The present government-funded schemes, including the Mahatma Gandhi National Rural Employment Scheme, play a dampener when it comes to encouraging the ultra poor — those who do not have any asset — to take up micro-entrepreneurship, according to a World Bank-sponsored study.
The Consultative Group to Assist the Poor (CGaP), an arm of the World Bank, in association with Ford Foundation, had initiated and sponsored the Ultra Poor Programme (UPP) in 2006 that aimed at establishing micro-enterprises with regular cash flows to enable ultra-poor households to grow out of poverty and eventually gain access to microfinance.
“This programme is successful elsewhere in the world. But in India, NREGS caused an increase in rural wages, which diverted the ultra-poor from establishing micro-enterprises,” Shamika Ravi, assistant professor of Economics and Public Policy at ISB who did the study, told mediapersons here.
Each household was allotted $357 (around Rs 18,000) as a one-time cost of intervention to help them build an enterprise, and 10 similar programmes were initiated across eight countries - Pakistan, Haiti, Peru, Ethiopia, Yemen, Ghana, Honduras and India.
In India, the NGO wing of Swayam Krishi Sangam (SKS) operated the largest of the 10 schemes.
The ultra poor households were chosen randomly and asked to take up any business ideas starting from livestock, non-farm package, telephone, tailoring, grocery shop to setting up tea stalls. Almost 60 per cent of them ended up choosing livestock and were given about a week-long training and a regular stipend to meet enterprise-related expenses for 18 months, she said. “But the government-funded schemes, including MGNREGS, play a dampener. By the end of the programme, nearly half the households sold the asset and joined casual labour work,” she said.