A Case Study of Kalahandi Bolangir, and Koraput (KBK) Districts of Odisha
Women Entrepreneurship and Government of Odisha
Experiences across the world show that microfinance, credit and market linkages are important to create gainful economic activities for women and for women empowerment. Group based credit access and economic activities began to emerge as a successful alternative to large-scale intervention programs. In 2001, thus Mission Shakti, a Government of Odisha’s development programme was initiated with the aim of strengthening WSHGs at Panchayat, block and district levels through the capacity building.
Mission Shakti for Women Empowerment
Indian culture, as well as tradition, respects women as ‘Shakti’, the source of power. She serves to be the form of mother, sister, wife and daughter. Days have passed and now they are free of every burden and have proved themselves quite capable. After the successful political role of women in Panchayati Raj system, for which Late Biju Patnaik, ex-Chief minister of Odisha, deserves all the credit, now they have proved their excellence in the economic sector also, being a part of family’s income source through Mission Shakti. Groups constituted under Mission Shakti are basically non-formal organizations.
In order to get rid of financial crunch, this idea was conceived in the minds of the poor people. They assembled and initiated such effort. Banking organizations, co-operative banks, private banking sectors, NGOs and both the Union and State Governments extended a helping hand.
Where banking organizations were reluctant to sanction individual loans apprehending the uncertainty in repayment, there they cheerfully grant group loans and also double the loan amount. Group loans generally grow with small business—agriculture and consumer loan including repayment of the previous loan from the private money lenders (Sahukar) and for medical treatment etc. Most of the people, who were below poverty line (BPL), have now been excluded from under the Mission.
The units run by SHGs are in cattle rearing, goat farming, poultry, beekeeping, horticulture, tissue culture, floriculture, pisciculture, vegetable and mushroom cultivation, sewing, handicrafts, making of soft toys, cottage industries’ products, handicrafts, pickle and spice production etc. SHGs are also carrying out labour-intensive programmes.
Selling of controlled kerosene and LPG has been handed over to these SHGs. The State Government has directed the Health and Urban Development Department for purchasing phenyl and pesticides prepared by the SHGs. During natural calamity, SHGs are being engaged in relief and restoration work.
Panchayati Raj and Horticulture Departments are also one step ahead in providing special loan assistance to some selected SHGs. A Programme named ‘Trupti’ is being implemented including the SHGs. Under this, about 500 industrial entrepreneurs in each block have been conceptualized. They are being paid with an amount of INR 1 lakh each out of which 50 percent is grants-in-aid and rest 50 percent has to be collected by these SHGs. Women once engaged only in household work are now generating income for their family. With the help of the SHGs, women entrepreneurs in the village are discussing themselves regarding the day-to-day development in social, political, economical, cultural and spiritual fields.
They also discuss their personal and family problems and find a way for a solution to their impediments through SHGs. In adivasi populated areas, the SHGs are fighting against illiteracy, poverty, superstitions and sale and distillation of spurious country liquor. They also create public awareness regarding the eventuality of drinking wine or using other excise goods. The moral power of women representatives in Panchayati Raj system becomes strong and decisive owing to these SHGs. Programmes and preparations undertaken by the Government for proper health service towards women and children are successfully being implemented. Hence, infant mortality rate has been reduced and “care of the pregnant one helps in bringing out a healthy child” is well taught in the SHG active areas.
Mission Shakti has been a flagship programme of Government of Odisha for women empowerment. It has been riding through women self-help groups towards its mission goal. Achieving women empowerment in a state like Odisha suffering from regular calamities is a great challenge before the Government of India and Odisha. There has been a multi-pronged approach to make women prominently visible in the development scene of Odisha. However, it is again another gigantic task before government, corporates, academics and NGOs. While, in the area of self-government i.e. in Gram Panchayats, women have a good presence, yet there are challenges due to low participation of women in influencing Panchayat in favour of women development. About 70 percent of them are used as dummies in the hands of influential men or politicians. In addition to this, there are other discrepancies and problems related to women development and women empowerment.
Promoting WSHGs in the state has helped in bringing financial freedom and social visibility of women. It was also having the aim to exercise and showcase women strength against social evils. Later, this brought significant financial power for women, their organization-building through SHG gateway and visibility in social and livelihood development WSHGs, created as an exclusive supplementary credit delivery mechanism, were not sustainable and had limited success. So “Mission Shakti” has been a campaign for holistic women empowerment.
It was launched on 8.3.2001 with a target to organize 2 lakh women self-help groups (WSHGs) covering all revenue villages of the State. Since the formation, WSHGs has crossed 2 lakh by 2008. Women at large have displayed great strength in the success of the Mission due to their positive contribution to the group dynamics and their natural inclination for savings. Since its inception, Mission Shakti has been working holistically to encompass different aspects of women empowerment through SHG movements.
These include expansion of credit linkage to as many SHGs as possible so that SHGs have a paid-up capital to start their economic activities. This also requires capacity building of SHGs in accounting, livelihood activities, and skill up-gradation in employment generation activities. Products made by WSHGs require standardization, quality control and good marketing.
Micro Enterprise Promotion and Microfinance in Odisha
Micro enterprise and microfinance development have emerged as major strategies to combat the twin issues of poverty and unemployment. Governments at both the State and Centre and NGOs have adopted several approaches and strategies to combat them. However, while microfinance as a means to empower women has been progressing in the state quite successfully, utilisation of credit for adequate income and employment generation has become a cause of concern for most of the stakeholders.
Moreover, there is a growing concern that micro enterprise development programmes are not successful to the desired extent because of the lack of adequate and timely availability of credit. The missing link is that micro enterprise and microfinance, more often than not, have been dealt with, in isolation without any synergy between the two.
Though there are major players like NABARD, SIDBI, CARE, RGVN, RMK and NBCFDC in promoting SHGs, still these interventions do not have a specific and strategic component to support exclusively in the areas of business growth and micro enterprise promotion. Micro enterprise promotion apparently appears to be the next step in providing micro credit. However, there are several other critical forms of support required in successful micro enterprise development programs, especially if we intend to respond to the needs of the poorest members of society. These include such things as the provision of infrastructure, support in marketing, technical advice and management training. The policy environment in which micro enterprises operate at local, national, and international is also a critical factor.
An MFI/NGO intending to promote micro enterprise may not be in a position to provide all these ingredients because it involves huge costs, capacity and most importantly, time. Therefore, it is pertinent that the MFI/NGO should go for collaboration with other agencies for providing forward and backward linkages for micro enterprise promotion.
NGO Efforts for Women Empowerment
In the last one decade, many initiatives have been taken by NGOs in promoting livelihoods through SHGs in the non-farm sector. Organisations like Samanwita, Pallishree, Rescue, Pradata, Charms in Kondhamal district are engaged in production and marketing of “turmeric powder, chilly powder and powered spices” through self-help groups but are not able meet the demand of the market in terms of volume of production though the quality of the product is as good as that of any branded companies. Similarly, a number of agencies like Manab Vikash is producing leaf plates and marketing them outside the state but is not able to maintain the quality as the market demands.
Darbar Sahitya Sansad, Samagra Bikash Parishad in Baliapal are producing a lot of material including furniture with golden grass, but are not able to produce in large volume and hence are facing difficulties in marketing their products.
ORUPA which has been working for a decade to help the rural and urban producers has failed substantially Similarly a number of organisations like Creed in Kanas, Freedom and several organisations have been promoting applique work through self-help groups.
However, the groups are not paid for four to six months or till the products are sold in the market. This demotivates the producers. Hence, they become defaulters and the remuneration paid to them does not meet their livelihood requirements. In the majority of the groups, the women self-help group members do rice processing, rice selling and ‘badi and papad’ making. Since rice processing and rice selling have become profitable micro enterprises, preparation and selling of ‘badi and papad’ has become a loss proposition as they cannot prepare it in large volume and lack adequate infrastructure to store it.
With regard to skill upgradation, RUDSET Institute, based at Bhubaneswar, has been conducting entrepreneurship development programmes (EDPs) for agriculture and allied activities such as diary, sheep and goat rearing, poultry, bee keeping, horticulture, sericulture, piggery, mushroom cultivation and other products. EDPs are also being conducted for dress designs for men and women, agarbati manufacturing, woollen knitting, bag making, cane chair making, bakery products, applique patchwork, fruit preservation, dairy products, fancy items etc. These programmes also include orientation for two-wheeler repair, pump set repair, radio and television repair, motor winding, beauty parlour management, photography, videography, screen printing, photo lamination, watch repairs, domestic electrical appliances repair, bookbinding, telephone and mobile repairing etc.
A few state level agencies such as Udyog Vikash under the aegis of DEIS, Pune and Bhoomika have been helping the micro entrepreneurs in different ways such as preparation of BDS and helping them in getting both financial as well as noon-financial resources. Presently, Bhoomika under the aegis of DEIS being supported by CORDAID has developed audio-visual aids on business opportunity identification and production process based on 92 non-farm and 12 on-farm trades, pictorial training module for tribal and non-Odia speaking people and developed a number of study materials based on micro enterprise promotion for bankers, NGO field functionaries, development practitioners, SHPIs and SHG leaders.
Further, initiatives have also been taken in mass media (Doordarshan) to telecast exclusively on different products and services available for possible income generating activities.
Mahila Vikash Samaaya Nigam, a state level nodal agency for the women empowerment undertakes economic programmes, social sensitization and allied infrastructural activities. It undertakes various training programme for women capacity building. Further, “Swayamsiddha” a women empowerment programme of Government of India is being implemented in 36 blocks the KBK districts and in the district of Boudh.’
The programme aims at holistic women empowerment through formation of WSHGs and the accompanying capacity building of the members. MVSN apart from imparting skill upgradation training has also recently started focussing on design and development of handicraft products.
Project “Shakti Gaon” has been introduced in the State for engaging SHGs as retailers of LPG cylinders for rural households. The process of implementing the scheme has already been launched in Ganjam and Sundargarh districts. In this regard, necessary tie-ups have been made with ORMAS and Oil Agencies namely, HPCL and IOL.
ORMAS is an agency that addresses the needs of micro enterprise promotion in the state, especially through support to identified sub-sectors. ORMAS is currently engaged in streamlining backward linkages in the form of strengthening production stream and also linking up with markets through buyer-seller meals, craft exhibitions and such promotional activities. In some identified products, ORMAS has the capacity to provide specific technical assistance in the form of quality certification and assessment.
Alternative Microfinance Institutions in Odisha
During the last decade, NGOs have dominated the retail service landscape with the most widely practiced service model being the SHGs. In Odisha, way back in 1992-93, RGVN was the first agency to have provided loan funds to hundreds of NGOs for further onward lending to SHGs. Post-1995, revolving grant for SHGs became an inbuilt component within large integrated projects of NGOs supported by donors. While many NGOs promote SHGs and remain as SHPIs, there are a growing number of agencies who have entered into retail microfinance, providing service to individuals and groups. Registered under different legal forms suitable to run credit operations, these new generation service providers identified the need to address outreach as well as sustainability aspect of microfinance operations.
Microfinance institutions such as Swayanshree Micro credit Society (registered under Section 25 of Companies Act), promoted by CYSD; Gram Utthan and BISWA (registered under 1860 Societies Act) promoted under CARE CASHE Programme provide microfinance services to both groups and individuals. Looking at the scope of microfinance market, recently few MFIs operating in other states such as Asmitha Microfm Ltd., BASEX, KAS Foundation etc., have entered into Odisha recently. Among all the MFIs operating in Odisha, Asmitha Microfm Ltd. has got the largest clientele base as well as the largest loan portfolio. It is an NBFC registered with the RBI under Section 45/1A in June 2002 and launched its operation in the state in September 2002. It has been rated with “a” by MCRIL and has set a steady repayment rate of 100 percent.
Similarly, BASIX is a new generation livelihood promotion institution working in Odisha since the last four to five years to promote a large number of sustainable livelihoods for the rural poor and women, through the provision of financial services and technical assistance in an integrated manner. The corporate structure of BASIX comprises a range of companies to address a diverse set of tasks. The company maintained a high portfolio quality with an on-time repayment rate of 97.3 percent. FWWB (Friends of Women World Banking) has come forward to direct the NGO-MFIs in the state which have multifarious development activities, towards delivering financial services in a cost effective way. FARR in Kalahandi and BISWA in Sambalpur have been assisted by FWWB. RGVN also currently supports small and medium-size NGOs with loan funds as well as capacity-building grants.
RoIe of SIDBI/SFMC for Microfinance
SIDBI through SFMC (SIDBI Foundation for Micro Credit) has emerged as a leading wholesaler, which is promoting sustainable MFIs for addressing the gap remaining in the rural credit system. To create a national network of strong, viable and sustainable microfinance institutions from the informal and formal financial sector to provide microfinance services to the poor women, SFMC was launched as a separate branch of SIDBI in November 1998. Since then, it is endeavoring to provide an institutional answer to the huge unmet demand for microfinance and to emerge as a viable apex wholesaler. More specifically, it is trying to develop a new financial system for microfinance in the country.
As far as SIDBI’s strategies are concerned, SFMC provides institution building support to MFIs by making them strong, formal, sustainable and responsive; helps in shifting towards commercial source of finance, encourages investment in microfinance by formal financial sector leading to mainstreaming of microfinance; capacity building through reputed technical and management institutes; development of network of service providers viz. rating agencies, TSPs (technical support providers), etc. and facilitating the creation of a favorable policy and regulatory framework.
With regard to products and services, it provides loans to large and medium scale MFIs for on-lending; capacity building grant support to MFIs for financing expansion costs and technical assistance, liquidity management support, equity support/transformation loan to eligible MFIs and loans to FFIs (formal financial institutions) for on-lending to client MFIs, building human resource of MFIs through short and long duration training, placement of fresh professionals, institution building of MFI network, TSPs action research, studies surveys, impact assessment, etc.
Role of Public Sector and Private Sector Banks for Microfinance
It is to be noted that wholesaling to MFI is still very nascent in Odisha as the only handful of organizations have the capacity to expand outreach. On the other hand, public sector banks are responding slowly to the needs of NGO-MFIs and community-based federations of SHGs. This situation is due to a lack of assessment mechanism and lack of experience in wholesale funding among bankers. Some beginning in this direction has been made by SBI, which has appraised and approved bulk lending of INR 75 lakh to “Swayamshree Micro Credit Services”  and has agreed to support BISWA and Gram Utthan. The participation of private sector banks like ICICI Bank, ABN-Amro and HDFC Bank in bulk lending to MFIs is promising. They have come in a big way by looking at the scope of microfinance in the state.
In spite of massive bank linkage in Odisha, a large chunk of poor still depends upon the money lenders. A study conducted in Southern Odisha reveals that though commercial banks and RRBs are operating in the areas, the credit gap is still around 60 percent. The informal credit source is mostly commission agents, money lenders and marketers of the product. The average rate of interest in the informal credit sector is in the range of 48 percent-100 percent.
To free them from the clutches of the informal sources, a large number of NGOs have started graduating to NGO-MFIs in the area to which formal financial institutions do not have access. Further, the qualitative performance of the NGO-MFIs and their outreach has attracted the private sector banks and MFIs to operate in Odisha. To do a microfinance programs through client-owned, managed and controlled institutions, the Government of Odisha has taken initiatives in federation building and so far there are 2,939 clusters and federations operating in the state.