Rajasthan Grameen Aajeevika Vikas Parishad (RGAVP)

In 2016, the RGAVP, under the National Rural Livelihood Mission, had created more than 350,000 SHGs. However, it struggled with setting up Cluster Level Federations (CLFs). CLFs are the apex monitoring institutions under the NRLM. They oversee the management of SHGs and VOs, access to funds, members’ livelihood investments as well as convergence with other schemes.

We partnered with the RGAVP in 2016 with the aim of establishing financially sustainable community institutions that would result in higher access to funds for communities. Working with 42 CLFs in 10 districts, the strategy was two-pronged –

Improve public delivery systems through good governance.
Establish CLF based livelihood models to improve financial sustainability.

In two years, average income increased by 55% across 160,000 households resulting in the World Bank being able to withdraw its financial support. The Rajasthan government further replicated this model across all its 33 districts.

Visit Website: Rajasthan Grameen Aajeevika Vikas Parishad

Download At a Glance Document | Programme Report

Challenges
In Rajasthan, the RGAVP implemented the National Rural Livelihood Mission by collectivising women and giving them access to funds for livelihood activities. But several challenges persisted:
1. Institutional Challenges
  Though many CLFs, VOs and SHGs are registered on paper the ground realities painted a very different picture. Many of them were largely non-operational for a variety of fairly basic reasons – general body meetings did not take place routinely often because many of them did not even have premises in which to work from. Additional gaps like a lack of any effective grievance redressal mechanism in place were also common.
2. Financial Challenges
  60% of self-help groups (SHGs) under the CLFs were unable to open a bank account and only 44% had received loans from commercial banks. Accounting practices were not followed properly – essential books of accounts and records were not suitably maintained while community investment funds and start-up funds meant for operationalising CLF offices remained untapped
3. Operational Challenges
  There was an acute shortage of field staff that hampered effective delivery under the programme. Moreover, CLF office bearers were not suitably trained or equipped to perform their roles and manage the requirements of members of SHGs.
The Intervention
We identified three priority areas to create deep irreversible improvements that will make these institutions more effective as well as inherently sustainable in their operations:
1. Institutional Strengthening
  - Staffed CLFs adequately with qualified professionals, members from the community cadres, and technical paraprofessionals.
  - Trained CLF members and office bearers on fund management, governance, roles and responsibilities, preparation of annual action plans, micro credit plans etc.
  - Established ‘procurement committees’ who helped utilize the start-up funds for setting up CLF offices.
2. Bank Credit Linkages
  - Trained dedicated ‘Bank Sakhis’ to facilitate commercial loan applications.
  - Created a cadre of ‘Business Correspondents’ to facilitate doorstep transactions for 160,000 households.
  - Established credit risk and banking management committees to oversee bank loan defaults.
3. Livelihood interventions and unlocking MGNREGA Funds
  - Established cluster-based livelihoods models including custom hiring centres for farm machinery, custard apple value chain, development of farmer producer companies and promotion of micro entrepreneurs.
  - Ensured timely release of MGNREGA funds as per job cards allotted.
Progress
In 2018, after only two years of implementation, we successfully met the objectives of the partnership and exited Rajasthan. This model, which was piloted in 10 districts, was then replicated by RGAVP state-wide in 33 districts. Further, as these CLFs were able to sustainably use their resources, the World Bank decided to withdraw its funding support of 50% as these community institutions were generating sufficient revenues to cover their operational costs.

Institutional Strengthening and Capacity Building
- 100% targets met for setting up new SHGs.
- 3% of defunct/non-operational SHGs revived.
- 400+ CLF staff members and 2000+ community cadres recruited.
- 5000+ training sessions conducted for over 15,000 SHG members.
Financial Sustainability
- 40 crore of project funds unlocked.
- 25 crore of credit provided through bank linkages.
- 6 crore of funds disbursed through rotation.
- 95% of loans disbursed to village level organizations repaid (up from 75%).
- Greater amount of MGNREGA funds were disbursed in the 42 intervention clusters.