Self-Employment with the Help of Integrated Rural Development Programme

The Integrated Rural Development Programme (IRDP) aims at providing self-employment to the rural poor through acquisition of productive assets or appropriate skills that would generate additional income on a sustained basis to enable them to cross the poverty line. Assistance is provided in the form of subsidy and bank credit. The target group consists largely of small and marginal farmers, agricultural labourers and rural artisans living below the poverty line.

The pattern of subsidy is 25 per cent for small farmers, 33-1/3 per cent for marginal farmers, agricultural labourers and rural artisans and 50 per cent for Scheduled Castes/Scheduled Tribes families and physically handicapped persons. The ceiling for subsidy is Rs. 6000/- for Scheduled Castes/Scheduled Tribes families and the physically handicapped; for others, it is Rs. 4000/- in non-DPAP/non-DDP areas and Rs. 5000/- in DPAP and DDP areas. Within the target group, there is an assured coverage of 50 per cent for Scheduled Castes/Scheduled Tribes, 40 per cent for women and 3 per cent for the physically handicapped.

Priority in assistance is also given to the families belonging to the assignees of ceiling surplus land, Green Card Holders covered under the Family Welfare Programme and freed bonded labourers. Allocation Funds for IRDP IRDP is a Centrally Sponsored Scheme that is in operation in all the blocks of the country since 1980. Under this scheme Central funds are allocated to States on the basis of proportion of rural poor in a State to the total rural poor in the country. Since the inception of the programme till 1996-97, 50. 99 million families have been covered under IRDP at an expenditure of Rs. 11434. 27 crore.

The total investment during this period has been Rs. 28047. 65 crore which includes a subsidy component of Rs. 9669. 97 crore and a credit disbursement of Rs. 18377. 68 crore. Of the total families assisted under this programme 44. 75 per cent were Scheduled Castes/Scheduled Tribes and 27. 07 per cent women. During the Eighth Five Year Plan the total allocation (Centre and State) under IRDP was Rs. 5048. 29 crore and the total investment amounted to Rs. 11541. 06 crore. In quantitative numbers, 10. 82 million families were covered under IRDP against the initial target of 12. 6 million families fixed for the entire Eighth Plan period.

However, from 1995-96 physical targeting under the programme was abolished with the focus shifting to financial targets and qualitative parameters. Of the families covered 50. 06 per cent were Scheduled Castes/Scheduled Tribes and 33. 59 per cent women. The coverage of women was still lower than the target of 40 per cent. The IRDP has been successful in providing incremental income to the poor families, but in most cases the incremental income has not been adequate to enable the beneficiaries to cross the poverty line on a sustained basis mainly because of a low per family investment.

The results of the last Concurrent Evaluation (September 1992 – August 1993) revealed that of the total beneficiaries assisted under the programme, 15. 96 per cent of the old beneficiary families could cross the revised poverty line of Rs. 11,000 (at 1991-92 prices), while 54. 4 per cent of the families were able to cross the old poverty line of Rs. 6,400 per annum. But, the analysis by income group of families revealed that in case of those within initial income of Rs. 8501 – 11,000, 48. 22% of beneficiary families could cross the poverty line of Rs. 1, 000 which is quite encouraging.

The analysis of the family income of the beneficiaries reveals that a large percentage (57. 34%) of the families had annual family income from assets of more than Rs. 2000. The annual income from the asset was more than Rs. 6000 in 29% cases. The major constraint in the implementation of IRDP has been sub-critical investments that have adversely affected the Incremental Capital Output Ratio (ICOR) levels and thereby undermined the viability of the projects.

Though the average per family investment has been rising steadily in monetary terms, in real terms the increase has been inadequate and in some cases sub-critical due to the inflationary trends and the increase in the cost of assets. At the instance of the Ministry of Rural Development (now renamed as Ministry of Rural Areas & Employment), the Reserve Bank of India appointed in 1993, a High Powered Committee under the Chairmanship of Dr. D. R. Mehta, Deputy Governor of Reserve Bank of India to make an in-depth study of IRDP and recommend suitable measures for its improvement.

The Committee was asked to review among other factors, the process of selection of appropriate income generating assets, credit structure, recovery of loans, and procedural matters in respect of obtaining loans, and efficacy of existing administrative structures of the District Rural Development Agencies (DRDAs).

In consonance with the recommendations of the High Powered Committee, the new initiatives taken by Government under IRDP in the Eighth Plan included (a) Targeting the segment of literate unemployed youth below the poverty line for IRDP activities by giving them subsidy upto Rs. 500 or 50 per cent of the project cost (whichever is lower)(b) (b) Promotion of group activities through enhancement of ceiling on subsidy to Rs. 1. 25 lakh or 50 per cent of the project cost (whichever is lower) for all group ventures involving at least 5 members (c) (c) Back-ending of subsidy to prevent leakages in subsidy administration (d) (d) Shifting the emphasis to financial targets and qualitative parameters from a perfunctory physical coverage of families and (e) Enhancing the limit of allocation to programme infrastructure from 10 per cent to 20 per cent in all the States and 25 per cent in the North Eastern States.

Among the other steps taken to enhance the efficacy of the programme are abolition of the cut of line to enable all families below the poverty line to be assisted under the programme, targeting the investment per family at progressively higher levels each year, extension of the family credit plan to 213 districts of the country, enhancing the ceiling limit of collateral free loans to a uniform limit of Rs. 0, 000 with a view to easing the constraints faced by poor beneficiaries while taking loans from the banks, extension of the cash disbursement scheme to 50 per cent blocks in the country, decentralisation of the sanctioning powers for infrastructural projects below Rs. 25 lakh and entrusting the banks with the task of identification of beneficiaries in about 50 districts on a pilot basis.

These interventions have had an impact on the average per family investment that rose from Rs. 889 in 1992-93 to Rs. 15036 in 1996-97. In pursuance of the High Powered Committee’s recommendation, for the first time in 1995-96 credit targets were fixed. There has been a continuous increase in the volume of credit mobilised by the banks during the successive years of the Eighth Plan period. Correspondingly, the subsidy credit ratio, which averaged 1:1. 77 in the first three years of the Eighth Plan, rose to 1:1. 96 in the fourth year and further to 1:2. 17 in 1996-97.

However, there are genuine reasons for the inability of the banks to meet the full credit requirements of IRDP beneficiaries. These include poor recovery of IRDP loans, lack of adequate rural banking infrastructure in certain areas and the weak financial performance of Regional Rural Banks and Cooperative banks. There has been considerable diversification of IRDP activities since the inception of the programme. Initially, a majority of the beneficiaries under the programme subscribed to primary sector activities.

In 1980-81 the sectoral composition of IRDP activities was heavily skewed towards the primary sector, which had a sponsorship of 93. 56 per cent, while the share of the secondary, and tertiary sectors were 2. 32 per cent and 4. 12 per cent respectively. Over the years, the share of the primary sector has come down considerably and is currently around 55 per cent, while the shares of the secondary and tertiary sectors have increased proportionately to 15 per cent and 30 per cent respectively.

Inadequate development of infrastructure and insufficient forward and backward linkages and market facilities has been an area of concern under IRDP. In an attempt at filling up the critical infrastructural gaps and strengthening the linkages and marketing facilities, the allocation under IRDP towards the development of programme infrastructure was increased from 10 per cent to 20 per cent in all the States and to 25 per cent in the North Eastern States. Decentralisation in the sanctioning powers for infrastructural projects had already been given effect to in 1994-95.

However, despite this enhanced provision for programme infrastructure under IRDP and the relaxation in sanctioning norms, the actual expenditure on infrastructural development was a mere 5 per cent to 7 per cent of the total allocation under the programme at the all-India level. There is, therefore, a critical need to prepare a perspective infrastructural plan at the district and block level and to ensure that the funds earmarked for infrastructural development under IRDP are closely monitored and not diverted elsewhere.

The salient features of IRDP performance during the Eighth Plan are given in Ninth Plan Strategy for IRDP Direct poverty alleviation programmes will continue on an expanded scale in the Ninth Plan. But these programmes would be oriented towards strengthening the productive potential of the economy and providing more opportunities for involving the poor in the economic process.