WUERNnENT AND mom* PROBRWWIES FOR X W O R M L BECTOR fiND

THEIR 1MPRCT.ON INCOME hND EPIPLOVVENT

CHAPTER Y l f

GOVPRMP~ENT AND NGOu* PROGRAWHES FOR INFORMAL SECTOR AWD

THEIR IMPACT ow t nconE AND EnPLaunanr

'For a I n tin- i t w a r bmlirvmd that

aceel errted reonamic growth would aradicatm puvarty in

t h e Third Yorld emuntriss. H o w a v s r , t h e exprrirnur of

many oountraeo i s t h a t h i a h the rat* of poverty

aontinumd mven with an irpravemsnt in thm G r a s s Dmmumtfg

Produat ( G D P ) It io n o w f e l t tha t t h i s strategy will nat

aehiave the objsotiue o f removing p o v r r t y , at larat

wlthin a rr&ronablr persad of t inr. A s a ramult, t h e

lnrtitutionr which had amrlirr facussed on growth havm

now come to believe i n direat attack on povrrty.

Efforts in thlr direction haus cams i n a big

way in many af thm Third Yarld countrisr, including

India, Sbevmrrl plans and sahemes arm baing ' implmmrnted

i n India to tacklr pclvnrty. Howevrrr, mart of thrmr

soheare havr aoaordod highoi priority to tha remoual mf

rurml poverty than urban poverty . ~xasption to t h i r arm

sons sahrrar+ f a r slum dwallmro. in t.hr form of urrating

c f u ie aamn i t Les and hour in# rahe~er I The lnaore

Qeneratlng schemrs were glven inadequate attention. I t

only r t t m r ths Ssuenth Five Year Plan (1885-801 that

some attaapt ware made ta inproye the aconaata

conditian~ of the urban poor, corprl~in~ t r m e NCU i Q 8 6 a

981 of S t r m r t vrndmrm, d m m m e t l o rervantr, roauqngmrsr

a r m 1 l m m o h a n i u m , rag p i u k w r s r t o . , w h o prrforn r h o s t of

other m t f v i t i e m i n the Informal seetor. NQQm hauu also

corn* i n a big way to arsint thoem 6metions. A br iof

nntr on thoas mchemsa is prermntad in the following tuo

drations. ~ m a t l o n - I derla w i t h tho salient fmaturar of

self-employmmnt praqramrr for the urban poor and NGOa

ursdit prograame. The seaand seetlon discusses their

impact on inearno and employment lmuela of the informal

Self-Emplaymmnt Pro#ramr- for Urban Paor tSEPUP)t

A s in t h e ease of the integrated Rural

Deuelopmsnt Prog~amnas (IRDP) far t h e rural poor a n r w

uahera w r m enviragad for tha urban poor in 1986, v i z . ,

t h e Self Employment Progranmr far Urban Poor {SEPUP).

Under t h i s progrrrme, familims living brlow t h e

subsistenas l r v m l i n ci tieaftowns which a r m not aavmred

by lntmgcatrd Rural Dmvrloprrnt Programms (IRDP) arm

idmntif i m d and he1 pmd ta undop- take ael f - m m p l o y m m n t

v m n t u r s r by providing mubmfdy and bank a r m e l i t . 7hr

foflowing oritorfa arm adoptmd to sanetian loan8 t

(1 ) T h e monthly ino~a* og the fanlly ahould not rxommd

RS. 800. A daelatatlon on t h m family inuorm an

pr.m~ribmd f a r m ~ e q ~ i r l d to be aubmltted mlong with

t h e r p p l io r t ien .

(21 Appliaantr. w h o haw- already borrowed undsr any

other r o h e m m arm not eligiblm.

(3) Thm appl i c rn t ahauld havm previous s x p e r i m n a m and

aptitude for undmrtaking thm r c t i v i t y f o r which

assi~tance i s rppf imd for.

1 The applicant's namm should appear in thr ration

c a r d issued to himfhmr o r to t h e family i n whiuh hmishe

is a member.

(51 The appl iaant shauld not be a defau l trr in r m s p e ~ t

of any I ornladvnncer obtained f ron. any bankfcrsdi t

institution.

( 6 ) Tha rppltaant should b r a reridmnt of thr

city/town f o r a minimum of t h r r r yrarr.

Under t h i s programme, Imans are provided t m

benmficiarirs, rubjaet to a limit of Rs.5,060 per family

(inclusiv~ of 25 per c e n t subsidy), a t 10 pep omnt

i n t e r m s t and repayable in 33 instalmentm with a

repayment 1101 iday of 3 ionthe.

Thim aah*mm 1~ i n o p r r r t l o n in B a n ~ r l o c r o t t y

sinas it. i n ~ e ~ t i o n * Our in$ 1988-07, a total DQ 8,461

bmnmfi~iarirm W m r * msmimtmd under t h i r pragrammm w i t h a

laan amount of Rs-245.28 Iakhs. T h i s oanc t o an aumrage

,rnaunt of Rs. 2,909 per bmnsf i e i ary . T h f r number has

~ r k h r , C h w a V * r a a m araunt of loan working auk to a

ks.3 .972 par bone€ la lacy . Further, Ln IQ88-BB, about

8,648 bmneflclarles were covered with an amount OC Re.

352.72 iakhr, whiah aomme to Rm. 3,888 per benet iaiary.

In 1089-80 and 1BQO-$1 a total of Rs. 450.1% lrkhu w r s

r a n a t ioned ta 11,183 bsnef lclarlra, which umrkr out t o

Rs. 4,021 per bsnef lo iary . In other words, the eourrage

of benmf totarirr under t h l m programme was about 11,189

with a loan amount of Ra. 1357.40. lakhs ( p e r benef ialary

Rs.3,8041 f roa 1B88- 1087 t o 1880-1891, covering only

4 . 0 1 per cent of t h e total informal sector in IQQi. 2

(a1 Finanuing m i Aaaeta under OEPUP r

Table 7 . 1 premmnta tho to ta l amount st loan

advanold f o r vartous raherss. A tota l of Rs.3,82,890

war dimburned f o r 100 brneficlariem. T h m a v e r a g e anaunt

o* loan Igrmdit oomrm to Rs.S,830. T h i m amount im

i no lumive of 26 per arnt of subsldy. H a w r v r r , i t mould

be notiawd that thrra are mharp differenems I n the

average urmdit advanmrs mad+ to dlgtsrent sub-

Hoeof A ~ Q ~ w hd lkpyrrnt I h m t Oratdm Wtdw Eamll- wvnt laan u Z of am l bf r l r f d m alrrlu Ms.1 1 b . I 1 h . I 1-n 1k.I lorn I&.) d a d Sd

aativitimr- The avsruge laan to t h e manufaaturing nrator

was R+*3,468. In the casm af thr trading and rrrviaa

srctars i t warn Rn.4,2OB and R8.4,QlD reepsatively.

Thus, thm ranufaeturin# srctar, which is euppasrd to g r t

P hi#hsr quantum af aroirtanca, srtr a lowrr amount.

The overall repayment position shows t h a t

22.73 par cent UP the laan amount was rmpsid as an thr

da te of intarview. Thia, houevar, dues not show t h e

over-due posttion of the loans. Thmrefore, an attempt

ks mads hmrm ta work-out thr ratio PF rspaymrnt of

loans to damand f o r rspayrsnt. AceordSng to this

eweroimm the rmpaymmnt r a t i e was 33.81 per arnt. Thia

means, 86.39 per aant of tha loans are avrrduo.

Repayment ar aar inr t the dmnand ham nat mxaasdrd bryond

38.48 pmr omnt in manufaaturing and 28.30 par ornt in

trading ceotaro. ~ h f s low l r v r l of repayment haw

r e s ~ l tad in maunting over-burs to the extent of 06.30

202

per aent i n a1 l r o c k a r m and 81.52 par cent to 73.83 pmr

cent aororr rmotors.

The r m p a y m m n t rrcard of our rrspondmntr is tuo

bad when momparad w i t h t h e repayment position of o t h m r

6n.t i - p o v + r t y progrannse. ThSs is, parhape, durn to th.

inclusion .of Pul IY repaid rrspandonts in t h r above

I i n 1 f w r enelude thir tesmsnt., t h a t w 3 l l give a

totally different picture. Table 7.2 discluums that

tho ovar-all. tmpa~rnent to d m m a n d , rxcluding thr fully

repaid mares, w m r k m out t o 23.01 per m m n t . Th+ piaturr *

is not much dt f f s l rent batwsen t h m sub-smaturr, excorpt i n

respect af t h e rervicr ssetor where t h e repayment

la b e t t e r rt 26.54 per cent. This gives us an

owerail overdur of 76-90 per cant, whiah is lower

comparmd to thr ovrrdue position of 76.12 par urnt of

Trblr 7.2 r Lomn Amount, Rapyrmmnt and Ovmrdum at thr Bank Bmnmtlaiarier lEroludln# fully rmpaid)

A a t i v l t y Loan Demand Repaymmt Rlpayrrnt Qvmrdum Ovrrdur Amaun t {Rs. l {Rs. 1 as S of tRm.1 a r S o f (Rs. 1 demand derad

------TI--LI------lr--I-I--------------p------"------------*------.----*.

--------____1--"11----II1C-----""111I"1"rrr----P-----------------------

Total 347340 23335 51399 23. Oi 71838 78.89

thr total drrrrrnd i n th* oar* of the martin-money oua-

the re-vmry drlvm of the banks is unsntirfacatory and

Role af NGOr an bnv-loprent af Urban tnfmrral Ssatar r

S o v m r e l Government Organirations have engaged

thlrmrelvsr i n tha upl i f tmeri t of t h s wrrakar rectianw of

s a c i r t ~ , both in rural and urban armar. Howrvrrr thrrm

pragrammmm h r v r failed ta provide the brnmfitr ta r roh

and a v m r y m e m b r r of t h e , vrakr r smotilont, particularly to

the unarganined labour. Realimina that government alone

is unable t o handle t h e povarty situation in tha

country, during the last 10 to 15 years many NGOo have

come into bminp and their numbmr has fincreased in rural

areas aorpared t o urban armas. Several of thrrm arm

prometing saaial, aultural and religious autfvitims.

Only a few ~rganirations have d i r e c t intrractien w i t h

t h e povmrty grmupr. In addition to thrma a c r t i u i t i m r ,

they are playing a ~fgniffcant role i n a euanaric

upliftmmnt of thm umrkrr rmotions, by promoting

mntrepranrurship among them;

Hart of therr organianti~ns mre rmariving

8rantm t d # aantributions f ~ o n philanthropistr,

aovernmmnt agmnoimm, l o a r t govrrnmmnts and from formign

t The t m r l * t Ornupa of thmae organtmrt ianr r r r

.,in1 Y weakmr o*ctl~nr and 1 o w ~ r Lnconr groups

gartiaularly woman and rag pieklnt ahlldrrn. Thw a r m a

of their o~eratlan are S ~ U Q S and other area. where the

urakrr r r a t i o n r a r e concentrated. Saumrml o# thesm

pmople arw idsnkif Led through aurvey and r f e w on t h i

riaommrndationr of Hahila Ptandalr and l o a a l l y elacted

reprasm~tatfuer- Such identified hauseholds hawe been

provided wfth education and health taallltlmr. tn orae ai

rag pieking children (now adultat, if the uhfldrmn are

not intermuted in oduo~tion, thry have been aatlvated to

u n d o r s ~ trainin8 for skill aequisltion. The ahildren are

usually trainrd I n aetfuitlas in whiah they arw

interested. The duration of the coursr i s n o r m a l ly I to

2 years. burin# the training period, stipend f s aiuen,

which varlra from Rs. 100 t o 250 par month. A portion ot

it is dsporrited in a bank in the name af the ahild.

This amount ie to be used tor purohnaing tools after

oamptetion of the aaurrm, SQ that thry aould take up

self -smplvymmnt act iu i t 19s. Sore of those trainrd

pmrsona arm work ing in tailoring units, printing

p r e t a e s , garager and pub1 i~ seator undrrtakLngs a m

salaried pmrruna and thsr are happily earning a

Normal l y , most of - t h o N G O s have idsntif i ad, t w a

types of sahmrrr far t h e banef i t ; of thm unoraanirmd

*=tor workrrr in' iSangalore a i t y . ( 1 1 Skill drvmlopmsnt

proat*al. ( 2 ) s.l* e m p l o y m m t p r o # r r n m . 3 U n d r ~ thr

ski 1 L dwv.lop.mnt PrQgrammr, at ter trainin#, t h m

candidat*. h r v m bmmn absorb-d i n thrlr o w n o taan lmrt ian

or plaasd in jobm ~utsid- thr organlsatlan G a m e ~nn+acsr-

( 1 . Under Cha relf-mmplo~rmnt programmer, sane of thr

trainad oandidater h a v m bewn pravldrd w i t h aapltal also.

This t s partioularly r o in the case of tradlng nativity.

Soma of tha * m p l ' m units w e r m asmisted undrr orre or the

other pragranmrs. Our data m h o w Chat thr NGDa, m i t h m r

out of the i r own funds or through bankm, h n u m finanaad

the benef iairrime to the tune of Rs.53,900 (Tabte 7.31.

The avora@m amount of rsaistanoe par benefiaiary workr

out t o R 8 . 1 . 8 9 6 . Howevor, thore are w i d e variatlano Ln

advance@ m a d r to d i f f arent sub-rrctorr. The s r r v l a m

sector has received the highest amount, compared ta t h m

othar t w o groups. The average loan amount i n the ease

of t h e othnr t w o eeutorr w a r Irse beuause, the laana

w e r m providmd by NQOr themaelues for there t w o segmrnts,

whereas, thm smrvice sector brnefieLarLes obtained loans

from oommeroial banks with the h a l p o€ NGOs. T h i s does

not mean that tho benefloiarier Ln other t w o smctors

Obtained finanam only from NGQs. A f e w benrgtaiarier

received lwanu from financial LnstLtutiona on the

~ocammendation of NGOrI while othorm #at loans dlreotly

f r a m NGO8. Among thorm who #got f inanu ial ass ir kmnee t r o m

hlthe NQO funds, the mmnufaaturlng .rresctor rreelvsd an

aVera$w of RS. 1,450 and the trading rector a n m a g e r

...--- I,, M U ~ ef t h a t W I ~ ~ t ~ thrt*t #rwp lrturr ot Ratwm 01 jobs d t r t r h

trrinlng n o d

mitb or wtrldr tbm por Idd otiui8ation

L l I 1 to 16 q a 91 Tallorin$ 21 ?ira w r t vlUlin group of l l t l a or#anisation of *If-employdl 8I Somn 31 Mr(r labourat mublda non- s e b l prlntint ro ln i l l l r r ~ l l t n 4t lkehrnia 41 hit-nalavd mbib

I ) SIm uman 11 l r l lo r ln# I I Plm wart within tha ar#mlsat ion

21 h t i ~ SWVU~S 01 %ft akint

a) httr burim~ PI k ~ f - m p l g m t autridm YO~M 31 Flnrnolrl m i r h b

p t t y buslmn wrrn

3, Aanlnl I U o l m form) 11 Umakmr S W ~ I Q ~ 11 T r i l o r l n ~ 11 %If m p l g n n t outsIda 21 Knittint 21 Pinancirl nslstama

thruqh banks to ondrttrlrr patty ttrdn.

Ald th wrrker trurt !I Ytrhr stctim I t Printin# 11 Job plwmnt within wwn, partleu- 21 l l n d i y 21 Jab p l a ~ t mubib l r r l y Iltwrtn 91 Colpmln# 3) SmIf-mpluynnt outsidm

'---1131L-~--------------~*~~----~'~----~---.-----1"~---~1-1111-1---~"-11-11-11-11-..--1~--1

Gaadulll l n t e r ~ t l a n r l 11 Uann of wrlrmr I t I r i l s r ln# 11 Self raplgrd outsIda ~~soelr t lon (Rqd. 1 s r a t i m and 2) Knittin# 21 Jab p l a e n n t witbin

athrr wan 31 Soft toya $1 Fimmlal mlstrnw to uk ln# dmrtaka ptey kt*.

4I Bdio 1 9 lhpalr

51 f ittmts tr&

4, Thm lultlpltPmm 11 slrr pwplr 11 rli~orrn# 11 elm wor~ ultn . ~ndrwttlrl pttleularly 2) CanlInntr otlrrrlutlon cPaptrtlra raelaty y#lll 81 Prlntlq 91 Jab plaamat ultbin

sttwlratlon 11 C~rpntry 3) Flnrnclrl r o r l t r ~ ~

thraqh hkr to drrtJm sal f-amployad rctlrltl88.

1, R;, plckra lducation 1) Ry plukln# 1) k r p n l r y 11 Job plrormrt ad drrrloprnt tchm rn

21 k b l o 41 k l f - n p l ~ y n n t ablh 31 Caurbr

nrr iem ~~.-."r---'-CI-C.I-CI-l---~l------L-lI--.C-II--~C----~-~-.II--*"~~~~-~~~~-~."~l~-~~~l~~~~*-~~

g, Shrrrlh Vldyr Pnth 11 Umramisd 1) Trlla wwn m4 m 21 KnlCt

3) bbru 4 1 T V R

rapi 51 h h a 81 b b 71 Sorp

mauf 01 Coir

akin

Rs.188, whareaa those who ctbtrinmd loans from ths Banks

on the reaarrmndatian af NGQ's rearived a much higher

asaietanee. Amon$ thaa, the rarviar seetar abtained an

average of Rs.6,OOQ. The trading meetor Rw.4,bOO and

the manufratuiing seator Rs.3,QM). I n othar w ~ r d m , thr

NGO asmimtanum turns out ta be I m m a and this i r due to

thm paucity of fundm w i t h thmm.

~ 1 i r l L Y lo.ot Loan hvera#o b a d -C mmnt Orrtlur Ovnrdw lhpyunt h f l - uwnt lorn u S at m $ 6f u l o f m l o f alrrlrr 4Rs.I (I. I 4h.I lorn 4b.I Iun 4b. 1

The repayment of loans war quite ratirtaatory

{Table 7.3). Qvmr BO per cent of t h e loans wera repaid.

Aerosr smctars, i t was th. highest i n t h e care of the

manufaatwring seatar at 85.87 per cent, whiah i s hisher

than t h e smrviee reator, with 53 par ernt and 51.87 prr

cent i n t h e easa of t h e trading rector, Tha perc+nta#s

of repayment was ousr 07 per umnt against the demand.

The lawemt pmrerntage of repayment w a r notiead i n thr

servicm sactor, with 63 per e e n t . In t h e a t h s r two

coaes i t w r r about 100 per cent. I f w e examine tha

p o s i t i o n of o v r r d u ~ s sncluding the,fully rrpaid aa%em,

the overdus as peraantngm OF demand i s on a higher r f d r

(see Table 7 .4 ) .

The fmrr-gains analysis ulrarly bring* out t h s

sharp d i f f r r a n c m ~ i n the average amount af loan mwtrndrd

by banks undrr SEPUP prosramma and NGOa programm8r. I t

- . --

(Rm. 1 (h.1 4b.I k 8 a f ~b.\

I"-"-C--l-------ll.-----*"----------.~II~II-IIIIIII*~~-~~~-~"~"~'~~~~-~~~~~~~~~-~~~"~~~

Total a7aw nlrx ~MIS u.m mo 22.36 n.s6

is observed t h a t - t h m uusrage loan amount was highrr in

the eame of BEPUP brnrf f aiar i mr than WQOa. Cankrary to

t h i s , the rmpaymrnt, was quite hi$h i n thr urrrse m f the

NGOs, oomparsd to thm SEPUP sohere. This shows that thm

NGOs are ablm to motivate the i r bsnrPSe5arias to rrpay

loans on tine and ta bslng doun t h e drfault ratr.

Default Sn R m p a y m m n t s

In the previaus saction, wm have analysed the

repayeent position af the borrowars. From t h f u 3 . t is

natiaed t h a t t h e repayrsnt ratm was vary low i n t h e uaar

of bmnefioiarisr aasistrd undar SEPUPc In this montest,

i t is equally inpartant ta r z a r i n e t h e faatorr t h a t

contributed to t h m low levml of rrpaymrnt. I t i 6 ts br

noted that, out a) 100 bsneficiarlms, 42 had either paid

Or w m r m payin# the loan armunt. 'Ihu rrraining 68

bm,mf i u l a r i a ~ had n ~ t Paid Loans prompt\y durn to vmrlous

r e a s ~ n ~ Amanfl these, 30.21 per oent ot th8

banef l ~irri*~ * r ~ r m s r e d that thaw ware unablr to repmy

tho loans due to Lnad-quate income generation froa the

~cheme. About 27.58 per cant had defaulted i n

rmpaymen t T h e s m a r e basicnl ly wile ul defaul term.

Tharo fr anothar uatwgory of drfaulteru, who aaoount for

12.07 pmr amnt, rnd a r e under the lapcraasLon that thmir

loans would bm w a i v e d off i n the near future . The r a s t

had f a i l e d t o repay loans due to Lnurersa La family

expenditure an aceaunt at high-r farlly r i z e , decline i n

prof I t due to l a r s in bualness , lnoesare In eduaatlonal

exprnditurm of their children, health problem and

unforeseen expenditure on social 4 urrc t lens I Lke

marriages, f s r t i v a l r , death oereronlas eta. The same is

true i n t h m oare of other banking raherar. 4

Thm above analysis reveals that several

factors have contributed to the ddault. However, many

o f t h q brnsiioirrimm d i d not bothir about rrpaynent af

thmir Iasnr, eumn though thmy were generating inoore

from t h m asnet and were oapable of paylng. the reeent

governmental pali~lms with regard to canaellntian of

loans m i g h t have bean rmmponaLblr tor th le klnd of

situat ian. f h m position aC NGOs loans in reaprot of

repayment war quite high, anly a negligible proparti~n

was Overdue.

Smv*ral atudt*a have painted out that the

tnf oraal .mator t m / houmehalde w e t * drpr lurd of

faoiliti*sm In athor words, they vlmw~d ~ r l d & k

as a M ~ S S ~ ~ O 1 ink* B+CIUS~ of s w h deprivat ton, many oC

the unit61 hourrhalds i n th is sector are f a c i n g ahortaar

of f i x e d and workins capital which has aaured suoh unite

t o oprratn under unviablr condltlans, The 1 lbsral

deve\bplllwnt rchoIare, ILO (1872), HLhan (l97Ba7iSII

Sethuraman (187Qa a 9491, H i t t e r (IB86 t 241, Jorhl and

Joshl (107BnI, Hazundar (1g8Q a 7 1 and G s r r y ( 18781 h m v e

argued that, if aapltal is injected into t h e infarma1

a e c t o r , i t w i l l be posriblr to eraate more lnoome and

absorb more labour. fn other words, i t has been

e ~ p l icltly or lmplioitly assumed by the^ that any

aotion regarding t h m in for ra l soutor would naa+rsarlly

help to dlspel poverty. Another group ot saholars, Hc

1987 r40, Viahwrkacaa 1080 a 47 and Haan 1 0 8 B r 44-45

Pointed out that laak of skills Ln the eeotar war

reapanoiblr for thr low rarnlng tevrlr In thr e s o t ~ r .

These two arguments might havr inf luen~ed several

doveloping oauntrlms ta deular and Ia~lea*nt *am*

*Peeif fc sahenor t o promote and d-urnlop intmrmrt seator

6 i t i n th* urban araaa- uhethrr muoh rehrmes h a v ~

any Lapaat on tha ineom* and employment Irvsls of

Sorm studies have ~ t t u m p t e d to answer thim

q u e r t i o n ~ F o r instance, in Hadras, thn publie *matar

banks haul taxtended f inanf s ia l help to this wrutor

through th* Forum of Working Uonsn. Thr evaluation of

the schema by thm planning unit of thr Bank of Ind ia has

revealed that the a v r r r g s ineono earned by t h e

beneficiary has inurmasmd from Rs.4 in t h r prm-borrowin$

period t o R r . 7 per day i n the part borrlowLng period. 6

I n Hydmrabad. tho lnoome Support Programme {(SPb t o r the

i n f o r m a l saotor werkars has brought out sane p o s i k L v ~

changes i n their inoome l e v r l r (Valdhyanathnn and B h a t

1888 r 38-44) . In. Cul~utta. 'Eauador and Phil lppinsa also

t h e bank o red i t t o nlcro-wntmrprLmea has ehown pomltlvr

rerul t s in rnaprot of inaorea, orployrent and rmpayrent

rates (Khanmrt 1887 t 40) . S i m i l a r l y , four East A a i a n

Countriar South K o r r a . Ta iwan, Singapore and Honekonp

have aahleuwd the far ter t rmtee a# gr-th during th*

Past f e w dmoad+s durn to r ta te interuantlon. Bemruaa of

t h i s , (Urndm 1901 oLted by Majumdnr and La11 a001 t 188I

Hourmrg atudy 41984 a 2801 rlro o l r L m r thst

intmrvrntlan in f h m Informal r rotar also produamm high

raturnm both in inoreased inaoqr and emplayrent,

Sethurrman (1077b 1 i06) and Llnd Apaul ( I B 0 5 r 202-

2101, Harper ( l H 8 B I LubmlI ( 1 B B l s 84-85), Berger end

~armilko (forthaoaaln#l have nlaa arp~easrd a slrilar

On t h e e n n t ~ a r y , t h e Hrrxistr are of t h m v i m u

tha t bank credit is unliksiy to rsruit in an inprovmnent

I n i n t o r e or praduetivr rmomuruer. F o r fnctancs. thr

study of flrasdorp (1883 t 2011 ham pointmd out that

there w a r 1 i t t l e mvidanaa t.hat. t h e improved access to

c r e d i t fa~ilitias wauld lead to an increase Sn the level

o f employment, einaa the erpmnsion of a buslnmsr w a s

eonsidwrmd a m only one, and not n particularly

important, priorsty for t h e injautian at funds.'

The Uarld Bank ( C i t e d In Lsnda A Paul 1685 e

2011 also pointed out t h a t t h e informal sratar

aotivities are those . i n which tha a d d i t i o n a l warkerr

add little or nathsng to tha valua of t h e output*.

Citing the Indonemian NCOs* experfsnce, Gsthuraman (1985

t 7281 pointmd out that, thmugh a fru rrttampt.8 warm lnadw

to impart technical training i n t h a job, thair impaut on

P r o d u c t i v i t y and Snemmm has bean limited. Trndlmr (crlted

In Berger i n 8 8 t ' SQiBI and B v m r r t t and flf ra Savara

(Is84 : 262) also rrrivad at the erne uonolusian.

111 I t t r I l y l r t of l l r l m r l u b w C w , l r r l l r u pruuurlL

study i t ir hypotharlard that the Lntmrventian by H G 0 s

and Government agenaler I n thw form of orsdlt and skill8

or both will laproue inaore and employment I n th+

informal meator unlks. Tha v a l Ldlty of t h l r h y p o t h e s i s

i 6 tee tad by us lng our f laid data.

On* of thm objrotiumr ot thr prtsmnt atudy Ir

t a t e m t the hypothmsis that Interu+ntlon leadm to an

inareas+ in the Ievol of inoomes and rmplayment. In the

praosn t atudy, w e h a v e e~amlnmd t h i s hypothesis and

arrmsssd the ispaat of f inaneta1 asslatanae or ski1 1 and

bath, an lnaolae and mmploynant. UQ h a v s analysed these

mffmats at tho housmhold as well a schenr lev~1,

us ing tha b e f o r e and af t s r - Intervent lon C r iama-work The

pro$rr~s/ohangea fn t e r m s at inorearm in ine~mmr and

mmploymrnt in thmsr r a h m m e s r r o a l s o srmn in eomparlson

w i t h non-benaflciary garple w h s r m lntmruentlon was

Inaama and R m p l a y r m t Imumlr r t Hauaehold L m v r l Befmre and A f trr thr Suhmmem t

To a ~ o s r r t h e incorm and r m p l oyarnt

Performanwm of assisted and nmn-nsmi+trd emtabliehrentr,

data ~ r g r r d i n g inoors and rrploynsnt of household l m u m i

b e f o r e availing loans were collrutad. 7

Table 7.5 prseante the level at aampls

houaeholdr annual lncoaa both in pr* and port-asriotanas

period. The overa l l average In~ame ot the rampls

hausrhalds works out Co Rta.38,381 batore *walling of any

type of &am i m t a n ~ e . I t has Lncrmwsmd to Rs.43,886 af tor

,( I Awn44 1- 01 kqlm hwblda kfon rd Aftrr th bhm (Imldlq rorkn -1

- . &-&-----------------.-...---.-...,.-.-..--..".,,,-,-.----- .--- lP d nmufretutin# S , I rrblnf I SarwJcIn~ I Total I ~ t f lclarlm 1nctauw lmnur Intnror Imnm

kfon Utmr Edota After lafon dfkr kfm Afkr

availing laans, rrrult.ing in an incrreasr crP 14.2B per

cent avrr tha pre-acoirtnncr period. The aomprrieon

among thr various sub-seators of t h s informal smutor

houerholds ham shown variakfons i n thr inarmism of

incomes. Thm inareaam of inoorrs I n t h s uasm af

nanuf a* tur i ng rmctor hausaha1 dr warn thm highrat a t 16.48

Per uent and t h i s fnarrnsr war dur t a int.erventian. T h i t

Was follawmd by t h s srruicr seator i n whiah tha inurrarr

war 13.28 p m r omnt. I t f~Ilowr from thlr that t h m

nanufaoturlng arctor h~uaehaldr ware able to Qenmrate

more income, aonpmrmd to thr trading and r e r v l o l n g

~ e o t o r a . This Lnormrms cannot b r r o l a l y attrlbutmd to

tho intervention of N G O ~ and bnnka. Ths i n c o m m r of thr

f r n m i l i e s m i g h t h a v m rimmn due t o other factors too, ouah

as, inflationary situation in thr aconawy, wage rat*

hike and inormaem i n the nuabm~ of earning members i n

the family. In ordmr to f ind nut thr row1 impact of the

schemsa on houmoho l d inoorss, ae aent ioned ear t l a c , the

non-benwf icinr 1981' man-aasirtsd were aovored and their

incomes at two points of time were aol lected and treated

as controllsd variables. Through thlr, the changes in

inaomea of the other two groups were measured, I t 1s

found i n Table 7 . 8 , that the bank banefiuiary hauamhold

incomm inareneed at a higher rate (21.51 per cent! 'than

the houaeho1dr benrf ited by NGOs Ln a l l thrae sub-

seatoror. Hawevmr this increase was an the lower r ldm

when compared ta the lsvels of inorease due t o BEPUP in

other studies. For inatancs, the inarears in i n ~ o m s due

ta the implrrmontation of SEPUP w a r to the extent af 58.B

per amnt among the cltler studled. I t w a s the highest at

Ahmmdabad at t37 pwr amnt, f o l lowed by Aabala 63.2 per

cent and Snharanpur 50.0 per cant (Kurup 1060*841. Anang

the bank benet loirrimm. the service meohor (28.98 pmr

C ~ n t ) hauemhald income inateased at a higher rate than

that of t h m aanufaoturlng swotor (22.24 per cmnt) and

Crldidf?'~*0~9r;.(a0.02 par cent#. It ue 10ok at t h m

ditfer.n~m. a a ~ n j ' ~ub-swctorm of WGO bmnmf toiar i ~ p

the manutaaturtna m m o t ~ r mhmu* th. hi8hm.t inoreare rt

16.22 p*r aant aOWap*d ta th* other two seataps. ~ h t r

is in e o n f ~ r m i t ~ w i t h t h e V ~ * W held ,that the household=

i n t h e m m r v l a e *matar I*SS income than thoam of

the lnanufaaturin$ seator. B u t I n the mas. oC bank

brnsf iaiarimma thm mervfoe swotor hauaehoIds Enoars

inarearm is on the higher aide. T h i s is, parhapst, due

to t h e sxpan8i on of existing garages and workshops.

From tho foregaing analysis i t is evldent that

the intorvwnti~nfadditi~nal assistance has rsaul ted In a

eonsiderabl e inaraace of Lncomea in a\ l sectors,

part iculac Ly In the core a€ bank bsnat Lciar ies and WGO

beneficiary housmhald=. i f m a y also be obrecved that,

e v e n without intsrusnkion, the incomes of the houssholda

had increased in the aase of non-benefIctrrles. Even

then this incrmaae is on the lower sLde i n all sub-

seotors; aompared t o the other t w o kLnds 04 benef i c la ry

housrho lds . I f w e deduct the owtent ot t h i s increase

from thr above, tho other t w o kinds of benee L c i a r i m a

werr s t i l l l e f t w i t h subatantLaI realdual inoonm whlah

i s due t o i n k r e v e n t i o n . Therefore, there 13 a stpang

ground t o ruggrs t aant inuat ion of special aohen+r, muah

arrdit p = o # r a m m m s of bank8 and skill and orledtt

~ r ~ g r a m m m s of NGbm.

Hoummhold Erployrmnt L m v m l t

In Tmblm 7.6 we havm prerrntrd th+ avrragm

number of mandayr of employrrnt generatmd by samplr

hmurrhmldr. The average mrndaya of hoummholds per annur

b e f o r e availing the benefits work aut to 585 and 848

a f t e r thr intrruentian. Comparison among diffmrant

cars af the NGQ brnrPJeiary graupm, thr a v r r a g e mandays

genwrated par hauamhold wurkr out to 817 whfah is t h e

highest, aamprrrd to brnk brnmficirry and non-

beneficiary housmhold~ i n t h e prs-armirtancs period.

The same t r r n d ' continued even after intrruention.

Hawsvar, t h e perauntage fneraamr of mandryr mP

employment a f t e r the intervention shows that thsre was

13.85 per aant incraaro over the previour pmriad in the

c r s s of brnk benmficiary hmu~eholds, which is higher

than t h e NGO's rate of incrrarm at 12.82 per cmnt and

non-beneficiary h~uraholds at 6.93 per arnt .

This piotura ahangmm whrn w a look at t h e

sectoral Irvel . In the case of bank b+nsfiaiary

houaehaldm, the average nandayr af employasnt per

n r n u f a a t u o i n ~ haurrhold UPS thm highsmt in bath prm and

pos t intrrurntSon period. In thio aasr, the inaraars

was 15.89 per amnt in manufacturing and lawmnt i n t h s

0a.e o f t h e srrufcs m r o t ~ r benmfieiary haumabold 47.41

Per a e n t ) . A miai lar pat tern i s obsrrvad i n t h r garr mf

NGO benrfioiary hourmhoidr.

Lnutwturlnl S frdln~ I knluin# I trtrl S Inunarr I m r w inarr# imun

lktorr I f tat bfrn Attrr kfwr lftrr hfrra Ubr

I.. "------------.-----L--------.-.-..--...-.-"~.-.-~~-~-~~~~~-----*-~~~.---~~--*-*~.--*..*------*"

11 , ses 474 U.N 583 ~ . n w ssi 5.a sas IUI 1o.m

The other noticeable f a a t o r ia that. , In thm

case OF non-bsnrf ie iar ims , khrrs has baen an incrrase of

mandnye p+r housrhold withlout any Int.arvrntion. Thia

i s prrhaps, due t o tha r n t r y CIF additional family

workforae into the labour market.

Evsn than tha intorvmnti~n sf feat of aoheaus

on amployment of h~usoholdo was thm hiahask i n the coma

of bank b a n r f i c f a r i e s , compared t o t h s other two type8

of brnmPiaiary hauseholds i n the pre-intmrvention

Period. therafarm, it can br eonaluded that , , t h e

interurnt ion of goua~nmunt i n the form uf ersdit and

NGOt intervrnt jan i n thm Farm of credit and sk! l 1 + have

h@lpad the informal s e a t o r hausrhald* to improvr both

the i r amp l oyamnt and i neoms I 1 S.

~ h m ~ v * r a l i *Vera#- Lnoore works out to

R S . ~ , 654 t h m Pr*-aaheme per lod and Ra. 0,198 i n the

p o e t - a ~ . i ~ t a n a e par iod ( t a b l e 7.71. &ares* d l € t m r m n t

kinds of bend laiarie8, Lk is Caund that the par unit

inearn* i n ' the case PC non-benef la tar les w a s Rs. 8,182 i n

p r r - s ~ h ~ m w Lad m a d B , 755 in yo3 t-achor+ p m r Lad. The

post income is lowQonparmd to the poat-aeslatanoe

inoome tn the Gas* of bank benufLelarLss (Ra.8,QOO).

Though the NGO benef LcLary average Znuoms Ls o w , the

lnareaae i n peraentage terms was the h i g h s r t at 54.32

per cant, followed by bank bene€Lularles at 34.88 per

c e n t and nan-bend i c l a r les a l 7 . 8 7 per cent. The lncono

per day appearr to be t o w at Rs, 17,8O, eorpnrmd to the

wage r a t e s paid t o the organlred f a c t o r y workara but

h i g h when aonpared t o agrlouttucal Labourers i n

Karnataka. For instanas, i n Karnataka the average daily

wage lncome of the agrlavltural labourarr ura R m . i 0 4 B 1

and the a v e r a a a daily wagor ot warkers I n factorlea w a r

Rs.30.50 in iB05-88 (GOK 1887-68~72-731. T h i s is an

indication of the s ~ l a t e n a e oC w L d e incams dlffermntialm

between the organistad urban EndurtrLal r r o t o r on the an*

s i d e and informat soator and the rural areas on the

o t h e r . Howsvrr , eomparmtiusly spnaktng the informal

seetor inoorer Ln urban a r r a o arm hiather than thoss of

the rural agrlaultural labourers and rural unorgantwsd

1 (may IM*~ d ha *nllaluk him I* ltmr Uc *In tlnldlq wrhn W ~ I C I

llrnwfroturln# X trdlr# 8 Iktrisi~q I Tnbl 1 irr lag lnorarsr lnorewm i w r m inorwe

kfon After kfon Aftmr hfr r Afkr hfore 4fbr

Fte ti60 urmfretutln$ satat 13 wrhatr and 11 utrlw mbtr m k r s m ercldd 8s thy ur net wit#.

labourers. This eanf irrr the general paint that the

informal m m e t a r participants earn Iouer inoora aomparsd

to the formal but dmfinitaly higher than agricultural

wages.

In the ranufactur in$ roetar of nmn-

bmnmflaiarimr, it is obsa~rumd that thr avera$r inawms

Inarearm was notierably hfgher at R+,8,408 in pr8-sohmmm

pariod uhioh has inaraa~sd t o Rs.1Q.191 during the post-

scheme period. This g i v r r riaa tu thr doubt t h a t thr

sample smlsation of the non-banefiefary houorholdr

was wrong. In fact, we have t.akrn cornpararbla units.

I n m p i t m of thLa tha aurragr tnooave are found hleher in

t h i s ~ a t t # b r y On aeeounf t h m hlghsr eacntngs of sonr

membera of these houreholdo. However, the inormmmntnl

inaomm Ln t h i s o a m m w a r Lou earparad to the othmr two

kinds of bmnmflelarler- Crt contrast ta thla, the bank

beneaf i c i a r i e m av+ra#e inaara Lm the e m r e ot

manufauturlng was found tb be Rs.7095 i n ptr-amsirtanom

period m n d has emno up to Rs.8,SlQ i n the pas t -

aosiatanor period, whbh ir loom earpared ta the s e r v i ~ e

e o c t o r brnef lclmry avscaga Lncore .of Rm. 10a 042 L n the

port -ass is tance prr i d , w h ~ r e a u ~ the serw l a m seetar

banof i a iary average incon+ i n pre-ass is tnncw prr lad was

Rs. 5,850 and Rs. 0,400 in the af hr-ara is trrraa pap lad.

Thim was low cowpared to the bank bonaf Lclary rsruice

sector, but the p+rcsntage increase was rare. Ths

trading s e s t v r of NGO and bank b+nef iaLary &i~aoaes are

lower eoaprred t o the trading seator non-benef l c l a r las

in both prm ai~d gost altuatlonm. . Yhatsusr r a y the

dlfferenoer in average lnoore, t w o things are elear

, ( F l the patoentags Inettaars i t 3 lneorea of HGO

benefioiarias was tha highest in a l l seators at 62.14

Per aant, 4 3 * 4 1 per aent and 43.59 per a m n t In

nanuf actur i n l a trading and arsru ice amotars respect Luel y

and (21 ear 1 llrr to thr rahere, the NG0 benrf fo iar iwa

W w r m campal led t o work in in fmr ior w e t L v f k L e a where the

returns n i g h t b* tan#Lblr and r r l a t l u a l y hlshmr, but

t h o i r erploynrnt ar w e e k mituatton was hazardous and

+sploitakLvr. In thr -mas of thr bank benv#iclarlrm, the #

Inereare, though r r w r r t~ b w law In retatlan to NGO

benrf i e i a r ie~, ie qul tr a tan L f faant due to Lnteruont ion.

The percenta#r Lneranse in the carr of tha tradlnt

seatar uaa thr hlghmrt at a(8.40 per a e m t , fr,lIow+d by

the a e r v l c e m ~ o t o c at 34.21 per e n and thr

manufacturlng srcrtor at 34.04 per aent. F r o m t h i s I t is

clear that the trndInp and a e r v i a s seators were

generating norm Lnuomr than the manufacturlng sector.

ThLa Is, perhaps, due, to the nature of manutacturlng

suoh as, tailoring, agarabntht rak ing ate., whieh are

normal ly lower ineore y i e l d i n @ segments.

Fran the above tyo a l t w r n a t i v w presentations

i t i s oloar that d u ~ t o ic~tmruorrtiorr, the average l eve ls

of ineoos L n a r m a m d l r \ a l l rwtor r , ooaparrd to the

prrrvioua yoars. B u t , la t e r w s of pereorrtager, in tha

aarm af HB06r. the Lncreaam wae more than Ln the other

sectors. ThLa shows that IGO Lntaruentlon has hmlped i n

inormarina inmaawe m o r e than tho interwantLon by the

banking inrtitutionu.

A pur r t ion that. 1s af i n t m r a m t i s s whsthmr

thrrr ha+ barn mny markrd ~ h i f t af hourahold ineanss

from lower to higher inoamr mlrbm and whmthar the

benafiaiaries havm crmrsed the povr r ty tina af ter

~ ~ t r r v e n t i o n . Out a$ 300 sampler, t.herr were i i

housahalds i n the inaarr slab of Ru.3,546 bsform

availing of t h m rahanr and this nunbsr has a u m r d o w n ta

5 a f t a r the intarvsntian or assistnnee tTebJr 7-61. The

n u m b m r 9f bmnrfjuiary hawreholds i n t h e in~onr slab of

Rs.3,501 - 4,800 bsforc, has deal inrd from 15 ta 5 . In

t h e n e x t inamms sfnb of Rs.4.801 to 8,400, thara w e r r 32

b e n e f i a i m r i e i a and this nurbrr has dselined ta 23.

Similarly, i n the inatoar slab af Rs.B,401 to 7,200,

there umra 23 benefiaiariarr and its nrrnberr daclined to

10 a f t e r thr scheme. Fran this i t fs clear that the

lower incomr hau~rhaldr haus u r n down a f t e r thr

interurntion. In t h e case of S n a a n m af above Rm.7,2Qi,

thn numbrr of brnePiaiaris~ Pnursasrd from 219 ta 252.

From t h e abovr analysis jt i s elrar a thrre was

mobiI i t y ' o) hauaehaldrs Pram lower inaoma to higher

ineomm braekats. B u t thr numbrr of bsnrfiafnrisr of

households that aatually arorrad thr urban pavrrty linr

was 251 (83.88 per o e n t ) , This inct luda~ 218 (73 pmr

cent) uhm ' w m r r alrrrdy a h v r t h m offiaierlIy dmfinmd

Pnucrrty 1 i n r a) Rm,?,200. I f w r oonsidar only t h e

! 4 tank-

4.. 10 9 21 24 9 19 100 2 0 3 4 21 2f3 14 26 100 . ..

~ g n r i f i c d t W

eliuibla bmnrfieiarirs, there wsre 81 (27 psr c a n t )

families . who w m r e b+lc~w t h e poverty l i n e before t h e

rchsne and this has deulinad to 16.B8 par ernt aftar the

schema was availad of by the benePiairries.

In the real renss, the poreentaga of fami l i e~s

below the poverty Ijns was 27 during ths prr-ars3rtanom

period and t h i s number decl tried to 14.88 per cant. af tmr

tfie sohrne warn implmnsntrd. From this it appsarm that

thr Imvr) of pavarty among tha informal sector

housmholds was lsrm canpared to the rural arras. Thim

f i n d l n g aoes againat the bsl irf that the inforral sector

ho~~ehaldr eomprias OP all kinds of surplus labour, and

t h m inoLdmnor 0% pauwrty lo hlghmr i n thLs eatsgory.

Thu8, i t oan be ooneludod that pavsrty lo not a

dirtini#ulmhlng oharncrtmr 1st lc oC tho inf o r m a t seetor

hourehoIda, bmoausu, tho poverty lwrl L r r thr study was

just 14.68 p m r asnt. whleh is lsss than tha pouwrty l i n r

i n the country i . s 18.9 por cenk during the year 1908-90

(CHIL ' l Q 8 L a a Tablr 8.121,

Hmbi l i t y across brnrficiary ) Io~sm)l~ lds

indiartes that in the ease of bank banePioirrims, 69 prr

aent of thr houmrholdr crassrd t h e povarty tine in t h e

porn t- ass i r tanam pmr i ad. Out. of the 27 aligibls

borrowers, only 40.74 par csrnt, crossed the pavetrt.y 1Sne.

In thm case of NGO brnePiciarirs, it i s naticsd t h a t

t h e r e were 82 hcauteholds above the povrrty 13na during

t h e pre-asoimtanos prrivd. This 3s fnclusivu of

housshald~ whsch werr above t h e povsrty 1 inr IAPL)

before intrrvrntian. Ewaiuding thiu grmup, t h s below-

povrr t.y 1 ins 4BPLI trousahcrlds brf or- intmrvention

aocounted for 2@ per crent.. ThIm has daalinrd ta 16 per

aont after fntrrusntimn. This means, 11 (3 f .94 pmr c e n t

of the sligibls bmtruwrrs) hausrholds have urossrd t h e

pouerty 1 ine. This is Ian earnpared to C h r p o v m r t y

dwcl inr r a t s of bank brnmf iaiarie~. Another notiarabls

trmnd is that i n the oasr of NGO baneffaiary hausrholda~,

i t is found that t h e number o f haur~mholdr %n tha ineome

w1.b a p Ra,8,&01 - 7,200 warn m l m s e t t.hr *&me i n b m t h

a~~istanar and PO@ t-z~bifi&*& pdriodj. A n l m t t a r

situation Ir notlead In the caaa of ths bank brnef i a i a r y

particularly in t h m Incore slab Ra,7,201 to

10, OOQ* T h i s means, t h e earning l r v m l of th- informal

oato or houreholds Ln t h e aLty of Bangalore f a 1 1s I n the

inaome range of Rs. 7,200 ta 10,OOQ psr nnnum.

I n ths unre ~f non-benatlclary haurehalda, It

is amen that 25 per cent usre found bmlow the poverty

i fns at the tiam w h r n f h m l r counter-parts obtained bank

asa is tanoe. Saae of t h e m , h o w e v e r , have n ~ a s s e d the

p o v m r l r 1 Lne rubrequent ly due to Lncrsnss ln f a w l 1 y

earninl~, n o t brcauso of Lnlerventton but becauss of

various o t h e r f a c t o r s , as pointed out earl L e r . Cn their

case, only 5 persons <20 per cant) out of 25 had c r e s e e d

the p o v m r t y Line- T h i s is Low, ooaparod ta the other

categories whlah w e r e asa lsted.

The above analysis indlcater that the lapact

on the sconolni e cotid i t ions of the b m n e f i a l m r y households

was more poaitlve in t h e aase of bank bansfIclaries and

NGO brnef ic far Lea. Among these, L t Ls found that the

impact at credit on ths candltlans of bank bonefLoLary

househo Ids La 8 l g n i t Lcant. t h l s 1s baaause, t h*

P F Q g 0 r t lon of bonk bmnef Lclar l o r who h a v e crossed thr, 4

Pover ty line h a s been htgh as aorpared to t h m NBO

b ~ n e f i c i a r i c r e . Secondly, 1 C is found that the banks as

1 as HGOs haus Ldant l t lsd the highas t number ot non-

~ ~ i $ i b l w ~ n ~ n - g e n u i n ~ Lnforrml bur inesr houamho l d

bmnrf iuiarimr to m x t r n d brnmf t t r , Thm m x t r n t of r l a -

idsntifiaatLon in the aar+ of bank banefielmrfee w a s 73

per arnt and 7 1 p m r eont ln r r m p m m t of NGO

brnmf LeLarimm. T h l 6 Ls blah, eoaparrd to 42-20 per amnt

of a is - Ldent l* Led barrowers 118 Ahmedabad, Arbala and

Saharanpur s tudy , (Kurup 10E19sB81. ThLrdly. the rron-

bmnef lolar les did not eross t h m paw-rty I ln*

a i g n i f ioantly. Evrim then, L n the natural rolourse of

ecanomio devwlapnant, 20 per cent ol the households

among those below th+ pover ty 1 Lne crorrad the poverty

I in*. Even rf ter ewalusion at the natural eourss of

crass %n# of the poverty I Lne, thia track racord of bank

and NGO bmnsC 1aiary hourwholdrrr is bet k e r . This conf lras

our hypothesis that Lnterrentlon helps €arllLea at

informal sretor ta improve t h e f r e c o n m m l c posLtlon and

came out af the viclous c i r c l e e# pauerty,

Sohema-Vise Hob1 1 l ty { B e n d 1eLary l r ruome ~ r r l y ) (E*olualuer

Thr pi~ture rrntionrd above has rsvealsd that

mars non m i ig tbl borrawmr~ had dsr Svsd benmf f tr. Thf s

has happened mainly bruausa, ths banks had rslisd on the

daalaration of fnaore on t h e appfiuation by t h e

b9nef ieiary, In smu+ral cases, t h e applicant had

declared t h a t hm w o l t h r 9 0 1 9 earner in the family and

birr l T b 0 0 m l U s 6 below R8.7.200 por O n n u m . tlraullh othOr

membmrm of t h ~ family were marnfng at t h w t i n o of

deelarat ion. 1 f w e cons l d e r the appl tuantrm i n u o a e

alone for thm purpon8 of ciaarifyinq below and above the

pavorty 1 ins, the f o l lowins picture .nerpCmr.

I t may br seen from the Tablr 7.0 that out of

246 ramp18 unit^, about 85 per aont of the r n t e r p r i s r a

~ g + e aarnlng Lncoae below the poverty line of Re.7.200

per annum. Fol l o u i ng intervent ion, thts number aane

down to 40 ,19 per cent, whlah means that about i 6 . B i per

G e n t of thr sample uni ts orosaed the peviarty line.

Among difforvnt kinds of bmnef laiaries, it ia noticed

that the h ighmr t number of benmflcl~ry units that fall

below ths povmrty line was In the care of NGO

brnef lciariare 187 per asnt), t h m r e a s o n b e i n g that,

several of these u n i t s were found engaged i n low inaome

generating activity suuh as rag picking, p e t t y trades

eta. E v e n than, m o m s improvement has been observed in

t h e i ~ ease due to interv+ntion. the During prs-

intervention psriad, tha number balow the pavmrty l i n e

was about 87 per c r m n t . This declined to 70 per oent,

af tor intrruention. Biml lar lye the p~rcrntage of

bmneftcfarimr below the poverty line ham dselined from

7 1 to 48 In the case of bank beneflolarlee. This waa

h i g h e r uomparmd t o NGO brnefl~iarims- But i n t h i s

the dmaiine of t h e number of p a r s o n s below the

r P ,I thr Balw 4801 6401 7201 lwl 10001 20001 total Balw 9601 Mi ON1 FW)1 10901 15001 tohl *,ltl,,j m to b to to to to L 3000 t4 to to to to ta k

4000 6400 7W IOOaQ Im POOOO A h a 4MO 1400 7WO 10000 lSOOO 2MW Aborr

poverty l inr is tho highest compared t o the non-

beneflaiaries, where t h e r e war an i n s i g n i f i c a n t f a l l i n

the incldenoe of poverty (8 per cent). I t is alao elear

that there hbs bmrn nobility of units from t h e lawmr

income to the highor income braukrtr in respeat o f a1 I

cotegorier of beneficiaries. Hawever, 3n the c a m of

non-benefioiarias, the mobility.waa lowar eoapared ta

the other two kinds of beneficiaries.

From thm above analymie, t h e followin$

eonelurions emerge. First, thara is an upward rism i n

the personal inoaarp of t h e bank and NGO brnrf'iaiarirm

and to soma r n t a n t , i n the case of nun-brnrffciarirr

also* Seoondl y , t h e mabi l i t y i n t h e ease of NQO

benef ia iar imp f porn I ow Jnaaor to higher inaome bra~katm

povmrty linr warn lass oaaparrd to bank benmfiolarfsm.

T h i s dams not asan that t h m NGO aohmmms have lmss impaot

an the ~ O Q ~ O W L Q oonditions of the Informal seetor

ben~ftcsiariwm. A o t u l I l y , t h m prrarntaqm of lnooms # ~ i n

i n the case of NGO bsnsf iaiar lor la larger. But tho

r g d u ~ t i ~ n irl thr poverty level of NGO benrficiarleo wan

(OW because, t h m y werr oarnina muoh lower inaaasm in tha

pro-interu~ntlon perlad, camprrad t o the income earned

by the bank bmnwfiaiarios; the rsaoon bring, that they

were angaged in inferior jobs such as rag piebing,

domo*tiu rrrvmnta ate. b r f o r r obtaining assistanos. In

other warda, t h m fnterventi~n by v a l u n t a s y organisations

has brought abaut a significant change in the eaanomia

condition of the poor. However, such change is

inadequate. There is need to suppart these group* by

other pragrammos. T h i r d l y , the percentage of

benef lolarims t h a t oroared the pover ty l Lna is leas in

tho case of non-benrf i a l a r Les and ins i g n i f iaant

uompared to t h m other aatsgor& of Benelfiaalres.

Employment Bmnerrtlon (Sahmmrl Eraludln# Uarkors

In tho prqufous meotlon w e have semn that the

CrmdLt programme of t h m banku and t h m MG0 s k i l l and

oredit devolopnmnt programmes have playmd . a poaitivm

role in incrmaalng the inoomes of the in formal smctor

"ntraprmneurm ar wall ar wnrksre. In a ~ l m l l r r way,

they hav8 alma madm a signiffcant impact on rrplayaent.

~ h s avorage snploymmnt (Tablm 7.101 ganeratwd by th r

bank brnof i o f a r Lmo wau 347 during thw pomt-arristancr

period, whiah is hiah oorprrsd to the poaition of HGO

b e n e f iaiary units (230 mandays) but low eomparrd to the

non-bsnefldfarlea, in whose caa+ thaao f igurrr are 467

mandays.. However, due to intsrvanttan, the mandays of

employment generated has lnareared by 500 mmndaya in

tho manuf aoturlnq rsator of bank bensf loiarleo. T h i s Is

high oomparmd t o tha o t h e r antegory of bsnrf i c i a r i o r .

Another signif !cant polnt Is t h a t 'the average mandays

per unit in the non-benefiaiary uategory were Lou due to

tho fac t that the manufaoturing unlta in th la group had

engaged more than one worker. B e t w r s n the sub-sectore,

there are same variations. T h l r i s l a ~ g e l y on aacount of

variation in t h e number of w o r k e r s rmploysd in the

sample units. This fact aocounte f a r the over lapp ing in

employarnt generation. In order ta understand the real

impact, an attempt is m a d e to wotk out the growth of

amployment o w e r a period of t i m e . I t t i n o t i c e d (Table

7 . 1 0 ) that thmre is lncreaer ef erployarnt Ln a l l

c&trgoriwr m t schemer due to the aradLt and mkLl l e

Prngramnea. tn the case of non-benef laiarlar alao, L t

is found that thmre le an lncroare in raployo-nt. But,

t h i s Sncrmasm im leas compmrrd to the other aategorima

O f benmf lo iar ies. The Ln~remre ot mattdays af

.--- I C - - - - * - - " - - - - - - - - l ~ - - - ~ - - - - - - ~ ~ " " ~ ~ ~ ~ - ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ " " ~ " ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ " ~ ~ ~ ~ ~ ~ ~ ~ ~

0 Famlly Labour Hlrmd labour Total

,ficiarl*m inaludIn$ tratnmmr ineluding trainearn

B A % In- 0 A % I n - B A S in- armase ermas+ ereaaa

,_1---------1--3""-1--l-------------------"--"-----*-"--------"----------"--------

Trrd i n# 293 326 11.14 - - - 283 325 11.14

Bervicint 306 338 0.08 0 128 100.00 306 484 51.88

Manufacturing 412 440 0.82 174 180 9.22 565 630 7.00

Trading 344 355 3.30 - - - 344 355 3.34

~ m p l o y a r n t , for a1 1 t h m nub-sectors taken togather, ir

44.07 pmr cant Ln t h m arm* ot bank ban+flclarlrs. Thla

inarmarm inoluder not only the fami ly labour but ale0

hired labour nnndays. The r f r s i n family lnbour

employment l m 31.02 per cant and the remaining part is

aciounted f o r by hirmd labour mandays. Genorat Lon of

additional mandays wna found to be the highest tn the

ears of the rsrfi~uta~turlntj emator (40.97 psr oantl, aa

gpmpered to the ovmr-a l ! Lnaceare, of uhiah, Increase

of family labaur randays aonstltuts a major share (38.27

per ~ e n t ) . Tha rervlue rseotor had nhawn a lowar rate o#

4Q.88 p s r cent, but the share of family labour was 8.25

per cent, whioh i t w low earnparad Lo the other sub-sectors

of t h e bank benet l c l a r i+a.

If w e look a t t h e inpaat. of NGO 3nt.rrvention

on mrnployasnt, thrrr is & elear pasitius trend. I n t h e

e r s r of NGO assistmd sehrmrs, t.ha ineraass in rmploymant

stood a t 50.19 prr a s n t , uhSnh 9s higher than that of

t h e bank benefi&irrisr 144.07 per cent.). In t h t r

cr te#ory of bnnrfiaiarSsr alrm signifi~ant difPerrnurr

were ncttiamd roraPr sub-sretmra. These dlfPrrencmr are

wide conparsd to t h e narrow diffmranes i n t h m a s af

bank beneficiaries. I n the aarr of t h e manufacturing

segment, t h e lnerease in mmployrant generation was 67.04

Pmr aont , fa1 lowsd by 51.88 par amnt in t h r smrvlao

sector. Thim inorrm++ is hi#hrr, czarpared to t h r two

p ~ ~ t o r u O C the brnk Boneit LuaLres. Yherear, 111 the aasc

of t h m t radint rmotor the inarsaam i n eaploymsnt was low

at 11.14 per aunt in NGO group, t h i s ir lowrr than t h m

gain i n thm amrvlce aseoto; under t h m bank benmflaiary

eategorr (47.82 per aantl. I n oontrnat t o thisr t h m

inareaam of family wmployrent 4mandaysl was more In the

cam* of NGO bones lelat i+s. Thm Ltlcrraae w a s 41.94 per

amnt: in the l a a r m of nanufamtutlnig, 11 per asnt Ln

trading and n lowrr Lnersaae Ln the aervica sratar at

In contrmst to the above, thsra has been a

rrcipiento catrgary a1 am, oven w i t.hout any f ntrrvent ian.

T h i r increaer ia bound to occur In the normal course of

mconomi c bevel apmant., I t is rvidrnt hers that the

increasr In mandays is juot . 6.48 i n all r l e ~ t c a r o taken

together. Howavar, there were d3 f frrmnce bmtween sub-

activities. Howavar. thas t d i f farenees r not

signifinant i n t h e case af snrvica and manufacturing.

The athar impartant faator i n this aategory is thm

doninanas of family labour and it has I inurmarmd

over t h m period.

From the formgoing account it can be coneluded

t h a t intervrntimnw havr brought about increase ,in

mandays sensxated. ' Thio incrrase vrrius acrrosr sub-

Seatars of both NGQ and bank bsnrficiarirs. Hauevor.

i t is found that the lmareaae ut r u p l a y r r t ~ t i n M Q U ,

sector Lra norm, elomparsd to bank bonrf ilolallres. I n

~ t h m r word=, the NQDe a r m , i n praattom, morlr rf f r c t i u e

i n lmprauina the employaont aondltlbn a# t h + i r

bmnmf Lo iar lea. I n the carr of non-benet l m l n r i e a also,

morn@ v i s I ' b I e ohangs has coale about o v e r a per tad at

t i m e , but this change is low aorparsd L o the

bsnaf i a i a r ies. f f w e subtract the quaatturn of natural

g r o w t h of mrplornset from the Lnorrrontal randrys of

employmr~t of other cstegorler af beneflalnrLer, ettll

we find aare additional tncreajla af rmpIoyrlnnt- T h i s

can b r attr tbutrd to intecvention. In genmral, i t r a y

be cone l udrd that the aan-powtar d e u e 1 opmen t,

particularly ski 1 l acquLs l t l o n thrnush learning and

doing, has greater impact on Increrare i n srpLoyrsrrt

generation than through provleLon of credlt #or small

bus ineaserr o r m l c r o - e n t + r p r i5rs . Thlg is particularly

true In t h e dare of NGO beatsf ic Lar lrs, because, the

training provided to thea by NGOa ham enabled thea t o

compete in the urban labour market wi th arleatrr

confidence. T h i s sugaesta that rueh reaaurrr sh~uld came #

in a big way i n future.

Incorms of HGO Yorkeru C benef i c i a r lea 1

T h r aonpar lercbn of inf orrral sector

Bntreprensuro incarno w l t h that of workera w l t h l n the 1

NGOs has brought out sowe LntsrestLnl results. I t r a y

from tabim* 7 m i I , that the r v a r r g e ~ n o o u 04 tha

.ork.rH was le.3 In PI. and at krr-rcharr p r t o d whan

cornparad t o ent*r?r.nur.r (noome. gut the pre and poet

incoma a* the m a l l u t actur l n g anttmprnnsura \ear

compared ta t h m warkerc p o ~ t - a a = L j t a ~ = * i m a a a r In

nanufrotur1n.S- f Lnd Lnl lo*. .arlnr t th. g m r r r l

b e l i e f that the workera i n ~ o r e r are n o r m a l l y hlghmr on

acaount of cont inuous errployment. B u t hera ths incornea

a r e OW, P + . F ~ L o u \ ~ c L Y Ln the seruLce s a M t m r ThLs' i a

mainly bsaa.uae the NGOs had identlf i rd the target groupr

mostly balonting to weahkar s ie~ t fonn r e s i d i n g i n slues,

shanty t o w n s and carrying out t o w Lncane generat l n g

activities. For such g t o u p ~ , the M G O L s have g i r r n

s k i l l , t r a i n i n g and plaosd then in rmapactable jobs.

This has greatly helped t h e m In Improving t h e i r earnlng

capacity. Thls 1s clear from the inc rementa l inooae

ra ter of workers and srrtrmproneure. t t is faund that

the i n a r r m e r n t a l rater of Lnuone Ln t lw da,aet of uarkerm

i n the manufr~turlng rector were 7 7 . 6 2 per cent and

service a a ~ t a r 5%. 99 per c e i ~ t at tar lntarusnt Lon. Pram

t h i s anm can i n f e r that the incremental incore would ba

more in the oaeo of jab placement than $elf-srplaymsnt.

From the above dfsoussion, L t L r f aund that

tho average l s u m l of earningm of entrepranours of

SIrv ica seator both prrimds was batter compared t o

i n f o r m a l maot~r l abour e m p l o y e d i n the asr,u ice sEt~ t0 f .

tabla 7, i l I Aurta#m lnaamr and Brplnyrant at nQONm ManrCialmtlar {Unltm l by d4tCatrnt ptaatnrmr

p a t l ~ l t ~ l naore IRs. I Empl oyusn t t Handay s 1 % %

Na. of inarrnrr i ncteasm Units Bmfora Aftar Bsfora After

__c-------------*---r-rI----"---------""---"l-n--"n--------",""--m----""-----

Crgdit L Skill

nanuf ratur ing 15 2487 4413 77.45 206 319 53.33

Trading " 9 9 - - * -

Skill

tlanuf actur i ng 17 3307 5123 52.10 194 352 61.10

Setvicin# 2 6600 10200 54.55 200 506 05.08 - r - r - - - l l l l l l ~ l " " l l - - - - - - - - - - - - - - - - - - - - - - ~ " - ~ - " " ~ - - - ~ - ~ - - - - - - - - - - - ~ ~ " ~ ~ - " - l - .

Total I9 2009 3381 52.61 143 2IJ3 83.35

flanuf ac tur i ng - - - - - - -

Servicing - - - - - - - - - - - C - l l l w - " l l l l - - - * - - - - - - " - - - " - - - - - - - - - - - - - - - - - - - - - - - " - - - - - - - - - - - - - - - - * " " - -

total 10 4477 0220 43,41 263 325 11.14 - - - - 1 " 1 - - - * + l l l l ~ l ~ " L L ~ " " w - c " - " " " - - - - - - - - - - - ~ - - - - - - - - - " - - l - l - - - - - - " " - - - - " " " - "

Total

flanuf actur ins 32 2954 4730 02.13 201 337 B7.74

Servicing 4 5050 8400 43.59 308 404 51.88 ----"1------*-llr"------------"------~~--------------------------------------

Tatal 40 3537 5458 54.30 230 345 50.19

B u t Ln thr nanufmuturin# saotar, workers wets batter aQ4

f t Lnkrrvant Lon than thr uni tr. In terra of

inaromrntal inoore, the workora were b m k t o r o f f than the

entrepreneurs in bath tha seatars. But , Ln t e r s r ~ of

av+ragm lneomrs, the a r + d i t rmeipient rntrrprconaurr of

serv i e r sector were better o f f and manugaatur in# rector

workers ware bmttar o f f in Jobs. Thlo suggests that

s~lf-employment is bmkter thaor jab- ylnaemsnt Lrt asrvlce

see top , provided thr parsons who a r m assisted by MGOs

are alao suppar tsd to take up self -employment nckLuL ty.

Also job placement i n manufackarring Ls better than self-

employrant wlthout any auah arsistanae.

income and Employment af Job Placad Bene f lolories r

Thr average e a r n l n g s as t h e workers ( T a b l e

7.lZI in tho lnfarnal sector were R6.2 ,641 per worker

dur l ng the pre-aar latance per loJI w h i c h increaard to

R s m 4 , 8 0 0 per worker w f t+r Lnkervant ion 1. e. a 31.49

per c a n t increase (see Tablm 7.81. In splts of t h i s

Inerearm, t h m f r inaomes are s t i l l l a w carparad to t h e

lncrsamit i n Incaras per entrepreneur Ln the case ot the

units, B u t the peroanta~o Lncreaaa in income i n the

care of workers 1s much higher at 74.18 per cent,

CQopwred to mntroprsneurs of MGO unlte at 54.3 per cent

aI \~ j blkrrk b u ~ ~ r f ic [ a r y ~ n l r t rul,ra~reura .at 34 .66 pur c s ~ r L .

~ ~ b l r V 1 I Avm~a#m Insomr and Imploymmnf m? 'Ma0 dab Plaamd Ianm?imlarlrr IwarLmrm)

~ c t l u i t ~ lnearr (R+. 1 ' Employment (Hrndayr) s s

Na. of i ncrsasm i ncraasm Vorkerr Emfatr After ' 8mPare After

Trading - - -. - - - -

_-c-"-----"----'----------r-----*"--------"-*------------

Total 54 2841 MOO 74.161 21 4 282 31.49

Like income, anployarnt genaratian of wurkero

also d i d not. signif Scantly inareass Fa1 )owing NGO

interurntian ( r a m Table 7 . 6 ) . The increasa warn j u s t

31.48 per cent., whfich is l a w , carpared ta NGQs units

(5Q.iQ) and bank benmficiaries (43.90 per cent) and

lmpaat PP WGO Prmgfammm r

Chenaea crf lneora and Employment (of Skill and Credit,

S k i l l and Crrdit Bmnefimlmxiesl of NGO'U

NGO pro$ramnes have thrum c~rponents. The

c r r d i t and ski I l programmes af NGO' r have p l ayed a more

P a S i t f v r r m l r i n inarmawing $nuore. This is true of

1. Sore of the seharaa for urban aarmuntty w o r m site8 and meru Lars, r lun Lnpraumrrnt, Intagrat& .uhi Id Devmlopnmnt s e r o tors C t CDG 1, Bar L a r r r v L o m u Approaah, HLd-day meals f o r th* ehtldrrn and maall and medlur towns develaprmnt prograarae (Par

drtallr rss NCU 1888 8 8 8 ) .

2. Computed f r o m tho unpubllahmd paper of 88PUP data, Karnataka State, Reserum Bank of CndLa, Bangalore, 'Canara Bank, Lead Bank, Bangalare PLstr Let, Canara Bank, Lead Bank and Prtority Slerctot Honitoring Swator, Banlalore CLrals O f f lee, Bangalore and Canaro Bank, Hstru J Lv l a ion, Ban$nlurs.

3. The SEYA m t Ahmedabad , A~napurna HnhL In flandal af Bombay, Sarvodaya Ln S r i tanka Ya~kfn$ Woaene Forum in tladras are soma o# the HGdoa that haum undsr takmn these . k tnds of aat Lv L t Lrs {Sea for details mEIGTSs G a i n Clout , Recragrrltianm, thr Urban E d ~ k v o l . 13, Wo.8. actobsr 18188 3 2 ) .

4. See ThippaLah and Dmuendra B a b u I R D Pragraame Ln Karnataka, Kuruksstra, uol. ~ w w u i , No. 2 , Noueaber 1987 135.

5 For goad macount af trmfning programmes see Flu3 tnan 1989.

0 . See I rnprowencr~t at Enanomie C:odi t . i m n c of Ilrbsn P a a r m , Y m d m a V o l . XXV I , NQ. 3, February 18-28, 1902, p. 15. and alsa see Sel F-Enplayed Women's Assmeintion tSEUA) Expnriener Sn Ahmadabad.

The hourohold incanr ir daffnmd as the total incoar der3vrd by the hourshmid f r o m a l l sourams at the t i m e 0 ) interview . These inuomme a r e oompared w i t h t h s prruimur 3naurao enjaysd by hausahold brPo~e rvaifsng of crrdit or skill by any OP thr housrhold m r m b r r . l n the Sara of non- beneficiary hmuaeholds, the incars drrivad by such housrhuldr on* year prior to t h e intrrviaw date $ 8 collautmd. Thrmr jnaareo have beon used a a cantrol lad grmup to assess the 3rpolct,. of intmrvrntSon aF banks and NGQ*.