National Micro Finance Conference 2010 “FINANCIAL INCLUSION AND RESPONSIBLE MICRO FINANCE”

1. National Micro Finance Conference 2010 “FINANCIAL INCLUSION AND RESPONSIBLE MICRO FINANCE” Translating Financial Inclusion into Sustainable Livelihood 18 March 2010 Mythili Ravi IL&FS Cluster Development Initiative Ltd.

2. OR… Translating Sustainable Livelihood into Financial Inclusion ??

3. Key Questions for the Session • Does the transition to livelihoods demand institutions beyond microfinance? If so, how to coordinate? • Is there a way to integrate National Skill Development Mission and National Rural Livelihood Mission? • Is there a way such that SHGs, NREGA, NRLM and Financial Inclusion agenda work in tandem with each other? Answer to all – A resounding “YES”

4. Ecosystem Institutions Macro – Economic Framework Education/Vocational System Policies Livelihood is a function of ( Skill , Opportunity & Assets ) Political Framework & Government Financial System Formal/Informal Social System, Values , Beliefs etc Technology Distribution Patterns Income /Assets

5. Financial Inclusion & Sustainable Livelihood Two-way relationship which is mutually reinforcing, but more fundamental are….. • Need for prioritisation of financial products • Access to social security (PF, pensions, etc) • Risk mitigation products (Insurance – life and non-life) • Savings • credit • Income earning opportunities • Education (basic) • Employability • Empowerment

6. Evaluation of SGSY – salient aspects • 23% of total SHGs formed graduated to Micro enterprises • 22% of SHG were able to access bank credit • Success Factors • Systematic mobilisation into SHG (eg. AP, TN) • Capacity building • Skill Development • Need for …. • systematic capacity in skill building and • sustained technical, marketing and placement support

7. Lack of Capacity building due to…….. • Inadequate institutional infrastructure • lack of trainers • limited capacity of existing institution • inaccessibility of training facilities to rural poor due to entry level barriers, high costs and distant locations • lack of umbrella organization for implementation

8. The Context

9. Macroeconomic Context Services and Manufacturing sector to expand – increasing share of the economy Agriculture to grow at negative rate • India on Growth Path • Even in downturn the growth projected at 7% HOWEVER, POVERTY STILL PREVAILS – As per World Bank statistics, India’s poor are at 400 million

10. Constraints in Agriculture sector for livelihoods • 54% of population dependent on agriculture, but…. • Contribution of agriculture to economy reduced from 32% in 1990-91 to 18.5% in 2004-05

11. By 2026, majority of Indian population will be in younger age bracket, but at present only 2% of them are vocationally trained • However, they cannot be classified as Employable because: • School Drop out ratio is very high • Only 2% of the labour force aged 15-35 have received any vocational training • 67% of the labour force are either illiterate or primary school level educated • 69% of unemployed are educated but without professional training or skills • 36 % of the population in 2011 would be people in age group of 15-34 years • These represent YOUTH entering workforce

12. Opportunities in the Environment • Textile, Garment & Apparel 26.2 million • Leather & Leather Products 4.6 million • Construction 47.3 million • Logistics 4.0 million • Auto & Auto Components 11.7 million • Organised Retail 17.3 million • Banking, FS, & Insurance 4.2 million • Tourism & Hospitality 4.5 million • General Engineering 3 – 5 million (by 2012) Source: General Engineering and Logistics: IL&FS Analysis, NSDC Report

13. Rationale for Industry • Globalisation leading to • Greater opportunities in world trade – better technology, larger markets • Competition – more players & relocation of global brands to low-cost production destinations • Competitiveness – vital for survival • through productivity improvement (capital and labor) • Actualise Growth Potential • Inclusive Growth Agenda

14. Findings of NMCC With Liberalization, Indian industry deployed more capital, but …. during 1990-2004, there has been continuous reduction in capital productivity across all major sectors This implied substitution of capital for labor without technological upgradation Because of scarcity of skilled workforce to work on new installed capital 2008, A study on Labour Intensity & Employment potential of Indian Manufacturing, ICRIER

15. Vicious cycle of Low-Skill Economy

16. Policy Context NRLM Mission • reduce poverty among rural BPL through • promotion of diversified and gainful self-employment and • wage employment • opportunities to provide appreciable increase in income on sustainable basis. • Output • 160 lac SHGs to enter Micro enterprise level • 75 lac rural BPL youth to be provided placement support (20% of total NRLM funds allocation)

17. Market-relevant skill development converges industry need with poverty eradication goal • Courses designed to meet the specific needs of the industry, across sectors • Employment linkages with organized sector • Short-duration courses to improve accessibility to trainees • No artificial educational requirement barriers • Formal certification • Employment in organised sector forms the basis for financial inclusion and access to social security 17

18. IL&FS Response & Experience as a Practitioner

19. IL&FS Framework for Livelihoods • Income earning opportunities • Education (basic) • Employability • Empowerment • Program for • Education • Skill Development • Livelihoods promotion (through integrated package of inputs)

20. Basic principles • Sustainability through emphasis on commercial viability • Market-driven basis • Convergence of schemes for enhanced outcomes • Multi-stakeholder partnership • to converge towards common goal • Leverage upon individual strengths Into self-sustaining synergies

21. We work with • School drop-outs (Persons with basic primary education only) • Academically less oriented • Socially and economically underprivileged (BPL youth, Poor women, SC/ST/OBC) • Persons facing entry barriers in formal education / vocational education space • Traditional artisans (even without formal literacy)

22. Some of IL&FS Projects • MORD Supported SGSY- Special Projects for training and placement of Rural BPL youth (1,12,600) • State- supported projects (Eg. Haryana, Manipur, Rajasthan) • Corporate Mandates (Vedanta, Brandix, Trichy ancillaries) • Livelihood Projects (Tripura, Bihar, Rajasthan, UP)

23. Strategic Framework

24. Components of Approach How……….. • Establish Multi-Stakeholder Partnerships • Linkage with business development services and network with market players • Integrate with employment generation /livelihood strategies of GoI • Creating and operationalising platforms for linkages (informal-formal, industry, civil society, local government) • Blend with the Institutional structure – Dovetail with schemes / policies (DIPP, MORD, MoLE) • Create institutional Capacities (Trained Trainers) • Scalability • Quality (Design, content, delivery, standards) • Accountability & Transparency

25. Components of Approach How……….. • Establish Multi-Stakeholder Partnerships • Linkage with business development services and network with market players • Integrate with employment generation /livelihood strategies of GoI • Creating and operationalising platforms for linkages (informal-formal, industry, civil society, local government) • Blend with the Institutional structure – Dovetail with schemes / policies (DIPP, MORD, MoLE) • Create institutional Capacities (Trained Trainers) • Scalability • Quality (Design, content, delivery, standards) • Accountability & Transparency

26. Components of Approach- Tools & Methods • Adoption of Technology • Multimedia • Revolutionize teaching / skill development process • Prepare students for life through soft skills and life skills

27. Multi-stakeholder partnership to pool in core strengths and ensure “buy-in” NGO, Community Industry /Employer Training Holistic (Technical & Soft, Life skills) Technical Partners & Certifying Agency Government (SGSY, MES, NACO, state govt. resources,) IMPLEMENT MANAGEMENT AND SUPPORT AGENCY

28. 3-Year pilot project to train 30,000 BPL Youth completed 1 year ahead of schedule in August, 2009 with 93% placement rate. Industry & Placement partners over 487. 85% women placed Over 80% - SC/ST/ OBC Trained more than 195 trainers Enhanced use of underutilised or unutilised infrastructure with government, institutions, etc. Established 101 training centers in 14 states. Training module available for 8 trades in 9 languages. Skill Development Programs -Key Highlights 28

29. Impact on Trainee 29

30. Impact on Industry BEFORETRAINING AFTERTRAINING 30

31. Independent evaluation study of Pilot project • Dropouts-between 5% to 8% • Gender composition-Predominately women, only 7% male. • Age group-18-25 Years • Caste composition-More than 50% beneficiaries were from BC and Most BC caste. • Educational qualification: 52% to 60% had completed higher secondary school. • Occupational structure of families:33% from Agricultural and 66% non agricultural-Shift due to SEAM Programme. • Distribution income of household: Respondents contribution more than 50% of household income. 31 Study conducted by MIDS States covered-Tamil Nadu, Andhra Pradesh & Karnataka. Total 1,087 respondents surveyed.

32. Livelihood Programs – Artisan Clusters Narsapur Lace Mega Cluster Tripura Rubber Park

33. Tripura Bamboo Mission – a case study in Livelihoods promotion Government of Tripura initiative for Integrated Development of Bamboo Sector Objective: Scale up the turnover from Rs 28 cr to Rs 76 cr in 4 years and Double livelihoods Address entire value chain - “Farm to Market” Provide infrastructure, skill training, design support, market linkages, O&M support Resource mobilization of Rs 48 crores

34. Progress Achieved 2007-2009 • Turnover Increase: from Rs 27 cr to Rs 56 crores in two years • Livelihoods Generated: 4000 incremental across four districts • Capacity Building: Over 5000 artisans trained • Institution Development: State Level SPV and 14 village level producer collectives. • New Product Development: Incense rolling, industrial Mat weaving and range of home utility products • Private Investment: Rs 5 crs across three machine stick making units • Resource Mobilization: Rs 38 crores mobilized . • Market Linkage: linkages with leading retailers (Fabindia, Shoppers Stop, Mother Earth) and industry partners

35. Community Production Infrastructure • 15 community based production centers established at the village level with: • Introduction of upgraded production infrastructure • State of art machines, tools and equipment • Treatment and processing facilities • Access to quality Raw Material and Accessories • Finishing and packaging facilities

36. TECHNOLOGY INTRODUCTION • Bamboo treatment • Basic Dyeing • Natural Dye • Power tools • Juki machine • Pneumatic tools • Finishing

37. DESIGN DEVELOPMENT -PARTNERS • NID-Ahmedabad • AIACA-New Delhi • Industree Crafts Foundation • Eric Benque- Paris • Sandeep Sangaru-Bangalore • Sangeeta Sen – Ex Fabindia • Siddhartha Das – NID • Hrishikesh - NIFT • Nandini - NIFT • Tulip Sinha

38. Skill Development • Training of over 5000 artisans across four districts. • Induction of reputed designers and bamboo technical experts • Focus on treatment of bamboo & new techniques • Development of utility based designs & new contemporary products. • Production management to achieve economies of scale.

39. Market Linkages • Linkages with leading retailers Shoppers Stop, Fabindia, Mother Earth • Marketing tie up exporters, institutions, corporates and distributors • Appointment of Marketing agents in major cities. • Exhibitions and Trade Fairs • E-Portal for promotion and market development (www.tripurabamboo.com)

40. New Product Development Utility items for Hotel & Restaurants

41. Lamps and Lampshade

42. Candle and Lighting Stands

43. Bamboo Basketry

44. Product Development: Home Utility

45. Product Development: Hand Bags

46. Product Development: Lighting

47. Product Development: Table Ware

48. Product Development: Furniture

49. Product Development: Yoga Kit, Mats & Cushions

50. StoryBoard.ppt