Swarnajayanti Gram Swarojgar Yojana

Swarnajayanti Gram Swarojgar Yojana (SGSY) is a poverty eradication plan started from April1, 1999. It merged six other schemes, viz. IRDP, TRYSEM, SITRA, DWCRA, GKY and MWS. It is a programme of micro enterprises covering all aspects of self employment through the formation of self-help groups (SHGs). Initially, individual beneficiaries were given assistance but progressively majority of the funds have been for SHGs because group activities have a better chance of success.

Self- employment is a significant step to have sustained incomes and remove the shackles of poverty. Earlier programmes like IRDP were good but were not adequate to meet all the requirements. The government introduced this self-employment programme ‘Swarnajayanti Gram Swarozgar Yojana’ (SGSY) with an objective to bring the assisted poor families above the poverty line in 3 years by providing them income-generating assets through a mix of bank credit and government subsidy. It ensures the family a monthly net income of atleast Rs.2000. It intended to benefit the SCs, STs, disabled and women-headed households. But these sections will be excluded from the programme if they are not listed in the below poverty line (BPL) census. Under this programme, a group is given Rs 10000 per member and a maximum of Rs 1.25 lakh per group.

Under the SGSY, assistance is given to the poor families living below the poverty line (BPL) in rural areas for taking up self employment. The persons taking up self-employment are called swarozgaris. They may take up the activity either individually or in Groups, called the Self-Help Groups (SHGs). For successful self-employment, it is necessary to take up the right activity. For this purpose, 4 to 5 activities are selected in each Block with the help of officials, non-officials and the bankers. These are called ‘Key Activities’, and should be such that they give the swarozgaris an income of Rs. 2000 per month, net of bank loan repayment.

Subsidy under the SGSY will be uniform at 30% of the project cost, subject to a maximum of Rs. 7500/-. In respect of SC/STs and disabled persons however, these will be 50% and Rs. 10,000/- respectively. For group of swarozgaris (SHGs), the subsidy would be 50% of the project cost subject to per capital subsidy of Rs. 10,000/- or monetary limit on subsidy for irrigation projects.

Quite often, in villages, people have skills. If any BPL person feels that he/she can gainfully take up any activity he/she should approach the Sarpanch or the BDO or the Branch Manager of the nearest Bank. Effective self-employment not only means choosing the right activity but also carrying out the activity in the right manner. Self-Employment involves procurement of raw material, production, marketing of goods and dealing with finance. A single swarozgari may not be able to do all this by himself/herself. It is therefore advisable for the swarozgaris to form Groups – the Self-Help Groups. SGSY actively promotes Self-Help Groups.

The SHGs have been the focus under the SGSY. The formation of SHGs contributes to the empowerment and economic wellbeing of the poor by improving their collective bargaining power. Savings by members and internal lending help the group members to improve their economic position. A strong group which possesses special skills, technical knowledge, marketing linkage etc can reach the stage of micro enterprise.

SHGs become cohesive in the long run only if they are homogeneous. Social mobilization is an important step in the formation of SHGs. It requires a high degree of motivation, time and management skills for group formation. SGSY is implemented through the District Rural Development Agency (DRDAs). These DRDAs will have to be supported by NGOs, PRIs and other community-based organizations in the formation of SHGs. The SIDBI, NABARD, RMK and many zila parishads have helped in the formation of SHGs. Strong networks and linkages need to be established with such institutions under SGSY. NGOs have an advantage in reaching the poor because of their nearness, trust, commitment, flexibility in approach, responsiveness and cost-effectiveness. They have played a dynamic role in the formation of SHGs and have taken care of them over the years. Till December 2007, 29 lakh SHGs were formed in India. Of these 20% have taken up economic activities under the SGSY scheme.

But voluntary and non-governmental action is weak in some of the poorer states. Departments of Social Sciences, Agricultural and Rural Development in Universities and Colleges could be engaged as facilitators in the process of group formation.

The identification of main activities and planning are important components of SGSY. But it has been a weak link so far. It is necessary to identify the livelihood opportunities and the micro level planning process needs to be strengthened for the programme to succeed. After identification of the key activities, it is necessary to organize training programmes for the beneficiaries under the SGSY schemes. This not only requires short-term training but also on-the-job training (OJT).

The SGSY programme should be credit-driven. The demands for credit of the vast majority of poor remain outside the formal credit system. So, a system would have to be put in place which is flexible and responsive to the financial needs of the poor and is capable of timely and adequate supply of credit. The inadequacies of formal credit institutions can be overcome by combining the strength of commercial banks with the NGOs to effectively link the poor with the commercial banking channels. In the credit delivery system under SGSY financial intermediation should be encouraged. Since commercial banks cannot reach the rural poor in every part of the country, other formal institutions like Primary Agricultural Credit Cooperative Societies (PACs), Regional Rural Banks (RRBs) that cater to the specific credit of the rural population, can be integrated into the credit delivery structure under SGSY programme. The Government should try to give funds under this programme to the rural poor to diversify into non-agricultural activities. Governmental agencies like Khadi and Village Industries Commission (KVIC) and District Industries Centre (DIC) were set up to provide non-farm activities. Inspite of these, only 16% of rural population is engaged in non-farn activities. SGSY groups from a group of villages can form a federation. Such federation producing a single product can ensure better marketing, lower production cost, quality improvement and sell their products through KVIC outlets, state emporiums, handlooms and handicraft trade fare etc. Marketing strategy is an important part of every self employment programme. Construction of permanent spaces along with provision for storage godowns can be taken up under SGSY.

Self employment programmes are likely to have an uneven regional spread. The negative relationship between the incidence of rural poverty and access to land is established. The landless people face the greatest risk of poverty. Access to even small plots of land can significantly reduce poverty and food insecurity. The SGSY programme can continue to promote land based activities in the rural areas. Diversification into other land-based activities like sericulture, horticulture, floriculture, aquaculture would be encouraged. Women Swarojgaries can be the sole owners of redistributed land. Schemes that give subsidies and credit for land buying can be converged with the SGSY programme. The Integrated Rural Development Programme (IRDP) approach for fixing targets and time frames were given up under the 9th Plan itself. In the 9th Plan, both IRDP and SGSY were subsidy driven programmes. But this subsidy became a major obstacle in the promotion of self-employment project. The poor are capable and willing to pay for the credit and other financial services of NGOs and financial institutions without depending on government subsidy. So, financial resources can be directed for providing infrastructure and other support facility in the 10th plan.

The challenge before the government is to provide employment opportunity which provides increased incomes. Therefore, enlargement of programmes like SGSY and their effective implementation have become very necessary in such a scenario.