The distribution of benefits has improved, but resource efficiency is still far from being achieved
The Gram Panchayats are the focal points for development activities. In this regard, a concerted campaign – Sabki Yojana Sabka Vikas – has laid the foundation for strong community participation involving panchayats and self-help groups (SHGs). Poverty has decreased significantly due to the focus on benefit delivery of government programs such as Ujjwala Yojana, PM Awas Yojana and Deendayal Antyodaya Yojana-National Rural Livelihood Mission (NRLM). Groups that were often excluded from these programs were included and gram sabha validations were conducted to ensure that services reached disadvantaged groups.
The Panchayati Raj Institution (PRI)-SHG partnership has accelerated the pace of poverty reduction, and the use of Aadhaar to validate entitlement has significantly reduced corruption. In addition, transfers from the Finance Commission made directly to the gram panchayats have led to the creation of basic infrastructure at a much faster pace in rural areas.
In 2020, researchers from the International Initiative for Impact Evaluation examined the impact of NRLM in nine of India’s poorest states. They found that an additional 2.5 years of joining self-help groups was linked to a 19% increase in total household income. At the same time, only 19% of SHG loans were used for productive purposes, such as supplementing their livelihoods, and only 65 SHGs had started some form of entrepreneurial activity. Most SHGs remain confined to being microfinance units rather than becoming commercial entities. This challenge persists with the NRLM. The report indicates that the success of the NRLM depends on improving the ability of members to diversify into highly productive activities. At the same time, no serious effort is made to converge resources between different programs to reduce administrative overhead.