ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Self-employment Schemes


Poverty levels among Scheduled Caste (SC) and Scheduled Tribe (ST) groups remain high at 31.5% and 45.3% respectively, as compared to average poverty levels of 25.7% in rural India. Despite the rapid growth of the economy at the rate of 7%–8% per annum, vulnerable and poorer sections of society do not benefit. Given that formal sector employment opportunities—both in the public and private sectors—are shrinking in rural areas, there is a need to focus on self-employment business opportunities as a means to address poverty among these vulnerable populations. The bank-linked self-employment scheme of the Telangana State Minorities Finance Corporation is one such endeavour. However, the recent Comptroller and Auditor General (CAG) report on the performance of the scheme highlights some of the problems that have led to its underperformance.

A flagship programme for vulnerable groups, the scheme assists beneficiaries in setting up business units. Under this scheme, the Telangana State Scheduled Castes Co-operative Development Corporation has to prepare annual action plans (AAPs) through a bottom-to-top approach. However, the actual practice is that the corporation prepares AAPs without obtaining inputs from the districts. The AAPs were approved by the governments with significant delays ranging from four to 11 months from the commencement of the financial year. The actual release of the budget is further delayed by four to five months. There is a huge gap between the amount approved in the budget and that released every year (many times, to the tune of 50%). The actual expenditure incurred was only 85% of the released amount. Many times, even though the implementing agency did not spend the entire amount, they submitted utilisation certificates, which as per the CAG report, is a misrepresentation of facts. This way, every year, the corporation can show that the targets are achieved in terms of utilisation, but in reality there is no much progress.

Identification of the right beneficiaries is crucial for the success of the scheme. As per the scheme guidelines, beneficiaries are to be identified by the gram sabhas by using the Society for Elimination of Rural Poverty’s (SERP) poorest of the poor (PoP) database. Applications received from interested individuals are to be registered on the Online Beneficiary Management and Monitoring System (OBMMS). The feasible self-employment business units are to be explained to the identified beneficiaries on the basis of local needs, market feasibility and socio-economic viability. Beneficiaries have to be given sufficient freedom to choose their favoured type of business units. However, in most districts, the SERP database was not used to identify the beneficiaries. Sometimes, ineligible persons—those beyond the eligible age limit, or persons with contacts to local politicians—were identified as beneficiaries. During the 2014–17 period, as against the target of 83,184 beneficiary units, only 46,601 units were established (a shortfall of 44% of the target).

It was also found that the OBMMS software—developed to meet the planning, monitoring and administration requirements of the scheme—was not able to detect duplicate beneficiaries, incidences of repetition of Aadhaar numbers. Missing Aadhaar and bank account numbers were frequently reported. The absence of minimum validity controls in OBMMS software to recognise and check duplicate loan and Aadhaar account numbers indicated poor design and development of the software.

As against the stipulated 15-day gap between the receipt of the application and date of sanction of the subsidy, a gap of more than one year for 28% units, more than six months for 51% units and more than three months for 21% units was observed. Although the stipulated 15 days is indeed too short a period, a delay beyond six months is not acceptable. Even one year after the release of the subsidies, no photographs of the units were uploaded, indicating there was no assurance that the units were set up.

Identifying locally pertinent and prioritised business opportunities, developing relevant skill sets among the beneficiaries, enhancing capabilities and technical skills like estimation of profit and loss, net present value and internal rate of returns for different business opportunities, selecting the right business models, and refining the OBMMS, are crucial for enhancing the performance of the scheme.

In an ever-changing, complex business environment, withstanding market uncertainty is the key to improving success rates among start-ups. The scheme needs to be modified such that, following commencement of the business, the government should support and incubate the business for a minimum period of three years. These three years will allow start-ups sufficient time to fine-tune their business models and become sustainably profitable. Considering the beneficiaries of this scheme are the poorest of the poor, these suggestions ought to be taken into account.

A Amarender Reddy



Updated On : 1st Jun, 2018


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