluntarism - charity (parmaarth) and service

(seva) are part of the Indian tradition. Voluntary action originated in religious
activity. In the nineteenth century, the origins of voluntary action can be
traced to Christian missionaries, who went beyond proselytization to attend
to the worldly problems of the people in rural and tribal areas that they
were working with. Partly in response to such efforts, Indian organizations
such as the Ramakrishna Mission were formed by Swami Vivekananda and
they aimed to do voluntary work. As described above, Rabindranath Tagore
began the Sriniketan experiment for rural development in the areas adjoining
Shantiniketan. However, Mahatma Gandhi can be called the father of the
modern voluntary movement in India.
Gandhiji’s inspiration for voluntary action came from multiple sources. The
first of these was his religious upbringing, wherein he imbibed the message of
empathy towards the suffering of others. This is poignantly captured in one of his
favorite bhajans Vaishnava jana to taine kahiye je pir parai jaane re – ‘Call only
that person devoted to God, who understands the pain of others’. The second
source was his exposure to the work of Christian missionaries and those engaged
in social service activities in the West. The third came from exposure to the ideas
of Leo Tolstoy and John Ruskin, who defined a virtuous life as living simply and
being close to nature, pursuing spiritual rather than material goals.

Gandhiji experimented with these ideas in South Africa, first working in the
Ambulance Corps during the Boer War, then practicing social activism and
community living at the Tolstoy and the Phoenix Farms, living close to nature,
in a frugal and self-reliant manner. When Gandhiji came back to India, Gopal
Krishna Gokhale advised him to go around the country and see the people
as they live. The poverty of the people made a deep impression on him.
Gandhiji’s first satyagraha in support of the indigo laborers in Champaran,
while primarily a political struggle, also had elements of constructive work
(as Gandhiji called voluntary action), such as training villagers in hygiene,
educating children, building roads and digging wells. After this, Gandhiji
made constructive work an integral part of his political strategy, where periods
of intense struggle for Independence were interspersed with working for the
alleviation of suffering and social and economic upliftment of the poor.
Gandhiji established these activities around interested individuals. His

Ashrams, first near the Sabarmati in Ahmedabad and later at Sewagram in
Wardha, were havens where various individuals with a strong sense of social
purpose came to Gandhiji. He gave them different missions based on their
background, ability and interest. Thus one was given the task of serving lepers,
another of working with Harijans, yet another of promoting basic education,
while some others were entrusted the task of promoting khadi and village
industries. These activists eventually established organizations such as the
Hind Kusht Nivaran Sangh, Harijan Sevak Sangh, Buniyadi Talim and the All
India Spinners’ Association, which worked in these areas. These organizations
constituted the beginning of indigenous voluntary action in India.
6.2 Post-Independence NGO Efforts for Livelihood

Promotion132
6.2.1 Gandhi and other Pioneers
In the post-independence era, some of the institutions inspired by Gandhiji,

such as the Harijan Sevak Sangh, began to receive government support,
while others became organs of the government, such as the Khadi and Village
Industries Commission. Other institutions chose not to seek much state
support. These were grouped under the umbrella of the Sarva Seva Sangh,
which was a federation of Gandhian voluntary organizations in different fields
132
This section is largely taken from a paper by Mahajan, Vijay (2002). Voluntary Action in India:
A Retrospective Overview and Speculations for the 21st Century. National Foundation for India,
New Delhi.Press.

and different locations. Its members were known as Sarvodaya workers, who
worked out of Ashrams in different remote parts of the country. A training
center for such workers was established at the Shram Bharti Ashram at
Khadigram in Munger district of Bihar and for many years it trained scores of
young Sarvodaya workers under the guidance of Acharya Dhiren Mazumdar.
Other Gandhians started independent ashrams or institutions all over the

country. Among the most prominent ones was Manibhai Desai, who established
the Bhartiya Agro Industries Foundation in Pune for rural development and
attracted many professionals to work with him. The work of Gandhians was
spread all over the country and in different fields, from the Gandhigram (now
Rural University) near Madurai in Tamil Nadu to the Anandvan at Warora set
up by Baba Amte to rehabilitate leprosy affected persons, to the Gandhi Peace
Mission in Nagaland, to the Textile Labor Association, the progenitor of the
Self-Employed Women’s Association (SEWA) in Ahmedabad, Gujarat.
Many Gandhians resisted institutionalization and preferred individual or

group voluntary action. Acharya Vinoba Bhave was one such pioneer. In 1951,
watching the growing violence linked to the issue of unequal land ownership
in the countryside, particularly in the Telangana region, he made a visit to the
area and had a dialogue with the landless and the landlords. In the village of
Pochampalli, 40 kms from Hyderabad, he had an inspired vision based on
a simple gesture by Ramachandra Reddy, the young son of a landlord, who
offered to donate part of his land to the landless people in his village. Vinoba
decided that he would make it his mission to persuade landowners all across
India to voluntarily give part of their land for redistribution to the landless.
This became the Bhoodan Movement. Vinoba walked incessantly for nearly 14
years throughout the length and breadth of India and managed to collect 42
lakh acres of land under Bhoodan by 1966. This was a high point of Gandhian
voluntary action in India and perhaps unparalleled in the world.
6.2.2 The Young Idealists
In 1966, the country had a major drought, and as a result near-famine

conditions prevailed in many parts, particularly in Bihar. This resulted in an
upsurge of voluntary relief efforts, often spearheaded by Sarvodaya workers
who had established ashrams all over Bihar. Jayaprakash (J. P.) Narayan was
the leader of this movement, working from the Sakhodara Ashram in Nawada
district. After the relief efforts, many of the workers decided to take up longer
term efforts to reduce dependence on rains, increase agricultural production
and generally work for rural development. J. P. himself chose one of the poorest

areas, the Musahari block, named after a community apocryphally said to eat
mice (musa ahar) because they had no other food. J. P. also helped establish
the Association for Voluntary Action in Rural Development (AVARD), as an all
India forum for such efforts.
Many young student volunteers who came to work in relief efforts during the
Bihar Famine in 1966 and later the Bangladesh refugee crisis in 1971, stayed
on or came back to establish voluntary organizations. Bunker Roy, who
established the Social Work and Research Center (SWRC) at Tilonia, district
Ajmer, Rajasthan and Joe Madiath, who set up Gram Vikas in Ganjam district,
Odisha are two examples of this. Dr Anil Sadgopal, a molecular biologist
trained at CalTech, USA, who was working at the Tata Institute of Fundamental
Research (TIFR), established a program for innovations in rural education
at Hoshangabad district, Madhya Pradesh. A young doctor couple, Rajnikant
and Mabel Arole, set out to improve the rural primary health care system at
Jamkhed in Ahmednagar district, Maharashtra. Dunu Roy, who used to run the
Front for Rapid Economic Advancement, a student organization at IIT Bombay,
established the Vidushak Karkhana, combining appropriate technology with
social analysis in Shahdol district of Madhya Pradesh.
These efforts, though small, were significant as they attracted a new generation
of young people, urban and well-educated, who had access to mainstream
opportunities but who chose to live and work in remote rural areas with poor
people. By this time, many international relief and development groups such
as OXFAM, UK, Bread for the World, Germany, and Catholic Relief Services,
USA began work in the country, using donated food grains for food for work
programs, offering short term lean season wage employment, and building
rural community assets such as roads and tanks. Foreign donor agencies which
were not directly active in projects also started to give funds to Indian voluntary
groups for carrying out development programs. Many of the established NGOs
such as ASSEFA, Tamil Nadu; MYRADA, Karnataka; AWARE and RDT, AP
began their work in this period, largely with international donor support.
In 1975, Prof Ravi Matthai, founder Director of the Indian Institute of Management,
Ahmedabad (IIM-A), conceived and led an experiment to test whether corporate
management disciplines could be related to gut issues of Indian poverty. He selected
Jawaja block which included about 200 villages with a population of approximately
80,000 people in a drought prone district of Rajasthan, and was then regarded by
the government authorities as devoid of any scope for development. Believing that
people were the greatest resource for development, Matthai began to work with
village communities on issues of livelihood and empowerment.

Volunteers from IIMA and the National Institute of Design (NID) joined with the
local citizens in their search for livelihood options that could be sustained in the
face of social, environmental and political challenges.
Languishing skills in weaving and leather work were selected in an effort to

develop new opportunities for earning that could be outside the control of local
vested interests while remaining rooted in familiar and tested capacities. The
Jawaja Experiment thus began with Prof Ravi Matthai leading a small group of
volunteers to what seemed a barren patch of land with little resources and even
less hope. Forty years later, the Jawaja Leather Association and the Jawaja
Weaver’s Association, linked as Artisan’s Alliance of Jawaja (AAJ), continue
their struggle for self-reliance and dignity. They have come a long way. The
leather workers and weavers have won a degree of economic independence.
Their products are reputed in India and in many parts of the world.
The Social Work and Research Center (SWRC)133 was resurrected by Bunker
Roy as The Barefoot College. It is a voluntary organization that uses skill
development and education to focus on issues of electrification through solar
power, health, drinking water and women empowerment. The Villagers’
Barefoot College in the village of Tilonia gives lessons in reading, writing and
accounting to adults and children especially the drop-outs, cop-outs and wash-
outs. Girls heavily outnumber boys in the night schools. In 2008 there were
approximately 3,000 children attending 150 night schools. The programs
focused on building capacities of the villagers so that they could manage and
maintain community infrastructure like water pumps (reducing dependence on
outside mechanics), and on solar power to decrease dependence and time spent
on kerosene lighting. The programs are influenced by the Gandhian philosophy
of each village being self-reliant. The policy of the Barefoot College is to take
students, primarily women from the poorest of villages and teach them skills
such as installing, building and repairing solar lamps and water-pumps without
requiring them to read or write.
At the same time, many idealistic youth rejected the route of voluntary action in
favor of more militant activism, even the armed struggle. Not all those who were
unhappy with the state of society, however, chose the path of the armed struggle,
or at least, militant activism for social change. They recognized both their own
constraints and structural constraints to social action.
133
See http://en.wikipedia.org/wiki/Barefoot_College for more information

Some were inspired by the obvious success of the efforts of Dr Kurien in
organizing milk producers into the famous AMUL dairy cooperative. They
began to recognize that social change required more than just good intentions or
ideological zeal. A degree of professionalism was needed. The Institute of Rural
Management, Anand (IRMA) was set up in 1980 by Dr Kurien and provided
scores of young graduates to the voluntary, particularly rural development sector.
PRADAN was set up in 1982 to attract, train and support young professionals in
rural development and brought in hundreds of professionals, who worked at the
grassroots with tribal and other disadvantaged communities in remote locations.
By the 1990s, the working paradigm had shifted from volunteerism to

professional voluntarism. The former implied working for no or a token
remuneration, which was feasible only for either individuals who could be
supported by well-off friends and families or the very few who could live very
modestly and without any recourse to face life cycle contingencies. The latter
emphasized that voluntarism meant of one’s free will or in Hindi swa-prerit or
self-motivated) and that taking of moderate remuneration did not come in the
way of public-spirited work.
6.2.3 The State and the NGO Sector – A Difficult

Relationship
The difficulties in the relationship between the state and the voluntary sector
began soon after independence, with some of Gandhiji’s followers opting for
politics and power and others for voluntary constructive work. However, as
most were comrades in the freedom struggle, their earlier friendships continued
and resulted in state support to various voluntary agencies, which were mainly
Gandhian in those days. The state also supported Vinoba’s Bhoodan Movement
(in some cases, by donating state land!). Nevertheless, the differences in social
vision and approaches to growing disparities became a cause for increasing
the hiatus between voluntary sector workers such as J. P. and political leaders,
particularly Indira Gandhi.
The 1970s began with the euphoria of military and moral victory in the Bangladesh
war. But soon, poor economic performance, coupled with decline in ethical
standards in politics, caused widespread unrest. In 1973, the Nava Nirman (new
construction) movement spearheaded by student activists in Gujarat led to the fall
of a corrupt state government. By 1974, J. P. had developed serious differences
with Indira Gandhi and started a political movement for total revolution, which
led to the imposition of emergency in mid-1975, and clamping down on political
opponents as well as voluntary activists, many of whom were seen as disruptive.

This is how the first post-independence downturn in the relationship
between the government and the voluntary sector, came about. The Foreign
Contributions Regulation Act (FCRA) was enacted in 1976 to control the
inflow of foreign funds to voluntary agencies, which were by then beginning
to be called non-governmental organizations or NGOs. The state began to
take notice, but negatively. There was a complete reversal in 1977, however,
when the first Janata government came to power after Indira Gandhi’s defeat.
Voluntary action was elevated to a high pedestal and many national programs
designed on the inspiration of voluntary work. For example, the government
launched a Food for Work program on the lines run by the voluntary sector,
which later became the National Rural Employment Program. The work of
the Aroles at Jamkhed led to a nation wide scheme for Community Health
Workers. The Government of India launched the National Adult Education
Program, the first government program designed to be implemented almost
exclusively through voluntary agencies. As a result, many so-called voluntary
agencies sprouted as implementers of government programs, while others
expanded and became dependent on government funding.
There followed, inevitably, a downturn when Indira Gandhi was re-elected

in 1980. One of her first acts was to set up the infamous Kudal Commission
of Enquiry into the affairs of certain Gandhian organizations, particularly
AVARD and the Gandhi Peace Foundation. This enquiry caused a lot of
disruption for the voluntary sector, particularly to the Gandhian and Sarvodaya
organizations, and led to a certain degree of loss of credibility as well. The
government also further tightened the FCRA based on vague charges of foreign
funds being misused for fomenting disruption. The Left separately launched
an aggressive campaign against NGOs, with Prakash Karat accusing NGOs of
being imperialist tools since they received foreign funds. These attacks led to a
further loss of credibility and confidence in the voluntary movement.
In the next turn of the historical cycle, when Rajiv Gandhi came to power
in late 1984, he decided to give a larger role to NGOs in implementing
development programs. Archetypal voluntary activist Bunker Roy was
brought in as Advisor to the Planning Commission and Rs 100 crore were
earmarked in the Seventh Five Year Plan for funding NGOs. The Council
for Advancement of Peoples’ Action and Rural Technology (CAPART)
was established to route government funds to NGOs, while government
departments, state governments and District Rural Development Agencies
were encouraged to work with NGOs. This soon led to a flood of government
funding and in some cases, led to corruption on both sides - with lots of
so-called NGOs sprouting up to mop up government funds.

In the early 1990s, the flow of foreign funds also went up significantly in
the same period as northern governments began to channel more of their
aid through their respective country NGOs. This was partly a result of the
Reagan-Thatcher ideology in the US and the UK, under which the welfare
state was dismantled and the private sector was encouraged to take over many
of the roles that the state was playing. In the social and development sectors,
this meant that Private Voluntary Organizations (PVOs), as they are called
in the US, were to take the lead. The same ideas were imported to India.
Under the pressure of foreign donors, and the increasing acknowledgment
of the abysmal failure of government poverty alleviation schemes such as
the IRDP, a large number of government programs and schemes were given
for implementation to NGOs. This included the Integrated Watershed
Development Program and the formation of SHGs for savings and credit,
among others. Another trend that was seen was that several new generation
government programs not only learnt to use NGO methods of participatory
planning and implementation but also recruited a large number of NGO
workers as staff.
By the end of the 1990s, the limitations of NGOs as implementers of

government programs became apparent. The high quality of NGO work began
to deteriorate when they tried to scale up, and many were not able to cope
with the procedural needs of carrying out work using public funds. State
support remained confined to a few enlightened senior bureaucrats, while a
vast majority of politicians and lower level government functionaries remained
hostile to NGOs. In some of the worst cases, shady NGOs established a nexus
with the latter and shared in the spoils.
6.3 Post-Independence Government Efforts at

Post-Independence, India took up planned development and started

adopting five year plans. While the first two five year plans focused on
increasing the area under irrigation through the construction of large multi-
purpose dams, the Third Five Year Plan sought to achieve a rapid increase
in the level of agriculture production through the Intensive Agricultural
District Program (IADP-1960) and later the Intensive Agricultural Area
Program (IAAP-1964). These programs followed the package approach of
use of improved practices and achieved modest results. These programs
operated within the limitations set by existing crop varieties which had
relatively low response to fertilizers.

A major change occurred with the introduction of the high-yielding varieties.
The propagation of various high-yielding varieties over fairly large areas was
taken up as a full-fledged program from Kharif 1966 onwards. By 1967-68,
6.04 million ha were brought within the purview of this program. On the eve
of the Fourth Plan, the coverage estimated was 9.2 million hectares.134 This
produced the desired results and food grain production shot up from 72 million
tons in 1965-66 to 108 million tons by 1970-71. But it also led to unforeseen
problems. The smaller farmers and the less irrigated regions were left behind.
To correct this, the Government of India started special programs to address
the segments or regions left behind. A serious limitation of the High Yielding
Varieties approach also became apparent by the late 1960s when they realized
that just the know-how was not enough, a variety of services to enhance
livelihoods were also necessary. Therefore, an alternative strategy was evolved,
which tried to integrate various services for a sector- wheat, paddy, milk or
soybean, by building market linkages, technology transfer, building physical
and social infrastructure, etc. The focus now was to bring all these elements
under one fold, using the integrated approach.
The Small Farmers Development Agencies (SFDA) program,135 aimed at the

target group of small and marginal farmers and agricultural laborers, was
operationalized since 1971 covering 1818 blocks in the country. The objective of
the Program was to assist persons, specifically identified from this target group,
in raising their income level by helping them to adopt improved agricultural
technology and acquire means to raise agricultural production using minor
irrigation sources and so on and also to diversify their farm economy through
subsidiary activities such as animal husbandry, dairying, horticulture, etc.
Up to March, 1980 the agencies had identified 16.7 million persons from the
target group for such assistance. Out of these, 8 million beneficiaries, including
1.3 million belonging to the scheduled castes and scheduled tribes, had been
given assistance. Some 6.1 million or 75 percent of these beneficiaries had been
helped to access improved agricultural practices through subsidized supply of
inputs, improved implements and field demonstrations.
A special program for the development of Drought Prone Areas (DPAP) was
introduced in the mid 70s. A program of Food for Work was launched in 1977 to
provide opportunities of work for the rural poor particularly in slack employment
periods of the year which would at the same time create durable community
assets. Irrigation facilities had been expanded manifold.
134
http://planningcommission.nic.in/plans/planrel/fiveyr/welcome.html
135
http://planningcommission.nic.in/plans/planrel/fiveyr/6th/6planch11.html

With a view to removing regional disparities, particularly in less endowed or dis-
advantaged areas, like the hill and tribal areas, special sub-plans of development
were introduced. A Minimum Needs Program was designed to secure to the
rural areas within a reasonable time-frame certain basic amenities in the field of
education, health, drinking water, electrification, roads and house-sites.
6.3.1 Efforts Targeted at Wage Employment
To take care of severe unemployment and related distress in drought years,

various programs were devised and the most successful of these was the
Maharashtra Government’s Employment Guarantee Scheme (EGS):
EGS aims at providing unskilled manual work to all able-bodied persons

looking for employment. The scheme will form part of the State Plan program
of the Integrated Area Development Scheme for small farmers and agricultural
laborers. The works proposed to be taken up under the scheme relate to contour
bunding, irrigation, roads and village industries. The Gujarat Government’s
Right to Work Scheme provides for unskilled jobs to the unemployed workers
on multipurpose, major, medium and minor irrigation works, capital projects,
roads and soil conservation works.136
The Food for Work Program initiated in 1977-78,137 aimed at the creation
of additional employment in rural areas on works of durable utility to
the community, with the use of surplus foodgrains available in the buffer
stock for payment as wages. After its launch the program proceeded in fits
and starts, but gained momentum in 1978-79 when over 12 lakh tons of
foodgrains were utilized creating 372.8 million man-days of employment.
During 1979-80, the utilization was estimated at 23 lakh tons of foodgrains
resulting in about 600 to 700 million man-days of employment. The
National Rural Employment Program was conceived along the same lines,
with the main aim to take care of that segment of the rural poor, which
largely depended on wage employment and virtually had no source of
income during the lean agricultural period.
This was then sub-divided into a Rural Landless Employment Guarantee

Program (RLEGP). This was introduced on August 15, 1983, with the
objective of (a) improving and expanding employment opportunities for
the rural landless with a view to providing guaranteed employment to at
136
http://planningcommission.nic.in/plans/planrel/fiveyr/welcome.html
137

least one member of every landless household for up to 100 days in a year
and (b) creating durable assets for strengthening the infrastructure so
as to meet the growing requirements of the rural economy. An outlay of
Rs 500 crore, to be fully financed by the Central Government, was provided
under this program in the Sixth Plan. The implementation of the program
was entrusted to the states and union territories, but they were required to
prepare specific projects for approval by a central committee. During 1983-
85, the central committee approved 320 projects with an estimated cost
of Rs 906.59 crore. The target for employment generation in 1983-84 and
1984-85 was fixed at 360 million man days against which 260 million man
days of employment was generated.138
Mid-way through the Sixth Plan, the RLEGP139 was revamped. It started with
the dual objective of expanding employment opportunities in the rural areas
and providing sharper focus on the landless labor households, which constitute
the bulk of people below the poverty line. Efforts were made to implement a
limited guarantee for providing 80 to 100 days employment to the landless
labor households through this program. In the seventh Plan an outlay of
Rs 1,250.81 crore was provided for NREP in the Central Sector, which was to
be matched equally by the states. An outlay of Rs 1,743.78 crore was provided
in the seventh Plan for RLEGP which was to be borne entirely by the Center.
Based on the average wage of Rs 8.61 per day as in 1984-85 and a wage material
cost ratio of 50:50, a total employment of 1,445 million man days under NREP
and 1,013 million man days under RLEGP were to be generated during the
Seventh Plan period at an average rate of around 290 million man days and
200 million man days per annum respectively.
These wage employment programs eventually became the Mahatma Gandhi

National Rural Employment Guarantee Act (MGNREGA) and the NREG
Scheme was launched on February 2, 2006. In the first full year of operation
which was 2006-07, the scheme covered 200 districts. The program was
later expanded nationwide. The primary objective of the scheme is to provide
guaranteed wage employment for hundred days in a financial year for a rural
household who volunteer to do unskilled manual work. This work guarantee
can also serve other objectives: generating productive assets, protecting the
environment, empowering rural women, reducing rural-urban migration and
fostering social equity, among others.
138
139
http://www.teindia.nic.in/mhrd/50yrsedu/15/8P/84/8P840203.htm

6.3.2 Khadi and Village Industries
The Khadi and Village Industries Commission (KVIC) was the largest livelihood
promotion effort based on Gandhian thinking. Set up in the 1950s, KVIC is
an example of the first large government intervention in the non-agricultural
sector. The KVIC selected nearly 20 activities, from khadi (hand spun,
hand woven cloth) to gur (jaggery) making to leather work, and promoted a
network of training centers, production units, common processing facilities
and marketing outlets. Even though the KVIC counts its outreach in crore, the
benefits of KVIC programs were rather modest in terms of additional wages or
employment. In addition, most of the industries required subsidies, given in
the form of marketing rebate on products.
6.3.3 Efforts Targeted at Self-Employment
Recognizing that ‘job-creation’ was not a feasible option, the Government

of India started focusing on self-employment opportunities in the latter half
of 1970s.
Of the 350 million people below the poverty line in India, around 300 million
were from rural areas. Landless laborers, small and marginal farmers, rural
artisans, and other workers constituted the bulk of the people below the poverty
line. Recognizing that the people in the target group possessed little or virtually
no assets, appropriate skills or vocational opportunities, the program sought to
assist them through an appropriate package of technologies, services and asset
transfer programs.
The Integrated Rural Development Program (IRDP) was launched in 1980. The
IRDP was morphed into the Swarnjayanti Gram Swarozgar Yojana (SGSY),140
a major scheme for self-employment of the rural poor. The basic objective of
the scheme was to assist poor families (swarozgaris) by providing them income
generating assets through a mix of bank credit and government subsidy,to help
raise their position above the poverty line. Credit was the critical component
of the scheme, whereas subsidy was an enabling element. The scheme involved
organization of the poor into SHGs build their capacities through a process
of social mobilization, training, selection of key activities, planning of activity
clusters, creation of infrastructure, provision of technology and marketing
support, and so on.
140
http://planningcommission.nic.in/sectors/index.php?sectors=rural

Unfortunately credit mobilization under SGSY had been low. Furthermore, a
large number of SHGs were formed, but many fizzled out midway after availing
the revolving fund. The SGSY program was restructured and recast as the
National Rural Livelihood Mission (NRLM) in 2011.141
6.4 Microfinance as a Livelihood Intervention in India142
6.4.1 Background of the Microfinance Industry in India
6.4.1.1 Era of Moneylenders and Early Attempts at Alternatives

Access to credit has for ever been a major constraint for the poor in India.
Traditionally the poor depended on large farmers, merchants and middlemen,
pawn brokers and moneylenders for meeting their credit needs. The
relationship between money lenders and the poor was usually that of patron-
client, meaning that the transaction affected their social and economic
relations more widely. Unable to pay high interest rates, the poor often ended
up forfeiting their land and eventually becoming bonded laborers to money
lenders. Abusive practices were quite common and there seemed to be no
escape from this situation.
Many attempts were made to break dependence on money lenders through

provision of institutional credit. In the famine years of the 1860s, after the
peasants rebelled in some areas, the British colonial administration started
giving tacavi loans out of the land revenue. These were not widespread and
became prone to patronage and corruption of lower revenue officials. In the
1890s, some British administrators tried to experiment with the Raiffeisen,
Germany style savings and credit cooperatives and the colonial government
passed the Indian Cooperatives Act in 1904. The cooperatives were, however,
largely run by rich farmers and were embroiled in local power politics. The
poor could only receive loans only if they worked for lower wages for the
rural elite. In addition, unlike the German cooperative system, the Indian
cooperatives were not based on savings and were merely seen as a channel for
disbursing government loans. Thus the people had little stake in the health of
the cooperatives and slowly the system become dysfunctional.
141
http://megplanning.gov.in/plan/suplement/2012-13/sector/2.pdf
142
This section is partly based on a significantly updated version of Vijay Mahajan and T. Navin;
Microfinance in India: Growth, Crisis and the Future, in Köhn, Doris (Ed.) Microfinance 3.0
Reconciling Sustainability with Social Outreach and Responsible Delivery, accessible at http://
rd.springer.com/book/10.1007%2F978-3-642-41704-7#

6.4.1.2 Post Independence Efforts (1947-68)
The need to produce enough food to feed the growing population was
a priority for the newly independent India. In the initial two decades
1947-67, cooperatives became less and less important as an answer to
provision of credit for agriculture. After the All-India Rural Credit Survey
(Gorawara Committee) report in 1954 showed that only 7 percent of rural
credit came from institutional sources, the Government asked the then
Imperial Bank of India (later SBI) to open 400 branches outside of big cities
and extend credit for agriculture. The Reserve Bank of India established a
Rural Planning and Credit Division and later the Agricultural Refinance and
Development Corporation to extend wholesale loans to banks. But none of
this proved adequate and when the high yielding variety package of intensive
agriculture was launched in the mid-1960s, it became imperative to upgrade
the rural credit system as well.
6.4.1.3 From Nationalization of Banks to Financial Sector Reforms

(1969-1992)
The government put the banks under ‘social control’ in 1967 as the banks,
on their own, were unable to address the credit needs of agriculture. But
within two years, the then Prime Minister Indira Gandhi nationalized the
top ten banks and mandated them to open a large number of rural branches.
Then in 1975, after money-lending was abolished during the Emergency, the
government set up a network of Regional Rural Banks (RRBs) to reach out
to the rural poor, specifically small and marginal farmers, rural artisans and
agricultural labor. With a focus on physical expansion of banking services the
branches grew rapidly between 1969 to 1990.
Table 37: Growth of Commercial Bank Branches and Priority Sector Credit
(1969-2010)
Year Rural Total Population per Priority sector

branches branches branch (in 1000s) credit as
% of total credit
1969 1833 8262 64 14
1980 15105 32419 21 33
1990 31114 55410 14 43.8
1995 33004 62367 15 33.7
2000 32734 65412 15 35.4
2010 32624 85393 13.8 35.1
(Source: RBI Progress of Commercial Banking at a Glance – RBI Statistical Returns)

Though the last column in the table 37 looks impressive, the fact is that the so-
called priority sector includes many non-poor sectors, such as large farmers,
commercial agriculture, small-scale industry, self-employed professionals and
exports. The banking system had limited ability to reach the small borrowers
as was evidenced by the fact that in 2004, only about 5 percent of bank credit
went to small borrowers. With insistence on collateral, only the well-off were
seen as a bankable proposition and large number of poor remained excluded
from the financial system. Despite the best of intentions of policy-makers,
the actual beneficiaries of the expansion of banking network turned out to
be medium and large farmers, both in their own names and indirectly in
the name of small farmers by using social connections and bribes to capture
cheap loans. The emphasis of the government was always on disbursement
of loans often by organizing ‘loan melas’ (fairs) and the hapless bankers were
left to their own means when it came to recoveries.
By 1989, the build-up of defaults had reached such a level, that the then Deputy
Prime Minister, Choudhary Devi Lal, himself a large farmer, announced the
first nationwide loan waiver – the Agricultural and Rural Debt Relief (ARDR)
Scheme in 1989. This became an example of patronage that was copied by
several state governments every time they wished to please the electorate.
The culmination of this was the Agricultural Debt Waiver and Debt Relief
Scheme, which during the financial year 2008-09, waived loans worth
Rs 71, 680 crore (about USD 15 billion at the then exchange rate), covering
some 43 million farmers.
6.4.1.4 Self Help Group – Bank Linkage model – Achievements and

Shortcomings
In order to enhance access to credit to the poor, since the mid-1980s, NGOs
started experimenting with credit groups. MYRADA, an NGO in Karnataka
since 1986 and PRADAN in Rajasthan since 1987, began setting up SHGs for
encouraging savings and credit and training on the principles of self-help.
These SHGs consisted of 10-20 members who pooled savings monthly and
lent to members from the pooled savings after a few months. In 1992 the RBI
approved a pilot project of linking SHGs to banks, which eventually led to the
SHG-Bank linkage program (SBLP) in 1996. The SBLP received major policy
and promotional support after two industry advocacy groups worked with the
RBI-appointed working groups in 1995 and later in 1999, both from the RBI,
NABARD, the central and various state governments, in particular, Andhra
Pradesh.

It was scaled up nationwide through support of National Bank for Agriculture
and Rural Development (NABARD) refinance of largely public sector bank
loans. As per NABARD’s Annual Report 2012-13, (p. 51).143
Starting from a modest scale as a pilot in the year 1992, the SHG-Bank
linkage program (SBLP) has turned into a solid structure with more than
79.60 lakh savings-linked SHGs covering over 10.3 crore poor households
as on 31st March 2012. The total savings of these SHGs amounted to
Rs 6,551 crore. The number of credit-linked SHGs under the program stood at
43.54 lakhs.
Though a great leap forward in terms of enhancing credit access by the poor,
the SHG model suffers from a major lacuna - it is subsidy driven, with at least
three types of subsidies:
• First, someone needs to organize the SHGs. In the early days, this was done
by NGOs, a role increasingly taken over by the government agencies as the
scale went up. But both required subsidies. In Andhra Pradesh, the funding
came from World Bank loans of USD 600 million to the government run
Society for Elimination of Rural Poverty (SERP).
• The second subsidy comes in the form of lower interest loan funds. While
in the early years, banks lent to SHGs at 12 percent per annum, successive
state governments tried to subsidize the rate at which SHGs got funds. In AP
it came down successively from 12 percent in 1996 to 9 percent before the
1999 state elections, to 3 percent after the 2004 elections in which the SHGs
were promised ‘pavala vaddi’ (quarter % per month interest or 3% pa).
In 2011, the subsidy was increased to cover the full interest, so the cost of
funds to SHGs has been reduced to 0 percent.144
• The third subsidy is in the form of bad debts that banks have to write off.
The recovery rates of SHGs in early years were 95 percent plus and have
steadily fallen as the poor sensed the program becoming one of political
patronage. The increasing subsidy had also led to increasing cornering of
credit by the better-off members, corruption and reduction in repayment
rates in expectation of loan waivers.
143
Annual Report, 2012-13, National Bank for Agriculture and Rural Development (NABARD),
accessible at www.nabard.org/Publication_AR2012_13_E_fullr%20(1).pdf
144
http://www.serp.ap.gov.in/AWFP/FrontServlet?requestType=BudgetLineReportRH&actionVal=Bu
dgetline1&Year=20122013&FunctionalHead=-1&District=-1&Mandal=-1&CostCenter=-1

6.4.2 Achievements and Shortcomings of MFIs in India
After the 1989 loan waiver, banks had already got put off from poverty lending.
With the advent of the economic reforms in 1992, banks became more oriented
to their financial health rather than to their social obligation. Ela Bhatt, the
founder of Mahila SEWA Cooperative Bank in Ahmedabad since 1976, and of
the wholesale lender, Friends of Women’s World Banking (FWWB), who was
a member of the Planning Commission, led the demand for alternative credit
channels for the working poor. Government of India established the Rashtriya
Mahila Kosh (RMK) as an apex lender to NGOs on-lending to women’s
groups. NGOs, which were registered as not-for profit societies or trusts began
borrowing from RMK and donors and lending to the poor in groups, following
the SHG methodology as that was the one favored by the RMK.
Realizing the limitations of borrowing and lending as a non-profit NGO,

BASIX established in 1996, India’s first commercial Microfinance Institution
(MFI), Bhartiya Samruddhi Finance Ltd, registered as a non-bank finance
company (NBFC) with the RBI. The growth of MFIs was supported by the
state owned Small Industries Development Bank of India (SIDBI) and loans
from commercial banks under the priority lending quotas since 2000. Initially
they lent to NGO-MFIs but within a few years, as the amounts outstanding
increased, they sought some equity as a risk cushion. This is when the larger
NGO-MFIs began transforming into for-profit NBFCs. In the next step, by
2006, these NBFCs started attracting equity investments from specialized
microfinance investment vehicles and private equity funds. For example,
SHARE got equity from Legatum, Spandana from JM Financial and SKS from
Sequoia, by 2007, within a few years of having been NGOs. By 2010, the MFI
growth in India had reached its peak growing at 80 percent per annum and the
outreach had reached around 30.85 million.
SHGs and MFIs emerged as two alternatives to meet the credit needs of the
poor and initially the two models complemented each other. In certain districts
of Andhra Pradesh, however, the models began to compete and lend to each
others’ clients. In the run up to the SKS Initial Public Offering (SKS IPO) in
August 2010, this became a reckless rush to build portfolio and the multiple
lending led to over-indebtedness in a small proportion of the borrowers.
Many poor families were overwhelmed by the repayment obligations. As they
began to skip installments, MFI staff, accustomed to near 100percent on-time
repayment, increased pressure on recoveries. Reports of coercive recoveries
and in some cases, suicides by borrowers, began to appear in the media.

This led to a political backlash and the AP state government enacted a law
in October 2010 to curb MFIs. Though the law was aimed to protect MFI
borrowers from coercion and over-indebtedness, it virtually stopped MFIs
from functioning in AP. Two crucial provisions were – MFI staff could not go
to the residence or work place of the borrowers for recovery, but instead had to
sit in a ‘central place’ hoping for borrowers to come there. Second, no further
loans were allowed, with government permission necessary for each individual
loan. This by itself slowed down recoveries drastically. But Opposition leaders,
particularly former Chief Minister Chandrababu Naidu, used this as an
opportunity to win popularity by saying that the law had not done enough and
told the poor not to repay MFI loans. This led to a mass wilful default. Over 9.2
million loans worth Rs 7200 crore became overdue and 90 percent remained
unpaid till April 2012. Banks panicked and stopped lending to MFIs all over
India and the outstandings of the MFIs shrank by half.
6.4.2.1 Enhancing Access to Microcredit by the Poor

MFIs could achieve what the banking sector could not achieve over the years.
Within a short period of 15 years, borrowers from MFIs increased from a
mere 3,000 in 1995 to 30.85 million in 2010. In the corresponding period, the
banking sector with its huge infrastructure only showed a decline in terms of
lending to small borrowers. MFIs offered a variety of loans for agriculture, agri
allied and non-farm activities as well as for housing needs.
Table 38: Growth of Microfinance in India: 1995-2010
Number of active borrowers (sum) Gross Loan Portfolio (sum)
3,50,00,000 6,00,00,00,000
3,00,00,000 5,00,00,00,000
2,50,00,000
4,00,00,00,000
2,00,00,000
3,00,00,00,000
1,50,00,000
2,00,00,00,000
1,00,00,000
50,00,000 1,00,00,00,000
0 0
1990 1995 2000 2005 2010 2015 1990 1995 2000 2005 2010 2015
Number of active borrowers (sum) Gross Loan Portfolio (sum)
Source: MIX Market data

6.4.2.2 MFIs displaced Moneylenders rather than Competed with
SHGs, even in AP
MFIs have been criticized for multiple lending, creating indebtedness of clients
and charging high interest rates.
Studies by the National Council for Applied Economic Research (NCAER, 2011)
and the Institute for Financial Management Research Trust (IFMR Trust, 2011)
show a different picture. As per the NCAER Study145 – On an all India basis, MFI
loans for all household types made up a small portion of the overall debt. While
47 percent of the total amount borrowed by households in the sample was from
informal lenders, only 12 percent of the amount was from MFIs. In Hyderabad,
the informal lenders were largely substituted by SHGs. Thus MFIs were not the
main cause of indebtedness anywhere in India, including in AP.
The IFMR study shows a similar trend. Indebtedness among MFI clients
(11%) is drastically lesser in comparison to informal source clients
(82%) and formal source clients (37%). While the interest rates of MFIs are
higher than other formal sources, the NCAER study showed that the transaction
costs of obtaining MFI loans were lower than that for SHGs when one includes
costs towards wage loss, travel, food expenses, documentation charges, stamp
duty and bribes. This explains why millions borrowed from MFIs at apparently
higher interest rates.
6.4.2.3 MFIs have Mitigated Risk for the Poor by Providing Access to
Insurance Services
MFIs in India have brought insurance services at the doorstep of the poor and
low income segment. Following the lead of BASIX, which was a pioneer in
micro-insurance, by 2010, about half of the MFIs were offering credit-linked
life insurance and about 20 percent were also providing non-life insurance.
A variety of risk coverage services were being offered which covered life risk,
accident risk, health risk, and asset risk. BASIX – BSFL (Bhartiya Samruddhi
Finance Limited) is the only MFI which also offered weather-index based crop
insurance and livestock insurance to its borrowers. The number of micro-
insurance policies was about 25 million.146 This is in spite of the fact that
under the Insurance Regulatory and Development Authority’s (IRDA) micro-
insurance guidelines, perversely, NBFC-MFIs are not allowed to market micro-
insurance - only non-profit NGO MFIs can.
145
Assessing the Effectiveness of Small Borrowing in India, 2011.NCAER Center for Macro Consumer
Research, New Delhi, p. 23
146
MFIN Micrometer, Issue no 8, Dec 2013. Microfinance Institutions Network, Hyderabad-Delhi.

6.4.3 Conclusion
The scenario that is emerging is that of a movement towards a greater clarity

on the regulatory role of the Reserve Bank of India, greater legitimacy for
MFIs, closer monitoring of the sector and strengthened consumer protection
norms for the sector, leading towards responsible microfinance. The current
phase of microfinance sector could be viewed as the beginning of a period of
qualitative transformation in the sector. While the first phase (1996-2010)
could be characterized as a period of rapid expansion of the NBFC MFI sector
with quantum jump in micro-credit lending to small borrowers, the current
phase (2011- onwards) could be seen as a period of qualitative consolidation
of the microfinance industry with the strengthening and increased clarity on
regulatory framework and consumer protection norms.
While the first phase placed a larger emphasis on micro-credit, the second
phase will expand the range of financial services offered by the MFIs to also
include thrift, insurance, pension services and money transfer. In the first
phase, the regulatory framework was mainly prudential and weak in consumer
protection. In the second phase, consumer protection norms are stronger.
With Credit Information Bureaus having access to over 70 million MFI loans,
instances of multiple lending and over- indebtedness will reduce sharply. With
the institution of Ombudsmen, the instances of misbehavior with customers
and coercive recovery practices are bound to get minimized. The first phase was
dominated by five fatal assumptions:147
(i) credit is the main financial service needed by the poor;
(ii) credit can automatically translate into successful micro-enterprises;
(iii) even the poorest wish to be self-employed and can be helped;
(iv) that those above the poverty line (APL) do not need micro-credit and
(v) all microcredit institutions can become financially self-sustaining.
These assumptions were not well-founded but led to growth and eventually to
the microfinance crisis. Now as microfinance is reconstructed with stronger
assumptions, based on experience, the industry is likely to become more
scalable and sustainable, fair to both the clients and the providers alike.
Already, the signs of a turnaround are visible – the MFI industry in India has
regained its 26.5 million borrowers and Rs 24,000 crore loans outstanding
147
Mahajan, Vijay. Is Micro-credit the Answer to Poverty Eradication? Association of Women in
Development (AWID) Journal, Vol. II No.1 May 1997, Washington DC.

Overnight the leaders of the microfinance sector turned from being touted as
the ‘Messiahs of the poor’ to ‘blood-thirsty Shylocks’. When asked to comment
on this volte-face by the media, a veteran put it rather poignantly, quoting
Rudyard Kipling’s celebrated poem ‘If’
IF you can keep your head when all about you

Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or being lied about, don’t deal in lies,
Or being hated, don’t give way to hating,
And yet don’t look too good, nor talk too wise:
If you can dream - and not make dreams your master;

If you can think - and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you’ve spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build ‘em up with worn-out tools:
If you can make one heap of all your winnings

And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: ‘Hold on!’
If you can talk with crowds and keep your virtue,

‘Or walk with Kings - nor lose the common touch,
if neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds’ worth of distance run,
Yours is the Earth and everything that’s in it,
And - which is more - you’ll be a Man, my son!

by December 2013.148 Coupled with its rival sibling, the SHG-Bank Linkage
Program, with its 43.5 million borrowers and over Rs 36,000 crore loans
outstanding by March 2012149 the two models of microfinance in India reach at
least 56 million poor households (assuming 20% overlap on the gross total of
70 million) with over Rs 60,000 crore loans outstanding.
6.4.3.1 Livelihood Impact of Microfinance

A study by SIDBI150 showed that about three-fourth of the microfinance clients
(of the sample) were able to develop their existing livelihood activities and
about one-third were able to diversify into new activities. About three-fourth
were able to increase their income levels through the MFI assistance. Two-
third were able to improve food consumption, over half were able to improve
housing conditions, a little less than half were able to increase their household
assets, three-fourth were able to provide better educational facilities for their
children, about three-fifths felt their social status improved as a result of their
association with the microfinance movement.
A Randomized Control Trial (RCT) study by Abhijit Banerjee et al,151 suggests

that though microcredit has important effects on business outcomes and the
composition of household expenditure, no evidence was found to suggest that
microcredit empowers women or improves health or educational outcomes.
More than a shortcoming of microfinance, it reflects a shortcoming of the RCTs,
which cannot deal with effects which take longer than 18 months.
A study by Sane and Thomas152 showed that due to the stoppage of

micro-credit in Andhra Pradesh post the October 2010 state law, the
consumption of poor households went down by 19 percent overall and
within that overall total, went down by 16 percent for food items and by
43 percent for educational expenses. There cannot be stronger evidence
on the effects of the absence of microcredit, nor on the folly behind the
thinking which led to AP Government’s action in 2010.
148
MFIN Micrometer, Op. cit
149
Annual Report, NABARD 2012-13. Op. cit
150
Small Industries Development Bank of India, Findings from the Impact Assessment Study: EDA,
2008
151
Banerjee, A., Duflo, E., Glennerster, R., & Kinnan. The Miracle of Microfinance?Evidence from a
Randomized Evaluation, Massachusetts Institute of Technology. 2009
152
Sane, Renuka and Susan Thomas, The real cost of credit constraints: Evidence from micro-finance.
WP-2013-013, Indira Gandhi Institute of Development Research, Mumbai, July 2013, accessible at
http://www.igidr.ac.in/pdf/publication/WP-2013-013.pdf

In 2013, Bandhan was the largest Indian MFI with over 5 million clients and
Rs 5000 crore outstanding. An IIM Ahmedabad team studied Bandhan’s work
through a survey of 1,050 households comprising not only of microcredit
recipients, but also several different categories of control households who did
not receive any assistance. Here are some findings.153
Compared to the control group, the average annual household net income
from all sources increased by Rs 13,231. This represented a 13.8 percent
increase (inflation adjusted at 8% pa). Client households increased their
ownership of non-farm business assets by Rs 15,588 on average. Client
households could also generate on average 35.8 man-days per month of
full-time employment for family members. Positive women empowerment
effects were found concerning the woman member’s influence over children-
related decisions, e.g., educational expenses, family planning, girl education,
daughter’s marriage etc.
There cannot be a more unequivocal statement that indeed microcredit

promotes livelihoods.
Table 39: Key Data on MFIN Member MFIs December 2013
Indicator As of 31st Dec As of 31st Dec YoY change

2013 2012
Branches 9,568 9,138 5%
Employees 64,173 61,077 5%
Clients 26.48 mn 22.87 mn 16%
GLP (Rs) 239.97 bn 186.34 bn 29%
Loans disbursed 6.26 mn 5.36 mn 17%
(during the quarter)
Loan amount 92.81 bn 61.19 bn 52%
disbursed (Rs)
(during the quarter)
Lives insured* 24.68 mn na na
Sum insured (Rs)
*
384.69 bn na na
Pension accounts* 1.01 mn na na
*
Insurance and pension products are delivered to the microfinance clients in partnership with
insurance companies/national pension scheme (NPS)
153
The IIMA-Bandhan report is accessible at http://www.iimahd.ernet.in/assets/upload/
media/1423256596IIMA-Bandhan-WEB.pdf

Table 40: Data on SHG Bank Linkage Program March 2012
(As on 31 March 2012)
Industries SHGs (Number in Lakh and Amount MFIs* (Amounts
in crore) in crore)
2011 @ 2012 @ 2011 # 2012 #
Number Amount Number Amount Number Amount Number Amount
Loans 11.96 14,547.73 11.48 16,534.77 471 8,448.96 465 5,205.28
disbursed (2.41) (2,480.37) (2.09) (2,643.56) (2) (843.77) (12) (239.42)
during the
year
Loans 47.87 31,221.16 43.54 36,340.00 2315 13,730.62 1960 11,450.35
out standing (12.85) (7,829.39) (12.16) (8,054.83) (139) (3,041.77) (129) (1,597.11)
Savings 74.62 7,016.30 79.60 6,551.41 - - - -
accounts (20.22) (1,817.12) (21.23) (1,395.25)
with banks
@ Figures in parentheses indicate the share of SHGs covered under SGSY

*
Actual number of MFIs provided with bank loans would be lower as several MFLs availed loans from more
than one bank/more than one loan
# Figures in parentheses indicate the assistance of SIDBI to MFLs
6.5 New Generation Government Development

Programs
The fact that the Government of India flagship program was ineffective and
not working well was widely accepted both outside and within the government
by the mid-1990s. This led to a search for alternatives, and a range of state
government programs came up with improved design and implementation
models. We describe three of these – Kerala’s Kudumbashree, Andhra Pradesh’s
Velugu or Indira Kranti Patham and National Rural Livelihoods Mission.
6.5.1 Kudumbashree – Kerala Women’s Empowerment

Program
Kudumbashree,154 launched by the Government of Kerala in 1998 to wipe out

absolute poverty from the state through concerted community action under
the leadership of Local Self Governments, is today one of the largest women-
empowering projects in the country.
154
Shihabudheen N. What is right and wrong with Kudumbashree: the field experiences in
International Journal of Humanities and Social Science Invention; ISSN (Online): 2319 – 7722, ISSN
(Print): 2319 – 7714; www.ijhssi.org Volume 2 Issue 5 – May. 2013 – PP.09-21).

The program has 37 lakh members and covers more than 50 percent of the
households in Kerala. Built around three critical components, microcredit,
entrepreneurship and empowerment, the Kudumbashree means prosperity
(shree) of family (Kudumbam). The mission statement of Kudumbashree is:
“To eradicate absolute poverty in ten years through concerted community

action under the leadership of local governments, by facilitating organization
of the poor for combining self-help with demand-led convergence of available
services and resources to tackle the multiple dimensions and manifestations of
poverty, holistically”.
One of the largest women’s movements in Asia with a membership of 37.8 lakhs
that represents the same number of families, Kudumbashree developed an
innovative methodology to identify the poor using non-economic parameters.
The poor thus identified are organized under a well networked Community
Based Organization (CBO). For effective convergence of the program, a three
tier CBO is in action. This methodology has since been incorporated into the
policy framework of the state for identification of the poor. Poor families were
brought under the Neighborhood Groups (NHGs) - groups of 10-20 women
from the same neighborhood, form the foundation of the structure. These are
federated into 19,773 Area Development Societies (ADSs) which are federations
of NHGs within a ward of a municipality. The ADS are further federated into
1,072 Community Development Societies (CDSs) – which are registered as a
Society under the federation of an ADS within the municipality. The entire
program has 2.05 lakh NHGs.
The program has helped women mobilize a sum of Rs 1688 crore as thrift, and
disbursed loans amounting to Rs 4195 crore to the members of Neighborhood
Groups. 150,755 NHGs were graded under the Bank Linkage program, of
which 127,467 NHGs were linked with banks and an amount of Rs 1140
crore was mobilized as credit. The program helped set up 25,050 individual
enterprises and 1757 group enterprises (with minimum 5–10 members) of
women developed in urban areas and 3516 individual enterprises and 10620
group enterprises (with minimum 5–10 members) of poor women formed in
rural areas. In addition, 570 group enterprises and 810 individual enterprises
were started under the Special Employment program (Yuvashree).
In addition, 248 entrepreneur groups (Thelima) were formed for the

municipal solid waste management in urban areas. Sales from monthly
markets and festival fairs were about Rs 2 crore per month. The

Kudumbashree also runs welfare programs like Ashraya - Destitute
Identification and Rehabilitation Project under which 71011 destitute persons
were identified and a chain of 31 special schools for physically and mentally
challenged children set up. Kudumbashree functions as the voice of the
community – in particular the voice of the economically and socially weak,
and of women,through the medium of local self-government (LSG). Most
plan interventions of gram panchayats and urban local governments in the
areas of poverty reduction and women’s development use the CDS network
for implementation.
The Nine Point Index (Urban) used for identifying vulnerable households (in
place of poverty line) for Kudumbashree:
1. Those with no land or those holding less than 5 cents of land
2. Those with no house of their own or living in a dilapidated house
3. Those with no access to sanitary latrine
4. Those with no access to safe drinking water within 150 meters from the
house
5. A household headed by women: a widow, a divorcee, an abandoned lady or
an unwed mother
6. Households where no person in the family has regular employment
7. Socially disadvantaged groups (SC or ST)
8. Presence of mentally or physically challenged person or chronically ill
member in the family
9. Families without color TV.
In order to include a household into the program and into a NHG, at least 4 out
of 9 points must be applicable.
Kudumbashree has been studied by a number of development agencies and

scholars and by and large found to be an effective program compared to the
older generation IRDP and DWCRA. We cite below an independent evaluation
of Kudumbashree:
“Kudumbashree no doubt has contributed to the socio economic development

of women. Despite the remarkable achievements, there are clouded and
hidden deficiencies, which will work against the established goals of the
mission affecting the sustainability and other serious problems in future. The
over politicization, the loss making micro enterprises, the cross borrowing
practices, the mis-utilization of funds etc., darkens the shining image of
the project”.

“The high interest rates especially in housing programs is a trap against
the beneficiaries and making such programs interest free will make it really
empowering. It is high time to think about tackling these defects, otherwise
it will lead to a vulnerable end of this program acting against women and the
poverty eradication mission. Now the approaches are going the right way,
but practices are in conflict with the approaches and hence go in the wrong
direction. Hence the Kudumbashree practices need an urgent treatment;
otherwise it will remain as another platform for exploitation of women and
extravagance of state resources”.
Unsustainable micro enterprises: The results of the field survey reveal

that about 80 percent of SHG members who run micro enterprises lack
entrepreneurial skills. Above 60 percent enterprises are found to be
unsustainable but continue to operate to avail the subsidy and other facilities
from government. Over 38 percent of the respondents complained that
they have been facing stiff competition from enterprises of neighboring
Kudumbashree. They have felt that the competition between such units is
by and large unhealthy. MA Oommen,155 who studied 393 micro enterprises
spread over the districts of Thiruvananthapuram, Kollam, Malappuram,
Palakkad and Wynad, reported that 35 percent of such micro enterprises do
not break even.
6.5.2 SERP, Andhra Pradesh
Perhaps one of the most effective poverty alleviation programs, and the largest
in terms of coverage of poor households, Society for Elimination of Rural
Poverty (SERP) was started in Andhra Pradesh in the mid-1990s. It began
as an UNDP promoted South Asia Poverty Alleviation Program (SAPAP) in
six mandals of three districts – Mahabubnagar, Kurnool and Anantapur. Its
appointed CEO was K. Raju, then a young IAS officer who was earlier the
District Collector of Nellore and later of Kurnool district. One of the advisors
of SAPAP was the Pakistani development expert Shoaib Sultan Khan. Raju
combined the lessons from Khan’s work in the northern provinces of Pakistan,
where he ran the Aga Khan Rural Support Program, with the local concept of
self-help groups, increasingly being linked with banks for savings and credit.
By 1999, the SAPAP proved to be a grand success, but in just six mandals (each
covering about 25 villages).
155
M.A. Oommen, 2007, Kudumbashree of Kerala: An Appraisal, Institute of Social Sciences, New
Delhi., cited in Shihabudheen N. op. cit.)

Raju then brought in the World Bank, whose District Poverty Initiatives
Program (DPIP) was to roll out in Andhra Pradesh in six districts. The
Government of AP established a special implementation agency — the Society
for Elimination of Rural Poverty (SERP). The program was named Velugu
(new dawn) by the then Chief Minster Chandrababu Naidu and it became a
very successful poverty alleviation program. This was show cased to the World
Bank’s President Jim Wolfensohn, who visited AP in November 2000 and a
few months later the Bank approved the state-wide expansion of AP-DPIP into
the AP Rural Poverty Reduction Program (APRPRP). By 2004, when Naidu
lost the elections and YS Rajasekhar Reddy came to power, the program was
renamed by the Congress government as Indira Kranthi Patham (IKP) or
Indira’s Revolutionary Path. SERP has been supported by a series of World
Bank loans, beginning with USD 111 million under the DPIP from 2000 to 2006
and then a further USD 474 million (over three phases) under the APRPRP
from 2003 to 2011. In addition, the State Government contributed to the cost
of SERP and many of its programs (outlays not known).
The following excerpts from the SERP website156 describe the program in
greater detail.
SERP was established by the Government of Andhra Pradesh [in the late
1990s] SERP implements Indira Kranthi Patham (IKP) in all the 1098
rural Mandals [administrative unit comprising of 25-30 villages] of 22 rural
districts in AP. The vision of SERP is to enable every poor family in rural
Andhra Pradesh to come out of poverty and stay out of poverty. SERP works
on a comprehensive multidimensional poverty alleviation strategy by focusing
equally on the Livelihoods Value Chain and Human Development Indicators.
The fundamental unit of development at SERP is the rural poor household
and all interventions of SERP strive to achieve essentially two outcomes -
sustainable per capita household incomes of Rs 1,00,000 per annum from
multiple sources and improved Human Development Indicators.
SERP has promoted three levels of poor women’s institutional structures as

follows:
Self-Help Groups: Increasing the confidence of the poor calls for

preparing and organizing the poor into SHG. SHGs are organized
based on principles of homogeneity and commonality of interests.
156
www.serp.ap.gov.in

A typical SHG comprises 10–12 members. The rules of organizing are kept
simple and flexible to ensure inclusion of the poorest. For instance, norms
relating to group meetings, weekly savings etc. are decided by the members
themselves to suit everyone’s convenience. Each SHG identifies its own leaders,
and also engages the services of a bookkeeper for maintaining group records.
The organization building encompasses the entire household; women, men
and youth.
The SHG include thrift and credit activities, participatory monitoring of the
groups, and group level poverty reduction plans. The SHGs are encouraged
to develop a vision and short and long-term goals and priorities. This is
accomplished through a series of dialogues held by the Community Coordinator
(CC) with the communities. Simultaneously, the CC also encourages the
community to identify representatives, called Community Activists, who share
many responsibilities in the social mobilization process along with the CCs.
The challenge of CCs has been to develop village-specific, group entry point
strategies for developing confidence among the poorest of the poor so that they
realize that organizing themselves into groups is an important step to solving
their own problems.
Village Organizations (VOs): All the Self Help Groups in a village are
federated into a Village Organization (VO). Typically, the VO includes
8–10 SHGs. The main logic behind building a federation at the village
level is to address the commonality of issues at a larger forum. The VO
leaders manage the affairs of the VO. The people select community leaders
through a process of informed choice. The Community Activists (CA),
who are committed community members volunteering their time, actively
collaborate with the Community Coordinators and Self-Help Groups
in project implementation. The Village Organization also monitors the
function of self-help groups, helps strengthen and provides access to credit
to the SHGs. VOs are also responsible for organizing training to the SHG
members on various aspects of group management. Training of trainers is
conducted with multiple stakeholders (i.e. community activists, bookkeepers
and village professionals) to enhance capacities who in turn transfer
knowledge and practice to group members.
Mandal Samakhyas: The MS is the apex organization at the sub-district

level representing all the VOs. Locally-elected members from the VOs form the
executive body of the MS and monitor the functions of the Village Organization,
make linkages and access with Government Departments, audit the self-help
groups and help with microfinance.

SERP has relentlessly worked on a unique structure of community-based
organization by organizing 1.14 crore rural women into 10.27 lakh SHGs, 38646
Village Organizations, 1098 Mandal Samakhyas and 22 Zilla Samakhyas. SHG
membership in Andhra Pradesh is the largest in the country with around 30
percent of the total SHG members in the country. SERP has established a unique
institutional structure for the Community-Based Organizations in the World. This
CBOs structure in A.P. has facilitated cumulative bank loans of Rs 34,889 crore
of commercial bank loans to SHG members, Collective Marketing to the tune of
Rs 3925 crore resulting in a benefit of Rs 75 to Rs 100 per quintal to the farmers.
Pesticide free cultivation in 23.0 lakh acres in 2010-11 alone resulted in a saving of
Rs 3000 to Rs 15,000 per acre to the farmers. This unique model has been adopted
by Aajeevika (National Rural Livelihoods Mission) at the national level in India.
SERP monitors project processes (i.e. how and why things are happening)
through Process Learning. A key objective of this system is to help people at
different levels in the project make causal linkages and then take action on the
basis of that new knowledge. Local groups generate indicators during group self-
assessments and exchange visits. Usually, the bookkeeper of each SHG has been
trained in facilitating the administration of the Self-Monitoring Tool. This is done
once every quarter. The SHGs take up a discussion of the scores obtained on the
tool, the trend in scores, areas requiring attention, action planning, etc.
Important features of the Self-Monitoring Tool are:

• Pictorial based, no text, easy to comprehend and score
• Indicators based on realistic assessment by SHG members
• Scope for adding new indicators relevant for Self-Help Groups
• Refined after elaborate field testing
There are thirteen indicators used by the groups for self-assessment:
1. Participation in group meetings
2. Group discussion (all participants are not only leaders but members)
3. Norms of group functioning (meetings on time)
4. Capital formation; savings
5. Access to credit
6. Repayment of loans
7. Cooperation among themselves
8. Cooperation with other groups
9. Linkages with outside agencies
10. Participation in trainings
11. Abiding by social contract (i.e. children going to school)
12. Awareness on all group related issues among the members
13. Do the poor have an identity in the community.
The World Bank carried out a number of evaluation studies of the two programs
– AP DPIP and APRPRP, implemented by SERP, and we cite below from the
End of the Project Evaluation:
“As this is a panel study, all the 4800 baseline study (BLS) sample
households were revisited and around 98 percent of the BLS sample
households surveyed could be contacted. The traditional Double Difference
method to assess the impact of APRPRP was found to be inadequate as it
could not capture the positive externalities generated by the program due to
saturation of the coverage of the project, finding strict control groups was
almost impossible”.
“Therefore the assessment compared project participants, essentially

households where the woman has joined an SHG, with non-participant
households, where the women have not joined an SHG. There may be some
biases therefore in comparing the two in terms of end of project benefits,
either because non-participants may have self-selected or have been excluded
from joining SHGs due to their socio economic conditions, or benefited from
a project externality, such as social support from the SHGs to the wider village
community. Comparing like for like groups among the poorest of the poor or
poor to some degree minimizes this, although this is not perfect either. It is
assumed that the sample survey households have been sampled so that they do
not represent a group which would have benefited to a greater degree than the
overall population by one of the project’s pilot”.
“APRPRP contributed to a considerable reduction in rural poverty in AP. The

percentage of households below the poverty line declined from 29.4 percent to
20.7 percent between baseline (2004) and end term (2009)—a decline of about
2.1 percentage points per annum. However, the estimates indicate that most of
this decline was due to the rapid reduction of poverty among the participants,
which reduced from 29.8 percent to 17.5 percent in comparison the poverty
ratio for non-participants declined to just 27.2 percent. In comparison the
percentage of households below the poverty line in rural AP as per NSSO data
the poverty estimates declined from 42.5 percent in 1993-94 to 29.3 percent in
2004-05, at 1.2 percentage points per annum. Subsequently, between 2004-05
and 2006-07, rural poverty declined sharply at the rate of 2 percentage points
per annum to 25.3”.
“In comparison, analysis across social groups indicates that poverty declined
among participants from socially excluded households (SCs and STs) more
substantially than non-participant SCs and STs between the baseline survey

and the final evaluation. In the case of SCs, the decline was 14.7 percentage
points compared to 6 percentage points among the non-participants, and for
ST households the poverty among participant households declined by 15.5
percentage points against 8 percentage points among the non-participants”.
“At the institutional level, systems have been put in place, especially for last
mile service delivery: banks, insurance, delivery of food grains etc. Services
have changed the way they do business. SERP and associated institutions
has built up a considerable capacity for innovating and delivering rural
development. Staff from SERP had also moved to key government positions,
such as District Collectors, influencing further how programs and schemes
are implemented. And at the higher level, both by local and State government
to modifying, and/or developing new programs and schemes to address new
needs for SHG members, for example in schemes addressing pensions, social
safety nets, credit policy, land access for leaseholders, nutrition etc”.
“At the policy level, a very significant number of policies that have been changed
or introduced at State level have often been drafted by the concerned project
officers. The project has influenced livelihoods programs in other States, and
the design and approach for the National Rural Livelihoods Mission”.
“While no overall economic rate of return (ERR) analysis was done, Economic
and Financial Analysis was carried out for total project investment of US$472
million taken at current prices. With the provision of only US$ 190 million for the
livelihood investments, the FRR is 18.1 percent. Institutional linkages with Banks
providing access to US$7.86 billion for 0.9 million SHGs improved the financial
rate of return (FRR) significantly to 26.3 percent. Diversifying the income activities
through community-managed sustainable agriculture, livestock, community led
marketing and employment generation activities further enhanced the FRR to 31.2
percent. Inclusion of all project costs resulted in 30.1 percent FRR for the project
as a whole. Net present value increased from Rs 3 billion (only project led CIF)
to Rs 82 billion (with institutional linkages for additional credit) and further to a
maximum of Rs 112 billion (with diversified income generation activities)”.
“Livestock and sustainable agriculture are two pre dominating activities and is an
option of 73 percent of the beneficiaries. ERR is not expected to be much different
from FRR, since international traded inputs and outputs are only marginal. What
is therefore important is the financial attractiveness of the community led project
interventions. This is confirmed by the annual income levels of US$488 per annum
to US$1,132 per annum for all groups according to Impact Evaluation Study by
CESS 2010, which means sustainability of project interventions is most likely”.

Results on the Ground: The poor and their organizations have cumulative
savings exceeding USD340 million and have leveraged more than USD1.2 billion
in credit from commercial banks since 2000 [till 2009]. [This number exceeds
USD 7 billion by 2013]. According to an independent evaluation by the Center
for Economic and Social Studies, Hyderabad, the average income has increased
by 115 percent from USD483 to USD1041 per annum for project participants
over the last five years as against 64 percent increase for non-participants. A
household is spending three times more on education of the family. There has
been a reduction in indebtedness and vulnerability as well as distress migration.
Food insecurity is a major vulnerability faced by the rural poor and is an

important goal when addressing rural poverty. In order to meet the shortfall,
in income and consumption needs, households borrow from money lenders
and traders at very high interest rates, pushing them further into debt trap.
Alternatively, the poor reduce the quantity of food consumed. This model of
food security is a market based one that offers food as a credit product rather
than grant or aid. Food Security Line is a community managed credit and food
distribution mechanism to address the food requirement of the rural poor. The
Food Security Line provides a single window within a village for purchase of
food grain, packing and distribution of food grains and recovery/repayment of
the outstanding credit, thus making it accessible for the poorest.
“I used to survive on head loading. In 2004, I joined a few others to learn

from the women in Anantapur district. After returning, we started weekly
savings and received small loans. Initially, a lot of people migrated and it was
difficult for us to repay the loans. But after starting the food security credit
line, it became much easier. I want to convey, on behalf of my community that
there have been a lot of changes for the better. The incidence of tuberculosis
has greatly been reduced, women are using the hospitals for deliveries and
more of our children are going to schools” — Chenchu Tribal Leader,
Mahbubnagar District.
Creating a Cadre of Grassroots Professionals: For every program

activity, community members are offered training in specialized skills that
provide a sustainable and cost-effective medium for scaling up. There are
over 140,000 grassroots professionals across the state known as Community
Resource Persons. These professionals offer services such as mobilizing
and monitoring institutions and federations, management of enterprises,
quality control, para-legal services, community health services, job resource
information, micro-planning, and business agents. Many resource persons
from AP are currently helping mobilize groups and federations in Bihar.

Future Plans: The decadal experience at SERP has shown the success in
terms of Universal Approach. The challenge to SERP is now to design focused
interventions for the poorest of poor households in rural AP. Given this, SERP
has articulated the need for a new vision and a fresh approach to finish the
unfinished business of the elimination of poverty in the POP households.
SERP’s comprehensive new approach is aimed at achieving minimum income
levels of Rs 100,000 per annum per family for all the 30 lakh poorest of
the poor households identified in the State in addition to improved human
development indicators.
Project Development Objective Indicators - APRPRP157
Table 41: Project Development Objective Indicators- APRPRP
Indicator Baseline Current Target

Number of
poor organized Value 0 11,100,000 11,000,000
and mobilized
Date May 31, 2003 June 30, 2010 Sept 30, 2011
into Self Help
Groups Comment The outcome targets for a number of PDOs have
already been met including those for number of poor
mobilized and number of SHGs formed.
Number Value 0 994,595 930,671
of SHGs Date May 31, 2003 June 30, 2010 Sept 30, 2011
formed and
Comment The outcome targets for a number of PDOs have
strengthened
already been met including those for number of
SHGs formed.
Number of Value 0 929,356 800,000
SHGs linked to Date May 31, 2003 June 30, 2010 Sept 30, 2011
the Banks
Comment The outcome target for the PDO has been achieved.
There was an error in measurement which was
corrected to reflect the actual number of SHGs credit
linked to the Banks.
Formal Value $219,327 $ 7 billion
sector credit Date May 31, 2003 Sept 30, 2010 Sept 30, 2011
obtained by
Comment The targets are likely to be met based on the credit
SHGs through
plans of the commercial banks for FY 2010-11
linkages with
Banks
157
http://www.worldbank.org/projects/P071272/andhra-pradesh-rural-poverty-reductionproject?
lang=en&tab=overview

6.5.3 Aajeevika - National Rural Livelihoods Mission
(NRLM)
The NRLM was launched by the Ministry of Rural Development (MoRD),

Government of India in June 2011. Though the IRDP was rejigged after 20 years
as the Swarna Jayanti Swarozgar Yojana (SJSY), it continued to be run a lot
like the earlier IRDP with emphasis slowly shifting from loans to individual poor
households to loans being given to Self-Help Groups, who had come together for
income generating activity. But the weaknesses of IRDP in terms of inadequate
skills, and poor access to backward and forward linkages, continued to mar the
SGSY. In the meanwhile, several state level programs, in particular the World
Bank funded Andhra Pradesh Rural Poverty Reduction Program (APRPRP) run
by the State Government promoted Society for the Elimination of Rural Poverty
(SERP), proved to be much more effective in mobilizing and empowering the
poor and giving them permanent access to credit, insurance and market linkages.
Based on this successful experience, the NRLM has been conceived as an

ambitious program in scale and scope. It has an agenda to cover 70 million
poor households, across 600 districts and 6 lakh villages in the country through
self-managed SHGs and federated institutions and support them for livelihood
collectives in a period of 8-10 years. In addition, the poor would be facilitated
to achieve increased access to their rights, entitlements and public services,
diversified risk and better social indicators of empowerment.
The NRLM envisages that if properly helped, the poor have the ability to move
gradually on the continuum from increasing consumption from their present
level of deficit till they reach adequate levels. Once this level is reached they have
the ability to retire their old debts most of which were to meet consumption
shortfalls and start borrowing for enhancing existing livelihoods till they reach
a point of intensifying their existing activities and/or diversification. Pushing
them to diversify before this could actually be harmful for the very poor.158 Thus
the major focus of NRLM is to stabilize and promote the existing livelihoods
portfolio of the poor, in farm and non-farm sectors. NRLM examines the entire
portfolio of livelihood activities of each household and facilitates support for
the activities at the individual or household level, and at a collective, or at both
levels. As agriculture is the mainstay livelihoods activity for the rural poor,
NRLM lays special emphasis on allied activities such as animal husbandry,
fisheries and collection of non-timber forest produce.
158
Quite similar to the warning voiced by David Hulme and Paul Mosley (1996) Finance against
Poverty, London, Routledge, when microfinance had just started taking roots.

The Key Principles of NRLM, the largest livelihood promotion or support
endeavor of the government is given in the box.159
Box 17: Key Principles of NRLM
Excerpt from ‘Framework for Implementation’ NRLM, MoRD

1) Universal Social Mobilization
a) 100% saturation from periphery
b) Promotion of institutions of the poor at various levels
c) Livelihood promotion/support related decisions to be taken up by these
institutions: matching their capacities, endowments and expectations,
through a transparent process.
2) Special Financial Provisions

a) Substantial allocation for training, capacity building and skill development
b) The revolving fund
c) Funds for community owned infrastructure
d) Universal financial inclusion
e) Provision of interest subsidy
f) Encourage use of Information, Communication & Technology
g) 5 percent of the Central allocation is earmarked for innovations
3) Livelihoods
a) Poor have multiple livelihoods including: wage labor, small and marginal
holding cultivation, cattle rearing, forest produce, fishing, and traditional
non-farm occupations.
b) Infrastructure creation and marketing support
4) Convergence and Partnerships

a) Linkages with PRIs
b) Partnerships with NGOs
c) Partnership with other financial institutions
d) Technical Support: Use of community resource person instead of external
extension agents
5) Sensitive Support Structures:

a) Independent specialized implementation agency
b) Monitoring and Learning
c) Phased Implementation in view of the social capital of the poor
159
http://indiagovernance.gov.in/files/NRLM.pdfand http://www.aajeevika.gov.in/

6.5.3.1 Other Government Programs to Support Livelihoods
On its part, the Government of India (GoI) has started taking many initiatives
to promote or support livelihoods. However, in a broader sense, many of the
initiatives taken up by GoI in areas of health and education indirectly affect the
livelihoods of a large number of people. But as has been already stated earlier
in this report, we focus on only those initiatives that are directed to augment
the livelihoods of people, improving their economic wellbeing.
It can be seen that the Government has launched several programs to enhance
the livelihoods of the people. The GoI has made its intent clear by making large
allocations for these efforts, which have also been increasing over time. The
following table, Table 42, gives a fair sense of some of the important livelihood
promotion programs of the GoI.
Table 42: Govt of India- Key Livelihood Programs Annual Outlays (2011- 2014)
Key Livelihood Programs Outlays 2013-2014 2012-2013 2011-2012

in Rs crore
Rashtriya Krishi Vikas Yojana (RKVY) 9,954 9,217 7,860
Bringing Green Revolution to Eastern 1,000 1,000 400
India (BGREI)
National Rural Livelihoods Mission 4,000 3,914 2,921
(NRLM)
National Rural Employment 33,000 33,000 31,000
Guarantee Scheme (NREGS)
Food Security subsidy 85,000 75,000 72,823
Total Investment in Livelihood 1,32,954 1,22,131 1,15,004
Programs
In addition to these programs directed to enhance livelihoods, there are

several other programs of the GoI in areas of Crop Husbandry, Soil &
Water Conservation, Animal Husbandry, Dairy Development, Fisheries
Development, Forestry & Wild Life based Livelihoods adding up to about Rs
18,781 crore in the Budget of 2013-14, which feed into the livelihood of the
rural producers.
In addition to these programs, the GoI has also launched a program National
Urban Livelihoods Mission (NULM) which will be rolled out across the
country. The NULM actually an improved version of the earlier poverty
alleviation program for the urban poor titled Swarna Jayanti Shahari
Rozgar Yojana (SJSRY) under the Ministry of Housing and Urban Poverty

Alleviation (MoHUPA). Even for this program a budget of Rs 6,404 crore has
been provided for the remaining period of the 12th Five Year Plan for cities
with a population of one lakh or more, with Rs 950 crore being allocated for
2013-2014. From this it can be estimated that the Government had invested
more than Rs 1.25 lakh crore for various livelihood generation programs in
2011-12, which has been increasing since then.
Though no accurate figure is available, it has been estimated that the total
funds granted to various development NGOs in year 2011-12 was about Rs
10,334 crore 2011-12 (report from Times of India, January 20, 2013), including
programs for health and education. Even if it is assumed that one-third of this
fund was utilized for livelihood promotion or support programs, it would add
up to about Rs 3,500 crore per year, about 2.5 percent of the budget allocated
for similar purpose by the GoI.
Ever since the sustainable livelihoods framework was proposed as a unified

framework for development intervention in 1991, and adopted as the primary
framework for development aids by agencies like DFID in 1997, many
countries including India started focusing their attention on supporting
the livelihoods of the weaker sections of the population. Apart from getting
special emphasis in the 11th and 12th Five Year Plans, the annual budget
allocations for programs augmenting livelihoods also have been steadily going
up. As has been pointed out in the State of India’s Livelihoods (SOILs) Report,
2012, the GoI allocated Rs 1.21 trillion for programs specifically directed
towards livelihood promotion and/or support such as NRLM; Rastriya Krishi
Vikas Yojana (RKVY), and National Rural Employment Guarantee Scheme
(NREGS). Apart from these, Rs 6.6 trillion was also invested in programs that
supported livelihoods of people indirectly, such as subsidies for agriculture,
food security among others. But in spite of such large investments by the GoI,
livelihoods of a large number of people are not yet stable.
(in million)
Livelihood Support Budget in Rs 1,211,310
Livelihood Support Budget in $ 22,024
Estimated Population 1,220
Population % below Poverty Line $1.25/day 32.7%
Population below Poverty Line $1.25/day 399
Livelihood Budget per Poor Household $ 303.6
Livelihood Budget per Poor Household/Day $0.83

But this leaves us with a serious question of why, in spite of India doing
reasonably well in terms of its GDP growth performance and such serious
efforts by the Government of India, we have not been able to stabilize the
livelihoods of such a large proportion of our citizens.
Several possible explanations have been proposed by different scholars looking

at the India development scenario:
1. India is a large diverse nation, run by a mammoth bureaucratic machinery.
Therefore, the intent and the spirit of the policy are often not translated
into effective implementation all across the country.
2. India has also adopted a representative democratic structure, where the elected
representatives who formulate policies, are responsible to the people who elect
them only once in five years. Diversity among the large number of people they
represent is also too large for them to coherently consolidate their needs.
3. The livelihood perspective necessitate that the portfolio of activities
that all the members of a household across multiple sectors, which
often involves trade-off in resource (especially their time) allocation are
considered together. But most development programs till recently have
focused on individual beneficiaries: and most of these programs also have
been sectoral. Shifting from this individual focused sectoral thinking to
livelihood basket thinking has often not happened.
4. Livelihood interventions often involve creatively thinking of the resources
accessible and markets that can be tapped. Though there is no dearth of
creative energy in India, large bureaucratic machinery often fails to respond
to situations creatively. Despite there being some creative individuals who
come up with innovative responses to situations, a large majority of the
officers stick to the few illustrations given in the detailed guidelines.
5. Over long periods of time poor people have been pushed to less endowed
geographical areas in the country. Areas with lower productivity,
inadequately developed infrastructure and often with high natural risks.
Therefore, their costs of production as well as costs of accessing the
markets are far higher, making their products non-competitive and posing
a different challenge.
6. Poor being inhabitants in poorer areas, these areas are also not attractive
for the posting of the best people in the system. Many people who get
posted in these areas look at these as ‘punishment postings’ and try to
complete their tenure. On the other hand, the well performing officers
are ‘rewarded’ with working closer to the senior decision makers who are
mostly not located in these poorer areas. So the officers left behind in these
areas where the poor live, are not-so-competent people, mostly interested
in completing their tenure, to solve a much more complex problem.

7. In the absence of high quality implementation and supervision in these
areas, local leaders in these areas and residual bureaucrats often develop a
network of interests. These often perpetuate the status-quo, which ensures
their power positions.
8. India has an elite-driven democracy, which often is not in complete grip
over the local structures. These often create artificial barriers within the
poor group, often making their aggregation and effective participation in
the market. The divisions between Below and Above Poverty Lines to be
eligible to benefit from some programs, special provisions for SC/ST/OBC
etc. also often create divisions among the poor and increase their allegiance
to different certifying authorities.
Some of these factors together have not allowed various livelihood promotion
and/or support programs to achieve their intended outcomes.
6.6 Private Sector Interventions with Significant Effect

on Livelihoods
In this section, we describe several important livelihood promotion interventions

undertaken by the private sector. If we look at the private sector in its broadest
sense, that is not just the corporate sector but the entire large, medium, small
and the informal sector, then we come to the surprising realization that the
private sector can be the preeminent sector for livelihood promotion. For
example, fully 93 percent of all workers are employed in the informal sector,
including agriculture. As the resources of the state dwindle (as a percentage of
the GDP), the main repository of financial resources is the private sector. It also
has the ability to tap into the capital market. Thus, it makes sense to explore how
the private sector can play the role of poverty alleviation in a more explicit and
deliberate manner.
When one talks of poverty alleviation or development work by the private sector,
attention is immediately drawn to corporate philanthropy efforts, such as the
work being done by the Tata Trusts and the Tata Steel Rural Development Society,
or to Corporate Social Responsibility (CSR) initiatives such as the Azim Premji
Foundation’s program for urban schools in low-income areas. Thousands of crore
of rupees are spent each year through corporate philanthropic efforts. Though it is
laudable , most of this spending goes into activities that are not congruent with the
mainline business strategies of the corporations and is thus seen as non-strategic,
public relations type of activity at best or a drag on corporate resources, at worst.
Consistent top management support to such initiatives is an exception.

As Figure 19 below indicates, most private sector activity generates both
business and developmental benefits. However, most Normal Private
Business Activity (NPBA) generates little developmental benefit and much
more of business benefit. In contrast, traditional corporate philanthropy
(TCP) generates more developmental benefit than NPBA but yields relatively
little business benefit. This in turn constrains the amount of resources that
businesses can put in corporate philanthropy.
Figure 19: Balancing between Development Benefits and Business

Benefits
Development benefits
Service or Product
Traditional suitable for the base of
Corporate pyramid (SoP-BoP)
Philanthropy
(TCP)
Corporate Social
Responsibility (CSR)
Normal Private sector

Business Activity (NPBA)
Business
benefits
Corporate social responsibility (CSR) is an intermediate paradigm that tries

to restore the balance between NPBA and traditional corporate philanthropy
(TCP), and succeeds in increasing the developmental benefit of businesses,
without reducing, and sometimes increasing the business benefit. However,
both TCP and CSR work is generally carried out by large business corporations
and not by the vast majority of smaller (and non-corporate) private sector
entities.
In contrast, a Service or Product suitable for the Base of Pyramid (SoP-BoP)

would increase both business and developmental benefits. For this to be achieved
sustainably, businesses must be engaged in commercial relationships with the
poor, rather than philanthropy. In this project, we begin with the premise that
it is possible for business to move from the TCP, NPBA and the CSR paradigm
to the Services or Products for the base of the Pyramid (SoP-BoP) paradigm.

However, this requires some amount of awareness building and championing.
Some successful examples have to be demonstrated and showcased and
structures set up to promote a large number of others.
Late Professor C. K. Prahalad had argued that the poor constitute a large
emerging market segment and they need to be seen as such. Calling this
segment the ‘bottom of the pyramid’,160 he has brought attention to the
enormous potential of the poor as a market provided the private sector changes
the way it looks at them and adapts its practices to match the attributes of
this market. The success of the ‘shampoo in sachets’ strategy propounded by
Prof Prahalad is now well known but it needs to be coupled with strategies to
enhance the incomes of the poor to be able to afford the goods and services
being offered by the private sector.
There are many innovative ways in which companies are already serving the
world’s poor in ways that generate strong revenues, lead to greater operating
efficiencies and innovation. An example from Mexico is Cemex, the large
cement manufacturing company, selling cement and other construction
material to poor slum-dwellers to upgrade their housing. The program, known
as ‘Patrimonia Hoy’ is tied with microfinance and the material is delivered by
Cemex in instalments to suit the pace at which the poor can afford to build
their house using mainly their own labor. In India, Essilor, the world’s largest
optical lens manufacturer, runs a program called Eye Mitras, under which rural
youth are trained by the Basix Academy for Building Lifelong Employability
(B-ABLE), to test people’s eyes and recommend and provide spectacles to them.
Rural people get a much needed service and the youth get a stable, dignified
livelihood.
In general, however, such SoP-BoP ideas are largely incubated in small civil
society organizations in closer proximity to the poor, or by government
organizations charged with the responsibility of providing citizen services. Both
of these organizations have limited understanding of business scenarios. The
private sector, particularly at the lower end, is too concerned with its issues of
day to day survival and will respond to such initiatives only if sees a profitable
opportunity for itself. However, in its quest for new markets, the private sector
does come up with product and distribution innovations which extend their
offering to the poorer segments.
160
Prahalad, CK and Stuart Hart, 2004. The Fortune at the Bottom of the Pyramid. Wharton Publishing.

Larger private businesses on the other hand are often far removed from poorer
communities and encounter problems while assessing the business viability of
innovations incubated by NGOs and government organizations. Transaction
costs of search for scalable ideas are high for an individual corporation dealing
with a large number of products of services, many of which could potentially
serve the poor and make money. But managers find it hard to spare the time
and energy to do this consistently, while attending to their mainstream work.
Change agents and champions within the private corporate sector also need
support mechanisms that allow them to build services or products suitable
for the BoP around new ways of doing business. This includes resources and
staying power during the phase of experimentation, trial and error and the time
required to reach break-even.
6.6.1 ITC e-Choupal
ITC is one of India’s leading private companies, with annual revenues of US$2
billion. The company has initiated an e-Choupal effort that places computers
with Internet access in rural farming villages. The e-Choupals serve as both a
social gathering place for exchange of information (choupal means gathering
place in Hindi) and an e-commerce hub. What began as an effort to re-engineer
the procurement process for soy, tobacco, wheat, shrimp, and other cropping
systems in rural India has also created a highly profitable distribution and
product design channel for the company.
The e-Choupal model has required that ITC make significant investments to
create and maintain its own IT network in rural India and to identify and train
a local farmer to manage each e-Choupal. The computer, typically housed in
the farmer’s house, is linked to the internet via phone lines or, increasingly, by
a VSAT connection, and serves an average of 600 farmers in 10 surrounding
villages within a five kilometer radius.
The host farmer, called a sanchalak, incurs some operating costs and is
obligated by a public oath to serve the entire community; the sanchalak
benefits from increased prestige and a commission paid him for all e-Choupal
transactions. The farmers can use the computer to access daily closing prices
on local mandis, as well as to track global price trends or find information
about new farming techniques—either directly or, because many farmers are
illiterate, via the sanchalak.

They also use the e-Choupal to order seed, fertilizer, and other products such as
consumer goods from ITC or its partners, at prices lower than those available
from village traders; the sanchalak typically aggregates the village demand for
these products and transmits the order to an ITC representative. At harvest
time, ITC offers to buy the crop directly from any farmer at the previous day’s
closing price; the farmer then transports his crop to an ITC processing center,
where the crop is weighed electronically and assessed for quality. The farmer
is then paid for the crop and a transport fee.
Farmers benefit from more accurate weighing, faster processing time and
prompt payment, and from access to a wide range of information, including
accurate market price knowledge, and market trends, which help them
decide when, where, and at what price to sell. Farmers selling directly to ITC
through an e-Choupal typically receive a higher price for their crops than they
would receive through the mandi system, on an average about 2.5 percent
higher. In areas covered by e-Choupals, the percentage of farmers planting
soy has increased dramatically, from 50 to 90 percent in some regions, while
the volume of soy marketed through mandis has dropped as much as half.161
By 2012, e-Choupal services reached to over 4 million farmers across 6,500
e-Choupal outlets covering 40,000 villages.162
6.6.2 Hindustan Unilever Project Shakti
Project Shakti is a rural distribution initiative of Hindustan Unilever Limited

(HUL) that targets small villages populated by less than 5,000 individuals.
It benefits business by significantly enhancing HUL’s direct rural reach,
and by enabling HUL’s brands to communicate effectively in media-dark
regions. It also impacts society by creating livelihood opportunities for
underprivileged rural women. Project Shakti impacts society in two ways —
the Shakti Entrepreneur (SE) program creates livelihood opportunities for
underprivileged rural women.
The Shakti Entrepreneur (SE) program recognizes that while micro-credit

plays a key role in alleviating poverty, its ability to do so depends on the
availability of investment opportunities. Shakti contributes by creating
profitable micro-enterprise opportunities for rural women- Shakti Amma.
Armed with microcredit, rural women become Shakti entrepreneurs.
161
Kuttayan Annamalai Sachin Rao, University Of Michigan, 2003
162
http://www.itcportal.mobi/businesses/agri-business/e-choupal.aspx

In 2010, HUL rolled out the Shaktimaan initiative through Project Shakti.
Through the Shaktimaan initiative, men in the Shakti Amma families
distribute HUL products to villages adjoining the respective Shakti village.
Through the Geographical Information System (GIS), villages around the
Shakti families are tracked and based on this the Shaktimaan has also been
given bicycles to ensure smooth travelling between villages.
Through Project Shakti and Shaktimaan, HUL reaches over 100,000 villages
across 15 states in India and over 3 million households every month. On
an average, an SE earns Rs 700 to 1,000 a month, and since most of them
live below the poverty line, this earning is significant, often doubling the
household income.163
6.6.3 Fabindia
Founded in 1960, by John Bissell to market the diverse craft traditions of India,
Fabindia started out as a company exporting home furnishings. It was founded
with the strong belief that there was a need for a vehicle for marketing the vast
and diverse craft traditions of India and thereby help fulfill the need to provide
and sustain employment. The first Fabindia retail store was opened in Greater
Kailash, New Delhi 15 years later.
By the early eighties, Fabindia was already known for garments made from
hand woven and hand printed fabrics. The non-textile range was added in
2000, while organic foods, which formed a natural extension of Fabindia’s
commitment to traditional techniques and skills was added in 2004, with
personal care products following in 2006. Handcrafted jewelery was introduced
in 2008.
Today, with a pan-India presence, Fabindia is the largest private platform for
products that derive from traditional crafts and knowledge. A large proportion
of these are sourced from villages across India where the company works
closely with the artisans, providing various inputs including design, quality
control, access to finance and raw materials. Fabindia links over 80,000 craft
based rural producers to modern urban markets, thereby creating a base for
skilled, sustainable rural employment, and preserving India’s traditional
handicrafts in the process.
163
Indian Management, Feb 2012

Fabindia’s endeavor is to bring customers a choice of products and lifestyle
– that offers an alternative to the mass-produced, while creating sustainable
livelihoods in the rural sector.164
6.6.4 Public-Private Partnerships in Livelihood

Promotion
6.6.4.1 India’s First Telecom Revolution – STD PCOs

India had fewer than 2,500,000 telephones in 1980, almost all of them in a
handful of urban centers. In fact, 7 percent of the country’s urban population
had 55 percent of the nation’s telephones.165 The country had only 12,000
public telephones for 700,000,000 people, and 97 percent of India’s 600,000
villages had no telephones at all. What was worse was that India, like most of
the Third World, was using its priceless foreign exchange to buy the West’s
abandoned technology and installing obsolete equipment that doomed the poor
to move like telecom snails. The Europeans, Americans, and Japanese were
beginning to move like information greyhounds. The technological disparity
was getting bigger not smaller. India and countries like her were falling farther
behind not just in the ability to chat with relatives or call the doctor but, much
more critically, in the capacity to coordinate development activities, pursue
scientific study, conduct business, operate markets, and participate fully in the
international community.
In Mr Sam Pitroda’s words, ‘‘My message was that India should abandon
electromechanical switching and move immediately toward digital
systems for switching and transmission. My reasoning was two-fold. First,
electromechanical switching was ill-suited to the Indian climate and to Indian
conditions. With few available telephones, most lines were intensively used, and
electromechanical equipment was much more likely than digital to malfunction
from overuse. (We later discovered that some public phones in India generate
as many as 36 calls per hour at peak volume, compared with maybe 10 to 12 in
the United States.) Electromechanical switches are also more vulnerable to dust
and moisture. Analog transmission, finally, suffers over distance, while digital
transmission is what gives those astonishingly intimate connections halfway
around the world. In a country with low telephone density like India, distance
-- and therefore static -- were nearly unavoidable.
164
http://www.fabindia.com
165
Excerpts from Pitroda Sam- Development, Democracy and the Village Telephone

Second, the development of digital technology would help build native
industries in electronics, software, and related fields. Moreover, India needed
one piece of digital equipment that no other country manufactured but that
many developing nations could use: a small rural exchange. In the United
States and Europe, the smallest exchanges built will accommodate 4,000 to
10,000 lines, and, in small towns and rural areas, these exchanges are installed
and then deliberately underutilized. This kind of waste may be tolerable in a
country where the number of small exchanges is tiny. In India, exchanges with
a vast overcapacity would have to be installed in hundreds of thousands of
villages, and waste on such a scale was unthinkable. Development of an efficient
exchange for 100 to 200 telephones would not only solve India’s problem, it
would give the country a valuable high-tech export.
By 1987, within our three-year limit, we had delivered a 128-line rural

exchange, a 128-line private automatic branch exchange for businesses, and
a small central exchange with a capacity of 512 lines, and we were ready
with field trials of a 10,000-line exchange. Better yet, the components for
all these exchanges were interchangeable for maximum flexibility in design,
installation, and repairs, and all of it was being manufactured in India to the
international standard: a guaranteed maximum of one hour’s downtime in 20
years of service. We had fallen short on one goal-our large urban exchange
was well behind schedule - but, overall, C-DOT had proved itself a colossal,
resounding success.
In most areas, coin-operated phones seemed a poor idea for any number of
reasons, including the fact that they cost a great deal to manufacture. Instead,
we equipped ordinary instruments with small meters, and then put these
phones into the hands of entrepreneurs who set them up on tables in bazaars,
on street corners, or in cafes or shops whose owners feel they attract customers.
These telephone ‘owners’, frequently the handicapped, take in cash from their
customers but are billed only six times a year, with 20 percent to 25 percent
discounted as their commission. The phones are in such constant use that, in
most cases, the revenue is enough to support a family. We launched a drive to
install 200,000 such phones in public places nationwide, creating more than
100,000 jobs along the way. Today, the small yellow signs indicating a public
telephone can be seen all across India.’’
The telecommunications sector plays an increasingly important role in the

Indian economy. It contributes to Gross Domestic Product (GDP), generates
revenue for the government and creates employment. From 2001 to 2011,

the total number of telephone subscribers has grown at a Compound Annual
Growth Rate (CAGR) of 35 percent. The comparable rates in the 1980s and
1990s were 9 percent and 22 percent, respectively. However, the composition of
the subscribers shows that mobile subscribers have led the way. The increase in
teledensity has mainly been driven by the increase in mobile phones. Demand
side factors—ultra low cost of handsets, low tariffs and ultimately the ease of
using a phone—as well as supply side factors have made mobiles popular in
India.
International comparisons show that India has one of the lowest mobile tariffs
in the world. Between 2007 and 2010, prepaid and blended rates show a
decline of 25.3 and 21.5 percent, respectively. In contrast, postpaid tariffs show
a decline of only 8.23 percent. The majority of the subscriptions in India are of
the prepaid type. This has been termed as the budget telecom network model,
an innovation that took birth in South Asia.
6.6.4.2 Common Services Centers (CSCs)

Common Services Centers (CSCs) Scheme is a nationwide initiative of the
Government of India to assist the establishment of one lakh CSCs in six
lakh Indian villages. The CSCs scheme was started in 2006 with a vision of
developing these centers as a front-end delivery points for governmental,
private and social sector services to rural citizens in an integrated manner.166 In
addition, around 10,000 urban CSCs were also expected to be operationalized.
A typical CSC comprises of PC(s), printer(s), scanner(s), UPS, digital or

web camera and broadband connectivity. Additional equipment in the form
of projection systems, biometric devices, and others are included, where it
is relevant and sustainable. It was estimated that the monthly operational
costs per CSC would be approximately Rs 10,000 per month. It was expected
that revenue from online Government to Citizen (G2C) services would meet
approximately one-third of the operational costs. Further, since the number of
available online G2C services were insufficient to contribute to the estimated
Rs 3300 per month revenue of the CSC from G2C services, it was envisaged
that viability gap funding up to a limit of Rs 3300 per CSC per month would be
provided to the SCA.
166
Common Service Centers program —India Development Gateway.

It was also assumed that there would be enough B2C services that would enable
the Village Level Entrepreneur (VLE) to earn at least Rs 7000 pm.167
As on 30th June 2013, the CSC network has been operationalized across 32
states and Union Territories. While 129,428 CSCs are reported to be operational,
110,055 are connected. A rollout of the scheme is yet to commence in Daman &
Diu, Dadra & Nagar Haveli and Karnataka. As per the data available, during the
period of April 2012 to March 2013, 78,895 unique CSCs were reported to have
executed transactions. It is estimated that about 11.67 crore transactions worth
Rs 3,190 crore have been executed through CSCs during this period. While about
67.73 percent of the reported transactions through CSCs were for G2C services,
about 16.32 percent were for utility services. The remaining transactions come
from B2C services like financial inclusion (9.46%), telecom (4.15%), education
(0.05%) and other services (2.28%).
Success of the CSC initiative depends highly upon availability of G2C

services. Due to absence of G2C services, footfalls at the CSC are not as per
the expectations of the VLEs and SCAs. As a result of below average footfalls,
income of the VLEs is currently not as per expectation. In spite of this, almost
all VLEs are willing to expand the operations of their CSC, which shows their
optimism about the CSC initiative. There is also a need to increase awareness
of the CSC scheme itself, the services available at the CSCs and their benefits
amongst the rural citizens. Poor connectivity and electricity are the other two
major issues impacting the growth of the CSCs. It was found that majority of
the villages do have electricity supply but it is not regular. Fifteen percent of
CSCs have less than six hours of electricity available per day. Most CSCs have
alternate power backup arrangements.
167
CSC 2.0 – A Discussion Note (2014). Department of Electronics and Information Technology, GoI.

Three Main Approaches for Livelihood
7. Promotion
7.1 Three Practical Approaches That Have Emerged
In the rest of this chapter we will survey a large number of practical approaches
adopted by livelihood promotion organizations and try to draw general lessons
from them. Organizations that work directly to promote the livelihoods of the
poor have primarily adopted three approaches:
a. Opportunities based approach
b. Ensuring access to entitlements approach
c. Approaches for the highly disadvantaged groups
The opportunities based approach seeks to primarily improve the

economic returns of the target group by helping them leverage existing
forms of capital (natural, social, human, etc.) and enhancing them through
productivity enhancement and market linkages. This approach therefore
necessitates a certain pre-existing degree of awareness within the target group,
and availability and access of resources.
The ensuring access to entitlements approach on the other hand seeks

to primarily improve the social and political situation by creating awareness,
ownership and access to and control of-
a. Social, economic and political entitlements, and
b. Different resources of land, water, forest, human and livestock
This is because net economic gains made by a family pursuing economic

activities in a ‘low entitlements environment’ are insufficient and unsustainable
and the livelihood activity itself is highly prone to risk of being lost. These rights
and entitlements are experienced at an individual level, and at household and
community levels. For example, within a household, women and men may or
may not enjoy the same kind of rights, while within a community different caste
groups may have different access rights to the same resource such as a water
source or forest resources.
Three Main Approaches for Livelihood Promotion 213

Figure 20: Mapping the Economic and Socio-political Situation to the
Economic Pyramid
Economic Prosperity
Economic Situation Spectrum

Segment I
Segment II
Segment III
Segment IV Socio Political

situation Spectrum
Exploitation and Discrimination Protected Rights
Extreme Poverty
Figure 20 above illustrates the economic situation and the socio-political

situation mapped as two axes, superimposed over the economic pyramid,
which as we know, can be viewed as four segments. Segment I, being the
Middle and High Income segment, which is neither poor, nor vulnerable,
Segment II is the Vulnerable segment, Segment III, the Poor and Segment
IV, the Extremely Poor.
As the name suggests, the Approaches for the Highly Disadvantaged

groups are methodologies specialized and customized to the needs of the
target group- the disadvantaged, poorest of the poor, women, those affected by
natural disasters and people with disabilities.
Livelihood interventions are the deliberate and conscious efforts by an

agency or an organization to promote and support livelihood opportunities
for a large number of people (other than those directly or indirectly
employed by them).
In the subsequent section, diverse types of efforts are described, in detail.

7.2 Opportunities Based Approaches
7.2.1 Natural Resource Regeneration Approach
India abounds in such efforts both by the government and by NGOs. The major
government programs in this field began as part of the Drought Prone Area
Program, which then transformed into the National Watershed Development
Program. The government programs are large but they have incorporated (and
many time ignored) the lessons from NGO efforts in watershed development.
There have been numerous NGO efforts led by charismatic leaders, such as
the Social Center (now WOTR) led by Jesuit Fathers, AFPRO led by Late
Col. Verma in Ahmednagar, Maharashtra, Anna Hazare’s celebrated work in
his village Ralegaon Siddhi, the early work of MYRADA in Gulbarga district
supported by the Swiss Agency for Development and Cooperation (SDC) and
led by Aloysius Fernandez, who linked this work with that of self-help groups.
Later generation of NGOs active in this field include the AKRSP (India) and
the Development Support Center, in Gujarat, both initiated by Late Anil Shah
after retiring as a development civil servant, PRADAN’s work in several tribal
districts in Jharkhand, Odisha, Chhattisgarh and Madhya Pradesh and in
Mewat, Rajasthan, and the influential work of Action for Social Advancement
(ASA) at Jhabua and SPS at Dewas in Madhya Pradesh, with the founder of
the former serving on the National Advisory Council (along with Deep Joshi of
PRADAN, among others), and Mihir Shah of SPS serving as a Member of the
Planning Commission.
We present a case study of Dharampur Utthan Vahini (DHRUVA) an NGO

promoted by the Bhartiya Agro Industries Foundation, 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.
Box 18: Learnings from the DHRUVA Experience
DHRUVA is an NGO working in southern Gujarat. It is promoted by

Bhartiya Agro-Industries Foundation (BAIF), of which it is also an associate
organization. BAIF works in eight Indian states through several NGOs that
it promoted. In 1975, the late Manibhai Desai; who had worked closely with
Gandhiji during the Freedom Struggle, set up the BAIF in Pune. Since then

its focus has been on creating gainful self-employment opportunities for
disadvantaged rural communities, in order to ensure sustainable development.
To achieve this, BAIF works directly at the grassroots with the NGOs they
promote, through development, research, effective use of local resources,
extension of appropriate technologies and by upgrading skills and capabilities
with community participation.
In 1995, BAIF established DHRUVA as an independent NGO after working

in the southern Gujarat region for over 15 years. DHRUVA did some
pioneering work with the tribals with the able support of Mr Arvind Mafatlal, a
philanthropist and industrialist. Today DHRUVA works in 200 tribal villages
in the districts of Valsad, Navsari and Dangs in south Gujarat and also in the
Silvassa district of the Union Territory of Dadra & Nagar Haveli.
The Context
DHRUVA selected Vansda block based on a study conducted in 1975 by IIM
Ahmedabad. The study highlighted the low nutritional status of the block,
where tribal families could manage a square meal in only 200 days of a year.
Slowly the operations of DHRUVA were expanded to the Dharampur, Kaprada
area of Valsad District and subsequently the Vansda block was delimited under
Navsari district.
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.
The Intervention
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 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. While the operating structure in case of
cashew and its processing is as described above, the Vasundhara Agri-Horti
Producer Company Limited (VAPCOL) pitched for marketing of fresh mangoes.
However, processed mango products such as pickles, mango pulp and so on,
are marketed by Vasundhara under the same brand ‘Vrindavan’.
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 self-
sufficiency. 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 has a producer company that has been registered at Pune under
the name Vasundhara Agri-Horti Producer Company Limited (VAPCOL). 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 35-37
(depending on its quality) to the farmer. The same cashew-nut fetches a market
price of Rs 390-430 per kg after processing and packaging.
Likewise mango fetches an average of Rs 10-15 per kg, whereas mango pickle
fetches a rate of Rs 80 per kg. Thus the actual value-addition takes place only
in the post-harvesting 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 holders. 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 12,000 acres of land
covering more than 13,000 families. 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
between Rs 15-20,000 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 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.
VAPCOL earned Rs 3 lakhs as profit in 2007-2008 and it is estimated that it will
earn a profit of Rs 12 lakhs in the present year (2009). A profit of Rs 3 lakhs was
earned by selling 1500 tons of fresh mangoes to ITC Ltd.
DHRUVA Staff and Structure

The organogram of DHRUVA has an Executive Vice-Chairman from BAIF, a
Chief Program Coordinator and an Apex Co-ordination team of eight that takes
care of institutional development, member’s centrality and gender integration.
The work force is flanked by 21 engineers and technologists, a 24-member
training team, 14 finance specialists, 46 agriculturists, 12 health and sanitation
staff, and 9 administrative staff.
The team facilitates the operations of 11 co-operatives. One official has been
deputed from BAIF for the operations of VAPCOL and is also the manager
for Vasundhara. The deployment of the project implementation staff is based
on cluster basis, which is demarcated on a geographical basis. Each block has
about five-nine clusters with a Cluster Incharge and six support staff. The

beneficiary coverage ranges from 12-15 GVMs and 1200-1500 Wadi owners, 45-
50 SHGs and one-two co-operatives. Likewise every block - namely Dharampur,
Kaprada, Dangs and Vansda has a key Resource Person for each block.
At present, there are 201 GVMs with 2676 members, covering 288 villages and
22,675 households. Acreage under plantation is 8843 hectares- approximately
one acre per household. Soil and water conservation work has been undertaken
and watershed treatment has been implemented on 6040.9 hectares. 476
springs or rivulets have been developed benefiting 2191 households and over
1898 temporary check dams are built every year.
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 12/kg and
Rs 37/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.
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 (proper) 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.
7.2.2 Value Chain Based Interventions
The interventions discussed in this section involve a large number of small

and medium farmers, dairy farmers or other producers, all having independent
livelihoods. They act as the supply base for the commodity that is to be
processed – such as sugarcane, soyabean, milk or organic vegetables. The
higher stages in the value chain require more capital and are more complex to
manage and thus are not necessarily owned by the farmer. In some cases, as in
sugar and milk, cooperatives were organized to integrate up the value chain. In
other cases, these stages are privately owned.
7.2.2.1 Sugar Cooperatives

The sugar cooperatives emerged from the struggle of cane growers who often faced
dearth of buyers and un-remunerative cane prices. In the early 1940s, sugarcane
was the chief cash crop sown in the Ahmednagar canal tracts. Rich peasants
farming sugarcane mostly utilized co-operative credit to finance their working and
fixed capital requirements. They got the cane processed into gur and collectively
marketed most of this crude sweetener at outlets that were run cooperatively.
Given these circumstances, the setting up of a co-operative sugar factory by

rich peasants would have basically called for only a large fixed capital outlay on
a technologically superior plant required for processing cane juice into sugar.
In fact, some rich Mali peasants of Sholapur district took this step from gur to
sugar manufacturing in 1933, when they set up their own sugar factory.
In December 1945, a conference of cane growers of the Kopargaon—Belapur

region, convened at Shrirampur, resolved to sponsor attempts to establish their
own sugar factories. Two years later, i.e., in the independence year, leading
local cultivator co-operators began collecting share capital for the venture.
Eventually, their factory, the Pravara Sahakari Sakhar Karkhana commenced
its cane crushing in 1950, at Loni, in the canal tracts of Ahmednagar district.
The leading organizer of this peasant venture was V. E. Vikhe Patil, a prominent
local Maratha leader, who later served as its chairman for several years.

There were two chief advantages that cane cultivators enjoyed by processing
their cane into sugar rather than into gur. First, in the late 1940s, the price
of sugar was evidently higher than that of gur. Next the quantum of sugar
that can be recovered from a unit volume of sugarcane juice is roughly twice
the amount of gur that could have been processed from the same volume of
cane juice. This is because sugar manufacturing is technologically superior
and also more efficient in its extractive process than gur processing factories.
Hence, the higher price of sugar coupled with a greater recovery would have
meant a larger return per unit quantum of cane to cultivators setting up their
own sugar factory.
Thus a number of factors worked together to facilitate establishment

of co-operative sugar factories in Ahmednagar district of Maharashtra,
in the early 1950s168 : (a) the existence of a rich peasant strata belonging to
numerically large, and therefore politically powerful cultivators from the
non-Brahmin upper castes, (b) the extensive and intensive cultivation of
sugarcane by rich peasants, made possible by the spread of canal irrigation,
(c) a co-operative infrastructure serving the credit and marketing needs of
rich peasants farming sugarcane, (d) the attraction of high profits to be earned
by processing sugarcane into a higher valued commodity like sugar and (e)
the favorable changes in the political arena. The sugar co-operatives became
politically powerful, at least till the period prior to liberalization of the 1990s.
7.2.2.2 Milk Processing - AMUL and NDDB

The Anand Milk Union Ltd (AMUL) was successfully established as dairy co-
operative in the 1950s. It involved a two-tier structure wherein the village level
Primary Milk Producers Cooperative Society collected milk at the villages,
which was then processed at the district level Milk Union. Initially these
were marketed directly by the district Milk Union under the brand name of
AMUL. This two-tier structure helped in the following way: the village level
cooperative addressed the challenge of marketing faced by small producers
with no bargaining power and lack of access to safe storage, for better price
realization. The district level cooperative union provided value addition
through standardization and processing into miscellaneous products.
Over time, the ‘Anand Pattern’ spread to several other districts of Gujarat
and now there are 17 District Milk Unions in Gujarat with 3.2 million
member farmers. They formed a state level Federation for producing higher
168
Ignatius Chithelen Origins of Co-operative Sugar Industry in Maharashtra Economic & Political
Weekly April 6, 1985

end products such as skimmed milk powder, flavored milk, ice-cream and
chocolate. The Amul brand name was adopted for all dairy products marketed
by the Gujarat Cooperative Milk Marketing Federation, irrespective of which
district union the products came from. The marketing efforts at the Federation
level aimed at retail markets enabled continuous demand for cooperative
products and higher price realization. The realization of remunerative and
stable prices by milk producers ensured stable incomes and access to necessary
inputs for milk production. The employment generated through processing
and marketing activities is substantial. An estimated 15 million producers are
associated with the milk cooperatives.169
The National Dairy Development Board (NDDB) was incorporated in 1965 with
the specific charter of replicating the Anand Pattern milk cooperatives across
the country. By 1968, NDDB had formulated the first phase of Operation Flood
which aimed to capture for public dairies a ‘commanding share’ of the milk
market in four metropolitan cities of Mumbai, Delhi, Kolkata and Chennai.
These dairies were, in turn, to be supplied with liquid milk from modern
processing dairies to be located in rural areas with high milk production
potential (called milksheds) or they could in addition, or solely gifted skimmed
milk powder and milk fats for re-combination. The rural dairies also helped
balance seasonal fluctuations in milk production through the separation of milk
into fat and other solids in the surplus season and their storage for subsequent
use in the lean season.170 In total there were three phases of Operation Flood
(OF) from 1970 till 1996.
Under OF-I, through a multidisciplinary team consisting of veterinarians,

dairy technologists, agricultural scientists, and extension specialists, the NDDB
went ahead with the task of creating co-operatives. This approach was later
popularly known as the Spearhead Team (SHT) approach. Dairy plants up to a
processing capacity of 4 lakh liters per day were built up. The financial support
was provided by the NDDB using proceeds from the sale of imported milk
powder and butter oil. Initially the NDDB played a crucial role in conceiving
and implementing turnkey projects in Gujarat, and later in other states. NDDB
also took up the responsibility of planning, erecting, commissioning, and
monitoring dairy projects through the Indian Dairy Corporation. The OF-II
extended the coverage of the NDDB activities to many other states. Class two
milksheds were also taken up under the Anand Pattern of cooperatives. Large
metro dairies (Mother Dairy complexes) were commissioned.
169
www.Amul.com
170
Ajit Kanitkar, Vikalpa Vol. 21, No. 2, April - June 1996

The OF interventions have been widely debated. The evaluation of the work by
World Bank, World Food Program and Government of India has been criticized
by scholars on account of its (a) relative exclusion of the poorest (hence not fit
as a poverty reduction intervention), (b) marginal impact on milk production
(the increase in milk production during 1970 to 1996 cannot be significantly
attributed to Operation Flood, hence other models of dairy development need
to be promoted, (c) excessive focus on creation of processing infrastructure
while productivity achievements are inadequate, and (d) focus on marketing
aspects neglecting the production and productivity challenges.
7.2.2.3 Soybean Cultivation and Processing

With the rapid spread of the high-yielding varieties of wheat and rice in India
during the early 1970s, farmers used even marginal lands for these crops, and
a question arose as to where soybean would fit in the cropping system. M. S.
Swaminathan, the then Director General of ICAR, had pointed out that unless a
crop is grown in one million hectare and produces at least a million tonnes each
year, it would not make much of a difference to the Indian economy. Indian
soybean scientists then started looking for possible niches where soybean could be
grown, including intercropping, relay cropping, rotation, and utilizing fallow lands.
A major niche was found in Madhya Pradesh, where a large area used to be
left fallow in the rainy season to conserve moisture and fertility. Williams et
al.(1974) estimated that if all the fallow and marginal lands were brought under
soybean, Madhya Pradesh alone would have over two million hectares under
soybean. This eventually came to be true, thanks to the concerted efforts of the
Madhya Pradesh Government and the M P State Cooperative Oilseed Growers
Federation, in promoting soybean cultivation and marketing in the state.
Consequently, the total area under soybean in Madhya Pradesh rose to

808,000 hectares by 1983–84 compared with 102,000 hectares in Uttar
Pradesh, 30,000 hectares in Rajasthan, 12,000 hectares in Himachal Pradesh,
and about 6,000 hectares in Bihar and Gujarat, bringing the national total close
to about one million hectares! With a total production of about 723,000 tonnes,
this was a very impressive achievement and it further catalyzed the allocation
of more funds for promoting soybean cultivation.171 By 2010-11 the area under
soybean had gone up to 9.3 million hectares with an estimated production of
10.13 metric tonnes.172
171
Success of Soybean in India: The Early Challenges and Pioneer Promoters B B Singh
172
Estimates from Directorate of Agriculture, GoI, SOPA

During the 1980s India faced a severe shortage of edible oil along with a very
difficult situation on the foreign exchange front. It was in this context that
NDDB and National Cooperative Development Corporation (NCDC) with the
support of the European Union, initiated the soyabean expansion program in
Madhya Pradesh and Rajasthan. A vertically integrated intervention addressing
production, processing and marketing involving primary producer cooperatives
and regional processing plants with state level marketing Federations was
launched in the early 1980s.
In Rajasthan the intervention also included mustard and groundnut besides

soybean. A large number of primary producer co-operatives were mobilized
and appropriate package of practices were introduced for oilseed production
at the farm level. The co-operatives operated village level purchase centers for
purchase of oilseeds from farmers, which ensured remunerative rates thus
enhancing production at the farm. The procured oilseeds were transported
to the processing plants. At that point of time, soyabean de-oiled cake was a
much demanded export commodity earning valuable foreign exchange while
oil production saved on the import bill for edible oil, saving foreign exchange.
The large scale of operations offering remunerative prices led to a large area
under oilseeds.
With the economic liberalization regime, the edible oilseeds co-operative sector
lost its special status and along with it many other private processing units
closed down, due to financial non-viability. Today a few big private processing
units (170) dominate the trade with nearly 50 percent in MP alone. Allegedly,
these units have remained financially sustainable, primarily due to the rather
nebulous tax practices of these units.
7.2.2.4 Organic Farming

The growth of organic agriculture173 in India has three dimensions and is being
adopted by farmers for different reasons. The first group, in this category
of organic farmers, are those in no-input or low-input use zones. Organic
farming is a way of life for them and they continue practicing it as a tradition
(quite possibly under compulsion, in the absence of resources needed for
conventional high-input intensive agriculture). The second category of farmers
are those who have recently adopted the organic farming way, in the wake
of ill-effects of conventional agriculture - may be in the form of reduced soil
173
Taken from National Project on Organic farming Deptt of Agriculture and Cooperation, Govt of India
National Center of Organic Farming, Ghaziabad

fertility, food toxicity or increasing cost and diminishing returns. The third
category comprises of farmers and enterprises that have systematically adopted
commercial organic agriculture to capture emerging market opportunities
and premium prices. While the majority of farmers in the first category
are traditional (or by default organic farmers), they are not certified. The
second category farmers comprise of both certified and un-certified farmers.
However, a majority of the third category of farmers are certified and engage
in commercial farming. It is this category of farmers who are the focus of
attention. The entire data available today on organic agriculture, relates to the
activities of these commercial organic farmers.
Emerging from 42,000 hectares under certified organic farming during 2003-
04, organic agriculture has grown almost 29 fold during the last 5 years. By
March 2010, India had more than 4.48 million hectares under the organic
certification process. Out of these 4.48 million hectares, 1.08 million hectares
are cultivated lands, while collections from 3.4 million hectares of wild forests
are the source remaining organic harvests.
For quality assurance, the country has an internationally acclaimed certification

process in place for export, import and domestic markets. National Program on
Organic Production (NPOP) defines the regulatory mechanism and is regulated
under two different acts for export and domestic markets. NPOP, notified
under Foreign Trade Development and Regulation Act (FTDR), oversees export
requirements. The NPOP, notified under this act, has already been granted
equivalence by the European Union and Sweden and USDA has also accepted
the conformity assessment system of NPOP. Due to this, the product certified
by any Indian accredited certification agency under NPOP can be exported
to Europe, Sweden and USA without the need for recertification. Eighteen
accredited certification agencies oversee the requirements of the certification
process. Of these, four are public sector agencies, while the remaining fourteen
are under private management.
With the phenomenal growth in area under organic management and growing
demand for wild-harvest products, India has emerged as the single largest
country with highest arable cultivated land under organic management. India
has also achieved the status of single largest country in terms of total area
under certified organic wild harvest collection. With the production of more
than 77,000MT of organic cotton lint, India had achieved the status of largest
organic cotton grower in the world a year ago, producing over 50 percent of the
world’s total organic cotton.

Although world over, commercial organic agriculture with its rigorous quality
assurance system is a new market controlled, consumer-centric agriculture
system, it has grown almost at the rate of 25-30 percent per year during the last
10 years. In spite of the fears of recession, the growth of organic agriculture has
been unaffected. The movement that started in the developed world is gradually
picking up in developing countries. However, the demand is still concentrated
in developed and most affluent countries. Local demand for organic food is
growing and India is poised for faster growth with a growing domestic market.
The success of the organic movement in India depends upon the growth of its
domestic markets. India has traditionally been a country of organic agriculture,
but the growth of modern scientific, input intensive agriculture has pushed
it to the wall. Nevertheless, with increasing awareness about bio-safety and
quality of food, long term sustainability of the system and accumulating
evidence of the organic approach being as productive as conventional methods,
organic farming has emerged as an alternative system of farming that not only
addresses quality and sustainability concerns, but also ensures a debt free,
profitable livelihood option.
One such initiative is the Community Managed Sustainable Agriculture

(CMSA) introduced in Andhra Pradesh in 2004 to address low profitability
resulting from the high cost of fertilizer and pesticides, with subsequent
indebtedness, even leading to suicides in desperation. CMSA encourages a shift
to non-pesticide management, based on understanding the crop ecosystem,
adopting suitable cropping practices, including multi-cropping, understanding
insect biology and behavior and adopting suitable preventive measures. CMSA,
which is largely driven by farmers’ SHGs, also engages the local community
in building and sharing knowledge and skills. A farmer who has successfully
adopted CMSA becomes a community resource person who then promotes
and advises on these methods and provides extension services in neighboring
villages.
CMSA has shown impressive results. It has substantially reduced cultivation

costs without reducing productivity significantly, resulting in a net increase
in farmers’ income as well as health and ecological benefits (United Nations
Environment Program (UNEP 2012); see also Kumar et al. 2009). Since men
tend to migrate for work and women undertake farming responsibilities, these
health benefits have a gendered significance. By 2012–13, nearly 2 million
farmers adopted CMSA on over 1.5 million hectares or over 10 percent of
Andhra Pradesh’s net cropped area (SERP 2013).

7.2.3 The Integrated Livelihoods Promotion Approach
Several organizations have attempted integrated livelihood promotion for

the poor. The most notable amongst these is BRAC in Bangladesh, which in
addition to providing microcredit, insurance and input supply, and output
marketing services in poultry, silk and handicrafts sectors, also provides
primary health and education services. Technoserve, USA, which works
in Latin America and Africa, takes a commodity sub-sector development
approach and organizes the producers into cooperatives. In India, SEWA
organizes women into occupational cooperatives and then provides them
banking services through the SEWA bank, insurance through Vimo SEWA
and marketing through the SEWA Trade Facilitation Center. Likewise, Indian
NGOs like ASSEFA, BAIF and PRADAN have adopted integrated approaches
in sub-sectors such as mango, cashew, dairy, poultry and tasar silk, combining
producer organizations with the system for provision of financial services.
7.2.3.1 The Basix Livelihood Triad Model

Learning from all these integrated approaches and its own experience
since 1996, Basix evolved the Livelihood Triad model after a decade of
experimentation with various livelihood promotion methodologies. It is
designed to provide a comprehensive set of livelihood promotion services to
rural, poor households, through a network of collaborating organizations.
The rationale behind the livelihood triad strategy is as follows: micro-credit,

by itself, is helpful for the more enterprising amongst the poor in economically
Figure 21: The BASIX Livelihood Triad
Institutional Development
Services (IDS)
BASIX
Livelihood Triad
Agriculture, Livestock
Inclusive and Enterprise
Financial Development Services
Services (IFS) (AGLEDS)

dynamic areas. Less enterprising poor households need to start with savings
and insurance before they can benefit from micro-credit, as they need to cope
with risk. The poor also need services such as money transfer either from
family members who have migrated to cities for work, or from the government,
providing social security payments. Farmers can also benefit from specialized
products such as warehouse receipts that help finance the retention of
harvested produce, thereby reducing distress sales.
All these services lead to the financial inclusion of the poor and hence are called
Inclusive Financial Services (IFS). Additionally producers in economically
backward regions, and poor people in all regions need a whole range of
Agriculture, Livestock and Enterprise Development (AGLED) Services such
as input supply, training, technical assistance, local value addition and
market linkages. Since most small farmers find it hard to make a living with
just agriculture, they also need support for livestock rearing, such as dairy
buffaloes or poultry chicken. Then, there are landless, poor households, who
need assistance with starting non-farm micro-enterprises.
Table 43: Services Available under the BASIX Triad
Inclusive Financial Services Agriculture/Livestock & Institutional Development

(IFS) Enterprise Development Services (IDS)
Services (AGLEDS)
 Savings (either directly,  Productivity  Individual level awareness
where regulations enhancement – increase and, self-confidence
permit, or on behalf in yields and reduction building, vocational skill
of regulated banks as in costs and entrepreneurship
correspondents) development
 Credit: agricultural,  Risk mitigation (other  Formation of groups,
allied and non-farm, than insurance, such as federations, cooperatives,
short and long-term vaccination of livestock) mutual benefits, of
producers
 Insurance, for lives and  Local value addition  Accounting and
livelihoods – life, health, (washing, drying, management information
crops, livestock, assets cleaning, sorting, systems, using IT
grading, packing, etc.)
 Money transfer, for  Alternate market  Building collaborations
migrant workers linkages for input supply to deliver a wide range of
 Warehouse receipts & output sales services
 Financial syndication  Non-farm enterprises –  Sector and Policy work –

and dealing with capital agro- processing, small analysis and advocacy for
markets industry, services, etc. changes or reforms

It is not possible to work with poor households individually if these services are
to be offered in a cost-effective manner. As most poor people are isolated and
dispersed, it is necessary that they come together for better bargaining power
at the marketplace. Provision of necessary livelihood promotion services in a
cost effective manner becomes easier when the poor are organized into groups,
informal associations and sometimes co-operatives or producer companies.
The formation of such groups and their effective and sustainable functioning at
a scale, requires Institutional Development Services (IDS). Once the poor are
organized into groups, they can also persuasively bargain for better inputs (fair
prices, good quality and timely supply), services from governments (extension,
infrastructure, etc.) and output marketing (better prices, and refusal to accept
cheating or exploitation by middlemen).
BASIX adopted the BASIX Livelihood Triad Model (BLTM) in 2003 and it has
been used to serve over two million rural poor households all over India. The
model has undergone several evaluations and though these have revealed many
areas of improvement, on the whole, BASIX feels that the model is superior
to any other integrated approach. Though many NGOs and government
development agencies offer livelihood promotion services, those are mostly
confined to only one or two main services or sub-sectors. These services are
mostly subsidized, with producers paying nothing or certainly not the total
costs. It is in this aspect that BASIX Livelihood Triad Model clearly stands apart
from the others. Every service that is provided is charged for, and together
these services constitute a revenue model for the organization, particularly
where there is a sizable cluster of fee-paying users.
It took BASIX several years to build these revenue models and even now it
is work in process. The revenue model for inclusive financial services (IFS -
credit, insurance, savings and payments) was the easiest to build and scale
up and with these, BASIX covered over 4 million persons. The agriculture,
livestock and non-farm enterprise development (AGLED) services model has
proved to be most successful in dairy, followed by vegetables, pulses, oilseeds
and paddy but is hard to break even in areas where there are no clusters of at least
300-400 farmers within a 10 sq km radius. Thus it is difficult to break-even in
case of non-farm activities. IDS cannot seek upfront payment as it is hard to
go to a group of unorganized people and say, “pay us a fee to help organize you
better”. By the time producers get organized into viable business groups, it can
take two to three years. Thus, IDS can work only when third parties pay all or
at least part of the cost.

BASIX works with other collaborating organizations such as insurance
companies Aviva and Royal Sundaram for life and non-life risk, Pepsico for
potato marketing and ITC Ltd for livestock services. In addition, BASIX has
its own subsidiaries such as BASIX Sub-K, for enabling banking transactions
without going to branches, BASIX Krishi for providing agricultural and
livestock services to farmers and the BASIX Academy for building Lifelong
Employability (B-ABLE) for providing vocational skills to youth.
The BLTM has been widely adopted by many organizations with variations.
The major influence of BLTM has been on the design of the various government
rural livelihood programs. Outside India too there is a widespread acceptance of a
more holistic approach to livelihood promotion for the poor. In 2012, BASIX was
invited by the Swiss Agency for Development Cooperation to spread the Livelihood
Triad model in Africa and it is now working on it in Tanzania, Cameroon and
Mozambique, under the rubric of African Livelihoods Partnership.
Collaborative Polygon for Livelihood Promotion: Over the years, the

economy has become specialized, dynamic and complex. While on one hand the
services required for supporting large numbers of livelihoods have become more
diverse, on the other, it has necessitated that agencies providing these services
become more specialized. This stems from our understanding that different
sets of interventions are required based on the nature of the critical bottleneck
at that point in time. These can be very diverse: from organizing the producers
to establishing market linkages, or arranging finance. It is not feasible for any
one agency to arrange all of these. As a result, BASIX evolved a strategy of the
Collaborative Polygon (See Figure 22).
Figure 22: Collaborative Polygon
Collaborative Polygon Credit Provider

Different economic
activities along a sub-
sector can best be taken up
by different institutions/ Input Output Processor/
agencies. Effective Supplier Marketer
intervention in livelihoods Rural
requires collaboration Producer
between agencies with
complementary strengths. Research & Extension
Training Agency

Mahajan and Dichter (op. cit.) argue that promoting enterprises for the poor
depend on multiple factors such as market demand, infrastructure, availability
of skills, and government policies, to name a few. Hence, it is a complex process
and a better approach is to identify the bottleneck and work to either eliminate
it or minimize its damaging effects. Though a large variety of services are
required in such situations, not all of them are required at the same time and
in every case. Thus, the offering should be contingent upon the requirement of
the situation. For supporting livelihoods, services are required in input supply,
output marketing, infrastructure, technology development, research, training,
community organization among others. Only a specialized type of organization
can offer such services, and as it is difficult to build in-house competencies to
address all these factors, collaboration becomes indispensable. Collaborative
arrangements between various agencies help address this problem to some extent.
7.3 Approaches Ensuring Access to Rights and

Entitlements
Some believe that poverty is not just an economic phenomenon, but results
from structural inequalities bolstered by a feudal, caste-based social and
political structure. They want to address poverty and inequity by goading the
poor to demand their rights and entitlements, engage in militant struggles
and also use constitutional mechanisms such as the courts, human rights
commissions to obtain their rights. The Chhattisgarh Mines Shramik Sangh,
led by the late Sankar Guha-Neogi, is one such example.
The inspiration for this was the Naxalite movement, which began with an
armed uprising of peasants in the North Bengal village of Naxalbari in 1967,
and became entrenched in parts of the Bengal and Bihar country side. It
attracted many well-educated individuals, who were disenchanted with the
system and were inspired by the work and ideas of Mao Zedong, Che Guevara
and Indian proponents of the armed struggle - Charu Mazumdar and Kanu
Sanyal. Thus Dr Vinayan worked with the Maoist Coordination Center in South
Bihar, and CP Reddy with the Ryutu Kuli Sangam in Andhra Pradesh.
Those continuing to engage in armed struggle, even in the late 1990s are
broadly referred to as the People’s War Group, which is active in northern
Andhra Pradesh and the neighboring districts of Maharashtra, Madhya
Pradesh, Chhattisgarh and Odisha. It is also active in Bihar and Jharkhand.
The ideological inspiration of the PWG is now questionable and it is seen as
an outlet for disgruntled adventurist youth, much as ‘terrorist’ groups such as
the United Liberation Front of Assam (ULFA) in Assam and others elsewhere.
Determining the stage at which a legitimate struggle against the state is tagged

‘secessionist’ or ‘terrorist’ depends on many factors, including the handling
of grievances in the early stages by the political leadership and the law and
order machinery, the motivational mix of persons who assume leadership
roles in such struggles and the extent to which disruptive foreign influences
get involved.
Each of these narratives described below share a common thread of deep

personal commitment towards securing basic rights of the poor and a
protracted struggle often in the face of animosity and political vendetta. Yet,
the fact that they stood by their conviction come what may, is a lesson that each
one of us should learn. What better tribute to their indomitable spirit than this
poem by Shri Harivansh Rai Bachchan!

Others established militant movements, but stayed away from ‘armed struggle’.
Thus, Sankar Guha-Neogy organized the highly exploited iron ore mine workers
through the Chhattisgarh Mazdoor Sangarsh Samiti in Madhya Pradesh,
while Nalini Nayak and Fr. Tom Kocherry worked with coastal fishermen in
Kerala. In Uttaranchal, Chandi Prasad Bhatt organized villagers to protect their
forests from felling by contractors by hugging trees, in what became known as
the Chipko Movement. In Gujarat, the Behavioral Science Center worked with
Dalits to ensure that they got minimum wages and also the right to till their
own lands. Since the mid-1980s, Medha Patkar led the struggle for the rights
of tribal inhabitants of the areas displaced by a series of large dams to be built on
the Narmada river. Though some of these movements have withered away and
may not have achieved their end objective, they made a big impact on the way
the nation has thought about issues of peoples’ rights, environment-development
trade-off and the role of commercial interests in forming state policy.
We provide below three detailed case studies of struggle for the rights and
entitlements of the poor to livelihoods.
7.3.1 Chhattisgarh Mines Shramik Sangh
Sankar Guha Neogi was a remarkable trade union activist. He started off as a
worker in the Bhilai Steel Plant (BSP) in the 1960s, and pursued his studies
while working to complete his B.Sc. He was so active in the militant wing of
the trade union at BSP that he was dismissed, however he continued his work.
In 1975, he was arrested during the Emergency and was jailed for a year and a
half. On his release, he formed the Chhattisgarh Mukti Morcha (CMM), which
became an umbrella organization, under which both miners and local farmers
were organized. The miners were under the banner of the Chhattisgarh Mines
Shramik Sangh and the local farmers under the Chhattisgarh Gramin Shramik
Sangh (CGSS). The fact that he organized both workers and farmers showed his
unorthodox and superior approach to trade union work that was unmatched
anywhere else.
Sankar Guha-Neogi succeeded in sustaining the Mine Worker movement for

14 years from 1977 till his death in 1991. Thanks to the struggle he led, the
wages of mine workers went up from Rs 3 per day in 1977 to Rs 60 per day
by 1991- a five to six-fold increase, even if we take inflation into account.
But Guha-Neogi was not just a trade unionist. He was a social activist
and he noticed that liquor consumption went up as the wages rose, so he
organized the women in the workers’ families for an anti-liquor campaign.

The participation of women workers helped develop the campaign and
ensured its effective implementation. Initially the movement faced the
wrath of liquor contractors and their political patrons. He also led the CMM
to set up a dispensary, which later became a 15 bed hospital, and is now a big
establishment called Shahid Hospital, in Dalli-Rajhara. The CMM also set up
six schools in the area. He worked with farmers to increase their productivity
and get them better prices. He organized workers to counter the destruction
of the environment and carried out a tree planting program, another program
for cleaning up streams and rivers, and a third for ensuring garbage collection
and disposal in the miners’ bastis. He even worked against excessive noise
pollution caused by excessive use of loudspeakers! The quote below describes
the destructive transformation of the area and shows his concern for the
environment:174
“The entire area is rich in iron ore and now has one of the most productive
mines in Asia. But just 35 years ago when people went from Kusumkasa to
Dondi or Bastar, they had to cross dense forests. On the way they would
encounter small villages of Gond adivasis. Under the lush green canopy of
trees, lived numerous species of birds and their songs filled the air. Little
streams and rivulets roamed and rippled across the miles creating yet another
kind of music. Children played freely. Young men and women frequently
gathered to dance in the forest through the night”.
“Then one day some officers of the Geological Survey of India arrived in the
forest. They were soon followed by a team of Russian and Indian engineers.
Then there was a sudden, unexpected, thundering blast. People, birds, animals
and trees alike trembled from the shock. That first blast was followed by
many, many more. After this the jarring noise of the bull-dozers came to
dominate over all that was before. Who knows where the koyal and peacock
fled to? The drums fell silent and young people no longer danced in the
forest, for there were no forests left. One by one, lakhs of trees were cut and
carted away. In their place sprang up scores of sawmills. The once crystal clear,
bubbling streams all turned blood red from the iron ore particles which now
flowed in them”.
“Finally the day came when no trace of the green canopy was left. Instead,
from Rajnandgaon to Durg and Raipur, grand palaces of the saw-mill owners
174
From “Sankar Guha Neogi – His Work and Thinking” www.doccenter.org/JVA/His_Work.pdf

and traders came up. The iron ore from Rajhara was smelted to make steel
at the plant in Bhilai and the swirling smoke from its chimneys heralded
‘development’. Upon foundations tainted by destruction, came to stand the
edifice of ‘new development’. Then the cement plant was installed and the
powder dust shower of cement, which spread over the field’s destroyed the
agriculture of lakhs of farmers. Meanwhile the putrefying molasses at the
newly opened distillery created an all-pervasive odor. Eventually all the rivers
were polluted. A vile itching spread among the people who live beside these
rivers. The mortality rate of cattle became unnaturally high. More and more
people began flocking to the townships and cities. There amid the ceaseless
noise of machines, the stink of chemical pollutants and filth, hutment colonies
proliferated where people were compelled to live like insects. The protection
of the environment is now the central issue. It is the new challenge-to which
we must rise”.
“This world is beautiful and I certainly love this beautiful world, but my work
and my duty are important to me. I’ve to fulfill the responsibility that I’ve taken
up. These people will kill me, but I know that by killing me none can finish our
movement”.
What an integrated view of livelihoods, development and the environment!
Just so that we also draw the right lessons about the political economy of
activism, it is necessary to see how the vested interests reacted to this activist
and what the Indian State did or did not do to protect him or at least to
prosecute those who conspired to assassinate him. Sankar Guha-Neogi was
shot dead on the night of 28th September 1991, while he was asleep.
7.3.2 Mazdoor Kisan Shakti Sangathan (MKSS)175
MKSS is a people’s organization and part of the growing non-party political

process in India. A rough translation of the name is: “Organization for the
empowerment of workers and peasants”. As the name indicates the MKSS
works with the rural poor - workers and peasants from the central districts
of the north western Indian state of Rajasthan. In 1990, the people of the
area set up the MKSS to strengthen participatory democratic processes and
to collectively fight exploitation. Formed on the twin slogans of justice and
175
www.mkssindia.org/about-us/story-of-mkss

equality, the immediate focus of the MKSS was satisfying the minimum needs
of the family and the community, so that ordinary people could live their lives
with dignity and participate as citizens with a sense of equality.
Later, as the organization grew in strength and experience, its constituents

began to see the links of their own local struggles with wider ongoing
national or even global processes. The Right to Information (RTI) struggle,
for which the organization is best known outside, is one such example.
However, the MKSS retains its commitment to broad-based work at a local
level, and it is therefore important to understand the organization and the
role it sees for itself, in order to better perceive the context of a particular
campaign.
Therefore, this note first explains the emerging positions and structure of the
organization, and then examines the MKSS and the RTI Campaign. The MKSS
describes itself as a ‘people’s organization’. In India today, there are a number
of efforts outside Government acting on behalf of the people. These vary from
organizations of charity, at on one end of the spectrum, to non-party political
organizations at the other. Amid these lie the (foreign and Indian) funded
(large and small) development organizations. All of these are clubbed under
the descriptively deceptive category of ‘NGOs’.
The MKSS considers itself a political organization, with an understanding of

this term in its broadest connotation, including an examination of the norms
for power sharing and distribution. The organization has a commitment to
challenge the inequality and inequity of distribution of power in the socio-
political structure. The poor cannot get a greater share, unless they understand
and operate the political structure. This means operating the democratic
process to their benefit.
It is therefore important that the MKSS works with issues that affect people
and impact the mainstream, both politically and economically. The MKSS
does not work in a tribal area, but with people who are part of a caste ridden
society. The area reflects the socio cultural ethos of the mainstream, and the
organization has to therefore address those issues. There are a range of issues
related to equality and justice from communalism, Dalit atrocities, caste factors
in electoral politics, corruption, gender issues in a feudal society, human
rights violations, to the co-option of development paradigms; in particular,
in the context of “economic liberalization”. These are all issues that affect
large numbers of people, in a similar manner, all over the country. It is in this

context that the work on transparency and right to information has been widely
accepted and seen as an issue of empowerment and governance.
The MKSS is a non-party, people’s organization. It is an argued position

within the MKSS, that in India today, solutions to the prevalent lack of ethics
in governance will have to be sought in the context of people’s rights and
responsibilities. The Indian Constitution says that the sovereignty of India
vests in its people. The people have to understand that they are not merely
vote banks, but shareholders in the country’s future and collectively have a
right to decide for themselves the nature of their own development. We will
have to evolve systems of control and accountability, whereby the elected
representative can govern only in the interest of the collective that he or she
represents. For this, it is essential that the MKSS work with people to evolve
modes by which political parties and their representatives are made constantly
accountable to the people themselves.
Nevertheless, a matter of concern stems from the fact that they are unable
to have the right kind of impact on the key centers of mainstream decision
making. This is particularly true for organizations that concentrate on a couple
of issues and do not work with the objective of seizing State power. Questions
posed about using the space and energy generated by electoral politics have not
been adequately answered.
The MKSS directly addresses the issues of survival for the poor peasants and
workers of an area roughly covering 5 tehsils in 4 districts. About 300,000
people live in the geographical area where the MKSS works. However, the
MKSS is involved in larger ongoing processes and campaigns at a state and
national level with an objective of helping these processes of participatory
democracy spread and mature. While there are many people who contribute to
MKSS efforts and activities on a voluntary basis, only a small number of people
are involved with the MKSS on a full time, and day-to-day basis.
The poor have not had a chance to shape and express their ideas of an
egalitarian society. The MKSS has given them a voice. The issues raised by the
MKSS – including the Right to Information – have been ideas shaped by people
who have been damned: the ‘illiterate and uneducated’. The MKSS believes that
workers and peasants should not be limited to only battling for survival issues,
where they are relegated to the fringes of policies created by others. They must
also aim to raise fundamental issues of governance and polity. In a functioning
democracy, questions raised at a small, local level can and must impact the
larger fabric of governance, because the governing principles are the same. It

also seems clear that a majority of the Indian middle class is bankrupt of ideas,
and is caught up in the mirage of consumerism.
Unlike an urban trade union, the MKSS has to be involved in all sorts of issues
of empowerment and oppression that people may face. They cannot draw
theoretical lines of concern. Therefore, all germane, collective issues have to
be taken up. They may be related to land, gender, health facilities, education,
wages, employment, housing, communalism, market prices, common
property issues, alcoholism and governance. The concern for human rights is
fundamental to many of the struggles of the MKSS.
The MKSS has resisted the defining and classifying of its work as per various
external categories. It engages with development issues, but is not a registered
society – so superficially classified as an ‘NGO’. It engages with issues of labor,
and has been in the process of fostering formation of labor unions for the
National Rural Employment Guarantee Act (NREGA) workers. However, the
MKSS itself does not fall within the parameters of a labor union. It has had
people stand for election at the panchayat level. It sees many of its activities
as being political in nature, but it does not see itself as a political party. That is
why it has said that it is a non-party, people’s organization.
Amongst other things, it finds the classification and separation of State and
non-State efforts as limiting. This includes the concept of the State being the
perpetrator of all exploitation.
“The concept of the State being outside ourselves, we felt, had to be

perceptionally turned around. The State is ours, usurped by a ruling elite.
Some of the slogans that have come out of their struggles are indications of
this changed perception. `Hamara paisa- hamara hisab!’ (Our money and our
accounts’) and therefore, `Sarkar hamare aap ki…nahin kisi ke baap ki!’ (The
State is ours not the inheritance of a feudal few)”.
Most of the people in the MKSS come from the local area, and from poor
families. At the time the MKSS was formed, there were only two people from
urban and privileged backgrounds. Since then the majority of MKSS full
timers have been drawn from the people of the area. There is an ideological
commitment in the MKSS to try to match the lifestyle and work ethics with the
community to which it belongs. The lifestyle in the MKSS is subjected therefore
to the same restrictions and facilities that exist in the community around it.
This is not to say that there are no additional facilities available for its use.

However, thought is given to using only those facilities that are felt practical,
and do not contradict with the basic working norms of the organization.
Even the language of such an ideology must emerge from those who are
seeking to bring about change. Not defining a pre-set ideology has been both
a strength and a weakness. For the people it has been easier to understand
and adjust to a theory that has evolved through their immediate needs,
never seen in isolation and always related to larger political, social and
other values in society.
“For those of us who see the links before others do and also seek comfort
in logically worked out world views within pre-defined ‘isms’, the non-
conformity has denied comfort of working within an easily understood and
accepted paradigm. But at the same level, it has been a challenge to balance the
principles and values that underlie people orientated political ideologies, action
and the contradictions that do surface, may arise from within the paradigm
itself, or from happenings outside of it. It has of course made us sensitive to
timing and action that will make the best use of opportunities”.
Many of the strengths of the MKSS are also causes for its constraints. There
are two kinds of constraints that one cannot easily overcome the first is the
socio-political environment, which obviously is unavoidable and the other set
of constraints comes out of the nature and structure of the organization. Since
this is a result of deliberate choices made, it is obvious that these constraints
or weaknesses would only go if the choices were to change. Nevertheless, we
touch upon them below:
The discourse of the mainstream on the political system defines democracy

in very narrow terms of casting votes once every five years, and guarantees
accountability of elected representatives only in terms of voting people out in
the next election. This narrowing down of the meaning of democracy has been
of great advantage to the ruling elite. Despite the fact that now the elite has got
a multi caste or class face, the moment privileges come, the character of the
ruling class dominates. It has been essential therefore to define democracy in
its broadest terms. The problem arises when the MKSS has to define its position
about the electoral process itself. While it cannot deny the immense importance
of it, it also cannot offer solutions or choices between candidates as they are
today. This befuddles both the community and the MKSS. The MKSS has been
trying to understand when, where and how, the other democratic processes the
MKSS has been working on can converge with the electoral process.

The MKSS also has to work within the context of a colonial bureaucracy,
which is largely inaccessible and accountable only to superior officers.
Working till very recently in secrecy (under the umbrella of the notorious
Official Secrets Act – a problem for all of South Asia that was under British
rule), and riddled by increasing amounts of corruption at all levels; the
basic bureaucratic structure itself requires an overhaul. The RTI Campaign,
(discussed in detail later) grew from a series of local struggles, into a national
campaign, and eventually into a people’s movement that ensured the passage
of a strong national Law. This is an example of how strongly rooted local
struggles can eventually have a fundamental impact on the whole paradigm of
governance. This potential for impact at a much wider level has been seen in
the MKSS experience of being a part of a campaign for a National Employment
Guarantee Act also.
The RTI Campaign was born out of a poor people’s need to survive. The need
has been expressed and demands were made many times before, but this time
it was both seen as a fundamental right of all citizens and as a right for survival
for the poor. The need for this right, transparency of all public operations
including, but not limited to the operations of the government, has enabled
the MKSS to communicate with a large number of people. That a government
or any institution dealing with public life should be accountable to the people
has been accepted as a primary democratic principle. This accountability helps
in effectively dealing with corruption and arbitrary exercise of power.
The mode of public hearings is not new, but the village based ‘Jan Sunwai’
as an open democratic platform to verify information and entitlements was a
breakthrough in people’s action. The MKSS has used it with people to share
information, and to examine the validity and details of official records. The
Public Hearings have been both social audits of work done and a kind of
forum for ascertaining the (truth) about the nature of democratic functioning
at the most tangible and immediate level: the village panchayat. It has
allowed for the expression of genuine people’s opinions and has empowered
them, leading to an understanding of both the machinations of corruption
and the way it can be fought.
The MKSS has fought the encroaching and crippling domination of the so
called ‘free market’ at the only level where it can have an immediate impact
on people’s lives: by running fair price grocery shops. These shops began
with the financial support of the people themselves, to influence the prices
of commodities at the local market. The tremendous reaction of shopkeepers
against the shops and the popular support from consumers allowed the

community to understand methods of exploitation in price and quality, and
the kind of price manipulations that were taking place in the name of the free
market. The shops also provided the MKSS with a forum to communicate with
small urban centers from which they are otherwise isolated.
While struggling for implementation of their legal right to the statutory

minimum wage, the members of the MKSS realized that to enforce their
economic rights and exercise democratic controls, they needed the right to
access the documents, which constituted the basis for granting or denying them
their rights. This information was stashed away by the Government and had
been kept secret from the people.
They began by demanding transparency of financial records of expenditure

in the Panchayat, the village council. Their demand for transparency,
accountability, social audit (public audit by the people) and redressal
(including the return of stolen public money), began with the first Public
Hearing organized by the MKSS in 1994. The first set of Public Hearings
was preceded by unofficially accessing the documents, as there was no legal
entitlement. The contents of these documents were then shared and verified
with the residents of the area. People came together on the date of the public
hearing to testify and audit the work executed by their village council, and
government officials.
The revelations of these few, initial public hearings led to an immediate and
sharp reaction from government officials, who refused to share information and
made it clear that in their view people had no right to access such documents.
The MKSS made a declaration of beginning a prolonged struggle till the citizens
were given open access to the records of expenditure and governance at a local
level. The Rajasthan Chief Minister and the Government responded to the
pressure by making assurances, which they did not keep.
The MKSS began a sustained struggle that was to last for three years, before
they could get the assurances implemented- changing the Panchayat Raj Rules
and widening the scope of their demands to the People’s Right to Information
from all bodies that had an impact on public interest. Their first set of demands
was met in July 1997 when the Panchayati Raj Rules were amended by the
Government of Rajasthan. The public hearings held after these amendments
have had a dramatic impact. Elected representatives and officials found guilty
of corruption have publicly returned money and ordinary citizens have seen
how the right to access documents gives them an opening to ask questions and
receive answers from those who rule. Today, people are grappling with working

out the modes by which the public can effectively audit the decisions of those
who rule in their name.
In a democracy, without the right to know, there can be no real right to exercise
power and to make the Government and the State machinery accountable to
its people. The Constitution of India acknowledges that the people of India
are the sovereign powers of independent India. To exercise their sovereignty,
and participate in governance in a responsible and ethical manner, the people
must have a right to know. In 1996 the National Campaign for the People’s
Right to Information (NCPRI), was created with the twin objectives of drafting
and campaigning for legislation to be passed at the Center (Parliament) and
the States; as well as supporting grass root struggles for access to government
records and information critical to people’s lives.
India has inherited a colonial bureaucracy and a Westminster model of

democracy, in which today both the elected government and the bureaucracy
are riddled by corruption. Corruption has a bearing on the survival of poor
people and the right of the citizenry to decide on issues that would benefit the
nation as a whole. Right to Information is an effective tool to control corruption
and the arbitrary exercise of power. It helps establish that the Government
has to be accountable to its people. This can bring about a basic change in
the relationship between the people and the Government. It can enable
and empower people to exercise control over governance. Hence it has now
become clear that it is critical to the struggle against the implementation of
anti-people policies by governments who have become puppets in the hands of
transnational financial powers.
If national Governments have to work with the people’s mandate, then links
with the world outside cannot derail the poor and the citizen’s right to live,
to know and decide on matters that affect their lives. People in different
states have begun to use the right to probe and question decisions related to
education, health, power projects, displacement, environment, and nuclear
policies. The Right to Information is not a right that will independently solve
all problems of corruption or the misuse of power. It is nevertheless a vitally
important enabling campaign for all struggles for development rights, human
rights and democratic rights.
The NCPRI, has been able to lobby both in the states and at the Center, and
today there are Right to Information Laws that have been enacted in the
States of Tamil Nadu (1997), Goa (1997), Madhya Pradesh (1998), Rajasthan
(2000), Maharashtra (2000), and Karnataka (2000), Delhi (2001), Jammu

and Kashmir (2003) and Assam (2003). The demands by citizens across the
country helped bring forth a greatly improved National Bill, which was passed
by Parliament in 2005, replacing the much weaker Freedom of Information
Act passed in 2003. The RTI Act, (2005) came into effect across the country in
October 2005.
It is characteristic of the personal philosophy of Aruna Roy, the founder and the
main spirit behind the MKSS, that her name is not mentioned even once in this
major excerpt from the MKSS website. Aruna joined India’s elite civil service,
the IAS in 1976 and served for several years before quitting to work with the
people. Though she hails from a well-off family and has been showered with
awards, she chooses to live a very hard and modest life in Dev Doongri in the
Bhilwara district of Rajasthan among the people she works with.
7.3.3 Narmada Bachao Andolan - History of the First

Decade of Struggle
Medha Patkar was a 30-year-old social activist and researcher when she came to
the Narmada Valley in 1985 to study the villages to be submerged by the Sardar
Sarovar Dam. As her work progressed, Patkar grew increasingly horrified by
the treatment of villagers at the hands of the project authorities. Soon she gave
up her survey and joined activists working to secure fair compensation for the
dam’s ‘oustees’. Over the next few years, Patkar traveled by foot, bus and boat
throughout the nearly 200-kilometer-long submergence zone, living with the
people to be displaced, listening to their fears for the future, and urging them
to organize to force the government to respect their rights.176
Patkar spent most of her time among the adivasis in the remote and rugged
Satpura hills of Maharashtra. Over the years, her oratory and organizing skills
helped build the trust of many local people and also attracted a committed
coterie of young activists from outside to come to the valley. These activists,
who included engineers, social workers, and journalists, were to play a vital
role in the Narmada movement. Early in 1986, the activists and villagers from
Maharashtra set up the NDS (Committee for Narmada Dam-Affected People).
The NDS villagers refused to be moved out or to cooperate with dam officials
in any way until their resettlement demands were met.
176
A History of The Narmada Bachao Andolan - Extracted from Patrick McCully, Silenced Rivers: The
Ecology and Politics of Large Dams (Zed Books, London, 1996). Accessible at http://www.narmada.
org/resources/books/silenced_rivers.html

Similar organizations have been formed to improve resettlement policies in
Gujarat (where the dam is located) and the upstream state of Madhya Pradesh
(where most of the reservoir would lie). Several of these groups began to
investigate the official claims of the benefits the project would provide. Among
their findings were that crucial environmental studies had not been conducted,
that the number of people to be displaced was not known, that estimates of the
amount of land to get irrigation water were wildly optimistic, and that while the
supply of drinking water to some 40 million people in Gujarat was supposed
to be one of the project’s main benefits, the massive sums needed to build the
pipes and pumps to deliver this water had been left out of the estimated project
costs. These findings led the oustee groups to conclude that the claims of
project benefits were fraudulent and just resettlement impossible and so at six
rallies held simultaneously in the three affected states on August 18, 1988, the
NDS and their allies announced their total - but strictly non-violent opposition
to the dam.
National press coverage and awareness of the anti-Sardar Sarovar campaign

burgeoned in the late 1980s and support for the Narmada activists mounted
among environmental, human rights, religious, landless, and adivasi
organizations around the country. Within the valley, the activists built alliances
across class and caste boundaries and between adivasi and ‘caste Hindu’
areas. Villagers evicted in the 1960s to make way for the town built for the dam
workers, and farmers who would have lost land to the massive canal network
also joined the opposition groups. In 1989, this growing movement was united
into an alliance of the directly affected villagers and their local and national
supporters - the Narmada Bachao Andolan (NBA).
The International Front: Interest in the growing Narmada controversy

within the international environmental community was boosted by two trips
Medha Patkar made to Washington in 1987 and 1989. Lori Udall from the
Environmental Defense Fund (EDF) in Washington was inspired by Patkar
to take the lead role in raising the NBA’s concerns with the World Bank. Udall
also helped build a network of committed and informed activists in North
America, Europe, Japan, and Australia who become known as the Narmada
Action Committee.
Medha Patkar met with some World Bank executive directors during her
1989 visit. ‘When I hear what NGOs say about this project and then what the
operations staff say’, one director remarked afterwards, ‘it sounds like they
are talking about two different projects’. Patkar also gave testimony at a
congressional subcommittee hearing into the World Bank’s performance on

Sardar Sarovar. Congressional staff, journalists and environmentalists broke
into spontaneous applause after her impassioned, hour-long presentation. A
number of Congressmen later wrote to Bank President Barber Conable urging
that the project be suspended.
The next foreign success for the NBA was a symposium in Tokyo in April
1990. Influencing opinion in Japan was vital for the Narmada campaign as
the Japanese government was lending some $200 million for the turbines
for Sardar Sarovar. NBA and international activists joined Japanese NGOs,
academics and politicians at the Tokyo symposium, which received considerable
national press coverage. The activists later met Japanese government officials.
Within a month of the symposium, the Japanese withdrew all further funding
for the dam. This was the first time that a Japanese aid loan had been
withdrawn for environmental and human rights reasons.
The Long Road to the Indian Review: Back in India, the NBA had dropped
its straightforward ‘no dam’ position in March 1990 and instead proposed the
project be suspended pending a comprehensive and open review. In an attempt
to pressure the government into holding the review, the NBA organized the
most spectacular action of its campaign. On Christmas Day 1990, 3,000
oustees and NBA supporters set off for the dam site from the town of Rajghat in
Madhya Pradesh which came to be known as the Long March. Eight days later
the marchers reached the village of Ferkuwa on the border with Gujarat and
found their way blocked by the police and a counter demonstration organized
by the Gujarat government.
An angry month-long stand-off ensued. At first, the NBA attempted to break

through by sending forward groups of volunteers, their hands tied in front of
them to symbolize their commitment to non-violence. The police repeatedly
forced back the volunteers. Some were beaten and around 140 were detained.
Patkar and six others then began a fast by the side of the road. The days
passed by but the government remained unresponsive. On the 22nd day, the
hunger strike and march were called off. Although the Long March failed in
its immediate objective, it gained massive press coverage throughout India
and made Medha Patkar a national celebrity. The Ferkuwa stand-off and fast
also jolted the World Bank - some months later the Bank-funded Independent
Review was established.

By 1991, full-scale construction on the dam had been underway for four
years. Submergence was clearly possible during the upcoming monsoon,
which hits the Narmada Valley between June and September every year. At a
ceremony in Manibeli, the Maharashtra village closest to the dam, a group of
oustees and activists vowed to be the first to face the rising waters. An NBA
compound was set up at one of the lowest parts of Manibeli with a house
where the Samarpit Dal, or ‘Save or Drown Squad’, would sit and prepare to
drown. In response, the government banned Patkar and other activists from
the villages during the monsoon, and prohibited the villagers from holding
anti-dam protests.
The NBA defied the bans, and hundreds of their supporters were arrested
during the monsoon months. Members of the Samarpit Dal went into hiding
to avoid detention and to be able carry out their vow. A weak monsoon,
however, meant that the water stayed several meters below Manibeli in 1991.
The following year the water rose during one monsoon storm to within a meter
of the lowest house behind the dam. Patkar was among 11 people in the house
at the time. Also in 1992, police shot dead an adivasi woman while evicting her
community from forest land which was to be given to resettled oustees.
The report of the Independent Review was released in June 1992. The NBA
and its international supporters were delighted that it vindicated so many
of their claims and they used it to step up pressure on the World Bank.
Environmentalists wrote an open letter to World Bank President Lewis Preston,
which they published as a full-page advertisement in the London Financial
Times. It warned that if the Bank refused to withdraw funding for Sardar
Sarovar, then NGOs would launch a campaign to cut government funding of the
Bank. The letter was endorsed by 250 NGOs and coalitions from 37 countries.
Full-page advertisements placed in The Washington Post and New York Times
by US environmental groups made similar demands.
The World Bank Withdraws: The Bank finally announced its withdrawal
in March 1993. The authorities’ initial reaction was to step up their use of
violence and intimidation. In November police shot to death an adivasi boy.
Street demonstrations against the killing were met with lathi charges and
yet more arrests. Without World Bank funds, work on the canal system soon
ground to a halt. Available financial resources were poured into raising the
dam wall - the most visible symbol of the project and the most intimidating

to the people refusing resettlement. With the dam wall 44 meters high, large-
scale submergence began during the 1993 monsoon. The lands of hundreds of
villagers were inundated and the homes and possessions of 40 families washed
away. Police arrested the occupants of the lowest houses and dragged them
to higher ground to prevent them carrying out their pledge to drown. Similar
scenes were repeated during the 1994 and 1995 monsoons. In 1995 some
villagers braved water which rose to chest height before receding.
With the World Bank out of the way, the NBA stepped up pressure on the
Indian government to commission a comprehensive review, one which would
look at all aspects of Sardar Sarovar - the terms of reference for the Morse
Commission had covered only resettlement and the environment. In June 1993,
Medha Patkar and Devram Kanera, a farmer from Madhya Pradesh, began a
fast in downtown Bombay. After 14 days, the government agreed to start the
review process - but once the fast was called off they reneged on their promise.
Ever more frustrated with the government’s duplicity, the continuing arrests
and beatings of activists and the submergence of homes in the valley, the NBA
decided once again to use the strongest weapon at their disposal - their own
lives. In July 1993, the NBA announced that unless the review process began
by August 6, seven activists would throw themselves into the monsoon-
swollen Narmada. Less than 24 hours before the deadline, the central
government told an NBA delegation that they would establish a five-member
group to ‘look into all aspects of SSP’. The jal samarpan - ‘self-sacrifice by
drowning’ - was called off.
The review committee heard submissions from the NBA, affected people,
central government ministries and the relevant state governments - except
that of Gujarat which boycotted the review. Scientists and engineers presented
detailed suggestions for alternative methods of supplying water and power.
In May 1994, the NBA opened another front in its campaign by filing a
comprehensive case against the project with the New Delhi Supreme Court. The
case moved forward at a painfully slow pace with numerous postponements,
delays and cancellations.
New hope for the campaign came in late 1994 when the Madhya Pradesh
government announced that it had neither the land nor resources to resettle
the state’s huge numbers of oustees and that it wanted the planned dam
height to be reduced. In an effort to pressure the upstream government to
force Gujarat to halt the dam, the NBA decided to muster its resources for yet
another round of fasts, this time to be held in Bhopal, the Madhya Pradesh

capital. On November 21, 1994, Patkar and three men from the valley stopped
eating. Twenty-six days later, the Madhya Pradesh government agreed that it
would demand a halt to construction pending progress on resettlement. The
NBA called off the fasts. Three days before the end of the fasts, the Supreme
Court ordered the government-commissioned review to be made public. The
report questioned the basic data used to design the project and criticized the
resettlement effort. The court asked the review team to investigate further the
viability of the project. The NBA received a significant boost in January 1995
when the central government in New Delhi forced Gujarat to suspend raising
the dam wall with its lowest point 63 meters above the river bed, just under half
the planned final height. The suspension order came because the project was
violating a court ruling that oustees must be resettled six months before their
land is submerged.
It is unlikely that the Bank will ever fund another river development project
on such a scale in a democratic country. It is also unlikely for the foreseeable
future that the Indian dam lobby will succeed in pushing through any projects
involving such large-scale displacement. ‘‘We are not going in for large dams
anymore,’’ Indian power minister, N.K.P. Salve, told International Water Power
and Dam Construction in late 1993. ‘‘We want run of the river projects and
to have smaller dams, if they are necessary at all, which will not cause any
impediment whatsoever to the environmental needs.”
To continue the story, we cite from another source:177

Pressuring major member governments to block World Bank loans in 1992 did
not work out the way transnational advocacy coalition hoped. The campaign
did call attention to severe problems with World Bank lending and lead to
changes in its policies and practices. It did not lead to stopping or significantly
scaling back Sardar Sarovar Dam or the larger Narmada Project. The Indian
and state governments remained sufficiently committed to fund the project out
of their own resources, resources that have become more plentiful as the pace
of India’s economic development picked up in the 1990s and 2000s.
The continuing severity of demand for water in Gujarat meant that as soon as
the Supreme Court handed down its judgment in 2000, construction of the
Sardar Sarovar Dam resumed. It quickly reached the authorized 90 meters; and
177
Peterson MJ with research assistance from Osman Kiratli and Ilke Ercan, Version 1; September 2010.
Narmada Dams Controversy – Case Summary. Accessible at http://scholarworks.umass.edu/cgi/
viewcontent.cgi?article=1015&context=edethicsinscience

permission was sought to raise it further. It stood 95m high by the end of 2002
and 100 meters high in 2003. The 100-meter height created a reservoir high
and long enough to fill the irrigation canal. By the end of 2005 that canal was
complete almost to the Gujarat border, with construction of the extension into
Rajasthan under way. As construction of Sardar Sarovar’s additional height and
of upriver dams in Madhya Pradesh proceeded, more disputes broke out about
treatment of oustees from those projects.
Allegations that Madhya Pradesh was failing to provide ‘land for land’ were
rife; the state government claimed that many oustees preferred money to
land. Villagers from Jalsindhi petitioned the Supreme Court for a review. The
question of how many people are affected has been controversial from the
start, with NBA and others citing higher numbers and the state governments
lower ones. In 2006, NBA complained that Madhya Pradesh was persisting
in ignoring the land for land principle and failing to provide resettlement in
advance of construction. Madhya Pradesh officials contended in return that
most of the oustees wanted money rather than land.
Finally, the GoI, introduced a new Land Acquisition Bill in Parliament in 2013,
which recognized the right for adequate compensation and resettlement for
any project affected person whose land is taken away or who is made to move.
7.4 Approaches for the Highly Disadvantaged
7.4.1 The Diversified Portfolio of Subsistence Activities

(DPSA) Approach
As we saw in the Chapter 2 of data on poverty, the poor in India are almost
always working or available for work. They work, but often earn very low
incomes (if self-employed) or at low wage rates (if wage employed). The poor
are engaged in a ‘Diversified portfolio of subsistence activities’ (DPSA) for
earning their livelihoods. A typical household maybe engaged in:
• Cultivation (on own land, or leased or encroached land) – except for the
truly landless
• Agricultural wage labor
• Non-farm wage labor (construction, services, etc.)
• Livestock rearing or fishing
• NTFP collection
• Non-farm self-employment (weaving, crafts, services)
• Migration, etc.

The challenge for livelihood promotion here can be expressed algebraically as
follows:
• If the number of activities a household is engaged in is n,
• Gross revenue per day from each activity j is gj
• Cost per day of each activity j is cj
• Risk of each activity j is rj
• Days of employment in each activity j is dj
Then total household income is
Y= Σ (gj– cj)* (1- rj)*dj

j=1, n
Thus to increase income, there are only five alternatives:

1. Either increase gj, gross revenue per day from each activity
2. Or reduce cj , cost per day of each activity
3. Or reduce rj, risk of each activity
4. Or increase dj, days of employment in each activity
5. Or increase n – increase the number of activities or diversify.
Many livelihood practitioners instinctively try to take up the 5th alternative,

whereas it should be the last resort, as it is the most disruptive alternative for
the poor household.
7.4.1.1 DPSA Intervention by IGS in Bandhavgarh

Bandhavgarh is one of the popular National Parks in India. It is located in
the Umaria district of Madhya Pradesh. Bandhavgarh, which has a rich
biodiversity and one of the highest known tiger populations in India in an area
of 105 km², was declared as a National Park for Tiger Reserve in 1968. There
were 14 villages located within the reserve forest and 70 villages in the forest
peripheral area. The resident tribes in the villages are predominantly Gonds,
and Baigas, who primarily practice agriculture while the Yadav community
is into cattle rearing. The human and cattle population exert pressure on the
forest resources as it meets their requirements food, fodder, fuel, water, etc.
This triggered conflicts between forest officials and villagers. The constraints
of the displaced communities due to rehabilitation are as follows.
Agriculture is the main source of income and the landholding ranges between
one-two acres. The agricultural land is undulating and the predominant crops
are paddy, maize, jawar, wheat etc. Farmers do cultivate vegetables on a
small scale such as potato, tomato, onion, chilli, cauliflower, palak (spinach),

dhaniya (coriander), ladies finger,cabbage and so on. Their farm produce
and vegetables are normally sufficient for their own consumption and very
few farmers sell paddy, wheat and gram. Irrigation is a major issue and the
farmers cannot afford to create the infrastructure required for irrigation. As
a result, agriculture is rain-fed dependent. In the year of good crops, there
is always a problem of crop damage by herbivorous animals such as spotted
deer, wild boar and others. This is a source of tension between the Park
Authorities and village communities, as the villagers are ultimately deprived
of a good harvest.
Dependency on forest produce such as collection of mahua (flower used for

preparing local liquor) and tendu leaves is a seasonal activity that engages
them for two months. Threat from wild animals, decline of mahua trees
and restrictions from the forest department on entry constrains the people
dependent on these activities. Cattle rearing also faces numerous problems
due to non-availability of good quality breeds, feed and fodder and primary
healthcare services, and susceptibility to predators. The absence of a market in
the vicinity does not help the milk producers in generating additional income.
People living in the village are significantly dependent on wage labor. The
wages through agriculture work is available for couple of months in a year and
partly through the NREGA program. Though the Forest Department provides
wage earning opportunities, the distribution of wage days is found to be skewed
with a couple of households receiving work in the range of 90 to 180 days in a
year, while many households struggle to find work for not more than 20 days
in a year. Fencing and digging are the major wage-earning activities offered by
the Department for which they pay Rs 80 to Rs 90/- per day. Therefore, many
households from the villages migrate seasonally to nearby towns and cities in
search of employment.
People depend on informal sources for getting credit support. They depend
on traders for consumption credit, while money lenders help finance
agricultural activities. The interest varies from 36 to 60 percent per annum.
For emergencies people rely on the support of friends and relatives. There
are other informal village institutions such as SHGs. The forest department
promotes Eco Development Committees (EDC) to carry out development
activities and to maintain the ecosystem of the National Park. The other
informal groups are Gram Samiti, Village Development Committee, Nigrani
Committee, Forest User Group, Nirman Samiti, Shikha Swastha Committee
and Watershed Committees etc. Due to various reasons, most of these groups
are defunct and not able to contribute for the livelihood enhancement of the

village communities. An inherent absence of community initiative in the
developmental activities is quite apparent.
In 2010, with the support of RBS Foundation, Indian Grameen Services

(IGS), which is part of the BASIX Social Enterprise Group, initiated an Action
Research Project in eight fringe villages of Bandhavgarh National Park. The
core objective of the project is ‘to promote sustainable livelihoods in eight
fringe villages’ thereby minimizing the residents’ dependence on forest
resources and reducing the pressure on the National Park. The eight villages
selected for this intervention are Rakhi, Bhijaria, Kathili, Lukanar, Damna,
Deori, Gata and Ghagod. IGS made a detailed study and livelihood analysis
of the 481 households of eight fringe villages and the study showed that the
households do not have enough surpluses, and the financial institutions were
unwilling to provide credit for all these interventions. Therefore, IGS planned
to support these households financially based on the requirement for the
livelihood activities.
Since 2010, IGS started intervening in the eight selected villages through
Livelihood Financial Services (LFS), an extension of Technical Support Services
for enhancing incomes from existing livelihoods. As part of institutional
development, IGS formed 28 SHGs and by integrating these groups, an
apex Self-Help group federation’, Charan Ganga Mahila Samruddhi Sangh
(CGMSS)’, was promoted in 2011. LFS services are for farm and non-farm based
livelihood activities that can contribute to family incomes. Purchase of pump
house, bullocks, fencing, digging of bore well, land leveling, inputs purchase
and so on are the activities associated with agriculture and allied activities.
The minimum financial support for agriculture and allied activities are as low
as Rs 5000/-, while the maximum, Rs 25000/-. The financial support was also
given for Microenterprise Development (MED) activities such as grocery shops,
shuttering equipment for concrete slab work, setting up of mini flour mill,
setting up of brick making unit, tent house, etc. Of all the MED interventions,
establishment of two mini flour mills proved successful, both in terms of
enhancing the income of individual entrepreneurs and also for serving people
in the fringe villages of Bandhavgarh locally, thereby reducing the opportunity
cost (daily wage). The interest rate of loans for agriculture and allied activities
is 8 percent and for microenterprise activities it is 12 percent per annum on
diminishing basis.
The Equated Monthly Instalment (EMI) for repayment is decided by CGMSS

and fixed as monthly or quarterly or half yearly, depending on the cash flows of

the activity and repayment capacity of the members. The repayment period for
the loans is fixed as short as 12 months and as long as 60 months depending
on the purpose for which the loan was taken, amount given on loan and the
members’ ease to repay the loan. The loan products have been developed by the
CGMSS level appraise the loans and disburse the same based on the decision.
To create the revolving fund at the federation level, CGMSS resolved to repay
back these loans to the federation so that the revolving fund thus created will
be rotated further and used to support members of the federation.
The microenterprise activities supported during the course of intervention are:

setting up grocery shops, shuttering equipment for concrete slab work, setting
up of mini flour mill, setting up brick making unit, tent house etc.
Table 44: Role Played by Different Institutions during the Intervention
Self Help Groups Federation (CGMSS) IGS

 Setting up norms for  Monitoring the  Capacity building and
SHG and implementation performance of cluster, provide need based
of the same for better and SHGs support for strengthening
functioning of cluster and federation
 Maintain books of
 Mobilizing savings from accounts  Support federation to
members address village level
 Initiate various
issues
 Internal lending, livelihood promotional
monitoring and recovery aspects  Implementation of
of loans Livelihood Triad Services
 Sanction loans, disburse,
 Assist federation on monitor and utilize  Educate community.
implementing activities revolving fund optimally Reduce dependence on
through SHGs forest and lower man-
 Pursue with executive
wild life conflicts through
 Participate in village committed for recovery
livelihood finance and
SHG leader’s meeting of revolving funds
technical support
and build consensus for
collective decisions and
actions
7.4.2 The Ultra-Poor Program of BRAC
BRAC,178 an international development organization based in Bangladesh,

is the largest non-governmental development organization in the world,
measured by the number of employees and the number of people helped, as of
November 2012. Established by Sir Fazle Hasan Abed in 1972, soon after the
independence of Bangladesh, BRAC is present in all 64 districts of Bangladesh.
178
http://en.wikipedia.org/wiki/BRAC

By 2012, it was offering services in Afghanistan, Pakistan, Sri Lanka, Uganda,
Tanzania, South Sudan, Sierra Leone, Liberia, Haiti and the Philippines.
BRAC employs over 100,000 people, roughly 70 percent of whom are women,
reaching more than 126 million people. The organization is 70-80 percent self-
funded through a number of commercial enterprises that include a dairy and food
project and a chain of retail handicraft stores-Aarong. BRAC maintains offices in 14
countries throughout the world, including BRAC USA and BRAC UK.
What is unique about BRAC is its method of pulling people out of poverty.
As one author said, “BRAC’s idea was simple yet radical: bring together the
poorest people in the poorest countries and teach them to read, think for
themselves, pool their resources, and start their own businesses” (Barber).
This is exactly what BRAC did and continues doing in Bangladesh and 10 other
poverty-stricken countries around the world.
BRAC has organized the isolated poor and learnt to understand their needs
by finding practical ways to increase their access to resources support their
entrepreneurial zeal and empower them to become agents of change. Women
and girls have been the focus of BRAC’s anti-poverty approach for BRAC
recognizes both their vulnerabilities and their thirst for change.
History: Known formerly as the Bangladesh Rehabilitation Assistance

Committee and then as the Bangladesh Rural Advancement Committee
(currently, BRAC does not represent an acronym), Sir Fazle Hasan Abed
started BRAC in 1972 at Sulla in the Sylhet district as a small-scale, relief and
rehabilitation project to help returning war refugees after the Bangladesh
Liberation War of 1971. In nine months, 14 thousand homes were rebuilt as
part of the relief effort and several hundred boats were built for the fishermen.
Medical centers were opened and other essential services were ensured. At the
end of 1972, when the first phase of relief work was over, BRAC turned towards
long-term development needs and re-organized itself to focus on empowerment
of the poor and the landless, particularly women and children.
By 1974, BRAC had started providing micro credit and had started analyzing
the usefulness of credit inputs in the lives of the poor. Until the mid-1970s,
BRAC concentrated on community development through village development
programs that included agriculture, fisheries, cooperatives, rural crafts, adult
literacy, health and family planning, vocational training for women and
construction of community centers. BRAC set up a Research and Evaluation
Division (RED) in 1975 to analyze and evaluate its activities and provide

direction for the organization to evolve. In 1977, BRAC shifted from community
development towards a more targeted approach by organizing village groups
called Village Organizations (VO). This approach targeted the poorest of the
poor – the landless, small farmers, artisans, and vulnerable women. Those who
own less than half an acre of land and survive by selling manual labor were
BRAC’s target group. That same year, BRAC set up a commercial printing press
to help finance its activities. The handicraft retail chain Aarong, was established
the following year.
In 1979, BRAC entered the health field by establishing a nation-wide Oral

Therapy Extension program (OTEP), a campaign to combat diarrhea, the
leading cause of the high child mortality rate in Bangladesh. Over a ten year
period 1,200 BRAC workers went door-to-door to teach 12 million mothers the
preparation of home-made oral saline. Bangladesh today has one of the highest
rates of usage of oral rehydration, and BRAC’s campaign cut down child and
infant mortality from 285 per thousand to 75 per thousand. This initial success
in scaling up propelled rapid expansion of other BRAC programs such as
Non-Formal Primary Education which BRAC started in 1985 - a model that has
been replicated in about a dozen countries.
In 1986 BRAC started its Rural Development program that incorporated four
major activities – institution building, including functional education and
training, credit operation, income and employment generation and support
service programs. In 1991 the Women’s Health Development program
commenced. In the following year, BRAC established a Center for Development
Management (CDM) in Rajendrapur. Later, its Social Development, Human
Rights and Legal Services program was launched in 1996 with the aim to
empower women with legal rights and assist them in becoming involved with
community and ward level organizations. In 1998, BRAC’s Dairy and Food
project was commissioned and an Information Technology Institute was
launched in the following year. In 2001, BRAC established a university called
BRAC University with the aim to create future leaders and the BRAC Bank was
started to cater primarily to small and medium enterprises.
Education: BRAC’s Non-Formal Primary Education program

provides five-year primary education course in four years to poor, rural,
disadvantaged children and drop-outs, who cannot access formal schooling.
These one-room schools are for children between 8-14 years of age. Each
school typically consists of 33 students and one teacher. Core subjects
include Mathematics, Social Studies and English. The schools also offer
extracurricular activities. As of June 2008, BRAC established 37,500

primary schools and 24,750 pre-primary schools, enrolling nearly three
million children, 65 percent of whom are girls. The schools have a drop-out
rate of less than five percent.
BRAC set up centers for adolescents called Kishori Kendra that provide reading
material and serve as a gathering place for adolescents where they are educated
about issues sensitive to the Bangladeshi society such as, reproductive health,
early marriage, women’s legal rights etc. BRAC has also set up 964 community
libraries, 185 of which are equipped with computers.
Public Health: BRAC started providing public healthcare in 1972 with an

initial focus on curative care through paramedics and a self-financing health
insurance scheme. The program went on to offer integrated health care services.
Its key achievements include the reduction of child mortality rates through
a campaign for oral rehydration in the 80s and taking immunization from
2 percent to 70 percent in Bangladesh. BRAC currently provides a range of
services that reach an estimated 31 million rural poor and include services for
mothers in reproductive health care and infants. In Bangladesh, 78 percent of
births occur in the home. BRAC has implemented a program in which midwives
are trained to work in the homes of women to ensure that births are as risk-free
as possible. As of December 2007, 70,000 community health volunteers and
18,000 health workers have been trained and mobilized by BRAC to deliver
door-to-door health care services to the rural poor. It has established 37 static
health centers and a Limb and Brace Fitting Center that provides low cost
devices and services for the physically disabled.
Social Development: In 1996, BRAC started a program in collaboration with

the Ain O Shalish Kendra (ASK) and Bangladesh National Women Leader’s
Association (BNWLA) to empower women to protect themselves from social
discrimination and different forms of exploitation of which dowry, rape,
acid throwing, polygamy, domestic violence and oral divorce are common in
rural Bangladeshi communities. It also encourages and assists women to take
action when their rights are infringed. The program has two components: the
Social Development component and the Human Rights and Legal Services
component.
The Social Development component focuses on building human and socio-

political assets of the poor – especially women – through institution building,
awareness raising, training and collective social mobilization. The Human
Rights and Legal Services component seeks to empower the poor by increasing

their awareness of their rights (legal, human and social) and entitlements
through participation in activities like the Popular Theatre and through Human
Rights and Legal Education (HRLE) classes arranged by BRAC for its Village
Organization members.
BRAC also offers external services such as access to lawyers or the police, either
through legal aid clinics, by helping women report cases at the local police
station or when seeking medical care in the case of acid victims. At the end of
June 2006, 124,748 HRLE classes were held and 1,332 acid victim cases and
1,735 rape victim cases were reported.
Disaster Relief: BRAC conducted one of the largest NGO responses to

Cyclone Sidr which hit vast areas of the south-western coast in Bangladesh in
mid-November 2007. BRAC distributed emergency relief materials, including
food and clothing, to over 900,000 survivors, provided medical care to over
60,000 victims and secured safe supplies of drinking water. BRAC is now
focusing on long-term rehabilitation, which will include agriculture support,
infrastructure reconstruction and livelihood regeneration.
ICT Development: Established in 1996, BRAC Net Limited is Bangladesh’s

one-stop ICT (Information and Communication Technology) solution provider.
BRAC Net has built its nationwide network utilizing its licensed spectrum. Its
network today is based on WiMax and fibre optics technology to serve hundreds
of large corporations and thousands of Small and Medium Enterprises (SME)
and Educational institutions throughout the country. It serves tens of thousands
of residential customers directly or indirectly (through resellers) and rural people
through its cybercafé franchises, called ‘e-hut’. For the first time in Bangladesh,
the perennially poor can now avail the services available online to improve their
quality of life. BRACNet is committed to establish such interconnected e-huts
all over Bangladesh using its fixed WiMAX and optical fibre network. More than
70 e-huts operate in rural Bangladesh providing services in internet browsing,
broadband connectivity, basic computer and IT training, web cam and digital
camera service, computer composition and printing, computer servicing,
graphics designing, and photocopying to the rural community. E-hut hopes to
introduce digital services such as IP phoning, e-commerce, video conferencing,
money transfer and courier services in the future.
Economic Development: BRAC’s program includes microcredit wherein it

provides collateral-free credit using a solidarity lending methodology, as well
as obligatory savings schemes through its VO. Reaching nearly four million
borrowers, VO provide loans to poverty groups. BRAC is considered the largest

micro lender in Bangladesh, the renowned Grameen Bank being a close second
(Barber). BRACs lending typically gives loans to the poor to start raising
chickens for eggs and meat.
Not only does BRAC lend money to a loanee, BRAC teaches the loanee how
to care for and raise the chickens. Once again, the uniqueness of BRAC is its
hand in self-empowerment, even in lending programs. BRAC’s microcredit
program has given over $1.5 billion dollars in loans over the past 30 years
(Barber). 90 percent of BRACs microloans have gone to women (Barber), which
is astounding given the very traditional and passive roles women typically have
in Bangladeshi culture. Repayment of the loan is over 98 percent. This is a
testament to the success of BRACs micro lending program.
In addition to microfinance, BRAC provides enterprise training and support

to its member borrowers in poultry and livestock, fisheries, social forestry,
agriculture and sericulture. It provides inputs essential for some enterprises
through its program. Support Enterprises include poultry farm and disease
diagnostic laboratory, bull station, feed mill, broiler production and marketing,
seed production, processing, marketing and soil testing, BRAC nursery, and
fish and prawn hatchery. BRAC’s Vegetable Export program started in 1998
is a venture that is aimed at bridging the gap between local producers and
international markets.
BRAC also focuses on the problem of youth employment, providing assistance

for young men and especially women to join the workforce, for example, with
programs such as the Adolescent Development Program. BRAC also has a
number of commercial programs that contribute to the sustainability of BRAC’s
development programs since returns from the commercial programs are
chanelled back into BRAC’s development activities. These programs include
Aarong, a retail handicraft chain, BRAC Dairy and Food Project, and BRAC Salt.
In 2002, BRAC launched a program called Challenging the Frontiers

of Poverty Reduction – Targeting the Ultra Poor (CFPR-TUP) designed
specifically for those that BRAC defines as the ultra-poor - the extreme
poor who cannot access conventional microfinance. BRAC has reached out
to those who, due to extreme poverty, cannot access microfinance. BRAC
defines such people suffering from extreme poverty as the ‘ultra-poor’, and
has designed a program customized for this group that combines subsidy
with enterprise development training, healthcare, social development
and asset transfer, eventually pulling the ultra-poor into its mainstream
microfinance program.

Box 19: Reaching the Poorest: BRAC’s Graduation Model
One of the world’s largest non-governmental organizations (NGOs), BRAC

works in 70,000 villages and 2,000 urban slums in Bangladesh. BRAC has
always had a strong focus on poverty - providing microfinance, schooling,
healthcare, legal services, and marketing facilities. But in the 1980s, BRAC
realized that its microfinance programs were not reaching many of the poorest.
In 1985, BRAC partnered with the Government of Bangladesh and the World
Food Program to add a graduation ladder to an existing national safety net
program that was providing the poorest households with a monthly allocation
of food-grain for a two-year period. BRAC worked with these beneficiaries
and added skills training, mandatory savings, and small loans to accelerate
livelihoods development. In less than 20 years, the program reached 2.2 million
households.
In 2002, BRAC fine-tuned its approach both through better identification of

the ultra-poor (defined as people who spend 80% of their total expenditure
on food and cannot attain 80% of their standard calorie needs) and through a
more intensive sequenced set of inputs.
By 2010, BRAC had reached around 300,000 ultra-poor households with this new
approach termed ‘Challenging the Frontiers of Poverty Reduction/Targeting the
Ultra Poor (CFPR/TUP)’. BRAC estimates that over 75 percent of these households
are currently food secure and managing sustainable economic activities.
BRAC’s program for the poorest, CFPR/TUP, has been intensively studied
since 2002. Three rounds of surveys were conducted with the same group of
participants: the baseline in 2002, an end line in 2005, and three years after
the program’s end in 2008. Results indicate the following:
Graduation rate: 95 percent of program beneficiaries graduated on the basis

of participants fulfilling six out of nine indicators, such as food security,
diversified income sources, asset ownership, improved housing, and school
enrolment.
Poverty: 85 percent of participants started on less than half a dollar a day.

Three years after the program’s conclusion, 92 percent of participants moved
above half a dollar a day threshold (purchasing power parity adjusted).
Food security: Chronic food insecurity fell by 47 percentage points among

participants. Annual food expenditure rose by 93 percent, and caloric intake

increased over 22 percent, particularly in the consumption of vegetables, eggs,
meat, and fish. The upward trend continued a year after the program’s end,
suggesting that beneficiaries were able to sustain higher consumption levels
without program support.
Savings and credit: Participants save more than non-participants.

Approximately 60 percent of beneficiaries also save informally—a practice
that increased with program participation. The percentage of participants with
outstanding loans increased from 27 percent at baseline to 77 percent in 2005.
Empowerment: By the end of the program, 83 percent of selected households

felt more confident about coping with crisis and accessing resources from their
communities.
Health and education: Spending on medical treatment among participants

increased. Sanitary conditions also improved, with a majority of participants
accessing latrines and wearing sandals when they use them (an important
The Graduation Model

THE GRADUATION MODEL
MARKET REGULAR SUSTAINABLE
ANALYSIS COACHING LIVELIHOODS
ACCESS TO CREDIT
Poverty Line
Targeting to ensure only the

poorest households are being
Extreme Poverty selected
Asset Transfer Consumption support to
stabilize consumption
Savings to build assets and
Skill Training instill financial discipline
Skills training to learn how
to care for an asset and how to
Savings run a business
Targeting Asset transfer of an in-kind

good (such as livestock) to
help jump-start a sustainable
Consumption Support economic activity
0 MONTHS 3 MONTHS 6 MONTHS 21 MONTHS 24 MONTHS

hygienic practice). A larger number of boys were enrolled in primary school a
year after the program ended; there was no change in girl’s schooling.
Source: Hashemi, Syed M. and Aude de Montesquiou. 2011. Reaching the

Poorest: Lessons from the Graduation Model, CGAP Focus Note 69. Accessible at
http://www.cgap.org/sites/default/files/CGAP-Focus-Note-Reaching-the-
Poorest-Lessons-from-the-Graduation-Model-Mar-2011.pdf
7.4.3 Family Livelihood Resource Center, ARAVALI
Aga Khan Foundation with the help of ARAVALI, an autonomous society

initiated by the Government of Rajasthan started a livelihood program named
Family Livelihood Resource Center (FLRC) in 2008 to devise replicable
livelihood approaches and models, for mainstreaming poorest families. Its
main objective is to enable aggregation of support inputs, develop and deliver
customized package and their delivery to the identified families; to ensure that
the families become stakeholders of development and not just the beneficiaries.
In doing this, it creates space for including a wide range of livelihood options
and supporting initiatives, for instance encouraging weaning away from
narcotics, or by reducing the money spent on medicines, or reduction of
expenses on social functions, or linking families with the state’s beneficial
schemes are vital for strengthening the ultra-poor’s livelihood. It is the state of
vulnerability and not ‘on the Below Poverty Line (BPL) list’ that is considered
important for identifying and targeting the poorest families. For instance, a
newly widowed woman with no income, living with her children in a ‘half-
pucca’ house and having appropriate clothes is not likely to be considered a
BPL, but she may be categorized as FLRC ultra poor (based on the vulnerability
context), when aspects such as the likelihood of her ability to secure a future
source of income, and liabilities are considered. Similarly, for FLRC a family
living in a stone house because they can use waste-stones in that area does not
necessarily mean that they are living Above the Poverty Line (APL).
Based on the socio-economic history of the family measured using an

innovative tool called ‘Instrument of Engagement’, hand holding support
is designed by FLRC. The tool helps identify critical poverty factors and
potential of the family and it is also a tool for engaging the ultra-poor, so that
they become stakeholders in the process rather mere beneficiaries.

The approach followed by FLRC to identify ultra-poor families, and the
challenges faced show that identification of families by itself is not just a
simple survey, as is conventionally held by the government when identifying
BPL (Below-Poverty-Level) families. Almost a third, or possibly, close to half
of the FLRC ultra-poor families were not under the central government BPL.
FLRC helped develop an innovative tool the ‘Instrument of Engagement (IoE)’.
It not only helped examine the socio-economic history and critical factors
affecting the families, but it also helped the FLRC fellows build a rapport with
the families, which is crucial for a long-term intervention. In addition, FLRC
successfully linked them to government entitlements. A total of 1300 ultra-poor
families were linked to social security schemes, and their applications were
put on a priority list, while several families got assistance when filing work
applications for MNREGS. The applications of ultra-poor families, currently
listed above the poverty line,will be submitted during the next round of the
BPL survey. Some critical initiatives, piloted as interventions for providing
livelihood options such as, rearing goats or poultry, silicosis and mining related
advocacy, or even a de-addiction drive on Doda, have helped these destitute
communities.
7.4.4 Livelihood in the Aftermath of Disasters
The role of livelihoods-based responses following natural disasters has been greatly
debated within the humanitarian community, over the last decade. Increasingly,
the importance of taking into account the livelihoods of disaster affected
populations and, wherever possible, protecting and developing them, has been
recognized and addressed by all key actors in disaster recovery processes.
More importantly, disaster affected populations have overwhelmingly identified

livelihoods as their greatest recovery priority. An evaluation of the Disasters
Emergency Committee involvement in the 2001 Gujarat recovery effort noted
that, “People constantly emphasized the need to restore livelihoods rather than
receive relief and expressed some frustration that outsiders did not listen to
them on this point” (Humanitarian Initiatives UK, 2001,p.16). Similar findings
in Indonesia and elsewhere, affirm; at a global scale, the importance given by
people to restoring their capacity to earn a living.
Livelihood recovery, as a field of practice, is young and at an experimental

stage. It is only now being formalized within disaster response and recovery
initiatives. All the same, often there are not many shared insights and learning
as to how one can comprehensively assess and implement ‘livelihoods recovery’.
Interventions often fall back on former modalities of providing food and

replacing physical assets. Programming and funding for livelihoods support
is channeled through multiple sectors, and livelihood practitioners struggle to
develop effective coordination mechanisms and tools to assess needs, evaluate
impacts, and prevent overlapping and conflicting interventions.
Still, much has changed in the way that national and international actors
respond to the livelihood needs of affected peoples. The growing recognition
of the complex make up of livelihoods has resulted in many new modalities
and more comprehensive programs that address not only the replacement
of physical assets, but the restoration of crucial social networks, the provision
of financial services, and the development of markets. Furthermore, there is an
increasing emphasis on long term sustainability and the resilience of livelihoods
to future disasters. Within this changing discourse of practice and learning, new
approaches are continually defined and lessons drawn from experience.
CARE179 recognizes that the ability of poor households to make a living is not
static. A range of intervention options must be available to poor populations
facing different trying circumstances. To enhance the livelihood security of
vulnerable populations at different levels, a three-pronged livelihood systems
approach has been conceived based on the Relief-Development continuum.
This is based on the notion that relief, rehabilitation or mitigation and
development interventions are a continuum of related activities, not separate
and discrete initiatives. Household food, nutrition and income security can
be enhanced by one, or a combination of the three intervention strategies
described below.
7.4.4.1 Livelihood Promotion (development-oriented programming)

Livelihood promotion involves improving the resilience of household
livelihoods so that food and other basic needs can be met on a sustainable basis
(i.e. development). Interventions of this type often aim to reduce the structural
vulnerability of livelihood systems by focusing on:
• Improving production to stabilize yields through diversification into
agro-ecologically appropriate crops and natural resource management
measures (e.g. soil and water conservation)
• Creating alternative income-generating activities (e.g. activities to
develop small enterprises)
• Reinforcing coping strategies that are economically and environmentally
sustainable (e.g. seasonally appropriate off-farm employment)
179
An international humanitarian agency delivering broad-spectrum emergency relief and long-term
international development projects

• Improving on-farm storage capacity to increase the availability of buffer stocks
• Improving common property management through community
participation.
Interventions of the kind aimed at promoting livelihoods could also deal with
meso-level development, where the linkages between food surplus areas and
food deficit areas could be strengthened by investing in regional infrastructure
and market organization. Such interventions help improve the terms of trade
for the poor by improving local access to income, enhancing food availability
and lowering food prices. In addition, livelihood promotion activities can focus
on preventive measures that improve health and sanitation conditions and the
population-resource balance to insure that any income and production gains
are not lost to disease and unchecked population growth.
7.4.4.2 Livelihood Protection (rehabilitation/mitigation-oriented

programming)
Livelihood protection involves protecting household livelihood systems
to prevent an erosion of productive assets or to assist in their recovery
(rehabilitation or mitigation). Such interventions entail timely food and
income transfers, which can reduce long-term vulnerability resulting from the
forced selling of productive assets to meet immediate food and other needs.
The negative impact of livelihood insecurity can be reduced by detecting
where livelihood and food insecurity are likely to occur, at the right time, and
by establishing contingency plans that can be rapidly implemented, before a
significant erosion of household assets transpires and other erosive coping
strategies are activated. The capacity to detect changes in livelihood and food
insecurity at an early stage and to respond promptly could considerably reduce
the costs of dealing with a full-blown emergency.
Protection-type interventions would include infrastructure improvements

or soil and water conservation measures, carried out through food- or
cash-for-work or some other means, to enhance the long-term viability and
resilience of the communities. Saving the child population from becoming
more vulnerable to disease and malnutrition would also fall in this category
of intervention approach. Recovery measures such as infrastructure repair
and rehabilitation, distribution of seeds and tools, afforestation and repair
of water sites would also be included in this set of interventions. The types
of intervention to be pursued must be selected and implemented by the
communities themselves.

7.4.4.3 Livelihood Provisioning (relief-oriented programming)
Livelihood provisioning involves providing food and meeting other essential
needs for households to maintain nutritional levels and save lives. Such
interventions usually entail food and health relief for people facing an
emergency, or who are chronically vulnerable. Targeted food and health relief
is critical and should be combined with promotional interventions, where
possible, to phase out food transfers. In relief situations where people have
left their homes (i.e. situations involving refugees and internally displaced
populations), promotional interventions such as health and nutrition education
and family planning initiatives would be naturally limited to those activities
that can be conducted at the camps.

The Contingency Approach to Selecting a
8. Livelihood Promotion Methodology
In this Chapter, we shall examine how we go about promoting livelihoods

in practice. We begin by revising the key lessons from the conceptual and
practical approaches described earlier. Then we will walk through a step by step
methodology, which answers an important question –“On what basis does one
choose an appropriate livelihood promotion methodology for a particular target
population group in a particular location in a particular period?” The obvious,
but ambiguous answer is, “It depends”. The significance of the Contingency
Approach is that it answers two questions:
• “What does the livelihood promotion methodology depend on?”, and
• “How does one select from various alternatives?”
8.1 Key Learnings from the Conceptual and Practical

Livelihood Approaches
We have so far studied several conceptual livelihood approaches – the

Sustainable Livelihood Approach (SLA), the Rural Livelihood Systems (RLS)
Framework, and Coolies’ Framework; and the three broad practical approaches
viz. Opportunities based, Entitlements based and Highly-Disadvantaged
Segments approaches, using illustrative examples and cases.
In addition, we looked at three possible political responses – Exit, Voice or

Loyalty. The first is typified by Naxalites and other groups working beyond the
Constitution’s ambit. The second type of response ‘voice’, illustrated by the
work of rights based activists such as Sankar Guha-Neogy, Medha Patkar and
Aruna Roy, while the third response ‘loyalty’ exemplified by large and effective
government programs such as APSERP, Kudumbashree and BRLP. All of these
responses, in their own way ensure that the poor get enhanced access to their
rights and entitlements and through this process, secure their livelihoods.
The Contingency Approach to Selecting a Livelihood Promotion Methodology 269

The key learnings are summarized below:
The essence of the SLA way of thinking or beliefs holds that livelihoods are
more than just employment or income. Livelihoods are a way of life for poor
households, which provide not just the basic means of living, but also an identity,
a place in society that define their prospects in life even up to the next generation.
Poor households adopt livelihood strategies depending on the assets they hold
and the external environment they face. This helps the vulnerable households
cope with the risks and shocks they face. The external environment comprises of
various institutional norms; some local or traditional, some recent and formal,
which either support or restrain their livelihoods.
Policy, institutions and processes differ from the vulnerability context in

that the latter principally comprises of exogenous trends and events (shocks,
seasonality, economic trends), while the former comprise of social and political
aspects, which are typically endogenous to the norms and rules of the society
that the poor live in.
It is useful to make a broad distinction between effects on livelihoods over which

people have little or no control (the vulnerability context) from those that are
the result of history, politics, assertion, negotiation and opportunities in which
local communities can actually or potentially engage and participate.180 Thus,
any effort at livelihood promotion requires understanding and acting upon the
asset endowments (or limitations) of the poor, the risks they confront, and the
institutional environment that either facilitates or blocks their endeavor to build
pathways out of poverty. While there can be little control on adverse events such
as shocks, disasters and so on, the abilities to cope, or the resilience and the
asset base can be built in a planned fashion. Thus the SLA helps the livelihood
practitioner to go beyond the old ‘livelihoods is employment and income
generation’ paradigm, to the wider paradigm that it truly represents.
The SLA has been adapted by different bilateral and multilateral development
organizations. Differences arise over the appropriate scale or level of livelihood
action, for example, the society as a whole,the community, the household
or the individual; over the emphasis placed on rights and claims compared
to enterprise and markets; over the social and political as opposed to the
economic; and over the rhetoric and reality of efforts to achieve a real measure
of participation and empowerment of the poor.181
180
Ellis, Frank (2000). Rural Livelihoods and Diversity in Developing Countries, Oxford University Press
181
Husein, Kareem (2002). Livelihoods Approaches Compared: A Multi-Agency Review of Current
Practice, DFID

Table 45: Sustainable Livelihood Approach of UNDP & DFID
UNDP DFID
Goal To promote access to assets and To understand livelihood strategies adopted
their sustainable use by the poor
Entry Adaptive or coping strategies Assets or structures and processes that
point employed by people maximize people’s opportunities
Both DFID and the UNDP have used the SLA. The UNDP’s goal, within its
overall mandate, is to promote access to assets upon which people rely, and
their sustainable use. In order to do this, and to understand how assets are
utilized, it uses the adaptive or coping strategies that people employ in their
livelihoods as its entry point. In contrast, DFID aims to understand the
livelihood strategies adopted by the poor as part of its overall framework, but,
in principle, it focuses its development activity either on the assets themselves,
or on structures and processes. The rationale being that this method will
maximize people’s opportunities over the long-term.
In contrast to the SLA, where the primary focus is economic, with some
consideration for institutional influences, the RLS places much more emphasis on
the social and cultural aspects of livelihoods – the value orientations of people, the
role of gender and power relationships, and the meaning of livelihoods, including
the aspects of dignity and an identity in society. This is shown in Figure 23.
The Coolie’s Framework gives importance to the opportunities-based approach. It

recognizes the internal and external contexts that affect the livelihoods of the poor,
and offers a detailed understanding on how livelihood promoting organizations
can design interventions, primarily in the economic space. It is useful in putting
a conceptual approach into action by identifying specific economic activities in a
value chain that can be pursued beneficially by a large number of the poor.
The three practical approaches viz. Opportunities based, Entitlements based

and Highly Disadvantaged Segments approaches have been born out of
practical action on the ground by different agencies. The common aspects that
stand out are:
• Focus on enhancing the livelihoods of the poor, since it is at the core of
poverty reduction
• The household is the basic unit of attention, and individual aspirations
must be taken into account
• The livelihoods of the poor exist within a larger system and context, and
therefore the livelihoods promotion effort must incorporate ‘systems’ thinking.

The practical approaches have been enhanced by the three political responses
– Exit, Voice or Loyalty, which have the following in common, in addition to
the above:
• Understanding the political economy – the pattern of control over resources
–is critical to livelihood promotion
• There is no point in trying to enhance production by the poor if the patterns of
exploitation continue – since more production will mean more exploitation.
Figure 23: Contrasting the DFID (SLA) Approach with the RLS Approach
The strength of the The strength of the

DFID approach: RLS approach:
• Direct attention to • Direct attention to the
forces and factors in center and the process
the broader context of decision-making in
of people livelihoods people’s livelihoods
such as risks causing regarding role sharing
vulnerability policies gender and power
services transforming relations
institutions In a rural context • Facilitates
• Facilitates consideration of the
exploration of Or role of people’s three
the composition fold value orientations
In an urban setting
and relevance of a in the process of
differentiated asset strategy development
portfolio of people’s • Extends the focus
livelihoods from outer to inner
• Puts a clear focus on realities of livelihood,
the links between which constitute an
the asset portfolio important source for
livelihoods strategies giving meaning to
and livelihood livelihood.
outcomes that people
aim at.
People are the focal point and if any development agenda works against their
livelihoods or well-being, it must be opposed. The difference is that Naxalites
are willing to engage in armed struggle to overthrow the state, while the

Figure 24: Map of Various Livelihood Promotion Efforts in India
Economic Prosperity for all Map of Various Livelihood Promotion

Approaches in India (Govt, NGOs, Corporate)
Desired Status (2027)

es
ach
pro
ap
sed
s ba
n itie
rtu
po
Op
Poverty Line
No Freedoms Political Participation
No Participation and Freedom - Fullest
Srarting Status (1947) Rights and Entitlements

based approaches
Regular, Multi-party
Election
Naxalites, etc.-
Extra - Constitutional
Extreme Poverty
activists work outside the system but within Constitutional boundaries and
the government programs work within the system. Figure 24 depicts the
approaches discussed in detail earlier in this Resource Book.
8.2 Mapping Livelihood Approaches onto the Socio-

Political and Economic Space
Having examined descriptions of various approaches, let us now draw out some
lessons. The figure below depicts the trajectory that the two basic approaches
take. While the opportunity-based approach focuses on interventions to
improve economic status, the Rights and Entitlements based approach engages
in interventions to enhance freedom and right to political participation, and
then based on changes effected by those approaches, works to improve the
economic status. While these three are broad approaches, it is also necessary
to understand that within each approach, there are different sub-approaches
suitable for different economic segments.
The three broad approaches are mapped on the economic pyramid segments.
The original approaches have been enhanced using socio-political factors;
on the left, by a violent and extra-Constitutional assertion of rights
and entitlements; while on the right by the work of activists seeking an
extension of Constitutional and legal guarantees for rights and entitlements
(See Figure 25).

Figure 25: Livelihood Approaches Mapped onto Economic Pyramid
Segments
Assertion of rights and Ensuring access

entitlements through to rights and
Left-wing militancy entitlements through
the Constitution
Predominantly Growth Vector

Segment I
Minimalist Credit Approach
Approaches Segment II Integrated

for the Highly Approaches
Disadvantaged
Segment III
Segment IV
Segment IV (the bottom-most): The Extremely Poor segment. The

approach most suitable would be the one for building the livelihoods of the
Highly Disadvantaged- Ultra-Poor, or people affected by disasters (man-made
and natural), HIV-affected people, the disabled, etc.
Segment III: The Poor segment. The opportunity-based approaches, in

particular the ‘integrated’ approaches, rather than the minimalist credit
approach would be most appropriate, as it best addresses their need for both
capital and promotional support, ensuring improvements in asset yields and
risk reduction, in addition to just asset-creation.
Segment II: The Vulnerable segment. This segment has at its disposal some
assets, knowhow and access to markets, but requires access to more capital.
This is a segment for which the ‘minimalist credit’ approach works well.
Segment I: The Middle Class and High Income segment. This segment is
neither poor, nor vulnerable. It is indeed the growth vector of the economy
and tends to lead into new sub-sectors and locations in search of opportunities
for a return on capital. It is capital surplus and capable of investing. This
segment has the capability to support the lower three segments through wage
employment and informal networks of technical knowledge sharing.
Scenario A: Working with the extremely poor using a rights and entitlements
approach where the positive outcomes created are on the socio-political
spectrum, but not so much on the economic front. e.g. NBA in the first
10 years.

Figure 26: Working with the Extremely Poor using Rights and
Entitlements Approach (Scenario A)
Scenario A Economic Prosperity
Depicts no movement in
the economic situation
spectrum but movement in Starting point
the socio political spectrum
Ending point
Poverty Line
Exploitation and Protected Rights

Discrimination Extreme Poverty
Scenario B: Working with the extremely poor in order to create economic

security for them- e.g. providing free food grains under the Food Security Act
or similar schemes.
Figure 27: Working with the Extremely Poor to Create Economic

Security (Scenario B)
Scenario B Economic Prosperity

Depicts a movement in
spectrum but no Starting point
movement in the Ending point
socio political spectrum
Poverty Line

Discrimination
Extreme Poverty

Scenario C: Working with the poor to create access to entitlements and
economic returns, e.g. BRAC, Bangladesh. These scenarios are examples
to illustrate the approaches adopted for the extremely poor segment and
the associated outcomes. Readers may use this to generate scenarios to
understand the other approaches that can be used with the other economic
segments.
Figure 28: Working with the Poor to Create Access to Entitlements

and Economic Returns (Scenario C)
Economic Prosperity
Scenario C
Depicts a movement in
Starting point
spectrum as well as the Ending point
socio political spectrum
Poverty Line

Discrimination
Extreme Poverty
8.3 How to Select the Approach to Promote Livelihoods
A livelihood intervention implementing agency, more often than not starts

out with a problem or an issue to be solved, or a specific target group to work
with. Chapter 7 describes How they can go about working with the people in
the target segment as an Approach. We have also seen through examples that
different economic segments need different kinds of Approaches. When one
examines the Map of Livelihood Approaches in India (Figure 24), one can
discern that,
The approach adopted by an intervening organization is dependent on three

things:
a. The economic segment that the target group belongs to
b. The political participation and freedom they enjoy
c. The competencies and proclivity of the intervening organization

Therefore, in order to identify or establish the Livelihoods approach to be
adopted by an organization, one would have to systematically analyze the
nuances of the economic segment as well as the political freedom and the
freedom to entitlements of the target group.
8.3.1 Recommended Steps
8.3.1.1 Step 1: Identify Specific Target Group

People are at the core of development and therefore the first thing an
organization needs to do is identify their target group. They have to decide
whether to work with women in the informal sector, as SEWA did, or with
economically active men and women like BASIX. There can be no fuzziness.
If the target group is better defined, the next set of actions- and ultimately the
outcomes, become clearer. The identification of the target group is purely an
organizational choice, primarily shaped by the founder’s desire or deep passion
and concern for the problems their target groups face.
8.3.1.2 Step 2: Understand the Geographical Area

Identification of the geographical area of operation is an iterative choice that
determines these locations based on considerations such as adequate density
of the target group to demonstrate impact, and factors such as familiarity with
a region, proximity to nearest rail or road head and ease of access. It is useful
to study such factors before selecting the geographical area:
Demographic Information is useful to examine the categories of people

inhabiting the selected area: Are they tribal? Are the majority castes into
farming? Are they artisans? More often than not,every Indian district has a
Gazetteer. A fair description of the livelihood patterns of various demographic
groups can be found in these publications.
Literature regarding the area under study (available in local libraries, religious
institutions, schools, universities, or from knowledgeable key informants) can be
extremely helpful. Historical information can help to understand how changes
in the political, social, cultural and economic context may have affected people’s
livelihoods and the institutions that help sustain them. The District Gazetteers,
referred above, often provide information about this aspect as well. The current
literature may be on programs of the government, NGOs, and on organizations
and institutions, both in the area under study and also in general.
Some of this literature will require ‘interpretation’ as it may not specifically

refer to household livelihood strategies and local institutions, but may be
potentially valuable and often provide a useful starting point.

Anthropological or sociological studies of local cultures (available in
local and university libraries). Anthropological studies, especially recent ones,
may provide detailed descriptions of customs, beliefs and types of behavior
among different local population groups that are all part of local institutions.
Reports on past projects (available in project offices or with local development

organizations and NGOs). Past projects may have tackled similar issues and the
lessons learnt from their successes or failures will be of great help.
Statistical information from census surveys or surveys of agriculture, industry,

small enterprise, employment and markets (available in local libraries or local
government offices, but often also from on-going development projects and
local NGOs).Statistical information can help the investigators to determine the
‘frame’ for their study: How many people do they need to talk to? How common
are different forms of livelihood? How many people are likely to be affected by
different types of institutions? What are the forms and the extent of rural poverty?
In India, the District Statistical Office periodically brings out a Statistical

Outline of the district. Information related to economic activities in the district
is available in the NABARD District Development Manager’s office, under
the Potential Linked Plan that is published every year in most districts. The
District Rural Development Agency (DRDA) and the District Industries Center
(DIC) also publish their annual plans and reports, which have statistical and
descriptive information related to livelihoods and industries in the area.
Refer to ‘Major Data Sources on Livelihoods in India’ in the Tools Chapter.
8.3.1.3 Step 3: Study the Attributes of the Target Group

After identification of the target group and the geographical location, the next
and perhaps most important step would be to understand the various attributes
of the target group with respect to livelihoods. A comprehensive tool has been
designed to assess the socio-political status of an individual, a household, or
the village community (IA-SPS). It is to be administered at three levels – the
individual, the household and the community levels, IA-SPS-I, IA-SPS-H and
IA-SPS-VC respectively. This tool maps the attributes of the individual, the
household, or the village community along several dimensions such as Access
to Resources (labor, land, forest or grazing lands, water and capital) and Access
to Rights and Entitlements (individual, social, political, economic and cultural).
Intra household dynamics can be understood by studying the outputs of IA-
SPS-I and IA-SPS-H tools. Similarly community dynamics can be understood
by studying the output of IA-SPS-VC tool.

8.3.1.4 Step 4: Identify the Broad Approach
We make use of two tools; IA-SPS and ILH-ESL which help us locate the target
group on the ‘rights and entitlements’ (x-axis) and the economic prosperity
(y-axis) spectrums. Both the tools are scoring tools. The IA-SPS tool is a
scoring tool and the scores indicate the level of access to resources, rights and
entitlements by the individual, household or community. A score of 200 is the
maximum and indicates full access to all resources and rights and entitlements.
This gives us the position of the starting point of a community on the x-axis.
The scoring on the y-axis is based on economic criteria and another tool –
the Instrument for Locating a Household on the Economic Snakes and Ladder
Space (ILH-ESL). Details on these tools are available in the tools chapter.
They have to be administered to a random sample of households in the target
segment and area.
8.3.1.5 Step 5: Fine-tuning within a Broad Approach

1. If the target segment scores low in IA-SPS, then move towards the right
along the spectrum of ‘exploitation and discrimination to protected
rights’ (x-axis) i.e. focus more on empowerment and enhancing access to
entitlements (pensions, food security through FSA, adequate work through
NREGA, financial services through financial inclusion, education through
Right to Education).
2. If the target segment scores medium on IA-SPS, then focus on market
opportunity based approaches, which helps in moving towards the top on
the spectrum of ‘extreme poverty to economic prosperity’ (y-axis).
3. If the target segment scores high on IA-SPS, then it is likely to take care of
itself and it should not be the target segment.
4. If the target segment scores low in ILH-ESL, we need to move it first
from below towards the middle along the y-axis and this may first require
political work in terms of access to resources – labor, land, water, forests
or grazing land and capital before capitalizing opportunities for income
enhancement and risk reduction.
5. If the target segment scores medium in ILH-ESL, then it needs to move
from the middle towards the top along the y-axis i.e. focus more on
capitalizing opportunities for income enhancement and risk reduction.
6. Finally, if the target segment scores high on ILH-ESL, it should again not
be a target segment.
7. Those segments which appear in the top right hand corner of the graph
should not be target segments for development programs. This does not
mean we make no contact with them, because they can be formidable

obstacles if they oppose the efforts to uplift the others. It is best to co-
opt these segments in the development strategy, such as by sharing some
common facilities, or treating them as early adopters of innovations. It
is better to invoke the Gandhian trusteeship feeling in them rather than
accuse them of seeking to exploit the masses.
8. NGOs that are autonomously funded may have more leeway for fine-
tuning their approach than Government or CSR-based programs, as they
would find it harder to focus on the rights-based approach. But even within
government programs it is possible as a way of enforcing legislation or
ensuring program benefits reach those it is intended for.
The specific interventions required in a situation may have to be figured out,

based on the local context. One has to bear in mind that these approaches
are not tightly compartmentalized. More often than not, organizations use a
combination of approaches which are dynamic over time- the organization
may be sometimes forced to change the approach because of a change in
environment or simply because the current one does not yield results.
Steps 4 and 5 are therefore iterative in nature. The mix of approaches and
the interventions should be reviewed at periodic intervals and necessary
adjustments should be made to accommodate for changes in context and to
achieve the desired outcomes.
Promoting livelihoods is a complex business and the best way to go about it, is
to ACT!
8.4 Designing the Localized Intervention
8.4.1 Take into Account the External Context
Over recent years, across the world, there has been a growing understanding
that market institutions should perform production and distribution related
economic functions, while the state should concentrate on delivery of public
services and the civil society should play the role of social ombudsman and
undertake social innovations, which both the state and market are not geared
to handle.182
182
For a detailed discussion on this see Hansmann, Henry (1987); `Economic Theories of Non Profit
Organizations’ in The Non Profit Sector: A Research Handbook, edited by Powell, Walter D., New
Haven, Yale University Press, and recent research paper by Debika Goswami, Rajesh Tandon and
Kaustuv K Bandyopadhyay (2012); Civil Society in Changing India: Emerging Roles, Relationships
and Strategies, PRIA, New Delhi. Also see Mahajan, Vijay. 2008. Scaling Up Social Innovation.
Seminar, Annual Number

On a similar line, the Government of India has started disinvesting from many
of the manufacturing and other commercial functions and concentrating
more of its resources and efforts on public services, including promotion of
livelihoods of the weaker sections of the society. In the same line, the private
sector has also started participating in delivery public services: either through
joint action by various modes of Private-Public-Partnership,or by contributing
resources for CSR.
Encouraging this trend, the GoI by an amendment to the Companies Act in 2013,
has made it mandatory that every company having net worth of Rs 500 crore or
more, or turnover of Rs 1,000 crore or more, or with a net profit of Rs 5 crore or
more during any financial year shall spend at least 2 percent of its average net
profits of the previous three years on specified CSR activities. While presenting the
Bill to the Parliament, it was shown that the top 100 privately owned companies
had spent Rs 5,611 crore for CSR related activities in 2011-12, while the public
sector units had allocated Rs 2,388 crore183 for CSR. It was estimated that a total
fund of five to eight times of this, amounting to about Rs 30 to 40,000 crore will
be available for such socially useful investments.
Assuming that one-third of this would be invested for livelihood promotion

or support, the balance in health and education, it can be seen that while
the Government would invest Rs 125,000 crore for livelihood promotion
programs, the corporate sector would contribute Rs 15,000 crore and the
development NGOs would invest about Rs 3,500 crore. In other words
88 percent of the livelihood initiatives will be taken up under government programs,
10 percent with CSR funding and about 2 percent through NGO initiatives.
8.4.1.1 Degrees of Freedom are thus Limited – Design, Budget,

HR, etc.
This scenario will have several implications, in the coming five to ten years.
One of these will have significant implication for livelihood practitioners, and it
arises from two important aspects: (i) the large size of the Government and (ii)
high degree of context specificity of livelihood strategies. Though the relevance
of contextualization of Livelihood Initiatives is recognized given the size of
its organization, the Government will have little ability to remain flexible. It
will have large programs where the degrees of freedom for making localized
choices will be limited. However, as the Government recognizes the need for
local adaptation, it is making various design changes to accommodate such
context specific modifications.
183
Lok Sabha Secretariat, Parliament Library and Reference, Members’ Reference Service, Reference
Note No. 11 /RN/Ref./2013

8.4.1.2 There is Scope for ‘Localizing’ National or State-wide
Programs
This is where the livelihood professional, whether a part of the implementation
arm of the Government, a CSR Initiative or an NGO, will have to play a critical
role. As mentioned in Chapter 2, Sustainable Livelihoods Approach is an
alternate approach for development, where apart from focusing on the resources-
skills-markets (as was done for the poverty alleviation approach), special
attention is paid to (i) local institutional arrangements that shape the world-view
and aspirations of the people, and (ii) risks and vulnerability faced and perceived
by people, both of which affect adoption of a livelihood strategy by a family.
This assessment cannot be done at a national level. Therefore, a livelihood

practitioner needs to:
a) Study the national or state level program and its design elements carefully,
including those elements that can be, or cannot be changed;
b) Map the local Livelihood Resource-Skill-Markets;
c) Assess the risks and vulnerabilities faced by people in the area; and
d) Identify the various institutional arrangements in the area, some local or
national, some formal and others informal, which help people engage in
some activities and cope with the risks and shocks;
e) Identify specific areas that need local adaptation;
f) Develop the specific localized intervention plan for the area.
8.4.1.3 Understand the Operating Model of the Program

Every livelihood support program has some design elements. For example,
the NRLM envisages creation of people’s institutions at the village level
and federating them to help achieve scale. It is important for the livelihood
professional to understand these design elements and the grounds for their
existence.
Now these design elements have implications for the localized intervention
plan. As NRLM recognizes the need for people to be involved in decisions
related to their own livelihoods, it is proposed that instead of taking these
decisions on an individual basis, these be institutionalized. Therefore,
mobilizing people and forming their own institutions, whether a SHG (as in
Andhra Pradesh, Bihar) or a Producer Group or PG (as in Gujarat, Kerala),
is an essential step for engaging with NRLM. It needs to be kept in mind that
various forms of people’s institutions have been created in the last few decades.
Therefore, to effectively engage with NRLM, an important action point for a
livelihood professional would be to take stock of various people’s institutions
that exist in the area and to consider their present state.

Depending on this assessment of the people’s institutions the livelihood
professional may choose to (i) engage some of the existing institutions to
undertake the activities after due re-orientation; or (ii) strengthen some of
the existing groups and then engage them; or (iii) promote new institutions in
for forms of SHGs or PGs. While promoting such people’s institutions at the
grassroots level one needs to bear in mind:
a) The purpose of creating such institutions is such that these institutions
take up livelihood promotion or support related decisions matching their
capacities, endowments and expectations, through a transparent process.
b) An institution is not just a formally formed organization. It is a set of
mutually accepted norms of behavior.
Once we understand the reasons behind the creation of such institutions, in the
course of promoting them, we have to include steps to enable them (and so also
their constituents, the poor) to take decisions related to their own livelihoods
matching their capacities, and not just savings and credit. Additionally, as
institutions are also run by a set of mutually accepted norms, processes will
have to be initiated so that the group develops and accepts norms required for
conducting their own livelihood activities and continues to accept them. The
rule of maintaining their books of accounts and records is just one of many
such norms required for managing their livelihoods.
Such actions will be integrated by the livelihood opportunities professional

in her or his work plan only when they have studied the program document
thoroughly. Therefore, when building a localized livelihood intervention, it
is very important that the livelihood professional studies the program design
carefully. Most of these documents are available in the relevant websites of
these programs. (MGNREGA program design-related information,184 RKVY
or NADP related program design information,185 Program design related to
BGREI,186 NULM program latest designs187).
8.4.1.4 Selecting Suitable Activities based on Supply-side or Demand-

side Approach
Having examined the design of the larger program through which we plan to
support or promote livelihoods for a large number of disadvantaged people,
184
http://nrega.nic.in/netnrega/WriteReaddata/Circulars/Operational_guidelines_FourthEdition_
eng_2013.pdf
185
http://agri.tripura.gov.in/links/rkvy.pdf
186
http://bgrei-rkvy.nic.in/Guidelines/Guidelines.pdf
187
http://www.mhupa.gov.in/w_new/NULM percent20missionpercent20document.pdf

and the livelihood context within which they make a living, it is important to
select activities suitable for the local situation. There are two broad approaches
– demand side and supply side. The supply side approach begins with what
is being and can be produced locally. Consider an example — assume the
natural agro-climatic conditions in Mansi block of Khagaria district in Bihar
are suitable for growth of Makhana. There are several physical resources such
as small ponds where Makhana can be grown and which people can easily
access. Makhana being a natural vegetation of the area, the locals are quite deft
at harvesting them from the ponds.
The demand side approach is where one begins with end consumers and their
demand and investigates what can be produced locally to meet that demand,
thereby creating livelihoods. In the Makhana example, with the growing
preference for ready-to-eat food among young professionals, one food product
company in Kolkata has developed a technology for soft-roasting Makhana
and preparing some ready-to-eat products. This is an example of non-local
demand, which is difficult for the poor people to directly uncover, and so
prepare themselves adequately. As both the NRLM and NREGA programs are
being implemented in this area, the livelihood interventionist can dovetail this
kind of demand discovery into the program.
Thus another variation of the demand side approach is to look at the local
demand. A tool has been developed to deal with this, based on the use of the
monthly per capita expenditure data available from the NSS for each State,
separately for rural and urban areas. That is then applied to a district population,
rural and urban and the district’s ‘local demand’ is computed. The tool is available
in the Tools Chapter and in the accompanying CD.
8.4.1.5 Sector(s) or Value Chain Stages in which We Intervene

What livelihood activity should one consider for the intervention? Should one
improve an existing livelihood activity, or promote a new one?
This is a very critical choice when designing an intervention. While doing this
we need to keep in mind that the poor are engaged in a diversified portfolio of
subsistence livelihoods. Unlike the large producer, for whom every sector that
she or he is involved in, gives a large chunk of returns, none of the activities
of a poor household contributes to more than 30 to 40 percent of their gross
revenue.
As a result, even a substantial increase in return from any single sector

only makes a small contribution to their total revenue. As a result, working

consistently in any one sector may not be that lucrative for a poor household.
They may be interested only to the extent of the marginal addition to their
total kitty.
On the other hand, we must also remember that every different activity has a
different pattern of behavior in the market. When does it sell? When does the
stock grow? Who are the major competitors? How long can the commodity be
stored? Each of these elements have varying nuances from sector to sector.
Therefore, the more the number of sectors one chooses to work with,the
more complex it makes the business, with increasing probability of running
each business sub-optimally. Therefore, the livelihood promotion or support
professional will have to be aware of this trade-off.
We need to also keep in mind that when actually getting engaged in an activity
we need to be specific. Gross generalizations may be useful for academic or
policy purposes often they help a practice. There is no commodity called
a vegetable. The way the prices of potato, which has a long storage life and
is produced in lighter soils in north India, behave is very different from the
price of tomato, which has a much shorter storage life and is grown in a larger
spread of geographical conditions. Therefore, if the livelihood professional has
to ensure good return to potato farmers, the chosen course of action has to be
very different from that adopted for tomato farmers.
Then there are other trade-offs to consider. One has to choose between
enhancing returns from one of the activities that many people are already
engaged in, and which is already attuned to their current life style, and
introducing a new activity for an emerging market that offers a great potential
in the near future. Both choices have their consequences, and therefore offer a
trade-off for the livelihood professional.
In an attempt to address this challenge of multiple people engaged in multiple

activities forming the base level institution of an affinity group, the Ministry
of Rural Development in Bihar with support from the World Bank, developed
a concept of ‘Shelf-of-Work’. In this methodology, a set of activities can be
taken up in the area, utilizing resources from large programs like National
Rural Employment Guarantee Program. This Shelf-of-Work also incorporates
the views of the people, after due vetting by a group of experts. It is then in
the custody of the Gram Sabha,who can choose activities from this shelf,
in due consultation of the members of the institution. (See some of the
recommendations about such Shelf-of-Work in http://nrega.nic.in/circular/
minutes_working_groups.pdf).

8.4.2 Design of the Intervention
While developing the intervention design we need to take decisions along two
dimensions of the intervention:
• The Nature of Intervention
• Design of the Enterprise(s) of the Livelihood Activities
8.4.2.1 Nature of the Intervention
Deciding where to intervene in the value-addition chain and deciding the
approaches for the mode of the intervention (“How to”), are closely linked. We
can either intervene by providing a single missing input, integrating several
inputs or by taking a systemic approach.
Which of the following inputs should we focus on?

a) Creating appropriate enabling conditions for the people taking up the
chosen basket of activities, through a policy dialogue.
b) Introducing or adapting a technology that can be locally used by the people.
c) Training and skill building in either improving productivity, or in managing
their own institutions.
d) Creating facilities for some local value addition through establishment of
proper infrastructure, institutional arrangements and training of the people.
e) Marketing support to help producers access a new market with increased
sales or higher returns.
f) Asserting rights and ensuring delivery of entitlements, which has been
already granted under law or by the society.
g) Policy Advocacy to create a more enabling environment for production/
storage/processing of commodities produced/proposed to be produced by
the people.
h) Building a local interdependent economy.
i) Extending financial services such as savings, credit, insurance or money
transfer.
j) Building or refurbishing infrastructure.
k) Building or strengthening people’s institutions, for engaging in different
components of the livelihood activity.
It is not essential that we should choose only one instrument of intervention, it

is also possible to use more than one. However, this choice needs to be made,
keeping in view the mission and competence of the organization, as discussed
in the section on Internal Context earlier. As we have seen in Chapter 5 when
discussing the Political Economy of Livelihoods, often livelihood choices are
limited by the control on various resources.

8.4.2.2 Design of the Livelihood Enterprise
Finally, the livelihood activity can be structured on different aspects in different
ways. How are we going to organize the producers? Will they be self-employed
or wage earners? Who will own the activity, or network of activities? Who
will manage it? And where will it source its funds? Though these are some
of the choices that we have, the type of employment an activity provides, its
ownership, management and size are closely interlinked issues. Note, however,
that describing the business activity is very different from choosing the sub-
sector or industry in which we intend to work (which we covered under the
type of intervention).
To continue with our Makhana example, we need to first understand that if the
people in the area will have to engage with NRLM they need to be organized
into their SHGs or PGs. From the detailed mapping of the factor conditions
in the area, we have to identify the SHGs or PGs that would be engaged in
harvesting the Makhana.
We need to decide whether the same SHG or PG should also undertake the
post-harvest processing like drying and peeling or would we like to involve
another SHG or PG that may not have access to these ponds to take up the post-
harvest work, and thereby generate some additional employment for those who
do not have a pond? Should the same group directly market their products, or
would it be better to federate several of these groups (which is also permissible
under the NRLM design) and let them do the marketing? That being a separate
enterprise, do we need a different form of an organization? This is the base of
our localized micro-strategy. This is when we need to start looking at different
ownership models.
Ownership and Management of the Livelihood Enterprise
The first choice is who are we going to work with: individual self-employed
entrepreneurs, that is entrepreneurs who generate wage employment for
others, or community owned livelihood activities, which generate profits in
addition to wage employment?
Livelihood opportunities often come in the form of micro-enterprises

generating self-employment. But, let us not forget that they also come in
the form of wage employment. Often livelihood interventions are designed
with an assumption that given the necessary training, capital and access to
market, the poor producer will be able to establish and manage his or her
own enterprise.

Making an assumption is fine, but one should also first find out if the individual
wants to be an entrepreneur? Why not help them ask: Do I want to run my own
enterprise or am I more contended with a job? Does the poor producer want to
run an enterprise or is he or she looking for regular wage employment? It also
needs to be attuned with the institutional design already proposed in the larger
program design. For example, if working with NRLM, which uses the SHG as
the building block of the people’s institution, whatever be our choice, we also
need to define what would be the role and relationship of those institutions
with the enterprise being promoted.
Thirdly, we need to consider, if reducing risk is more critical than enhancing

income, what is more risky? Running our own business or having regular
wage employment? Finally, when it comes to coping in difficult economic
circumstances, poor people are highly entrepreneurial out of necessity. But not
all poor people are good business entrepreneurs.
We may need to ponder on these issues and decide whether we would like
to promote micro-enterprises that generate self-employment, or promote
activities that generate wage employment? The latter may of course be more
difficult, and in most cases, poor producers have no other option than to be
self-employed. It may still be possible to organize micro-enterprises into a
network of activities, which supply and buy from each other. DHRUVA’s (Box
18) mango and cashew orchard development program supported a range
of activities, comprising both the landed and the landless. For example, the
landless are involved in manufacturing mango pickles and decorticated cashew
that are marketed, and in producing vermi-compost, which is used by all the
farmers developing orchards.
For a private enterprise, an alternative to both self-employment and wage

employment is organizing producers in a collective, such as a co-operative, a
savings and credit group, or a water users’ association. This leads us into issues
of ownership and management of the livelihood activity. This often creates
opportunities for employment by the collective.188
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 are not the same. More often than not, these are performed
188
Pastakia Astad (2007); ‘Making Institutional Choices for Livelihood Interventions’: A research study
based on on-line data collected through Solution Exchange,

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 a 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 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

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.189
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 requires a formal structure
like a cooperative or a producer company? Do they also own the activity? Do they
have the capacities to discharge the roles of the owner? What interest do they
represent? Is there some party whose say in management of the activity has to
be considered? Are we willing to give the power to the chosen group of owners?
189
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

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 are 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 Co-
operative, 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 co-
operatives 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 have 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.190
Livelihood Enterprise Owned by the Livelihood Promotion Organization

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
190
Rama Kandarpa and Radhika Mathur (2007), Institutional Development – An operational guide,
Hyderabad, BASIX

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 a 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 such 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 involves 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.

Who’s in Charge?
Managing the interface with rapidly changing markets is a highly skilled job.
The dilemma is whether the capabilities of local communities can be built
so that they can manage unfamiliar tasks (such as negotiating with export
markets) themselves, or should hired professionals manage them? What could
be the cost? If we had to pay the full professional fees of professionals, would
we remain competitive in the market?
As a marketing agency, the Association of Crafts Producers seeks to act as a

buffer between producers and the vagaries of the market. Can we ensure that
the producers are able to meet the demands of the market themselves? How
will the losses, if any (that’s what is being a buffer means!) be borne or split-up?
8.5 Setting Objectives
After developing the micro-strategy, it is essential to give a concrete shape

to this long wish list and make a statement of the livelihood organization’s
ambitions. What is a number of people we want to serve? When? Where? An
objective needs to be SMART.
S Specific
M Measurable
A Ambitious, but
R Realistic, and
T Time-bound
For example, stating that we will facilitate Makhana farmers improve their
livelihoods through proper marketing, may be a good statement of intent. But
is not statement of an objective.
On the other hand, it may be useful to state: “In the next five years we will
organize 2,000 women in Mansi Block into their SHGs, who will be engaged in
cultivating and procuring Makhana from local ponds, further deepened under
the MGNREGA projects and another 200 women of landless households from
the same block who will process Makhana and market them for the Ready-to-
Eat Food Product Co. in Kolkata. This will help increase their income by at least
20 percent from their present income levels, while ensuring that all of them
get immunized against water borne diseases under the NRHM, and all their
children of the school-going age group are enrolled in nearest school”.

(Of course, this is an example to illustrate some points. We have to formulate a
realistic objective based on the intervention agency’s capacities).
Formulating the objective in such specific measurable terms also helps

formulate activity plans better, and realistically.
For example, if one states that ‘increasing their income by at least 20 percent
from their present income levels’ is part of their objective, then they will not
forget to add a Baseline Survey as a part of activity planning. It will also help
monitor our progress periodically. For example, in case the contract with the
Kolkata-based Ready-to-Eat Food Product Co. does not work out, they will
start looking for an alternate buyer, instead of selling the Makhana in the local
market, as was done earlier, or let them rot.
8.5.1 Activity Planning
After formulating the objectives, based on a realistic assessment of the capacity

of the intervention agency to implement the fine-tuned strategy for localized
conditions of Resources-Skills-Markets-Institutional arrangements, it is
necessary to list down various action steps required to ensure these strategic
choices are translated into feasible tasks and processes on the ground. At this
stage it is important to identify various activities that must be executed to
achieve those objectives.
There are various activity planning methods developed, such as PERT and
CPM. These are available in various text books of Project Management. Such
project monitoring and management methods are also detailed at various
websites on those topics. A simplified version of project formulation is available
in the chapter on Tools.
Since the Sustainable Livelihoods Approach is a bottom up approach, it is

important to involve the community members at this stage. Though it is even
better to involve the community at the stage of Local Livelihood Mapping, but
usually at that stage the contact with the community is not strong enough. But
at this stage of developing Activity Plan it is essential that select members of
the community are involved. This helps in two ways: (i) it helps to get a better
understanding of what is possible at the local level, and (ii) prepares the people
to own and take up the planned action.

8.5.2 Developing the Human Resource Plan
After developing the action plan we need to develop a plan considering

the resources required for taking up those activities. While doing this it is
important to revisit the initial plan document. Usually every Inception Report
or original Concept Document also specifies a human resource strategy and a
plan. The plan must match with the overall program design.
For example, the NRLM Inception Report as well as its Operation Guidelines
specifies the use of services of CRP. A CRP is a person from the community,
who demonstrates specific abilities essential for the program in the local
context. In a Makhana growing area if a farmer demonstrates superior abilities
in Makhana production, he or she should be used to train others. Having
someone else, say even a qualified person with M.Sc. (Ag) degree through
extension education, may not work out in this case. If someone demonstrates
good management of their group accounts, they should be relied to train
accounts keepers from other groups.
Now this being a stated policy of NRLM, if one desires to link with NRLM, right
from the stage of creating activity plans they should identify the activities for
which services of the CRPs can be used. Since there is also a budget line item for
remuneration to CRPs, the plan should be aligned to those specifications. This,
in turn, might alter the intervention agency’s activity plan. For example, if CRPs
are used in the livelihood intervention then there should be some activities
planned to identify and train CRPs. In this example, if the CRP is a very good
paddy farmer, he or she may be quite knowledgeable about post-harvest
processing of Makhana, but may need some practical instruction on training
other farmers. Therefore, this human resource plan will have to be developed
with the Activity Plan iteratively. There are several HR Planning tools available
on the internet. We can use any of them that match our requirements.
8.6 Mustering Financial Resources
8.6.1 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.
1. 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 a
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 maybe 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 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 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 maybe 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.

2. 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.
3. 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, budget is just our ‘best
estimate’ and not the real or actual cost.
8.6.2 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 is required for promoting or supporting 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 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 into 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 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. (Remember the FLRC experience of
Aravali cited earlier).
8.7 Initiating and Stabilizing 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 improvement of the people’s livelihoods involve 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 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 the long-term goals to
overcome this stage.
8.8 Monitoring, Evaluation, Learning and Redesign
However, livelihoods of people are affected by a wide range of factors many

of them external, and beyond the control of the participants. Therefore, it
is essential to develop appropriate systems of monitoring and mid-course
correction. Livelihood intervention programs are incomplete without such
systems. It has been argued that livelihoods present dynamic challenges,
where the livelihood context changes very rapidly. Therefore, livelihood
professionals have to be mentally and operationally ready to change the
goal-post.
An appropriate system has to be in place to handle such changes. One of the

risks of such endeavors, with changing goal-posts, could be obsessive criticism
of whatever is achieved or done. On the other hand the dynamic nature can be
used to justify any inadequacies in the program implementation taking shelter
under the fact that the earlier goal has become irrelevant over time. Therefore,
it is crucial to develop a sensitive monitoring system that can respond to some
of the changes in the context, and at the same time ensure non-deviation from
the main goal of the initiative.
8.8.1 Fixing Key Indicators and Conducting a Baseline

Survey
As a first step it is essential to identify some critical indicators of progress. As

livelihood is multidimensional, many variables need to be kept under watch.
But statistical theory indicates that as the number of variables rise, the rigor
or strength of the measure goes down. Therefore, finding an appropriate set of
key variables becomes a critical task. For example, total volume of Makhana
collected may be rising, but the number of women actually engaged in that
work may tell a different story. Thus, it is important to choose the right set of
key indicators to be monitored.

8.8.2 Monitoring Processes – Participatory and Others
The next critical task for the livelihood professional is to design an appropriate
monitoring process. As livelihood is multidimensional and information
about many of the dimensions is available with the community members,
the monitoring process will have to accommodate participatory processes.
However, a participatory monitoring process is expensive and also tends to
become slow.
If the purpose of the monitoring is mid-course corrections and changes in the

program, slow monitoring defeats that very purpose and it is often in danger
of becoming a post-mortem. Developing a process that makes relevant set
of information available for quick decisions becomes very critical, especially
since the livelihood context is very dynamic. An important character of
the monitoring system in a dynamic context is the management’s ability
to respond to information thrown up by this system. As a result, it pays to
consider an appropriate and timely response system while designing the
monitoring system.
8.9 Mid-term and End of Project Evaluation and

Learning Therefrom
The Mid-term and End-term Evaluation by a suitable external agent are two
other critical processes when designing a livelihood intervention project. This
process is distinct from the regular monitoring process. The regular monitoring
process has to deal with a large number of variables, given the dynamic nature
of the livelihood context. Therefore, it is essential to build in a system of
continued learning in a livelihood intervention design, both at a local level and
at a larger level. The eventual idea is to move livelihood promotion practitioners
to engage in ‘reflective practice’191 We will describe this term briefly, which
emanated at the MIT from the work of Donald Schön and Chris Argyris.
Reflective practice is ‘the capacity to reflect on action so as to engage in a

process of continuous learning’. According to one definition it involves ‘paying
critical attention to the practical values and theories, which inform everyday
actions, by examining practice reflectively and reflexively’. This leads to a
developmental insight.
191
Schön, D. (1983) The Reflective Practitioner, How Professionals Think In Action, Basic Books

Reflective practice can be an important tool in practice-based professional
learning settings where individuals learning from their own professional
experiences, rather than from formal teaching or knowledge transfer, may
be the most important source of personal professional development and
improvement. Further, it is also an important way to be able to bring together
theory and practice; through reflection you are able to see and label schools of
thought and theory within the context of your work192.
There are a number of Indian development and livelihood promotion

organizations which have been inspired by this view of individual and
organizational learning. The most notable of these is PRADAN, which was
introduced to Schön’s ideas and book by Prof Rolf Lynton in 1987 through
PRADAN’s founder Vijay Mahajan. This was carried on under the guidance of
co-founder Deep Joshi for another 15 years.
It not only adopted many of the concepts in its institutional processes (for
example, holding an organization wide ‘retreat’ of three days every six
months) but also pursued reflective practice relentlessly. It is not for nothing
that PRADAN is regarded as one of the most effective as well as thoughtful
livelihood promotion organizations in India. Besides Deep Joshi of PRADAN,
Al Fernandez of MYRADA, Rajesh Tandon of PRIA, Girish Sohani of BAIF,
K. S. Gopal of CEC, CS Reddy of APMAS and Ajay Mehta of Seva Mandir are
some of the other deeply reflective practitioners in the sector.
In the Government too, agencies such as APSERP, APRLP, MPRLP and

Kudumbashree have had early leaders like K. Raju and Vijay Kumar, Satya
Pal Tucker, Jitendra Agrawal and T. K. Jose who are reflective practitioners.
The late Anil Shah, who retired as Planning Secretary of Gujarat was also a
reflective practitioner.
All these people and numerous others not named, work towards building
‘learning organizations’ and establish the necessary processes, norms and
supportive culture. The learning is not of the single or double loop variety,
but the ‘triple loop’ kind, explained below. Triple loop learning, a concept
developed by Hawkins,193 based on the work of Chris Argyris and Donald Schön
on ‘double loop learning’, is described below graphically:
192
http://en.wikipedia.org/wiki/Reflective_practice
193
Hawkins, P (1991).The spiritual dimension of the learning organization. Management Education and
Development 22(3): 166-181

Figure 29: Triple Loop Learning
Performance
Mission, Strategic Plan; Feedback Cycles to
Assumptions to get Results; Keep Improving
Resource Allocation
Design Programs
Redesign Programs; & Plan Services
Revise Service Plans
Improve Build
Program Performance
Deliver
Delivery Measurement &
Programs and
Learning Capability
Services
Measure and
Assess Results
3 Cycles for:
Organizational
Learning
In the inner loop of the model, program staff, who can be program managers,
operations supervisors, or service delivery staff (including contractors)
regularly measure and assess operational results to make day-to-day or
month-to-month improvements in a [livelihood promotion] service delivery
operations.
In the middle loop, management uses measured results to determine

whether the program design needs to be changed. For example, analysis of
results may indicate a program design flaw that leads to inconsistent service
quality, so management may try to build better quality assurance into the
program. Analysis may also indicate occasionally arising external conditions
that negatively affect results. This may suggest that adding a new program
element to detect and address those conditions, when they arise, may be
valuable (For example, a community health clinic may develop a referral
relationship with a homeless services program).

In the outer loop, basic resource allocation decisions across programs
or regions are driven by performance results, and, in the long-term, a
[development] agency may revise its strategic plan or even its mission. As noted
in the bubble on the right side of the graphic, the organization can also improve
its performance measurement capabilities (e.g., develop better measures or
targets, improve the technology and systems used to manage performance
data) and people throughout the organization can learn how to be better users
of performance information, essentially ‘learning to learn more effectively’.
We end this Chapter with the hope that livelihood promotion organizations
would engage in reflective practice and experience triple loop learning.194
194
The diagram and the text are from Managing for Results and Organizational Learning
Models. Accessible at http://www.auditorroles.org/professional-context/managing-for-
results-and-organizational-learning-models.html

Tools for Livelihood Promotion Design,
9. Implementation and Evaluation
9.1 Tools Developed as Part of the Fourth Edition of the

Resource Book
These tools have been designed and developed to support the approaches
described in this Fourth Edition of the Resource Book. Readers are advised
to use them or customize them in line with your requirements, and more
importantly, write to us with your feedback.
9.1.1 Livelihood Profiling and Display using Google

Maps
This is a tool for placing data on a Google Map. The data has to be collected
for the places corresponding to those available on Google Maps and uploaded
using a spreadsheet. Illustrative data has been provided from a Basix study of
Jharkhand.195 Once complete, if the place markers on Google Maps are clicked,
the data for that place, as noted in the spreadsheet, is displayed. This is not
as powerful as GIS, but it is much easier to use and is accessible to non-IT
professionals.
9.1.2 Tool to Estimate Demand for Mass Consumption

Items
This is based on the use of the Monthly Per Capita Expenditure data available
from the NSS for each State. It is separately available for rural and urban
areas. It is then applied to a district population: rural or urban, and the ‘local
demand’ for the district is computed. The ‘locally expressed demand’ is the
one from visiting traders and buyers who travel to a district renowned for a
particular commodity or product, say, Tasar silk from Godda district.
195
Jharkhand Livelihood Enhancement Action Platform report, 2003, BASIX
Tools for Livelihood Promotion Design, Implementation and Evaluation 303

9.1.3 Socio-political Analysis- IA-SPS Tool
The Inventory to assess the socio-political situation comprises of three
separate sets of self-explanatory scoring worksheets, which can be applied to
a Rural Individual, a Rural Household and a Village Community respectively.
Practitioners can use these sheets to generate an IA-SPS score. The organization
can use the insights from this score so generated, to determine the nature of
Livelihood Promotion Approach that will be apt in the given circumstances.
9.1.4 Instrument for Locating a Household on the

Economic Snakes and Ladder Space (ILH-ESL)
This tool helps measure the sources of income, identifies each economic activity
that a household seasonally engages in, and helps gather data on costs and
revenues for each activity. The tool points out the ‘ladders’ that can aid through
a possible increase in income. It measures sources of credit and costs, and also
lists various sources of risks such as disease, drought, floods, and so on. These
sources of costs and risks are the ‘snakes’ leading to possible decrease in income.
9.1.5 Preliminary Processes of Advocacy

This is a step by step guide to designing and executing an advocacy action plan.
9.1.6 Major Data Sources on Livelihoods in India

This is a compilation of the various data sources (in brief) and their possible
applications, for use as a ready reckoner for practitioners.
9.2 Tools Added in this Edition from Other Sources
9.2.1 CoDriVE PD
The (CoDriVE PD) Community Driven Vulnerability Evaluation - Program
Designer tool196 enables communities to assess and quantify climate change
concerns, vulnerabilities and to plan for activities that help them to adapt and
build resilience. The CoDriVE PD tool does the following:
• Reviews past history and the current scenario for all climate-sensitive
livelihood sectors and non-farm livelihoods and aspects integral to them –
gender, health, local governance, traditional knowledge, etc.
196
http://www.e-agriculture.org/sites/default/files/uploads/knowledge/2013/12/wotr-pdhandbook-
final-web-version.pdf

• Examines the drivers and pressures (externalities) that influence decisions,
create change and vulnerabilities in communities;
• Records the perceptions of climate risk by different stakeholders and
actors, its impacts and their coping and adaptation responses;
• Creates systems approach maps with all the interdependencies and
interactions between the capitals and sectors and their issues and
problems; and finally,
• Generates a vulnerability code that grades all highly sensitive and essential
resources on a scale of 1 to 5, based on the five capitals--Human, Social,
Natural, Physical, and Financial.
9.2.2 Stakeholder Analysis Tool – As Developed by the

MPRLP
This is a step-by-step guide to identify the key stakeholders in any situation and
to figure out how a development intervention may affect them (either positively
or negatively), and thereby anticipate their response.
9.3 Tools Referred to in the Resource Book Third

Edition
9.3.1 Participatory Methodologies for Resource

Analysis
The Methodologies referred to here are a description of Participatory Learning

and Action (PLA) tools, which may be used for resource analysis at the village-
level, to understand the local context and people’s perspectives better. These
tools may be useful for the applications of:
a. Mapping - The village map, The Social Map and the Resource Map
b. Diagramming - Services and Opportunities Map, Chapati Diagrams,
Seasonality, Village transect
c. Ranking - Wealth Ranking, Matrix Ranking
9.3.2 Household Survey
The Household Survey is a comprehensive set of formats that capture various

aspects of resources, income, vulnerability and assessment of credit and other
inputs.

9.3.3 Village Survey
The village survey contains a set of formats that help collect information related
to demographics, income levels, resources, livelihood systems, infrastructure
and institutions at a village level.
9.3.4 Market Survey

The Market Survey helps in gathering information related to products and
services transacted at the local markets.
9.3.5 Designing a Livelihood Intervention using the

Coolies’ Framework
This is a very detailed system of tools and formats, which takes an intervention
agency through the various steps in designing a relevant intervention. This
involves Observing and Understanding the Local Economy, Selecting Livelihood
Activities suitable for the poor in the area, deciding on the Intervention, and
includes popular tools like seasonality analysis, triagulation and 3-E exercise.
9.3.6 Sub-Sector Analysis

Sub-sector analysis is a methodology that helps explain the value addition
chain, various players and the economic system of any sub-sector. This is
helpful particularly when a large scale activity is being planned.
9.4 Tools of General Utility
9.4.1 MART 3-M Framework

MART is a leading consultancy firm on emerging markets. Their 3-M model
(Micro finance, Micro market and Micro planning) is a simple and practical
approach in livelihood development. The model incorporates survey of local
haats (shandies), village shops, traders and other marketing systems to
understand the demand pattern. Supply side is studied through the survey of
availability of raw material, skills and infrastructure and support services. The
demand and supply in the area, as well as existing entrepreneurs, are surveyed.
Then the results analyzed through a micro planning exercise and it is ensured
that the activities are selected scientifically with a proper basis. This helps in
the preparation of a detailed implementation strategy for livelihood promotion.
Interested readers may purchase the 3-M Framework.197
197
User Manual on MART 3M Model (Rs 100) (available in English and Hindi)

9.4.2 Mapping the Market
Developed by Practical Action,the Market Map Framework198 is a conceptual

framework for visualising the commercial and institutional environment in
which small-scale producers (including small holder farmers) operate. It is also
a participatory tool that can be used to represent and communicate knowledge
about specific producers, their market chains, institutional environments and
service needs.
9.4.3 Disaster Livelihood Assessment Toolkit (LAT)
FAO and ILO jointly developed the Disaster Livelihood Assessment Toolkit
(LAT), which is used to analyze and respond to the impact of disasters on
people’s livelihoods and to understand their capacity and opportunities for
recovery, so that it leads to increased resilience to any future events. It consists
of three main technical elements:
Livelihood Baseline (LB): Compiled at the national level before the

disaster, it targets areas prone to natural hazards. It provides quantitative and
qualitative data on key aspects of livelihood systems (populations, wealth and
poverty indicators, occupations, etc.).
Initial Livelihood Impact Appraisal (ILIA): This is an initial assessment

of the impact of the disaster on livelihoods at a ‘local level’, within the first three
months.
Detailed Livelihood Assessment (DLA): This is an assessment of the

impact of the disaster on livelihoods, opportunities and capacities for recovery
at the household, community, and local economy levels.199 The results are used
to create the response options containing concrete project and program profiles
and strategy outlines.
9.4.4 Logical Framework Analysis

The Logical Framework Approach (LFA) is a management tool mainly
used for the design, monitoring and evaluation of development projects. It
is a project design methodology, while the LogFrame is a document. It is a
useful approach in development as it encourages the articulation of a common
interpretation of the objectives of a project and how they will be achieved.200
198
http://practicalaction.org/docs/ia2/mapping_the_market.pdf
199
http://www.fao.org/fileadmin/templates/tc/tce/pdf/LAT_Brochure_LoRes.pdf
200
http://www.tandfonline.com/doi/pdf/10.1080/02688867.1987.9726638

Tracking progress against carefully defined output indicators provides a clear
basis for monitoring progress. Verifying purpose and goal level progress then
simplifies evaluation. In development projects, especially those seeking to
create a difference in the lives and livelihoods of people, this tool helps identify
and retain focus on achieving the impact. Given a well-constructed logical
framework,201 there should be only one understanding on what exactly the
project attempts to accomplish, and how likely it is to succeed—in terms of
programmatic (goal-level) as well as project (purpose-level) objectives.
9.4.5 Monitoring and Evaluation Guide
Louisa Goslings Monitoring and Evaluation, How to Guide is a simple, brief

easy-to-read document with practical examples that explains why, what, how,
when of Monitoring and Evaluation.202, 203
9.4.6 Formulating a Livelihood Project
This is a management tool that helps intervention agencies plan, execute and
monitor their livelihood interventions in an effective and efficient manner.
9.4.7 Progress Out of Poverty Index
This is a tool where by asking 10 simple questions about asset ownership, one
can rigorously determine the expenditure level (and therefore) the poverty level
of a household.
This is based on very high quality statistical correlations established between

poverty tables (based on monthly per capita expenditure or MPCE) from the
National Sample Surveys- (NSS) and asset ownership, and is now a widely
accepted tool.
201
The Use and Abuse of the Logical Framework Approach: A Review of International Development
NGOs’ Experiences
202
http://www.dochas.ie/Shared/Files/4/BOND_M&E_Guide.pdf
203
http://www.ifad.org/evaluation/guide/index.htm

10. Appendix
List of Cases/Articles being provided in the CD

(as part of Resource Book)
1 Mahajan, Vijay 1990 – Rethinking the IRDP, Mimeo, PRADAN, New Delhi.
2 Pulley, Robert van, 1989. Making the Poor Creditworthy. A Case Study of the
Integrated Rural Development Program in India. World Bank Discussion paper.
3 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.
4 Mahajan, Vijay (2004). The Algebra of Livelihoods – A Presentation. Basix,
Hyderabad.
5 Scoones, I. (1998) ‘Sustainable Rural Livelihoods: A Framework for Analysis’,
Working Paper 72, Brighton, UK: Institute for Development Studies.
6 Sandhya Rani Mahapatro, 2013. Declining Trends in Female Labor Force
Participation in India: Evidence from NSSO, Institute for Social and Economic
Change, Bangalore.
7 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.
8 Krishna A. Escaping poverty and becoming poor: Who gains, who loses, and
why? World Development. 2004; 32(1):121–136.
9 The Maoist Challenge, K Srinivasa Reddy, Seminar.

10 Rural Diversification: What Hope for the Poor, D Start, 2001.
11 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.
12 J. Kydd, Agren. (2002): Agriculture and rural livelihoods: Is globalization opening
or blocking paths out of rural poverty? ODI Network Paper.
13 Somasekhar, K. Impact of Globalization on Indian Agriculture &
Challenges – A Critical Review. International Journal of Arts Commerce and
Literature Vol 1 Issue 2 February 2013.
14 Deshingkar, Priya, and S. Akter, 2009, ‘Migration and Human Development in
India’, Human Development Research Paper 2009/13, United Nations
Development Program.
15 Remittance Needs and Opportunities in India, Thorat and Jones, 2011.
Appendices 309
16 Support for migrant workers: The missing link in India’s development:
Deshingkar, Khandelwal and Farrington, 2008.
17 V. Ratna Reddy et al Participatory Forest Management in Andhra Pradesh: A

Review. Working Paper No. 62, October 2004. Center for Economic and Social
Studies, Hyderabad.
18 Recent paper by Mahajan, Vijay 2013. Call for an Inclusive Banking Structure for
India by 2019, Fifty Years after Bank Nationalization. DFID and SIDBI, New Delhi.
19 Vandana Shiva and Kunwar Jalees, Farmers Suicides in India Research
Foundation for Science, Technology and Ecology, New Delhi.
20 Mahajan, Vijay (2002). Voluntary Action in India: A Retrospective Overview and
Speculations for the 21st Century. National Foundation for India, New Delhi.
21 This section is partly based on a significantly updated version of Vijay Mahajan
and T. Navin; Microfinance in India: Growth, Crisis and the Future, in Köhn,
Doris (Ed.) Microfinance 3.0 Reconciling Sustainability with Social Outreach and
Responsible Delivery.
22 Annual Report, 2012-13, National Bank for Agriculture and Rural Development
(NABARD).
23 Assessing the Effectiveness of Small Borrowing in India, 2011. NCAER Center
for Macro Consumer Research, New Delhi, p. 23.
24 MFIN Micrometer, Issue no 8, Dec 2013. Microfinance Institutions Network,
Hyderabad-Delhi.
25 Mahajan, Vijay. Is Micro-credit the Answer to Poverty Eradication? Association
of Women in Development (AWID) Journal, Vol. II No.1 May 1997, Washington
247 DC.
26 Banerjee, A., Duflo, E., Glennerster, R., & Kinnan. The Miracle of Microfinance?
Evidence from a Randomized Evaluation, Massachusetts Institute of
Technology. 2009.
27 Sane, Renuka and Susan Thomas, The real cost of credit constraints: Evidence
from micro-finance. WP-2013-013, Indira Gandhi Institute of Development
Research, Mumbai, July 2013.
28 IIMA-Bandhan report.
29 Pitroda Sam- Development, Democracy and the Village Telephone.
30 Ajit Kanitkar, Vikalpa Vol. 21, No. 2, April - June 1996.
31 Husein, Kareem (2002). Livelihoods Approaches Compared: A Multi-Agency
Review of Current Practice, DFID.
32 Mahajan, Vijay. 2008. Scaling Up Social Innovation. Seminar, Annual Number.

3rd Floor Surabhi Arcade Bank Street, Koti,
Hyderabad- 1
Ph: 040 - 66585800
E-mail: info@ilrtindia.org
Website: http://ilrtindia.org

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Resource Book for

Second Reprint Edition:

Price: Rs 1000/- (Including a CD)

Design, layout and printing:

1. Introduction to the Fourth Edition of the Resource Book 1

2. Livelihoods – A Conceptual Understanding 13

3. Describing and Measuring Livelihoods 41

5. The Political Economy of Livelihoods in India 124

6. Lessons from Practical Livelihood Promotion Approaches 163

7. Three Main Approaches for Livelihood Promotion 213

8. The Contingency Approach to Selecting a Livelihood 269

iv Resource Book for Livelihood Promotion - Fourth Edition

9. Tools for Livelihood Promotion Design, 303

10. Appendix 309

Table 1: Trends in Sectoral Share of GDP over Four Decades in India 49

Table 2: Trends in Sectoral Share of Employment over Four Decades 50

Table 3: Distribution of Population and Average Daily Per Capita 51

Table 4: Percentage Distribution of Unorganized Workers in Different 51

Table 5: Comparative Estimates of Household Characteristics by 52

Table 6: Distribution of Total and Unorganized Workers (2004-05) 52

Table 7: Labor Force Participation Rate by Sex and Place of Residence 53

Table 8: Distribution of Workforce and GDP as per the Industry of Origin 54

Table 9: Landholding Pattern in India 55

Table 10: Sector wise Distribution of Employment and GDP 56

Table 11: Literacy Rates in the Period 1951 to 2011 57

Table 12: Average Wage/Salary Earnings (Rs per day) Received by 57

Table 13: Average Wage/Salary Earnings in (Rs per day) by Industry of 58

Table 14: Per 1000 Distribution of Population by Type of Employment 59

vi Resource Book for Livelihood Promotion - Fourth Edition

Table 18: Occupational Transition Matrix : Rural India 63

Table 19: A Comparative Account of Growth in Employment and Income 64

Table 21: Shocks Related to Adverse Events: Percentage of Rural 77

Table 23: Impact of Globalization on Agriculture (number of farmers) 88

Table 24: Idiosyncratic Risks and Suggested Mitigation Measures 95

Table 25: Adaptive Strategies based on Risk Management Category 95

Table 26: Status of Water Sources in the Sample Villages 96

Table 28: Distribution of Ownership Holdings of Land, India 126

Table 31: Fishery as a Livelihood Option 131

Table 34: Percentage Distribution of Number of Accounts from 146

List of Tables vii

Table 38: Growth of Microfinance in India: 1995-2010 181

Table 41: Project Development Objective Indicators- APRPRP 197

Table 43: Services Available under the BASIX Triad 231

Table 45: Sustainable Livelihood Approach of UNDP & DFID 271

viii Resource Book for Livelihood Promotion - Fourth Edition

Figure 1: Illustration of Factor Conditions Affecting Livelihood Choices 4

Figure 2: Emergence of Livelihoods Perspective 21

Figure 3: The Sustainable Livelihood Approach 22

Figure 4: Sustainable Livelihoods Framework, Ian Scoones, IDS 25

Figure 5: The Sustainable Livelihoods Approach Considering an 27

Figure 6: IFAD’s Sustainable Livelihoods Approach 28

Figure 7: Rural Livelihoods Systems Framework: Capturing 30

Figure 8: The DFID SLA and the SDC RLS Blended 31

Figure 9: Elements of the External Context 35

Figure 10: The Coolie’s Framework 37

Figure 11: The Stages in a Value Chain 39

Figure 12: The Evolutionary Path Across Sectors in a Developing 48

Figure 13: Vulnerability to Risk 71

Figure 14: Effects of Climate Change 90