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STUDY TEAM AND SUPPORT STAFF

Prof.M.A.Oommen, Malcolm.S.Adiseshiah Chair, Institute of Social Sciences, New Delhi

Shri.N.Gopalakrishnan Nair, Consultant.

Dr.R.P.Nair, Institute of Social Sciences, Thiruvananthapuram

Shri.D.Mohanan, Institute of Social Sciences, Thiruvananthapuram

Ms.Preetha.P.Nair, Institute of Social Sciences, Thiruvananthapuram

ACKNOWLEDGEMENT

This Report is a bit delayed, for which I tender my apologies to the Kudumbashree Mission. Mr.T.K.Jose initiated the project and took keen personal interest. Ms.Sarada Muraleedharan who succeeded him was also equally interested. My sincere thanks to them. Dr.R.P.Nair’s help both physical and intellectual is thankfully acknowledged. He and Mr. Mohanan helped particularly in doing the field work regarding micro enterprises. Mr.N.Gopalakrishnan Nair was always ready to help. Preetha.P.Nair did the computer work cheerfully. I am grateful to them all.

M.A.Oommen

CONTENTS

AcknowledgementAcknowledgementAcknowledgementAcknowledgement

ListListListList ofofofof TablesTablesTablesTables

ListListListList ofofofof FiguresFiguresFiguresFigures

ListListListList ofofofof AppendiAppendicAppendiAppendiccesceseses

ChapterChapterChapterChapter 1:1:1:1: IntroductionIntroductionIntroductionIntroduction

Salient Features of KDS A Brief History of KDS The structure of Kudumbashree CBOs The Objectives of the Study Methodology Sampling Design Questionnaires Questionnaire for NHG households Questionnaire for the Secretaries of NHGs

ChapterChapterChapterChapter 2:2:2:2: KudumbashreeKudumbashreeKudumbashreeKudumbashree Households:Households:Households:Households: AAAA SocioSocioSocioSocio EconomicEconomicEconomicEconomic ProfileProfileProfileProfile

ChapterChapterChapterChapter 3:3:3:3: RevisitingRevisitingRevisitingRevisiting thethethethe KudumbashreeKudumbashreeKudumbashreeKudumbashree PoorPoorPoorPoor

The Economic Status: Evidence from the field Self – Evaluation Evaluation by Secretaries A criteria - based analysis

PagesPagesPagesPages

1

15

22

ChapterChapterChapterChapter 4:4:4:4: TheTheTheThe NineNineNineNine PointPointPointPoint Index:Index:Index:Index: AAAA ProgressProgressProgressProgress ReportReportReportReport andandandand aaaa CritiqueCritiqueCritiqueCritique

31

The Official Poverty Line The KDS Index: Some general criticisms

ChapterChapterChapterChapter 5:5:5:5: TThriftTThrifthrifthrift andandandand CCreditCCreditreditredit SSocieties:SSocieties:ocieties:ocieties: AAAA CriticalCriticalCriticalCritical EvaluationEvaluationEvaluationEvaluation

Thrift and Loans: The Macro Picture The Micro Scenario Purpose of loans and debt liabilities

ChapterChapterChapterChapter 6:6:6:6: LocalLocalLocalLocal Governments,Governments,Governments,Governments, KudumbashreeKudumbashreeKudumbashreeKudumbashree andandandand ConvergenceConvergenceConvergenceConvergence

Local Government, Kudumbashree and the Plan

39

54

61

ChapterChapterChapterChapter 7:7:7:7: KudumbashreeKudumbashreeKudumbashreeKudumbashree andandandand WomenWomenWomenWomen EmpowermentEmpowermentEmpowermentEmpowerment

Organisational Empowerment Economic Empowerment Knowledge and Leadership Empowerment Social Capital

ChapterChapterChapterChapter 8:8:8:8: KudumbashreeKudumbashreeKudumbashreeKudumbashree andandandand MMicroMMicroicroicro EnterprisesEnterprisesEnterprisesEnterprises –––– SomeSomeSomeSome CaseCaseCaseCase StudiesStudiesStudiesStudies

77

Kudumbashree Micro Enterprises – the Macro picture

A Brief profile of Micro Enterprises in Thiruvananthapuram District

A Case study of Micro enterprises in Venganoor Panchayat

The Sample units: More details Analysis of working units Units under the Agriculture Sector Units under the Industrial Sector Units under Services Sector Analysis of closed units Lease Land Farming Viability of KDS Micro enterprises: More evidences:

Views and suggestions of the organisers of the Micro Enterprises

ChapterChapterChapterChapter 9:9:9:9: AnAnAnAn EvaluativeEvaluativeEvaluativeEvaluative SummingSummingSummingSumming UpUpUpUp

 

107

ReferencesReferencesReferencesReferences

117

 

LIST OF TABLES

 
 

Pages

Table 2.1:

Percentage distribution of Respondent Households according to Family size

16

Table 2.2:

Percentage

distribution

of

Members

according

to

16

Physical conditions

 

Table 2.3:

Distribution

of

members

according

to

level

of

17

education

Table 2.3 (a):

Distribution of members who are head of the households according to level of education

17

Table 2.4: Distribution of members who are head of the households according to social status and level of education

17

Table 2.4 (a):

Distribution of members who are head of the households according to social status

18

Table 2.5:

Distribution of members according to Occupation and Nature of employment

18

Table 3.1:

Trend in the number of NHGs formed and families covered (2000 01 November 2006)

23

Table 3.2:

Distribution of sample households according to BPL/APL status, natural region and Phase: Rural & Urban

26

Table 3.3:

Distribution of members according to Economic status as reported by Secretaries

27

Table 3.4:

A Social Class wise distribution of poor and non poor based on the 4/ 9 Point Criteria

28

Table 4.1:

Improvement in housing conditions after joining the NHG

35

Table 4.1(a):

A

break up

of

the

Improvement

in

the

housing

35

conditions

 

Table 4.2:

Pattern of Food Consumption before and after joining NHG

36

Table 4.3:

Source of Drinking Water before and after joining

 

36

Table 4.4:

NHG Sanitation Facility before and after joining NHG

36

Table 4.5:

No of those employed in the family before and after joining NHG

37

Table 4.6:

Alcohol addicts in the family before and after joining NHG

37

Table 5.1:

Overall trend in Thrift and Loans (Mar 2001 to Nov

40

2006)

 

Table 5.2:

Overall trend in Thrift and Loans per family (Mar 2001 to Nov 2006)

41

Table 5.3:

District wise Trend in Linkage Banking

 

45

Table 5.4:

Portfolio pattern of Households not depending solely on Thrift and Credits

46

Table 5.5:

Purpose wise distribution of loans availed: A Phase/ Region wise breakup

47

Table 5.6:

Distribution of members who availed loans by source

 

49

Table 5.6(a):

Source wise and region wise break up of debt liability at the end of June 2006

50

Table 6.1:

Distribution

of

NHGs

according

to

participation

in

56

various activities

 

Table 7.1:

Distribution of members according to type of Empowerments after joining the NHG

63

Table 7.2:

Distribution of members according to Organisational

64

empowerment after joining the NHG

Table 7.3: Education status wise distribution of members according to organisational Empowerment indices after joining the NHG

66

Table 7.4

Self perception of the Members regarding increase in Income & Savings after joining the NHG

67

Table 7.5:

Social category wise Distribution of members according to Economic Empowerment after joining the NHG

68

Table 7.6:

Social category wise Distribution of members according to Knowledge Empowerment after joining the NHG

69

Table 7.7:

Social category wise Distribution of members according to leadership Empowerment after joining the NHG

69

Table 7.8:

Education wise Distribution of members according to harassment after joining NHG

71

Table 7.9:

Distribution of members according to improvement in Social capital

73

Table 7.9 (a):

Distribution of members according to Social capital

73

Table 8.1:

Micro enterprise units functioning in various districts in Rural Areas

77

Table 8.1(a):

District wise micro enterprise units functioning under yuvasree (50K)

78

Table 8.2:

Micro enterprises Thiruvananthapuram District

79

Table 8.3:

Micro Enterprises in Venganoor Panchayat – Total units registered and units selected for case study

80

Table 8.4:

Working and Non Working Enterprises by Type

81

Table 8.5:

Economic profile of the working units

82

Table 8.6:

Employment/Wages pattern of the working units in the Agricultural sector

83

Table 8.7:

Select Economic indicators of Agriculture – Based Enterprises

84

Table 8.8:

Performance Indicators of units under agriculture

85

Table 8.9:

Micro Enterprises under Industrial Sector

 

86

Table 8.10:

Important Indicators of enterprises in the Industry Sector

87

Table 8.11:

Performance

indicators

of

the

enterprises

in

the

87

Industrial Sector

 

Table 8.12:

Basic Indicators of the Working Units under Service Sector

88

Table 8.13:

Basic Data on the Working of the Enterprises under Service Sector

89

Table 8.14:

Performance Indicators of the units under Service Sector

89

Table 8.15:

District wise details of lease land farming as on January 31, 2007

91

Table 8.16:

Distribution of Micro Enterprises by type of product/services and cost efficiency

93

Table 8.17:

Problems

&

Suggestions

reported

by

Micro

94

Entrepreneurs

 

LLLListististist ooooffff FFFFiguresiguresiguresigures

 

Fig: 1.1:

The Role of Kudumbashree CBOs in Women Empowerment: A diagrammatic Presentation

5

Fig 3.1:

Trend

in

the

formation

of

NHGs

(2000 01

Nov

23

2006)

Fig 3.1 (a):

Trend in the Number of Families covered 2000 01 Nov 2006

24

Fig: 5.1(a):

Trend in Thrift & Loan (Rural)

 

42

Fig: 5.1(b):

Trend in Thrift & Loan (Urban)

43

Fig: 5.1(c):

Trend in Thrift & Loan (Tribal)

 

43

Fig: 5.2:

Thrift Loan Ratio

44

Fig: 6.1:

Decentralised

Planning

And

Kudumbashree:

A

57

Stylised Presentation

 

LLLListististist ooooffff AAAAppendicesppendicesppendicesppendices

 

Appendix 2A:

Percentage distribution of households according to Natural region and phase

20

Appendix 2B:

Distribution of NHGs by Regularity of holding meetings and nature of Attendance

21

Appendix 3A:

District wise distribution of Progress of NHGs (March 2001 Nov 2006)

29

Appendix 3B:

BPL (APL) Percentage Distribution by Natural Region and by Phases

30

Appendix 5A:

Average debt liability – by source of debt

 

52

Appendix 5B:

District wise percentage distribution of Secretaries according to opinion on the rate of interest charged by banks on loans

53

Appendix 7A:

education status wise distribution of members according to knowledge

74

Appendix 7B:

Distribution of members according to Nature of Co operation

75

Appendix 7C: Distribution of NHG Secretaries according to resolving conflicts with in family members and conflicts in which the members or their family are not involved

76

Appendix 7D:

Distribution of Candidates from Kudumbashree CBOs who won 2005 Local body elections by type of LGs

76

Appendix 8A:

Performance Indicators – Agriculture Sector Units

98

Appendix 8B:

Performance Indicators – Industrial Sector Units

100

Appendix 8C:

Performance Indicators – Service Sector Units

102

Appendix 8D:

Performance Indicators – Closed Units (Sector Wise)

104

Appendix 8E:

Lease land farming A case study of two NHGs in Venganoor Panchayat

106

Appendix 9A:

Income and Expenditure Highlights

116

CHAPTER 1 INTRODUCTION

In Part I of this chapter we provide a brief

backdrop to the study. The second part of the chapter is devoted to explain the

objectives and methodology of the study.

This chapter is introductory.

I

Formally inaugurated in May 1998 and launched in April 1999, but fully operationalised by 2003, the Kudumbashree (KDS) is ‘a women-oriented anti- poverty programme’ cast in a mission mode under the leadership and patronage of panchayats and municipalities. As the Mission statement puts it:

“To eradicate absolute poverty in ten years through concerted community action under the leadership of Local Self Governments by facilitating organisation of the poor combining self-help with demand led convergence of available services and resources to tackle the multiple dimensions and manifestations of poverty holistically”. The economic base of this self help initiative (popularly called ‘Ayalkoottams’) is built on the concept and strategies of micro finance.

1.1 Salient Features of KDS

1.1.1 Although the basic idea of KDS is derived from microfinance, in its organisational form and operational dimension it has evolved with several unique features. Broadly speaking, micro finance means providing financial services to the poor, long excluded by mainstream banking and financial market. Neoliberals, NGOs as well as several governments of the world now support it for their own reasons. Micro finance as a prominent financial service emerged in the 1970s, notably after Muhammad Yunus of Bangladesh started the Grameen Bank, and began to offer financial services to the poor once excluded from formal banking primarily because they lacked physical collateral. Today micro finance has emerged as an industry in which even big multi-national and national commercial banks are interested because the poor and their collectives have demonstrated their credit worthiness through prompt repayment in a world where their richer counterparts have a record of mounting non-performing assets and bad debts or even create sub-prime lending hazards.

1.1.2 The Task Force appointed by NABARD in the latter part of 1990s consider micro finance as the provision of thrift, credit and other financial services and products of very small amounts to the poor in rural, semi-urban and urban areas enabling them to raise their income levels and improve living standards [NABARD (1999)]. The underlying assumption here is that the loan money will be used primarily on income-generating schemes which enable the loans or micro credit to be liquidated in the process. The major features of micro credit are:

Loans are generally advanced to individuals or groups who are members of collectives often called self-help groups (SHGs). An SHG is a substitute for physical collateral and is referred in the literature as providing ‘social collateral’. The formation of groups has the twin advantage of lowering transaction costs and improving repayments, through peer pressures and through the sheer need for sustainability. Micro credit is viewed as a method of promoting market-led growth. Yunus even goes to the extent of describing this phenomenon as privatizing economy [Yunus M (1997)]. By increasing the purchasing power of the poor, a larger market potential is created.

It involves loans without collateral

1.1.3 From humble beginning in far flung areas of the developing world such as Bangladesh, India, Indonesia, Africa and Latin America, micro credit graduated into a major industry in contemporary world. Three different approaches have been identified in the evolution of micro finance: the Latin American model, the Grameen Bank model and the SHG-based

model. Latin American model is a commercial model. It tries to ally with the formal financial system rather than donors or government-targeted programmes. Emphasis on social and community development of the poor and marginalized women is totally absent in such a model. Instead the main focus is on enterprise creation and growth. The Grameen model is basically centred on small women groups and poverty. The self-help group based model popularised and institutionalised by the National Bank for Agriculture and Rural Development (NABARD) through the commercial banking system is the common pattern in India. KDS does not fall into any one of these, though its economic base partakes the micro finance paradigm and its organisational pattern evolved from the community development society that originated in the Alappuzha municipality in the early 1990s.

1.1.4 In what ways KDS distinguishes itself from other micro finance organisation? This question is answered by outlining the emerging features of KDS.

1.1.5 One, KDS is not a commercial institution. It is a community-based organisation (CBO) of the poor identified on the basis of a 9-point criteria. (See section 1.2.2). It has three tiers with the neighbourhood groups of poor women (NHGs) at the bottom, the Area Development society (ADS) at the intermediate level and the community development society (CDS) at the apex level. [For details see section 1.3). By now most poor families in the state have come under the CBOs and are net-worked. Contrary to the extant income poverty approach of the Government of India (GOI), KDS has developed a holistic approach to poverty alleviation.

1.1.6 Two, in the KDS community organisation the neighbourhood groups (NHGs) of poor women at the bottom level act as micro financial intermediaries called Thrift and Credit Societies (TCSs). At the intermediary level there is a cluster of 8-10 NHGs called Area Development Society and at the top level of local government the community development society (CDS) is formed by federating all ADSs under the local government. During their weekly meetings, small savings brought by members are collected. The Secretary of the NHG takes up the responsibility of thrift and credit operations at the NHG level. Collection of savings, account keeping, loan disbursement, repayment collection etc is done by the secretary. Each TCS has a thrift register and the weekly savings are accounted in the register. The savings thus mobilised is deposited in a commercial bank. Thus the TCS of KDS functions as a micro-finance intermediary. Kudumbashree promotes the savings of the poor by encouraging the formation of Thrift and Credit Societies (TCSs). Almost simultaneously with the inauguration of the CDS programme in

Alappuzha in 1993 1 , the Government of Kerala (GoK) adopted the idea behind the Self Help Groups (SHGs) which have already gained currency in India through the efforts of NGOs like MYRADA (Mysore Resettlement and Development Agency) and promoted by NABARD to bring financial services to the reach of the poor and the informal sector. Now CDS in Kerala is an institution that covers all the municipalities and panchayats.

1.1.6.1 The most important rationale in bringing financial services to the door steps of the poor households is the economy in the transaction costs. For formal banks it will be costly to mobilize the small savings of the poor families lying scattered. Equally prohibitive is the cost to the conventional banks in financing a large number of these families who require credit frequently and in small quantities and that too not backed by collateral securities. It is in this context that the intervention of NABARD and the mediation of CDS on behalf of their TCS assume significance in providing ‘unconventional’ banking and alternative financial services to poor women. An important and probably unique aspect of the micro finance system of KDS is that several individual members and the majority of NHGs do not avail of bank credit and rely only on their own ‘thrift’/savings [See Chapter 5].

1.1.7 Three, KDS through its micro finance structure and through its many- faceted activities seeks to empower poor women who are identified using the nine-point poverty criteria [See section 1.2.2]. The empowering process 2 is worked through the three-tiered community-based organisation referred to as community development society (CDS). The multi-pronged approach focusses on human resource development, community health, child welfare through ‘Balasabha’, basic minimum needs, rehabilitation of poorest of the poor (the Ashraya Project), lease land farming, housing, besides micro finance and micro enterprise development. The term ‘empowerment’ is used here as a process whereby the powerless women gain a greater share of control over resources and decision-making be it in their family or other social institutions to which they get associated. A stylised diagrammatic presentation is given in Fig 1.1.

1.1.8 Four, KDS has the patronage and support of the State Government as well as the local governments. It now functions as part of the participatory planning process and functions as a delivery mechanism at the local level. It is a fact that the CDS has over these years demonstrated the potential to function as a sub-system of the municipalities and panchayats integrating the various antipoverty programmes and function as their delivery system.

1 See next section (1.2) for a brief history of Kudumbashree.

2 It is logically untenable and practically impossible to envisage the empowerment process as a 12- stage flow process as the State Planning Board (2002) Economic Review (p327) has done.

The strength and viability of the CDS system is derived largely from the fact that it is functionally linked to the local bodies.

Fig 1.1

The Role of Kudumbashree CBOs in Women Empowerment:

A diagrammatic Presentation

WOMEN

EMPOWERMENT

Economic Empowerment
Economic Empowerment
Economic

Economic

Empowerment

Empowerment

Asset Creation and income generation

Empowerment Asset Creation and income generation Micro Enterprises Micro Finance (Own Thrift + Bank Loan)

Micro Enterprises

Micro Finance (Own Thrift + Bank Loan)

Micro Enterprises Micro Finance (Own Thrift + Bank Loan) Social Empowerment Decision Making Participation in
Micro Enterprises Micro Finance (Own Thrift + Bank Loan) Social Empowerment Decision Making Participation in
Social Empowerment

Social

Social Empowerment
Social Empowerment
Empowerment

Empowerment

Finance (Own Thrift + Bank Loan) Social Empowerment Decision Making Participation in Planning and implementation

Decision Making

Thrift + Bank Loan) Social Empowerment Decision Making Participation in Planning and implementation process Social

Participation in Planning and implementation process

Making Participation in Planning and implementation process Social Co-operation reciprocity and Trust (Social Capital)

Social Co-operation reciprocity and Trust (Social Capital)

CBOs

Co-operation reciprocity and Trust (Social Capital) CBOs 1.1.9 Five, the most conspicuous feature of the programme
Co-operation reciprocity and Trust (Social Capital) CBOs 1.1.9 Five, the most conspicuous feature of the programme

1.1.9 Five, the most conspicuous feature of the programme is its emphasis on poverty reduction with a target to abolish absolute poverty in ten years. Officially it is characterised as “a planned, mighty onslaught on poverty”.

1.1.10 In brief, KDS is a micro finance-centred CBO with several unique features. The spectrums of activities taken are much wider than that of the Grameen Bank of Bangladesh of Nobel prize fame. In approach and functions they stand poles apart. While both work on the principle of mutual trust and faith which help both in ensuring a very high rate of repayment (90-95%) the Grameen Bank has considerable control and supervision in regard to repayment compared to KDS where the spirit of voluntarism is dominant. One Taka per member per week is compulsory under the Grameen. More over every member has to contribute 5 per cent of the loan amount as

Group Tax, besides 25 per cent of interest payments to Group Contingency Fund. The Grameen Bank worker is a ubiquitous presence and attends weekly meetings of members. Grameen Bank’s charter on social development approved in 1984 contains 16 principles (such as solidarity, courage, hard work, discipline etc) to which each group member (only 5 members in a Grameen Group as against an average of 15-40 members for KDS) has to take an oath of allegiance. Even without such formalities the KDS women shoulder greater social responsibilities and as this report strongly demonstrates enjoy greater empowerment reckoned in terms of several parameters. The chief defect of KDS and probably that of such micro credit institutions like Grameen Bank is that they do not envisage any systemic change or structural change in favour of the poor. The poor have to rise by their own bootstraps. The odds against such an approach are very high and could not be expected to bring about radical social and structural changes. We may also note that KDS is a state created CBO and not part of the tribe of adversarial CBOs who keep a critical distance from the state and struggle for alternate forms of mobilisation and goals.

1.2 A Brief History of KDS

1.2.1 Kudumbashree did not emerge out of the blue. In India the idea of providing credit to the poor goes as far back as the cooperative movement. But linking banking to the supply of credit to the priority sector and even the weaker sections and expanding the outreach of banking to remote rural areas could be traced to the bank nationalisation of 1969. The much publicised subsidised credit programme called IRDP (Integrated Rural Development Programme) launched by the Government of India with the help of the commercial banking in early 1980s failed to take off as a sustained project. Beneficiaries did not have a choice over the purpose and amount of credit. Credit target was the overriding concern of banks and implementing officials. It was in this background that NABARD took the initiative of group lending by promoting self-help groups during 1986-87, with the help of Mysore Resettlement and Development Agency (MYRADA). On the basis of an all-India survey of the micro finance in the country, NABARD launched a SHG-linked banking project in 1991. It was the success of this project and the general endorsement of the scheme by the Reserve Bank that micro finance began to progress in the country. Broadly speaking, Kudumbashree of Kerala is an outgrowth of the broad micro finance initiative in the country. Looking back we may say that it was the result of a tripartite initiative in which not only NABARD, but also the UNICEF and the urban poverty cell of the Local Administrative Department, Government of Kerala were involved. The basic idea was to evolve a poverty eradication mission identifying poor women through a

multiple criteria and form them into a community based organisation (as against seeing them as benefit-receivers) which in turn worked as a micro finance intermediary.

1.2.2 In the early 1990s, certain important initiatives taken by the UNICEF in the Alappuzha town enthusiastically supported by the functionaries of the Urban Basic Services (UBS) project of the Government of India already functioning in the Alappuzha municipality (fully backed up by the Government of Kerala (GoK)) triggered a new process in the history of urban poverty eradication in the state and probably in the whole country. The most important initiative was to rectify the shortcomings in the identification and targeting of the poor, and the manner of enlisting community participation. In 1991, UNICEF initiated a community-based nutrition programme (CBNP) in the Alappuzha municipality on an experimental basis to improve the nutritional and health levels of the poor especially women and children. As part of this, UNICEF, Chennai office jointly with the Alappuzha municipal UBS team conducted a survey of 5728 households in the town to develop a simple measure of poverty that would enable local community members and volunteers to identify the multiple factors that characterise poverty. Based on this survey nine factors were identified and any family with four or more of these is classified as poor. The nine factors 3 designed for identifying the poor are:

Scheduled Castes and Tribes

Only one or none of adult family members being employed.

Kutcha or thatched house.

Lack of household sanitary latrines.

Non-availability of safe drinking water.

Family having two meals or less per day.

Alcohol or drug addicts in the family.

Family having at least one illiterate member.

Family having at least one child below 5 years.

3 The Kudumbashree has modified the index and the current version is given below:

Revised Poverty Index or Risk parameters (Urban Areas)

1. No Land/less than 5 cents of land.

2. No house/dilapidated house.

3. No sanitary latrine.

4. No access to safe drinking water within 150 meters.

5. Women headed house hold/presence of a widow, divorcee/abandoned lady/unwed mother.

6. No regularly employed person in the family.

7. Socially disadvantaged groups (SC/ST)

8. Presence of mentally or physically challenged person/chronically ill member in the family.

9. Families without colour TV.

1.2.3 Proper identification of the poor is an important first step. But organizing them into a community-based set up is equally important. Kerala’s contribution consists in taking steps towards organizing the poor women into a three-tier system and giving statutory recognition to it. Through several rounds of interaction with the community especially women by the officers of the UBSP (Urban Basic Services for the Poor) who took steps to initiate the process of community organization in Alappuzha with the active cooperation of ICDS supervisors, and Anganwadi workers the CDS structure was made a reality. In 1993, a model byelaw for CDS developed by the state UBSP cell together with the Alappuzha UBSP received the state government approval. On February 6, 1993, the Alappuzha community development society (CDS) was formally inaugurated and this has come to be characterised as the ‘Alappuzha model’. All the households in the other 57 towns (in total 784000 households) were surveyed and using the 4/9 (any four out of nine), 192000 of them or 24.5 per cent were identified as poor. In the meantime in 1994 the entire district of Malappuram, admittedly the most backward district of the state, with more than 600,000 households were surveyed and poor were identified using the nine-point index with minor modifications with the help of the Literacy Mission and local women volunteers assisted by the Anganwadi functionaries. In a span of two years from the inauguration of the CDS system in Alappuzha in February 1993, it has been extended to the entire municipal towns of the state, besides the panchayat areas of the Malappuram district. The Malappuram ‘model’ which was an extension of the CDS system to the rural areas was made possible again thanks to the UNICEF’s Community Based Nutrition Programme and Poverty Alleviation Project [CBNP and PAP]. Because of the success experienced in Alappuzha and Malappuram, the GOK resolved to extend the programme further to the entire state under the name ‘Kudumbashree’ a Malayalam word which means prosperity to the family. It was conceived as a ‘poverty eradication mission’ and the original project prepared by NABARD and the Local Administration Department in 1997 was entitled ‘Poverty Eradication Mission Kerala state: A Woman based participative programme to eradicate poverty in Kerala by 2007’. It is useful to spell out below the mission objectives given in the Report which became the objectives of the KDS mission.

Identifying the poor families by the community through a poverty index. Empowering the poor women to improve the productivity and managerial capacitities of the community organising them into CDSs. Encouraging thrift and investment through credit by developing CDS to work as informal banks of the poor.

Improve incomes of the poor through improved skills and investments for self-employment. Ensuring better health and nutrition for all. Ensuring basic amenities like safe drinking water, sanitary latrines, improved shelter and overall environment improvement. Ensuring a minimum of primary education for all children belonging to risk families. Enabling the poor to participate in the decentralisation process through the CDS, as a subsystem of the local bodies.

1.2.4

It

is clear from the above objectives that the CDS with its micro finance

activities is the kingpin of the whole KDS programme and eradication of

poverty through women empowerment is envisaged as an integral and viable part of the programme.

1.2.5

In the panchayat areas, KDS was introduced in three phases. The KDS office was set up in June 2000, and the first phase was till September 2002, the second phase was till March 2003. Now KDS covers the entire village panchayat areas in the country. Undoubtedly, the launching of the people’s plan campaign triggered an accelerated growth during the latter part of the Ninth Plan and the period since then.

1.3 The structure of Kudumbashree CBOs

1.3.1 The lowest tier of the CBO consists of the Neighbourhood Groups (NHGs) comprising 15-40 women members selected from poor families identified using the nine-point criteria detailed above. The NHG members elect their secretary and president besides three volunteers to be in charge of community health, income generation activities and infrastructural

development. In weekly meetings not only the members bring their thrift (or instalments due by those who have availed of loans), they discuss their livelihood problems and seek solutions. This is in sharp contrast to the Grameen model where weekly savings is compulsory and the bank staff go

to collect them.

1.3.2 The second or intermediate tier called Area Development Society (ADS) is formed at the ward level by federating 8-10 NHGs. The Area Development Society is managed by representatives elected from the various federating

NHGs. To dovetail their activities with that of the local government (LGs),

a ward level monitoring and advisory committee is formed under the

chairmanship of the elected ward member of the LG. This arrangement helps to include the priorities of the poor into the plans of the local governments.

1.3.3 At the panchayat level in the rural areas and at the municipality level in the urban areas, stands the community development society (CDS), a body registered under the charitable societies Act of the state. A CDS is formed by federating various ADSs. It is through this apex body that the Kudumbashree operates.

1.3.4 In the original Alappuzha and Malappuram ‘models’ of organization of the poor along with the local self governments, there was a provision for preparing a micro plan at the NHG level and a mini plan at the ADS level coordinated at the CDS level. This was not faithfully implemented. The GOK has now come up with a very innovative initiative to prepare an anti- poverty sub-plan in which all local governments are partners. The Government has issued detailed procedures for preparing such a plan. All local governments have to prepare a sub plan which is conceived as a bottom up planning exercise by the CDS system. A long-standing criticism of the head-count ratio based on a poverty line is the possibility of neglecting the poorest of the poor, the destitutes. An important component of the anti-poverty sub plan is the detailed package of care services for the poorest of the poor called Ashraya.

II

The Objectives and Methodology of the Study

1.4 The Objectives of the Study

1.4.1 The project has been in effective operation for seven to eight years now. It is high time, a comprehensive evaluation of the project is undertaken to assess the performance of the programme, to examine the extent to which the declared goals have been achieved, to identify the weaknesses of the programme, if any, and to suggest possible conceptual and operational improvements. The present study is an attempt in this direction. More specifically, the broad objectives of the study are:-

i. To evaluate critically, the conceptual and operational relevance and significance of the nine point index and to suggest modifications to suit the changing situations and to evolve new criteria.

ii. To estimate the thrifts savings, investment in productive activities, expenditure on household durables, outstanding liabilities, and so

on with a view to obtaining a detailed picture of the economic position of the households.

iii. To find out the quantitative and qualitative improvements in the level of living of the NHG members covered by the Kudumbashree programme.

iv. To investigate the functioning and effectiveness of the community based organisations of Kudumbasree, and to analyse the linkage between Kudumbasree and the local bodies.

v. To critically examine the viability of the micro enterprises under the Kudumbasree and assess their economic and social impact, especially on the members of NHGs.

vi. To analyse the role of the CBOs in promoting convergent action to ensure timely availability of requisite facilities and

vii. To evaluate the role played by Kudumbasree in relation to women empowerment.

1.5 Methodology

1.5.1 The study is primarily empirical. The data from the field is supplemented by secondary sources. Besides secondary sources and the field investigation [See Sampling design below] we held elaborate discussions with a wide cross section of functionaries at the panchayat level, mission coordinators, CDS Chairpersons and ordinary members. We have interacted rather closely with the functionaries from over 150 panchayats in the Kollam and Thiruvananthapuram Divisions by attending their monthly review meetings. The sampling design for field investigation is outlined below.

1.6 Sampling Design:

1.6.1 The study has used a multi-stage random sampling. The Poverty Eradication Mission has divided the state into three regions for the purpose of administration. Each region consists of a few districts. The following are the three regions and the districts in each:

Region I: Thiruvananthapuram, Kollam, Pathanamthitta and Alappuzha. Region II: Kottayam, Idukki, Ernakulam, Thrissur and Palakkad. Region III: Malappuram, Kozhikode, Wayanad, Kannur and Kasargode.

1.6.2 The survey covers both the rural and urban areas. In the rural areas, from each region two districts are selected in such a way that each region will have substantial areas falling under each of the three natural divisions viz.

highland, midland and lowland. In many studies and surveys conducted in the past in the state and the experience with the implementation of rural development programmes, it has been clearly shown that the natural resource endowments, the pattern of economic activities, the lifestyles, and even the level of cooperation of the people, differ significantly among natural regions. Therefore, it will be useful to ensure adequate representation in the sample of each of these three natural divisions. Thus, from each region two districts were selected in such a manner that these two districts together will have substantial areas falling in each of the three natural divisions. The districts selected from each of the regions are as follows:

Region

Sample districts

I

Alappuzha and Kollam

II

Eranakulam and Idukki

III

Kannur and Wayanad

1.6.3 A total of 54 CDS/village panchayats were selected for the study. These 54 CDS/village panchayats were first allocated to the selected districts of each region in proportion to the total number of CDS/village panchayats in the selected districts. It has been ensured that from each region, there will be three panchayats from each natural division, one each belonging to Phase I, Phase II and Phase III. It may be mentioned here that the phase of the project is important because usually in Phase I project areas only the preliminary work will be in progress. In Phase II areas, the project may be half way through and in the Phase III areas the project will be in its final stages. So, for representative sampling and for a meaningful interpretation of the survey results, a phase-wise analysis is helpful. Attempt has also been made to include, as far as possible, the different grades into which the sample CDS is categorised.

1.6.4 From each selected CDS/Panchayat, three ADS were selected at random and from each selected ADS, five neighbourhood groups (NHGs) were selected also at random. From each selected NHG, ten households were selected at random. To sum up, through the sampling procedure, the study intended to cover 54 CDS, 162 ADS, 810 NHGs and approximately 8000 families (of members of NHGs). The selection is done from a district-wise list of CDS, ADS and NHGs, supplied by the Poverty Eradication Mission. Because of non-response from a few CDS/NHGs, the actual number of families surveyed in rural areas were only 6519.

1.6.5 From the urban areas, the survey covered one City Corporation and two municipalities. As suggested by the Kudumbashree office, Kozhikode City Corporation, the Thalassery municipality from Kannur district and the Cherthala municipality from Alappuzha district were selected. In the urban sector, a total of 40 NHGs were selected for the study 20 from the corporation and 10 each from the two municipalities. From each NHG, 10 families were surveyed. Thus, in all 400 families in the urban areas were covered by the survey. The actual survey covered 397 urban households. Thus 6916 households were surveyed in total.

1.7 Questionnaires

1.7.1 Two sets of questionnaires were used to canvass the information necessary for making an evaluation of the performance of the Kudumbashree project, one meant for NHG member households and the other to secretaries of NHGs. The first questionnaire which covered 6916 households is very important because the informant is the person who saves/borrows/undertakes production activity and has to be constantly in touch with other members as well as the officials and the financing institutions. The NHG member is also the person who gets the direct benefit of the project. The second questionnaire is meant for the secretary of the NHG. In total 794 secretaries were covered. Among the local level functionaries concerned with the Kudumbasree project, the secretary is perhaps the most important link. She necessarily, has to be thoroughly familiar with the activities carried by the NHGs in her jurisdiction and is eminently suitable to provide information on the same.

1.8 Questionnaire for NHG household

1.8.1 The household questionnaire is very elaborate with a total of 123 questions regarding the diverse aspects and activities of the Kudumbasree project. This questionnaire is divided into four parts A, B, C and D. Part A is meant for collecting information on the identification particulars of the NHG member. The details of savings of the member in the thrift and credit society and particulars of other savings, if any, are also collected. The uses to which the loans taken by the NHG member (thrift loan plus bank loan), the items of assets which the member has created with the credit and the source-wise details of the current debt liability of the member were also ascertained in this part.

1.8.2 Part B attempts to ascertain from the member, the improvements, if any, in a number of indicators after the member joined the NHG. The questions here incorporate also some of the nine points considered for designating a

family as poor. Important among these are the condition of the house, literacy status, additional employment generated, sanitation, drinking water, pattern of food consumption, land owned and its value etc.

1.8.3 Part C deals with questions on women empowerment. There are four sub divisions under this organisational empowerment, economic empowerment, leadership empowerment and knowledge empowerment. There are, in all, 45 questions in this part, meant for eliciting information on the various dimensions of empowerment. Part C is very important as it attempts to measure the improvements which took place in the members personal abilities as well as in the members social position as a result of her participation in the NHG activities.

1.8.4 Part D attempts to measure the ‘social capital’ (see para 7.7 for definition) generated consequent on the working of the community-based mechanism in the operation of the Kudumbasree programme. Changes in the variables such as the willingness of the member to cooperate with other group members, mutual trust with other members of the group as well as other people, the cooperation received from other members, the mutual trust and cooperation received from different sections of society and the like are information collected in this section.

1.9 Questionnaire for the Secretary of the NHG

1.9.1 The questionnaire canvassed from secretaries is arranged in two parts A and B. Besides the identification particulars of the concerned NHG and ADS, general particulars about the secretary such as her age, marital status, educational qualification, economic status etc. are ascertained so that the general background of the main functionary of the NHG can be understood. Other information collected in Part A include the total membership of the NHG, the age profile of the members, the regularity of the NHG meetings, NHG's linkages with the banking institutions and so on. Part B includes questions intended to assess the activities and progress of the NHG during the tenure of office of the present incumbent. Important among them are the functioning of the thrift and credit societies under the NHG, particularly the amount of thrift mobilised, loans given, bank loans arranged, particulars about the members availing the loans, the purpose for which the loans are taken, the type of assistance provided by the NHG to the members, general pattern of decision making in the group, capacity building programmes initiated by the NHG, micro enterprises run by the group, approximate monthly turnover, promptness in keeping the various registers, account books and other records.

CHAPTER 2 KUDUMBASHREE HOUSEHOLDS:

A SOCIO-ECONOMIC PROFILE

2.1 The CBOs of Kudumbashree have been working over seven years by now. Long before that some of them especially those in urban areas and Malappuram district worked as community development societies as we explained in Chapter 1. But very little is known about the socio-economic characteristics of the CBO members except that they were selected on the basis of a nine-point poverty criteria. This chapter tries to give a brief socio- economic profile of KDS members based on the field investigation of 6916 households with nearly 30,000 population.

2.2 In Appendix 2A we present the distribution of the sample households by region by phase, by rural-urban division and by districts. We followed a multiple stratification to make the sample to include the various stages and locations of the neighbourhood households. Appendix 2A shows that the majority of the sample households are from the midlands (44%), followed by the highlands (34%) and then the coastal (16.56%). The urban coverage is nearly 6 per cent. The idea is not to make aggregate estimates but to highlight the various dimensions of a group of people brought under the generic title of poor and formed part of the CDS/KDS collectivity.

2.3 A common notion among people is that poor have a large family size, are either illiterate or only with low education levels and comprise mostly of the socially backward castes. Tables 2.1, 2.2, 2.3, 2.3(a) and 2.4 throw light on these attributes. Table 2.1 shows that more than 88 per cent of the sample population falls in the 3-6 size class. Indeed the 3-4 represents the mode. The average family size is 4.28 for the sample population and it ranges from 4.18 in Idukki to 5.09 in Kozhikode (Corporation). The presence of large families in urban areas is due to the inclusion of a colony in Kozhikode Corporation area comprising mostly Tamil population where more than one family live in a single house. Actually in Kerala very poor households of SC/ST families and fisher folk are compelled to live in the space of small shelters.

Table 2.1 Percentage distribution of Respondent Households according to Family size

Family size Rural Urban All 1-2 6.60 10.10 6.80 3-4 57.60 37.50 56.50 5-6 32.00
Family size
Rural
Urban
All
1-2
6.60
10.10
6.80
3-4
57.60
37.50
56.50
5-6
32.00
34.50
32.20
7-8
3.70
16.90
4.40
9-11
0.10
1.00
0.10
All
100.00
100.00
100.00

Table 2.2 Percentage distribution of Members according to Physical conditions

Physical Condition Rural Urban All % % % Orthopedically handicapped Eyesight impaired Hearing impaired Normal
Physical Condition
Rural
Urban
All
%
%
%
Orthopedically handicapped
Eyesight impaired
Hearing impaired
Normal
0.4
2.0
0.5
8.8
12.6
9.0
0.7
0.5
0.7
90.1
84.9
89.8
Total
100.0
100.0
100.0

2.4 KDS members do not constitute a physically challenged population as may be seen from Table 2.2. Orthopedically handicapped population comprises only 0.4 per cent of the rural members, although among the urban members it is as large as2 per cent. Eye disease seems to constitute a high proportion and probably needs remedial attention. It may be noted here that the KDS mission has launched a special programme called Ashraya to rehabilitate the physically challenged poor through the local governments.

2.5 We may discuss the level of education and caste-wise social distribution together with the help of Tables 2.3, 2.3(a), 2.4 and 2.4(a). That over 7 per cent of the sample members are degree holders or with some professional qualification and 46 per cent have SSLC schooling show that poverty is not confined to illiterates. The majority among the degree holders as well as illiterate comprise the other backward classes [See Table 2.4 and 2.4(a)]. Out of the sample population of 6916 households 3246 are OBC and 2566 belong to general categories making a total of nearly 84.1 per cent. The urban sample does not compare well with that of the rural in that 78 per cent of them are with primary school and below qualifications. It is also significant that over two thirds (66.6 per cent) who are heads of households

are either illiterate or only with primary level education. Among the poor, it is important to note that there is a dominant presence of the advanced communities (37.1%) and a significant majority of them have a poor educational background [See Table 2.4 and 2.4(a)].

Table 2.3 Distribution of members according to level of education

Level of Education Rural Urban All Illiterate &Literate below primary Primary SSLC Degree and above
Level of Education
Rural
Urban
All
Illiterate &Literate below primary
Primary
SSLC
Degree and above
Others
13.00
13.60
13.00
32.00
64.60
33.90
47.50
20.70
45.90
6.60
0.80
6.30
0.90
0.30
0.90
All
100.00
100.00
100.00

Table 2.3 (a) Distribution of members who are head of the households according to level of education

Head of Not Head Level of Education Head of the household Not Head of the
Head of
Not Head
Level of Education
Head of the
household
Not Head of
the household
the
of the
All
All %
household
household
%
%
Illiterate & Literate
below primary
Primary
SSLC
Degree and above
Others
270
628
898
25.2
10.7
13.0
443
1903
2346
41.4
32.6
33.9
323
2851
3174
30.2
48.8
45.9
28
408
436
2.6
7.0
6.3
6
56
62
0.6
1.0
0.9
All
1070
5846
6916
100.0
100.0
100.0

Table 2.4 Distribution of members who are head of the households according to social status and level of education

Social Literate below Degree Illiterate Primary SSLC Others All status primary & above SC 28.1
Social
Literate below
Degree
Illiterate
Primary
SSLC
Others
All
status
primary
&
above
SC
28.1
18.3
10.2
12.4
14.3
0.0
14.1
ST
7.0
5.6
2.3
3.4
0.0
16.7
3.6
BC
0.8
2.8
0.7
0.9
0.0
0.0
1.0
OBC
51.6
39.5
55.2
51.1
53.6
66.6
51.6
General
12.5
33.8
31.6
32.2
32.1
16.7
29.7
All
100.0
100.0
100.0
100.0
100.0
100.0
100.0

Table 2.4 (a) Distribution of members who are head of the households according to social status

Not Head of Social All status Head of the household Not Head of the household
Not Head of
Social
All
status
Head of the
household
Not Head of
the household
Head of the
household
All
the household
%
%
%
SC
151
688
839
14.1
11.8
12.1
ST
39
165
204
3.6
2.8
2.9
BC
11
50
61
1.0
0.9
0.9
OBC
551
2695
3246
51.6
46.0
47.0
General
318
2248
2566
29.7
38.5
37.1
All
1070
5846
6916
100.0
100.0
100.0

2.6 The poverty situation of the KDS members is captured well in Table 2.5 which gives a fairly detailed account of the employment pattern. About 42 per cent are reportedly unemployed. Those who are employed are self employed engaged primarily in non-agricultural business or work as part time or casual labourers. Over 70 per cent of those who have full time employment and 90 per cent of part time and over 97 per cent of the casually employed are either engaged in non-agricultural self employment or wage employment. Self employment is the dominant pattern. Even when they report themselves as ‘APL’ [See Chapter 3] several of them could be considered as struggling to keep the wolf out of the door.

Table 2.5 Distribution of members according to Occupation and Nature of employment

Occupation Full time Part time Casual All Agricultural Labour Self employed in agriculture, fishing Self
Occupation
Full time
Part time
Casual
All
Agricultural Labour
Self employed in agriculture,
fishing
Self employed in non-
agriculture, business
Workers head load and
general
Workers (Construction)
Workers (Plantation)
Employed Small scale trade
Others
Pension / Remittance
Unemployed
1.6
0.8
0.3
0.4
9.4
7.1
0.9
2.3
55.4
64.2
58.5
33.9
15.7
25.7
38.9
17.7
0.4
0.2
0.1
0.1
0.0
0.0
0.2
0.1
0.9
0.3
0.2
0.2
15.9
1.7
0.9
1.9
0.7
0.0
0.0
0.5
0.0
0.0
0.0
42.1
All
100.0
100.0
100.0
100.0

2.7 NHGs in Kerala are generally alive and kicking except in the urban areas in certain cases. [See Appendix 2 B for details). In most cases meetings are held regularly. Exceptions are very rare. In all the rural NHGs, above 75 per cent attendance is the regular pattern. Attendance falling in the 40-60 per cent range is very rare except in urban areas [See Appendix 2 B].

Appendix 2A Percentage distribution of households according to Natural region and phase

Coastal Mid Land High Land District Urban Total Phase Phase Phase Phase Phase Phase Phase
Coastal
Mid Land
High Land
District
Urban
Total
Phase
Phase
Phase
Phase
Phase
Phase
Phase
Phase
Phase
All
All
All
I
II
III
I
II
III
I
II
III
Alappuzha
1.82
1.81
1.81
5.44
3.79
5.81
3.70
13.30
0
0
0
0
1.43
20.17
Ernakulam
1.59
1.74
1.29
4.61
2.96
6.29
2.82
12.07
1.60
0.00
0.00
1.60
0.00
18.29
Idukki
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
3.51
5.19
1.78
10.48
0.00
10.48
Kannur
0.00
1.30
0.00
1.30
6.02
3.50
1.59
11.10
3.60
1.88
2.31
7.79
1.45
21.65
Kollam
1.63
1.62
1.95
5.21
1.92
3.53
1.82
7.27
1.78
1.82
1.76
5.36
0.00
17.84
Kozhikode
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
2.86
2.86
Wayanad
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
2.13
6.58
0.00
8.70
0.00
8.70
All
5.05
6.46
5.05
16.56
14.69
19.13
9.93
43.75
12.62
15.47
5.86
33.95
5.74
100.00

Appendix 2 B Distribution of NHGs by Regularity of holding meetings and nature of Attendance

whether NHGs hold regular meetings Usual Attendances of members Phase Region Yes No Total Above
whether NHGs hold regular meetings
Usual Attendances of members
Phase
Region
Yes
No
Total
Above 75 %
60% to 75 %
40 % to 60%
All
Count
%
Count
%
Count
%
Count
%
Count
%
Count
%
Count
%
Costal
36
92.3
3
7.7
39
100.0
26
66.7
13
33.3
0
0
39
100.0
Midland
118
100.0
0
0.0
118
100.0
93
78.8
23
19.5
2
1.7
118
100.0
I High Land
100
99.0
1
1.0
101
100.0
74
73.3
27
26.7
0
0.0
101
100.0
Total Phase I
254
98.4
4
1.6
258
100.0
193
74.8
63
24.4
2
0.8
258
100.0
Costal
56
98.2
1
1.8
57
100.0
47
82.5
8
14.0
2
3.5
57
100.0
Midland
154
99.4
1
0.6
155
100.0
112
72.3
41
26.5
2
1.3
155
100.0
II High Land
116
100.0
0
0.0
116
100.0
97
83.6
19
16.4
0.0
116
100.0
Total Phase II
326
99.4
2
0.6
328
100.0
256
78.0
68
20.7
4
1.2
328
100.0
Costal
42
100.0
0
0.0
42
100.0
30
71.4
12
28.6
0
0.0
42
100.0
III Midland
83
97.6
2
2.4
85
100.0
63
74.1
21
24.7
1
1.2
85
100.0
High Land
44
100.0
0
0.0
44
100.0
33
75.0
11
25.0
0
0.0
44
100.0
Total Phase III
169
98.8
2
1.2
171
100.0
126
73.7
44
25.7
1
0.6
171
100.0
Urban
35
94.6
2
5.4
37
100.0
18
48.6
14
37.8
5
13.5
37
100.0
All
784
98.7
10
1.3
794
100.0
593
74.7
189
23.8
12
1.5
794
100.0

CHAPTER 3 REVISITING THE KUDUMBASHREE POOR

Kudumbashree is a poverty mission which seeks “to eradicate absolute poverty in ten years through concerted community action”. This chapter and the one that follows (Chapter 4) are meant to critique the progress made in eradicating poverty. We also try to critique the conceptual foundations of the nine-point index along with the progress made. Technically the poor are to be identified using the 4/9 criteria and the graduation process out of poverty is also through the progress in eliminating most of these criteria. This chapter has two parts – Part I analyses the overall picture of progress. Part II shows the field situation as revealed from the NHG secretary schedules and household surveys.

I

3.01 KDS which commenced work in early 1999 was the obvious continuum of the urban poverty alleviation programme via the community development society (CDS) network. It has by then covered all the urban local bodies and the entire rural local bodies of the Malappuram district. It now covers all the rural areas and has extended its activity domain to the tribal areas. Table 3.1 shows the trend in the number of NHGs formed, families covered and families per NHG of the rural, urban and tribal areas from April 2000 through November 2006. [The graphical presentations of the trend in growth of NHGs and families there of are given in Fig 3.1 and 3.1(a)]. The Table given as Appendix 3A gives the district- wise distribution of the progress in the total number of NHGs and families. We give below certain broad inferences from these tables.

3.02 KDS as officially reported has registered a spectacular growth in the number of NHGs and families covered. The number of NHGs increased from 37458 in 2001 to over 1.77 lakhs in November 2006. During the same period the number of families covered increased from 8.67 lakhs to 37.35 lakhs. This comprised the rural, urban and tribal groups. In rural areas except in the Malappuram district, it was introduced as a phased programme. Overall , during the period from 2000 April to November 2006, the number of NHGs in rural areas registered a growth of 464 per cent with a simple average growth rate of 77 per cent per annum and the corresponding increase in the number of families was 386 per cent with a simple average growth of 64 per cent. The overall growth of NHGs in urban areas was only 59 per cent and the growth of the number of families 163 per cent. This may appear less spectacular, but it is also striking

because the entire municipalities/corporations were covered, even before the KDS project was launched.

Table 3.1 Trend in the number of NHGs formed and families covered (2000-01 - November 2006)

No of NHGs formed No. of Families covered Families /NHG Year Rural Urban Tribal Total
No of NHGs formed
No. of Families covered
Families /NHG
Year
Rural
Urban
Tribal
Total
Rural
Urban
Tribal
Total
Rural
Urban
Tribal
Total
2000-01
28973
7538
947
37458
654621
196000
16400
867021
22.59
26.00
17.32
23.15
2001-02
93052
7848
1010
101910
1843631
196000
12164
2051795
19.81
24.97
12.04
20.13
2002-03
107745
7863
1190
116798
2068227
247165
15096
2330488
19.20
31.43
12.69
19.95
2003-04
122704
7947
2049
132700
2462322
273347
24846
2760515
20.07
34.40
12.13
20.80
2004-05
143983
8667
2049
154699
2837977
292207
24846
3155030
19.71
33.71
12.13
20.39
2005-06
153117
10687
2036
165840
3020500
292207
32802
3345509
19.73
27.34
16.11
20.17
2006-07
163426
11987
2232
177645
3183529
515715
35880
3735124
19.48
43.02
16.08
21.03
(06Nov)

Fig 3.1

Trend in the Formation of NHGs (2000-01 - Nov 2006)

200000 180000 160000 140000 120000 Rural Urban 100000 Tribal Total 80000 60000 40000 20000 0
200000
180000
160000
140000
120000
Rural
Urban
100000
Tribal
Total
80000
60000
40000
20000
0
Neighbourhood Groups

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

 

(06Nov)

Year

35

Fig 3.1 (a)

Trend in the Number of Families Covered (2000-01 - Nov 2006)

4000000 3500000 3000000 2500000 2000000 Rural Urban Tribal Total 1500000 1000000 500000 0 No. of
4000000
3500000
3000000
2500000
2000000
Rural
Urban
Tribal
Total
1500000
1000000
500000
0
No. of Families

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

 

(06Nov)

Year

3.03 The number of NHGs per GP increased from 29 in March 2001 to 165 in

2006. The average number of families per NHG for gram panchayats works

out to 22 for March 2001 and that for ULBs, 26. The size shot upto 43 for ULBs, while it declined to 19 for GPs by November 2006 (See Appendix 3A). Clearly while in urban NHGs more members were added, in the rural areas new NHGs were formed. On the basis of discussions with certain focus group members we may safely say that 85 to 90 per cent group were alive and active.

3.04 The remarkable progress made in the growth of NHGs (See Table 3.1 and Appendix 3A) makes it imperative to reexamine the methodology of admitting NHG members and the process of implementation. The percentage of NHG households covered to the total households (as per 2001 Census) in the gram panchayats which was only 13 per cent in March 2001 rose to 63.54 per cent in November 2006 (if we project a 5 per cent growth in new families by 2006, the percentage will be reduced to 60). The corresponding growth in the municipal areas was from 11.42 per cent to over 30 per cent. In November 2006, the percentage of NHG families covered ranges from 45.46 per cent in the Kollam district to over 90 per cent in the Kannur District. Assuming that the projected number of families in

2006 will be around 72 lakhs, the KDS poor will be over 50 per cent. This surely is not a realistically tenable number. The head count ratio of Kerala (population below the poverty line) based on the NSS 61 st round household consumer expenditure survey for rural areas works out to 13.2 per cent for rural areas and 20.16 per cent for urban areas for 2004-05 [Himanshu (2007):

498] which roughly corresponds to the period of our enquiry. Mahendra Dev and Ravi (2007) have estimated the number of poor (also based on NSS (61 st round) consumer expenditure) to be around 4.79 million which at an average family size of 4.5 works out to 10.6 lakh families. Actually several secretaries have confessed that the process of selection has not strictly followed the 4/9 criteria. The picture of poverty is exaggerated considerably if we were to accept the KDS numbers.

II

3.1 The Economic Status: Evidence from the field

3.1.1 The success of Kudumbashree is to be measured by the magnitude of poverty reduction. For this we have used three measures:

(i)

Each sample household was asked to report whether it belonged to the (Above Poverty line) APL/BPL (Below poverty line) category. This is an important self-evaluation particularly because they are generally aware of the nine-point index.

(ii)

NHG –wise situation analysis of poor/non-poor as reported by the secretaries in the sample.

(iii)

A status study based on the major measurable criteria of the nine point index.

3.2 Self – Evaluation

3.2.1 Table 3.2 gives the distribution of sample households according to BPL/APL status for ULBs and by natural region and the three phases for rural areas. A more disaggregated picture area-wise and phase-wise is given in Appendix 3B. For urban areas 23.4 per cent continues to be APL and only the rest (76.6%) poor. The overall picture of APL in rural areas is much higher at 32.2 per cent. On apriori basis the presence of APL can be explained by the fact that those who graduated from BPL category have not been escorted out. Also, this may be because the identification criteria were not strictly followed.

3.2.2 The households in Phase III identified by 4/9 criteria, technically should comprise only the poor. But in Phase III in all the regions we find a mix of

APL and BPL. In phase III, the proportion of APL is as high as 38 per cent for highland and 37 per cent for coastal areas with an overall average for the rural areas (phase III) being 34.8 per cent. On the whole the proportion of APL ranges from 30.6 per cent in the Wayanad district to 35.9 per cent in the Ernakulam district. When we examine region-wise, the APL proportion goes as high as 45.1 per cent in the midland region of Kollam. In Alappuzha, Kannur and Wayanad, the percentage of BPL households is higher in Phase II and III (See Appendix 3B). The proportion of APL families ranges from 16.5 per cent in Wayanad district (in Phase II) to as high as 60.2 per cent in the Idukki district (Phase III). Clearly as more panchayats were added in Phase II and III, the norms of selection seems to be relaxed.

Table 3.2 Distribution of sample households according to BPL/APL status:

Natural Region and Phase Rural & Urban

Economic Coastal Midland District status Phase Phase Phase Phase Phase Phase I II III All
Economic
Coastal
Midland
District
status
Phase
Phase
Phase
Phase
Phase
Phase
I
II III
All
I
II III
All
All
Sample
Districts
APL
% to Total
BPL
% to Total
Total
122
159
129
410
370
444
219
1033
35.0
35.6
37.0
35.8
36.4
33.6
31.9
34.1
227
288
220
735
646
879
468
1993
65.0
64.4
63.0
64.2
63.6
66.4
68.1
65.9
349
447
349
1145
1016
1323
687
3026
%
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Economic
Highland
All (Rural)
District
status
Phase
Phase
Phase
Phase
Phase
Phase
Urban
Total
I
II
III All
I
II
III All
APL
% to Total
BPL
% to Total
Total
255
244
154
653
747
847
502
2096
93
2189
29.2
22.8
38.0
27.8
33.4
29.8
34.8
32.2
23.4
31.7
All
Sample
618
826
251
1695
1491
1993
939
4423
304
4727
Districts
70.8
77.2
62.0
72.2
66.6
70.2
65.2
67.8
76.6
68.3
873
1070
405
2348
2238
2840
1441
6519
397
6916
%
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

3.2.3 Two broad conclusions can be drawn from Table 3.2 and Appendix 3B. One, the identification of the poor, based on the 4/9 criteria has not been strictly followed. Our discussions as well as interactions with members have convinced us that several external factors notably the ward members influence the choice of the NHG members. Rational and criteria – based formation is rendered difficult in such a context. It may also be because the mission authorities are indifferent or not strict in following the criteria. Two, there is no programme to escort out those who graduate from the BPL situation.

3.3

Evaluation by Secretaries

3.3.1 NHG secretaries quite often unanimously elected by the groups are the key functionaries of the programme at the grassroots level. The secretaries were asked to report on the economic status of their members. The responses of the secretaries are reported in Table 3.3.

Table 3.3 Distribution of members according to Economic status as reported by Secretaries

No. of No: of members District NHGs APL BPL Total % of APL to Total
No. of
No: of members
District
NHGs
APL
BPL
Total
% of APL
to Total
Alappuzha
154
1100
1900
3000
36.67
Ernakulam
167
1029
1686
2715
37.90
Idukki
84
334
1019
1353
24.69
Kannur
157
679
2513
3192
21.27
Kollam
155
719
1890
2609
27.56
Kozhikode
17
169
469
638
26.49
Wayanad
60
176
682
858
20.51
All
794
4206
10159
14365
29.28

3.3.2 The 794 secretaries of the NHGs covered had a total membership of 14365. Table 3.3 shows that 29.28 per cent were APL families and only around 71 per cent BPL families. The APL proportion ranged from 20.5 per cent in the Wayand region to around 38 per cent in Ernakulam. This corresponds broadly with the findings of the self evaluation of individual families reported in Table 3.2.

3.4 A criteria based analysis

3.4.1 Families with less than four of the nine criteria 4 are identified as non-poor. Families having more than 4 criteria out of 6916 families covering the poor adds up only to 443 or 6.4 per cent. The non-poor constitute an

4 The nine-point criteria we have used (latter refinements are not taken into account) are given below:

(a)

Kutcha House

(b)

No access to safe drinking water

(c)

No access to sanitary latrine

(d)

Illiterate adult in the family

(e)

Family having not more than one earning member

(f)

Family getting barely two meals a day or less

(g)

Presence of children below 5 year in the family

(h)

Alcoholic or drug addict in the family

(i)

Scheduled caste or scheduled Tribe family.

overwhelming majority of 93.6 per cent. To investigate further we give in Table 3.4 a disaggregated picture by broad social classes such as SC/ST categories and other backward classes. The Scheduled Tribes have the single largest majority (36.8%) followed by Scheduled Castes, (21.1%). Interestingly even among the SC/ST categories also non-poor constitute a significant majority. Among the backward classes who comprise 3307 households only 120 or just 3.7 per cent constituted the poor. On the whole the poor constitute only 6.4 per cent of the total sample households. There could be some under estimate.

Table 3.4 A Social Class-wise distribution of poor and non-poor based on the4/ 9 Point Criteria

Social After joining NHG Category Poor % Not Poor % All % SC ST BC
Social
After joining NHG
Category
Poor
%
Not Poor
%
All
%
SC
ST
BC & OBC
General
177
21.1
662
78.9
839
100.0
75
36.8
129
63.2
204
100.0
120
3.7
3187
96.3
3307
100.0
71
2.8
2495
97.2
2566
100.0
All
443
6.4
6473
93.6
6916
100.0

3.4.1 To conclude the major findings of the chapter are:

37.4 lakh family-strong membership of Kudumbashree definitely convey an exaggerated picture of the nature and magnitude of poverty in the state. The total families as per 2001 census were only around 67.3 lakhs in the state and now around 72 lakhs. That over 50 per cent of the families in the state are poor cannot be considered as indicating the real situation. The methodology of identification of the poor and its actual implementation at the ward level leave many things to be desired. The omission of meals criterion in the revised index along with a somewhat loose and open ended definition of women-headed households [See para 1.2.2 and foot note No.3) and families without colour TV have left the identification of poor delightfully ambiguous one. Presence of mentally or physically challenged persons/chronically ill members in the family also could be interpreted widely to open the gate wider. [See Chapter 4]. Under such a situation KDS fails to serve as a platform or organisation of the really deprived. There is no mechanism to escort out the non-poor. At any rate the place of the non-poor in the NHG/ADS/CDS level probably has to be clarified and defined.

Appendix 3A District wise distribution of Progress of NHGs (March 2001-Nov 2006)

%Households No of Families No of House No of NHGs formed Rate of Families covered
%Households
No of
Families
No of
House
No of NHGs
formed
Rate of
Families covered
Rate of
No of NHGs
per GP
Rate of
covered to
covered per
Rate of
growth
Total
District
GPs/
holds
growth
growth
NHG
growth
%
households
ULBs
(2001
%
%
%
Mar
Nov
Mar
Nov
Mar-
Nov-
Mar
Nov-
Mar-
Nov-
Census)
-01
-06
-01
-06
01
06
-01
06
01
06
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Trivandrum
78
505653
2413
16740
593.74
58495
344165
488.37
30.94
214.62
593.74
24.24
20.56
-15.19
11.57
68.06
Kollam 1
69
491734
1489
12085
711.62
24310
223550
819.58
21.58
175.14
711.62
16.33
18.50
13.30
4.94
45.46
Pathanamthitta
54
268498
647
6426
893.20
17280
131304
659.86
11.98
119.00
893.20
26.71
20.43
-23.49
6.44
48.90
Alappuzha
73
345928
2187
12691
480.29
51216
254434
396.79
29.96
173.85
480.29
23.42
20.05
-14.39
14.81
73.55
Kottayam
2
74
368727
1371
10310
652.01
16803
215042
1179.78
18.53
139.32
652.01
12.26
20.86
70.18
4.56
58.32
Idukki
3
51
252256
1897
8829
365.42
34028
161983
376.03
37.20
173.12
365.42
17.94
18.35
2.28
13.49
64.21
Ernakulam
88
364881
1252
12189
873.56
29684
206828
596.77
14.23
138.51
873.56
23.71
16.97
-28.43
8.14
56.68
Trissur
92
459526
4680
15512
231.45
96075
281736
193.25
50.87
168.61
231.45
20.53
18.16
-11.53
20.91
61.31
Palakkad
4
90
455911
736
19365
2531.11
13881
330352
2279.89
8.18
215.17
2531.11
18.86
17.06
-9.55
3.04
72.46
Malappuram 5
100
552722
4645
12810
175.78
167000
298810
78.93
46.45
128.10
175.78
35.95
23.33
-35.12
30.21
54.06
Kozhikode 6
77
364557
2499
13311
432.65
56973
280803
392.87
32.45
172.87
432.65
22.80
21.10
-7.47
15.63
77.03
Wayanad
25
160398
1178
7156
507.47
18205
120248
560.52
47.12
286.24
507.47
15.45
16.80
8.73
11.35
74.97
Kannur
81
237932
3197
10509
228.71
50613
215305
325.39
39.47
129.74
228.71
15.83
20.49
29.41
21.27
90.49
Kasargode
39
181536
782
5493
602.43
20058
118969
493.12
20.05
140.85
602.43
25.65
21.66
-15.56
11.05
65.53
Total GPs
@
991
5010259
28973
163426
464.06
654621
3183529
386.32
29.24
164.91
464.06
22.59
19.48
-13.78
13.07
63.54
Total ULBs
58
1716097
7538
11987
59.02
196000
515715
163.12
206.67
59.02
26.00
43.02
65.46
11.42
30.05
129.97
Tribal 8Dist
-
-
947
2232
135.69
16400
35880
118.78
-
-
-
17.32
16.08
-7.18
-
-
Grand Total
-
6726356
37458
177645
374.25
867021
3735124
330.80
-
-
-
23.15
21.03
-9.16
12.89
55.53

(Source Kudumbashree; Statistical Hand book 2005 ) @Total number of Panchayats increased to 999 by bifurcation with effect from 23.7.2005. Kollam 2, Kottayam 1, Idukki 1 Palakkad 1, Malappuram 2, and Kozhikode 1. For purpose of analysis only the old 991 Panchayats have been considered.

Appendix 3B BPL (APL) Percentage Distribution by Natural Region and by Phases

Districts / Coastal Midland High land All Natural Phase Phase Phase Phase Phase Phase Phase
Districts /
Coastal
Midland
High land
All
Natural
Phase
Phase
Phase
Phase
Phase
Phase
Phase
Phase
Phase
Phase
Phase
Phase
Total
Total
Total
Total
Region
I
II
III
I
II
III
I
II
III
I
II
III
57.9
60.0
78.4
65.4
67.6
74.1
61.7
68.8
0.0
0.0
0.0
0.0
64.4
70.8
67.2
67.8
Alappuzha
(42.1)
(40.0)
(21.6)
(34.6)
(32.4)
(25.9)
(38.3)
(31.2)
(0.0)
(0.0)
(0.0)
(0.0)
(35.6)
(29.2)
(32.8)
(32.2)
71.8
71.7
44.9
64.3
63.4
54.9
64.1
59.2
57.7
0.0
0.0
57.7
64.1
58.6
58.1
60.3
Eranakulam
(28.2)
(28.3)
(55.1)
(35.7)
(36.6)
(45.1)
(35.9)
(40.8)
(42.3)
(0.0)
(0.0)
(42.3)
(35.9)
(41.4)
(41.9)
(39.7)
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
65.8
67.4
39.8
62.2
65.8
67.4
39.8
62.2
Idukki
(0.0)
(0.0)
(0.0)
(0.0)
(0.0)
(0.0)
(0.0)
(0.0)
(34.2)
32.6)
(60.2)
(37.8)
(34.2)
32.6)
(60.2)
(37.8)
0.0
54.4
0.0
54.4
63.9
80.6
88.2
72.7
77.1
88.5
72.5
78.5
68.9
77.7
78.9
73.7
Kannur
(0.0)
(45.6)
(0.0)
(45.6)
(36.1)
(19.4)
(11.8)
(27.3)
(22.9)
(11.5)
(27.5)
(21.5)
(31.1)
(22.3)
(21.1)
(26.3)
66.4
69.6
60.7
65.3
54.9
60.2
69.8
61.2
81.3
70.6
70.5
74.1
67.2
65.1
66.8
66.3
Kollam
(33.6)
(30.4)
(39.3)
(34.7)
(45.1)
(39.8)
(30.2)
(38.8)
(18.7)
(29.4)
(29.5)
(25.9)
(32.8)
(34.9)
(33.2)
(33.7)
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
69.4
83.5
0.0
80.1
69.4
83.5
0.0
80.1
Wayanad
(0.0)
(0.0)
(0.0)
(0.0)
(0.0)
(0.0)
(0.0)
(0.0)
(30.6)
(16.5)
(0.0)
(19.9)
(30.6)
(16.5)
(0.0)
(19.9)
65.0
64.4
63.0
64.2
63.6
66.4
68.1
65.9
70.8
77.2
62.0
72.2
66.6
70.2
65.2
67.8
All Dist Rural
(35.0)
(35.6)
(37.0)
(35.8)
(36.4)
(33.6)
(31.9)
(34.1)
(29.2)
(22.8)
(38.0)
(27.8)
(33.4)
(29.8)
(34.8)
(32.2)

(Percentage of APL families is given in the bracket

CHAPTER 4 THE NINE-POINT INDEX: A PROGRESS REPORT AND A CRITIQUE

This chapter has two parts. Part I of this chapter is a brief critique of the nine-point index to drive home the need to modify it or even to evolve alternate ways of identifying the poor. In India debates relating to measure of poverty continue to be dominated by the poverty line and head count ratio anchored on accepted calorie norms with rural-urban differentiation. Although it is out of place to go through the ‘The great Indian poverty debate 5 ’ we may contextualise the discussion with reference to a brief critique of the official poverty line. Part II, presents the progress made in regard to seven out of the nine criteria 6 . The criteria relating to SC/ST and children below five years are obviously not suitable candidates to scale progress and hence omitted. This chapter is to be seen along with the previous one.

I

4.1 The Official Poverty Line:

4.1.1 A meaningful poverty assessment should be based on sound conceptual foundations and must serve at least four purposes:

(1) Identify the poor from the non-poor (2) Find out how deep is poverty through an appropriate scale that facilitates comparison over time and space (3) Make a meaningful aggregation about the magnitude of poverty in a jurisdiction, be it a country, a state or panchayat or whatever the level of aggregation required and (4) Throw policy insights for reducing poverty progressively. The official poverty line (PL) as well as the 9 point index of KDS cannot be said to be based on sound conceptual foundations and do not satisfy most of these

5 The Great Indian Poverty Debate’ is the title of a book edited by Deaton and Kozel (2005) which discusses the on going debate on poverty in India since the 1990s. The authors consider the poverty debate ‘great’. 6 Under the Ashraya scheme to rehabilitate the poorest of the poor (destitutes) the 9-point criteria have been modified. Besides 8/9 criteria another eight criteria such as families without land, those who spend night in streets or sleep in the verandas of shops, families headed by unwed mothers, families subjected to chronic illness etc. are also used. [For details of this see ‘State Planning Board (2007): pp.364-66).

purposes. While the official income poverty line anchored on a minimum calorific norm of 2400 Kcal per capita per day in rural areas and 2100 Kcal per capita per day in urban areas 7 has been subjected to considerable scholarly debate (and it still continues), the KDS 9-point criteria have not attracted much review 8 .

4.1.2 Although we do not want to go into the details of the official PL and the debates we may briefly mention some of its important shortcomings. One, the underlying conceptual foundation is weak. It is not comprehensive. As Amartya Sen (1985, 1992, and 1999) has elaborated, there is a great need to consider the quality of human resources, their capabilities and functionings in any poverty conceptualisation. For him poverty is capability deprivation. Capability refers to the freedom one has to choose from a range of functionings, which means achieving what one wants to do or be. Poverty in this perspective would mean absence of elementary capabilities. The basic question in poverty reduction is one of expansion of elementary capabilities, namely, education, health care, employment, gender equity and women empowerment and provisioning of social and economic security. Of course, we affirm that the elementary capability of being adequately nourished recognised in the official PL is an important aspect of the conceptual foundations of poverty. Second, the PL takes no notice of the fact that when the income of one individual or group of individuals close to a PL falls poverty is reduced. It thus violates the axiom that a reduction of income of any one below the PL given everything else, must increase the poverty measures [See Sen (1981): Appendix C]. Three, the most glaring mistake is that the updated official poverty lines based on the adjusted prices of the 1973-74 consumption expenditure class, do not correspond to the calorie norms of 2400 Kcal and 2100 Kcal for rural and urban areas. [For good empirical proof of this see Mehta, Venkataraman (2000), Utsa Patnaik (2004, 2007), and G.C.Manna (2007) among others]. Utsa Patnaik (2007) gives an elaborate Table based on 55 th NSS round data for 1999-2000 and shows that 2400 calorie based head count ratio (HCR) will come to 74.5 per cent and not the official HCR of 27.4 per cent based on the adjusted prices of the 1973-74 expenditure class [See U.Patnaik (2007)]. In brief, even as a nutritional norm-based measure, the HCR is weak. Four, at best it is useful only as an aggregated measure of poverty in a state or economy and has no use in identifying a poor family. It was precisely because of this that the Ministry of Rural Development conducted BPL

7 The Planning Commission Expert Group (1993): identified the total household monthly consumer expenditure whose food expenditure met these calorie norms, from the 28 th NSS round consumer expenditure survey for 1973-74 and for later years was updated using Agricultural Labour Consumer price index for rural areas and that of industrial workers for urban areas. 8 The only exception is the detailed review in Oommen (1999).

surveys. Five, in the official PL approach, the nutritional norm leaves non- food requirements as an empirical component. How much non-food preferences have been at the expense of food items is not known. This is particularly so, when it comes to catastrophic payments to meet emergency health requirements.

4.1.3 In India although there are a large number of economists who reverentially appreciate the calorie norm-based approach, most discerning scholars have found it weak and wanting. Long before Planning Commission endorsed the PL approach, Amartya Sen after examining the theoretical and practical problems of conceptualising and measuring poverty held that the head count measure is “quite unacceptable as an indicator of poverty” [Sen 1981:11]. It is in this setting that we have to evaluate the 4/9-point index of KDS. It is primarily to be seen as a tool of identification of the poor. It is not used or meant to be used as an aggregate measure for evaluative judgements about the level of poverty in a society or jurisdiction. Although it had no apriori theoretical conceptual foundations, the CBO which provides the support base today when they evolved it formulated the index on the basis of a field survey in Alappuzha municipal town. An elaborate critique of the 9-point index, its conceptual, statistical and empirical basis was made by M.A.Oommen (1999) as part of an evaluative exercise. We do not propose to go over it again. In Section 4.2 we spell out some important criticisms of the Index to help further revision and /or modification of it.

4.2 The KDS Index 9 : Some general criticisms

Any four criteria out of nine in the KDS index means, all criteria are treated as equally important. They however are not independent and equally important. Weighting is needed to reflect the priorities of the community. It can be fixed using statistical weighting devices or by community-based preference ordering which each panchayat may adopt.

No land/less than 5 cents is important and must be retained. Inclusion of other assets can be problematic although consideration of ownership of the pair of clothing is an essential item that is important.

Income is important because it indicates a universal purchasing power which can remove many of the deprivations like lack of food, illiteracy, kutcha house, lack of latrines etc. But in view of the difficulty of getting correct information this need not be included.

9 The comments here refer to the revised Nine-point Index [See Foot note.3. given in Chapter 1].

No house or Kutcha house is admittedly a sign of poverty. criterion should be retained.

This

Absence of sanitary facilities and non-availability of and non- accessibility to safe drinking water are important and their inclusion in the revised criteria is justifiable.

Family getting less than two meals a day is probably the most important criterion of poverty. The omission of this in the revised index has to be viewed seriously because a poverty measure that omits this elementary capability is basically flawed.

‘Women headed household/presence of a widow, divorcee/abandoned lady/unwed mothers are more an open ended criterion than a specific measure.

The criterion relating to employment has to be made more precise. Presence of adults seeking employment in a family is a great deprivation. Even if there is only one earning member, the family need not be poor because a single earner may command a large salary income or inherited wealth etc. The type of employment or occupation that fetches income for the family is also important.

An SC/ST family need not necessarily be poor. They are not essential attributes or expressions of poverty. Indeed SC/ST families have been subjected to very high traditional deprivations. They need special entitlements and affirmative action. Inclusion of an ethnic factor as a measure is logically incorrect especially when you want to measure progress overtime of the community in general. Again inclusion of ‘presence of mentally or physically challenged person/chronically ill member in the family is also opening wide the gate of admission. Thus, basically only three factors – Kutcha house, family having no earning member and family getting less than two meals a day are basic attributes of poverty.

II

4.3 This part presents the progress made by the sample households in regard to the major parameters after joining the KDS project. This is the most obvious way to evaluate progress. As we have noted in Part I, improvements in housing and pattern of food consumption are crucial parameters in poverty reduction. Tables 4.1, 4.1(a) and 4.2 present the

situation

parameters.

before

and

after

joining

the

NHG

in

regard

to

these

two

Table 4.1 Improvement in housing conditions after joining the NHG

Item No of Houses % of Improvement to Total No Improvement Renovation / Maintenance Addition
Item
No of Houses
% of Improvement to Total
No Improvement
Renovation / Maintenance
Addition / Extension
New Construction
5826
84.24
593
8.57
208
3.01
289
4.18
Total
6916
100.00

Table 4.1(a) A break-up of the Improvement in the housing conditions

Improvement in the condition of house because of joining NHG Present House No Renovation/ Addition
Improvement in the condition of house because of joining NHG
Present House
No
Renovation/
Addition /
New
All
Improvement
maintenance
Extension
construction
Thatched
Tiled
Concrete
Others
Partially Concrete
461
57
14
14
546
3359
294
76
80
3809
1420
151
90
141
1802
539
84
24
50
697
47
7
4
4
62
All
5826
593
208
289
6916

4.3.1 Only 16 per cent of the 6916 households surveyed have reported improvement in the housing conditions after joining the KDS Mission. About 18 per cent of the thatched households improved their housing. It is important to note that more than 50 per cent of the new houses constructed were concrete structures.

4.3.2 As regards the traditional three meals pattern, [See Table 4.2] there is some visible improvement. There is a decline in the households with one meal per day by 16 per cent and those with only two meals have progressed even more remarkably. The percentage of families with three meals has also improved. Although not spectacular, this needs special mention.

Table 4.2 Pattern of Food Consumption before and after joining NHG

Before Joining After Joining NHG Increase/ Decrease No. of Meals NHG No % No %
Before Joining
After Joining NHG
Increase/ Decrease
No. of Meals
NHG
No
%
No
%
No
%
One Meal per day
Two Meals per day
Three Meals per day
Others
286
4.14
246
3.56
-40
-16.26
644
9.31
494
7.14
-150
-30.36
596`7
86.28
6150
88.92
183
2.98
19
0.27
26
0.38
7
26.92
All
6916
100.00
6916
100.00
-
-

4.3.3 Tables 4.3 and 4.4 show the progress with reference to two important health – related parameters viz. safe drinking water and sanitary facilities. There is good improvement especially in regard to attached sanitary facility and own pipe connections along with decline in public well and public tap. There is significant reduction (29.21 per cent) in the proportion of families taking to open defecation. Even so it is a matter of grave concern that 9.7 per cent of the households still take to open defecation.

Table 4.3: Source of Drinking Water before and after joining NHG

Before Joining After Joining Increase Item NHG NHG /Decrease No % No % No %
Before Joining
After Joining
Increase
Item
NHG
NHG
/Decrease
No
%
No
%
No
%
Public Well
Public Tap
Own Well
Own Pipe
Tank Supply
Ponds
Others
More than One Source
739
10.69
717
10.37
-22
-3.07
1337
19.33
1307
18.90
-30
-2.30
3218
46.53
3216
46.50
-2
-0.06
430
6.22
478
6.91
48
10.04
9
0.13
10
0.14
1
10.00
158
2.28
158
2.28
0
0.00
890
12.87
895
12.94
5
0.56
135
1.95
135
1.95
0
0.00
All
6916
100.00
6916
100.00

Table 4.4: Sanitation Facility before and after joining NHG

Before joining After joining Increase Item NHG NHG /Decrease No % No % No %
Before joining
After joining
Increase
Item
NHG
NHG
/Decrease
No
%
No
%
No
%
Open defecation
Outside house
Attached
Others
Outside and attached
867
12.54
671
9.70
-196
-29.21
5143
74.36
5140
74.32
-3
-0.06
704
10.18
916
13.24
212
23.14
143
2.07
124
1.79
-19
-15.32
59
0.85
65
0.94
6
9.23
All
6916
100.00
6916
100.00
-
-

Table 4.5 No of those employed in the family before and after joining NHG

Before joining Item /No After joining NHG Increase /Decrease NHG Persons No % No %
Before joining
Item /No
After joining NHG
Increase /Decrease
NHG
Persons
No
%
No
%
No
%
None
One
Two
More than Two
156
2.26
134
1.94
-22
-16.42
4586
66.31
3207
46.37
-1379
-43.00
1688
24.41
2867
41.45
1179
41.12
486
7.03
708
10.24
222
31.36
All
6916
100.00
6916
100.00

4.3.4 Gainful employment is an important factor that contributes to the income and well-being of a family. There is definite and reportedly remarkable improvement as is well exemplified in Table 4.5. Equally significant is the reduction in alcoholism among the houses surveyed [See Table 4.6]. It is to be noted that this is happening in a state where liquor consumption and alcoholism has assumed pathological proportions.

4.3.5 Finally, we may examine the situation in regard to illiteracy. [Not reported in Tables]. Excluding children below five years the 6916 families have a total population of 28254. Of this 234 or about 0.8 per cent constitute illiterates falling in the age group 5-17. This surely is not a high proportion. But because they are from very poor households one may have to revisit to examine the cause of this vulnerable situation. More serious is probably the case of the adults above 18 comprising a total population of 1439 or a little over 5 per cent. That there are people who are not covered by adult literacy programmes or school programmes in the KDS family categories is a matter that should attract the attention of those who manage the Mission.

Table 4.6 Alcohol addicts in the family before and after joining NHG

Before joining After joining Increase Item /No NHG NHG /Decrease No % No % No
Before joining
After joining
Increase
Item /No
NHG
NHG
/Decrease
No
%
No
%
No
%
No addict
One addict
Two addict
More than two addict
5773
83.47
5958
86.15
185
3.11
1093
15.80
921
13.32
-172
-18.68
29
0.42
22
0.32
-7
-31.82
21
0.30
15
0.22
-6
-40.00
All
6916
100.00
6916
100.00
-
-

4.4 To conclude, item-wise analysis does not show that there has been uniform progress, although in certain areas such as that of employment growth and reduction in alcoholism the progress made has been quite impressive. That poor households are moving into the proverbial three meals a day syndrome is also a welcome sign. Although the progress cannot be attributed to KDS activities alone, overall achievements have been something to write home about.

CHAPTER 5 THRIFT AND CREDIT SOCIETIES: A CRITICAL EVALUATION

This chapter is devoted to examine the role and progress of Thrift 10 and Credit societies of Kudumbashree. Admittedly the poor are short of savings. They need credit for a variety of purposes such as for meeting daily consumption needs, for shelter, children’s education, health care, for meeting social needs such as marriages, festivals, besides for productive purposes to earn the income needed for survival and progress. The poor on their own surely cannot meet these needs individually, while a lot of them are achievable through the self-help groups/neighbourhood groups. In this chapter first we present a macro overview of thrift and credit mediated through Thrift and Credit Societies (T & CSs) of Kudumbashree. This is followed by an analysis of some issues related to purpose of loans, debt liabilities etc based on the field investigation.

5.1 Thrift and Loans: The Macro Picture

5.1.1 Tables 5.1 and 5.2 show the overall trend in the thrift and loans from March 2001 through November 2006 of the Kudumbashree CBO. The basic data

relating to thrift and loans are from the Kudumbashree office which receive reports from their Mission Centres (we are aware that such reported aggregates are not always precise) could be treated as revealing the overall magnitudes and trends. The overall thrift (savings) which was only Rs.

31.79 crore in March 2001 rose six times in two years to reach Rs. 184.29

crore and then quantum jumped to Rs. 697.61 crore by November 2006. Currently it is heading towards Rs. 800 crore. This fabulous growth (surely because of coverage and intensity of mobilization) of nearly 22 times in five

years has very little parallel in the history of micro finance in the world 11 . This works out to Rs.39270 per NHG and Rs.1874 per family in November

2006. Interestingly nearly 93 per cent of the aggregate saving is contributed

by the rural NHGs (See Table 5.1) whose average per NHG works out to

10 Thrift is a better word to refer to the frugal savings of the poor than the term savings used in the economics literature where it is the surplus arrived after meeting consumption. 11 Two authors in a recent paper claim that the Kalanjiam community Banking Programme controlled by poor women with a savings total of Rs. 74.44 crore by members (covering villages/slums in 31 districts of Tamil Nadu, Andhra Pradesh, Karnataka, MP, Orissa, Rajasthan, Maharastra and Pondicherry) is “the largest micro finance programme in Asia and probably the largest programme in the world” surely is based on inadequate knowledge. [See M.P.Vasimalai etal (2007)].

Rs.39539 and per family Rs.2038. It is remarkable that the tribal NHGs have stepped up the thrift per family from Rs. 142 in 2001 to Rs.2218 in November 2006. Table 5.2 clearly shows that there has not been much growth in the thrift per family of urban NHGs which stayed within the range of Rs.729 in March 2001 to Rs. 1,341 in March 2006. Actually in two years there was a decline compared to the previous year. The lack of impressive growth in the thrift of the urban NHGs may be because of the larger opportunities of formal portfolios open to them.

Table 5.1: Overall trend in Thrift and Loans (Mar 2001 to Nov 2006)

(Amount in Rs.)

Rural No of NHGs formed Thrift per Loan per Year Thrift Loan NHG NHG Mar-01
Rural
No of NHGs
formed
Thrift per
Loan per
Year
Thrift
Loan
NHG
NHG
Mar-01
28724
172753615
6014.26
82157662
2860.24
Mar-02
93052
903510975
9709.74
800253374
8600.07
Mar-03
107745
1635202807
15176.60
1981590544
18391.48
Mar-04
122704
2879949978
23470.71
5117085458
41702.68
Mar-05
143983
4413895241
30655.67
9686426420
67274.79
Mar-06
153117
5949299905
38854.60
14214712935
92835.63
Nov-06
163426
6461714885
39539.09
18250090968
111671.89
Urban
Mar-01
7538
142890060.00
18955.96
137729155.00
18271.31
Mar-02
7848
166012238.00
21153.45
188273020.00
23989.94
Mar-03
7863
199098559.00
25320.94
209587470.00
26654.90
Mar-04
7947
224524316.00
28252.71
230165508.00
28962.57
Mar-05
8667
286167644.00
33018.07
313100207.00
36125.56
Mar-06
10687
391769702.00
36658.53
433723110.00
40584.18
Nov-06
11987
436388809.00
36405.17
486406430.00
40577.83
Tribal
Thrift per
Loan per
Year
No of NHGs
formed
Thrift
Loan
NHG
NHG
Mar-01
947
2333921
2464.54
66690
70.42
Mar-02
1010
5064521
5014.38
2203592
2181.77
Mar-03
1190
8626455
7249.12
4939333
4150.70
Mar-04
2049
35691344
17418.91
42517566
20750.40
Mar-05
2049
35691344
17418.91
42517566
20750.40
Mar-06
2036
54114722
26578.94
107612661
52854.94
Nov-06
2232
77998663
34945.64
143236185
64173.92
Total
Mar-01
37209
317977596.00
8545.72
219953507.00
5911.30
Mar-02
101910
1074587734.00
10544.48
990729986.00
9721.62
Mar-03
116798
1842927821.00
15778.76
2196117347.00
18802.70
Mar-04
132700
3140165638.00
23663.64
5389768532.00
40616.19
Mar-05
154699
4735754229.00
30612.70
10042044193.00
64913.44
Mar-06
165840
6395184329.00
38562.38
14756048706.00
88977.62
Nov-06
177645
6976102357.00
39269.91
18879733583.00
106277.88

5.1.2 As regards loans made out of thrift also, Kerala has a very notable record. The thrift loan trend which was low in the early years picked up fast for rural, urban and tribal categories. The thrift loan ratio of all categories is well exemplified in Figures 5.1(a), 5.1(b), 5.1(c) and overall it ranges from 0.69 in 2001 to 2.71 in 2006. The aggregate loan disbursed increased from just Rs. 21.9 crore in 2001 to Rs. 1887.97 crore, 86 times increase in five years. The latter figure as a percentage of the total bank advances (including cooperative banks) in 2006 works out to 3.3 per cent. The thrift loan per family works out to Rs. 5072.8 in 2006 as against Rs.328 in 2001 whereas the per NHG loan increased from Rs.5911 to over Rs.1.06 lakhs during the same period. This is literally self help par excellence because these are made out of their own savings/thrift. The T&CSs act as virtually unstructured intermediaries at the door steps of the poor households and facilitate the mobilization of small thrift that surely might not have been saved at all but for this. The small savings pooled at the ADS level form the collective capital of the Kudumbashree CBO.

Table 5.2 Overall trend in Thrift and Loans per family (Mar 2001 to Nov 2006)

(Amount in Rs.)

Rural No of Thrift Thrift Loan Loan Thrift Year NHGs Thrift per per Loan per
Rural
No of
Thrift
Thrift
Loan
Loan
Thrift
Year
NHGs
Thrift
per
per
Loan
per
per
Loan
formed
NHG
family
NHG
Family
ratio
Mar-01
28724
172753615
6014
378
82157662
2860
180
0.48
Mar-02
93052
903510975
9710
532
800253374
8600
471
0.89
Mar-03
107745
1635202807
15177
810
1981590544
18391
981
1.21
Mar-04
122704
2879949978
23471
1183
5117085458
41703
2103
1.78
Mar-05
143983
4413895241
30656
1565
9686426420
67275
3435
2.19
Mar-06
153117
5949299905
38855
1979
14214712935
92836
4727
2.39
Nov-06
163426
6461714885
39539
2038
18250090968
111672
5756
2.82
Urban
Mar-01
7538
142890060
18956
729
137729155
18271
703
0.96
Mar-02
7848
166012238
21153
847
188273020
23990
961
1.13
Mar-03
7863
199098559
25321
806
209587470
26655
848
1.05
Mar-04
7947
224524316
28253
821
230165508
28963
842
1.03
Mar-05
8667
286167644
33018
979
313100207
36126
1072
1.09
Mar-06
10687
391769702
36659
1341
433723110
40584
1484
1.11
Nov-06
11987
436388809
36405
846
486406430
40578
943
1.11
Tribal
Mar-01
947
2333921
2465
142
66690
70
4
0.03
Mar-02
1010
5064521
5014
416
2203592
2182
181
0.44
Mar-03
1190
8626455
7249
571
4939333
4151
327
0.57
Mar-04
2049
35691344
17419
1437
42517566
20750
1711
1.19
Mar-05 2049 35691344 17419 1437 42517566 20750 1711 1.19 Mar-06 2036 54114722 26579 1652 107612661
Mar-05
2049
35691344
17419
1437
42517566
20750
1711
1.19
Mar-06
2036
54114722
26579
1652
107612661
52855
3285
1.99
Nov-06
2232
77998663
34946
2218
143236185
64174
4073
1.84
Total
Mar-01
37209
317977596
8546
475
219953507
5911
328.51
0.69
Mar-02
101910
1074587734
10544
564
990729986
9722
519.76
0.92
Mar-03
116798
1842927821
15779
808
2196117347
18803
962.65
1.19
Mar-04
132700
3140165638
23664
1150
5389768532
40616
1973.05
1.72
Mar-05
154699
4735754229
30613
1510
10042044193
64913
3201.20
2.12
Mar-06
165840
6395184329
38562
1919
14756048706
88978
4428.86
2.31
Nov-06
177645
6976102357
39270
1874
18879733583
106278
5072.85
2.71

Source: Aggregate figures from Kudumbashree. All others are worked out by the author.

Fig: 5.1(a)

Trend in Thrift & Loan (R ural)

20000000000 18000000000 Thrift 16000000000 Loan 14000000000 12000000000 10000000000 8000000000 6000000000
20000000000
18000000000
Thrift
16000000000
Loan
14000000000
12000000000
10000000000
8000000000
6000000000
4000000000
2000000000
0
Thrift & Loan

Mar-01

Mar-02

Mar-03

Mar-04

Year

Mar-05

Mar-06

Nov-06

Fig: 5.1(b)

Thrift & Loan (Urban)

600000000.00 Thrift Loan 500000000.00 400000000.00 300000000.00 200000000.00 100000000.00 0.00 Thrift & Loan
600000000.00
Thrift
Loan
500000000.00
400000000.00
300000000.00
200000000.00
100000000.00
0.00
Thrift & Loan

Fig: 5.1(c)

Mar-01

Mar-02

Mar-03

Mar-04

Year

Mar-05

Mar-06

Nov-06

Thrift & Loan (Tribal)

160000000 Th r ift 140000000 Loa n 120000000 100000000 80000000 60000000 40000000 20000000 0 Thrift
160000000
Th r ift
140000000
Loa n
120000000
100000000
80000000
60000000
40000000
20000000
0
Thrift & Loan

Mar-01

Mar-02

Mar-03

Mar-04

Year

Mar-05

Mar-06

Nov-06

Fig: 5.2

Thrift Loan R atio

3 R u r a l 2.5 Ur ba n Tr iba l Tota l
3
R u r
a l
2.5
Ur ba n
Tr iba l
Tota l
2
1.5
1
0.5
0
Thrift Loan Ratio

Year

Mar-01

Mar-02

Mar-03

Year

Mar-04

Mar-05

Mar-06

Nov-06

5.1.3 Micro credit the world over is predominantly commercial bank-linked, the Kudumbashree is a conspicuous exception. Table 5.3 presents the district- wise trend in the growth of bank linked credit of KDS. The table shows that from Rs.63.54 crore in December 2003, it grew to Rs. 406.36 crore in January 2007, a 6.4 times increase in four years time. Even with this growth it is only 21 per cent of the Thrift Credit issued in 2006 by the KDS. Only 44 per cent of the NHGs take bank-linked credit today. Although this is a significant progress compared to 2003 when only 20 per cent of the NHGs took to bank-linked credit. The three districts of Kollam, Alappuzha and Wayanad account for over 34 per cent of the bank-linked credit. Kollam which accounted for the largest share in 2003 (14.58%) continues to hold the premier position although with a reduced percentage share (12.59%). While Thrissur which held the second position in 2003 with 11.56 per cent, it fell to 6.31 per cent in 2007, Palakkad with a measly sum of Rs.1.07 crore by way of bank-linked credit in 2003 rose to 36.55 crore or over 36 times and accounts for 9 per cent of the total bank linked credit in January 2007.

Table 5.3 District-wise Trend in Linkage Banking

(Rs. In Lakhs)

Dec-03 Nov-04 No of Loan District NHG's disbursed % Loan / Dist No of Loan
Dec-03
Nov-04
No of
Loan
District
NHG's
disbursed
% Loan /
Dist
No of
Loan
NHG's
disbursed
% Loan /
Dist
Thiruvananthapuram
1499
365.91
5.76
2501
638.71
4.91
Kollam
1912
926.55
14.58
3489
1776.31
13.66
Pathanamthitta
894
176.67
2.78
1076
471.33
3.62
Alappuzha
2363
719.33
11.32
4598
1530.06
11.77
Kottayam
1104
280.92
4.42
2798
673
5.18
Idukki
1400
431.30
6.79
1865
578.21
4.45
Ernakulam
1581
325.25
5.12
4415
922.22
7.09
Thrissur
1875
734.62
11.56
4283
2067.31
15.90
Palakkad
1161
107.18
1.69
1370
268.15
2.06
Malappuram
537
604.41
9.51
2536
1032.08
7.94
Kozhikode
1394
442.14
6.96
2555
728.16
5.60
Wayanad
2173
629.80
9.91
3520
1282.08
9.86
Kannur
1432
381.54
6.00
2262
712
5.48
Kasargod
1824
229.09
3.61
2409
323.07
2.48
Total
21149
6354.71
100.00
39677
13002.69
100.00
Nov-05
Jan-07
Thiruvananthapuram
6351
2245.76
7.87
8983
3508.79
8.63
Kollam
5626
3304.77
11.58
7526
5117.08
12.59
Pathanamthitta
1957
1415.77
4.96
2429
2409.87
5.93
Alappuzha
8414
3856.81
13.51
9241
4702.88
11.57
Kottayam
3364
1130.09
3.96
3366
2172.27
5.35
Idukki
3260
2097.69
7.35
3927
2807.06
6.91
Ernakulam
6830
1605.68
5.63
5873
2156.96
5.31
Thrissur
4847
2396.71
8.40
5269
2566.04
6.31
Palakkad
6179
2216.42
7.76
9824
3655.55
9.00
Malappuram
3766
1429.93
5.01
4360
1745.65
4.30
Kozhikode
4287
1717.62
6.02
5377
2790.63
6.87
Wayanad
6050
3163.24
11.08
5950
4070.78
10.02
Kannur
3410
1226.47
4.30
4106
1932.38
4.76
Kasargod
2021
736.92
2.58
2449
1000.75
2.46
Total
66362
28543.88
100.00
78680
40636.69
100.00

Source: Economic Review various years

5.2 The Micro Scenario

5.2.1 Being ‘tiny’ savers the possibility of KDS households taking to a wide range of portfolio options is out of question. Only 26 per cent (1790 households out of 6916) reportedly resort to savings options outside their thrift and

credit societies. The pattern of portfolio choice is shown in Table 5.4 which shows that there is not much difference as between the rural and urban areas except that urban households have a higher proportion (46.5%) of insurance protection or contractual savings. A significant proportion of households take to post office savings in both the rural and urban areas (27 per cent). Chit fund also occupy a dominant position in the portfolio of the KDS clients.

Table 5.4 Portfolio pattern of Households not depending solely on Thrift and Credits

Post Chit More Insurance Others All office fund than one Rural % To Total Urban
Post
Chit
More
Insurance
Others
All
office
fund
than one
Rural
% To Total
Urban
% To Total
468
324
680
49
211
1732
27.02
18.71
39.26
2.83
12.18
100.00
16
10
27
0
5
58
27.59
17.24
46.55
0.00
8.62
100.00
Total
% To total
484
334
707
49
216
1790
27.04
18.66
39.50
2.74
12.07
100.00

5.2.2 Another noteworthy aspect is that despite the mushrooming of non- Kudumbashree micro-finance institutions, KDS members seem to hold on to them loyally. Only 8-9 per cent of KDS members are members of other caste/communal and NGO self help groups that are fast growing in the state. It may be that many may not have reported truthfully. The impression that we gathered from discussions with officials lead us to believe that this is a case of underreporting. The KDS charge officer in Chirayinkizh gram panchayat even issued a strongly worded circular (No.1/07-CDS) against dual/multiple membership. Discussions with the officer have shown that such circulars had no effect. The Mission surely, has to take serious note of this. Divided loyalties can be counter productive because the Mission has wider social goals than simple micro credit. More over NHGs of KDS are conceived as a subset of the local government. The easy facility of borrowing from one and repaying to another and seeking to make the best out of differential interest rates can not be in the interests of building a viable micro finance foundation.

5.3 Purpose of loans and debt liabilities

5.3.1 Only 5810, out of the 6916 households surveyed or 84 per cent have reportedly borrowed money. May be for the rest who do not borrow it becomes a place of prudential regular savings. Quite often it is alleged that

the poor and the not-so-poor indulge in reckless spending. Table 5.5 which shows the purpose-wise distribution of loans taken by KDS members, broken into phases and rural and urban categories proves this allegation wrong. The proportion spent on daily needs among the rural categories is as low as 7.86 per cent for Phase I, highland families and the highest in 25.73 per cent for Phase III coastal areas. In urban areas daily consumption needs (31.56 per cent) account for the single largest item with housing coming as a close second. Except the highland NHG members, in all phases in all rural and urban areas, housing by and large occupies the highest proportion. This is followed by working capital for micro enterprises. Festivities do not figure prominently. Invariably in all cases education and medical expenses are important items and along with housing account for over 50 per cent of the expenditure. The poor and the not-so-poor recourse to prudential spending. That poor households borrow for education and health care is a healthy sign because capability deprivation is the hall-mark of poverty.

Table 5.5 Purpose-wise distribution of loans availed: A Phase / Region- wise breakup

Phase I Purpose Daily needs Education Medical expenses Housing Marriage Coastal Mid Land High Land
Phase I
Purpose
Daily needs
Education
Medical expenses
Housing
Marriage
Coastal
Mid Land
High Land
Total
33
15.21
85
11.90
69
7.86
187
10.34
31
14.29
81
11.34
123
14.01
235
12.99
11
5.07
89
12.46
113
12.87
213
11.77
62
28.57
240
33.61
191
21.75
493
27.25
20
9.22
78
10.92
68
7.74
166
9.18
Income generating purpose
34
15.67
75
10.50
241
27.45
350
19.35
Redemption of loan
Festivities
Others
All
22
10.14
43
6.02
38
4.33
103
5.69
0
0.00
2
0.28
0
0.00
2
0.11
4
1.84
21
2.94
35
3.99
60
3.32
217
100
714
100
878
100
1809
100
Phase II
Purpose
Daily needs
Education
Medical expenses
Housing
Marriage
Coastal
Mid Land
High Land
Total
34
14.53
153
15.79
155
13.10
342
14.33
32
13.68
142
14.65
179
15.13
353
14.79
25
10.68
113
11.66
229
19.36
367
15.38
84
35.90
278
28.69
169
14.29
531
22.25
27
11.54
71
7.33
76
6.42
174
7.29
Income generating purpose
17
7.26
131
13.52
256
21.64
404
16.93
Redemption of loan
Festivities
Others
All
9
3.85
42
4.33
67
5.66
118
4.95
0.00
1
0.10
3
0.25
4
0.17
6
2.56
38
3.92
49
4.14
93
3.90
234
100
969
100
1183
100