National Micro Finance Conference 2010 “FINANCIAL INCLUSION AND RESPONSIBLE MICRO

FINANCE”

Translating Financial Inclusion into Sustainable Livelihood

18 March 2010

Mythili RaviIL&FS Cluster Development Initiative Ltd.

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Translating Sustainable Livelihood into Financial Inclusion ??

OR…

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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”

Key Questions for the Session

Technology

Macro – Economic Framework

Distribution PatternsIncome /Assets

Social System, Values , Beliefs etc

Fin

anci

al S

yste

m

For

mal

/Info

rmal

Po

litic

al F

ram

ewo

rk &

Go

vern

men

t Po

licie

s

Institutions

Livelihood is a

function of ( Skill , Opportunity & Assets )

Education/Vocational System

Ecosystem

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

Financial Inclusion & Sustainable Livelihood

April 21, 20235

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

Evaluation of SGSY – salient aspects

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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

Lack of Capacity building due to……..

April 21, 20237

The Context

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Macroeconomic Context

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-India on Growth Path -Even in downturn the growth projected at 7%

Services and Manufacturing sector to expand – increasing share of the economyAgriculture to grow at negative rate

HOWEVER, POVERTY STILL PREVAILS – As per World Bank statistics, India’s poor are at 400 million

Constraints in Agriculture sector for livelihoods

0

50

100

150

200

250

300

350

400

450

1993-94 1999-00 2004-05

Millions

Agriculture Secondary Tertiary

• 54% of population dependent on agriculture, but….

• Contribution of agriculture to economy reduced from 32% in 1990-91 to 18.5% in 2004-05

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- 36 % of the population in 2011 would be people in age group of 15-34 years

- These represent YOUTH entering workforce

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

By 2026, majority of Indian population will be in younger age bracket, but at present only 2% of them are vocationally trained

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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

Opportunities in the Environment

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 Agenda13

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

April 21, 202314

Vicious cycle of Low-Skill Economy

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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)

Policy Context

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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

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Market-relevant skill development converges industry need with poverty eradication goal

IL&FS Response & Experience

as a Practitioner

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Income earning opportunities Education (basic) Employability Empowerment

Program for Education Skill Development Livelihoods promotion (through integrated

package of inputs)

IL&FS Framework for Livelihoods

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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 strengthsInto self-sustaining synergies

Basic principles

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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)

We work with

April 21, 202321

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)

Some of IL&FS Projects

April 21, 202322

Strategic Framework

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OP

TIM

UM

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ILIZ

AT

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OF E

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G

TR

AIN

ING

IN

FR

AS

TR

UC

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RE

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NT

ING

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CU

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(IN

DE

SIG

N, C

ON

TE

NT, D

ELIV

ER

Y &

STA

ND

AR

DS

)MULTI-STAKEHOLDER PARTNERSHIPS

(Govt., Industry, Experts)

INN

OV

AT

IVE

US

E O

F T

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HN

OLO

GY

DEMAND LED TRAINING APPROACH

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

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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

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Components of Approach- Tools & Methods

Adoption of Technology Multimedia Revolutionize teaching / skill development

process Prepare students for life through soft skills

and life skills

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Multi-stakeholder partnership to pool in core strengths and ensure “buy-in”

Training Holistic

(Technical & Soft, Life

skills)

Training Holistic

(Technical & Soft, Life

skills)

Industry /Employer Industry /Employer NGO, CommunityNGO, Community

Technical Partners & Certifying AgencyTechnical Partners & Certifying Agency

Government

(SGSY, MES, NACO, state govt. resources,)

Government

(SGSY, MES, NACO, state govt. resources,)

IMPLEMENT MANAGEMENT AND SUPPORT AGENCY

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Skill Development Programs -Key Highlights

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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.

Our Journey since September 2007

Highlights As on March 13, 2010

No. of Trainees Enrolled

46,185

Of which Dropped out 3,967Completed training 40,794Of which placed in the industry

36,847

Placement in progress 3,947Placement % 90.32Dropout % 8.8

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Impact on Trainee

PARAMETER PRE - TRAINING POST – TRAINING

Core Employable Skills None Certified industrial sewing machine operator

Monthly Income Rs. 300-350 Prescribed Minimum wages plus productivity linked bonuses

Social Security (PF, Insurance)

None Covered as per the company policy

Nutrition Under nourished Improved nutrition due to meals provided by Company

Life management skills/soft skills

No organized inputs Greater awareness

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Impact on Industry

BEFORE TRAINING AFTER TRAINING

Study conducted by MIDS States covered-Tamil

Nadu, Andhra Pradesh & Karnataka.

Total 1,087 respondents surveyed.

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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.

Livelihood Programs – Artisan Clusters

Narsapur Lace Mega ClusterTripura Rubber

Park

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

Tripura Bamboo Mission – a case study in Livelihoods promotion

• 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

Progress Achieved 2007-2009

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

Community Production Infrastructure

TECHNOLOGY INTRODUCTION

o Bamboo treatmento Basic Dyeingo Natural Dyeo Power toolso Juki machineo Pneumatic toolso Finishing

DESIGN DEVELOPMENT -PARTNERS

o NID-Ahmedabado AIACA-New Delhio Industree Crafts

Foundationo Eric Benque- Pariso Sandeep Sangaru-

Bangaloreo Sangeeta Sen – Ex

Fabindiao Siddhartha Das – NIDo Hrishikesh - NIFTo Nandini - NIFTo Tulip Sinha

• 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.

Skill Development

- 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)

Market Linkages

New Product DevelopmentUtility items for Hotel & Restaurants

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Lamps and Lampshade

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Candle and Lighting Stands

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Bamboo Basketry

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Product Development: Home Utility

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Product Development: Hand Bags

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Product Development: Lighting

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Product Development: Table Ware

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Product Development: Furniture

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Product Development: Yoga Kit, Mats & Cushions

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StoryBoard.ppt

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Brought in ESIC Account opening PF Basic health services

Working on ………… Pensions Housing & housing

loan Insurance

Convergence

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Convergence – the Unfinished Agenda

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Sustainability through skill upgradation - NSDC

Enable school dropouts to “complete” their education

through a bridge course –NSDC

Converge ‘Poverty alleviation – urban and rural’ at

policy making level

Update ‘Poverty’ criteria and ‘BPL status’

Policy asymmetry in minimum wage and BPL cut off??

Thanks

April 21, 202353

IL&FS Skill Development Projects – Some visuals

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SESS centre in Ahmadabad Welding Centre-Trichy

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Quality in Delivery - Use of technology and innovative

learning tools

K-Yan (projector and Computer) loaded with multimedia content

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Multimedia Based Training

K-Yan

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Quality in Delivery – Blend with Soft Skills

Quality in Delivery – Blend with Soft Skills

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A GLIMPSE FROM THE TRAINING OF TRAINER PROGRAMME FOR SELF

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Thanks once again !

April 21, 202363