CHAPTER-5 CONSUMER BEHAVIOR IN RURAL...
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CHAPTER-5
CONSUMER BEHAVIOR IN RURAL MARKET
INTRODUCTION
CULTURAL FACTORS
GEOGRAPHIC INFLUENCE
ECONOMY, EMPLOYMENT AND LIVELIHOODS
PROMOTION OF SHGs GROUPS
CONCLUSION
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CHAPTER-5
CONSUMER BEHAVIOR IN RURAL MARKET
South Rajasthan is consisting of the 5 most tribal districts of the state and
being inhibited dominantly by the local tribal families, who have been
deprived of their access to main stream of development and their means of
living is mainly dependent on rain fed agriculture, labor, migration, small
dependence on forest and also on few locality based small enterprises. The
experience of agricultural input industry can act as a guideline for the
marketing efforts of consumer durable and non-durable companies. The low
rate finance availability has also increased the affordability of purchasing the
costly products by the rural people. Marketer should understand the price
sensitivity of a consumer in a rural area. The urban metro products and
marketing products can be implemented in rural markets with some or no
change. The rural marketing required the separate skills and techniques from
its urban counterpart. The Marketers have following facilities to make them
believe in accepting the truth that rural markets are different in so many
terms.
(i) The rural market has the opportunity for.
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(ii) Low priced products can be more successful in rural markets because
the low purchasing, purchasing powers in rural markets.
(iii) Rural consumers have mostly homogeneous group with similar needs,
economic conditions and problems.
(iv) The rural markets can be worked with the different media
environment as opposed to press, film, radio and other urban centric media
exposure.
A free market economy provides freedom to the consumers to buy and
consumer goods of their choice. The buying preferences of consumers send
signals to producers to produce various commodities in required quantities.
Producers, therefore, produces only those commodities which are desired by
the consumers. The buying behavior of the rural consumers is influenced by
several factors, such as socio-economic conditions, cultural environment,
literacy level, occupation, geographical location, efforts on the part of
sellers, exposure to the media, etc.
1. Cultural factors influencing consumer behavior
Cultural factors exert the broadest and deepest influence on consumer
behavior. The marketer needs to understand the role played by the buyer‘s
culture. Culture is the most basic element that shapes a person‘s wants and
behavior. In India, there are so many different cultures, which only goes on
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to make the marketer‘s job tougher. Some of the few cultural factors that
influence buyer behavior is: Product (color, size, design, and shape): There
are many examples that support this point. Urban India looks at technology
with the viewpoint of ‗the smaller the better‘. However, in rural India, the
viewpoint is totally opposite. That is the main reason for the large
acceptance of big audio systems. There are so many different cultures, and
each culture exhibits different social practices. For example, in a few
villages they have common bath areas. Villagers used to buy one Lifebuoy
cake and cut it into smaller bars. This helped lifebuoy to introduce smaller
75-gram soap bars, which could be used individually. The male in Indian
culture has always been given the designation of key decision maker. For
example, the Mukhiya‘s opinion (Head of the village), in most cases, is
shared with the rest of the village. Even in a house the male head is the final
decision maker. This trend is very prominent in rural areas. Low per capita
disposable incomes that is half the urban disposable income; large number of
daily wage earners, acute dependence on the vagaries of the monsoon;
seasonal consumption linked to harvests and festivals and special occasions;
poor roads; power problems; and inaccessibility to conventional advertising
media. However, the rural consumer is not unlike his urban counterpart in
many ways.
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2. Geographic Influences:
The district is predominantly inhabited by tribal‘s mainly Bhils, Bhil
Meenas, Damor, etc. The main occupation of the people, especially of
tribal‘s, is agriculture. The tribal‘s live in small one-room houses, known as
"tapra", which lie scattered all over the area. The other major castes are
Patels, Rajputs, Brahmans, Mahajans, and Muslims. Literacy percentage is
67.06 (2011) but women literacy, though doubled as per 2011 census, is only
52.66%. Rajasthan is home to many tribes who have very interesting history
of origin, customs and social practices. At that time the Bhil and Mina tribes
roamed and ruled the land. They were respected by the Sakas, Kusanas,
Abhiras, Hunas and others. Today, they may be considered a backward
people but that does not, in anyway, call for any pejorative interpretations of
their primitivism.
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3. Education
School Education
Schools Total No. 2010-11 124048
Pre-primary ‖ ‖ 49853
Upper primary
‖ ‖ 51955
Secondary & Sr. Sec. ‖ ‖ 22240
Enrolment total ” ”
(Boys)
‖ ‖ 85.93
(Girls)
‖ ‖ 66.57
Pre Primary
(Boys)
‖ ‖ 4625562
(Girls)
‖ ‖ 4024141
Upper Primary
(Boys)
‖ ‖ 2033845
(Girls)
‖ ‖ 1513386
Secondary & Sr.sec.
(Boys)
In lakh Sep 2010 19.35
(Girls)
‖ ‖ 11.20
Literacy rate
(Population aged 7 yrs &
above)
% 2011 67.06
4. Economy, employment and livelihoods
The State economy has demonstrated reasonable progress in recent years.
The State Gross Domestic Product (SGDP), at 2004-05 constant prices, has
grown with a cumulative average real growth rate of 5% p.a. over last 4 yrs
and 9.69% during 2010-11.The per capita income at current prices is Rs.
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39,967. The share of tertiary sector has grown gradually over the years,
while share of primary sector has reduced gradually over the years.
Share of sectors in SGDP Till 2010-11 at constant (2004-05) prices
The increase in share of agriculture sector in 2010-11 from 19% to 21.6%
has been majorly due to 27% increase in agriculture contribution to total
SGDP during last year, owing to robust monsoon.
5. Primary Sector
5.1 Agriculture
The role of agriculture sector in the state economy is quite significant, not
only for its contribution of 21.6% to the total SGDP ( 2010-11) but also for
its contribution to employment, as it employs 62% of state's workforce.
Agriculture in Rajasthan is mostly dependent on rainfall that remains
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scantly, low and irregular. Primarily rain fed, the State has major part of the
irrigation area under tube wells and wells. Only about 30% of the cropped
area is irrigated. Since major part of the state is 'rain fed', the rain fed
integrated agriculture system holds the key for agriculture development.
Majority of small and marginal farmers do agriculture at subsistence level
(they grow food and fodder for household consumption). Even if they have
small surpluses, they sell it off locally to buy other needs of the household.
Though the average land holding of farmers in Rajasthan is relatively better
than the holdings of farmers in rest of the country, the inequality in land
holding is an important issue. Small and marginal farmers constitute about
50% of the total farmers with only about 11% of the total land area. The
large land owners account for 9.1% of the number of landholders and
account for about 43% of the land area. Per capita value of agricultural
output in Rajasthan indicates that Rajsamand, Dungarpur, Barmer, Sirohi
and Udaipur lie at the bottom of per capita agricultural output index.
Irrigation facilities are poor in these districts. On other hand, Kota and Baran
have highest per capita agricultural output.
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Per capita agricultural output in Raj. (in Rs. P.a.)(2003-05)
High Moderate Low Very Low Extremely low
District Value District Value District Value District Value District Value
Kota 4370 Ganga
Nagar
3857 Bundi 2732 Sawai
Madho
Pur
1904 Jodh
Pur
1120
Baran 3962 Hanuman
Gargh
2874 Bharat
Pur
2373 Dhol
Pur
1901 Jaial
Mer
1088
Jhalawar 2847 Chittor
Gargh
2168 Karauli 1753 Bhil
Wara
1025
Tonk 2125 Jaipur 1656 Churu 977
Alwar 2017 Jhunjhunu 1631 Bans
Wara
880
Dausa 1606 Pali 753
Bikaner 1476 Ajmer 743
Nagaur 1412 Udaipur 595
Sikar 1278 Sirohi 582
Jalor 1246 Barmer 522
Dungar
Pur
503
Rajsa
Mand
353
5.2 Horticulture
The major horticultural crops in the state are orange, kinnow, lime, aonla,
chillies, garlic, Coriander, cumin, fenugreek, isabgol, mehandi etc. The
major initiative for promotion of horticulture in the state is National
Horticulture Mission. Under National Horticulture mission, an amount of
Rs. 29.31 cr has been incurred during 2010-11 to increase the area,
production and productivity of different horticulture crops like fruits, spices,
flower and medicinal crops in 24 districts. With Rajasthan being primarily
rainfed, horticulture holds the key for development in Rajasthan as there is
large scope for horticulture activities, esp. vegetable production. It has
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potential to provide additional employment opportunities to the rural people
while diversifying the rural economy to agro processing and other ancillary
activities. However, presently, the farmers, who are the most important and
critical actors in the agro- horticulture esp. vegetable value chain, have no
control over the value chain. Ownership, price fixation, value addition and
marketing of vegetable produce remain key issues and the farmers have
hardly any role in determining these, thus, subjecting them entirely to the
mercy of external factors without any bargaining power. One of the major
challenges is also the asymmetry of knowledge and information. This calls
for dedicated efforts by government to address imperfections in vegetable
value chain at various levels-capacity building, business development, value
addition, marketing and viability gap funding - keeping the interests of the
poor farmers at the highest priority. There is scope for creating a complete
eco-system (wherein capacity building, viability gap funding, business
development services and extension services can be provided) by
government, which gives incentive to private sector to invest, thereby,
giving much needed boost to the sector's growth. The intervention should
envisage strengthening the vegetable value chain on end-to-end basis and
creating strategic public-private partnerships for the benefit of all
stakeholders. Building community institutions of vegetable producers and
creating social capital for organizing the procurement thereby augmenting
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the livelihoods of producers; increase the downstream bargaining power etc.,
Building public private community partnership models around each
vegetable by laying well defined standards for procurement, storage,
processing and marketing Breaking technology barriers by effectively
transferring to the producers context-specific technology,
innovation/promotion of drudgery reduction tools, value-addition technology
etc Removing information asymmetry by supplying/publishing real-time
market Information to all stakeholders Facilitating critical investments for
creating appropriate infrastructure facilities- storage, processing; logistics,
working capital management etc. Enabling policy for eliminating barriers in
movement of vegetables and other issues.
5.3 Animal Husbandry
Traditionally animal husbandry has been an important source of
supplementary income to farmers in Rajasthan. As agriculture is at the
mercy of monsoon (which is scarce and erratic), farmers do animal rearing
along with agriculture. The farmers, who have productive land and irrigation
facility, rear cattle, while the small and marginal farmers rear goat and
sheep. With introduction of irrigation systems through Indira Gandhi Nahar
Pariyojna (IGNP) in western Rajasthan and other irrigation projects in rest of
the state, farmers have started replacing local breeds of cows with cross bred
cows and buffalos. The state is the main producer of wool in the country (40
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%), though the quality of wool is poor and mainly used for making carpets
and blankets. About 30 lakh sheep are sold in the mutton market but the
return to sheep owners is very low due to a lack of an organized
marketplace. The dependence on livestock has decreased over the years due
to fodder scarcity and low productivity of livestock. Though the production
of milk accounts for 10 % of the total national production, the milk
productivity of cattle (cows and buffaloes) is lowest in the state due to poor
breeds and nutritional practices. There is huge potential for growth.
Moreover, milk collection many a times becomes unviable because of large
distances, with low density of milk producers (and therefore, low volume of
milk). Due to scattered habitations (especially in western parts and tribal
areas in southern districts) the milk collection carries risk of milk getting
spoilt. Milk collection entails opportunity costs like fuel cost, labor cost,
storage cost etc and large distances, with low volume, many a times, renders
milk collection unprofitable. In Rajasthan, focus also needs to be given to
Stall fed goat rearing, which can be an ideal Occupation for the small,
marginal, and landless agricultural laborers. Goats relish the stalks and
residues of most of the nutritious cereals, and they do well particularly when
mixed with green fodder such as grasses and tree pods.
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6. Secondary and Tertiary Sector
The secondary sector in Rajasthan contributes to 29.8% of SGDP, while the
tertiary sector has assumed greater importance in the state as it contributes to
over 48.6% of SGDP at current prices. Indices of Industrial Production The
secondary sector includes manufacturing activity, mining & quarrying,
electricity, gas & water supply and all other construction related activities.
The indices of industrial production (manufacturing index, mining index,
general index etc) indicate a drop in growth of secondary sector in Rajasthan
during last year. Manufacturing growth fell to 1% during the year compared
to 14% growth the previous year. This can be partially attributed to overall
economic slowdown. Mining growth also fell to 1% during the year
compared to 7% growth the previous year.
% growth in indices of Industrial Production in Raj. 2010
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6.1 Employment
Unemployment is a serious threat to the State's economy. During the period
of January to December, 2010 the number of unemployed persons registered
in various Employment Exchanges were 2,00,752, out of which 28,994 were
women, 32,389 were scheduled However, in spite of these initiatives,
investment friendly environment still seems a distant reality.
6.2 Small Scale Industry
Small scale industry forms the backbone of industrial activity and
employment generation in Rajasthan. In fact, the small scale industry
generates more employment than its large a medium counterparts. Over 70
per cent of Rajasthan's industrial output comes from foregions dominated by
small scale industries: Jaipur, Bhilwara, Udaipur and Ganganag account for
39%, 18%, 9% and 4% of the State's industrial output, respectively. The key
districts driving industrial growth are Ajmer, Alwar, Barmer, Bharatpur,
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Bhilwara, Bikaner,Bundi, Chittorgarh, Jaipur, Jodhpur, Kota and Udaipur.
The informal sector contribution significantly to employment in Rajasthan;
there are an estimated 18.4 lakh enterprises the informal sector in the State,
generating employment for 29 lakh workers. Also, over 70 of the enterprises
in the informal sector are currently involved in activities related
manufacturing, trade, and repair activities.
6.3 Mining and Quarrying
Mineral wealth is an important natural resource in Rajasthan. The State
enjoys a near monopoly in the country in some of the non-ferrous minerals
such as lead, zinc and copper State produces large quantity of building
stones, marble, granite, and Kota stone, which exported to other states.
Rajasthan is the second largest mineral producing state and the largest
producer of cement.
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Workforce distribution in Rajasthan
Primary Sector Agriculture, Forestry 53%
Seconadary Sector Mining And Quarrying 1%
Manufacturing 6%
Tertiary Sector Construction 19%
Whole sale and retail trade;
repair of motor vehicles,
motorcycles, personals and
household goods
8%
Hotels and restaurants 1%
Transport, Storage and
communications
4%
Real estate, ranking and
business activities
1%
Public administration and
defence;
Compulsory social security
1%
Education 3%
Other Community, social and
personal service activities
2%
The primary sector in Rajasthan employs 62% of the workforce and
contributes to 21.6% State GDP. The tertiary sector employs 38% of
workforce and contributes to 48.6% of State GDP. The secondary sector
employs only 7% of workforce and contributes to 29.8% of SGDP.
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Rural Poor
Rural poor depend on moneylenders and friends/ relatives for credit. Due to
numerous reasons, they have low access to formal sources of credit. The
credit from informal sources comes at very high cost i.e. at 24% to 60%
annual interest. The immediate propensity of poor is to pay off costly loan
from moneylenders and then to use it for meeting their consumption needs,
health expenditures and after some time, start making small investments to
augment their livelihood sources e.g. seeds and other inputs, fodder for
animals etc. Once these needs are fulfilled, poor start making investments on
assets (capital investments) like deepening of wells, pipes for irrigation,
purchase of animals and so on. On an average a poor family needs about Rs.
20000/- credit (in multiple doses) every year to meet their consumption and
small working capital needs. If sustainable livelihood is to be ensured and
people have to be brought out of poverty, then a family would need at least
Rs.60,000/-credit (cumulative) over a period of 2-3 years (see box below).
This translates into total annual credit demand of Rs. 11000 crores. If the
demand is to be seen within the overall framework of 'livelihood finance'
then the micro credit market can be estimated to be around Rs. 33,000 crores
in next 2-3 yrs.
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Reasons for decline in time spent on Agriculture Raj. In Last 5 Yrs
Eastern Raj Over 37% households have decreased time on
agriculture because of scarcity of water (84%) and
shortage of finance (37%)
Southern Raj Over 71% of households have decreased time on
agriculture because of scarcity of water (55%) and
shortage of finance (30%)
Central Raj Over 53% households have decreased time on
agriculture because of scarcity of water (93%),
unfertile land (46%) and shortage of finance (46%)
Northern Raj Over 50% households have decreased time on
agriculture because of scarcity of water (43%) and
shortage of finance (25%)
Western Raj Over 66% households have decreased time on
agriculture because of scarcity of water (58%) and
finance (31%)
Reasons for decline in time spent on animal husbandry in Rajasthan 'No
access to finance' has been found to be one of major reasons for decrease in
dependence on livestock. Had there been access to credit for animal
husbandry, livelihood income could have been increased.
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Reasons for decline in time spent on animal husbandry in Raj in last 5
yrs
Eastern Raj Over 33% households have decreased time on livestock
because of shortage of feed (86%) and shortage of finance
(66%)
Southern Raj Over 55% of households have decreased time on livestock
because of shortage of feed (78%), shortage of finance
(47%) and lack of veterinary doctor (33%)
Central Raj Over 42% households have decreased time on livestock
because of shortage of feed (86%) and shortage of finance
(70%)
Northern Raj Over 33% households have decreased time on livestock
because of shortage of feed (41%) and shortage of finance
(33%)
Western Raj Over (50%) households have decreased time on livestock
because of shortage of feed (45%), lack of access of
veterinary doctor support and shortage of finance (29%)
As can be inferred from observations in box above, a negligible proportion
of poor are financially included for ‗livelihood credit‘ in rural Raj. There is
huge unmet demand for livelihood credit in rural Raj.
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Promotion of self help groups
There is no comprehensive database of self-help groups in the state. It is
difficult to compile the data of all SHGs in the state because of various
reasons like double reporting (more than one agency reporting the same
group) and groups going defunct etc. Many SHPIs are hesitant to share the
information on their groups. The only reference point for counting of SHGs
is the data on bank accounts of SHGs. As on March 2011, total 2, 33,793 to
2, 51,990 SHGs have been reported as having bank account. But there is
problem in taking this as reference as well, as there are good numbers of
groups that are not having bank accounts. Moreover, the data received from
NABARD and SGSY is way different from another and confusing. Many
SHGs become defunct after some time due to various reasons like a) the
promoting organization is not able to regularly visit the group, b) there is
conflict among group members, c) SHG fails to link with bank and d)
members distribute their savings among themselves and stop meeting and so
on. More reasons for loan defaults will be discussed in later section. But
such groups are seldom removed from the list of SHGs reported by the
SHPIs.
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Saturation index of SHG movement in Raj as of march 2011
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District-wise credit disbursal (SHG credit disbursal Index of Rajasthan)
Taking the SHGs promoted by SGSY and DWCD as representative sample
(combined reported SHGs promoted by SGSY and DWCD account for 77%
of total groups in Rajasthan) a ―district-wise credit disbursal index‖ has been
calculated. The index provides ranking of districts as per credit disbursed per
SHG during the year. Districts like Jalore, Dungarpur, Bikaner, Banswara
and Barmer have relatively lower amount of credit disbursal per group.
Districts like Hanumangarh, Jaisalmer, Dausa, Ajmer, Baran, Alwar and
Tonk have relatively higher amount of credit disbursal per group. The
Department of Women and Child Development (DWCD) has promoted
largest number of the groups in Rajasthan (214502 till March, 2011). The
department has a cadre of women workers (Aanganwadi Workers and
Sathins at village level) who organise women Self Help Groups. Total
saving of the groups has been Rs. 142.53 crores. Compared to savings, only
Rs. 94.64 crores has been disbursed by banks as credit during 2010-11. That
credit too is estimated to be distributed only among 10.26% of SHGs.
Further analysis of data provided by DWCD indicates that only 50% SHGs
are engaged in internal lending. Department of Rural Development,
Government of Rajasthan is promoting Self Help Groups through its three
main programmes - Swarnjayanti Gram Swarojgar Yojana (SGSY, now
NRLM), District Poverty Initiative Project (DPIP, now RRLP) and Mpower.
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Recently, the government of Rajasthan constituted a society named
Rajasthan Grameen Aajeevika Vikash Parishad (RGAVP), registered under
The Society Registration Act of Rajasthan of 1958, as an umbrella
implementation agency, for implementing its key schemes. The Chief
Minister is the President of the society, whereas the Chief Secretary of the
Government of Rajasthan is the Chairperson of the Empowered Committee.
A full-time CEO (an IAS officer) has been appointed as the state mission
director of 'livelihoods and SHG programs' of the society. He has also been
made the project director of the World Bank funded Rajasthan Rural
Livelihoods Project (RRLP). The Government of Rajasthan has initiated
pilots in the district of Bhilwara and Rajasamand with the support of Society
for Elimination of Poverty (SERP), Andhra Pradesh. Both the district
administrations have signed an MOU with the SERP to implement the CRP
strategies and take support of project resource professionals for promotion of
SHGs and their capacity building. Further, preparation for expanding this
pilot initiative to two more districts i.e. Banswara and Dungarpur is under
way. An analysis of support provided to SHPIs by NABARD during 2010-
11 indicates that the progress has not been encouraging. Out of Rs. 3.49
crores sanctioned to SHPIs, only Rs. 0.73 crores has been released. Out of
target of 10300 SHGs, only 3575 (35%) groups were actually promoted and
only 1464 (14%) were credit linked. Poor performance of credit linkage and
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group formation might be attributable to low financial support to SHPIs in
absolute terms. Even though NABARD's objective has been to supplement
SHPIs finances through its financial support, it seems that SHPIs are
promoting SHGs from NABARD's financial support only. Figures indicate
that only Rs. 0.73 crores has been released to promote 3575 SHGs in 124
Rajasthan. This translates to Rs. 2047 per group for promotion and credit
linkage. Actual 125 cost of promotion of one SHG is estimated to be around
Rs. 15,000 over a period of 3 years. Therefore, SHPIs find it difficult to
remain financially sustainable and usually quit before completion of the
projects.
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Achievements of SSV partners
Achievements of
few SSV
partners
Current Status Mar 11
No. of
SHGs
Savings
mobilized
mar11
No. of
SHGs
bank
linked
Loan
outstanding
Credit
mobilized
from external
PEDO 1786 77,522,042 1248 138,143,729 185,478,710
Ibtada 660 22,157,000 470 36,969,800 198,800,000
PRADHAN 720 13,323,231 134 22,147,980 14,044,000
SRIJAN 439 4,826,859 90 4,488,979 11,085,500
GDS 260 4,233,745 105 11,792,010 17,170,000
Access dev.
Services
67 581,929 12 0 99,450
GSVS 100 2,700,980 62 7,595,039 8,145,000
GMVS 310 1,34,45,755 220 5,48,15,810 3,98,80,500
Navachar Sansthan 86 1,614,950 50 1120,031 1,006,500
Saheli samiti 215 3,148,000 30 5,199,357 4,789,000
Cmf (urban pilot) 86 1,293,190 0 1,297,384 0
Cmf (Rural pilot) 173 2,557,826 45 481,265 1,847,000
Total 4,902 14,74,05,507 2,466 28,40,51,384 48,23,45,660
About 4902 SHGs have been promoted by SSV partners and Rs. 14.74 cr
saving has been mobilized (equivalent to Rs. 30,070 per SHG). The SHGs
have loan outstanding of Rs. 28.4 cr equivalent to Rs. 57,946 per SHG.
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Conclusion
The cash inflow of a household in Rajasthan is broadly generated from labor
wage Employment, agricultural wage employment, agriculture, livestock,
micro-enterprises and remittances from family members who have migrated.
The cash outflow is primarily on expenditure incurred on food, clothes,
education of children, household expenses, cattle feed, local conveyance,
health etc. In addition, there is substantial expenditure on life events like
marriage, birth, death; on health related events and construction of house;
and investments like deepening of wells/ new wells, pump sets, tractors etc.
Given this context, savings, credit and insurance have been found to be the
three prime financial services those poor needs. Before we elaborate on them
further, it's important to understand the economic profile of poor in
Rajasthan. Though the sector is growing at a fast pace, it is still not
attracting enough skilled human resources. There is a need of an institutional
mechanism for overcoming the demand and supply gap of staff at various
levels for livelihood interventions within the state. The capacity building of
project staff at state, district, block, and cluster and village level can be done
through partnering with academic institutions/NGOs like Center for
Microfinance. There are multiple examples of successful courses and
training programmers for capacity building on microfinance and livelihoods.