Showing posts with label TRIPTI. Show all posts
Showing posts with label TRIPTI. Show all posts

Monday, March 31, 2014

Micro Investment Plan (MIP) of SHG

The international standard for the definition of the poor i.e. a household that spends more than one-third of its income on food is followed in India, 95 percent of all households would be considered poor. Every country needs an inclusive political and economic institution to break out the cycle of poverty. The delivery of financial services at an affordable cost to the vast sections of extremely poor and vulnerable groups of people is a necessity for the development of India.

Plans are useless, but planning is indispensable. — Dwight D. Eisenhower

Budgets help to determine how much money one has, where to invest it, and whether one can achieve your financial goals. A budget is a forecast of all cash sources and expenditures. MIP is a tool for financial planning that can be used for both SHG and its members. Socio-Economic Analysis of each SHG is performed as risk is involved in giving loans without any collateral. The format used in TRIPTI can be downloaded here.

Indicative Components/ Seven Steps for preparing a Micro Investment Plan (MIP) :

Step 1-SHG Details Format
Step 2-Members’ socio-economic details Format
Step 3-Income and expenditure statement of members Format
Step 4-Listing of Household Investment Plans (for economic, social, and household needs) Format
Step 5-Prioritization of Members Format
Step 6-Financing and Rotation Plan Format
Step 7-Terms of Partnership Format

MIPs are promoted under National Rural Livelihood Mission as it helps in better planning to avoid bad loans on behalf of the banks. Micro Investment Plan is prepared with the initiatives of Community Resource Person Strategy in the Project. MIP is used for SHG members where many factors like a priority, wealth ranking, Investment in the activity proposed, Loan Amount, Life of Asset, Monthly Incremental Income, Saving Capacity of Household, Installment Amount, No. of Monthly Installment and other entitlements (PDS, Insurance, Pensions, etc) are considered. MIP includes plans for investment on asset creation for income generation and household needs investments. MIP is assessed at a Household-level where assets, liabilities, risks, vulnerabilities, entitlements, and other expenses are noted down in the detail.

But such detail exercise exists only in theory. Most of the MIP forms had not been filed properly. Activity proposed, No. of installation, Payback amount, and signature of President & Secretary is the main focus of Banks. The low-income who have been excluded from the financial services of formal institutions lacks financial literacy in most cases. Financial literacy for poor villagers is really important but it doesn't mean training by government officials once in a blue moon. There is always a need for the Livelihood mission/MFI/NGO to reach and build the capacity of SHG members. People need awareness about financial products, fraud activities, or else they are misleading and fall to misdeeds of chit fund companies promising high returns; This often ends up losing the lifetime savings.

Let us see a practical example of credit linkage. An SHG demanded nearly 1 Lakh as per their MIP and each member of the SHG deliberately had put Rs 10,000 as the investment capital for the proposed activity. Rs 50000 from the GPLF (Gram Panchayat level Federation of SHG under Livelihood Mission) at a nominal interest rate of 7% was given as a loan to SHG. Group divided this money among themselves equally (Rs. 5000) per member. The amount according to their need(proposed activity) will always differ from each member but fairness is maintained through this equal division. Only internal loaning is done among members on the basis of priority. In the case of external loans/grants, this fairness in distribution is always maintained by SHG. So, Priority in lending is a nice theoretical concept. How do a rural manager can change 20 years of what the common wisdom has taught them?

Saturday, July 20, 2013

SHG Model under TRIPTI Scheme - 2

SITUATIONAL ANALYSIS:- The social inclusion process will include two steps; first to identify the left out poor, those who are not a part of any SHG/ other CBOs, and second to ensure their participation in different community-based organizations [SHGs, GPLF, etc.] at the village/ Gram Panchayat level. In this process, the project also needs to identify the extremely poor and vulnerable groups (EPVG) in the community that typically suffer from severe economic and social impediments.

For this purpose, the project adopted a community-based participatory approach to identify and prioritize project beneficiaries, including ‘extreme poor and vulnerable groups, persons with disabilities, and the ‘left out poor’. The proposed methodology for the same is called situational Analysis in the project which will comprise of the following exercises:

1- Participatory identification of Poor(PIP):
o Social mapping/ collection of baseline of beneficiaries
o Well Being Grouping
2- SHG Grading
3- Institution Mapping
4- Livelihood mapping

FUNDS:- For operational sustainability of the GPLF, it needs different kinds of funds like the start-up fund, Institution Building (IB) fund, and Community Investment Fund (CIF). Start-up funds and IB funds are basically meant for office establishment and capacity-building activity. The Community Investment Fund (CIF) acts as a catalyst to help poor households meet their demand for improved access to credit for investment needs. The Community Investment Fund will be an infusion from the TRIPTI Project to the Gram Panchayat Level Federation (GPLF) down to the members and is expected to revolve among SHG members for taking loans and repay loans from this fund.

The SHG may provide loans for individual-based livelihoods preferably for reducing vulnerabilities and shocks, income-generating activities, meeting social needs, and supporting investments in housing, education, etc. based on the priorities fixed by the communities in their Micro Investment Plans (MIP). Member borrows from its SHG for implementing Household Investment Plan and repays the loan amount in full with agreed terms and conditions. The amount of loan received as CIF will be first available to the neediest and vulnerable. On repayment and accumulation of group funds, the other ranked members will avail funds from the group. The other sources of funding MIP are SHG’s own funds and bank finance.

Pro-Poor Inclusion Fund (PPIF) is a part of the Community Investment Fund (CIF) which will focus on activities aimed at identifying the extremely poor and vulnerable groups (EPVG) and enhancing their productive capacity. The fund size of PPIF is Rs 5000/- per eligible SHG.

Panchasutra- SHGs were well aware of the Panchasutra are the five principles of maintaining an SHG and includes: 
• Regular Meeting
• Regular Saving
• Bookkeeping
• Timely Repayment
• Internal Lending

Thursday, July 18, 2013

SHG Model under TRIPTI Scheme - 1

Targeted Rural Initiatives for Poverty Termination & Infrastructure (TRIPTI) aims at enhancing the socio-economic status of the poor, especially women and disadvantaged groups, in ten districts of Orissa over a period of five years, beginning 10 February 2009. The project is assisted by the International Development Agency of the World Bank and implemented by Orissa Poverty Reduction Mission, a society under the Panchayati Raj Department of Government of Orissa. TRIPTI project under World Bank Assistance is running in 38 blocks in 10 districts that will be treated as pilot blocks for NRLM.

The SHGs are at the first tier of the community institution structure. One SHG is formed constituting 10-20 women members (in case of disability or dispersed location the group size may be 5 to 20). The second tier of the structure is called Cluster Level Forum (CLF) which is an aggregation of 5 to 15 SHGs at the village/hamlet level. GPLF is the third tier of SHGs which is formed taking representation from all CLFs at the GP level.

I have the privilege of working closely with TRIPTI block level team and SHG Federation at Kharidpipal GP for 21 days in Balasore. Bhograi is one of the blocks in Balasore that falls under the TRIPTI project. It consists of 32 Gram Panchayats out of which I was placed at Kharidpipal. Kharidpipal GP consists of eight villages. The GPLF federation of SHG is constituted of 13 CLF and 152 SHG. The detail of the structure is given in the diagram. That gave me a decent understanding of the SHG model that will be implemented in NRLM scheme with a slight tweak. I will draw the conclusion that the creation of dedicated machinery (staff support) &  Universalisation of SHGs has made it more sustainable than SGSY.

Looking on the data of Annual Exp of Average Poor – Rs.40-60K; 35-55% Food; 10-30% Health; 15-20% Education; 10-20% C&E (MGNREGS 2011). Most of the schemes related to the poor fail because the poor spend their money on urgent needs such as health rather than asset building. It is not only economic poverty but lack of financial planning that also plays a crucial aspect. Hence, TRIPTI focuses on the Micro Investment Plan (MIP) which is a household investment plan prepared by individual households and their consolidation at the SHG level.

MIP has socio-economic information will include critical factors such as income, assets and liabilities, needs and problems, number of earners and dependents, single woman, physical/mental disability amongst the members in their family if any, health problems, livelihoods and opportunities, skills, saving capacity, social backwardness, literacy, etc. It will look for the income and expenditure statement of members. The SHG at the outset ranks its members according to their wealth. The Self Help Groups will then be facilitated to prepare a list of all SHG members along with their loan requests indicating both activity/purpose and loan amount. The group would appraise each loan request and determine the loan terms like the amount of loan, installment amount, repayment period, etc. Here, the group would take into consideration the potential for chosen activity in the local area and the competence of the members to carry out the same gainfully.